Spencer Case PDF

IMB 665
RETAIL STRATEGY AT SPENCER’S
ASHIS MISHRA AND PULAK GHOSH
Ashis Mishra, Assistant Professor of Marketing and Pulak Ghosh, Professor of Decision Sciences and Information Systems prepared this case for
class discussion. This case is not intended to serve as an endorsement, source of primary data, or to show effective or inefficient handling of
decision or business processes.
Copyright © 2018 by the Indian Institute of Management Bangalore. No part of the publication may be reproduced or transmitted in any form or
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Management Bangalore.
This document is authorized for use only in Dr. Mallika Srivastava's Retail Management at Narsee Monjee Institute of Management Studies (NMIMS) from Jun 2020 to Dec 2020.
Retail Strategy at Spencer’s
INTRODUCTION
It was an early November evening in 2016. Shashwat, the Sector Head of retail business of Spencer Retail
Ltd. (Spencer’s) was in his first floor office at Duncan House overlooking a busy Netaji Subhash Road.
He had a meeting scheduled at the end of the week with the group chairman Sanjiv Goenka regarding the
performance of Spencer’s, their future strategy and the consequent resource requirement for the next
financial year. ,
Historically, Spencer’s has been one of the first organized food and grocery retailers in India with more
than 150 years’ presence in retail business. Spencer’s was one of the pioneers of the hypermarket format
in India. They started their first hypermarket in Hyderabad in 2000. In 2016, they had over 120 stores
across 40 cities in 11 states in India. Spencer’s had been growing steadily over the last six years in terms
of net sales and market share in the food and grocery segment. The total sales area had grown to more
than 100,000 sq. meters. It was one of the most preferred shopping destinations for the consumers in its
area of operation and enjoyed strong brand recall.1
However, Spencer’s was not able to generate net profit at a company level even though majority of the
stores were able to individually generate operational profit. It had negligible market share in the
hypermarket (4.7%) and modern grocery retail (3.2%) verticals where competition was quite intense. The
key challenge for Shashwat was to choose the future direction for Spencer’s. In a highly competitive
hypermarket space (food and grocery dominated), profitability is often directly related to volume and
economies of scale. This is frequently the result of aggressive growth. However, aggressive growth
involves aggressive investment in a business that has not yet been profitable. The food and grocery
business has been dominated by traditional smaller format mom and pop (kirana) stores and the modern
large format retail is a relatively untested entity in Indian retail. In addition, the consumers have become
more information driven and demanding. Preference for online channels among the youth and affluent has
been growing at a much faster rate compared to more established brick and mortar channels. Skilled
manpower is a relatively sparse resource in India and employee turnover is uncharacteristically high
(compared to global standards) in the Indian retail sector. Shashwat had to provide a financially tangible
plan of action to the group chairman in the weekend meeting. He decided to meticulously evaluate his
options before the impending meeting.
COMPANY BACKGROUND
Spencer’s has been a public limited company under RP – Sanjiv Goenka group. Established in 1820, RP –
Sanjiv Goenka group is one of the most prominent business houses in India. With assets of over INR
265.5 billion and employee strength of more than 55,000, the group’s gross revenue for FY ’14 was INR
138.8 billion ($1 = INR 64, in December 2017).
1
Company sources
Page 2 of 18
Spencer’s was founded by two British nationals, John William Spencer and Charles Durant in the pre-
independence era (1863). It became part of the Group in 1989. In 1995, the RP-Sanjeev Goenka group
entered into a joint venture with Dairy Farm International (Hong Kong). It opened and operated
supermarkets under the name “Food World” and hypermarkets under the name “Giant”. The joint venture
was terminated in 2006. Out of the 93 stores during that time, RP-Sanjiv Goenka Group retained 48
stores; refurbished them and re-launched the modified stores under the “Spencer’s” brand.
By 2016, they had over 120 stores operating in three formats (a 1500–15,000 sq. ft. convenience store
“Spencer’s neighborhood store”, supermarkets format “Spencer’s” and a 15,000–50,000 sq. ft.
hypermarket format “Spencer’s Hypers”) across 40 cities in India. The details of the Spencer’s stores
across the country are provided in Exhibit 1. The financial highlights and store operating statements of
Spencer’s are presented in Exhibit 2A and 2B; 80% of the total sales at Spencer’s were from the food and
grocery vertical. The strength in core grocery ensured the best in industry financial metrics for Spencer’s
and its financials were in the top quartile in the industry.
INDIAN RETAIL SCENARIO
Indian retail market was worth US $ 648.9 billion2 in 2015 and increased by an average of 16–18% per
annum while the growth of organized retail was much higher (30%). It was estimated that by 2017,
India’s retail market would be worth US $ 1026.06 billion and a total of USD 1.3 trillion by 2020.3 The
unorganized retail was almost 89% of the total retail pie. However, the traditional retail formats were
increasingly adopting the best practices of their organized counterparts and thereby gradually blurring the
organized/unorganized differentiation.
The biggest retail clusters in India were based on a large and concentrated consumer base and those
clusters were mostly based in metros or big cities (viz. Metros such as Greater Mumbai, Delhi and NCR,
Hyderabad, Bengaluru, Kolkata, Chennai, etc.; Tier 2 cities such as Ahmedabad, Pune, Surat, Jaipur,
Kochi, etc.). Metro cities and other big cities accounted for 30% of the total retail consumption and
almost 90% of organized retail consumption. A brief of various retail verticals and their share in modern
retail is provided in Exhibit 3.
However, Indian infrastructure involving logistics, road transportation, warehousing, etc. were rather
inadequate. In addition, high cost of fuel increased costs for retailers. Logistics could constitute up to 20%
of the cost of a product owing to the high reliance on road transportation. Also, achieving economy of
scale is a function of how the retail stores are distributed across the country.
Rental rates were high and predicted to rise in Metros and other big cities in particular, as space was
limited, which exerted more pressure on retailers’ bottom lines. Percentage of consumption in metros and
big cities was expected to decrease because of high rentals, oversaturation of retail options in those
places, and gradual improvement of income even in tier 2, 3, and 4 cities.
2
India Retail Report 2015
3
Page 3 of 18
Manpower attrition rate was very high in the retail industry (20 –25% in non-food and as high as 60% in
food and grocery) and hence human capital procurement and its management continued to be one of the
biggest challenges. In addition, lack of availability of skilled manpower troubled most of the large Indian
retailers.
Nevertheless, owing to recent reforms, the cap on foreign investment into single brand retail was
increased from 51% to 100% and the cap on multi-brand retail was increased to 51%, allowing foreign
firms to enter the market and take advantage of India's vast consumer base. The number of opportunities
for retail development outside the traditional main cities (such as the relatively saturated Mumbai and
Delhi) was increasing, as regional growth continues.
FOOD AND GROCERY SECTOR IN INDIA
Food retail industry in India has been mostly unorganized (share of organized is estimated to be around 8-
9% in 2017-2018) while majority of the income for average Indian consumers was spent on food and
grocery-related items (about 70%). The food and grocery category comprised perishables (11%), dry
grocery (48%), fresh produce (22%), and dairy (19%). The distribution of categories in the food and
grocery sector is presented in Exhibit 4. In addition, according to Assocham, the liquor segment has been
growing at the rate of 30% per annum and includes whisky, beer, wine, and other spirits.
The food and grocery sector in India was characterized by low entry and exit barriers for small and local
players because retail was not considered as a separate industry (it was part of the overall service sector)
and hence it was not governed by any significant licensing or laws. In addition, most individual/small
players operated out of temporary shacks/open market and hence their overheads were also minimal.
However, for organized players/chain stores, the real estate cost and overheads were quite prohibitive.4
The limited differentiation in basic product range led to minimal switching costs for consumers and
significant buyer mobility. Hence, the western model of high-levels of loyalty was almost non-existent in
Indian retail. Consumers in India were more driven by category loyalty, convenience and price sensitivity
rather than store or brand loyalty. However, relative importance of these parameters of store selections
could vary significantly across different consumer segments with varying socio-economic classes.
The penetration of e-commerce in metros and big cities in the grocery category further complicates
customer loyalty towards brands and brick & mortar stores. As a result, presence in online retail platform
and aggressive pricing emerged as often used strategies.
5
Other than the metros and big cities, the retail customers in the smaller towns and rural areas had a
unique relationship with the local retailers that was more driven by tradition, personal relationship over a
significant period of time, availability of credit facility, and personal convenience rather than the oft-
quoted parameters such as variety, assortment, price superiority, services, etc.
4
Spencer’s sources, expert interview from retail industry
5
Page 4 of 18
INDIAN CONSUMERS
India has been the second biggest country in the world in terms of population. It also has a young
population that provides a large consumer base for retailers. India’s working population was expected to
be 117 million over the next decade. By 2020, the median age for India would be 29 years. In 2010, the
emerging middle class consumers were 470 million and as per PWC estimates, this segment was likely to
grow to 570 million by 2021. However, the emerging middle class earned a paltry $1.70 to $5 per capita
per day and the purchasing power is likely to double over the next decade.6
The Indian middle class has been increasingly spending more on aspirational and non-essential goods. In
the financial year 2010, about 20% of consumer spending had shifted from essentials to non-essential
goods and services including consumer durables, apparels and accessories. Shoppers were increasingly
purchasing premium products (price 20% higher than category average). An analysis of over 80 FMCG
brands indicated more than one-third sales coming from premium brands. In addition, the consumers were
increasingly more receptive to new products, services, and ideas. So, India is likely to be a high earning,
less saving, and more consumption-oriented economy by 2025. The major growth for Indian retail could
be in tier 2 and 3 cities.
The online retail sector is expanding rapidly as Internet connectivity increased in the country. The digital
strategy adopted by the companies had enormous opportunities not only in e-commerce but also in
changing business models, customer experience improvement, and engagement with the customers.
COMPETITION
Spencer’s operated in two different formats (viz. neighborhood stores/supermarkets and hypermarkets).
The distribution of various stores of Spencer’s across India is provided in Exhibit 5.
Similar kind of stores and operations were observed in Future group’s “Big Bazar” stores, Trent group’s
“Star Bazar”, Aditya Birla group’s “More”, Raheja group’s “Hypercity”, Reliance Retail’s “Reliance
Fresh, Reliance Mart”, and Radhakrishna Damani’s “D-mart”. The larger format retailers were adding
new stores at the rate of 15% per year. Average annual sales per store was close to INR 45 crore (I crore =
10 million).7
The specialty format (Godrej Nature’s Basket, Nuts ‘n’ Spices, Twenty-Four Seven, etc.) was a new
addition to the Food and Grocery bandwagon. This retail space was growing at 47% per annum.
The financial details of a few competitors of Spencer’s are listed in Exhibit 6. Spencer’s was ranked fifth
in grocery retailers during 2014. The company positioned itself to offer value to its customers, with a
large number of private label products on offer. The high levels of customer service on offer in Spencer’s
6
Retailing in India – Jan 2016, Euromonitor International, India retail report 2015, 2013
7
Food Retail in India – August 2015, Marketline Industry profile
Page 5 of 18
very well-designed outlets, all of which were located in upscale neighborhoods in India’s large cities,
were evidence of the company’s premium positioning.
“Future Value Retail” has been one of the leading players in the food and grocery sector in India. Future
Value Retail ranked third in retailing in India in 2015, with a 1% value share, but its double-digit value
growth was steady from 2012-2015, owing to its consistent expansion of its retail outlets. In 2015, it
merged with Bharti Retail (after Bharti’s Split from Walmart) to expand its penetration into the Indian
retail sector and its total sales was INR 194.5 billion. It operated mostly in discount and budget-value
retail segment. “Future Value Retail” targeted low to middle income group with “inexpensive price
range” positioning. It covered 17 million sq. ft of retail space across 240 cities and operated in multiple
formats. By the end of FY 2015, Big Bazaar (part of Future Value Retail) was operating with 246 large
format outlets at different Indian cities. Future group operated in five different formats in food and
grocery vertical (viz. supermarket, hypermarket, neighborhood stores, convenience store and premium
superstore) and six different formats in apparel and lifestyle vertical (viz. specialty, discount, seamless
mall, etc.) across multiple metros, tier 1 and tier 2/3 cities in 21 states of India. The different formats of
future group stores are presented in Exhibit 7. The distribution of stores of Future group across the
country is provided in Exhibit 8.
Reliance Retail has also been one of the larger players in the Indian retail sector. By March 31, 2015, the
company operated 2,621 stores jointly covering more than 11.7 million sq. ft. retail space across 146
cities in India. Reliance Retail was also positioned as a value (lower price points/multiple price points)
retailer and value retail accounted for 55% of its turnover in 2014. Reliance retail operates three different
formats in food and grocery vertical and five different formats in various other verticals (viz. apparel,
footwear, jewelry, etc.). The various formats of Reliance retail are listed in Exhibit 9.
SPENCER’S STRATEGY
Taste the world
Spencer’s has been predominantly a food and grocery major. After its split from Dairy Farm
International, Hong Kong, Spencer’s positioned its stores with “Taste the World (TTW)” theme (2008).
The value proposition of TTW positioning was “to provide the shoppers with a futuristic and international
shopping experience”. The operationalization of the TTW positioning involved the following:
a) Artfully and aesthetically redesigned stores

b) New and improved visual merchandising
c) Modified and developed merchandise mix; deep and wide merchandise mix in food and grocery items
to provide international shopping experience; also carried exclusive apparel brands (Beverly Hills
Polo Club International LLC.)
d) Addition of new and crowd puller categories to the merchandise mix viz. wine and spirit section,
gourmet center run by international chefs, Patisserie section, etc.
e) No discount pricing or promotional pricing
Page 6 of 18
The TTW strategy was successful in creating a unique as well as enviable positioning for Spencer’s and
managed to attract majority of high-end customers to the store. In the next couple of years, it was
observed that the average middle class and lower class of the consumers did not consider Spencer store’s
to be “their store”. The profitability of the TTW stores became a challenge and the long-term
sustainability of the strategy was questioned. Probably, the average hard-bargaining Indian consumers
who were typically associated with chaotic and commotion filled market places were not ready for this
large format international shopping experience! Increase in competition at the lower end of the market,
reduced store traffic in Spencer stores and a consumer satisfaction survey in early 2010, made the
leadership of Spencer’s revisit its store positioning and strategy. The results of the consumer survey were
on expected lines.
a) Store experience and product quality were highly appreciated.

b) Lack of lower price points and discount pricing was the major bottleneck.
c) Lack of deals and lack of merchandise at lower price points drew negative opinion among customers.
Make fine living affordable
Based on the above feedback, Spencer’s developed a modified positioning for its stores in 2011. The new
positioning was “Make Fine Living Affordable” (MFLA). MFLA retained the basic philosophy of TTW;
but it was more inclusive towards a larger consumer base. MFLA positioning involved the following:
a) Value-oriented positioning was adopted.

b) Overall price level was reduced.
c) They identified the key items for which consumers were aware and price conscious (viz. rice, lentils,
cooking oil, etc.), denoted the items as “Known Value Items (KVI)” and matched the price of those
items to local open markets.
d) They created “Entry Price Points (EPP)” for most of the merchandise categories. These were the
lowest price points available in the given product category and it was aimed at attracting a larger
consumer base from the competitors.
e) Spencer’s introduced private labels in various categories (viz. staples, breakfast cereals, snacks, many
FMCG categories such as home cleaning, home furnishing and apparel, etc.)
f) Distinct and logical space allocation inside the stores for various ranges of merchandise, more
aggressive visual merchandise (viz. signage and point of sales (POS)) indicating availability of
various categories at multiple price points (viz. your favorite rice at a trusted price, prices you can
trust, etc.).
Since 2011, Spencer’s has been selectively following the MFLA strategy in its stores. It has created little
islands inside the hypermarkets for specific categories. Each island has its own look and feel and own
differentiation. It is the selection and arrangement of these islands that made each of the Spencer’s stores
unique. Its focus is to provide a complete lifestyle experience to the customers with apparels, electronics
and accessories, in addition to food and routine grocery categories. It also helps in-store performance and
profitability to carry high-margin items. Spencer’s had 38 hyper stores and 68 neighborhood stores and 15
Page 7 of 18
supermarkets across 11 states in the country. A brief of their stores across the country is provided in
Exhibit 1.
SPENCER’S STORES
Although, its hyper stores were more than 45,000 square feet in size, increasingly, Spencer’s was
focusing on compact hyper stores that were smaller in size than regular hyper stores (about 24,000 sq. ft).
A typical spencer store layout is presented in Exhibit 11. Compact hypermarkets provided Spencer’s with
better reach in most of the cities that they operated. Real estate cost in India being rather high, compact
hypermarkets offered a viable alternative in organized food and grocery business. These stores were most
often situated in the middle of the city or other easily accessible areas. In addition, no two compact hyper
stores were exactly similar to each other. While around 60% similarity could be observed among
Spencer’s various hypermarkets, the rest were customized as per local tastes and requirements of
consumers. In spite of all the customization, on final verdict, each and every Spencer’s store was designed
to provide the customers with the same look and feel and same experience. Shashwat felt with smaller
stores and aggressive expansion plans, it was possible to open about 60 compact hypermarkets in the next
3-4 years that would provide better economies of scale and in turn improve its bottom line.
MERCHANDISE MIX
Spencer’s merchandise mix across various store formats is listed in Exhibit 10. All categories of
merchandise were present in Spencer’s hyper stores while the smaller format Spencer’s sold only food
and personal-care categories. Spencer’s stocked private labels in most of the categories it operated in. All
of its private labels were conveniently priced and promise great quality. Private labels in India accounted
for 20–25% of profit for most retailers. According to an AC Nielsen report, private labels had a great
future. In select stores, Spencer’s offered Patisserie, Gourmet, Wines and Spirits, Tobacconist,
Epicuisine, and Nutty Delights as specialized sections of assortment and delight.
As the consumers were price conscious and the competitors essentially used price for differentiation,
Spencer’s carefully priced its merchandise. It followed different pricing policies for different categories of
merchandise. It matched the best price for the KVI product categories with all local competition that
included local kirana stores, open markets, and organized players. For other merchandise categories, it
used high-low pricing. It had developed competitive market intelligence systems and used the same for
dynamic benchmarking of pricing across categories.
OPERATIONS AND HR
Spencer’s had its own logistics and supply chain facilities. It used cold chains for the perishables.
Perishables procurement policy was based on scale. It directly procured from the farmers for certain high-
volume products. For the rest, it procured from the local wet markets and wholesale markets.
Page 8 of 18
On the HR front, high attrition of the employees was a major challenge and this could vary from 20% to
90% across the stores per annum. Providing a career path and higher salary to the front-level employees
continued to challenge the top management, especially in a highly competitive market where business
was operating on a thin margin, and paying higher salaries was not an option.
SPENCER’S CONSUMERS
According to Spencer’s, customer loyalty in India (and many other emerging economies) is significantly
different than most of the developed economies (viz. USA, UK, etc.). For most Indian consumers, loyalty
is category loyalty rather than brand or store loyalty.
Based on Spencer’s experiences, the shopping pattern for Indian consumers was also significantly
different from their western counterparts. They were neither habituated nor comfortable with shopping in
very large stores (say 100,000 sq. ft or more) and invariably they needed some help during their shopping
period (either for locating items or discovering their price/quality, etc.).
According to Spencer’s sources, the shopping habit of typical Indian consumers did not involve bulk
shopping for a long period of time (say a month). Consumers had different time durations for buying
different categories of items and consequently they choose different types of stores to buy different
categories of merchandise.
The other significant characteristic of the Indian consumer was the frequent changes during his/her
purchase decision-making process. Shopper data revealed that about 75% of the urban affluent consumers
actually purchase items that are quite different from what they had planned during the pre-purchase stage.
OPTIONS FOR SPENCER’S
As per the available information, Spencer’s had two options. They could adopt an aggressive growth
strategy and thereby expect economy of scale and scope in retail operations. With aggressive growth, they
could reach larger customer base which in turn could improve their merchandise turnover period, sales,
and profit. This makes immediate sense when we consider the business models of the competitors.
Majority of Spencer’s competitors had more number of stores and multiple formats targeted towards
specific segments. The traditional approach of Spencer’s has always been debatable in terms of success
rate. The general economic condition of India, lack of penetration of organized food retail into tier two
and three cities, and the increasing propensity of the consumers towards acceptance of modern retail
provide huge opportunity for Spencer’s growth. This could be the sustainability mantra for organized
retail in the future.
Alternatively, they could cut down cost, improve operational efficiency, and make existing stores
profitable. This is quite natural choice for any organization considering the fact that Spencer’s is
financially not profitable as yet and their cash flow continues to be negative. Other financial indicators
too (current ratio, cash balance, profit margin, etc.) highlight their financial instability. Most of their
Page 9 of 18
competitors have stronger financials even though they are not profitable yet (other than D’Mart). They
could benchmark their operation with profitable Kirana (neighborhood mom and pop) stores. Once the
profitable business model is identified, one can innovate, grow aggressively, and in turn reach more and
more customers. So, the success mantra is “First satisfy the existing set of customers profitably and then
think of larger customer base.”
Shashwat was really in a tricky situation. On one hand, Indian consumer’s characteristics and the
competitor’s business model had been driving him towards an aggressive expansion strategy. On the other
hand, the policy of steady and sustainable growth of the parent company, the current financial condition
of the existing stores, the characteristics of the food and grocery sector in India, and his compelling desire
to create an unique positioning for Spencer’s, has been driving him towards a more rational and
conservative path of profitability. Profitability has to be the end objective of any business, is it not? Could
there be any other option that he is missing out? Finally, he decided to work out the details of strategies
and execution constraints for the various options available to him and come up with his recommendations
to the group chairman.
REFERENCES
1. “India Retail Report 2015”

2. “India Retail Report 2013”
3. Marketing Whitebook 2015-16”
4. Marketing Whitebook 2014-15”
5. “Retailing in India” January 2016, Euromonitor International
6. “Food Retail in India” August 2015, Marketline Industry profile
7. Interview with Sector Head, Spencer’s Retail Limited
Page 10 of 18
Exhibit 1
Spencer’s stores across the country
Zone No. of Hypermarkets Supermarkets/

states Neighborhood
stores
North 3 15 18
South 5 22 39
East 2 15 11
West 1 1 0
Total 11 53 68
Source: Spencer’s
Exhibit 2A
Financial Highlights of Spencer’s (INR billion)
Name Y-2013 Y-2014 Y-2015

Total Revenues 13.379 14.512 16.818
Costs of Goods & Services (Total -10.810 -12.027 -13.541
Expenses)
Operating Income 2.568 2.485 3.277
Earnings Before Interest, Tax & -7.936 -1.045 -0.807
Depreciation
Operating Income After Depr. & -1.113 -1.364 -1.238
Amort.
Earnings Before Tax -1.981 -1.658 -1.761
Net Profit -2.091 -1.658 -1.735
Operating Profit Margin -11.56 -8.44 -7.62
Return on Assets (ROA) -25.54 -21.05 -21.4
Return on Equity (ROE) -132.92 -163.57 -474.48
Quick ratio 0.1 0.05 0.05
Cash Ratio 0.04 0.01 0.01
Days in Inventory 29.04 35.36 37.44
Source: EMIS Report (accessed 04/08/2016)
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Exhibit 2B
Store operating statement for a typical hyper store and a typical neighborhood store (in
millions INR)
(indicative only) Neighborhood Store Hyperstore

% %
Net Sales 5 100% 50 100%
Retail cost of sales 4.05 81% 40 80%
Shrinkage, damage and other bad costs 0.05 1% 0.2 0.5%
Freight & Packaging Cost 0.015 0.3% 0.15 0.3%
Cost of sales 4.115 82.3% 40.4 80.8%
Margin 0.91 18.3% 10.6 21.2%
Operating Expenses
Payroll 0.15 3% 0.15 3%
Overhead Expenses 0.3 6% 1.5 3%
Rent and other charges 0.4 8% 4.0 8%
Total store operating expenses 0.85 17% 7.0 14%
Store Operating profit 0.065 1.3% 3.6 7.2%
Source: Spencer’s
Exhibit 3
Indian retail and share of modern retail
Retail verticals Total in Billion INR, Modern Retail Share of Modern

(%) percentage of total (Billion INR) Retail (%)
retail pie
Clothing and apparel 3245 (8.3%) 1397.72 43.1
Footwear 335.92(0.8%) 140.18 41.7
Jewelry 2013.44 (5.1%) 205.38 10.2
Food and grocery 23034.96 (59.1%) 3799.7 1.6
Time wear 115.92 (0.3%) 71.41 61.6
Consumer 1377.50 (3.5%) 311.22 22.6
Electronics
Mobile and Telecom 2039.81 (5.2%) 393.68 19.3
Others 6721.43 (17.3%) 911.21 13.5%
Total 38934.28 3810.78 9.8
Source: India Retail Report 2015
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Exhibit 4
Distribution of categories in food and grocery sector
F&G Market Share

Perishables
11%
Eggs, Meat,
Poultry,
Dairy Seafood
19%
Milk, Milk products Flour, Grain, Grocery Dry
48%
Pulses, Spices
Fruits,
Vegetables
Fresh Produce
22%
Grocery Dry Fresh Produce Dairy Perishables
Source: India Retail Report 2015
Exhibit 5A
Spencer’s stores across the country8
Serial State Type of city Neighborhood Hyper and Super

No. stores stores
1 Andhra Pradesh I/II 8 9
2 Telangana Metro 11 8
3 Karnataka Metro 1 2
4 Kerala I/II 4 1
5 Tamil Nadu Metro 15 2
6 Gujarat Metro 0 1
7.a West Bengal Mega 9 11
7.b West Bengal I/II 2 3
8 Jharkhand I/II 0 1
9 Haryana I/II 3 4
10 Uttar Pradesh I/II 15 10
11 Uttaranchal I/II 0 1
Total 68 53
Source: Spencer’s
8
Mega – population >10 million, Metro – population > 1 million, Tier 1 – population > 100,000, Tier 2 – population <100,000
Page 13 of 18
Exhibit 6
Spencer’s competitors and their financials (INR millions)
Future Avenue Hypercity Trent

Spencer’s Retail Reliance
Enterprises Supermarts Retail (India) Hypermarket
Limited Fresh Ltd.
Ltd. Ltd. Limited Limited
Statement type Consolidated Individual Consolidated Individual Consolidated Consolidated
Latest period Y2015 Y2015 Y2016 Y2015 Y2015 Y2015
Total operating
16,818.59 1,66,503.60 94,248.40 66,203.30 10,561.43 7,979.80
revenue
Net sales revenue 16,818.59 1,61,116.10 93,188.50 64,335.20 10,561.43 7,673.70
EBITDA -807.31 1,40,953.90 15,996.50 62,207.90 760.35 -577.90
Operating profit
-1,238.24 1,37,922.90 4,484.70 61,401.90 518.98 -813.90
(EBIT)
Net Profit (Loss) -1,735.52 2,724.80 379.90 2,113.90 134.77 -843.10
Total assets 8,127.01 85,655.70 74,184.40 23,478.00 5,119.85 10,708.70
Non-current assets 6,025.60 29,474.50 54,282.70 16,179.10 2,697.63 8,936.70
Current assets 2,101.41 56,181.20 #N/A 7,298.80 2,422.22 1,772.00
Cash and cash
41.76 1,505.20 1,487.00 358.60 119.83 88.10
equivalents
Total equity 66.89 51,883.60 34,203.40 11,936.70 533.12 8,119.10
Issued capital 2,427.99 49,895.40 #N/A 5,615.40 5,818.37 1,468.40
Total liabilities 8,060.12 33,772.10 47,925.30 11,541.20 4,586.72 2,589.60
Non-current
2,380.27 16,735.30 47,925.30 7,713.10 2,583.30 1,099.90
liabilities
Non-current loans
2,330.00 16,735.30 46,460.30 7,407.10 2,583.30 750.00
and borrowings
Current liabilities 5,679.85 17,036.80 23,686.60 3,828.10 2,003.43 1,489.70
Current loans and
2,780.00 #N/A #N/A #N/A 833.13 250.00
borrowings
Return on Assets
-21.35 3.18 0.12 9 2.63 -7.87
(ROA)
Return on Equity
-2,594.54 5.25 0.35 17.71 25.28 -10.38
(ROE)
EBITDA Margin -4.8 1.95 6.18 4.46 7.2 -7.53
Operating Profit
-7.36 0 12.13 0 4.91 -10.61
(EBIT) Margin
Return on Sales
-10.32 1.69 6.01 3.29 1.28 -10.99
(ROS)
Source: EMIS, November 2016 (accessed 07/11/2016)
Page 14 of 18
Exhibit 7
Future Group formats
Food and Store type Apparel Store type Others Store type
Grocery and
Lifestyle
Big Bazaar Hypermarket Central Seamless Home Town Department
Mall Store (home)
Food Bazaar Supermarket Brand Discount Futurebazaar.com Online
Factory store
Food Hall Premium Food fbb Specialty EZone Department
Superstore Store
(electronics)
Easyday Neighborhood Planet Specialty FabFurnish.com
convenience Sports
store (after
merger with
Bharti Retail)
KB’s Neighborhood I am in Specialty
Conveniently convenience
Yours store
Nilgiri’s Supermarket aLL Specialty
(acquired; also
used for
sourcing)
Source: Future group website
Page 15 of 18
Exhibit 8
Future group stores across the country
Serial No. State Type of city Big Bazaar FBB Food Bazaar
1 Assam II/III 3 1
2 Bihar II/III 4 1
3 Chhattisgarh II/III 5 1
4 Jharkhand II/III 3
5 Maharashtra I/II 17 3
5 Maharashtra Mega 15 5 6
6 Odisha I/II 6
7 Sikkim II/III 1
8 Tripura II/III 1
9 West Bengal I/II 10 1
9 West Bengal Mega 16 2
10 New Delhi and NCR Mega 13 5 2
11 U.P. I/II 18 4 1
12 Uttaranchal II/III 2 1
13 Punjab II/III 3
14 M.P. I/II 1
15 A.P. I/II 2 4
16 Karnataka Metro 10 3 1
16 Karnataka I/II 13 2
17 Kerala I/II 10 3
18 Tamil Nadu Metro 5 1
18 Tamil Nadu I/II 4
19 Telangana Metro 9 5
20 Gujarat Metro/II 12
21 Rajasthan II/III 11
Total 194 42 10
Source: Future group website
Page 16 of 18
Exhibit 9
Reliance Retail formats
Store Type Merchandise

Reliance Convenience Store Fresh produce, general and convenience merchandise
Fresh
Reliance Supermarket Fresh produce, general and convenience merchandise,
Super clothing, beauty, leisure, electronics and home
products
Reliance Hypermarket Adds Furniture and Jewelry to Reliance Super
Mart Offerings
Reliance Specialty store – electronics
Digital
Reliance Specialty store – Jewelry
Jewel
Reliance Specialty store – apparel and
Trends accessories
Reliance Specialty store – Footwear
Footprint
Reliance Specialty store – Automotive
Autozone services and products
Source: Reliance Retail website
Exhibit 10
Merchandise mix of Spencer’s
Categories Merchandise Mix

Food Fruits & Vegetables, Staples, Processed food, Beverages, Dairy, Fish & Meat, Spices & condiments
Personal Care Beauty, Skin care, Oral care, Hair care, Baby care, Men’s grooming, Personal hygiene
Home Home Décor, Home furnishing, Bathroom essentials, Kitchen essentials, Dining essentials, Travel
needs, Toys and stationery
Electronics & Home appliances, Kitchen appliances, Electrical fittings & accessories, Digital equipment &
Electricals accessories
Fashion and Men’s casual, Men’s office wear, Women’s casual, Women’s ethnic, Innerwear, Accessories,
Accessories Footwear
Specialties Organic food, Diet food, Pet food, Baby food, Nuts and Dry fruits
Source: Spencer’s
Page 17 of 18
Exhibit 11
Store Layout Hyper – Spencer’s
Source: Spencer’s
Page 18 of 18

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IMB 665

RETAIL STRATEGY AT SPENCER’S

ASHIS MISHRA AND PULAK GHOSH

INDIAN RETAIL SCENARIO

FOOD AND GROCERY SECTOR IN INDIA

Taste the world

a) Artfully and aesthetically redesigned stores

a) Store experience and product quality were highly appreciated.

Make fine living affordable

a) Value-oriented positioning was adopted.

OPTIONS FOR SPENCER’S

1. “India Retail Report 2015”

Zone No. of Hypermarkets Supermarkets/

Name Y-2013 Y-2014 Y-2015

Source: EMIS Report (accessed 04/08/2016)

(indicative only) Neighborhood Store Hyperstore

Retail verticals Total in Billion INR, Modern Retail Share of Modern

Source: India Retail Report 2015

F&G Market Share

Grocery Dry Fresh Produce Dairy Perishables

Source: India Retail Report 2015

Serial State Type of city Neighborhood Hyper and Super

Future Avenue Hypercity Trent

Source: EMIS, November 2016 (accessed 07/11/2016)

Source: Future group website

10 New Delhi and NCR Mega 13 5 2

Source: Future group website

Store Type Merchandise

Source: Reliance Retail website

Categories Merchandise Mix

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