Sunday, 5 May 2013
Case Study on Pantaloon Retail India-Marketing Dissertation Topic
· Pantaloon expects food, fashion and accessories, home products, health and beauty, and leisure and entertainment to drive household consumption expenditure in the forecast period. It estimates that there will be at least US$40 billion of additional consumption every year, driven mainly by these categories. Pantaloon is focusing on developing capabilities and business models to address this opportunity profitably.
· Pantaloon plans to pursue expansion to consolidate its position as the leading retailer in India. It will exploit the synergies that exist across its multi-format and multi-brand businesses. In common with other major retailers, Pantaloon will, however, be forced to review its plans if there is a slowdown in consumer spending. Apart from sustaining the tempo of expansion, the company’s focus will be on trimming expenses and maintaining profits. Among the steps Pantaloon is taking in this direction are pruning the advertising budget, and managerial integration by having a common human resources team, one IT team, and single management for its various business units.
· Pantaloon Retail was established by Kishore Biyani, who managed a family textiles and yarns business. In 1987, Biyani established Manz Wear Pvt Ltd to manufacture and sell branded trousers for men, using Pantaloons as the brand name. A chain of franchised Pantaloon shops was subsequently created. In 1992, the name of the company was changed to Pantaloon Fashions (India), and it became a public limited company. Later, it was decided to set up company-owned stores that would also sell garments from other companies. The first company-owned and managed 1,200 square metre Pantaloon department store was opened in Kolkata, in 1997.
· In 1999, the name of the company was changed once again, to Pantaloon Retail India Ltd, more closely reflecting its main business. In 2001, the company ventured into hypermarkets by establishing a Big Bazaar store in Kolkata. In 2002, it launched the Food Bazaar chain to sell fresh fruit and vegetables, bakery and grocery items. All the different ventures of the company initially operated under the banner of Pantaloon Knowledge Group. In 2006, Pantaloon opted for a new corporate identity for its outlets, under the Future Group umbrella.
· By the end of 2007, Pantaloon had a presence across a number of different formats/channels, with its business classified under two broad divisions – Value Retailing and Life Style Retailing. Value retailing comprised stores retailing grocery and other household items, that offered volume-based discounts. These included Big Bazaar, Food Bazaar, Depot, Fashion Station and Health Village. Life Style Retailing, on the other hand, included its retail brands that offered non-grocery products, such as Pantaloon, Central Malls, All and Blue Sky.
· According to estimates from the government’s Central Statistics Organisation, food products account for over 60% of overall household expenditure in India. To build a dominant presence in food, Pantaloon has explored both the upper and lower ends of the market, in addition to its mid-market presence through Food Bazaar. It added 47 Food Bazaar outlets in the 2007/2008 financial year, bringing the total outlet count of Food Bazaar to 136 as of June 2008. Food Bazaar has also piloted the Gourmet fascia in Delhi, targeted at the upper-end segment. For the mass segment, in August 2007, it launched KB’s Fairprice, a low-frill, small format convenience store located in low-income neighbourhoods in major cities. As of June 2008, there were 101 stores under the brand in Delhi, Mumbai, Hyderabad, Bangalore and Ahmedabad.
· Pantaloon has acquired a controlling equity stake in Godrej Adhar, a rural retail chain in 65 villages across India. It has derived two key benefits from the acquisition: a channel to address rural consumption; and an opportunity to scale up an efficient sourcing network for rural agricultural produce to serve Food Bazaar. Its partnership with the MyDollar Store franchise in India has enabled the Food Bazaar network to offer renowned imported brands to Indian consumers.
· To increase revenues from the fashion business, Pantaloon has increased investment in branding and communication; expanded its lifestyle and value formats; and emphasised appropriate merchandise. In the lifestyle segment, it has significantly expanded the Central format, almost doubling its area under operation, to around 775,000 square feet (72,000 sq m). Central outlets have been opened in Delhi and Mumbai, in addition to a second store in Pune. In the 2008/2009 financial year, Pantaloon is expected to double the total number of Central stores to 14, with new stores being established in Navi Mumbai, Thane, Ahmedabad, Bangalore, Indore, Nasik and Vishakapatnam. In the value segment, it aims to expand Big Bazaar from 90 stores covering around 5 million square feet (460,000 sq m) to over 8.1 million square feet (750,000 sq m) by June 2009. Its flagship format, Pantaloons, added nine new stores in 2008, to exceed an area of 1 million square feet (92,900 sq m) mark.
· Pantaloon also has 16 subsidiary companies and over 10 joint ventures, under which it engages in a host of other businesses. Prominent among these is Home Solutions Retail India Ltd, which retails furniture and furnishings, consumer durables and other electronic items, under brand names such as Collection-I, Furniture Bazaar, E-Zone, Electronics Bazaar and Future Bazaar India Ltd. Future Bazaar India Ltd manages Pantaloon’s Internet retailing business.
· In home products, Pantaloon’s Big Bazaar chain leads the general merchandise category. The company is expanding the range of products on offer in the chain through innovative merchandise from local and foreign markets. With the outlet count of Big Bazaar poised to reach around 143 stores by June 2009, Pantaloon expects to maintain its leadership position in general merchandise retailing.
· Home Solutions Retail (India) Ltd, the company’s specialist subsidiary, focuses on home improvement and consumer durables. It has expanded its flagship format, Home Town, into four new cities. The company plans to launch Home Town Bazaar and Home Town Collection, which will operate in the value and lifestyle segments, respectively. In addition, it will introduce Home Town Design Centre, offering consumers design services.
· In furniture, Furniture Bazaar, its value format, has a standalone presence in 13 locations, as well as the 73 locations where it is present within Big Bazaar, as of June 2008. In electronics and consumer durables, the company is aiming for a leadership position in Mumbai, Pune, Ahmedabad, Bangalore, Hyderabad, Chennai and New Delhi.
· The lifestyle format, E-zone, had 29 stores across the country as of June 2008, including 10 stores in Bangalore and six stores in Mumbai. The company is working closely with brand owners in the category to improve display and marketing, and improve margins through buying efficiency, better vendor management, and a mix of private brands. In the value segment, Electronics Bazaar had a presence in 95 locations in 54 cities, as of June 2008.
· In December 2007, Future Staples Office Products, a joint venture between Pantaloon and Staples Inc, US, commenced retail operations in India. As of June 2008, the joint venture had helped Pantaloon establish five independent stores and delivery operations across nine cities, retailing office supplies at 10 independent stores, and 24 store-in-stores (SIS) across four cities. The company expects to operate nearly 18 stores across six cities in India by March 2009, and 40 SIS formats. In addition, the Staples Business Advantage, aimed at mid-sized businesses for daily stationery requirements, will be launched as a delivery service.
· Pantaloon has established a number of businesses focused on new opportunities in the financial products market. These include Future Capital Holdings (FCH), a subsidiary company, which has been listed as an investment advisor, with funds of around US$1.1 billion, and also operates an arm focused on financial products retailing. Two other subsidiaries, Future General India Life Insurance Co Ltd and Future General India General Insurance Co Ltd, have launched portfolios of insurance products. Pantaloon also has specialised businesses in logistics, brand and Intellectual Property Rights (IPR) development, retail media services, and retail technology services. These businesses are expected to grow and create value for the company.
Source-Euromonitor International : Local Company Profile-April 2009
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