A Quest for Growth…

(This case study has been internally designed at ITC’s Lifestyle Retailing so as to enable an
appreciation of real life business and marketing issues. Personalities and situations are
fictional and only representative. Just like in real life, information is far from complete and
must be sought, beyond what is readily available).

Vikas Kumar, General Manager Marketing & Retail at Elite Wear Inc. was in a
pensive mood, sitting in his corner room office. Though his company has shown
year-to-year growth of almost 100% in terms of sales value, he knew that the
opportunities in the fashion & lifestyle industry promised a far greater potential.

The company’s vision was to establish a dominant presence in the premium

branded western wear market in the country. The company had made giant strides
in a small duration of 3 years since its inception. To enlist a few:

1. The company had established a national presence thru its Exclusive Brand
Outlet (EBO) chain Wings Lifestyle with 48 stores in 38 cities

2. Wings Lifestyle had been recognized within the Fashion Industry as the
“Most admired brand retail chain”.

3. Wings Sport was the first offering in the area of relaxed wear and its
national launch in June 2000, was hailed the “best brand launch” within the
industry

4. Wings Classic formal wear and Wings Clublife eveningwear were

subsequently launched in November 2002 and May 2003 and the initial
response to these offerings was encouraging.

In a highly cluttered market, Elite Wear Inc. had created an impact by doing things
differently. One of the key differentiators for the company was its exclusive
distribution route. When all the other brands are available at most of the Multi
Brand Outlets (MBOs), Elite Wear had focused on offering a unique shopping
experience to its customers thru Wings Lifestyle – the Retail brand. The product
offerings, in turn, were distinctly differentiated in their being fashion forward and
comfortable.

The company had really ambitious growth plans and after a good beginning it was
clearly a time to build on the foundation. Vikas was also a member of Strategic
Investment committee and wanted his team to make a representation to the
committee with their point of view on how to drive growth.

He called a meeting of his Sales & Marketing team to discuss the future course of
action. Vikas initiated the discussions saying,“ We need to energise our presence in
the premium segment. I believe there is far more potential to be exploited than we
have factored in so far.”

Vidhu Misra, National Sales Manager said “I’ve been saying this for some time
now. We should enter MBOs and aggressively expand our distribution. These stores
will not only give us additional sales but will also give us an opportunity to
showcase our product range to a lot of customers who have not entered our stores.
In any case there is a huge demand for our Wings brands from various MBOs and
large format retailers”.

George Abraham, Marketing Services Manager, differed sharply, “ We can’t just

dilute what we have managed to achieve. Increasing the distribution width in a
category like premium apparel is not the solution. We need to get a ‘buy in’ to our
brand proposition from more and more people. We need to drive traffic to our
stores and aggressively build our Retail brand.
Just making the brand available in other MBOs will give us growth that would be
temporary and not sustainable over a period of time – besides totally diluting the
halo that we have created around our brands. After all, how can we create our
trademark ambience in other stores.” He said this even as he pulled out turnover
data of premium brands that had relatively extensive distribution.

Continuing, he said, “We know we have a good thing going with our EBOs. Why
don’t we look at growth thru this chain itself? I believe we should all focus on
getting more people into our stores (footfalls) and converting more of them into
buyers (conversions)?”

Vikas said, “For the kind of growth we are targeting, we need to think outside the
box. Can we meet in a couple of days? I’ve requested Prof Ramesh, a retailing
consultant to join us. George, get Kiran (Customer Relationship Manager) to join
us. Day after then, 11 AM.”

At the subsequent meeting, after the round of introductions with Prof Ramesh,
Vikas got to the point quickly,” Prof Ramesh, what do you think -- how should we
go about this?”

Prof Ramesh said, “ I wish the answers were simple. Lets look at it from the point
of view of your leveraging strengths and capitalizing on the opportunities that
present themselves.

Wings Lifestyle today, really is the fashion destination existing in almost all the
traditionally strong catchments such as South Ex. and CP in Delhi, Linking Road in
Mumbai.

As you all know, the retail landscape is changing rapidly and is set for even more
rapid change during the next few years. The key changes are as follows --

 The increase in level of the consumer’s service expectations is driving the

growth of organized Retailing

 This is visible in the rapid expansion of exclusive branded outlets across

product categories -- Apparel / Food / Automobiles / Lifestyle accessories /
White goods

 Also visible, is the e

 mergence of world class Shopping malls in the key cities, cueing evolution of
consumer shopping habits – combining the shopping experience with
entertainment and dining
 Other players in the apparel Industry were driving growth thru expansion in
the EBO channel -- communicating their brand world as part of the shopping
experience

With your proven strength in leveraging your EBO network, it makes sense to look
at expansion of the network. The emerging shopping malls are going to be the new
catchments of tomorrow. This is where you must look at opening new exclusive
stores. I would estimate an opportunity for about 15 such malls in the top 6 cities
over the next year”.

Kiran who did not look enthused, interrupted,” I don’t think we should look at new
opportunities for EBOs at all, when I think there is huge scope in improving
business at our own stores. New stores will demand fresh investment and with
these new Malls, one never knows how property rates will move over time.

I believe there we should look hard at improving Footfalls to our stores. We can
boost the buzz factor around our stores by enhancing Word of Mouth generating
activities such as instore events and celebrity association. If we can double our
footfalls, we needn’t be discussing expansion of our EBOs.
Besides, while our retention rates are far better than the industry average, there is
a drop-dead rate (% of people who do not come back after the first time) of 70%.
We should at this as an opportunity.

I think we should take a cue from the retail trends that Prof Ramesh has spoken
about. With consumer’s expectation levels on service growing and the competition
now increasing their EBO numbers, we should examine how much superior our
shopping experience is now versus competition. An increased thrust on CRM is
required at two levels – a) taking the experience we offer to a new high – and b)
extending our Loyalty programme to our key stores.

This would help in improving our conversion levels as well as increase our retention
levels. Any investment that we do would rather be on enhancing the experience
that we offer our consumers.”

“We should explore tie-ups with different organizations which can help us in driving
traffic to our stores. Banks, Airlines, Credit Cards & telecom companies are sitting
on huge databases of our potential customers. We should concentrate on attracting
these customers to our existing stores and follow it up post purchase to ensure
they keep coming back to us. We’ve created these 48 EBOs and now we should
focus all our energies & resources in making them realize their full potential,” said
Kiran.

“Why are we ignoring the MBO channel? We should extend our brands to at least
the top 400 outlets. There is ready potential to be captured straight away,” said
Vidhu.

“I’ve expressed my views on this. I don’t think that is really the right thing to do
from the brand point of view,” George said,” what do you think, Prof Ramesh ?”.

“Quite dicey, really,” said Prof Ramesh,”a key component of your brands’ value
proposition has been your unique retail experience and ambience. What you should
look at is targeting the shoppers in MBOs thru a new brand, maybe a formal wear
brand, formal wear being the largest segment in the market.”

“But MBOs don’t want another brand. They want Wings. The value that we have
created with Wings is not being fully captured at our EBOs. We can maximize this
value capture thru our presence in MBOs,” said Vidhu.

“I am not really in favor of a new brand. It would mean separate investments and
effort required to create a new brand right from scratch,” said George.

“I wouldn’t be so hasty in doing away with Prof Ramesh’s suggestion on a new

brand. With the industry being so fragmented and the competition levels being so
high, may be it won’t hurt to have a complementing premium brand just for the
MBO channel. It would give us the freedom to be aggressively price competitive in
MBOs,” said Vikas.
Vikas rose and walked to the whiteboard,“ The Strategic Investment committee
wants an interaction with each of you before finalizing our medium term growth
strategy. Let me write down the key questions before each of us for clarity. We can
each be individually prepared for the interaction.” He invited Prof Ramesh also to
join in the meeting with Strategic Investment committee to share his point of view.
 Key questions to each group

1. Marketing
a) What should be the overall growth strategy for Elite Wear & Co.?

b) What would be the key imperatives/guidelines, if the company were

to take a decision to go into MBOs?

c) Should the company launch a new brand especially for MBOs? If so,
could it be an extension of Wings?

d) What are the means to boost word of mouth around existing brands
and drive more footfalls to the stores?

2. Sales
a) What should be the overall growth strategy for Elite Wear & Co.?

b) What could be key considerations one should look into while drawing
up the MBO expansion plan?

c) If Elite Wear were to extend presence to MBOs, would there be any

impact on sales in existing EBOs? Also, which other areas would you
review/modify of the existing business model to be successful in the
MBOs?

d) On what criteria would you evaluate the feasibility of EBO expansion

plan?

3. Customer Relationship Management

a) What should be the overall growth strategy for Elite Wear & Co.?

b) How can one enhance the shopping experience to retain a strong

competitive edge and boost consumer retention?

c) What could be the key elements of a highly effective Loyalty

programme?

d) How can one enhance the buzz and Word of mouth around existing
stores? What are the measures that one can take that can boost the
footfalls into existing stores substantially?

4. Consultant
a) What should be the overall growth strategy for Elite Wear & Co.?

b) What are the key trends impacting the retail landscape? What
implications does the growth in organized retailing have on strategies
of Elite Wear & Co.?

c) How can one constantly be superior to competition as far as service

and experience delivery go?

d) What would be the appropriate brand strategy for MBOs? Could an

extension of Wings be considered? What should be the pricing
strategy for the new brand/sub brand?

The Strategic investment committee is to arrive at the following –

1. SWOT analysis of the business

2. Medium term growth strategy for the business and its implications
on the various business issues raised during the discussion.