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Executive Summary

The retail sector in India is witnessing a huge change in its retail industry as
traditional markets make way for new formats such as departmental stores,
hypermarkets, supermarkets and specialty stores. In this project an attempt has
being made to understand the current scenario of the organized retail sector in
India and the future challenges as well as the opportunities for the Indian retail
sector. The challenges are such as opening of the multi brand retail to foreign
players, who are at present only allowed to invest in single brand retail up to 51%
and 100% in wholesale retail through FDI and also the threat possessed by foreign
players such as Wal-Mart, Carrefour and Tesco because it is often said that
emergence of this player changes the entire game of retail in the country. It would
be challenging for the Indian players to grow in the market and grasp the hold on
the consumers to bring them up shopping to their store. The history of Indian retail
sector is not much older but a couple of decades. The major reform in the Indian
retail sector started in the year 1991 after liberalization measures were taken by the
country. Since then the retail sector have being growing but yet it has to emerge as
at the top.

This project will put light on steps being adopted by some existing player to
face this challenges possessed by emerging players and unorganized retail segment
with precise case study about Sahakari Bhandar who have being in this filed for
past 40 years and how it has evolved its business in recent years especially after
joining hand with Reliance Retail, in systematic manner through a SWOT analysis
of this firm and highlighting the some future opportunities for present players in
the rural market who have till now confined their operation only to I,II,III tier
cities. The project focuses majorly on opportunities in term of un-tapped market,
challenges from emerging player along with a case study on the oldest player in the
segment Sahakari Bhandar would be the essence of this project.
Introduction
The retail sector in India is majorly categorized into two forms i.e. organized
retail and unorganized retail. Organized retail consists of the modern retail stores
such as super market, hyper market, etc. on the other hand unorganized retail
consists of the traditional retail stores such as Kirana shop, general store, paanwala,
etc. The retail sector in India is witnessing a huge changing exercise as the
traditional markets make way for new formats such as departmental stores,
hypermarkets, supermarkets and specialty stores. Western-style malls have begun
appearing in metros introducing the Indian consumer to a shopping experience like
never before. Retailing is one of the pillars of the economy in India and accounts
for about 35% of the GDP. Organized retailing refers to trading activities
undertaken by licensed retailers i.e. those who are registered for sales tax, income
tax, etc. These include the corporate backed hypermarkets and retail chains, and
also the privately owned large retail businesses. Organized retail such
supermarkets accounts for just 6% of the market as of 2009. Regulations prevent
most foreign investment in retailing. Retailing is emerging as a sunrise industry in
India and is presently the largest employer after agriculture. Retailing includes all
activities involved in selling goods or services directly to final consumers for
personal, non-business use. India's vast middle class and its almost untapped retail
industry are key attractions for global retail giants wanting to enter newer markets.
However the Indian retail sector is still in an emerging stage. Organized retailing
aims at providing an ideal shopping experience for the consumer based on the
advantages of large-scale purchases, consumer preference analysis, excellent
ambience and choice of merchandise. Efficient management of the supply chain to
ensure the profitability of the entire chain, large outlets with modern ambiance and
facilities, a wide product profile, self service facilities etc are generally the features
of a modern retail store.

For a long time, the corner grocery store was the only choice available to the
consumer, especially in the urban areas. This is slowly giving way to international
formats of retailing. The traditional food and grocery segment has seen the
emergence of supermarkets/grocery chains. The Indian Retail sector has caught the
world’s imagination in the last few years. Topping the list of most attractive retail
destination list for three years in a row, it had retail giants like Wal-Mart,
Carrefour and Tesco sizing up potential partners and waiting to enter the fray. In
fact all the three retail giants have already made an entry in the Indian market and
have made tie-up with Indian companies. India’s retail growth was largely driven
by increasing disposable incomes, favorable demographics, changing lifestyles,
growth of the middle class segment and a high potential for penetration into urban
and rural markets. Asian markets witness a shift in trend from traditional retailing
to organized retailing driven by the liberalizations on Foreign Direct Investments.
For example, in China there was a drastic structural development after FDI
was permitted in retailing. India has entered a stage of positive
economic development which requires liberalization of the retail market to gain a
significant enhancement. Hence the Indian government is looking forward to allow
a 51% entry to the foreign companies in organized retail sector. A vast majority of
India's young population favors branded garments. With the influence of visual
media, urban consumer trends have spread across the rural areas also. The
shopping spree of the young Indians for clothing, favorable income demographics,
increasing population of young people joining the workforce with considerably
higher disposable income, has unleashed new possibilities for retail growth even in
the rural areas.
History

In India retailing started from the emerged from the opening up of the
nearby Kirana stores. This in more specific terms can be said to be as a convenient
store. The government of India took steps in order to open up its economy and
welcome the new trend of modern retail. Very first franchise model of store chains
in India was started by the khadi and village industries commission. 1980’s
brought more change as slowly the economy was opening up. The textiles sector
with companies like Bombay Dyeing, Raymond’s, S Kumar’s and Grasim saw the
emergence of retail chain stores. Later in a few years Titan successfully created an
organized retailing concept and established a series of showrooms for its premium
watches. With 1990’s there was more change and now the manufacturers were
shifting to become pure retailers. 1990’s brought the emergence of shopping
centers, mainly in the urban areas where facility of car parking and home delivery
provided a complete destination of shopping experience for all the segments of the
society. The traditional grocers, by introducing self-service formats as well as
value-added services such as credit and home delivery, have tried to redefine
themselves. However, the boom in retailing has been confined primarily to the
urban markets in the country. 2000’s brought the emergence of hyper markets and
super markets trying to provide with 3 V’s i.e. value, variety and volume.

In the past few years, India’s retail journey seemed picture perfect with the
most attractive ‘stops’ still unexploited and under-penetrated. Favorable
demographics, steady economic growth, easy availability of credit, and large scale
real estate developments were fuelling the growth of Indian retail market. The
opportunity was there for all to see and India was the destination of choice for top
global retailers. One can assume that the retailing revolution is emerging along the
lines of the economic evolution of society. India has sometimes been called a
nation of shopkeepers. Even among retail enterprises that employ hired workers,
the bulk of them use less than three workers. India's retail sector appeared
underdeveloped not only by the standards of industrialized countries but also in
comparison with several other emerging markets in Asia and elsewhere. There
were only 14 companies that ran department stores and two with hypermarkets.
While the number of businesses operating supermarkets was higher most of these
had only one outlet. The numbers of companies with supermarket chains were very
few which now has grown to a great number proving India’s potential in this
sector.
Retail sector in India

The Indian retail market is the 5th most attractive market in the world. The
retail market in India is still mostly untapped and needs to be explored. The growth
in the market is forecasted due to the vast middle class that prevails in India. The
turnover of the retail sector in India is of about $510 billion. This figure is
expected to grow by about 15 to 20 % in the next coming decade. The India Retail
Industry is the largest among all the industries, accounting for over 12 per cent of
the country’s GDP and around 8 percent of the employment. One of the reason for
the sector not being too much successful as in the other developed countries is the
initial investment that is required to break even with the other companies and
compete with them. India Retail Industry is gradually inching its way towards
becoming the next boom industry. India continues to be among the most attractive
countries for global retailers. At US$ 511 billion, its retail market is larger than
ever and drawing both global and local retailers. Apparel, along with food and
grocery, has being the leading organized retailing in India. India has one of the
largest numbers of retail outlets in the world. A report by Images Retail estimates
the number of operational malls to grow more than two-fold, to cross 412, with
205 million square feet by 2010, and a further 715 malls to be added by 2015, with
major retail developments even in tier-II and tier-III cities in India. The future in
Indian retail looks more promising as the market is growing and the government’s
policies are becoming more favorable and emerging technologies are facilitating
operations. The Indian population is witnessing a significant change in its
demographics. A large young working population with median age of 24 years,
nuclear families in urban areas, along with increasing working-women population
and emerging opportunities in the services sector are the key growth drivers of the
organized retail sector.
However there are a few loopholes in the retail sector which might be
needed to be overcome. The manufacturers cannot directly reach all retailers in a
particular geographical area. Therefore, the manufacturers cannot maintain the
desired relationship with the retailers which in turn make management of the
channel complicated. This also makes the possibility of a direct feedback loop
from the retailers almost remote. Therefore, the member operating between the
manufacturers and retailers become more powerful as they can block the channel
of communication between the two. So the dependence of retailers on other
channel members increases to a high extent. Thus the participation of retailers in
the flows of marketing mix becomes lower than desired. The financial strength of
the Indian retailers, in general, is very low and hence the investment capabilities.
This makes the retailers more dependent on the other channel members. However,
these characteristics are peculiar to the small retail outlets and may not be present
at every kind of retail level. Indian market has high complexities in terms of a wide
geographic spread and distinct consumer preferences varying by each region
necessitating a need for localization even within the geographic zones. India has
highest number of outlets per person (7 per thousand) Indian retail space per capita
at 2 sq ft/person is lowest in the world Indian retail density of 6 percent is highest
in the world. Delving further into consumer buying habits, purchase decisions can
be separated into two categories i.e. status-oriented and indulgence-oriented.
CTVs/LCDs, refrigerators, washing machines, dishwashers, microwave ovens and
DVD players fall in the status category. Indulgence-oriented products include
plasma TVs, home theatre systems, iPods, high-end digital cameras, camcorders,
and gaming consoles. Consumers in the status category buy because they need to
maintain a position in their social group. Indulgence-oriented buying happens with
those who want to enjoy life better with products that meet their requirements.
When it comes to the festival shopping season, it is primarily the status-oriented
segment that contributes largely to the retailer’s cash register. While India presents
a large market opportunity given the number and increasing purchasing power of
consumers, there are significant challenges as well given that over 90% of trade is
conducted through independent local stores. Challenges include: Geographically
dispersed population, small ticket sizes, complex distribution network and little use
of IT systems, limitations of mass media and existence of counterfeit goods.
Unorganized v/s Organized

The retail industry is divided into organized and unorganized sectors. Over
12 million outlets operate in the country and only 4% of them being larger than
500 sq ft (46 m2) in size. Organized retailing refers to trading activities undertaken
by licensed retailers, that is, those who are registered for sales tax, income tax, etc.
These include the corporate-backed hypermarkets and retail chains, and also the
privately owned large retail businesses. Unorganized retailing, on the other hand,
refers to the traditional formats of low-cost retailing, for example, the local kirana
shops, owner manned general stores, paan/beedi shops, convenience stores, hand
cart and pavement vendors, etc.
Most Indian shopping takes place in open markets and millions of
independent grocery shops called kirana. Organized retail such supermarkets
accounts for just 4% of the market as of 2008. Regulations prevent most foreign
investment in retailing. Moreover, over thirty regulations such as "signboard
licenses" and "anti-hoarding measures" may have to be complied before a store can
open doors. There are taxes for moving goods to states, from states, and even
within states.

Unorganized Retailing

In India, the most of the retail sector is unorganized. The retail business
contributes around 12 percent of GDP. Of this, the organized retail sector accounts
only for about 5 percent share, and the remaining share is contributed by the
unorganized sector. The main challenge facing the organized sector is the
competition from unorganized sector. Unorganized retailing refers to the
traditional formats of low-cost retailing, for example, hand cart and pavement
vendors, & mobile vendors, local kirana shops, owner manned general stores,
paan/beedi shops, convenience stores, hardware shop at the corner of your street
selling everything from bathroom fittings to paints and small construction tools; or
the slightly more organized medical store and a host of other small retail
businesses in apparel, electronics, food etc. The main advantage in unorganized
retailing is consumer familiarity that runs from generation to generation. It is a low
cost structure and they are mostly operated by owners, have very low real estate
and labor costs and have low taxes to pay as compared to the organized sector.
India has sometimes been called a nation of shopkeepers. Small-store (kirana)
retailing has been one of the easiest ways to generate self-employment, as it
requires limited investment in land, capital and labor. It is generally family run
business, lack of standardization and the retailers who are running this store they
are lacking of education, experience and exposure. These kirana shops are having
their own efficient management system and with this they are efficiently fulfilling
the needs of the customer. This is one of the good reasons why the customer
doesn’t want to change their old loyal kirana shop.

A large number of working class in India is working as daily wage basis, at


the end of the day when they get their wage, they come to this small retail shop to
purchase wheat flour, rice etc for their supper. For them this the only place to have
those food items because purchase quantity is so small that no big retail store
would entertain this. Similarly there is another consumer class who are the
seasonal worker. During their unemployment period they use to purchase from this
kirana store in credit and when they get their salary they clear their dues. Now this
type of credit facility is not available in organized retail store, so this kirana stores
are the only place for them to fulfill their needs. Another reason might be the
proximity of the store. It is the convenience store for the customer. In every corner
the street an unorganized retail shop can be found that is hardly a walking distance
from the customer’s house. Many times customers prefer to shop from the nearby
kirana shop rather than to drive a long distance organized retail stores. These
unorganized stores are having n number of options to cut their costs. They incur
little to no real-estate costs because they generally operate from their residences.
Organized retailing
Organized retail business in India is relatively very small but has
tremendous scope. This organized retail sector includes supermarkets,
hypermarkets, discounted stores, specialty stores and departmental stores. For
example, Spencer network has 69 stores, which includes seven Spencer
hypermarkets, three Spencer super markets and 49 Spencer daily’s. The organized
sector is expected to grow faster than GDP growth in next few years driven by
favorable demographic patterns, changing lifestyles, and strong income growth.
The Indian Retail sector has caught the world’s attention in the last few years.
Topping the list of most attractive retail destination list for three years in a row, it
had retail giants like Wal-Mart, Carrefour and Tesco signing up potential partners
and waiting to enter the Indian market. Organized retailers have not been
successful to provide services that match those of kirana stores. The true reason of
their troubles is that the business capacity of the kirana shop owners and buyers is
high in India.

Mom and Pop stores already have a model that is preferred by consumers
and is also cost efficient. The big stores are still trying to get their model right in
providing an alternative to neighborhood retailers who offer convenience, credit
and personalized service. The major constraint of the organized retail market in
India is the competition from the un-organized sector. Traditional retailing has
been deep rooted in India for the past few centuries and enjoys the benefits of low
cost structure, mostly owner-operated, therein resulting in less labor costs and little
or no taxes to pay. Consumer familiarity with the traditional formats for
generations is the greatest advantage to the un-organized sector. On the contrary,
organized sector have big expenses like higher labor costs, social security to
employees, bigger premises, and taxes to meet. The Indian population is
witnessing a significant change in its demographics. A large young working
population with median age of 24 years, nuclear families in urban areas, along with
increasing working-women population and emerging opportunities in the services
sector are going to be the key growth drivers of the organized retail sector. The
organized retail sector is yet to be completely explored by the Indian players in
order to match the competencies of those foreign players.
Foreign Direct Investment(FDI)

Present Scenario
The Indian economy is highly regulated and the most significant regulation
is the restriction of foreign ownership. The DIPP (Department of Industrial Policy
and Promotion) is the governing council of foreign direct investment in retail who
takes care of all the issue relating to FDI in every sector of the economy. Presently
India only allows 100% FDI in wholesale cash and carry business which was
opened completely in 2006 and as per the recent on 31st march 2010 sales to 'group
companies' should not exceed 25% of cash & carry company’s turnover and should
only be for ‘internal use’. Government has also open-up FDI to 51% in single
brand retail in late 2008 and has prohibited FDI in multi brand retail which soon is
expected to be open for foreign player. Government has always try to promote and
opt policy in the best interest of its society and economy in large, that by
strengthening its domestic players and protecting the interest of it unorganized
player in the market. Even Indian companies are trying to capitalized this
opportunities by joining hand with their foreign counter-part by a joint venture in
order to avail the expertise knowledge of big MNC in this sector. The recent
example could be Wal-Mart and Bharti group, Carrefour and Future group, Tesco
and Reliance.
Currently there is a big and controversial discussion is going on in the
parliament about the bill which has being passed a few days earlier on opening up
of FDI in multi brand retail. Prime Minister Manmohan Singh recently said, “We
need greater competition and, therefore, need to take a firm view on opening up of
the retail trade” and on the other side opposition party BJP said that “opening up of
this sector would threaten the existence of unorganized players”. There are both
pros and cons related to this issue ,lets us put light on some concerns and benefits
which India could deprive if FDI in multi brand retail in opened and try and arrive
at the conclusion.
Following are the benefits which India is expected to deprive if it
open’s door for FDI in multi brand retail:

1. Improvement in backend:
The supply chain will improve as the large retailers will be able to bring their
advanced expertise to bear. More importantly, the likes of Wal-Mart, Tesco and
Carrefour will be able to bring a global scale in their negotiations with the
MNCs such as Unilever, Nestlé, Reckitt, P&G, Pepsi, Coke, etc. They will be
able to pass on these reduced prices to their customers and, India being a price-
sensitive market, this will certainly help them pick up sales. On the other hand,
these companies will not be able to bring skills to bear on the F&V side, this is
an area fraught with inefficient intermediaries such as the arthiyas and mandis,
and while you can set up a direct distribution linkage with farmers, managing it
successfully on an end-to-end basis is not an easy task which is something that
even the likes of Reliance and Pantaloon have also not been able to manage so
far.

2. Provide customers better shopping experience:


Those customers who go to the large retail outlets will get better pricing and a
better shopping experience, but whether it beats the convenience of kirana
down the street for day-to-day shopping is highly debatable. So, wherever
organized retail is available, there will be some shifting of shopping baskets
such that the monthly shopping might move to the larger hypermarket, but the
convenience and day-today vegetable shopping will continue from
neighborhoods stores.

3. Generate new employment:


As the Indian GDP grows so will the need for new retail formats, experiences
and outlets. New stores, whether kirana, organized retail or FDI, will
automatically lead to new employment generation, it really depends on how
much of the incremental spend each of these three categories captures.
It is a fallacious argument that employment generation will go up only because
FDI retailers are entering the system as penetration of any form of retail goes up
in India, it will inevitably lead to new employment generation. One can argue
that the speed of this penetration will increase through more competition and,
therefore, employment generation will get hastened.

Apart from these benefits the biggest benefit would be that the Indian
companies would be getting an opportunity to learn from these big MNC’s and
not only help them to develop their business skills but also help them to get an
exposure to the foreign market for expansion. Opening up of the FDI will help
our economy as the retail giants will bring in lots of investment. The
competition will get tougher and this help the consumers as each company
would like to give the best to the customers.
Concerns about opening up of FDI:
• It is unlikely that perishables would receive too much attention from
global retail chains in the initial stages As it has been seen that organized
retail usually starts with non-food items and slowly moves to dry food
category and over a period of time enters into fresh food category. In
general, perishables are difficult to manage and it is unlikely that it would
receive too much attention from global retail chains in the initial stage.

• And most unemployment created due to emergence of MNC such as


Wal-Mart, who reduces the cost of by 10-12% , now if this is the case
then an unorganized store won’t be able face such stringent competition
and hence would forced to close down their operation. Now this is big
cause of concern because Indian retail sector comprises largely of
unorganized sectors, and closer of this segment would create huge
unemployment. There is no reason to believe that capital-intensive global
retail chains would create more jobs.
• Other worry is that the global player will wipe out the struggling
domestic players who are already facing legacy issue, harvest age and
poor supply chain management.
• And the worst part in that Government haven’t specified any provision in
their proposal to cater this segment which will be unemployed due to
emergence of this MNC’s.

Now after goings through all the pros and cons it would recommend that a
country could not confined itself and has to open its market for foreign players
which is in turn is going to benefit its people. Government should not allow 100%
at once but may do so slowly and gradually which is what being preferred by the
Indian players. Here India could learn a lesson from China who opened up its retail
sectors for MBR back in 1992 by allowing 26 % of FDI by 2002 it has raised that
limit to 49% and by 2004 it completely opened these sectors by allowing 100%
FDI. Its retail market is now $580 million in size and at present now in China 25%
is organized were as in India it is only 5%.
Types of Retail Operations
Retailing is one of the largest sectors in the global economy. It is going through
a transition phase not only in India but the world over. For a long time, the corner
grocery store was the only choice available to the consumer, especially in the
urban areas. This is slowly giving way to international formats of retailing. The
traditional food and grocery segment has seen the emergence of
supermarkets/grocery chains (Food World, Apna Bazaar, More, etc.), convenience
stores (Convenio, HP Speedmart) and fast-food chains. It is the non-food segment
however that has been made into a variety of new sectors. These include
lifestyle/fashion segments (Shoppers' Stop, Globus, LifeStyle, Westside),
apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archie’s,
Music World, Crosswords, Landmark), appliances and consumer durables (Viveks,
Jainsons, Vasant & Co.), drugs and pharmacy (Health and Glow, Apollo). Retail
Management System targets small and midsize retailers seeking to automate their
stores. The package runs on personal computers to manage a range of store
operations and customer marketing tasks, including point of sale, operations,
inventory control and tracking, pricing, sales and promotions, customer
management and marketing, employee management, customized reports and
information security.

The traditional grocers, by introducing self-service formats as well as value-


added services such as credit and home delivery, have tried to redefine themselves.
However, the boom in retailing has been confined primarily to the urban markets
in the country. Even there, large chunks are yet to feel the impact of organized
retailing. There are two primary reasons for this. First, the modern retailer is yet to
feel the saturation' effect in the urban market and has, therefore, probably not
looked at the other markets as seriously. Second, the modern retailing trend,
despite its cost-effectiveness, has come to be identified with lifestyles. In order to
appeal to all classes of the society, retail stores would have to identify with
different lifestyles. In a sense, this trend is already visible with the emergence of
stores with an essentially `value for money' image. The attractiveness of the other
stores actually appeals to the existing affluent class as well as those who aspire for
to be part of this class evolution of society.
Following are the types of organized retail operations or
organized retail formats:

Malls
Malls are the largest form of organized retailing today. Most malls give
space out to individuals on lease and these are enticed by the economies resulting
from the sharing of costs. In malls like these, the combined brand pull of all outlets
is used to create a pull for the mall. Malls are located mainly in metro cities and in
urban localities. Malls range from about 60,000 sq ft to 7, 00,000 sq ft and above.
They lend an ideal shopping experience with an amalgamation of product, service
and entertainment all under one roof. Examples of such malls are In-orbit mall,
Thakur mall, etc.

Departmental stores
Departmental stores are expected to take over the apparel business from
exclusive brand showrooms. These stores range over about 30,000 sq ft. Among
these Raheja’s Shoppers Stop has being one of the most successful stores. It has
even its own set of brand for clothes called Stop.

Specialty Stores
Specialty stores are those stores which look to target one specific segment of
the market. Chains such as the Bangalore based Kids Kemp, the Mumbai books
retailer Crossword, RPG's Music World and the Times Group's music chain Planet
M, are focusing on specific market segments and have established themselves
strongly in their sectors. Absence of discounting as a dominant format of retailing
in India is a glaring peculiarity. The reasons are two-fold. Unlike most Western
countries, Indian retailers have much less bargaining power. They thrive as small
store and don't have the clout to negotiate terms with the manufacturers. The other
reason is that the retailers themselves have no economies of scale to offer discounts
on their own. However, the scenario is now changing. Increased investments and
the entry of big business houses in retailing is leading to the emergence of bigger
retailers, who can both bargain with the suppliers, as well as, reap economies of
scale. Hence, discounting is becoming an accepted practice.
Discount Stores
As the name suggests, discount stores offer discounts on the MRP through
selling in bulk reaching economies of scale or excess stock left over at the season.
A discount store sells products at a lower price by reducing its own margins. This
type of stores target high volumes to ensure profitability. The product category can
range from a variety of perishables as well as non-perishable goods. Big bazaar is
the company’s foray into the world of hypermarket discount stores, the first of its
kind in India. Price and the wide array of products are the USP’s in Big Bazaar.
Close to two lakh products are available under one roof at prices lower by 2 to 60
per cent over the corresponding market prices. The high quality of service, good
ambience, implicit guarantees and continuous discount programs has helped in
changing the face of the Indian retailing industry. Examples of discount stores are
More, Reliance Fresh, Sahakari Bhandar, etc.
Super Markets
Super markets are self service outlets catering to varied shopper’s needs are
termed as supermarkets. These are similar to department stores but with a focus on
food and household maintenance products. This is more of a self-service operation
wherein a customer just goes and picks what he wants. Super markets can be
further classified into mini super markets typically of about 1,000 sq ft to 2,000 sq
ft and large super markets typically of about 3,500 sq ft to 5000 sq ft. They have a
strong focus on food and grocery.
Convenience Stores
These are relatively small stores of about 750 to 1,000 sq ft located near
residential areas. They stock a limited range of high turnover convenient products
and are surely open 7 days a week. Prices are little bit cut down by the stores so as
to compete the kirana stores in the residential areas. More, Reliance fresh, Apna
bazaar, etc are a few examples of convenient stores.
Existing Players
Future Group
One of the pioneers of organized retail in India is Kishore Biyani and his
future group is one of the leading organized retailers in India. Pantaloon Retail
(India) Limited, is India’s leading retailer that operates multiple retail formats in
both the value and lifestyle segment of the Indian consumer market. Headquartered
in Mumbai, the company operates over 16 million square feet of retail space, has
over 1000 stores across 73 cities in India and employs over 30,000 people. The
company’s leading formats include Pantaloons, a chain of fashion outlets, Big
Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain,
blends the look, touch and feel of Indian bazaars with aspects of modern retail like
choice, convenience and quality and Central, a chain of seamless destination malls.
Some of its other formats include Brand Factory, Blue Sky, Top 10 and Star and
Sitara. The company also operates an online portal, futurebazaar.com. Future
Value Retail Limited is a wholly owned subsidiary of Pantaloon Retail (India)
Limited. This entity has been created keeping in mind the growth and the current
size of the company’s value retail business, led by its format divisions, Big Bazaar
and Food Bazaar.

The company operates 120 Big Bazaar stores, 170 Food Bazaar stores,
among other formats, in over 70 cities across the country, covering an operational
retail space of over 6 million square feet. As a focussed entity driving the growth
of the group's value retail business, Future Value Retail Limited will continue to
deliver more value to its customers, supply partners, stakeholders and communities
across the country and shape the growth of modern retail in India. A subsidiary
company, Home Solutions Retail (India) Limited, operates Home Town, a large-
format home solutions store, Collection I, selling home furniture products and
eZone focused on catering to the consumer electronics segment. Pantaloon Retail
is the flagship company of Future Group, a business group catering to the entire
Indian consumption space.
K Raheja Group
K Raheja Corp are the pioneers in organized retail by taking a first giant step
to successfully establish a retail store know as "Shopper's Stop".
The group is expanding its retail chains across the country on the back of the vast
experience it gathered from feedbacks and keen observance of people's taste
keeping in tune with its culture, customs, traditions and income.
Crossword, In orbit Mall & Hyper City have set new bench marks on the basis of
information and adaptation of worldwide changes, innovations and new techniques
in retailing practices. Shopper’s Stop Ltd., has redefined retail in India, taking it to
the next level. From being just the sale of goods to consumers, the company has
created a unique aura around retail and turned it into an experience, an indulgence.
Shopper’s Stop Ltd., has been instrumental in bringing about a retail revolution in
the country and has become the highest benchmark for the industry. Since its
inception in 1991, Shopper’s Stop Ltd, which was founded by the K Raheja Group
(Chandru L Raheja Group), one of the leading players in the country in the
business of real estate development and hotels, has been offering premium and
luxury value for the entire family.

It is the only retailer from India to become a member of the prestigious


Intercontinental Group of Departmental Stores (IGDS). They have signed a 50-50
joint venture with the Nuance Group for Airport Retailing. The group has
announced plans to establish a network of 55 hypermarkets across India with sales
expected to cross the US$100 million mark by 2010.

TATA Group
Established in 1998, Trent - one of the subsidiaries of Tata Group - operates
Westside, a lifestyle retail chain and Star India Bazaar - a hypermarket with a large
assortment of products at the lowest prices. In 2005, it acquired Landmark, India's
largest book and music retailer. Trent has more than 4 lakh sq. ft. space across the
country. Westside registered a turnover of Rs 3.58 million in 2006. Tata’s has also
formed a subsidiary named Infiniti retail which consists of Croma, a consumer
electronics chain. It is a 15000-17000 sq. ft. format with 8 stores as of September
2007. Another subsidiary, Titan Industries, owns brands like “Titan”, the watch of
India has 200 exclusive outlets the country and Tanishq, the jewellery brand, has
87 exclusive outlets. Their combined turnover is Rs 6.55 billion.

RPG Group
One of the first entrants into organized food & grocery retail with Food
world stores in 1996 and then formed an alliance with Dairy farm International and
launched health & glow (pharmacy & beauty care) outlets. Now the alliance has
dissolved and RPG has Spencer’s Hyper, Super, Daily and Express formats and
Music World stores across the country. RPG has 6 lakh sq. ft. of retail space and
has registered a turnover of Rs 4.5 billion in 2006. It ventured into books retail,
with the launch of its own bookstores “Books and Beyond” at the end of 2007. An
IPO was also offered, with expansion to 450+ Music World, 50+ Spencer's hyper
outlets covering 4 million sq. ft. by 2010.

Landmark Group
Lifestyle by the Landmark group was launched in 1998 in India. Lifestyle is
spread across six cities, covering 4.6 lakh sq. ft. with a turnover of Rs 7.5 billion in
2009. A new division named Lifestyle International has emerged for their
international brands business comprising Bossino, Kappa and Springfield in their
portfolio. Their retail mix includes Home solutions (Home centre), fashion
(lifestyle, landmark International), value retailing (max retail), hypermarkets &
supermarkets (Max), kids entertainment (Fun city). They plan to invest Rs. 300
crore in the next two years to expand on Max chain, and Rs 100 crore on City max
3 star hotel chains. They have already instituted a separate company christened
City max Hotels (India).

Piramal Group
In September 1999, Piramal Enterprises announced their arrival into retail
with the launch of three retail concepts: India's first true shopping mall of
international standards, called Crossroads; a lifestyle department store named
Piramyd Megastore; and a family entertainment centre known as Jammin. Piramyd
Megastore and Jammin were anchor tenants for Crossroads (recently sold to
Pantaloon for Rs 4 billion). In 2001, the group entered the business of food &
grocery retail with the launch of TruMart supermarkets in Pune. They have around
18 TruMart stores covering 1.90 lakh sq. ft. registering a turnover of Rs 57.6
million in 2009. Piramyd Megastore’s contributes more than 70 % to their retail
mix with a turnover of Rs 112.8 million. They plan to open 150 stores covering 75
million sq ft of retail space in the next 5 years.

Bharti-Wal-Mart
Their plans include US$ 7 billion investment in creating retail network in the
country including 100 hypermarkets and several hundred small stores. They have
signed a 50:50 percent joint venture agreement with Wal-Mart. Wal-Mart will do
the cash & carry while Bharti will do the front-end.

Reliance Retail
India’s most ambitious retail plans are by reliance, with investments to the
tune of Rs. 30,000 crore to set up multiple formats with expected sales of Rs
90,000 crore by 2009-10. There are already more than 300 Reliance Fresh stores
and the first Reliance Mart Hyper mart has opened in Ahmadabad. The next ones
are slated to open at Jamnagar, followed by marts in Delhi / NCR, Hyderabad,
Vijay wada, Pune and Ludhiana. Reliance retail under the chairmanship of Mr.
Mukesh Ambani is the most expected growth retail organization in the near future.
They have also entered into a joint venture with the Sahakari Bhandari in order to
get their expertise in the retail sector to use.

A V Birla Group
They have a strong presence in apparel retailing through Madura garments
which is a subsidiary of Aditya Birla Nuvo Ltd. They own brands like Louis
Phillipe, Van Heusen, Allen Solly, Peter England, Trouser town. In other segments
of retail, AV Birla Group has announced investment plans of Rs 8000 - 9000 crore
in the first 3 years till 2010. The Group’s foray into the retail sector began in
December 2006 when it acquired Trinethra, the chain of stores based in south
India. May 2007 saw Aditya Birla Retail Limited (ABRL) launch their own brand
of stores called 'More.' Till end-September 2009, the company had set up 640
supermarkets and five hypermarkets. All the supermarkets are branded More and
the hypermarkets are branded More Megastore. The company has around 11,000
employees and has a pan-India presence. More supermarkets are neighborhood
stores with the core proposition of offering value, convenience and trust to the
customers and averaging 2,500 sq ft area. The hypermarkets are self-service
superstores offering value and range in food and non-food products and services at
a single location.
Hypermarkets are located in large catchment areas and encourage mass
consumption with discount prices and substantial depth of assortment with an
average store size of 55,000 sq ft shopping area. Within a short span of less than
three years, More has more than 1.6 million members as part of its loyalty
program. More has also launched a huge range of private labels in food and
grocery, staples and apparel which have already obtained a significant share of
category as well as salience with the consumer. Aditya Birla Retail Limited is the
retail arm of Aditya Birla Group, a USD 28 billion Corporation. The Company
ventured into food and grocery retail sector in 2007 with the acquisition of a south
based supermarket chain. Subsequently Aditya Birla Retail Ltd. expanded its
presence across the country under the brand "more." with 2 formats Super market
Hypermarket.
Emerging Players
Indian retail sector recognized that it can no longer operate in a water tight
environment and in 2006 INDIAN recognizing the need to globalize this sector
open-up gate for foreign MNC by allowing 51% foreign direct investment in
wholesale cash and carry business which leads in emergence of retail giant Wal-
mart in Indian retail industry. Further improvising on its step government of India
allowed 100%FDI in wholesale cash and carry business and 51% in single brand
retail which in turn invited international players such as US firm wal-mart, French
retailer Carrefour and British firm Tesco and METRO enter Indian organised retail
sector.

Let’s put light on the some emerging player and their India plans

Wal-mart
Wal-mart, $2 billion company with their operation in almost every context
of the world has entered India in 2006 with a joint venture with Bharti retail for
cash and carry store and supply chain store and it will operate under the of easy
day whose operation are fully taken care by Bharti. Wal-mart has plan to invest
around $10000 million dollars in 5 years in India and in 3years have open around
12 store across India and by 2012 is planning to open around 80 store across the
country. It is being said that Wal-mart has cut down the operating cost by 10-12%
in market were its conducts its operation and which in turn has helped them to give
better price to its customer now it would be interesting to see how does existing
player sustain such emerging competition.

Carrefour
Carrefour world second largest retailer, which has tied up with the country’s
largest retailer Future Group for India entry, is reported to have secured properties
for cash-an-carry outlets in New Delhi, Bangalore, Chennai, Hyderabad and
Mumbai. And it is expected to open its first store at Seelampur in New Delhi this.
According to the source its is planning to roll-out 30 store in coming 3 years across
the country under the brand of KB Best Price with the investment of around $5000
million in last 3 to 4 years.

Tesco
British retail giant Tesco, Annual profit of 3.18 billion pounds, expects to
open its first cash-and-carry store in India by the end of this year. In India, Tata
Group firm Trent is the joint venture partner of Tesco for the cash-and-carry
business. Tesco spoke person said in an interview that. "Our local management
team is helping our franchise partner, Trent, to develop its Star Bazaar
hypermarket operation. Plans for our wholesale business are also on track with our
first cash and carry store expected to open towards the end of this year. Now it
would be interesting to see how existing strong player like Bharti, future group and
Trent mobilize this opportunities In term of straightening their back hand
infrastructure which will help them to sustained the upcoming the challenge face
by this player once after FDI in multi brand retail is opened. Till then is it’s just a
wait and watch situation in India’s most booming retail sectors.
Rural Market
While most of the new entrants in organized retailing are focusing on urban
markets, some companies are now experimenting with the different models of
organized retail in rural areas. The interest in rural retail stems from its market
potential. For example, rural market in India account for almost 100% of the
agriculture input sales, 53% sales of the fast-moving consumer goods sectors, and
59% of the durable goods sales. Good monsoons and improvement in agricultural
productivity has fuelled greater affluence, transforming rural markets into a large
consuming class. As rural markets are considered to be drivers of future growth,
companies are fine tuning their models of organized retail in rural markets. For
their agriculture input requirement, farmers have been buying from the local
traders who supply fertilizers, seeds, pesticides and so on at the time of sowing. At
the same time, retailing for consumer products in rural India has been traditionally
driven by grocery stores who also stocks different FMCG product this shops which
carry a limited number of merchandise and brands often suffer from frequent
stock-outs. Companies have started initiatives in rural retails to address these
issues by building shopping plazas in the villages with long term plan to build
partnership with rural consumers. some prominent in rural retailing in India
include hariyali kissan bazaar promoted by DCM sriram consolidated ltd., choupal
sagar, set up by the international business division of tobacco major ITC ltd, and
Aadhaar promoted by godrej agro vet ltd.

Hariyali kissan bazaar, a pioneer in new format rural retailing, started with
catering to a wide range of requirements of farmers such as farm implements and
other agriculture inputs through stores housed over an area of 2 to 3 acres, catering
to a cluster of villages. These are self-services stores wherein farmer’s pick-up
product from DCM sriram products as well as agric-products sourced from other
companies kept in the shelves. In case farmers needs advice abound agricultural
practices, it provides by an agric-graduate who is stationed in the store. After initial
experiments of carrying agriculture inputs, these stores have expanded their
merchandise to include an assortment of consumers and household products
Choupal sagar, the second layer of physical infrastructure supporting the internet
kiosk e-choupal of ITC, has been set up to serve two purposes.

One purpose is to acts as a collection center for farm output that the farmers
would like to sell to ITC, based on the prices across the mantis and ITC’s buying
prices inform them through e-choupal in the villages, the second and the more
important purpose is to function as a high quality low cost channel for rural India,
offering a wide variety of products ranging from personal care to household utility
product. Typically, these shops have floor space of 7000 to 10000 square feet.
While choupal sagar stocks ITC brands along with other national brands for
consumer merchandise sourced directly from manufacturers, it has partner with
TVS and either to showcase and sell motorcycle and tractors, respectively. As in
the case of urban malls, large parking spaces, which accommodates over 150
tractors/ is also provided? Currently there are 20 choupal sagars in rural areas of
Madhya Pradesh, Uttar Pradesh and Maharashtra.

Godrej agro vet ltd. (GAVL) entered the organised rural retailing by opening
up large-formats stores named Aadhaar. The stores provided the farmers with the
high quality supplies of agriculture inputs like pesticides, seeds , and fertilizers
along with the others consumer products, grocery, apparel, utensils, and other
household items. Implemented as the hub and spoke modal, a typical spoke store is
spread over about 1000 square feet area of floor space and hub store has a floor
area of 7000-10000 square feet. In addition to these big companies, some smaller
initiatives have also been made by co-operative to cover rural market. The warn
bazaar set up by sugar co-operative in Kolhapur and single district of Maharashtra
consists of superstores of 10000 sq feet area and smaller stores of 500-1000 square
feet area. They have a product mix covering agric-inputs, food and groceries,
apparels, consumer’s durables and vehicles. Similarly, caste society, based near
Ahmednagar in Maharashtra, which operates three supermarkets, has several shops
arranged in a shopping center format spread over 5000 square feet area. This was
the some business giants who have recognized the potential of the untapped rural
markets. But still it has only being able to conquer the tip of an ice berg and
therefore it would be interesting to see how the existing and emerging players
explore this opportunity by extending their operation to rural masses.
Sahakari Bhandar-A Case Study
History and Introduction
Sahakari Bhandar a government owned co-operative was started in the year
1966. Sahakari Bhandar has about 20 retail stores in the Mumbai city. It can be
said that Sahakari Bhandar has captured the whole Mumbai city for its retail
operations. Though Sahakari Bhandar exists in the market for more than 40 years it
has restricted its operations to Mumbai city only. Sahakari Bhandar was an old-
fashioned Indian state owned department store until sometime. In the year 2006
Reliance retail entered into a merger with the Sahakari Bhandar. As Reliance being
new to the retail sector it can make use of the expertise of SB. Thus Reliance has
made the effort to make the old fashioned Sahakari Bhandar into a new modern
store and it has being able to achieve it as well. The new department stores of
Sahakari Bhandar are completely renovated and air conditioned their staff in a well
dressed uniform. Reliance Retail can make use of the stores as a secret test bed for
product lines and a new system of supply chain management. With RIL coming
into the picture it is expected to see more number of shops of Sahakari Bhandar not
just in Mumbai but in other cities as well. Reliance Retail’s tie-up with Sahakari
Bhandar is perceived to transform the face the organized retail industry in India.
Reliance has reached an understanding with the Sahakari Bhandar to manage the
supply chain for the latter's 20 stores in the city. Sources close to the development
indicate the arrangement is likely to be upgraded into a franchise agreement later.
A buyout is unlikely since it is partly owned by the government.
Another possibility is scaling up the total store presence across the city once
it has finished renovating the existing stores. Sahakari Bhandar has over the years
built its brand on affordability, offering marginal discounts on branded products.
The unbranded commodities, for which the store is popular on account of its
competitive prices, have been put under another label, SB Home. To drive home
this USP, the store's long history (since 1966) is visible at various touch points,
along with a new tagline, "Sahi Quality Sahi Price". While sections like kitchen
appliances and jewellery are missing in the new format store, there have been
additions like a pharmacy, bakery, music and DVD counter along with a fresh fruit
and vegetables section. The tie up with Sahakari Bhandar works well for Reliance,
which is betting big on retail, as it provides a presence in some of the choicest
locations in the city without the hassles of finding the correct property.

Swot Analysis of Sahakari Bhandar


Strength
Loyalty:-
Sahakari Bhandar was among the first organized co-operative store which
started operation from 1966, providing a diversified range of product and service to
its customer. Now what make Sahakari Bhandar different from other player is their
closeness to their customer and the relationship being built with them. In short they
know A to Z about their customer, who is being coming to them since years and
loyal to them. Now this has given them edge over their competitors even though
having the same facility and goods, it’s the emotional attachment and the closeness
with the brand Sahakari Bhandar that brings them to their outlet. Through our
observation and research it was found that customer and employee relation is so
good that customer knows an employee by his/her name. This was really worth
noticing that how a employee have become as part of customer life, and there
efficiency in dealing with their customer is the real strength of this brand and this
element of customer service is being created over 40 years of consistent and
successful operation, which is really working miracles for the brand SB and
making them one of the most competent players in terms of sales per square feet.

In this competitive environment where company are taking proactive step to


retain its customer and create loyalty for their brand must surely learn lesson from
this Sahakari Bhandar whose base is their loyal customer, who are being shopping
in from them since inception of their outlets had has no plans to switch their
loyalty to others players in the vicinity. As observed by us during our research that
60 % of the total sample size of customer was above the age of 45 and are being
shopping from the same were store since their childhood. Now they have not only
created customer but also retain them through their proactive customer service.
Proficient customer service and the empathy (i.e. knowing customer needs) part of
their service is the key strength of Sahakari Bhandar and a thing which they can
cherish upon.

Availability:-
Gone are the days when people confined their thinking about Sahakari
Bhandar as mere general store, if the still feel so they must visit the nearest store to
them , I am sure they would surely change their perception about SB(Sahakari
Bhandar). A properly designed store matching all the needs of modern superstore
with properly design layout, eye catchy infrastructure, with proper mechanism with
technically advanced point of sale computers, properly air conditioned has
revolutionized Sahakari Bhandar image in the minds of customer from old-
fashioned Indian state-owned store to a well established modern supermarket this
is mainly after the tie-up with reliance retail who are working with this brand on
management agreement, which has really helped then to strengthen their logistical
arm. Both the player is working with great synergy to provide its customer “Sahi
quality Sahi price” which is theirs new tag line and even USP form past 40 year. If
you still have a suspicious in our mind visit regarding Sahakari ad I insist the
reader to visit Sahakari Bhandar Prahabhadevi store Sahakari Bhandar first effort
to provide a true family experience, this is the biggest of Sahakari Bhandar having
almost every merchandise under it right from staples, vegetables to apparels almost
everything, which truly give us a feeling of having everything under one roof with
“Sahi quality sand Sahi price”

Now this the store where we conducted research and it was found that the
reason the shoppers loyalty with this brand was firstly trust for the brand as
specified earlier and then the availability factors which this store and every store of
Sahakari Bhandar provide i.e. right from peas to CD and apparel to utensils
everything is being try and made available for the convenience of the customer.
Why availability is the strength and makes them different from other players in
vicinity is keeping goods as per local appeal. Were in was found during our
research that vile-Parle (e) Sahakari Bhandar especially kept fast food article for
their Jain customer which is their in masses in the proximity of the store and like
this store very store have try and alter its their product merchandise as per the
demand of their customer which is not being done by any organized current player
at least in Mumbai. Making goods available as per local taste and understanding
the want of the customer is what differentiate a kiranas or mom-pops store and has
a advantage upon over organized player is what is being said by various expert but
Sahakari Bhandar in this regime have proved them wrong by catering customer as
per their demand with the maintaining close relationship with their customer
through their dedicated employee have made them a high tech kirana store.

As said by Mrs. Nilesh pednekar (strategist reliance retail)

“We don’t want our customer, come to us only on weekend and shop for a week,
but we want them to come to us daily and shop for a day”. This statement helps us
to know that how Sahakari Bhandar has always belief in breaking the rule of retail
were in this competitive organized sector they still have their own distinct identity
were they belief that ”our competitor are not Wal-mart, Bigbaazar in real case but
are the roadside kirana wala who possess the same customer relationship and
closeness to customer like we have and that was make them our main competitor”
this thing can even be for fact that staples and other foods item are the most selling
and the goods for which Sahakari Bhandar is admired for in terms of its quality and
price

Location:
Location has being a key strength for Sahakari Bhandar which has located
its outlets in the cities some of the key location such as Matunga, Juhu, and Breach
candy, etc. If observed this are some location were real estate cost are touching
sky, and the store are either at residential areas or area in the close proximity of
station. Now a new players could not even imagine opening up store hear because
their majority profit would firstly eaten up in real estate cost and secondly the
competition they will face from this established players. Reliance which is largely
betting big on retail, would have consider place as a driving force while tying-up
with Sahakari Bhandar which provides a presence in some of the choicest locations
in the city and even the stigma of co-operative is working miracle for this stores.
Weakness
(The following weaknesses are being completely based on the research sample size
and based on their opinions.)

Inefficient replenishment of food and vegetables:


During our research it was often being found that many customer of were
dissatisfied with the quality of vegetables during the noon time as compared to
morning and this often caused inconvenience to its customer especially the
working crowd who normally shop during noon time. So this was one of the
weaknesses of this store. When this was informed to management its was being
know that this thing is often the biggest fences SB is trying to work on, because
while get the goods from distribution center to stores there is lots of inconvenience
being created through toll nakas and clearance agents and this consumed lots of
time and unable them to replenish their stocks quickly. Even customer often
compliant about, the improper cleanliness at the area of food and vegetables and
requested us to inform this to the management to ensure proper and hygienic
environment at their foods and vegetables segment which will help them to
enhance the shopping experience of customers.

Low Youth customer strength:


If observed above the age-group below the 30 is only 15-20% in term of
number of foots falls which is the great cause of concern for the brand whose
major strength is their loyal customer or in short are the base of this brand, but five
year down the line this can often be a great cause of concern if considerable steps
are not being taken to attract this young masses who often posses high disposal
income and drive them to their store, which would surely arrive them long benefits.
This could often being done by offering value added services which will help
attract this high demanding young crowd.
Less and inefficient payment counter:
When asked about would like to recommend any changes in this store?

More than 70% of the customer complaint about less cash counter and point of
sales computer not working, skills of employee etc and the considerable amount of
time wasted in queue’s standing for payment of bill, causing lot of inconvenience
to the customer. Therefore SB really needs to take proactive steps in this regards,
either by increase number of payment counter or by introducing any such
mechanism which would enable them to make payment quickly and easily. This is
the necessary steps which often need to be taken fast if the compared their business
or competes with kiranas.

Inefficient marketing communication:


Firstly, SB being an establish brand doesn’t go for huge advertisement, but it
does go for sales promotion by coming up with timely scheme of discount, offers
etc. when customer were asked about the attraction and influence this promotion
cause in their shopping behavior we were amazed to know that majority of their
customer were unaware about the scheme and offer. This could majorly due the
fact that, customer were not being communicated about such scheme and offers
and its was often found that majority of the customer where unable to listen the in
store announcement properly, so to start up and to overcome this problem we
would recommend that initially they can work on proper in store announcement
and then start providing for value-added services to their customer if they what to
retain their customer because youth, along with good price expect better shopping
experience and proper communication which is the core quality determinants of
any service provider .
Opportunities
Rural market:
As Specified in the earlier part of my project about rural market its
capabilities to turn around the fortune of any business, if being expected by rural
masses. Therefore it throws a goodly opportunity for this long existing player with
a traditional name Sahakari Bhandar depicting a Maharashtrian culture could
flourish well in the rural areas of Maharashtra if it diversifies its business to this
untouched rural segment.

Private label:
This is the most recent activity being started by each and every organized
retail players to produced in-house product with their own brand labels, having
better margins and as per the collected sources working well for these players. The
players such as Big-bazaar and MORE are the players started with this trend of
selling private labels goods in segment such staples and even processed food etc.
Now Sahakari Bandar being a late adapter should start with the private label
merchandise for staples and other processed food items which in future can help
them to increase their product portfolio with better margins.
Threats
Unorganized players getting organized:
It is observed and heard more frequently about how unorganized players
(traditional kirana wala) have diversified its business and getting organized in
every aspects of his business. This often posses the biggest threat to SB because
even this brand having sharing the same story and strength which often a Karana’s
have, such as loyalty, good relationship, etc and therefore is a great cause of
concern and is surely the area which have to be looked into.

Emerging foreign players and existing players:


Other threats which are is quite often being observed and seen by every
customer is the price war among the existing players, every one quoting about the
quality at reasonable price often creating a clutter like situation. This players,
which are focusing more on upcoming generation and especially youth by
providing various add-on and complementary services with good shopping
experience often posses a big threat in future to SB, whose biggest strength is the
customer loyal customer above the age of 45. Even the recently emerging player
such as Wal-mart, Tesco, and Carrefour along with their strong Indian counter-
parts will make the competition more stringent for Sahakari Bhandar.
Michael Porter’s Five Forces

Michael Porter formulated the five forces in the year 1979 in order to study
the competitive advantage of the firm when compared with the other competitors
present in the market. Strategy consultants occasionally use Porter's five forces
framework when making a qualitative evaluation of a firm's strategic position.
According to Porter, the five forces model should be used at the line-of-business
industry level; it is not designed to be used at the industry group or industry sector
level. An industry is defined at a lower, more basic level: a market in which similar
or closely related products and/or services are sold to buyers. A firm that competes
in a single industry should develop, at a minimum, one five forces analysis for its
industry. Porter makes clear that for diversified companies, the first fundamental
issue in corporate strategy is the selection of industries (lines of business) in which
the company should compete; and each line of business should develop its own,
industry-specific, five forces analysis. The average Global 1,000 Company
competes in approximately 52 industries (lines of business).
Following are the Five Forces for Sahakari Bhandar:

1. Threat of new entrants:


There can be a threat of a new entrant in the market. The retailers have to
fight for the same audience though it may depend upon the class of the people but
India is a country of masses so it does not makes a big difference. This force helps
an existing company to know what effect it might have on its business on the
entrance of a new player in the market. As Sahakari Bhandar has believed that their
biggest competitors are the kirana walas they have a threat from their business.
Though the kirana wala do not impact their business that much the threat factor is
much lesser and hence forth they even don’t have a threat from the big retail giants
coming up in India. Sahakari Bhandar has the location advantage as well as the
loyalty factor is high. Sahakari Bhandar can reach where Wal-mart or Tesco
cannot. Though they may try to consider this factor and come up with some new
strategies they can always bank upon their loyal customers because the service
offered by them is excellent.

2. Rivalry amongst the existing firms:


Rivalry exists in any kind of business and in the case of retailers there is a
lot of rivalry as they need to get the customers to their store first. The firms have to
be sure about the effectiveness of their strategy before implementing it. The
retailers have to conduct a research on the products that have to be merchandised at
their store. In case of Sahakari Bhandar they have a rivalry with the kirana wala
where they have the advantage of their big store and the shopping experience they
provide. The merchandising of their products have being very effective. Though
there are other stores such as more, big bazaar, etc, they are in the business from
the last 40 years which is an advantage for them and they also specialize in grocery
which is their major strength. The rivalry is going to benefit the consumers as the
firms are going to provide the best products and best service in order to attract and
retain the consumers.

3. Threat of substitute products:


The products offered by the players are a close substitute of each other. Thus
it is the price factor that has to be considered in this case. Sahakari Bhandar are
specialized in grocery and they have to make sure that the quality has to be
maintained so as to keep their customers satisfied and see to it that they came back
again. The products that are provided by Sahakari Bhandar are also available at the
other stores. But as a customer comes in to buy grocery he will like to finish his
shopping at the same store rather than going to different stores. The discounts and
offers also play a big role in case of substitutes. Reducing the price of the products
cannot be a solution because if one player reduces the price the other has to reduce
it as well. But there is a limit to which extent discounts can be provided, a
company cannot bare losses and sell its product. This is what being thought by
Sahakari Bhandar and that’s why they don’t believe in giving big discounts. The
threat of substitutes to them is minimum as compared to other stores.

4. Bargaining power of the suppliers:


The suppliers play a very important role as a business cannot be efficiently
run without their support. A company has to ensure that their suppliers are happy
and Sahakari Bhandar has being effective in doing this. It can be very costly for a
firm to switch from one supplier to another but at the same time it has to see that
the existing supplier does not takes advantage of it. The question that arises here is
how much power does the supplier have over the company? Sahakari Bhandar has
a good sale of the grocery and F&V thus the suppliers of these both have a
business with them and hence even they are in a need to sell. Sahakari Bhandar has
the advantage over the suppliers as there are substitutes available. In case there are
a very few suppliers of the required product then the suppliers have the upper hand.
Sahakari Bhandar purchases in bulk quantity and thus their economy of scale is
efficient enough.

5. Bargaining power of the buyers?


Consumers are the king of the market and any business organization has to
satisfy its customers anyhow. The buyers have the bargaining power more than the
sellers because there are many sellers in market. In case of retail the buyers cannot
bargain directly with the sellers but they can switch from one store to another if
they are not satisfied with that seller. Sahakari Bhandar has taken various steps in
order to retain their customers and has provided a number of offers to the
customers. Sahakari Bhandari is the only store where the customers are seen
bargaining not for price but for the quality or availability. This is a good sign for
them as it shows the loyalty of the customers that they want to complaint also and
they want to shop at the same place. Sahakari Bhandar comes up with discounts
and offers on every occasion of festival or change or the season. They have being
giving offers in summer, winter, during Diwali, etc. Thus the bargaining power of
the customers of Sahakari Bhandar is even with them as they are satisfied to
enough.
A survey on the customers of Sahakari Bhandar

1. Why do you prefer Sahakari Bhandar?

25

67
2. Are your expectations met by the store?

20

80

3. How frequently do you visit Sahakari Bhandar?

18

7
61
14
4. What category of product do you mainly purchase from Sahakari
Bhandar?

2
31
10

40

32

7 5

5. What difference did you find at Sahakari Bhandar?


10

30
60

6. Are you able to locate the product easily?

96

7. Did you find the promotions attractive?


300

70

8. Are you in the Loyalty Member Club?

40
60

9. Are you happy with the services offered by Sahakari Bhandar?


3

97