President– Marketing | 23 Feb 2006
We are constantly on the lookout for finding new ways and means to improve the current state of affairs. Thus, innovation is a very important aspect of our working strategy. The other very important philosophy is that of Indianness. All our concepts and formats as well as the way we go about things are very Indian. The way Big Bazaar is designed and the way the whole concept has developed reflects a sense of Indianness.
Sanjeev Agrawal, Marketing Head, Pantaloon Retail (India) Ltd, is responsible for the retailer’s marketing and brand building exercise at the corporate and store retailing level. He is also closely involved in all new business development activities and speciality stores like Food Bazaar, Gold Bazaar, etc.
An engineer from IIT (BHU) and a management graduate from IIM, Lucknow, Agrawal began his corporate journey with HLL as management trainee straight out of the campus. Over the years, he has worked with some of the most reputed companies in India – Godrej Soaps, P&G, Modi Revlon, and Balsara Home Products.
In conversation with Saurabh Niranjan Turakhia, Agrawal discusses the evolution and success of Big Bazaar and gives his point of view on how modern retail stores can become future proof.
Q. What are the major factors that have led to the success of the ‘Big Bazaar’ brand?
I think what has worked for us is that we have been able to connect with the customers in the right manner. We filled a need gap which was there in the market. Apart from that, our competence in providing products at lowest prices and great quality in an ambience much better than what the customers were used to, has also contributed to our success.
Q. Please share the success story of Big Bazaar.
It all started in 2001, when we opened the first Big Bazaar store in Kolkata, followed by the second store in Hyderabad. At that time, these were the first stores based on this format, and we only had apparel and general merchandise in our stores. Business picked up pace, and in July 2002, at the time of adding the fourth Big Bazaar outlet at Lower Parel in Mumbai, we introduced the first Food Bazaar, too, which managed to get tremendous response from day one itself. We’ve been getting a very high footfall for every new store that we’ve opened. Today, we have reached a stage where we have 25 Big Bazaar and 38. Food Bazaar outlets all over the country. Having surpassed the number of Big Bazaar outlets, Food Bazaar also has standalone formats. There are four such formats in Mumbai, and one each in Ghaziabad (Uttar Pradesh), Kolkata and Bangalore.
Q. What are the key thrust areas for Big Bazaar?
The focus is on continuing to provide very high ‘value for money’ to our customers by providing exciting offers throughout the year such as our ‘Exchange offer’.
Q. How do you plan to do this?
It will be facilitated by constantly working on our buying and supply chain efficiencies. Having already achieved economies of scale and size, we intend to better our gains by opening new stores regularly.
Q. What are some of Kishore Biyani’s (MD, Pantaloon Retail (India) Ltd) philosophies that are strongly believed in and followed across the organisation?
One of the key philosophies of Mr Biyani that is highly followed is ‘Rewrite rules, retain values.’ In essence, it means we don’t take anything as fixed. We are constantly on the lookout for finding new ways and means to improve the current state of affairs. Thus, innovation is a very important aspect of our working strategy. The other very important philosophy is that of Indianness. All our concepts and formats as well as the way we go about things are very Indian. The way Big Bazaar is designed and the way the whole concept has developed reflects a sense of Indianness.
Q. How has the organisation’s structure contributed to your success?
Since we work in teams, and do so very strongly, it has helped us in our success.
Q. What are some of the best practices observed at Pantaloon?
Undoubtedly, teamwork is one of them. Apart from that, we are proud of our high speed of reaction. Another good practice is that we ensure that we are able to interact with and listen to our customers on a continuous basis.
Q. How have in-house brands like ‘Golden Harvest’ performed?
The performance has been very good. The fact is that consumers have very high confidence in Food Bazaar. Therefore, whatever is offered by Food Bazaar is taken very positively by consumers. This is justified as the quality is comparable to other products in a similar range, while the prices are lower too. We are able to control prices because various middlemen involved in supply chains have been eliminated for our model. We buy directly from manufacturers and then sell.
Q. Do you see opportunities in the packaged food sector helping Big Bazaar?
In fact, it’s the other way round. The packaged food sector can grow well with Big Bazaar. This is because the kind of consumers that frequent Big Bazaar are upper end consumers belonging to the affluent class, who are comfortable with innovating, experimenting and risk taking. They tend to buy more packaged foods. Therefore, Big Bazaar becomes the ideal platform for innovations and implementation of new ideas in the packaged food sector.
Moreover, India offers a good market for the packaged food sector as the consumer is changing, and if the expectations are met well, growth is bound to happen.
Q. Don’t you think offering good quality products at a low price might result in your losing out on the premium you can charge for a quality product?
I don’t see any reason why we should charge a premium. Everyone wants to save money, including those belonging to the upper class. Moreover, because of this, we attract various strata of the society – upper end as well as the middle class. We are a modern format retail chain, and typically, in such a format, there is a trickle-down effect. Initially, people from the upper end will try and value our offerings, and eventually, the awareness and brand association will take place with the middle class, too. Let’s put it this way, we are a mass store able to excite consumers of different economic strata.
Q. Could you divulge details on contribution from various areas?
Forty-five per cent of our sales come from apparel. The next big contribution is from food products.
Q. Is it true that having strategies around the price frontal has helped Big Bazaar in India?
Undoubtedly. In fact, that’s the whole platform on which our offerings are based. That’s why the tagline reads ‘Isse sasta aur achcha kahi nahi’. The recent phenomenon seen by the ‘Maha Savings Day’ offer nationally on January 26, 2006, was unprecedented in the history of Indian retail industry.
Q. What are your views on the future of malls and lifestyle products?
All those who will be able to connect well with consumer needs and expectations will do well.
Q. What are the factors that players should be careful about in order to succeed?
There are different need gaps in the market. Each player has to sort out which need will be addressed by his offering. Everyone need not have the same strategy. So, depending on the business strategy and model, there would be relevant factors to be taken care of.
Q. What is the ideal target audience for Big Bazaar?
It would be SEC A and B1 primarily.
Q. Does this kind of format for stores work well in the interiors?
The store we opened in Sangli, which is a city with a population of six lakh got a very good response from consumers. On an average, there are 40,000 people visiting the outlet every week. Our success is not limited to metros or larger towns. Our store in Vizag and the recently opened stores in Indore and Lucknow have received tremendous response. We have different teams working on different categories, and we are able to drive the business strongly on account of good analysis and strong negotiations.
Q. What role does market research play?
Market research plays a very crucial role as we have to be in touch with customers and understand their needs and expectations on an ongoing basis.
Q. What is the conversion rate like?
The conversion rate is in the range of 40-45 per cent on one individual to one bill basis. What needs to be understood is that people don’t come in singles. Therefore, the conversion rate is actually to the tune of 90-95 per cent.
Q. Are there any criteria observed before introducing any new category or product?
We don’t have a fixed criteria list. The condition is that the product should cater to the entire buying basket. Whatever fills the requirement of the customers finds a place. Apart from that, what needs to be taken care of is that there should be a possibility to deliver it at value for money.
Q. What are the targets set for 2006?
We work at a pretty aggressive rate and as a company we are growing by around 65-70 per cent. We will continue to have such kind of growth in the future too.