Project Report on Pantaloon Retail India-Marketing Case Study and Dissertation Topic
Strategic Analysis Report on Pantaloon Retail India
Strategic Direction and Company Analysis of Pantaloon Retail India
·
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.
Company Background
·
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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