MRS DOC

CONSUMER PREFERENCE ON GARMENT

ACKNOWLEDGEMENTIt is pleasure to acknowledge those who have contributed to this project directly or indirectly, though it will be still an inadequate appreciation of their contribution, we here by acknowledge the names of the people to whom we shall always remain grateful. We would sincerely like to express our gratitude to Mr. Ravjibhai Patel who gave us the grand opportunity to have Grand Project at Adani Supermarket. We would especially like to thank Mr. Manish Christian, the Retailing Manager at ADANI for evincing keen interest in our work, continuous encouragement and guide us through out our survey. Without his cooperation it was impossible to reach up to this stage. We are also very thankful to all the members of Adani Supermarket who shared their valuable knowledge with us & gave us opportunity to understand the field of competitive Retail industry. We are also very thankful to Prof. Rajeshwari Jain who performed as a guide for this project. We are thankful for her constant guidance, support and inspiration. We would also like to sincerely express our gratitude to our director Prof. S. Chinnam Reddy & all the faculty members who have been time & again directly or indirectly helped us in relation to the Grand Project. Without the theoretical knowledge imparted by them during 4th Semester of M.B.A. course it was not possible to have it applied in practical life. We are thankful to the librarian at the SKPIMCS & at the AMA for extending their helpful hands as and when needed without any hesitation. Thanks to our parents, who always keep us from falling apart during endless hours of our project. They always keep our sprits up and our hamstring in working order. We eagerly look forward for the suggestions for improvement from the readers of this project. Dhaval Pandya Mayur Karavadara

CERTIFICATE

CONSUMER PREFERENCE ON GARMENTThis is to certify that Mr. Dhaval Pandya and Mr. Mayur Karavada, the students of M.B.A. 2nd Year of S.K.Patel Institute of Management & Computer studies, Gandhinagar have completed their grand project titled as A STUDY OF CONSUMER PFERENCE IN GARMENT IN ADANI HYPERMARKET AT AHEMDABAD in the year 2005-2006 in partial fulfillment of Gujarat University requirement for the award of degree of Master of business administration.

Prof. S. Chinnam Reddy Director

Prof. Siddarth Das Coordinator

Prof. Rajeshwari Jain Grand Project Guide

Date: __/__/2006

DECLARATION

CONSUMER PREFERENCE ON GARMENTWe hereby, declare that the grand project on A STUDY OF CONSUMER BEHAVIOR PATTERN WITH RESPECT TO PART OF PRODUCT MIX FOR UPCOMING HYPERMARKET IN AHMEDABAD is our original work and has not published elsewhere. This has been undertaken for the purpose of partial fulfillment of Gujarat University requirement for the award of degree of Master of Business Administration. Date: __/__/2005 Place: Gandhinagar

Uteshiya Dilip M.

Thakrar Milan R.

INDEX

SR. NO.

PARTICULARS

PAGE NO.


01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21

EXECUTIVE SUMMARY PREFACE INTRODUCTION OF RETAILING INDUSTRIAL ANALYSIS PROBLEM OF THE INDUSTRY FUTURE SCENARIO OF THE INDUSTRY THE TIMES OF INDIA HIGHLIGHTS A BRIEF HISTORY STORY OF THE TIMES SIZE AND FORM OF THE ORGANIZATION AWARDS AND ACHIVEMENTS IN ADVERTISING FUTURE PLANS OF THE COMPANY VARIOUS DEPARTMENTS OF THE BCCL RMD RESULTS & MARKETING DEVELOPMENT PORTFOLIO OF BCCL THE TIMES OF INDIA THE ECONOMIC TIMES FEMINA FILMFARE CURRENT TRENDS OF MAGAZINE INDUSTRY IN INDIA RESEARCH METHODOLOGY o RATIONALE OF THE STUDY

02 03 04 07 10 12 13 15 17 19 20 22 23 24 26 28 32 36 41 47 50 50

CONSUMER PREFERENCE ON GARMENTo RESEARCH PROBLEM o RESEARCH OBJECTIVE o HYPOTHESIS o STRATAS o SAMPLING PROCESS o SOURCES OF DATA o RESEARCH INSTRUMENT o LIMITATIONS OF THE STUDY o TABLES & CHARTS OF THE RESEARCH STUDY o CONCLUSION OF THE RESEARCH STUDY 22 23 24 25 26 27 SALES PROMOTION OF FEMINA & FILMFARE PROCESS OF PENETRATION FOR FEMINA & FILMFARE SUGGESTIONS EXTRA ACTIVITIES BIBLIOGRAPHY QUESTIONNAIRE 50 51 52 52 52 53 53 54 55 61 62 64 70 71 72 73

EXECUTIVE SUMMARYThe grand project at ADANI HYPERMARKET, Ahmedabad was very informative and knowledge giving. We have done Research Study on the consumer preferences on garment. The Research Study was confined to Ahmedabad City with a sample size of 250. We have primary data through questionnaire. We have also used different retail magazine and web-site for require information in our secondary data.

CONSUMER PREFERENCE ON GARMENTAt the end of the Research study we have come to the conclusion that ADANI HYPERMARKET have good potential to attract customer in store but they require to create more awareness in the garment selling at hypermarket. There were some limitations also of our Research study. All the suggestions and findings might prove important to ADANI RETAILING and helpful to find consumer preferences in garment department.

PREFACEThe business of retail in India has seen significant changes in last few years. We have seen the emergence of new formats and the application of global concepts and constructs albeit with modifications to suit the Indian environment. It not only provides the Indian consumers a wide choice, but also represents a very large employment opportunity for people with diverse skill sets. India has largest retail density in the world with 12 million retail outlets for a population of over a 1000 million, though 96% of these are smaller than 500 sq. ft. A 2 percent share of organized retail in India is the way below the 80 per cent share in USA, 40 per cent in Thailand and 20 per cent in China. Organized retailing is growing very rapidly in India.

CONSUMER PREFERENCE ON GARMENTIn India we find Convenience store, Department store, Hypermarket, Supermarket, Specialty store etc. from where people purchase their requirement. All these stores can be differentiated based on size as well as the product mix available. Adani retailing India Ltd. is the group company of Adani group having nearly 61 supermarkets and 5 hypermarkets in Ahmedabad. It has penetrated the Ahmedabad market and it is on the way of expansion in other cities of Gujarat. Adani want to improve there consumer promotion scheme in garment. So studying the consumer preferences and find what the people of Ahmedabad expect in garment preferences should be understood. Our questionnaire is based on the requirement of the company. Our study will provide some insight to the company in understanding consumer buying behavior and deciding the part of product mix requirement for upcoming hypermarket.

1. INTRODUCTION The first question that must be considered is: what is retail? The word retail is, in fact, derived from the French word RETAILER, which means to cut off a piece or break bulk. A retailer may be defined as a dealer or trader who sells goods in small quantities or one who repeats or relates. Retailing can hence, be considered as the last stage in the movement of goods and or services to the consumers. put simply, any firm that sells products to the final consumer is performing the function of retailing .it thus consists of all the activities involved in the marketing of goods and services directly to the consumers, for their personal, family or household use. The past century has been witness to many changes occurring in our everyday world. Industrial and technological growth has made a significant impact on our lives as consumers. One such industry, which has made a phenomenal impact on our daily lives, is retail. This industry touches our lives as end consumers, by providing us with the products or services that we need.


Almost everything we use in our daily lives including the feed we eat, the clothes we wear, and the things we need for our homes or for ourselves, are bought from retail stores. Goods are manufactured all over the world but are ultimately sold to us through these retail stores. India has already proven its mettle as superpower in the arena of information technology. The retail industry offers to bloom to the same level if conductive environment and support is provided it. Indias one billion populations make the country the second largest in the world in terms of population which is the very basis for successful organized retailing. We should take heart from the fact that most of the worlds successful retail stories in the developed as well as developing countries have shaped up in small towns and villages. Retailing is a green pasture not just for individuals or companies but also comes with job opportunities in all aspects of the operations. Professionalisms in retail while still in its infancy does show some promising future for those keen to make a career in this fascinating world. Talking about our project, the title of the project is A STUDY OF CONSUMER BEHAVIOR PATTERNS WITH RESPECT TO PART OF PRODUCT MIX FOR UPCOMING HYPER MARKET IN AHMEDABAD. For acquiring related data we have formed one questionnaire which contains 12 questions. Basically all these questions are focused on the consumers behavior for visiting any outlet, purchase the product and frequent need of the products. We have also learned the theoretical knowledge which requires for completing this project. We have got the knowledge about the Retailing, as well as the consumer behavior. We have learned about the Retail industry in Indian context as well as in global context. After studding these aspects of Retailing we have tried to give the suggestions and the recommendations for strengthening the future policies of the Adani hyper market in the Ahmedabad. This project will helpful to the organization for knowing what is consumers behavior regarding products and services offered by local provision store and general store, as well as about the part of the product mix..


1.

2. RESEARCH METHODOLOGY

2.1 TITLE OF THE PROJECT: A study of consumer behavior patterns with respect to part of product mix for upcoming hyper market in Ahmedabad

2.2 OBJECTIVES: To study consumer behavior for purchasing products from different types of retail format To analyze product requirement of consumers from provision store, superstore etc. with frequent use. To analyze product mix factor affecting switching of consumer from traditional retail formats to hypermarket.

To analyze the consumers perception about the concept of discounted sale.

2.3 SCOPE: Study of consumer behavior patterns who purchase their household necessity from provision store as well as from the supermarket and the study was limited to 180 ft. Ring road, Kalawad road, Raiya road, Gondal road, Nirmala convent road, 150 ft. ring road. University road, Yagnik road Karanpara, Manharplot etc.

2.4 TIME SCOPE For completing this project we have taken a time period of three month with our study of the 4th semester.

2.5 SAMPLE DESIGN: 2.5.1 Sampling type In this project convenient sampling method is used for the selection of customer.

CONSUMER PREFERENCE ON GARMENT2.5.2 Sampling unit To define sampling unit, one must answer the question that who is to be surveyed. In this project sampling unit is households who are purchasing there household necessity from the supermarket and the customers who are purchasing there routine household items from the provision store of Ahmedabad city of different areas. The Geographical Unit is Area and the social unit is house holds. 2.5.3 Sample size The sample size of the survey was 200 customers.

2.6 METHODS OF DATA COLLECTION 2.6.1 Primary methods 1. Questionnaire 2.6.2 Secondary methods 1. Magazines. 2. Newspapers 3. Websites 4. Books 5. Other projects. 2.7 FIELDWORK: In order to gather the primary data associated with our survey of consumers over a selected hub of areas in Ahmedabad, we have undergone an extensive fieldwork. The basic purpose of the field work was, obviously, to record responses of target consumers. 2.8 LIMITATIONS The time duration to carry out the survey of all the areas of Ahmedabad was very short. Our survey was restricted to areas like 180 ft. Ring road, Kalawad road, Raiya road, Gondal road, Nirmala convent road, 150 ft. ring road. University road, Yagnik road Karanpara, Manharplot etc.

CONSUMER PREFERENCE ON GARMENT The sample size for the survey of customers was limited to 200 respondents, which might not be representative of all customers of Ahmedabad city. The respondents are selected by convenience so they may not be representative of the analysis. The results are totally derived from the respondents answers. There might be a difference between the actual and projected results. Research also depends on surveyors bias & his/her ability to analyze the data & draw conclusion.

CONSUMER PREFERENCE ON GARMENT3. INDUSTRY PROFILE 3.1 GLOBAL RETAILING Retailing is the final step in the distribution of merchandise - the last link in the Supply Chain - connection the bulk producers of commodities to the final consumers. Retailing covers diverse products such as foot apparels, consumer goods, financial services and leisure. A retailer, typically, is someone who does not effect any significant change in the product execs breaking the bulk. He/ She is also the final stock point who makes products or services available to the consumer whenever require. Hence, the value proposition a retailer offers to a consumer is easy availabilities of the desired product in the desired sizes at the desired times. Many retailers did globalize, and some succeeded. Yet many more retailers, especially U.S.-based retailers, struggled and failed to find the holy grail of globalization. Indeed, the retailing industry is littered with the charred remains of investments that drained cash from the bottom line. Retail behemoths were humbled by poorer, technically unsophisticated local companies that simply knew their customers better. They were sideswiped by financial crises in such disparate locations as Argentina, Indonesia, Russia, and Mexico. So is there still hope for retail globalization? The answer is yes. Despite the many failures, there are also many successes. The factors that drove enthusiasm in the past have not disappeared. Emerging markets still represent the greatest hope for increased spending power, home markets are still laden with excess capacity and slow growth, and big retailers still have much to offer consumers in emerging countries. In the developed countries, the retail industry has developed into a full-fledged industry where more than three-fourths of the total retail trade is done by the organized sector. Huge retail chains like Wal-Mart, Carr four Group, Sears, K-Mart, McDonalds, etc. have now replaced the individual small stores. Large retail formats, with high quality ambiance and courteous, and well-trained sales staff are regular features of these retailers


Top Ten Retailers Worldwide Rank Retailer 1 2 3 4 5 6 7 8 9 10 No of stores owned 8130 3445 7150 2169 2105 2231 2512 1307 Sales in FY-00 US$ Millions $180,787 $61,047 $49,000 $45,738 $45,729 $44,189 $37,028 $36,823 $36,726 $36,362

Wall-Mart Stores Inc. (USA) 4178 Carrefour Group (France) The Kroger Co. (USA) Royal Ahold (Netherlands) Metro AG (Germany) Kmart Corporation (USA) Sears, Roebuck and Co. (USA) Albertson's, Inc. (USA) Target Corporation (USA)

The Home Depot, Inc. (USA) 1134

Broadly the organized retail sector can be divided into two segments, In-Store Retailers, who operate fixed point-of-sale locations, located and designed to attract a high volume of walk-in customers, and the non-store retailers, who reach out to the customers at their homes or offices. Apart from using the internet for communication (commonly called e-tailing), non-store retailers did business by broadcasting of infomercials, broadcasting and publishing of directresponse advertising publishing of traditional and electronic catalogues, door-to-door solicitation and temporary displaying of merchandise (stalls).

3.1.2 Global 250 Highlights


This year we have expanded our coverage of large retailers. The table presents the 250 largest retailers around the globe. An additional 50 retailers were added, in part, because there are a large number of companies that have sales in the low- to mid-$2 billion range that in previous years were not being highlighted. Several of these companies are rising stars; others simply are solid performers whose status should be acknowledged. The retailers in the current list generally performed well in 2003. The global economic upswing gained momentum in 2003, which provided an important lift to retailers around the world. Importantly, many regions North America, Asia, Latin America, Africa exhibited growth in consumer demand for the year. This synchronous upturn underpinned the 3.9 percent gain in inflation-adjusted global GDP in 2003. It was the global economys strongest rate of increase since 2000. Only Western Europe did not experience acceleration in growth during the year. 2004 Results Retail sales for these 250 companies totaled $2.6 trillion. With global retail sales of roughly $8 trillion, these 250 retailers are capturing about a third of the marketplace. Retail sales varied across a wide range from a high of $256 billion for Wal-Mart to CBRL Groups $2.2 billion. (CBRL Group is known mostly for its Cracker Barrel Old Country Store Restaurants.) However, at the bottom of the list, the race was much tighter. There were 58 retailers whose sales were within a very narrow band of $3 billion to $2.2 billion. There also were nearly a dozen more retailers with sales of slightly more than $2 billion who just missed making the list.

CONSUMER PREFERENCE ON GARMENTThe improved global economy, coupled with increased productivity from technology investments, has helped retail profitability. For those companies who report their results, only 5 retailers, or 6 percent, recorded a net loss in 2004. In last years report, 7 percent of the retailers had losses, and in the prior year, 13.5 percent were unprofitable. For those who were profitable in 2004, the average net income figure represented 3.3 percent of group sales. The largest retailers have, for the most part, retained their leadership roles. Among the top 10 retailers, there were only small movements in the rankings. The top three companies Wal-Mart, Carrefour and Home Depot remained the same. Tesco and Aldi Einkauf moved up two slots, while Sears dropped from 10th to 13th largest global retailer. Sales from these 10 retailers reached $740 billion, representing 28.4 percent of the total from these 250 companies. There are two new Chinese retailers that have joined the ranks of top retailers. Shanghai friendship, ranked 164 on the list, is the parent company of Chinas largest supermarket Operator, Lianhau Supermarket. Beijing Gome Home Appliance is the 230th largest retailer on the list. As the Chinese government continues to support efforts of consolidation among its retailers, the number of large retail conglomerates will continue to grow. Chinas securities regulator in October 2004 approved a plan for Bailian Group to acquire major stakes in five other retailers, including Shanghai Friendship. The Chinese government is facilitating consolidation, in part, to allow its retailers to better compete against the growing presence of foreign retailers. At the end of 2004, China began allowing foreign retailers to set up wholly owned units, with no restrictions on the number of outlets or locations. 3.2 RETAILING IN INDIA 3.2.1 RETAIL SALES The evolution of Indian retail industry For Indian retailing, things started to change slowly in the 1980s, when India first began opening its economy. Textiles sector (which companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim) was the first to see the emergence of retail chains. Later on, Titan, maker of premium watches, successfully created an organized retailing concept in India by establishing a series of elegant showrooms. For long, these remained the only organized retailers, but the latter half of the 1990s saw a fresh wave of entrants in the retailing business. This time around it was not the manufacturer looking for an alternative sales channel. These were pure retailers with no serious plans of getting into manufacturing. These entrants were in various fields, like - Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books. As of the year ending 2000 the size of the Indian organized retail industry was estimated at around Rs. 13,000 Crore. The various segments that make up the organized retail industry along with their size are in table given below. Retail growth is already gathering momentum and

CONSUMER PREFERENCE ON GARMENTthe organized retail industry is expected to grow by 30 per cent in the next five years and is expected to touch Rs. 45,000 Crore in 2005. Thus, the growth potential for the organized retailer is enormous Retailing in India The retail market size in India is estimated to be around $180 billion. Retailing provides jobs to almost 15 percent of employable Indian adults and it is perhaps the largest contributor to India's GDP. But the flip side of the coin is that the average size of each of the retail outlets in India is only 50 square feet and though a large employer, the industry is very unorganized, fragmented and with a rural bias.1. The Indian retail industry is unorganized

There are nearly twelve million retail outlets in India and the number is growing. Two thirds of these stores are in rural location. The vast majority of the twelve million stores are small "father and son" outlets. According to the "Retailing in India" report published by the PwC Global Retail Intelligence Program, share of the unorganized sector is 98%.2. The Indian retail industry is fragmented

Retail stores in India are mostly small individually owned businesses. The average size of an outlet is 50 sq. ft. and though India has the highest number of retail outlets per capita in the world, the retail space per capita at 2 sq. ft per person is amongst the lowest in the world.3. The Indian retail industry has rural bias

Nearly two thirds of the stores are located in rural areas. The retail industry in rural India has typically two forms: "Haats" and "melas". Haats are the weekly markets: they serve groups of 10-50 villages and sell day-to-day necessities. They are frequently used as replenishment point for the small village retailer. Melas are larger in size and more sophisticated in terms of the goods sold. Mela merchandise would include more complex manufactured products such as televisions. Even in urban areas, organized in India is restricted to the top few cities of the country as shown in Table given below: Trends in Retailing Retailing in India is at a nascent stage of is evolution, but within a small period of time certain trends are clearly emerging which are in line with the global experiences. Organized retailing is witnessing a wave of players entering the industry. These players are experimenting with various retail formats. Yet, Indian retailing has still not been able to come up with many successful formats that can be scaled up and applied across India. Some of the notable exceptions have been garment retailers like Madura Garments & Raymonds who was scaled their exclusive showroom format across the country

CONSUMER PREFERENCE ON GARMENT1. Experimentation with formats Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out; the old ones tweaked around or just discarded. Some of these are listed in Table below.Retailer Shoppers' Stop Ebony Crossword Pyramid Pantaloon Subhiksha Vitan Food world Globus Bombay Bazaar Efoodmart Metro S Kumar's Current Format Department Store Department Store Large bookstore Department Store Own brand store Supermarket Supermarket Food supermarket Department Store New Formats. Experimenting With Quasi-mall Quasi-mall, smaller outlets, adding food retail Corner shops Quasi-mall, food retail Hypermarket Considering moving to self service Suburban discount store Hypermarket, Food world express Small fashion stores Aggregation of Kiranas Aggregation of Kiranas Cash and carry Discount store

Retailers are also trying out smaller versions of their stores in an attempt to reach a maximum number of consumers. Crossword bookstores are experimenting with Crossword Corner, to increase reach and business from their stores. Food World is experimenting with a format of one-fourth the normal size called Food World Express.2. Store design

Irrespective of the format, the biggest challenge for organized retailing is to create an environment that pulls in people and makes them spend more time shopping and also increases the amount of impulse shopping. Research across the world shows that the chances of senses dictating sales are as much as 10-15% for certain categories. This reason is good enough for organized retailers to bring in professional designers while developing a new property. And, that is why retail chains like Music World, Barista, Pyramid and Globus and laying major emphasis & investing heavily in store design. Music World spent three months in college campuses and metros studying the market and talking to youngsters before starting work. The brand identity was created after extensive research: a logo was designed and the look of the stores across the country was decided upon. Apart from the visual impact, the functionality of the store design was also taken care of. Listening posts have been created for people to listen to their favorite album and an area in the center of the stores has been earmarked for celebrity visits and promotions.3. Emergence of discount stores

CONSUMER PREFERENCE ON GARMENTWhat does Subhiksha in Chennai, Margin Free in Kerala and recent entrants like Bombay Bazaar in Mumbai, RPG's - Giant in Hyderabad, Big Bazaar in Kolkata, Hyderabad and Bangalore have in common? Their products are below MRP. Discount stores have finally arrived in India and they are expected to spearhead the revolution in organization retailing. Though this segment is growing, it is small compared to international standards where around 60 per cent of the business comes from this format. Internationally, the largest retailer in the world Wal-Mart is a discounter. These discount stores have advantages of price, assortment dominance and quality assurance and have the ability to quickly build scale and pass on the benefits. However, the success would be for retailers who are able to build the scale fast and manage their operations efficiently while offering value to the customer consistently.4. Unorganized retailing is getting organized

To meet the challenges of organized retailing that is luring customers away from the unorganized sector, the unorganized sector is getting organized. 25 stores in Delhi under the banner of Provision mart are joining hands to combine monthly buying. Bombay Bazaar and Efoodmart have also been formed which are aggregations of Kiranas. In a novel move, six Delhi based restaurants have come together and formed a consortium: NFC, to promote New Friends Colony, a posh locality in the Capital, as a branded place in town. The aim is to increase footballs in the area, which is fast losing its sheen to its closest and upcoming destinations such as large cineplexes, and malls, which are backed by the corporate house such as 'Ansals' and 'PVR'.5. Not all stories are a success

A lot of activity is happening in retail and though we do have may success stories, not all ventures have been successful. Shoppers' Stop, for example, implemented JD Edwards ERP, but could not reap much benefit due to less than optimal number of operating locations. A few references of other such less successful ventures is given below:

Franchising, as a way to grow has not worked out well for Vitan, the second oldest food supermarket. More than two third of its 19 odds outlets have either folded up or snapped up ties with the parent.

The foray of organized retailing in the small towns of India has met with limited success. The notable example being Shoppers' Stop foray in Jaipur. The retailers are now focusing their energies on the top six cities.

India's oldest food supermarket chain, the Bangalore based Nilgiris has been up for sale for a few months now but yet to find takers. In Delhi, the Escorts group-promoted Nanz, a food supermarket has shut down after being unable to find a white knight.

CONSUMER PREFERENCE ON GARMENTThese failures and limited successes have happened both due to a lack of experience and understanding of issues.

VISION 2010


Industry Retail Industry 200425000 20000 INR Cr 15000 6283 4614 10000 5000 0 21990 16148

Organised Malls 5759 4229 4712 3460 4189 3076 3665 2691 3665 2691 Consumer

Entertainment

Personal Care

Eaiting out

Specially

Apparel

Grocery

According to ICICI estimates, the share o organized retailing is set to increase from 20 percent in 2010. A share of Rs. 2900 Crore in 2004 will leap to Rs. 38,447 in 2010.India Retail Industry 201025000 20000 INR Cr 15000 6283 4614 10000 5000 0 Apparel Entertainment Eaiting out Grocery Specially Consumer Personal Care & Leisures Durables Others 21990

16148

& Leisures

Durables

Others

2094 1538

Organized Malls 5759 4229 4712 3460 4189 3076 3665 2691 3665 2691 2094 1538

CONSUMER PREFERENCE ON GARMENTThe past 2-3 years have seen a number of developments in the retailing business in India. The entry of corporate houses like RPG, Tata and Piramals has increased the capital availability in the market. Bigger players like Shoppers Stop are in a position to take advantage of their sizes in dealing with the manufacturers. Despite a slowdown in the economy, customer queues at the stores are not decreasing. Retail sector is bound to grow in the coming years. But how much and in what direction are the questions that need to be evaluated. Various agencies have made different estimates of the size of organized market in 2010. The one thing in common amongst these estimates is that the Indian organized retailing industry will be very big in 2010. The status of the industry will depend a lot on external factors like Government regulations and real estate prices, besides activities of the retailers and demands of the customers. Based on our analysis of present trends, and development of retailing elsewhere, we present our perspectives and snapshots of organized retailing, as it would exit in 2010.

1. Investment will increase

Retail sector will see huge investments in the next 4-5 years. Newer chains will come in and the present players will increase their penetration. By 2005, the established players would have reached saturation levels in metropolitans and will shift the focus of their investments to other Class 1 cities. By 2010, there will be little difference between the metros and the next 20 cities (the present million plus cities). However, the investments would largely be private investments, or at best secondary markets. This will happen because expansion will happen through investments by business houses that will not sell their stakes. If any purely retailing company exists, it will be an exception. However, if the ban on foreign players holding a controlling stake is lifted, the sector could see drastic movements. The entry of foreign players will undoubtedly result in buying and selling and some businesses might withdraw their money in anticipation. The entry of foreign players, if allowed, will not only affect ownerships, but also change the basics of business. Huge investments in stores and their supply chains can transform the entire scenario. But the lifting of ban is a policy issue that cannot be predicted, and can only be decided by the government.2. Demographics

In the next 10 years, India population is expected to grow by about 14 per cent. But this increase will not be even. Important trends that will affect retailers are listed below.

CONSUMER PREFERENCE ON GARMENTThe number of children (0-15 years) will remain stable at 30 million: This will mean a lesser growth for toys, games and some apparel segments. But given the current nascent stage of the growth, these sectors will still offer high growth rates. The number of people in 40-60 years of age will go up by 30%: Sales of cosmetics, skin care, hair dyes, and other youth inducing products will rise. More consumer resources would be spent on retirement planning and saving for retirement. Home improvement and financial services firms would benefit from this trend. The number of households will increase by 25%: This would lead to a higher growth in the household-decor items vis-a-vis personal items as apparel and fashion accessories.3. Regional differences will stay

Although a few players will be able to form pan-Indian retail supply chains, the retail market is unlikely to be a single entity. For example, food retailing in Chennai, Kolkata and Chandigarh is vastly different in terms f shopping habits and consumer tastes. Many such differences will remain. Though a few national retail chains will develop, they would have to coexist with strong regional players, who would excel in their understanding of the customers and strong brand names. The national players would primarily be is sectors like Apparel, Fashion, Food and Music. Importance of local supplies for grocery sector would ensure the regional chains would reign supreme in these sectors. The key to success for national players will to maintain the efficiencies that come from their large-scale operations while retaining the ability and the flexibility to satisfy different needs of different consumers. However, organized retailing, in some cases, will change and harmonize consumer habits, purchasing patterns and consumer behavior. McDonalds and Barista have already been successful in doing this.4. Retailers would adapt more than one format

Today, internationally all top-retailers (except Kmart and Aldi) operate 3-4different formats, with companies like Metro AG operating 13 formats. This diversity of formats allows the company to utilize its brand value across different segments and categories of customers. Signs of such a development are visible in India as well. A movement towards Class-I cities necessitates modification of operating format5s to suit different needs. By 2010, top retailers would be operating at least 3-4 formats. The biggest challenge that the retailers will have to face would be of maintaining different brand images, and though clashing images would be formed, a few retailers would be able to use Brand Extensions to establish different images in different cities.5. Dual focus on costs and time


With more dual income families consumer ability to spend will increase, but the time available for shopping will go down. Customers will become more demanding in terms of rapid and friendly service. Retailers would develop shopping as an entertaining experience, but the more successful ones will be the ones who provide faster service. On the other hand, increasing competition would push the prices down. Efficiencies in supply chain and economies of scale would allow retailers to reduce their prices without compromising either on the shopping experience or on their own profitability.6. 24 hours retailing

Time stressed consumers will also ask for round the clock retailing. As these consumers will be ready to pay a premium for service at odd hours, the timings of shopping will have to adapt to needs of these consumers. A number of 24 hours retail stores would emerge to cater to this need. The assumption here is that the current administrative restrictions on running shops at nights will be lifted. It is expected that in the face of increasing demand from both the consumers and the industry fore, regulations regarding retailing will be eased.7. Small retailer will coexist

Within a decade; large organized retailers would be controlling a substantial portion of the retail trade. Yet, it is not to say that small, independent and unorganized retailers will disappear in large numbers. They will survive on their core strengths of personal relations with customers and closeness to residences. The experiences of South East Asian countries has been that even after 10 to 15 years of allowing FDI in retailing, unorganized retailers still control a sizeable chunk of the retailing market. The Indian experience in retailing is expected to be no different.

However, to compete with the big retailers on price, small retailers will form cooperatives for purchasing, just as the once in France, Spain and Italy have already done. This trend has also started in Delhi, and is only expected to increase.8. Supply chain dynamics

T he balance of power between retailers and manufacturers will shift towards the retailers. The bigger retailers would be able to seek the lowest prices, require their suppliers to assume greater business risks, and collaborate with suppliers to achieve overall cost reduction in their operations. Scale economics would help in operating optimized supply chains and logistics network with investments in information technology enabling process efficiencies and effectiveness.

CONSUMER PREFERENCE ON GARMENTIncreased volumes would enable investments in specialized equipment for transportation of goods. Retailers with large chains would negotiate and get central procurement but local dispatches from their suppliers.9. Internet

Internet retailing will thrive in the coming decade. It may not be apparent now because internet access is far behind the US and west, and high usage charges represent a serious impediment to frequent consumer usage. The Government has already shown intent to deregulate the telecommunications sector. Deregulation would increase Internet usage in the country and also the trading on the net. However, it is expected that the bricks and mortar stores converting to clicks and mortar model would dominate the Internet sector. ? This is because of their already existing brand names and economies of operations that they would be able to reap.Conclusion

The past 4-5 years have seen increasing activity in retailing. Various business houses have already planned for few investments in the coming 2-3 years. Though the retailers will have to face increasingly demanding customers and intensely competitive rivals, more investments will keep flowing in and the share of organized sector will grow rapidly. Organized retailing in India is surely poised for a takeoff and will provide many opportunities both to existing players as well as new entrants.


3.2.2 MAJOR RETAIL PLAYERS Retailing in India is still evolving and the key players are working with newer formats in an attempt to grow at a fast rate. The table lists some of the important retailers in India at the present time:

CONSUMER PREFERENCE ON GARMENTFormat Brands Group No of Stores (Approximate) 350 279 150 90 30 19 1 19 5 1 5 1 13 Estimated Turnover (INR millions) 5500 1000 1500 3600 500 110 120 400 150 850 1800 --3,030

Neighborhood stores

Supermarket

Margin Free Margin Free (Discounter) Safal Mother Dairy Subhiksha Subhiksha (Discounter) Foodworld RPG Nilgiris Sabka Bazaar Haiko Trinetra Ravjis Giant (Discounter) Big Bazaar Metro Shoppers Stop Nilgiris Sabka Bazaar Lakewood Mall Pvt Ltd Trinetra Adani RPG Pantaloons Metro K Raheja Group-Real Estate

Hypermarket Cash & Cary Departmental store


The trend of large corporate groups entering the organized retail sector - looking for new business opportunities continues. Groups such as ITC, RPG, and Tatas which entered the organized retail sector are expanding their operations in the country. Most of the players in organized retailing are in the initial stages of their business and expansion plans. Accordingly, most are not profitable businesses at the present time. Pantaloon and Westside (Trent) are listed on the capital markets and have shown net profitable in the last year. Most other players are hoping to break even and start making money only in the coming years. The presence of multinational retailers is still an exception with Dairy Farm, Marks & Spencer, already on the market. Metro is expected to set up operations by the end of the year. 3.2.3 RETAIL & CONSUMER SECTOR CHALLENGES AND OPPORTUNITIES Hurdles faced by the Retail Sector The Indian Government is in the process of formulating a strategy to nurture and support the retail sector. Due to this, retailing in India is largely unorganized and fragmented. Lack of FDI (Foreign Direct Investment) is another reason why it remains so traditional. Policy makers continue to put barriers for the entry of foreign enterprises due into this sector. But the last decade has witnessed significant movements towards modern retailing, especially in the consumer durable products segment. Products, marketed on lifestyle platforms, experienced a dearth of appropriate retail outlets, which could fit their brand positioning. As a result, many brands began to set up their own retail outlets initially, thereafter expanding their modern retail network through franchise arrangements. In contrast, the grocery segment has been slow to take to modern retail. The grocery sector in India is estimated to be USD 90 billion. The organized retailing in this segment is still in its nascent stage and needs to develop in terms of its scale and share in the market, margins earned, labour productivity, and economic propositions like distinctive sourcing, development of private labels, technology, etc. But there are some modern retailing formats in grocery that have emerged and are catching on with the increasing number of nuclear households in urban India, where both husband and wife may be working out of home or traveling. A large number of retail outlets in India still remain family owned. They offer limited Products and finance facilities. Banks are hesitant to provide these retail sector units with finance facilities due to their small size which is non viable for the banks. The supermarket format in India faces the difficulty of obtaining licenses, customer inhibition and the lack of suitable personnel.

CONSUMER PREFERENCE ON GARMENTBut organized retailing is likely to emerge in other categories like appliances, IT products and others. This kind of progress will depend largely on real estate, prices, supply chain bottlenecks and sourcing. Emerging Channel Conflicts The relationship between manufacturers, wholesalers, middlemen and retailers need to improve so that business practices are smooth and stock outs in India become uncommon. In the grocery sector, for example, there are still no direct transactions between major owners and large retail chains-with local suppliers still being routed through the companys distributors. Direct interaction through intermediation of the distributor could lead to conflicts for the larger part of the business of brand owners. However, with recent changes and growth in the retail segment, the supply chain relationship is also likely to undergo several changes in future years. Brand Competition The Indian urban consumer is quite aware of international trends and most consumers are very value-conscious. Indian retailers need to be extremely efficient in their operations and design, as the value-conscious Indian consumers will not pay more for a superior shopping experience. What this means for international brands is that they need to clearly offer contemporary designs and provide value to the Indian consumer - even if this means adapting their international designs to suit local conditions. With the advent of global competition in the retail sector, domestic companies will have to learn to keep up with the trends of the market or face the consequences of shutting down. But consumers have benefited from this competition as it provides them with a larger variety of choices and a better standard of living. Franchising Development Transnational retail giants have opened up stores in India through franchise arrangements with Indian promoters. Marks and Spencers have recently opened its store in New Delhi and Mumbai through the licensee route. 3.2.4 RETAIL & CONSUMER SECTOR EMERGING TRENDS/OUTLOOK An Emerging Middle-Class The income distribution of households has also undergone a sea change in recent years. The consolidated purchasing power of the country has gone up, and the trend is projected to continue. A significant share of population will move up the affordability and affluence ladder by 2006 - 07.---


MarketThe Affluent Upper middle Core middle Low middle Poor Sub Poor

Metros600000+ 480000-600000 120000-480000 48000-120000 15000-48000 < 15000

Towns480000+ 3000000-480000 96000-300000 36000-96000 12000-36000 < 12000

Rural areas360000+ 180000-360000 72000-180000 30000-72000 9600-30000 < 9600

As the table above shows, the lower middle income segment is also expanding. While the affluent, upper middle and core middle segment taken together is 86 millions, the low middle segment itself is 204 million. This segment could be an equally attractive proposition for retailers and they could target specific business models for this segment Growth of Organized Retail The sheer size and potential of Indias consumer market is enough for the big international retailers to have an interest in setting up stores in the country, despite the obstacles they might face. The growth prospects of this sector seem to be very positive. A large number of malls, entertainment complexes and eateries are being set up. The next few years is likely to see rapid growth in organized retailing with several leading international retailers establishing a presence in India.

3.4 ENVIRONMENTAL ANALYSIS In order to understand the industry we undertook two different environmental analyses. The first is the PEST Analysis where the political, environmental social and technological

CONSUMER PREFERENCE ON GARMENTaspects are looked into and another is Porter's Five Forces where the competitive environment of the Industry is analyzed. 3.4.1 PEST Analysis Now, in a particular geographic region, the environment there affects the retailers in the region in various ways. We have studied the effects under the following heads: 1. 2. 3. 4. Political environment Economic Environment Social (Socio-Cultural) Environment Technological Environment

1. Political Environment With the opening up of the economy, more and more MNC's have pervaded the Indian Business arena, through joint ventures, franchisees or even self-owned stores. The very first MNC getting into the business was Spencer's, a tie up between the RPG Group and the Dairy Farm International; a $ 10 billion Hong Kong based company, and a part of the Jardine Mathenson group. Government uses regulation to prevent development of monopolies, which results in restricted competition and fixed prices. (MRTPC). Government also propounds price competition laws and unfair trade practice laws. Retailers must understand what rights they have in pricing merchandise, what provision they should make for customer relations, what rights and responsibilities they possess when making a sales, what rights their employees have and what liabilities they may face while selling products to the consumers. 2. Economic Environment The type of economic system (capitalism or socialism etc.) existing in a country has a direct bearing on the potential for and the development of the retailing industry in that country. A retailer cannot escape the effects of the factors in the macroeconomic environment, be it domestic or global that influences the local market. Inflation, unemployment, interest rates, tax levels, the GDP and the rate of real growth in GDP (Inflation adjusted) are some aspects of the economy which a retailer must cope with. Real growth makes more income available to people who then tend to spend more, leading to higher sales and more profits for the retailers. However growth also leads to higher competition in the long run. As the economy expands, higher demand levels lead more firms into the market, trying to fulfill the consumers' needs. The inflation (i.e. increase in price) leads to less goods being bought at higher prices. As the retailers' cost of goods increases, they attempt to pass on this increase to the consumers. However, it is often not possible to pass on the entire amount to the consumer, hence resulting in cuts in the retailers profits. With the increase in Purchasing Power Parity (PPP) and the disposable income of the Indian consumer, retailing is catching up at a very fast space in the country.


3. Social Environment The demographic trend and lifestyle patterns, of the society that a retailer intends to serve, decide the retailers strategy. Traditionally, children seldom accompanied their parents while grocery food shopping. Shopping for children was confined to that during festivals when dresses were brought for them. But, in the present day, due to scarcity of time, working parents prefer to spend as much time as possible with their children and this includes their shopping hours also. As the organization retail sector offers the option of entertainment along with shopping, the younger couples opt for these retail outlets for shopping Speaking at KSA Retail Summit, 2000, Peter Lau, Chairman of Giordans International, Hong Kong, said, "It is the format of consumer expectation that changes, not the goods or services they want. KSA Techno Park conducted a study on consumer attitude towards shopping in association with the market research firm ORG- MARG in January and February 1999. The study was spread over the four zones of India viz. North, South, West and East and covered a random sample of 7300 respondents in twelve cities. The results of this study clearly reflect that the buying patterns do vary according to the customs and lifestyle of a region. In the south approximately seven hours are spent on shopping per week. This figure is the highest amongst the four zones, which probably explains the more spurt of new malls and supermarkets in the south than in the other zones. Further, the study has attempted to find out what a customer expects out of a store. Here, the six attributes desired by most number of people (65% and above) are polite and courteous salespeople, quality of products, non intrusive sales persons, value for money, attractive displays and range of products. Although desired by a very low percentage of people (only 10%) yet the attribute of an entertainment centre for children has also figured in. That is to say, apart from quality and range of products, value for money and attractive displays, the human touch has a vital role to play. Smart, polite and courteous sales people might make all the difference for a store, which is like any other in terms of its Product offerings. There is also emphasis on schemes and promotions, which, as the study ratifies, do pull customers. Further the trend is towards more convenience and flexibility in terms of exchange/ return policies, which play a vital role in encouraging the purchase.

4. Technological Environment Technology is probably the most dynamic change agent for the retailing industry. The computerization of the various operations in a retail store, including inventory management, billing and payments as well as database (of customers) management, widespread use of bar coding, point -of-sale terminals and Management Information System has changed the face of retailing drastically. Apart from providing the retailers with better and timelier information

CONSUMER PREFERENCE ON GARMENTabout their operations, the technology also does the job of preventing theft, promoting the store's goods and creating a better shopping atmosphere. These can be done with the help of closed circuit televisions, video walls, in-store video networks, kiosks and other forms of interactive applications ranging from CD-ROMs to virtual reality to let customers select and buy products. They make the customer's life a lot easier by facilitating the use of developments like credit cards. Toll free 800 numbers have brought about a revolution in consumer's ordering and feedback mechanisms. These also pave way for tele-shopping and net-shopping. Emerging technologies will also facilitate just-in-time management of certain products within the store. These trends are already visible in the music and greeting card industries. 5. Legal Environment Despite the size and the phenomenal potential that exists, retailing is among the lesserevolved sectors of the Indian Industry. Retailing as an industry is yet to be recognized in India. The policy environment is currently seen to be unfavorable to organized retailing. Given the huge investments that need to be made, a look on the Foreign Direct Investment Policy in the sector might be needed. Complex sales tax rates, octroi and excise structures are major deterrents. Other impediments to growth of retail include the bureaucracy, inflexible labour laws and multiple licensing requirements. Real estate in India is also not geared to facilitate organized retailing. Restriction on FDI The Indian economy is highly regulated and the most significant regulation is the restriction of foreign ownership. A strong FDI presence in retail sector is expected to not only boost the retail scenario, but also act as a driving force in attracting FDI in upstream activities as well. This will be more prominent in food processing and packaging industries because many large retail chains also promote their own brands by way of backward integration/contract manufacturing. The status of organized retailing in some South East Asian countries that allowed FDI in retailing has been given in Table below: Country Malaysia Thailand Philippines Indonesia South Korea China Organized Retailing 50% 50% 35% 25% 15% 10% Traditional Retailing 50% 50% 65% 75% 85% 90%

CONSUMER PREFERENCE ON GARMENTIndia 2% 98%

In view of the demands made by industry and the need to boost the retail trade, the Government is actively considering removing the restrictions. A recent note circulated by the Ministry of Commerce has proposed permission for FDI up to 100 per cent in retail trade subject to Government approval on a case-to-case basis. However, this permission, if it is given, will be with lots of strings attached. Besides following rules on minimum capitalization, the foreign entrants will be expected to neutralize the outflow of foreign exchange (repatriation of dividends) by way of export earning on a year to year basis. The biggest opposition to allowing 100% FDI is the feared exit of the small retailers. Currently, moves are on to counter these apprehensions and the players are keenly awaiting the final decision from the Government. Land and Property laws There is a shortage of good quality retail space and rents are high for what is available. Compounding these shortages are the following problems. One of the drivers of property prices is the high demand for space in the cities. This demand is exasperated by the flow of black money (undeclared for tax purpose) that is generally invested in the property sector. Only Indians can own property in India, which complimenting the restrictions placed on FDI, restrict the entry of foreign players. Stamp duties on property deals are significant (12.5% in Gujarat and 8% in Delhi). The lease alone can cost up to 6-10 per cent of sales while it's just 3-5 per cent globally. The initial urban planning of cities was done with smaller plots in mind which along with rigid building and zoning laws make it difficult for procurement of retail space. The urban land ceiling act and rent control acts have distorted property markets in cities, leading to exceptionally high property prices. The presence of strong pro-tenancy laws makes it difficult to evict tenants and make people reluctant to give real estate on rent. The problem is compounded by problems of clear titles to own Labour Laws The labour laws instituted to protect store workers are not flexible enough to support the modern formats of retailing. These rigidities in the law constrain the operations of modern retail outlets.


Working hours are restricted, with shops required to close one day of the week and the hiring of part-time employees is difficult, However, in Bangalore, the State Government has permitted flexibility in the use of labour without doing away with the associated benefits accruing to it. Taxes

Corporation tax is 38% and this would be even higher at 45% for a foreign business. Even essential basic foodstuffs are taxed (8% on milk). The varying sales tax rate across states make supply chain management an even more difficult task for retailers. With the expected introduction of Value Added Tax (VAT) in April 2005, some of the sales tax anamolies in the supply chain could get correct over a period of time. However, retailers might also be additionally burdened as given below:-

Changing tax structure: Retailer margins to come under VAT net

In the tax regime contemplated from April 1 2003, VAT will be imposed at every stage between the manufacturer and the final consumer. Thus, margin payable to the distributor and the retailer will also be taxed.

As retailers and wholesalers would be taxed under VAT, their margins will decline. Companies, in turn, will come under pressure to increase trade and distributors margins to the extent of the tax being paid by them, thus pushing up the cost of the product. The MRP could therefore increase in order to neutralize the impact of VAT on margins. Goods with a long distribution chain between the manufacturer and final consumer, such as FMCG items and consumer durable, would be the worst affected.

CONSUMER PREFERENCE ON GARMENT3.4.2 Porters Five Forces As yet, we have been analyzing the retailing industry in the context of the macroenvironment - consisting of Political laws, Economic regulations, Social customs and Technical standards, in the land of a particular retailer. Now we move on to the analysis of the industry in the contest of competition prevalent within the players of the industry. This addresses the need to identify those factors in the environment, which influence the capability of a firm to achieve a competitive advantage and to position itself to such advantage. Players at different levels of scale of operations have to confront different levels of competition posed collectively by the five forces- threats of new entrants, rivalry amongst the existing firms, and pressure from the substitutes and the bargaining power of buyers and suppliers. Different forces take on prominence in shaping the competition at and also across different levels. 1. Threat of Entry To an industry depends on the extent to which there are barriers to entry, which most typically, are one or more of the following six: 1. Economies of scale are not such a big issue in the retiling industry. The scale of operation might be small for a firm to begin with and it can, in its initial stages, focus on a specific target segment whose needs can be addressed by that scale of operations. But these surely gain importance once expensive technological advancements (which may be beyond the reach of small retailers) come into picture. For instance, it may be difficult for the small firms (or retail outlets or chains) to use fully automated inventory systems or toll-free 800 numbers or in-store video networks or other interactive applications. As a result, they might lose out on the grounds of efficiency, in competition with their larger competitors. So they must adapt by concentrating on providing more personalized services to the target segment seeking it. Hence this factor is mainly responsible for triggering competition between large and small retailers. Capital requirements again depend on the scale of operations. Franchisers have an edge over the corporate retail chains in this regard as they are able to form national / international networks without high investment of their own.

2.

3.

CONSUMER PREFERENCE ON GARMENT4. Cost advantages independent of size (scale) arise due to the experience gained by early entrants and the relationship they have established over time with their suppliers, manufacturers and customers. These might also pose difficulties in handling market and operational problems. This is why absolutely new local entrant faces severe competition from the large retail chains operating worldwide who might want to plunder their regions, with the expertise that they have gained as a result of years of experience. On the top of it, with the help of lucrative offers, they tie-up with the existing local players who know the area well. Expected Retaliation from the existing firms (at large scales) is rising over time or due to recent trend of foreign collaborations, they now have the financial muscle to combat any sort of competition relating to price or promotion. For small and local retailers, this is not such a big issue. v. Legislation regarding location, prices, number of employees etc. affects the operations or even establishments of a new entrant - at large as well as at small scales. Today legislation has contributed towards increasing competition tremendously by allowing entry of foreign players, independently or as a joint venture with the local players. But it works towards keeping a check on entry by implementation of regulations. Differentiation: postulates that new entrants might have to spend heavily to overcome existing customer loyalties, which established firms are enjoying due to past advertisement and customer service or simply due to early entry into the market. To attract its target segment, a retailer will have to project some benefit(s) that he/she is offering over and above the offerings of the existing players.

5.

6.

2. Intensity of Rivalry Among Existing Competitors is High In case of tangible products in retailing industry as the existing feature in the consumer market is brand loyalty (i.e. loyalty to a manufacturer's product) rather than store loyalty. Consumers look for a particular brand which they have used/ consumed/ heard about, which might be available with a number of different types of retailers- big and small. Today big supermarkets or malls with specialized retailers do pose a threat to the neighborhood retail stores, which are now used for fulfillment of immediate and small needs only. On the other hand, large professional retailers face competition from more personalized retailers who might be more comfortable with offering facilities like credit on purchases, return and exchange offers, specialized, hard to get and better quality items and extended business hours in order to retain whatever customer base they have and not let it be lured away by competitors. They just have to niche around big retail stores and malls by improving customer service, tailoring selection to customer needs and not competing directly with their product lines. Big retailers cannot match small ones on value. They live on hype and not reality. E.g. Big retail stores (chains) like Wal-Mart create illusion that they always undersell the market, based on a handful of heavily promoted items at rock bottom prices, but the rest of their inventory is not as price competitive.

CONSUMER PREFERENCE ON GARMENTMr. R Gopalkrishnan of Tata Sons has opined that- "In India, smaller retailers continue to grow contradictory to the normal economic development where small retailers decline in numbers with their emergence of the large players." Experts feel that the size of population and the high unemployment rate have contributed to their growth of small retailers. With so many looking for work, setting up a small outlet is relatively a simple Thing to do. Lastly, high (10%) industry growth has turned competition into a market share game. 3. Pressure from Substitutes Emerges Mainly From Two Factors 1. 2. Switching costs for customers to the substitute. Buyer willingness to search out for substitutes.

Also the threat of substitution may take four different forms, each of which we shall now discuss with reference to above factors. Product-for-product substitution The growing popularity of traditional non-store retailing base of catalog mail orders, direct mailers, telephone sales, door-to-door selling, supplemented by recent innovations like vending machines, in-home video tape infomercials, on-line CD ROM systems, tele-shopping and net shopping poses a threat to store retailers. These media do provide the customers with ease of shopping, some entertainment and even more information about range of products. But still it according to Indian consumer psyche it will take time to apply in Indian market. E-tailing transactions are less than a quarter of a percent of the total retail business in India. Even in western countries, it accounted only for 20% of the total retail spending. Substitution of need We take switching from one store or one type of store (e.g. small neighborhood retail outlet) to another (e.g. a big department store) as an example of this type of retailing. In this case, the buyers might be looking out for new experiences and might not mind the nominal switching costs (like longer distance to be covered)

Retailing will definitely remain, in one form or the other, as long as the manufacturers manufacture and consumers consume. Retailing does not seem to become extinct even in the future. The issue that remains to be addressed is just - what forms it keeps evolving into. One most prominent form visible today is e-tailing. 4. Bargaining Power of Suppliers Is High If 1. There is high supplier concentration (i.e. few number of suppliers for the industry). In case of the retailing business, large numbers of manufacturers are competing for shelf space, resulting into low bargaining power of suppliers in this context.


2.

There are other substitute products for sale to the industry. With large numbers of firms manufacturing similar goods or providing similar services, differentiation is what gives a competitive edge to some suppliers over others. But again due to spade of brands in the market bargaining power of suppliers is low even in this context. But in one specific case of exclusive distribution or dealership bargaining power of suppliers may be high. The industry is not an important customer of the supplier group. This is not at all the case here. Today, apart from probably factory outlets, retailing is the only interface between manufacturers and consumers. The suppliers' product is an important input to the buyer's business. Generally, this is not the case with individual suppliers, hence affecting their bargaining powers adversely. Switching costs from one supplier to another are high. This again is not the case in most of the categories of retail sales expect for the exclusive dealership of some firms. There is threat of forward integration by suppliers. This might be a threat in the long run. Signs are visible in the form of direct mailers, door-to-door selling, tele-shopping and etailing. Marketers across the FMCG category and the durable sector feel that the retailer is going to be a powerful influence on buyers. A primary reason for this is trust. Many families take goods on credit from the retailer and moreover, spoilt goods are taken back by him. With all these facilities thrown in, when he recommends a product, the consumer has no reason to doubt him.

3.

4. 5.

6.

5. Bargaining Power of Buyers Is High Bargaining Power of Buyers is high for the retailing industry because of flux of retailers of varying sizes and types within the reach of consumers. Hence because of nominal or no costs of switching suppliers (for the final consumers), these retailers are fighting for the fixed budget of consumers. The customer in the past decade has become the key focus. The marketing strategies revolve around him. From shopping, the trend has shifted to Shopping entertainment and In certain cases, where retailers are providing highly differentiated products or services to the buyers, the buyers have low bargaining powers e.g. Crossword in Ahmedabad.

4. COMPANY PROFILE OF Adani group 4.1 VISION OF THE GROUP

CONSUMER PREFERENCE ON GARMENTTo be a globally competitive, India focused MNC with leadership in trading, private infrastructure and select niche technologies and be committed to the delight of our customers and shareholders. 4.2 BUSINESS AREAS 4.2.1 Global Trading Adani Export Limited Adani Wilmer Limited Adani Global Limited

4.2.2 Private Infrastructure Adani Port Limited Gujarat Adani Port Limited

4.2.3 Niche Technologies B2C India Limited iCall India Limited

4.3 CORPORATE OFFICE Adani Group Adani House Near Mithakali Circle, Navrangpura, Ahmedabad India 380 009 Tel: + 91 79 6565555 / 5555555 Fax: + 91 79 6565500 / 5555500


4.4 B2C INDIA LIMITED B2C India Limited is promoted with an intention to foray into retailing marketing business with an immediate objective of setting up a chain of retail outlets in line with its core competence of Trading and Infrastructure. This venture has a starting advantage of the trading and procuring strengths of Adani group. In a few months with the institutional thrust and support of Adani group B2C has created a multi locational retail store chain with 24 supermarkets & 4 hypermarkets 4.5 INTRODUCTION OF ADANIS HYPERMARKET& SUPERMARKET Ahmedabad, since the 1990s, witnessed a retail revolution that is fast catching up with the rest of the country. Leading the pack in the race for retail supremacy is Adanis supermarket. It all began with Vahid brainchild, V. set up in 1990. Later, a company promoted by the Rs. 2000 crore Adani Group, B2C India Ltd, set up Adanis Ravji supermarkets in Ahmedabad in July 2001. The Adani Group entered into retailing business, through the entity B2C India Ltd, with the takeover of Ahmedabads famous V Ravji Supermarket as a business model. Seeing an opportunity in the retail market, Adani Group had signaled the arrival of corporate chain retail supermarkets in a field that earlier was family owned and run single outlets. The Adani Groups core competence of global trading, infrastructure development and focus on niche technologies- essentially a service oriented intermediary between consumer and producerled Adanis into retailing. Adani Group helped Vahid Ravji to realize his dream of reaching a wider audience and exposing them to the choice, quality and service of a big supermarket chain still bearing his name. They have been certified with ISO 9001 and with ISO 2000 for only ISO Certified retail chain At present, the Adani group has one fully operational Adanis hypermarket located on 150 ft. ring road, near Indira circle in Ahmedabad

4.5.1 MISSION

CONSUMER PREFERENCE ON GARMENTTo attain and maintain a position of leadership and market dominance in Food & Grocery Selling while leveraging our core strengths of sourcing & logistics. 4.5.2 VISION To achieve national leadership in retailing business by smooth amalgamation of professional expertise and systems with a family like atmosphere interacting with the consumers.

STRATEGIES FOLLOWED BY ADANI Strategies followed by Adani are as follows Many store rather than big store in one place so they can capture the more market place and also satisfy the customer by providing the routine household products nearer to there place. Maximize the profit from the manufacturers brand Higher customer satisfaction by providing the better quality, higher convenience, extra ordinary Ambience, value addition and attractive promotion schemes. Pursue new customer groups and entry into new geographical areas. Expanding their business in particular one state e.g. Gujarat then nationally and then internationally.


MARKETING MIX OF ADANI HYPERMAKET & SUPERMARKET Marketing mix is defined as the set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market. Apart from the traditional four Ps, which are product, price, place and promotion, authors such as Booms and Bitner add the three extra Ps of people, physical evidence and process. They argue that the marketing mix of four Ps is not comprehensive enough. The major difference is argued to be the intangible element of human behavior, where quality and its control is of paramount importance. The main task of marketers in retail is to understand many of the complexities of the marketing mix in order to ensure they will be better prepared to plan, control and manage different type of retail operations. Retail managers have to control the aspects of the marketing mix, which have most bearing on the demand creation and satisfaction level of consumers.

It is to be noted that the decisions regarding all the 7 Ps discussed below are taken at the central warehouse situated at Mithakhali. PRODUCT A product is anything that can be offered to a market that may satisfy a need or a want. This means a combination of goods and services, which includes the store, the staff and the merchandise. In retailing the complete retail offer of location, price levels, merchandise, store layout or method of selling, brand name and service provided play a pivotal role in a firms existence and long-term success or survival. The shopper has to believe that the merchandise, or outlet, offers added value in order for it to be successful. Service In a hypermarket, the customers are expected to perform self-service by carrying their own purchased items. So considering this expectation that prevails in any supermarket, in Adani hypermarket also the customer performs self-service and is guided by the store staff, wherever required, whose roles are mentioned in the people aspect of the marketing mix. Some of the stores provides the home delivery and also take the order on phone if the residence of the customers is nearer from the store. Merchandise Offered PRODUCT CATEGORIES 1. Drinks/Juices 2. Bakery Products 3. Breakfast 4. Jams & Pickles

CONSUMER PREFERENCE ON GARMENT5. Tea & Coffee 6. Biscuits 7. Squashes/Syrups 8. Baking Products 9. Instant Food 10. Snacks 11. Confectionery 12. Dry Fruits/Mukhwaas 13. Spices 14. Dairy Products 15. Oil/Ghee 16. Noodles/Pastas 17. Dals/Pulses 18. Plastic Products 19. Detergents 20. Dental Care 21. Soaps 22. Shampoos 23. Baby Care 24. Hair Care 25. Lady Care 26. Home Remedies 27. Disposables 28. White goods 29. Apparels 30. Jewellery 31. Vegetables 32. Footwear 33. Cosmetics.


PRICE As far as products sold in any Adani outlets are concerned, any branded products are sold at their Maximum Retail Price [MRP] on which they get some percentage of margin from the manufacturers. The purchase manager at the central warehouse decides this margin on a negotiation basis, with the manufacturer of the company whose product/s is to be purchased. Finally the goods of that company are purchased who offer them the best deal. Same is the case in Adani labeled commodity goods which are purchased from the producers at some price and are sorted, packed and are resold to the customers by adding some percentage of margin. The prices of those goods are set at par with the prices prevailing in other major Kiranas stores and supermarkets. Again the discounts offered on various products depend on the level of margins offered by the manufacturers out of which some percentage is passed on to the customers in the form of discounts. PLACE CHANNELS AND CHANNEL FLOW Adani follows the both type of supply chain structure limited as well as extended. A extended channel is where the manufacturer wholesaler and retailer provide a chain of facilitating service in order to sell the right product to the final consumer. In case of the perishable goods they follows the limited supply chain structure in which Adani store manager gives order directly to the producer and for all the other goods they follows the extended supply chain structure. A central warehouse controls all purchases of the products branded as well as groceries for all the outlets. Individual store would send their requirements to the central warehouse, which in turn disburse goods to them according to their requirements. This system would give an advantage in purchasing bulk items at very good rates and hence pass this advantage to customers. This activity of purchase is being handled at SKC [Stock keeping Center], all the other stores send their requisitions to this main store, and thus maintain their inward and outward entries with SKC.

CONSUMER PREFERENCE ON GARMENTTypical Supply chain at ADANI

Store 1

Supplier

SKC [Central Ware house]

Store 2

Customer

Store 3

Internal Movements When Necessary

In a typical inventory of any ADANIs hypermarket, goods presently received, after checking them are received by handing over of an inward slip to the suppliers. At the same time any goods going out of the hypermarket, would go along with an outward slip. A regular stocktaking activity takes place in the hypermarket periodically. At that point, the sales associates are required to assist in the activity by taking the actual physical stock for their work arrears. They are supplied with a printed blank from with heads like the Item Code, Item Name, Rate, Quantity, wreck Number etc. for which they are supposed to note down for particular areas allotted to the for stock taking. After handing over this list/report to the managers desk, the report is then tailed with the stock as per the stock statement of the system. The sales associates are answerable to clarify discrepancies if any to the management. DISTRIBUTION Goods after being received from the supplier are then packed in various sizes, packages to cater to the retail requirements of customers in case of private label brands. Other brands products are dispatched to different stores as per their requirements. Stocks are also being internally transferred to other stores according to requirements of various outlets in times of shortages. DANIs has daily business cycle by transferring goods mainly on daily basis. However this differs according to the category of the goods. In case of perishable items, manager can directly order to the local suppliers.

CONSUMER PREFERENCE ON GARMENTRETAIL LOGISTICS Retail logistic is the organized process of managing the flow of merchandise from the source of the supply to the customer from the producer/manufacturer, wholesaler/intermediary through to the warehouse, transport to the retail units until the merchandise is sold and delivered to the customer. Adanis store logistics system incorporates the following functions. Physical Movement of the goods The holding of these good in the stockholding points The holding of goods in quantities required to meet the demand of from the end consumer The management and administration of the process, which in modern complex distribution systems is a function in its own right PROMOTION The store has quantified promotion objectives taking into consideration the: Specified target audience; Main communication points; Responsibilities and tasks; Period times for promotions Thus the so-called SMART objectives are derived which will provide Specific, Measurable, Actionable, Realistic and Timed results. Before deciding and taking action on the objectives formed the following considerations are taken into account: 1. The full range of available promotion methods and out of them which one or a combination will be most suitable. 2. The probable overall budget to be allocated. 3. The existing competition of the company and the brand. 4. Evaluation of past promotional campaigns. 5. The customers and suppliers attitude and behavior to the company and the brand. 6. Assumptions about what promotions are most effective. Advertising

CONSUMER PREFERENCE ON GARMENTThe advertising media used for promotional purposes at present is only major newspapers like Times of India and Gujarat Samachar. As a designing of advertisements is concerned, they have their own in-house advertising agency named Aashin. Apart from the advertisements in the newspapers, insertions of these ads are also put in the newspapers, which are printed on high quality paper in four colours. The stores advertising is an institutional one, which sells the store as a pleasing place to shop, which can be easily understood from their slogan, Extra shopping pleasure at no extra cost. No other media is being used presently, but considering the changes in the situation of the economy and the market place they may go in for Internet as one of the media for selling the merchandise they offer, online. But still e-shopping is a new concept and is in its budding phase in India, so they think that people will take more time to adjust to it and thus may think over it in the near future. SALES PROMOTION Currently they are giving the promotional scheme like 2 kg Sugar or Rasana worth Rs. 60/- on every purchase worth Rs. 500/-. Bapunagar store which they have recently acquired from the Radhe, they have given the sales promotion like on the purchase of Rs 500/- you will get the tow tickets of City Gold is free and on the purchase of Rs. 300/- one ticket is free of the City Gold theater. Before one month back they have given the sales promotion like on the purchase of Rs. 500/- customer will get either Nazarana Basmati Rice worth Rs. 60/- or Rasna worth Rs. 60 free. And on the purchase of worth Rs. 300/- customer will get the Year Fundoo Mug or Rasana worth Rs. 30 free. Another sales promotion scheme they had followed before one month back is customer will get the Assured Gift on the collection of 10 or more coupons. One coupon for every purchase worth Rs. 100/-. [*****Refer Annexure]

Discounts Offered No. 1 2 Product on which discount is offered Colgate total (150 gm) Godrej colour soft (hair colour) Discount & Offers Only Rs. 49[MRP 51] Rs. 25 off

CONSUMER PREFERENCE ON GARMENT3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Ashirvad Atta (5 kg) Palmolive talc Close- Up toothpaste red (150 gm) Oral-B tooth brush Palmolive shaving brush + shaving cream Fa shaving cream Palmolive shaving gel Gillette get Sunsilk sampoo (50 ml) Palmolive soap Nivea soap (75 gm) Harpic toilet cleaner (500 ml) triple action Mr. White detergent (3 kg) Surf Excel (1 kg) Frooti green mango (500 ml) Mapro squash & syrup Kissan ketchup / sauce (1 kg) Tastybite Dhalmakhani (instaunt food) Pickwick waffer (200 gm) Priya Gold biscuit family pack Sundrop superlite (5 lt. Jar) Sundrop Heart Sundrop Nutrulite (5 lt. Jar) Chings veg. Noodles (200 gm) Smith & Jones (200 gm) 1 kg Ashirvad Atta free 15% off. Neslte Kit-Kat worth Rs.6 free 25% discount 15% off 25% off Buy 1 get 1 free 15% off Lipton ice tea worth Rs. 20 free Buy 2 get 1 free + 20% off Buy 3 get 1 free + 15% off 15% off Mr. White soap worth Rs. 30 free 10% off 200 ml frooti free 25% off Lipton ice tea worth RS. 20 free Buy 1 get 1 free 15% off 15% off Heritage rice 1 kg free Daawat Rice 500 gm free Heritage Rice 1 kg free Buy 2 get 1 free Buy 2 get 1 free


28 29 30

Cadbury bournvita (500 gm) Refile pack Mapro Jam (500gm) Purchase worth RS. 500

Cadbury perk worth RS. 5 free 25% off Get 2 kgs Sugar or Rasana gift hamper worth RS. 60 free.

The percentage of discount offered also depends on the expiry date of the products purchased apart from the margins they get. For e.g., if the expiry date of any product purchased from the manufacturer is very near then the purchase manager of Adani demand more margins from them which is passed on to the customers and so on such products the percentage of discount would be more as compared to other products whose expiry date is quite away. PEOPLE NO OF EMPLOYEES & THEIR ROLE There are around 60 to 80 employees or more than that in each store which constitutes of both frontline and back stage staff. . Sales Girls &boys The roles of them are To arrange the products properly in the shelf and also keep them clean To arrange the products as per the expiry date To paste the Bar code stickers on the respective products. To guide the customers whenever required and if necessary they also help the customers by carrying the basket and moving the trolley. On a rotation bases some of the sales girls have to make bills, handle cash, credit card or other forms of payments and hand over receipts and change. 2-3 wrecks are allotted to every salesgirl whose responsibility is to take care of the handling and ordering of the merchandise of those wrecks, which at the end is reported to the store manager. They are also responsible for any kind of theft by the customers.


Manager The manager is responsible for all the floor activities of the store like Managing and monitoring the staff of the store To see the products are well arranged in the shelf and the window display is attractive To fax the stock requirements of the store to the central warehouse every night before closing the store and to order for the perishable goods from the local suppliers Interacting with the customers and handling their complaints, whenever required To discuss the accounting related issues with the accountant. To carry out the performance appraisals of the sales girls To give the on-the-job training to the salesgirls

CONSUMER PREFERENCE ON GARMENTEmpowered for any kind of special displays. Assistant Manager In some of the stores there is the Assistant manager who helps manager in maintaining the floor activities. Security Guard The role of the security guard is To take care of the belongings of the customers by giving them a coin, which the customers have to return back to him after shopping To give the basket to the customers The all security guards are on contract based. Helpers The role of the helpers is to Verify the stock received and keep the stock to be displayed in front of the respective wrecks and the extra stock in the storeroom. Helping the customer by lifting the carry bags to their vehicle. Data Entry Operators The role of the data entry operators in the Adani store is to enter the daily transaction of outflows and inflows. TRAINING Training is provided at store level for the salesgirls. They are given training by some of the experience salesgirls and by the manager in areas of product knowledge, company procedures and more importantly how to deal with customers to ensure maximum satisfaction. The training phase depends on capabilities of the sales girls. For the store managers the training is provided at store level as well as class room training. MOTIVATION

CONSUMER PREFERENCE ON GARMENTThe staffs are motivated by the store manager. The store manager arranges for a small treat for staff of the store bye offering them ice cream, juice apart from regular cup-of tea. If the salesgirls do something extra apart from their regular work then they will be rewarded. The staff members are given a Diwali Bonus. There is a contest for the best person of the store who will be rewarded. There is also another contest for the best store, which will receive a trophy and certificate of appraisal and dinner for the entire staff of that store. PHYSICAL EVIDENCE SIGNAGE Internal: As far as the stores internal signage are concerned, to promote the schemes offered, various pamphlets are pasted on the walls, banners are hanged which attract the attention of the customers. Also danglers of discounts offered on various products are hanged above and on the respective wrecks. External: There is a signboard of Adanis hypermarket in front of the building indicating that there is an Adani outlet here, which can be seen from some distance away. Also banners are displayed at the crossroads bit away from the store to direct the customers towards the store. DRESS CODE Salesgirls: - Blue apron with a badge of Adani on left. Each sales girl has her own ID card attached to a string which they wear daily depicting their identity as the sales girls of that store. Helpers: - Grey colour shirt and trouser. Manager/Assistant/Accountant: - Any kind of formal dress. PROCESS BRIEF EXPLANATION OF THE PROCESS

CONSUMER PREFERENCE ON GARMENTThere is either

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