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DISSERTATION

On
THE MARKETING STARTEGY OF VISHAL MEGA MART
By
KARAN GUPTA
A3104612016

BCOM (HONS) 2012-2015


Under the Supervision of
Dr. PUJA SINGHAL
Assistant Professor
Department of COMMERCE AND FINANCE
In Partial Fulfillment of the Requirements for the Degree of
BACHELOR OF COMMERCE ACCF
At

AMITY BUSINESS SCHOOL


AMITY UNIVERSITY UTTAR PRADESH
SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA
2011

CERTIFICATE

I Dr.PUJA SINGHAL hereby certify that KARAN GUPTA student of BACHELOR


OF COMMERCE at Amity Business School, Amity University Uttar Pradesh has
completed the Term Paper Report on The Dimensions of Reverse Logistics: A Study
of the Indian Organized Retail Environment, under my guidance.

Dr. PIJA SINGHAL


Assistant Professor
Department of COMMERCE AND FINANCE (ACCF)

DECLARATION

Title of Term Paper MARKETING STRATEGY OF VISHAL MEGAMART


I declare
(a) That the work presented for assessment in this Term Paper Report is my own, that it has not
previously been presented for another assessment and that my debts (for words, data, arguments and
ideas) have been appropriately acknowledged
(b) That the work conforms to the guidelines for presentation and style set out in the relevant
documentation.

Date : 30TH SEPT 2013

KARAN GUPTA
A3104612016
B COM(HONS) ACCF 2012-2015

ACKNOWLEDGEMENT

"Knowledge is an experience gained in life. It is the choicest possession, which


should not be shelved but should be happily shared with others".

Apart from my efforts, the success of any project depends largely on the encouragement and guidelines of
many others. I take this opportunity to express my gratitude to the people who have been instrumental in the
successful completion of this project. I express my gratitude to my esteemed guide, DR. Puja Singhal
Faculty of AMITY UNIVERSITY Noida for her valuable critiques, assistance and encouragement, which
enabled me to carry on the project successfully. She gave me a wonderful opportunity to work on this
project. Her time-to-time guidance and incessant support helped me to broaden my outlook on the project. I
am highly obliged for her support throughout the dissertation.

Lastly, no words are enough to express my heartiest gratitude to my parents whose blessings are inspiration
in the foundation of my work.

TABLE OF CONTENT

1. ABSTRACT

2. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3. INDUSTRY OVERVIEW.

10
19

4. COMPANY PROFILE

5. RESEARCH OBJECTIVES.

.33
34

6. RESEARCH METHODOLOGY

36

7. LITERATURE REVIEW .

8. MARKETING ANALYSIS AND RESULTS... 36

9. SUGGESTIONS

10. CONCLUSION

11. BIBLIOGRAPHY .

61

62

64

ABSTRACT

VISHAL MEGAMART is a retail house in India. 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 their supply chain, it has set up seven
regional distributions centers and an apparel manufacturing plant.

It started as a retailer of ready-made apparels in Kolkata in 2001. At the time of Incorporation, the registered
office of their Company was situated at 4, R. N. Mukherjee Road, Kolkata 700 001 . In 2003, it acquired the
manufacturing facilities from Vishal Fashions Private Limited and M/s Vishal Apparels.

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
their 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.

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.

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. Pantaloons, big bazaar, Vishal Mega
Mmt, 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 manufacturers 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 manufactming and distribution chain.

Some of the key features of retailing include:


Selling directly to customers with out having any intennediaries
Selling in smaller units I quantities, breaking the bulk
Present in neighborhood or in the location which is quite convenient to the
customers.
Very high in numbers
Recognized by their service levels
Fitting any size and or location

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.

INDUSTRY OVERVIEW
Introduction of Indian Retail Industries:

Retail is India's largest industry, accounting for over 10 per cent of the country's GDP and around eight per
cent of the employment. Retail industry in India is at the crossroads. It has emerged as one of the most
dynamic and fast paced industries with several players entering the market. But because of the heavy initial
investments required, break even is difficult to achieve and many of these players have not tasted success so
far. However, the future is promising; the market is growing, government policies are becoming more
favorable and emerging technologies are facilitating operations. Retailing in India is gradually inching its
way toward becoming the next boom industry. The whole concept of shopping has altered in tenns of format
and consumer buying behavior, ushering in a revolution in shopping in India. Modem retail has entered India
as seen in

Sprawling shopping centers, multi-storied malls and huge complexes offer shopping, entertainment and food
all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing
and growth in the consumption by the Indian population is going to take a higher growth trajectory.

The Indian population is witnessing a significant change in its demographics. A large young working
population with median age of 24 years, nuclear families in urban areas, along with increasing workingwomen population and emerging opportunities in the services sector are going to be the key growth drivers
of the organized retail sector in India.

Retailing is the final step in the distribution of merchandise - the last link in the Supply Chain - connecting
the bulk producers of commodities to the final consumers. Retailing covers diverse products such as foot
apparels, consumer goods, financial services and leisure.

A retailer, typically, is someone who does not effect any significant change in the product execs breaking the
bulk. He/ She are also the final stock point who makes products or services available to the consumer
whenever require. Hence, the value proposition a retailer offers to a consumer is easy availabilities of the
desired product in the desired sizes at the desired times.

In the developed countries, the retail industry has developed into a full-fledged industry where more than
three-fourths of the total retail trade is done by the organized sector. Huge retail chains like Wal-Mart, Carr
four Group, Sears, K-Mart, McDonalds, etc. have now replaced the individual small stores. Large retail
formats, with high quality ambiance and courteous.
10

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.

Retailing is more than selling goods:


Retailing consists of the sale of goods or merchandise, from a fixed location such as a department store or
kiosk, in small or individual lots for direct consumption by the purchaser. Retailing is a well recognized
business function which compromises making available desired product in the desired quantity at the desired
time. This creates a time, place and form utility for the consumer. The success of retailing is highly
dependent on an efficient supply chain management. A well-developed supply chain reduces wastages and
transaction cost thereby reducing the cost of inventories to be maintained by the producers and the traders. A
reduction in the cost of inventory management leads to a reduction in the final price to the consumer.

Retailing has been identified as a thrust area for promotion of textiles, processed foods, agricultural and
horticultural produce. Retail Sector can be divided into organized and unorganized sectors:

Unorganized Retail:
Unorganized retailing is characterized by a distorted real-estate market, poor infrastructure and inefficient
upstream processes, lack of modem technology, inadequate funding and absence of skilled manpower.
Therefore, there is a need to promote organized retailing.

Unorganized Retail:
Unorganized retailing is characterized by a distorted real-estate market, poor infrastructure and inefficient
upstream processes, lack of modem technology, inadequate funding and absence of skilled manpower.
Therefore, there is a need to promote organized retailing.

Evaluation of Organized Retailing:


American mass retailing began in the late 1800s with Montgomery Ward marketing its products through
general merchandise mail order catalogs, which was very effective at that time for reaching a largely rural
society. In the 1940s, the population began its movement to the suburbs as the economy shifted from an
11

agricultural base to an industrialized nation. The first shopping center was opened, which would eventually
be a significant factor in the decline of downtown Retailing in the 1960s and 70s. JC Penney and Sears
began their national mass retailing expansion, and the use of credit cards as Major retail chains began.
The 1950s witnessed the reaffirmation of the traditional family. The first planned mall and franchised food
restaurant opened. As people continued to flock to the suburbs, the downtown areas began to decline. Larger
suburban malls were created and anchored by traditional downtown department store merchants. Freeways
were expanded and the sales of private automobiles grew, giving the consumer a wider accessible area in
which to shop. Discounters were born, Korvetta being one of the firsts.

The 1960s witnessed the growth of enclosed shopping centers, with department stores anchors and specialty
retail chains. The baby boomers were teenagers at this point, leading to the growth of juniors-oriented stores
and vendors. Women became targets not just as mothers or wives as they entered the workforce and
consumers became more demanding in their expectation of quality and service.

In the 1970s, promotional pricing started to pick up the department stores as off-price retailer emerged. The
growth of retail space slowed, as sales increase came- at-the expense of competition, not of market growth.
This competitive market led to the under performance of several retailers as gross margins experienced
downtown pressure from increased competition. Retailers in large upscale markets recognized the time
shortage created by dual-career families and began to offer more services to assist in saving time.

The 1980s witnessed the growth of off price retailing as a distinct, enduring retail format. Retailers began to
drop low profit lines. Acquisitions and mergers were actively utilized as growth strategies, private brands
were redeveloped to enhance umqueness and margins and offshore sourcing was developed to compensate
for margms

Broadly the organized retail sector can be divided into two segments, In-Store Retailers, who operate fixed
point-of-sale locations, located and designed to attract a high volume of walk-in customers, and the nonstore retailers, who reach out to the customers at their homes or offices.

It was only in the year 2000 that the economists put a figure to it: Rs.400,000crore (1 crore = I 0 million)
which is expected to develop to around Rs.800,000crore by the year 2005 ---- an annual increase of 20 per
cent. Retailing in India is unorganized with poor supply chain management perspective. According to a
recent survey by some of the retail consulting bodies, an overwhelming proportion of the Rs.400,000crore
retail markets are UN ORGANISED. In fact, only a Rs. 20,000crore segment of the market is organized. As
much as 96 per cent of the 5 million-plus outlets are smaller than 500 square feet area. This means that India
per capita retailing space is about 2 square feet (compared to 16 square feet in the United States). India's per
capita retailing space is thus the lowest in the world (source: KSA Technopak (I) Pvt Ltd, the India operation
12

of the US-based Kurt Salmon Associates).

Currently the retail landscape is filled with Supermarket chains with over 1000 outlets all over the country to
increase to around 5000 by the 2005. The success of a couple of hyper mart's indicating the evolution of
hypermarkets in the country prominent among them is Giant, Metro, Big Bazaar models. While the average
bill value at a supermarket is in the range of Rs.300 per bill, the average bill amount at a Hypermarket is in
the range ofRs.750-1000, indicating that the model is in tune with the global models where the average
spend is increasing with the shopping expenence.

SCOPE AND VARIETY


The opportunities are endless - from running a market stall or managing a gift shop on a cruise liner to the
chief executive of a global conglomerate.
You can work with the things you love from fashion, sport or technology to food, wine or furniture.
You might want to deal with customers every day, making sure they get a great experience in a store or
online, or you may enjoy providing back office services. You could be buying, marketing or managing the
supply chain or providing critical services such as finance, human resources or property management.
Retail keeps changing. Retailers constantly anticipate shoppers changing tastes and behaviour so there is
always something exciting happening. Online and multichannel retailing has had a significant impact over
the past ten years creating even more roles.

Some of the benefits are:

FLEXIBLE WORKING PRACTICES


If you want flexible working hours, retail is the sector for you. You can often combine your hours with
other commitments such as studying or caring.
You can study for a retail qualification while you work meaning you get work experience, an income and a
qualification! When youre ready, there is a raft of progression routes depending on what you enjoy most.
If you want to be self-employed there are several ways to start your own retail business. Market stalls, craft
fares and the internet are all great ways to test your market and start your business. Marks and Spencer
started as a market stall!
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EXTRA BENEFITS
As well as the usual employment benefits, you may be eligible for discounts from your employer which are
a great boost to your salary. Discounts can help with anything from the cost of your regular grocery bills to
major items or treats such as the very best equipment for your favourite sport or hobby.

JOB SECURITY
Retail is a growth sector, even during the recent recession retailers continued to employ an increasing
number of people. The internet means more retailers are selling outside the UK. This provides great job
security and opportunity for people who love retailing and become good at it.
Not only that, the skills you develop are easily transferred to other sectors. Most sectors have customers of
one sort or another.

RETAIL IS EVERYWHERE
Where there are people there are retailers and retail career prospects. You can take your retail knowledge
and experience abroad.

Indian Retail Scenario:


Retailers in India have to experiment with formats maintaining scalability in terms of segments, along with
deepening penetration levels.

Traditionally Indian Retail can be traced back from Weekly Markets, Melas, and Village Fairs in Small
towns and villages to Kirana stores, PDS outlets, Khaki Bhandaar, co-operative stores in Urban cities. The
wave of retail began with various textile manufactures like Bombay Dyeing, Raymond's, S Kumar's, and
Grasim foraying into selling the product through their outlets and competition among FMCG players driving
the forces towards retailing. The evolution of retailing lead to an emergence of various formats like
Shopping malls, Super-marts, Hyper-marts, Departmental Stores, Apparel Stores, etc. catering to majority all
sectors of society providing the all-important 3Vs- Value, Variety and Volume.

India is the country having the most unorganized retail market. Traditionally it is a Family's livelihood, with
their shop in the front and house at the back, while they run the Retail business. More than 99% retailers
function in less than 500 square feet of shopping space. Global retail consultants KSA Technopak, have
14

estimated that organized retailing in India is expected to touch Rs 35,000 crore in the year 2005-06.
The Indian retail sector is estimated at around Rs900,000 crore, of which the organized sector accounts for a
Mere 2 per cent indicating a huge potential market opportunity that is lying in the waiting for the consumersavvy organized retailer .Purchasing power of Indian urban consumer is growing and branded merchandise
in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly
becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to
advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more
attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling
brands.

The focus should be on branding the retail business itself. In their preparation to face Fierce competitive
pressure, Indian retailers must come to recognize the value of building their own stores as brands to
reinforce their marketing positioning, to communicate quality as well as value for money. Sustainable
competitive advantage.will be depended on translating core values combining products, image and
reputation into a coherent retail brand strategy.

Growth of Organized Retail in Indian Cities:


The Retail sector contributes to around 36 percent of GDP in India and is largest employment generator. The
sector is dominated by small-scattered unorganized regional players, large players contributing to meager 10
percent of the total pie. Organized retail is at its nascent phase wherein the large organized retail groups are
having aggressive expansion plans to penetrate the Metros and Tier I cities and establish themselves
amongst rural masses of Tier I and Tier II cities. There lies a challenge for retailers to experiment with new
value formats along with developing customer loyalties. Since there will be demographic shift in population
growth, urbanization and migration due to transition in urban household growth and income distribution.
The total retail market in the top 67 cities in India in 2011 was Rs. 2.55 trillion, which is expected to
increase toRs. 3.91 trillion in 2013. American mass retailing began in the late 1800s with Montgomery Ward
marketing its products through general merchandise mail order catalogs, which was very effective at that
time for reaching a largely rural society. In the 1940s, the population began its movement to the suburbs as
the economy shifted from an agricultural base to an industrialized nation. The first shopping center was
opened, which would eventually be a significant factor in the decline of downtown Retailing in the 1960s
and 70s. JC Penney and Sears began their national mass retailing expansion, and the use of credit cards as
Major retail chains began. The 1950s witnessed the reaffirmation of the traditional family. The first planned
mall and franchised food restaurant opened. As people continued to flock to the suburbs, the downtown
areas began to decline. Larger suburban malls were created and anchored by traditional downtown
department store merchants. Freeways were expanded and the sales of private automobiles grew, giving the
consumer a wider accessible area in which,to shop.
15

The 1960s witnessed the growth of enclosed shopping centers, with department stores anchors and
specialty retail chains. The baby boomers were teenagers at this point, leading to the growth of
juniors-oriented stores and vendors. Women became targets not just as mothers or wives as they
entered the workforce and consumers became more demanding in their expectation of quality and
service.

According to CRISIL, around

87 percent of the retail opportunity comes from top 25 cities

compromising Metro Delhi, Mumbai, Calcutta, Jyfini Metros Hyderabad, Chennai, Bangalore,
Mini Metros Ahmedabad and Pune, Tier l cities of Kanpur , Nagpur, Surat and Ludhiana, Tier II
cities Coimbatore, Chandigarh, Lucknow, Kochi, Jaipur and Tier III cities Vadodara, Vizag, Indore,
Vijaywada, Thiruvananthpuram, Bhopal, Nashik and Madurai.

Organized retail has been established in Metros and Tier 1 cities, other cities having
negligible level of penetration.

16

Old Retail Formats:

Kiranas:

These are food and non-food neighborhood counter stores, also called 'mom and pop stores'
westem

countries. These are big chunks

forming the segregated and unorganized

in
retail

segment These are family-owned and- run retail-outlets picking the goods from wholesalers totaling
to around 12 million stores across India.

Mandis:

These are the largest chunk of unorganized retail catering to urban and rural masses. Mandis are
physically located at different regions to enhance convenient shopping. The sellers bring across
various products like eatables, vegetables and fruits, pulses, cereals, spices etc. The most prominent
of them are sabzi mandis found in most of the localities across India.

Village Haats:

This form is operating in rural areas where buyers and sellers gather once in a week or month from
nearby villages and small towns to cater their livelihood and leisure needs. These haats are a
source of entertainment and socialization among rural
masses.

Push Cart Vendors:

The are categories

of vendors roaming from door to door in various localities selling fruits,

vegetables, and other eatables, from which mostly housewives makes purchases that too on credit.

The

group's

philosophy is

backward integration in the

integration

and

towards

this

end

has initiated

field of high fashion by setting up a state of the

art

manufacturing facility to support its retail endeavors.

Company Background:

Vishal Retail was incorporated on July 23, 2001 as Vishal Retail Private Limited as
17

a retailer of ready-made apparels in Kolkata


the

business of 'M/s

2003 , the

The

in 2001. The company has acquired

Vishal Garments' and 'M / s Vishal Garments' in 2001. In

company has acquired the manufacturing facilities from Vishal Fashions

Private Limited and M/s Vishal Apparels.

Vishal is one of fastest growing retailing

groups

almost all price ranges. The

showrooms have over

fulfills

needs , and

all

your household

can

in India.

Its outlets cater

70,000 products range which

be catered to under one roof. It is

covering about 2059292 lac sq. ft. in 18 states across India. Each
international

quality goods and prices hard to match. The

derived from the large central purchase of goods and


the consumer.

18

to

cost

store gives you


benefits that are

services are passed on to

COMPANY PROFILE
Introduction of Vishal Retail Ltd.:
Vishal Retail Ltd,

a leading player in

the

Indian retail industry, is

a pioneer in

discount retailing and is focused on tier II and III cities in the country. It has a strong
presence in manufacturing and retailing of readymade garments (apparels); retailing of
non-apparels and

a large variety of FMCG

products. The

company has

pan-India

presence with 108 mid-sized hypermarket format stores as on April 28, 2008 covering
about 2.3mn sq ft retail space area. Vishal is supported by strong manufacturing
set-up

in

Gurgaon,

Dehradun

and

Manesar

with

a capacity of 5,000 garment

pieces per day in each unit. It also has 29 warehouses located in 8 key cities in India
covering over 1.1mn sq ft area.

Vishal started as a humble one


Calcutta) is

today

store enterprise m

conglomerate

encompassmg

states. India's first hyper-market has also been


Vishal.

Situated

in

1986

in

Kolkata (erstwhile,

117 showrooms in 75 cities I 20

opened for

the

Indian consumer by

the national capital Delhi this store boasts of the singe largest

collection of goods and commodities sold under one roof in India

The group had a turnover of Rs. 1463.12 million for fiscal 2005, under the dynamic
leadership of Mr. Ram Chandra Agarwal. The group had of turnover Rs 2884.43 million
for fiscal 2006 and Rs. 6026.53 million for fiscal 2007.

The group's prime focus is on retailing. The Vishal stores offer


affordable family fashion at prices to suit every pocket.

19

THE FOUNDERS

20

Factors Affecting Retailing in India:


Various

factors affect retailing in India. However, if one were to Single out the single biggest

different in the development of organized

retailing in India, it would undoubtly be the cost

of real estate. The high cost of real estate in India, in spite of the fact that the per capital income is
one of the lowest in the world, makes the country a land of contradictions. In fact so exorbitant is
the cost of property in almost every town

of India that it makes the very-concept

organized retailing nonviable. Obsolete r e n t a l

laws have

compounded the

situation

of
even

further and unless immediate and serious steps are initiated in this direction it would be fairly
long before the benefits of this concept reach the public at large.

The rampant corruption &poor implantations of taxation

laws also permit a majority of the

unorganized retail fraternity with substantially large turnover to avoid paying


full taxes.
There a r e no single factors but numerous factors which have prevented organized retailing from
taking off as it should have in India. Some of the leading factors that have restricted this growth are
as follows.
High real estate costs

Obsolete rental laws

Lack of finance options


High interest costs

Unplanned cities
Rampant corruption

Exorbitant electricity costs

21

OUR PROMOTERS AND GROUP COMPANIES


Our Promoters

The following individuals are the Promoters of our Company:

a). Mr. Ram Chandra Agarwal;

b). Mrs. Uma Agarwal; and

c). Mr. Surendra Kumar Agarwal.


The following companies are the Promoters of our Company:

a). Unicon Marketing Private Limited;

b). Ricon Commodities Private Limited; and c). Vishal Water


World Private Limited.
In addition, the following HUFs are the Promoters of our Company:

a). Mr. Ram Chandra Agarwal (HUF)

Name of Shareholders & Number of Shares % of shareholding

1. Unicon Marketing Private Limited 315,000 49.53

2. Ricon Commodities Private Limited 300,000 47.17

3. Mr. Ram Chandra Agarwal 12,010 1.89

4. Mrs. UmaAgarwal 9,010 1.4


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Total -636,020 100.00

VISION STATEMENT
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

Because of increasing number of nuclear families, working women, greater work pressure
and greater commuting time, convenience has become a priority for Indian customers.

They

want ever thing under one roof for easy access and multiplicity of choice. The growth and
development of organized retailing is driven by two main factors - lower prices and benefits the
customer can't resist. India is rapidly involving into a competitive market place with potential
target consumers in the niche middle class segments. The market trend indicates

tremendous

growth
opportunities.
MISSION STATEMENT:

We shall deliver Everything, everywhere, everytime for every Indian Consumer in the most profitable
manner.

VRPL's BUSINESS:-

VRPL started as a retailer of ready-made apparels in Kolkata in 2001. In 2003, VRPL acquired the
manufactming 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.
made apparels
footwear,

toys,

Currently, VRPL sell ready-

and a wide range of household merchandise and other consumer goods such as
watches, toiletries, grocery

items,

sports

items, crockery, home

fumishing,

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

vendors and manufacturers).

VRPL

endeavor

(primarily

from small and medium size

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 10 years.

In order to reduce costs and take advantage of economies of scale VRPL have embarked on
23

backward integration of their products. VRPL's apparel manufacturing plant is located at-Gur.gaon,Haryana. For ensuring efficiency in supply chain, VRPL have set up seven regional distribution
centers located
Ghaziabad

around Kolkata (West Bengal), Thane

(Maharashtra),

Jaipur

(Rajasthan),

(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.

VRPL Business Processes:-

VRPL's business process can be summarized as below:


Establishment of Stores:

)>

Selection o(location

In selecting

location for a new store, VRPL start by identifying

the city/town. VRPL target

primarily cities/towns which may be classified as Tier II or Tier III cities. In this regard, an
analysis of the demography, literacy levels, nature of occupation and income levels. Within a
city/town, VRPL target locations with good infrastructural facilities such as easy accessibility,
provision for water, electricity, parking, security and other basic amenities. VRPL prefer to locate
their stores in areas where real estate is available at reasonable prices. 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. Accordingly, VRPL plan their strategy to search
for areas within cities where such customers are domiciled in large numbers and make efforts to
locate themselves within the reach of such customers.
VRPL believe that adoption of standard fonnats for their stores has led to their brand establishment
and identification among their customers and will increase their base of loyal customers. In pursuance
of this, they have adopted standard parameters for store planning and establishment.

For ensuring

standardized formats of their stores, VRPL consider various factors, such as internal and external decor
and colour schemes, allocation of store space, stock mix and pricing and accounting
methods.

>Insurance
VRPL

maintain

Sundaram
facilities

and

comprehensive msurance
IFFCO-TOKIO for

and trucks.

coverage

with

their existing stores,

VRPL insurance policies include


24

Tata

AIG,

distribution

Bajaj

Allianz, Royal

centers, manufacturing

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.

25

APPARELS AND NON APPARELS


Under category management for, say, apparels, VRPL create and cater to products across length
and breadth of a category at different price points, fabrics, designs, shapes, seasons, colors and
sizes.

VRPL formulate annual merchandising plan for each division of merchandise taking into

consideration factors such as past sales data, regional


of

stores

resources,

(established

and proposed),

likely

customer
fashion

tastes

and

and preferences, number

trends,

in-house

production

vendor management and price. Each division is further divided into major categories

(for instance, men's apparel as a division is further divided into three major categ01ies, namely,
upper, lowers and sports and ethnic wear). These major categories are in tum segregated into various
subcategories. For example, men's upper as a major category would be further divided into several
sub-categories such as formal shirts, casual shirts, party wear etc. Each sub-category consists of
pre-defined SKUs, which are classified on the basis of price point, brand, style, pattern and size.

VRPL draw annual sales projections for different SKUs and, accordingly, ascertain their sourcing
requirements. Based on such information and lead time estimates for supplies, purchase orders
with delivery schedules are issued. The inventory position for each SKU is reviewed fortnightly
taking into account

the actual sales and variations from the budgeted plans. Regular visits to

the stores are made by the category merchandising team to identify the slow-moving-SKUs
and explore the options to expeditiously dispose of them.

For certain non apparel categories, their merchandise planning and scheduling also depends on
introduction of new products and schemes by the vendors. For instance, if a branded home appliance
manufacturer replaces a product with a new version, then their planning for the product would need
to be reviewed based on th e acceptability of
the new version.
In-house Manufacturing
VRPL benefit

from

backward

integration and in-house

manufacturing of part of the apparel

products sold in their stores. Through their manufacturing capabilities, VRPL

is able to attain relative independence from intermediaries with a competitive advantage in


terms of value and cost. VRPL use their manufacturing strengths to focus on enhancing product
knowledge

and their experiences from manufacturing enable them to negotiate better tenns from

the vendors and job workers.

VRPL currently have an apparels manufacturing plant at Gurgaon, Haryana. The manufacturing
plant is well-equipped with fully automatic machines--fol"- fusing, buttoning, embroidery and welt
26

pocket-making operations. The factory has a capacity to manufacture

5,000 pieces per day. The

plant was commissioned in 2004 and achieved a capacity utilization of 80%. It has 450 machines
and is operated by 500 workers. Further, VRPL are exploring the possibilities for establishment of
another manufacturing facility, for the purposes of which they have acquired certain portions ofland
admeasuring 7.24 acres in Dehradun, Uttaranchal.

In addition to in-house manufacturing, they have outsourced some parts of the manufacturing
to "job workers" who work in their factory premises. VRPL undertake quality control measures by
way of random sampling to ensure the pre-determined quality standards are met. To verify that the
quantity of supplies is as per the order, they undertake count-check for every receipt of the goods.

VRPL's manufacturing team works closely with their design team to understand trends, develop
products, value engineer and finally create season wise collection that cater to regional tastes.

Purchasing
Purchasing or vendor management

assumes

cri tical importance in retail business where

one

has to deal with multiple products. VRPL have in place a vendor management system, under
which they identify vendors all over the country and overseas and seek to develop alliances and
arrangements with them. They regularly interact with the vendors and share information such that
the vendors remain familiar with their goals and targets. It has been their strategy to procure goods
from small and medium sized vendors and manufacturers, which they believe has led to reduction in
the cost of goods the sell and increase in their profitability.

Upon ascertaining the procurements needs based on each SKU, VRPL explore the various options
for sourcing the products. They continuously strive to procure goods from the place of origin to reduce
the costs and control the quality. For identifying the vendors, VRPL assess the various

possible

options on factors such as capacity, credibility in the market, quality awareness and experience.

27

After identifying the vendors for the goods, VRPL place purchase orders based on their SKU-wise plan,
estimated lead time of each vendor and-quantity to be procured from each vendor. VRPL follow a
policy of 'payment on delivery' to negotiate better prices with the vendors and in certain cases they also
release payments in advance. To ensure quality of supplies, VRPL check quality by way of random
sampling at the time of receipt of the goods. To verify that the quantity of supplies is as ordered, they
undertake count-check for every receipt of the goods. For FMCG products, VRPL procure from
large as well as small and medium size manufacturers. For procurement from the large manufacturers or
their distributors, they endeavor to enter into fom1al arrangements for supply of products to all 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.

28

VISHAL APPARELS BRAND

Vishal Mega Mart is one of India's

fastest growing retail chains.. The chain currently has 172

company stores in 24 states I 110 cities in India. The Vishal brand is known for great modem 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.

29

Popular Brands are:

Zeppelin:
Mens Shirts & Trousers

Fizzy Babe: Ladies AND 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 Shirt

Fume: Mens Shirts

T-Shirts, Undergarments.
Massa Bay: Mens

Trousers

& Bermudas

Apparel Manufacture

The basic raw materials required for the manufacturing process of apparels includes fabrics
accessories. VRPL merchandising teams
depending upon their production
VRPL

source

various

source fabrics from local manufacturers in India

plan. VRPL also source fabrics

other components

and

from

the place of origin.

and accessories from vendors in various parts of the

country and also import them from China.

Inventory Management, Distribution Network and Logistics


30

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 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 385,0lisquare feet. These distribution
centers are located
Ghaziabad

around

(Uttar

Kolkata (West Bengal), Thane

Pradesh),

Ludhiana

(Punjab),

(Maharashtra), Jaipur

(Rajasthan),

Gurgaon (Haryana) and Mahipalpur (New

Delhi). VRPL have clearly demarcated the stores which will be serviced by each distribution center.
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

connection

through

centers

and stores

broadband

are connected through

which helps to efficiently

company-wide vi1tual network

manage

their network of stores and

distribution centers throughout the country.

They primarily utilize their own vehicles to transport the inventory to their stores from the dist1ibution
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

through

costs.

Distribution

centers operations

have

been

streamlined

standardization 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.

31

the

SWOT ANALYSIS

STRENGTHS:
We can encase brand image ofVishal Retail Ltd. to sell its new product.

It sells product at cheaper prices.

Garment sector of the Vishal is much more superior to other retail stores.

it offers wide range of products under one roof.

It provides good after-sale service.

It is the only store in Lucknow where you can exchange the goods after purchase. (On
selected items).
The Vishal Mega Mart is situated at the big market place.

It segments on middle and lower middle income groups, which constitute majority of the

population in India.

It has welled design store & well organized store.

WEAKNESSES:

Absolutely no brand awareness for the product. (Z-Line).

Need t o

incorporate

many

new

features

as

per

customer

Requirement.

Lack of proper extraction of work from staff.

Need to include more varieties of the same item.

Need to provide m o r e offers/ d i s c o u n t s

on FMCG. Here t h e perception of

t he p e o p l e is quite low, because from my consumer behavior survey 1 have found out
32

that most of r e s p o n d e n t s think that Vishal Mega Mart is not providing good
offers/discounts on FMCG in comparison of Big bazaar.

Need to i m p rov e store layout according to cust om er facility.

People are not so modern In Lucknow and their perceptions are quite advance.

OPPORTUNITIES:
No other big competitor in that area.
To increase the customer satisfaction by providing different variety of products.

Z-line (Manufacturing unit of Vishal) if we create the brand image of it. It will get additional sales in

the future.

Coming era is of knowledge and information if we sell our manufacturing unit product through

internet so we can create its brand image + additional sales in future.


There is a boom of retail in future according to current scenario. If Vishal creates brand image of
its Z-line product, so it can give direct competition to the other branded products in future.

THREATS:

Big bazaar, Spencer, Reliance and Globus are the main competitors.

Overseas group entering the market.

Increased competition in the domestic market.

RESEARCH OBJECTIVES
OBJECTIVES OF THE STUDY
To understand the different marketing strategies being followed by Vishal
Mega Mart.
To learn their marketing mix.
Proper understanding and analysis ofVISHAL MEGA MART

33

Conduct a survey on a sample selected from the customers of VISHAL MEGA MART and to

obtain their opinions


To know the strategy to make a customer retention.
To know the consumer's expectations from Vishal mega mart.

RESEARCH METHODOLOGY
Research methodology is the way to systematically solve the research problem .It may be under stood
as a science of studying to how research is done scientifically. In it we study the various steps that
are generally adopted by a researcher in studying his research problem along with the logic behind
them.

In research methodology we not only talk of the research

methods but also consider the logic

behind the methods we use in the content of our research study and explain why we are using a
particular method and why we are not using others so that research results are capable of being
evaluated either by the researcher himself or by
others.
Secondary data are those which have been collected by someone else and which have already been
passed through the statistical process.

There are several ways by which secondary data can be

classified.

Data collection methods


The Quantitative data collection

methods, rely on random sampling and structured data

collection instruments that fit diverse experiences into predetermined response categories. They
produce results that are easy to summarize, compare, and generalize. Quantitative research is
concerned with testing hypotheses derived from theory and/or being able to estimate the size of a
phenomenon of interest. Depending on
assigned

to

different treatments.

the

research

question, participants

If this is not feasible, the researcher

may
may

be

randomly

collect data on

participant and situational characteristics in order to statistically control for their influence on the
dependent, or outcome, variable. If the intent is to generalize from the research participants to
a iarger population, the researcher will employ probability sampling to select participants.
quantitative data gathering strategies include:

Experiments/clinical trials.

34

Typical

Observing and recording well-defined e v e n t s (e.g., c o u n t i n g the number of patients waiting

in emergency at specified times of the day).

Obtaining relevant data from management information systems.

Primary Data Collection:


The considerable and diverse

array of primary data methods includes,

such as randomized

controlled

trials (RCTs) and other controlled

uncontrolled trials;

observational studies such

surveillance studies;

and simpler

designs

as case series

controlled

and single

studies,

case

reports

and
or

and categorized in terms of multiple attributes or

dimensions, such as whether they are prospective


observational,

trials; other prospective but

as case-control, cross-sectional

such

anecdotes. These methods can be described

e.g., true experiments

or

retrospective,

or uncontrolled, and other attributes

interventional

or

noted below. Some of these

methods have alternative names, and many studies employ nearly limitless combinations of these
attributes
Primary data used in this project is mainlv collected through questionnaire which has been taken with
the help o(sample size which has been taken and atier that the entire data has been manipulated.

Secondary data:
Secondary data originally collected for a different study, used again for a new
Research question.

Service

District

Statistics including

basic

client

counts, attributes, demographics,

social conditions and lots of program information (analogous to public schools and scheolt@aGh@rs, who constitute some of the most accountable of public servants).

Other

Social

and

Economic

Indicators,

figures, inflation indicators, Income Figures, etc.

Resource Inventories and other needs assessments

Opinion Polls taken by others

Budgets

The secondary data used in this project is :

Through internet
35

Consumer

Price

Index, unemployment

Through books of retail

Company profiles of big bazaar and shopper's stop

LITERATURE REVIEW
MARKETING ANALYSIS

SUMMARY

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.

36

MARKETING STRATEGY OF VISHAL MEGA MART


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 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-tum lead to
consumption of their apparels. VRPL have a number of private labels for apparels such as
Zepplin, Paranoia, Chlorine, Kitaan Studio, Famenne, Flourier Women and Roseau.

37

PRICE

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 unifonn pricing policy across their stores in respect of private labels and nonbranded 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.

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 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.

promotional

from

schemes

formulates promotional

weekly.

Apart

general sales promotion,

They launch

the category manager

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


38

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 tenn 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 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 ofRs. 300 million.

Their Competitive Strengths

It believes that the following are their principal competitive strengths which have
contributed to their current position in the retail sector in India

Understanding of the 'value retail' segment


Their 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 their stores.

It endeavthier to continuously reduce their costs through a variety of measures, such as,
39

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 their stores depending on the regional customer behavior and preferences. Central to their
value retail strategy is to pass on the benefits of cost reduction measures to their customers.

Supply chain management


Their

supply chain management involves planning, merchandizing

sthiercing, standardization,

vendor management, production, logistics, quality control, 'pilferage' control replacement and
replenishment. Their supply chain management provides us flexibility to adapt to changing patterns in
consumer behavior and their ability to add value at various steps/levels. In particular, their
supply chain management gains strength from their ability to undertake in-house manufacture,
design and development of apparels.

Strong and efficient logistics and distribution network

VRPL's distribution and logistics network comprises seven distribution centers. Besides, VRPL
have their own fleet of 31 trucks, which helps VRPL to transport and deliver their products in a cost
and time

efficient

manner.

VRPL

believe

that their distribution

and logistics set up is well

networked and allows them to fulfill the store requisition within short time period of generation
and receipt

of order,

merchandise and

which

has helped

VRPL

to

optimize

in-store

availability

of

minimize transportation costs. Their strong distribution and logistics network has

enabled them to dispense with the requirement of a dedicated storage space at every store, which is an
industry practice, and instead undertake periodical replenishment of depleted stock. Due to adoption of
an efficient racking system, they are able to benefit from optimum utilization of the space allocated
for display in their stores. This provides them assistance in maintaining a low working capital
requirement and less carrying cost.

Geographical spread

Their stores and distribution centers are spread in various parts and regions of the country. This
has not only enabled us to build their 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 their existing stores are located in Tier IT and Tier ill
cities, which, It believe, enables us to capture market share in locations where a majority of their
target customers are
located.
40

Identifying new locations

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, their

income from their private labels was Rs. 583.60 million, which accounts for 9.68% of their total
sales for fiscal 2007. It believes that their focus on their private labels and their recognition in
their customer segment enables us to differentiate themselves from their competitors.

Their Strategy
It intends to pursue the following strategies in order to consolidate their position as an operator in the
'value Retail' segment in India. Their growth strategy is based on:

Increasing their penetration in the country by leveraging their supply chain, distribution and logistics
network

It intends to increase their penetration in the country by setting up new stores in cities where it
already have Presence, as also entering into new areas in the country. In particular, it intends to
focus on expansion in Tier II and Tier :m cities. It believe that their existing infrastructure have been
designed for a higher scale of operations than their current size, and can help us grow without the
need to significantly

increase costs. Moreover, their continuous

effort to improve systems and

processes leads us to believe that it can deal with higher scale of operations without any hindrance.
Higher business volumes will also improve their negotiating pouters and help us get further economies
of scale in their buying.

Emphasis on Backward Integration

It believes that through backward integration It will continue to substantially control the cost of
41

production, resulting in such cost benefits

being passed on to their customers. It intends to

increase the in-house manufacture, design and development of their products and realizes economies
of scale. It intends to manufacture at least 25% of their requirement
require

expansion

of their

for

apparels and may

existing manufacturing facilities. This will also enable us to reduce

their reliance on external agencies for supply of their products and will result in loiter tum-around
time.

In addition, their focus would be to undertake in-house such functions of the manufacturing
processes, which, in their view, would add maximum

value and would enable us to reduce their

procurement costs.

Expansion of FMCG

Historically, it has derived significant portion of their revenue from sale of apparels. 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,

It

believe

retailing of FMCG products will bring customers to their stores on a frequent basis and this may intum lead to consumption of their apparels. It believe retailing ofFMCG products would help us to
eliminate the

impact of seasonality of the apparels market in India, which depends on factors such as change in
tether conditions and festival celebrations. In furtherance of their 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.

42

Procurement from low-cost production centers outside India

In addition to their strategy to continue procurement of goods from small and medium size vendors
and manufacturers which leads to cost efficiencies, It intend to procure
low-cost

production

FMCG and apparels from

centers located outside India. Towards this objective, It 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.

Increasing customer satisfaction and their base of loyal customers

It believes that understanding the needs of their customers is of prime importance for the continuous
growth of their business. In order to continuously provide customer satisfaction, their customer
management

team

assimilates

customer feedback and it endeavthier to take necessary steps to

address the requirements of their customers. In addition, It has introduced, in association with SBI
Cards & Payment Services Private Limited,

co-branded

credit

card.

It proposes

continuously undertake such initiatives to increase the satisfaction of their customers.

43

to

IMPACT OF VARIOUS ENVIRONMENT ON "VISHAL MEGAMART"


Social Impact

There are variables/factors that effects customer impulse

buying behavior

in FMCG sector

considering retail market in India. The impact of various impulse buying factors like sales and
promotions,

placement

of

products,

window

merchandising, effective price strategy

etc. on

customer impulse buying behavior has been analyzed. A hypothetical model has created in this paper
which has been 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 Mega mart 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 socioeconomic 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


durables,

he spread over an area of 150,000

IT and lifestyle products, and home

furnishings

sq. ft. and sell apparel, consumer


besides all the goods available

in

VISHAL MEGAMART. Community facilities including a health center and phantasy, and a
vocational training center 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

44

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
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 rationalization of business procedures have already
ensured a high economic growth with a rapidly expanding base for the manufacturing and hiend 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
hub prices than what

business

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 20,00030,000 sq.ft. in size generating sales of Rs 7500 per square feet.
VRL's business model is based on value retailing, where by it offers quality products at reasonable
prices to customers

primarily in the lower and middle income

group. VRL sells around 7,000

products of household needs, ready-made apparels, footwear, toys, watches, toiletries, grocery items,
sports items, crockery, gift and novelties.

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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house In Apparel Manufacturing & Private Labels


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
SAP to connect

all its stores

and distribution

centers

of implementing

through a virtual network connection

which will help it to efficiently manage the network of outlets throughout the country.
Outlook and Valuation

Vishal compares well in terms of profit margins & Mcap I 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 PIE 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.

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POLITICAL IMPACT

This environment is very important from the view of these particular topics, because every way
would pass through the political corridor. The Government of 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
groups,

and

corporation.

Labour unions,

women's rights

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,
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efficiency and an enriching customer experience. Retailing is the second largest income generator in
India after agriculture and 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 FR02008 -the Franchise
and Retail show -shares some of his perceptions on IT deployment in retail sector.

Technology is a one-time investment but the return on investment is continuous. For the first three
years ROI may not be there but then onwards there is no cost. Many of the large retailers spent
crores of rupees on doing up their premises but buy some cheap software at Point of Sale (PoS) for
computerized invoicing. I think it is a wrong strategy because it doesn 't help you to find out who
your customers are, it doesn't generate information on stocks and shelf space analysis is very critical.
Why do some products move faster while others don't? Mere PoS computerization is not going to
help in these matters.

Technology-driven companies like Wal-Mart have minute information, even to the point, let us
say, which truck will reach their warehouse in next 45 minutes. Proper supply chain is essential
and customer experience is very critical for retail success. The retailer has to ensure that customer
is not required to hang around or take too much time to spot his product.

If you are a large

retailer, even a one percent saving makes a huge difference. The problem with ordering through
phone is that it may not be properly registered or the person concerned might forget about the call 15
minutes later. If you can't provide the product or service, the customer will go lo next shop.

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SUGGESTIONS

1. Company need to spend a lot on advertising and promotion to create brand


image of its product.

2. Make frequent advertisements in both print and electronic media.

3. Making stalls in corporate meals like trade fair, maybe beneficial to create
brand image of its product.

4. Need to provide additional offers and discounts as per customer requirements.

5. Need to include varieties of similar item.

6. Provide more discounts on FMCG.

7. Provide better customer service.

8. Maintained proper display to create impulse. (It is assumed that near about

70% sales comes from impulse marketing and if proper display is not maintained impulse
cannot be created).

9. Better if we provide filtered information about Vishal.

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CONCLUSION

After completing this research we come to know that Only Big Bazaar is ahead of Vishal Stop
because of its prime Location and higher product range. Shoppers' Stop is new in Lucknow as
compared to Vishal Megamart and it is slowly covering its market. But there are few areas
where these malls needs amendments and these suggestions are mentioned in these malls.
Advertising is an important factor of getting sales promotion and Vishal Megamart is ahead of
Shoppers' Stop in that case, but Product Quality of Shoppers' Stop is better than Big Bazaar.
Product Range of Shoppers' Stop is better than that of Big Bazaar.

Overall Vishal Megamart is ahead of Shoppers' Stop and Globus Retail, but just little behind to
Big-Bazaar.

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LIMITATIONS OF THE STUDY:

1. Sometime respondents are not taking interest in such type of surveys therefore there is chance
that they might be giving wrong information.

2. The respondents are free from all barriers so he/she can give his/her opinion which may not
be true in many occasions.

3. The staff of the Vishal only provides/ communicates the merits of its products.

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BIBLIOGRAPHY

BOOKS REFERRED:

RETAILING MANAGEMENT
(PRADHAN,SWAPNA)

THE ART OF RETAILING

PHILLIP KOTTLER

WEBSITES:

http://www.dare.co.in/people/featured-entrepreneur/entrepreneur-of-the-month-ram-chandraagarwal-vishal-retail-limited.htm

VISHALMEGAMART.NET

TIMESOFINDIA.INDIATIMES.COM

http://www.studymode.com/essays/Vishal-Mega-Mart-Price-Gap-Analysis-394730.html

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