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Retail Business Plan

Retail Business Plan

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Published by Arihant
Praxis Business School, Batch 2007-09
Praxis Business School, Batch 2007-09

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Published by: Arihant on Nov 21, 2009
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04/17/2013

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Retail Business Plan
A reportSubmitted to
Prof. S. Govindrajan
In partial fulfillments of the requirements of thecourse
Retail Management
On01.03.09
By
Arihant SinghiPratik GuptaVijay Leon
1 |Page
 
Executive Summary
 The Indian retail market has around 15 million outlets and has the largest outletdensity in the world. However, most of these outlets are basic mom-and-popstores with very basic offerings and fixed prices, and lack good ambience. TheIndian retail scene has witnessed too many players in too short a time, crowdingseveral categories without looking at their core competencies or having a wellthought out branding strategy.Although the organized retail sector has come up in a big way in India, of late,the local kirana stores are still far from phasing out. The kirana stores have muchlower operating costs than an organized retail store. Organized retailing isspreading and making its presence felt in different parts of the country.With the entry of very large corporate houses like Reliance Fresh, Vishal, AV Birlagroup, Bharati Wal-Mart joint venture and the existing Biz Bazaar, Spencer, FoodMart are also in large scale expansions across the country. India has been ratherslow in joining the Organized Retail Revolution that was rapidly transforming theeconomies in the other Asian Tigers. Though with a population of a billion and amiddle class population of over 400 millions organized retailing (in the form of food retail chains) is still in its beginning in the Country.When a new idea whose time has come arrives, it cannot be bunged by anyone.Especially when it proposes an essentially finer monetary and behavioral valuescheme to its clientele, it gradually takes over the old way, and otherstakeholders have no option but to acknowledge and transform accordingly.Modern retailing is one such inevitable reality which has started taking a spin inthe traditional retail scenario and is soon liable to capture the retail sector andfurther enhance its compass. The question which then arises in the face of thisforeseeable change is the future of the traditional outlets (Kiranas) with anetwork so intense that most of us have a kirana store within five minutes of ourresidence. The kirana also operate on a low-cost model with family-ownedproperties (an extension of the house), with most of the family working in thestore itself. They cater to impulse needs at short notice, and early opening andlate closing times which suit many families.In the last five years (2001-2006) Indian retailing industry has seen exceptionalaugmentation. Where the country was in the dominance of unorganized retailing2 |Page
 
the organized retailing sector has now emerged in a momentous way and iscontributing significantly to the growth of Indian retail sector. It is predicted thatorganized retail will form 10% of total retailing by the end of this decade (2010).Cultural and regional disparity in India is the major challenge in the face of retailers. Due to this factor the retailers in India are deterred from adopting adistinct retail format. And so there is a scope for a variety to formats to co-existin India. These are the few reasons why we have chosen this format.In order to move ahead with our plan, we’ve had to make certain assumptionsand get a fair idea of the market. For this, the group conducted a primaryresearch on the local kirana stores with respect to their financials. Theassumptions for the model store EBITDA are based on the research findings. Thesample size was of 20 kirana stores of size of approximately 200-250 sq. ft. Theresearch frame was around the areas of Bowbazar, Sealdah, Kalighat,Bhawanipore and Kasba.While calculating the EBITDA assumptions were made on sales, gross marginpercentage and operational expenses. Finally, the per square feet EBITDAworked out to around Rs. 95.Apart from this, the 4 P’s of marketing – Place, Promotion, Price and Product –have also been covered in this project.We are setting up 55 stores in 11 tier 2 cities to reach the mass and attractfootfalls. A category mix with space allocation , sales and sales/ sq.ft, GM%, RGM% has been calculated.3 |Page

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