Strategies of Pantaloon Retail (India) Limited

STRATEGIES OF PANTALOON RETAIL (INDIA) LIMITED

Back ground

Pantaloon Retail (India) Limited is India’s largest leading retailers. It operates on

multiple platforms like Value and life style segment in the Indian consumers market. Company

head quarters located in Mumbai. As on Feb 2009 Company operates over 12 million square feet

of retail space, 1000 stores in 71 cities with employee strength of 30,000 people. The company is

in aspect of giving retailing a modern look with reachable for middle and middle lower class

people. Retailing includes retail formats like Pantaloons, Big bazzer, Food bazzar, brand factory,

Blue sky, and Top 10, Star & sitar and e zone. The company also operates on online future

bazzar.com for upper class that can get internet connectivity. Home Town a large-format home

solutions store.

Pantaloon Retail is the flagship company of Future Group, a business group catering to

the entire Indian consumption space. Future Group led by its founder and Group CEO, Mr.

Kishore Biyani, is one of India’s leading business houses with multiple businesses spanning

across the consumption space. While retail forms the core business activity of Future Group,

group subsidiaries are present in consumer finance, capital, insurance, leisure and entertainment,

brand development, retail real estate development, retail media and logistics. [1]

Corporate statement

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.[2]

Rewrite Rules, Retain Values.

1Strategies of Pantaloon retail (India) limited

Mail stone to world class retiling

The company was established in 1987 as Manz wear private Limited launched its first

product Pantaloons rousers. In May-1992 company offered Initial public offering. The company

enters in modern retails business in 1997 from Kolkata with 8000Sq.ft store. In 2002 company

initiated a lunch of food chain market Food bazzar. In 2004 central mall was lunched to

concentrate on India one sector launched near brigade road in Bangalore.

In 2005 group moves beyond retailing starts diversification and in organic growth by

acquiring galaxy entrainment, Indus League clothing and Planet retail. In 2006 company starts

finical facilitation company to help internal need Future capital Holdings. Starts its first Home

building and improvement product retailing in Bangalore. Starts joint ventures with Staples, US

based company and with Genreali a Italian Insurance major.

In 2007 Group had turnover of $1 billion. Specialized companies in retail media,

logistics, IPR and brand development and retail-led technology services become operational. In

2008 big bazaar crosses 100 malls.

Reorganization and awards

Coca-Cola Golden Spoon Awards 2008

2007 Images Retail Awards -Kishore Biyani

National Retail Federation Awards International Retailer for the Year 2007 – Pantaloon

Retail (India) Ltd

World Retail Congress Awards Emerging Market Retailer of the Year 2007 – Pantaloon

Retail (India) Ltd

Hewitt Best Employers 2007 Best Employers in India (Rank 14th) – Pantaloon Retail

(India) Ltd

PC World Indian Website Awards Best Indian Website In The Shopping Category -

Futurebazaar.com

Ernst & Young Entrepreneur of the Year Award Ernst & Young Entrepreneur of the Year

(Services) – Kishore Biyani

CNBC Indian Business Leaders Awards The First Generation Entrepreneur of the Year –

Kishore Biyani

Lakshmipat Singhania – IIM Lucknow National Leadership Awards


Images Retail Awards Best Value Retail Store – Big Bazaar Best Retail Destination – Big

Bazaar Best Food & Grocery Store – Food Bazaar Retail Face of the Year – Kishore

Biyani

Readers’ Digest Awards Platinum Trusted Brand Award - Big Bazaar

CNBC Awaaz Consumer Awards Most Preferred Large Food & Grocery Supermarket –

Big Bazaar

1.1 SWOT analysis

SWOT Analysis is a strategic planning method used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or in a business venture.[3]This

analysis helps in pointing out the objective and flow of business under internal and external

factors. Favorability of the strategy based on the factors can be analyzed. The technique first

used by Stanford University in 1960 by Albert Humphrey. Figure 1 is formulated based on the

factors for pantaloon retail chain.

Strength Weakness

High brand equity Management Uniform customer visits

Brand embossed Multi diversified business

Large Variance under one roof No single platform for all the business needs.

EDLP(Value pricing)

No bargaining markets , no interaction of

customer for value pricing

Threats Opportunity

Increasing Competitors Increasing interest in organized retailing

Government polices Changing consumer preference

Unrecognized modern retailing Demographical advantage

Local politics 29 states,12 different langauages,72 festivals

Resistance from small retailer

Young country -60% below 30 years of age

Shut down of subiksha

Figure 1 SWOT Analysis for Pantaloon retail chain


1.2 Strategies

The company observes retail customer trend and changing consumption tastes. Organization

is customer driven opposed to product driven .Company is very conscious about culture and

regional consumption pattern. Strategies change frequently due to orient to the customer’s needs.

The continues of learning, unlearning and relearning is applied to update the quick changing

strategies across the organization. As Kishore Biyani MD Pantaloon retail India LTD says

“Retail is like riding bicycle. In uphill if you stop pedaling you will slide down”. The statement

express the need of continues learning process to form the strategies. Based on analysis its

business strategies can be categorized in 3 major groups. They are

Diversification strategy

Classes destination strategy

Maximum market shares strategy

Diversification strategy

The company started its business as textile manufactures but growth in modern

organized retailing attracted the company to switch diversify to the next consumption pattern.

The company diversified and acquired a large business in organic and inorganic way. But

company did not forget ripe its strategy and values in the diversified company.

In every new business company started to rewrite the rules by retaining values. The

company in latter stage organized to support each other by physical material flow if required.

Diversification is done in two main categories RETAIL FORMATS and

SPECIALIZED BUSINESS shown in Figure 2.

Figure 2 Business diversification of pantaloon [4]


Classes destination strategy

Future group has diversified its business keeping the retiling as common goal. To set and

concentrate on one stratum is main objective of this strategy. Each business is set to operate on

defined strata. Company has divided Indian customers in three different groups. INDIA ONE,

INDIA TWO, INDIA THREE. Each has different values, products and quality requirements.

INDIA ONE or consuming class .The population of this constitutes only 14%.Till recent

times the modern retiling formats is offered for this class. According Maslow’s theory of

hierarchy the 14% people are in self actualization and Esteem needs in the pyramid. For this

class pantaloon patterned Future bazaar, E zone, Central, brand factory, Home town and star

Galaxy entertainment.

INDIA TWO or the serving class it includes people like house hold helpers, office peon

etc. This is the people who make service INDIA ONE class. The population of this class is more

than 30%. In the needs hierarchy they are located in for Social and security .Earning capacity of

this class is 60% lesser than INDIA ONE. For this class as the big bazaar, Food bazaar, Future

money and other retail formats are presented.

INDIA THREE or struggling class. The class led life on hand to mouth existence. They

can’t afford for beater living style. This segment doesn’t contribute much in the contribution

cycle. The need of the segment is local as they are finding it cheaper. The present business model

is not addressing this class.

Figure 3 shows change in consumption patter by different class in 2001-02 and 2007-08.INDIA

ONE has changed from 25% to 35% normally the total profit in this segment will comparatively

20% more than they are sold in next segment. As ambiance is factor and other pleasuring non

value added services are necessary. INDIA TWO has not changed it conception level. INDIA

THREE has seen 10 % decline.

Figure 3 Indian consumption patterns [4]


Maximum market shares strategy

The retail chain by pantaloon in all business patterns tries to achieve maximum market

share in all the products or service it provides .The Company does not bothers about short term

profit or loss by a strategy. This are considered as learning. The business will sell at marginal

profit some times to attract the new customer who will prove potential customers in future. The

strategy achieved by focusing pricing factors in INDAI TWO and on service and quality in

INDIA ONE.

Pricing strategies

Pricing is strategy used by Pantaloon retail chain to attain maximum market shares. The

company offers numerous schemes to attract the new customer as well as to retain the present

customers. The company’s schemes are categorized in following groups

Value pricing

This approach is used where external factors such as recession or increased

competition force companies to provide 'value' products and services to retain sales. The

product value will be associated with external factors.

Promotional pricing

Pricing to promote a product is a very common application. The application of

this done by BOGO (Buy one Get One), BTGO (Buy Two Get One Free) etc.

Bundling

Bundling is marketing tool sell two or more complementary product as a package

with attractive price. The price is will lesser then individual selling price.

Example: A Person needs one soap for a period of time

But bundling with attractive price with more than 3 soaps can attract them.

Low interest rate financing

Future money helps in asset purchase at 0% interest.

Physiological discounting

In India this approach is called as Bata rating system. Organization utilizes this

approach when product has emotional value rather than rational value. Example a product

is priced for 99 instead of 100.When board shows price reduction from 100 to 99,

Consumer looks at 3 digits to 2 digits rather than exact value.


Time pricing

The innovative way of attract the customer is Timely pricing it is known that

during holidays rate of customer is more. Reduction of profit margin with lot of

advertisement will invite new customers. The company has learnt it from strategy made

on public holiday 26-Feb. When the turnover of the day reached 30 cores where average

is 5 cores.

With such experience crowded management is essential so to divert potential

customers “Wednesday bazaar” where it will offer less profit margin sales.

Bundling

Marketing: Technique of offering two or more complementary goods or services

together as a package deal. Bundled items are sold at a price attractively lower than the

total of their individual selling prices.

1.3 Levers issues

Human resource

Well trained staff, Appearance, Empowered individuals, Use scenario planning as a tool for

quick decision making, Brand ambassador

Organization structure & controls

The entrepreneurial culture and spirit prevails in the company, Appetite for taking risks is

encouraged, learning while doing, No rigid organizational structure, organization design

approach, Balanced Score card approach

Retail control

Semi Centralized, Complex

Sourcing

E-touch with supplier, Self production facilities with small number of suppliers, Short

term contracts (based on lowest bid)

Process

Modern hard technology, Devolved internally, Reduces cost, new strategies and process

innovations

Facilities

Special propose, Large, Capital driven, Placed in major cities


2.6 Alternative strategy formulation

Figure 4 Retail strategy work sheet for Pantaloon retail chain

The retailing strategy work sheet worked out on the basic facts and requirements.

According to the Retail strategy work sheet in figure 4. To attain all the Retail outputs at the

required level company should chose retailing business with the Internet shopping mode. This


model provides great availability because the customer orders are processed and orders are given

to suppliers immediately if product is not available the next supplier will be asked to supply.

Cost can be reduced drastically as there is no fixed assets or big infrastructures or

inventory is required the complete model works on customer money because customer will pay

fir for the item he will get tomorrow.

Can provide customer with good quality as there is no chance of perishing. Home

delivery is compulsory in this model in which customer can enjoy the pleasure of getting goods

on door. There is no billing time in this model as it is internet base within fractions of second

billing is done.

2.7 Why not e-retailingThe organization focused on mall base selling rather than e business in initial stages.

Apart from having so many advantages company had no focused on this pattern. The reasons for

not selecting this system is probably

Targeted on INDIA ONE initially , Who are away from internet services

Supplier base and support was not so strong

Absence of good software support in supplier management

E business threat of cash jam in initial days

Face to face communication is tradition of Indian retailing from many years

The threat or cyber crime

2.8 Conclusion

Pantaloon retail India evolved its business strategy based on understudying customers.

The organization deploys the cultural and regional strategies to attract the customers. The

changing emotions of customers are tracked and they are linked with the power of modern

retailing environment. But still the company has introduce modern retailing malls to the social

class people of India it has fear of threat of business decline from the competitors like Reliance

fresh and Aditya birla more Who are potential competitors.

Referencing

1. http://www.pantaloon.com/companyinfo.asp, Retrieved on 16 Feb 2009


2. http://www.pantaloon.com/corporate_state.asp, Retrieved on 18 Feb 2009

3. http://en.wikipedia.org/wiki/SWOT_analysis , Retrieved on 19 Feb 2009

4. http://www.pantaloon.com/PRIL_QIP_presn_Dec4_06_ver2.pdf , Retrieved on 20 Feb

2009


http://www.pantaloon.com/corporate_state.asp

Strategies of Pantaloon Retail (India) Limited

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