Food World Case Study
SWOT Analysis of Food World. The joint venture retail industry of RPG and DFI Group,....
CASE STUDY ON FOOD WORLD
Presented by: Sanchari Dasgupta Sayam Roy Satyabrata Dhal Richa Sharma Sameer Ranjan Padhy Seba Surabhi Nayak Sambit Swarup Patra Satyajit Panda
COMPANY HISTORY • “Food World” the pioneer of organized food retailer in India, was first opened in 1996 by Ram Prasad Goenka (RPG) group at Chennai. • In 1999, RPG group formed a joint venture with Dairy Farm International (DFI) group a Hong Kong based retailer. • The groups parted ways in 2005 and DFI got to keep the Food World stores and the trade name.
KEY EVENTS Years
Key Events, Milestones
Food World (FW) first opened in Chennai by RPG Group
Joint venture between RPG and DFI ( 51:49 respectively)
Two groups infused more equity worth $1.5 billion into Food World
RPG solely opened „Giant Hyper-market‟ in Hyderabad
DFI filed suit against RPG for infringement of brand name „Giant‟
RPG & DFI parted ways, DFI to keep Food World Stores
DFI found new partners for its Indian joint venture
SWOT Analysis of FOOD WORLD
OPPURTUNITIES India world‟s eight largest retail industry with 7% projected growth annually. More than 12 million retail outlets (more than rest of the world combined) but highly fragmented and un-organized. Organized retail sector 2-4% of total market, expected to rise by 20-25%. Retail industry accounts for 10% of GDP & 8% of employment. Stronger retail growth in next 5 years favored by changing lifestyle, income growth, suitable demographic conditions. India govt. announced FDI up to 51% in retail trade thus encouraging giants like Wal-Mart, Tesco to partner with Indian companies. Enhanced customer choice through brand advertising and television penetration. Less range of product availability at traditional stores.
STRENGTHS • Joint venture between domestic RPG Group (20 companies in 7 different business sectors) & foreign DFI Group (Hong-Kong based retail giant expertizing in multinational operations). • Diffusion of innovation, ideas, technology, trends from both group. Concept of AC clean stores with all needed family products. • Popularity from localized promotion and advertising. • Alliance with leading companies like Pond‟s, Pizza Corner, Worldspace. • Involving local business man to sell items outside stores. • Offering “Value for Money” thus building an image in factors of hygiene, quality, range and customer trust. • Identified the price gap, supply gap, choice gap, quality gap in the Indian seller market and fulfilled them by leveraging its own brand identity. • Tapped private brand potential in 15 categories (rice, bread etc..)
THREATS Basically from Competitors: • Pantaloon Retail India Ltd. Planning for expansion of retail space to 30 million sq. ft and entry into insurance, real estate, consumer finance. Expected turnover increase from $242 million to $6600 million by 2007. • Nilgiri, supermarket chain from south India, plans to increase its private label business share from 35% to 50% with expected rise in sales from $66 million to $88 million. • Subhiksha, Chennai based supermarket and pharmacy discount chain, plans to introduce self-service display counters, 600 outlets pan India, expected rise of sale from $74.8 million to $132 million. • Trinethra, Andhra based group chain, drawn up aggressive growth strategy for south with expected turnover of $66 million over $37.4 million last fiscal. • Reliance Fresh, plans to invest $550 million in next 4yrs and open stores in 784 cities across India.
WEAKNESSES • Controversy between DFI and RPG over opening the „Giant Hypermarket‟ by RPG (alone). • Poor mutual understanding hence fighting over issues of control. • DFI and RPG deciding to part ways. • After segregation DFI unable to invest over Food World stores due to expired MOU (with RPG) and FDI rules.
FUTURE STRATEGIES •
DFI undergone new partnership with Arko Ltd. and Bestow contractors and Developers Pvt. Ltd. who jointly undertook 50% share of Food World Supermarkets Ltd. (earlier Food World). Food World Supermarkets Ltd. (FSL) targets to have 200 FSL stores in country in different formats like hypermarkets, supermarkets, express stores.
Our Suggestions • • •
DFI being a multinational retailer, should learn the Indian way of merchandizing. Try maintaining fragmented supply and MRP regime all over the country. Instill back the Food World‟s trust in customers by constantly maintaining the quality and service. Increase brand awareness by promotion and advertisement.
CONCLUSION According to the global retail development index Indian retail market enjoys 40% annual growth. So even though DFI is having a hard time, due to the appealing market and Food World being an established name it will continue to stick to India and expand their presence.