Aakash Book Store

Book Retailing in India

Market Size: Rs. 30-60 bn in 2007 (Rs.120 bn in 2012)

15 percent organized retailers
Key organized retail chains: Crossword, Om Book Shop, Odyssey, etc
 Lifestyle bookstores
 Comfortable seating & interiors
500,000 independent retailers: business dependent on textbooks,
activity books and stationery
Ahmedabad Commercial Areas
 Om Book Store

 4 months old, located near IIM-A and AMA

 Aesthetic appeal of store, 4 coffee tables and chairs available for reading
 Target segment: 15-25 years age group
 50-100 visitors a day, came through referrals (not through Advertisements and
Family & Friends)
 63% said they preferred OM and 80% expressed satisfaction with the service
provided but most customers were infrequent visitors. 41% were first time visitors
 Staff not very knowledgeable and no computerized system
 Informed customers through call about availability of books
 Loyalty program not successful with 68% customers not aware about the program
 Most customers spend < 500 and less than 60mins on each visit
 75% customers had no kids but still the store had 25% area dedicated to kids
 Crossword

 2 types of stores: 2 large Crosswords and 4 Crossword Corners

 150 customers on weekdays and 500 on weekends
 Target Segment: 20-40yrs of age (more than 50% were married)
 Music, toys, gifts, magazines and stationary = 40% space, impulse merchandise available
as well
 Low aisles to give a feeling of large store and coffee outlet within the store
 Billing counter has long queues
 Staff less knowledgeable and computerized system
 32% sales through rewards program
 Books & stationery main purchase
 Divided customers into 5 segments
 Book Rewards Programme (BRP) customers had high commitment and wanted to increase
their purchase
 Locations for Aakash Book Store
Satellite
• Newly developed residential area
with a lot of retailing activity
• 2 multiplex,2 hypermarkets ,2 malls
& 10% of population within 2Km
radius
• Mostly SEC A, SEC B and SEC C:
Educated and higher income
• Site Identified: Nehru Nagar
crossroad site shop : 10000 sq. ft
located on ground floor , road facing
Gurukul
• 2 major hospitals ,3 schools ,drive-
in hall and Doordarshan, 13%
population within 2 Km radius
• SEC B , SEC C and SEC D households
• High retailing with small stores , 1
hypermarket and 1 fast food joint
• Site Identified: Shop in a Mall :
8000sq ft , ground floor ,good
frontage
Bopal
• Suburbs with mostly SEC C and little
commercial activity
• Site Identified: 3km from Satellite –
Ambli crossing , in a shopping
complex , 1st floor, good frontage
• 2000 sq ft. , Upper class houses
coming up
 Methodology

Site Characteristics Comparison

Evaluated Pros and Cons of each site
Used Proximal-area based Model
 Market share Model
Profitability Analysis
 Site Characteristics Comparison

Traffic flow and Location

accessibility Satellite Gurukul Bopal Characteristics Satellite Gurukul Bopal
Quality and amount Parking - Within the
of vehicular traffic 10 8 5 complex 6 5 4
Quality and amount Parking - Outside the
of pedestrian traffic 6 9 7 complex 7 5 7
Proximity to railway Access to store
station/airport 2 2 1 entrance and exit 8 6 8
Proximity to Condition of the
important roads and building 10 10 8
streets 10 10 8 Access from main road
Quality of roads or or street 10 10 10
streets 10 10 8 Adjacent Retailers 10 10 8
Average 7.6 7.8 5.8 Average 8.5 7.66 7.5
Rank 2 1 3 Rank 1 2 3

Restrictions Satellite Gurukul Bopal

Signboard
But for the book stores, advertising does not play
visibility 8 6 9
Rank 2 3 1 a major role in driving customers to the stores
1) Analyze the data provided in the case study to decide on an appropriate store
location for Aakash Book Store. Which method would you use and why?
Store Determination
 Satellite 10,000sq ft good mix of SECA,SECB,SECC
 Site at Nehrunagar, no commercial structures near it.
 Road facing frontage and ground floor availability
 Residential, corporate and tourist population access

 Gurukul 7000sq ft, SECC,SECB, large number of SECD

 Opening into courtyard, no visibility from outside mall. LOCATION DISADVANTAGE
 Competition only from OM book store.
 Residential, corporate, schools and tourist population access

 Bopal 2000 sq ft, SEC C primarily

 Low population concentration
 City center crossword corner existent
 Aakash in outskirts where upcoming SECA,SECB population upcoming.
 Residential and school/college audience
Store Determination Continued
 Catchment area ( B=G<S)
 Traffic(pedestrian) ( Bopal < Satellite<Gurukul)
 Traffic ( Bopal < Gurukul <Satellite)
 Accessibility to Markets S and G = 10
 Visibility (G<S<B)
 Number of Stores and the type of markets existing in the area
 Branded Retailers (S<G<B)
 Other book retailers ( S<G=B)
 Amenities Available
 Within the complex ( B<G<S)
 Outside the Complex ( G<S=B) Rent ( B<G<S)
 Advance Payment (B<G<S) Refurbishment Cost(B<G=S) Lease Tenure ( S<G<B)
 Proposed Space Description – S is Left , G is Right and B is front
Deciding Locational Advantage Wrt Competitors

Spatial-interaction-based Model has

been used as its objective is to maximize
expected market share or profit.

Gurukul is the clear winner, but with low

visibility, increased competition and medium
branded retail activity, It may be titled
slightly in favor of the similarly benefitted
Satellite.

• Therefore , the store should be located at Satellite keeping in mind all the above factors
 Method used
• Spatial Interaction based model- maximize expected market share/profit

Microsoft Office
Market Share Analysis Excel Worksheet

Average
Number of budget C*B*Probal
Site C*B Market Share (%)
customers (C ) allocated per ibility
annum (B)
Grukul 555000 3317 1840935000 987235192 23.76
satellite 666000 3317 2209122000 842903246 20.29
Bopal 31407 3317 104175788.2 8560736 0.21
4154232788
• To find market share: Huffs Model; Preferred store location:
2) Which of the three locations would
be profitable for the store?
Profitability Ratios
Gross Margin of Satellite > Gurukul > Bopal

Operating Margin of Satellite > Gurukul > Bopal

ROI of Satellite > Gurukul > Bopal

(Satellite is approx 1.5-2 times of Gurukul)

Expense Ratio for Satellite is less for all the years

except those years when lease payment has to
Made

CAGR of Gurukul > Satellite

(Note PBDT of Bopal has –ve growth in the
first two years. Hence CAGR was
calculated from 3rd year)

Aakash Book
Store

Although CAGR of Satellite is less than Gurukul but on the Basis of the profitability ratios
we prefer Satellite over other locations.
Recommendations
 Aakash Book Stores’ most preferred Location in Ahmedabad would be SATELLITE due to
the presence of good mix of SEC A, B & C customers and higher profitability.
 Merchandize mix Merchandize Mix
 Loyalty program for its Customers – Aakash Reward Programme Book Music Magazine
Stationery Toys Others
 Registration Fee of Rs 125 /-.
15%
 Benefits: 40%
5%
1. New arrival Alerts.
15%
2. Offers & Discounts.
3. Point earned can be redeemed at other outlets. 15%
 Cozy interiors
10%
 Well furnished seating space
 In-house coffee bar
 Mild Music
 Key chains, Magnets, Pens, Readers Digest and small gifting items need to be placed near
the checkout counter.