Key Points for b Plan

8/8/2019 Key Points for b Plan

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KEY POINTS

THE BRIEF:

We were told to devise a plan which allows P&G to enter retail and carve a 25%

market share in any segment within 3 years.

P&G Where we stand

Strengths Reaches 4B people worldwide (large scale ops) Largest producer of household cleaning products Diversified brand portfolio (more than 300 brands and revenue of $79B) Product innovation (spent $2B for R&D in 2009, while Unilever spent $1.3B) Distribution channels all over the world New billion dollar brands

Strong market infrastructure Already has retail in Fekkai (hair salons & products), The Art of Shaving

(customized shaving and grooming for men), Carnetts Car wash (using Mr.Clean detergent), dry-cleaning stores (Tide branded)

Weaknesses Top brands are losing market share Health and beauty women only Lagging in online media presence and leadership Refuses to manufacture private label products for its retail customers Slow, process heavy culture

Opportunities Health and beauty for men Doubling environmental goals for 2010-09-20 Utilizing online social networks Going green/eco friendly New acquisition opportunities Selling directly to consumers (retail)

Threats Substitute brands that have a cheaper price

Private label growth Slowdown in consumer spending Increase in raw material price Competition like Reliance, Spencers (RPG), Future Group, Tata Retail,

Birlas More, Bharti-Walmart EasyDay

RETAIL INDUSTRY IN INDIA What the market is like


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Strengths Cheap labor Growing economy Entry of big players into organized retail (Reliance, Future Group, RPG, etc.) Retail is the largest employer in India after agriculture. Employs 7% of the

total workforce and contributes 14% to the national GDP. Perceived as a status symbol (aspirational) to shop at malls and

supermarkets. Ability to source indigenous goods like rice, pulses, etc. Work in tandem with farmers to give them better returns.

Weaknesses Tax and regulatory structures. Slow and complicated process of setting up

stores that need large number of permits. (Setting up a store in Mumbaineeds 29 permits that take over 6 months to get. Setting up a second store ofthe same chain needs all the 29 permits to be applied for afresh.)

Getting products to stores is a big problem. Supply chain and distributionneed to be modernized. Dearth of warehousing and distribution centres nationwide. Poor transport links No cold supply chain for perishables. Currently estimated that up to 40% of

perishables are lost during transport. Current retail market has low productivity, low capital and technology

Opportunities Indian population is rapidly approaching 1.5 billion. This population will

become the worlds fifth-largest consumer market by 2025.

290 million Indians are expected to move up from BPL status to the middleclass, making the middle class reach 600 million by 2025. They havehousehold incomes between $4,400 to $22,000 (on the basis of purchasingpower parity).

Indias total retail spend is slated to reach 860 billion by 2018. Indias economy is set to double in size by 2015. More than 90% of Indias food market is unbranded. Almost 50% of the Indian population is under the age of 30 years. They are

young and belong to the liberalization era. They are willing to spend ratherthan save.

Threats Indian population is rapidly approaching 1.5 billion. Growth must be sociallyinclusive to be successful.

There are groups that have entrenched interests. They will resist what theycall the Walmart Invasion.

Farmers groups Traders Middlemen

Rural sensitivities in the Indian heartland (800 million people living in 600,000villages)

Limited consumer understanding Talent shortage. Need a new generation of retail managers.


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UNDERSTANDING THE CONSUMER Young earners who want tospend!

- Young shoppers (by 2015 there will be 800Cr Indians between 15-60 years)- Higher incomes (1.6 million households in India earning around Rs 45 lakh peryear)- Easy finance (credit cards)- Urbanization (it converts the local population from net savers to net spenders)- Organized retail lure (malls and supermarkets are enticing consumers)

THE COMPETITION: Future, Raheja, RPG, Reliance, Bharti-Wal-Mart, Tata

The Early players:

- Raheja Corp- Future Group- RPG

The Heavyweights:- RIL- Tata- Bharti-Wal-Mart

Future Group Pantaloons, Big Bazaar, Food Bazaar Central (malls), Home Town (homeimprovement), EZone (electronics)Depot (Books and music),Futurebazaar.com (online shopping)

K. Raheja Corp Shoppers Stop (department stores),HyperCity (hypermarkets), Crossword(bookstores), HomeStop (lifestyle stores)Inorbit (malls)

RPG Spencers Retail, Health & Glow(wellness), MusicWorld (music),FoodWorld (food stores)

Reliance Reliance Fresh, Reliance Mart(hypermarket), Reliance Digital, RelianceTrendz (clothing), Reliance Footprint(shoes), Reliance Wellness, RelianceJewels, Reliance Timeout (watches)Reliance Super (mini-mart), RelianceAutoZone, Reliance iStore (Appleproducts)

Bharti-WalMart Cash and Carry storesTata Westside, Landmark (books and music)

Star India Bazaar (low-price


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hypermarkets), Under Infiniti RetailCroma (electronics)

GAPS IN THE MARKETa) No cold supply chain for perishables transfer (30% of perishables lost on

transport)b) Dearth of trained retail professionalsc) Untapped rural marketd) Organic food retail there is a demand but no supply

BUSINESS STRATEGY

P&G retail stores in USA:- The Art of Shaving High end mens grooming- Fekkai high end hair salons- Carnetts - Carwash

- Dry-cleaning

P&Gs strategy while entering into retail:1) Provide services that fit in with the existing product line2) Do not go head-to head with large retail chains by selling exclusive P&G products3) Go after particular niches where there is no undeniable retail leader

The tie-up with Tata Groups Trent & Infiniti Retail Ltd.P&G and Tata create a joint venture to create a new brand of pan-Indian retail storesselling:- Luxury goods

- Food & perishables- Clothes, footwear and accessories- Books, music, stationery- Electronic goods- Groceries- Jewellery- Hair salon (Fekkai)- Mens grooming (The Art of Shaving)

P&G needs to create a cold supply chain for perishables:- As they are a large FMCG company, they already have the knowhow to create a

cold supply chain- They have a presence in the rural market

Why they need to create a cold supply chain:- They need to make this investment as no one else in India has a cold supply chain- They will attain low-cost leadership in food retail- This will help the tie-up with Tata as they will be the only ones with a cold supplychain

The tie-up with Tata Motors Ltd.P&G and Tata Motors create car-wash facilities for cars, LCVs and HCVs at every

Tata Motors service center:- This will mirror the service run by P&G in the US (Carnetts)


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- Use P&G products for cleaning (Mr. Clean)

The retail outlets will be in the following formats:

Hypermarkets (25,000 sq. ft.)

Titan, Fastrack, Westside, Landmark, Croma, Tanishq outletsFekkai hair salonThe Art of Shaving storeForeign brandsFood & groceries market (private label food products)

Supermarkets (15,000 sq. ft.)Other multibrand retailFood & groceries market (with private label and multi brand food products)

Rural format:- Tata Motors has already opened 600 small outlets for the Tata Ace in rural andsemi-urban markets. It has also tied up with 117 public sector, gramin and co-operative banks to help small entrepreneurs buy the vehicle.- These outlets can be upgraded to sell a variety of low-cost goods that rural peoplecan use- To get organic food to the cities (where there is a demand for it) the group can tieup with farmers directly and help them grow certified organic produce that can betransported to cities via the cold chain and warehouses. This will benefit the farmersby cutting out the middlemen and benefit the retail group by lowering costs.- At the same time, initiative need to be taken that will bring prosperity to the rural

sector. These can be setting up vocational training courses, providing microfinancethrough tie-ups with local cooperative banks, etc.

Why this format?- This tie-up needs to have a share in every rupee that the Indian consumer spends- Needs to address all ranges of Indian consumers- Needs to empower rural Indians (India 2.0) to be able to gain 25% plus marketshare

Why should P&G tie-up with Trent and Infiniti Retail?1) The Tata Group also has FMCG products like tea and salt

2) Trent runs Westside, Croma and Landmark retail outlets3) Trent has a deal with DLF to buy about 1 million sq.ft. of space for its retail outlets4) Tata Realty and Infrastructure has signed up with Jafza International (a Dubai-based company) to build 7 logistics parks in India

Why should Tata tie up with P&G?- P&G will have the only cold supply chain in India- P&G will bring in their US-based retail chains to India (exclusively for thehypermarket format in major cities)- P&G has in-depth understanding of the FMCG market in India- The tie-up will allow the Tata Group to have a share in the profits of FMCG sales- Through the tie-up, the JV will be able to attain low-cost leadership in food retail

Roll-out format:


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- The retail outlets will be launched in Gujarat, Punjab, Andhra and Maharashtra firstas these states have the highest purchasing power- After this, the outlets will hit Southern India- Finally the chain will launch in the whole country

Year 1 target:8 hypercity malls300 Easyshop stores500 Kisan Malls

Year 2 target:5 hypercity malls400 Easyshop stores500 Kisan Malls

Year 3 target:

1 hypercity mall100 Easyshop stores300 Kisan Malls

SETTING UP THE COLD CHAIN

Capital expenditure:WarehousesCold Storage EquipmentPack HousesTruck fleet

Office and logistics systemsExpenditure estimate: Rs. 500 Crore

Uncertainties:Demand riskElectricity fluctuations and chargesFuel for the trucksObjections from the truckers lobbyObjections from the wet market operators in MumbaiPolitical interference

SUPPLY CHAIN- P&G will source directly from farmers and bypass all the middlemen. Thiswill cut costs and allow the farmer to have a greater share of the profits.- P&Gs cold storage supply chain will allow the perishables to be storedand keep fresh for longer- The Tata groups logistics parks will allow P&G to make use of theirlogistics infrastructure and deliver more efficiently to their retail outlets

MARKETING PLAN

ObjectivesGenerate over Rs. 850Cr in sales by the end of year 1.Increase sales by 100% by the end of year 2.


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Target marketMaximus HyperCityAge: 1 to 50 years (Kids, Teens, Young people, middle age groups)SEC group: A & B

This store format will not just provide a great shopping experience, butalso be a fun and exciting place to hang out. With its food bazaars, foreignbrand showrooms, excellent infrastructure and great ambience, this willbe the weekend destination for families. For shoppers, it will provide:- Everything under the sun, all in one place- Clean, fresh and cheap foods, especially organic brands- A lifestyle statement

Maximus EasyShopSEC group: AllAge: 1 to 50 years (Kids, Teens, Young people, middle age groups)The size of Easy Shop stores will vary from 2,000 to 4,000 sq ft and will have aproduct mix that is slightly different from what is available in supermarkets likeSpinach, Foodland Fresh, Reliance Fresh, Spencers etc. Easy Shop has beenpositioned itself as the convenience neighbourhood store, offering variety of freshproduce, grocery, meals-to-go, dairy products, bakery items among others.

Kisan MallSEC group: B, C, DAge: 1 to 50 years (Kids, Teens, Young people, middle age groups)The Kisan Malls will contain all the products that middle income group

families need like FMCG products, groceries, apparel, etc. The displaysand promotions will cater to the rural target audience. There will be acarnival/mela like atmosphere with continuous promotions and discountson offer.

Our target market is divided in to 2 sections:- Rural population (800 million)- Urban, semi-urban population (200 million)

Positioning

Maximus HyperCity- Everything under the sun, all in one place- Clean, fresh and cheap foods, especially organic brands- A lifestyle statement- Luxury mall

Maximus EasyShop- Utilitarian and easy to shop- No hassles shopping- Quick and easy to access

Kisan Mall- Utilitarian and friendly


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- Place of attraction in rural areas

RETAIL BEST PRACTICES

Distinctive brand personalityMore than the products strong companies sell, their brand personalities are whatdistinguish them from less remarkable concepts in their categories. The personalitiesof these brands are distinct and memorable.The brand is in the entire shopping experience from the visuals to sensory stimulito product assortment to customer service to tone of voice in messaging. Thestrength of execution on brand depend on marketing, merchandising, and storeoperations are all working together to deliver a distinctive personality whichpermeates the entire customer experience.

Value added services and content

Great retailers deliver more value than their product alone. Some add value to theirproducts through the stories and details they provide about their products. Someinform their shoppers about the origins, cultural significance, and manufacturingprocesses behind their products. In doing so, they enable customers to buy intoshared values and significance. Others show how to use their products.

Cross-channel shopping experienceEarlier retailers could distinguish themselves by offering the option of ordering aproduct online and then picking it up in store.To really stand out and servecustomers well, retailers must take the cross-channel shopping experience to thenext level.

Retailers add the brand value of simplicity and streamlining, including options suchas:- Order online, call when youre on the way to the store, and get the productdelivered to your car when you arrive.- Use a scanner instead of a shopping cart to select your items in store and get theproducts delivered to your home.Retailers allow you to create shopping lists online but they produce itemized print-outs indicating where you can find the items in store. They also inform you whetheror not the product is in-stock at your local store.

Strong organizational culture and values

Almost all of the top retail companies have strong organizational cultures and values.And these are manifested in a superior customer experience. They are renowned forhow well they treat their employees. Sometimes the value companies places onsocial responsibility is a primary reason why people buy the brand.

Sales promotionsGreat retailers clearly communicate their product and brand stories, and theirfeatures and services. In addition to traditional methods, these companies integratetheir brand promotion into the actual customer experience. Through pages on theirwebsites, in their catalogues, and in their in-store collateral, they actively promotewhat makes them different and better than other companies.They also execute and live up to their promise and this is the priority for anycompany

Key Points for b Plan

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