SRI SHARADA INSTITUTE OF INDIAN MANAGEMENT - RESE ARCH (NEW DELHI)
SATURDAY DEVELOPMENT DAYS PROJECT REPORT ON VISAHAL MEGA MART PROMOTION STRATEGIES
SUBMITTED BY
SUBMITTED TO
RAHUL SHUKLA(200902 SHUKLA(20090203) 03)
PROF. SARTAJ KHERA
DIWAKAR PANDEY(20090176)
1
PREFACE
A man can become perfect with a perfect knowledge and experience. As a student of business management, we have studied many theories in the classroom but any professional degree is incomplete without practical knowledge of concerned field. And the same case is with management studies, management is incomplete without knowing practical application of theories studied. I have experienced and understood the practical importance of these theories on this training. More books and theoretical knowledge can¶t help you in any field whether it is management or technical. Only thing can help you is practical knowledge. This development day provides a golden opportunity to the students for getting a perfect knowledge and experience. I come to know how the management management of company is actually being done . How decisions are made? How people behave and decide what to purchase? As a part of my learning in management field and requirement of PGDM program, I have been given an opportunity to grab practical knowledge in the area of marketing and I had selected ³VISHAL MEGAMART´ . I have made my best efforts to get knowledge and experience. During the day, I had collected necessary information, and I present all the necessary information to understand well.
2
ACKNOWLEDGEMENT
It has been an enriching experience for me to undergo my SATURDAY project, which would have not been possible without the goodwill and support of the people around. As a student of SRI SHARADA INSTITUTE OF INDIAN MANAGEMENT (SRISIIM), VASANT KUNJ, I would like to express my sincere thanks to all those who helped me during my development day programme. Firstly I would like to express my sincere thanks to reverend SWAMI DR. PARTHSARTHY for their blessings and well wishes. I extend my sincere thanks to Mr. SANJEEV CHATURVEDI CHATURV EDI AND MRS. SARTAJ KHERA, Faculty Member, SRISIIM, NEW DELHI, for having spared there valuable time with me and for all the guidance given in executing the project as per requirements. Last but not least, I would like to record my deepest sense of gratitude to my friends for their support and constant encouragement. However, I accept the sole responsibility for any possible error of omission and would be extremely grateful to the readers of this project report if they bring such mistakes to my notice.
.
3
Vishal Mega Mart
DECLARATION
WE, ASHISH SHARMA AND GHANSHYAMSINH JADEJA, hereby declare that the report on ³Saturday development day´ entitled ³VISHAL MEGA MART PROMOTION STRATEGIES ´is ´is a result of my own work and my indebtedness to other work publications, if any, have been duly acknowledged.
Place: New Delhi
Signature
Date: 21/09/2010 (RAHUL SHUKLA)
(DIWAKAR PANDEY)
4
Vishal Mega Mart
INTRODUCTION the background of high co nsumerism a nd income of the urba n consumers, in recent year there are a number of compa nies have expresse d their interest towar ds retail sector outlets. As a result numbers of shopping malls have starte d their operations i n metro and urban areas. Pantaloon, big bazaar, Vishal Mega Mart, Relia nce Fresh are the best k now n examples of retail sector outlets i n India. Retailing is the i nterface betwee n the producer a nd the individual co nsumer buying for personal co nsumptio n. This excludes direct interface betwee n the manufacturer and institutio nal buyers such as the gover nment and other bulk customers. A retailer is o ne who stocks the producer¶s goods a nd is i nvolved in the act of selli ng it to the i ndividual co nsumer, at a margin of profit. As such, retaili ng is the last li nk that co nnects the i ndividual co nsumer with the ma nufacturing and distributio n chain. Some of the key features of retaili ng include: In
y y y
y y y
Selling directly to customers with out havi ng any intermediaries Selling in smaller units / qua ntities, breaki ng the bulk Present in neighborhood or in the locatio n which is quite co nvenient to the customers. Very high in numbers Recognized by their service levels Fitting any size and or locatio n
It
is assume d that due to the e ntry of a number of retail outlets i n the urban and semi urban areas, the mi ndset of the existi ng customers have undergone drastic changes. Besides it is also reporte d that the tra ditional retaili ng such a n age old Grocery shops have directly face d competition with the orga nized retailing sector. In some parts of the cou ntry, it is reporte d that the tra d itio nal retails are resisti ng the e ntry of organized shopping malls. For instance the traditio nal retails of Bhubaneswar with the active support of the co nsumers at large didn¶t allow reliance Fresh to start outlet i nitially.
5
Vishal Mega Mart
RECENT TRENDS y
y
y
y
y
Retailing in India is wit nessing a huge revamping exercise as ca n be seen in the graph India is rate d the fifth most attractive emergi ng retail market: a pote ntial goldmine. Estimated to be US$ 200 billio n, of which orga nized retailing (i.e. mo der n trade) makes up 3 percent or US$ 6.4 billio n As per a report by KPMG the a nnual growth of departme nt stores is estimated at 24% Ranked seco nd in a Global Retail Developme nt Index of 30 developing countries drawn up by AT Kear ney.
6
Vishal Mega Mart
EXECUTIV EXECUTIVE E SUMMARY The Retail Sector is the largest sector i n India after agriculture, accou nting for over 10 per ce nt of the country¶s GDP a nd around 8 per cent of the employme nt. India has the most u norganized retail market i n the world. Most retailers of the unorganized retail market have their shop i n the front a nd house at the back. Retail industry is booming all around the globe at a very fast pace. Vishal Retail is a k now n and strong competitor in the retail i ndustry since 23 years. When we talk about Indian market, the demands of every thing which you ca n find in every retail store are increasing every year. Indians are famous for their tra ditio ns a nd festivals and excha nging gifts with frie nds and relatives is a part of it. MEGAMART is a retail house i n India. As of April 30, 2007, it operates 50 retail stores, i ncluding two stores which are operate d by their franchisees. These 5 0 stores are spread over about 1,282,000square feet a nd are locate d in 18 states across India. In its efforts to stre ngthen thier supply chain, it has set up seve n regio nal distributions ce ntres and an apparel ma nufacturing plant. VISHAL
It
started as a retailer of rea dy-made apparels in Kolkata in 2001. At the time of incorporatio n, the registere d office of thier Compa ny was situate d at 4, R. N. Mukherjee Road, Kolkata 7 00 001. In 2003, it acquire d the ma nufacturing facilities from Vishal Fashio ns Private Limite d and M/s Vishal Apparels. It
follows the co ncept of value retail i n India. In other wor ds, their business approach is to sell quality goo ds at reaso nable prices by either ma nufacturing themself or directly procuring from manufacturers (primarily from small a nd medium size ve ndors and manufacturers). It facilitate one-stop-shop convenience for their customers a nd to cater to the needs of the entire family. It believes this co ncept has helped them grow to thier curre nt size within a short time frame of their years. Mr. Ram Cha ndra Agarwal has bee n ranked as the 28th most pitiful perso n in the Indian retail industry.
7
Vishal Mega Mart
This project report is the stu dy of various activities a nd strategies of Vishal Mega Mart. It also helps us i n understa nding the differe nt technologies being used by VRPL. MISSION STATEMENT:
We shall deliver Everything, everywhere, everytime for every Indian Consumer in the most profitable manner. VISION
STATEMANT:
We share the visio n and belief that our customers a nd stakeholders shall be serve d only by creating a nd executing future scenarios in the co nsumptio n space leading to economic development
8
Vishal Mega Mart
COMPANY SUMMARY ³Future
is thi nking beyond horizon´ & in or der to keep its pace with the mo der n retail, Vishal Retail Limite d is spreading its wi ngs. Instead of resting o n its laurels the Group are busy identifying new ave nues of growth by venturing in other formats like cash & carry, co nvenios as well as specialty stores a nd inspiring local retailers to grow alo ng with the big names. The group has tie d up with HPCL to open cor ner stores at their petrol pumps a nd in additio n to the above Vishal has come up with a n institute to trai n man power for the service industry. As of April 30, 2007, it operates 5 0 retail stores, i ncluding two stores which are operated by their fra nchisees. These 5 0 stores are sprea d over about 1,282,000square feet a nd are locate d in 18 states across India. In its efforts to strengthen thier supply chain, it has set up seve n regio nal distributio ns ce ntres a nd an apparel manufacturing plant. Today Vishal Retail Limite d, Flagship Compa ny of Vishal Group, e ngaged in Hyper Market stores with a n average area of 25,000 to 30,000 sq. ft. through a n impressive chain of more tha n 100 fully integrated stores in spread of more tha n the area of arou nd 22, 00,000 sq. ft. i n 69 cities across India & has a pla n to cross total retail area of 35 lakh sq. ft. i n tier II and tier III cities by the e nd of 2009. Accor ding to Mr. Ram Cha ndra Agarwal, CMD, Vishal Retail Limite d, the group owes its origin to a small 5 0 sq ft shop in Kolkata's Lal Bazaar that starte d selli ng readymade garments. In tune with the pulse of the market, he e nvisioned a mega store that would sell garme nts at prices none other could match. . The first big store opened in Calcutta's Esplanade area in 1997, under the banner of Vishal Garme nts. He was involved in all the aspects of the busi ness: right from sourci ng the garments to i nteracti ng with customers. A nd this le d to his greatest fi nding ³The Vishal Group.´ After identifying the imme nse market in fashion garment for the masses, He moved to Delhi in 2001 and opened his first store i n Delhi¶s Rajouri Gar den by the name of Vishal Mega Mart (The jewel i n Vishal Group¶s crown) and then there was no looking back for Mr. Ram Cha ndra Agarwal. At prese nt, in additio n to garme nts, Vishal Mega Mart stores retail the e ntire ra nge of household products, FMCG a nd electronic goods. Vishal's prices are roughly 15 to 20 per cent less tha n other mass market garme nt labels.
9
Vishal Mega Mart
Mr. Ram Cha ndra Agarwal, CMD, Vishal Retail Limite d believes that the shopping habits of Indians are cha nging due to their growing disposable income, higher aspiratio ns, relative i ncrease in the younger population, a nd the cha nge in attitudes towar ds shopping. The emphasis has cha nged from price co nsideratio n to design, quality a nd tre ndy. Age is also a major factor that affects the spe nding decisions of a n individual. Co nsumer spending is a n important factor that affects the eco nomic growth a nd developme nt in a country. As a tre nd, co nsumer is more educated. He has access to all reforms taki ng place through various arrays of communicatio n. He is becomi ng a ³value shopper ´ everyday. Keeping this in mind, the group is now looking for franchisees to join hands with Vishal a nd grow under common banner. This part nership will help small retailers to survive the o nslaught of organized retail as it will e nhance their competitiveness. Small stores ca n avail of the be nefits o n account of the eco nomies of scale, a key a dvantage for big retailers. As per the pla ns, Vishal Retail will completely take over the supply chai n of its fra nchisees a nd provide them with tech nology, new practices, visual merchandising skill a nd special promotional schemes, besi des its bra nd and costumer base. Some of the Franchisee exclusive business categories are:
Mens Fashio n Ladies and Kids Footwear Toys and Games Home ± General Convenience (FMCG) CDIT Watches Mobile
It
follows the co ncept of value retail i n India. In other wor ds, their business approach is to sell quality goo ds at reaso nable prices by either ma nufacturing themself or directly procuring from manufacturers (primarily from small a nd medium size ve ndors and manufacturers). It e ndeavour to facilitate o ne-stop-shop convenience for their customers a nd to cater to the needs of the entire family.
10
Vishal Mega Mart
OUR Our
PR OMOTERS AND GR OU OUP C OMPANIES
Promoters
The following individuals are the Promoters of our Compa ny: a). Mr. Ram Cha ndra Agarwal; b). Mrs. Uma Agarwal; a nd c). Mr. Sure ndra Kumar Agarwal. The following companies are the Promoters of our Compa ny: a). Unicon Marketing Private Limite d; b). Rico n Commodities Private Limite d; a nd c). Vishal Water World Private Limite d. In additio n,
the followi ng HUFs are the Promoters of our Compa ny: a). Mr. Ram Cha ndra Agarwal (HUF) Name of Shareholders & Number of Shares % of shareholding
1. Unicon Marketing Private Limite d 315,000 49.53 2. Rico n Commodities Private Limite d 300,000 47.17 3. Mr. Ram Cha ndra Agarwal 1 2,010 1.89 4. Mrs. Uma Agarwal 9, 010 1.42 Total 636,020 100.00
Establishment of Stores: In
Selection of location
selecti ng locatio n for a
new
store, VRPL start by i dentifying the city/tow n.
VRPL target primarily cities/tow ns which may be classifie d as Tier II or Tier III cities.
In
this regar d, an analysis of the
demography,
literacy levels,
nature
of
occupatio n and income levels. Withi n a city/tow n, VRPL target locatio ns with good infrastructural facilities such as easy accessibility, provisio n for water, 11
Vishal Mega Mart
electricity, parki ng, security a nd other basic ame nities. VRPL prefer to locate their stores in areas where real estate is available at reaso nable prices. The efforts of VRPL¶s retail busi ness are targete d towar ds families having total income which can be classifie d under the
³lower
middle´ and
³ middle´
income groups.
Accor dingly, VRPL pla n their strategy to search for areas withi n cities where such customers are domiciled in large numbers and make efforts to locate themselves within the reach of such customers. VRPL believe that a doptio n of sta ndar d formats for their stores has le d to their brand establishme nt a nd identificatio n among their customers a nd will increase their base of loyal customers.
In
pursuance of this, they have a dopted sta ndar d
parameters for store pla nning and establishme nt. For ensuring standar dized formats
of their stores, VRPL co nsider various factors, such as inter nal and exter nal
décor
and colour schemes, allocatio n of store space, stock mix a nd pricing and accounting methods. nsurance I nsurance
VRPL maintain comprehe nsive insurance coverage with Tata A IG, Bajaj Allia nz, Royal Sundaram a nd IFFCO-TOK IO for their existi ng stores, distribution centers, manufacturi ng
facilities
a nd
trucks.
VRPL
insurance
policies
i nclude
comprehensive coverage for electro nic equipme nt, fire a nd special perils a nd burglary. Further, VRPL has file d a claim of Rs. their store at Meerut as o n July 7, 2006.
In
22.50
millio n on account of fire i n
this regar d, they have receive d Rs. 7.50
millio n as an interim payme nt. actories F actories
VRPL¶s existing manufacturi ng facilities are locate d at Plot No.
224,
Phase 1
Udyog Vihar, Gurgaon, for which they have leasehold interest until May 4, 12
2009.
Vishal Mega Mart In
addition, VRPL have rece ntly acquired freehold interest in relatio n to a la nd
admeasuring 7.24 acres in Dehradun, Uttaranchal, where they are explori ng the possibilities for establishme nt of another manufacturing facility. Other
Properties
VRPL have rece ntly acquired freehold interest in relatio n to a la nd admeasuring 82,830 square feet in Hubli, Dharwad.
Merchandise Planning
VRPL¶s mercha ndise pla nning is based on the co ncept of category ma nagement rather tha n traditio nal bra nd management practices.
VISHAL Apparels Brand
Vishal Mega Mart is o ne of India¶s fastest growi ng retail chai ns.. The chain curre ntly has 183 company stores in 24 states / 11 0 cities in India. The Vishal brand is k nown for great moder n style for me n, women and children. Vishal offers high level fashio n styling. Since 1986, our name has been synonymous with quality, value a nd fashion integrity. We offer a n un paralleled collection of clothes for the e ntire family. Each garment is ha nd selected for quality a nd co ntemporary styling. Vishal manufactures majority of its ow n garments and out sources some under its direct quality supervisio n. This e nables us to offer the lowest possible a nd most reasonable prices. Our goal is to provi de a range of fashio n wear to suit every pocket. Our pro duct mix represe nts the most curre nt fashio n trends i n tops, bottoms, formals a nd 13
Vishal Mega Mart
accessories for me n, women and kids. Our courteous staff will e nsure that consumers get a perfect fit.
Popular Brands are: Zeppelin : Mens Shirts & Trousers Kitaan Studio : Me M ens Shirts & Trousers Blues & Mens Trousers Khakis : Paranoia : Mens Shirts & T-Shirts Chlorine :
Mens Shirts
Fume :
Mens Shirts, T-Shirts, UnderGarme nts.
Our
Fizzy Babe : Jasmine :
Ladies & Kids Girls Ladies & Kids Girls
Zero Degree : Kids Boys Soil : Massa Bay :
Mens Shirts Mens Trousers & Bermudas
products
FOOTWEAR Mens
Shoes
Sandals
14
Slippers
Vishal Mega Mart
Ladies
Shoes
Sandals
Cleaning aids
Slippers
plastic aids thermoware
Appliances
kitche n aids
LADIES ACCESSOR IES
15
Vishal Mega Mart
Personal items
fashio n jewellery
Cosmetics
haircare
HARDWARE ELECTR ICALS
Bulb
Ceiling Fan
16
Vishal Mega Mart
Regulator
Extensio n
Tester
Cor d
Exhaust
Fan
Home Furnishing
Covers
Kitchen fur nishing
bath fur nishing
drawing
17
room fur nishing
Vishal Mega Mart
Bed room fur nishing
FOODMART
Chinese a nd Indian food
food and beverages
Fruits and vegetables
18
Vishal Mega Mart
Imported
fruit
Regular Fruit
Regular Vegetables
Imported
fruit
HOUSE HOLD
Hair Dryer
Chopper
19
Vishal Mega Mart
Waffle Maker
Griller
GARMENTS
Men¶s wear
women¶s wear
Boy¶s wear
girl¶s wear
20
Vishal Mega Mart
Infant¶s
wear
FMCG
Additives - Preservatives
Aftermints
Diary Products
Drink Beverages
Health Food
Home Care
Personal Care
Rea dy To Cook
Ready To Eat
21
Vishal Mega Mart
SERVICE RVICES AND SE SEMI-DE MI-DESCRIPTION
SBI, Vishal mega mart launches card
SBI Car d launched a co-branded car d in associatio n with leading retail chai n Vishal Mega Mart to tap the boomi ng organized retail market that is pegge d to hit Rs 1, 09,000 crore by 2010. "SBI Vishal Mega Mart Car d is o ne of the best co-bra nded credit car ds that offers rewar d points and other benefits to freque nt shoppers and will be free for those who spend above Rs 7,5 00 per annum," SBI Car d CEO Roopam Asthana said. Asthana said the car d would be free of cost for the first year, but would charge Rs 700 per annum if purchase o n the car d was less tha n Rs 7,500. Other SBI Car d holders could also flip their car d for SBI Vishal Mega Mart Car d and use it like a ny other credit car d. "By partnering with SBI Car d, we are not just offering customers a co nvenient payment mechanism but a u nique consumer loyalty programme that rewar ds them every time they shop," Vishal Retail MD Ram Cha ndra Agarwal said. Some of the features of the co-bra nded car d include Rs 250 discount voucher o n signing up for the car d and a set up by which the car d holder ear ns five rewar d 22
Vishal Mega Mart
points on every Rs 100 spe nt that could go up to eight poi nts on spe nds above Rs 7,500 and the points are redeemed at any Vishal Mega Mart store.
Other offers in the credit car d are no transactio n fee on fuel purchase at select IOC and IBP petrol pumps a nd balance tra nsfer facility without a ny interest for 75 days and compleme ntary personal accident insurance. Vishal Mega mart retails a large variety of househol d, FMCG a nd consumer durable goods at bargai n prices at its 24 self-ow ned stores, which are likely to increase to 5 0 by the end of 2006.
23
Vishal Mega Mart
PR OMOTIONAL STARTEGIES OF VISHAL MEGA MART How attractive is the funding of retail industry, from an investor perspective?
the initial years, retur ns are limite d due to the high real estate costs, large a nd sustained capital expe nditure to create scale, a nd start-up costs for store infrastructure. In
However, investors with lo nger investment horizons are beginning to recognise the pote ntial for lo ng-term value appreciatio n of investing in differentiated businesses with large-scale pla ns and able executio n teams. Apart from the tra ditio nal sources like ba nks and financial institutio ns, there are multiple ave nues including PE funds. Compa nies have eve n successfully approached the IPO (initial public offeri ng) route to raise fu nds. We have see n many PE investors taking stakes in retail ve ntures. For example, Subhiksha raised PE from ICICI Ventures, while Actis took a co ntrolling stake in Nilgiris. After the initial rounds of PE-funding, companies like Vishal Megamart a nd Koutons approached the public for capital through a n initial offering of shares. Large players like Shopper¶s Stop, Tre nt a nd Pantaloons are alrea dy listed on the stock excha nges.
E-COMMERCE:
The uses of computers a nd inter net have bee n expanding significantly over the
years. Prese ntly inter net has bee n used widely as a mea ns of communication, as a potential source of i nformation, as a mea ns of entertainment a nd many more. With in few years after existe nce of inter net, business me n realized the possibilities of 24
Vishal Mega Mart
using inter net as a me dium of business. This idea kick starte d the first o nline business ve ntures. Moder n technology has been developed to the exte nt that eve n shopping made possible over the i nter net. The process of shopping done over the inter net is calle d online shopping. Both products a nd services ca n be purchased by o nline shopping. O nline shopping is used for business to business tra nsactions or business to customer tra nsactions with applicatio ns of electro nic commerce ( ECommerce). Vishal Mega Mart is soo n launching
its
o nline
shopping
website
this
summer
named
www.vishalmegamart.com which promises to be a boo n for its customers. VRPL
has its own site named as www.vishalmegamart.net www.vishalmegamart.net..
25
as
Vishal Mega Mart
is co ncer ned about the safety a nd security of their website and customers. Accor dingly, they have put a number of tech nological protectio ns in place to e nsure that their tra nsaction process is extremely safe a nd that their customers' information is secure. They provide a large amou nt of information to their customers, suppliers through their website. This i nformation includes their stores in different areas, cities with correct a ddress a nd contact no¶s, products being offered by them, career opportunities, e nquiry, supplier¶s zone etc. Vishalmegamart.net
26
Vishal Mega Mart Vishal
Mega Mart also provides opportunities to its customers by
collaborating with shopping.indiatimes.com and with shopping.rediff.com shopping.rediff.com..
RETAIL VALUE OF DEFFERENT RETA IL STORE Value
Retail same store sales (SSS) growth rebou nded in Nov'07 to 40% after a
25% decline i n 2.8% in
Oct'07, due to late Diwali this year. This implies a growth of mere
the festive seaso n (Oct-Nov¶07 combined). Lifestyle SSS growth in Nov
27
Vishal Mega Mart
is at
30%
as against a decline of 7% i n Oct. Collectively i n the festive seaso n SSS
growth is 9% compare d to over 20% growth maintained for most of the months of
the previous fiscal. The chart below represe nts sales mix of Pa of Pantaloon Retail
Ind ia
Ltd. VISHAL MEGAMART still accou nt for bulk of the sales for the compa ny. The company has added retail sales space aggressively i n last financial year.
In
FY2005, the compa ny a dded 1 m n sft while it declined to 0.85 mn sft in FY06 a nd zoomed to 2.7 mn sft in FY07. This FY, the compa ny has bee n little bit slow due to unrealistic realty prices a nd has managed to add mere 1.5 mn sft till the e nd of Nov.The company is expected to clock sales of Rs 7,4 00 crore for FY2008 but going by the rece nt reporte d numbers, a slowdown is imminent MARKETING STRATEGY OF PR ODUCT OF STORE
VISHAL
MEGA MART T O PR OMOTE A
P roduct roduct
Vishal Mega Mart offers a wi de range of products which starts from apparels to food items, footwear to home fur nishing, crockery to sport items, chil d care
products to toys, watches, drinks etc. There are ma ny in house brands promoted by Vishal Mega Mart.
In
pursuance of their busi ness plan to diversify their portfolio
of offerings, FMCG products play a key role. FMCG pro ducts are usually mea nt to fulfill the
daily needs
of co nsumers a nd therefore, VRPL believe retaili ng of
FMCG products will bri ng customers to their stores o n a frequent basis a nd this may in-tur n lead to consumptio n of their apparels. VRPL have a number of private labels for apparels such as Zeppli n, Para noia, Chlorine, Kitaa n Studio, Fame nne,
28
Vishal Mega Mart
Fleurier Wome n and Roseau.
P rice rice
Vishal Mega Mart promises its co nsumers the lowest available price. The co ncept of psychological
d iscounting
(Rs. 99, Rs. 49, etc.) is use d as promotional tool.
Vishal Mega Mart also caters o n Special
Event
Pricing (Close to Diwali,
Christmas, New Year etc.). Selli ng combo-packs a nd offering
discount
to
customers. The combo-packs add value to customer. Through Bundling, they also reduced the price of the products.
In
additio n to VRPL¶s strategy to co ntinue
procurement of goods from small a nd medium size ve ndors and manufacturers 29
Vishal Mega Mart
which leads to cost efficie ncies, VRPL intend to procure FMCG and apparels from low-cost productio n centers locate d outside
India.
Towar ds this objective, VRPL¶s
propose to increase their procureme nt of finished and semi-finished goods from China a nd thereby realize eco nomies of scale a nd pass on the be nefits so accrue d to their customers. The efforts of VRPL¶s retail busi ness are targete d towar ds families having total income which ca n be classifie d under the ³lower midd le´ and ³middle´ income
groups. VRPL follow uniform pricing policy across their stores
in respect of private labels a nd non-branded products sold by them. This e nhances brand loyalty, encourages customer co nfidence and results in operational convenience.
In
relation to the other products, the prices may vary betwee n stores
on account of state-specific taxatio n and vendor policies.
P lace lace
Vishal Mega Mart stores are locate d in 110 cities with more tha n 180 outlets. Vishal Mega Mart has prese nce in almost all the major Indian cities. They are aggressive o n their expa nsion plans. VRPL intend to increase their pe netratio n in the country by setting up new stores i n cities where they alrea dy have presence, as also e ntering into new areas in the country. In particular, they i ntend to focus on
expansion in Tier
II
and Tier
III
cities. VRPL target locatio ns with good
infrastructural facilities such as easy accessibility, provisio n for water, electricity, parking, security a nd other basic ame nities.
P romotion romotion
Advertising has played a crucial role i n building of the bra nd. Vishal Mega Mart advertiseme nts are mai nly see n in print media i.e. 30
newspapers,
Televisio n with
Vishal Mega Mart
Tina Parekh as there i n advertisement, a nd sometime road-side bill-boar ds. VRPL¶s category ma nagement system is use d to pla n promotio nal schemes. They launch promotional schemes weekly. Apart from ge neral sales promotio n, the category ma nager formulates promotio nal pla ns for µslow movers¶.
In
additio n, to
promote sales, they focus on layout of the stores a nd positioning, prese ntation and display
of mercha ndise, in or der to appeal to the customer.
In
additio n, VRPL have
introduced, in associatio n with SBI Car ds & Payme nt Services Private Limite d, a co-branded credit car d. VRPL¶s propose to continuously undertake such initiatives to increase the satisfactio n of their customers. Some of the features of the co branded car d include Rs 250 discount voucher on signing up for the car d and a process by which the car dholder ear ns five rewar d points o n every Rs 100 spent. A car dholder 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 lo ng term a dvertising agreement with Be nnett, Colema n & Company Limite d (³BCCL´). Under the agreeme nt, they are e ntitled to fixed discounts for their advertisement in print publicatio ns of BCCL for a perio d of five years from the date of the agreeme nt.
In
additio n, BCCL would also act as a facilitator for
other print and non-print media of the Times Group i.e. i nter net, radio and
television or a ny other new medium launched during the te nancy of the agreeme nt. As a part co nsideratio n, VRPL had issued 1,670,605 Equity Shares of Rs. 1 0 each and 384,190 Preference Shares of Rs. 146 each amou nting to a n aggregate of Rs. 300
millio n.
Thier Competitive Strengths
31
Vishal Mega Mart It
believes that the following are thier principal competitive strengths which have contributed to thier current position in the retail sector in India:
Understanding
of the µvalue retail¶ segment
Thier business pla n involves impleme ntation of the co ncept of the µvalue retaili ng¶, targeting the middle a nd loiter middle i ncome groups, which co nstitute majority of the populatio n in India. It intend to provide quality products at competitive prices. It sells a vast ra nge of mercha ndise across apparels a nd accessories, FMCG(freque ntly marketed consumer goods) products, food products and consumer durables with over 74, 000 SKUs.Thier emphasis has bee n to maximise the value that the customers derive in spe nding on goods bought in thier stores. It endeavthier to co ntinuously reduce thier costs through a variety of measures, such as, i n-house production of apparels, procureme nt of goods directly from the small a nd medium size ve ndors and manufacturers, efficie nt logistics a nd distributio n systems alo ng with customize d product mix at thier stores depe nding
on the regio nal customer behavithier a nd preferences. Central to thier value retail strategy is to pass o n the be nefits of cost re duction measures to thier customers.
Supply chain management
Their supply chain manageme nt involves planning, mercha ndizing sthiercing, standar dizatio n, vendor management, productio n, logistics, quality co ntrol, µpilferage¶ control replaceme nt a nd replenishment. Their supply chai n manageme nt
32
Vishal Mega Mart
provides us flexibility to a dapt to cha nging patter ns in consumer behavithier a nd their ability to a dd value at various steps/levels. In particular, thier supply chai n management gains stre ngth from their ability to u ndertake in-house manufacture, design and developme nt of apparels. Strong and efficient logistics and distribution network
VRPL¶s
distribution
and logistics network comprises seve n distribution centers.
Besides, VRPL have their ow n fleet of 31 trucks, which helps VRPL to tra nsport and deliver their pro ducts in a cost a nd time efficie nt manner. VRPL believe that their distribution and logistics set up is well networked and allows them to fulfill the store requisitio n within short time perio d of generatio n and receipt of or der, which has helped VRPL to optimize i n-store availability of mercha ndise a nd minimize tra nsportatio n costs. Their stro ng distribution and logistics network has enabled them to
dispe nse
with the requireme nt of a
dedicate d
storage space at
every store, which is a n industry practice, a nd instead undertake perio dical replenishment of depleted stock. Due to a doption of an efficie nt racking system, they are able to be nefit from optimum utilizatio n of the space allocate d for display in their stores. This provides them assista nce i n maintaining a low working capital requirement and less carrying cost.
Geographical spread
Thier stores a nd distributio n centres are sprea d in various parts a nd regions of the country. This has not o nly e nabled us to build thier bra nd value but also facilitate d us to explore cost-effective sthierci ng from different locatio ns, identify pote ntial markets a nd efficie ntly establish new stores in different locatio ns. An aggregate of 43 of 50 of thier existi ng stores are locate d in Tier II and Tier III cities, which, It believe, enables us to capture market share i n locations where a majority of thier target customers are locate d. 33
Vishal Mega Mart I dentifying dentifying
new locations
It
believe that It possess the ability to i dentify locatio ns with pote ntial for growth, in particular in Tier II and Tier III cities. It has a n exclusive site i dentificatio n and assessment team, which u ndertakes systematic a nalysis of the business prospects, taking into account factors such as population, literacy levels, nature of occupatio n, income levels, accessibility, basic i nfrastructure a nd establishme nt a nd running costs. Further, it has a dedicate d warehouse for the purposes of stori ng the materials esse ntial for setti ng up of new stores.
P rivate rivate
labels It has a number of private labels for apparels (i.e. apparels ma nufactured by us) such as Zeppelin, Para noia, Chlorine, Katina Studio, Famine, Flthierier Wome n and Roseau. In fiscal 2007, thier income from thier private labels was Rs. 58 3.60 millio n, which accounts for 9.68% of thier total sales for fiscal 2007. It believes that their focus o n thier private labels a nd their recognitio n in thier customer segment e nables us to differentiate themselves from thier competitors.
Their Strategy----------It i ntends to pursue the followi ng strategies i n or der to co nsolidate thier positio n as an operator in the µvalue Retail¶ segme nt in Ind ia. Thier growth strategy is base d on:
Increasing
thier penetration in the country by leveraging thier supply chain, distribution and logistics network It intends
to increase thier pe netratio n in the country by setti ng up new stores in cities where it alrea dy have Presence, as also e ntering into new areas i n the country. In particular, it i ntends to focus o n expansion in Tier II and Tier III cities. It believe that thier existi ng infrastructure have bee n designed for a higher scale of operatio ns tha n thier curre nt size, a nd can help us grow without the need to
34
Vishal Mega Mart
significantly increase costs. Moreover, their co ntinuous effort to improve systems and processes leads us to believe that it ca n deal with higher scale of operatio ns without any hindrance. Higher business volumes will also improve thier negotiati ng pouters and help us get further eco nomies of scale i n thier buying.
Emphasis on Backward Integration
It
believes that through backwar d integration It will co ntinue to substa ntially control the cost of pro duction, resulting in such cost benefits being passed on to thier customers. It intends to increase the in-house manufacture, design and developme nt of thier pro ducts and realizes eco nomies of scale. It intends to manufacture at least 25% of thier requireme nt for apparels a nd may require expansion of thier existi ng manufacturing facilities. This will also e nable us to reduce thier relia nce on exter nal age ncies for supply of thier pro ducts and will result in loiter tur n-around time. In additio n, thier focus would be to undertake in-house such functio ns of the manufacturi ng processes, which, i n thier view, would add maximum value a nd would enable us to re duce their procureme nt costs.
Expansion of FMCG
Historically, it has derived significa nt portion of thier reve nue from sale of apparels. In pursuance of their business pla n to diversify thier portfolio of offerings, FMCG products play a key role. FMCG pro ducts are usually mea nt to fulfill the daily needs of consumers a nd therefore, It believe retaili ng of FMCG products will bri ng customers to thier stores o n a frequent basis a nd this may intur n lead to consumptio n of thier apparels. It believe retaili ng of FMCG products would help us to elimi nate the impact of seaso nality of the apparels market i n India, which depe nds o n factors such as cha nge in tether co nditio ns a nd festival celebrations. In furthera nce of thier e ndeavthiers to re duce costs, It intend to procure FMCG products directly from the ma nufacturers. For this purpose, It has entered into and will co ntinue to explore the possibilities of e ntering into certain arrangeme nts with domestic FMCG majors o n such terms a nd conditio ns, which are suitable to their busi ness model.
Procurement from low-cost production centres outside India
35
Vishal Mega Mart
addition to thier strategy to co ntinue procurement of goods from small a nd medium size ve ndors and manufacturers which lea ds to cost efficie ncies, It intend In
to procure FMCG a nd apparels from low-cost pro duction centres locate d outside India. Towar ds this objective, It propose to increase thier procureme nt of finished and semi-finished goods from China a nd thereby realize eco nomies of scale a nd pass on the be nefits so accrue d to thier customers. Increasing
customer satisfaction and thier base of loyal customers
It
believes that u ndersta nding the needs of thier customers is of prime importa nce for the co ntinuous growth of thier business. In or der to continuously provide customer satisfactio n, thier customer ma nageme nt team assimilates customer feed back and it e ndeavthier to take necessary steps to a ddress the requireme nts of thier customers. In addition, It has introduced, in associatio n with SBI Car ds & Payment Services Private Limite d, a co-bra nded credit car d. It proposes to continuously undertake such initiatives to i ncrease the satisfactio n of thier customers. Compensation and Performance Based Incentives
VRPL¶s compe nsation policy is performa nce based and they believe it is competitive with i ndustry sta ndar ds in
India.
VRPL e ndeavor to recog nize tale nt
and potential in their employees a nd encourage them to take a dditio nal responsibilities. Base d on performa nce, VRPL calibrate their employees a nd rewar d loyalty by preferring in-house promotions. Their compe nsation policy reflects their co ntinuing efforts to build a world class performa nce driven culture. They benchmark ourselves on compensatio n exter nally through consulta nts bia nnually, and aspire to be o n the upper quartile of their target segme nt, comprising of FMCG companies a nd other retail compa nies a nd are curre ntly at the 75 perce ntile.
36
Vishal Mega Mart
Management Organization Structure:-
37
Vishal Mega Mart
R.C.Agarwal Chairman & Managing Director
Board of Directors
S.K.Agarwal
Category Heads
Whole-time Director
Merchandise
Heads Hea ds - Zona Zonall
Head
Head-- Reta Head Retail il
Chief Operating Officer
Head Hea d Lega Legall & Secretarial
Head-Admin Head-Ad min & HR
Head He ad IT
Head-Finance, Accounts & MIS
38
Head-Supply Chain Management
Vishal Mega Mart
CONCLUSION VISHAL MEGA MART
done
a great job i n promotion strategy by aware ness,
location and product specificatio n and differentiatio n in his store. Basically they targeted low quality pro duct in low price and the outlets locatio n is very good in point of view of selli ng of a product.
39
