Professional Documents
Culture Documents
in Chennai (4-5 lacs) First year company opened 10 stores across Chennai and by 2000 it had expanded to 50 stores By 2002 it had 120-130 stores across Tamil Nadu In 2004 it decided to open 420 stores across states like Gujarat, A.P., Delhi and Karnataka In 2005 , it started selling Mobile phones
Contd
In
2008, a typical Subhiksha store had supermarket, pharmacy and telecom section Acc to R. S. I wanted to do the things in the Indian way Targeted lower, lower middle and middle class Everyday low pricing and supply chain efficiency
the 100 ft road It was an 2000 square feet stores, 150 sq feet fro pharmacy, 200 sq feet for backend and rest for supermarket Pharmacy -3 lacs, mobile -60-80 lacs, FMCG- 1012, Fruits and vegetables-3 lacs Pharmacy- continuous patient like diabetes and cardiac telecom handset ,accessories, recharge coupons Sold both branded and pvt labels. ,F&V- 30 %, FMCG- 70%
Category management:
1200 SKU , stock product of top 3 brands In FMCG- 950 brands In grocery- 150 brands Pvt. label like Tatwa, Aaharam, Subhiksha Everyday low pricing model Displayed comparative price structure and total discount on the bill of customer Centralized pricing and sourcing strategy Advertisement through local radio channel like Radio Mirchi
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Marketing :
Contd
3. The Crew: Operated by 13 people 2 cashiers,2CSR,2 sales assistants and a person for home delivery OJT , Sales incentive 4. Management: One ROM and Ass. ROM Managing category wise sales , increase customer interaction , store hygiene, F&V wastage reduction etc. 5. Customer Service: Bar code technology, technology to minimize bill process time
Each classes having 100-125 SKUs Greater attention for A to D (80% of total sales) Saving benefits to the customers are based on
these categories
during the last three months e.g. Maggie Dynamic MBQ for Chennai stores Hub stores may have stock higher than MBQ levels in order to reduce lead time, subject to availability of storage space. Review information was sent electronically to the central MIS department in afternoon
Contd
MIS
raised indents for each store and electronically send them to the Hoskote warehouse in the evening Inter-store inventory transfer at relevant stores On an average each store has inventory worth of 6 lakh with inventory turnover of 20-25 Shrinkage cost-.25%, less than the industry average of 1.5% Audit of the store inventory was carried out every month
Contd
Category A class B,C and D E to K Review period Daily basis Twice a week Twice a month Maximum batch quantity (MBQ) level 3 days of demand 6 days of demand 15 days of demand
stores) Enjoyed synergies associated with the warehouse atmosphere Total area of 66000 square feet, with around 200 employees Capacity to serve around 80 stores
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Contd
Did not have any fancy fitting, flooring, and air
conditioning unit Opened on a lease contract of 15 years (renewable), open 24 hrs a day Average business volume per year was Rs. 80 crores, with total managing cost of 2.4 crores Each SBU had its own storage location Separate area for segregation and batch making, private label processing, and loading and unloading operations
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Warehouse Operations
Process Involved 1 2 3 4 5 Receive indent from MIS department in the late evening Detailed SKU list is given to Segregation and batch making unit Required number of SKU units are withdrawn from bins Store-wise dispatch list was made for batch making If an SKU was unavailable in sufficient quantity, demand was met in the order of A-B-C (Sales performance) stores such that each store obtained at least five units Boxes are packed and sealed, than shifted to the area allocated for the corresponding store in its belt A small sheet which displayed name of the store was stapled to each box SKUs are dispatched in the next afternoon
6 7 8
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Transportation Management
About 14 vehicles were used for transport,
(called as the belt) The first unload, last load rule was followed
F & V and grocery SKUs were dispatched in two
shifts (6 am and 1 pm) Transport agreement consisted of minimum commitment plus additional rupees/km clause Keys of the vehicle shutters were not given to the transport agency
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material (rice from the mills) and processed it to produce private label products Raw materials were checked for quality at the warehouse as per the standards(rice cooking) Some samples were sent to Chennai for quality checks Bar code technology was not used for private labels As grocery items were procured in bulk, it contributed to some amount of the inventory
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Inventory Management(Warehouse)
According
to the Subhiksha philosophy, a warehouse should operate as a cross-docking point and should not keep much inventory Warehouse inventory for mobiles and F & V products lines was close to zero Within FMCG products, it maintained stocks for A to D category of items. For other categories, it acted as a cross-docking point
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Questions
1. Can Subhiksha (Indiranagar) store retain its existing customers and can increase the no of footfalls and average bill with increasing competition in organized retail ?
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Here are some problems that Subhiksha is facing currently Less no of brands & private labels Attrition of Human Resource IT Infrastructure
Checkout counters 3
Lead time to get Inventory Inventory review Lack of Inventory at Warehouse Location of the store
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Subhiksh a
More
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2. Is Subhikshas marketing, category management, and business planning activities heading in the right direction?
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Marketing
- Good promotional activities - Excellent display of price comparison - Can go for catalogue mailing
Manageable No of SKUs
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Business Planning Activities Market Research before selecting the location for a new store Layout of the Store
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Wheel of Retailing
High end strategy Medium strategy
Subhiksha
Low end strategy Low prices Price sensitive consumers
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February 2009, Subhiksha operations came to an end The main reason was financial mismanagement Raised all the money needed through debt rather than equity (debt equity ratio of 1:0.031) It went for a corporate debt restructuring exercise
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1800
Steep Decline
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1600
1400
1200
400
200 10 0 19 1999 50
140
0
2000 2003 2007 Mar-08 Sep-08 2009
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1997
stores No study done before opening a store Problems in supply chain management No proper IT system installed (ERP, SAP) Being a low price store, it was giving competition to small kirana stores which have a strong presence in India
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Recent Developments
In 2012 Subhiksha announced a comeback after
3 years when
Change in the Indian retail sector with FDI coming
in Huge opportunity as Indian retail market is expected to reach $720 billion, with the organized markets share expected to be around 9-10% by 2015
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present retail industry A proper research is must before taking any new step Avoid the burden of debt on the balance sheet Effective inventory management Proper training of staff
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