You may already read the Case Study of the Rise and Fall of Subhiksha Retail. Today we will see why and how Vishal Retail failed and eventually shut down.
Vishal’s distribution centre‐led model failed as it could not build an IT network in‐turn meaning buying at the warehouses was not aligned to customer needs and it ended with dead inventory.
Vishal’s private label venture in every single category was a complete disaster as it neither had the competence nor the scale. Then came the 2008 slow down which Vishal Retail executives never saw as their Inventory management was poor and they failed to notice it held the key for sustainable profitable growth. Rental costs – important driver for operating profitability were ignored.
Vishal’s Investment in back‐end was equally important but nothing happened. Leverage created the largest problem so should have been avoided. Finally, Vishal, which had Rs7.3bn in debt, was sold for Rs700m to TPG and the Shriram Group in a distress sale.