Why vishal mega mart failure with reasons?

Answer 1

Vishal expanded without having the proper capital. They got the orders from the suppliers but when the stores didn't work out, the entire supply chain got choked. Vishal raised Rs 110 crore from an IPO in June 2007 which wasn't enough to meet it scorching growth pattern. It had 50 stores by then and was looking to expand to 130 stores in a year. But it went for short term debt which resulted in a big blow to their entire supply chain when the stores didn't happen as intended. Vishal instead of stabilizing and consolidating themselves first in different places and then moving to newer locations, tried to be the first in every town. Vishal's distribution center led model failed as it couldn't build an IT network. Buying at warehouses was mostly not aligned to what the customers needed and resulted in dead inventory. Vishal tried to develop private labels in almost every category but had limited scale to support them. Now Vishal Mega Mart is a history.

Ashish Pandey

SM1, 10-12

IIPM, New Delhi