ASSIGNMENT

OF

PROJECT MANAGEMENT

TOPIC: PROMOTION MIX OF RETAIL SECTOR IN INDIA

SUBMITTED TO: SUBMITTED BY:

Mr. Satinder Kumar Amit Singh

Roll No.59

MBA II Sec D

Retailing overview

It’s a human tendency to have a comfort, luxurious life and have all facilities to him. And as there is a golden period going on now; anybody can enjoy these benefits. And retailing concept is also from one of these facilities. Retailing is simply provides the end product to customer. So retailers are directly in touch with customers.

A View of a MALL

Retailing is more than selling goodsRetailing 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 is a well recognized business function which compromises making available desired product in the desired quantity at the desired time. This creates a time, place and form utility for the consumer. The success of retailing is highly dependent on an efficient supply chain management. A well-developed supply chain reduces wastages and transaction cost thereby reducing the cost of inventories to be maintained by the producers and the traders. A reduction in the cost of inventory management leads to a reduction in the final price to the consumer.

Retailing has been identified as a thrust area for promotion of textiles, processed foods, agricultural and horticultural produce.

Retail Sector can be divided into organised and unorganised sectors:

Unorganised retailing is characterized by a distorted real-estate market, poor infrastructure and inefficient upstream processes, lack of modern technology, inadequate funding and absence ofskilled manpower. Therefore, there is a need to promote organised retailing. Organised Retail refers to a form of retailing whereby customers can buy goods in a similar purchase environment across more than one physical location for verticals from food, grocery, apparel, consumer durables, jewellery, footwear, beauty care, home décor, books to music.

RETAILING IN INDIA

Retailing in India is witnessing a huge revamping exercise. India is rated the fifth most attractive emerging retail market: a potential goldmine. As per a report by KPMG the annual growth of department stores is estimated at 24%. Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney.

Retail Sales in India

This chart is showing three lines mainly, overall retail sales; food, beverages and tobacco segment sales and clothing sales. And here researcher’s focus is on clothing segment. So let now discuss about apparel industry. As we know apparel is one of the basic needs of any person. And now in India, either a rural person or an urban person, all prefer these easy and comfort retail formats for them. As a research conducted by KPMG/research firm; in India, in rural segment there is a 61% spending and in urban market, there is 39% spending in case of clothing and footwear.

Traditionally retailing in India can be traced to the emergence of the neighborhood ‘Kirana’ stores catering to the convenience of the consumers, an era of government support for rural retail: Indigenous franchise model of store chains run by Khadi & Village Industries Commission, 1980s experienced slow change as India began to open up economy. Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar’s and Grasim first saw the emergence of retail chains. Later Titan successfully created an organized retailing concept and established a series of showrooms for its premium watches. The latter half of the 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers. For example, Food World, More and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books. Post 1995 onwards saw an emergence of shopping centers, mainly in urban areas, with facilities like car parking targeted to provide a complete destination experience for all segments of society. Emergence of hyper and super markets trying to provide customer 3 V’s - Value, Variety and Volume. Expanding target consumer segment: The Sachet revolution - example of reaching to the bottom of the pyramid. India is on the radar screen in the retail world and global retailers and at their wings seeking entry into the Indian retail market. The market is growing at a steady rate of 11-12 percent and accounts for around 10 percent of the country’s GDP. The inherent attractiveness of this segment lures retail giants and investments are likely to sky rocket with an estimate of Rs 20-25 billion in the next 2-3 years, and over Rs 200 billion by end of 2010. Indian retail market is considered to be the second largest in the world in terms of growth potential

SWOT Analysis of retail sector in IndiaRetailing is a “technology-intensive" industry. It is technology that will help the organised retailers to score over the unorganised retailers. Successful organised retailers today work closely with their vendors to predict consumer demand, shorten lead times, reduce inventory holding and ultimately save cost.

Example: Wal-Mart pioneered the concept of building competitive advantage through distribution & information systems in the retailing industry. They introduced two innovative logistics techniques – cross-docking and EDI (electronic data interchange). On an average a super market stocks up to 5000 SKU's (Stock keeping Units) against a few hundreds stocked with an average unorganised-retailer. Less Conversion level: Despite high footfalls, the conversion ratio has been very low in theretail outlets in a mall as compared to the standalone counter parts. It is seen that actual conversions of footfall into sales for a mall outlet is approximately 20-25 percent. On the other hand, a high street store of retail chain has an average conversion of about 50-60 percent. As a result, a stand-alone store has a ROI (return on investment) of 25-30 percent; in contrast the retail majors are experiencing aROI of 8-10 percent. Customer Loyalty: Retail chains are yet to settle down with the proper merchandise mix for the mall outlets. Since the stand-alone outlets were established long time back, so they have stabilized in terms of footfalls & merchandise mix and thus have a higher customer loyalty base.

OPPOURTUNITY The Indian middle class is already 30 crore & is projected to grow to over 60

crore by 2010, making India one of the largest consumer markets of the world. The IMAGES-KSA projections indicate that by 2015 India will have over 55 crore people under the age of 20 – reflecting the enormous opportunities possible in the kids and teens retailing segment.

Organised retail is only 4 percent of the total retailing market in India. It is estimated to grow at the rate of 27 percent p.a. and reach Rs. 1,37,000 crore by 2010.

Percolating down: In India it has been found out that the top 6 cities contribute 66 percent of the total organised retailing. While the metros have already been exploited, the focus has now been shifted towards the tier-II cities. The 'retail boom' of which 85 percent has so far been concentrated in the metros, is beginning to percolate down to these smaller cities and towns. The contribution of these tier-II cities to total organised retailing sales is expected to grow to 20-25 percent.

Rural Retailing: India's huge rural populationhas caught the eye of the retailers looking for new areas of growth. ITC launched India's first rural mall "Chaupal Saga" offering a diverse range of products from FMCG to electronic goods to automobiles, attempting to provide farmers a one-stop destination for all their needs. "Hariyali Bazar", started by DCM Sriram group, provides farm-related inputs & services. The Godrej group has launched the concept of 'agri-stores' named "Aadhaar" which offers agricultural products such as

fertilizers & animal feed along with the required knowledge for effective use of the same to the farmers. Pepsi on the other hand is experimenting with the farmers of Punjab for growing the right quality of tomato for its tomato purees,pastes.

THREATS If the unorganised retailers are put together, they are parallel to a large

supermarket with little or no over-heads, a high degree of flexibility in merchandise, display, prices and turnover.

Shopping Culture has not developed in India as yet. Even now malls are just a place to hang around largely confined to window shopping.

GLOBAL PLAYERS IN INDIA

METRO AG GERMANY

MECDONALDS USA

WALLMART USA

MARKS AND SPENCERS UK

LANDMARK LIFESTYLE FRANCE

BENETTON MIDDLE EAST

1. Promotion

Promotional strategies include all means through which a company communicates the benefits and values of its products and persuades targeted customers to buy them

Promotion has four distinct elements - advertising, public relations, word of mouth and point of sale.

2. PROMTION PROMOTIONAL STRATEGIESCotton county use all available means to promote products and communicate information

they make effective use of strategies like Advertising, Sales promotion, PR etc. to thrive in the international and local markets

The Role of Advertising

As a tool of marketing, advertising is the structured and composed non – personal communication of information .It is persuasive about products services or ideas. Cotton County’s advertising makes the buyer aware of the products and communicates the information about the products floated in the market. On a broader scale their advertising engorges the development of new products and speeds their acceptance. For advertising it uses electronic media (INDIA TV &

ND TV) as well as print media (local newspapers). It fosters employment, gives consumer and businesses and wide variety of product choices.

The Role of Public Relations

In this world of growing economies and tough competition, corporations realized that the direct personal contact and relationship with consumer is the prime opportunity to build and maintain relationships that result in future sales. Also it is way to create mutual goodwill.

The Primary Role of Public relation is to manage the organization‘s reputation and help build public consent for its enterprises. In today’s completive environment public consent can no longer be assumed .At Cotton County this aspect is given due attention .The CEO is always willing to meet visitors, pay visit and know the public consent. There is team of efficient managers who explore every avenue. They plan execute the public relations programs. They constantly monitor and analyze changes of attitudes in variety of publics. They visit shopping centers conduct interview analyze incoming mails and field reports .The organization uses PR to manage relationships with vendors, the employee’s customers, stock holders competitors and the public in general.

The Role of Sales Promotion Sales promotion is direct inducements that offer extra incentives with the

objective to enhance or accelerate the product’s moment from the producer to the consumer. Cotton County believes in direct inducement. So their prizes, extra products, gifts or specialized information are offered to the consumers.

VIEWS OF INDIAN AND FOREIGN RETAILERS

In the Indian Retail market, on one side are the industry lobby groups representing foreign companies and multinational retail chains who are seeking an opportunity to do and spread their business in India, and on the other hand there is the domestic retail industry that fears for its future with foreign companies intruding into the scenario. The Indian business lobbies operating at the national level, such as CII and FICCI, have chosen a cautious approach, but those operating at the state level are vehemently opposed to FDI participation in retail.

Opening up the multi-brand retail sector to foreign investors is a difficult proposition and if responses of the domestic retail sector swing opinion then it will take long before the government takes a big step.

The foreign players such as Bharti, Walmart and Carrefour have favoured 100% FDI in multi-brand retailing, but given the political sensitivity around the subject, they are willing to settle for 49-51% initially. Metro, the first foreign retailer to venture into cash-and-carry here, has stated that a step-by-step approach would be appropriate as that would give opportunities to the local industry to build competencies. Government should also be blamed for not creating adequate infrastructure is opined by a few whereas other concerns voiced include that farmers will not necessarily get a better deal when the foreign retailers begin operation.

Some Promotional strategies generally used to attract the customers

Small business owners can easily get too involved in the day-to-day operations of their retail stores to spend any time brainstorming marketing ideas or promotional events. With the advancement of foreign retailers in India, Indian retailers have also started giving good amount of services and they are giving tough competition to foreign retailers by their promotional Schemes. They use some schemes which are enlisted below.

1. Sending out a FREE sample of product with a special "two for one" offer - this enables customer to get a first hand experience of product in action AND the "two for one" offer maximizes average transaction value.

2. FREE lessons on make-up, sewing, hair styling, skin care, gardening, building a pergola/deck/retaining wall. The list is endless. By seeing how to get the best use out of their products they're likely to buy a range of accessories and essential items to help them achieve the results they're looking for.

3. Open day ... this is ideal for gardening centers or hardware stores where they can offer workshops and demonstrations on tasks that are specific to the needs of their customers … landscape design, installing a sprinkler, home handyman tasks, building etc. This is similar to the 'FREE lessons' idea above.

4. Hold joint promotions with other businesses. They offer their products as FREE gifts when customers purchase at their shop and vice-versa.

5. Free gift with purchase - you could offer a FREE T-shirt valued at Rs200 with every Rs500 purchase. The value to the customer is Rs200 but their hard cost is a fraction of that amount so it's perceived to be more beneficial than a discount is (in the eyes of their customer) and it's much healthier on their bottom line than offering a Rs200 discount.

6. Buy one get one FREE. (same benefits as above )

8. FREE gift for cash payments over Rs ... instead of paying the Banks merchant fees they're rewarding their customers instead. It's costing you no more however it's encouraging their customers to buy from they and therefore will increase their sales volume.

9. Buy now, pay in 12 months time ... encourages customers to spend more than they ordinarily would have if they were paying the whole amount now.

10. Package products together. Cosmetics companies are famous for this. They package some of their poorer selling products together with their most popular lines and promote them as some sort of package. Packaged products make customers feel that they're getting a good deal for buying in bulk, it maximizes their average transaction value, and it helps you move slow selling items.

11. Bounce backs - it's a fact that a customer is most warm to their products and services right at the time of purchase so make a special offer to them right when they buy - something that compliments the product they've just bought.

12. Package their knowledge - create introductory reports and newsletters and package them in with their product purchase.

13. Cross-selling checklist - this is a great way to maximize the average transaction value of each sale. Either run through a checklist with the customer (eg. The "building a pergola" checklist listing all the items they'll need) OR create it into a special "how to" guide that includes instructions and enables them to check off all the items they need. This does the customer a favor because it ensures that they don't forget an important item and it bumps up their sales figures too.

14. FREE after sales service - cleaning or maintenance of purchased product.

15. FREE hotline service - where they can call and ask specific advice relating to getting the best use of their product.

SOME COMPANIES WITH A WIDER CONCEPT

In the retail industry, with the advent of large players like Shoppers' Stop and Pyramid earlier, and Lifestyle and Globus more recently, the race has been to retain customer base. Thus loyalty programs for members were born. And to keep up the enticement, new value additions are constantly sought and implemented. A look at two of such programs.

Lifestyle International (P) LtdLifestyle - gathering loyalty around them Lifestyle International (P) Ltd., cossets its loyal customers by inviting them to be part of an exclusive circle they call The Inner Circle. Membership to the circle can be obtained in two ways-by-purchasing merchandise worth 1500/- or by paying Rs.150/-. The store also has free corporate membership programs with big corporate like ICICI, Reliance Infocomm, etc. The circle members are given membership cards, which when presented at the billing counter automatically earns privilege points. As for accrual of points, a member gets one point on every purchase worth Rs.50/- So on purchase of merchandise worth say 5000/- one gets 100 points. These points get accumulated and are sent to the customer every quarter in the form of gift vouchers. These vouchers can be used at various places with which Lifestyle has a tie-up, for example, Pizza Hut. Benefits Privilege points accumulated on the membership card translates into gift vouchers for a host of items as also value adds like special offers, discounts, exclusive movie screenings, special invites, get together events, and more. Some of the pleasant surprises included special screening of the movies Kyun Ho Gaya Na and Spiderman. Tie-ups with Pizza Hut, Water Kingdom, etc. bring in their own set of benefits. Sometimes just stepping into a Lifestyle store can fetch one a free cup of cappuchino coffee at Qwiky's who have a presence within the store.Some promotional offers for the holiday season Lifestyle has a new promotion in place - spend RS 5000/- and get a gift voucher for RS 500/- redeemable on luggage items in the store.

Another exclusive offer that ended recently gave Circle members RS 100/- off on every visit to HFX Beauty Lounge, the upscale, professionally managed chain of salons in Mumbai. Earlier this year they had a promotion titled Style Vroom, aimed at the youth. It covered merchandise

like handbags and apparel and also highlighted brands. Style tips and experts gave advice. In September the outlet at Malad, Mumbai saw the launch of 'Indulgence', the 'studio' that has as its core, personalized hair and skin treatment using products from French cosmetic giant J.F.Lazartique. Advertising the promotions- Hoarding and bus shelters are used a lot.

A lot of pamphlets are printed as also mailers. But apart from this, the store used an engaging method of letting customers know of their latest promotion in August. Along with little tricolor flags, honoring the Independence Day sentiment, they also distributed small pennants proclaiming the upcoming discount or off sale, as they call it. Members are immediately rewarded for purchases at any of the Globus stores, in addition to a host of other privileges such as exclusive tie-ups, promotions and special shopping hours. Globus offers two different card categories, each with it own benefits. A shopper gets a Privilege card on purchase of merchandise worth over RS. 2000/- and a Globus Gold Card Membership on purchases worth RS.15000/-.Discount offers and privileges at other leading outlets also can be availed of as part of the benefits of tie-ups. Some promotional offers free holiday package of 2 nights and 3 days on purchase of goods worth RS 5000/-A 4 night, 5-day free holiday package on purchase totaling RS 10000/- and above. For the above offers, where free stay extends to a couple and a child below 2 years, 22 national and 4 international destinations are up for grabs.

Targeting youth in a big way, Globus has specific promos like Fashion remixes, Pizza hut offer etc. The former, conducted recently at all Globus retail stores in the country was very successful. The promotion allowed participants to join the grooming sessions by leading industry specialists. It also included free tips and vouchers from Dr.Gold Gym, Anjali Mukherji's Health Total to name a few, etc. They were given expert advice on personality, hair styling, skin care and clothes. Fashion consultants helped them on fashion wear and sartorial etiquette. Globus also organizes Rampage, a fashion show to showcase the chain's latest apparel range.

Advertising the promotion Youth being the target focus, Globus uses the Internet and website very effectively for all the campaigns as it has always generated a good response. Globus also actively participates in promotional tie-ups with the colleges for various events through out the year. The mega store is also exploring the idea of using music channels in the near future. Globus' extensive use of all kinds of media to communicate its message effectively has included print, hoarding, radio, magazines and other promotional activities that are implemented from time to time in all the stores. Innovative advertising Spicing up a promotion Radio Mirchi's hot new method of spreading awareness about its breakfast channel Hello Mumbai used an unlikely vehicle. The much talked about dabbawallahs, whose operations have been the subject of study and example for many a management student, and who also had their moment of fame when Prince Charles visited India last year, became 'direct mailers' for the channel! They carried, in an exercise spread over four days, a dry red chili along with each of the over two lakh lunch dabbas they take to hungry Mumbaikars every day. An accompanying sticker proclaimed the message: 'For more spice tune into Hello Mumbai with RJ Harsh and get to know what's hot in Mumbai.' The exercise certainly grabbed the attention of the intended audience, going by the response in the form of interest in the breakfast show and feedback from listeners. The creativity used as well as the right timing (lunchtime is one time when people generally take a break and so are receptive to advertisements) contributed to the success of the venture.