Why did Big Bazaar Failed?

How India’s First Retail Supermarket Big Bazaar Failed

 

The Rise and Fall of Big Bazaar

 

Big Bazaar, once a household name in India, symbolized affordable retail for millions. Launched in 2001 by Kishore Biyani under the Future Group, Big Bazaar grew rapidly, becoming a staple for middle-class families seeking value-for-money products. However, the journey from its meteoric rise to its eventual downfall is a tale of aggressive expansion, strategic missteps, and market disruptions.

How Big Bazaar Started?

 

Big Bazaar is the flagship brand of Future Retail. But it is not like it became such a big name overnight. The story of its inception is quite old.

The company was started in 1987 with the name Manz Wear Private Limited.

Beginning of Pantaloon

 

In 1991, the name of the company was changed to Pantaloon Fashions (India) Limited.

• The company’s IPO came in 1992.
• In 1994, exclusive menswear stores were started across the country under the name Pantaloon Shoppe.
• The company started selling branded clothes through multi-brand retail stores in the country.

Pantaloon Retail started three Big Bazaar Stores in Kolkata, Bangalore and Hyderabad in just 22 days in 2001.

Food Bazaar supermarket chain was started in 2002.

After this, in 2003, Big Bazaar entered tier-2 cities by opening a store in Nagpur. In 2007, the company opened its 50th store in Kanpur. After that, Big Bazaars opened in every city and crowds of people started gathering.

Who is Kishore Biyani?

 

Kishore Biyani was born on 9 August 1961 in the house of a textile businessman in Mumbai.

Kishore Biyani has been a student of HR College, Mumbai.

• His business journey started in Mumbai in 1980 with the sale of stone wash denim fabric.
• Kishore Biyani’s dream was to make his own label products available to everyone, and to some extent he was successful in it. Kishore Biyani started Pantaloon at the age of just 26. Kishore Biyani had built an entire empire of retail business through Future Retail, but the way he took Future Retail from rags to riches, in the same way now the company has fallen from riches to rags.

What are the Factors behind Rise of Big Bazaar?

 

1. Foundation and Vision: Kishore Biyani envisioned Big Bazaar as an Indian equivalent of Walmart. The goal was to create a hypermarket that combined the look and feel of a local bazaar with the comfort and convenience of a modern retail store.
2. Rapid Expansion: Big Bazaar’s growth was swift and strategic. By targeting urban and semi-urban areas, it tapped into the growing middle class’s aspirations. Its unique selling proposition was offering a wide range of products under one roof at competitive prices.
3. Innovative Marketing: The brand’s marketing campaigns, such as “Sabse Saste Din” (Cheapest Days), attracted hordes of customers. These mega sales events became a significant part of Indian shopping culture, drawing in consumers looking for the best deals.
4. Diverse Product Range: Big Bazaar offered everything from groceries and apparel to electronics and home essentials. This wide array of products, combined with attractive pricing and frequent discounts, made it a one-stop-shop for many families.

5. Customer Experience: The stores were designed to mimic the traditional Indian marketplace, creating a familiar shopping environment. The strategic store layouts and product placements ensured a pleasant shopping experience, encouraging repeat visits.

On Account of these factors, according to an estimate, by 2020, Future Group’s Big Bazaar, Easyday and FBB had a total of more than 1,800 stores, which were spread across 420 cities in the country.

Why did Big Bazaar Failed?

What are the Factors behind fall of Big Bazaar?

 

1. Aggressive Expansion:

Big Bazaar’s rapid expansion came at a cost.

• The aggressive opening of new stores led to rising debt levels.
• Maintaining and managing these stores became increasingly challenging, stretching the company’s resources thin.

2. Competition and Market Dynamics:

The retail landscape in India began to change with the entry of global giants like Amazon and Walmart (through Flipkart).

• These e-commerce platforms offered the convenience of online shopping, posing a significant threat to traditional brick-and-mortar stores.

3. Operational Challenges:

Big Bazaar struggled with supply chain inefficiencies and inventory management issues.

• The inability to adapt to changing consumer preferences and technological advancements further exacerbated its problems.

4. Debt and Financial Strain:

The Future Group’s mounting debt became a significant burden.

• Efforts to restructure and refinance the debt were met with limited success.
• The financial strain impacted store operations, leading to a decline in customer satisfaction.

5. COVID-19 Pandemic:

The pandemic dealt a severe blow to the retail sector.

• With lockdowns and restrictions, footfalls in physical stores plummeted.
• Big Bazaar’s inability to pivot quickly to an online model left it vulnerable, accelerating its downfall.

The Acquisition and Aftermath

In 2020, Reliance Industries Limited (RIL), led by Mukesh Ambani, announced plans to acquire Future Group’s retail, wholesale, logistics, and warehousing businesses in a deal worth approximately ₹24,713 crore.

• This acquisition was seen as a lifeline for the beleaguered Future Group.
• However, the deal faced legal hurdles from Amazon, which had a stake in Future Retail, leading to a prolonged legal battle.

Comparison of Big Bazaar and DMart

Big Bazaar, founded by Kishore Biyani in 2001, adopted an aggressive and rapid expansion strategy. This approach led to high levels of debt due to borrowing for growth.

• Additionally, Big Bazaar struggled with inefficient inventory management, resulting in stockouts and overstocking, and focused on a broad, diverse product range.
• Their customer strategy relied heavily on discount-based promotions, but their supply chain was poorly managed.
• Ultimately, these issues contributed to Big Bazaar’s decline, leading to its sale to Reliance Retail.

In contrast, DMart, established by Radhakishan Damani in 2002, pursued a controlled and strategic expansion. This conservative approach kept debt levels low, as growth was self-funded.

• DMart’s efficient inventory management minimized wastage, and their market focus was on essential items with high turnover rates.

They built customer loyalty through everyday low prices and maintained a highly efficient supply chain. These factors have contributed to DMart’s continued growth and expanding profitability. 

Conclusion

The story of Big Bazaar is a classic case of rise and fall in the retail industry. It highlights the importance of sustainable growth, strategic adaptability, and the ability to foresee and respond to market changes.

While Big Bazaar’s legacy as a pioneer in Indian retail remains, its downfall serves as a cautionary tale for businesses navigating the dynamic and competitive landscape of modern retail.

Happy Reading!