A Project on Store Operation of Big Bazaar

Presented to Mr. Subhranil Dutta, Store Manager, Big Bazaar, Lee Road, Kolkata Presented by
Pradipto Dey Kausik Tarafdar Upander Singh

Post Graduate Program in Retail management (2007-2009)

Acknowledgem ent
This project report was written during the spring of year 2008 and is the result of 6 weeks of hard work. These 6 weeks have been a very interesting period that has provided us with a deeper knowledge about the area of Store operation. With this project, we hope to develop a futuristic view of industrys progress. A study like this can not be completed without help from other persons and therefore we would like to express our gratitude to all persons having contributed to completition of this project. First of all, we would like to think our mentor Mr. Subranil Dutta Store Manager, Big Bazaar, Lee Road, Kolkata. Who has been provided us with guidance, inspiration, perspective and stimulating discussion, throughout the writing of this report. Additionally we would like to express our gratitude to Mr. Sandip Marwah, Head Operation (East zone). Thank you for allocating this project. This study would not have been possible conduct without your help. Furthermore, we would thank to Mr. Aniruddha Sengupta and Mr. to provide us relevant information for this Project. Finally, we would like to thank our friends and family member for giving us constant support and encouragement.

NSHM, Kolkata PGPRM (2007-2009)

Dated-17th March2008

Table of Contents

1. Executive Summery....3 2. India Retail Scenario...5 3. Company Profile ...14 4. Future Group Manifesto ...16 5. Hierarchy of Pantaloon (Future Group).18 6. Findings..19 7. Retail Scenario of Kolkata.....20

Executive Summary

Retailing is emerging as a sunrise industry in India and is presently the largest employer after agriculture. In the year 2004, the size of Indian organized retail industry was Rs 28,000 Crores, which was only 3% of the total retailing market. Retailing in its present form started in the latter half of 20th Century in USA and Europe and today constitutes 20% of US GDP. It is the 3rd largest employer segment in USA. Organized retailing in India is projected to grow at the rate of 25%-30% p.a. and is estimated to reach an astounding Rs 1,00,000 Crores by 2010. The contribution of organized retail is expected to rise from 3% to 9% by the end of the decade. The projection for the current year ie 2005 is Rs 35,000 Crores. In India, it has been found out that the top 6 cities contribute for 66% of total organized retailing. With the metros already been exploited, the focus has now been shifted towards the tier-II cities**. The 'retail boom', 85% of which has so far been concentrated in the metros is beginning to percolate down to these smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%. In the year 2004, Rs 28,000 Crores organized retail industry had Clothing, Textiles & fashion accessories as the highest contributor (39%), where as health & beauty had a contribution of 2%. Food & Grocery contributed to 18% whereas Pharma Retail had a contribution of 2%. Pantaloon Retail (India) Limited, is Indias leading retailer that operates multiple retail formats, the company operates over 5 million square feet of retail space, has over 450 stores across 40 cities in India and employs over 18,000 people.

INDIAN RETAIL SCENARIO

OVERALL INDIA VIEW

Area(`000 sq km) =3,300 Population(million) =1,095 Medium Age =25 years Government Type =Federal Republic

Economic Overview : Indian is currently undergoing an economic revolution which is generating fast-paced changes and development. There is stable 8 % annual growth,

Rising foreign exchange reserves of close to USD 140 billion, Consistent and flowing Foreign Direct Investment(FDI) of close to UDS 8 billion, Export surge in excess of 20%.

This altogether enable the Indian economy to expand in coming years. Investment eccentric : With a rapidly expanding consumer base (private consumption currently account for 61% of Indias GDP) and stabilized consumer price index rate 4.2%. India is now preferred investment destination and has surpassed the U.S to become the second most favourable destination for FDI, in the world after China. GDP and CPI 2002 3.6 4.3 2003 8.3 3.8 2004 8.5 3.8 2005 8.5 4.2

GDP Growth(%) CPI(%)

Source : EIU, July 2006

FOREIGN DIRECT INVESTMENTS: Foreign direct investment is opened to single brand retailers. Steady increase in FDI 2002 FDI (INR m) 273530.2 FDI (FDI bn) 5.6
Source : EIU, July 2006

2003 201379.6 4.3

2004 248062.4 5.5

2005 295293.4 6.7

DEMOGRAPHICS AND CONSUMER BEHAVIOUR A growing population, a youthful workforce and soaring consumer confidence are solid argument for long term growth.

A growing population, a youthful workforce and soaring consumer confidence are solid argument for long term growth. Indias population in 2005, is estimated to 1095mn. By 2016, India will have second highest population in world after China. 2002 1049.7 2003 1065.1 2004 1080.3 2005 1095.2

Population (mn)

More than 50% of the Indias Population is less than 25 years of age compared to others developed countries. Age profile % of total population 0-14 years 15-64 years Over 65 years 1999 34.0 61.4 4.6 2004 31.7 63.5 4.8 2009 29.6 65.2 5.2 Trend

Source : EIU, July 2006

MAJOR RETAIL PLAYERS Comprised of organized and traditional retail formats,Indian Retail market is estimated to be worth USD 350 billions.
o o o

Organised Retail is estimated at USD 8 billions.Organised Retail is growing at over 30% annually. Of indias 12 millions retail outlets,more than 80% are operated by small family business using household loabour. The retail industry represents 13% of GDP and accounts for 6% of indias work force.Burgeoing growth rate in the retail industry are attributed to growth in India economy,rising income and changing consumption and expenditure patterns.

TOP MAJOR RETAIL PLAYERS Retailer No.of Total Total Expansions Stores Retail Sales Plans Space(000 2004sq ft) 05(USD mn) Pantaloon Department Pantaloon 13 1,948 241 Invest around Retail store USD125 mn Indian Ltd between FY06-FY08. Open 80-100 more stores across formats. Hypermarket Big Bazaar 18 N/A N/A Triple total Retail area by FY08 to 6.5 mn Sq. ft. Supermarkets Food 9 N/A N/A Enter into Bazaar Furniture and home retailing. Seamless Central 3 N/A N/A Malls Existing formats Brand Names

RPG Retail

Hyper markets Spencers

480

96

Open 21 hypermarkets and supermarkets Open another 100 Music Stores in FY08. Add 2 mn Sq. Ft. of Retail Space in FY08 Entering Hypermarket format, 18 Stores planned by FY08 Setting up Speciality Stores for Home Solutions. Set up 25 New Departmental stores by FY08. Invest USD 65mn over next 5 years. Add 640,000 sq.ft. of Retail Space. Open 17 Stores under the departmental and Hypermarket formats by FY08.

Music Stores Music world

225

N/A

N/A

Super markets Spencers Shoppers Department Shoppers Stop Ltd. stores Stop

49 20

N/A 1000

N/A 96

Books & Crosswords 33 Music Stores

N/A

N/A

Home furnishing

Home Stop N/A

N/A

N/A

Landmark Department Group Stores (Based in Dubai)

Lifestyle

370

67

Trent Department India Ltd Stores

West side

19

350

52

Hypermarkets Star India Bazaar

N/A

N/A

Books & Land Mark 4 Music Stores

N/A

N/A

Upcoming Malls in India (till 2007)

Metropolitan Cities National Capital Region Mumbai Hyderabad Bangalore Kolkata Chennai Sub Total No. of Malls 60 28 15 9 9 4 125

Mini Metropolitan Cities No. of Malls Pune 9 Ahmedabad 5 Tier II Cities 81 Total 220

Let us look at the evolution process

Detailing reasons why Indian organized retail is at the brink of revolution, the IMAGESKSA report says that the last few years have seen rapid transformation in many areas and the setting of scalable and profitable retail models across categories. Indian consumers are rapidly evolving and accepting modern formats overwhelmingly. Retail Space is no 10

more a constraint for growth. India is on the radar of Global Retailers and suppliers / brands worldwide are willing to partner with retailers here. Further, large Indian corporate groups like Tata, Reliance, Raheja, ITC, Bombay Dyeing, Murugappa & Piramal Groups etc and also foreign investors and private equity players are firming up plans to identify investment opportunities in the Indian retail sector. The quantum of investments is likely to skyrocket as the inherent attractiveness of the segment lures more and more investors to earn large profits. Investments into the sector are estimated at INR 2000 - 2500 Crore in the next 2-3 years, and over INR 20,000 Crore by end of 201

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Company Profile:-

Pantaloon Retail (India) Limited, is Indias leading retailer that operates multiple retail formats in both the value and lifestyle segment of the Indian consumer marker. Headquartered in Mumbai (Bombay), the company operates over 5 million square feet of retail space, has over 450 stores across 40 cities in India and employs over 18,000 people. The companys leading formats include Pantaloons, a chain of fashion outlets, Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain, blends the look, touch and feel of Indian bazaars with aspects of modern retail like choice, convenience and quality and Central, a chain of seamless destination malls. Some of its other formats include, Depot, Shoe Factory, Brand Factory, Blue Sky, Fashion Station, aLL, Top 10, mBazaar and Star and Sitara. The company also operates an online portal, futurebazaar.com. A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a large-format home solutions store, Collection i, selling home furniture products and E-Zone focused on catering to the consumer electronics segment. Pantaloon Retail was recently awarded the International Retailer of the Year 2007 by the US-based National Retail Federation (NRF) and the Emerging Market Retailer of the Year 2007 at the World Retail Congress held in Barcelona. Pantaloon Retail is the flagship company of Future Group, a business group catering to the entire Indian consumption space.

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Future Group Manifesto

Future the word which signifies optimism, growth, achievement, strength, beauty, rewards and perfection. Future encourages us to explore areas yet unexplored, write rules yet unwritten; create new opportunities and new successes. To strive for a glorious future brings to us our strength, our ability to learn, unlearn and re-learn, our ability to evolve. We, in Future Group, will not wait for the Future to unfold itself but create future scenarios in the consumer space and facilitate consumption because consumption is development. Thereby, we will effect socio-economic development for our customers, employees, shareholders, associates and partners. Our customers will not just get what they need, but also get them where, how and when they need. We will not just post satisfactory results, we will write success stories. We will not just operate efficiently in the Indian economy, we will evolve it. We will not just spot trends, we will set trends by marrying our understanding of the Indian consumer to their needs of tomorrow. It is this understanding that has helped us succeed. And it is this that will help us succeed in the Future. We shall keep relearning. And in this process, do just one thing. Rewrite Rules. Retain Values.

Group Vision
Future Group shall deliver Everything, Everywhere, Everytime for Every Indian Consumer in the most profitable manner.

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.

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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.

Core Values
Indian ness : confidence in ourselves.

Leadership: to be a leader, 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.

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Hierarchy of Pantaloon (Future Group)

Mr. Kishore Biyani, Managing Director Mr. Gopikishan Biyani, Wholetime Director Mr. Rakesh Biyani, Wholetime Director Mr. Ved Prakash Arya, Director Mr. Shailesh Haribhakti, Independent Director Mr. S Doreswamy, Independent Director Dr. D O Koshy, Independent Director Ms. Anju Poddar, Independent Director Ms. Bala Deshpande, Independent Director Mr. Anil Harish, Independent Director

Rakesh Biyani Anshuman Singh Damodar Mall Hans Udeshi Hemchandra Javeri Kailash Bhatia Madhumati Lele Rajan Malhotra Sadashiv Nayak Sanjeev Aggarwal

CEO - Retail CEO - Value Fashion CEO - Incubation & Innovation CEO - General Merchandising CEO - Home Solutions Retail (India) Ltd. CEO - Integrated Merchandising Group CEO - Services CEO - Big Bazaar CEO - Food Bazaar CEO - Pantaloons

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Vishnu Prasad

CEO - Central & Brand Factory

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Kruben Moodliar Mayur Toshniwal Rajesh Joshi Rohit Malhotra Sandeep Marwaha Sanjay Jog Ushir Bhatt Atul Takle Prashant Desai Vinay Shroff

President- Operations (Value Retailing) Head - Operations (North Zone) Head - Operations (West Zone) Head - Operations (South Zone) Head - Operations (East Zone) Head - Human Resources Executive Board Member Head - Corporate Communications Head - Group IR & New Ventures (PE) Head - Supply Chain Management

Big Bazaar-A paradigm shift to the Modern Retail Bazaar

Big Bazaar PRILs Hypermarket format that truly heighten up the expectation of value concisious Indian customer to a new level ever before. It has changed the customers perception to that extent that they have already started to realize that Big Bazaar can provide real value for their money. The first store opened in Kolkata in 2001 at VIP and was followed by stores in Hyderabad and Bangalore in short span of 22 days. These stores contributed over Rs.43 crores to the companys business and over Rs. 2.89 crores to the PBDIT in first year it self.

Sabse Sasta 3 din

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Science, 2006 Republic days mega sale of Big Bazaar has been generating a unprecedented response from customer. Its now been extended for three days .In the 2007 customer had spent Rs. 125 cores and in 2008 it has made a sale of whopping Rs.300 cores During our project period, we had specifically studied those three days of Mega sale at Big Bazaar. We noticed several scope of improvement in the Big Bazaar store (Lee Road, Kolkata) like customer handling, stock replenishments and customer satisfaction We have found that few areas need some attention from the management side. We realized that customer is somewhat willing to forgive a bit despite their inconvenience because of the understanding of difficulties of store personals and management people. But, if we will take care of those areas and fix them as soon as possible then overall profitability of the store and customers shopping experience would be definitely better then before.

Findings

We have studied each scope of improvement and tried our best to make a proposition, which have drawn our attention. 1. While we were juggling customer on the shop floor at various departments, we were noticing that stocks were disappearing very quickly but replenishments were not done at timely manner and because of this a lot of customers were going back without making any purchase. Our proposition to fix this situation that respective Category managers as well as Department managers need to be careful about the backup stock .Forecasting is to done in well advance .In case if its a relatively new store then past sales data of other stores of same retail chain can be used to anticipate the sales volume. 2. During Big sale days we have noticed that hundreds of customers were waiting on queues .The line never stop to buy a product, pay the bill, enter the store .These queues deter many customers to make a purchase, even worse enter into the store. After selecting products, many customers were leaving their baskets within the store. So to improve the overall sales volume and profitability of the store management has to take necessary steps .To reducing the customer wait time we can implement Queue Buster A handheld device ,its a mobile handheld it sported a barcode reader ,printer ,computer, swipe card reader .In this way customers can check out process will be faster in two ways 18

a) Customers can get their bills printout paid off bill amounts either in cash or credits to store personals who are using the handheld devices. b) If any thing goes wrong, if the payment is not accepected by the handheld machine, then also customers reached the POS counter with mobile POS receipts could make the check out process faster by checking out the receipts they have got from the mobile printers and keep their cash ready when they arrived at cashiers. Big Bazaar can thinks over another interesting technology to deploy to make better shopping experience for its customers especially on the extreme occasions. I-Scan (Symbol Technologies-New York) its a generation in precision replenishment. That allows the customer to scan the merchandise as they pick the products off-the-shelf, thus saving them significant amount of shopping time. Once the shopping is completed, they can handover the device to the customer service desk and can cash-out quickly. Initial investment for implementation of these technologies might be high but they definitely improve the overall store profitability, which will offset the initial investments.

Visual Merchandising
What is VM? VM is art and science of displaying merchandise within store, it is about implementing effective design, ideas to educate customer, create desire and finally increase store traffic and sales volume.

Findings
We noticed few section of stores trading area wherein some scope of improvement lies, if visual merchandising of those area can be taken care of, then possibility of increase in the some particular categorys sales is quite high The visibility of certain categories, especially apparel is very important if retailer wants to increase the sales volume of those categories. Because researchs shown that customer

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People generally search for the product on offer so the high margin product should be up fronted that means those item should be in the eye height so that its easily catches customers attention and generate impulse purchase

We have also noticed improper, inadequate some time no signage which creating inconvenience for the customer & ultimately hampering the sale

Demographics of Catchments
For the frontline employee its easier to judge the customer profile & behavior, because they are the one who come in direct contact with the customer. So in that way the job of a frontline staff is also quit important and the same time challenging. As we have worked there for three days we also find some interesting fact about the customers. Customer ware mostly non-Bengali & form Gujrati, Sindhi, Marwari community and age approx 20-70 but mostly between 30-60. People generally came from vicinity of the store, although a few ware come form outside of the Kolkata also. I found a high conversion rate in the customer at least in croaky and they all want to avail the offer. One thing was always in the back of their mind is the word SASTA. Although there was a lot of impulse purchase also. Nevertheless offers ware the main crowd puller. We found customers ware not so happy with the verity and the rang we have. They want more verity to choose form. Many of them ware not too happy with the level of service also .

Space productivity analysis

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We calculated the space productivity of three different departments they are Kids, Home linen, Crockery. By this calculation the quantity sales been generated in Rupee can be understood easily .It represents how effectively the retailers utilizes its space and is usually measured by sales per sq foot of selling space or gross margin Rupees per square foot of selling space.

Merchandise Productivity Analysis

Category Total sales Rs. Sales % total Total sq ft Sq ft % total Sales per sq ft Total GM Rs GM % total Space Productivity Index Home linen 6,745,45.25 4.49 35000 2.1 899.39 236090.83 35 16.6

: Analysis is been done for the period of three Big sale days only

Merchandise Productivity Analysis

Category Crockery Merchandise Productivity Analysis Total Sales 2,75,748.85/Sales % total 1.8 Total sq ft 350 Sq ft % total 1 Category Kids Sales per sq ft Rs. 787.85 Total GM Rs. 68937.21 Total Sales Rs.1, 69,600/GM % total 25 Sales % total 1.97 Spacesq ft Productivity Index 25 Total 1600 Sq ft % total 4.57 Sales per sq ft Rs. 106 : AnalysisRs.been done for the period of three Big sale days Total GM is 67840 only % total GM 40 Space Productivity Index 8.75 21 : Analysis is been done for the period of three Big sale days

Therefore, from above analysis we have found that Crockery department productivity per square is highest among others, so category managers should focus more on this particular category in order to maximize Stores overall profitability.

Kolkata Retail Scenario

Its a party time for the retail sector in Kolkata, as South City Mall is gets off and also the pan India network of more is also rolling out in the city. Subhiksa is also ready to open their 17 new stores. Kolkata is going to see a additional 5.5 million of new retail space in the near future and most of them are opening in suburban area So Kolkata is all set to notice a retail war in the years to come. South City Mall, the largest mall in eastern India is already opened, This world class mall sprawl over 10 lakh sq. ft . and have provision for 134 outlets. This 650 crore shopping destination would generate a combined sale of 1000 crore. Shopper's Stop would set up its biggest outlet in the South City Mall. The 83,000 sq ft store would be the 25th outlet of the retail major's pan Indian presence and third in the city Retail tycoon Kishore Biyani's Pantaloons is also putting up a 71,000 sq ft anchor

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store inside the mall The mall would also don names of retail chains like Spencer's and Star mark By the end of 2009 Kolkata will have another at least 17 new mall. Nearly six malls coming up at Rajarhat alone, according to Himon Sanyal, head, corporate (East), Jones Lang LaSalle Meghraj Some of the big upcoming shopping malls in and around Kolkata include Acropolis (Rajdanga), Lake Mall, City Centre II, Forum II, Terminus, and DLF among others. Spencers, among the oldest names in retail sector, threw open the doors of its Hypermarket store on in Kolkata on the 1st February, 2008, the group patriarch R P Goenka opened the store. The booming real-estate industry in around Kolkata, flourishing I.T sector and growing consumerism, it is all leveraging the growth possibility in Kolkata retail.

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