1. INDUSTRY PROFILE
1
1.Industry Profile Indian Retailing: Retailing in India is one of the pillars of its economy and accounts for about 15% of its GDP.
The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people. India's retailing industry is essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India's retail and logistics industry employs about 40 million Indians (3.3% of Indian population). Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process. In November 2011, India's central government announced retail reforms for both multi-brand stores and single-brand stores. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Walmart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple The announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reaches a consensus. In January 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership. Indian government continues the hold on retail reforms for multi-brand stores. Organized retailing, in India, refers to trading activities undertaken by licensed retailers, that is, those
who
are
regist registered ered
for
sales sales
tax,
income income
tax, tax,
etc.
These include the publiclypublicly- traded supermarkets, supermarkets, corporate-backed hypermarkets and retail chains, and also also the privately owned large retail businesses.
2
1.Industry Profile Indian Retailing: Retailing in India is one of the pillars of its economy and accounts for about 15% of its GDP.
The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people. India's retailing industry is essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India's retail and logistics industry employs about 40 million Indians (3.3% of Indian population). Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process. In November 2011, India's central government announced retail reforms for both multi-brand stores and single-brand stores. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Walmart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple The announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reaches a consensus. In January 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership. Indian government continues the hold on retail reforms for multi-brand stores. Organized retailing, in India, refers to trading activities undertaken by licensed retailers, that is, those
who
are
regist registered ered
for
sales sales
tax,
income income
tax, tax,
etc.
These include the publiclypublicly- traded supermarkets, supermarkets, corporate-backed hypermarkets and retail chains, and also also the privately owned large retail businesses.
2
Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local mom and pop store, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. Organized retailing was absent in most rural and small towns of India in 2010. Supermarkets and similar organized organized retail accounted for just 4% of the market. Background of Indian retailing:
Most Indian shopping takes place in open markets or millions of small, independent grocery and retail shops. Shoppers typically stand outside the retail shop, ask for what they want, and cannot pick or examine a product from the shelf. Access to the shelf or product storage area is limited. Once the shopper requests the food staple or household product they are looking for, the shopkeeper goes to the container or shelf or to the back of the store, brings it out and offers it for sale to the shopper. Often the shopkeeper may substitute the product, claiming that it is similar or equivalent to the product the consumer is asking for. The product typically has no price label in these small retail shops; although some products do have a manufactured suggested retail price (MSRP) pre-printed on the packaging. The shopkeeper prices the food staple and household products arbitrarily, arbitrarily, and two consumers may pay different prices for the same product on the same day. Price is sometimes negotiated between the shopper and shopkeeper. The shoppers do not have time to examine the product label, and do not have a choice to make an informed decision between competitive products. India's retail and logistics industry, organized and unorganized in combination, employs about 40 million Indians (3.3% of Indian population). The typical Indian retail shops are very small. Over 14 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in size. India has about 11 shop outlets for every 1000 people. Vast majority of the unorganized retail shops in India employ family members, do not have the scale to procure or transport products at high volume wholesale level, have limited to no quality control or fake-versusauthentic product screening technology and have no training on safe and hygienic storage, packaging or logistics. The unorganized retail shops source their products from a chain of Middlemen who mark up the product as it moves from farmer or producer to the consumer. The unorganized retail shops typically offer no after-sales support or service. Finally, most transactions at unorganized retail shops are done with cash, with all sales being final. 3
Until the 1990s, regulations prevented innovation and entrepreneurship in Indian retailing. Some retails faced complying with over thirty regulations such as "signboard licenses" and "antihoarding measures" before they could open doors. There are taxes for moving goods to states, from states, and even within states in some cases. Farmers and producers had to go through middlemen monopolies. The logistics and infrastructure was very poor, with losses exceeding 30 percent. Through the 1990s, India introduced widespread free market reforms, including some related to retail. Between 2000 to 2010, consumers in select Indian cities have gradually begun to experience the quality, choice, convenience and benefits of organized retail industry.
Growth of Indian retailing:
Growth over 1997-2010 India in 1997 allowed foreign direct investment (FDI) in cash and carry wholesale. Then, it required government approval. The approval requirement was relaxed, and automatic permission was granted in 2006. Between 2000 to 2010, Indian retail attracted about $1.8 billion in foreign direct investment, representing representing a very ver y small 1.5% of total investment flow into India. Single brand retailing attracted 94 proposals between 2006 and 2010, of which 57 were approved and implemented. For a country of 1.2 billion people, this is a very small number. Some claim one of the primary restraints inhibiting better participation was that India required single brand retailers to to limit their ownership in Indian Indian outlets to 51%. 51%. China in contrast allows 100% ownership by foreign companies in both single brand and multi-brand retail presence. Indian retail has experienced limited growth, and its spoilage of food harvest is amongst the highest in the world, because of very limited integrated cold-chain and other infrastructure. India has only 5386 stand-alone cold storages, having a total capacity of 23.6 million metric tons. However, 80 percent of this storage is used only for potatoes. The remaining infrastructure capacity is less than 1% of the annual farm output of India, and grossly inadequate during peak harvest seasons. This leads to about 30% losses in certain perishable agricultural output in India, on average, every year.
4
Indian laws already allow foreign direct investment in cold-chain infrastructure to the extent of 100 percent. There has been no interest in foreign direct investment in cold storage infrastructure build out. Experts claim that cold storage infrastructure will become economically viable only when there is strong and contractually-binding demand from organized retail. The risk of cold storing perishable food, without an assured way to move and sell it, puts the economic viability of expensive cold storage in doubt. In the absence of organized retail competition and with a ban on foreign direct investment in multi-brand retailers, foreign direct investments are unlikely to begin in cold storage and farm logistics infrastructure. Until 2010, intermediaries and middlemen in India have dominated the value chain. Due to a number of intermediaries involved in the traditional Indian retail chain, norms are flouted and pricing lacks transparency. Small Indian farmers realize only 1/3rd of the total price paid by the final Indian consumer, as against 2/3rd by farmers in nations with a higher share of organized retail. The 60%+ margins for middlemen and traditional retail shops have limited growth and prevented innovation in Indian retail industry. Growth after 2011 Before 2011, India had prevented innovation and organized competition in its consumer retail industry. Several studies claim that the lack of infrastructure and competitive retail industry is a key cause of India's persistently high inflation. Furthermore, because of unorganized retail, in a nation where malnutrition remains a serious problem, food waste is rife. Well over 30% of food staples and perishable goods produced in India spoil because poor infrastructure and small retail outlets prevent hygienic storage and movement of the goods from the farmer to the consumer. One report estimates the 2011 Indian retail market as generating sales of about $470 billion a year, of which a miniscule $27 billion comes from organized retail such as supermarkets, chain stores with centralized operations and shops in malls. The opening of retail industry to free market competition, some claim will enable rapid growth in retail sector of Indian economy. Others believe the growth of Indian retail industry will take time, with organized retail possibly needing a decade to grow to a 25% share. A 25% market share, given the expected growth of Indian retail industry through 2021, is estimated to be over $250 billion a year: a revenue equal to the 2009 revenue share from Japan for the world's 250 largest retailers.
5
The Economist forecasts that Indian retail will nearly double in economic value, expanding by About $400 billion by 2020. The projected increase alone is equivalent to The current retail market size of France.
The Indian Retail Market:
Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization
Even within th e
Geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail Space per capita at 2 sq ft
9 m2)/ person is lowest in the world Indian retail density of 6
(0.1 percent is highest in the
1.8 million households in India have an annual income of over
world. 45 lakh (US$85,500). Delving further into consumer buying habits, purchase decisions can be separated into two categories:
status-oriented
and
indulgence-oriented.
CTVs/LCDs, refrigerators,
machines, dishwashers, micro w ave ovens and DVD players fall in the
washing
status category.
Indulgence-oriented products include plasma TVs, state-of-the-art home theatre systems, iPods, high-end digital cameras, camcorders, and gaming consoles. Consumers in the status category buy because they need to maintain a position in their social group. Indulgenc e -oriented buying happens with those who want to enjoy life better with products that meet their requirements. When it comes to the festival shopping season, it is primarily the status-oriented segment that contributes largely to the retailer’s cash register. While India presents a large market opportunity given the number and increasing purchasing power of consumers, there are Significant challenges as well given that over 90% of trade is conducted through independent local stores. Challenges in clu de : Geographically dispersed population, small ticket sizes, complex distribution network, and little use of IT systems, limitations of mass media and existence of counterfeit goods.
6
1.1 Major Indian Retailers:
REI AGRO LTD Retail: 6TEN and 6TEN kirana stores
Future Groups-Formats: Big Bazaar, Food Bazaar, Pantaloons, Central, Fashion Station, Brand Factory, Depot, aLL, E-Zone etc.
Raymond Ltd.: Textiles, The Raymond Shop, Park Avenue, Park Avenue Woman, Parx, Colourplus, Neck Ties & More, Shirts & More etc.
Fabindia: Textiles, Home furnishings, handloom apparel, jewellery
RP-Sanjiv Goenka Group Retail-Formats: Spencer’s Hyper, Spencer's Daily, Music World, Au Bon Pain (Internaional bakery cafeteria), Beverly Hills Polo Club
The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark, Titan Industries with World of Titans showrooms, Tanishq outlets, Croma.
Reliance Retail-Formats: Reliance MART, Reliance SUPER, Reliance FRESH, Reliance Footprint, Reliance Living, Reliance Digital, Reliance Jewellery, Reliance Trends, Reliance Autozone, iStore
Reliance ADAG Retail-Format: Reliance World
K Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, Inorbit Mall
Nilgiri’s-Formats: Nilgiris’ supermarket chain
Marks & Spencer: Clothing, lifestyle products, etc.
Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International Franchise brand stores.
Pyramid Retail-Formats: Pyramid Megastore, TruMart Next retail India Ltd (Consumer Electronics)(www.next.co.in) Vivek Limited Retail Formats: Viveks, Jainsons, Viveks Service Centre, Viveks Safe Deposit Lockers
PGC Retail -T-Mart India [1], Switcher, Respect India, Grand India Bazaar,etc.,
Subhiksha-Formats: Subhiksha supermarket pharmacy and telecom discount chain.
Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain
Vishal Retail Group-Formats: Vishal Mega Mart
BPCL-Formats: In & Out
7
German Metro Cash & Carry
Shoprite Holdings-Formats: Shoprite Hyper
Paritala stores bazar: honey shine stores
Aditya Birla Group - "More" Outlets
Kapas- Cotton garment outlets
Nmart Retails with 71 operating Stores till now and total 153 Stores in India and 1 to open in Dubai Shortly. (Expected to be 150 by the end of Aug-2012)
8
2. COMPANY PROFILE
9
2.Company Profile Background and inception of the company: About Reliance Group
The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private sector enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in excess of US$ 58 billion. The flagship company, Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector company in India.
Dhirajlal Hirachand Ambani (1932-2002) Founder of Reliance Group
Backward vertical integration has been the cornerstone of the evolution and growth of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully integrated along the materials and energy value chain. The Group's activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and chemicals), textiles, retail, infotel and special economic zones. Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products. Major Group Companies are Reliance Industries Limited, including its subsidiaries and Reliance Industrial Infrastructure Limited. 10
About Reliance Retail Limited
Reliance Retail Limited is an organized retail arm of the Reliance Industries Limited. Reliance industry is the largest conglomerate in India. It has an annual turnover of US$35.9 Billion. It is also listed on 206th position in the Fortune Global 500 companies. Reliance Retail is actually the retail group of Reliance Industries Limited. It has a number of brands like Reliance Time Out, Reliance Digital , Reliance Wellness, Reliance Autozone, Reliance Super, Reliance Mart, Reliance iStore, Reliance fresh, Reliance footprint, Reliance Jewels,
Reliance
trends,
and
Reliance
living.
Reliance Group was established in 1970's. The Reliance Retail was found in the year 2006 as an operating subsidiary. It has its head office in Mumbai, India. Reliance is gearing up to revolutionize the retailing industry in India. Towards this end, Reliance is aggressively working on introducing a pan-India network of retail outlets in multiple formats. A world class shopping environment, state of art technology, a seamless supply chain infrastructure, a host of unique value-added services and above all, unmatched customer experience, is what this initiative is all about. The retail initiative of Reliance will be without a parallel in size and spread and make India proud. Ensuring better returns to Indian farmers and manufacturers and greater value for the Indian consumer, both in quality and quantity, will be an integral feature of this project. By creating value at all levels, we will actively endeav or to contribute to India's growth. The project will boast of a seamless supply chain infrastructure, unprecedented even by world standards. Through multiple formats and a wide range of categories, Reliance is aiming to touch almost every Indian customer and supplier.
11
About Reliance Digital
Reliance Digital is a Consumer Electronics, Durables, IT & Telecom retail arm of Reliance Retail Group, a subsidiary of Reliance Industries Limited hosts over 150 national and international brands of electronic products. Reliance Digital Stores offer more than 4000 types of electronic products. After a successful launch of Reliance Fresh stores across several towns and cities in India, Reliance Retail Limited unveiled ‘Reliance Digital’ in the year 2007, its pilot consumer electronics concept mega store. The new destination for the latest in technology and entertainment products & services, and currently 58 Reliance Digital stores are operating in India.
12
Nature of the business carried: Reliance Digital Store is a one stop shop for different electronic needs of all customers. May it be household appliances, computers, laptops, games or telecom products; customers can find every gadget, for every budget at Reliance Digital. It has over 4000 products at reasonable prices for its valued customers.
Vision, Purpose, Values and Promises: Vision
Reliance Digital seeks to fulfill the dream of every Indian, be it through its nationwide network of conveniently located stores or through its presence on the web, by providing a delightful shopping experience of products & solutions and helping them bring home the latest & best in technology from the widest selection at the lowest assured price with complete peace of mind through lifelong support. Or more simply “We bring Technology to life for you” Purpose
Growth is Life
“Bettering the lives of Indian everyday”
Values
We believe in people
We believe in and follow the customer
We believe in the good of the community
We believe in each other
13
Promises
A delightful shopping experience
A delighted community
A delightful place to work
Products/ Services Profile: Reliance Digital – The Merchandise Mix Complete range of Consumer electronics Home appliances Kitchen appliances Computing & gaming Personal audio Mobile communications High-end audio & home theaters High definition flat panel televisions Music and movies Digital photography & photo printing Accessories to enhance product usage & experience And lots more! More than 150 brands, 4000 products and countless solution bundles individually recommended to best suit the customers’ needs.
Services
Reliance Digital reviews all its products to provide the best to its customers. It has a specially designed ‘Experience Zones’ to get the real feel of the product before purchasing it. Reliance Digital provides financial assistance through easy EMI Schemes; Company has appointed Bajaj Capital to provide financial assistance to its consumers. Consumers have to make 40% down payment and the remaining amount is distributed into 8 EMIs and interest rate varies from brand to brand products. Reliance Digital has a ResQ facility, which serves the purpose of a technical support team. It comes to rescue to provide solutions for problems that customers may face with products from 14
all leading brands. This facility is available 7 days a week; 365 days a year from 10 a.m. to 10 p.m. They have qualified engineers to deal with installation and to guide you with the usage of the appliances.
ResQ services are -
Product installation : ResQ help to set up customers’ product for optimum performance
Specialised customer training:
Specialised training to customers on products and related applications by an industry trained personnel
Authorised Service Station for diagnosis and repairs (Caters to all brands)
One stop solution for repairs for all brands’ products
Repairs covering both pre and post manufacturer warranty periods
On-site service for select products – for the rest, our engineers shall transport products to and fro from the service station
Demonstrate Product Usage:
Live demonstration of all features of the product
Provide handy care tips
15
Health check-up plan: Preventive Maintenance
To ensure that products do not malfunction, resQ offer periodic services and maintenance check-ups
Tips on upkeep of products for optimal performance
Also covers products not purchased from Reliance Digital
Enhanced Utility: ResQ Accessories
ResQ offer a host of utility products and accessories that are compatible with products & help customers get more of them!
Extended Warranty Service- ResQ Care Plan
Free repairs, including both parts and labour
Free preventive maintenance visits during plan period
Area of operation – National: Reliance Digital is a Consumer Electronics, Durables, IT & Telecom retail arm of Reliance Retail Group, a subsidiary of Reliance Industries Limited, and currently 58 Reliance Digital stores are operating in India and 9 stores are operating in Bangalore.
16
Ownership pattern: Reliance Industries Limited
Refining
Textiles
Reliance Gas & Reliance Aviation
Vimal Vimal Gifting & V2 Vimal
Retail
Reliance Digital Reliance fresh Reliance footprint Reliance Jewels Reliance trends Reliance Petroleum Retail Roxy Office Depot GAPCO And many more
Petrochemicals Polyester & Fibre Intermediates
Petrochemicals - Polymers
Recron Stretch Recron Cotluk Recron Dyefast Recron 3s Recron LP Relpet And many more
Repol Relene Reon Cisamer & Relab
Reliance industry is the largest conglomerate in India, having number of brands with
the
different businesses. The ownership pattern of Reliance Digital can be explained as - Reliance Industries Limited has different subsidies; Reliance Retail Limited is one among the subsidies and under which Reliance Digital is one of the Retail Business of Reliance retail. Reliance Digital or the Reliance Retail Limited has not listed in stock market individually but Reliance Industries Limited (RIL) as whole listed under stock market where all the subsidies of RIL is considered to be a group and listed in the stock market. Hence Reliance Digital is a Public Limited Company and Mr. Mukesh D. Ambani is the Chairman and Managing Director of Reliance Industries Limited.
17
3. COMPETITORS
18
Competitors Information:
Croma
Croma is India’s first national, large format, specialist retail chain for consumer electronics and durables. Croma is promoted by Infiniti Retail Ltd, a 100% subsidiary of Tata Sons. Woolworths, one of the world’s leading retailers, provides technical and strategic sourcing support, ensuring that you buy nothing but the best. Croma's first store opened on October 9, 2006 at Juhu in Mumbai, and it's rolling out many more stores across India.
Brand Philosophy
If service wasn't important.
If technology wasn't complex.
If variety wasn't confusing.
We would have no reason to be in business.
We help you buy.
eZone
eZone is an experience-led lifestyle format that brings together the best in national and international consumer electronic and durables brands in a family-centric environment. Typically covering 12,000 square feet, an eZone store truly enables you to experience electronics through three dedicated zones - Liberation Zone, Experience Zone and Home Zone. The Liberation Zone offers personal products like computers, laptops, handy cams, MP 3 players and mobile phones. Entertainment products such as Plasma / LCD, Flat TVs, Home Theatre systems, DVD players, and Stereo systems are displayed in the Experience Zone. In the Home Zone segment, one gets to pick electronic goods of his or her choice including Refrigerators, AirConditioners, Washing Machines and Microwave ovens among other kitchen-related appliances. eZone also offers an unparalleled service and support through the special ‘E-Care’ customer support centre. E-Care is a special, dedicated support system designed to offer the best customer service after purchase of any product at eZone. 19
Others
There are other unorganized consumers electronic and durables brands such as Pai International, Girias and Harsha Electronics are operating in Karnataka and some other states of the country and these can be called as local market competitors but these brands are not to be considered as competitors for Reliance Digital Retail Limited.
20
4. INFRASTRUCTURE FACILITIES
21
Infrastructural facilities: Planogram
Also known as plano-gram, plan-o-gram, and POG, planogram is a visual representation of a store's products or services considered as a tool of visual merchandising in retail store.
Signage
Signage is kind of visual graphics created to display information about products to customers.
Experience Zones
Experience zones take consumers through a delightful and interactive voyage in the world of electronics and durable goods. Crafted with the latest signage, audio and merchandising where customers can experience the products before purchasing.
Home theater experience zone
It is an exclusive experience zone in reliance digital store. It is a small room arranged well furnished with sound systems where consumers can experience the home theaters before purchasing.
Play station
Play station is advanced video gaming station where customers who visit the store can play and have delightful shopping experience with reliance digital.
22
Learning Center
Learning center is training center that is located within the reliance digital store where employees are trained on the products thos e arrived in the store and usually this center is used for meetings in the store.
Work flow model: The nature of the business is r etailing hence the manufacturing of goods is not involved with reliance digital instead goods are ordered and brought into stores for the retail sales. The numbers of products from the d ifferent brands with different product ranges are recruited into stores and further sales is made so the work flow model could be Operating Model and Stock Ordering Process.
Operating Model
23
Operating Model Explanation
1. The operating model begins with Pre – installation Counseling & queries of customers basically this happens though telephonic queries b y customers or approach to know about product available in reliance digital and this step will supported by resQ team. Usually this will not be the initial step in most of the cases, customers directly approach store to know about the products. 2. The second step could begin the actual operating model because most of the customers first approach store and get to know details about their required product, when customers walk in to the store employees counsel the customers, attend their queries and also understanding their requirements they provide consultative solution to customers and this can be considered as beginning step of operating model. 3. After counseling and consultation when customer make the purchase of goods, delivery of goods will be supported by Reliance D&L Team, team also help customer in exchange and product pick-up in case of any replacements after sale of goods as post sales service. 4. When goods are delivered to customers by D&L team, reliance resQ team helps customers by Demonstration and Installation of product at customers place. 5. And after sales services such as extended warranty/maintenance and repairs will be supported by resQ team in the company. 6. And also replacement and up gradation of products will be supported by resQ team and further queries regarding products etc will handled by resQ team, with this again operating model may continues as discussed above.
24
Stock Ordering Process
Reliance Digital has classified electronics and consumer d urable goods into four departments as 1. Consumer Electronics 2. Home Appliances 3. Information Technology 4. Telecommunication
When the goods in the departments need to be ordered; each department follow the following procedure for ordering the stock.
Stock Ordering Process
Stock Ordering Process Explanation
1. Stock report of every product is verified regularly by all the departments. 2. In case there is no stock or less quantity in the stock for the products, st ock ordering mail
has to be sent to the category department of respective section requestin g the list of goods g required in the department with the complete details such as Product, Brand Name, Article code and Quantity, and ordering mail should have store code. 3. Category department is a central body present in the Mumbai corporate
e office, category
department place the order to respective Brands to deliver the goods to central ware house of the state. 25
4. Brand people deliver ordered goods to respective central ware house, central ware house
become the distribution center for the stores. 5. Distribution center sends the goods to the stores those are ordered. 6. When the goods arrive to the store goods are received by material department of store. 7. And finally goods are sent to the respective departments. 8. Each department has to update its stock report every day for the stock reference and keep
follow up on stock level.
Future Growth and Prospectus: At a time when inflation and high input costs are putting pressure on margins of retail companies, Mukesh Ambani-led Reliance Retail expects its specialty and value formats driving the firm’s next stage of growth. Reliance Retail’s value formats include Reliance Fresh, a neighborhood retail concept, Reliance Mart, an all-under-one-roof supermarket concept, and Reliance Super, a mini-mart concept. The value formats offer a wide range and assortment of products required for daily household needs. Its specialty formats include Reliance Digital, consumer durables and information technology concept, Reliance Trends, apparel and accessories concept, and iStore by Reliance Digital, an exclusive Apple products stores. Other specialty formats include Reliance Footprint for footwear, Reliance Jewels, and Reliance Living, a home wear, furniture, modular kitchens and furnishings concept. Reliance Retail plans to double its stores across all formats within next five years. At present, it has more than 1,050 stores and a pan-India presence. Reliance Digital Retail Limited will have 100 stores by the year 2014 in pan India. And also company planning to provide financial assistance to the reliance digital customers by the reliance group as of now it has appointed Bajaj Capital for the financial assistance to Reliance Digital customers.
26
5. STRATEGIES USED IN THE ORGANISATION
27
The McKensy’s 7S Framework
The McKinsey 7S model
The McKinsey 7S model was named after a consulting company, McKinsey and Company, which has conducted applied research in business and industry. The McKinsey 7S Framework was created as a recognizable and easily remembered model in business. The seven variables, which the authors term "levers", all begin with the letter "S": These seven variables include structure, strategy, systems, skills, style, staff and shared values. Structure is defined as the skeleton of the organization or the organizational chart. The authors describe strategy as the plan or course of action in allocating resources to achieve identified goals over time. The systems are the routine processes and procedures followed within the organization. Staff are described in terms of personnel categories within the o rganization (e.g. engineers), whereas the skills variable refers to the capabilities of the staff within the organization as a whole. The way in which key managers behave in achieving organizational goals is considered to be the style variable; this variable is thought to encompass the cultural style of the organization. The shared values variable, originally termed super ordinate goals, refers to the significant meanings or guiding concepts that organizational members share.
28
From above 7, three are called Hard ‘S these are such as
Strategy System Structure
And other four are called Soft ‘S’, namely
Skills Staff Shared value Style
McKinsey’s 7s at Reliance Digital Strategy
Strategy is the plan of action an organization prepares in response to, or anticipation of, changes in its external environment. Strategy is differentiated by tactics or operational actions by its nature of being premeditated, well thought through and often practically rehearsed.
Reliance Digital routinely have different campaigning strategies for their new products and to move stock which offer exciting sales promotion offers for the customers to persuade them to know the product and purchase it. For e.g. During Christmas and New Year sale they had up to 50% discount on products. Reliance Digital uses display fixtures to communicate and educate customer about the sales promotion and they decorate the window areas with the products related to their promotion.
System
The system that Reliance Digital has for its sale of goods is friendlier and assists customer in purchase of products. The procedure that they follow in Reliance Digital for sale of product is initially when customers walk in to store junior sales associate welcome customer in to store by greeting them and ask them how he can assist them, when customer ask him about his required product junior sales associate takes customer to that particular department and leaves customer to Senior sales associate or Team leader to attend the customers, here the person attend customer queries and explain about product features and benefits. And also consult them to go for
29
Particular product. When customer makes purchasing decision the same person takes customer to cash counter to make bill of the purchased product and when customer reaches cash counter cashier at counter greet the customer and makes billing and keep the product in Reliance Digital carry bag and hand over to customer in case goods are heavy to carry there are store boys who help customer taking them out of store and keep the products in their vehicle and if the products are huge in size they make delivery arrangement through D&L Team.
Structure
The design of organizational structure is a critical task of the top management of an organization. It is the skeleton of the whole organization. It prescribes the formal relationship among various positions and activities.
30
6. STRUCTURE OF THE ORGANISATION
31
Organization Structure
32
Store Hierarchy
CMO – Commercial Operations Manager VM – Visual Merchandiser DM – Department Manager CE – Consumer Electronics Telecom – Telecommunication HA – Home Appliances IT – Information Technology TL – Team Leader SSA – Senior Sales Associate JSA – Junior Sales Associate MOO – Material Operational Officer MOE – Material Operational Executive CRM – Customer Relationship Manager SHE – Senior Helpdesk Executive JHE – Junior Helpdesk Executive
33
Skills
Employees must have products knowledge and they should have skills to persuade customer to purchase product. At Reliance Digital Company provide training to the employees on products which help employees to make sale of product with their best knowledge of product and skill. In successive intervals the company sends mystery shoppers to stores to evaluate the performance of the employees and they rate the performance of employees in the store and report to the company if the training is required company arranges for it. And whenever new product has arrived to store they provide training on that particular product in the store learning center. During the training conducted by the company they make sure that the employees are aware about the products information and also sales associates are given proper selling skill tips and training on selling procedure. Employees are also trained on how to greet and groomed to their best ability and they are trained to handle all minor issues encountered in the store.
Staff
Organizations are made up of humans and it's the people who make the real difference to the success of the organization in the increasingly knowledge-based society. The importance of human resources has thus got the central position in the strategy of the organization, away from the traditional model of capital and land. Reliance Digital has 58 stores in pan India and has got more than 1000 employees working for the company.
Shared value
We believe in people
We believe in and follow the customer
We believe in the good of the community
We believe in each other
34
Style
Reliance Digital has a very friendly environment for all the employees .The management follows top/down and bottom/up approach. Where in top management transfers the information from the higher level to the lower level. The target and objectives are set by the top level managers and are delegated to the lower level managers those in turn transfer to Team leader and sales associates in the store level, hence all the major decision are taken by the higher authority and shared to the lower level. The lower level employees i.e., Team leader and sales associates revert back to the daily reports to the Department manager who in turn reports to the store manager and further store manager to his higher authority and it continues. Every employee has a participative approach towards the business. Every employee is concerned with his Duties, Responsibilities and accountability for the happening of the event and employees have to report to their higher authority at regular intervals.
35
7. SWOT ANALYSIS
36
SWOT Analysis Strength:
Brand Name Reliance - Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector company in India.
resQ Services - The dedicated service arm that is available for support all 365 days of a year, from 10 a.m. to 10 p.m.
Network - Over150 international and national brands.
Private label sale – Some of own products (Reliance Reconnect).
Product mix - One-stop shops for all technological solutions, it has over 4000 products at reasonable prices.
Weakness:
Poor inventory control.
Inadequate human resources.
Operating costs are too high.
Opportunity:
Potential for investment.
High growth potential.
E-retailing.
Retail franchising.
Wholesale trading.
Threat:
Increasing competitor’s market share.
Price war with competitors.
Inflation.
Competition offered by Chinese products.
37
Analysis of Financial Statements Reliance Digital Retail Limited Balance Sheet as at 31st March, 2010
38
Analysis:
Long term funds increase in 2010 compare to the year 2009. Share capital remains unchanged where Reliance Digital Retail Limited borrowed more funds in the form of secured and unsecured loans.
The investment in fixed assets is increased to 10448.63 lakhs in 2010 from 8509.70 lakhs in 2009.
The investment on current asset increased from 3989.34 lakhs in 20009 to 6790.10 lakhs in 2010.
Interpretation:
The Reliance Digital Retail Limited investing more money in the form of fixed assets. The current liabilities are not sufficient to meet the regular requirements and also company is using long term funds to finance current assets.
39
st
Profit and Loss Account for the year ended 31 March, 2010
The sale is increased from 31628.01 lakhs in 2009 to 41186.78 lakhs in 2010. Though sales has increased when comparative to last year the loss margin increased in 2010 because of increased in the operating expenses. Reliance Digital Retail Limited should take measures to reduce operating expenses.
40
8. CONCLUSION
41
