bigbazaar
TRANSCRIPT
RETAIL INDUSTRY
Part 3 of Sector Specific SCM presentation
Group 6
GLOBAL RETAIL
• World’s largest private industry
• > US $ 8 trillion sales worldwide annually
• Accounts for almost 10% of GDP in most countries
• Major employer in most economies
16% in US
15% in Brazil
12% in Poland
07% in China
FACTSHEET
TOP RETAIL SALES: WORLD
Rank Country Sales (US $)
1 U.S.A $ 4 Tn
2 E.U $ 2 Tn
3 Japan $ 1 Tn
4 China $ 750 Bn
5 U.K $ 444 Bn
6 India $ 300 Bn
7 Russia $ 200 Bn
GLOBAL PLAYERS
CHANGING TRENDS
Six core areas to win in the changing environment
MV
I (M
an
ag
em
en
t ve
ntu
res
Inc)
in
2008
GRDI 2008 Market Attractiveness
ORGANIZED RETAIL (AS A %OF TOTAL SALES
INDIAN RETAIL
Weekly MarketsVillage FairsMelas
Convenience StoresMom and Pop/Kiranas
PDS OutletsKhadi StoresCooperatives
Exclusive Brand OutletsHyper/Super MarketsDepartment StoresShopping Malls
Traditional/Pervasive Reach
Government Supported
Historic/Rural Reach
Modern Formats/ International
Source of Entertainmen
t
Neighborhood Stores/Convenie
nce
Availability/ Low Costs /
Distribution
Shopping Experience/Efficie
ncy
EVOLUTION OF INDIAN RETAIL
MAJOR PLAYERS: INDIA
• Future Group – PRIL
• TATA Group
• RPG Group
• Reliance Retail
• AV Birla Group
• Landmark Group
Source: Ernst & Young
Total Share Of Retail In India
Source : Datamonitor, 2009
Source India Retail Real Estate,The road ahead, ICICI white paper pg2-6
Retail store formats Store Format Non store
Format Small/Medium Size
Large scale Consumer Co-op Stores
Direct Mktg/Channel less Retailing
1. Mobile Retailers, Hawkers.
2. Convenience stores.
3. Specialty Stores
1.Super Market.
2.Departmental Stores.
3.Discount stores.
4.Manufacturer’s
Showroom
5.Super stores.
6.Entertainment
1.Co-op stores.
2 .Sahakari Bhandars.
1.In home Selling.
2.Tele shopping .
3.Online retailing.
4.Vending
Machine
RETAIL OPTIONS
• Strategic License Agreements
• Cash and Carry
• Distribution eg.International Cosmetic Brand
• Franchisee route
• Manufacturing
• Joint Venture
ANALYSIS OF INDIAN RETAIL
POTER’S 5 FORCES MODEL
Bargaining Power Of suppliers
Bargaining Power Of Buyers
Rivalry Amongst Competitors
P.E.S.T ANALYSIS OF INDIAN RETAIL
P.E.S.T - POLITICAL
FDI should be allowed in stages
Initial stages: 26% FDI
Establishment Phase: 49% FDI
Mature Phase: 100% FDI
No incentives needed to attract FDI; Market size and potential are sufficient
3 yrs.
3 yrs.
P.E.S.T - POLITICAL
P.E.S.T - ECONOMICAL
• Increasing disposable income
• Personal Consumption as a percentage of GDP
• Plastic money becoming a big pie of credit
P.E.S.T - SOCIAL
• Population as a growth driver
Growing working women populationAdoption of nuclear family cultureBaby boomer effectGrowth in urban population70% of organised retail is concentrated in 6 major cities. Of 300 million Indian middle class, only 15% live in these 6
major cities
P.E.S.T - TECHNOLOGICAL
•ERP/SAP
•Bar-coding
•RFID
•Convenient Packaging
•Transportation ( reefer vans etc)
SWOT OF INDIAN RETAIL
STRENGTHS
• Shopping convenience
• Wide range of retail formats to suit every consumer
• Plastic card revolution.
• Greater availability of quality retail space.
29
WEAKNESS
• Policy related issues
• Limited consumer insight
• Inadequate human resources
• Taxation hurdle
• Underdeveloped supply chain
• Lack of adequate utilities
30
OPPORTUNITIES• Rapid economic growth
• The young India
• Emergence of India as a retail hub
• Potential untapped markets
• Sectors with high growth potential
• Abundant availability of skilled labour
• Low cost of operations
OPPORTUNITIES
Opportunities
• Rural retail
• Wholesale trading
• E-retailing
• Retail franchising
33
Threats
• Political issues.
• Social issues.
• Inflation.
• Lack of differentiation among the malls that are coming.
34
BIG BAZAAR… isse sasta aur accha kahi nahi…
Big Bazaar Fact File..
Outlet 104 outletsLocated in India
Parent group Future group; Pantaloons Retail India Ltd.
Owner Kishore Biyani (CEO)
Founded 2001
Head quarter Jogeshwari , Mumbai
Industry Retail
Store Type Hypermarket
Business Model High Volume Low Price; WalMart Business Model
Website www.bigbazar.com
Tag line Isse sasta aur achha kahin nahi.
Vision Statement
To deliver every thing, everywhere, every time to every Indian consumers in the
most profitable manner….
Mission Statement
We share the vision and belief that our customers and stake holders shall be served
only by creating and executing future scenarios in the consumption space leading to economic
development…
Big Bazaar – The Big Pie of PRIL…
As of Mar’10
Big Bazaar Spread..
Big Bazaar Life Cycle
Big Bazaar’s Core Concept
Create• A blend of a typical Indian
Bazaar and International supermarket atmosphere…
Give• The customer all the
advantages of… • Quality, Range and Price• See, Touch and Feel
Product Portfolio…APPARELS FOOD FARM
PRODUCTCHILL STATION
HOME AND PERSONAL CARE
Denims and t-shirtsFabric and cut pieceFormalsCasualsParty wearEthnic wearAccessories Undergarments Night wear Dress materials Sarees
Staples Ready to eatReady to cookInternational foodSpices Imported bazaarTea and coffee
FruitsVegetables Imported fruitsDairy products
Soft drinksPackaged juicesMilk itemsFrozen foodsIce creams
ShampooDetergentsSoapsLiquid washCreams deodorants Home cleanersUtensils PlasticsCrockerySundries
Product portfolio…ELECTRONICS BAZAAR
FASHION & JWELLERY
FURNITURE BAZAAR
CHILD CARE AND TOYS
OTHER SERVICES
TV setsWashing machines Refrigerator Personal careSmall appliancesLaptops Computer accessories Kitchen appliances
Footwear Beauty careStar parivaar
Living room bed room KitchenDining roomKids roomPaintings Decorative rooms
Kids wear Toy bazaar stationaryChild care
MR. RIGHTBakery Loot martTulsi Future moneyFuture generally
Demand Forecasting @ Big Bazaar
Demand Forecasting Features
•Look beyond the obvious seasonal rush by
▫Weekly “Sabse sasta Din” (Wednesdays)
▫“Sabse saste char din” in January
▫“5 days maha bachat ” in August
▫Junk Exchange etc
•Half yearly basis for example:▫Diwali season – March▫Summer season- October
•Weekly forecasts for perishables
Demand Forecasting Features
Demand Forecasting Challenges•WHAT Scale of forecast???
•Sporadic demand
•WHAT and HOW to introduce new goods
•HOW to Change prices and promotions
Categorization of goods
SeasonalNon-Seasonal
Internal Constraints
•Batch size
•Third party manufacturing
Methods of Demand Forecasting -I
•Last 3 years data & growth rate of current year
Judgmental Techniques
Statistical
Techniques
Demand Forecast
ing
•For a few other important products expert analysis is obtained……
…..Delphi Technique
Methods of Demand Forecasting -II
Demand Forecasting Process
Beginning Early
Taking expert inputs
Avoiding over- dependence
on tools Thinking of
multiple solutions
Playing one’s role
Be on the field
LOGISTICS and SCM @ Big Bazaar
Supply Chain @ Big Bazaar
Transportation of Goods
Transportation charges paid to the transporter are Rs 17500/month up to 1500 Kms If the distance is more than this then 4.50Rs per kilo meter
Warehousing @ Big Bazaar• Economic Functions
Consolidation
Break-Bulk
Stockpiling
Value-Added Services
• Operational Functions:
Receiving goods
Keeping records
Proper handling; Quality Maintenance
Order receiving
Dispatching goods
Marketing intelligence
Other legal functions related to trade
Types of DCs @ Big Bazaar
•M.D.C. (Mother distribution centre) e.g. Tarapur warehouse
•R.D.C. (Regional distribution centre) e.g. Hassangarh warehouse
•C.D.C. (Centre distribution centre) e.g. Mumbai warehouse
SCM Macro Processes @ Big Bazaar
C.R.M• Market• Price• sell
I.S.C.M• Strategic
planning• Demand planning• Supply planning• Fulfilment• Field service
S.R.M• Source• Negotiate• Buy• Design
collaboration• Supply
collaboration
Logistics @ Big Bazaar
•Inward Logistics▫Non Perishables▫Perishables
•Outbound Logistics▫General ▫Reverse
Inward Logistics (Non-Perishables)
Front end team of particular department
Category team of Central office
Data
DC or WH
Stock Transfer Out (STO)
Stock pick
Start picking
Stock Transfer Note
Gate Pass
Stock
Goods are received; checked for real
condition and number mentioned
in the gate pass, delivery note
Security in the logistics dept randomly checks the number of cartons
Logistics department member Cross-checks items in front of the particular dept team member by the stock-in
transfer, number wise
Damaged
Details entered in the Stock
outward Register and sent back to the warehouse.
Details entered in the Goods Inward Register & goods
stocked in the shoppe
Right goods
Information
Perishable Goods Logistics department
Collection of stock
Vendor
Checks
TAX; INVOICE; PURCHASE ORDER
If all OK…Goods Received Note is generated for particular
dept
Particular dept
Inward Logistics (Perishables)
Less Perishable: Internal W/H
Highly Perishable: Shop Floor
Outbound Logistics
•Home Delivery
•Store to store Transfer
•Inter Warehouse
•Reverse logistics
Reverse Logistics (RL)
• Return of damaged or expired stock
• Return of non saleable items
• First retailer in India to apply reverse logistics
• 4 Reverse Logistics W/Hs
• Average spending on reverse logistics for▫Garments - 10 to 15%▫Furniture -20%
IT @ Big Bazaar
ERP/SAP @ Big Bazaar - Snapshot
WHEN 2005
AIM To deploy a robust transaction management system and an enterprise wide platform to run its operations
SOLUTION SAP Retail Solutions
IMPLEMENTED BY SAP Team (24) with the help of Novasoft, Singapore
PROJECT HEAD Chief Information Technology Officer, Chinar Deshpande
No. of users 1200
Time Taken About six months
Cost Of Implementation Around $10 million
ERP/SAP Implementation @ Big Bazaar
• Blueprinting existing processes and mapping them to the desired state
Phase I
Inventory Management @ Big Bazaar
Inventory Types
Cyclical
•FMCG, Food & Beverages
Safety
Stock
•FMCG
Seasonal
• Apparels
Inventory-Decision Making
•The Store Manager is the boss.
•He inspects▫Stocks time to time ▫Demands of Customer
•He maintains Stock-in & Stock-out to decide on level of inventory.
Re-Order Points for Inventory•Orders placed as and when required (JIT)
Apparels •If stock < 4 items per piece•1 Sample; 10 Back up pieces
General Merchandise •7 days •incl. 2 days transit time
Vegetables and fruits •Daily Basis from local vendor
Meeting Uncertain Demands•Strong Backward Integration
•If more pieces/stock required…
▫Ask other nearby Big Bazaar store
▫Transfer of interest: Divert customers to other store
•Example: In apparels stock lasts ~45 days. In case of emergency transfer the interest to Pantaloons
Waste Management @ Big Bazaar
Waste Management
Perishable goods
Damaged on deliveryGiven back to vendor
After keeping in
stockGiven to
alt. distribution channels
Non perishable goods
Damaged on
deliverySent back to DC/WH
After keeping in stockSent to
registered vendors of scrap
Assessment Process:
Customer Satisfaction Surveys Audits
Customer Satisfaction Surveys
Model •CEM- Customer Experience Management
Focus•Customer experience at every touch point•Ranging from their first impression of the store to their experience with the staff
Agency •MACRO-Market Analysis and consumer research Organization
Customer Satisfaction Survey Process
Agency sends “ Mystery Shopper”
Their experience is documented
Feedback is sent to Big Bazaar
Analysis is done for improvement
Advantages of CEM
Track performance at all levels
Identify opportunities to be leveraged upon
Continuous Improvement
In –house Initiative “Pragati”•Head office operation team personnel visits
the store and observes:
▫Store exterior ;Baggage window; Customer service
Store ambience etc…
•Done on a quarterly basis
•Encourages stores to improve performance on in-house competition level.
Audits @ Big Bazaar
•Ernst & YoungAudit Firm
•Process Audit •Risk ManagementFocus•Independent Audit Firm•Monthly/quarterly basis.
Internal Audit
Presence of the Company across all segments
Specialized services
Cost control initiatives and frugal culture
Periodical reviews of the various operations
Continuous Enterprise Risk Management
Controls in SAP.
Increased size of operation has the risk of execution and management.
Having appropriate locations => Maximum Customer reach for each format.
Foreign Investments (Indian Sub-continent)
Collaborations with high end brands to cater to high end consumers.
Impact on the margins due to changes in the business environment.
High business risk due to increased competition and dynamism in the industry.
Increase in the size of operation => increase in the risk of the execution and management.
Casual Observations @ Big Bazaar•Trolleys are not easily available.
•Little attention to cleanliness.
•Inefficient In-house packaging.
•Crowded store interiors.
•Sign boards are not prominent.
•Long Billing time
•Weak publicity of value added services
•Family crowd is evident. Youth only 10%.
•Food Bazaar efficiently managed. It is a bit over staffed but layout is very good.
Casual Observations @ Big Bazaar
Recommendations….• Improvement in supply chains
•Warehouse location
• Improvement in packaging
• Infrastructure
•Separate less paying billing counters
• Improvement in Cleanliness
Acknowledgement…
•Location: Chinchwad
•Contact Person: Mr. Aushutosh Sathe (Store Manager)•References:
▫Work Staff▫Customers▫Former SIIB Students (Tanya Grover; Mudit
Murarka)
•Visit details:
▫No. of visits: 3
28th Dec ‘10: Zahid and Raj ( 3 pm- 4 pm) 2nd Jan ’11: Divya, Sachin and Dhaval ( 1 pm-
3 pm) 10th Jan ‘11: Nitika, Rishika, Swati, Raj ( 4pm
– 6pm)
Thank You !!!