Introduction

Industry Background

India, like Britain, is a nation of shopkeepers. With over 12 million retail outlets,
India probably has the highest density of retail outlets in the world, with one for
approximately every 90 persons; little wonder that the country is the ninth-largest
retail market in the world, with estimated annual retail sales of around USD215
billion in 2005 (Rs 960,000 crore). At the same time, the share of organized trade in
this enormous market is currently very small. It is estimated at just USD8 billion (Rs
35,000 crore) in 2005, up from USD6.25 billion (Rs 28,000 crore) in 2004. This
accounts for less than 4 per cent of the total retail trade in the country.

An Underdeveloped Retail Market

Organized trade in India is very underdeveloped when compared with other emerging
markets in Asia, Latin America and Eastern Europe.

The Indian and Chinese markets are comparable in many aspects:

Both countries are not homogeneous. They comprise many markets within a single
country, with significantly varying cultures and customer preferences across regions.

There is a significant rural population in both countries, which has much lower
purchasing power compared to the urban population.

Both countries are geographically very large and unevenly developed, adding a
significant distribution and logistics dimension to the retail trade.

The Size Of The Opportunity

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Research done by the Tata Strategic Management Group (TSMG) indicates that over
the next 10 years, the total retail market in India is likely to grow at a compounded
annual growth rate (CAGR) of 5.5 per cent (at constant prices) to USD374 billion (Rs
16,77,000 crore) in 2015. The organized retail market is expected to grow much
faster, at a CAGR of 21.8 per cent to USD55 billion (Rs 246,000 crore) in the same
time frame, garnering around 15 per cent of overall retail sales. Based on our
projections, the top five organized retail categories by 2015 would be food, grocery
and general merchandise apparel durables food service and home improvement.

Retailers inspired by the Wal-Mart story of growth in small town America are tempted
to focus on smaller towns and villages in India. However, a careful analysis of the
town strata-wise population, population growth, migration trends and consumer spend
analysis reveals a very different picture for India.

As per our estimates, the share of the 35 towns with a present population of greater
than 1 million in India's total population would grow much faster than their smaller
counterparts, from 10.2 per cent today to reach 14.4 per cent by 2025. Simultaneously,
the share of these towns in the overall retail market would grow from 21 per cent
today to 40 per cent by 2025.

Within these top 35 towns, an estimated 70 to 80 per cent of retail trade could be in
the organized sector. This is similar to the experience in China, where in cities like
Shanghai and Beijing, the organized sector accounts for 70 to 80 per cent of overall
retail trade in certain categories. Retailers should therefore focus on the top 37 towns
in the next decade, as the opportunity in smaller towns and rural India would be
smaller and more fragmented, compared to the larger towns. Organized retail market
in India

There are a few key trends that one observes in international markets

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TREND1: Convenience Stores And Hypermarkets Are Gaining Prominence

These are driven by a consumer need for convenience and lower prices / higher value
in mass categories, while the big box category killer stores are gaining importance in
the specialty retail categories. While supermarkets may emerge at the initial stages of
retail market development, in the long term they are unable to match the consumer
value proposition of convenience stores and hypermarkets.

TREND2: Private Label Brands Become Important

Private labels today account for 17 per cent of global retail sales, with the highest
share of 23 per cent in Europe and the lowest share of 4 per cent in Asia. M+M Planet
Retail data shows that private label penetration varies from 25 per cent to 95 per cent
among some of the largest retailers in the world. Growing acceptance among
consumers, increasing price competition, the need for differentiation among retailers
and the ability to offer higher margins are the key factors contributing to the growth
of private labels. Private labels provide the retailer an ability to offer a significant
price advantage to consumers, their prices being 16 to 32 per cent lower than
manufacturers' brands.

Implications Of Indian Retailer

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Global trends have important implications for Indian retailers. The Indian consumer
is very value conscious willing to spend money in most cases, but constantly cost
conscious, evaluating every rupee spent. It is therefore imperative for retailers to offer
a price advantage through sourcing and operational efficiency, as well as a strong
private label programme to attract customers. Existing and new entrants need to
achieve scale quickly to drive efficiencies in procurement, supply chain and
marketing. Else, they risk being marginalized by larger players.

Real estate and human resources will be the critical drivers to build scale. While there
are a few hundred malls under various stages of development across the country at
present, retailers will also need to think out of the box to ensure the availability of
real estate. This may include acquiring and developing the real estate themselves,
rather than wait for mall development. Given the rising demand for retail real estate,
retailers will need to take a long-term view on rentals and look at alternative options
like ownership or very long leases. Retailers that invest in training will be able to
ensure the availability of quality manpower in a rapidly growing market.

In conclusion, the retail market in India offers an opportunity for a large player to
build a Rs 40,000-crore retail business spanning multiple categories by 2015 (at
current prices). Compared to this, the revenue of the largest Indian retailer, Pantaloon,
grossed only Rs 1,085 crore in 2005. Little wonder that large domestic business
houses and international retailers have expressed a keen interest to enter the retail
sector in India. To capitalise on the opportunity, however, players need to be
aggressive in outlook and build scale quickly.

Future Group:

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Future Group is India’s leading business group that caters to the entire Indian
consumption space. Led by Mr. Kishore Biyani, the Future Group operates through
six verticals: operates through six verticals: Retail, Capital, Brands, Space, Media and
Logistics.

The company’s leading formats include Pantaloons, a chain of fashion outlets,  Big
Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain,
blends the look, touch and feel of Indian bazaars with aspects of modern retail like
choice, convenience and quality and Central, a chain of seamless destination malls.
Some of its other formats include, Depot, Shoe Factory, Brand Factory, Blue Sky,
Fashion Station, all, Top 10, MBazaar and Star and Sitara. The company also
operates an online portal, futurebazaar.com.

A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town,
a large-format home solutions store, Collection i.e. selling home furniture products
and E-Zone focused on catering to the consumer electronics segment.

Future Group’s vision is to, “deliver Everything, Everywhere, Every time to Every
Indian Consumer in the most profitable manner.” The group considers ‘Indian-ness’
as a core value and its corporate credo is - Rewrite rules, Retain values.

Company’s vision:

Future Group shall deliver Everything, Everywhere, Every time for Every Indian
Consumer in the most profitable manner.

Company’s Mission:

We shall infuse Indian brands with confidence and renewed ambition. We shall be
efficient, cost- conscious and committed to quality in whatever we do. We shall
ensure that our positive attitude, sincerity, humility and united determination shall be
the driving force to make us successful.

Pantaloon Company Profile

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Pantaloon Retail (India) Limited, is India’s leading retailer that operates multiple
retail formats in both the value and lifestyle segment of the Indian consumer marker. 
Headquartered in Mumbai (Bombay), the company operates over 5 million square
feet of retail space, has over 350 stores across 40 cities in India and employs over
18,000 people.

Pantaloon Retail is the flagship company of Future Group, a business group catering
to the entire Indian consumption space.

Characteristics:
Target market and Positioning of Pantaloons:

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Pantaloons are positioned as a department store catering to the middle and upper-
middle class sections at each of its locations. Its core offering is branded merchandise,
retailing international, national and regional brands as well as private and proprietary
labels.

Today, a leader in Fashion Pantaloons promises Fresh Fashion for the entire family as
well as the young and the young-at-heart. The belief is that they will be the key
drivers of fashion. Thus it is a store focusing on providing a value for money
proposition as it provides quality fashion products at an affordable price as compared
to the competitors.

Store location :
The location of a retail store occupies an important place in retail strategy. It not only
conveys the image of the store, but also influences the merchandise mix and the
interior layout of the store. While the merchandise mix can be changed and prices can
be adjusted, it is difficult to change the decision on store location.

Accessibility of the market :

Accessibility of a market is defined in terms of the availability of public transport and
road/local trains connections to the markets. It is mostly located in posh locality in the
center of the city. Further the easy availability of transport facilitates makes the
location really accessible for shopping.

Visibility:
Pantaloons is situated very close to the main road. Pantaloons being a three floor
building have great visibility. To enhance the visibility pantaloons has put its sign
board on the top of the building.

Total number of stores and the type of stores that exist in the area:

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Its presence area encompasses stores like Lifestyle, Trent; Adidas….which directly
compete with Pantaloons. This is really disadvantageous for Pantaloons.

Product Mix Offered:

The kind of product mix to be offered by the retailer is another important
consideration. As mentioned earlier the main product line of Pantaloons is men’s and
women’s clothing and other accessories comprising a vigilant mix of private as well
as other labels... Since Pantaloons provides products to a potentially large number of
customers at affordable prices, it falls in the High Turnover - Low Margin Category.

Pricing:
Pantaloons visual merchandising is creative, innovative and outstanding which can be
seen from its own in house private brands such as John Miller.
All the merchandise is placed at both 360 degree and 180 degrees.
The new launched products are showed by prominent color back ground.
Window display is highly interactive for impulsive buyer.
Price range is average.

Store layout :
Pantaloons follows a free form store layout. No particular format is followed anything
is placed anywhere but strategically. Pantaloons fall under following categories-
Departmental stores, Malls, E-retailers Here when it comes to arranging the clothes,
same type of clothes are put up together in different sizes so that same clothes are
available for every size at one point only.

Being a department store, Pantaloons exhibits an arrangement of merchandise in a

freeform layout. Such a layout allows free movement and also encourages people to
browse and shop with convenience. The floor space is allocated on the basis of the
contribution of a particular department to business. As such, the Men’s department has
been assigned an entire floor. The total area of the entire store is approximately
50000sq.ft.

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The layout of the store is modified on a regular basis by shifting the fixtures and
display of the merchandise so that the customers develop a feel of novelty in the store.

Space Allocation and Utilization:

Furniture and fixtures:

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Goods are effectively displayed on a variety of fixtures such as tables, other racks,
display cases and manufacturer point- of -purchase display.

Display Areas, Walkways & doors:

Approximately 75 % of first time customers remember a store’s entrance, which
provides the first and last view of the store’s interior. well designed entrance is
inviting to the customers and that’s what pantaloons provides.
Pantaloons stores have very attractive display areas, in which they put the dummies,
accessories & all. They have a broad walkway & doorways.
Also there are small screens put up at various corners which are most visible, and
which they show case ads of their own as well as other brands available there. Here
each rack are placed in such a way so that consumers can easily take their wanted
products. Pantaloons have their own in house brands in Apparel as well as different
sections.
Pantaloons visual merchandising is creative, innovative and outstanding which can be
seen from its own in house private brands such as John Miller. All the merchandise
are placed at both 360 degree and 180 degrees. The new launched products are
showed by prominent color back ground. Window display is highly interactive for
impulsive buyer.

Visual merchandising:
Pantaloons have applied the concept of category management in its day-to-day
merchandising function as against the traditional brand management merchandising
practice followed by most retailers. Category managers look at sales and margins of
each brand in a category. The whole idea of category management is to create
products across length and breadth of a category at different price points, fabrics,
design, shape, seasons, color and size.

They are characterized by a broad variety, deep assortment. The Category manager
develop a merchandising strategy for the category taking into consideration customer
profile, classification, resource structure, vendors, fashion trends, items and price
points. The category manager visit stores regularly to check assortments of
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merchandise displays, stock levels and old season merchandise, consult with team
leaders and sales people on problems and suggestions. Although no concrete
information was provided with respect to the ways of forecasting the sales and
inventory planning, it was highlighted that a buffer stock of approximately 10-12% of
the total stock is maintained in the store.
One can come across campaign graphics in the store with merchandise places near
them. Mannequins are displayed with accessories to generate impulse purchases. Spot
lights are also focused on the visual merchandise so as to gain the attention of the
customers.
Pantaloon focuses on the latest fashion apparels. No rack is kept empty as it may
create a negative impression in the minds of the customers. E.g. Concerning the T
shirts department (especially in case of UMM Brand), one t shirt of a particular color
or design is displayed, while next to it, on a shelf the same T shirt but with different
colors is displayed.

Packaging:
The Products purchased by the Customers are packed in green colored Recyclable
Plastic Bags. The bag is sealed with a tape bearing a statement “Thank you for
shopping ant Pantaloons” on it.

Assortment and Variety:

Pantaloons typically fall in the High Assortment – High Variety quadrant. Although
the assortment and variety in each of the categories is high, depth is emphasized upon
in case of core merchandise categories such as men’s formal wear, men’s casuals and
sportswear. Conversely, the typical fashion apparels and accessories are dominant on
the Width front.

SWOT analysis:
Strength:

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Brand equity and early mover advantage; Entrepreneur led, professionally managed
by an experienced team; Project execution and operations capabilities; Vast range of
lifestyle and value retail products and services; Strong distribution and logistics
network and supply chain; strong distribution and logistics network, with our 21
distribution centers covering; and Large base of customers and Strong focus on
systems and processes; Retailing is a "technology-intensive" industry. It is technology
that will help the organized retailers to score over the unorganized retailers.
Successful organized 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 against a few
hundred stocked with an average unorganized retailer. It is the main sponsor in
Femina Miss India. Strong management team Brand recognition and reputation and
Diversity and variety in products offered on the web (footwear, apparel, sporting
equipment etc.) Strong control over its own distribution channel No bad reputation
like child labor or environment pollution

Weakness:
Weaknesses found can be the opportunities of improvements. The No of outlets
available in the locations of pantaloons are very low. It does not have a strong
presence everywhere. Promotional Cost Vs Revenue Less Conversion level: Despite
high footfalls, the conversion ratio has been very low in the retail 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%. On the other hand, a high street
store of retail chain has an average conversion of about 50-60%. As a result, a stand-
alone store has a ROI (return on investment) of 25-30%; in contrast the retail majors
are experiencing a ROI of 8-10%. 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. High prices in some
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products E-retailing is limited – limited variety of products available online direct sale
to consumers is creating conflicts with its own reseller’s online customer service not
"helpful" or easy to find.

Opportunity:
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. Organized retail is only 3% of the total retailing market in India. It
is estimated to grow at the rate of 25-30% p.a. and reach INR 1, 00,000 Crore by
2010. Percolating down- In India it has been found out that the top 6 cities contribute
for 66% of total organized retailing. While the metros have already been exploited, the
focus has now been shifted towards the tier-II cities. The 'retail boom', 85% of which
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 organized
retailing sales is expected to grow to 20-25%.
Rural Retailing: India's huge rural population has 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" is started by DCM Sriram group which provides farm related inputs &
services. The Godrej group has launched the concept of 'agri-stores' named "Adhaar"
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.

Collaborate with other online retailers to offer its products Possibility of outsourcing
the web development and e-commerce to a third party developer new avenues for
opening of outlets. And Increase the promotional activities.

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Threats:
Increase in the Price of Raw materials Pantaloon strong reputation in the apparel
industry Identify the Threats - competitors activities More number of outlets of
competitors available in the surrounding If the unorganized retailers are put together,
they are parallel to a large supermarket with no or little overheads, high degree of
flexibility in merchandise, display, prices and turnover. Shopping Culture: Shopping
culture has not developed in India as yet. Even now malls are just a place to hang
around with family and friends and largely confined to window-shopping.

Competition within vicinity:

Pantaloons is mostly located in same place as its competitors. Like in Baroda and even
in Pune is in a mall so it’s very much nearby its competitors. Its major competitors are
Westside, Globus, and central.

Marquees:
A special type of sign is used to display the name of the store. It is used to announce a
change in season, sale, a special event or a promotion.

Promotion Strategy:
Hoardings:
Pantaloon puts its hoarding at prime locations, featuring the upcoming Fashion events
or its brand ambassadors who are generally eminent celebrity.
Category manager plans promotions / brand or product building schemes. The
category manager identifies slow movers and also disposal plan for the same.

Technology:
IT System:
IT system at Pantaloon stores is fully centralized; the report of daily sales is being
reported to head office in Germany. Pantaloon Retail selected the entire suite of

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Connected Retailer solutions to take them into the future of retailing. They purchased
Connected Retailer Store, Merchandising, Planning, Sales Analytics, and CRM. At the
core of their systems is the Connected Retailer Merchandising Solution, which
streamlines operations, unifies asset management, and helps retailers learn the truth
about their business. This powerful retail enterprise solution features an open-
architecture design that provides unprecedented flexibility, scalability, power, and
control merchandising’s centralized transactional database and support tools enable
retailers to make and execute better decisions based on accurate, current, and shared
information. By using consistent data to guide all processes, the solution automatically
synchronizes and integrates all key functions, including planning, ordering, pricing,
flow, sales, margins, and inventory management Connected Retailer.

Bar Coding and Scanners:

Point of sale systems use scanners and bar coding to identify an item, use pre-stored
data to calculate the cost and generate the total bill for a client.

Payment:
Payment through credit cards has become quite widespread and this enables a fast and
easy payment process.

CRM Systems:
Data warehousing & mining technologies offer consumer data and apply it to
business. This, along with the various available CRM (Customer Relationship
Management) Systems, allows the study of the buying behavior of consumers in detail
and grows the value of individual consumers to their businesses. SAP implementation
is not a single phase process. The project was divided into three phases.
The first phase involved blueprinting existing processes and mapping them to the
desired state. In this phase, the entire project team worked on current processes within
the structure of the organization, analyzed and drafted them. This blueprint was later
used in the formation of new states of the solution. Since the SAP would combine all
the processes, each and every one of these had to be evaluated.

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In the second phase, the SAP platform was developed with the help of Nova soft’s
template which was predefined by SAP after evaluation of Pantaloon’s needs and
expertise in retail solutions.
The last phase in this project was for stores to switch over to the new system and for
current data to be ported. Before the SAP implementation, all the data was
unorganized. This data had to be migrated to the new SAP application.

Maintenance & Hardware:

This application is currently being used by around 1,200 employees across the
organization. For maintaining this implementation and its related applications,
Pantaloon has an in-house team and it has outsourced ABAP resources. They are also
in the process of setting up a SAP CompetencyCentre. The system runs on a HP
Superdome server on HP UNIX 11i and the database is from Oracle. The cost of this
project was about $10 million.

Future projects :
After the successful implementation of SAP for its retail chain, Pantaloon plans to go
ahead with IT projects such as implementation of WMS with RFID, Customer
Intelligence and CRM. Inventory and Promotions Optimization will be pursued later
this year. More than eight years after it forayed into the retail business, Pantaloon
Retail decided to implement SAP to keep itself competitive in the rapidly growing
Indian retail market.

Conclusion and recommendations:

Pantaloons are the best bet in retail. The store has been well maintained in accordance
with the latest demands of the consumers. However it still needs to focus on several
parameters which are posing hindrances towards its growth so that the store can retain
its current Numerous Uno position in the lifestyle segment. The organization must
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strive for the development of new formats to facilitate a better shopping environment
for its customers. It can be undoubtedly stated the company has well planned retail
strategies currently but these must be updated with the continuously changing
environment so that it can sustain the competitive advantage.

Bibliography:

www.pantaloonretail.in/companyinfo

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www.wikipedia.org/wiki/Pantaloon_Retail_India.

www.business-standard.com/retail/pantaloon.

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