Final Project

“EFFICENCY OF CUTOMER LOYALTY PROGRAMME at RELIANCE FRESH

KARTHIK NAGAR, BANGALORE”

Submitted in partial fulfillment of the requirements forthe award of the degree of

MASTER OF BUSINESS ADMINISTRATION

BYMUHAMMED ARIF K.A.

Reg No: 85201022

School of Management Studies, CUSAT

Under the guidance ofDr. Manoj Edward

Assistant professor, School Of Management Studies, CUSAT

SCHOOL OF MANAGEMENT STUDIESCOCHIN UNIVERSITY OF SCIENCE AND TECHNOLOGY

COCHIN-6820222010-2012

Efficiency of customer loyalty program at Reliance fresh

DECLARATION

I hereby declare that the project entitled “EFFICENCY OF CUSTOMER LOYALTY

PROGRAMME AT RELIANCE FRESH KARTHIK NAGAR, BANGALORE” under

the guidance of Dr. Manoj Edward, Assistant Professor School of Management Studies,

Cochin University of Science & Technology, is a bonafide record of the project work done in

partial fulfillment of MBA degree 2010-2012. This work has not been undertaken or

submitted elsewhere in connection with any other academic course.

DATE:

PLACE: COCHIN MUHAMMED ARIF K.A.

2School of Management studies, CUSAT


ACKNOWLEDGEMENT

It was a great experience doing the project in one of the leading Retail group in the Country. The project did help me a lot to understand the Indian retail sector and customer loyalty program of reliance fresh.

I would like to express my gratitude to Dr. P.R. Wilson, Director of School of Management Studies for his support.

I express my sincere thanks to Dr. Manoj Edward, Assistant Professor, School of Management Studies, for his motivation, guidance and valuable recommendations for completing of the project.

I wish to express my sincere gratitude to Mr. Hemanth Nagarajan, Reliance Retail Ltd, Bangalore, for guiding me throughout the study and sharing his valuable time for providing his information and guidance for my endeavour.

I am even thankful to my family and friends for their inspiration and timely help in completion of the work.

And at last let me thank all those who helped me in the collection of data needed for the study.

I am well aware that my words are not sufficient to acknowledge the true support and encouragement that has been bestowed upon me.

MUHAMMED ARFK.A.



TABLE OF CONTENTS

EXECUTIVE SUMMARY......................................................................................................................................3

INTRODUCTION............................................................................................................................................ 3

1.1 INTRODUCTION...........................................................................................................................................31.2BACK GROUND OF THE STUDY.....................................................................................................................31.3NATURE OF THE STUDY................................................................................................................................31.4 OBJECTIVES OF THE STUDY.........................................................................................................................3

INDUSTRY PROFILE....................................................................................................................................... 3

2.1EVOLUTION OF RETAIL.................................................................................................................................32.2RETAIL IN INDIA: BRIEF OVERVIEW..............................................................................................................32.3RETAIL: MAJOR DEVELOPMENTS AND INVESTMENTS..................................................................................32.4RETAILING OVER INTERNET..........................................................................................................................32.5RETAILING FORMATS IN INDIA.....................................................................................................................32.6CHALLENGES FACING INDIAN RETAIL INDUSTRY..........................................................................................32.7THE FUTURE.................................................................................................................................................3

COMPANY PROFILE....................................................................................................................................... 3

3.1RELIANCE INDUSTRIES LIMITED....................................................................................................................33.2 RELIANCE RETAIL LIMITED...........................................................................................................................33.3MAJOR SUBSIDIARIES...................................................................................................................................33.4 RELIANCE FRESH..........................................................................................................................................33.5ORGANIZATION CHART................................................................................................................................3

REVIEW OF LITERATURE................................................................................................................................ 3

4.1CUSTOMER LOYALTY....................................................................................................................................34.2EVOLUTION OF LOYALTY PROGRAMMES.....................................................................................................34.3OBJECTIVES OF LOYALTY PROGRAMMES.....................................................................................................3

RESEARCH METHODOLOGY........................................................................................................................... 3

5.1RESEARCH METHODOLOGY..........................................................................................................................35.2 RESEARCH DESIGN.......................................................................................................................................35.3 SAMPLE SIZE:...............................................................................................................................................35.4DATA COLLECTION.......................................................................................................................................35.5DATA ANALYSIS:...........................................................................................................................................3

ANALYSIS AND INTERPRETATION.................................................................................................................. 3

6.1INTRODUCTION............................................................................................................................................36.2MISSION, GOALS AND TASKS OF LOYALTY PROGRAMME............................................................................36.3MISSION OF LOYALTY PROGRAMME:...........................................................................................................36.4WHAT IS LOYALTY MEMBERSHIP?................................................................................................................36.5 ANALYSIS.....................................................................................................................................................3



FINDINGS AND SUGGESTIONS....................................................................................................................... 3

7.1FINDINGS......................................................................................................................................................37.2SUGGESTIONS..............................................................................................................................................37.3CONCLUSION................................................................................................................................................3

REFERENCES................................................................................................................................................. 3

APPENDIX..................................................................................................................................................... 3

EFFICIENCY OF CUSTOMER LOYALTY PROGRAMME – QUESTIONNAIRE...........................................................3



LIST OF TABLES AND FIGURES

1.LOYALTY CARD SALES................................................................................................................................. 3

2.1RELIANCE ONE CARD STATUS................................................................................................................... 3

2.2AWARENESS OF BENEFITS OF A RELIANCE ONE CARD..............................................................................3

2.3BENEFITS OF A RELIANCE ONE CARD ARE SATISFYING...............................................................................3

2.4 FREQUENCY OF USE................................................................................................................................. 3

2.5REASON FOR NOT USING RELIANCE ONE CARD.........................................................................................3

2.6 INFORMATION ABOUT THE RELIANCE ONE CARD....................................................................................3

2.7FREQUENCY OF SHOPPING....................................................................................................................... 3

2.8 RELIANCE FRESH HAS AN EXTENSIVE STOCK THAT CATERS TO CUSTOMER NEEDS....................................3

2.9 PROBABILITY OF RECOMMENDING RELIANCE FRESH...............................................................................3

2.10PROBABILITY OF RECOMMENDING RELIANCE ONE CARD........................................................................3

2.11 COMPARISON BETWEEN THE RELIANCE FRESH AND OTHER RETAILERS.................................................3

2.12 ASSISTANCE FROM THE CUSTOMER SERVICE DESK...............................................................................3

2.13CASH-BACK OFFERS ARE USEFUL THAN GAINING CASH VOUCHERS.........................................................3

2.14 CASHIER ENQUIRY FOR THE RELIANCE ONE CARD..................................................................................3

2.15RELIANCE PARTNERSHIP WITH THE DIFFERENT RETAILS..........................................................................3

2.16 LOYALTY PROGRAMMES ARE CARRIED OUT BY THE RELIANCE FRESH FOR THEIR BENEFIT ALONE.........3



EXECUTIVE SUMMARYThe retail industry is among the largest industries in India. Reliance Fresh has a strong

presence in the retail sector in India. Retailing in India is evolving rapidly , with consumers

spending growing by the unprecedented rates and with increasing number of global players

investing in this sector .organised retail in India is undergoing a metamorphosis and is

expected to scale up to meet global standards over the next five years . Today retail sector is

witnessing changes such as the opening up of retail chain by many business houses such as

Reliance, Birla group, TATA and many more .

Nowadays it is important to earn loyalty of investors, employees and customers. The essence

of customer loyalty include dimensions of customer loyalty, mission, goals, tasks of customer

loyalty as well as process of developing customer loyalty programme, choice of a target

group, implementation of customer loyalty programme, registration of participants, collection

of information about customers, storing the information, ways to communicate it with

customers, establishment of privileges to participants of the loyalty programme and

evaluation of the success of the programme.

So here I am trying to find out the “Efficiency of customer loyalty programme at Reliance

fresh. The loyalty programme of Reliance Fresh is called “Reliance One”. Customers are

made members of the scheme and by this scheme they get reward points for every hundred

rupees purchase. The membership programme helps to increase sales and build a strong

relationship with the customers. In the primary observation I found that more than 60% of

the Reliance fresh customers are having the membership card but sales through the loyalty

card is less than 40%. So I have developed a procedure to define the problem and analysed

the problem in a different way. In the primary analysis a number of factors which affect the

loyalty program of the reliance fresh . The important factors relating to the loyalty program is

analysed in this project. Consumer response were randomly collected trough questionnaire.

But for an efficient study we have to analyze whether these factors have an influence on

efficiency of the customer loyalty program. The method is adopted in the study is mostly

descriptive and analytical. A descriptive design is flexible enough to permit the consideration



of many different aspects of a phenomenon. So the study has been conducted and I have

evaluated the efficiency of customer loyalty program at reliance fresh.

Thus the study brings out the factors which affect the efficiency of customer loyalty program

of the reliance fresh and also describe the customer’s feedback regarding the reliance one

membership card. In the study it is found that different factors can have influence on the

performance of reliance one loyalty card as well as the total sale of store. There are lot of

reasons for customers not taking the reliance one membership card such as existing reward

system, other retailer’s loyalty program ,lack of communication…..etc. So more than 50 % of

loyalty card members are not using their membership card. I had put forward some

suggestions to improve the efficiency of customer loyalty program at Reliance fresh.



CHAPTER -1

INTRODUCTION



1.1 INTRODUCTIONRetailing is the interface between the producer and the individual consumer buying for

personal consumption. This excludes direct interface between the manufacturer and

institutional buyers such as the government and other bulk customers. A retailer is one who

stocks the producer’s goods and is involved in the act of selling it to the individual consumer,

at a margin of profit. As such, retailing is the last link that connects the individual consumer

with the manufacturing and distribution chain.

Retail, according to Concise Oxford English Dictionary, is “the sale of goods to the public for

use or consumption rather than for resale”. The barter system was first known retail form;

then the currency changed hands; we had the handcart vendor selling goods in the streets; of

late we have a pop & mom stores which compliment the neighborhoods stores. The first

retailer in India includes Bata, Pantaloon, Bombay Dyeing, Spencers, and Nilgiris &

Higginbotham. The current retail scenario is controlled by the likes of Shoppers’ Stop, Brand

Outlets, Big Bazaars etc. The top 4 world players include Wal-Mart, Carrefour, Tesco and

Metro. The opportunities as mentioned are aplenty with close to 15000000 sq.feet of retail

space is under construction for various malls & shopping centers across the country

Retailing consists of the sale of goods or merchandise, from a fixed location such as a

department store or kiosk, 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 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 decades. Indian retailing is a big



business by itself .its total turnover was estimated to be Rs:1400000 crore in 2010. It is

expected to grow at a fast rate in the recent future due to the recovery of the Indian economy.

in the most conservative estimate . This turnover left the retailers with at least Rs:1400

crore(taking the average margin @10 of sales ) as gross profit.

The Indian Retailers sector will offer many interesting trends and opportunities in the coming

year. A major area of concern in India regarding growth of organised retail and entry of

foreign players is that traditional retails channels such as ‘Kirana’ stores will be wiped out.

With in Indian retail market growing from us$336 billion in 2006 to us$590 billion in 2011,

even if share of modern retail grows from current level of 4% to estimated 16% in next five

years, the absolute market size of traditional retail will grow from around us$324 million in

2006 to us$493 billion in 2011. These figures shows that modern and traditional retail will

successfully co-exist.

1.2BACK GROUND OF THE STUDY As the retail sector is growing very fast, new players are entering into the market very often,

so that customers will have a wide range of choices and this will increase the bargaining

power of the customer and more additional benefits they receive. As the retail sector in India

is mainly unorganized there is a wide scope for organised players . Loyalty of the customer

is a major factor in the growth of a retail store. Currently different companies in the retail

sector have different customer loyalty programme such as Reliance one, Pay back card, Tata

star card etc. So here I am trying to find out the efficiency of customer loyalty program at

Reliance fresh.

1.3NATURE OF THE STUDY The study focused on analysing the efficiency of customer loyalty program at reliance fresh.

The efficiency should have evaluated on basis of specific factors such as customer

satisfaction with loyalty program, customer benefits, customers preference , customer

expectation ….etc. The method adopted in the study is mostly descriptive and analytical. The

collection of primary data and secondary data has been attempted through personal interview

and observation. The secondary data have also been supplemented at appropriate places. Also

the customer survey had to be done inside the store to increase its reliability. The data

collected by the study is analysed and interpreted. Information from other retailer’s customer

loyalty program were taken to make the study effective. Based on the findings certain



suggestions are made which enables Reliance Retail to serve customers better and improve

the efficiency of customer loyalty program.

1.4 OBJECTIVES OF THE STUDYThe primary objective of this study is to understand how important a part is the loyalty

program adopted by retail firms to push the firm into its future.

Some other objectives are stated as follows:

1. To study the extent of loyalty among customers, shown towards the store under study

2. To measure the awareness customers has about Reliance One Membership card.

3. To know the existent loyalty programs in the retail sector and analyze the various

competitors in the sector

4. To study the “Loyalty Sales Percentage”

5. To study the customers’ response towards loyalty programs

6. To understand the role of loyalty programs in building long lasting customer

relationships

7. To study the role of loyalty programs to raise the sales figures of the firm under study

8. To measure the satisfaction of customers regarding the loyalty programme.



CHAPTER – 2

INDUSTRY PROFILE



2.1EVOLUTION OF RETAIL

Retail, according to Concise Oxford English Dictionary, is “the sale of goods to the public for

use or consumption rather than for resale”. The barter system was first known retail form;

then the currency changed hands; we had the handcart vendor selling goods in the streets; of

late we have a pop & mom stores which compliment the neighborhoods stores. The first

retailer in India includes Bata, Pantaloon, Bombay Dyeing, Spencers, and Nilgiris &

Higginbotham. The current retail scenario is controlled by the likes of Shoppers’ Stop, Brand

Outlets, Big Bazaars etc.

The top 4 world players include Wal-Mart, Carrefour, Tesco and Metro.

The opportunities as mentioned are aplenty with close to 15000000 sq.feet of retail space is

under construction for various malls & shopping centers across the country. Retailing

consists of the sale of goods or merchandise, from a fixed location such as a department store

or kiosk, 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 theend of the

supply chain. Manufacturing marketers see the process of retailing as a necessary part of their

overall distribution strategy

What is retailing?

The sale of goods or commodities in small quantities directly to Consumers.



Buy, Sell & Move

Buy, Move & Sell

Having gone through some of the terminologies in retail and having seen a broad outline of

retail now let’s look into the 3 basic things, which govern the retail market.

1. Buy

Buying would involve the following activities, which would mean setting the guiding

principles for all the merchandise decisions that a retailer makes. It should reflect target



market desires, retailers, institutional type, market place positioning, defined value chain,

supplier capabilities, costs, competitors & product trends

2. Move

It can be easily said but the processes that are involved in the “move” part are complex but

simple. From the product stage through the processing stage to the packed ones the move

stage would continue. Various levels that involves in “move” part are: The buyer shortlists

the product, places the order. The vendors receives the order, process the same, packs and

send it to the distribution center from where it reaches the store for the customer to buy.

One of the fast picking up aspects of the logistic in India is the COLD CHAIN. More and

more organizations are looking for various aspects of cold chain to ensure that the products

where temperature plays a vital role is maintained and sustained till such time the sale

happens. The Merchandising and Category management is another important function of the

retail industry. In this we have to opt for right product, place, quantity, quality, mix, price and

time. Each of the stores would operate on certain basic business projection and all others will

follow a typical pattern. For this pattern to be arrived, the merchandise management plays a

big role. The merchandise can make or break an organization of its profitability. When we

say category management, it would amply the assortments of products the customer sees as

reasonable substitutes for each other with similar characteristics. It also covers the process of

managing merchandise in a retail business with the objective of maximizing sales

3. Sell

Finally of the Buy, Move & Sell comes the selling part of it which involves a running of a

retail stores. Operations as it is known are the crucial functions, which derive its strength

from various other faculties.

The beginning of the day is done with the store being opened by the competent person. The

first activity to happen will be the housekeeping activities followed by the staff scheduling.

The morning’s meetings happen chaired by the head of the store. The stock outs are

established and the replenishments happen as the day progresses, though it is suggested that

replenishments of the stock should always happen when the customer is not there. The head

of the store usually inspects any one or all the departments of the store, which is otherwise,

called the “FLOOR WALK”.

The cashier would ensure that all the cashiers have enough and correct float cash, whether the

POS role, card swap machine and pen is in place or not. In starting of the day head cashier



gives all cashiers a sum of Rs.1500 as loan. Having set everything in place, the store would

then be opened for the customers. The department’s heads in turn would brief their team on

the achievements of the previous day and set target of the day. During this brief any incidents

worth mention would also be discussed and the promotion offers, which are current, will also

be taken up. Orders will be placed for all the stock out SKU follows up will also be done for

and also ensuring that the stocks are kept as per the planograme are checked. It’s just not the

duties mentioned above but selling also happen simultaneously.

At the end of day the process of concluding the activities is called the “END OF THE

DAY” activities. As the person who is in charge of closing the store goes around checking

whether the locks are in place or not; the high value merchandise counters are properly

secured;

Check for any person hidden in the change rooms or cloaks rooms; the cashier would ensure

that all the money that has been given as float tallies apart from the money that need to be

submitted by the respective cashiers. There will be a checklist that needs to sign off together

by the security as well as the in charge for having checked for conformity at the end of the

day.

The Indian Retail market is worth a whooping 930000 crores. If one has to divide between

the organized and unorganized sectors the major contribution comes from the unorganized

sector, which contributes close to 98% of the total retail market. The balance of 2% amounts

anywhere between 18-2000 crores.

The difference between organized and unorganized sectors in the US & some of the Far East

Asian countries are pretty low unlike in India. With the advent of seasoned players in the

field of retail in India, the gap is likely to be abridged in the coming years.

The difference between them is 85:15 in favor of organized sector in the US and 81:19 in the

favor of the organized sector in Taiwan. The employment opportunities in retail is pretty

high. But again the ratio of organized and unorganized is skewed towards the unorganized

sector. While the organized retail sectors deploys 500000 people & the unorganized sector

deploys close to 80 times the workforce. Factors that influence the growth in retail

The DINK/HINK families, working women, working parents and the rising disposable

income has contributed to the growth of Retail across. The middle-income group is the fastest



growing segment in the country today. Further the electronic media is also aiding the growth

of the Retail industry. To summarize the top 6 factors those drive the growth of the retail

Industry in India would be as follows:

The Demographics

Lifestyles

Needs and Desires

Shopping Attitudes and Behavior

Retailers action

Environmental Factors

These six factors clubbed with a co-coordinated logistics make the sale happen. As in any

industry there is a social commitment also to be fulfilled. These can be recapitulated as under:

Quality products

Competitive prices

Wide range to choose from

Employment opportunities that are created

The economy would experience sea of change and

Would mean a WIN WIN situation to everyone

2.2RETAIL IN INDIA: BRIEF OVERVIEW

Indian retail business values at around US$ 550 billion as of now and about four per cent of it

accounts for the organised sector. A report by Boston Consulting Group (BCG) has revealed

that the country's organised retail is estimated at US$ 28 billion with around 7 per cent

penetration. It is projected to become a US$ 260 billion business over the next decade with

around 21 per cent penetration.

Another report by Business Monitor International (BMI) suggests that enhancing middle and

upper class consumer base has set vast opportunities in India's tier-II & tier-III cities. The

greater availability of personal credit, improved mobility, better tourism et al, are all small,

but significant contributors to the growth of Indian retail industry. Also, more and more



companies are willing to invest in India due to significant growth forecasts on gross domestic

product (GDP) (BMI predicts average annual GDP growth of 7.6 per cent through 2015).

The factors responsible for the development of the retail sector in India can be broadly

summarized as follows:

Rising incomes and improvements in infrastructure are enlarging consumer markets

and accelerating the convergence of consumer tastes.

Looking at income classification, the National Council of Applied Economic

Research (NCAER) classified approximately 50% of the Indian population as low

income in 1994-95; this has declined to 17.8% in 2006-07.

Liberalization of the Indian economy which has led to the opening up of the market

for consumer goods has helped the MNC brands like Kellogg, Unilever, Nestle, etc. to

make significant inroads into the vast consumer market by offering a wide range of

choices to the Indian consumers.

Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

The internet revolution is making the Indian consumer more accessible to the growing

influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping in

creating awareness about global products for local markets. About 47% of India’s population

is under the age of 25; and this will increase to 55% by 2015. This young population, which

is technology-savvy, watch more than 50 TV satellite channels, and display the highest

propensity to spend, will immensely contribute to the growth of the retail sector in the

country. As India continues to get strongly integrated with the world economy riding the

waves of globalization, the retail sector is bound to take big leaps in the years to come.

The Indian retail sector is estimated to have a market size of about $ 180 billion; but the

organized sector represents only 3% share of this market. Most of the organized retailing in

the country has just started recently, and has been concentrated mainly in the metro cities.

India is the last large Asian economy to liberalize its retail sector. In Thailand, more than

40% of all consumer goods are sold through the super markets and departmental stores. A

similar phenomenon has swept through all other Asian countries. Organized retailing in India



has a huge scope because of the vast market and the growing consciousness of the consumer

about product quality and services.

A study conducted by Fitch, expects the organized retail industry to continue to grow rapidly,

especially through increased levels of penetration in larger towns and metros and also as it

begins to spread to smaller cities and B class towns. Fuelling this growth is the growth in

development of the retail-specific properties and malls. According to the estimates available

with Fitch, close to 25mn sq. ft. of retail space is being developed and will be available for

occupation over the next 36-48 months. Fitch expects organized retail to capture 15%-20%

market share by 2010.

A McKinsey report on India says organized retailing would increase the efficiency and

productivity of entire gamut of economic activities, and would help in achieving higher GDP

growth. At 6%, the share of employment of retail in India is low, even when compared to

Brazil (14%), and Poland (12%).

Total Private Consumption Expenditure in India – 375 Billion USD

Retail Sale – 205 Billion USD

Organized Retail – 6.2 Billion USD (3%)

Retailing – 35% of GDP

Luxury Retail Soars High

Without wasting any time to react on the Indian Government's decision of allowing 100 per

cent foreign direct investment (FDI) in single-brand retail, luxury brand retailers have

announced their expansion plans in Indian markets. Brands like Vertu, Christian Loubotin,

Armani Junior, among others, will open their exclusive stores at DLF Emporio in early 2012,

while brands like Van Laack and Diesel Black Gold will commence their operations by

January 2012 itself.

A report by CII-AT Kearney revealed that Luxury brands market in India grew at a healthy

20 per cent during 2010 reaching a size of US$ 5.8 billion. It further stated that the Indian

luxury market stood at a value of US$ 4.76 billion in 2009 and is anticipated to be worth US$

14.7 billion by 2015.



Where on one hand the luxury electronics and car segments registered a growth of over 35

per cent, fine dining grew by almost 40 per cent in 2010. Apparel and accessories, watches

and personal care witnessed a substantial growth rate, between 24-30 per cent.

Similarly, India has surpassed the US to become the third largest men's luxury jewellery

market in the world in 2011, stated the researcher Euromonitor International. The researcher's

study projected Indian men's jewellery market at Rs 954 crore (US$ 183.76 million) in terms

of sales and made an anticipation for it to grow 36.4 per cent in 2012.

2.3RETAIL: MAJOR DEVELOPMENTS AND INVESTMENTS

After the US, Germany has also come up in full support of FDI in retail in India. Metro AG,

one of the prominent German retail chains, has shown intentions to venture in Indian markets

along with US' Wal-Mart and France's Carrefour.

Cumulative FDI inflows in single-brand retail trading during April 2000 to September 2011

stood at US$ 44.45 million, according to the Department of Industrial Policy and Promotion

(DIPP).

Certain developments and investments that took place on the Indian retail canvas recently are

discussed below-

Real estate major DLF's subsidiary DLF Brands has struck a deal with Chicago-based

Claire's Stores Inc to bring the latter to India and open its 75 stores over 2011-16.

Claire's is a specialty retailer which targets young girls through over 3,000 stores

globally.

French retail chain, Carrefour is on an expansion spree in India wherein it is about to

finalise lease deals across 10 to 12 sites in the country to open cash-and-carry

(wholesale) outlets.

The world's largest retailer Wal-Mart will open an innovation lab in Bengaluru by the

end of 2011. The lab would be tasked to drive the US$ 422-billion company's next

generation innovations that impact shopping behavior among the customers.

US fast moving consumer good (FMCG) giant McCormick, that has recently formed

a joint venture (JV) with Indian basmati rice brand Kohinoor Foods, intends to tap



Indian packaged food industry and achieve sales of US$ 85 million in the first year of

operations in the country.

FMCG firm GSK Consumer Healthcare (GSKCH) has made a debut into Indian

breakfast cereal market by launching oats cereal under its flagship brand ‘Horlicks'.

The breakfast cereal market in India is currently dominated by PepsiCo and Kellogg's.

Oral and dental hygiene products manufacturer Colgate Palmolive has decided to invest Rs

200 crore (US$ 38.52 million) to establish a greenfield facility at an upcoming industrial

estate in Sanand which is being developed by state-run Gujarat Industrial Development

Corporation (GIDC).

2.4RETAILING OVER INTERNET

Indian retailers and consumer durables companies are joining the web bandwagon with

India's online shopping industry registering phenomenal growth of almost 100 per cent

annually. India has more than 100 million internet users, out of which around half of them are

up for online purchases and the statistics is growing every year, says Google. Furthermore,

the Indian online retail industry would register annual growth rate of 35 per cent to increase

from current size of Rs 2, 000 crore (US$ 385 million) to Rs 7,000 crore (US$ 1.35 billion)

by 2015, according to a leading industry body.

The US$ 10 billion Indian e-commerce market is expanding exponentially (it grew 47 per

cent in 2011 to reach the present size) as rising internet penetration is making customers buy

more and more stuff online. Investors are also betting high in the industry; they poured

around US$ 200 million into Indian e-commerce start-ups in last couple of years.

Retail brands are expected to bring a great transformation in online space. Women's apparel

retail brand Biba and tyre brand Bridgestone have become available online recently. Internet

and Mobile Association of India (IAMAI) expects online advertising to increase by 30-40 per

cent in 2011-12 on back of increased internet usage by retailers.

Government Initiatives



Finally paving way for foreign retailers like Wal-Mart, Tesco and Carrefour to open

independent retail stores in India, the Government has initiated steps towards allowing 51 per

cent FDI in multi-brand retail and raising FDI limit in single brand retail from 51 per cent to

100 percent

2.5RETAILING FORMATS IN INDIAMalls: The largest form of organized retailing today. Located mainly in metro cities, in

proximity to urban outskirts. Ranges from 60,000 sqft to 7, 00,000 sqft and above. They lend

an ideal shopping experience with an amalgamation of product, service and entertainment, all

under a common roof. Examples include Shoppers Stop, Pyramid, and Pantaloon.

Specialty Stores: Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer

Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing

on specific market segments and have established themselves strongly in their sectors.

Discount Stores: As the name suggests, discount stores or factory outlets, offer discounts on

the MRP through selling in bulk reaching economies of scale or excess stock left over at the

season. The product category can range from a variety of perishable/ non perishable goods.

Department Stores: Large stores ranging from 20000-50000 sq. ft, catering to a variety of

consumer needs. Further classified into localized departments such as clothing, toys, home,

groceries, etc.

Department Stores: Departmental Stores are expected to take over the apparel business from

exclusive brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop,

which started in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across

India and even has its own in store brand for clothes called Stop!.

Hyper marts/Supermarkets: Large self service outlets, catering to varied shopper needs are

termed as Supermarkets. These are located in or near residential high streets. These stores

today contribute to 30% of all food &grocery organized retail sales. Super Markets can

further be classified in to mini supermarkets typically 1,000 sqft to 2,000 sqft and large

supermarkets ranging from of 3,500 sqft to 5,000 sq ft. having a strong focus on food &

grocery and personal sales.



2.6CHALLENGES FACING INDIAN RETAIL INDUSTRY

The tax structure in India favors small retail business

Lack of adequate infrastructure facilities

High cost of real estate

Dissimilarity in consumer groups

Restrictions in Foreign Direct Investment

Shortage of retail study options

Shortage of trained manpower

Low retail management skill

2.7THE FUTURE

The retail industry in India is currently growing at a great pace and is expected to go up to

US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the

year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer

spending has also gone up and is also expected to go up further in the future. In the last

four year, the consumer spending in India climbed up to 75%. As a result, the India retail

industry is expected to grow further in the future days. By the year 2013, the organized

sector is also expected to grow a CAGR40% .



CHAPTER – 3

COMPANY PROFILE



3.1RELIANCE INDUSTRIES LIMITEDDhirubhai was born on 28 December 1932 at Kukaswada near Chorwad, Junagadh district.

Dhirubhai was intelligent. He was also highly impatient of the oppressive grinding mill of

the school classroom. He chose work which used his physical ability to the maximum.

During weekends, he began setting up onion/potato fries stall at village fairs and made

extra money which he gave to his mother. When he was 16 years old, he moved to Aden,

Yemen. He worked with A. Besse & Co. for a salary of Rs.300 (Present Day $6.49). Two years

later, A. Besse & Co. became the distributors for Shell products, and Dhirubhai was

promoted to manage the company's filling station at the port of Aden.

Ten years later, Dhirubhai Ambani returned to India and started "Majin" in partnership with

Champaklal Damani, his second cousin, who used to be with him in Aden, Yemen. Majin

was to import polyester yarn and export spices to Yemen . The first office of the Reliance

Commercial Corporation was set up at the Narsinatha Street in Masjid Bunder. It was 350

sq ft (33 m2). room with a telephone, one table and three chairs. Initially, they had two

assistants to help them with their business. Sensing a good opportunity in the textile

business, Dhirubhai started his first textile mill at Naroda, in Ahmedabad in the year 1977.

Textiles were manufactured using polyester fibre yarn.

Dhirubhai started the brand "Vimal", which was named after his elder brother Ramaniklal

Ambani's son, Vimal Ambani. Extensive marketing of the brand "Vimal" in the interiors of

India made it a household name. Franchise retail outlets were started and they used to sell

"only Vimal" brand of textiles. In the year 1975, a Technical team from the World Bank

visited the Reliance Textiles' Manufacturing unit. This unit has the rare distinction of being

certified as "excellent even by developed country standards" during that period.

Dhirubhai Ambani is awarded with starting the equity cult in India. More than 58,000

investors from various parts of India subscribed to Reliance's IPO in 1977. Dhirubhai was



able to convince large number of small investors from rural Gujarat that being shareholders

of his company would be profitable. Reliance is the largest producer of polyester fibre and

yarn in the world, with a capacity of 2.5 million tonnes per annum. Reliance invests

significant amounts on R&D in the polyester sector. Reliance Technology Center, Reliance

Testing Centre and Reliance Fibre Application Centre constantly develop and introduce

innovative products for the textile industry.

Reliance Industries Limited is Asia's largest manufacturer of Polypropylene (PP). With a

combined capacity of over 1 million tonnes, Reliance figures amongst the Top Eight

Polypropylene producers in the world. Reliance holds a 70% share of the Indian Market

and caters to 3% of the world’s consumption of PP.

RIL's Journey



3.2 RELIANCE RETAIL LIMITED”Growth through Value Creation”.

Reliance is gearing up to revolutionize the retailing industry in India. Towards this end, they

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 they 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.

The magnitude and strategy of RIL's retail foray is sure to have far reaching social and

economic implications by directly influencing the lifestyles of hundreds of millions of

consumers, besides indirectly impacting the livelihood of tens of millions. This indirect

impact will be on those engaged in a wide range of economic activities including farming,

consumer goods manufacturing, and a host of myriad other services that bring hundreds of

categories of goods and services from the producers to the final consumers.

Business analysts feel that Mukesh Ambani's advantage is his huge financial strength coupled

with a track record of implementing mega projects in record time, at globally competitive

capital costs. MukeshAmbani has learned to dream big from his great visionary father, the

late Dhirubhai H Ambani, who is acknowledged as one of India's tallest, most ambitious and

successful business leaders for his sharp business acumen and skilled people management



ability. The announced retail project is any indication; MukeshAmbani has indeed inherited

all these skills from his father. Re-writing the rules of business has been the forte of

Dhirubhai and Mukesh is attempting the same in retail. Quite clearly, RIL is now all set and

ready to conquer the organized retail domain. The Indian retail scene is now going to witness

some real fast-paced action, with the consumer – as always – having the best deal

3.3MAJOR SUBSIDIARIES Delight Proteins Limited

Reliance Agri Product Distribution Limited

Reliance Autozone Limited

Reliance Corporate IT Park Limited

Reliance Hypermart Limited

Reliance Trends Limited

Reliance digital Retail Limited

Reliance-Grand Vision India Supply Private Limited

Reliance-Vision Express Private Limited

Retail Concepts & Services (India) Limited

3.4 RELIANCE FRESHReliance Industries launched its first retail format called Reliance Fresh in Hyderabad.

Spread over 2,000-5,000 sqft, 11 such Reliance Fresh neighborhood convenience stores were

come up in the city. These stores sell fresh fruit and vegetables besides staples (dal, atta, rice)

as well the company’ sin-house brand Reliance Select and Reliance Value. 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 Endeavour 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.

The Fresh stores at Hyderabad are part of a pilot project, which will help company

understand customer needs. The pilot for this format will be taken too many other cities over

the next few months. Next on the company’s list are bigger cities including Delhi and

Mumbai.RIL intends to invest close to Rs 25,000 crore over the next five years in the retail

business. The company plans to establish 4,000 retail outlets across various formats by then,

and is eyeing sales of Rs 1, 00,000 crore over the 5-year period from the retail business.

Besides Reliance Fresh, the company also plans to launch larger format stores called “Feel

Fresh Plus” which will be spread over 10,000-15,000 sq ft. The Fresh Plus stores will stock

fruit and vegetables as Well as apparel, consumer electronics, FMCG items and even

medicines. From Hyderabad, these stores will travel to Mumbai and Delhi where Reliance

has identified up to 80 locations each.

But even as the retail debut kicks off with fruit and vegetables, it seems the company is doing

a rethink on whether to get into the larger formats such as hypermarkets and supermarkets.

These two formats require over 1 lakh sqft of space and may not come up at prime city

locations. Instead, Reliance is contemplating tapping alterative sites such as the SEZs for

opening hypermarket.

The strategy is to open one Reliance Fresh store in a radius of three to four km to serve

1,000-2,000 families. This means about 30-40 stores in the major metros. Reliance Fresh is

selling vegetables and fruits sourced from farmers through the company’s agri hubs. Reliance

Fresh would carry fresh fruits and vegetables, staples, top-up grocery, on-food items and

dairy products and a whole lot of other categories at very competitive prices. All the stores

opened have an average area of about 1,800sqft and an average of about 20 sales associates

attending to customers in each store open from 8 a.m. to 10 p.m. on all seven days of the

week. A targeted sales turnover of Rs 90,000 crore (US$ 20 billion) by 2010 with a planned

investment of Rs 30,000 crore over the next five years – that's the retail vision of

MukeshAmbani and his RIL retail team. RIL's retail venture seems all set to achieve the

status of being the flag-bearer of India Retail Inc, and that too in record time!

Culling information from all possible sources, Images F&R Research attempts to put the

Reliance Retail jigsaw in order and see how the concept and strategy differentiates from the



existing competition, how it impacts the intermediaries and consumers, and more

interestingly, how will it stand up to the real competition from global retail powerhouses like

Wal-Mart, Carrefour, Target, Metro, Sears and Tesco that are eager to enter the Indian retail

arena once the FDI barrier is lifted. Read on for the full story…

It's been in the news for quite some time now. Earlier, about a year ago, it was only

whispered in close industry circles. Slowly the whispers become louder, and the word gained

ground that India's largest private sector company, Reliance Industries Limited (RIL), is

entering the Indian retail sector in a real big way But with virtually nothing coming from

anyone in the know inside RIL about their retail plans, this has to be one of the most closely

guarded secrets of India’s corporate story.

Amidst all sorts of speculations in the media circles about RIL's intended retail foray, the

word finally came out on January 23, 2006, when the Mukesh Ambani controlled Reliance

Industries Limited presented the mega retail initiative plans to its board of directors who

subsequently gave their consent to pursue the retail business through a wholly-owned

subsidiary of the company –likely to be christened Reliance Retail Limited. The Reliance

Retail blueprint envisages nation-wide chains of hypermarkets, supermarkets, discount stores,

department stores, convenience stores and specialty stores, in about 800-odd cities and towns

across the length and breadth of India. The RIL board of directors approved the initial phase

of the retail foray at an estimated cost of Rs 3,350 crore (US$ 750 million).

That was big news for both the national and international media, which went all along again

with intense speculation. Giving full respect to the importance of this announcement, more

than one leading international daily – chiefly, The Financial Times – gave this news a front-

page treatment, speculating (like many others)that this investment could just be an initial

trance of a much larger commitment from Reliance Industries towards the retail project.

Just how big and grand this investment is for the Indian retail sector can be gauged by the

simple fact that the entire Indian retail sector is estimated to be at Rs 1050,000 crore (US$

233 billion) – growing at five per cent annually – and the estimated share of organized retail

is only Rs 36,000 crore (US$ 8 billion), at present, albeit growing at over 30 per cent every

year .That makes Reliance Retail's proposed investments equivalent to about 10 percent of

India's organized retail market – such a level of investment in the Indian retail arena has been

unprecedented in the country's most promising sunrise industry – retail.



So much so, projections by the Images-KSA India Retail Report 2005 of an organized retail

market of Rs 100,000 crore (US$ 22 billion) by 2010 now appears conservative, likely to be

achieved much earlier than 2010.If Indian retail was lacking a whole-hearted and full-

blooded thrust from a big and large corporate house (apart from the lukewarm investments

made by the Tata sand ITC), it is now all set to change. Mukesh Ambani, who has been

nourishing retail ambitions for quite some time now, has clearly positioned himself in to the

role of redefining the entire landscape of Indian retail.RIL Set to Become World's Largest

Real Estate Property Owner. What is even more interesting is that Reliance Industries

Limited will far out surpass the Catholic Church in becoming the world's largest owner of

real-estate property by virtue of its mega Retail and Satellite Township plans, in the next two

to three years!

Now what exactly does this mega retail plan portend for the Indian retail sector ?In fact, what

exactly are RIL's plans, in terms of retail strategy? How will RIL differentiate its stores and

concept from existing players who have already moved into the retail space earlier, and have

already established a good foothold? How will this impact the existing retail majors – the

likes of Pantaloon Retail, Trent India, Shoppers' Stop, RPG, etc? How will the consumer

benefit from RIL's venture and how will intermediaries like traders, suppliers and farmers all

along the supply chain network benefit? What will be the USP of Reliance Retail?

And, more significantly, how will this impact the major international retailers who plan to

enter the Indian retail market? Reliance Retail is in fact giving India for the first time a real

feel of the scale at which these global retail powerhouses actually operate, it is preparing

India to stand up to the ensuing competition and in the process, allow consumers the full

benefits of modern retail.



3.5ORGANIZATION CHART


CEO

Zonal Chief Executive

State Head

Supervisor

Cluster manager (for 8 Stores)

Store Manager

Asst. Store manager


CHAPTER – 4

REVIEW OF LITERATURE


Customer service executive


4.1CUSTOMER LOYALTYComplexity of modern business requires managers to strive for innovative strategies to

acquire and retain customers in any product market field. As acquiring new customers is

getting costlier day by day, business organizations have offered continuity/loyalty

programmes to retain/reward existing customers and maintain relationships. The premise of

CRM is that once a customer is locked in, it will be advantageous to both the organization as

well as customer to maintain relationships and would be a win-win situation for both.

Consumers find it beneficial to join such programmes to earn rewards for staying loyal.

Through loyalty programmes, firms can potentially gain more repeat business, get

opportunity to cross-sell and obtain rich customer data for future CRM efforts. Modern

retailers supplement traditional competitive initiatives like stocking national & international

famous brands, providing customer service, competitive price, wide merchandise range,

product promotions and location, through loyalty schemes.

Definition:

“Loyalty Programme” can be defined as a programme that allows consumers to accumulate

free rewards when they make repeated purchases with a firm.

Oliver defines consumer loyalty as’ a deeply held commitment to rebuy or repatronise a

preferred product/service consistently in the future’, thereby causing repetitive same

brand(store) or same brand set purchasing, despite situational influences and marketing

efforts having the potential to cause a switching behaviour.” According to four stage loyalty

model proposed by Oliver, loyalty consists of belief, affect, intentions and action. It is

implied that loyalty develops over time and consumer moves through the above four stages.

At the first stage which is cognitive, loyalty is determined by the information about the offer

i.e. price and quality. It is largely influenced by consumer’s evaluative response of the value

perceived of an offer-a loyalty programme. The second stage which is affective loyalty,



relates to a favourable attitude towards an object. Based on value perception and experience,

the consumer develops feelings resulting into like or dislike. Conative loyalty which is the

third stage implies that attitudinal loyalty must lead to a desire to intend an action e.g. revisit

the store, repurchase a brand. Once intentions transform into action, it results into action

loyalty. The previous three stages may result in a readiness to act. This readiness is

accompanied by consumer’s willingness to search for the favourite offering despite

considerable effort necessary to do so

Factors which influence/shape loyalty are: satisfaction emanating from prior purchase

experience with a retail outlet motivating a consumer to come to the store again; switching

barriers, once a consumer signs a loyalty program, if he leaves it, he loses the point

accumulated on previous purchases made. Thus once a consumer becomes a member of any

loyalty program, switching barriers get created; interpersonal relationships, particularly in

the context of a retail store, floor persons, billing persons in charge and customers interact. If

a customer frequently visits the store, interpersonal relationships develop as shopping of

groceries requires frequent visits to the store. This also helps in strengthening loyalty &

creating a switching barrier; attractiveness of alternatives, in the context of retail store if

there is any new outlet which is closer than the current store; proximity enhances the

attractiveness of it & may create a barrier to loyalty. If a retail store comes out with a very

special promotion then also temporarily it may become very attractive to a potential customer

& hence may trigger a drift on that purchase occasion. If the customer has signed in a

particular loyalty programme then he would weigh alternatives & accordingly decide to stay

loyal or drift.

4.2EVOLUTION OF LOYALTY PROGRAMMES It is believed that in mid 1800s, co-operatives pioneered this concept. Literature mentions the

famous Green Shield Stamp – a co-operative dividend programme. However, real impetus

was seen in 1990s with technological developments in developed markets. Wide ranging

programmes were in existence from ‘save your till receipts’ to sophisticated smart cards and

complex coalition programmes involving huge customer base and large number of loyalty

partners with greater diversity of rewards.

In US the value of loyalty programs was worth $6 billion in early 2000, and there were 2,250

separate loyalty programs. Recent study found that 90% of Americans actively participate in



some type of loyalty programs. Forrester research study found that 54% of primary US

grocery shoppers belong to 2 or more programs. In UK, 92%of UK consumers participated in

a loyalty program of which 72% were members of 2 or more programs. According to a study

by Byrom et al. (2001), there were 150 schemes in operation resulting in the circulation of

more than 40 million cards.

Early adoption of loyalty programmes was found in airline sector. Hotels, retail, financial

services, leisure sectors followed suit. FMCG sector also experimented through continuity

programmes and loyalty clubs. It is observed that durable goods manufacturers, many service

businesses (like entertainment businesses-multiplexes, credit card providers)and organized

retail outlets have been using varied loyalty programmes.

4.3OBJECTIVES OF LOYALTY PROGRAMMES Variety of objectives; such as to build lasting relationships, to gain profit through extended

product usage & cross selling, to gather information, to strengthen loyalty, to defend, to

preempt competition; can be addressed through loyalty programs. Loyalty programs

encourage consumers to shift from myopic or single-period decision making to dynamic or

multiple-period decision making as loyalty programs operate as dynamic incentive schemes

by providing benefits based on cumulative purchasing over time.11

Benefits to the firm: Loyalty programs yield benefits12 both to the firm as well as

consumers. It is expected that increased customer loyalty leads to lower price sensitivity &

stronger brand/store attitude which create switching barriers. Access to important information

on consumers & consumer trends enables to design appropriate reward and communication

programs leading to greater satisfaction, commitment. This gives competitive advantage to a

firm. Typically, loyal customer brings higher average sales due to cross selling & up-selling

opportunities than a non loyal member. They enable targeting special consumer segments as

purchase history can be analysed relating to demographic and other information. It facilitates

implementation of product recalls as the database is available, and it is believed that loyal

customer is profitable as, servicing existing customer is less costly compared to new one. The

profitability is generated by reduced servicing costs, less price sensitivity, increased spending

and favourable recommendations passed on to potential customers(Grahame &



Uncles;1997)13. Loyalty programmes increase referrals/advocacy. It is assumed that satisfied

customers are not only loyal but they advocate and refer to their social circle,

family/friends/reference groups. efforts Long term relationships can be built through such

programs.

Benefits to Consumers:

Consumers benefits as their risk is reduced as some incentive is offered to stay loyal.

Psychological reassurance is experienced dealing with the same firm. Consumer also gets a

feeling of a smart shopper. His or her social need –a sense of belonging gets satisfied as, a

customer becomes a part of loyal group. Communities get formed which share similar values.

They get something for nothing (free)-economic benefits are accrued by staying loyal. Once

consumer is convinced about the value he derives from purchase, repeat behaviour becomes a

habit or inertia and this reduces time in evaluation, comparison and search. Advocating the

firm to peers also gives satisfaction and motivation to act as an opinion leader. Trust &

commitment is reflected in future dealings with the firm. Relationships are observed as for

mutual gain and not as being viewed as purely on commercial basis. Customers evaluate

loyalty programs by considering relative awards/points and likelihood of achieving/getting

rewards. Program design having thresholds, rewards and time constraints combined with

individual level requirements and preferences determine customer’s expected benefits of

participation.



DIMENSI

ON

RELAINCE

FRESHMORE

STAR

BAZAAR

FOOD

BAZAAR

SUBHIKS

HA

MEGA

MART

Name of

the Loyalty

Programm

e

Reliance OneClub

More

Star Power

Rewards

Program

Silver and

Gold Card.

Shakthi Card

and Future

Card

Subhiksha

m Card

Maha

Meetha

Offer

Benefits/

rewards

Custom made

deals, bonus

point accruals,

add-on cards for

family members,

free home

delivery, shop on

home, cash off

vouchers,

preview of

promotions,

event invitations

etc..

price-

offs,

privileg

es, gifts,

every 10

rupees

spent - 1

point

awarded

Rs 51 coupon

for the

purchase

worth Rs 1000

of one month

payment, 48

days of free

credit- future

discount etc.

4 point per rs

100, EMI

facility with

no charge,

priority

payment

counters for

card holders,

points can be

converted into

vouchers etc.

lucky draw

every

month and

winner gets

entire last

month

purchase

free, special

discount/

offers,

telephone

order

taking and

home

delivery,

future

discounts

etc

11 kg sugar

free

throughout

the year, rs

250 discount

voucher, 8

reward

points for

100 rs

purchase,

gift,

discounts

etc



DIFFERENT LOYALTY CARD SCHEMES IN INDIAN RETAIL GROCERY

SECTOR

CHAPTER -5

RESEARCH METHODOLOGY



5.1RESEARCH METHODOLOGYThe study mainly focuses on “efficiency of customer loyalty program at Reliance fresh”.

Loyalty of the customer is important part of crating sales through the loyalty card as well

getting benefit both reliance fresh and customer. The efficiency of customer loyalty

evaluate only through the total of the Reliance fresh, customer feedback and comparison

among the other retailers loyalty program.

Data has been collected from the customers through direct interaction at the store.

Specific questionnaire has been prepared for data collection. 100 responses have been

taken from amongst a population of ∞. Relevant data is collected with direct interaction

and formal discussion with the respondents. And also evaluate 2 month sales through the

loyalty from SAP system .The secondary data collected provided other relevant

information for the study

5.2 RESEARCH DESIGNDescriptive research design:

Descriptive analysis is the discipline of quantitatively describing the main features of a data

collection of data .it aims to summarize a data set, the analysis aims to provide an overview

of the respondents and an insight into their behavioral patterns under the study.



5.3 SAMPLE SIZE:Location: Reliance fresh Karthik Nager, Bangalore

Sampling methodology: purposive random sampling method

Sample size: For the purpose of the study, 100 customers were selected randomly who were

visiting reliance fresh outlet.

5.4DATA COLLECTIONThe data, which will be collected for the purpose of study, is divided into 2

Primary Source: The primary data comprises information survey. The data will be collected

directly from respondent with the help of structured questionnaires and directly data collected

from store manager

Secondary Source: The secondary data will be collected from internet and references from

Library.

5.5DATA ANALYSIS: The data will be analyzed based on suitable tables by using mathematical technique. The

project is mainly analyzed by using bar charts and pie charts



CHAPTER-6

ANALYSIS AND INTERPRETATION



6.1INTRODUCTION Nowadays it is important to earn loyalty of investors, employees and customers. The

essence of customer loyalty, dimensions of customer loyalty, mission, goals, tasks of

customer loyalty as well as disputes a process of developing customer loyalty programmed:

choice of a target group, grounding the structure implementing customer loyalty

programmed, registration of participants and type of the programmed, collection of

information about customers and Storing, ways to communicate with customers,

establishment of privileges to participants of the loyalty programmed and evaluation of the

programmed success.

Loyalty demonstrates person’s disposition to brand of goods (service), supermarket, category

of goods, and a certain activity. An enterprise seeks loyalty of investors, employees and

customers in order to consolidate its position in the market.

There is a linkage between these participants of the business. The growth of revenues and

share of the market enables to attract potential customers or customers of competitors. The

growth of the market share stimulates more rapid expansion of the enterprise and its

competitive advantage. It makes attracting of investors easier.

A prosperous enterprise can offer personnel good pays for their job and create conditions for

their career. It helps to keep the best employees who affect the results of reducing costs,

improving quality, and increasing productivity. The higher productivity is one of the

conditions to pay larger salaries to the employees, to bankroll trainings or other programmers

stimulating loyalty of employees. Enterprises create loyalty programmers in order to develop

loyalty and to reward. It is effective marketing instrument helping to create such a situation



where all interested sides win.

Customer loyalty programmers are more frequent. Loyalty programmes allow enterprises to

understand their customers better as well as to satisfy their needs and expectations.

Customer loyalty programmes relate enterprise and customers, initiate permanent dialogue

between them, and increase satisfaction of customers also they are a source of different

information about customers, they mitigate potential shift of the best customers to

competitors, and help to cooperate with partners and to keep terms with competitors .. Effect

of loyalty programmes and factors of success were analyzed in fields of automobile, packer

goods, finance, airlines, retail, and telecommunication services.

In Lithuania there are not many scientific publications related with methodology of

developing loyalty programmes, their application advantages, and arising problems yet. We

can pontifically assume that practice of developing loyalty programmes is more advanced

than theory. Therefore, it is necessary to find an answer to the question how Customer loyalty

programme should be developing that it will be useful for both enterprise and customer.

Dimensions of customer loyalty

Customer loyalty means the trust that enterprise gains making and developing mutual useful

Relationships with customer. Referring to Lovelock and Wright (1999), loyalty is customer’s

voluntary decision to maintain long-term relations with the enterprise. Successful long-term

relations that lead to loyalty help to reduce a risk and uncertainty arising from the

consumption that nowadays gets more and more complex. Customer will be loyal if he or she

gains more benefit than other enterprise can offer. If enterprise, its goods or services

disappoint customer or suggestion of other enterprise is more valuable to customer, the

probability that customer will give preference to competitor of the enterprise will increase.

Discussions on different customer loyalty dimensions bringing influence on its management

take place in the scientific literature. The source of loyalty studies was a form of customer

behavior Hard-core loyalty is distinguished for devotion to the enterprise, repeated purchase

probability, staying with the current provider and recommendations for the enterprise to

friends, colleagues, family members, etc.

By now some scientists accept such approach to loyalty. But scientists more often accent

attitudinal loyalty as other dimension of the loyalty now. Customer’s loyal attitude shows a

conscious effort to evaluate competing brands, customer’s preferences and willingness to



purchase goods or services. Lee, distinguish customer’s responsibility and preferences to

brand as the features of loyal attitude. Loyal behavior and loyal attitude influence the

enterprise in different ways.

Loyalty based on customer attitude could be more vulnerable when loyalty is based on

behavior. According to them, it is necessary to estimate that behavior and attitude are

changing over time, so loyalty is changing, too. Without above-mentioned dimensions of the

behavior and the attitude, accent cognitive loyalty emphasizing complexity of the loyalty.

Calls cognition-based or cognitive loyalty as rational because customer makes decisions

recognizing the processes in the enterprise, thinking, handling information, estimating the

technology, etc.

The scientist points other important dimension of loyalty – emotional loyalty. It is a result of

customer feelings, expectations, and interpersonal relationships with employees. Distinguish

the importance of expectations and experience, but distinguish the importance of customer

interpersonal relationships with employees. Interpersonal relationship and mutual trust

determine social comfort, greater attention, and sometimes growth into friendship. It becomes

switching barriers to other provider of goods or services. What determines customer loyalty?

Scientists often point customer satisfaction assume that different level of satisfaction matches

up to different level of loyalty.

6.2MISSION, GOALS AND TASKS OF LOYALTY PROGRAMME1) To develop and strengthen loyalty of present customers. The enterprise seeks this by

undertaking to meet customers’ needs better than other participants of the market during all

period of relationship with customers;

2) To attract new customers. The enterprise can seek it in two different costly ways, namely:

Suggesting attractive privileges stimulating to become a participant of the loyalty

programme, and attracting these who have heard good responses of participating in the

loyalty programme. In our opinion, in the first case the enterprise needs more effort and

resources. When participants of loyalty programme advertise the programme, it depends on

how the enterprise reminds them about the loyalty programme and its objectives, benefit for

participants, how they value receivable benefit, etc.

3) To create a database of customers. Without the database customer relationship



management is Impossible. In the database not only demographical data of customers should

be, but also information about their behavior should be stored, for example, preferences of

consumption, acceptance of brands, periodicity and quantity of purchase, the change of the

brand, etc.

4) To provide maintenance to departments of the enterprise implementing functions of

development and Research of goods (services). The data about customers help to

communicate with them directly and to find out difficulties of consumption, what attributes

of goods (services) should be improved, to get ideas for creating new goods (services). The

obtained information of qualitative research does not reflect the opinion of all consumers.

But referring to consumer’s live word is essential in preparing to comprehensive quantitative

research of the market;

5) To provide possibilities to communicate between participants of the programme. It will

help Service provider or agent, who initiates or controls the process of communication, to

communicate with Customers regularly

6.3MISSION OF LOYALTY PROGRAMME:1. To establish a stable turnover basis; it means that customer loyalty is like assumption of

future profit. So it is counted in the value that will be gained in the future;

2. To calculate lifetime-value indicators;

3. To increase the customer’s value, notably through additional sales;

4. To write off costs of investing in the customer’s acquisition;

5. To cut transactional operational costs, for example, loyal customers more than others

understand their Responsibilities and functions are more tolerant to failures, etc.

6. To attract new customers through positive responds of loyal customer



6.4WHAT IS LOYALTY MEMBERSHIP?

FEATURES AND BENEFITS

Loyalty Membership is a program devised by Reliance Industries Limited for Reliance

Fresh to retain the customers visiting their stores. It is a program by which Reliance

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Fresh store issues a Loyalty Membership Card to its customers to encourage them to

shop at the store regularly. Each time they buy something they collect points which will

allow them to redeem cash vouchers to shop at store in future. Followings are the

features of the program:--

An electronic method of identifying customer purchases and translating that

information to reward customers based on their shopping habits

There is a reward point system by which customers receive reward points on every

purchase made at the store.

For every purchase of Hundred Rupees customer will receive one reward point.

Benefits of the Reliance fresh

Customer should accumulate minimum of 25 points to get a reward voucher by

which he can make purchase at the store equivalent to Rupees 17.50

Customers can also retain these points and receive reward voucher whenever

they want.

The program data help retailers to adjust their product assortment to customer

demands.

Retailers remove or cut back slow-moving items and devote more shelf space to

the products that program members buy.

Identify their most loyal customers.

Learn more about their best customers buying habits.

Offer the products and services according to their best customers demand.

How do Loyalty-Membership Program works?

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To enroll, customers typically complete an application form asking for their

Name, address, gender, phone number, e-mail address, income etc.

Each time cardholders make a purchase; the store scans their membership card,

tracks the sale and converts this data into useful information.

Loyalty Membership programs give customers points that accrue with their

purchases and can be redeemed for rewards

What are the advantages of this Loyalty?

Following are the advantages of Loyalty Program:

Loyalty Program gives customers the sense that the retailer values them

personally and respects them.

This program has an inbuilt system of giving discount over the competitive

prices of the goods, if compared from general retailers

1.Loyalty card sales

Weeks 1 2 3 4 5 6 7 8

% of loyalty

sales

39.22 44.32 37.33 40.57 45.42 42.5 43.58 43.69

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Target given to us is to increase the loyalty sales up to 50% from 30 %within the period

2 months. In the reliance fresh more than 60 % customer having the reliance one

membership card but they could not be use regularly.

The reasons for not using the reliance one card are

Not satisfied with the benefits

Find it difficult to carry the card

Forget carrying the card

Not reminded by the staff

6.5 ANALYSIS

The survey was carried out among 100 respondents of Karthik Nagar who come to visit

Reliance fresh. A specific questionnaire has been prepared for the customers and data

was obtained from them by moving around the floor and personally interacting with

them. The customers gave valuable information regarding their Reliance one

membership card status, awareness of benefits, satisfaction regarding the reliance one

card……… etc. All the analysis and its interpretations have been done and given in the

form of charts and graphs.

2.1RELIANCE ONE CARD STATUS

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The analysis reveals that out of 100 customers surveyed, 60% have Reliance one

membership card and 40% do not Reliance one membership card.

Reason for not joining Reliance one membership card:

The reward system is not satisfactory

Not satisfied with Reliance Retail’s service

Lack of information

Fed up with loyalty programmes of different retailers

Don’t feel the process to be transparent

It’s difficult to carry membership card while shopping

Not interested in giving personal details

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2.2AWARENESS OF BENEFITS OF A RELIANCE ONE CARD

The efficiency of customer loyalty programs are depends on the customer perception

regarding the benefits of loyalty program such as exchange points for discount vouchers

and exciting products and services ,bonus point offer ,offer on products of interest to

members,……….etc. .Hence, the following questions have been asking about the

awareness of benefits of a Reliance one card.

Frequency Percent Valid

Percent

Cumulative

Percent

NO 12 12.0 20.0 20.0

YES 48 48.0 80.0 100.0

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Total 60 60.0 100.0

The diagram above clearly indicates that majority of the customers surveyed

that is around 80% of them, are aware of the benefits of Reliance one card. The

remaining 20% are unaware of the same probably because they have not

received information regarding Reliance one card from the customer assistance

or reliance store.

2.3BENEFITS OF A RELIANCE ONE CARD ARE SATISFYING

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The finding on the satisfaction level of the benefits of Reliance one card reveals

that 41.67% of the surveyed customers agree that the benefits of a Reliance one

card are satisfying. 3.3% have strongly agreed to this parameter, 30% remained

neutral stance. About 21.67 % of the surveyed customers, however were

dissatisfied with the benefits of Reliance one membership card.

2.4 FREQUENCY OF USE

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71% of Reliance fresh customers are regularly use Reliance one Member ship card and

whereas remaining 29% do not use them regularly.

Reasons for not using member ship card are:





2.5REASON FOR NOT USING RELIANCE ONE CARD

58


2.6 INFORMATION ABOUT THE RELIANCE ONE CARD


Percent

Cumulative

Percent

Advertisement 3 3.0 4.9 4.9

Store staff 51 51.0 83.6 88.5

Friends & Relatives 3 3.0 4.9 93.4

Others 4 4.0 6.6 100.0

Total 61 61.0 100.0

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The analysis clearly reveals that most of the customers who participated in the

survey came to know about the reliance one membership card through the store

staff. The remaining 20% has claimed to have known about the same from

advertisement, friends &relatives and others. Thus we can see that customer

assistance is more effective in canvassing the reliance one membership card.

2.7FREQUENCY OF SHOPPING

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As the pie chart indicates, 52% of the people mostly prefer to buy products like

fruits &vegetables, staples, FMCG, Dairy and processed products from the

reliance fresh. And other 48 % of people are not coming regularly but they are

coming once in a two-week or once in a month.

2.8 RELIANCE FRESH HAS AN EXTENSIVE STOCK THAT CATERS TO CUSTOMER NEEDS

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More than 45% of the customers surveyed agreed to the statement that Reliance

fresh has an extensive stock that caters to their needs .8% strongly agree with

the statement. In making this assessment they considered aspects like quality,

convenience, product availability etc.

However nearly 23 % of people expressed their dissatisfaction with the store

because of some external factors like customer assistance, product availability.

Product price etc

2.9 PROBABILITY OF RECOMMENDING RELIANCE FRESH

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63 % of the respondents do say that they would recommend the Reliance fresh

to their friends and relatives. 5% of the respondents strongly agree in

recommending it. This shows how reputation of a store or any firm for that

matter can gain reputation and widen the customer base through word of mouth.

29% of them say that they would take neutral opinion in this matter.

2 % of them say that they will not recommend it. This might be those customers

who might be having some dissatisfaction with respect to service or the product

availability at the store.

2.10PROBABILITY OF RECOMMENDING RELIANCE ONE CARD

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37 % of the people do say that they would recommend the Reliance one card to

their friends and relatives. 20% of them say that they would not recommend it.

This might be those customers who might be having some dissatisfaction with

respect to service or the product availability at the store.

2.11 COMPARISON BETWEEN THE RELIANCE FRESH AND OTHER RETAILERS

Frequency Percent Valid Percent Cumulative

Percent

Disagree 11 11.0 18.0 18.0

Neutral 19 19.0 31.1 49.2

Agree 26 26.0 42.6 91.8

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Strongly agree 5 5.0 8.2 100.0

Total 61 61.0 100.0

More than 40% of people said that loyalty programs offered by other retail

chains are better than reliance one membership card. And 8% of people strongly

agree with the statement .The remaining 50% people include disagree and

neutral opinions. They are of the opinion that Big Bazaar and More-Aditya Birla

etc. are having extensive loyalty programs.

2.12 Assistance from the customer service Desk

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More than 65% people are satisfied with customer service assistance offered at

Reliance fresh. More than 30% people are not satisfied with customer assistance of

reliance fresh due to the following reasons:

Behavior of the Reliance staff

Product arrangement

Price of the product

Quality of the product

Sometimes making wrong displays

2.13CASH-BACK OFFERS ARE USEFUL THAN GAINING CASH VOUCHERS

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Most of the surveyed customers thought that reliance one card loyalty programs

as cash back offers rather than an offer which would fetch them cash vouchers.

55 %customers out of the 100 respondents agree that cash back offers is of

better than gaining cash vouchers. But 45 % of the customer are of the opinion

that cash voucher is better because they can purchase products and directly

deduct the amount from their bill.

2.14 CASHIER ENQUIRY FOR THE RELIANCE ONE CARD

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The above diagram indicates that cashiers at the store are instructed to give

information to customers regarding the reliance one card and convince them to

take a card for themselves while they make their bill. If not for this, the chances

for customers knowing about the card and registering will be very less. 85 % of

them said that they were asked about the card by their cashier at the cash

counter. However 15% of them said their cashier did not talk about the card.

This can be those situations where they might be first time customers and has

not got a chance to interact with the cashier. This again puts stress to the

importance of giving proper training and instructions to the cashiers as to how to

make the customers take a card.

2.15RELIANCE PARTNERSHIP WITH THE DIFFERENT RETAILS

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The Reliance one Card can not only be used Reliance fresh , but it can also be

used in different retail formats of Reliance Industries LTD such as Reliance

fresh, Reliance trends, foot print, etc. These are all ways to increase the number

of points on the card which customers hold. Hence, 70 % of the customer agrees

that this feature of Reliance one membership Card is an added advantage. But as

Reliance Digital and Reliance jewels are not accepting the reliance one card and

30 % people are mentioning this problem.

2.16 LOYALTY PROGRAMMES ARE CARRIED OUT BY THE RELIANCE FRESH

FOR THEIR BENEFIT ALONE

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Percent

Cumulative

Percent

strongly

Disagree2 2.0 3.3 3.3

Disagree 15 15.0 24.6 27.9

Neutral 17 17.0 27.9 55.7

Agree 24 24.0 39.3 95.1

Strongly agree 3 3.0 4.9 100.0

Total 61 61.0 100.0

T

.

The above diagram shows that, 45% of people think that loyalty program of

the reliance fresh are carried out for the benefit of the store alone. But 28 % of

them stayed neutral or are of no opinion .27 % of them disagreed to the

statement because they think that loyalty program are carried out by Reliance

fresh for their Benefit alone

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CHAPTER- 7

FINDINGS AND SUGGESTIONS

7.1FINDINGS

From the study it is found that the customers are not satisfied with the benefits

they get out of joining the loyalty programme and they expect more.

Discounts given on products are helpful to generate the loyalty among the

customers.

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Most of the customers buy their requirements in Reliance fresh on a weekly

and monthly basis. Customers agree that Reliance fresh has an extensive stock

that caters to their needs.

They are expectinga lot of varieties and wide price range in staples and food

fmcg.

The major reason for not joining our loyalty programme are

The reward system is not satisfactory

Not satisfied with Reliance retail’s services

Lack of information

Not interested in giving personal details

Don’t feel that the process to be transparent

It’s difficult to carry membership card while shopping

Fed up with loyalty programme of different retailers

The CSAs at billing counter are not reminding customers the benefits of loyalty

programme. And this is a major reason for customers not using the membership

card during shopping.

Lack of professionalism in the behavior of CSAs. This affects the attitude

customers have towards the store.

Many customers were not aware of the benefits of the card. People didn’t even

know that they were getting reward points for the purchase they were making

and that they could redeem these points for cash vouchers.

Some customers forget to take the card along with them and fail to use them

while billing.

Varied terms and conditions for issuance of card

7.2SUGGESTIONS

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The value of the 1 reward point can be reduced so that customers get more

points per 100 Rupees purchase. This can appeal psychologically to the

customer and increase the inclination to use the programme.

Instead of issuing cash vouchers customer should be made able to redeem their

reward point by directly getting reduction in the bills. This can make the

programme more user friendly and effective.

CSAs should be instructed to remind every customers of the loyalty programme

and make new customers join the programme. Incentives can be given to CSAs

to motivate them.

Point of Purchase materials of the loyalty programme and its benefits should be

displayed at the billing counter.

Even though there is no need for customers to carry the card along with them

and they can use the programme by just mentioning the card number, most of

the customers are uninformed in this regard. So customers should be made

aware of this option at the time of joining itself.

CSAs should be given an induction training to make them aware of the

importance of loyalty programme and the role they have in the success of the

programme.

7.3CONCLUSION The success of a loyalty programme will depend on improving the perceived

value of the rewards offered. Possibility of obtaining a reward should not be so remote

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that a consumer loses interest in the programme. Effort levels required to participate in

the programme should be commensurate with the rewards. Perceptions of

reasonableness and fairness should prevail. Top management commitment is a

necessary prerequisite for any program’s success. Both financial and philosophical

commitment by top management provides constant motivation for those who are

managing such programmes. Loyalty programme needs to be viewed as a business

strategy which requires long term commitment. Investments made will reap benefits

only in the long run. Technological and managerial support both are needed to make the

programme successful.

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REFERENCES

1. Kotler Philip,” Marketing Management”, New Delhi, Pearson Education Inc.,

2006

2. C.B. Gupta,”retail management”, introduction of retail Industry.

3. Barry Berman, Joel R. Ivans and Mini Mathur, ―Retail Management: A

Strategic Approach‖, Pearson Education Inc,

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4. Oliver Richard L. (1999),”Whence consumer Loyalty?”Journal of Marketing

5. www.ril.com

6. www.businessworldindia.com

7. www.ORG-GFK.com

8. www.india-reports.com

9. www.wikipedia.org

10. www. economictimes.indiatimes.com

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APPENDIX

EFFICIENCY OF CUSTOMER LOYALTY PROGRAMME – QUESTIONNAIRE

Age Group : 18-25 25-35 3 35-45 45-55 55 above

Marital Status : Married Single

Occupation : Professional Homemaker Se self-employed

Student Other

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Monthly Income: <25,000 25,000-50,000 50,000-75,000

>75,000

How often do you visit Reliance fresh to make purchases in a month?

1-2times 3-5 times 6-10 times 10+ times

01. Do you have a RELIANCE ONE MEMBERSHIP Card? (If yes go to question

number 03)

Yes No

02. What would be the reason for not joining our loyalty programme ?

a. The reward system is not satisfactory

b. Not satisfied with Reliance Retail’s service

c. Lack of information

d. Not interested in giving personal details

e. Don’t feel the process to be transparent

f. Its difficult to carry membership card while shopping

g. Fed up with loyalty programmes of different retailers

h. Others..

03. Are you aware of the benefits of a Reliance one Card? Yes No

04. Do you feel that the benefits gained through Reliance one Cards are satisfying?

Strongly agree Agree Neutral Disagree

strongly disagree

05. Do you use the Reliance one card, every time you shop at our store? (If yes go to

question number 07)

Yes No

06. What would be the reason for not using our card




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Find the redeeming process cumbersome

Others..

07. How did you came to know about Reliance One membership card?

Advertisement Store Staff Friends& Relatives Others

Strongl

y

Agree

Agre

e

Neutr

al

Disagr

ee

Strongl

y

Disagr

ee

08. Are you a frequent shopper?

09. Do you feel that Reliance fresh has

an extensive stock that caters to your

needs?

10. What would be the probability of

recommending our store?

11. What would be the probability of

recommending Reliance one Card?

12. Do you think the loyalty programs

offered by other retail chains are better

than RELIANCE ONE Cards?

13. Do you get proper assistance from

the Customer Service Desk (CSD)?

14. Do you feel that cash-back offers are

useful than gaining cash vouchers?

15. Does your cashier ask for your

RELIANCE ONE Card at the time of

billing?

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16. Do you feel that the RELIANCE

ONE partnership with the different

retail stores is an added advantage?

17. Do you think that loyalty programs

are carried out by the retail stores for

their benefit alone?

18. Do have any suggestions to improve the existing our loyalty programme:

THANK YOU

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Final Project

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