PRESENTATION ON BIG BAZAAR Presentation by Gurdeep Singh

PRESENTATION ON BIG BAZAAR Presentation by -Gurdeep Singh -Pushpak Pandey -Shaleen Agarwal -Rohan Tandon -Richa Kohli

Agenda Retailing : An overview Indian retail The change factor FDI in Indian retailing Why FDI ? How FDI ? Big Bazaar- Company Profile - Customer Segment - Vision and Mission - Swot analysis - BCG Matrix - Porter 5 Forces Model

Retailing: An overview l l An overview l Retailing l World’s largest private industry l. US$ 6. 6 trillion sales annually Fortune 100 l 9 Retailers l Carrefour, Ahold, Home Depot, Kroger, Metro, Kmart-Sears, Target, Albertsons’ Indian Retailing l Largest employer after agriculture - 8%* of population l Highest outlet density in world l. Around 12 mn outlets l Still evolving as an industry l. Long way to go

Evolution of Indian retail Historic/Rural Reach Traditional/Pervasiv e Reach Government Supported Modern Formats/ International Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency

Evolution of Indian retail l Informal retailing Sector l Typically small retailers. l Evasion of taxes l Difficulty in enforcing tax collection mechanisms l No monitoring of labor laws Indian retail l Formal Retailing Sector l Typically large retailers l Greater enforcement of taxation mechanisms l High level of labor usage monitoring

Categories of Indian retail l l l Corporate Houses l Tatas: Tata Trent l RPG group: Food World, Health and Glow, etc l ITC: Wills Life Style l Rahejas(Shoppers. Stop), Hiranandani(Haiko), DLF(DT cinemas) etc. Dedicated brand outlets l Nike, Reebok, Zodiac etc Multi-brand outlets l Vijay Sales, Viveks etc Manufacturers/ Exporters l Pantaloons, Bata, Weekender

Classifying Indian retail l Modern Format retailers l Supermarkets (Foodworld) l Hypermarkets (Big Bazaar) l Department Stores (S Stop) l Specialty Chains (Ikea) l Company Owned Company Operated Traditional Format Retailers l Kiranas: Traditional Mom and Pop Stores l Kiosks l Street Markets l Exclusive /Multiple Brand Outlets

Large Indian retailers l Hypermarket l l l Indian retailers Department store l l l Big Bazaar Giants Shoprite Star Lifestyle Pantaloons Piramyds Shoppers Stop Trent Entertainment l l Fame Adlabs Fun Republic Inox PVR

The changing Indian consumer l l Greater per capita income l Increase in disposable income of middle class households l 20. 9%* growth in real disposable income in ’ 99 -’ 03. Growing high and middle income population l Growing at a pace of over 10%* per annum over last decade Affordability growth l Falling interest rates l Easier consumer credit l Greater variety and quality at all price points †From Euromonitor Retail Survey

The changing Indian consumer l l l *Data from NCAER The urban consumer l Getting exposed to international lifestyles l Inclined to acquiring asset l More discerning and demanding than ever No longer need-based shopping l Shopping is a family experience Changing Mindset l Increasing tendency to spend l Post Liberalization children coming of age l 100 mn 17 -21 year olds*. Tend to spend freely. Greater levels of education

Anticipated growth l Anticipated growth Market size l Current market size is roughly US$ 286 bn* l 96% of the 12 Million stores are less than 500 Sq. ft. l Forecast Growth rate for the retailing industry is roughly 8. 3% for 2003 -2008 l Sales from large format stores would rise by 24 -49%** l Formal and modern format retailing would enjoy rapid growth

Industry dynamics l l Low domestic competition l Because of fragmented nature of industry Lack of exposure to global best practices l Low entry barriers for unorganized retailing l Moderate entry barriers for organized retailing Wholesale system under-invested leading to 20 -40% wastage Non level playing field issues l Wide differences in treatment of small and large retailers

Industry dynamics issues l Real Estate Costs l Supply Chain Inconsistency l Poor Infrastructure l Lack of Skilled Manpower

Growth factors l Growth factors Growth determining factors l Government Policy l Infrastructure development l GDP growth l Employment generation and job creation l. In several new sunrise industries l. Implies greater purchasing power

The Indian advantage l Advantage India ranked 1 st in the Global A. T Kearney Retail Development Index l India l Russia l China

THE SIZE OF THE OPPORTUNITY Total Retail Organised Rs. Billion Retail as % Rs. Billion of Total Food & Grocery 6422 50 1 Textiles & Apparel 980 185 19 Jewelry & Watches 554 30 5 Consumer durables 415 43 10 Pharmaceuticals 364 10 3 Home Solutions 351 32 9 Books, Music & Gifts 115 15 13 Others 1159 111 10 10360 476 5 Products Total

FDI in Indian retailing l FDI in Retail not permitted Current Indian FDI Regime l FDI not permitted in retail trade sector, except in: l Private labels l Hi-Tech items / items requiring specialized after sales service l Medical and diagnostic items l Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator) l For 2 year test marketing (simultaneous commencement of investment in manufacturing facility required)

FDI in Indian retailing l l Current FDI Metro Group of Germany l Cash-and-carry wholesale trading l Proposal faced strong opposition Entities established prior to 1997 l Allowed to continue with their existing foreign equity components. l No FDI restrictions in the retail sector pre 1997 l Foodworld l 51: 49 JV between RPG and Dairy Farm International, l Leading food retailer in India now l Mc Donalds

Hypermarket The chain of retail stores of the Pantaloon Retail (India) Ltd. 89 outlets in India Headquarter in Mumbai Focusing on Value of Money

COMPANY PROFILE • Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of India’s leading business houses with multiple businesses spanning across the consumption space. While retail forms the core business activity of Future Group, group subsidiaries are present in consumer finance, capital, insurance, leisure and entertainment, brand development, retail real estate development, retail media and logistics. • Led by its flagship enterprise, Pantaloon Retail, the group operates over 12 million square feet of retail space in 71 cities and towns and 65 rural locations across India. Headquartered in Mumbai (Bombay), Pantaloon Retail employs around 30, 000 people and is listed on the Indian stock exchanges. The company follows a multi-format retail strategy that captures almost the entire consumption basket of Indian customers. In the lifestyle segment, the group operates Pantaloons, a fashion retail chain and Central, a chain of seamless malls. In the value segment, its marquee brand, Big Bazaar is a hypermarket format that combines the look, touch and feel of Indian bazaars with the choice and convenience of modern retail.

• In 2008, Big Bazaar opened its 100 th store, marking the fastest ever organic expansion of a hypermarket. The first set of Big Bazaar stores opened in 2001 in Kolkata, Hyderabad and Bangalore. • The group’s speciality retail formats include, books and music chain, Depot, sportswear retailer, Planet Sports, electronics retailer, e. Zone, home improvement chain, Home Town and rural retail chain, Aadhaar, among others. It also operates popular shopping portal. • Future Capital Holdings, the group’s financial arm provides investment advisory to assets worth over $1 billion that are being invested in consumer brands and companies, real estate, hotels and logistics. It also operates a consumer finance arm with branches in 150 locations.

Customer Segment • Big Bazaar target to upper middle class and higher customers. • The large and growing young working population is a preferred customer segment. • Big Bazaar specially target working women and home maker who are the primary decision maker.

Mission & Vision • Future Group shall deliver Everything, everywhere, every time for every Indian Consumer in the most profitable manner. • 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

SWOT ANALYSIS • STRENGTHS • • • EVERY DAY LOW PRICING GOOD INFRASTRUCTURE CONSUMER PREFERENCES DIVERSE MARKET COVERAGE AWRENESS ABOUT THE BRAND HIGH AMONG MASSES • OPPORTUNITIES • • SUB URBAN UNTAPPED MARKET “ONE STOP” CONCEPT UNKNOWN YET EVOLVING CONSUMER ORIENTATION CO BRANDING AND FRANCHISING FOR FASTER GROWTH

SWOT ANALYSIS • WEAKNESS • LOW PERCEPTION AMONG CONSUMERS • LESS AVAILABILITY OF STORES • SUPPLY CHAIN BOTTLENECKS(FRAGMENTED MARKETS) • THREATS • NEW ENTRANTS AND FOREIGN PLAYERS • UNORGANISED RETAIL MARKET

5 FORCES PORTER MODEL • RIVALRY AMONG COMPETITORS • RELIANCE, MORE, VISHAL, NEXT, SPENCERS • NEW ENTRANTS • WALMART, CARREFOUR, METRO, IKEA • FOREIGN PLAYERS ALLOWED TO SOME EXTENT • BARGAINING POWER OF SUPPLIERS • SUPPLIERS HAVE A HUGE UNORGANISED SECTOR TO CATER TO

Contd… • BARGAINING POWER OF CONSUMERS • PRICE SENSITIVE CONSUMERS • MORE AVAILABLE CHOICES • THREAT OF SUBSITUTES • UNORGANIZED RETAIL

BCG MATRIX

MARKETING ‘ 7 P’s ANALYSIS

PRICING §Value Pricing (EDLP) § Promotional Pricing • Low Interest Pricing • Psychological Pricing • Special Event Pricing (Republic Day) § Differentiated Pricing • Time Pricing § Bundling

PRICING COMPARISION

TIME PRICING

LOW INTEREST FINANCING PSYCHOLOGICAL PRICING

PROMOTION • “SAAL KE SABSE SASTE 3 DIN” • FUTURE CARD (Discount Upto 3%) • SHAKTI CARD • JUNK SWAP OFFER • BRAND AMBASSADOR: M. S. DHONI • ADVERTISMENT (Print Ads, T. V. , Radio) • POINT OF PURCHASE PROMOTION • GIFT TO EVEY 100 th CUSTOMER (Seasona

BANNERS AND POSTERS

PEOPLE • People Are The Customers Which Are The Biggest Asset Of A Company. • Well Trained Staff. • Appearance. • Presently Around 10000 Workers Are Working And Around 500 Workers Are Recruited Every Month. • High Security For Safety Of Customers.

Problems ahead Reduction in consumer spending Slow construction of malls Difficulty in raising working capital High rentals Lowering margins New emerging competitors

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