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In May 2012, during the mid-summer heat of Calcutta (now Kolkata), Sanjay Gupta, chief executive of
specialty retail and head of group marketing, with responsibility for Spencer’s Retail Limited (Spencer’s),
reviewed his repositioning recommendations to the board. At this point in the company’s trajectory,
Gupta envisioned moving away from the Taste the World (TTW) positioning that he had helped to
develop and implement only a few years ago. At that time, market liberalization in India had begun to
take hold, and organized retailers1 wanted to grab a share of the growing middle class that longed for a
shopping experience similar to shopping at international supermarkets and department stores. Delivering
such an experience to a population accustomed to multiple trips to a nearby open bazaar or Kiranas would
present a daunting task. Nevertheless, Gupta and Spencer’s leadership had moved forward with the TTW
positioning, and when the positioning was fully implemented, Spencer’s was viewed as the best food and
grocery store in terms of its ambience and international look and feel, and it was regarded as a lifestyle
store. Indeed, the TTW strategy had served to reinforce the top-quality image that Spencer’s had
historically occupied in the consumer’s mind.
Unfortunately, the TTW positioning had created several negative consequences as well. Post TTW,
Spencer’s was seen as a costly retailer — a store for the upper classes and not for the masses. The look
and feel of the store’s interior did not give shoppers the impression that it was “their store.” Spencer’s
was viewed as too neat and orderly, and the environment lacked the commotion and excitement that
consumers had grown to accept as a part of their shopping experience. Also, in an attempt to create an
upscale image, lower priced shop-keeping units had been replaced by the best national and international
brands on the store shelves, thus creating a perception of the store being “expensive.”
Furthermore, two strategic considerations did not fit well with the TTW positioning. First, while the TTW
positioning drew shoppers from India’s SEC A socioeconomic class (i.e., the upwardly mobile population
in big cities; see socioeconomic classification chart in Exhibit 1), the positioning and price levels failed to
1
The Indian retail market is broadly classified as unorganized retail, which is made up of open bazaars/haats and corner
stores called Kiranas, and organized retail, which resembles the modern Western-style supermarkets and department
stores.
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appeal to the SEC B and SEC C populations in other metropolitan areas2 and smaller towns, and these
latter sections represented the future growth areas for organized retail. Also, while the big cities had a
reasonably high population of SEC A shoppers, the smaller towns had far fewer of them. Spencer’s
therefore had to find a way to maintain its reputation as the top-notch retail choice for Indian shoppers,
while at the same time encouraging SEC B and SEC C shoppers to embrace it as their store. A second
area of concern stemmed from the competition from stores such as Big Bazaar, which were luring the
price-sensitive segment away from Spencer’s by offering low prices and frequent price promotions.
In response to these concerns, Gupta developed a plan to reposition Spencer’s with a new mantra: “Makes
Fine Living Affordable” (MFLA). This repositioning aimed at retaining the high-quality image of
Spencer’s but also introduced pricing, product assortment and merchandising flexibility to attract value-
oriented customers who were looking for a pleasant shopping experience and high-quality products at
reasonable prices. Since organized retail was set to grow exponentially, and with competition from lower
priced retailers intensifying, Spencer’s needed to quickly correct its “expensive” price perception while
still managing to retain the “high quality” image that consumers had traditionally associated with the
store. This shift required modifying Spencer’s positioning to more of a “value” retailer, a feature that was
likely to appeal to the SEC B and SEC C populations. While the MFLA positioning seemed to represent
an appropriate path forward, Gupta’s mind was occupied with several critical questions that he was sure
would be raised by the leadership team during his presentation.
How would the merchandise assortment under MFLA be different from that under TTW? Would the
repositioning alienate the SEC A shoppers who had been attracted to the TTW positioning? If so, was the
transition reversible? How would any changes in product assortment and pricing affect Spencer’s top and
bottom lines?
Spencer’s Retail Limited was a closely held, public limited company that fell under the umbrella of the
RP-Sanjiv Goenka group of companies, with an estimated market cap of INR 90 billion (or US$1.67
billion).3 In 2010, the companies owned by the patriarch Rama Prasad Goenka (RPG) was divided
between his two sons — Harsh Goenka and Sanjiv Goenka. The RP-Sanjiv Goenka group of companies,
managed by Sanjiv Goenka, included such diversified lines of business as Calcutta Electric Supply
Corporation (CESC), Noida Power, and Integrated Coal Mining in the power sector; Phillips Carbon
Black, which made chemicals used as pigments and reinforcements in rubber and plastic products; Au
Bon Pain Cafe India and Spencer’s Retail under the retail group; Saregama, India and Open Media
Network in the entertainment and media sector; and CESC Properties, a real estate company.
Founded in 1863 by two British nationals, John William Spencer and Charles Durant, Spencer’s retail
operation began with its first store in Madras (now Chennai) and soon expanded to cover the entire span
of undivided British India. Spencer’s became a part of the erstwhile RPG Group in 1989.
In 1995, Spencer’s entered into a joint venture with a Hong Kong-based company, Dairy Farm
International, which operated supermarkets under the name of Food World and hypermarkets under the
name of Giant. The joint venture was terminated in 2006, and the RPG Group retained 48 of the 93 stores,
2
Indian Census Commission defines a metropolitan city as one possessing a population of more than four million people.
There are around 100 metropolitan cities in India, of which Mumbai, Delhi, Bengaluru, Kolkata, Chennai, Hyderabad,
Ahmedabad and Pune are the eight cities that qualify as the top metro cities in the country.
3
Exchange rate (2011): 1 U.S. Dollar ≈ 54 INR; Purchase Power Parity: 1 U.S. Dollar ≈ 23 INR.
http://data.worldbank.org/indicator/, accessed March 4, 2014.
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with the remaining 48 being refurbished and relaunched under the Spencer’s brand name. In 2011,
Spencer’s had 180 stores in 44 cities in India. It employed more than 7,000 people and posted a revenue
of INR 10,178 million (US$221.54 million) in the year ended March 2011. A breakdown of Spencer’s
stores across different states in India and its financial statements are presented in Exhibit 2.
LEADERSHIP AT SPENCER’S
As the chairman of the RP-Sanjiv Goenka Group, Sanjiv Goenka was ultimately responsible for the
Spencer’s brand, and he had always been committed to the professional management of the stores (see
Exhibit 3 for an organization chart). Sumantra Banerjee, a graduate from the Indian Institute of
Technology (IIT), with an MS from Case Western Reserve University and an MBA from the University
of Connecticut and several years of experience at Monsanto, USA, was the president of the Retail Group.
He served in leadership roles in several of the RP-Sanjiv Goenka group of companies, including
Spencer’s, where he focused on the store’s strategic direction and organization and on its competency-
building.
Vineet Kapila, an MBA from Xavier Institute of Management (formerly Xavier Labor Relations Institute
or XLRI) served as Spencer’s president and chief executive officer until November 2012, at which time
he was succeeded by Mohit Kampani, who had an MBA from Xavier Institute of Management and had
been serving as Spencer’s head of merchandising and operations. Until his promotion, Kampani had been
responsible for profit and loss at Spencer’s, and he had been successful in several cost-reduction and
revenue-generation initiatives. To fill the void created by Kampani’s promotion, as well as to prepare for
potential strategic foreign partnerships or for a potential public listing, Spencer’s hired Venkat
Narayanan, former director of merchandising at Office Depot in the United States, and Kingshuk Basu, a
former executive at Kroger and Daymon Worldwide. Narayanan, with an undergraduate engineering
degree from IIT and an MBA from the Indian Institute of Management (IIM), was responsible for
merchandising, and Basu, who held an undergraduate engineering degree from IIT and an MBA from
Michigan State University, became the head of operations.
In his role as chief executive, specialty retail, Sanjay Gupta was responsible for building and positioning
the Spencer’s brand. He was the driving force behind the proposed migration from Spencer’s TTW
positioning to that of MFLA. He played a critical role in ensuring delivery of revenue and profit. Gupta
had an undergraduate degree in Business from Madras University.
INDIAN RETAIL
Shops and stores were everywhere in India. The size of the Indian retail sector was estimated to be about
US$400 billion in 2011 (India’s nominal gross domestic product (GDP): US$1,848 billion in 2011), and it
was growing at an average annual rate of 8 to 10 per cent. Spencer’s operated in the organized retail
space, which accounted for only about 9.7 per cent of the retail market, but it was expected to reach about
15 per cent by the year 2015. Organized retail was present only in big cities and other growing urban
areas, where approximately 30 per cent (mostly belonging to the rich and the burgeoning middle class) of
the Indian population of 1.21 billion lived. This group accounted for 70 per cent of Indian GDP.
According to a Global McKinsey Report, by 2015, the Indian middle class was expected to spend about
34 per cent of its after-tax income on food, beverage and tobacco, 4 per cent on apparel, 3 per cent on
household products, and about 9 per cent on personal products and services. Spencer’s goal was to
capture a part of this expenditure.
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Indian organized retail had an oligopolistic structure, with each retailer occupying a different strategic
position. In particular, two retailers stood in direct competition with Spencer’s.
Future Group
Big Bazaar, owned by the Future Group, was a chain of hypermarket stores, and its sister store, Food
Bazaar, was a chain of large supermarkets that offered a wide mix of product categories at discounted
prices. Founded by Kishore Biyani, chief executive officer and managing director of Pantaloons Retail
India Limited, the Future Group owned 162 Big Bazaar stores and 43 Food Bazaar stores in more than 93
cities across the country.4
Reliance Retail
Reliance Retail included Reliance Fresh, Reliance Super, and Reliance Mart. Reliance Retail operated
more than 1,300 stores in 120 cities in India. Dhirubhai Ambani founded Reliance as a textile company
and led the evolution of Reliance as a global leader in the materials and oil and energy businesses.
Reliance Retail’s core strategy focused on backward integration, and the company had built an effective
value chain, from farmers to end consumers.5
Spencer’s utilized four store formats — Spencer’s Express, Spencer’s Daily, Spencer’s Super, and
Spencer’s Hypermarkets (Hyper), all of which varied in size and product assortments. The formats ranged
from small shops called Spencer’s Express (with an approximate area of 1,000 square feet) all the way up
to the much larger Spencer’s Hyper (with an area of greater than 15,000 square feet). Collectively, the
first three store formats could be thought of as convenience stores. They were located in residential
neighbourhoods or at country clubs and were primarily utilized for daily shopping and fill-in trips. These
convenience stores carried an assortment of fruits and vegetables, food and non-food fast-moving
consumer goods (FMCG), staples and frozen foods. The largest of these stores had floor areas of more
than 10,000 square feet and sometimes offered a selected range of baked, chilled and frozen foods,
personal and home-care products, baby care, basic apparels, and electronics and electrical items.
The Spencer’s Hyper combined a supermarket with a department store. The Hyperstores stocked, on
average, 70,000 items. A typical Hyperstore physically organized its merchandize under the following
verticals: staples, fruits and vegetables, bakery, dairy and frozen items, FMCG, liquor, apparel,
electronics and electrical, and general merchandise.
To ensure active customer engagement, Spencer’s hyper also organized a variety of in-store programs,
including country and theme festivals; the Spencer’s Chef Corner, with master chefs showing how to
prepare exotic dishes; new items in the in-store food courts; and wine- or cheese-tasting sessions. In 2011,
Spencer’s operated 28 Hyperstores in 10 states in India. Its strongest presence resided in the states of
Andhra Pradesh and West Bengal, with four stores in Kolkata, West Bengal (See Exhibit 2). Indeed, the
72,000 square feet Spencer’s Hyper in the South City Mall in Kolkata, inaugurated in 2008, was one of
the signature Hyperstores where Spencer’s “Taste the World” positioning was first implemented.
4
www.futuregroup.in/pdf/FRL_Annual_Report_2011_12.pdf, accessed March 4, 2014.
5
www.ril.com/html/aboutus/aboutus.html, accessed March 4, 2014.
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The goal of the TTW positioning was to brand the retail store through its décor, its merchandising and its
pricing policies. The value proposition of the TTW branding was to provide shoppers a “futuristic and
international shopping experience.” Perennial Designs Inc. of Canada (the agency behind the
transformation of Loblaws from a discount retailer to an up-market retailer in Canada) was engaged to
deliver the in-store brand architecture.
The TTW positioning had three broad components. First, the artfully decorated South City Hyper-placed
“Heritage Boards” that told the Spencer’s story, each with the TTW tagline. The parentage rooted in
British traditions was highlighted throughout the store, as was Spencer’s commitment to quality and
service. Functionally, each set of product verticals was colour-coded and the items in that category were
listed.
Second, the TTW merchandising plan included product displays that matched or exceeded the kind of
visuals often seen in the United States or Europe and in large shopping centres in Singapore and Hong
Kong. Products that were high-end brands with international reputations were displayed at the end of
aisles or on kiosks. For instance, Dove or Tide occupied these prominent locations, while domestic brands
and private labels were placed in the less-conspicuous shelf locations. The apparel division was bolstered
by an exclusive tie-in with Beverly Hills Polo Club International LLC, a world-renowned apparel brand.
The TTW strategy largely excluded items with opening price points, and price-promotion signs were a
rarity.
The third component of the TTW positioning was the introduction of a number of differentiating elements
such as a gourmet centre that was run by an internationally trained chef and which offered recipes and
sold ingredients, a patisserie that sold made-to-order cakes and other baked items, and a wine and spirit
centre that stocked imported wines from all over the world, as well as premium spirits. No other
competing stores matched these unique features.
Shopper Responses
Initial reactions to the TTW positioning were overwhelmingly positive. Shoppers from across the city
flocked to witness the new future of retailing in India, and the press offered glowing reports:
India’s Largest Spencer’s Unveiled: Finally, we opened it — the largest Spencer’s hypermarket in
India. After months of intense preparation, the doors of what is also Kolkata’s first-ever
Spencer’s Hyper opened to the public at the glitzy South City Mall on 1 February 2008. It has
been a blast since then, with footfalls and bill conversions exceeding anything that the company
has ever done (or seen) before on a first-week run. This is easily its strongest store launch ever.6
The senior company executives offered upbeat predictions about growth plans for Spencer’s Hyperstores
all over India. Unfortunately, the euphoria soon subsided as the novelty wore off and the global financial
downturn led consumers to tighten their belts. Even upwardly mobile consumers — Spencer’s target
market — became uncertain about their economic futures. Store traffic declined significantly, from about
2,900 persons per 1,000 square feet in 2008 to 2,500 persons per 1,000 square feet in 2009.
6
Paul Ancheta, “India’s Largest Spencer’s Hyper Unveiled,” February 11, 2008, http://blog.paulancheta.com/2008/02/indias-
largest-spencers-hyper-unveiled.html, accessed March 4, 2014.
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In January 2010, the company commissioned a consumer research team to assess what Spencer’s
shoppers were looking for and how satisfied they were with different aspects of the TTW positioning.
Exhibit 4 presents the demographic profiles of Spencer’s Hyper customers. The lower part of the exhibit
also highlights the salient features of shoppers of South City Hyper. This particular store had attracted a
greater number of businessmen and senior executives than the national average, with 82 per cent of the
shoppers coming from SECs A1 and A2. There was a greater presence of women in the South City store
than in other Spencer’s Hypermarkets. However, the shoppers were somewhat older than what was seen
nationally.
While the TTW positioning had been generally successful in reaching the intended target, the customer
perception survey of shoppers at the South City Hyper (see Exhibit 5) presented a mixed picture. The
good news was that customers liked the product quality and the shopping experience, but they were less
positive about the price levels, deals offered and limited product offerings at the low end of the product
spectrum. There were also three additional points of concern: First, the segment loyal only to Spencer’s
was quite small. Second, a large segment of shoppers switched across retailers, including buying their
daily needs from open bazaars and the Kiranas. And third, Spencer’s closest competitor, Big Bazaar, was
perceived to be doing better in terms of low prices and deals.
Big Bazaar utilized a low-price and high-volume strategy. A typical Big Bazaar superstore occupied
about 40,000 square feet, of which about 7,000 square feet was taken up by the Food Bazaar. Big
Bazaar’s tagline was: “Is se sasta aur accha kahin nahi!” (Nowhere cheaper or better than this!) The store
also ran additional limited-time promotional events such as “Sabse Saste Teen Din” (Cheapest Three
Days) and product exchange programs such as “Purana Do, Naya Lo” (Give Old, Take New). During
these times, shoppers flooded the stores, with some locations becoming so overcrowded that the
management had to close the stores. One blogger wrote:
Don’t make the mistake of going there during a sale, on holidays, evenings, or on Sunday. When
I did this, I had to wait for almost an hour just to be served at the checkout. Forget about getting
all the items I wanted; I was happy to get out of there in one piece! I’ve also found that the full
price is all too often charged on sale items, so do check your receipt to make sure that discounts
have been properly recorded . . . However, if you visit the Big Bazaar in the daytime during the
week, it is possible to have a deceptively pleasant and hassle-free shopping experience.
The results of the consumer research survey put Spencer’s management, and especially Gupta, in a
quandary. The management was clearly not interested in going the Big Bazaar route since it would be a
shame to throw away the store’s carefully crafted quality reputation only to launch into a price war with
Big Bazaar. At the same time, Gupta realized that consumers were not totally impressed with the fancy
ambience and branded (national and international) products with high price tags. They were looking for a
wide range of products that included some with lower prices. Customers were also looking for prices that
compared favourably with the Kirana prices.
One solution was to implement a value-oriented positioning of Spencer’s Hyper that retained the high-
quality features of the store but lowered the overall price level. The MFLA positioning would be able to
balance both quality and price — a strategy that conveyed a perception of value to Spencer’s Hyper
shoppers. In addition to in-store signage and visuals, Gupta’s plan included aggressive pricing and
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judicious use of private labels. Gupta envisioned the MFLA positioning strategy to possess the following
key merchandising components:
Known Value Items (KVI) Pricing: The merchandise assortments under the MFLA positioning included
KVIs, which were priced to match the Kirana prices. KVI’s were items such as rice, lentils, cooking oil,
etc. that most households bought regularly and therefore were knowledgeable about the prices of these
items (see Exhibit 6). The goal of the new MFLA positioning was to draw some of the shoppers away
from the open bazaars and Kiranas and towards Spencer’s Hyper without alienating the members of
existing customer base, who would continue to embrace the high-quality aspect still offered by other
products.
Opening Price Point (OPP): A second merchandising strategy involved the introduction of OPP shop-
keeping units in value-sensitive categories. OPP was the entry price point for a particular category that
included KVI’s and Spencer’s private labels. The introduction of the OPP (i.e., the lowest priced items
that were available in a given product category) represented Spencer’s effort to draw customers away
from Big Bazaar and Kiranas.
Spencer’s Private Labels: The goal was to leverage the high-quality perception of Spencer’s and offer
private labels at competitive prices. Under the MFLA strategy, Spencer’s Hyper intended to introduce
private labels under different brand names in staples, breakfast cereal and snacks categories, other
FMCGs in the personal care categories, home cleaning products, home furnishing, and apparel for men,
women and children.
While Gupta felt good about bringing Spencer’s quality and price assortments into balance, he felt unsure
about the product mix. Would the new merchandizing mix bring in enough new customers to make up for
the loss in margins under the new pricing scheme? Would consumers’ attraction to these categories
translate into their buying products in other more profitable categories, such as bakery, apparel and
general merchandise?
The Test
In the middle of 2011, Gupta decided to run a year-long test of the MFLA strategy in the South City
Hyper market in Kolkata. From the perspective of size and merchandise, this store was a good
representation of other Hyperstores in India. Also, since the South City location was close to the
company’s headquarters, the executives felt they could effectively monitor the effect of the change from
TTW to MFLA positioning.
The South City store was redesigned, with the entrance signage displaying the new mission statement
from the store’s chairman Sumantra Banerjee, which said: “We are proud to offer our customers the finest
quality at an affordable price, an unparalleled shopping experience and excellent service that will make
you smile.”
As before, the store walls included the company heritage dating back to 1863 and a chronology of the
milestones reached. However, the aisles now displayed drop-down signage pointing to private labels (e.g.,
“Your favourite rice at a trusted price”). The pillar walls against the aisles that contained OPP items
displayed a sign “Prices You Can Trust,” which store managers referred to as PYCT walls, and the
messaging used the visual mnemonic of a “thumbs up” to reinforce this message to the shoppers. On the
signage, the words “Quality since 1863” were positioned between the PYCT tag line and the thumbs-up
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mnemonic to subtly convey quality and reliability (see Exhibit 7). The wine sub-store and its brands were
not altered, while the bakery added several new baked items, cakes and pastries.
To incorporate the affordability component of the new positioning, Gupta focused on staples, fruit and
vegetables, and FMCGs. These categories collectively accounted for 60 per cent of the average shopping
expenditure of a Spencer’s shopper during a typical shopping trip.7 Exhibit 8 provides a breakdown of the
revised merchandising plan under MFLA.
CONSUMER INSIGHTS
In February 2012, Gupta commissioned another in-store consumer research study to examine the effects
of the new positioning. The goal of this second study was to address three broad issues. First, it sought to
assess whether the new positioning had improved store loyalty and wooed shoppers away from other
stores and unorganized retail. Second, the study examined how consumers had responded to the overall
quality dimension (i.e., the “fine living” component of the MFLA positioning) and to the price dimension
(i.e., the “affordable” aspect of the positioning). The results of these issues have been provided in Exhibit
9.
The third objective of the study was to assess the effectiveness of the various in-store communication
tools in reinforcing the MFLA positioning. Shoppers were asked to indicate whether: (1) they had noticed
the message, (2) how they interpreted the message, (3) whether they liked the message, if noticed, (4)
whether the actual price and quality met the message claim, and (5) whether the message prompted a
purchase. The specific components of the in-store communications were as follows:
PYCT wall
Spencer’s quality seal
MFLA signs on the store walls
“Hara Bhara” signage (roughly meaning “fresh green”): organic fruits and vegetables at affordable
prices, with deep discounts every Wednesday and Thursday
“Anna Dhara” signage (roughly meaning “food grains”): specially designed combo offers of food-
grains, cooking oil and pulses
“Hot Picks” (deeply discounted FMCG food and non-food category items offered from the first
through the tenth of every month; items were expected to fly off the racks at these prices)
“Delight” themes “ (low price offers during festive seasons)
WAY FORWARD
Gupta was confident that with the help of the marketing communication firm that had helped develop the
messages and the displays, the store’s communication materials could be tweaked for better effect, but he
needed some direction from Spencer’s leadership regarding how to balance the store’s image of “fine
7
Indians usually go for a “major” shopping trip during the beginning of the month to coincide with monthly pay days. During
this trip, shoppers stock up on staples, pulses, spices, detergents, floor/toilet cleaners, insect repellents, biscuits and other
food items (Maggi/Ramen, chips, snacks etc.) and non-food FMCGs. This trip is followed up with occasional fill-in trips. A
total monthly shopping bill for shoppers at the organized retailers averages to about INR 8,000. Assuming five trips per
month, an average of INR 1,600 per trip is a good estimate for Spencer’s shoppers.
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living” with the “affordable” aspects of the new positioning. How far should the store go with the lower
price merchandising without jeopardizing its carefully crafted perception of high quality? Might the
addition of KVI pricing and OPP damage Spencer’s legacy as a provider of high quality? Gupta did not
want to make a decision on these matters without first establishing a better understanding of the strategic
direction from Spencer’s leadership.
A second issue that was sure to come up in the meeting concerned the impact the new positioning would
have on Spencer’s revenue and profitability. Gupta brought up some information about category share
and category margin, as well the changes in the sales during the test year under the MFLA regime (see
Exhibit 11). The good news was that the volume had increased, but, surprisingly, the increase had not
come from staples and fruits and vegetables. Was the volume increase sufficient to compensate for the
loss of margin in the staples, fruits and vegetables and FMCG relative to the margins during the TTW
period? How could Gupta interest these shoppers — who came for the lower priced, fast-moving items —
in higher margin categories?
During the first six months of the fiscal year (i.e., April to September 2011), Spencer’s Retail reached a
turnover of INR 7,140 million (US$132 million), on track to reach profitability or at least a break even,
with an expected annual operating revenue of INR 15,000 (US$ 278 million). Despite the positive trend,
Gupta knew that Spencer’s management team was determined to bring the company to higher profitability
for a likely public offering and to prepare for possible entry of larger international multi-brand retailers
under the Foreign Direct Investment (FDI) Act recently passed by the Indian Parliament.
Gupta gathered his notes and headed towards the conference room.
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SEC Indian Urban Population (per cent) Spencer’s Shoppers (per cent)
A1 3 43
A2 7 24
B1 8 15
B2 8 7
C 21 8
D 24
E1 12 D, E1, and E2: 3
E2 18
Total 100 100
The current urban SEC system has eight grades and is based on occupation and education of chief wage earner in
the households. An 8x12 grid places a household in an SEC group.
Source: “The New SEC System,” The Market Research Society of India, May 3, 2011. Company data have been modified.
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EXHIBIT 2B (CONTINUED)
Sanjiv Goenka
Chairman
RP-Sanjiv Goenka
Group
Sumantra Banerjee
President
Retail Sector
Sanjay Gupta
Mohit Kampani
Chief Executive – Specialty Retail &
CEO
Corporate Head – Marketing, RP-SG
Spencer’s Retail
Group
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n = 2054
Average Age 35
Average Annual Household Income (INR)* 442,000
Average Household Size 4.1
Age Distribution (per cent)
Less than 18 2
18-24 21
25-34 35
35-44 21
45-59 14
60 years or more 6
Occupation of Main Earner (per cent)
Businessman 17
Senior Executive 29
Junior Executive 16
Shop Owners 5
Supervisors/Clerks/Salespersons 16
Other 17
Shopping Groups (per cent)
Male Alone 45
Male with Friends and Co-workers 8
Male and Female as a Family 24
Female with Friends and Co-workers 4
Female Alone 19
Special Features of Spencer’s South City Customers (per cent)
Modes in Each Demographics
Age >35 55
Businessman and Senior Executives 76
SEC A1 and A2 82
Female’s Presence in a Shopping Trip 62
Average middle class savings rate (all India) is estimated at about 9-15 per cent. A McKinsey Quarterly Report estimates
that, by 2015, middle-class Indians will spend 34 per cent on food, beverages, and tobacco, 5 per cent on apparel, and 12
per cent on personal and household products. These are categories the Spencer’s carry.
Source: Adapted from Company files. Company data have been modified.
This document is authorized for use only in Prof. D K Batra's PGDM-II/ Retail Marketing_ at International Management Institute - New Delhi (IMI) from Sep 2019 to Dec 2019.
Page 13 9B14A001
EXHIBIT 5: SPENCER’S SOUTH CITY CONSUMERS’ SATISFACTION WITH TASTE THE WORLD
POSITIONING
Which other major grocery stores do you also shop at? (per cent)
Big Bazaar 81
Reliance 12
Others 65
Only Spencer’s 19
Reasonable prices 96 72 88
Prices are good value for the quality 94 68 84
Many items are on sale 80 38 90
Feels like I am getting a bargain 74 36 94
Source: Nielsen, Customer Satisfaction Survey, 2011. Company data have been modified.
This document is authorized for use only in Prof. D K Batra's PGDM-II/ Retail Marketing_ at International Management Institute - New Delhi (IMI) from Sep 2019 to Dec 2019.
Page 14 9B14A001
EXHIBIT 6: A SAMPLE OF KNOWN VALUE ITEMS (KVI’S) AND THEIR SELLING PRICES (SP) IN
INDIAN RUPEES
SP at Spencer’s Approx. SP in a
CLASS Margin (per Kirana
DESCRIPTION ITEM NAME cent)
Daal (Lentils)
Arhar (Toor) Dal Loose 1 kg 75 75
PULSES
Moong Dal (Dhuli) Loose 1 kg 70 7 to 10 85
Smart Choice Masoor Malka Loose (Pl) 1 kg 57 70
Rice
Kohinoor Charminar Basmati Rice 5 kg 339 535
CEREALS Loose Minikit Rice 1 kg 32 32
6 to 9
Gobind Bhog Rice Loose 1 kg 37 65
Loose Bashkati Rice 1kg 36 40
Cooking Oil
Mahakosh Soyabeen Oil 1 Litre Pouch 82 83
EDIBLE OIL
Ruchi Gold Mustard Oil 1liter Pouch 102 3 to 5 102
Fortune Refined Soyabean Oil 1 litre 92 99
Atta/Maida (Flour)
FLOURS Aashirwaad Whole Wheat Atta 5 kg 143 10 to 12 145
Ganesh Maida 1 kg 31 18 to 20 30
SWEETENER Sugar Loose 1 kg
41 3 to 4 38
MASALA Smart Choice Poppy Seed (Postadana) 100
(SPICES) g (Pl) 51 12 to 15 50
Potato 1 kg 9 10
VEGETABLES Onion 1 kg 29 8 to 12 28
Tomato 1 kg 16 16
Source: Adapted from Company files Company data have been modified.
This document is authorized for use only in Prof. D K Batra's PGDM-II/ Retail Marketing_ at International Management Institute - New Delhi (IMI) from Sep 2019 to Dec 2019.
Page 15 9B14A001
Source: Adapted from Company files. Company data have been modified.
What do you thing about the following aspects of the South City Spencer’s Store?
Deteriorated Same as earlier Improved
Merchandise Quality (per cent) 1 65 34
Range and Assortment (per cent) 3 35 62
Customer Service (per cent) 1 34 65
Store Spaciousness (per cent) 2 40 58
Price (per cent) 5 73 22
Source: Nielsen, Customer Satisfaction Survey, 2011. Company data have been modified.
This document is authorized for use only in Prof. D K Batra's PGDM-II/ Retail Marketing_ at International Management Institute - New Delhi (IMI) from Sep 2019 to Dec 2019.
Page 16 9B14A001
This document is authorized for use only in Prof. D K Batra's PGDM-II/ Retail Marketing_ at International Management Institute - New Delhi (IMI) from Sep 2019 to Dec 2019.
Page 17 9B14A001
EXHIBIT 10 (CONTINUED)
Hara Bhara
Noticed (per cent) 32
Understanding the meaning: open ended (per cent)
Low price of fruits and vegetables 21
Fresh/green fruits and vegetables available 46
Fresh vegetables available on Wednesday and Thursday 0
All vegetables available 0
Among those who noticed
Liked (per cent) 100
Price and quality meet claim (per cent) 81
Prompted to Purchase (per cent) 91
Anna Dhara
Noticed (per cent) 28
Understanding the meaning: open ended (per cent)
Variety of food grains available 13
Good quality food grains available 25
Discount/offers on food grains 14
Among those who noticed
Liked (per cent) 98
Price and quality meet claim (per cent) 94
Prompted to Purchase (per cent) 84
Hot Picks
Noticed (per cent) 17
Understanding the meaning: open ended (per cent)
New product 14
Good items 2
Hot offer 41
Offer on new items 3
Among those who noticed
Liked (per cent) 97
Price and quality meet claim (per cent) 91
Prompted to Purchase (per cent) 68
Delights themes
Seen (per cent) 79
Among those who noticed
Prompted to Purchase (per cent) 63
This document is authorized for use only in Prof. D K Batra's PGDM-II/ Retail Marketing_ at International Management Institute - New Delhi (IMI) from Sep 2019 to Dec 2019.
Page 18 9B14A001
EXHIBIT 11: SOUTH CITY SPENCER’S SALES MIX, MARGIN, AND VOLUME CHANGES AFTER
MFLA
Source: Adapted from Company files. Company data have been modified.
This document is authorized for use only in Prof. D K Batra's PGDM-II/ Retail Marketing_ at International Management Institute - New Delhi (IMI) from Sep 2019 to Dec 2019.