Comparative analysis of the Retail Industries in UK and India

Submitted ByDIVAKAR GAUR MBA 3C A1808709009

Submitted ToProf. DAVID OGLE AMITY UNIVERSITY LONDON

INTRODUCTION
Traditionally, marketing has focused on market share and customer acquisition rather than on retaining existing customers and on building long-lasting relationships with them. More recently, however, market share has been gradually losing its revered status as marketings holy grail and the wisdom of focusing solely on customer acquisition (hoping that this effort will compensate for high levels of defection) is now being seriously questioned and considered as very high risk since ever more players enter an increasingly crowded marketplace. In response to these changes there has been a new emphasis on defensive marketing, which focuses on holding on to existing customers and getting more custom from them (higher share of customer), in contrast to activities which focus on winning new customers. Calls for a paradigm shift to the pursuit of loyalty as a strategic business goal have become increasingly popular over the recent years. In 2010 UK retail sales were over 293 billion. The retail industry employed over 2.9 million people as at the end of December 2009. This equates to 11% of the total UK workforce. The BRC-Bond Pearce Retail Employment Monitor showed that in quarter four of 2010 retail employment was 0.6% higher than in the same quarter a year earlier, equivalent to 3,900 more jobs. 9% of all VAT-registered businesses in the UK are retailers, with the total number currently at 188,320. In 2010 there were 286,680 retail outlets in the UK More than a third of consumer spending goes through shops. Sales over the internet account for around 8% of total retail sales, despite strong growth in recent years.

SAINSBURY
J. Sainsbury plc (LSE: SBRY) is the parent company of Sainsbury's Supermarkets Ltd, commonly known as Sainsbury's (also Sainsbury and JS), the third largest chain of supermarkets in the United Kingdom with a share of the UK supermarket sector of 16.5%.The group's head office is in the Sainsbury's Store Support Centre in Holborn Circus, City of London. The group also has interests in property and banking. Sainsbury's was founded in 1869 by John James Sainsbury and his wife Mary Ann (ne Staples), in London, England, and grew rapidly during the Victorian era. It grew to become the largest grocery retailer in 1922, pioneered self-service retailing in the UK, and had its heyday during the 1980s. In 1995, Tesco overtook Sainsbury's to become the market leader, and Asda became the second largest in 2003, demoting Sainsbury's into third place. The founding Sainsbury family still retain approximately 15% of J Sainsbury plc shares (as of May 2008), through various trusts. The family sold down their stake from 35% in 2005. The largest Sainsbury family shareholders are Lord Sainsbury of Turville with 5.83% and Lord Sainsbury of Preston Candover, who controls just under 3% of the company, and benefits from 1.6% of the equity included in the above. The largest overall shareholder is the investment vehicle of the Qatari royal family who now hold 26.145% of the company. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

FINANCIAL PERFORMANCE
Between 1990 and 2010, Sainsbury's turnover increased from 6.9 billion to 21.4 billion, with a small dip in 2005, a year in which parts of the business were restructured. Profits before and after tax have been turbulent, with most years showing a pre-tax profit of 500700 million and a profit for the year between 300500 million, with 2005 and 2006 showing much reduced figures. 2005 saw exceptional costs of 100 million, and in 2006 Sainsbury's incurred "one-off operating costs" of 152 million, including 63 million to terminate the IT outsourcing contract with Accenture. Earnings per share in years other than 1994, 2005 and 2006 fell in the range 14p33p.

At the end of its 2009/10 financial year Sainsbury's store portfolio was as follows. Format Number Area (ft) Area (m) Percentage of space

Supermarkets

537

16,909,000 1,484,000 95.6% 841,000 67,700 4.4%

Convenience stores 335 Total 872

17,750,000 1,551,700 100.0%

CURRENT MARKET OPERATIONS

Sainsbury's currently operates 872 hypermarkets, supermarkets and convenience stores. This is split down as 537 supermarkets and 335 convenience stores. Subsidiary businesses of Sainsbury's include the following: Sainsbury's Local convenience store chain by Sainsbury's Sainsbury's Central mini-supermarkets by Sainsbury's, due to be phased out and be re-branded under the core Sainsbury's 'Main Mission' format Sainsbury's Online Online shopping service from Sainsbury's Sainsbury's Active Kids loyalty voucher scheme by Sainsbury's Sainsbury's Bank Financial services from Sainsbury's and Lloyds Banking Group, established in February 1997

PRODUCTS OF THE COMPANY

A large store typically stocks around 30,000 lines of which around 20% are "own-label" goods. These own-brand lines include: Basics: an economy range of around 700 lines, mainly food but also including other areas such as toiletries and stationery. The Basics range uses minimal packaging with simple orange and white designs, to keep the price as low as possible. Sainsbury's Local stores sell none or very few of these lines. Equivalent to Tesco's Value, Asda's Smart price and Morrison's Value. Taste the Difference (TTD): around 1100 premium food lines, including many processed foods such as ready made meals and premium bakery lines. TTD lines are similar to Asda's 'Extra Special', Tesco 'Finest' and Morrison's 'The Best'. The TTD range was relaunched in September 2010. When the range was relaunched in 2010 it features 1141 lines, with at least 75% of them being "new or improved". Different by Design (DBD): a smaller range of premium non-food lines, including flowers which were previously branded "Orlando Hamilton". Kids: these lines are for children. In 2006 these lines replaced the Blue Parrot Caf range. Be Good To Yourself (BGTY): products with reduced calorific and/or fat content. The BGTY range was relaunched in January 2010. Freefrom: launched in February 2010, it has over 75 product lines. These products are all grouped together in one aisle of the store (except fresh and frozen lines). These products are suitable for those allergic to dairy products. (The majority of these are dairy and gluten/wheat free) Sainsbury's Organic (SO Organic): Around 500 lines of food/drink which is not derived from food stuffs treated with fertiliser or pesticides. Fair Trade: Over 100 fair trade products. - All bananas sold at Sainsbury's are now fair trade. The own-brand tea and coffee is being converted to Fairtrade over the next three years. TU - own brand clothing range, which replaced the Jeff Banks designed range, Jeff & Co. TU Home - a range of home products, such as lighting, rugs, and kitchen products. This range has now been rolled out to most stores stocking non-food ranges.

MARKETING AND BRANDING

Since 2000 Jamie Oliver has been the public face of Sainsbury's, appearing on television and radio advertisements and in-store promotional material. The deal earns him an estimated 1.2 million every year. In the first two years these advertisements are estimated to have given Sainsbury's an extra 1 billion of sales or 200 million gross profit. Sainsbury's currently uses the "Try something new today" slogan which was launched in an effort to make consumers venture into purchasing more varied goods. The television adverts are also often accompanied by The Polyphonic Spree's Light & Day. Over the years, Sainsbury's has used many slogans: "Quality perfect, Prices Lower" The slogan used on the shop-front of the Islington store in 1882. "Sainsbury's For Quality, Sainsbury's For Value"- Used in 1918 above the Drury Lane store. "Sainsbury's. Essentials for the Essentials." "Good Food Costs Less At Sainsbury's" Used from the 1960s to the 1990s. Described by BBC News as "probably the best-known advertising slogan in retailing. "Sainsbury's - Everyone's Favourite Ingredient" Used in a series of TV commercials in the 1990s which featured celebrities cooking Sainsbury's food. "Fresh food, fresh ideas. Eat healthy"-used in 1998 "Value to shout about" A 1998/1999 campaign fronted by John Cleese which was widely claimed to have been a major mistake. Sainsbury's said it actually depressed sales. However, the company had been losing sales for years because of the rise of Tesco. "Making Life Taste Better" Introduced 1999 and used until May 2005. "Try something new today" Introduced in September 2005. Replaced on carrier bags, till receipts and all other corporate branding from this point. Remains main slogan. "Value where it matters" Used in advertising from late 2010.

In 2008 they created a shopping incentive by showing that, when shopping at Sainsbury's, you can feed your family for only five pounds. The incentive, called "Feed your family for a fiver", with the flagship of "Meatballs 'n' More" has been advertised on British television channels, with Jamie Oliver cooking for a family. Sainsbury's Active Kids is a loyalty voucher scheme by Sainsbury's.

Sainsbury's is a sponsor of the Paralympic Summer Games in London 2012, and it is the largest sponsorship signed in the history of the Game.

SAINSBURYs TAGLINE

"TRY SOMETHING NEW TODAY"

BIG BAZAAR
Big Bazaar was launched in September, 2001 with the opening of three stores in Calcutta, Bangalore and Hyderabad in 22 days. Within a span of ten years, there are now 148 Big Bazaar stores in 80 cities and towns across India. Big Bazaar is designed as an agglomeration of bazaars or Indian markets with clusters offering a wide range of merchandise including fashion and apparels, food products, general merchandise, furniture, electronics, books, fast food and leisure and entertainment sections. Food Bazaar, a supermarket format was incorporated within Big Bazaar in 2002 and is now present within every Big Bazaar as well as in independent locations. There are now 169 Food Bazaar outlets, including those located within Big Bazaar. A typical Big Bazaar is spread across around 50,000 square feet of retail space. While the larger metropolises have Big Bazaar Familycentres measuring between 75,000 square feet and 1,60,000 square feet, Big Bazaar Express stores in smaller towns measure around 30,000 square feet. Most of the Big Bazaar stores are multi-level and are located in stand-alone buildings in city centers as well as within shopping malls. These stores offer over 200,000 SKUs in a wide range of categories led primarily by fashion and food products. Big Bazaar is part of Future Group and is owned through a wholly owned subsidiary of Pantaloon Retail India Limited, that is listed on Indian stock exchanges.

FINANCIAL ANALYSIS
BALANCE SHEET (ASSETS) AS ON 31ST DECEMBER 2007-08 (Rupees (000)

Items Current Assets Cash And Cash Equivalents Short Term Investments Net Receivables Inventory

2007

2008

458,199

550,254

1531,841 1903,457

1711333 2500000

Other Current Assets

116,795

123,688

Total Current Assets Non Current Assets Long Term Investments Property Intangible Assets Accumulated Amortization Other Assets Deferred Long Term Asset Charges Total Non Current Assets

4,010,292

4,885,275

851,313 4,265,719 453,541

1,000,499 4500000 500,000

140000

150000

5,710,573

MARKETING AND BRANDING

PRODUCT
Big Bazaar offers a wide range of products which range from apparels, food, farm products, furniture, child care, toys, etc of various brands like Levis, Allen Solly, Pepsi, Coca- Cola, HUL, ITC, P&G, LG, Samsung, Nokia, HP etc. Big Bazaar also promotes a number of in house brands like: DJ & C Tasty Treat Clean Mate Sensei Care Mate Koryo and 44 other brands.

PRICING
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The pricing objective at Big Bazaar is to get Maximum Market Share. Pricing at Big Bazaar is based on the following techniques: Value Pricing (EDLP Every Day Low pricing): Big Bazaar promises consumers the lowest available price without coupon clipping, waiting for discount promotions, or comparison shopping. Promotional Pricing: Big Bazaar offers financing at low interest rate. The concept of psychological discounting (Rs. 99, Rs. 49, etc.) is also used to attract customers. Big Bazaar also caters on Special Event Pricing (Close to Diwali, Gudi Padva, and Durga Pooja). Differentiated Pricing: Differentiated pricing i.e. difference in rate based on peak and non-peak hours or days of shopping is also a pricing technique used in Indian retail, which is aggressively used by Big Bazaar. e.g. Wednesday Bazaar Bundling: It refers to selling combo-packs and offering discount to customers. The combo-packs add value to customer and lead to increased sales. Big Bazaar lays a lot of importance on bundling. e.g. 3 Good Day family packs at Rs 60(Price of 1 pack = Rs 22) 5kg oil + 5kg rice + 5kg sugar for Rs 599

PLACE
The Big Bazaar stores are operational across three formats hypermarkets spread over 40,000-45,000 sq ft, the Express format over 15,000-20,000 sq ft and the Super Centers set up over 1 lakh sq ft. Currently Big Bazaar operates in over 34 cities and towns across India with 116 stores. Apart from the Metros these stores are also doing well in the tier II cities. These stores are normally located in high traffic areas. Big Bazaar aims at starting stores in developing areas to take an early advantage before the real estate value booms. Mr. Biyani is planning to invest around Rs 350 crore over the next one year expansion of Big Bazaar. In order to gain a competitive advantage Big Bazaar has also launched a [Link], which helps customers to orders products online which will be delivered to their doorstep. This helps in saving a lot of time of its customers.

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PROMOTION
The various promotion schemes used at Big Bazaar include: Saal ke sabse saste 3 din Hafte ka sabse sasta din Wednesday bazaar Exchange Offers Junk swap offer Future card(3% discount) Shakti card Advertisement (print ad, TV ad, radio) Brand endorsement by M.S Dhoni and Asin

Big Bazaar has come up with 3 catchy lines written on hoardings taking on biggies like Westside, Shoppers stop and Lifestyle. They are: Keep West- aSide. Make a smart choice! Shoppers! Stop. Make a smart choice! Change your Lifestyle. Make a smart choice!

PEOPLE
Well trained staff at stores to help people with their purchases Employ close to 10,000 people and employ around 500 more per month. Well-dressed staff improves the overall appearance of store. Use scenario planning as a tool for quick decision making multiple counters for payment, staff at store to keep baggage and security guards at every gate, makes for a customer-friendly atmosphere.

PROCESS
Big Bazaar places a lot of importance on the process right from the purchase to the delivery of goods. When customers enter the stores they can add the products they which to purchase in their trolley from

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the racks. There are multiple counters where bill can be generated for purchases made. Big Bazaar also provides delivery of products over purchases of Rs. 1000.

PHYSICAL EVIDENCE
Products in Big Bazaar are properly stacked in appropriate racks. There are different departments in the store which display similar kind of products. Throughout the store there are boards/written displays put up which help in identifying the location of a product. Moreover boards are put up above the products which give information about the products, its price and offers. Big Bazaar stores are normally U shaped and well planned & designed.

BIG BAZAARs TAGLINE

"ISS SEE ACHA OR SASTA KAHI NAHI"

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COMPARATIVE ANALYSIS
SAINSBURY started as a retailer of fresh foods and later expanded into packaged groceries such as tea and sugar. His trading philosophy, as stated on a sign outside his first shop in Islington, was "Quality perfect, prices lower. In 1922 J Sainsbury was incorporated as a private company, as 'J. Sainsbury Limited', when it became the UK's largest grocery group. It ordered a direct mail campaign to 1 million Sainsbury's customers as part of his 6 month business review asking them what they wanted from the company and where the company could improve. Traditionally, the majority of
Sainsbury's stores were located in the areas around London and south-east England. The company acquired the Midlands-based Thoroughgood in the 1930s. Expansion since 1945 has given the company national reach, although the chain is not as represented in Scotland as other chains such as Tesco, and Morrisons . This is partly due to the fact that Sainsbury's lost out to Tesco in the bidding war for William

Low in the 1990s. Since 1999, Sainsbury's stores have received a new look. The old 'J Sainsbury' name,
used in various forms since 1869, was scrapped and replaced by 'Sainsbury's'. Most stores were refurbished with dark blue walls, bright orange wall panels and grey shelving, as well as new checkouts. Individual counters also have different brightly coloured panels behind them. The new flagship store in Greenwich, South London, was the first to receive this new look, leading to the term 'Greenwich Blue', which is used to describe the signature colour of a typical store. This format was subsequently rolled out across the entire store estate. Following the introduction of the 'Try something new today' slogan in 2005, stores were again refurbished with cream walls, and dark red and dark blue signage, along with cream coloured shelving and checkouts. New aubergine-coloured staff uniforms have been introduced to all stores. As of 2009, some stores still bear the old 'J Sainsbury' logo on external signage, including one branch in Princess Square, Bracknell, another in the centre of Welwyn Garden City, and the branch in Kirkcaldy, which opened in 1997. As of 2010, no stores bear the old 'J Sainsbury' logo on the signage apart from Sainsburys in Blackheath & Redditch, West Midlands.

A large store typically stocks around 30,000 lines of which around 20% are "own-label" goods.
Sainsbury's supply chain operates from 13 regional distribution centres (RDCs), with two national distribution centres for slower moving goods, and two frozen food facilities. In addition, the depot at Tamworth tranships floral and general merchandise to the RDCs. Each depot is given a "Depot Code".

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BIG BAZAAR was designed as clusters offering a wide range of merchandise including fashion and apparels, food products, general merchandise, furniture, electronics, books, fast food and leisure and entertainment sections. Food Bazaar, a supermarket format was incorporated within Big Bazaar in 2002 and is now present within every Big Bazaar as well as in independent locations. There are now 169 Food Bazaar outlets, including those located within Big Bazaar. A typical Big Bazaar is spread across around 50,000 square feet of retail space. While the larger metropolises have Big Bazaar Familycentres measuring between 75,000 square feet and 1,60,000 square feet, Big Bazaar Express stores in smaller towns measure around 30,000 square feet. Most of the Big Bazaar stores are multi-level and are located in stand-alone buildings in city centers as well as within shopping malls. These stores offer over 200,000 SKUs in a wide range of categories led primarily by fashion and food products. Starting 2008 with six million square feet of retail space with stores in 51 cities pan India, they ended the year with over 11 million square feet of retail space and over 1,000 operational stores across 63 cities and towns and 65 rural locations in India. They opened 25 Big Bazaar stores in 2008 and carried the total store count to 104. The company saw a 52 per cent increase in its total income from Rs 33.29 billion in FY 2006-07 to Rs 50.53 billion in FY 2007-08. Being aware of the threats and opportunities present in the Indian retailing, the top management at Big bazaar planned various strategic alternatives. Big Bazaar has huge promotion budgets. The biggest idea behind all advertisements is to prompt people to do bulk shopping. There are two types of promotional strategies of big bazaar. One is the holistic advertisement which promotes the brand and creates awareness among people. Other type of promotion is the particular store oriented promotion. There are promotional efforts even inside the store Big Bazaar ensures that no other kirana store / departmental store are offering considerable discount compared to its own price. This helped it Big Bazaar in being the "value for money" store. Product mix at Big Bazaar is compared to kirana store. Indian customers prefer to purchase grains, grams, etc., after touching them, so its better not to sell in polythene packs. Big Bazaar has counters where you can touch wheat, rice, sugar, etc., before purchasing. Advertisements about schemes and offers through local newspapers, radio in local languages, inspires customer more than the traditional ways. For Indians, shopping is an entertainment; they come in groups, with families so Big Bazaar offers something for every section of family. Their newspaper advertisements are present just before launch of any new scheme. This creates aura about the Big Bazaar brand in the minds of customers. Big Bazaar bill-boards are displayed on prime locations in various cities as a brand building exercise. They display the catchphrases now-a-days. For a retailer, location is one of the most important things. The strategic decisions to secure spaces before other retailers join in have resulted in creating early presence in market.

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