Retail Management Strategy

Project Submission
Men’s Innerwear – BIG SHORTS

Submitted to : Prof. Sunil Chandran & Prof. Madhumita Mohanty

Submitted by: Group 14

Section-B
Anchit Jain – MBA/07/126
Deeksha Singh – MBA/07/132
Sarvaiya Pujit – MBA/07/163
Anurag Singh – MBA/07/189
Hardik Bansal – MBA/07/199
Shubham Garg – MBA/07/226

1
BACKGROUND
The innerwear industry has grown manifolds in the last couple of decades and has a market share of Rs. 320
billion INR in 2018 in India and is growing at a CAGR of 11%. The basic need is now getting evolved into
intimacy, security, and comfort, it is now seen as a personality of an individual. Owing to that reason, the
brands have identified a potential market and are exercising strategies to tap the market. The innerwear
industry is bifurcated into three categories, i.e., men, women and kids. Women’s innerwear dominates the
market having a share of 60%, followed by men’s innerwear, which holds the share of 36%, and 4% by the
kids’ segment. The Men’s innerwear market is currently valued at 112 billion INR. The industry is currently
dominated by six major players, Jockey (Page Industries), Amul Macho, Rupa, LUX, Dollar & VIP. These
companies account for 36% of the market share, while 60% of the market is still unorganized and is driven
by local players. The industry operates through two mediums, Retail & E-commerce. Where the major share
is held by retail stores while looking at the current trends, the e-commerce segment is growing at a very fast
rate.

CONSUMER SEGMENT
Segmentation Target Positioning
The men’s innerwear The cities of Punjab are People are nowadays
consumers are segmented selected to start the retail becoming conscious about
into 4 categories based on business. Punjab has only the product and take an
their purchasing behavior. one Tier 1 city (Chandigarh) informed decision before
1. Premium Buyers and is majorly comprise of buying the products and
with higher Tier 2 and Tier 3 city. examine aspects like colours,
disposable income quality, price and ease of
living in metro cities. Looking at the demographics buying.
2. Informed Buyer of the market, the products
living in metro cities can be targeted to Informed On similar lines the products
who does substantial Buyers and Aspirational should be made from fine
information search Buyers which majorly quality material like Tactel
and considers factors resides in Tier 2 and Tier 3 which is known for its
like Price, Style, city. smoothness and strength.
Convenience and
Quality. The youth today look
3. Aspirational Buyers, forward to colors and designs
those living in Tier 2 which should be eco-friendly
and Tier 3 cities and and sustainable. The
aspire to live a life products will be made from
like the people of premium and vibrant colors
Tier 1 city. and designs to attract
4. Price-sensitive informed and aspirational
Buyers, people with

2
 low disposable buyers from Tier 2 and Tier 3
income. cities.

The industry can be The major cities of Punjab The people in the age of 15-
segmented based on are Tier 2 and Tier 3 cities 45 years from Tier 2 and Tier
demography therefore products should be 3 cities are price sensitive
• Geography targeted in those areas. therefore the price of product
• Age will be kept at mid premium
Based on Geography The population of Punjab segment at par with the price
industry can be segmented majorly comprise of people of competitor Jockey.
into 3 categories in the age of 15- 45 years;
1. Tier 1 therefore, products should be
2. Tier 2 targeted for this age segment.
3. Tier 3
Based on Age, industry can
be segmented into 3
categories.
1. 0-14 Years
2. 15-45 Years
3. 46 Years Above

Tier 2&3 cities Population

Ludhiana 19,17,000
Amritsar 14,25,000
Cart Size
Jalandhar 10,53,895
The men’s innerwear cart size Patiala 7,36,305
has been increasing continuously for past few decades. The cart size at present
is around Rs. 1500 in one-time purchase which includes a bundle of3,68,000
Bhatinda three briefs and 2 vests in 6 months.
The annual cart size is approx.Mohali
Rs. 3000 for informed and aspirational3,34,205
buyers from tier 2 and 3 cities.
Market Size Firozpur 2,06,973
Batala 1,98,481
The market size for Punjab region is calculated and can be seen tin the table attached below.
Pathankot 1,95,365
Total Population 64,35,224

Male Population 51%

Total Male 3281964
Male (age 18-45) 55%
Total Target Male 1805080

Average annual Basket Size 3000

Total Market Size ₹ 5,41,52,40,996

3
Loyalty to Competitors Brand
1. Jockey
1. Largest market share in economy segment.
2. Print and material preferred the most.
3. Maximum size range available
4. Easily available in all types of stores.

2. Amul
1. Maximum share in middle and premium segment customers
2. Unique advertising campaigns focusing on the female segment for men’s innerwear
3. Maximum variety catering to all three segments of cutomers

STORE FORMAT
Multi Brand Outlet
Pros Cons

1) Customers will have an option to

choose from a large variety of different
brands.
1) If not properly managed, it can
2) This retail outlet will bring in
lead to stores becoming
customers (increase the footfall) to our
overstocked & understocked.
stores and will increase awareness of
2) High employee training cost
our brand.
3) High competitor risk
3) Can interact with customers directly
and find out what they like about other
brands.

Exclusive Brand Outlet

Pros Cons
1) No risk of competitors
2) Economies of scale in operations
1) High cost to maintain the store
3) Better management – Managing
2) Not profitable if the profit
distributors
margins are less
4) Increases the awareness among local
customers

Largely owned labels

Pros Cons

4
 1) Less risk of competitors
2) Economies of scale in operations
3) Increase the awareness among local
customers
1) If not properly managed, it can
4) Helps in increasing the footfall at the
lead to stores becoming
store
overstocked & understocked.
5) Can interact with customers directly
2) High employee training cost
and find out what they like about other
brands

Based upon the above table, we have decided to open two types of stores
1. Exclusive Brand Outlet
2. Largely Owned Label Outlet

Restriction
Shopping Pedestrian Vehicular
Store Type on
Convenience Traffic Traffic
Operations

Freestanding High Low High Limited

Urban
Locations/
Limited to
Central Low High Low
Medium
Business
District
Neighborhood
and
community
High Low High Medium
shopping
centers
(Malls)
Retails shops
at Prime Medium High High High
Market Place

Based upon the above table, we have decided to go with the following options for store location

5
 1. Neighbourhood and community shopping centers (Malls) – It would be feasible to open
Exclusive Brand Outlets (EBO) and Largely Owned Label in malls. Some of the benefits of
having a store in malls are
• High footfall at malls can help in increasing the visibility of the brand
• Variety of Customers: In a mall, the shop is more likely to be discovered by customers who
never would've traveled to our store if we had freestanding stores.

2. Retails shops at prime market locations – It would be feasible to open Largely Owned Label in
prime market locations with high footfall. This will help to improve brand visibility due to high
pedestrian and vehicular traffic. Also, having merchandise from multiple brands will help to increase
the footfall at the stores.

EBO (Model A) Largely Owned Label

(Model B)
Store Size 1000 – 1200 Sq. ft. 2500 – 3000 Sq. ft.
Merchandise 100% Own Label Brand - 70% - Own label Brand +
Briefs, Vest, Sweatshirt, 30% - Other Brands (Jockey,
Trackpants, Socks, Van Husen, Lux, Dollar,
Handkerchief VIP), Briefs, Vest,
Sweatshirt, Trackpants,
Socks, Handkerchief
Store Design A single-story space with For the Largely Owned Label
appealing interiors and Store, we need a min 50ft
convenient flow. The front front entrance. The front
entrance would be 48Ft, 28ft entrance will be filled mostly
depth and 11ft in height, with attractive
featuring our brand advertisements of our private
exclusively with attractive labeled brand with a stand for
packaging that would drive samples. 70% of the store
walk-ins. will be filled with our brand
for increasing visibility
among customers who will
be visiting to purchase
different brand
Indicative CAPEX A capital requirement could A capital requirement could
Requirements be classified into the be classified into the
following parameters: following parameters:

Rent/Lease: 1.5-2.0 Lacs / Rent/Lease: 3.0-3.5 Lacs /

Monthly Monthly
Initial Setup Initial Setup
Cost/Investment: 25-40 Lacs Cost/Investment: 50-60 Lacs
(Interiors, Furnishing) (Interiors, Furnishing)
Operation Cost: 3.0 – 4.0 Operation Cost: 5.0 – 6.0
Lacs INR Lacs INR

6
LOCATION OF THE STORE

Factors considered for choosing the location of the store: -

1. Population Density
2. Presence of other businesses in that locality
3. Hotels, Cinema, Local Markets, and shopping mall within the vicinity
4. Traffic Flow Pattern
5. Number of competitors near the location

After careful observation, we decided to select 16 cities and 1 Union Territory (Chandigarh) in the state
of Punjab for the establishment of the Retail business of our brand. We have planned the phase-wise
networking such that the cities with higher market size and lucrativecatchment areas are given priority.
The reason for choosing these locations is as follows:

1. Closeness to the hotels, cinemas, malls, and local marketplaces

2. Be near the competitors (to leverage their customer base)
3. Be on the main road (to capture the traffic)
4. Trading draw should cover the maximum possible population

7
NETWORK PLANNING
The forecasted number of stores to be opened in the next 5 years is summarized in the table below.

The pilot cities will be Amritsar, Chandigarh, Ludhiana, and Jalandhar.

The population of the cities, along with the affluence of the population, played a role in the
selection of the cities.

EVALUATION OF FRANCHISING OPTION

How franchising will help us:

➢ Scale up operation and expand

➢ Cost sharing-expenditures required to expand
➢ Cultural Adeptness-Franchising it to local people will help them understand both customer and market
better. They’ll have a better idea of store locations
➢ Brand recognition through established customer bases built

8
Store Formats (Planned):

Sr. No Model Category Class Store Size Number

of
Stores
1 COCO Multi Brand MBO (Multi 1200 Sq. Ft 67
Retail Brand
Outlet)
2 COFO Factory EBO 600 Sq. Ft 52
Owned (Exclusive
Brand
Outlet)

Multi Brand Retail-based small-medium format will be Company Owned Company operated as these
store formats will require huge investments. Also, these will be experience stores which will help us give
a good experience to our customers and further establish the brand image for increasing interest in buying
franchises. Large Retail based format (based on Factory Outlets) will require much larger investments
but can be given to Franchises to operate it after 2 years. Being established brands already, a lot of
franchises will invest such large amounts. This will be in COFO format.
Minimum fee/Royalties: A minimum fee of INR 30000 per month will be charged, or 60% of revenue
will be charged for renting our brand name and operation strategies (Whichever is maximum)
Geography: The location of the business will be determined by both the franchisor and the franchisee.
Under no circumstances does a franchisee have the right to utilize the brand identification in any other
store or business, or in any other location (other than mentioned in the contract)
Validity: The franchise agreement will be valid for ten years from the date of the store's opening. Based
on both franchisor and franchisee agreements, the duration validity of this contract may change.
Nullification of Contract: If a franchisee is determined to have violated any of the contract's terms and
conditions the

9
 Costs:

Exclusive Brand Outlet Multi Brand Outlet

Fixed Cost
Furniture 400000 1200000
Rent 1200000 1800000
Security Deposit 300000 450000
IT equipment 80000 120000
Inventory 1200000 2000000
Others 50000 200000
Total Fixed Cost 3230000 5770000
Variable Cost
Utilities 300000 900000
Salaries 360000 1500000
Repairs 72000 198000
Variable Total 732000 2598000
Total Cost 3962000 8368000

IDENTIFYING THE CATEGORIES TO BE STOCKED

Traditionally, innerwear was an unorganized market in India. It still is, to a certain extent, dominated
by many small-scale players making ~60-65 percent of the market fragmented and unorganized.
However, the market segment is evolving gradually and moving towards organized retail. “The
innerwear industry is highly fragmented, with too many players in every price segment. The category
is still largely unorganized, with organized players just forming one-third of the market. There is an
influx of new entrantswith international brands and online labels, which has helped increase the share
of the organized business, and this will grow at a faster pace than before,” says Smita Murarka,Head –
Of Marketing, amanté. But the market as well as the consumer is changing at a rapid pace. Today,
Indian consumers are fast gravitating towards innerwear that is not just functional but has a style
quotient that reflects their individuality. Initially, it was a damp market marred by a lack of both
products and product awareness. But new age customer’s exhibit evolved characteristics that have led
to bolstered consumption patterns. With modern trends and product innovations, innerwear has turned
out to be an essential fashion need. “One of the main reasons for the growth of the Indian innerwear
market is because of the increasing size of the organized market and the declining share of the

10
unorganized market. This factor has also been instrumental in paving way for the various independent
brands that are emerging as the key players in the market,” says Saket Todi, Senior Vice President,
Lux Industries.

COMPETITOR ANALYSIS

The innerwear industry in India is a highly competitive industry, it consists of major brands like Van
Heusen, Jockey, Calvin Klein, etc. as well as several local brands. Local brands likeRupa, Lux, and Dollar
also own a large market share in the market. The competition among these brands is very intense as all of
them enjoy a large market share. The innerwear market in India is a lucrative segment poised for high
growth. It is alsountapped as compared to other fashion segments. “We have a beautiful future when it
comes to this segment. The market was unorganizedtraditionally but is fast getting structured. Once the
share of modern retail increases, we believe we have a bright future ahead,” says Richa Kalra. Moreover,
with the change in consumption patterns and the youth’s readiness to spend morein this category, lifestyle
retailers are showing more interest. Today, reputed large format stores like Central, Shopper’s Stop, et
all., all have dedicated spaces for this category. Given the promise that this segment holds, the competition
is rife not only with the global brands but also among all Indian brands, all for the better. With so many
brands around, thereis constant pressure to perform better as customers will pick only the best product in
the market. “Introduction of new products with unique designs and cuts from various brands areincreasing
the competition in the market. With so many new entries in the market, it is definite that the future of
innerwear seems quite prosperous and thriving,” says Saket Todi. Having said this, brands and retailers
who are going to spend a larger share of revenue inmaking their backend strong to understand customer
convenience, needs, and the currentfashion and market trends, will champion the growth story in the years
to come.

VENDOR MANAGEMENT

The undergarment industry is heavily dependent on its supply chain and if something goes wrong,
it can negatively impact the reputation of the brand in the long run. Thus, selecting the right vendor
form the start is important to guarantee that the products are delivered on time at the right price and
quality. A good relationship with the suppliers can also transform the business. Therefore, it is
important to select the right vendor. Even though vendors with lowest bid, fastest turnarounds times,
and best quality products should be given priority but below are the following factors that you
should also look at while selecting vendors.

1. Set the selection criteria – Before looking for a vendor, draw a list of your selection criteria.
Pay attention to –
• Maximum & Minimum order quantities
• Methods of delivery
• Storage and handling facilities
• Payments terms and conditions
• Return policies

11
 •
Certifications & standards held
•
Lead time from when order is received to delivered
2. Checking the vendor’s reliability – Over here, we should access
• Vendor Location - Impact of climate and political issues likely to have an affect
on their ability to supply goods
• Proximity to logistic hubs
• Transparency of information
3. Checking the vendor’s equipment and raw material quality
4. Checking the vendor’s workforce

MERCHANDISE HIERARCHY

Merchandise hierarchy is the way of organizing and displaying the merchandise. Each hierarchy
contains similar types of merchandise. The aim of having a merchandise hierarchy in undergarment
retails is to organize the merchandise so that customers can find what they are looking for.
Level Type About At our Store

Store is at the highest level in the

Level 1 Store merchandising hierarchy. A well-lit -
organized store attracts more customer
compared to a store having cluttered
merchandise.

Once the customer enters a store, they look

out for departments. In our case the
department is men's wear. Department
Level 2 Departme holds a wide variety of single type of Men's Wear
nt merchandise. We have decided to place
undergarments at the entrance of the stores

Department organizes the merchandise Men's Innerwear

Level 3 Division into similar division which are designed to & Men's Daily
help customers find what they are looking wear
for easily.

Products with similar characteristics are Briefs, Vest,

Level 4 Product grouped together to increase cross-selling Shorts, Trackpants,
and up-selling Socks
Handkerchief,
Trunks
Undergarments -
Level 5 Class A merchandise class groups similar Trunks, Boxer, Briefs
products together that share specific Vest - Half Sleeves
qualities

12
 Sub-class in the lowest level of
Level 6 Sub-Class merchandising hierarchy, but it is one of Dividing based on size
the most important levels as this is where & color
the customer makes the buying decision.

PRICING

We will adopt a penetration pricing strategy for the initial years to easily create brand
awareness among consumers. Over the years, by maintaining superior product quality and
adopting a channel-based pricing strategy, our store will grow as a market leader

LOYALTY SCHEMES
To increase the customer's basket size, we have to introduce loyalty and referral programs.

Referral Program
If any customer uses a unique customer code of his friend/family and purchases goods worth more than
₹ 500, both will get ₹100 off on their next purchase

Loyalty Points Scheme

Earning Points- 1 point on every ₹100 purchase

Redemption Value- 1 point = ₹1
Benefits – Other than encashing points, any customer who collects more than 100 points in a
financial year will be liable for prime membership, which includes perks like sale coupons, free
home delivery, etc

13
STORE LAYOUTS

➢ Type A stores: EBO – 600Sq Ft floor space

14
 ➢ Type B stores: MBO – 1500Sq Ft floor space

MANNING REQUIREMENTS AT STORE AND BACK END

Type A stores
The EBO with 600 Sq ft would require one sales executive to assist the customer and one
store manager who will also attend the billing counter. To optimize the manpower cost,
the racks and display merchandise can be replenished by the sales executive only. Hence,
total manpower = 2

15
Type B stores

The MBO with 1500 Sq ft would require one person dedicated to billing and store management
whereas 5 people to assist customers with their purchasing. 3 of the sales executives for the Private
label and 2 for the other brands are present in the store. The same sales executive can replenish the
store inventory on a rotational basis. Hence, total manpower = 5

OPERATIONS CHECK SHEET

• Floor & Shelf cleaning status (Twice a day)?
• Glass cleaning and visibility of mannequins from outside?
• Is the merchandise displayed properly on the shelf?
• Is the lighting and Lux level as per standard?
• Is all the stock replenished on racks?
• Is the IT system working properly?
• Is the store ambiance at par with the standard?
• Are the sales executive dressed and groomed properly?

RETAIL PROMOTIONS

Retail Promotions of our store are based on two major components:

Offline
1. Offline pamphlet distributions
2. Issuing exclusive (loyalty) cards/Offers to regular customers, promoting repeat buying.
This can involve redeemable points or discounts upon reaching certain threshold.
3. BOGO: Buy one get one free- we can use this to offer additional socks or polish or any
accessories with the shoes.
4. Using the seasonal sale option to clear out stocks
5. In-store promotions
Online
1. Using various digital marketing tools like Facebook Ad Manager, Google Ads to promote
our brand online. We can also go with programmatic media buying as it will give better
CPM.
2. Use of social media influencers on the launch of the store can also be very useful. To give
the initial boost.
3. Connecting with influencers and asking them to promote our brand on their channels.
4. Sending SMS to our regular customers, informing about discounts.

16
 Promotional
Cost Involved Revenue ROI
Strategies

Pamphlet INR 4000 for 10,000

15000 3.75
Distribution Pamphlets
40 loyal
INR 10/ Card: No of cards
Offline Exclusive Loyalty issued/month = 200; Total customers - 6
Cards 40*300 =
cost = 2000
12000
Assuming
100
customers
BOGO Avg cost = 300 1
visit our
store
=100*300
10 New
Ad Manager INR 10000 customers - 10
100000

Online Influencers INR 100000 150000 1.5

Feedback INR 50 1500 30

PERFORMANCE MANAGEMENT
Profitability/Financial Indicators:
• Sales compared to the year before or another prior time frame
• Sales compared to a strategic goal
• Sales to assets = Sales/total assets
• Gross profit margin = Gross profit dollars/sales*100
• Net operating income percentage (%) = Net profit before tax/sales
• Net operating income dollars before tax
• Return on investment = Net operating income dollars/net worth
• Debt to worth = Total liabilities/net worth financial indicators:
• Inventory turnover = Cost of goods sold/Inventory
• Inventory turnover days = 365/Inventory turnover
• Accounts receivable turnover annual = Credit sales/Accounts receivable
• Accounts receivable collection days = 365/Accounts receivable turnover

17
 • Accounts payable turnover annual = Cost of goods sold/Accounts payable
• Accounts payable turnover days = 365/Accounts payable turnover Store Productivity
indicators:
• Total sales per square foot of store space = Total sales/store square feet
• Average sale per customer or average sale per transaction = Sales/Number of customers
(or transactions)
• Staff costs per employee = non-owner wage, tax, benefits/Number of employees not
including owners
• Sales per labor hour, selling hours only = Total store sales/selling hours used
• Employee sales/hour = Individual employee sales/total hours worked by that employee
• Sales per labour hour, all payroll hours = Total Store Sales/total hours use

OTHER BACK-END RETAIL ORGANIZATION STRUCTURE AND ROLES

• Signages - Proper signages at places indicating the category of the lane/product category
at every place will be our part. Promotional signages with big banners of the
promotional/discount activities.
• Music-A light music will be played in the store. This will help increase the staying time of
the customers.

MISCELLANEOUS

• We plan to incorporate technology and become fully digital as well as have physical stores
to incorporate the young and online buyers
• Down the line, here is our plan from starting year,
• 1-2 Year - building of website and listing of all our products
• 2-3 Year - Launching our website with online shopping
• 3-4 Year - Promoting the online channel, increasing the radius of delivery
• 4-5 Year - Listing of products on other websites like Amazon and flipkart
• In addition to this, we will add, POS machines (from starting), Televisions to displays ads
and promotions in store (maybe after 1st year), CCTV cameras and monitoring the
activities, with the help of AI analyzing the behavioral patterns of the customers

18