Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 539 views

    Failure of Subhiksha: Team Members

    Uploaded by

    mohamad1972
    Subhiksha was an Indian retail chain that grew rapidly in the 2000s but then declined sharply. It started as a small grocery store in 1997 and expanded to over 1000 stores nationwide by 2007 through an aggressive growth strategy. However, it struggled with overexpansion, poor inventory management, high debt levels, and increased competition. By 2009, it was facing major financial difficulties and shut down operations. Revival attempts through debt restructuring and mergers failed due to ongoing liquidity issues and legal challenges.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Failure of Subhiksha: Team Members

    Uploaded by

    mohamad1972
    539 views31 pages
    Subhiksha was an Indian retail chain that grew rapidly in the 2000s but then declined sharply. It started as a small grocery store in 1997 and expanded to over 1000 stores nationwide by 2007 through an aggressive growth strategy. However, it struggled with overexpansion, poor inventory management, high debt levels, and increased competition. By 2009, it was facing major financial difficulties and shut down operations. Revival attempts through debt restructuring and mergers failed due to ongoing liquidity issues and legal challenges.

    Original Description:

    Failure of Subhiksha

    Original Title

    Failure of Subhiksha

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Subhiksha was an Indian retail chain that grew rapidly in the 2000s but then declined sharply. It started as a small grocery store in 1997 and expanded to over 1000 stores nationwide by 2007 through an aggressive growth strategy. However, it struggled with overexpansion, poor inventory management, high debt levels, and increased competition. By 2009, it was facing major financial difficulties and shut down operations. Revival attempts through debt restructuring and mergers failed due to ongoing liquidity issues and legal challenges.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    539 views31 pages

    Failure of Subhiksha: Team Members

    Uploaded by

    mohamad1972
    Subhiksha was an Indian retail chain that grew rapidly in the 2000s but then declined sharply. It started as a small grocery store in 1997 and expanded to over 1000 stores nationwide by 2007 through an aggressive growth strategy. However, it struggled with overexpansion, poor inventory management, high debt levels, and increased competition. By 2009, it was facing major financial difficulties and shut down operations. Revival attempts through debt restructuring and mergers failed due to ongoing liquidity issues and legal challenges.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 31

    Failure of Subhiksha

    Team Members-
    Priti R. Gupta 31
    Roshan Shanbhag 85
    Bipin Tiwari 103
    Chintan Vora 115
    Bhakti Vadia 107
    Outline
    Retail Stores
    Types of Retail Formats in India
    Indian Retail Market
    About Subhiksha
    About Subhiksha- Vision, Mission & Business Verticals
    Strategic Format of Subhiksha
    Retail Strategy, Store Scenario, Success & Fund Raising
    Segmentation, Targeting & Positioning
    Promotion, Pricing & Competitors
    Decline of Subhiksha
    Reasons of Decline
    Revival Strategies of Subhiksha
    Types of Retail Formats in India
    Mom & Pop Stores (Kirana Stores-Shivraj Store)
    Departmental Stores (Westside, Lifestyle,)
    Speciality Store (E-Zone)
    Malls (Inorbit, infinity)
    Discount Stores Subhiksha & The Loot
    Supermarkets (Dmart)
    Street Vendors (Hawkers)
    Hypermarkets (Big Bazar)
    Kiosks (CCD Express)
    Indian Retail Market
    Till 1997 Retail Market was non-existent inspite of 1991 FDI, untill 1998

    when Shoppers Stop started the Huge Retail Chain.

    Growth Wave I Pre-1991

    Growth Wave II 1991-2004

    Growth Wave III 2005-2015

    In past Entire retail accounted for US$12.4 billion (4.6%-OM) in 2006), now in

    2015 it is US$ 600 Billion (8%-OM)

    fastest growing in the world - expected to grow to US$ 1.3 trillion by 2020

    The government has approved 51% FDI in multi-brand retail and increased FDI

    limit to 100 % in single brand retail.


    The rise of
    Subhiksha.
    Vision & Mission
    Vision
    To emerge as the largest retailer in the food, grocery,
    pharmacy segment in all the geographical regions we operate
    from

    Mission
    To deliver consistently better value to Indian consumers , as
    guided Subhiksha to deliver savings to all consumers on each
    & every item that they need in their daily lives, 365 days a
    year without any compromise on the quality of goods
    purchased
    About Subhiksha
    Subhiksha trading service was started by R.
    Subramanian an IIM A & IIT Chennai alumnus in 1997
    Subhiksha in Sanskrit means (prosperity)the giver of
    all good things in life
    It was a super market and pharmacy chain
    Theme
    Why pay more when you can get it for less at
    Subhiksha?
    Discount store at prices lower than other retail outlets
    Set up 1,000 sq ft shops all across the city
    About Subhiksha Business Verticals
    Super Markets
    Fruits &Vegetables
    Pharmacy
    Telecom

    Ref: http://www.ukessays.co.uk/essays/education/the-indian-retail-industry.php#ixzz3mpuv71KB
    Strategic Format of Subhiksha
    Discount Store

    Multiple Products

    Small Store format

    Residential Locations

    Availing Branded Products


    Retail Strategy
    2C Model
    Criticality of cost
    Convenience of Buying
    No Frills Store
    EDLP Strategy(every day low pricing)
    Catchment area of approx 2 kms
    Establish itself as a neighborhood store
    Wanted To Attain Greater Penetration In All
    Markets
    Continued
    Lease Rental System For Stores

    Centralized Purchasing

    Subhiksha Card

    Marketing Communication

    Supply Chain And Inventory Turnover Efficiency

    Home Delivery System

    Use Of IT
    Retail Stores Scenario in India

    1000
    142, 150, 450, No. Of Outlets
    900 1000 Country Wide
    800
    700
    600 2004
    500 2005
    0, 0, 22, 325 2006
    400
    2007
    0 , 0, 140, 250
    300
    200 22, 35, 60, 105 94, 46, 55, 70

    100
    0
    Subhiksha Reliance FreshFood Bazaar Food WorldSpencer's Daily
    Success Timeline of Subhiksha
    1997 - 1st grocery Store in Chennai
    2000 - 50 stores in Chennai
    2000 June - ICICI Venture 10% stake for 15 Cr
    2001 - Increased Stake to 23%
    2002 - 120 Stores across Tamil Nadu
    2003 - Azim Premji 10% stake for 230 Cr
    2006 - 500 Stores across the country
    2007 - 1000 Stores Across the country

    Ref: http://www.ukessays.co.uk/essays/education/the-indian-retail-industry.php#ixzz3mpuv71KB
    Fund Raising
    In 2000 ICICI Venture invested in Subhiksha with
    10% stake at Rs15 Cr & raised stake to 23 % by 2004
    Subhiksha also raised a 15 Cr debt from the market
    2003 - Azim Premji took 10% stake from ICICI for
    Rs230 Cr
    2004 2007 equity of Rs160 Cr, debt of Rs. 345 Cr
    & bridge loan of Rs.125 cr
    2008- raised debt capital of Rs.600 Cr from Enam
    Securities Ltd, ICICI Ltd & Kotak Mahindra Bank

    Ref: insead.edu
    Segmentation
    Geographical Segmentation
    Opened stores in South India
    initially , later expanded
    elsewhere

    Later on, demographic (age


    groups) segmentation
    Different product portfolios
    were targeted for different
    market segments
    Target Market
    Expanding middle & upper classes has played a big
    role in the expansion of existing modern format
    stores & entry of new ones
    Attract not the top end customer but the aam aadmi
    Target Market for different products:
    Grocery & Vegetables Common man & specifically
    Housewives
    Mobile Youth
    Medicines Old Age People
    Positioning
    Low prices (USP)
    Consumer Savings
    Consumer Trust
    One Stop Shop
    Multiple products under one store
    Store designed with Indian touch
    Location Convenience
    Privilege to loyal customers
    Promotion & Advertising
    TV Advertisements
    Price Challenge Campaign
    Hoardings
    Celebrities for promotion
    EDLP approach
    Subhiksham Card
    Pricing Strategy
    EDLP Everyday Low
    Pricing Approach
    Prices below the MRP
    Product Subhiksha MRP
    Rice 5 kg Rs.102 Rs.119
    Britannia Rs.21 Rs.24
    Marigold
    400 gm
    Sugar 1 kg Rs.15 Rs.17
    Competitors
    Brand Name Outlet Type Level of
    Operation
    Spencers Supermarkets National
    Reliance Fresh Supermarkets National
    Food Bazar Supermarkets National
    More Supermarkets National
    The fall of Subhiksha
    Why the Decline?
    Aggressive expansion without proper focus
    Subhiksha was thinking of going for an IPO in 2007 but
    shelved it in view of uncertain market conditions
    No consolidation- Tried to be first in every town
    Poor inventory management
    Private Labels
    Operations came to a standstill due to non- payment of
    salaries, huge debt burden & arrears to suppliers
    Major competition by stores like Big Bazar, Spencers
    etc
    Continue
    Spending the debt raised money
    Liquidity crisis
    Poor Management
    Government Intervention
    Lack of strong HR policies & Staff
    Over Confidence & Aggressiveness
    Over expenditure on advertising

    http://www.business-standard.com/article/companies/from-subhiksha-to-viswapriya-subramanian-s-fall-
    from-grace-115091900768_1.html
    http://www.livemint.com/Industry/NZuA2lGw14976GioZpjKwK/Rs144-trillion-stuck-as-cases-pile-up-at-d
    ebt-tribunals.html
    http://www.ukessays.co.uk/essays/education/the-indian-retail-industry.php#ixzz3mpuv71KB
    Founder Speaks.
    We are a golden egg laying duck, we are in trouble.
    We need their (bankers and lenders) support and upon
    getting it we will restart operations and repay all the
    debt. It is not easy, but we have to make it happen.
    Failure Timeline of Subhiksha
    2007 - 350 Crore IPO
    2008 April - Enter into Wholesale Market
    2008 April - Un-mindful Expansion
    2008 July - Market Falls
    2008 Oct - Operating Difficulties
    2009 - Major Financial Crisis
    2009 March - Shut Down Operations
    Subhikshas Revival Strategies
    March 2009- Undergone a Corporate Debt
    Restructuring (CDR) exercise
    Merger with Blue Green Constructions &
    Investments Limited
    Post merger promised to pump in 130cr and Rs.100cr
    after 6-9 months (Indian retailing news)
    2010- Opened cash and carry store in Chennai
    Why These Strategies Failed
    Madras high Court rejects merger plan (The Hindu,Oct-2010
    & ET, Oct-2010)
    Petition filed by 13 banks
    Repayments
    Tried to re open too fast without clearing dues
    Liquidity crunch
    Conclusion
    Strategies Can Be Implemented (taking some particular set of
    assumptions)

    Repayment of Statutory liabilities


    Opening store in Tier-II & Tier-III cities
    One store at One city
    Warehouses near store
    Touch and feel aspect
    Dealing with B2C(Business to Customer) & also with
    B2B(Business to Business) business model
    Achieving economies of scale
    Right decision at right time
    Scanned Copy Of Product List & Prices
    THANK YOU

    You might also like