SWOT Analysis- Indian Retail Industry-Pantaloon Retail (India) Ltd. Part IX (iii)

Weaknesses

Higher Inventory Turns: In any retail chain management the products must move quickly from the store shelves. This can only be attained by keeping lower inventory levels and at the same time higher asset turns. The inventory level in Pantaloon is towards an upward direction mostly because of the expanded shopping store space. The organization maintains 40 % of their collection as per the recent fashion in market which piles up the stocks of the older ones. The asset turns of Pantaloon do not look impressive as of now. However in near future one can hope for improvement.

Less Conversion Level: Despite of high number of people, the conversion ratios have been very low in the malls than those in the standalone shopping stores. People go to mall to roam around with their families or friends and shopping takes the secondary place. On the other hand a standalone store has fewer footfalls, but can expect higher conversion rates. This can be a pitfall for Pantaloon, as many of its stores are located in the big shopping malls. Selling can go on a toss if the consumers maintain the same shopping characteristics in near future.

High Employee Turnover: Despite the human resource management processes, Pantaloon is experiencing a high employee turnover. This, in turn, is increasing the employee cost for the organization.
Dilution of equity to fund growth: The organization is on an expansion spree and would need a considerable amount of capital for setting up new shopping stores and other growth plans for the next few years. Pantaloon would also need funds from external sources to strategize and implement its growth strategies. Some dilution has already happened back in the year 2007.

Strain on the management bandwidth: Over the last few years, the company has expanded into multiple formats at multiple locations. Adding to it, the company has been investing in a number of various non-retailing businesses. In a few years, the organization could face the management bandwidth shortage. Decision making in the organization is decentralized with the power being distributed to the line managers. However, as the organization grows, the company must remember to strengthen its management information system (MIS), risk management and internal auditing system to ensure effective management of such a large business entity.

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