Jeev Sewa Sansthan Group of Institutions for Women Faculty of Management

CASE PRESENTATIONPRODUCTIONS AND OPERATIONS MANAGEMENT

KISHORE BIYANI AND BIG BAZAAR

Presented by Anshu SoodChitra VaswaniPadma UtwaniMadhuri KrishnaniSufiya Khan

Kishore Biyani is an Indian businessman. He is chief executive officer (CEO) of Future Group, and Managing Director of Pantaloon Retail

KEY PERSON

KEY GROUP COMPANIES

Future Group was founded on a simple idea: Rewrite rules, retain values. This fundamental belief created a new kind of marketplace, forever transforming Indian retail. Today our core values continue to guide how we do business and improve the quality of life of the people we serve. Future Group understands the soul of Indian consumers. As one of India’s retail pioneers with multiple retail formats, we connect a diverse and passionate community of Indian buyers, sellers and businesses. The collective impact on business is staggering: Around 220 million customers walk into our stores each year and choose products and services supplied by over 30,000 small, medium and large entrepreneurs and manufacturers from across India. And this number is set to grow.

BUSINESS STRATEGY

INTRODUCTION

Positioning and Target Segments

Big bazaar targets higher and upper middle class customers.

The large and growing working population is a preferred customer segment

Special attention to women and home makers who are influencers in purchasing decision and primary decision makers.

Positioning

High Service High price

Low Price Low service

Key Facts of the Case• Started by joining his family business after graduating.• Launched first branded ready made trousers brand called pantaloons through his

company pantaloons fashion.• Started Manufacturing garments under John Miller and Bare.• Biyani noticed Indian market is under retailed.• 2001- biyani entered into hypermarket.• First big bazaar at Mumbai clicked with the masses and pulled over 100000 people

within the first week of operation.• To fight with the mentality that big stores charge more.• Biggest competitor Kirana Shops.• Tied up with manufacturers to bring down prices of the products.• Farm to plate concept in Food Bazaar.• Targeting 60% of store space for private labels.

A feel of local market place

Narrow Lanes

Customers bumping into each

other

Crowded market place

Competitors

Reliance Trends

Fab Mall

WalmartLocal

Kirana

Food World

Shoppers Stop

P’s of Big Bazaar

Pricing Strategy

Marketing P’s• Value based pricing • Bundling and differential pricing• Penetration pricing• Easy availability• Multiple counters for billing.• Posters, television promotion and road shows • Home delivery• Easy location of the store almost all tier one and tier 2 cities

covered.

• High brand equity enjoyed by Big Bazaar• State of the art infrastructure• 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• It offers a family shopping experience, where entire family can visit

together.• Available facilities such as online booking and delivery of goods

StrengthsSW

OT

ANAL

YSIS

Weakness

• 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.

Opportunity:

• A lot of scope in Indian organized retail as it stands at approximately 4%.

• Increasing mall culture in India.• More people these days prefer to visit big stores where they

can find large variety under one roof.

Threats:

• Competition from other value retail chains such as Shoppers stop, Reliance (Fresh and trends), Hypercity and wallmart.

• Unorganized retail also appears to be a threat to Big Bazaar’s business. A large population still prefers to visit local convenient stores for daily purchases

• Changing Government policies• International players looking towards India

Questions• 1. The layout of Big Bazaar stores is radically different from those in the west. Do

you think this layout would be successful in the wake of the entry of big players such as wal-mart in the Indian market?

• Big bazaar tried to create a hustled market scenario for its Indian customers to indianize the store and compete with mandi’s and kirana store. But now it has established itself in the market and it’s a choice of middle, lower and upper class customers for their shopping. Big bazaar now competes with stores like walmart and reliance fresh it needs to now organize the store and bring changes in its process layout and make the bazaar look more organised.

• It should have structured and clean layout and clear display of items. Should not confuse the buyers as where the goods are kept or where is the particular section, it should be systematic and self explanatory.

2.Using the traditional supply chain has worked for biyani so far. Do you think it would work in the future as reliance has chosen to follow the exclusive supply chain route for its stores?

• The Reliance India have their own brands and inland producing system which gives them an edge over the competitors by providing the apparels at very cheap rates to the consumers while pantaloons have a tie up with the producers who provide them at a low price then market to pantaloons due to bulk buying, yes the threat has been posed to Biyani from the competitors in terms of prices offered by them, lets say Wal-Mart is offering bulk prices to the consumers, now it is only concerned with supplying to the wholesalers but it is selling to the retailers and direct consumers in disguise, he cheap price and bulk buying offered by them is the threat to biyani for which it has to develop the strategy to retain and sustain in the market.

3.Do you think having a farm near BigBazaar is a good idea? Do you think this concept would be operationally viable?

• Yeah this type of farm to store arrangement is definitely helpful in creating a credibility of the customers and ensuring the freshness of the perishables.

• It not only ensures the freshness but also it would mean less of transportation and storage cost which would cheapen the consumables and big bazaar would be able to live up to its brand mantra isse sasta and acha kuch nahi.

4.Biyani is targeting to occupy 60% of shelf space in his stores with in-house brands. Do you think it is a good idea?

• Every firm is now entering the market with their own private labels. Yeah it’s a s smart and strategic move to increase the profit margins as definitely the margins of profit on private labels is higher but definitely the percentage of private labels is higher in Big bazaar which would mean less availability of other brands and customers inconvenience in case of unavailability, such a case would result in either brand switching of customer from recognized brands to private labels of big bazaar or would lead to customer dissatisfaction and moving our of customers because f unavailability of their favorite brands. Either case the ratio must be effectively maintained b Biyani.