Assignment 2: Break even Analysis
Student name & USN No.
Bharat Patel- JU2024MBA16191
N Rithika- JU2024MBA14552
Vidhita Menon- JU2024MBA15470
K A Aswind- JU2024MBA18568
Uttam Kumar Mishra- JU2024MBA14099
Break-Even Analysis: Big Bazaar in
the Retail Industry
Break-even analysis is a crucial tool for businesses to determine the point at which total revenues equal total costs,
indicating neither profit nor loss. For Big Bazaar, one of India's leading hypermarket chains, understanding break-
even points is essential for pricing strategies, cost management, and overall financial health. This analysis will reveal
how Big Bazaar can optimize operations, assess new product introductions, and make strategic decisions to increase
profitability in the competitive retail sector.
Cost Breakdown and Break-Even Point
Variable Costs Fixed Costs Break-Even Point
Total: ₹2042.66 Lakhs Total: ₹7078.29 Lakhs 376,657 units
Per Unit: ₹123.17
Big Bazaar's break-even analysis reveals the company needs to sell 376,657 units to cover its fixed and variable costs.
With a selling price of ₹2000 per unit and variable costs of ₹123.17 per unit, the company must generate enough
revenue to offset its substantial fixed costs of ₹7078.29 Lakhs. This analysis provides crucial insights for Big Bazaar's
pricing and sales strategies in the competitive retail market.
Market Trends and Profit
Analysis
1 Market Growth
Rapid growth due to urbanization, changing consumer
preferences, and rising disposable income.
2 Competition
Fierce competition from e-commerce platforms like
Amazon and Flipkart.
3 Adaptation
Pressure on brick-and-mortar stores to enhance customer
experiences and integrate digital strategies.
Big Bazaar operates in a dynamic retail sector facing significant
challenges. With total revenue of ₹8287.98 Lakhs and total costs of
₹9120.95 Lakhs, the company is currently running at a loss of ₹832.97
Lakhs. To achieve profitability, Big Bazaar must increase sales beyond the
break-even point, reduce operational costs, increase efficiency, and
expand into digital and e-commerce platforms.
Competitive Landscape
Company Revenue (2024) Profit Margin
Big Bazaar ₹8287.98 Lakhs Negative
Reliance Retail ₹2.60 lakh crore 3.5%
DMart ₹42,000 crore 6.9%
Spencer's Retail ₹2,500 crore Negative
Big Bazaar faces stiff competition in the Indian retail market. While
struggling with profitability, competitors like Reliance Retail and DMart
are maintaining healthy profit margins. The company must address its
financial challenges and adapt to changing market dynamics to remain
competitive in the evolving retail landscape.
Challenges Faced by Big Bazaar
1 High Competition 2 Changing Consumer Preferences
Competing with large retail chains and e- Migration to online shopping and increasing focus
commerce companies, facing pricing wars and on health and wellness trends.
changing consumer behavior.
3 Supply Chain Issues 4 Rising Operating Expenses
Disruptions due to pandemic, challenges in High rent in prime retail locations and increasing
inventory management across multiple locations. labor costs impacting profitability.
Big Bazaar faces numerous challenges in the dynamic retail environment. Addressing these issues requires strategic
planning, investment in technology, and enhancing consumer experience to maintain competitiveness and improve
financial performance.
Strategies for Improvement
Price Optimization
1 Strategically increase prices and eliminate low-margin
products.
Customer Focus
2 Enhance customer engagement and improve in-store
experiences.
Digital Transformation
3 Develop mobile app and integrate AI-based technologies.
Brand Collaborations
4 Partner with popular brands for exclusive products and joint
marketing efforts.
To improve profitability and competitiveness, Big Bazaar should focus on
optimizing pricing strategies, enhancing customer experiences,
embracing digital transformation, and forming strategic brand
collaborations. These measures can help the company overcome current
challenges and position itself for future growth in the evolving retail
landscape.
