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Individual Assignment

Company: Future Retail

Q.1 How well is the company currently performing?


For the financial year ended March 2019, the Company has posted income from operations of
20,165 crores and net profit of 733 crores, resulting in earnings per share (EPS) of 14.58. By the
end of the financial year, the Company operated 1,511 stores and attracted 351 million customer
visits.

Through better technology and data platforms, they are now focusing on every customers’
individual needs and aspirations. By collating individual customers’ choices, habits and
preferences, they are creating better small stores in their own neighborhoods. Easy day in North
India and Heritage Fresh in Southern India is expanding at a rapid pace in large cities and small
towns. These small stores combine with the large-store formats like Big Bazaar, fbb and Food
hall to capture the consumption needs of a city across almost every income group. They are
working on optimizing this network for every city and town through better understanding of
consumption patterns, social trends and community preferences.

With their presence in 428 cities and towns, they are now set to replicate this approach at
national level. With 292 large format stores in almost every state of the country, Big Bazaar is
the country’s prominent national retailer. The brand is counted among the most trusted brands in
the services sector. This year, Interbrand India ranked Big Bazaar among the top 40 most
valuable brands in the country. The business has matured very well and is well poised to create
consistent value for our customers and every stakeholder.

During the year, they introduced the Easy Day Club mobile app for ordering products,
scheduling home deliveries and store pick-ups, along with many other features for the member
customers. A key technology goal they are aiming for introducing a conversation commerce
platform within the Easy Day Clubapp, wherein customers can place orders, track deliveries,
make payments - all through a message based interface. And being closest to customer, their
fulfilment cost or cost of delivering to customers’ homes from within a two-kilometer radius of
the store is the lowest amongst any modern retail or ecommerce model.

The small store network will be the prime driver for growth and consumer engagement in the
years ahead. Built on a strong digital platform and being close to customers, the stores operate
with the lowest fulfillment cost and lowest customer acquisition cost, compared to any digital-led
food and grocery business.
Key financial data for FY 2018-19
Q.2 Do the outlook of the industry and competitors positions offer attractive prospects for the
company?
In the last decade, the Indian retail industry has witnessed a major transformation and growth.
The e-commerce players have grown tremendously, consolidation and mergers too were
witnessed in this space. On the other hand, several international retail brands entered the Indian
market. Likewise, domestic brands too have flourished.
For international retail brands, India continues to be a market where they want their businesses to
grow. Earlier this year, the government made the Indian market more accessible for the global
players by making policy changes and allowing 100% Foreign Direct Investment under the
automatic route for single-brand retail. The local sourcing norm was also eased.
With the Private Final Consumption Expenditure expected to grow by about 10-11% y-o-y till
2021 (has grown at about 10-12% historically), GDP expected to go up to ~7.3% by FY21,
CARE expects the retail industry to register a growth rate of about 12-14% over the next 3 years
and reach about USD 1,150 billion by 2021. With factors such as higher demand from
consumers with higher incomes, job creations, improved standard of living, brand awareness,
higher discretionary spends and higher participation of producers/retailers in the organized retail
market, discounted and promotional pricing, increased number of products and more private
labels with retailers among others, the industry is expected to register growth going forward.
Growth Drivers:
 Growing income
3X rise in average household income to reach $18.4 mn in 2020
 Increased online spending
Online buyers to be 350 million by 2025 from existing 90 million, with digital spending
Projected to increase more than tenfold to $550 bn & account for 35% of all retail sales
by 2025
 Growth of rural consumption
Rural per capita consumption will grow 4.3 times by 2030, compared to 3.5 times in
urban areas
 Young millennial households
India will add nearly 90 million new households headed by millennials, who were born
into liberalized India. The average age of the country by 2025 will be 29 with the world’s
largest skilled manpower pool of 600 million+ by 2025.

For Future Retail, the small store network will be the prime driver for growth and consumer
engagement in the years ahead. Built on a strong digital platform and being close to customers,
the stores operate with the lowest fulfillment cost and lowest customer acquisition cost,
compared to any digital-led food and grocery business.

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