Summary – Big Bazaar Case Study

Big bazaar reflects the look and feel of Indian bazaars at their modern outlets. It is committed to providing the best
products at the best prices through various innovative promotions. All over India, Big Bazaar attracts a few thousand
customers on any regular day. Though the large and growing young working population is a preferred customer
segment, Pantaloon Retail (India) Limited appeals to all demographic and socio-economic types. In the words of Mr.
Kishore Biyani, “we want to meet the requirements of aspirational customers everywhere in India.” The case looks at
evaluating Food Bazaar’s management’s proposal to go further back in the supply chain.

Pros of Backward Integration/Company owned supply chain for Big Bazaar

Ability to be proactive instead of being reactive to logistics issues, like meeting unexpected demands during
promotions
Faster and more credible information regarding market fluctuations, production capabilities
IT network developed for managing supply chain can be used in other businesses of PRIL as well
To match up and even beat up the competition and the new entrants like Walmart, Reliance etc.
Potential of higher margins if able to adequately integrate

Cons of Backward Integration/Company owned supply chain

Difficulty in replicating the low cost structure of traditional distributor networks
o Labor cost advantages as against those in a corporate setting
o High real estate cost makes it expensive
Limited Flexibility
o Family members have more flexibility as to working timings as against professional managers
Higher risk
o Whole of the supply chain is company owned, any fluctuation in the market has a multiplicative affect
o Uncertainty as to timing of the break even
Complicated Location Decisions to ensure least total logistics cost
Government regulations on inter state shipments add to the cost

SWOT Analysis

Strengths
1. Blend of traditional Indian Retail Model with modern
retail, incorporating elements of bazaar experience
2. Allaying fears of high prices by offering bargains to
customers
3. Strong management team along with family involvement
4. Innovative segmentation, trying to reach all of them in
different ways
5. Wide variety of products and services
6. Innovative promotion schemes
Opportunities
1. With FDI still allowed only in Single Brand Stores,
opportunity to grow till 2009
2. Retail market will grow at an alarming rate of 25% to
30%
3. Opportunity in innovative projects like Home Solutions
4. Develop infrastructure and hence increase efficiency
5. Invest in real estate, an important asset in future
6. Potential to forward integrate in supply chain
7. Develop private labels

Weakness
1. Inability to understand that large part of segment also
wants hassle free shopping
2. Unplanned merchandise and labor
3. Lack of control on distributors in traditional supply chain
4. Unable to match the cost and flexibility of old fashioned
distribution network
Threats
1. Sector still in infancy stage, plagued by complex sales tax
2. High supply chain costs and inflexible labor laws
3. Growing competition from other planned players
entering into organized retail with relaxed FDI norms