Big Bazaar - Location Strategy
Big Bazaar - Location Strategy
Big Bazaar - Location Strategy
ON
MASTER OF BUSINESS
ADMINISTRATION
Introduction to the Topic:
A company's location strategy should confirm with, and be part of, its overall
corporate strategy. Hence, if a company strives to become a global leader in retail
chain, for example, it must consider establishing warehouses in regions that are
consistent with its strategy and that are optimally located to serve its global
customers. A company's executives and managers often develop location
strategies, but they may select consultants (or economic development groups) to
undertake the task of developing a location strategy, or at least to assist in the
process, especially if they have little experience in selecting locations.
Location Strategies was established in 2005 by Greg Kerfoot and Barbara Bruce
who have over 60 years of combined experience in development location research.
The firm has extensive experience in a broad spectrum of services including
feasibility studies, strategic assessments for underperforming properties,
acquisition analysis, risk / opportunity assessment, portfolio review and tenant
solicitation.
The choice of a store location has a profound effect on the entire business life of a
retail operation. A bad choice may all but guarantee failure, a good choice success.
This aid takes up site selection criteria, such as retail compatibility and zoning,
which the small store owner manager must consider after making basic economic,
demographic, and traffic analyses. In picking a store site, many storeowners
believe that it's enough to learn about the demographics ("people information" like
age, income, family size, etc.) of the population, about the kind of competition
they'll be facing, and about traffic patterns in the area they're considering.
Introduction to the Company
Pantaloon Retail (India) Limited, is India’s leading retailer that operates multiple
retail formats in both the value and lifestyle segment of the Indian consumer
market. Headquartered in Mumbai (Bombay), the company operates over 10
million square feet of retail space, has over 1000 stores across 61 cities in India
and employs over 30,000 people.
Pantaloon Retail was recently awarded the International Retailer of the Year 2007
by the US-based National Retail Federation (NRF) and the Emerging Market
Retailer of the Year 2007 at the World Retail Congress held in Barcelona.
Today Pantaloon is the fastest growing retail company in India. The number of
stores is going to increase many folds year on year along with the new formats
coming up. Their courage is to dream and to turn their dreams into reality – that
change people’s lives, is their biggest advantage.
Future Group
Future Group is one of the country’s leading business groups present in retail,
asset management, consumer finance, insurance, retail media, retail spaces and
logistics. The group’s flagship company, Pantaloon Retail (India) Limited
operates over 10 million square feet of retail space, has over 1,000 stores and
employs over 30,000 people. Future Group is present in 61 cities and 65 rural
locations in India. Some of its leading retail formats include, Pantaloons, Big
Bazaar, Central, Food Bazaar, Home Town, eZone, Depot, Future Money and
online retail format, futurebazaar.com.
Future Group companies includes, Future Capital Holdings, Future Generali India
Indus League Clothing and Galaxy Entertainment that manages Sports Bar, Brew
Bar and Bowling Co. Future Capital Holdings, the group’s financial arm, focuses
on asset management and consumer credit. It manages assets worth over $1 billion
that are being invested in developing retail real estate and consumer-related brands
and hotels.
The group’s joint venture partners include Italian insurance major, Generali,
French retailer ETAM group, US-based stationary products retailer, Staples Inc
and UK-based Lee Cooper and India-based Talwalkar’s, Blue Foods and Liberty
Shoes.Future Group’s vision is to, “deliver Everything, Everywhere, Every time to
Every Indian Consumer in the most profitable manner.” The group considers
‘Indian-ness’ as a core value and its corporate credo is- Rewrite rules, Retain
values.
Mr. Kishore Biyani
Major Milestones
1987 Company incorporated as Manz Wear Private Limited. Launch of
Pantaloons trouser, India’s first formal trouser brand.
1991 Launch of BARE, the Indian jeans brand.
1992 Initial public offer (IPO) was made in the month of May.
1994 The Pantaloon Shoppe – exclusive menswear store in franchisee
format launched across the nation. The company starts the distribution
of branded garments through multi-brand retail outlets across the
nation.
1995 John Miller – Formal shirt brand launched.
1997 Pantaloons – India’s family store launched in Kolkata.
2001 Big Bazaar, ‘Is se sasta aur accha kahi nahin’ - India’s first
hypermarket chain launched.
2002 Food Bazaar, the supermarket chain is launched.
2004 Central – ‘Shop, Eat, Celebrate In The Heart Of Our City’ - India’s
first seamless mall is launched in Bangalore.
2005 Fashion Station - the popular fashion chain is launched
aLL – ‘a little larger’ - exclusive stores for plus-size individuals is
launched
2006 Future Capital Holdings, the company’s financial arm launches real
estate funds Kshitij and Horizon and private equity fund Indivision.
Plans forays into insurance and consumer credit.
Multiple retail formats including Collection i, Furniture Bazaar, Shoe
Factory, EZone, Depot and futurebazaar.com are launched across the
nation.
Group enters into joint venture agreements with ETAM Group and
Generali.
Big Bazaar
Big Bazaar is a chain of department stores in India currently with 100 outlets. It is
owned by Pantaloon Retail India Ltd., Future Group. It works on the same
economy model as Wal-Mart and has been successful in many Indian cities and
small towns. The idea was pioneered by entrepreneur Mr. Kishore Biyani, the CEO
of Future Group. Currently Big Bazaar stores are located only in India. It is the
fastest growing chain of department stores and aims at having 350 stores by 2010.
GROUP VISION:
Future Group shall deliver Everything, Everywhere, Every time for Every Indian
Consumer in the most profitable manner.
GROUP MISSION:
We share the vision and belief that our customers and stakeholders shall be served
only by creating and executing future scenarios in the consumption space leading
to economic development.
CORE VALUES:
Simplicity & Positivity: Simplicity and positivity in our thought, business and
action.
In India the Retailing industry has a long way to go, and to become a truly
flourishing industry, retailing needs to cross the following hurdles:
•The first challenge facing the organized retail sector is the competition from
unorganized sector.
•In retail sector, Automatic approval is not allowed for foreign investment.
•Taxation, which favors small retail businesses.
•Lack of trained work force.
•Low skill level for retailing management.
•Intrinsic complexity of retailing- rapid price changes, threat of product
obsolescence and low margins.
•Organized retail sector has to pay huge taxes, which is negligible for small retail
business.
•Cost of business operations is very high in India.
Recent Trends of Retail Marketing In India:
•Retailing in India is witnessing a huge revamping exercise as can be seen in below
graph.
•India is rated the fifth most attractive emerging retail market: a potential
goldmine.
•Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade)
makes up 3 percent or US$ 6.4 billion.
•As per a report by KPMG the annual growth of department stores is estimated at
24
Strategic Decision Support Systems :
In modern retailing, a key strategic choice is the format. Innovation in formats can
provide an edge to retailers. Organized retailers inIndia are trying a variety of
formats, ranging from discount stores to supermarkets to hypermarkets to specialty
chains.
Formats Adopted by Key Players in India:
Recent changes:
• Raising aspirations: Value added goods sales, Food and apparel retailing key
drivers of growth.
• Investment Opportunities
• Location: with modern retail formats having made their foray into the top cities
namely Hyderabad, Coimbatore, Ahmedabad, Mumbai, Pune, Chennai, Bangalore,
Delhi, Nagpur there exists tremendous potential in two tier towns over the next 5
years.
Big Bazaar is a chain of shopping malls in India currently with 29 outlets, owned
by the Pantaloon Group. The idea was pioneered by entrepreneur Kishore Biyani,
the head of Pantaloon Retail India Ltd. Big Bazaar stores in Metros have a gaming
area and kids play area for entertainment.
Agra
Ahmedabad
Allahabad
Ambala
Asansol
Bangalore
Bhubaneswar
Chennai
Coimbatore
Palakkad
Kolkata
Delhi
Durgapur
Ghaziabad
Gurgaon
Hyderabad
Indore
Lucknow
Kanpur
Mangalore
Mumbai
Nagpur
Nasik
Panipat
Pune
Rajkot
Surat
Thane
Thiruvananthapuram
Vishakhapatnam
Big Bazaar has democratized shopping in India and is so much more than a
hypermarket. Here you will find over 170,000 products under one roof that cater to
every need of the family, making Big Bazaar India’s favorite shopping destination.
At Big Bazaar, you will get best products at the best prices, this is their guarantee.
From apparel to general merchandise, like plastics, home furniture, utensils,
cookery, cutlery, sports goods, car accessories , books, music, computer
accessories and many more. Big Bazaar is the destination where you get products
available at prices lower than the MRP , setting a new level of standard in price,
convenience, and quality.
Big Bazaar is a great platform for fashion conscious buyers, who want great
clothes at great prices. Leveraging on the companies inherent strength of fashion,
Big Bazaar has created a strong value for money, proposition for its customer. This
highlights the uniqueness of Big Bazaar as compared top traditional supermarkets,
which principally revolves around food, groceries and general merchandise.
KEY FEATURES:
b. GUARANTEED DELIVERY:
Big Bazaar guarantees to deliver the exact product that has selected, without
defects. In case of receiving a different product, or if the product is damaged in
transit, the customer should contact it within the stipulated time period and Big
Bazaar will ensure that it is replaced or refunded.
c. SECURE PAYMENT:
It commits to ensure that no payment misuse happens, so we work with banks and
payment gateways to ensure that your information is protected. Payments are
protected both by it and by the policies of customer’s bank, and the chances of
fraud in these channels are actually very low. Big Bazaar openly publishes its
office addresses and is part of India’s largest retail company with a presence all
over India – so you know how to contact us in person, if required.
d. OUR SIMPLE 15-DAY RETURN POLICY:
If customer has purchased something at Future Bazaar and the product did not
meet its expectations or does not fit to his needs, then it can return the product to
us; no questions asked, as long as it is in its original packaging and accompanied
by its invoice. We will even make the return process simple for you – just contact
our customer support and we’ll arrange to pick up the product from your home.
Alternately, you can drop it off at the nearest Big Bazaar.
GUARANTEED
DILIVERY
15 DAYS
PROMPT
RETURN
CUSTOMER
POLICY
SUPPORT
BIG
BAZAAR
MANUFACTUR-ER’S
SECURE
WARRANTY
PAYMENT
PRODUCT LINE
Here, one finds over 170,000 products under one roof that cater to every need of a
family, making Big Bazaar India’s favourite shopping destination. Where Big
Bazaar scores over other stores is its value for money proposition for the Indian
customers. Big Bazaar, one finds a huge variety of products to select from with a
good price and quality. With the ever increasing array of private labels, it has
opened the doors into the world of fashion and general merchandise including
home furnishings, utensils, crockery, cutlery, sports goods and much more at
surprisingly low prices. In recent years, Big Bazaar has adopted value pricing in
which they win loyal customers by charging a fairly low price for a high – quality
offering. However, consistent low price for the products is not only the universally
desired characteristic.
MARKETING STRATEGY
SEGMENTATION:
Segmentation involves finding out what kinds of consumers with different needs
exist. In the auto market, for example, some consumers demand speed and
performance, while others are much more concerned about roominess and safety.
In general, it holds true that “You can’t be all things to all people,” and experience
has demonstrated that firms that specialize in meeting the needs of one group of
consumers over another tend to be more profitable. Several different kinds of
variables can be used for segmentation:-
TARGETING:
First
How well are existing segments served by other manufacturers? It will be more
difficult to appeal to a segment that is already well served than to one whose needs
are not currently being served well.
Secondly
How large is the segment, and how can we expect it to grow?
Thirdly
Do we have strengths as a company that will help us appeal particularly to one
group of consumers?
Positioning involves implementing our targeting. Big Bazaar has established itself
in the first quadrant of Organization Value and Customer Value Matrix
The SWOT analysis of current strategy of Big Bazaar elaborates the
core competencies and areas of improvement. The key features that have shaped in
establishing of Brand includes
Big Bazaar ensures that no other Kirana store/ departmental store are offering
considerable discount compared to its own price. This helped Big Bazaar in being
the “Value for money” store.
Big Bazaar scores high on product mix as compared to Kirana store.
Cheap and local products are heavily stocked in Big Bazaar which make it easier to
attract lower middle class category of customers.
Promotion of Kirana event is rare event but Big Bazaar used this channel
efficiently to establish itself as national brand.
Customer loyalty resulting in high up sell i.e. selling to existing customers.
Big Bazaar refrains from high-end locations for business which reduces its rental
budget and provides competitive advantage over competitors. Kishore Biyani has
taken “early movers advantage” in many retail spaces.
Organization Value and Customer Value Matrix
The easiest way to understand the main aspects of marketing is through its more
famous synonym of "4Ps of Marketing". The classification of four Ps of marketing
includes marketing strategies of product, price, placement and promotion. The
following diagram is helpful in determining the main ingredients of the four Ps in a
marketing mix.
PRODUCT:
In simpler terms, product includes all features and combination of goods and
related services that a company offers to its customers. Product is the most
important aspect of marketing mix for two main reasons. First, for manufacturers,
products are the market expression of the company's productive capabilities and
determine its ability to link with consumers. So product policy and strategy are of
prime importance to an enterprise, and product decisions dictate the scope and
direction of company activity. Moreover, the market indicators such as profits,
sales, image, market share, reputation and stature are also dependent on them.
Secondly, it is imperative to realize that the product of any organization is both a
component and a determinant of the marketing mix as it has a great influence on
the other elements of the mix: advertising, personal selling, channels of
distribution, physical distribution and pricing. So without proper product policy, a
company can not pursue for further elements of marketing mix.
PRICING:
Normally it has been taken as a general law that a low price will attract more
customers. It is not a valid argument as customers do not respond to price alone;
they respond to value so a lower price does not necessarily mean expanded sales if
the product is not fulfilling the expectation of the customers
Generally pricing strategy under marketing mix analysis is divided into two parts:
price determination and price administration (ibid).
Placement under marketing mix involves all company activities that make the
product available to the targeted customer while planning placement strategy under
marketing mix analysis, companies consider six different channel decisions
including choosing between direct access to customers or involving middlemen,
choosing single or multiple channels of distributions, the length of the distribution
channel, the types of intermediaries, the numbers of distributors, and which
intermediary to use based on the quality and reputation .
PROMOTION:
Despite the fact that marketing mix analysis is used as a synonym for the 4Ps of
Marketing, it is criticised on the point that it caters seller's view of market analysis
not customers view. To tackle this criticism, attempted to match 4 Ps of marketing
with 4 Cs of marketing to address consumer views:
RETAIL MIX:
Foot wear: In this section footwear for men women and kids is made available.
Music: A wide collection of CDs DVDs is made available
Toys: All kinds of toys for children is available
Stationary: all kind of office stationery and stationery for school going kids is
available
Location
Big bazaar is located has 31 outlets in India , big bazaar locates its outlet near the
commercial area and residential complexes so that they can cover all their target
customers E.g. : their outlet in Ameerpet , Hyderabad , is located near commercial
areas so that the working class people can drop in and shop house hold items after
office hrs.
The choice of location of Big Bazaar in many ways captures the essence of what
they were doing- they adapt themselves to the habits tastes and preferences
according to the location. One of the distinct feature of their location is that it is
easily accessible and they try to locate their outlet in such a location where they
can reach a large customer base.
Layout
People often complain that Big Bazaar outlets always look very crowded. But few
realize that it is concisely designed to look just like that. When the shop looks neat
and empty, the masses never walk into it. There has to be what is called the ‘button
brush effect’, and an ‘organized chaos’. As Indians, we like bumping into people,
chatting, gossiping and eating while we shop!
Big Bazaar layout consists of layout of long rows of parallel fixtures; with no
aisles because aisles can be boring they restrict space and can’t be dramatized. At
Big Bazaar, they create multiple cluster or mini-bazaars within every store. It was
designed as an agglomeration of bazaars with different sections selling different
categories’
“It uses space efficiently.
It provides easy sitting of merchandise and linking of the product throughout the
store.
It allows more customers in the store at any time.
Allows staff of the store to work easily alongside the customers without disturbing
them.
Provide self-service atmosphere
Visual merchandising
They use danglers and hoardings at the entrance of the store as this may be a
deciding element in a consumer’s decision to enter a store. It uses various visual
merchandising like it uses remarkable window display for creating a shopping
environment as it creates initiative impression in the mind of customers as window
display also sometimes become a deciding factor whether to enter the store or not .
Retailers develop visual merchandising in order to relate customer’s social life
with the product, arouse their personnel interest for the product. “Retailers can use
combination of elements of in store display; such as colour, texture, lighting,
fixtures, graphics, signage.”
1. ADVERTISING:
Advertising is recognized as an indispensable tool of promotion. It has acquired a
lot of significance in the national and international markets. With the advent of
globalization and liberalization its imperativeness in the Indian retail sector has
increased as a result of competitions, latest technologies, and the rapidly changing
consumer lifestyles.
a. Objectives of Advertising:
c. Types of advertising:
1. Informative Advertising:
Purchases of durable products are generally erratic and often too expensive to buy,
so the retailer spends a huge amount on informative advertising.
2. Corporate Advertising:
Its main motive is to build a corporate image. Corporate Advertising builds up
retailer image. It increases goodwill towards the retail organization.
3. Financial Advertising:
It refers to advertisements by various financial institutions. Big Bazaar has also
tied up with ICICI bank, which provide information about the investment
opportunities and the risks and benefits.
4. Classified Advertising:
It refers to messages, which are placed under specific headings and columns in
various magazines and newspapers.
2. PROMOTION:
Promotion can be loosely classified as "above the line" and "below the line"
promotion. The promotional activities carried out through mass media like
television, radio, newspaper etc. is above the line promotion. The terms
'below-the-line' promotion or communications refers to forms of non-media
communication, even non-media advertising. Below-the-line promotions are
becoming increasingly important within the communications mix of many
companies, not only those involved in fmcg products, but also for industrial goods.
a. Price promotions
Price promotions are also commonly known as" price discounting". These can be
done in two ways:-
1. A discount to the normal selling price of a product, or more of the product at the
normal price.
2. Price promotions however can also have a negative effect by spoiling the brand
reputation or just a temporary salesboost (during the discounts).
b. Coupons
Coupons are very versatile, way of offering a discount.
The key objective with a coupon promotion is to maximize the redemption rate –
this is the proportion of customers actually using the coupon. It must be ensured
when a company uses coupons that the retailers must hold sufficient stock to avoid
customer disappointment. Use of coupon promotions is often best for new products
or perhaps to encourage sales of existing products that are slowing down.
The "gift with purchase" is a very common promotional technique. In this the
customer gets something extra along with the normal good purchased.
d. Competitions and prizes
This is an important tool to increase brand awareness amongst the target consumer.
It can be used to boost up sales for temporary period and ensure usage amongst
first time users.
e. Money refunds
g. Point-of-sale displays
A data collection system that electronically receives and stores bar code
information derived from a sales transaction. This could the zip codes for library
users, facilitating the library in determining geographic market are that users reside
in. Most of the big brands are following the suit of BTL promotion because of
rising prices of media based promotion, advertising clutter and increased impulse
purchasing. BTL promotions are gaining popularity among all big companies
nowadays considering their effectiveness because of the "individual customer
promotion" at a price, which is much lesser than the normal media promotions.
2. PERSONAL SELLING:
3. PUBLICITY OF PRODUCT:
4. PUBLIC RELATION:
Public relations the planned and sustained effort to establish and maintain goodwill
and mutual understanding between an organization and its target publics.
5. INTERNAL ATTRIBUTES:
6. LOGISTICS:
Logistics is the art and science of managing and controlling the flow of goods ,
energy, information and other resources like products, services and people from the
source of production to the marketplace. It’s Important to have professional
logistical support logistical. The operating responsibility of logistics is the
geographical repositioning of raw materials, work in process and finished
inventories where required at the lowest cost possible.
7. SUPPLY CHAIN:
Supply chain, is a coordinated system of organizations, people, activities,
information and resources involved in moving a product or service in physical or
virtual manner from supplier to customer. Supply chain activities transform raw
materials and components into a finished product that is delivered to the end
customer.
d. Big Bazaar is looking at making apparel business its largest revenue generator,
as much as 40 per cent in two years and 50 per cent of its overall business, in five
years.
e. Currently sales of apparel make up almost 30 per cent of Big Bazaar’s revenues,
which is next only to its food retailing business that makes up almost 40 per cent.
f. However, we will focus on apparel as the margin here is as high as 35 per cent
compared to food retailing business where margins are probably 12 per cent. So a
slight increase in apparel sales boosts the overall business. Going forward, Big
Bazaar plans to rearrange its apparel and fashion merchandise section in stores in
terms of design, layout and elbow space. This is expected to ensure better product
display in stores keeping with consumer buying habits and convenience.
h. During this time, the largest selling category was apparel. As many as 1lakh
jeans were sold and onelakh sarees as well as some 2 lakh t-shirts.
i.Some of Big Bazaar’s private labels, like DJ&C and Knighthood, are already big
revenue generators, with DJ&C projecting Rs 1,000crore in the next three years,
from 600crore right now.
LOCATIONAL STRATIGIES FOR LAST 5 YEARS