"Compare and

contrast the

resources, capabilities

and competencies of

two leading Retail

firms in India -

Reliance & Future

Group”

Roadmap..

Introduction

Resources Analysis

– Porter's Five Forces Model

– PEST

– SWOT

Capabilities Analysis

Strategy Analysis

Resource Gap Analysis

Recommendations

Though the firms chosen are Future group & Reliance Group

for comparing and contrasting the Resources, Capabilities &

Competencies our study shall be limited to Big Bazaar &

Reliance Mart of Future Group & Reliance group

respectively.

Scope of our study..

Retailing

The term “Retailing” refers to any activity that involves a

sale to an individual customer. It is the interface between

the producer and the individual consumer buying for

personal consumption.

Indian Retail Market

The retail sector in India is growing at a phenomenal pace.

According to the Global Retail Development Index 2012, India

ranks fifth among the top 30 emerging markets for retail.

The size of India's retail sector is currently estimated at around

$450 billion and organised retail accounts for around 5% of

the total market share.

It is estimated that the retail sector would continue to grow at

10-12 % per annum.

Brief Introduction about the

Firms

Corporate Profile

• Future Group is India’s largest retailer and one of the leading business houses.

• Its founder and Group CEO is Mr.Kishore Biyani .

• Future Group’s retail network touches the lives of more than 200 million Indians in 73 cities and 65 rural locations across the country.

• Currently operates around 1,000 stores spread over 16 million square feet of retail space.

How it grew…

• 1987 incorporated as Manz Wear Private Limited, launch of

Pantaloons trouser (India’s first formal trouser brand)

• 1992 launch of Initial public offer (IPO)

• 1994 establishment of Future Group India

• 1997 Pantaloons – India’s family store launched

• 2001 Big Bazaar, ‘Is se sasta aur accha kahi nahin’ - India’s

first hypermarket chain launched

• 2002 Food Bazaar, launch of supermarket chain

• 2007 Future Group achieved milestone of $1 billion turnover

Future Group

PANTALOON RETAIL INDIA LTD.

HOME SOLUTIONS RETAIL INDIA LTD.

FUTURE BRANDS LIMITED

FUTURE MEDIA (INDIA) LIMITED

FUTURE SUPPLY CHAIN SOLUTIONS LIMITED

FUTURE AXIOM TELECOM LIMITED

FUTURE VALUE RETAIL LIMITED

PANTALOON FOOD PRODUCTS (INDIA) LIMITED

FUTURE KNOWLEDGE SERVICES LIMITED

FUTURE CAPITAL HOLDINGS LIMITED

FUTURE GENERALI INSURANCE COMPANY LIMITED

FUTURE BAZAAR INDIA LIMITED

STAPLES FUTURE OFFICE PRODUCTS PVT. LIMITED

Vision: Future Group shall deliver Everything, Everywhere, Every

time for Every Indian Consumer in the most profitable

manner.

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.

Future Group

• Big Bazaar was started by Kishore Biyani, the Group CEO and Managing

Director of Pantaloon Retail India.

• Big Bazaar was launched in September, 2001 with the opening of its first four

stores in Calcutta, Indore, Bangalore and Hyderabad in 22 days.

• Within a span of ten years, there are now 161 Big Bazaar stores in 90 cities

and towns across India.

• Though Big Bazaar was launched purely as a fashion format including

apparel, cosmetics, accessory and general merchandise, over the years it has

included wide range of products and services.

• The current formats includes Big Bazaar, Food Bazaar, Electronic Bazaar and

Furniture Bazaar.

• As the modern Indian family's favorite retail store, Big Bazaar is popularly

known as the "Indian Walmart".

Corporate Profile

• Reliance Retail, Ltd. is a subsidiary company of Reliance

Industries. Founded by Mukesh Ambani in 2006 based

in Mumbai

• It is the second largest retailer in India.

• Its retail outlets offer foods, groceries, apparel and footwear,

lifestyle and home improvement products, electronic goods,

and farm implements and inputs.

• The company’s outlets also provide vegetables, fruits, and

flowers.

• More than 5 years into operation, RRL has now

expanded its presence in more than 85 cities across 14

states in India.

• The firm has expanded to more than 1,000 retail stores

across all formats.

How it grew..

Vision: With a vision to generate inclusive growth and prosperity

for farmers, vendor partners, small shopkeepers and consumers,

Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to

lead Reliance Group’s foray into organized retail.

Reliance Retail Ltd.

RELIANCE FRESH LIMITED

RELIANCE DIGITAL LIMITED

RELIANCE JEWELS LIMITED

RELIANCE TIME OUT LIMITED

RELIANCE TRENDS LIMITED

RELIANCE MART LMITED

RELIANCE FOOTPRINTS LIMITED

RELIANCE WELLNESS LIMITED

Other businesses

• Part of Reliance Retail Ltd headed by Mr. Mukesh Ambani

• First store in August 2006 at Ahmedabad

• It is designed to be an all under one roof supermarket that caters

to household needs like Food article , apparel, kitchen utensil,

electronics goods, furniture etc

• The hypermarket is selling the products on EDLP (every day low

price) basis at prices15-20 percent lower than market prices.

• In order to grow faster and better in local markets with higher

margins, it has focused largely on local brands instead of national

brands.

• Reliance is also selling clothes ,furniture, food article with private

labels.

Resource Based Approach for

Strategy Analysis of the Two

Firms

Porter’s five forces analysis

Threat of new entrant FDI policy now made favorable for

international players but still some

states are not willing to allow them in

retailing.

Domestic conglomerates looking to start

retail chain

Bargaining power of the

Supplier

The retail chain are using it own brand

in apparel as well in food segment.,

they are also big B2B consumer and

they are in better position to bargain

with the supplier.

There are few suppliers who have a

slight advantage over others on

account of being established players

and enjoying brand distinction

Bargaining power of Buyer Consumers are price sensitive

Availability of more choice

Threat of Substitute Unorganized retail

Rivalry among competitors

Shoppers Stop, Wills Lifestyle,

Spencers

Vishal Retail

Bharti & Walmart etc.

Contd..

Competitive Rivalry within

Industry

(High)

Threat of new Entrant

(Moderate)

Bargaining power of Suppliers

(Low)

Threat of Substitutes

(High)

Bargaining power of buyers

(High)

POLITICAL

A stable govt at the center will facilitate speedy economic recovery and create an encouraging investment climate

Problems of getting proper protection from local government.

.

ECONOMIC

India one of the fastest growing economies

increasing income of people

Increase in percentage of service contribution to GDP

Stable even during recession

Growth stage: High revenue but high expenditure on promotion

SOCIAL CULTURAL

Increase in nuclear families

Preference to shop in nearby local store with credit facility

Increase in working women proposition

Life style changes

Shift in product and service preferences

Increase in young population

TECHNOLOGICAL

Technological development for faster service

Better application of IT in the modern retail industry, like in supply chain management , store management and CRM

Electronic billing

Use ERP module for handling inventory and finance.

PEST

Strengths

Big Bazaar Reliance Mart

• High brand equity enjoyed by Big

Bazaar

•Low Price/Different Discount Scheme

• State of the art infrastructure – Huge

Display area

• Product Diversity - A vast variety of

stuff available under one roof

• Everyday low prices, which attract

customers

• Maximum percent of footfalls

converted in sales

• Huge investment capacity

• Biggest value retail chain in India

•Available facilities such as online

booking and delivery of goods

• First to enter into this

unorganized sector of

vegetables and fruits

•Private label sale – own

products (Reliance Select)

• Contract Farming

•Everyday low prices, which

attract customers

• Network – 1600 channels in

villages

Weakness

Big Bazaar Reliance Mart

• Unable to meet store opening

targets on time

• Falling revenue per sq ft

• General perception: ‘Low price

Low quality’

• Overcrowded during offers

• Long lines at billing counters

which are time consuming

• Limited only to value offering

low price products. A no of

branded products are still

missing from Big Bazaar’s line

of products. E.g. Jockey, Van

heusen,

•Limited consumer insight

• lack of detailed region specific

customer data.

• Inadequate human resources

• lack of trained personnel at all

level

• Underdeveloped supply chain

and underdeveloped logistics

infrastructure.

Opportunities

• A lot of scope in Indian organized retail as it stands at

approximately 4%.Retail chain influence the people due

to lower price, easy availability and value to money

• Potential for investment and high growth due to

increasing number of youth

• Fastest growing formats

• Rural retail

• E-retailing

• Retail franchising

• Increasing mall culture in India

• More people these days prefer to visit big stores where

they can find large variety under one roof

Threats

• Political issues - Government policies are not well-defined in emerging markets like India

– stringent employment and industry laws

– Taxation hurdle.

• Social issues as large number of small kirana store will be effected

• Competitors, global big players planning to foray into Market

• Poor inventory turns and stock availability

• Transportation system in rural India is week resulting in lower realization of value chain system

• Policy related issues

• Numerous license , permits and registration

• Farmer and retailer unfriendly APMC act.

Major competitors of Big Baazar & Reliance

Mart • Shoppers' Stop

• Westside (Trent)

• Lifestyle

• RPG Retail (Food world, Music world)

• Wills Lifestyle

• Globus

• Piramals ( Pyramid & Crosswords)

• Ebony Retail Holdings Ltd.

Capabilities

Big Bazaar

• Effective and efficient

Inventory control

• Diverse Industries

• Volumes / Economies

Reliance Mart

• Forge strong & Lasting

bond with millions of

farmers

• Offer unmatched

affordability, quality,

convenience, service and

choice

• Consistent quality and

unbeatable freshness

Performance of Future Group

Performance of RRL….

Competencies

Biz Bazaar

• Best pricing throughout

the year.

• A choice of more than

20,000 products

• Fast deliveries – tie ups

with world leaders in

logistics & transportation

services

• Special emphasis on

apparels and life style

products Providing

interesting discounts

Reliance Mart

•Ability to understand the

needs of the middle class

Indian customers and their

unflinching service

orientation.

Strategy: Big Bazaar

Real-estate game:

• According to kishore biyani, real estate cost should be

lesser than 5% of total sales of store in order to provide

maximum benefits to customer

• The strategic decisions to secure spaces before other

retailers join in have resulted in cost saving.

Nurturing relationship:

• Kishore Biyani follows the strategy to develop trust and

nurture relationship with suppliers. Whoever works with

Future Group, either leaves in initial deals or continues

forever.

Big Bazaar’s Chaos Theory evolved to

cater to the Indian Mindset

Strategy: Reliance Mart

Growth through Value Creation

• With a vision to generate inclusive growth and prosperity for

farmers, vendor partners, small shopkeepers and consumers,

it was set up to lead Reliance Group’s foray into organized

retail.

• Based on its core growth strategy of backward integration,

RRL has made rapid progress towards building an entire value

chain starting from the farmers to the end consumers.

•Employed Farm to fork in Reliance Fresh, No middlemen,

Farmers – Customer

Reliance Fresh - Farm To Fork Model

Gaps in the resources of the two retail firms

• Scope for improvement in Supply chain management

and weak support infrastructure

– Poor infrastructure-Underdeveloped supply chains, lack of

strong cold chains, poor warehousing facilities, bad roads,

etc.

– Absence of a mature Third Party Logistics (3PL) industry

– Fragmented supply base

• Rentals – skyrocketing to all time high

• Mistakes by retailers have also added to external

troubles

– Crowding in unattractive locations

– Inability to compete with traditional retail

– Over reliance on debt funding

Recommendations

Recommendations

Recommendations (contd..)

• Build a competent SCM system

– Strengthen support infrastructure

– Warehouses

– Cold Chain

– Third Party Logistics (3PL)

– Backward integration

– Optimize Processes

• Build a competent CRM system

– Service and quality can be improved by integrating customer

feedback with back-end systems and partners and.

– Growth of CRM facilitated by the help of IT in the organization

will earn a lot of reputation for the retail chain

Recommendations (contd..)

Thank You!