Assignment-3

Wal Mart & Bharti Transforming Retail In India

ByDeepak Verma Roll No- 13039 Section C

Table of Contents
Questions / Answers ............................................................................................................................... 3 Question 1 ............................................................................................................................................... 3 Question 2 ............................................................................................................................................... 5 Question 3 ............................................................................................................................................... 6 Question 4 ............................................................................................................................................... 7 Question 5 ............................................................................................................................................... 8 Question 6 ............................................................................................................................................... 9 Question 7 ............................................................................................................................................. 10 Question 8 ............................................................................................................................................. 11 Question 9 ............................................................................................................................................. 12 Question 10 ........................................................................................................................................... 13 Question 11 ........................................................................................................................................... 14 Question 12 ........................................................................................................................................... 15 Question 13 ........................................................................................................................................... 16 Question 14 ........................................................................................................................................... 17 Question 15 ........................................................................................................................................... 18 References ............................................................................................................................................ 19

Questions / Answers Question 1- What is modern retail? What is traditional retail? Classify the differences.
Answer 1 - Modern Retail is quickly becoming an important driver of changes in food markets in developing countries. Modern retail is shown to emerge quickly; offering more labelled and branded food products. Traditional Retail refers to these thousands of small, mostly family-owned retail businesses. They are also referred to as the "unorganized" retail sector.

Differences: 1) Order Acquisition Traditional Retail: The sales person goes to the outlet, counts the inventory, explains the promotions (if any) and then suggests an order to the store owner. The store owner then agrees or modifies the order.

Modern Retail: The order would be suggested by the IT system of the Modern Retail chain. This order either would flow to the manufacturer/ LSP (Logistics Service Provider) via EDI or email or fax. 2) Promotions Traditional Retail: Standard company promotions are executed.

Modern Retail: Promotions would be partially led by the Modern Retailers. These promotions would be unique to the Modern Retailer. Any snickering or customization or manipulation that needs to be done will have to be done by the manufacturer. 3) New Launch Traditional Retail: A manufacturer would have a sales launch for Traditional Retailers to introduce a new product to the market. On the day the product is to be launched, the salesperson would take orders for the new product and the new product would be on the shelves.

Modern Retail: The new product launch would have to be informed to the Modern Retail months in advance. It would have to be included in the product master of the Modern Retail. The planogram would have to be modified to include the new product.

4) Payment Traditional Retail: Payment is made to the distributor immediately or on the next visit of the salesperson. So, the credit period is usually equal to the time between 2 visits of the salesperson.

Modern Retail: Modern Retailers usually demand a long credit period from manufacturers and vendors. Sometimes, a Modern Retailer may ask for a special format for their invoices. They would not accept the standard invoice format of the manufacturer. 5) Scorecard Measures Traditional Retail: Usually, Traditional channel stores do not have a formal scorecard to measure manufacturers. They have a general approach which would be regularity of coverage, time between order and delivery, and fill rates.

Modern Channel: Modern retail chains have a formal scorecard to measure manufacturers. The logistics measures would be shelf availability, inventory levels, case fill rates, on-time delivery. 6) In-Store Traditional Retail: Once the stocks are delivered, the store owner or shop assistant arranges the stocks on the shelf or in the back room. When a customer asks for a product, the shop assistant knows where the stock is kept, gives the product to the customer.

Modern Retail: The stocks may be taken straight to the shelf or taken to the backroom. One of the most important differences between a Traditional Store and Modern Retail store is that in a Modern Retail store the customer picks up the product from the shelf. If the product is not on the shelf, the customer assumes that it is out-of-stock. The product may actually be available in the backroom. So, one of the important logistics activity in a Modern Retail store is to replenish the shelves regularly so that the shelf is always stocked.

Question 2 - Identify Challenges for Organized Retail in India from the case study.
Answer 2 Challenges are-

1) The organized retail sector in India is still at a developmental stage, characterized by a very small number of players trying to create a new paradigm. To become a flourishing industry, the Indian retail sector has to attract leading Indian and foreign players to make substantial investments.

2) Technology is one of the major challenges faced by organized retailers for efficient management.

3) Shortage of skilled workforce in retail sector.

4) Competition from unorganized sector is another challenge facing the organized retail industry in India.

5) Inadequate quality control.

6) Lack of Retail space.

7) Transportation is quite slow and takes many days.

8) The retailers in India are paying very high cost for real estate. This increases the maintenance cost and reduce profit margins.

9) Only 51% in Multi-brand Retail.

10) Understanding customers in terms of customer behavior and loyalty is a difficult job. Retailers need to implement effective customer relation management and loyalty program.

Question 3 - How could Organized Players ride over the challenges?

Answer 3 They can-

1) By developing better transportation system which is needed for efficient supply of goods.

2) Economical pricing of products and services. 3) Heavy Promotional activities. 4) Customization according to local environment. 5) Efficient Supply Chain Management. 6) Enhanced customer experience. 7) Improves workforce management. 8) Strengthened store opportunities. 9) Better logistics.

Question 4 - SWOT analysis of Indian Retail Landscape.

Answer 4

Strength 1) Shopping Convenience 2) Plastic Card Revolution 3) 2

nd

Weakness 1) Less conversion level. 2) Complexities in terms of license. 3) Shortage of quality retail spaces at affordable rates. 4) Lack of industry status. 5) Need to provide Value for Moneysqueezing margins. 6) Customer Loyalty.

largest contributor to GDP after

agriculture. 4) Pattern of consumption changing along with shopping trends. 5) Consumer spending increasing at 11% annually. 6) Innovative Logistic techniques. Opportunities 1) Wholesale trading. 2) Increase in consuming middle class population. 3) E- Retailing. 4) Increasing urban population- more participant in retail revolution. 5) Spending moving toward lifestyle products products. 6) Social factors like dual household income enhancing spending power. and esteem enhancing Threats

1) Political issues. 2) Personalized Kirana stores. 3) Poor monsoon and low GDP growth could affect consumer spending services offered by

drastically. 4) Differentiate taxation laws hindering expansion. 5) Unavailability of qualified personnel. 6) Rising rental costs affecting project viability.

Question 5 - What are different retail formats? What are the advantages and disadvantages
of those formats? Answers 5 Different Retail formats are1) Malls 2) Specialty Stores 3) Discount Stores 4) Department Stores 5) Hyper marts / Supermarkets 6) Convenience Stores 7) Wholesale Stores 8) Category Killers 9) Factory Outlets Advantages are 1) Low spillage and wastages. 2) More options for the consumer. 3) Saves time. 4) Get discounts in buying the bulk. 5) Depth in varieties. 6) Consistency and independence 7) Strong entrepreneurial leadership Disadvantages are 1) Lousy pay 2) Instability 3) High staff turnover 4) Cranky customers 5) Lack of bargaining power 6) Over dependence on owner 7) Lack of economies of scale.

Question 6 - Why International Retailers are eyeing India as a top destination for Retail
Business? Answer 6 Reasons are-

1) High purchasing power

2) Population of Middle income group is thrice than the population of Germany.

3) There is 7.1% forecasted growth in consumer spending. 4) Consumers believe in Save and Buy 5) So much potential in Indian Market as there is only 2% organized sector. 6) Growing number of working women. 7) Consumption perception is changing.

Question 7 - Whats your take on Indian Governments decision to limit organized

retailers in cities with 1 million populations? Discuss the pros and cons. Answer 7

Pros

Cons

1) Good sign for consumer because they will get lots of varieties at a reasonable price. 2) Provides employment opportunities. 3) Good opportunity for small traderscompetitive enough, promote

1) Lack of Retail Space 2) Indian Roads continues to be worst. 3) Monopolistic power for retailers

could result in high prices for consumers. 4) Increased monopolistic strength could force farmers to sell at lower prices.

incentive for better performance. 4) Organized retail could remove supply chain inefficiencies through direct purchase investment from in farmers better and storage,

distribution and transport systems.

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Question 8 - Retail business is not a zero sum game. Loss of one may not be the gain of
other. There is an opportunity for both Organized Players and Kirana Stores to co-exist. If you were to design a business strategy which will serve the objective of the stated statement, what elements you will include in your consulting paper.

Answer 8 - A zerosum game is a mathematical representation of a situation in which a participant's gain/loss of utility is exactly balanced by the losses/gains of the utility of the other participant.

Organized Players and Kirana Stores to co-exist-

1) Kirana store will survive and can become a part of modern retail by organizing themselves and getting assimilated into organized sector. 2) In international markets, the large departmental stores are operating and still the mom and pop stores have not disappeared. 3) Organized retail can lead to an improvement of the marketing system and therefore will lead to softening of prices.

If I were to design a Business Strategy the elements would be-

1) Proper Delivery of goods.

2) Large variety of products.

3) Proper Customer Relationship Management.

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Question 9 - Compare consumer behaviour pattern of Western consumers vis--vis

Indian consumers. (as stated in the case study) Answer 9

Western Consumers 1) Buy and Repay 2) Shop till you drop

Indian Consumers 1) Save and Pay 2) Look for festive offers.

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Question 10 - Identify at least six reasons why a person might pay a visit to a shopping
mall? Answer 10 Reasons are-

1) Great variety of stores.

2) Lots of offers and discounts.

3) Feel Good Factor i.e Good Ambience

4) Better Quality and Quantity

5) Better customer service.

6) Availability of Parking Space.

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Question 11 - Enumerate different ways through which organized players have increased
the consumption pattern in Indian consumers for global brands? What innovative strategies they have deployed to sell more products to the Indian consumers? Answer 11 Different ways are-

1) Various types of discounts. 2) Bulk Offers 3) Customer Loyalty Program. 4) Relating Products to their Standard of living. 5) Effective Advertisement

Strategies are:

1) Bring the coupon given in Newspaper and get the discount. ( Meena Bazaar ) 2) Discount on Green Cards ( Pantaloons ) 3) Maha Bachat Offers ( Big Bazaar ) 4) Buy more Give less ( Reliance Trend ) 5) Every Day Low Pricing ( Wal-Mart )

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Question 12 - What are the growth drivers for retail sectors in India?

Answer 12 Growth Drivers are-

1) Indias booming economy is a major source of opportunity. It is the third largest in the world in terms of purchasing power. India is the second fastest growing major economy in the world. 2) India's huge population has a per capita income of Rs 44,345. 3) Increasing use of plastic money for categories relating to Apparel, Consumer Durable Goods, Food and Grocery etc. 4) Increased credit friendliness. 5) The Demography Dynamics are also favorable as approximately 60 per cent of Indian population is below the age of 30. 6) Increased urbanization has led to higher customer density areas thus enabling retailers to use lesser number of stores to target the same number of customers. 7) With increased automobile penetration and an overall improvement in the transportation infrastructure, covering distances has become easier than before. Now a customer can travel miles to reach a particular shop, if he or she sees value in shopping from a particular location. 8) Increasing instances of Double Incomes in most families coupled with the rise in spending power. 9) Internet driving awareness and online purchases. 10) Tier II and III cities to fuel future growth of modern retail.

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Question 13 - What are different product categories in a retail outlet? Critically analyze
these categories in terms of spends, consumer behavior as per Indian Maket. Answer 13 Different Product categories-

1) Food and Grocery- Shops selling food and groceries constituted more than 5 million of Indias 12 million Retailers. Some of the major players ITC group, TATA, RPG group and AV Retail group.

2) Clothing, Textile and Fashion accessories- This segment was valued at US$22.1 billion in 2006, with organized retail contributing around 19%. Some of the Major players- Pantaloon, Provogue Group and Westside- were showing a keen interest in this segment.

3) Consumer durables and home appliances- It was valued at US$9.36 billion in 2006, with organized retail contributing 10.4%. Corporations entered into this segment include Haier, Panasonic, Onida , LG and Samsung.

4) Pharma Retail- Organized retail in this segment comprised of 3% only. This sector is valued at US$8.2 billion in 2006. Companies already present in this sector are Dr Morepen, CRS Health, Medicine Shoppe and Apollo Pharmacies.

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Question 14 - Is private label the solution for ailing retail outlets (organized retail sector)?
Answer 14 Yes, the private label is the solution for ailing retail outlets . Reasons are-

1) Private brands are low priced alternatives to high priced brands.

2) Evolving as a new Brand Identity.

3) Helps in increasing the profitability.

4) Private labels offer retailers control over product factors such as pricing, size, package design, production and distribution.

5) Successful private label brands will be able to create better sales opportunities for retailers.

6) The need for affordable packaged goods solutions is high, and private label products are going a long way toward answering that need. 7) Control over stock Inventory. 8) Freedom to create your own marketing plans. 9) Create a positive image of yourself for your customer which will lead to stronger customer loyalty.

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Question 15 - How could technology bail out retail players in this time of crisis?
Answer 15 Technology can help in many ways-

1) Implementation of IT will help in problem solving. It has led to improved planning, accurate merchandising, enhanced customer experience, strengthened store operations and increase profitability.

2) RFID ( Radio Frequency identification ) tags are used to keep a record of individual items which eliminated to count the items manually.

3) Unified Threat Management (UTM) firewall technology combines multiple security features into a single platform that can be easier and more cost effective to deploy and manage.

4) Sonic WALL streamlines the complexity out of retail security, allowing retailers of all sizes to leverage the Internet and their networks to enhance productivity, while maintaining the confidentiality, integrity and availability of their information assets.

Retailers stand to gain more competitive advantages in the marketplace from technology than ever before, with corresponding gains in cost reduction, revenue opportunities and customer satisfaction. To secure this competitive edge, however, retailers must take a comprehensive approach to protecting their technology from increasingly sophisticated threats.

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References
1) http://www.slideshare.net/pinakibasu100/key-drivers-of-growth-in-indian-retail 2) http://www.authorstream.com/Presentation/aSGuest95377-970467-retail-formats/ 3) http://en.wikipedia.org/wiki/Zero%E2%80%93sum_game 4) http://www.managementstudyguide.com/types-of-retail-outlets.htm

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