RETAIL MANAGEMENT

“GROUP PROJECT ON VISHAL MEGA MART”

POST GRADUATE DIPLOMA IN MANAGEMENT

BATCH 2020-2022

SUBMITTED TO:
Prof B.D.Nathani

SUBMITTED BY:
GROUP-8
Aman Verma -PGMB2005
Abhishek Saxena-PGMB2048
Durgesh Yadav-PGMB2051
Shivam Pandey-PGMB2052
Introduction

Vishal Mega Mart Retail Ltd, a company engaged in Hypermarket stores with an average area of
25,000 to 30,000 sq. ft. through an impressive chain of 172 fully integrated stores spread over
more than 24,00,000 sq. ft. in around 129 cities across India.

Founder
Ram Chandra Agarwal started Vishal Mega Mart in Kolkata in 1986, in a 100 sq ft shop in Lal
Bazaar. He started with around Rs 100,000, for which he had to take out a loan as well as dip
into family savings. He was the first businessperson to introduce “Hypermarkets” to Indians.

History
He ran his shop for nearly 15 years and then planned to do a large-scale retail business. In 2001,
Ram Chandra Agarwal moved from Kolkata to Delhi. Here he started a retail business called
Vishal Retail. His business was good and it was only in 2002 that he established the first
hypermarket company called Vishal Mega Mart in Delhi. During this period, he borrowed a huge
amount of money from banks to increase the company's popularity in the stock market, and then
Ram Chandra Agarwal suffered a loss of Rs 750 crores due to the fall in the stock market in
2008. Due to this huge loss, the company went bankrupt and Ram Chandra Agarwa had to sell
his hard-built company to repay the loan. In fact, in 2011, Ram Chandra Agarwal sold V-Mart to
Shriram Group. He then started a company called V2 Retail, which sells fashionable products at
affordable prices.

CEO
Vishal GUPTA - CEO - Vishal Mega Mart Gurgaon, India | There is not one particular owner of
Vishal Mega Mart it has a board of directors who manage the business on a daily & strategic
way.

VISHAL MEGA MART – SUCCESS

At a time when organised retail was in its infancy in India, Bhatia spotted a gem. Firstly, the
brand was not built on high streets: Its 200 stores were dotted across small towns.
Secondly, the consumption story of the Indian middle-class had just started to take off, and the
combination of rising aspirations and purchasing power was a right fit for any retailer.
Thirdly, the product mix of the stores was interesting: While 50 percent consisted of apparel, the
other half was merchandise and FMCG products. “It was a big opportunity for Vishal Mega
Mart”.

 VMM has established itself in the first quadrant of Organization Value and
Customer Value
The key features that have shaped in establishing of brand like: -
-It facilitates one-stop-shop convenience for their customers and to cater to the needs of
the entire family.
 -Maintaining the highest standards in quality and design, these stores have come to offer
the finest fashion garments at Down-to-earth price structure.

-VMM’s business approach is to sell quality goods at reasonable prices.

-It follows the concept of value retail in India.

-VMM target middle class as it is the largest consumer base in India.

 So it can be concluded that Vishal Retail, a value retailer with a focus on Tier 2 and Tier
3 cities, is expanding aggressively. The expansion will boost its retail space to 5.1 million
sq. ft by FY10 from 1.3 million sq ft in FY07. The company plans to increase its
penetration throughout the country over the next few years. They initiate coverage on the
company with an OUTPERFORMER rating. The expansion plan of Vishal Retail is very
aggressive. They expect the retail space to increase to 5.1 mn sq. ft. by FY10, at a CAGR
of 59% over FY07-FY10E. This expansion will increase its reach and provide volume
growth, whereby revenue is expected to increase four-fold.
 The company targets Tier-2 and Tier-3 cities where there is little or no presence of
organized retail players. Even in Tier-1 cities, it is present on the outskirts of the city.
This enables the company to enjoy first mover advantage and earn better margins than its
peers. Also, the rentals in such cities are low. The company’s operating margin is higher
than to peers due to owned manufacturing capacity of apparel, higher proportion of
apparel in the sales mix (60%), and sale of private labels only in apparels, high share of
private labels in the sales mix, efficient supply chain and distribution system and low
rentals. We expect the operating margin to increase to 12.49% in FY10 from 11.12% in
FY07 despite the ongoing capex.

REASONS FOR FAILURE

In 2010, Ram Chandra Aggarwal, founder of Vishal Retail sold his company to TPG and
Shriram Group firm for Rs.70 crore and after eight years Company changed his hands again and
Puneet Bhatia owns the company. For Puneet Bhatia, buying Vishal was a great investment
because it has a strong value proposition. At that time, there was a great opportunity for Vishal to
grow. Some of the opportunities are:
 There are 200 stores of Vishal which were dotted down across India.
 The consumption story of the Indian middle class had just started to take off and the
combination of rising aspirations and purchasing power was a right fir for any retailer.
 The product mix of Vishal was interesting like 50 percent consist of apparel and the other
half was merchandise and FMCG products. This was the great opportunity for Vishal to
grow that time.
As we all know that, with opportunity, though, come challenges. And in the case of Vishal Mega
Mart the odds were heavily stacked against the new owners in 2010 and it was on the verge of
collapse. Reasons for which there is failure in business are as following:
 The biggest problem was the deep financial mess the company was in, thanks to
aggressive expansion on the back of short-term debt.
 Poor execution and under-performance made the matter worse in which Vishal Mega
Mart must rebuild, reimagine, and reorganise every part aspect of the business.
 The major step in turning around the company was rationalising store count. A
combination of poor location, bad economics and under-utilisation of resources had made
most of the stores almost redundant. From 200 stores, the number was shrunk to 100 and
the new owners had to get rid of the legacy business and its issues.
 There was lack of planning in the company because they did not plan on time and this led
to certain wrong choices, like in-store ambience. From lighting and fixtures to flooring,
nothing was right earlier.
 Vishal Mega Mart was overconfidence because there are number of stores, and they are
not able to operate it. It’s hard to let go of success when it gets into the head.
 There was no learning to manage scale of the business. Vishal floundered beyond Rs. 500
crore mark and once you go beyond that, you need a professional hierarchy to share the
load. You need corporate structuring and processes, which were simply missing.
 While there was connect with low-income customers, changing aspirations were not
factored in entirely. Instead of downgrading the customer, they should have upgraded the
brand.
 Vishal’s growth was unprofitable because earlier credit was cheap, and they were
expanding recklessly. It was rightly said that “You can’t go on producing children, you
must nurture them too.”
 Vishal’s transactions were all cash deals, be it sourcing from vendors or operational
expenditure. Cash was king but that’s certainly not the way to manage scale. Large
operations require multiple currency layouts, not just heavy reliance on cash.
 There was also the lack of management skills to run a venture as large as Vishal.
 Vishal suffered partly due to an SAP issue, resulting in data loss. Besides, the critical
standard operating procedure in retail was not followed at all. In Vishal the server was
very small and there were issues with implementation of SAP, thereby creating problem
in data extraction.

For recurring this loss, a new management team, led by Gunender Kapur was put in place,
compliance issues were fixed, the entire apparel strategy was streamlined, product sourcing,
assortment and display were optimised, and distribution centres were made more efficient. It was
challenging for them, but they succeeded.
In the next few years, Vishal was back on his feet and revenue grew at a healthy compound
annual growth rate of 24 percent during the three years in which cash accrual has increased
steadily over the years. For the FY 2017, the company had posted revenues of Rs. 1341 crore,
with estimated profits of more than Rs. 150 crores. Vishal Mega Mart operates in the value retail
segment and is best positioned to benefit from the healthy business prospects of the organised
retail segment.

VISHAL MEGA MART – COMPETING WITH THEIR COMPETITORS

The top 10 competitors in Vishal Mega Mart's competitive set are Big Bazaar, Shoppers Stop,
Spencer's Retail Limited, Pantaloons, PEL, METRO Cash & Carry, DMart, Future Lifestyle
Fashions, Rctdirect, V2 Retail. Together they have raised over 1.4B between their estimated
84.5K employees.

Big Bazaar is seen as one of Vishal Mega Mart's top competitors. Big Bazaar was founded in
Mumbai, Maharashtra} in 2001. Big Bazaar is in the Hypermarkets & Super Centres industry.
Compared to Vishal Mega Mart, Big Bazaar generates $2.7B more revenue.

Shoppers Stop is Vishal Mega Mart's #2 competitor. Shoppers Stop was founded in 1991, and its
headquarters is in Mumbai, Maharashtra. Shoppers Stop competes in the Logistics, Wholesalers
& Retail Distributors industry. Shoppers Stop has 12,420 fewer employees than Vishal Mega
Mart.

Spencer’s Retail Limited is Vishal Mega Mart's #3 rival. Spencer’s Retail Limited is
headquartered in Kolkata, West Bengal, and was founded in 1863. Spencer’s Retail Limited
operates in the Apparel Retail industry. Spencer’s Retail Limited generates 177% the revenue of
Vishal Mega Mart.

MARKETING STRATEGY OF VISHAL MEGA MART TO COMPETE

WITH THEIR COMPETITORS

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

Price
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 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 centres
coated outside India. Towards this objective, VRPL propose to increase their procurement
of finished and semi-finished goods from China and thereby realize economies of scale and
passion the benefits so accrued to their customers. The efforts of VRPL retail business are
targeted towards families having total income which can be classified under the lower middle
and middle income groups. VRPL follow uniform pricing policy across their stores in respect
of Private labels and non-branded products sold by them. This enhances brand loyalty,
encourages customer confidence and results in operational convenience. In relation to the other
products, the prices may vary between stores on account of state-specific taxation and vendor
policies.

Place
Vishal Mega Mart stores are located in 110 cities with more than 180 outlets. Vishal Mega Mart
as 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 category management system is used
to plan promotional schemes. They launch promotional schemes weekly. Apart from general
sales promotion, the category manager formulates promotional plans for slow movers. In
addition, to promote sales, they focus on layout of the stores and positioning,  presentation and
display of merchandise, in order to appeal to the customer. In addition, VRPL have introduced,
in association with SBI Cards & Payment Services Private Limited, a cobranded credit card.
VRPL propose to continuously undertake such initiatives to increase the satisfaction of their
customers. Some of the features of the co-branded card include Rs250 discount voucher on
signing up for the card and a process by which the cardholder earns five reward points on every
Rs100 spent. A cardholder accumulates points on the basis of purchases made and the points
accumulated can be redeemed for gifts or purchases. In September 2005, VRPL entered into
a long term advertising agreement with Bennett, Coleman& Company Limited 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 of Rs.300 million.
Promotion
To make your shopping experience more exciting more. has created Club more. This is the
membership reward program, which reinforces their commitment of consistently adding value
to the shopping experience by choosing to be a part of more. After filling a simple registration
form, you can start enjoying the benefits of shopping with us right from Day 1!As our esteemed
member, each time you shop at more. outlet you earn Reward Points which can beer deemed in
your preferred more. outlet. What's more, as a Club more. member, you will also been titled to
special benefits, besides the regular offers and promotions at more. Asa Club more. member you
will also receive exclusive SMS alerts for special offers on our products and services. Currently
the Club more. program reaches out to over 1 million members.

CURRENT POSITION OF VISHAL MEGA MART

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 need amendments and these suggestions are mentioned in these
malls. Advertising is an important factor of getting sales promotion and Vishal Mega mart 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 Stopers’ Stop and Globus Retail, but just little behind
to Big-Bazaar.

Suggestions:

Company need to spend a lot on advertising and promotion to create brand image of its product.

Make frequent advertisements in both print and electronic media.

Making stalls in corporate melas like trade fair, maybe beneficial to create brand image of

its product.

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

Need to include varieties of similar item.

Provide more discounts on FMCG.

Provide better customer service.

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).

Better if we provide filtered information about Vishal.