STRATEGIC MANAGEMENT ASSIGNMENT

BIRLA INSTITUTE OF MANAGEMENT TECHNOLOGY

SUBMITTED TO: SUBMITTED BY:

Prof. R.J. Masilamani Group 6
Aniket Raj (19RM907)
Jayant Bansal (19RM920)
Pavitra Gupta (19RM928)
Rajat Aggarwal (19RM934)
Shivani Gour (19RM950)
Tushar Sharma (19RM958)
Big Bazaar is a household name that is used synonymously with ‘retail’ in India. We
represent the requirements of a typical Indian home. Founded in 2001 by Kishore Biyani, we
as a retail chain operate under the parent organisation – Future Group – that holds a
significant prominence in the Indian retail and fashion sectors. Big Bazaar is one of the oldest
hypermarket chains that houses around 250+ stores in the country. We cover three essential
categories in Indian retail: home, food, and fashion.
Popular retail chains – like the Food Bazaar and FBB form an integral part of Big Bazaar’s
identity. The latter (i.e. FBB) has exponentially grown into a major brand that epitomizes
fashion in India.
In spite of covering a wide gamut of consumer essentials at reasonable prices, we are best
known for our understanding of our customers’ evolving needs and comforts. In a fast-paced
world, we are perceived as a thought leader who relies on traditional Indian values of seva or
‘care for the customer’ while remaining firmly futuristic in taking business decisions that fuel
better quality and efficiency.
Big Bazaar is not just another hypermarket; it caters to every need of your family. Where Big
Bazaar scores over other stores is its value for money proposition for Indian customers. We
guarantee the best products at the best prices. With the ever-increasing array of in-house
brands, we have opened doors in the world of fashion and general merchandise, including
home furnishings, utensils, crockery, cutlery, sports goods and much more at prices that will
surprise you. And this is just the beginning.
Big Bazaar is a popular pocket friendly place to find household items, apparel, footwear and
food, all under one roof. Big Bazaar is a retail store chain which was started by Mr. Kishore
Biyani under the parent organization Future Group. Big Bazaar is a parent chain of the Food
Bazaar, Fashion at Big Bazaar (FBB) and E-Zone. These all are mainly under the same roof
of Big Bazaar. Big bazaar also has sister retail chains named as Brand Factory, Hometown,
Central, etc.
Reliance Industries announced the acquisition of the retail, wholesale, logistics and
warehousing businesses of Kishore Biyani’s Future Group for Rs 24,713 crore. The
acquisition was done through the company’s subsidiary Reliance Retail Ventures. Reliance
Retail will now have access to close to 1,800 outlets of Future Group’s Big Bazaar, Easyday,
Central, and Foodhall stores, which are spread across 420 cities in India.
“Reliance Retail Ventures Ltd (RRVL), subsidiary of Reliance Industries Ltd will acquire the
retail and wholesale business and the logistics and warehousing business from the Future
Group as going concerns on a slump sale basis for lumpsum aggregate consideration of INR
24,713 crore,” the company said in a statement.
The deal will help Reliance Retail accelerate and provide “support to millions of small
merchants in increasing their competitiveness and enhance their income during these
challenging times,” the company added. The acquisition is being done as part of the scheme
in which Future Group is merging certain companies carrying on the aforesaid businesses
into Future Enterprises Limited. The transaction had reportedly been in the works for months,
according to NDTV.
As part of the deal, the retail and wholesale undertaking businesses are being transferred to
Reliance Retail and Fashion Lifestyle Limited, a wholly-owned subsidiary of Reliance Retail
Ventures. Besides this, the logistics and warehousing undertaking is being transferred to
RRVL. The Reliance Retail and Fashion Lifestyle Limited also proposes to invest about Rs
1,200 crore in the preferential issue of equity shares of Future Enterprises to acquire 6.09% of
post-merger equity.
“With this transaction, we are pleased to provide a home to the renowned formats and brands
of Future Group as well as preserve its business ecosystem, which have played an important
role in the evolution of modern retail in India,” said Isha Ambani, director, Reliance Retail
Ventures. “We hope to continue the growth momentum of the retail industry with our unique
model of active collaboration with small merchants and kiranas as well as large consumer
brands.”
Future Group Chief Executive Officer Kishore Bayani said the deal takes into account the
interest of all its stakeholders including lenders, shareholders, creditors, suppliers and
employees “giving continuity to all its businesses”, Mint reported. “As a result of this
reorganisation and transaction, Future Group will achieve a holistic solution to the challenges
that have been caused by COVID-19 and the macro economic environment,” he added.

Inventory Issues:
There are many inventories maintained in the outlet and inventories are of different product
category. For FMCG and food product category, cycle inventory is maintained. Seasonal
inventory is maintained for apparel because there is fluctuation in demand. One of the
strategical issues faced by Big Bazaar is poor inventory management and inventory
management system. Inventory management system is all about tracking inventory levels,
sales, orders and deliveries to keep a sufficient supply of goods while minimizing the cost of
it. Biggest mistake that a retailer makes is the forecasting of stock accuracy. Stock accuracy
is the fundamental requirement of a good inventory system. Retailers often make mistake in
finding space allocation per SKU which lead to wrong forecasting of inventory. Retailers
stock up extra product due to bad space planning per SKU. It is very important for an
organized retailer to have a proper space allocation and proper space utilization so as to make
profits. A retailer should be able to forecast the accurate stock because wrong forecasting will
lead to stockout. Due to stockout, there will be loss of sales, loss of customer and
dissatisfaction among customers due to word of mouth. Therefore, the company might lose
its current market share as consumers once shifted can never be regained.
One of the major challenges faced by Big Bazaar is retail shrinkage. Retail shrinkage in Big
Bazaar is caused due to various external and internal factors.
External factors:

 Packaging of the products at manufacturer’s location

 During the transportation of the products
 Pilferage: Stealing of products during transportation
 Stealing of products and breakage of products at warehouse

Internal Factors:

 Damaged products received at store

 Expired products received at store
 Stealing of products at warehouse
 Missed SKUs while billing
 Missed quantity
 Scanning of a single item for a combo offer
 Gift wrapping of items not in bill

There are some of the problem areas of having poor inventory control and the root cause
behind them are:

 Error in receiving of products and the cause is incomplete vendor invoice billing
 Error in stock accuracy and stock control and the cause is lack of physical inventory
verification and lack of training of employees
 Shrinkage due to employees
 Damage of product in the backroom and the cause is improper storage of products
 Expiry of products in the backroom and the cause is improper storage and nor
following FIFO method
 Pilferage during transportation and the cause is lack of control at the receiving bay

Other than shrinkage issue, another issue with Big Bazaar is the inventory management
system. Big bazaar’s inventory management system is centrally connected to its central office
and has often led Big Bazaar into big troubles. For example, the discount week on the eve of
Republic, where many of its stores had to shut after overwhelming demand and insufficient
inventory. This failure in inventory management caused Big Bazaar huge revenue loss as well
as bad reputation among customers. Big Bazaar IT infrastructure lags as compare to its global
competitors in terms of effectiveness of its Data Mining system. The data mining system
enables the retailer to critically analyse and select its consumer segments and its specific
needs and thus coming up with schemes to target them. There are many disadvantages of
centrally managed system. The staff at Big Bazaar outlet has negligible knowledge of its IT
infrastructure details. They generally lack the skills to treat the IT problems at their own. As
all the control lies with Mumbai central office, in case any problem arises in system, either
the store manager has to take help from its outsourcing partner or central office IT team. The
time delay in the procedure often cost it a substantial amount of business.
Recommendations:
 Develop an appropriate process training programs to employees in terms of stock
control and physical inventory verification will bring down errors in stock control
process
 Formulate and document SOP’s for appropriate storage and handling the materials
along with display of visual controls will keep product damage in check
 Conduct constant monitoring of the excess stock in backroom and following FIFO
method to ensure right picking of products that move to the floor help in reducing loss
due to expiry of products in backroom storage.
 Formulate guidelines to receive bulk quantities and visual controls will address the
issue of pilferage at the receiving gate itself.
 Optimize the transportation management and then synchronizing it with the
warehousing plans so as to meet fluctuating customer’s demands is required to
competing successfully when margins are tight.
 Improving Warehouse Management System by strategic use of IT
 Calculating space allocation per SKU properly so that there is no wrong forecasting of
inventory.
 It is very important for Big Bazaar to have a proper space allocation and proper space
utilization so as to make profits.

Staff Issues:
 Shortage of Trained Manpower:
This is a surprising challenge for Organized retailers - especially big retailers in India
is shortage of talent. Yes, for all the population that exists in India and for all the
stores of Big Bazaar in India has a serious shortage of experienced people resource for
retailing. Number of people experienced in managing complex supply chain, people
who have basic merchandising skills, people with store planning skills are very few.
As a result, most of the existing Big Bazaar stores have poorly organized
merchandise, inadequate inventory, and excessive inventory - leading to lost sales and
increased capital requirements. Indian retail giants will have to spend substantial
resources in terms of time & money to train local workforce and bring them on par
with standards.
If finding store managers is a challenge, the bigger challenge is to find the adequate
workforce for store clerks, cashiers, sweepers, helpers etc. The problem here is not
that of availability - but that of availability of the right kind of people - and the
cultural divide that exists between the potential employees and employers.
 Hiring the right talent:
Most people who work in frontend of Big Bazaar are school dropouts from mainly
rural background, they do not speak English nor do they understand the sophisticated
IT systems. Added to this there is a social stigma for working at a store by standing
for 9 to 10 hours straight. Indian society does not give respect for such professions.
 All this implies that Big Bazaar must develop a unique strategy to hire and train their
shop floor staff. As a result, most workers treat working at a retail store as a
temporary job - till they find a better one in an "office". This implies that employee
turnover is very high - as much as 40% per year in case of Big Bazaar. At such rates
of turnover, people management becomes a big challenge. The concerned authorities
of Big Bazaar will have to develop unique organization development strategies,
employee retaining strategies and also have a plan to improve the image of working in
shop - i.e., remove the stigma of working in a shop.
Recommendations:
1. Train existing employees
In order to make up for a shortage in skilled workers, Big Bazaar should begin
with offering training to their existing employees, in order to tailor them to fill
current gaps. This can mean training offered in-house, where a knowledgeable
employee shares with others their valuable expertise. It's a great way for Big
Bazaar with a few good resources to increase their value without expending too
much time and money.
Another option is outside training. Big Bazaar can offer their employees
incentives to return to school to get the education they need. While this option can
be more expensive and time-consuming, it can also pay off in the long run. Not
only does it ensure their employees are trained to their standard quality, but as an
incentive alone can attract a great deal of talented workers to their doorstep.
2. Adaptability - apply workforce skills in a different way
Interestingly, there might be a more direct solution than one can think of. Big
Bazaar has also discovered that they already have the people they need, but are
merely using them in an ineffective way. It's important to keep an open mind
when looking at available skill sets, paying close attention to skills that could be
transferable.
3. Use contingent workers
Naturally, one of the easiest ways to fill a skills shortage is by hiring contingent
workers. With freelancers, consultants, contractors and more, Big Bazaar can fill
massive gaps in their operation quickly and in a cost-effective manner. Contingent
workers are becoming an incredibly popular option. Their expertise, availability
and flexibility allows them to work within the confines of any timeframe, budget
and project
4. Re-evaluate recruiting practices
When skills shortages become a serious concern, it might be time to re-evaluate
how one recruit new employees. New staff members don't have to be perfect from
the get-go. Without hurting the company norms, Big Bazaar could easily hire
applicants with 80 percent of the right requirements and help them grow into the
role. Big Bazaar could also try hiring applicants with all the right skills, but ones
perhaps with less experience.
If Big Bazaar diversifies its hiring practice, and consider transferable skills as
mentioned before, they could find excellent, motivated individuals who could
easily help the company to reach its goals