Professional Documents
Culture Documents
INTRODUCTION
In the background of high consumerism and income of the urban consumers, in
recent year there are a number of companies have expressed their interest towards
retail sector outlets. As a result numbers of shopping malls have started their
operations in metro and urban areas. Pantaloon, big bazaar, Vishal Mega Mart,
Reliance Fresh are the best known examples of retail sector outlets in India.
Retailing 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. Some of the key features of retailing include:
It is assumed that due to the entry of a number of retail outlets in the urban and
semi urban areas, the mindset of the existing customers have undergone drastic
changes. Besides it is also reported that the traditional retailing such an age old
Grocery shops have directly faced competition with the organized retailing sector.
In some parts of the country, it is reported that the traditional retails are resisting
the entry of organized shopping malls. For instance the traditional retails of
Bhubaneswar with the active support of the consumers at large didn’t allow
reliance Fresh to start outlet initially.
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RECENT TRENDS
Retailing in India is witnessing a huge revamping exercise as can be seen in
the graph
India is rated the fifth most attractive emerging retail market: a potential
goldmine.
Estimated to be US$ 200 billion, of which organized retailing (i.e. modern
trade) makes up 3 percent or US$ 6.4 billion
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.
pay- packets which are hefty, and having a huge package of salary package.
more nuclear families in urban areas
rise in the number of working women
more disposable income and customer aspiration
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TYPES OF RETAIL
The retail industry is divided into organized and unorganized sectors. Organized
retailing refers to trading activities undertaken by licensed retailers, that is, those
who are registered for sales tax, income tax, etc. These include the corporate-
backed hypermarkets and retail chains, and also the privately owned large retail
businesses.
Unorganized retailing, on the other hand, refers to the traditional formats of low-
cost retailing, for example, the local kirana shops, owner manned general stores,
paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.
Malls
The largest form of organized retailing today. Located mainly in metro cities, in
proximity to urban outskirts. Ranges from 60,000 sq ft to 7, 00,000 sq ft and
above. They lend an ideal shopping experience with an amalgamation of product,
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service and entertainment, all under a common roof. Examples include Shoppers
Stop, Vishal Mega Mart, India bulls, Pantaloon.
Specialty Store
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. 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, Vishal Mega Mart 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.
Convenience Stores
These are relatively small stores 400-2,000 sq. feet located near residential areas.
They stock a limited range of high-turnover convenience products and are usually
open for extended periods during the day, seven days a week. Prices are slightly
higher due to the convenience premium.
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MBO’s
Multi Brand outlets, also known as Category Killers, offer several brands across a
single product category. These usually do well in busy market places and Metros.
USA - 85%
Taiwan - 81%
Malaysia - 55%
Thailand - 40%
Brazil - 36%
Indonesia - 30%
Poland - 20%
China - 20%
India - 3%
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EXECUTIVE SUMMARY
The Retail Sector is the largest sector in India after agriculture, accounting for over
10 per cent of the country’s GDP and around 8 per cent of the employment. India
has the most unorganized retail market in the world. Most retailers of the
unorganized retail market have their shop in the front and house at the back. Retail
industry is booming all around the globe at a very fast pace. Vishal Retail is a
known and strong competitor in the retail industry since 23 years. When we talk
about Indian market, the demands of every thing which you can find in every retail
store are increasing every year. Indians are famous for their traditions and festivals
and exchanging gifts with friends and relatives is a part of it.
It follows the concept of value retail in India. In other words, their business
approach is to sell quality goods at reasonable prices by either manufacturing
themself or directly procuring from manufacturers
(primarily from small and medium size vendors and manufacturers). It facilitate
one-stop-shop convenience for their customers and to cater to the needs of the
entire family. It believes this concept has helped them grow to thier current size
within a short time frame of their years. Mr. Ram Chandra Agarwal has been
ranked as the 28th most pitiful person in the Indian retail industry.
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This project report is the study of various activities and strategies of Vishal Mega
Mart. It also helps us in understanding the different technologies being used by
VRPL.
MISSION STATEMENT:
VISION STATEMANT:
We share the vision and belief that our customers and stakeholders shall be served
only by creating and executing future scenarios in the consumption space leading
to economic development
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COMPANY SUMMARY
“Future is thinking beyond horizon” & in order to keep its pace with the modern
retail, Vishal Retail Limited is spreading its wings. Instead of resting on its laurels
the Group are busy identifying new avenues of growth by venturing in other
formats like cash & carry, convenios as well as specialty stores and inspiring local
retailers to grow along with the big names. The group has tied up with HPCL to
open corner stores at their petrol pumps and in addition to the above Vishal has
come up with an institute to train manpower for the service industry.
As of April 30, 2007, it operates 50 retail stores, including two stores which are
operated by their franchisees. These 50 stores are spread over about
1,282,000square feet and are located in 18 states across India. In its efforts to
strengthen thier supply chain, it has set up seven regional distributions centres and
an apparel manufacturing plant.
Today Vishal Retail Limited, Flagship Company of Vishal Group, engaged in
Hyper Market stores with an average area of 25,000 to 30,000 sq. ft. through an
impressive chain of more than 100 fully integrated stores in spread of more than
the area of around 22, 00,000 sq. ft. in 69 cities across India & has a plan to cross
total retail area of 35 lakh sq. ft. in tier II and tier III cities by the end of 2009.
According to Mr. Ram Chandra Agarwal, CMD, Vishal Retail Limited, the group
owes its origin to a small 50 sq ft shop in Kolkata's Lal Bazaar that started selling
readymade garments. In tune with the pulse of the market, he envisioned a mega
store that would sell garments at prices none other could match. . The first big store
opened in Calcutta's Esplanade area in 1997, under the banner of Vishal Garments.
He was involved in all the aspects of the business: right from sourcing the
garments to interacting with customers. And this led to his greatest finding “The
Vishal Group.”
After identifying the immense market in fashion garment for the masses, He
moved to Delhi in 2001 and opened his first store in Delhi’s Rajouri
Garden by the name of Vishal Mega Mart (The jewel in Vishal Group’s crown)
and then there was no looking back for Mr. Ram Chandra Agarwal. At present, in
addition to garments, Vishal Mega Mart stores retail the entire range of household
products, FMCG and electronic goods. Vishal's prices are roughly 15 to 20 per cent
less than other mass market garment labels.
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Mr. Ram Chandra Agarwal, CMD, Vishal Retail Limited believes that the
shopping habits of Indians are changing due to their growing disposable income,
higher aspirations, relative increase in the younger population, and the change in
attitudes towards shopping. The emphasis has changed from price consideration to
design, quality and trendy. Age is also a major factor that affects the spending
decisions of an individual. Consumer spending is an important factor that affects
the economic growth and development in a country. As a trend, consumer is more
educated. He has access to all reforms taking place through various arrays of
communication. He is becoming a “value shopper” everyday.
Keeping this in mind, the group is now looking for franchisees to join hands
with Vishal and grow under common banner. This partnership will help small
retailers to survive the onslaught of organized retail as it will enhance their
competitiveness. Small stores can avail of the benefits on account of the economies
of scale, a key advantage for big retailers.
As per the plans, Vishal Retail will completely take over the supply chain of
its franchisees and provide them with technology, new practices, visual
merchandising skill and special promotional schemes, besides its brand and
costumer base.
Mens Fashion
Ladies and Kids
Footwear
Toys and Games
Home – General
Convenience (FMCG)
CDIT
Watches
Mobile
It follows the concept of value retail in India. In other words, their business
approach is to sell quality goods at reasonable prices by either manufacturing
themself or directly procuring from manufacturers (primarily from small and
medium size vendors and manufacturers). It endeavour to facilitate one-stop-shop
convenience for their customers and to cater to the needs of the entire family. It
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believes this concept has helped them grow to thier current size within a short time
frame of their years. Mr. Ram Chandra Agarwal has been ranked as the 28th most
pitiful person in the Indian retail industry.
In order to reduce costs and take advantage of economies of scale it has embarked
on backward integration of their products. Thier apparel manufacturing plant is
located at Gurgaon, Haryana. For ensuring efficiency in supply chain, it has set up
seven regional distribution centres located around Kolkata, Thane (Maharashtra),
Jaipur (Rajasthan), Ghaziabad (Uttar Pradesh), Ludhiana (Punjab), Gurgaon
(Haryana) and Delhi. Further, it has focussed on developing a cost and time
efficient distribution and logistics network, which currently comprises seven
distribution centers and a fleet of trucks for transportation. It achieved total sales of
Rs. 6,026.53 million for fiscal 2007, as opposed to a turnover of Rs. 2,884.43
million for fiscal 2006 and Rs. 1,463.12 million for fiscal 2005. During the same
period thier profit after tax was Rs. 249.83 million, Rs. 124.74 million and Rs.
30.20 million, respectively. As a result, thier sales increased batten fiscal 2004 and
fiscal 2007 at a CAGR of 89.83% and thier profit after tax increased batten fiscal
2004 and fiscal 2007 at a CAGR of 302.89%.
The Group also has a plan to raise around Rs 200 crore through
preferrential issue in the next few months to fund the company’s expansion plan.
Mr. R C Agarwal said “Rs 100 crore corpus raised through the initial public
offering had already been utilized and more money was required to push the
expansion plans further.”
“Retailing is an engine for taking merchandise to the end-users. There is a
lot of opportunity in this sector for us since demand of the potential consumers are
not being met under the existing facilities. Therein lies the road to success.” says
Mr. R C Agarwal
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DETAILS OF DIRECTORS:-
Mr. Ram Chandra Agarwal, 43 years, is VRPL’s Chairman and Managing
Director. He holds a bachelor’s degree in commerce from St. Xavier’s College,
Kolkata. Mr. Agarwal has more than 20 years of experience in the retail industry
and has been with VRPL since their inception in 1997. He started the business
under the name of “Vishal Garment” with a small store at 9, Lal Bazaar Street,
Kolkata. Mr. Agarwal has made efforts for the development of the value retailing
industry in India and is well known for his business acumen.
industry has more than 20 years of work experience. Mr. Aggarwal joined VRPL
Board on October 31, 2006.
Our Promoters
Acquisition of Business from M/s Vishal Garments and M/s The Vishal
Garments
Vide a business purchase agreement dated November 23, 2001 executed betiten
thier Company and Mr. Ram Chandra Agarwal (carrying on proprietorship
business in the name of M/s The Vishal Garments) and Mrs. Uma Agarwal
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Major Events:
A chronology of some key events in the history of the Company is set forth below:
Year---- Milestone
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VRPL’s BUSINESS:-
VRPL started as a retailer of ready-made apparels in Kolkata in 2001. In 2003,
VRPL acquired the manufacturing facilities from Vishal Fashions Private Limited
and M/s Vishal Apparels. Subsequently, with evolution of retail industry in India
and change in consumer aspirations, VRPL diversified their portfolio of offerings
to include other retail goods. Currently, VRPL sell ready-made apparels and a wide
range of household merchandise and other consumer goods such as footwear, toys,
watches, toiletries, grocery items, sports items, crockery, home furnishing,
beverages, drinks, gift and novelties.
VRPL follow the concept of value retail in India. In other words, VRPL’s business
approach is to sell quality goods at reasonable prices by either manufacturing
themselves or directly procuring from manufacturers (primarily from small and
medium size vendors and manufacturers). VRPL endeavor to facilitate one-stop-
shop convenience for their customers and to cater to the needs of the entire family.
VRPL believe this concept has helped them grow to their current size within a
short time frame of 8 years.
In order to reduce costs and take advantage of economies of scale VRPL have
embarked on backward integration of their products. VRPL’s apparel
manufacturing plant is located at Gurgaon, Haryana. For ensuring efficiency in
supply chain, VRPL have set up seven regional distribution centers located around
Kolkata (West Bengal), Thane (Maharashtra), Jaipur (Rajasthan), Ghaziabad (Uttar
Pradesh), Ludhiana (Punjab), Gurgaon (Haryana) and Delhi. Further, VRPL have
focused on developing a cost and time efficient distribution and logistics network,
which currently comprises seven distribution centers and a fleet of trucks for
transportation.
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VRPL achieved total sales of Rs. 1005.31 cr for fiscal 2008, as opposed to a
turnover of Rs.602.65 cr for fiscal 2007 and Rs. 288.46 million for fiscal 2006.
During the same period VRPL’s profit after tax was Rs. 40.64 cr, Rs.25.07 cr and
Rs. 12.39 cr, respectively.
of their stores, VRPL consider various factors, such as internal and external décor
and colour schemes, allocation of store space, stock mix and pricing and
accounting methods.
Insurance
VRPL maintain comprehensive insurance coverage with Tata AIG, Bajaj Allianz,
Royal Sundaram and IFFCO-TOKIO for their existing stores, distribution centers,
manufacturing facilities and trucks. VRPL insurance policies include
comprehensive coverage for electronic equipment, fire and special perils and
burglary. Further, VRPL has filed a claim of Rs. 22.50 million on account of fire in
their store at Meerut as on July 7, 2006. In this regard, they have received Rs. 7.50
million as an interim payment.
Factories
VRPL’s existing manufacturing facilities are located at Plot No. 224, Phase 1
Udyog Vihar, Gurgaon, for which they have leasehold interest until May 4, 2009.
In addition, VRPL have recently acquired freehold interest in relation to a land
admeasuring 7.24 acres in Dehradun, Uttaranchal, where they are exploring the
possibilities for establishment of another manufacturing facility.
Other Properties
VRPL have recently acquired freehold interest in relation to a land admeasuring
82,830 square feet in Hubli, Dharwad.
Merchandise Planning
VRPL’s merchandise planning is based on the concept of category management
rather than traditional brand management practices.
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VRPL stores, such that they are able to derive fixed margins from sales of such
products, irrespective of the locations. Under these agreements, they benefit from
special discretionary discounts and offers directly from the manufacturers or their
distributors.
Vishal Mega Mart is one of India’s fastest growing retail chains.. The
chain currently has 183 company stores in 24 states / 110 cities in India. The
Vishal brand is known for great modern style for men, women and children.
Vishal offers high level fashion styling. Since 1986, our name has been
synonymous with quality, value and fashion integrity. We offer an unparalleled
collection of clothes for the entire family. Each garment is hand selected for
quality and contemporary styling. Vishal manufactures majority of its own
garments and out sources some under its direct quality supervision. This enables
us to offer the lowest possible and most reasonable prices.
Our goal is to provide a range of fashion wear to suit every pocket. Our product
mix represents the most current fashion trends in tops, bottoms, formals and
accessories for men, women and kids. Our courteous staff will ensure that
consumers get a perfect fit.
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Zeppelin : Mens Shirts & Trousers Fizzy Babe : Ladies & Kids Girls
Kitaan Studio : Mens Shirts & Trousers Jasmine : Ladies & Kids Girls
Blues & Khakis
Mens Trousers Zero Degree : Kids Boys
:
Paranoia : Mens Shirts & T-Shirts Soil : Mens Shirts
Mens Trousers &
Chlorine : Mens Shirts Massa Bay :
Bermudas
Mens Shirts, T-Shirts,
Fume :
UnderGarments.
Apparel Manufacture
The basic raw materials required for the manufacturing process of apparels
includes fabrics and accessories. VRPL merchandising teams source fabrics from
local manufacturers in India depending upon their production plan. VRPL also
source fabrics from the place of origin. VRPL source various other components
and accessories from vendors in various parts of the country and also import them
from China.
Inventory Management, Distribution Network and Logistics
VRPL’s distribution network and logistics encompasses all activities to ensure that
goods are dispatched in right quantities and at right time to reach stores with
sufficient time in hand to promptly cater to customer demands and optimization of
inventory position.
They have built a system to monitor the inventory position on a real-time basis at
each store, under which a stock requisition or delivery order is generated when pre-
determined stock or re-order levels are reached. The re-order levels for stores are
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determined based on factors such as display levels, lead time for replenishment and
average daily sales. VRPL review these re-order levels on continuous basis to
factor in variances in demand based on seasons, trends and promotional schemes.
VRPL have seven distribution centers over approximately 385,033 square feet.
These distribution centers are located around Kolkata (West Bengal), Thane
(Maharashtra), Jaipur (Rajasthan), Ghaziabad (Uttar Pradesh), Ludhiana (Punjab),
Gurgaon (Haryana) and Mahipalpur (New Delhi). VRPL have clearly demarcated
the stores which will be serviced by each distribution centre. The reorder levels for
distribution centers are ascertained on the basis of factors like average daily sales
of all the stores services, lead time for replenishment and buffer stock, which caters
to both the existing and proposed stores to be fed. As for the stores, they regularly
review these re-order levels.
VRPL’s distribution centers and stores are connected through company-wide
virtual network connection through broadband which helps to efficiently manage
their network of stores and distribution centers throughout the country.
They primarily utilise their own vehicles to transport the inventory to their stores
from the distribution centers. In addition, VRPL use the services of logistic
solution providers including low cost transport service providers in order to deliver
products on time to VRPL stores and optimize transportation costs. Distribution
centers operations have been streamlined through the standardisation of racking
system, layouts and implementation of automatic replenishment system.
Under arrangements with some of their merchandise manufacturers, they receive
payment on account of display of their products.
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Our products
FOOTWEAR
Mens
Ladies
Girls
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Boys
HOUSE HOLD
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Appliances kitchen aids
LADIES ACCESSORIES
Cosmetics haircare
HARDWARE
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Lock Hammer
CAR ACCESORIES
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Lights Mirror
ELECTRICALS
Regulator Tester
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Home Furnishing
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FOODMART
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HOUSE HOLD
GARMENTS
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Infant’s wear
FMCG
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SBI Card launched a co-branded card in association with leading retail chain
Vishal Mega Mart to tap the booming organized retail market that is pegged to hit
Rs 1, 09,000 crore by 2010.
"SBI Vishal Mega Mart Card is one of the best co-branded credit cards that offers
reward points and other benefits to frequent shoppers and will be free for those
who spend above Rs 7,500 per annum," SBI Card CEO Roopam Asthana said.
Asthana said the card would be free of cost for the first year, but would charge Rs
700 per annum if purchase on the card was less than Rs 7,500.
Other SBI Card holders could also flip their card for SBI Vishal Mega Mart Card
and use it like any other credit card.
"By partnering with SBI Card, we are not just offering customers a convenient
payment mechanism but a unique consumer loyalty programme that rewards them
every time they shop," Vishal Retail MD Ram Chandra Agarwal said.
Some of the features of the co-branded card include Rs 250 discount voucher on
signing up for the card and a set up by which the card holder earns five reward
points on every Rs 100 spent that could go up to eight points on spends above Rs
7,500 and the points are redeemed at any Vishal Mega Mart store.
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Other offers in the credit card are no transaction fee on fuel purchase at select IOC
and IBP petrol pumps and balance transfer facility without any interest for 75 days
and complementary personal accident insurance.
Vishal Mega mart retails a large variety of household, FMCG and consumer
durable goods at bargain prices at its 24 self-owned stores, which are likely to
increase to 50 by the end of 2006.
In the initial years, returns are limited due to the high real estate costs, large and
sustained capital expenditure to create scale, and start-up costs for store
infrastructure.
Apart from the traditional sources like banks and financial institutions, there are
multiple avenues including PE funds. Companies have even successfully
approached the IPO (initial public offering) route to raise funds.
We have seen many PE investors taking stakes in retail ventures. For example,
Subhiksha raised PE from ICICI Ventures, while Actis took a controlling stake in
Nilgiris.
After the initial rounds of PE-funding, companies like Vishal Megamart and
Koutons approached the public for capital through an initial offering of shares.
Large players like Shopper’s Stop, Trent and Pantaloons are already listed on the
stock exchanges.
E-COMMERCE:
The uses of computers and internet have been expanding significantly over the
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How to Shop
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3. Proceed to Checkout
7. View or print your Order Acknowledgment and check your Order status.
Here are a few important action points that you should bear in mind:-
1. Keep your PC updated with the latest anti-virus / anti-spy ware software.
2. Install a personal firewall on your PC to protect your account.
3. Keep your PC updated with the latest security patches and, most
importantly,
4. Do not click on links or open attachments in unknown or unsolicited (spam)
emails.
Management Information Systems (MIS)
They have strong MIS capabilities that make use of their technological investments
to generate valuable insight for them and help them in improving their operations,
as well as in enhancing their speed of response to what the customers want. They
are thus able to monitor their performance on a day-to-day basis, across stores,
departments and product categories and compare the same with other stores as well
as across periods. This helps them take corrective action on a timely basis, and
optimize their stock. They are currently using Business Objects to analyze data
related to the buying trends of their loyalty customers.
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Following are the table which shows the different software used by the
organization in the organization activities, for customer transaction & for
employees working in the organization.
Functional Area:
Merchandising Buying,
product ordering, Receipt
confirmation, Stock
transfer, Inventory
Management, Sales
Merchandise event
Comments: JDA is one of the leading ERP systems used by many retailers for
multiple
Business models in regards to retailing. The system is fully integrated and takes
care of
the Supply chain from a manufacturer to the end customer by using back-end and
front-end systems like MMS (Merchandise Management System) & WinDSS
(Windows Distributed Stores Systems).
Functional Area:
Financial Accounting
Comments: Completely integrated with their retail ERP- MMS, allows them to get
online integrated financials.
Functional Area:
Human Resources.
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4. “WMS” software
Functional Area:
Distribution and Logistics.
Comments: WMS enable the space planning and also integrated SKU location
which enable faster picking and putting of merchandising.
Functional Area:
Merchandising Planning.
Internal/External communication.
FUTURE SERVICES:
Expansion Plans
VRL plans to scale up its nationwide presence increasing store space from
1.28million sq. ft. in March 2007 to 5 million sq. ft. by March 2010. The company
plans to open 32 retail stores in FY2008 of which, 22 stores will be funded from
the IPO proceeds while the balance 10 would be funded through debt and internal
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accruals. Most of the 22 stores will be located in Tier III cities (18 stores) followed
by Tier I cities (three stores) and Tier II cities (one store).
Says Vishal Retail Ltd chairman RC Agarwal: ‘‘In the next one month, we expect to tie up a Rs
45-crore fund through a bank to drive our next phase of expansion (primarily towards lease,
interiors, and stocks) in fiscal ’04-05. We had earlier financed our projects in a small measure
through the Punjab & Sind Bank and Bank of Baroda.’’
Mr Agarwal also owns Kolkata’s three-year old entertainment property Vishal Waterworld Ltd.
The new retail expansion drive will increase Vishal’s network from 14 stores in 10 cities to 29
stores in 15 cities. Under the company-owned model, Vishal will add ten stores—all large format
(25,000-40,000 sqft)—while under the new franchisee model (it has one in Kota) it will add
another five mid-sized stores (around 10,000 sqft) in fiscal ’04-05.
‘‘We’re hoping to finalise a 40,000 sqft-store in Delhi’s Mathura Road area. In the next couple
of months a franchised store will open in Hyderabad, and another will follow in Agra in four
months,’’ he says.
Vishal expects the company’s turnover to more than double to Rs 200-225 crore in ’04-05. The
new territories: Chandigarh, Lucknow, Ahme-dabad and Surat.
Mumbai and south will be targeted not before ’05-06, says Mr Agarwal. Vishal now has
presence in towns with large ‘middle-middle class’ consumers like Jaipur, Varanasi, Siliguri,
Cuttack, Ranchi, Bhubaneswar and Indore.
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What is driving Vishal’s expansion? ‘‘Our philosophy is to make the customer feel that he is
paying for a dhaba chai (cheap tea joint) in five-star surrounding. We price our products up to 50
per cent cheaper than leading department stores and this, we think, appeals to a good number of
middle-middle class consumers. We believe in volume turnover; margins are low,’’ says Mr
Agarwal.
He adds: ‘‘So far the industry has seen competition in the premium-end of the retailing market,
but for the price-sensitive middle-class buyer, we only have large unorganised apparel market—
we hope to play a role here.’’
KSA Technopak manager Munir Suri points out that margins vary across formats —in a
premium department store retail margins could be 10-25 per cent for branded labels while in
hypermarkets it could be around 30-40 per cent.
Says Mr Suri: ‘‘Traditionally, retailers have targeted SEC A and SEC B consumers through
department stores—like Shoppers’ Stop, Westside, Ebony, Lifestyle. But now hypermarkets and
discount stores like Big Bazaar and Giant—where pricing is positioned at substantial discount to
MRP—are stirring the marketplace by targeting mass consumers.”
‘‘The Indian market is huge: it has enough room for speciality, department or hypermarket
model. However, I don’t see any clutter at the top-end— their proposition is different,’’ he adds.
Vishal is looking at expanding its vendor base too, which is already huge with around 35-40
vendors. Also, in order to bring a level of consistency in supplies, Vishal has recently
operationalised its first apparel-making facility in Gurgaon.
Employing 500 people on a single shift basis, the Gurgaon plant makes 1.25 lakh pieces a month.
‘‘The plant has just opened, we will ramp it up once the need arises,’’ says a company source.
Vishal is now looking at engaging a creative agency to convey its mass-market gameplan. It is
also weighing its options to retail non-apparel products in future through its chain.
COMPETITIVE ADVANTAGE:
Compiling data from various sources - Annual reports, Magazines, Websites etc
Here is how Pantaloon Retail, Vishal MEGAMART , Trent, Shoppers Stop and
Spencers stack up against each other in the following key factors.
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Retail Space under Operations [in million sft at the end of March-2008]:
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the previous fiscal. The chart below represents sales mix of Pantaloon Retail India
Ltd. VISHAL MEGAMART still account for bulk of the sales for the company.
The company has added retail sales space aggressively in last financial year. In
FY2005, the company added 1 mn sft while it declined to 0.85 mn sft in FY06 and
zoomed to 2.7 mn sft in FY07. This FY, the company has been little bit slow due
to unrealistic realty prices and has managed to add mere 1.5 mn sft till the end of
Nov.The company is expected to clock sales of Rs 7,400 crore for FY2008 but
going by the recent reported numbers, a slowdown is imminent.
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M A R K E T I N G A N A LY S I S S U M M A R Y
Marketing help to define the business for the customer's interests, not your own. It
is the process of learning what customers want or need and determining how to
satisfy those wants or needs. It is also used to confirm whether the customer
reacted to a marketing program as expected. The benefits of market research
include:
Learning who your customers are and what they want.
Learning how to reach your customers and how frequently you should try to
communicate with them.
Learning which advertising appeals are most effective and which ones get no
response.
Learning the relative success of different marketing strategies, thus
improving return on investment.
Learning how not to repeat your mistakes.
Vishal Mega Mart has been the pioneer of retail revolution. Its first fight was
against local ‘Kirana’ stores. The task was to change the mindset of consumer to
bring about changes in their shopping patterns. It wanted people to do bulk
shopping for their monthly ration instead of going to the shop each week.
Product
Vishal Mega Mart offers a wide range of products which starts from apparels to
food items, footwear to home furnishing, crockery to sport items, child care
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products to toys, watches, drinks etc. There are many in house brands promoted by
Vishal Mega Mart. In pursuance of their business plan to diversify their portfolio
of offerings, FMCG products play a key role. FMCG products are usually meant to
fulfill the daily needs of consumers and therefore, VRPL believe retailing of
FMCG products will bring customers to their stores on a frequent basis and this
may in-turn lead to consumption of their apparels. VRPL have a number of private
labels for apparels such as Zepplin, Paranoia, Chlorine, Kitaan Studio, Famenne,
Fleurier Women and Roseau.
Price
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Vishal Mega Mart promises its consumers the lowest available price. The concept
of psychological discounting (Rs. 99, Rs. 49, etc.) is used as promotional tool.
Vishal Mega Mart also caters on Special Event Pricing (Close to Diwali,
Christmas, New Year etc.). Selling combo-packs and offering discount to
customers. The combo-packs add value to customer. Through Bundling, they also
reduced the price of the products. In addition to VRPL’s strategy to continue
procurement of goods from small and medium size vendors and manufacturers
which leads to cost efficiencies, VRPL intend to procure FMCG and apparels from
low-cost production centers located outside India. Towards this objective, VRPL’s
propose to increase their procurement of finished and semi-finished goods from
China and thereby realize economies of scale and pass on the benefits so accrued
to their customers. The efforts of VRPL’s retail business are targeted towards
families having total income which can be classified under the “lower middle” and
“middle” income groups. VRPL follow uniform pricing policy across their stores
in respect of private labels and non-branded products sold by them. This enhances
brand loyalty, encourages customer confidence and results in operational
convenience. In relation to the other products, the prices may vary between stores
on account of state-specific taxation and vendor policies.
Place
Vishal Mega Mart stores are located in 110 cities with more than 180 outlets.
Vishal Mega Mart has presence in almost all the major Indian cities. They are
aggressive on their expansion plans. VRPL intend to increase their penetration in
the country by setting up new stores in cities where they already have presence, as
also entering into new areas in the country. In particular, they intend to focus on
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expansion in Tier II and Tier III cities. VRPL target locations with good
infrastructural facilities such as easy accessibility, provision for water, electricity,
parking, security and other basic amenities.
Promotion
Advertising has played a crucial role in building of the brand. Vishal Mega Mart
advertisements are mainly seen in print media i.e. newspapers, Television with
Tina Parekh as there in advertisement, and sometime road-side bill-boards.
VRPL’s category management system is used to plan promotional schemes. They
launch promotional schemes weekly. Apart from general sales promotion, the
category manager formulates promotional plans for ‘slow movers’. In addition, to
promote sales, they focus on layout of the stores and positioning, presentation and
display of merchandise, in order to appeal to the customer. In addition, VRPL have
introduced, in association with SBI Cards & Payment Services Private Limited, a
co-branded credit card. VRPL’s propose to continuously undertake such initiatives
to increase the satisfaction of their customers. Some of the features of the co-
branded card include Rs 250 discount voucher on signing up for the card and a
process by which the cardholder earns five reward points on every Rs 100 spent. A
cardholder accumulates points on the basis of purchases made and the points
accumulated can be redeemed for gifts or purchases. In September 2005, VRPL
entered into a long term advertising agreement with Bennett, Coleman & Company
Limited (“BCCL”). Under the agreement, they are entitled to fixed discounts for
their advertisement in print publications of BCCL for a period of five years from
the date of the agreement. In addition, BCCL would also act as a facilitator for
other print and non-print media of the Times Group i.e. internet, radio and
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television or any other new medium launched during the tenancy of the agreement.
As a part consideration, VRPL had issued 1,670,605 Equity Shares of Rs. 10 each
and 384,190 Preference Shares of Rs. 146 each amounting to an aggregate of Rs.
300 million.
It believes that the following are thier principal competitive strengths which
have contributed to thier current position in the retail sector in India:
Thier business plan involves implementation of the concept of the ‘value retailing’,
targeting the middle and loiter middle income groups, which constitute majority of
the population in India. It intend to provide quality products at competitive prices.
It sells a vast range of merchandise across apparels and accessories,
FMCG(frequently marketed consumer goods) products, food products and
consumer durables with over 74,000 SKUs.Thier emphasis has been to maximise
the value that the customers derive in spending on goods bought in thier stores.
It endeavthier to continuously reduce thier costs through a variety of
measures, such as, in-house production of apparels, procurement of goods directly
from the small and medium size vendors and manufacturers, efficient logistics and
distribution systems along with customized product mix at thier stores depending
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on the regional customer behavithier and preferences. Central to thier value retail
strategy is to pass on the benefits of cost reduction measures to thier customers.
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Geographical spread
Thier stores and distribution centres are spread in various parts and regions of the
country. This has not only enabled us to build thier brand value but also facilitated
us to explore cost-effective sthiercing from different locations, identify potential
markets and efficiently establish new stores in different locations. An aggregate of
43 of 50 of thier existing stores are located in Tier II and Tier III cities, which, It
believe, enables us to capture market share in locations where a majority of thier
target customers are located.
It believe that It possess the ability to identify locations with potential for growth,
in particular in Tier II and Tier III cities. It has an exclusive site identification and
assessment team, which undertakes systematic analysis of the business prospects,
taking into account factors such as population, literacy levels, nature of occupation,
income levels, accessibility, basic infrastructure and establishment and running
costs. Further, it has a dedicated warehouse for the purposes of storing the
materials essential for setting up of new stores.
Private labels
It has a number of private labels for apparels (i.e. apparels manufactured by us)
such as Zeppelin, Paranoia, Chlorine, Katina Studio, Famine, Flthierier Women
and Roseau. In fiscal 2007, thier income from thier private labels was Rs. 583.60
million, which accounts for 9.68% of thier total sales for fiscal 2007. It believes
that their focus on thier private labels and their recognition in thier customer
segment enables us to differentiate themselves from thier competitors.
Their Strategy-----------
It intends to pursue the following strategies in order to consolidate thier position as
an operator in the ‘value Retail’ segment in India. Thier growth strategy is based
on:
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Increasing thier penetration in the country by leveraging thier supply
chain, distribution and logistics network
Expansion of FMCG
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celebrations. In furtherance of thier endeavthiers to reduce costs, It intend to
procure FMCG products directly from the manufacturers. For this purpose, It has
entered into and will continue to explore the possibilities of entering into certain
arrangements with domestic FMCG majors on such terms and conditions, which
are suitable to their business model.
to procure FMCG and apparels from low-cost production centres located outside
India. Towards this objective, It propose to increase thier procurement of finished
and semi-finished goods from China and thereby realize economies of scale and
pass on the benefits so accrued to thier customers.
Social Impact
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taken into consideration for our research work on impulse buying behavior of the
consumers. The study is based on the primary data collected from Vishal
Megamart from the area of DELHI and NCR regions with the help of structured
questionnaire on ricer scale. Data analysis has been done using SPSS software. The
statistical analysis method employed in this study is Factor Analysis. After the
through analysis of the available data it has been found out that since income of
individual is increasing and more and more people are moving towards western
culture in dressing sense, in eating etc so the purchasing power of the people has
really gone up and thus the impulse buying of the commodities is on a great
increment mainly due to pricing strategies of retail players and full of festivals
throughout the year. Under the social environment effect hoping to usher in a
socio-economic revolution VISHAL MEGAMART is all set to create at least
500,000 jobs through its jumbo Rs.80 billion investment in retail network to be
launched in the two north Indian states.
The hypermarkets would be spread over an area of 150,000 sq. ft. and sell apparel,
consumer durables, IT and lifestyle products, and home furnishings besides all the
goods available in VISHAL MEGAMART. Community facilities including a
health centre and pharmacy, and a vocational training centre to assist youth in
tapping employment avenues would also be provided at these centers. Sixty-eight
Town Centers, each spread over 130,000 sq. ft. would be in place in most of the 70
district headquarters of Uttar Pradesh by the end of next year.
Poised to usher a new paradigm in rural areas, the agri-business vision of VISHAL
MEGAMART is to build infrastructure for efficiency, value addition, logistics and
market access to improve farm incomes, create an efficient market place for the
true price discovery of farm produce, drive major initiatives to bring the best
technology and thereby bring about drastic improvements in farm practices
LEGAL IMPACT
In this environment govt. plays his legal role to develop the mentioned industry.
He makes suitable law for the multi-dimensional growth of the industry. Govt. has
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also fixed a limited FDI in this sector, no body will invest more money from this
limit, but after liberalization govt. changes his policy.
Liberalization of the Indian economy and rationalisation of business procedures
have already ensured a high economic growth with a rapidly expanding base for
the manufacturing and hi-end services sectors. Fresh avenues for gainful
employment to a predominantly young and talented population have created high
disposable incomes that translate in to higher consumption and thus better
opportunities for all verticals of retail to flourish. The country's dynamic retail
landscape presents a grand opportunity to investors from across the globe, to use
India as a strategic business hub prices than what they received from the erstwhile
traders/middlemen. Corporate retailers like ITC, Godrej, VISHAL MEGAMART,
AV Birla and many others have already established the farm linkages. Indian
farmers are finally making good money, after centuries of social and economic
exploitation. The Indian government too has chipped in with a massive loan waiver
worth Rs 60,000 crore to lighten the farmers' debt burden
ECONOMIC IMPACT
Asian Markets Securities report on Vishal Retail IPO
VRL’s focus is on tier II and tier III cities, which account for 87% of its total retail
space. Of the 50 stores, Vishal Retail has 43 stores located in Tier II and Tier III
cities. An average store is 20,000-30,000 sq.ft. in size generating sales of Rs 7500
per squre feet.
North India accounted for 62% of FY 2007 sales, east India 19%, west India 15%
and south India 4%. In FY07, the apparel business contributed 63% of revenues,
while the non-apparel business contributed 22% and the FMCG sector 15%.
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VRL has a garment facility in Gurgaon having a capacity of 5,000 pieces per day.
The in house apparel manufacturing facility offers private labels under the banner
of Vishal Mega Mart. In FY2007, income from private labels was Rs 58.4 crore,
which accounted for 9.7% of total sales.
Strong Infrastructure
VRL’s distribution and logistics network comprises seven distribution centers with
a total area of 471,426 sq. ft. The company also has its own fleet of 41 trucks,
which helps in transport and delivery of products in a cost and time efficient
manner. The company is in the process of implementing SAP to connect all its
stores and distribution centres through a virtual network connection which will
help it to efficiently manage the network of outlets throughout the country.
Vishal compares well in terms of profit margins & Mcap / Sales, although its
average sales per square feet is very low compared to its peers because of its
presence mainly in smaller cities.
At the upper price band of Rs 270 per share, the P/E would be 24.1 times the FY
2007 EPS of Rs 11.15 on post-issue equity of Rs 22.40 crore. The leading players
like Pantaloon Retail, Shopper’s Stop and Trent (India), enjoy very high valuation
with the PER of around 90, 80 and 40, respectively. Although VRL does not fall in
to that league due to its value retail business model focused on smaller towns &
cities, nevertheless, retail being a high growth industry, Vishal Retail will also do
well & command good valuation.
VISHAL MEGAMART expect the company to post sales & PAT growth of 60%
& 70% respectively over FY07-09. Valuing conservatively at 18 - 20x FY2009
EEPS of Rs 29.91, VISHAL MEGAMART see the stock scaling up to Rs 538-600
levels over next one year. Investors can certainly subscribe to this growth stock.
POLITICAL IMPACT
This environment is very important from the view of these particular topics,
because every way would pass through the political coridor.The Government of
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India has succeeded in its reform process; the economy is poised to grow at an
annual rate of 5% during 2005-2010. The reforms include policies to woo foreign
investors, make import duties in compliance with WTO commitments and
customize the EXIM policy to boost imports.
Due to some political region at least three major cities saw protests in May against
Reliance, India’s largest corporation, entering the business of retailing fresh
vegetables and fruits through its brand Reliance Fresh. In Ranchi and Indore, the
protests had political backing and turned violent.
The protestors, mostly street vendors, fear the company’s low prices will destroy
their market. While it is too early to know if their fears are founded in reason or
hype, the protests also stem from the fact that they feel cheated by a government
that is in a hurry to promote large retail businesses and refuses to keep its promises
made to small vendors and retailers, who control about 95 per cent of the country’s
overall retail business. India has an estimated 12 million street vendors in its cities
—the 2004 National Policy for Urban Street Vendors pegs it at 10 million—and
roughly 2.5 per cent of each city’s population is engaged in vending on streets.
Many visible corporate brands are into the retail business: VISHAL MEGAMART,
Bharti, Big Bazaar, Godrej and Subhiksha. India has not allowed FDI in multi-
brand retailing. But international behemoths like Wal-Mart, which has a deal with
Bharti, are raring for joint ventures. (Wal-Mart is world’s largest retailer and the
second largest corporation. Labour unions, women’s rights groups, and grassroots
organizations have long argued that the reason for Wal-Mart’s cheap prices is how
shoddily it treats its employees. Wal-Mart had to leave Germany and South Korea
because it did not get the kind of room for its policies as in the US and other
countries.)
TECHNOLOGICAL IMPACT
India’s organized retail industry, constituting 3 per cent of the total retail, is indeed
on a growth path. It has necessitated the development of sophisticated IT solutions
to enable more profitability, efficiency and an enriching customer experience.
Retailing is the second largest income generator in India after agriculture and
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constitutes 38 per cent to gross national income. Dynamic Vertical Solutions Pvt
Ltd, based in Gurgaon, has already made a mark in the field by providing complete
end-to-end solutions for different types of retailers. Atanu Ghose, Technology
Head at DVS and an IT veteran with 37 years of experience, who was in Bangalore
recently to attend FRO2008 — the Franchise and Retail show — shares some of
his perceptions on IT deployment in retail sector.
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M A N A G E M E N T O F T E C H N O L O G Y , I N N O VA T I O N
& CHANGE
within a tag carries information and is read using radio waves. Vishal Mega Mart
uses the latest technology to improve its performance Quality as well as Quantity
Wise. Bar code scanners are very sophisticated devices these days. Functionality
and reliability is extremely important. Vishal Mega Mart also uses CCTV to
monitor its stores. Various CCTV’s are being installed in a store, with a room
where the entire functioning taking place in a store can be monitored by a human
operator.
VRPL have partly implemented their information technology set up and are
currently in the midst of completing the process of upgrading their information
technology set up and have entered into an agreement dated September 6, 2005
with Tata Consultancy Services Limited for providing information technology
services including implementation of more advanced ERP applications such as
SAP, rendering services inter alia for management information system on reports
related to stock management, receipt processing, picking and packing, project
systems, merchandise assortment management, pricing and promotion, sales,
controlling and financial accounting.
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O R G A N I Z AT I O N S T R U C T U R E
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It believes a key to thier success will be thier ability to continue to maintain and
grow a pool of strong and experienced professionals. It has-been successful in
building a team of talented professionals and intend to continue placing special
emphasis on managing attrition and attracting and retaining thier employees. It
intend to continue to encthierage thier employees to be enterprising and expect
them to ‘learn on the job’ and contribute constructively to thier business, either
through ideas, personal networks or effective knowledge management. It also
intend to continuously re-engineer thier management and organizational structure
to allow us to respond effectively to changes in the business environment and
enhance thier overall profitability
VRPL encourage their employees to be enterprising and expect them to ‘learn on
the job’ and contribute constructively to their business, either through ideas,
personal networks or effective knowledge management. In essence, they train their
employees to become next generation entrepreneurs, who can effectively lead the
growth of their business. Their corporate objective is to provide every associate
with an average of 5 man days of training per annum through internal and external
resources.
All senior management members are required to contribute 30 hours per annum
towards training.
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REFERENCES
http://www.vishalmegamart.net/
http://www.vishalmegamart.net/aboutus.htm
http://en.wikipedia.org/wiki/Special:Search?
search=vishal+mega+mart&go=Go
http://en.wikipedia.org/wiki/Retailing_in_India
http://www.business-standard.com/india/news/weakness-continues-sterlite-
mm-plunge-8/15/51/50474/on
http://indiaretailbiz.wordpress.com/2006/11/03/11-vishalmegamart
customers-petty-traders-have-no-reason-to-worry-say-vishal-officials/
STORE MANAGER:
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