Subhiksha crosses halfway mark; well on its way to 1,000 in 2007

Subhiksha – the chennai based, no frills, discount retail chain, which recently hit the 500-stores mark, has catapulted itself into one of the country’s largest supermarket chains, with over one million sq. ft. of retail space, spread across five states of the country.

Speaking on the occasion, R Subramanian, MD, Subhiksha said, “With Maharasthra we will complete our 600-store target, and we will shortly activate Phase 2 of our expansion plans foraying into 5 more states including Chandigarh, Punjab, Madhya Pradesh, Uttar Pradesh, Haryana and West Bengal. We hope to hit the 1000-store mark during 2007.”

“Our goal of becoming India’s favorite neighborhood store is now well on its way. We want to be able to provide customers from all segments of society, in all parts of the country, with a viable smart shopping option,” added Subramanian.

Unlike Big Bazaar, its discount, food and grocery, retail counterparts, Subhiksha believes in setting up non-air conditioned small neighbourhood stores (near the community) measuring around 2,000 sq.ft. in retail space. As such, while Subhiksha competes with big store chains on regular discounts, it competes with traditional ‘father and son’ kirana stores on close proximity to its customers.

Subhiksha operates in four verticals — fruits and vegetables, pharmaceuticals, FMCG and telecom. Beside loyalty discounts and regular discounts of 10% on medicines and 8 to 10% on FMCCG products. The retail chain also makes the Every Day Low Price (EDLP) offer to its customers, which is sustained through discounts obtained by the chain from direct supply arrangements with manufacturers, along with bulk purchase and cash transactions.

While the discount model of Subhiksha is based on world famous Wal-Mart strategy, the carpet bombing model is based on the ‘Starbucks’ strategy, in which the coffee retail chain opens a cluster of stores in close proximity to each other, in a geographical area which has high population density with purchasing potential. This enables the chain to cannibilise sales within its own network rather than allowing them to go to other individual stores or retail chains. Even, Reliance, so far seems to have followed a similar strategy having opened a Cluster of ‘Fresh’ stores in Hyderabad and Jaipur.

While, the decade old, Rs. 340 crore in turnover, Subhiksha retail chain, has invested about Rs. 300 crore on its first phase of expansion, the total outlay for 1,000 stores will be around Rs. 500 crore. It may be recalled that ICICI Venture Capital holds 24% of the equity in the company. The company is mulling over making Initial Public Offering (IPO) in the second half of 2007.

futurebazaar.com, the new online shopping destination

Future Bazaar, a subsidiary of the Kishore Biyani owned, India’s biggest listed retailing company, Pantaloon, has recently launched its online retail initiative – futurebazaar.com, in direct competition with virtual shopping sites like ebay.in, indiatimes.com, rediff.com. Although, present online retail turnover is estimated at Rs. 180 crore, futurebazaar.com is targeting to achieve a sale of Rs. 300 crore in the first year itself. Unlike other aforesaid portals, the futurebazaar.com is backed by brick and mortar retail chain Big Bazaar of the Future Group. The portal is reported to be getting a traffic of around 40,000 hits every day with a conversion rate of 1 per cent.

Futurebazaar.com, among others, claims to have on offer the widest range of apparel, books, entertainment, cameras, consumer durables, home decor, kitchenware and kitchen appliances, mobile phones, toys and games, laptops, watches and accessories. The current range of over 5,000 products is categorised under 15 major headings and 185 sub headings.

All the products on offer at futurebazaar.com carry manufacturers’ warranty and are delivered at the customer’s door step through Big Bazaar chain and logistic carriers like Blue Dart and Gati in more than 1,500 cities and towns spread across the country. Unsatisfied customers have the choice of unconditionally returning the merchandise within 15 days of purchase. The portal can deliver merchandise. Portal also claims to provide customer support through real persons as against virtual support throgh computers provided by its competitors.

“Leveraging the tried and tested ‘brick and click’ strategy, futurebazaar.com is the only e-commerce portal with a strong offline presence, quite different from the current e-commerce players who have adopted a ‘marketplace’ model. Backed by our end-to-end supply chain and the ability to source nearly a million products, our economy of scale gives the customers the lowest prices,” said Sankarson Banerjee, CEO, Future Bazaar, while formally launching the shopping the portal.

Subhiksha to storm Kolkata with 90 stores in four months

Subhiksha, the Chennai-based, R. Subramanian owned, over 500 stores strong, discount food and grocery chain, in its now familiar carpet bombing strategy of simultaneously opening a large number of outlets in a single location, is gearing up to storm Kolkata with a cluster of 90 outlets in four months. It has already begun the process of identifying store locations and building distribution centers in the city.

Subhiksha will have more stores than Post Offices in Kolkata, said a company official.

Subhiksha would also set up a regional hub in Kolkata for procurement so as to avoid paying central sales tax, which despite proposed reduction in the rate, will continued to be levied at 3% from April, 2007.

Kolkata, which has a Rs 300-crore-a-month market for food and groceries, offers a huge potential as the organised retailers in the city like Arambagh, C3 and Food Bazaar, account for just Rs 10 crore.

At the moment, Subhiksha does not deal in poultry or fish, however, it would consider offering these items in Kolkata as “Fish and Kolkata are inseparable,” said R. Subramanian, M D of the company. Subhiksha offers an average discount of 9-10 per cent, compared with 2 per cent at Food Bazar. Subhisksha has no takeovers in mind and the entire chain will be created from scratch, added Subramanian.

Unlike other retail stores in Kolkata, Subhiksha will have the added advantage of remaining open between 9 AM and 9 PM.

Kolkata foray for the retail chain is part of second phase expansion for the retail chain in which it wants to take the number of stores in the network to 1,000 by the end of 2007. The expansion will be spread across five states of Bengal, Punjab, Madhya Pradesh, Uttar Pradesh and Haryana, including Chandigarh.