Subhiksha founded in 1997 by R. Subramanian, an IIT-IIM graduate. It operated over 1600 outlets selling groceries, fruits, vegetables, medicines and mobile phones and positioned itself as value retail chain. It adopted strategy to cut price, focus on lower & upper middle class, and opened shops near catchment area of customers. It started with one store in Chennai and within a short span the count reached to 1600 outlets (2008).
Why did Subhiksha SuperMarket Fail ?
- Rapid store expansion in various formats from groceries, medicines, mobiles, electronics, consumer durables and IT without sufficient fund in hand.
- Operated on very slim or zero margins as a result higher cash outflow whereas inflows were almost nil.
- Not much attention to customer service resulted into bad quality service at store level.
- Downstream supply chain was not integrated as a result lower fill rates and customer dissatisfaction.
- Expanded business through debt (` 7500mln debt).
- In October, 2008 the company ran out of enough funds to manage its operations.
- Poor inventory management resulted into defective inventory, breakages, lower fill days and pile up inventory.
In addition to this, you may please refer Retail Experts Analysis on the Rise & Failure of Subhiksha.