Karan Jaidka (12P141) Mayur Kumar (12P216)Nikhil Jagdish Lilani (12P218) Suraj Khanna (12P235)

 Retailing and Franchising – Section B – Group 11

PGPM 2012-14Management Development Institute (MDI), Gurgaon

Big Bazaar and Aditya BirlaRetail More: A Comparative Study

Objectives of the Project

Organized Retail in India is still in its nascent stages and like any other burgeoning industry, this industry too has its own grave challenges but it still is very promising

With few big organized retailers deciding to exit the industry, others who have still managed to sustain have to remain highly competitive in order to survive

Each of the retail companies has their own unique strategies and offerings in order to sustain and grow their business. The retail outlets to be compared in this report are: Big Bazaar (Future Group) and More (Aditya Birla Retail). The retail chains would be compared on a number of factors, as described in the rest of the presentation

The Indian Retail Sector

The Indian retail industry has experienced high growth over the last decade with a noticeable shift towards organized retailing formats. The industry is moving towards a modern concept of retailing

The Indian retail market, currently estimated at USD 490 billion, is projected to grow at a CAGR of 6% to reach USD 865 billion by 2023

The opportunities in food and grocery retail in India are immense, given that it constitutes about 69% of India’s total retail market

Consumers shopping at modern trade have grown from 54% in 2012 to the current 68% (2013), driven by increasing consumption, comfortable shopping experience, new categories, wide variety of brands under a single roof and attractive prices

A whopping 55% of the modern trade shoppers actively seek promotional deals, 35% of them make bulk purchases, of which 30% are male customers

Mass media has a big role in bringing the rural market to the center-stage, which is setting the actual consumer aspiration. The key element to be focused on is the supply chain and infrastructure in the Tier-II cities

The country is moving at a fairly fast pace and consumers are creating their own opportunities and are becoming exposed to information

There is a huge aspiration level among the people in Tier-II and Tier-III cities which the retailer has yet to tap

The Companies Selected

Big Bazaar is the largest hypermarket chain in India

It was started by Mr. Kishore Biryani, the Group CEO and Managing Director of Pantaloons Retail, in September, 2001

Today, there are over 292 Big Bazaar stores in 93 cities and 60 rural locations across the country

The current formats include: Big Bazaar, Food Bazaar, eZone, Home Town, Central, Planet Sports, aadhaar, KB’s Fairprice and futurebazaar.com

Big Bazaar caters to roughly 300 million customers each year and they select products and services supplied by over 30,000 small, medium and large suppliers across India. Currently, about 35,000 people are employed with the firm

Big Bazaar claims to guarantee the best products at the best prices

They completely value ‘The Indian Dream’ and their stores reflect the look and feel of Indian bazaars.

More is a pan-India retail chain operated by the Aditya Birla Group company, Aditya Birla Retail Ltd. The Group entered the retail space in December, 2006

At present, there are 490 ’More’ supermarkets and 15 ‘More Megastore’ hypermarkets across the country. The company plans to increase these numbers to 1,300 supermarkets and 65 hypermarkets respectively by 2016

The company has its own set of private label brands like Feasters, Kitchen's Promise and Best of India

‘More’ supermarkets are neighborhood stores with the core proposition of offering value, convenience and trust to the customers, averaging 2,500 square feet area

The hypermarkets are self-service superstores offering value and range in food and non-food products and services at a single location

Comparison of the twoRetail Chains

Mission, Vision and Core Values (1 of 2)

Big Bazaar More

Customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development

To deliver superior value to their customers, shareholders, employees and society at large

They will be the trendsetters in evolving delivery formats, creating retail realty, making consumption affordable for all customer segments – for classes and for masses

They shall infuse Indian brands with confused and renewed ambition

They shall be efficient and cost-conscious and committed to quality in whatever they do

Mission

Vision

Big Bazaar More

To deliver Everything, Everywhere, Every time to Every Indian Consumer in the most profitable manner

To consistently provide the Indian consumer complete and differentiated shopping experiences and be amongst India's Top retailers, while delivering superior returns to all stakeholders

Mission, Vision and Core Values (2 of 2)

Big Bazaar More

Indianness: Confidence in themselves Integrity

Leadership: To be a leader in thought and business

Commitment

Openness: To be open in and receptive to new ideas, knowledge and information

Passion

Adaptability: To be flexible and adaptable, to meet new challenges

Seamlessness

Speed

Core Values

PositioningBig Bazaar More

Big Bazaar is an aspirational brand targeted mainly at the Indian middle class

‘Hamesha Extra’ is the core essence of More

Big Bazaar’s positioning shifted from being a one-stop shop for buying quality goods at really cheap prices (‘Isse Sasta Aur Accha Kahin Nahin’) to a more emotional appeal (‘Naye India Ka Bazaar') to commemorate completing 10 years of operations

More’s ‘everyday lowest price guaranteed’ is a critical component of their USP

The new positioning reflects the changing ethos of Indian shoppers

They aim at offering the best value for money to their customers

The freshness and range of their products is used to attract customers

Their core proposition includes offering value, convenience and trust to their customers

Target Audience

Big Bazaar More

Big Bazaar targets the price-conscious middle class of India as their primary customers

More’s stores are conveniently located in neighbourhoods and cater to the daily needs of families and young adults

The large and growing youth of the country is aimed as the preferred target segment and strategies are adopted to attract such customers

The hypermarkets are aimed at attracting families and small businesses to make large purchases on a weekly or monthly basis

Working women and homemakers (primary decision makers) form an important part of the target group

Working women and homemakers are the targeted segment

Retail FormatsBig Bazaar More

Hypermarket Chain (Big Bazaar): Provides affordable and often discounted prices for a household’s every need

Supermarket (More for you): Conveniently located neighbourhood supermarket chain providing one-stop shopping solutions for customers’ grocery and other household products needs

Supermarket Chain (Food Bazaar): Provides a blend of a typical Indian bazaar and international supermarket atmosphere

Hypermarket (More Megastore): Complete destination shopping area with a variety of national, international and house brands under one roof

Futurebazaar.com (Online Store): Offers products ranging from apparel, electronic goods, jewellery to books, movies and food

Clubmore (loyalty program): With a strong membership base of over 3 million customers, More offers exclusive promotional offers and schemes to them

Other retailing formats: Home retailing (Home Town) and a consumer durables chain (eZone)

Presence and Reach in IndiaBig Bazaar More

There are 292 Big Bazaar stores in over 90 cities and 60 rural locations in India

Currently, there are over 490 More Supermarkets in just 10 states across the country

There are 22 Central stores in India

15 More Megastore Hypermarkets are situated in 8 cities namely Hyderabad, New Delhi, Thane, Bangalore, Indore, Vadodara, Mysore and Nasik

Home Town is present in 10 locations in key metros

Ezone is a 55-store network

Map showing presence of Big Bazaar stores in India

SKUs and Types of Products Maintained

Big Bazaar More

Big Bazaar offers 200,000 SKUs of merchandize in a wide range of categories led by fashion and food products

A More Megastore Hypermarket maintains 25,000 SKUs of merchandize per store

SKU breakup (revenue contribution):-Food and groceries: 40%Fashion and apparel: 30%

Electronics and other items: 30%

More offers a significant number of private label products as well

More Megastore Hypermarkets are driven by food and grocery SKUs (with lower margins) and the number of apparel SKUs are on the rise

Design, Layout and Size of StoresBig Bazaar More

Big Bazaar stores are designed like convenience stores so that people feel like they are shopping on the streets

More stores are bright and clean, with layouts that allow ease of navigation

The design is like a planogram, providing ample space for customers to walk and see the products on display

The product display is well organized, allowing ease of choice

The average size of a Big Bazaar store is 50,000 sq. ft. and the Big Bazaar family center is 80,000-120,000 sq. ft.

The stores have been designed by Fitch, the leading international retail design firm

The minimum size of a More Supermarket is 2,500 sq. ft. and that of a More Megastore Hypermarket is 50,000 sq. ft.

Inside a Big Bazaar StoreInside a More Store

Pricing StrategiesBig Bazaar More

Value Pricing: Big Bazaar offers its customers the lowest available price without coupon clipping or comparison shopping (Promotional Pricing and Every Day Low Price). It also adopts a Low interest pricing strategy

More’s private label products were marked down by a significant margin

Psychological Discounting: Involves setting an artificially high price and then offering the product at substantial savings

Pricing strategies used for private label products were unique so that they could not be compared with usual products

Differentiated Pricing: Difference in rate based on peak and non-peak hours or days of shopping is a pricing technique used aggressively used by Big Bazaar

More promises best in market pricing as it sources fresh fruits, vegetables and staples directly from farmers

Time Pricing: Big Bazaar charges different rates for a given product depending on the time, day or month (Wednesday Bazaar, Festive Season Pricing, Special Offer Period pricing, Sabse Sasta Din, School Time, Seasonal Offers)

More also generally follows the Value Pricing Strategy

Bundling Pricing Strategy: Offering multiple products for sale as one combined product

Other Pricing Strategies: Buy More, Save More, Highlighting the savings possible, Cashing in on Sports events, The Price Challenge Offer

Advertising and Brand Building Activities

Big Bazaar More

Big Bazaar generally uses mass media such as television, print, radio and outdoor for advertising. It has now extended its presence on social media as well

More uses mass media such as print, radio and outdoor to advertise its promotional schemes. Television ads are scarcely aired. Social media presence is very limited

Big Bazaar also makes use of innovative cross-selling and up-selling strategies

Its most popular advertising campaign was ‘Hamesha Extra’ for which it received many accolades

Popular advertising campaigns include ‘Saal ka Sabse Sasta Din’, ‘Isse Sasta Aur Accha Kahin Nahin’, ‘Naye India ka Naya Bazaar’, etc.

More displays large-sized promotional offers and special offers near the entrances of its stores

It has roped in celebrities like MS Dhoni, Asin Sakshi Tanwar and now, Shikhar Dhawan to endorse the brand

There is audio-visual promotion of private label products inside the stores

Other promotional activities include weekend discounts, exchange offers, point of purchase promotion, promotion of schemes on the loud-speaker within the stores

More has colour slips based on product pricing

Brand endorsement also takes place through positive word of mouth and the Future Card

Change in logo

Footfall and RentalsBig Bazaar More

Footfall: 3.5-4 million per week, which averages out to around 15,000 per store per week

Footfall: 2-2.2 million per week

The footfall increases substantially on offer days and in the festive season

Rentals: On an average, More pays INR 35-40 per sq. ft. as rent in bigger cities and INR 20-22 per sq. ft. as rent in Tier-II cities

Rentals: On an average, Big Bazaar pays INR 35-40 per sq. ft. as rent in bigger cities and INR 20-22 per sq. ft. as rent in Tier-II cities

Relationship Management ProgramBig Bazaar More

PAYBACK: Big Bazaar has tied up with PAYBACK, India’s largest and one of Europe’s most successful multi-partner loyalty programs. This program enables customers to collect thousands of points across online and offline partners, with a single card

Clubmore: Its 3 million members enjoy a range of exclusive promotions and offers. Becoming a member is as simple as filling a form. Each time such a customer shops, he earns reward points which can be redeemed at a later stage

T24 Program: Big Bazaar has tied up with Tata Teleservices Ltd. and rolled out its T24 program through which customers will be rewarded with free talk-time for every purchase at Big Bazaar stores starting at INR 10 to a maximum of INR 350

Big Bazaar Profit Club: A unique membership program where one can pay INR 10,000 and can shop for INR 1000 per month for the next 12 months i.e., INR 12,000 over a period of 12 months. This card can be used across 215 + Big Bazaars, Food Bazaars and fbb- Fashion at Big Bazaar stores across the country. It can also be used as a gift card and an employee incentive mechanism

Conclusion and Recommendations

Conclusion

Based on the comparison of the stores on the above 11 factors, the following points can be arrived upon:- Though Big Bazaar and More are not direct competitors of each

other, they do intrude into each other’s space in multiple ways, and hence, they have to remain competitive

The retail chains have positioned themselves differently over the years; yet, the target audience of both firms does intersect

They have similar retail formats and both companies enjoy a pan-India presence

More stores are more spacious and their layout allows better ease of navigation

Pricing and promotional strategies are quite different from each other

Big Bazaar does have a superior relationship management system in place

Recommendations (1 of 2)

Though Big Bazaar plays prominently on price, it should not compromise on quality. The moment the quality of products sold at Big Bazaar starts deteriorating, customers will start shifting to other retail chains as there are a plethora of options available in the organized retail segment these days

Big Bazaar should adopt a High-Low pricing strategy (along with its existing pricing strategies) rather than a Every Day Low Pricing strategy

Crowd management is a major matter of concern, especially on offer days and on weekends. The number of staff should be increased in each section to handle the crowd. A proper queue management system is pivotal

More needs to work on its customer loyalty program and come up with innovative methodologies to retain its customers. Big Bazaar is leagues ahead of More in this regard

More also needs to develop a more aggressive advertising campaign given the fact that it is now beginning to find its foothold in the Indian retail space after a prolonged lean phase

Recommendations (2 of 2)

More enjoys a wide range of private label products and it should go all out in promoting these products and offering attractive schemes on them

More should also work on training its staff adequately because a lot of customers complain about the lack of knowledge/courteousness with regard to the staff

Both stores should work on making their customers aware of their loyalty programs because a lot of them have no clue about such rewards and incentives which the retail chains are making available to them

As both retail chains are in the expansion mode, they must ensure that they do not intrude too much into each other’s space so that their existing customers do not leave them and shift over to the competitor retail chain as and when the competitor offers them something more attractive than the former

Thank You!

Big Bazaar and Aditya BirlaRetail More: A Comparative Study