Food bazaar

Food bazaar stocked on an average 10,000 stock keeping units (SKUs) and occupied on an average 5,000 square feet of retail space. It was modeled on the Indian mandi, where customers could touch feel and chose products supplemented by packaged foods for western shoppers. The products sold were categorized as:

1) Processed Food & Non Food (Hungry Kya).
2) Dry Staples (Golden Harvest)
3) Wet Staples (Chill station).

The processed Food and Non Food category contributes 60% of Food bazaar sales. This category includes a mix of products for a large number of FMCG companies and a wide range of imported products, health foods, and specialty foods. Dry Staples includes dry groceries like rice, wheat, dal, spices etc, this a category contributes 30% of the sales. Wet Staples includes fruits and vegetables. This contributes 10% of the sales.

Local flavors and varieties are made available through the shop model, by arrangements with leading vendors in each city. The company has launched Food Bazaar Masalas, Food Bazaar Tea and premium Harvest Pulses.

While Big Bazaar today, includes Food bazaar the management has also rolled out Food bazaar independently in locations and is considering rolling out Food Bazaar as a part of Pantaloons and as a part of neutral – the integrated seamless mall being developed by Pantaloon.

While apparel still continuers to be the largest selling category at Big Bazaar contributing to over 40% of the sales in a short span, the share of food sales has increased rapidly to 25.74%.

Managing the supply chain

The management opted for the consolidator model for the new merchandise categories that it sought to introduce. This was largely done for those products that were manufactured or produced across the country like steel utensils and food grains but were sold in the unorganized sector. Consolidators were traders/ proprietors in specific products. For most of the players in the unorganized market it is difficult to deal with an organized retailer. The consolidator was already a player in that sector and provided them with the ease and comfort of a face to face relationship. At the same time because of his knowledge and access to the market, he was able to put together he product line with ease and at the best possible prices. This reduced the lead time and also enabled the company to go ahead with its expansion.

This model provided the consolidators an opportunity to expand their business without becoming employees of the company. Due to the large scale of volume, the consolidator could operate at low margins ranging from 1% to 3%.

Distribution is decentralized. There is a warehouse attached to each store so that the ownership of the merchandise is held by a particular center. Initially the stock turnover was three months, which is now down to two months in the new stores where you do not really have a precedent or background.

Organization structure

The organization structure for Big Bazaar is flat in nature. For big bazaar the divisions are Apparel, Non Apparel and the New Business Division, which includes Gold, Footwear and the shop in shops. For food bazaar a separate team has bee created which again works independently.

About 1,800 people work for Big Bazaar directly. Support and Ancillary services comprise of another 400 people. A new trainee is put through a basic three day training program before going on the shop floor. Evaluation is done every six months.

Encouraging Loyalty

In the year 2003, the management launched the Big Bazaar ICICI bank co-branded credit card aimed at promoting customer loyalty. On the purchase if Rs 1,500 or more, the customer has the option of making a payment by three EMIS, without any charges. For every Rs 100 spent on shopping four reward points are awarded. The company is looking at the possibility of providing free home delivery to the cardholders.

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