BigMart, a prominent player in the retail industry, has continually evolved to meet the dynamic demands of the market. A strategic analysis of BigMart is essential to understand how the company positions itself in the competitive retail landscape and identifies opportunities for growth. This article delves into key aspects of BigMart’s strategy, including its market positioning, competitive advantages, and future prospects.
BigMart has successfully positioned itself as a one-stop destination for a wide array of consumer goods. With a focus on providing value for money and a diverse product range, the company caters to the needs of a broad customer base. The strategic placement of stores in both urban and suburban areas ensures accessibility for a wide demographic, enhancing BigMart’s market reach.
The company’s commitment to quality, competitive pricing, and an efficient supply chain has contributed to its strong market presence. By leveraging economies of scale, BigMart has managed to keep prices competitive while maintaining product quality, a crucial factor in the fiercely competitive retail sector.
- Supply Chain Efficiency: BigMart’s robust supply chain management is a cornerstone of its success. The company employs advanced technologies to optimize inventory management, reduce lead times, and enhance overall operational efficiency. This efficiency not only lowers costs but also ensures a constant and diverse product supply, meeting customer demands effectively.
- Private Label Strategy: BigMart has strategically invested in developing and promoting its private label products. This not only allows the company to offer exclusive items but also improves profit margins. By creating a loyal customer base for its private label products, BigMart can mitigate the impact of external market fluctuations.
- Technology Integration: Embracing technology has been a key component of BigMart’s strategy. The implementation of data analytics and artificial intelligence helps the company analyze consumer behavior, optimize pricing strategies, and personalize the shopping experience. This technology integration enhances customer satisfaction and fosters brand loyalty.
- E-commerce Expansion: Recognizing the growing trend of online shopping, BigMart has strategically expanded its presence in the e-commerce space. Investing in user-friendly online platforms and efficient logistics, the company aims to tap into the digital market and reach customers who prefer the convenience of online shopping.
- Sustainability Initiatives: As consumer awareness of environmental issues increases, BigMart is likely to focus on sustainability initiatives. Implementing eco-friendly practices in packaging, supply chain operations, and product sourcing not only aligns with current consumer preferences but also positions the company as a responsible corporate entity.
Big Mart is considered one of the most valuable brands in Nepalese super market store industry. The first store was launched on 10th July, 2009 in the largest mall of the country – City Centre,Kamalpokhari, Kathmandu. It currently operates a chain of 3 supermarkets in the capital city , and has ambitious plans to establish a market leader position in the country in the next three years .
Pestle analysis report will look at the macro environmental factors (Political, Economic, Social, Technological, Legal and Environmental) and its impact on big mart store .
The political factors focuses on government policy and meticulously takes into account items such as government intervention in the economy, taxation policy, interest rate and monetary policy, consumer protection right, competition regulation, political stability etc. As in our country political stability is very poor and government changes within short period, this has adversely affected the economy and retail industry sectors like big mart. There is lack of government inspection and government regulation which has increases the inflation in country. High inflation decreases the purchasing power of people which in turn affects the sales of store.
The political situation of Nepal can affect a lot to any business. Due to the unstable political condition there is a high risk to Big Mart and other retail business. The consequences of the twelve years long internal war has affected the political scenario. The most important thing is that there is no constitution of Nepal. Due to such consequences Big Mart is stepping back to open outlets in different sectors. As their objective was to open their outlets in every locality, the political factors have affected them a lot
The economic factors focus on the economic growth, government spending, unemployment rate and policy, taxation, tariffs and subsidiaries, production level etc. The economic growth of our country is very less about 2.98%comparing the neighboring country India about 5.8%. The government spending on the development of infrastructure of country is very poor and this has affected the overall industrial sector. Big mart stores are mainly affected by government taxation policy, unemployment and low production level.
The unemployment rate of country is very high and people consumption capacity is very low. There is lack of skilled labor and due to the lack of skilled labor the industries are closed. The country is importing more finished goods than exporting due to this domestic products are less competitive in market. Due to poor economic condition, stores like big mart have not capitalized the resources like labor, capital and technology in full gear which has reduces the potential market value and competences in the market.
As a retail store, it has to pay high amount of tax to the government. Also, due to the low number of outlets it has losing opportunities, hence resulting lower profit. Also the inflation rate is 18% which has pressured them to increase the wages of their staffs which increase the cost.
Socio- Cultural Factors
In Nepal the concept of buying grocery in departmental store is slowly increasing. So, Big Mart business is really affected by the perception and life style of people. Big Mart stores were geared to the higher level people in the beginning. Changes in the social trends can really impact the demand for the products in Big Mart. With the social acceptance, it has become the attraction place for middle class level too. Today Big Mart has become a social place to hang out and for shopping goods. Big Mart has helped to show the social status of people as they will choose products that match their tastes and preferences.
The demographics, living standard, lifestyle, fashion consciousness, occupation have direct impact on the business of store. Without the help of society it is impossible to run the business because the society not only provides the customer but also provides labor work force, supplier and market.
Technological factors influence a business of big mart in a major way. It affects the business ability to produce, to sell, expand and to maintain demand. The technological factors include the government spending on technology research, new inventions and development, life cycle and speed of technological obsolescence, global communications, and manufacturing advances, internet etc.
With technological advances system the operating cost and inventory cost of big mart store has been reduced which also help in reducing the cost of product but big machines used in stores like wet umbrella dispenser, store equipment have to be imported from India which is very costly. The government spending on technology is very low and due to limited MNC`s technology advances is poor.
Legal factors include rules and regulation of governing bodies and this factor try to understand the impact of rules, regulation and laws on the businesses. It mainly includes the regulatory bodies and processes, employment law, consumer protection, industry specific regulation etc. Sound legal system is basic requirements for running of the business operating but at present our country`s legal system is worse, the political parties are unable to make constitution which has affected the business environment of country. There has not been a regular regulation and inspection of consumer protection and employment law which have created problem between employee and employers.
There are different types of laws that may affect the business of Big Mart. The first one is consumer laws which are designed to protect the rights of customers against the unfair and misleading practices. Another category of law is competition law where they are designed to protect small departmental stores and to make sure that there is no existence of monopoly in the retail industry. Another category of law includes employment law. They are mainly aimed at protecting the rights of employee covering the areas such as minimum salaries and incentives, facilities and minimum working hours. This law is designed to provide a safe working environment to the employees and use of safety products.
Environmental factors include ecology and geographical factor areas such as, natural resources endowments, weather, climate conditions, and also include the environmental issues. Big mart should implement the environment friendly policies and their business activities should not degrade the environment.
Changes in the weather may positively or negatively impact the business of Big Mart. For example, in winter season, the demand for soft drinks like Coca Cola is low whereas in summer season the demand for the same products is high. This shows that there is a seasonal impact on the business of Big Mart. The potential impact of environmental factor on big mart store is low.
Factors to be considered to be competitive in Retail industry
Supermarkets purchase goods for resale, and goods and services for conducting their operations. Supermarkets have to decide what product assortment to carry, what vendors to buy from and what prices and terms to negotiate with their suppliers (Kotler, 1984). To stand as a competitive supermarket in the retail market, innovative changes are required from time to time. Innovation change can be technological, organizational and managerial, which should be undertake to remain competitive in the market (Reardon et al., 2004a)
In order to remain competitive Super Markets should consider following external issues to remain competitive over others:
Right amount of Supply and Demand
Retailers of super market need to consider the level of demand supply. Products and services should be delivered after considering demand for that item. If supply become higher that the demand then a these retailers have to store the excess goods in inventory which will be costly to them. So, to remain competitive there needs to have a proper balance in between demand and supply.
Level of Competition
Competition from other retailers can be a great challenge for a retailer of super market. When other retailers sell products at a lower price than the one who is selling those products at higher price can get effected. So, super market needs to closely monitor the activities and strategies of competitors.
The basic component to remain competitive in the retail industry is to identify your Strengths, Weakness, Opportunities and Threats. Retailers of supermarkets must know their strengths and weakness and implement its strategies accordingly.
Super market needs to look after the economic background or the living standard of the people in that location or country. If purchasing power is lower, then it will be beneficial for super market to sell products and services, which can be afforded by the people of that location or a country. So, to have a competitive position, super market should look after the living standard of people.
BigMart’s strategic analysis reveals a company that is adaptive, technology-driven, and committed to meeting the evolving needs of its diverse customer base. By leveraging its competitive advantages and embracing future-oriented strategies, BigMart is well-positioned to navigate the challenges and opportunities within the dynamic retail landscape. The company’s focus on supply chain efficiency, private label products, technology integration, and future initiatives such as e-commerce expansion and sustainability efforts contribute to its continued success in the global retail market.
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[Bigmart- official website of big mart, accessed on 15th Decemebr, 2012]
[MSDN, Accessed on 15th December, 2012]