BIG BAZAAR

Presentation by-RAVI RANJAN

-BBM

Agenda

Retailing : An overview

Indian retail

The change factor

FDI in Indian retailing

Big Bazaar- Company Profile - Customer Segment - Vision and Mission - Swot analysis - BCG Matrix - Porter 5 Forces Model

Why FDI ?

How FDI ?

Retailing World’s largest private industry

US$ 6.6 trillion sales annually

Fortune 100 9 Retailers Carrefour, Ahold, Home Depot,

Kroger, Metro, Kmart-Sears, Target, Albertsons’

Indian Retailing Largest employer after agriculture -

8%* of population Highest outlet density in world

Around 12 mn outlets Still evolving as an industry

Long way to go

An overview

Retailing: An overview

Weekly MarketsVillage FairsMelas

Convenience StoresMom and Pop/Kiranas

Khadi StoresCooperatives

Exclusive Brand OutletsHyper/Super MarketsDepartment StoresShopping Malls

Traditional/Pervasive Reach

Government Supported

Historic/Rural Reach

Modern Formats/ International

Evolution of Indian retail

Source of Entertainmen

t

Neighborhood Stores/Convenie

nce

Availability/ Low Costs / Distribution

Shopping Experience/Efficie

ncy

Informal retailing Sector Typically small retailers. Evasion of taxes

Difficulty in enforcing tax collection mechanisms

No monitoring of labor laws

Formal Retailing Sector Typically large retailers Greater enforcement of taxation

mechanisms High level of labor usage monitoring

Indian retail

Evolution of Indian retail

Corporate Houses Tatas: Tata Trent RPG group: Food World, Health

and Glow, etc ITC: Wills Life Style Rahejas(ShoppersStop),

Hiranandani(Haiko), DLF(DT cinemas) etc.

Dedicated brand outlets Nike, Reebok, Zodiac etc

Multi-brand outlets Vijay Sales, Viveks etc

Manufacturers/ Exporters Pantaloons, Bata, Weekender

Indian retail

Categories of Indian retail

Modern Format retailers Supermarkets

(Foodworld) Hypermarkets (Big

Bazaar) Department Stores (S Stop) Specialty Chains (Ikea) Company Owned Company Operated

Traditional Format Retailers Kiranas: Traditional Mom and Pop

Stores Kiosks Street Markets Exclusive /Multiple Brand Outlets

Indian retail

Classifying Indian retail

Hypermarket Big Bazaar Giants Shoprite Star

Department store Lifestyle Pantaloons Piramyds Shoppers Stop Trent

Entertainment Fame Adlabs Fun Republic Inox PVR

Indian retailers

Large Indian retailers

Greater per capita income Increase in disposable income of

middle class households 20.9%* growth in real disposable

income in ’99-’03. Growing high and middle income

population Growing at a pace of over 10%* per

annum over last decade Affordability growth

Falling interest rates Easier consumer credit Greater variety and quality at all

price points

Indian consumer

The changing Indian consumer

†From Euromonitor Retail Survey

The urban consumer Getting exposed to international

lifestyles Inclined to acquiring asset More discerning and demanding

than ever

No longer need-based shopping Shopping is a family experience

Changing Mindset Increasing tendency to spend Post Liberalization children coming

of age 100 mn 17-21 year olds*. Tend to

spend freely. Greater levels of education

Indian consumer

The changing Indian consumer

*Data from NCAER

Market size Current market size is roughly US$

286 bn* 96% of the 12 Million stores are less

than 500 Sq. ft. Forecast Growth rate for the retailing

industry is roughly 8.3% for 2003-2008

Sales from large format stores would rise by 24-49%**

Formal and modern format retailing would enjoy rapid growth

Anticipated growth

Anticipated growth

Low domestic competition Because of fragmented nature of

industry

Lack of exposure to global best practices

Low entry barriers for unorganized retailing

Moderate entry barriers for organized retailing

Wholesale system under-invested leading to 20-40% wastage

Non level playing field issues Wide differences in treatment of

small and large retailers

Industry dynamics

Industry dynamics

Real Estate Costs

Supply Chain Inconsistency

Poor Infrastructure

Lack of Skilled Manpower

issues

Industry dynamics

Growth determining factors Government Policy Infrastructure development GDP growth Employment generation and job

creation In several new sunrise industries Implies greater purchasing power

Growth factors

Growth factors

India ranked 1st in the Global A.T Kearney Retail Development Index

India

Russia

China

Advantage India

The Indian advantage

THE SIZE OF THE OPPORTUNITY

Products

Total Retail Organised Organised Rs. Billion Retail Retail as %

Rs. Billion of TotalFood & Grocery 6422 50 1Textiles & Apparel 980 185 19Jewelry & Watches 554 30 5Consumer durables 415 43 10Pharmaceuticals 364 10 3Home Solutions 351 32 9Books, Music & Gifts 115 15 13Others 1159 111 10

Total 10360 476 5

Current Indian FDI Regime FDI not permitted in retail trade

sector, except in: Private labels Hi-Tech items / items requiring

specialized after sales service Medical and diagnostic items Items sourced from the Indian

small sector (manufactured with technology provided by the foreign collaborator)

For 2 year test marketing (simultaneous commencement of investment in manufacturing facility required)

FDI in Retail not permitted

FDI in Indian retailing

Metro Group of Germany Cash-and-carry wholesale trading Proposal faced strong opposition

Entities established prior to 1997 Allowed to continue with their

existing foreign equity components. No FDI restrictions in the retail

sector pre-1997 Foodworld

51:49 JV between RPG and Dairy Farm International,

Leading food retailer in India now Mc Donalds

Current FDI

FDI in Indian retailing

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HypermarketThe chain of retailstores of thePantaloon Retail(India) Ltd.89 outlets in IndiaHeadquarter inMumbaiFocusing on Valueof Money

COMPANY PROFILE

Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of India’s leading business houses with multiple businesses spanning across the consumption space. While retail forms the core business activity of Future Group, group subsidiaries are present in consumer finance, capital, insurance, leisure and entertainment, brand development, retail real estate development, retail media and logistics.

Led by its flagship enterprise, Pantaloon Retail, the group operates over 12 million square feet of retail space in 71 cities and towns and 65 rural locations across India. Headquartered in Mumbai (Bombay), Pantaloon Retail employs around 30,000 people and is listed on the Indian stock exchanges. The company follows a multi-format retail strategy that captures almost the entire consumption basket of Indian customers. In the lifestyle segment, the group operates Pantaloons, a fashion retail chain and Central, a chain of seamless malls. In the value segment, its marquee brand, Big Bazaar is a hypermarket format that combines the look, touch and feel of Indian bazaars with the choice and convenience of modern retail.

In 2008, Big Bazaar opened its 100th store, marking the fastest ever organic expansion of a hypermarket. The first set of Big Bazaar stores opened in 2001 in Kolkata, Hyderabad and Bangalore.

The group’s speciality retail formats include, books and music chain, Depot, sportswear retailer, Planet Sports, electronics retailer, eZone, home improvement chain, Home Town and rural retail chain, Aadhaar, among others. It also operates popular shopping portal.

Future Capital Holdings, the group’s financial arm provides investment advisory to assets worth over $1 billion that are being invested in consumer brands and companies, real estate, hotels and logistics. It also operates a consumer finance arm with branches in 150 locations.

Customer Segment

Big Bazaar target to upper middle class and higher customers.

The large and growing young working population is a preferred customer segment.

Big Bazaar specially target working women and home maker who are the primary decision maker.

Future Group shall deliver Everything, everywhere, every time for every Indian Consumer in the most profitable manner.

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

Mission & Vision

SWOT ANALYSIS

STRENGTHS EVERY DAY LOW PRICING GOOD INFRASTRUCTURE CONSUMER PREFERENCES DIVERSE MARKET COVERAGE AWRENESS ABOUT THE BRAND HIGH AMONG

MASSES OPPORTUNITIES

SUB URBAN UNTAPPED MARKET “ONE STOP” CONCEPT UNKNOWN YET EVOLVING CONSUMER ORIENTATION CO BRANDING AND FRANCHISING FOR FASTER

GROWTH

SWOT ANALYSIS

WEAKNESS LOW PERCEPTION AMONG CONSUMERS LESS AVAILABILITY OF STORES SUPPLY CHAIN BOTTLENECKS-(FRAGMENTED

MARKETS) THREATS

NEW ENTRANTS AND FOREIGN PLAYERS UNORGANISED RETAIL MARKET

5 FORCES PORTER MODEL

RIVALRY AMONG COMPETITORS RELIANCE,MORE,VISHAL,NEXT,SPENCERS

NEW ENTRANTS WALMART,CARREFOUR,METRO,IKEA FOREIGN PLAYERS ALLOWED TO SOME

EXTENT BARGAINING POWER OF SUPPLIERS

SUPPLIERS HAVE A HUGE UNORGANISED SECTOR TO CATER TO

Contd…

BARGAINING POWER OF CONSUMERS PRICE SENSITIVE CONSUMERS MORE AVAILABLE CHOICES

THREAT OF SUBSITUTES UNORGANIZED RETAIL

BCG MATRIX

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MARKETING

‘7 P’s ANALYSIS

PRICING§Value Pricing (EDLP)

§ Promotional Pricing• Low Interest Pricing• Psychological Pricing• Special Event Pricing (Republic Day)

§ Differentiated Pricing• Time Pricing

§ Bundling

PROMOTION•“SAAL KE SABSE SASTE 3 DIN”• FUTURE CARD (Discount Upto 3%)• SHAKTI CARD• JUNK SWAP OFFER• BRAND AMBASSADOR: M.S. DHONI• ADVERTISMENT (Print Ads, T.V., Radio)• POINT OF PURCHASE PROMOTION• GIFT TO EVEY 100th CUSTOMER (Seasonal)

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PEOPLE• People Are The Customers Which Are TheBiggest Asset Of A Company.• Well Trained Staff.• Appearance.• Presently Around 10000 Workers Are WorkingAnd Around 500 Workers Are Recruited EveryMonth.• High Security For Safety Of Customers.

Problems ahead

Reduction in consumer spendingSlow construction of mallsDifficulty in raising working capitalHigh rentalsLowering marginsNew emerging competitors

THANK YOU