Description
This is presentation about the rise and fall of subhiksha.
Rise and Fall of
INDIAN RETAIL INDUSTRY@2000
Source: Mckinsey quarterly
INDIAN SAM WALTON & DESI WAL MART!
?
R Subramaniam, IIT Chennai & IIM A alumnus First venture was in grocery
?
?
Diversified into medicine retail as well
USP was discount pricing
?
TIMELINE : THE ASCENT
?1997
: ?1999 Mar: ?2000 Jun: ?2000 : ?2002 : ?2004 :
?2005
: ?2006 End :
?2007
Feb : ? 2007 End :
1st store in Chennai 14 stores in Chennai 50 stores in Chennai ICICI venture invests in Subhiksha 120 stores across the state of Tamil Nadu Change in principle from “Consolidation” to “Expansion” Recruits personnel across the country 420 stores in Gujarat, Tamil Nadu, Delhi, Mumbai, Andhra & Karnataka 500 stores across the country Crosses 1000 stores across the country
TIMELINE : THE CRASH
2007 Oct : Subhiksha mulls a Rs.350 crore IPO to finance growth ? 2007 Dec : Shelves IPO in view of uncertain stock market conditions ? 2008 Apr : Plans foray into Eastern India ? 2008 Jun : Looks at alternate routes to fund expansion ? 2008 Sep : Reports about Subhiksha defaulting vendors payments, employee salaries. Wipro takes 10% stake ? 2009 Oct : Tabloids report problems about cash flows/employees clamor for salaries/Vendors cutting of supplies/Defaults on rents for the stores ? 2009 Jan : RS admits Subhiksha needs Rs.300 crores to keep afloat/enters negotiations with property owners on arrears and rentals
?
MARKET RESEARCH RESULTS
?Customers
generally looked for accessibility of the store, availability and quality of groceries, and price of branded groceries. ? Customers did not like to travel beyond 5 km for purchasing groceries. ? Customers did not place any premium on shopping in posh airconditioner set-ups.
MARKET RESEARCH RESULTS
?
?
?
Accessibility, Availability, Quality & Price of branded groceries Preferred 5 km radius. No premium for posh set up
DRIVERS OF
Positives
?
SCM-FACILITIES
No frills-reduces operating cost ? Just off to the main road- reduced the rental cost ? Within 2 km radius of target customers-easy accessibility ? Hub & Spoke Distribution System Negatives Less focus on the distribution system-resulting in stock outs ? Time lag between planning and execution ? Reseller of goods with diminishing margins
?
DRIVERS OF SCM-INVENTORY
Positives
?Central
purchasing system eliminating multiplicity of billings ?3 separate godowns for pharmacy, unbranded groceries & branded FMCG ?Focused only on the fast moving goods ?High inventory turnover efficiency Negatives
?Regional
demand variance not considered ?Expansion outpaced the system development time
DRIVERS OF
Positives
?
SCM - SOURCING
50% of vegetables and fruits were sourced from a single location (Nasik) and distributed to all other outlets. ? Mobile phones were sourced directly from Nokia and Motorola
Negatives
?
Case with pharma distributors
DRIVERS OF
Positives
?
SCM-INFORMATION
Introduction of Subhiksham card ? Use of Bar code system ? Implementation of home delivery system Negatives
?
ERP system was implemented very late. ? Expansion outpaced the IT implementation ? Very poor web interface
DRIVERS OF
Positives
?
SCM - PRICING
Reason for their competitive advantage ? Adopted Wal-Mart’s popular EDLP pricing strategy ? Got a good customer base through their low price Negatives
?
Subhiksha was not able to cope up with their investments with their low price during the later stage.
COMPARATIVE PRICE ANALYSIS
CONCLUSION
Subhiksha is no longer India’s answer to Wal Mart
THANK YOU
doc_675940131.pptx
This is presentation about the rise and fall of subhiksha.
Rise and Fall of
INDIAN RETAIL INDUSTRY@2000
Source: Mckinsey quarterly
INDIAN SAM WALTON & DESI WAL MART!
?
R Subramaniam, IIT Chennai & IIM A alumnus First venture was in grocery
?
?
Diversified into medicine retail as well
USP was discount pricing
?
TIMELINE : THE ASCENT
?1997
: ?1999 Mar: ?2000 Jun: ?2000 : ?2002 : ?2004 :
?2005
: ?2006 End :
?2007
Feb : ? 2007 End :
1st store in Chennai 14 stores in Chennai 50 stores in Chennai ICICI venture invests in Subhiksha 120 stores across the state of Tamil Nadu Change in principle from “Consolidation” to “Expansion” Recruits personnel across the country 420 stores in Gujarat, Tamil Nadu, Delhi, Mumbai, Andhra & Karnataka 500 stores across the country Crosses 1000 stores across the country
TIMELINE : THE CRASH
2007 Oct : Subhiksha mulls a Rs.350 crore IPO to finance growth ? 2007 Dec : Shelves IPO in view of uncertain stock market conditions ? 2008 Apr : Plans foray into Eastern India ? 2008 Jun : Looks at alternate routes to fund expansion ? 2008 Sep : Reports about Subhiksha defaulting vendors payments, employee salaries. Wipro takes 10% stake ? 2009 Oct : Tabloids report problems about cash flows/employees clamor for salaries/Vendors cutting of supplies/Defaults on rents for the stores ? 2009 Jan : RS admits Subhiksha needs Rs.300 crores to keep afloat/enters negotiations with property owners on arrears and rentals
?
MARKET RESEARCH RESULTS
?Customers
generally looked for accessibility of the store, availability and quality of groceries, and price of branded groceries. ? Customers did not like to travel beyond 5 km for purchasing groceries. ? Customers did not place any premium on shopping in posh airconditioner set-ups.
MARKET RESEARCH RESULTS
?
?
?
Accessibility, Availability, Quality & Price of branded groceries Preferred 5 km radius. No premium for posh set up
DRIVERS OF
Positives
?
SCM-FACILITIES
No frills-reduces operating cost ? Just off to the main road- reduced the rental cost ? Within 2 km radius of target customers-easy accessibility ? Hub & Spoke Distribution System Negatives Less focus on the distribution system-resulting in stock outs ? Time lag between planning and execution ? Reseller of goods with diminishing margins
?
DRIVERS OF SCM-INVENTORY
Positives
?Central
purchasing system eliminating multiplicity of billings ?3 separate godowns for pharmacy, unbranded groceries & branded FMCG ?Focused only on the fast moving goods ?High inventory turnover efficiency Negatives
?Regional
demand variance not considered ?Expansion outpaced the system development time
DRIVERS OF
Positives
?
SCM - SOURCING
50% of vegetables and fruits were sourced from a single location (Nasik) and distributed to all other outlets. ? Mobile phones were sourced directly from Nokia and Motorola
Negatives
?
Case with pharma distributors
DRIVERS OF
Positives
?
SCM-INFORMATION
Introduction of Subhiksham card ? Use of Bar code system ? Implementation of home delivery system Negatives
?
ERP system was implemented very late. ? Expansion outpaced the IT implementation ? Very poor web interface
DRIVERS OF
Positives
?
SCM - PRICING
Reason for their competitive advantage ? Adopted Wal-Mart’s popular EDLP pricing strategy ? Got a good customer base through their low price Negatives
?
Subhiksha was not able to cope up with their investments with their low price during the later stage.
COMPARATIVE PRICE ANALYSIS
CONCLUSION
Subhiksha is no longer India’s answer to Wal Mart
THANK YOU
doc_675940131.pptx