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Strategic Management Project on

Pantaloon Retail (India) Limited

INTRODUCTION
1987: PRIL was incorporated as Manz Wear Pvt Ltd and manufactured readymade
trousers under the Pantaloon brand

September 20,1991: Manz Wear Pvt Ltd, went public and in 1992 August 1997: The first departmental store called Pantaloons was opened in
Kolkata

1999: The companys name was changed to Pantaloon Retail (India) Limited (PRIL)

Pantaloon Retail (India) Limited, is Indias leading retailer that operates multiple retail formats in both the value and lifestyle segment of the Indian consumer market. Headquartered in Mumbai It operates over 17 million sqft of retail space Over 1000 outlets across 93 cities and 60 rural locations in India and employs over 30,000 people. Presently, in to five lines of businesses fashion and footwear, food, general merchandise, leisure & entertainment and home.

Leading formats of PRIL


Pantaloons Big Bazaar Food Bazaar Central Home Town Collection I E-Zone Fashion Station ALL Depot Shoe Factory Brand Factory

MISSION VISION VALUES


Group Mission
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.

Indian-ness: Confidence in ourselves. Leadership: Both in thought and business. Respect & Humility: To respect every individual and be

humble in our conduct. Introspection: Leading to purposeful thinking. Openness: To be open and receptive to new ideas, knowledge and information. Valuing and Nurturing Relationships: To build long term relationships. Simplicity & Positivity: Simplicity and positivity in our thought, business and action. Adaptability: To be flexible and adaptable, to meet challenges. Flow: To respect and understand the universal laws of nature.

Core Values

STRATEGY

Growth strategy with localization

Captures almost the entire consumption basket of Indian customers

Understanding of Indian consumers

Constant innovation

Deliver greater value

Divestment and demerger of non-retail businesses

Strategy aimed at achieving inclusive, sustained and profitable growth with three levers:
Customer-orientation
Continuous-innovation Collaborative transformation

Financials

Net Sales (Rs Cr) EBIT (Rs Cr) PAT ( Rs Cr) Core Retail Margins

2011-12 11810 719 65 29.4%

2010-11 11033 712 189 28.6%

%change 7.1 1 -65

Jun/06 1845 3390 Oct/06 Feb/07 Jun/07 Oct/07 Feb/08 Jun/08 5651 Oct/08 Feb/09 Jun/09 7669 Sales Turnover (Rs Cr)

Sales Turnover (Rs Cr)

Oct/09
Feb/10 Jun/10 Oct/10 Feb/11 Jun/11 Oct/11

Financials- Sale

9786 11324

CAGR = 39%

13315

Feb/12
Jun/12

Financials PSFS
Sales Rs per Sq Ft
Sales per Sq Ft

Rs.

7866

8306

8575

8294 7063.75 7385.66 6390

8187
7071

Industry Average=Rs.15000

May/07

Aug/08

May/12

Dec/06

Nov/04

Nov/09

Mar/08

Dec/11

Apr/05

Oct/07

Sep/05

Feb/06

Apr/10

Jul/06

Sep/10

Feb/11

Jun/04

Jan/09

Jun/09

Jul/11

Financials: Same Store Growth


Same Store Growth %
Lifestyle 36.65 22.2 10.28 10 10 38 Value Home

18.83 6.99 0 2005 2006 10.83

6 7.4
2009 -11

15.56 14 12 10.31 9.5 8.32

2.4

2007

2008

2010

2011

2012 -2.2

Competitor: Sales

Lifestyle, 3000

PRIL, 11810 Reliance Retail, 7600

Provouge, 609 KKCL, 301

Shoppers Stop, 2112

Trent, 1811 Arvind Retail, 523

Madura Fashions, 2250

Competitor: PSFS
SPSF (Rs / sq.ft)
SPSF (Rs / sq.ft) 14062.5

11690
10000 7071.8 8390 7808 4300

PRIL

Madura Fashions

Arvind Retail

Shoppers Stop

KKCL

Reliance Retail

Lifestyle

Porters Five Force Model


Threat of New Entrants High

Bargaining Power of Suppliers Less

Competitive Rivalry High

Bargaining Power of Buyers High

Threat of Substitute Medium - High

PEST Analysis
ENVIRONMENTAL

Foreign entrants Infrastructure

LEGAL

SOCIAL

Acquisition of land etc

Pantaloons Retail India Ltd

Change in the buying pattern

POLITICAL Opposition from political parties, for unorganized

TECHNOLOGICAL SAP has been instituted in the business

IO: INDUSTRY ORGANISATION MODEL

EXTERNAL ENVIRONMENT
GENERAL ENVIRONMENT INDUSTRY ENVIRONMENT COMPETITIVE ENVIRONMENT

GENERAL

Post liberalization Era Employment opportunities and hence spending power was increasing The GDP of India was growing at around 6-6.5%

INDUSTRY

Retail Sector $40 Bn Organized Retail Penetration was negligible 100% FDI allowed in Cash and Carry and Wholesale Retail Format in 1997

COMPETITIVE

Huge unorganized sector Clothing was mostly confined to markets No major company in Organized Retail

AN ATTRACTIVE INDUSTRY
Locate an industry with high potential for above average returns

What is in Store Urbanization Nuclear family Plastic Revolution


Jo Dikhta hain wahi Bikta hain

Organized retail provides brands needed visibility Helps companies launch new products : penetrate Offers wide product range, speedier deliveries

Increased urbanization has shifted consumers to one place and thus a single retail can catch more customers

Increased Income Increased Power of purchase Lack of time need everything under one roof

Credit cards

Proper Infrastructure Air conditioning, Trained employees, billing, parking, proper display of materials

STRATEGY FORMULATION
Selection of a strategy linked with above-average returns in a particular industry Textile Manufacturing to Modern Organized Rewrite the rules by retaining values India1: Future Bazaar, Central, E Zone, Home Town India 2: Big/Food Bazaar, Future money India 3

Diversification

Class Destination

Others

Maximum Market Share Strategy Price Strategy

ASSETS AND SKILLS


Assets are required to implement a chosen strategy

Pantaloon has succeeded in the ever-changing dynamic sector by leveraging the following assets and skills to adjust with the environment:

Core Competency

First Mover Advantage


Values and Culture Indian-ness Introspection Respect all customers Building long-term relationships Technology

Strong focus on systems and processes


Strong distribution and logistics network and supply chain

STRATEGY IMPLEMENTATION
Selecting strategic actions linked with effective implementation of the chosen strategy

Action required: Use the firms strengths (its assets or skills) to implement the strategy

SUPERIOR RETURNS
Earning of above-average returns

Action required: Maintain selected strategy in order to outperform industry rivals

VRIO Framework
SUPPLY CHAIN MANAGEMENT
Planning, merchandizing sourcing, standardization, vendor management, production, logistics, quality control, pilferage control replacement and replenishment. In-house manufacture, design and development of apparels.

VERSATILE RETAIL

Experimenting with formats and variety of products

REAL ESTATE

Lack of quality retail space Real Estate at prime locations Wide geographical spread

COST EFFECTIVENESS

Direct Buying Optimum Stock Management Cash Purchases

ATTRACTING AND DELIGHTING CUSTOMERS

Green card, Exclusive shopping days, Sponsorships, Indian-ness

VRIO Framework
Resource/ Capability Supply chain management Versatile retail Yes Yes Yes Yes Yes No Valuable Rare Costly to Organized to Competitive imitate Yes be exploited Yes consequences Competitive Parity Sustained Advantage Real estate Yes No Yes Yes Competitive Parity Cost effectiveness Attract and delight customers Yes No Yes Yes Yes No No Yes Competitive Parity Competitive Parity Normal Normal Above Normal Normal Performance implications Normal

VALUE CHAIN ANALYSIS


Inbound Logistics :
a. b. c. a. b. c. d. e. a. b. Goods received in well packed wooden boxes First to get ISO accreditation for Supply Chain and Logistics functions ERP and STO Revenue sharing Automatic Replenishment System ERP tracking Efficient Space Management SKU Rationalization ERP tracking of orders and dispatch Dispatch scan - challan

Operations :

Outbound Logistics:

VALUE CHAIN ANALYSIS (contd..)


Sales and Marketing :
a. b. c. d. e. Wide range of product portfolio Revolutionary pricing strategies Feasibility E-commerce Discounts and promotions

Services :
a. b. c. d. e. f. a. Cater to almost all strata of society Simplify shopping and boost esteem Fully automated billing process Reasonable prices Loyalty programs CRM High Turnover Low margin

Margin :

VALUE CHAIN ANALYSIS (contd..)


Procurement :
a. b. c. d. High bargaining power of suppliers Alliances and fair pricing terms with suppliers Space optimization / warehouse management Properties leased through vendors

Technological development :
a. Automation, ERP, RFID, SAP

HRM :
a. b. 35000 employees across formats and offices Regular employee engagement programs and training

Firm Infrastructure :
a. b. c. Dominance and Leadership Largest retail network Location and framework given utmost importance

BCG MATRIX
Retail type Formats Market growth
24% 24%

Market share
30% 15% (estimated) 9-10 % (estimated) 9-10 % (estimated)

Revenue (Crore)
1700 250

Year

Retail space (million sq feet)


1.74 2.59

Apparel Apparel Consumer durables Home electronics Food / value retail Food / value retail Food / value retail

Pantaloons Fashion Brand Factory

2012 2010

HomeTown

8.50%

750

2011

1.15

eZone

8.50%

1100

2011

0.5

BigBazaar Food Bazaar KB Fairprice

16% 16% 16%

71%

5000 1000 250 (estimated)

2011 2011 2012

7.64 0.55 0.19

BCG MATRIX

Market Growth

Relative Market Share

BCG MATRIX
Retail type Formats Market growth Sales (crore) Nearest competitor Competitor Relative sales (crore) Market share
562 2.3

Lifestyle

Central

21%

1300

Shoppers Stop

Apparel

Pantaloons Fashion

24%

1700

Madura 542 Garments retail

3.13

Consumer durables Home electronics

HomeTown

8.50%

750

@Home

1600

0.46

eZone

8.50%

1100

Next (Videocon) Reliance Fresh

8600

0.12

Food / value BigBazaar retail Food / value Food Bazaar retail

16%

5000

3860

1.5

16%

1000

Reliance Fresh

3860

BCG MATRIX of Relative Market Share

Market Growth

Relative Market Share

Rule of Three

PRIL: Diversification strategy


PRIL
Value Life style

Digital

Central Food Bazaar and Big Bazaar Home town KB's Fair priced E Commerce

Brand Factory

E- Zone

Planet Sports

Strategies- Adopted by PRIL


Classes destination strategy
Consuming Working Struggling

Maximum market shares strategy


Volume

Strategies: To Maintain Market Share


Fast Follower
Getting a Strategic Investor Improving Synergy Focus

FOREIGN DIRECT INVESTMENT IN RETAIL


What is Foreign direct investment (FDI)?
Investment directly into production in a country by a company located in another country Take advantage of cheaper wages in the country Special investment privileges such as tax exemptions To gain tariff-free access to the markets of the country or the region.

Goods and products of the retail industry or sector, are the finished objects/products of all sectors of commerce and economy of a country.

The FDI in India's retail business can be made through any of the following routes:
Cash-and-carry Hypermarkets Malls Supermarkets Department stores

Retail sector in India Organised Sector Unorganised Sector

Forms of retail trade

Single-Brand Retail Shops Multi-branded Retail Shops Convergence Retail Outlets

Recent Developments FDI in Retail

51% foreign direct investment (FDI) in multi-brand retail in India

FDI limit in single brand retail in India to 100%

Benefits of FDI in Retail


Easy access to capital Increased transfer of technology Enhanced supply chain efficiencies Increased employment opportunities Curtailment of inflation - Price Reductions Quality of different commodities will improve Farmers will be able to directly sell their produce to retailers

Conclusion
Indian Organized Retail Tough Phase
Losses

FDI in Retail
Opportunity Threats