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Competitive Analysis of Bhatbhateni Super Market

Essay by   •  April 20, 2018  •  Case Study  •  1,592 Words (7 Pages)  •  671 Views

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Introduction

BhatBhateni Super Market (BBSM) began from humble beginnings of a small cold store in 1984. Mr. Min Bahadur Gurung and his wife started this small store with the hope to run their normal life with ease. This small dream has now become the biggest retail chain in Nepal with over fourteen leading supermarket and departmental store in many big cities in Nepal. They cover over 120 sq. feet of real-estate with more than 60,000 customer coming in every day.

The chain of super store began from Maharajgunj which followed a rapid expansion in Kathmandu valley. Now, BBSM has stores in Koteshwor, Anamnagar, Pulchowk, Balaju, Kalanki and many more. They even took over the United World Trade Center in Tripureshwor which is the testament of their success over the years.

Over 3,500 staffs work in BBSM with products of varieties providing the customers with smooth one stop shopping. It has been said that a person can get all the essentials needed under one roof of BBSM. Their product ranges from the Fast Moving Consumer Goods (FMCG) to electronics, fashion and even jewelers providing gold and silver ornaments for the customers visiting the premises.

BBSM is the market leader in terms of retail outlets in Nepal. Kathmandu might have many small stores along with big outlets but none come close to the success that BBSM has garnered over the years. They are simply incapable to match the might of an empire called BhatBhateni developed by a humble Mr. Min Bahadur Gurung.


Competitive Analysis of Bhatbhateni

BBSM operates in a market that it created in itself. Before BBSM, Nepalese market had never seen of a superstore where people can go and get all the items they required at prices that were attractive to most of the population. This was the reason why people were gravitated towards BBSM and made it a success that we see today. So, here for the analysis of the market that BBSM work in Porter’s Five Forces Model is used.

Porter’s Five Forces Competitive Model

Threat of New Entrant

In present, the retail market in Nepal is booming. Due to the Nepalese culture of copying, everyone wants to adopt the model that BBSM used to get huge success. In every nook and corner of Kathmandu, small shop this kind can be found. The entry is simple because there are no regulations stopping them or putting a limit to how small or big the retail can be if just registered to Private Business, Partnership or Limited Company Acts prevalent in Nepal. In terms of big new entrants, the market is also open for them to come in, the problem only arising in building a brand. There are very flexible FDI codes for foreign chains to come in, there is no restriction on opening any type of retail chain. The only hassle being in case where liquor comes to play. The cost of establishing big chains might be hampered by the rising real-estate cost but the cost of running is moderate to low, if they can avoid Worker’s Union. So, overall Threat of New Entrant is high.

Rivalry among existing firms

Retail industry is driven by competition in Nepal. BBSM might be the big fish in the pond but smaller and medium scaled retail outlets are providing the competition even with their limited resources. Bigger retail outlets in Saleways, Big Mart and KK Mart are also good players in this market. They may not have the scale but still are able to draw enough customers away from BBSM. The smaller retail stores are the main throne in BBSM’s market. They are everywhere and due to the locational advantage they have over BBSM in many places, they tend to divert many possible customers away from BBSM. It can be analyzed that there is high rivalry between retail outlets.

Bargaining Power of Buyer

Retail Industry mostly does not have huge bargaining power of customers to tend to. (Report Linker, 2016)This is derived from the fact that their potential market and actual market is large and cannot sway these outlets. Everything in BBSM has a fixed price and cannot be bargained at. Due to huge amount of people coming to these stores, they do not need to worry about few switching away from them. BBSM also has an advantage of variety which small shops do not have. So, people wanting to shop at one stop are obliged to pay the fixed rates which means no bargaining power at all. An individual cannot buy enough at once to make a fuss about bargaining. So, Bargaining Power of Buyer is low.

Bargaining Power of Supplier

BBSM has the luxury of many suppliers trying to get the coveted shelf space. These suppliers believe that making it in the shelf of BBSM could boost their sales many folds. There are also large number of supplier which BBSM can dip into to get their products. The only drawback when it comes to suppliers come from the established brands with massive following in the market. These are Coca-Cola, Nestle, Gillette and so on which people will surely buy. They have the sway on the best possible space in BBSM. But due to the bulk purchase of BBSM, they cannot take away the power of bargaining from BBSM making them a lot weaker. This means an overall low Bargaining Power of the Suppliers.

Threat of Substitute Products or Services

Many goods available in BBSM has easily available substitutes because of its fast moving nature. Large number of FMCG (Fast Moving Consumer Goods) dominate shelves in BBSM and everyone has an alternative of sorts in the stores that is not BBSM. Threat is high in direct terms of the products being sold but the threat decreases when we look at the services. No physical retail outlet can boast the variety that BBSM has. They have all the essential under one roof which allows for people to shop once for all of their requirements. This could be matched by E-Commerce sites but they are still in nascent phase with many requisite missing for it to have a go at BBSM. Overall, the Threat of Substitute products or services is moderate.

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