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From Subhiksha (Prosper) To Iksha (Perspire): The Topsy-Turvy Story of Indian Retail Business Model

Author(s): H. M.J. Bidyarthi | Ashish K. Srivastava | P. V. Bokad | Mayur A. Dande

Journal: American Journal of Economics and Business Administration
ISSN 1945-5488

Volume: 2;
Issue: 2;
Start page: 153;
Date: 2010;
Original page

Keywords: Discount retailer | learning curve | multi-locational stores | capital structure

Problem statement: To examine the factors that led to inception, high growth and sudden closure of Indian business ventures in upcoming sectors in a short span of less than 10 years. Approach: An IITian and an IIM-A grad (India’s top notch academic institution) set up one of the largest Indian retail chain named Subhiksha Trading services Pvt. Ltd. in 1997 on an Indian business model that opened 1600 outlets in 10 years time across the country and proved a great hit for others to follow suit. This was based on the estimated $350 billion Indian retail market of which organized retail accounts for only 6% of the total market. Suddenly it found itself cash strapped heading for closure of its outlets and perspiring for obtaining funds to revive it. It left many lessons for Indian organized retail sector to draw which this study attempted to bring forth. Results: The debt financers raised their eye brows against Subhiksha’s enterpreneur and a debt restructuring plan is ensuing to revive it indicating severe deficiency in the capitalization plan of Subhiksha. Conclusion: The management of an organization must never oversight its invigorating weaknesses when the growth occurs rapidly during its introduction stage itself on account of favorable circumstances in the environment. The case of Subhiksha studied here is an illustrative lesson of failure of a sound business model due to this oversight.
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