Retail Marketing An Empirical Study

Retail Marketing: An Empirical Study

Introduction

1

Retailing is one of the world’s largest industries. It is in a permanent state of change, and the pace of this change has been accelerating over the last decade. From the marketing perspective, retailers are, by definition, closer to the consumer than manufacturing companies. Retailers represent the culmination of the marketing process and the contact point between consumers and manufactured products. While retailing has long set buying decisions as its highest priority and was very focused on the product assortment, it now follows a more holistic approach to management and marketing and is seizing the opportunity to be consumer oriented, engage in the personal contact with customers, gather information on consumer behaviour and exploit insights into consumer behaviour and preferences. What was once a simple way of doing business is transforming into a highly sophisticated form of management and marketing. Retail marketing consistently features more efficient, more meaningful and more profitable marketing practices. Today retail, which is derived into organized and unorganized, is emerging rapidly as a big industry all over the world and hence, India is also not untouched with this. So there is a need to know the current and the future trends of retail in India. For the third year in a row, India has topped AT Kearney’s annual Global Retail Development Index (GRDI). The Indian retail market is expected to grow from the current US$ 350 billion to US$ 427 billion by 2010. This study will be Annamalai University

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Retail Marketing: An Empirical Study based on the latest retail trends being adopted by the companies, why the big fishes are showing their interest in this sector particularly. Of the current size, organized retail – or modern retail – constitutes only 3 to 4 percent i.e. US $8 billion (36,000 crore INR approx). The rest of the retail pie is crowded with unorganized retail – or the traditional shops. India’s retail market which is seen as THE GOLDMINE by global players, has grabbed attention of the most developed nations.

4%

10% organised

organised

unorganised

unorganised 90%

96%

Current Position

Position By 2010 Fig. 1.1

Market estimates say that by 2010, organised retail will form 10 percent of the pie – up substantially from the current 3 to 4 percent. According to Euromonitor International, the entire sector will grow – in value terms – by 39.6 percent between 2006 and 2011. This means that it will strike an average a growth of rate of almost 7 percent annually. According to the Indian Brand Equity Foundation (IBEF), “Driven by changing lifestyles, strong income growth and favourable demographic patterns, Indian retail is expanding at a rapid place. The country may have 600 new shopping centres by 2010. Mall space from a meager

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Retail Marketing: An Empirical Study one million square feet in 2002, is expected to touch 40 million square feet by end – 2008.” Retail is the accumulation of various marketing practices directed towards providing the best merchandise available. It consists of the sale of goods or merchandise, from a fixed location such as a big department store or a small store (the kirana shop), in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. A retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user i.e., the consumer or the end-buyer. In the supply chain, retailers come at the end, just before the consumer. Manufacturer



Manufacturer

Wholesaler  

Retailer

Retailer 



Consumer

Consumer

Fig. 1.2 “Retailing includes all activities involved in selling goods or services directly to final consumers for personal, non-business use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing.” Retail is India's largest industry, accounting for over 10 per cent of the country's GDP and around eight per cent of the employment. Retail industry in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. The presence of 15 million kirana stores brings into light the very fact that the Indian retail industry is highly fragmented/ unorganized. Retailing in India is Annamalai University

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Retail Marketing: An Empirical Study gradually inching its way toward becoming the next boom industry, organized retailing in particular. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centers, multi-storied malls and huge complexes offer shopping, entertainment and food all under one roof.

Fig. 1.3 India has one retail outlet per 90 people, one of the highest densities in the industry in the world. India is the 9th largest retail market, with annual sales in the organized segment at Rs. 35,000 crore in 2005 – with revenues doubling every year. Food, groceries and general merchandise, apparel, consumer durables, food services and home improvement are the top categories in the organized sector. Overall revenues, including those of small shops, is expected Annamalai University

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Retail Marketing: An Empirical Study to grow 5.5% a year to Rs. 28,70,000 crore by 2015 at current prices. The organized segment is expected to grow faster, at 21.8%, to touch Rs. 420,000 crore by 2015. The future of Indian retailing may even witness the concept of 24 hour retailing and Gurgaon, Delhi and Bangalore have already started operations up to 11 p.m. Even though this concept has been in existence in few retail segments like pharmaceuticals and fuel, it still remains to be a challenge for other segments like food and groceries, apparel etc to adopt this trend. Although the organized retailing in India is coming up in a big way, it cannot simply ignore the competition from the conventional stores because of various factors like reach, extending credit facility and other intangible factors like the human touch which are provided only by the conventional stores. The urban retail market has been embracing various new formats and the malls turned out to be the trend setters by promising the concept of shoppertainment. The trends in the rural market also have been changing from the old Haats and Melas to the rural malls like ‘Chaupal Sagar’ launched by ITC, DCM Shriram Groups one-stop shopping destination called ‘Hariyali Bazaar’, Godrej groups agri-store ‘Adhar’ etc.

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Retail Marketing: An Empirical Study

Indian Retail Development Phases Fig. 1.4 In India’s retail Landscape, food dominates the shopping basket in India. IBEF (Indian Brand Equity Foundation) says, “The US$ 6.1 billion Indian food industry, which forms 44 per cent of the entire FMCG sales, is growing at 9 per cent and has set the growth agenda for modern trade formats. The prospect for growth of the branded segment is huge, as nearly 60 per cent of the average Indian grocery basket still comprises non-branded items.” What is India’s official, governmental position on retail – especially Foreign Direct Investment (FDI) in retail? The Government allows 100 per cent FDI in cash and carry through the automatic route and 51 per cent in single brand. Besides, the franchise route is available for big operators. Now, the government also proposes further liberalisation in the retail sector allowing 51 per cent FDI in consumer electronics, sports goods, stationery and building equipment. The doors are opening up – and it’s a good time to be in the sector! Annamalai University

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Retail Marketing: An Empirical Study Some key players in India are – Pantaloon Retail (India) Limited, Reliance Retail, Aditya Birla Retail, Bharti Retail, Shopper’s Stop and Lifestyle. •

Pantaloon Retail (India) Limited: - This is India’s leading retailer that operates multiple retail formats in both the value and lifestyle segment of the Indian consumer market. Headquartered in Mumbai (Bombay), the company operates over 5 million square feet of retail space, has over 450 stores across 40 cities in India and employs over 18,000 people. The company’s leading formats include Pantaloons, a chain of fashion outlets, Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain, blends the look, touch and feel of Indian bazaars with aspects of modern retail like choice, convenience and quality and Central, a chain of seamless destination malls. Some of its other formats include Depot, Shoe Factory, Brand Factory, Blue Sky, Fashion Station, aLL, Top 10, mBazaar and Star and Sitara. The company also operates an online portal, futurebazaar.com. A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a large-format home solutions store, Collection I, selling home furniture products and E-Zone focused on catering to the consumer electronics segment. Pantaloon Retail was recently awarded the International Retailer of the Year 2007 by the USbased National Retail Federation (NRF) and the Emerging Market Retailer of the Year 2007 at the World Retail Congress held in Barcelona. Pantaloon Retail is the flagship company of Future Group, a business group catering to the entire Indian consumption space. And, of

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Retail Marketing: An Empirical Study course, Pantaloon’s Managing Director Kishore Biyani believes in changing the rules of the game. •

Reliance Retail: - Mukesh Ambani’s 15,000-people Reliance Retail has already opened 250 convenience stores, branded as ‘Fresh’, across the southern states. Reliance Retail plans to invest Rs 25,000 crore on hypermarkets, supermarkets and specialty stores in the next four years. This is what its website has to say: “Reliance is gearing up to revolutionize the retailing industry in India. Towards this end, we are aggressively working on introducing a pan-India network of retail outlets in multiple formats. A world class shopping environment, state of art technology, a seamless supply chain infrastructure, a host of unique value-added services and above all, unmatched customer experience, is what this initiative is all about. The retail initiative of Reliance will be without a parallel in size and spread and make India proud. Ensuring better returns to Indian farmers and manufacturers and greater value for the Indian consumer, both in quality and quantity, will be an integral feature of this project. By creating value at all levels, we will actively endeavor to contribute to India’s growth. The project will boast of a seamless supply chain infrastructure, unprecedented even by world standards. Through multiple formats and a wide range of categories, Reliance is aiming to touch almost every Indian customer and supplier.

•

Aditya Birla Retail: - The Company, owned by Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group, with its mission – “Our mission is to

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Retail Marketing: An Empirical Study change the way people shop. We will give the Indian consumers a fundamentally better shopping experience. We will offer them More than what they expect”. While unveiling the brand name ‘More’, he had this to say about the vision of his company: “We believe that the Indian consumer today is undeserved. Even though we have many shopping outlets in India, many of them do not offer the kind of shopping experiences that people in most other parts of the world are used to, and even take for granted. As a result, spends by Indian consumers on their day-to-day needs and special shopping occasions are much less than they ought to be…” The Company operates under the brand ‘More’, has selected two formats – hypermarkets and supermarkets – for its initial foray. The first store has opened in Pune. Last January, the company acquired Trinethra Super Retail, which has given it more than 5,00,000 sq ft and a strong presence in four southern states of Andhra Pradesh, Karnataka, Tamil Nadu and Kerala, where it is the No. 1 retailer. The Birlas’ outlay for the business over the next three years is Rs 9,000 crore. •

Bharti Retail: - The world’s largest retailer Wal-Mart, which usually has a standalone presence in other parts of the world, is partnering with Sunil Mittal’s Bharti Enterprises in India. The venture will start with the cash & carry (wholesale) format, which could be extended to retail operations once foreign direct investment is allowed in multi-brand retail – something that is expected in due course. More about the company, Bharti Retail (Pvt.) Limited, is a wholly owned subsidiary of Bharti Enterprises. As a part

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Retail Marketing: An Empirical Study of its plans to provide a world-class retailing experience to consumers across India, the company has planned an investment of US$ 2 to 2.5 billion by 2015. Bharti Retail plans pan-India operations and is looking at approximately 10 million square feet of retail experience across all cities in India with a population of over one million. The 60,000 people, it plans to employ, will include ex-servicemen and women and provide multi faceted career opportunities for youth of India. •

Shopper’s Stop: - A menswear store owned by K. Raheja in the Mumbai suburb of Andheri in 1991 has now transformed into Shopper’s Stop, with 27 departmental stores. The company entered airport retailing in a joint venture with the Nuance Group. It also launched India’s largest hypermarket, Hypercity. In 2005, it bought the Crossword book-store chain.

•

Lifestyle: - Growing from one store in Bahrain in 1973, the NRI-led Landmark Group today operates over 5 million sq ft in the Middle East and India. The group’s first Lifestyle store in India opened in Chennai in 1999. Now it has 325,000 sq ft in Chennai, Hyderabad, Bangalore, Gurgaon and Mumbai. There are several home-grown and international players like Carrefour waiting in the wings. Expect a lot of action in this sector in next five years!

We will discuss more players and brands in the next chapters.

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Retail Marketing: An Empirical Study The retail and retailing is changing with a good pace and consumers are shifting from the traditional retailing (unorganised) to the modern retailing (organised). There are various factors: favourable demographics, growth in income, raising aspirations: value added goods sales, increasing population (working women) as well as the lifestyle of women, food and apparel industry growth, online marketing or buying and selling, rural markets giving high opportunities to retailers for investments and government is also allowing FDI in the retail industry in India. Let’s see how it is changing: -

Factors of changing Consumer Behaviour in Retail Fig. 1.5

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Retail Marketing: An Empirical Study Now the picture will be more clear to you that why there is a need to study the retail marketing. The above factors have affected the retail industry of India and created threat among the unorganised small retailers for their existence. This report will reveal the actual scenario of retail industry in India and also global. Relevance of Food Retail Formats in 2010:

Relevance of Non-Food Retail Formats in 2010:

Fig. 1.6 Annamalai University

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Retail Marketing: An Empirical Study

2

What is Retail? Retail:

Retail comes from the French word “retaillier” which refers to "cutting off, clip and divide" in terms of tailoring (1365). It first was recorded as a noun with the meaning of a "sale in small quantities" in 1433 (French). Its literal meaning for retail was to "cut off, shred, paring". Like the French, the word retail in both Dutch and German, Detailhandel and Einzelhandel respectively, also refer to sale of small quantities or items.

Retailing:

Fig. 2.1 Retailing practice of accumulation of various marketing practices directed towards giving the best merchandise available and it consists of the sale of goods or merchandise, from a fixed location such as a department store or kiosk, Annamalai University

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Retail Marketing: An Empirical Study in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. Retailing involves those companies that are engaged primarily in the activity of purchasing products from other organisations with the intent to resell those goods to the final customer, generally without transformation, and rendering services incidental to the sale of merchandise. The retailing process is the final step in the distribution of merchandise; retailers are therefore organised to sell merchandise in small quantities to the general public. The services added to the products commonly include transportation and stock keeping ensuring that the products are available at the point of sale. However, the process also encompasses the selection of products for a retail assortment, the provision of sales advice, after sales service and many other functions.

The Wheel of Retailing:

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Retail Marketing: An Empirical Study

Fig. 2.2 The Retail Life Cycle:

Fig.2.3

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Retail Marketing: An Empirical Study Characteristics of Retail Formats:

Table 2.1 Branding Strategies at different companies:

Table 2.2

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Retail Marketing: An Empirical Study Differently positioned retailers in The Price-Quality Space:

Fig. 2.4 Marketing Mix: 1) Place:

Table 2.3 Annamalai University

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Retail Marketing: An Empirical Study Factors for deciding Location:

Table 2.4 Location Positioning:

Fig 2.5

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Retail Marketing: An Empirical Study 2) Product or Merchandise: Merchandise Mix The product assortment is the core of the retailing service. A retailer’s total product offering is called a merchandise mix or product range. At a strategic level, merchandise management includes the process of selecting the right items for a store and, at an operational level, ensuring that they are available when customers want to purchase them. Items in the assortment are organised into groups, the so called categories. Merchandise planning encompasses selecting the right categories and the items within them. The selection of the appropriate items for a store refers to the breadth and depth of the assortment, quality levels and the brand portfolio. The lowest level of detail identifying a product in the retailer’s assortment is the stock keeping unit (SKU), which identifies a particular item. For example, a pair of pants of a certain brand, in a particular style, colour, and size, is one SKU. The number of SKUs at various retailers varies tremendously. While hard discounters often carry less than 1,000 SKUs, a typical hypermarket assortment accumulates to around 100,000 SKUs. Items in the assortment can be grouped in terms of many different criteria. The product life cycle is one important classification criterion: •

Staple merchandise consists of those products that are carried permanently by the retailer and that have relatively stable sales over time.

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Retail Marketing: An Empirical Study A hammer or a paint brush at a DIY retailer or jeans and white T shirts at a department store would be examples of staple goods. •

Fashion merchandise refers to products that have cyclical sales due to changing tastes and lifestyles. Colours and cuts of clothing change and merchandise offered this year is usually out of date next year.

•

Seasonal merchandise consists of products that do not sell equally well over consecutive time periods. Barbecue grills, skiing equipment, short pants and similar products have very high sales during one season of the year, but are not sold at all in other seasons.

•

Fad merchandise generates very high sales for a short time period. Often, toys and games, certain clothing accessories, or certain music CDs are fads. Tamagochis and Pokémons, for instance, were classic fads. Movie merchandise (e.g. Batman accessories) also constitutes typical fads. Price sensitivity is often very low and ensuring supply, while demand is high, is crucial for success.

The Category Management Process:

Fig. 2.6 Annamalai University

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Retail Marketing: An Empirical Study The Merchandise Mix: Breadth and Depth of Assortment:

Fig. 2.7 3) Price: Pricing in general and price promotions in particular have always been an important marketing instrument in retailing and, up to the present, price has played a very important role in retail marketing. However, it is precisely this focus on price reductions, often based more on belief and intuition on the part of the retailer, than on facts and knowledge about its effects that makes pricing a field of considerable strategic importance today. In many countries, retailer profit margins are very low. In food retailing, it is about 1 % of sales, so that a product that is sold for 1.00 EUR leaves the retailer with an average profit of 1 cent. This means that by increasing this price by only 1 %, profits could double–if consumers continue to purchase roughly the same amount of this product. Consequently, the profitability potential of pricing is considered to be substantial. Annamalai University

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Retail Marketing: An Empirical Study Methods of Price Setting:

Methods of Price Setting in Retail

Cost-oriented Pricing

Competitionoriented Pricing

Demand-oriented Pricing

Fig. 2.8 a) Cost-Oriented Pricing: The most commonly used method for determining

retail prices is the cost oriented method, also called cost plus pricing. Here, a fixed percentage (the markup) is added to the cost of products in order to determine the final retail price:

b) Competition-Oriented Pricing: In competition oriented pricing, the

retailer identifies his main competitors and sets his prices accordingly. Many retailers systematically monitor prices in their competitors’ outlets. Depending on the pricing strategy, prices for certain products are then established at or below the competitors’ price. c) Demand-Oriented Pricing: With demand oriented pricing, the retailer

bases his prices on consumer demand. The sensitivity of consumers to price changes is an important coefficient for setting a demand oriented price. The price elasticity (more precisely: own price elasticity) of demand is a measure of consumer sensitivity to price. It measures the responsiveness of quantity demanded to a change in price:

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Retail Marketing: An Empirical Study

Price Differentiation: Price differentiation means charging different customers different prices for the same product. The extreme case is negotiating the price with each customer individually. In some retailing industries, such as automobiles, such flexible pricing based on negotiations is standard and the prices actually paid vary greatly. While in the service industry (for example, movie theatres), prices for students or senior citizens are often lower, this is not usually implemented by retailers. Here, geographic price differentiation is the most commonly applied approach.

Dynamics of Pricing: HiLo Vs. ELDP: HiLo (High-Low) Policy: - With a HiLo pricing strategy, retailers have relatively high regular prices, but use substantial temporary price reductions to advertise their products and draw customers into the stores. Many supermarkets use this strategy. Price promotions can be regarded as a method of price differentiation through customer self-selection. HiLo pricing is often criticised for encouraging customer disloyalty and appeal to smart shoppers who only buy items on special prices. Especially for intensive HiLo strategies, this can lead to reduced profits of the retailer. ELDP (Every-Day-Low-Price) Policy: - The alternative is an EDLP strategy, for which prices remain stable over a long period of time. It involves offering consistently low prices. Wal-Mart is an important example of such a strategy. Annamalai University

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Retail Marketing: An Empirical Study EDLP has high price transparency, and thus can only be implemented successfully if the retailer has a very low cost structure. EDLP makes price comparisons much easier for consumers (and competitors) than a HiLo policy. An EDLP retailer must, therefore, have a very low retail price for most of his products and only the most efficient retailers will be able to sustain this in the long run. 4) Promotion: Store Design and Layout:

Types of Store Layout Fig. 2.9 Grid Store Layout: A grid store layout is characterized by long parallel aisles, with merchandise on shelves on both sides. This layout channels customer flow and it is often not very stimulating, but it is well suited for shopping trips in which customers need to easily locate certain products and basically move through the entire store. Self-service is rather easy, and the shopping

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Retail Marketing: An Empirical Study process for customers often fast and efficient. Space is utilised to a large extent. Supermarkets, drugstores and other retailers of fast-moving consumer goods normally adopt this layout. Free-Form Store Layout: A free-form layout (also called free-flow layout) follows an irregular pattern which allows customers a free choice of movement in certain areas of the store and along certain paths. It allows for more relaxed and unregimented shopping. However, it may require salespersons to aid the customer to find certain products. This style is found in many clothing stores.

Grouping of Store Offerings:

Merchandise Grouping

Item-Oriented Presentation

Theme-Oriented Presentation

Brand-Oriented Presentation

Fig. 2.10 In item-oriented presentation similar products are grouped according to their types. In theme-oriented presentation the whole range or collection of products is displayed and grouped together like festivals, marriages, etc. And, finally in brand-oriented presentation products of a common brand are grouped together at one place in the store.

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Retail Marketing: An Empirical Study Store Design and Store Atmosphere:

Visual elements (Colour, Brightness, Size and Shape) Gustatory elements (Extraservices in normal shopping)

Senses affecting Consumer Behaviour

Tactile elements (Floor Material and Sensation of touching)

Aural elements (Background Music and Audio advertising)

Olfactory elements (Various types Scents in store)

Fig. 2.11

In the figure above it is shown that how the above mentioned five factors affects the senses of consumer who step into the store. These are some of the very important factors that must be considered while making a store and planning for the beauty of its ambience.

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Retail Marketing: An Empirical Study Customer Relationship Lifecycle:

Fig. 2.12 Types of Customer Loyalty:

Fig. 2.13 Annamalai University

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Retail Marketing: An Empirical Study Latent Loyalty: While a positive attitude is an important objective, attitude does not necessarily correspond with behaviour and latent loyalty can occur. Situational influences can form a barrier between attitude and behaviour. For example, people can have a very positive attitude towards Tiffany’s, but not be able to buy there. Alternatively, they may feel very positively towards Harrods in London, but live hundreds of miles away. Ultimately, however, retailers do not wish to foster a positive attitude of consumers, but aim at increasing their sales. True Loyalty: True loyalty, the most favourable position, is signified by repeat patronage based on a strong relative attitude towards the retailer. Most definitions of loyalty now include both dimensions, i.e., behavioural loyalty corresponding with attitudinal loyalty. Spurious Loyalty: Spurious loyalty refers to a situation, where repeat patronage is observed, but is not based on a strong positive attitude towards the retailer. For example, a lack of alternatives in the area can result in store patronage without having anything to do with positive attitudes. Habitual purchasing behaviour might have the same effect.

Retail design: Retail design is a creative and commercial discipline that combines and utilizes many different design concepts together in the conceptualizing and construction of retail space. Retail design is primarily a specialized practice of architecture and interior design, however it also largely incorporates interior decoration, graphic design, ergonomics, and advertising.

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Retail Marketing: An Empirical Study Retail design is a very specialized discipline due to the heavy demands placed on retail space. Because the primary purpose of retail space is to stock and sell product to consumers, the spaces must be designed in a way that promotes an enjoyable and hassle-free shopping experience for the consumer. The space must be specially-tailored to the kind of product being sold in that space; for example, a bookstore requires many large shelving units to accommodate small products that can be arranged categorically while a clothing store requires more open space to fully display product. Retail spaces, especially when they form part of a retail chain, must also be designed to draw people into the space to shop. The storefront must act as a billboard for the store, often employing large display windows that allow shoppers to see into the space and the product inside. In the case of a retail chain, the individual spaces must be unified in their design.

Retail types:

Fig. 2.14: A Retail Store

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Retail Marketing: An Empirical Study There are three major types of retailing: The first is the market, a physical location where buyers and sellers converge. Usually this is done in town squares, sidewalks or designated streets and may involve the construction of temporary structures (market stalls). The second form is shop or store trading. Some shops use counterservice, where goods are out of reach of buyers, and must be obtained from the seller. This type of retail is common for small expensive items (e.g. jewelry) and controlled items like medicine and liquor. Self-service, where goods may be handled and examined prior to purchase, has become more common since the Twentieth Century. A third form of retail is virtual retail, where products are ordered via mail, telephone or online without having been examined physically but instead in a catalog, on television or on a website. Sometimes this kind of retailing replicates existing retail types such as online shops or virtual marketplaces such as eBay or Amazon.

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Retail Marketing: An Empirical Study

3

Retailing in India

The retailing industry in India estimated at Rs 9,30,000 crore (2003-04) is expected to grow at 5% p.a. In line with predictions made in 2002, organised retailing is well on its way to become a Rs 35,000 crore market by 2005. The size of organised retailing market stands at RS 28,000 crore in 2004, thereby, making up a mere 3% of the total retailing market. Moving forward, organised retailing is projected to grow at the rate of 2530% p.a. and is estimated to reach over an astounding Rs 100,000 crore by 2010. Its contribution to total retailing sales is likely to rise to 9% by the end of the decade. Let’s see the development of retail in India: -

Fig. 3.1

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Retail Marketing: An Empirical Study Currently Indian retail is seen as ‘The Goldmine’ for the investors and big retailers. It is expected that the current retail market is about $ 350 billion out of which $ 8 billion is of organised retail only. There are over 13 million kirana stores and over 80 per cent of them operate in 500 sq ft only. In this scenario of feverish activity, this report aims to map the global scene of the Indian retail Industry. It looks at the factors that have been fuelling this boom so far and what will drive the growth of the industry in the future. Urban India represents only a fraction of the opportunity that the retail sector can hope to exploit. Significant portion of future growth has to come from the rural market. This report takes a look at the modern retailing formats being experimented with, both in the cities and the countryside and highlights how they are different from one another. To fully harness the potential benefits that a huge leap in retail can offer to all its stakeholders in India, the roadblocks in its way have to be removed. This report analyses the issues that currently impede the realisation of the maximum progress possible. It also tries to come up with recommendations that, if implemented, can provide a fillip to the current growth rate of the industry and truly make the Indian Retail Revolution a success story that the world will have to sit up and take notice of. 1. Introduction Retailing is the final step in the distribution of merchandise - the last link in the Supply Chain - connecting the bulk producers of commodities to the final

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Retail Marketing: An Empirical Study consumers. It covers diverse products such as food, apparels, consumer goods, financial services and leisure. 1.1 Retail Value Proposition The value proposition that retail offers to a consumer is easy availability of the desired product in the desired size at the desired time. 1.2 Retailing in India •

Total Consumer Spend in the Year 03-04 - INR 9300 billion (USD 375 billion) growing over 5% annually

•

Retail sales - 55% at INR 280 billion (USD 205 billion)

•

Organised Retail - Only 3% but growing at 30%

•

Organised retail to cross INR 1000 billion mark by 2010

•

INR 200 billion investment in the pipeline

•

Top 6 cities account for 66% of total organized retailing

1.3 Trends Affecting Indian Retail Industry •

Changing age profile & Disintegration of joint family: - India is believed to have an average age of 24 years for its population as against 36 years for the USA and 30 years for China. A younger population tends to have higher aspirations and spends more as it enters the earning phase. Also, nuclearisation of families has led to enhanced demand.

•

Growing disposable income: - More Indian households are getting added to the consuming class with the growth in income levels. Also, with declining interest rates, the aversion of domestic consumers to taking loans is also fast disappearing.

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Retail Marketing: An Empirical Study •

Globalisation: - Growing media penetration is leading to a convergence of aspirations of various classes of consumers, bridging the rural-urban divide. The modern consumer cannot be satisfied by any product or service that is lesser in quality than the best offered in any other place on the globe. Till 1980s, India knew only kirana stores. Things started to change slowly

after that, with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim opening their company owned outlets. Later on, Titan, maker of premium watches, successfully created an organized retailing concept in India by establishing a series of elegant showrooms. In recent years in line with the global retail scenario, India has seen different retail formats being experimented with.

2. Retail Formats Broadly, the organized retail sector can be divided into 2 segments. •

In-store Retailers: Operate through fixed point of sale outlets located and designed to attract a high volume of walk-in customers. Also referred to as brick-and mortar format.

•

Non-store Retailers: Reach out to the customers at their homes or offices through direct selling, tele marketing and e-commerce.

•

Retail Organisations

Major formats of In-store retailers have been listed in Table below: -

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Retail Marketing: An Empirical Study Format Branded Stores (Exclusive Outlets) Specialty Stores (MultiBrand) Departmental Stores

Description Exclusive

Value Proposition

showrooms

either

Complete range available

owned or franchised out by a

for a given brand, Certified

manufacturer. Focus on a specific consumer

product quality. Greater choice

need, carry most of the brands

consumer,

available. Large stores

between brands possible. One stop shop catering to

having

a

wide

to

the

comparison

variety of products, organized

varied consumer

needs,

into different departments, such

service as differentiator.

as clothing, house wares, toys,

Supermarkets Discount Stores

etc. Extremely

large

self-services

retail outlets. Stores offering discounts on the

One stop shop catering to varied consumer needs. Low prices.

retail price through selling high volumes

Hyper-Mart

Convenience Stores Shopping Malls

Cash-n-carry

and

reaping

the

economies of scale. Larger than a Supermarket,

Low prices, vast choice

sometimes with a warehouse

available including services

appearance, generally located in

as cafeterias.

quieter parts of city. Small self-service

formats

Convenient location and

located in crowded urban areas. An enclosure having different

extended operating hours. Variety of shops available

formats of in-store retailers all

close to each other.

under one roof. B2B format where seller sells to

Convenient Buying.

shopping

establishments

and

large institutional customers.

Table 3.1

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Retail Marketing: An Empirical Study Of the Top-200 Global Retailers, 21% of retailers fall in the specialty stores category, followed by 18% in supermarket, 12% in department and 9% each in hypermarket and discount stores. 2.1 Retail Formats in India Indian retail formats can be classified into two distinct formats: Traditional Formats include: •

Kiranas: Traditional Mom and Pop Stores.

•

Kiosks.

•

Street Markets.

•

Exclusive / Multiple Brand Outlets.

Modern Formats include: •

Supermarkets such as Foodworld.

•

Hypermarkets such as Big Bazar, Giant, Shoprite, Star.

•

Department Stores such as Shoppers Stop, Lifestyle, Pantaloons, Piramyds, Trent.

•

Speciality Chains such as Ikea.

•

Company Owned / Operated such as Bata, Sony.

Forecourt Retailing: -This concept recently shot into limelight with oil companies trying to milk this revenue stream for more moolah. Apart from dispensing fuel, the stores offer value added services to busy consumers. This strategy is currently aggressively being pursued by IOC, BPCL, HPCL and Reliance. Trade Parks: - A new emerging concept in retailing is the establishment of business complexes particularly for international trade. Some of the examples Annamalai University

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Retail Marketing: An Empirical Study are India Exposition Mart set up by Handicraft Export Promotion Council in Greater Noida, International Home Deco Park (IHDP) set up by a group of private investors in Noida and World Trade Park coming up in Jaipur. IHDP will provide International buyers ready access to 60 world class exporters from India in the Home Furnishings category. This would be beneficial to buyers as they would not have to go to remote towns (where the infrastructure is not good) to see the designs and samples of exporters. Exporters apart from getting increased visibility will also get other facilities such as design library, design studio, forwarding services and so on. The parks are built to promote trade and are open to international buyers and buying houses only.

2.2 Retail Format Model for India The key to a winning retail format is to follow a model that suits the Indian consumer behaviour. One big undisputable fact is that almost all retail players (especially in food) have been region-specific. So whether it is FoodWorld, Nilgiris, Margin Free Market, Giant, Varkey's and Subhiksha in the South, Sabka Bazaar only in and around Delhi, Haiko in Mumbai or Ahmedabad-based Adani, they have clearly battled with scalability.

Issues to be tackled Scaling has multiple implications. Ideally, it is an attempt to increase market share/ revenues or growth. But the issues are: •

How does it affect operations?

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Retail Marketing: An Empirical Study •

Does it mean reduction in assortment, shift to standardisation and reduced customisation?

•

Where to scale, up, down or out?

•

When to scale?

•

Should a FoodWorld replicate its South-based format in a Delhi?

•

And what happens when it wants to go to other 10 million+ towns?

•

And then lower down the pop strata?

•

More real estate space is available in smaller towns, but do the footfalls justify the bigger box format?

Need for multiple formats Clearly, a retailer needs different formats for different town classes - but then what happens to economies of scale via standardization? A good way out is the way the RPG group is treating its Music World stores - flagship vs. smaller vs. the express outlets located in, say, a FoodWorld. Similarly, the way ABC has defined Café Coffee Day outlets - flagship vs. takeaway. Most of the global powerhouses in the retailing sector such as Wal-Mart, Carrefour, Tesco, etc have adopted multi-format and multi-product strategies in order to customize their product offering for distinct target segments: Retailer Formats Wal-Mart Discount, Hypermarkets,

Product Categories Food & Grocery, Furniture &

Warehouse Clubs,

Furnishings, Auto Services, General

Neighbourhood Stores,

Merchandise, Electricals, Financial

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Retail Marketing: An Empirical Study Convenience Stores Services, Appliances, etc. Supermarkets, Hypermarkets, Food & Grocery, General Neighbourhood Stores, Merchandise, Clothing, Home Convenience Stores, Internet, Products, Fuel, Automobile, etc. Catalogue Hypermarkets, Convenience Food & Grocery, Clothing, General

Tesco

Carrefour Stores, Supermarkets

Merchandise, etc. Table 3.2

In line with the global evolution, Indian Retailing has also witnessed a series of experiments across the country with new format being tested out; old ones tweaked around or just discarded. Some of these are listed in the table below: Retailer Old Format New Format Experimented With Shoppers' Stop Department Store Quasi-mall Quasi-mall, smaller outlets, adding food Ebony Department Store retail Crossword Large Bookstore Corner shops Piramyd Department Store Quasi-mall, food retail Pantaloon Own Brand Store Hypermarket Subhiksha Supermarket Considering moving to self service Vitan Supermarket Suburban discount store Food Foodworld Hypermarket, Foodworld express Supermarket Globus Department Store Small fashion stores Table 3.3 The above-mentioned modern formats of retailing have not as yet served the rural consumer. However, off late, some private players like ITC, HLL and DSCL are trying out innovative methods of retailing in rural India. 3. Indian Rural Market

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Retail Marketing: An Empirical Study 3.1 Opportunity The importance of the rural market is underlined by the fact that the rural market accounts for close to 70 per cent of toilet-soap users, 38 per cent of all two-wheeler, half of all TV sets, fans, pressure cookers, bicycles, tea, salt and toothpowder sold. What is more, the rural market for FMCG products is growing much faster than the urban counterpart. 3.2 Problems in Rural Marketing Although the rural market does offer a vast untapped potential, it should also be recognized that it is not that easy to operate in rural market because of several obstacles. The major problems faced are: •

Underdeveloped people markets

•

Lack of proper communication facilities

•

Poor media reach

•

Many languages and dialects

•

Dispersed market

•

Low per capita income

•

Low levels of literacy

•

Prevalence of spurious brands and seasonal demand

3.3 Understanding the Market Rural marketing is a time consuming affair and requires considerable investments in terms of evolving appropriate strategies with a view to tackle the

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Retail Marketing: An Empirical Study problems. The alternative 4As Model when applied to the rural retailing scenario comes up with the following challenges: •

Availability: - India's 627,000 villages are spread over 3.2 million sq km. However, given the poor state of roads, it is an even greater challenge to regularly reach products to the far-flung villages. To service remote villages, stockists use auto-rickshaws, bullock-carts and even boats in the backwaters of Kerala.

•

Affordability: - With low disposable incomes, products need to be affordable to the rural consumer, most of who are on daily wages. Some companies have addressed the affordability problem by introducing small unit packs.

•

Acceptability: - There is a need to offer products that suit the rural market. Because of the lack of electricity and refrigerators in the rural areas, CocaCola provides low-cost ice-boxes - a tin box for new outlets and thermocol box for seasonal outlets.

•

Awareness: - Mass media is able to reach only to 57% of the rural population.

Creating

unconventional

media

awareness including

then, ambient

means media.

utilizing For

targeted, generating

awareness, events like fairs and festivals, Haats, etc., are used as occasions for brand communication.

3.4 Developments in Rural Retailing

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Retail Marketing: An Empirical Study •

ITC's Chaupal Sagar: - Chaupal Sagar is one of the first organised retail forays into the hinterland. It has been initiated as rural shopping-cuminformation centres in Madhya Pradesh. The first rural mall has come up 40 kilometres from Bhopal towards Sehore. Chaupal Sagar offers almost everything - from toothpastes to televisions, hair oils to motorcycles, mixer-grinders to water pumps, shirts to fertilizers. Most of the brands it sells are national such as Marico, LG, Philips, torches from Eveready, shirts from ITC's apparel business, bikes from TVS, and tractors from Eicher. o Some other facilities on offer include: o Banking and automated teller machines o Insurance products for farmers o Entertainment facilities o Restaurants o Fuel pump in tie-up with BPCL o Cafeteria o Parking lot for 160 tractors o Primary healthcare facility o Information centres o Training facility on modern farm techniques o Godowns for storing the wheat and soybean and also for stocking products retailed at the mall

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Retail Marketing: An Empirical Study •

DSCL's Haryali Bazaars: - Having successfully pioneered a new concept of Haryali Kissan Bazaars in 2002 in Hardoi, agri-inputs focused DCM Sriram Consolidated Ltd. (DSCL) opened eight more (Ladwa in Haryana, Ferozepur in Punjab, Kota in Rajasthan and four locations in UP). The store complex is spread over 2-3 acres and caters to all the farmers requirements (both DCM Sriram products & other sources): farm inputs ((fertilizers, seeds, pesticides, animal feed), farm implements, spare parts, irrigation equipment, spraying equipment. Twenty such stores, each catering to 100 villages, are planned by the end of 2005.

•

HUL's Project Shakti: - Project Shakti is Hindustan Unilever Ltd's (HUL) rural self-help group initiative to push the penetration of its products to reach areas of low access and low market potential. To get started the Shakti woman borrows from her "Self Help Group" and the company itself chooses only one person. A Shakti entrepreneur receives stocks at her doorstep from the HUL rural distributor and sells direct to consumers as well as to other retailers in the village. Each Shakti entrepreneur services 6-10 villages in the population strata of 1,000 - 2,000 people. The women avail of micro-credit through banks. Some of the established Shakti dealers are now selling Rs. 10,000 - Rs. 15,000 worth of products a month and making a gross profit of Rs. 700 - Rs. 1,000 a month. The company is creating demand for its products by having its Shakti dealers educating consumers on aspects like health and hygiene.

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Retail Marketing: An Empirical Study •

Others are: - Marico launched a major initiative into rural markets by appointing 2,400 sub-stockists in the last two years. Recently, Dabur recently finished a pilot project for its super-stockists in Patna and has now rolled it out in Bihar, Madhya Pradesh and Rajasthan. Reckitt has also adopted the super-stockist system in Tamil Nadu and plans to set up such a system all over the country in the next year, with the target of covering one million outlets in the next three years.

3.5 The Rural Remedy The business model for rural retail can be successful only when integration between the profit and social motive is apparent. The social angle needs to be pronounced for it to be acceptable. The model should empower the rural consumer and at the same time take advantage of this empowerment through creation of demand for its own products and that of its partners. The roadblocks in the way of retail revolution hamper the growth of the industry both in urban and rural areas. These bottlenecks if not removed have the potential to retard the rapid progress that this sector has been witnessing.

4. Regulations in Retail Industry The policy environment is currently seen to be unfavourable to organised retailing. Some of the impediments to growth of retail include the following: 4.1 Restrictions on FDI Recent indications that the government is considering foreign direct investment in retail trade have sparked off a debate on the advisability and

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Retail Marketing: An Empirical Study consequence of this policy. At present, foreign direct investment (FDI) in pure retailing is not permitted under Indian law. Some of the areas in retailing that will be affected by FDI are as follows: •

Creating Additional Jobs

•

Diminution of Kirana Shops and Retail Stores

•

Access to Larger Financial Resources

•

Benefit to Consumers

•

Supplier Quality Enhancements

•

Enhanced Supply Chain

•

Increased Exports

•

WTOs Cross Retaliation

Verdict on FDI: - Market is an important asset. It needs to be protected the way other assets are protected. However, it is clear that FDI in retail trade will lead to incremental economic benefits and not substitute on-going activities. Any strategy in the direction of FDI should ensure that domestic players are not unduly displaced and sufficient opportunities are available for the growth of domestic players. Therefore, the strategy should be controlled release of restrictions on FDI. Percentage of FDI allowed should be increased in small amounts and for specific commodities at every step. Constructive suggestions and inputs from all stakeholders should be taken in shaping the policy. The government of India is looking for a tear-free FDI in retail. They have allowed 51 per cent equity ownership to single-brand retailers and thinking for

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Retail Marketing: An Empirical Study allowing FDI but with full preparation to save the small retailers and the loss of jobs in the country.

Greater Per Capita Income

Greater Consumer Spending due to economic boom GDP Growth

Employ Benefits Greater ment to Govt. Exports Increasing Tax Paying Population

Increased Tax Revenues

Greater Sourcing From India

Reduced Tax Evasion

Benefits to government by FDI in Retail Fig 3.2 4.2 Land and property Laws There is a shortage of good quality retail space, and rents are high for what is available. Compounding these shortages are the following problems: Only Indians can own property in India, which complimenting the restrictions placed on FDI, restrict the entry of foreign players. Stamp duties on property deals are significant. The lease alone can cost up to 6-10 per cent of sales while it's just 3-5 per cent globally. The initial urban planning of cities was done with smaller plots in mind which along with rigid building and zoning laws make it difficult for procurement of retail space.

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Retail Marketing: An Empirical Study The urban land ceiling act and rent control acts have distorted property markets in cities, leading to exceptionally high property prices. 4.3 Labour Laws The labour laws instituted to protect store workers are not flexible enough to support the modern formats of retailing. These rigidities in the law constrain the operations of modern retail outlets. Working hours are restricted, with shops required to close one day of the week and the hiring of part-time employees is difficult. 4.4 Taxes Effective corporate tax rate is 36.59% for a local company and 41.82% for a foreign company. Even essential basic foodstuffs are taxed. The varying sales tax rate across states makes supply chain management an even more difficult task for retailers. However, with the introduction of Value Added Tax (VAT) across all states, some of the sales tax anomalies in the supply chain could get correct over a period of time. 5. The Revolution Ahead The last few years have seen rapid transformation in many areas like: Scalable and profitable retail models are well established for most of the categories Indian consumers are rapidly evolving and accepting modern formats overwhelmingly •

Retail space is no more a constraint for growth

•

India is on the radar of global retailers

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Retail Marketing: An Empirical Study •

Suppliers / brands are willing to partner with retailers

•

Notwithstanding some stumbling blocks, no one can mistake the immense potential of the boom in the domestic retail sector.

•

Given the size and the purchasing power of the Indian consumer, the road ahead can only get smoother and it is only a matter of time before the domestic retail industry is on par with its western counterparts.

Some major Retail Development plans in India: 1. Reliance Retail Limited (RRL) recently announced the launch of its second

specialty store ‘Reliance TimeOut’ at Ambience Mall, Gurgaon having the area of 41,000 sq ft. and over one lakh products (books, music, stationery, toys and gifts). 2. ‘Wellness World’ of T. Spiritual Ltd. in the NCR region. 3. Luxor Group and Reliance Retail enter a Joint Venture to open new outlets

and inclusion of Luxor writing instruments in Reliance TimeOut. Luxor is planning to increase its ‘Signature’ and ‘The World of Luxor’ stores by opening 100 new stores by 2009. 4. FitnessOne on expansion in the south with F1@Home. 5. In the Indian Retail Summit Adlabs Cinemas bags ‘Retailer of the Year’ award. 6. Reebok focuses on kids wear and lifestyle segment and plans to increase the number of retail outlets from 580 to 750 by the end of year 2008. 7. Tata Tea forays into retail with Chai Unchai outlet at IIM, Bangalore.

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Retail Marketing: An Empirical Study 8. Microsoft India is in advanced talks with 10 leading Indian retailers to roll

out its next generation automated retail tools. 9. Reliance Retail Ltd (RRL) launched the third outlet of its specialty store

‘Reliance Footprint’ at Star City Mall, New Delhi. It is spread over 7,500 sq ft and has a range of over 2,500 products. 10. RIL Retail forays into lifestyle, entertainment. Reliance Retail aims to add 1.5 lakh sq ft of retail space every month. 11. Bata India Ltd introduced Westminster, an international range of handcrafted formal shoes for men. 12. Blue Dart bags retail logistics award. 13. Louis Phillipe brings in fashion formals for global generation. 14. Barista to open first highway café on Bangalore-Mysore road of 6,000 sq ft. 15. Arvind Mills to invest Rs 400 crore in Retail. 16. Swarovski India opens largest boutique in India in the area of 1,500 sq ft. 17. Gitanjali acquires Nakshatra. 18. Achal Cashews Private Ltd, a group company of Achal Industries (a cashew processor and exporter), has forayed into the retail sales of almonds. 19. Spencer’s has big plans for Kerala. 20. Home Solutions has an expansion plan of Rs 450 crore to 500 crore. 21. Wadhawan enters into lifestyle retail.

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Retail Marketing: An Empirical Study 22. Jodhpur Maharaja Gaj Singh II joins hand with Stadia Infrastructure to set

up Majestic Stadia in Sun City, Jodhpur. 23. Corporate Park, first premium biz centre in Jaipur, by September. 24. Tata Nano, people’s car, on road soon. 25. Dabur & Spain’s EatOut in restaurant foray. Mall development in India: Infancy

Development

Bangladesh, Sri Lanka

Maturity

South East Asia, Middle East China, India

Phase I

Decline

Phase II

USA, UK

Phase III

Phase IV

Fig. 3.3 From the above life cycle of shopping malls it will be clear to you that India is in the Development Stage whereas USA and UK are in the decline stage that’s why they are now focusing on the countries which are in the infancy and development stage. And India and China have become the favorite investment spots in the retail industry in the world because here the percentage of unorganised market is still very large.

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Retail Marketing: An Empirical Study Region-Wise Mall Development - 2005

South 22%

Region-Wise Mall Development - 2006 South 14%

East 5%

North 44% West 29%

West 40%

East 4%

North 42%

Fig. 3.4 The above have clearly shown that the western part has grown the most in terms mall development in India.

Fig. 3.5 The above graph shows clearly that the food and grocery industry is growing at a rapid speed of 91%, clothing comes at the second place with 55% and furniture & fixtures and pharmacy grows with 27%. The reason for the growth of food and grocery at the highest pace is that it the fastest consumable product in the market and cannot be stored for a longer period of time except some of the

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Retail Marketing: An Empirical Study dry foods. So the company’s are showing their interest in this field to earn a good profit easily.

Fig 3.6

Indian Retail Vs World Retail: •

Indian retail is fragmented with over 12 million outlets operating in the country. This is in comparison to 0.9 million outlets in USA, catering to more than 13 times of the total retail market size as compared to India.

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Retail Marketing: An Empirical Study •

India has the highest number of outlets per capita in the world - widely spread retail network but with the lowest per capita retail space (@ 2 sq. ft. per person).

•

Annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is higher than the size of Indian retail industry almost 100 times more than the turnover of HUL which is, India's largest FMCG Company.

•

Wal-Mart - over 4,800 stores (over 47 million square meters) where as none of India's large format store (Shoppers' Stop, Westside, Lifestyle) can compare.

•

The sales per hour of $22 million are incomparable to any retailer in the world. Number of employees in Wal-Mart is about 1.3 million where as the entire Indian retail industry employs about three million people.

•

One-day sales record at Wal-Mart (11/23/01) $1.25 billion - roughly two third of HUL's annual turnover.

•

Developed economies like the U.S. employ between 10 and 11 percent of their workforce in retailing (against 7 percent employed in India today).

•

60% of retailers in India feel that the multiple format approach will be successful here whereas in US 34 of the fastest-growing 50 retailers have just one format

•

Inventory turns ratio: measures efficiency of operations. The U.S. retail sector has an average inventory turns ratio of about 18. Many Indian retailers KPMG surveyed have inventory turns levels between 4 and 10.

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Retail Marketing: An Empirical Study •

Global best-practice retailers can achieve more than 95 percent availability of all SKUs on the retail shelves (translating into a stock-out level of less than 5 %).The stock-out levels among Indian retailers surveyed ranged from 5 to 15 percent.

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Retail Marketing: An Empirical Study

Latest Retail Players, Trends & Brands

4

India’s position globally, more particularly in the Asian region, in the race for organising the retail sector, still way behind. In India, only about four per cent of the entire retail sector is organised while the figure is at least a double digit in Asian countries like China, Thailand and Singapore. Nonetheless, India’s retail sector offers far more potential than most other countries. Observing the huge potential and opportunities therein, big overseas investors and retailers like Tesco, Carrefour, Wal-Mart, despite FDI barriers, are making efforts to step into the Indian Retail space and market their services and products. At domestic levels, all the biggies, including Reliance, Bharti, Future Group and Tata, are engaged in initiating new ventures and expanding existing retail formats. Premium financial institutions such as ICICI and HDFC have also joined in the new retail movement by extending finance in retail ventures. The potential might of India’s retail sector is not without reasons. Broadly speaking, a number of factors account for making the Indian retail sector potentially huge and viable enough to attract offshore and domestic firms, including banks. These factors include, rise in income, change in woman’s lifestyle, liberalisation and globalisation, consumerism, entrepreneurial spirit among new-age Indians, increased awareness about brands, changing lifestyles and high aspirations, improvement in rural markets and population growth, particularly of the middle-income slot. Annamalai University

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Retail Marketing: An Empirical Study Interesting, while the GDP contribution of the Indian retail sector is around 10 per cent, which is higher than any other country’s, employment in the sector is eight per cent. This amounts to the sector’s bigger role and responsibility in the sub-continent than other countries. At present, the organised retail sector is in its initial stages of development. But driven by compelling needs, be they infrastructure, technology, size, manpower or quality, the sector is fast getting organised. As it grows, it will generate more revenue, more employment and upgrade its allied sectors giving a boost to the country’s economy. But, then, what are the forces instrumental for the progress of the industry? Unarguably, they are people and organizations, for, without them, it would be difficult to even imagine the existence of the sector. Professionals in the sector are focused on future and command the progress and development of the sector. Their contributions have elevated the sector to a never-seen-before status ushering in the ongoing revolution. Without any doubt, these visionaries have helped in shaping India for a better tomorrow. Judging by the present pace of progress, India can attain, in a couple of years, its goal of being one of the top-most global markets in the world. What identifies a company, in most cases, is its brand, and, a brand, in a way, is an interface between the company and customers. Shoppers relate to brands more easily than to manufacturers. Today’s consumers are brandconscious and like to buy brands that speak out their individual personalities, identities and attitudes. Brands are indeed the face of the company, and a

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Retail Marketing: An Empirical Study positive image of a brand will attract customers and thereby help the company generate more revenue. Most Powerful People in Retail •

Ratan N Tata (Chairman, Tata) Ratan Tata is the great grandson of Tata group founder, Jamsetji Tata. He joined the Tata Group in December 1962, when he was sent to Jamshedpur to work at Tata Steel. In 1981, Mr. Tata was named Chairman of Tata Industries and, in 1991, he took over as group chairman from JRD Tata. Under Mr. Tata’s guidance, Tata Consultancy Services went public and Tata Motors was listed on the New York Stock Exchange. His dream was to manufacture a car costing Rs 100,000 (1998: approximately $2,200; today: $2,258). He realized his dream by launching the car in New Delhi Auto Expo on January 10, 2008. The car is expected to be sold to the public from December 2008 onwards.

•

Mukesh Ambani (Chairman and MD, Reliance Industries Limited) He joined Reliance in 1981 and initiated Reliance’s backward integration

from

textiles

into

polyester

fibres

and,

further,

into

petrochemicals. In December 2007, following a strong share price rally in his three group companies viz. India’s most valued firm Reliance Industries, Reliance Petroleum and Reliance Industrial Infrastructure, the net worth of Mukesh Ambani rose to $63.2 billion (Rs 2,49,108 crore). The retail business wing of Mukesh Ambani’s Reliance Industries, Reliance

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Retail Marketing: An Empirical Study Retail is eying on investing Rs 25,000 crore in the coming two to three years with a motive of complete exploration of retail operations. •

Kishore Biyani (Group CEO, Future Group) Having a rich experience of 25 years in the industry, Kishore Biyani, 46, is credited for the launch of Home Town, Future Money, Future Media and Future Logistics. One thing he would like to change in retail industry in India would be to bring more and more Indians into the fold of modern retail. His role models include Verghese Kurien, Rahul Bajaj, Sam Walton and many other great personalities. He believes that India is at a point of inflection and the years ahead will see new formats, new business models and new opportunities coming up.

•

Kumar Mangalam Birla (Chairman, Aditya Birla Group) Forty years-old Kumar Mangalam Birla took on, at the age of 28, the challenge of turning a sprawling and hidebound family business into a modern conglomerate. He succeeded his father in 1995 when the group had revenues of Rs 8,000 crore and market capital of Rs 8,000 crore. Within 10 years, the revenues rose to Rs 33,000 crore and the company boasts of a market capital of nearly Rs 30,000 crore. Under his chairmanship, the group has entered into the domestic organised retail market with an investment of up to Rs 9,000 crore.

•

Mukesh Wadhumal Jagtiani (Chairman, Landmark Group) Mukesh Wadhumal Jagtiani has around 35 years’ experience in retail industry. He began his career in 1973 with a single store in Bahrain

Annamalai University

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Retail Marketing: An Empirical Study measuring 5,000 sq ft. Employing 17,500 persons from 35 different nationalities, the Group has retail presence of six million sq ft with its over 570 stores across 10 countries. In 2007, the Group opened around 140 stores. Other achievements include entering new market (China) with the opening of two Babyshop stores in Shanghai, launching a new furniture brand named ‘uniQue’, opening of first ‘SPAR’ branded hypermarket in Bangalore by Max Hypermarkets through a license agreement with SPAR. •

Sunil Bharti Mittal (Founder, Chairman and Group CEO, Bharti Enterprises) Recipient of Padma Bhushan and a graduste from Punjab University, Chandigarh, Sunil Bharti Mittal started his career at the age of 18 and founded in 1976 Bharti Enterprises with a modest capital. Today, at 50, his enterprise figures among the ‘top five’ in India with a market capitalisation of over $ 35 billion (approximately Rs 1,400 billion) and employing over 30,000 people. Bharti has recently forayed into the retail sector and inked a 50-50 joint venture agreement with world’s biggest retailer, Wal-Mart for cash-and-carry business in 2006.

•

Mehul Choski (Chairman and CEO, Gitanjali Group) He is known for his keen sense of business excellence, charismatic leadership initiative and exceptional vision. He joined the group in 1981 and formed, in1985, Gitanjali Gems Ltd, the flagship company of the group. The Gitanjali Group hlds the largest number of diamond jewellery brands in India and these include Gili and D’damas. His vision and

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Retail Marketing: An Empirical Study excellent foresight led him to craft the Gili brand almost a decade ago when branded jewellery was still unheard of in India. •

Pia Singh (Director, DLF Ltd.) A graduate from the Wharton School of Business, University of Pennsylvania (USA) with a degree in finance, she has worked for the riskundertaking department of GE Capital, the investment division of General Electric, USA. She heads DT Cinemas and is also actively engaged in developing the company’s luxury and super luxury retail destinations across 100 locations throughout India.

•

Akhil Chaturvedi (Director, Provogue (India) Ltd.) The co-founder of Provogue, he has broad experience in the field of marketing of FMCG products. Prior to Provogue, he has worked with leading MNCs and Indian companies over a span of a decade and has also worked with Coopers and Lybrand Consulting Group. He is responsible for business development supply chain management. As on March 31, 2007, Provogue fashions were available across 98 Provogue studios and 67 national chain store locations.

•

DPS Kohli (Chairman, Koutons Retail India Ltd.) Having recently been awarded with the title of ‘Udyog Vibhushan fo Excellence in Industrial Performance’ by the Institute of Trade and Industrial Development., he has experience of 17 years. He would like to undo barriers to years. He would like to undo barriers to interstate trade and exercise a uniform single tax on all goods and services and remove

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Retail Marketing: An Empirical Study service tax. He believes that the organised retail in India is potentially the largest sector. Efficiencies in this sector will lead to gains and welfare. A 10 per cent-reduction in the price of goods through efficiency of retail means a 10 per cent-increase in the welfare of the entire population. •

Sameer Gehlaut (Chairman and Founder, Indiabulls Group) A graduate in mechanical engineering from the Indian Institute of Technology, Delhi, he was one of the three engineers selected by Haliburton to work for its international services business in the year, 1995. Under his leadership, Indiabulls (set up in financial year 2000) has grown from a securities broking company to one of the leading business conglomerates in the country. He has recently been named the 88th most influential person in business across Asia-Pacific by Asimoney.

•

Ram Chandra Agarwal (CMD, Vishal Retail Ltd.) Working with Vishal all the way since its inception and having 21 years of experience, various achievements such as receiving Retail Entrepreneur of the year award go to the credit of Ram Chandra Agarwal. One thing he would like to change in Indian retail is making VAT uniform across all the states. He believes retailing in India is witnessing huge revamping and the latest research has rated India as the top destination for retailers. The organised retail sector is expected to grow stronger than GDP in the next five years driven by changing lifestyles, burgeoning income and favourable demographic outline.

•

Sanjay Chandra (MD, Unitech)

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Retail Marketing: An Empirical Study At 35, he is one of the youngest and most successful entrepreneurs in India. He moved outside India to do his graduation and master’s course in business administration from the University of Massachusetts, USA and returned in 2002 to join the family business. In 2005, he became the Managing Director of the company and has been instrumental in creating and launching several projects in the Indian real estate industry. He has also taken Unitech beyond the borders by getting Unitech Corporate Park listed on London Stock Exchange’s Alternative Investment Market (AIM). He is currently leading the company’s foray into hospitality and airports development.

Most Powerful Brands in Retail •

Big Bazaar Big Bazaar, a retail venture of Future Group, is not just another hypermarket. It caters to every need of the family. Big Bazaar scores over other stores by its value-for-money proposition for Indian customers. It has opened the doors into the world if fashion and general merchandise including home furnishings, utensils, crockery, cutlery, sports goods and much more at prices that will surprise consumers. The company is now looking at opening a total of 300 Big Bazaar stores. It has introduced the neighbourhood concept of retail by opening stores in residential areas. It will also introduce new business segments such as health and wellness.

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Retail Marketing: An Empirical Study Current Stores: 80 Upcoming Stores: 300 •

Reliance Fresh Reliance Retail, the 100 per cent subsidiary of Reliance Industries, launched Reliance Fresh, the first of its multi-format retail forays involving an investment of Rs 25,000 crore in Hyderabad in October 2006. In this format, the focus is on fresh fruits and veggies and staple products that consumers buy very frequently. As of now, there are 453 Reliance Fresh stores operational across India. Reliance Fresh sells vegetables and fruits sourced from farmers through the company’s agri hubs. Current Stores: 489 Upcoming Stores: 1,000

•

Pizza Hut Pizza Hut of Yum! Brands, Inc. that has also KFC, Taco Bell, A&W and Long John Silver’s, is a very popular international brand in casual dine-in restaurant segment. The brand made its foray into India with a restaurant in Bangalore in June 1996. With 27 per cent market share of the eating-out market and over 70,000 footfalls per day across the country, Pizza Hut is geared to create an ideal eating out experience for its patrons. In India, Pizza Hut has 136 restaurants across 35 cities including Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Pune and Chandigarh. The company plans to double its business in India in the next three years.

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Retail Marketing: An Empirical Study Current Restaurants: 136 •

ITC’s Wills Lifestyle Over the last seven years, ITC’s Lifestyle retailing business division has established a nationwide retailing presence through its Wills Lifestyle chain of exclusive specialty stores. Beginning with its initial offering of Wills Sport relaxed wear from the first store at South Extension, New Delhi in July 2000, it has expanded its basket of offerings to the premium consumer with Wills Classic formal wear, Wills Clublife eveningwear and a tempting range of designer accessories. Current Stores: 40 Upcoming Stores: 80

•

D’damas Various brands of the group include Nakshatra, Asmi, Sangini, D’damas. Numerous brands that have made a mark in the Indian milieu come under the brand, D’damas and these include Forevermark Solitaire, Glitterati, Collection G, Gold Expressions, Vivaaha, Bollywood Gold and Inspirations.

•

Gili Gitanjali Group strategically positions itself as the leading diamond studded jewellery-manufacturing company. Today, it has the largest fullyintegrated diamond and jewellery manufacturing plant in the country. In 1994, the group introduced India’s first ever branded jewellery, Gili. Gili’s primary brand value is ‘Genuine diamond and gold jewellery at affordable

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Retail Marketing: An Empirical Study price’. It is the first jewellery brand that brought diamond jewellery within the reach of the mass. •

Croma Croma is a countrywide chain of retail outlets for multi-brand consumer electronics and durables from Infiniti Retail (a 100 per cent subsidiary of Tata Sons). Woolworths, Australian retail giant, provides Croma with technical support and strategic sourcing facilities from its global retail network. Croma offers to its consumers the country’s widest range of consumer electronics and durables – over 6,000 products, with 180 brands in eight categories. Current Stores: 31 Upcoming Stores: 100

•

Adidas Established in 1996, adidas India Marketing Pvt. Ltd is the Indian subsidiary of adidas Group AG. The adidas Group is one of the global leaders within the sporting goods industry. Having completed almost a decade in the country (India), adidas today has a total of 113 exclusive stores across the country. Current Stores: 113 Upcoming Stores: 150 - 200

•

Titan Titan Industries is India’s leading manufacturer of watches and jewellery and the world’s sixth largest manufacturer brand of watches.

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Retail Marketing: An Empirical Study Established in 1984 as a joint venture between the Tata Group and Tamil Nadu Industrial Development Corporation, the company transformed the Indian watch market, offering quartz technology with international styling. The company currently manufactures three main watch brands viz. ‘premium segment’, fastrack, and Sonata along with several sub brands like Titan, Edge, Titan Raga, and Nebula. The company has launched its first Swiss made watch, Xylys and also markets Tommy Hilfiger brand. Current Stores: 222 •

@home @home, retail division of 850 crore-company Nilkamal Ltd, is a market leader in plastic business. Launched in 2005, @home is a chain of large format retail store. It houses imported furniture, furnishings, home accessories, lights, kitchens, flooring and all that requires for home décor and interiors. On the average, size of each @home store measures 22,000 sq ft. In terms of store layout design, ambience and visual merchandising, the chain offers an international shopping experience in India. Currently, operating 11 stores in eight metros (including Mumbai, Bangalore and Chennai) with around two lakh sq ft of retail space, @home is writing new retailing rules in its category and provides, besides consultative services, many innovative services including financing. Current Stores: 11 Upcoming Stores: 70

•

Reliance TimeOut

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Retail Marketing: An Empirical Study In December 2007, Reliance Retail Ltd launched ‘Reliance TimeOut’, a one-roof shop for books, music, stationery, toys and gifts. Spread over 21,000 sq ft of area and housing over 56,000 products, the outlet offers to customers an extensive range of merchandise in books, music, stationery, toys and gifts. The company plans to expand into different locations in the country, including tier I and II cities. In the next three years, it plans to open 45 stores. The company has launched a pilot project, under which it opened two stores in Bangalore and Gurgaon, and the third one would be rolled out at Kochi in March 2008. The first store with 21,000 sq ft space was opened in Bangalore and the company proposes to launch the third one in Kochi and it will be spread over 23,000 sq ft area. Current Stores: 2 Upcoming Stores: 45 •

Cygnus Laxmi Diamond’s jewellery operations span the entire gamut including sourcing and procurement, cutting and polishing, assorting and manufacturing. With a turnover of over 1500 crore, Laxmi has sales offices and jewellery units all over the world. ‘Cygnus’ is a constellation of stars that is shaped like a swan. The Cygnus brand became, within just four years, one of the leading jewellery brands in India. In terms of consumer recognition and overall success, Cygnus is, indeed, within ‘top 3’ jewellery brands. Cygnus’ distribution module was focused on three distinct

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Retail Marketing: An Empirical Study segments: Cygnus fine jewellery stores (24 outlets), shop-in-shops (125) and traditional outlets (60). Current Stores: 24 Upcoming Stores: 10 •

PVR Started as a dream in 1997, the multiplex became, within a decade, a 70 mm reality: The first multiplex, PVR Bangalore, India’s largest ever multiplex was opened in the form of 11-screener. Today, the chain has 89 screens across the country. Its singular belief is ‘Movies first’. PVR Cinemas will soon have a very firm national footprint with 250 screens across the country. PVR plans to open cinemas soon in many cities like Delhi, Mumbai, Chennai, Jalandhar, Amritsar, Ludhiana, Aurangabad, Latur and other territories. PVR’s distribution arm, ‘PVR Pictures’, acquires and distributes Indian and international firms. Current Stores: 89 Upcoming Stores: 250

•

Lifestyle Lifestyle International (P) Ltd was incorporated in India in 1998. It is a part of the prestigious USD 1.5 billion Landmark Group (Dubai). Each Lifestyle store brings together five concepts under one roof apparel, footwear, children’s wear and toys, furniture and home décor. Positioned as a trendy, young, colourful and vibrant store, Lifestyle offers consumers not only just the ease of shopping experience. Currently, there are 18

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Retail Marketing: An Empirical Study stores

across Ahmedabad,

Bangalore,

Chennai,

Delhi,

Gurgaon,

Hyderabad, Jaipur, Mumbai and Pune. The company plans to open 35 Lifestyle stores and 15 Home Centre stores in three years. Current Stores: 18 Upcoming Stores: 35 •

Subway Founded in 1965 by Fred De Luca and Peter Buck, Subway is a wholly owned subsidiary of Doctor’s Associates Inc. (DAI). It is the second largest fast food chain in the world. The company has over 28,788 franchised units in 86 countries in the world. The first Subway restaurant in India was opened in December of 2001 in the Saket area of New Delhi. Subway’s growth in India has been very encouraging. During last year, Subway opened 45 new restaurants. Current Stores: 112 Upcoming Stores: 135

•

More Aditya Birla Group started with a simple mission, ‘to change the way Indian shops’. And, to achieve this goal, the team started with the understanding of consumer her needs, expectations and areas of dissatisfaction. Striving to fulfill this growing need of the Indian consumer by offering a solution to the inconvenience, inconsistency and lack of variety she experiences in her everyday shopping ritual, the retail promise of the Aditya Birla Group is aptly called ‘more’. The retail offering is

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Retail Marketing: An Empirical Study currently planed with the following two formats: supermarket and hypermarket. By March 2008, there should be nearly 500 more stores in the country, with a pan-India presence. The Group has plans to have two hypermarkets in place shortly. Current Stores: 500 •

Yo! China Started by an enterprising team of six individuals, Yo! China operates 30 outlets in trendy locations across the country. Yo! China is India’s first and largest Chinese fast food chain. With its tagline od ‘Chinese food, Chinese prices’, Yo! China, is a trademark owned and operated by Moods Hospitality Pvt. Ltd. On the average, over five lakh guests per month visit Yo! China restaurants. The chain delivers food to two lakh homes/offices. To maintain consistency in food and ensure top quality, production is centralized from a 8,000 sq ft base-kitchen at Gurgaon. All staff personnel are trained on ‘production hygiene’. Chefs are also trained on all menu preparations where the quality of each dish is classified into its appearance, portion size, freshness and taste. Current Outlets: 30 Upcoming Outlets: 300

•

Woodland Started in 1992, Woodland Shoes have created a niche for itself with the up-market discerning clientele. Woodland shoes, with a small turnover of Rs 7.7 million in 1992, have crossed Rs 1000 million mark

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Retail Marketing: An Empirical Study during the fiscal year 1999-2000. The brand is poised for steady growth of nearly 20 per cent every year. Woodland was introduced to the Indian market in 1992 primarily via wholesale distribution network and a couple of Aero-owned shoe retail stores. Today, the wholesale distribution is service by a network of 50 distributors covering the entire country. Practically, every good shoe store in all metropolitan and major town(s) is retailing Woodland shoes. •

Levi Strauss (India) Pvt. Ltd. Levi Strauss (India) Pvt. Ltd (LSIL) is a Bangalore-based, wholly owned subsidiary of Levi Strauss & Co. (LS & Co.), San Francisco. The company markets the Levi’s, Dockers and Levi Strauss Signature brands in India. Levi Strauss (India) Pvt. Ltd was established in 1994 and brought authentic original American Jeans-wear to India by launching the iconic Levi’s Brand. Current stores: 700

•

Westside Established in 1998, Trent Ltd is part of the Tata Group that operates ‘Westside’, one of India’s largest growing chains of retail stores. Trent entered into the hypermarket business in 2004 with ‘Star Bazaar’. In 2005, Trent acquired ‘Landmark’ that offers a vast assortment of books, music, movies and stationery. Trent agreed in 2006 to anchor the next 12 DLF malls across several cities of India. Already, 28 Westside departmental stores measuring 15,000 to 30,000 sq ft each have been

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Retail Marketing: An Empirical Study established in 19 cities that include Mumbai, Bangalore, Ahmedabad and Ludhiana. Westside stores have several departments such as men-wear, women-wear, kids-wear, footwear, cosmetics, perfumes and handbags, household accessories, lingerie and gifts. Current stores: 28 Upcoming stores: 100 •

Lacoste Brought in India by Brenard, Lacoste recognized Turner Morrison Group as its partner and formed Sports and Leisure Apparel Limited, the Lacoste licensee in India. After painstaking efforts, the first Lacoste boutique was inaugurated by Brenard Lacoste at Vama, Bombay in October 1993. Though the Lacoste range in India includes a wide range of garments, accessories, footwear, leather bags for ladies and gentlemen, every company employee is instilled with the conviction that they manufacture only one product ‘Quality’. The brand has grown steadily over the last 14 years. Today Lacoste is redefining the retail landscape and the experience through globally synchronized collections introducing new categories and opening new concept boutiques across the country. Current boutiques: 37

•

Kwality Wall’s Hindustan Unilever Limited is India’s largest FMCG company. Its mission is to add vitality to life. Kwality Wall’s launched in 1995, is the company’s mester brand for ice-cream. Through single unit operated

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Retail Marketing: An Empirical Study franchisees, the brand launched over 110 parlours countrywide in 2006. Continuing the trend in 2007, the brand has inducted over 100 franchisees. With over 300 parlours, Kwality Wall’s is one of the largest ice cream parlours chain in India. For expansion countrywide, the brand is looking at partnering with enterprising franchisees in many cities (across the whole country) including NCR, Ludhiana, Jaipur, Kolkata, Hyderabad and Goa. Expected requirement of franchisees every year is around 100 in number. •

Reebok In 1995, Reebok started operations in India through its 100 per cent subsidiary Reebok India Company. In a short duration of over nine years, it has become a leading marketer and distributor of sports and fitness footwear, apparel and sports equipment in India. The company has an extensive distribution network: it reaches out to its target customer through 500 exclusive Reebok stores, 200 shop-in-shop outlets and 2,500 dealer outlets. The company intends to capture the hearts and minds of young people worldwide by creating a deep genuine connection with youth culture. Current stores: 600 exclusive Upcoming stores: 750 - 800

•

Home Town Home Solutions Retail (India) Ltd, part of the Future Group, is India’s

most

Annamalai University

comprehensive

chain

of

home

making

and

home

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Retail Marketing: An Empirical Study improvement stores. HomeTown provides consumers with all that go into building a house and everything to make it a ‘home’. It also makes services of a specialized experts’ team available to consumers. The store is divided into three sections. While exhibitions sections have live displays (around 150 in numbers) of various rooms such as living room and dining room, markets section features products like sofa sets and kids furniture. The services section offers service options such as Mr. Plumber and Mr. Electrician.

Currently

present

in

Noida,

Hyderabad, Ahmedabad,

Bangalore and Pune, HomeTown displays products from all the major manufacturers from India and abroad. Current stores: 5 Upcoming stores: 4 •

Hidesign Dilip Kapur ventured out with the brand Hidesign in late 1970s. in the beginning Hidesign was retailing via distributors. However, from the last few years, the company ramped up its own-retail presence not only in India but also on international shores. Internationally, Hidesign sells in more than 15 countries in Europe, America, Asia, Africa and Australia. It has stores in the USA, Russia and UAE and intends to enhance its retail presence through similar exclusive stores in other parts of the world. In India, the Rs 101-crore company has 37 stores. Capetown and Abu Dhabi are also in the radar for opening of the outlets. Hidesign already has one store each in Shanghai, Hong Kong and the US, apart from two stores in

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Retail Marketing: An Empirical Study Russia and also three in Dubai. The company is also looking, for expansion, at San Diego, San Francisco and the Californian coastal cities. Current stores: 50 Upcoming stores: 10 •

Tommy Hilfiger Tommy Hilfiger brand was launched in India in April 2004. Tommy Hilfiger himself was in India to launch the brand. It was a two-city launch (Delhi and Bangalore). The launch activities included store opening events and a fashion show in Delhi. Today, Tommy Hilfiger is the only premium designer wear segment brand to have reached a national foot print successfully. It is present in 10 prominent cities with its flagship stores. Arvind Murjani Brands Pvt. Ltd is the sub licensee for Tommy Hilfiger (apparel). It offers a wide range of apparel (men and women) and accessories that include watches, fragrances, eyewear, leather goods, handbags and men’s undergarments. Current stores: 9

•

Food Bazaar Flagged off in April 2002, Food Bazaar a Future Group venture is a chain of large supermarkets with a difference. The best of Western and Indian values have been put together to ensure customer satisfaction and comfort while shopping. The western values of convenience, cleanliness and hygiene are offered through pre-packed commodities and the Indian value of ‘see-touch-feel’ are offered through the ‘bazaar-like’ atmosphere

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Retail Marketing: An Empirical Study created by displaying staples out in the open, all at very economical and affordable prices without any compromise on quality. Current stores: 122 (29 standalones, 92 shop-in-shop) Upcoming stores: 210 •

Spencer’s ‘Spencer’s quality’ is a time-tested phrase, which has been ingrained in the minds on Indian consumers. In 2007, Spencer’s retail was one of the fastest growing organised retailers in India. The group is adding 30 stores a month and has retail area of 1.3 million sq ft. in 2008, the company plans to add over one million sq ft in trading area under Spencer’s brand of hyper, super, daily and express stores. Currently, they are having revenue of over Rs 80 crore per month, which is likely to double by March next year. Spencer’s retail has several formats such as Spencer’s daily, super, hyper and express. Current stores: 400 Upcoming stores: 30 - 40

•

Esprit Esprit is an international youthful lifestyle brand offering smart luxury at affordable prices. Designed (with customers in mind), clothing and accessories are made with a special Esprit twist. The brand is for the current lifestyle of today. That is Esprit’s core philosophy. Customers can trust Esprit’s guidance in today’s crowded fashion environment, because all lines are contemporary and stylish. So, it is not surprising that Esprit is

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Retail Marketing: An Empirical Study one of the brands with highest rate of repurchases. In other words, it has the most loyal regular-customers. Esprit is all about lifestyle, attitude and not about age. It is a common thread, an international language that customers worldwide understand. •

Puma Puma is the global athletic brand that successfully fuses influences from sports, lifestyle and fashion. Puma’s unique industry perspective delivers the unexpected in sport lifestyle footwear, apparel and accessories through technical innovation and revolutionary design. Established in Herzogenaurach, Germany in 1948, Puma distributes products in over 80 countries. Puma opened its first exclusive showroom in India in 2006. The company would also use India’s expertise in garment sector and would manufacture sportswear in the country. It would also export garments manufactured in India. Current stores: 15 Upcoming stores: 30

•

Baskin Robbins Baskin Robbins entered the Indian market in 1993 through a joint venture between its parent company Allied Domeq Quick Service and the Ghai Group whose operations span a diverse range of interests and areas. Today, Baskin Robbins is one of the world’s largest ice cream franchisees, with more than 5,600 locations of which over 250 are in India. After 14 years, Baskin Robbins has become a part of daily lives and is one

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Retail Marketing: An Empirical Study of the brands indelibly linked with the discerning Indian consumer. In India, Baskin Robbins has presence in 60 cities. Current stores: 275 Upcoming stores: 100 •

Provogue The company was incorporated on November 11, 1997 as Acme Clothing Private Limited. Provogue stands for fashion and not for pure apparel and this, in itself, makes it the leader instantly. Its designs are cutting-edge and radical and epitomize in mantra, ‘Redefining fashion’. The company launched the fashion brand ‘Provogue’ in March 1998, and with a short span of seven years; it has established a strong brand identity in the minds of urban consumers.

•

Raymond The company has over 50 years’ experience in organised retail. With a 33 million-metre capacity in wool and wool-blended fabrics, Raymond commands in worsted suiting over 60 per cent market share in India and ranks amongst the first three fully-integrated manufacturers in the world. Currently, Raymond has more than 430 stores in India, Middle East and South Asia comprising ‘The Raymond Shop’ (TRS) and EBOs, spread across 170 cities with approximately one lakh sq ft of dedicated retail space. By 2010, Raymond plans to have a network of over 950 stores in the country, with over two million sq ft of retail space. The

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Retail Marketing: An Empirical Study company has diverse product range of nearly 20,000 designs and colours of suiting fabric to suit every age, occasion and style. Current stores: 430, 170 exclusive Upcoming stores: 950 •

Hypercity Hypercity Retail (India) Ltd is part of the K Raheja Corp. Group, a leader in the Indian retail sector. Hypercity, hypermarket in the true sense, is a 1.2 lakh sq ft plus format, which stocks a wide array of product categories – groceries, food, home needs, fresh food, garments, sports and fitness equipment, consumer durables. Recently, Hypercity Retail along with Shopper’s Stop Ltd has entered into franchise agreement with the Home Retail Group, UK to offer for the first time a unique multichannel shopping experience under the brand name of HyperCITY Agros to consumers in India. Current stores: 1 Upcoming stores: 60

•

Metro Shoes In the year of freedom (1947), o lone footwear store opened its doors to the public in Colaba. Over the past five decades, the company and the brand name have become synonymous with unmatched quality, skilled craftsmanship and high-fashion products in the footwear industry. Metro Shoes has a countrywide network of exclusive Metro showrooms at

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Retail Marketing: An Empirical Study 52 prime locations across 25 cities in India. The network has been designed to offer an extensive collection of footwear and accessories. Current stores: 74 Upcoming stores: 200 •

McDonald’s McDonald’s

is

one

of

the

world’s

great

entrepreneurial

organisations with four out of every five restaurants worldwide run by an affiliate partner of the company or a franchisee. There are about 30,000 restaurants in more than 119 countries serving around 50 million people everyday. McDonald’s India, a locally owned company is, is now 10 years young. It is managed by two joint ventures viz. Connaught Plaza Restaurants Pvt. Ltd run by joint venture partner, Mr. Vikram Bakshi and Hard Castle Restaurant Pvt. Ltd run by joint venture partner Mr. Amit Jatia. The company aims to set up five more restaurants in Punjab including cities like Ropar and Patiala. It also plans to set up a food processing plant with an investment of Rs 100 crore. It targets to have 131 restaurants in India, with 77 in northern and eastern regions and 53 in southern and western regions. Current restaurants: 131 Upcoming restaurants: 40 •

Club City Club City Hospitality is a brand of Franchise Management Company Pvt. Ltd, which is a part of the Franchise India Holdings Ltd. the

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Retail Marketing: An Empirical Study company plans to have 200 outlets and expand its operations by launching food courts in malls, multiplexes, airports, highways etc. club City has 15 food brands under its umbrella that offers to its customers a perfect cuisine-mix with an array of food varieties such as Dosa Plaza, Shanghai Post, Masala Country, Pizza & Co. Current stores: 43 Upcoming stores: 24 - 30 •

Crossword Crossword Bookstores Ltd, a wholly-owned subsidiary company of Shopper’s Stop Ltd, is India’s leading department store chain. The holding company inter-alia also acts as a master franchisee of the company. Since inception on October 15, 1992, Crossword has received high recognition for its achievements. Crossword, with 40 stores, is present across Mumbai, Bangalore, Ahmedabad, Gurgaon, Ghaziabad, Pune, Vadodara, Kolkata, Chennai and Hyderabad. Besides several innovations including tech aspect, Crossword features large, spacious, well laid out stores and cheerful interiors that encourage people to stay on and browse and make looking for books a much more pleasurable experience. Current stores: 48 Upcoming stores: 52

•

Copper Chimney Blue Foods Pvt. Ltd is a ‘partnership’ founded by four reputed businessmen experienced in setting up and managing restaurants, with

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Retail Marketing: An Empirical Study accomplishments spanning a wide range of markets and functions. Today, a blue food brand menu includes Bombay Blue, Noodle bar, Copper Chimney, Cream centre, Spaghetti Kitchen, Coffee Blues, Blue Sea and Spoon at various locations across India. Thirty five years ago, Copper Chimney opened its door to cater to the demand for Mughlai cuisine, a perennial favourite. Since then, this famous brand has been synonymous with delectable Mughlai and ‘North India Fare’. The restaurant is an indispensable part of the rich culinary heritage of Mumbai. Current restaurants: 9 Upcoming restaurants: 5 •

Cinemax India Ltd. Cinemax India Ltd is the subsidiary of the prestigious Kanakia Group, which has made, through successful realty business, a holistic contribution to elevating modern lifestyles in Mumbai. Started with Cinemax, Goregaon in 1997, the company has taken the movie-goingexperience to a new level. With high profile premiers and celebrity events hosting at Cinemax, Versova, the company has almost ushered in a revolution by offering recliner seats, massage chairs, karaoke, anytimeticket machines, luxurious and expensive interiors and best customer services. The largest multiplex chain in Maharashtra, Cinemax is all set to invest 840 crore for expansion. Current screens: 51 Upcoming screens: 400

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Retail Marketing: An Empirical Study •

Café Coffee Day Café Coffee Day is division of India’s largest coffee conglomerate, Amalgamated Bean Coffee Trading Company Ltd (ABCTCL), a Rs 450 crore ISO 9002 certified company. Café Coffee Day pioneered the café concept in India in 1996 by opening its first outlet at Brigade Road, Bangalore. Remained restricted to a very few people till late 1990s, coffee drinking in India grew as need for relaxed ‘hangouts’ for urban youths began to emerge. Recognizing this, Café Coffee Day embarked upon the journey of becoming an organised retail café chain with distinct brand identity. The chain plans, by 2010, to have 1,000 cafés in India and 50 cafés internationally. Current cafés: 533 Upcoming cafés: 1,000

•

Samsonite Samsonite came into being in India since 1996 as Samsonite India Pvt. Ltd. under 60:40 joint venture with the Tainwala family. The company commands a market share of almost 32 per cent of the total Indian luggage industry, which is estimated to be worth Rs 8 billion. The plant has an annual hard sell capacity of 100 lakh units. Almost 80 per cent capacity is being exported. Current stores: 167 Upcoming stores: 50

•

Bata

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Retail Marketing: An Empirical Study Bata, the Czech shoe major, was incorporated way back in 1931 as Bata Shoe Company Private Limited. In 1973, the company went public and changed its name to Bata India Limited. A leading player in the Indian footwear industry, Bata is a brand backed by quality, reliability and trust. It is the only footwear brand that offers quality and fashionable footwear for the entire family. Bata has been on an aggressive expansion mode and plans to add 200 international-look stores in the next two years. The company is also working towards positioning itself as a vibrant and contemporary companies by introducing new and exciting products, which are stylish, competitively priced and give value for money. Current stores: 1,000 Upcoming stores: 200 •

NEXT NEXT is one of the emerging giants in the organised retailing of consumer electronics and home appliances products. It stocks the entire range of consumer durables – right from air-conditioners, LCD and Plasma TVs, home theatre systems, washing machines, refrigerators, microwaves to small home appliances. Besides its own brands, NEXT has some of topmost brands such as Electrolux, HCL, Hyundai, Kelvinator, Kenstar, LG, NEXT, Nokia, Onida, Philips, Sahara, Samsung, Sansui, Toshiba and Videocon. Current stores: 215 Upcoming stores: 400

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Retail Marketing: An Empirical Study •

Maspar Maspar was set up in the year 2002, as a step towards integrating the parent company which has been manufacturing home furnishings for the export market for over 35 years. Supplier to prominent furnishing houses like Mark & Spencer, Ikea and Waverly, it brings its international quality standards to the Indian market. The team behind Maspar believes that Indian homes are becoming more and more contemporary. Ornate curtains and lifetime investments and décor are a thing of the past. The new generation of homemakers likes fresh and changing interiors to suit their lifestyle and entertaining needs. Current stores: 9 Upcoming stores: 1

•

Viveks Vivek’s Ltd is a popular consumer electronics and home appliances retail chain in India. The company grew from three stores to more than 53 stores and the turnover increased to over Rs 350 crore ($ 80 million). It also became a public limited company from a family-run enterprise. CII and Mckinsey raved about Viveks in these terms: ‘More trusted than the brands it sells’. Current stores: 53 Upcoming stores: 100

•

Adlabs

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Retail Marketing: An Empirical Study Adlabs is the largest entertainment conglomerate in the country, Started as a laboratory for processing ‘ad films’ over three decades ago. Adlabs is the defining force in every sphere of the entertainment industry: production, distribution, processing or in cinemas. In June 2005, Reliance ADAG became a majority promoter shareholder of the company. In 2006, Adlabs forayed into television content creation by becoming majority stakeholders of Siddhartha Basu’s Synergy Communications. The new entity, Synergy Adlabs, continues to create exciting new genres for the exploding television industry in India. Management expertise and resources

acted

as

catalysts

in

synergising

various

interrelated

businesses: animation, distribution, radio and digital cinema to name a few. Current stores: 131 Upcoming stores: 30 •

Landmark Established in 1998, Trent Ltd is part of the Tata Group that operates ‘Westside’, one of India’s largest and fastest growing chains of retail stores. Trent entered into hypermarket business in 2004 with ‘Star Bazaar’. In 2005, Trent acquired ‘Landmark’ that offers a vast assortment of books, music, movies and stationery. Launched in Chennai in 1987, Landmark has, over the past 20 years, built its stores on the foundation of providing customers the widest choice and great overall experience.

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Retail Marketing: An Empirical Study Landmark stores offers exhaustive range of over one lakh titles in books and music alone. Landmark’s USP is the range and depth of its stocks. Current stores: 10 •

Ethos Ethos Swiss Watch Studios is the India’s largest retail chain for Swiss watches. Ethos entered the watch retail market in 2003, when it opened a flagship store in the heart of Chandigarh. Within just three to four years, Ethos has grown to a chain of nine stores around the country spanning Bangalore, Chandigarh, Ludhiana, Mumbai, Pune and NCR and offers more than 25 premium Swiss watch brands. The latest addition are Breguet (a high end, most revered Swiss Brand in watches) and Maurice Lacroix, one of the world’s most premium brands of complicated watches with the rare ‘double retrograde’. Considering that over 30 per cent of overall sales fall into gifting category, Ethos has recently established a comprehensive institutional sales scheme. Current stores: 15 Upcoming stores: 50

•

Koutons Koutons established its operations in garment manufacturing and exports in early 1991. The company moved up the value chain from a garment manufacturer to a retailer by opening up its own stores in 2002. The company owns two brands with unique positioning ‘Koutons’ and

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Retail Marketing: An Empirical Study ‘Charlie Outlaw’. Of these, 610 are exclusive shops while rest (537 stores) is Charlie Outlaw shops. Current stores: 621

Top Foreign Firms in Indian Retail India is shining all the way and investing in India has become one of the profitable businesses. For those who aspire to see their brand recognised and known at the global circuit, India cannot be ignored any longer. With booming economy and promising future, international players are coming onto the Indian shores. The foremost in the league was the Wal-Mart-Bharti tie up. Since then, there has been no looking-back and the retailing sector is on the way to revolutionise itself. With the entry of foreign companies in India via joint venture or cash-n-carry format, retailing is touching new heights. After Walmart-Bharti tie up, joint ventures between other Indian and international players have been catching up and the retail market of the country has immense potential to grow further into a sector completely organised. The following are the top five international retail companies: •

Wal-Mart The Wal-Mart Stores, Inc. is an American public corporation that runs a chain of large, discount department stores. According to the 2007 Fortune Global 500 reports, it is the world’s largest public corporation in terms of revenues. Sam Walton founded the company in 1962, incorporated in October 31, 1969 and listed on the New York Stock

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Retail Marketing: An Empirical Study Exchange in 1972. Wal-Mart is the largest grocery retailer in the US, with an estimated 20 per cent share of the retail grocery and consumables business, as well as the largest toy seller in the US, with an estimated 22 per cent share of the toy market. The company’s operation primarily comprises three retailing subsidiaries: Wal-Mart Stores Division US, Sam’s Club and Wal-Mart International. It does business in nine different retail formats: super centres, food and drugs, general merchandise stores, bodegas (small markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants. In 2006, WalMart was the 67th most profitable corporation (profits divided by total revenue), behind retailers such as Home Depot, Dell, and Target, and ahead of Costco and Kroger. For the Fiscal year ended January 31, 2006, Wal-Mart reported a net income of $ 12.178 billion (approximately Rs 51.12 billion) on $ 244.992 billion (approximately Rs 13,796.8 billion) of sales revenue (3.5 per cent profit margin). For the same fiscal year, WalMart’s international operations accounted for about 20.1 per cent of total sales. As of December 6, 2007, net sales for 43-week period ended November 30, 2007 was $ 301.5 billion (approximately Rs 1,260 billion) up 8.6 per cent from the previous year’s results. Revenues are up 11 per cent over last year, but profits grew less than one per cent, amid a slowdown in same-store sales. Wal-Mart India Plans: India’s Bharti Group has announced a deal with US retail giant Wal-Mart to launch the first mega-retail store joint

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Retail Marketing: An Empirical Study venture in the country. The Bharti-Wal-Mart venture would make as initial investment of $ 100 million (approximately Rs 4 billon), which could further increase to $ 1.46 billion (approximately Rs 58.4 billion). •

Carrefour SA Carrefour SA is a French international hypermarket chain with a global network of outlets. After Wal-Mart, it is the second largest retail group in the world in terms of revenues. Carrefour operates mainly in the European Union, Brazil, Argentina and Columbia; but it also has shops in North Africa and Asia. In French, Carrefour means crossroad. The first Carrefour store was opened on June 3, 1957 in suburban Annecy near a crossroad. Today, it is the smallest Carrefour location in the world. The group was created by Marcel Fournier and Denis Defforey and grew into a chain from this first sales outlet. In 1991, it got merged with Promodes, known as Continent, one of its major competitors on the French market. In the Americas, Carrefour has presence in four countries: Brazil, Argentina, Columbia and the Dominican Republic. Active in three types of retail distribution viz., hypermarkets, supermarkets and hard discounters, Carrefour is entering the cash-n-carry market in Brazil, after purchase of Atacadao. In 1989, the company became the first international retailer to establish a presence in Asia when it entered Taiwan through a joint venture with Uni President Enterprise Corporation. It leveraged the experience it gathered in Taiwan to expand into other Asian markets. Carrefour also operates in the UAE and Jordan with a joint venture with

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Retail Marketing: An Empirical Study Majid al Futtaim. In March 2007, Carrefour opened a store in Kuwait in the Avenues mall. India plans: Carrefour has floated two separate units in India. Carrefour WC & C India Pvt. Ltd will roll out fully-owned wholesale stores and Carrefour India Master Franchise Co. Pvt. Ltd will enlist an Indian company to open the French firm’s branded stores in the country.

•

Tesco Tesco PLC is a British-based international grocery and general merchandising retail chain. It is the largest British retailer in terms of both global sales and domestic market share, and is the world’s third largest retailer, just behind Wal-Mart and Carrefour. Tesco now controls over 30 per cent of the grocery market in the UK, approximating the combined market share of its closest rivals, Asda and Sainsbury’s. in 2007, the supermarket chain announced over £ 2.55 billion (approximately Rs 196 billion) in profits. Originally specializing in food, it has diversified into areas such as discount clothes, consumer electronics, consumer discs and music downloads, internet service, consumer telecoms, consumer health insurance, consumer dental plans and budget software. The first Tesco store was opened in 1929 in Burnt Oak, Edgeware, Middlesex. The first self-service store was opened in St Albans in 1947 (still operational in 2007 as a Metro) and the first supermarket in Maldon in 1956. The Tesco brand first appeared in 1924 and the founder is Jack

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Retail Marketing: An Empirical Study Cohen. Tesco’s UK stores are divided into five formats, differentiated by size and the range of products sold: Tesco Extra, Tesco superstores, Tesco Metro stores, Tesco Express stores and One stop. Britain’s biggest retailer, the supermarket group Tesco, has announced record annual profits of more than $ 3.5 billion (approximately Rs 140 billion), 13 per cent higher than previous year’s. Tesco now operates in 13 nations, with over three thousand stores and employs nearly half a million people. India plans: Whilst Tesco is still in the look out for a Indian partner to team up its much anticipated foray, it is believed that the company is busy scouting for talent in the top B-schools in the country and also seeking for manpower with retail background. Well, the official line is ‘it is scouting for talent for its Tesco Hindustan Service Centre’ but the unofficial talk is ‘the latest round of manpower scouting is for its retail foray’. Tesco and Tata are in talks to create a joint venture in India.

•

Burger King Burger King was founded in 1954 by James McLamore and David Edgerton. Since then, it has been using franchise model to expand to just over 11,200 stores in more than 65 countries around the globe. Burger King Holdings is the parent company of Burger King. In the US, it operates under the Burger King Brands title while, internationally, it operates under the Burger King Corporation banner. By the end of fiscal year 2006, Burger King has more than 11,220 outlets in 61 countries. The company

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Retail Marketing: An Empirical Study has more than 37,000 employees who serve approximately 11.4 million customers daily. Revenues in 2006-2007: Burger King Holdings Inc., parent to the No. 2 burger chain, posted a 41 per cent surge in its fiscal 2007 secondquarter profit. For the quarter ended on December 31, Burger King earned $ 38 million (approximately Rs 1,520 million), or 28 cents per share, against $ 27 million (approximately Rs 1,080 million) or 24 cents per share, a year ago. India plans: Burger King is in talks with DLF for setting up a joint venture (JV). •

Starbucks Starbucks was opened in Seatle, Washington, in 1971 by three partners viz. English teacher Jerry Baldwin, history teacher Zew Siegel and writer Gordon Bowker. Starbucks Corporation is multinational coffee and coffeehouse chain company based in the Unites States. Starbucks is the largest coffeehouse company in the world, with 15,011 stores in 42 countries. International journey of Starbucks began in 1996 with the first coffeehouse in Tokyo and entered the UK market in 1998 with the acquisition of the then 60-outlet-UK-based Seatle Coffee Company and re-branding of its entire store at Starbucks. By November 2005, London had more outlets than Manhattan, a sign of Starbucks becoming an international brand. Starbucks serves a variety of beverages including brewed coffee, hot chocolate, espresso, teas, Frappuccino. Also available

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Retail Marketing: An Empirical Study are bottled beverages including Odwalla, Ethos water, San Pellegrino, Izze soda, and Horizon Organic Milk. As of 2008, Starbucks was ranked by Fortune magazine as the 7th best company to work for in the United States, up from 16th in 2007. In 2006 and 2005, it was ranked 29th and 11th respectively. Revenues Starbucks earned $ 673 million (approximately Rs 26,920 million) in profit on $ 9.4 billion (approximately Rs 376 billion) in net revenues for 2007. India plans: Starbucks entered India through a distribution tie-up with the country’s leading multiplex operator PVR Ltd for its select products. PVR has started retailing Starbucks products at its select multiplexes in Mumbai and Delhi.

Three Pioneering Brands •

Shopper’s Stop Shopper’s Stop Ltd is promoted by the K Raheja Corp Group (Chandru L Raheja Group), which is one of the leading players in the country in the business of real estate development and hotels. Pioneer of organised retail in India, Shopper’s Stop Limited has been instrumental in bringing about retail revolution in India. Since its inception in 1991, Shopper’s Stop Ltd has introduced various retail formats in India. Apart from the flagship business of department stores, there are also specialty stores for books, home décor, cosmetics and maternity acre and infant

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Retail Marketing: An Empirical Study care. Shopper’s Stop Ltd has also forayed in the food & beverages business. Current stores: 21 Upcoming stores: 28 •

Barista Coffee Company Barista Coffee Company Ltd is a joint venture between the Turner Morrison and Tata Coffee. Barista, India’s largest and fastest growing retailer of fine coffees was established in 2000 by Barista Coffee Company Limited, to recreate the ambience and experience of the typical Italian neighbourhood espresso bars in India. Headquartered in Delhi, Barista currently has over 160 espresso bars across India, Sri Lanka and the Middle East. Barista traces its roots back to the old coffeehouses in Italy – the hotbeds of poetry, love, music, writing, revolution and, of course, fine coffee. Barista Coffee Company is also planning to make its 60 ‘Barista’ coffee retail chains wi-fi enabled. Italy’s Lavazza Group acquired 100 per cent stake in Barista Coffee Company Ltd in the end of first quarter 2007. Current stores: 175 Upcoming stores: 35

•

Tanishq Tanishq, started in 1995, is the jewellery business group of Titan Industries Ltd promoted by the Tata Group, India’s most respected and widely diversified business conglomerate. Tanishq is India’s largest, and fastest growing jewellery brand with 103 boutiques in 72 cities across the

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Retail Marketing: An Empirical Study country. Tanishq has recorded sales turnover of Rs 1,290 crore for the financial year 2006-2007 growing at phenomenal rate of over 40 per cent CAGR in an otherwise flat jewellery market. Current stores: 103 Upcoming stores: 20 Leading Retail Suppliers (Shopping Malls) •

City Mall, Kota, Rajasthan Location Built up Area Plot Size Site frontage Front Road width Architects

•

Scottish City Centre, Jamnagar Location Built up Area Plot Size Site frontage Front Road width Architects

•

Kota 3.0 lakh sq ft 412’ X 215’ sq ft 400 ft 200 ft Maithel & Associates, Jaipur Table 4.1

Jamnagar 8 lakh sq ft 2.20 lakh sq ft 325 ft / 671 ft 100 ft Aakar Design Studio, Ahmedabad Table 4.2

Z Square, Kanpur Location Built up Area Plot Size Site frontage Front Road width Architects

Kanpur More than 8 lakh sq ft 5 acres 130 meters 100 meters Structural – M/s Hafeez Contractor, Interior – M/s Hafeez Contractor, Singapore Table 4.3

•

The Grand Mall, Coimbatore

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Retail Marketing: An Empirical Study Location Built up Area Plot Size Site frontage Front Road width Architects •

Parsvnath Mall, Rohini Location Built up Area Plot Size Site frontage Front Road width Architects

•

Coimbatore 1.4 million sq ft 6.56 acres 325’ 6” 100 feet Bentel Associates – South Africa Table 4.4

ROHINI 2.5 lakh sq ft 7,232.81 sq meter 16.97 meters 36 meters R/W G.P. Mathur Table 4.5

Viva Collage, Jalandhar Location Built up Area Plot Size Site frontage Front Road width Architects

Jalandhar 6 lakh sq ft 3.314 acres 184’ 74’ (NH-1) RSP Akitek, Malaysia; Design Forum of Architects, Noida Table 4.6

•

Omaxe, Connaught Place Location Built up Area Plot Size Architects

•

Connaught Place, Greater Noida 19 lakh sq ft 15.42 acres Hafeez Contractor Table 4.7

Promenade, Delhi Location Total Area Architects

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South Delhi 4.5 lakh sq ft Mohit Gujral Table 4.8 Page 97

Retail Marketing: An Empirical Study •

Vasant Square, Delhi Location Built up Area Land Area Net Leasable Area

•

Delhi 4.88 lakh sq ft 19,800 meters 2,95,000 sq ft Table 4.9

Forum Value, Bangalore Location Total Retail Area Architects

Whitefield Road, Bangalore 3,00,000 sq ft Mr. Razack Sattar, Prestige Group Table 4.10

Leading Retail Suppliers (IT Companies) IT companies also play a very important role in providing various software and application solutions for simplifying the working of big retail shops and shopping malls. The following are some of the leading companies: •

JDA Software Group, Inc.

•

SAP India

•

PROTOCOL

•

HCL Infosystems Ltd

•

AGS Infotech Pvt. Ltd

Leading Retail Suppliers (Shop Fitting Companies) •

Shopworks

•

Safe Enterprises

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BRV Retail Solutions

•

Four Dimensions

•

Shark Design Studio

Leading Retail Suppliers (Logistics Companies) •

OM Logistics

•

SAFEXPRESS

•

DRS Logistics

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Retail Mix

5

India has indeed started shopping in malls and new malls are mushrooming in every nook and corner of important cities in India. But it goes without a second thought that if malls have made a huge difference in the ways India shopped; they have also invited unnecessary worries and the foremost being that of the tenant mix. Brand, Retail Mix: Retail mix can be understood as the brand outlets in malls catering to the interest of the target audience, which depends on factors such as city and location. Mr. Astitva Sen, Vice President, Retail & Consumer Goods, Technopark Advisors Pvt. Ltd, explains the basic difference between retail and brand mix. He says Retail mix refers to the plan of category-specific space allocation within a mall. For example what would be the break-up of space allocated, say, to food and non-food? Brand mix refers to the space allocation plan for various brands (national as well as local) within various categories. Adding to the concept, Mr Pradeep Seth, CMD, Stadia Group, says, The brand mix in a mall is the mixing of tenants depending on the market the mall is targeting at. For a mall to succeed, it is very important to have an appropriate mix and critical mass associated to its mix. A mall has to be conceived in such a way that it targets its market with full support. Zoning and right selection of tenants is as critical as merchandise planning and category management is to retailers. They present the character of the mall Annamalai University

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Retail Marketing: An Empirical Study and distinctiveness to the target consumer, critical for gaining customer loyalty in a highly competitive scenario. Zoning: zoning is placing the right tenant at the right place. Mall developers, therefore, first identify their anchor tenants and build their tenant mix around them. Malls are built around the three concepts of zoning, comparative buying levels and adjacency. Zoning is a criterion that is usually followed in larger scale developments. This is done to facilitate the end consumer in the selection of goods by making specific sections. Usually, zoning is product specific and / or consumer specific. For example, one case of consumer-specific zoning would be separate areas for men’s wear, women’s wear and accessories, kids section, electronics and home products. Product specific zoning is usually placement-oriented. Anchor tenants: The selection of anchor tenants is an important ingredient of the success of a mall. Anchor tenants are considered to be the crowd pullers and contribute immensely in making the mall a favourite shopping destination. An anchor tenant is a larger format store (usually, a departmental store) that supports the development to get more footfalls. The anchor stores are placed in such a way that they even out the traffic movement and act as crowd pullers and smaller tenants survive because of this traffic. It is critical for any mall developer or owner to plan and finalise anchor tenants and, then, rest of the retail mix. The advantage that anchor tenants have is they enjoy favourable terms from the developer such as lower rentals, better conversion ratios and dedicated parking space.

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Retail Marketing: An Empirical Study Consumer segment First and foremost, it’s important to understand what type of consumer segment companies are targeting at. For this purpose they must find answers of these questions: •

Who are the consumers?

•

What do they prefer buying most?

•

Which retail brand is not available?

This will assist in determining the right mix. Retail mix Create a well-planned retail mix for each level. •

Do not just fill space.

•

Have something for every age-group on the same floor. Fig. 5.1

Selecting retail mix: ‘Complementary’ is a word of utmost importance while choosing the tenants of a floor. For instance, a jewellery brand is located next to a sari store. Stating the importance of right selection of retail mix, it is very necessary for a mall developer to understand its audience. Zoning plays a vital role in making the mall a successful venture. There are various factors that affect a mall’s zoning. The most important of them is placement. Another major factor is the placement of anchors. It’s very critical that a mall developer decides on its audience, tenants and delivers what consumers expect for this helps in generating footfalls in the long-run. Success factor: To run a mall successfully, it’s of utmost importance to study the consumer behaviour and follow a slightly different approach. For

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Retail Marketing: An Empirical Study instance, if a mall is big and spread over a large area, then splitting up the anchor and key tenants can generate footfalls on every floor and push the attention of consumers. Giving a few golden rules for being successful, some critical success factors are: 1) Right-sizing the mall in accordance with the catchment’s projected consumption capacity. 2) Creating distinctiveness. 3) Providing adequate infrastructure (circulation, parking, and loading and unloading bays). 4) Partnership with key retail tenants. Hence, the process undertakes researching on the pattern of shopping behaviour and then planning the anchored and other tenant mix in a mall.

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Visual Merchandising

6

The art if ‘visual merchandising’ in India is still in its infancy. Visual merchandising (VM) can be defined in many ways viz. from the point of view of brand experience, creation of purchase triggers or overall store planning. The definition of VM that can be best is a simple outcome statement ‘convert the passerby to a browser, the browser to a spender, the spender to a bigger spender and build customer loyalty’. The essential question that one has to put to store planners is ‘Are you providing, in your entire store design, a methodology of continuously providing both space and physical approach towards customer interaction points. Planograms, aesthetics, aisle widths etc. are parts of VM process. But, the first step is to understand, anticipate and locate points within the store, which can be earmarked for VM programme of the brand. Although visual merchandising is wider in perspective, the quick common understanding is of doing up window displaying. The difficulties commonly experienced by brands and retailers alike in carrying out a VM programme are: 1. Lack of identification of physical points within the store individually for each store from window to hot spots and zones. 2. Inability to adapt a common theme or design across 30/35 stores or more.

Many brands resort to making out a common kit and dispatching it with an installation instruction and then hope for the best. This approach usually Annamalai University

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Retail Marketing: An Empirical Study covers only the window. Many a time, brands and retailers who do not have a system of identifying the sizes of windows or their multiple numbers across pan-India. A lot of them are franchisee windows and got a differential treatment. Hot spots and zones are rarely identified. 3. Ineffective planning of timing in getting the VM programme installed

across 100 stores or more in time for the theme or occasion. This mainly because of the lack of two fundamentals: a. The planning of annual VM calendar in detail with budgets. b. The lack of a clear organisation structure with accountability for the

programme. A lot of knee-jerk reactions do happen because of this. 4. Decentralising a store VM programme and giving the responsibility to the store manager often leads to inconsistency of customer experience across company-owned stores and franchisee stores. 5. As the chain goes larger and the number of multiple formats increases,

execution becomes a nightmare. The aesthetics may be world class but the execution is usually pathetic. The state of affairs will change if the followings are observed and made to happen: 1. Brands and retailers quickly realise the importance of VM as a continuous communication to the customer of their broad brand objectives. 2. They work on an annual VM calendar with clear budgets and

responsibility. 3. They really carry out planning in advance.

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Retail Marketing: An Empirical Study 4. If there is a differentiation in budgets, use the criteria of store sales whether the store is company owned or franchised. 5. Ensure that the design and the material used relate to costs short-term windows or long-terms window. Complete a prototype store and tweak it until satisfied before going national. 6. Try not involving store managers in deciding on the way the installation pans out. Centralize it or appoint an agency. 7. Today’s retailers are expanding rapidly. Invest in a separate organisation structure to control this very important communication. Do not led it be only at store opening. 8. Develop an outside agency for design and execution unless you are

prepared to invest long terms in your own people. The advantage of an agency is that the designs are more varied and exciting. An internal team tends to produce similar stuff within a period of time.

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Findings and Suggestions

7

Findings: -

Fig. 7.1 1. Retailing in India is witnessing a huge revamping exercise as can be seen

in the graph. 2. India is rated the fifth most attractive emerging retail market: a potential goldmine. 3. Estimated to be US$ 200 billion, of which organized retailing (i.e. modern

trade) makes up 3 percent or US$ 6.4 billion.

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Retail Marketing: An Empirical Study 4. As per a report by KPMG the annual growth of department stores is

estimated at 24%. 5. Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney. 6. The final link with consumer for selling & feedback. 7. Impact on the economy. 8. Accessibility in various locations. 9. Avenue to study consumer preferences & buying habits. 10. Avenue for imaginative merchandising. 11. Buying thru touch, feel & comparison without dealer influence. 12. Buys in bulk, sells in smalls. 13. Induces impulse purchase. 14. Private Labels. 15. Focus on Small cities and towns. 16. Store design. 17. Multiple formats / New segments. 18. Bringing in Technology. 19. Farm to Fridge. 20. 24 hr retailing. Annamalai University

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Retail Marketing: An Empirical Study 21. Shoppertainment: a. Changes in the lifestyle. b. Variety. c. Fun & Entertainment. d. One Stop Shopping.

Suggestions: •

Key Success factors of Conventional retail: –

Reach.

–

Credit facilities.

–

Home delivery.

–

Intangible factors.

•

Is it viable for organized retail to emulate these factors?

•

Probable opportunities for Conventional retailers: –

Renovation of the existing formats.

–

Entry of B2B companies.

–

Consortium (conglomerate).

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8

Conclusion

SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis:

Fig. 8.1 The above is the SWOT analysis of Indian Retail Industry. The ‘S’ shows all of the strengths, ‘W’ shows the weaknesses, ‘O’ shows the opportunities and the ‘T’ shows the threats which is faced by the existing players in the retail industry. The following are the some of the future directions both positive and concerns (negative) aspects of this industry.

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Future Direction: Positives: •

AT Kearney has estimated India’s total retail market at US$ 202.6 billion which is expected to grow at a compounded 30 per cent over the next five years.

•

With the organised retail segment growing at the rate of 25-30 per cent per annum, revenues from the sector are expected to triple from the current US$ 7.7 billion to US$ 24 billion by 2010.

•

The share of modern retail is likely to grow from its current 2 per cent to 15-20 percent over the next decade

•

Over next two years India will see several Indian retail businesses attaining a critical mass as growth in the industry picks up momentum driven by two key factors: o Availability of quality real estate and mall management practices o Consumer preference for shopping in new environments

•

Wal-Mart: huge plans for India. Moving a senior official from its headquarters in Bentonville, Arkansas, to head its market research and business development functions pertaining to its retail plans in India.

•

New York-based high-end fashion retailer Saks Fifth Avenue has tied up with realty major DLF Properties to set up shop in a mall in New Delhi.

•

Tommy Hilfiger, retailer of apparels, expects to open one store each in Delhi, Ahmedabad, Lucknow and Bangalore in the next four months.

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Future Directions: Concerns: •

68 million square feet of mall space is expected to be available by end of 2007, which might lead to over-capacity of malls.

•

Lack of differentiation among the malls that are coming up. One option may be to look at specialization.

•

Poor inventory turns and stock availability measures - retailers clearly need to augment their operations.

•

Operations of retailers and suppliers are not integrated. Efficient replenishment practices practiced in the Indian auto and auto-component industry

can

be

leveraged

to

implement

efficient

supply

chain

management techniques. •

Supplier maturity, in terms of adherence to delivery schedules and delivering the quantity ordered, is an issue.

•

Sales tax laws - lead to retailers having state-level procurement and storage leads to Indian retailers having higher inventories. VAT has helped alleviate this a bit.

•

Increased adoption of IT and shrinkage management will be a critical area.

•

Supply chain and customer relations followed by merchandising, facilities management and vendor development are areas which have significant gaps and proactive training is a key imperative for overcoming these.

•

Government delayed decision of clearing FDI percentage.

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Retail Marketing: An Empirical Study •

Additional burden on retailer in the form of service-tax.

•

The Political lobbying by unorganised sector to stop permitting FDI limits in the name of their Protection.

Transformation of the Interface between Manufacturer and Retailer

Fig. 8.2

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Bibliography Business Today (magazine) Retailer (magazine) M Now (magazine) www.indianretail.com www.wikipedia.org www.managementparadise.com Marketing Management, Kotler – Keller, 12-e

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Appendices

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Retail Marketing: An Empirical Study Table A.1

Fig. A.1 Most Attractive Developing Regions for Retail

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Fig. A.2

Table A.2

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Fig. A.3

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Fig. A.4

Table A.3

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Table A.4

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