Future Group: The Walmart of India
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Case Code: BSTR398 Case Length: 15 Pages Period: - Pub Date: 2011 Teaching Note: Not Available |
Price: Rs.500 Organization: Walmart Industry: - Countries: India Themes: Business Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
For the financial year (FY) ended 2010, Arkansas-based Walmart Stores, Inc. (Walmart) stood as the largest retailer in the world with revenues of US$ 421.849 billion. The company had 8,970 stores and was also the largest private employer in the world, employing over 2.1 million people worldwide. Unlike the organized retail industry in the US, the Indian retail sector was highly fragmented with unorganized retailers capturing 97 percent of the market. Organized retailing was still at a nascent stage with only 4.6 percent share of the market in FY 2010. Of the organized retailers, Pantaloon Retail India Limited (PRIL), the retail venture of Future Group, was the largest in India with Rs. 97.86 billion in net sales for the FY ended June 30, 2010.
Walmart, set up in 1962 by Sam Walton, operated through several retail formats such as Supercenters, discount stores, neighborhood markets, SAM's Club, etc. As of October 2011, the retailer operated through three store formats namely Walmart US Stores, Walmart International, and SAM's Club. Over the years, Walmart had had to tackle issues related to store formats, technology deployment, human capital, and internationalization. In addition, the retail giant faced competition from department stores such as Target, Kmart, etc. The retailer's SAM's Club faced competition from Costco and BJ's Wholesale Club. Of late, the major challenge posed to Walmart was from Dollar Stores. To combat competition from Dollar Stores, Walmart had announced its plan to launch Walmart Express, a mini version of its discount stores.
PRIL had its headquarters in Mumbai, India and employed over 30,000 people in 20105. In 2010, the retailer had created a wholly-owned subsidiary, Future Retail Value Ltd. (Future Retail Value), which separated its Big Bazaar hypermarket stores and Food Bazaar supermarket businesses from its other lines of business. In addition to its hypermarket store formats, Future Group operated through several retail formats with the stated aim of offering products to consumers under one roof. Drawing inspiration from Walmart, PRIL offered products at competitive prices to customers through several discount and festival offers. In addition, it came out with a number of innovative formats and features in its stores taking into account the specific preferences of Indian customers.
PRIL faced several problems relating to expansion and scaling up. The retailer also faced competition from organized retailers such as Reliance Retail-Marks & Spencer, RPG Group-Spencer, Bharti-Walmart, and Tata Tesco-Star Bazaar. Despite these troubles, PRIL managed to successfully launch new formats and it tried to cover the entire retail ambit. Going forward, PRIL through its Future Retail Value, aimed to deliver more value to its customers, suppliers, and stakeholders and to shape the growth of organized retail in India....
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