Wednesday, April 04, 2007

India Retail Story - Subhiksha

We have covered the retail story quite closely, from the street. As the Retail market enters a steady state phase (its still a long way away), different formats are emerging. There are the Food Bazaar, Big Bazaars , Dmart and the Hypercity (Shoppers Stop group). Where does Subhiksha fit in? Subhiksha is a contrarian model - or an Indian model - call it what you like. It sort of merges the traditional small front end with the economies of scale of the modern back end.

Subhiksha, the shop is a rudimentary shop with racks having most (no the smaller stores do not have a huge variety to choose from) of what a basic shopper would need. The stores are not air conditioned, the receipts are printed on dot matrix printers (not in deskjet ones!!). They are very similar to what Margin Free in Kerala is or what Apna Bazaar or Sahakari Bhandar are in Mumbai.

Will the Subhiksha model succeed when an Apna Bazaar didn't - but Margin Free is a success for sure (more on that later). There is not a huge pricing differentitation between say a Lux soap offered in Big Bazaar v/s that of Subhiksha. Why should people shop in Subhiksha?
Can Subhiksha compete on merely pricing? May be it saves on store setup costs, power costs, but employee and supply chain costs will not vary by much because of its scale. My take here is that Subhiksha does not, unlike Big Bazaar, try and change the consumer behaviour - which is a big big plus point. Big Bazaar except for those who live near one, is a different behaviour. Drive down, stack grocery and shop once a month. Subhiksha says, just do your regular shopping, we are your regular shop, plus 10% every single time, every single item. Their vegetable and medicine counter are also pretty good. Where Subhiksha takes a hit, more than the look of stores is stocks - here they have to improve.

Will people shop in a rudimentary outlet and save a rupee or two on products or shop in a Big Bazaar that offers more product categories, better ambience - almost like a one stop shop? Perhaps yes, perhaps no, but as of now, unless there is a Big bazaar near every Subhiksha one cant say, and then again we are comparing chalk and cheese. Who will win? Will it be just one winner? My take on it is that it will be Big Bazaar in the long run.


Anonymous said...

in a world full of copy cats,where glamour often takes precedence over rationale and form over content, Subhiksha comes across as a refreshing change.
Not one to follow western ideology blindly Subhiksha has created their own format, their own model and am sure is the one chain to watch out for. Big bazaar is more predictable, hence boring. Both have their issues but for once i hope that the underdog lives up to its potential.

Shraddha said...

Subhiksha had advertised in a very big manner but finally failed to keep up the promises made. This is my personal experience. They dont have quite lot of products that even a kirana store keeps.
I am dejected .