Big Bazaar vs. Spencer’s

Dasari Kishan -8108Priti Kulkarni-8122Rupsha Neogi-8130

RPG

• RPG Enterprises was established in 1979• Has turnover touching Rs. 15,000 cr. • The group has more than 20 companies• Manages diverse business in the areas of

Power, Tyre, Transmission, IT, Retail, Entertainment, Carbon Black, and Speciality

Vision

• We shall be a leading Indian company with focus on market capitalisation

• Leadership in profitability and revenue growth in our chosen business

• Being a customer centric business• Being the most exciting workplace

SPENCER’S

• Spencer's Retail Limited is one of India's largest and fastest growing multi-format

• 250 stores, including 36 large format stores across 50 cities in India.

• Established in 1996.• Spencer's has retail footage of over 1.1 million

square feet

SPENCER’S HYPER

• Hypermarkets• Spencer's hyper are megastores, which

combine a supermarket with a department store. At least 15,000 sq. ft in size, they stock, on average, 70,000 items, giving shoppers fantastic deals across food, fashion, home and entertainment all under one roof.

Pantaloons (India) Retail

• Founded in 1987, Pantaloon Retail forayed into modern retail in 1997 with the opening up of a chain of department stores

Vision• 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.

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

• We shall infuse Indian brands with confidence and renewed ambition.

• We shall be efficient, cost- conscious and committed to quality in whatever we do.

• We shall ensure that our positive attitude, sincerity, humility and united determination shall be the driving force to make us successful.

segmenting

Consuming class [ 14% ] – High disposable income

Serving class [ 50%] – Drivers, cleaners etc. They serve the consuming class.

Struggling Class – Live a hand to mouth existence.

•Also the consumer class and serving class never shop at the same stores.•Serving class feels comfortable in crowds and chaos and hesitates even to enter the specialty stores.

Targeting• The target audience for big bazaar includes

people based on the economic status. They mainly cater to urban middle class and price sensitive customers

Positioning

• Big Bazaar is not just another hypermarket. It caters to every need of your family. Where Big Bazaar scores over other stores is its value for money proposition for the Indian customers

• Isse sasta aur accha kahin nahi – This can be used for the POSITIONING strategy. Shop till you drop”

• "Most Indian retailers tend to blindly copy from Western models. I am looking for a pan-Indian model of retailing,"

SWOT Analysis

strength• Good SCM• Variety of products

available under one roof• Higher PROFIT margins on

sold products• Good brands available at

affordable prices• Cheap goods available to

the consumers due to the absence of middlemen

weakness• High attrition rate• Employees are not well

trained in handling esteemed customers

• Sub standard Quality of goods

• There is no proper channel of advertising for promoting their products

OPPORTUNITY

• Huge potential rural market to be tapped

• Opportunities available in the cosmetics industry

THREAT• Many major players are

foraying in the retail sector like Wal-Mart, Reliance which may hamper their margins

• Customers may lose their trust on the company due to the supply of sub-standard products and may even switch to some other company

Five Force Model

• Buyer’s switching cost is low

• Firm can adjust prices quickly

• Price elasticity of demand demand

Five Force Analysis : Competitors

• FDI • Big Business houses

Five Force Analysis : Entrants

• Use strong cash flows from other sectors.

• Have network capabilities.• Sourcing capabilities.

• Local Supplies provide flexibility.

• Contracts with large firms provides efficiency.

Five Force Analysis : Suppliers

•Locally sourced suppliers.•Big companies like P&G & HUL.•Home grown brands like D&G John Miller.

• Low switching cost• Transportation cost• Because of wider product offering the customer will not

have options in every segment.

Five Force Analysis : Customers

Threat of New Entrants

• Economies of scale• The new entrants that are entering the retail

scenario today are those which have with them a lot of backing from the financial institutions who are willing to finance their ventures. E.g. reliance fresh

• High initial investments and fixed costs• The cost of initial investments is very high as

the prices of real estates have started going very high.

• Cost advantages of existing players due to experience curve effects

• Existing players have the first mover’s advantage in the market.

• They already have their brand value set and the customers are aware of the brand

Threat of Substitutes

• Indians love to chat with the shopkeeper and the purchase decision is heavily influenced by the `expert' comments of the shopkeeper.

• The friendly greeting and affection of your regular grocer cannot be easily replaced.

• The big retailers tend to be impersonal, there is no help around, and the sheer range of choice can be confusing.

Competitive Rivalry between Existing Players

• There are many players of about the same size like D-Mart, Vishal, Subhiksha, More Spencer’s, Relaince

• There is not much differentiation between players and their products

• The existing players don’t have much difference in terms of the product range they are offering to the customers. This thus results in price competition

• Low market growth rates• The growth of a particular company is possible

only at the expense of a competitor and capitalizing on the mistakes committed.

• Barriers for exit are high• High investments by the players makes it very

difficult for them to exit the current scenario in the industry.

• Scarcity of important resources• As the there is rapid expansion in this industry

and there are more and more new players coming in.

• The availability of skilled labor is very scarce in the current scenario.

• The existing staff is already employed by existing players.

SPENCER

• Renewing its focus on hyper format stores this fiscal as a part of its expansion strategy & segment has been less affected by the current economic downturn.

• It aims to scale up the number of hyper stores from 35 to 50 across the country .

• Hyper stores need upto 30000 square feet and investment of Rs 1500 per square feet, or upto Rs 4.5 crore per hyper store depending on the size of the store. The expansion could push turnover to Rs 1250 crore by end of this

• It would sell more international brands in future. Recently, the company introduced international names like Ladybird and Beverly Hills Polo Club.

• In order to raise further resources, Spencer’s is looking at diluting 10 per cent of its equity in favour of private investors. It is believed to have already begun talking with a few investors in this regard.

• The company will look at raising equity through IPO only after it achieve break-even. Spencer’s is also exploring induction of a multi-national retail player partner to sore up its back-end operations.

• Spencer's Retail has decided to stay out of the competition. We don't want Spencer's Retail to be known as 'sabse sasta', and we are not into this race,

• Spencer's strategy to differentiate itself from the rest, would peg the chain on the value platform offering positive shopping experience and delight to the customers in a large format environment.

• The space, where Big Bazaar and Subiksha operate, is getting too overcrowded with Reliance Retail making a gradual entry

Product range

spencer’s• Food• Fashion• Personal care• Home• Entertainment • Own brands• international

BB

INSTORE OPPORTUNITY

• Trolley/ basket branding• In-store promotion• Banners, Standees, Wall

Displays• Ceiling Drop Branding• Cash Till Branding• Spencer’s Offer Leaflet

Branding• Product Display• Retail Television Network

HSBC - Spencer’s Happy Ties cardholders are entitled to the following benefits:

• Reward points for every purchase made using the card – carrying a potential of upto 500 points per month on regular purchases.

• Extra Reward points for every purchase made with the card at a Spencer’s store

• Fuel surcharge waiver* at all fuel stations• A complimentary Spencer’s welcome voucher worth Rs 100• Redemption of reward points for gift vouchers from Spencer’s