LABEL Issue V
SUBHIKSHA – WHY DID IT CRASH LAND?
A dream venture for R. Subramaniam,
with the provision of a home delivery
an IIM-A and IIT Chennai alumnus
system. It went from 120 stores across
met a disastrous fate at the hands of
Tamil Nadu to 1600 stores across the
the complexity that is the Indian Retail
country in the span of less than six years.
market.
ICICI Venture invested with 10% stake in
It kick-started in the year 1997, in a
discount
store
format.
It
aimed
at
providing everyday low price to its
consumers blatantly imitating the concept
of the retail giant Wal-Mart. Subhiksha
may have had a first mover’s advantage in
the EDLP category, considering the fact
that its initial expansion was exponential
Subhiksha which was raised to 23% by
2004. In 2oo7 it shelved its plans of going
for an IPO due to uncertain market
conditions. Around 2008 Subhiksha went
for an expansion strategy, unmindful of
the growing competition and it was then
that the market for Subhiksha had a
downfall.
in spite of the retail market being almost
Other generic problems faced by Indian
nonexistent at its inception. It had done a
retailers just added the stock pile of bad
thorough study in terms of pricing
decisions taken by the management. Due
strategies and location selection thus
to its credit sales policy they encountered
catering to the masses, whose main
a
concern while leaving their homes for
generated a lot of bad debts. Subhiksha
shopping is the convenience a store
raised debt worth 600 crores in the year
provides.
2008 signalling bankruptcy. This move
It used to take its EDLP strategy so
seriously that once when its flagship store
in
Chennai
could
not
procure
the
lot
of
defaults
which
eventually
proved fatal in terms of Subhiksha’s
working force due to default payments of
wages and poor HR policies.
umbrellas at rock bottom prices, the
Also its decision of investing in telecom
management
keep
rather than creating its own private labels,
umbrellas in their shelves. Such was the
surmounted the problems it was already
dedication towards the consumers.
facing. In spite of attractive above the line
decided
to
not
Subhiksha had an interesting product
portfolio of F&V (Fruits & Vegetables),
Staples, Medicines and Mobile phones. It
also
had a special card
called
the
promotions, it witnessed declining sales. It
could not cope with the strong IT
infrastructure of its nemesis Food Bazaar.
It would rather be fair to say that it was
Subhiksha card for regular buyers along
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