SRI SHARADA INSTITUTE OF INDIAN MANAGEMENT - RESEARCH

(NEW DELHI)

SATURDAY

DEVELOPMENT DAYS

PROJECT REPORT

ON

VISAHAL MEGA MART PROMOTION STRATEGIES

SUBMITTED BY SUBMITTED TO

RAHUL SHUKLA(20090203) PROF. SARTAJ KHERA

DIWAKAR PANDEY(20090176)

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PREFACE

A man can become perfect with a perfect knowledge and experience. As a

student of business management, we have studied many theories in the

classroom but any professional degree is incomplete without practical

knowledge of concerned field.

And the same case is with management studies, management is incomplete

without knowing practical application of theories studied. I have experienced

and understood the practical importance of these theories on this training.

More books and theoretical knowledge can’t help you in any field whether it is

management or technical. Only thing can help you is practical knowledge.

This development day provides a golden opportunity to the students for

getting a perfect knowledge and experience.

I come to know how the management of company is actually being done. How

decisions are made? How people behave and decide what to purchase?

As a part of my learning in management field and requirement of PGDM

program, I have been given an opportunity to grab practical knowledge in the

area of marketing and I had selected “VISHAL MEGAMART” . I have made

my best efforts to get knowledge and experience. During the day, I had

collected necessary information, and I present all the necessary information to

understand well.

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ACKNOWLEDGEMENT

It has been an enriching experience for me to undergo my SATURDAY project, which would have not been possible without the goodwill and support of the people around. As a student of SRI SHARADA INSTITUTE OF INDIAN MANAGEMENT (SRISIIM), VASANT KUNJ, I would like to express my sincere thanks to all those who helped me during my development day programme.Firstly I would like to express my sincere thanks to reverend SWAMI DR. PARTHSARTHY for their blessings and well wishes.

I extend my sincere thanks to Mr. SANJEEV CHATURVEDI AND MRS. SARTAJ KHERA, Faculty Member, SRISIIM, NEW DELHI, for having spared there valuable time with me and for all the guidance given in executing the project as per requirements. Last but not least, I would like to record my deepest sense of gratitude to my friends for their support and constant encouragement.However, I accept the sole responsibility for any possible error of omission and would be extremely grateful to the readers of this project report if they bring such mistakes to my notice.

.

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Vishal Mega MartDECLARATION

WE, ASHISH SHARMA AND GHANSHYAMSINH JADEJA, hereby declare that the

report on “Saturday development day” entitled “VISHAL MEGA MART PROMOTION

STRATEGIES ”is a result of my own work and my indebtedness to other work

publications, if any, have been duly acknowledged.

Place: New Delhi Signature

Date: 21/09/2010

(RAHUL SHUKLA)

(DIWAKAR PANDEY)

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Vishal Mega Mart

INTRODUCTION

In the background of high consumerism and income of the urban consumers, in recent year there are a number of companies have expressed their interest towards

retail sector outlets. As a result numbers of shopping malls have started their operations in metro and urban areas. Pantaloon, big bazaar, Vishal Mega Mart,

Reliance Fresh are the best known examples of retail sector outlets in India.Retailing is the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. A retailer is one who stocks the producer’s goods and is involved in the act of selling it to the individual consumer, at a margin of profit. As such, retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. Some of the key features of retailing include:

Selling directly to customers with out having any intermediaries Selling in smaller units / quantities, breaking the bulk Present in neighborhood or in the location which is quite convenient to the

customers. Very high in numbers Recognized by their service levels Fitting any size and or location

It is assumed that due to the entry of a number of retail outlets in the urban and semi urban areas, the mindset of the existing customers have undergone drastic changes. Besides it is also reported that the traditional retailing such an age old Grocery shops have directly faced competition with the organized retailing sector. In some parts of the country, it is reported that the traditional retails are resisting the entry of organized shopping malls. For instance the traditional retails of Bhubaneswar with the active support of the consumers at large didn’t allow reliance Fresh to start outlet initially.

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Vishal Mega Mart

RECENT TRENDS

Retailing in India is witnessing a huge revamping exercise as can be seen in the graph

India is rated the fifth most attractive emerging retail market: a potential goldmine.

Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes up 3 percent or US$ 6.4 billion

As per a report by KPMG the annual growth of department stores is estimated at 24%

Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney.

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Vishal Mega Mart

EXECUTIVE SUMMARY

The Retail Sector is the largest sector in India after agriculture, accounting for over 10 per cent of the country’s GDP and around 8 per cent of the employment. India has the most unorganized retail market in the world. Most retailers of the unorganized retail market have their shop in the front and house at the back. Retail industry is booming all around the globe at a very fast pace. Vishal Retail is a known and strong competitor in the retail industry since 23 years. When we talk about Indian market, the demands of every thing which you can find in every retail store are increasing every year. Indians are famous for their traditions and festivals and exchanging gifts with friends and relatives is a part of it.

VISHAL MEGAMART is a retail house in India. As of April 30, 2007, it operates 50 retail stores, including two stores which are operated by their franchisees. These 50 stores are spread over about 1,282,000square feet and are located in 18 states across India. In its efforts to strengthen thier supply chain, it has set up seven regional distributions centres and an apparel manufacturing plant.

It started as a retailer of ready-made apparels in Kolkata in 2001. At the time of incorporation, the registered office of thier Company was situated at 4, R. N. Mukherjee Road, Kolkata 700 001. In 2003, it acquired the manufacturing facilities from Vishal Fashions Private Limited and M/s Vishal Apparels.

It follows the concept of value retail in India. In other words, their business approach is to sell quality goods at reasonable prices by either manufacturing themself or directly procuring from manufacturers

(primarily from small and medium size vendors and manufacturers). It facilitate one-stop-shop convenience for their customers and to cater to the needs of the entire family. It believes this concept has helped them grow to thier current size within a short time frame of their years. Mr. Ram Chandra Agarwal has been ranked as the 28th most pitiful person in the Indian retail industry.

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Vishal Mega Mart

This project report is the study of various activities and strategies of Vishal Mega Mart. It also helps us in understanding the different technologies being used by VRPL.

MISSION STATEMENT:

We shall deliver Everything, everywhere, everytime for every Indian Consumer in the most profitable manner.

VISION STATEMANT:

We share the vision and belief that our customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development

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Vishal Mega Mart

COMPANY SUMMARY

“Future is thinking beyond horizon” & in order to keep its pace with the modern retail, Vishal Retail Limited is spreading its wings. Instead of resting on its laurels the Group are busy identifying new avenues of growth by venturing in other formats like cash & carry, convenios as well as specialty stores and inspiring local retailers to grow along with the big names. The group has tied up with HPCL to open corner stores at their petrol pumps and in addition to the above Vishal has come up with an institute to train manpower for the service industry.As of April 30, 2007, it operates 50 retail stores, including two stores which are operated by their franchisees. These 50 stores are spread over about 1,282,000square feet and are located in 18 states across India. In its efforts to strengthen thier supply chain, it has set up seven regional distributions centres and an apparel manufacturing plant.Today Vishal Retail Limited, Flagship Company of Vishal Group, engaged in Hyper Market stores with an average area of 25,000 to 30,000 sq. ft. through an impressive chain of more than 100 fully integrated stores in spread of more than the area of around 22, 00,000 sq. ft. in 69 cities across India & has a plan to cross total retail area of 35 lakh sq. ft. in tier II and tier III cities by the end of 2009.According to Mr. Ram Chandra Agarwal, CMD, Vishal Retail Limited, the group owes its origin to a small 50 sq ft shop in Kolkata's Lal Bazaar that started selling readymade garments. In tune with the pulse of the market, he envisioned a mega store that would sell garments at prices none other could match. . The first big store opened in Calcutta's Esplanade area in 1997, under the banner of Vishal Garments. He was involved in all the aspects of the business: right from sourcing the garments to interacting with customers. And this led to his greatest finding “The Vishal Group.” After identifying the immense market in fashion garment for the masses, He moved to Delhi in 2001 and opened his first store in Delhi’s Rajouri Garden by the name of Vishal Mega Mart (The jewel in Vishal Group’s crown) and then there was no looking back for Mr. Ram Chandra Agarwal. At present, in addition to garments, Vishal Mega Mart stores retail the entire range of household products, FMCG and electronic goods. Vishal's prices are roughly 15 to 20 per cent less than other mass market garment labels.

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Vishal Mega Mart

Mr. Ram Chandra Agarwal, CMD, Vishal Retail Limited believes that the shopping habits of Indians are changing due to their growing disposable income,

higher aspirations, relative increase in the younger population, and the change in attitudes towards shopping. The emphasis has changed from price consideration to design, quality and trendy. Age is also a major factor that affects the spending decisions of an individual. Consumer spending is an important factor that affects the economic growth and development in a country. As a trend, consumer is more educated. He has access to all reforms taking place through various arrays of communication. He is becoming a “value shopper” everyday. Keeping this in mind, the group is now looking for franchisees to join hands with Vishal and grow under common banner. This partnership will help small retailers to survive the onslaught of organized retail as it will enhance their competitiveness. Small stores can avail of the benefits on account of the economies of scale, a key advantage for big retailers. As per the plans, Vishal Retail will completely take over the supply chain of its franchisees and provide them with technology, new practices, visual merchandising skill and special promotional schemes, besides its brand and costumer base.

Some of the Franchisee exclusive business categories are:

Mens Fashion Ladies and Kids Footwear Toys and Games Home – General Convenience (FMCG) CDIT Watches Mobile

It follows the concept of value retail in India. In other words, their business approach is to sell quality goods at reasonable prices by either manufacturing themself or directly procuring from manufacturers (primarily from small and medium size vendors and manufacturers). It endeavour to facilitate one-stop-shop convenience for their customers and to cater to the needs of the entire family.

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Vishal Mega Mart

OUR PROMOTERS AND GROUP COMPANIES

Our Promoters

The following individuals are the Promoters of our Company:a). Mr. Ram Chandra Agarwal;b). Mrs. Uma Agarwal; andc). Mr. Surendra Kumar Agarwal.The following companies are the Promoters of our Company:a). Unicon Marketing Private Limited;b). Ricon Commodities Private Limited; andc). Vishal Water World Private Limited.

In addition, the following HUFs are the Promoters of our Company:a). Mr. Ram Chandra Agarwal (HUF)

Name of Shareholders & Number of Shares % of shareholding

1. Unicon Marketing Private Limited 315,000 49.532. Ricon Commodities Private Limited 300,000 47.173. Mr. Ram Chandra Agarwal 12,010 1.894. Mrs. Uma Agarwal 9,010 1.42 Total 636,020 100.00

Establishment of Stores:

Selection of location

In selecting location for a new store, VRPL start by identifying the city/town.

VRPL target primarily cities/towns which may be classified as Tier II or Tier III

cities. In this regard, an analysis of the demography, literacy levels, nature of

occupation and income levels. Within a city/town, VRPL target locations with

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Vishal Mega Martgood infrastructural facilities such as easy accessibility, provision for water,

electricity, parking, security and other basic amenities. VRPL prefer to locate their

stores in areas where real estate is available at reasonable prices. The efforts of

VRPL’s retail business are targeted towards families having total income which

can be classified under the “lower middle” and “middle” income groups.

Accordingly, VRPL plan their strategy to search for areas within cities where such

customers are domiciled in large numbers and make efforts to locate themselves

within the reach of such customers.

VRPL believe that adoption of standard formats for their stores has led to their

brand establishment and identification among their customers and will increase

their base of loyal customers. In pursuance of this, they have adopted standard

parameters for store planning and establishment. For ensuring standardized formats

of their stores, VRPL consider various factors, such as internal and external décor

and colour schemes, allocation of store space, stock mix and pricing and

accounting methods.

Insurance

VRPL maintain comprehensive insurance coverage with Tata AIG, Bajaj Allianz,

Royal Sundaram and IFFCO-TOKIO for their existing stores, distribution centers,

manufacturing facilities and trucks. VRPL insurance policies include

comprehensive coverage for electronic equipment, fire and special perils and

burglary. Further, VRPL has filed a claim of Rs. 22.50 million on account of fire in

their store at Meerut as on July 7, 2006. In this regard, they have received Rs. 7.50

million as an interim payment.

Factories

VRPL’s existing manufacturing facilities are located at Plot No. 224, Phase 1

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Vishal Mega MartUdyog Vihar, Gurgaon, for which they have leasehold interest until May 4, 2009.

In addition, VRPL have recently acquired freehold interest in relation to a land

admeasuring 7.24 acres in Dehradun, Uttaranchal, where they are exploring the

possibilities for establishment of another manufacturing facility.

Other Properties

VRPL have recently acquired freehold interest in relation to a land admeasuring

82,830 square feet in Hubli, Dharwad.

Merchandise Planning

VRPL’s merchandise planning is based on the concept of category management

rather than traditional brand management practices.

VISHAL Apparels Brand

Vishal Mega Mart is one of India’s fastest growing retail chains.. The chain currently has 183 company stores in 24 states / 110 cities in India. The Vishal brand is known for great modern style for men, women and children. Vishal offers high level fashion styling. Since 1986, our name has been synonymous with quality, value and fashion integrity. We offer an unparalleled collection of clothes for the entire family. Each garment is hand selected for quality and contemporary styling. Vishal manufactures majority of its own garments and out sources some under its direct quality supervision. This enables us to offer the lowest possible and most reasonable prices.

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Vishal Mega MartOur goal is to provide a range of fashion wear to suit every pocket. Our product mix represents the most current fashion trends in tops, bottoms, formals and accessories for men, women and kids. Our courteous staff will ensure that consumers get a perfect fit.

Popular Brands are:

Zeppelin : Mens Shirts & Trousers Fizzy Babe : Ladies & Kids GirlsKitaan Studio : Mens Shirts & Trousers Jasmine : Ladies & Kids GirlsBlues & Khakis :

Mens Trousers Zero Degree : Kids Boys

Paranoia : Mens Shirts & T-Shirts Soil : Mens Shirts

Chlorine : Mens Shirts Massa Bay :Mens Trousers & Bermudas

Fume : Mens Shirts, T-Shirts, UnderGarments.

 

Our products

FOOTWEAR

Mens

Shoes Sandals Slippers

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Vishal Mega MartLadies

Shoes Sandals Slippers

Cleaning aids plastic aids

thermoware

Appliances kitchen aids

LADIES ACCESSORIES

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Vishal Mega Mart

Personal items fashion jewellery

Cosmetics haircare

HARDWARE

ELECTRICALS  

 

Bulb Ceiling Fan        

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Vishal Mega Mart

Regulator Tester     

Extension Cord Exhaust Fan

Home Furnishing

Covers bath furnishing

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Vishal Mega Mart

Kitchen furnishing drawing room furnishing

Bed room furnishing

FOODMART

Chinese and Indian food food and beverages

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Vishal Mega Mart

Fruits and vegetables

Imported fruit Regular Fruit  

Regular Vegetables Imported fruit  

HOUSE HOLD

Hair Dryer Chopper 

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Vishal Mega Mart

Waffle Maker Griller   

GARMENTS

Men’s wear women’s wear

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Vishal Mega Mart Boy’s wear girl’s wear

Infant’s wear

FMCG 

 

Additives - Preservatives Aftermints Diary Products  

Drink Beverages Health Food Home Care  

Personal Care Ready To Cook Ready To Eat

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Vishal Mega Mart       

SERVICES AND SEMI-DESCRIPTION

SBI, Vishal mega mart launches card

SBI Card launched a co-branded card in association with leading retail chain Vishal Mega Mart to tap the booming organized retail market that is pegged to hit Rs 1, 09,000 crore by 2010.

"SBI Vishal Mega Mart Card is one of the best co-branded credit cards that offers reward points and other benefits to frequent shoppers and will be free for those who spend above Rs 7,500 per annum," SBI Card CEO Roopam Asthana said. Asthana said the card would be free of cost for the first year, but would charge Rs 700 per annum if purchase on the card was less than Rs 7,500.

Other SBI Card holders could also flip their card for SBI Vishal Mega Mart Card and use it like any other credit card.

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Vishal Mega Mart"By partnering with SBI Card, we are not just offering customers a convenient payment mechanism but a unique consumer loyalty programme that rewards them every time they shop," Vishal Retail MD Ram Chandra Agarwal said.

Some of the features of the co-branded card include Rs 250 discount voucher on signing up for the card and a set up by which the card holder earns five reward points on every Rs 100 spent that could go up to eight points on spends above Rs 7,500 and the points are redeemed at any Vishal Mega Mart store.

Other offers in the credit card are no transaction fee on fuel purchase at select IOC and IBP petrol pumps and balance transfer facility without any interest for 75 days and complementary personal accident insurance.

Vishal Mega mart retails a large variety of household, FMCG and consumer durable goods at bargain prices at its 24 self-owned stores, which are likely to increase to 50 by the end of 2006.

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Vishal Mega Mart

PROMOTIONAL STARTEGIES OF VISHAL MEGA MART

How attractive is the funding of retail industry, from an investor perspective?

In the initial years, returns are limited due to the high real estate costs, large and sustained capital expenditure to create scale, and start-up costs for store infrastructure.

However, investors with longer investment horizons are beginning to recognise the potential for long-term value appreciation of investing in differentiated businesses with large-scale plans and able execution teams.

Apart from the traditional sources like banks and financial institutions, there are multiple avenues including PE funds. Companies have even successfully approached the IPO (initial public offering) route to raise funds.

We have seen many PE investors taking stakes in retail ventures. For example, Subhiksha raised PE from ICICI Ventures, while Actis took a controlling stake in Nilgiris.

After the initial rounds of PE-funding, companies like Vishal Megamart and Koutons approached the public for capital through an initial offering of shares. Large players like Shopper’s Stop, Trent and Pantaloons are already listed on the stock exchanges.

E-COMMERCE:

The uses of computers and internet have been expanding significantly over the

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Vishal Mega Martyears. Presently internet has been used widely as a means of communication, as a

potential source of information, as a means of entertainment and many more. With

in few years after existence of internet, business men realized the possibilities of

using internet as a medium of business. This idea kick started the first online

business ventures. Modern technology has been developed to the extent that even

shopping made possible over the internet. The process of shopping done over the

internet is called online shopping.

Both products and services can be purchased by online shopping. Online shopping

is used for business to business transactions or business to customer transactions

with applications of electronic commerce (ECommerce). Vishal Mega Mart is soon

launching its online shopping website this summer named as

www.vishalmegamart.com which promises to be a boon for its customers.

VRPL has its own site named as www.vishalmegamart.net.

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Vishal Mega Mart

Vishalmegamart.net is concerned about the safety and security of their website and customers. Accordingly, they have put a number of technological protections in place to ensure that their transaction process is extremely safe and that their customers' information is secure. They provide a large amount of information to their customers, suppliers through their website. This information includes their stores in different areas, cities with correct address and contact no’s, products being offered by them, career opportunities, enquiry, supplier’s zone etc.

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Vishal Mega MartVishal Mega Mart also provides opportunities to its customers by

collaborating with shopping.indiatimes.com and with shopping.rediff.com.

RETAIL VALUE OF DEFFERENT RETAIL STORE

Value Retail same store sales (SSS) growth rebounded in Nov'07 to 40% after a

25% decline in Oct'07, due to late Diwali this year. This implies a growth of mere

2.8% in the festive season (Oct-Nov’07 combined). Lifestyle SSS growth in Nov

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Vishal Mega Martis at 30% as against a decline of 7% in Oct. Collectively in the festive season SSS

growth is 9% compared to over 20% growth maintained for most of the months of

the previous fiscal. The chart below represents sales mix of Pantaloon Retail India

Ltd. VISHAL MEGAMART still account for bulk of the sales for the company.

The company has added retail sales space aggressively in last financial year. In

FY2005, the company added 1 mn sft while it declined to 0.85 mn sft in FY06 and

zoomed to 2.7 mn sft in FY07. This FY, the company has been little bit slow due

to unrealistic realty prices and has managed to add mere 1.5 mn sft till the end of

Nov.The company is expected to clock sales of Rs 7,400 crore for FY2008 but

going by the recent reported numbers, a slowdown is imminent

MARKETING STRATEGY OF VISHAL MEGA MART TO PROMOTE A PRODUCT OF STORE

Product

Vishal Mega Mart offers a wide range of products which starts from apparels to

food items, footwear to home furnishing, crockery to sport items, child care

products to toys, watches, drinks etc. There are many in house brands promoted by

Vishal Mega Mart. In pursuance of their business plan to diversify their portfolio

of offerings, FMCG products play a key role. FMCG products are usually meant to

fulfill the daily needs of consumers and therefore, VRPL believe retailing of

FMCG products will bring customers to their stores on a frequent basis and this

may in-turn lead to consumption of their apparels. VRPL have a number of private

labels for apparels such as Zepplin, Paranoia, Chlorine, Kitaan Studio, Famenne,

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Vishal Mega MartFleurier Women and Roseau.

Price

Vishal Mega Mart promises its consumers the lowest available price. The concept

of psychological discounting (Rs. 99, Rs. 49, etc.) is used as promotional tool.

Vishal Mega Mart also caters on Special Event Pricing (Close to Diwali,

Christmas, New Year etc.). Selling combo-packs and offering discount to

customers. The combo-packs add value to customer. Through Bundling, they also

reduced the price of the products. In addition to VRPL’s strategy to continue

procurement of goods from small and medium size vendors and manufacturers

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Vishal Mega Martwhich leads to cost efficiencies, VRPL intend to procure FMCG and apparels from

low-cost production centers located outside India. Towards this objective, VRPL’s

propose to increase their procurement of finished and semi-finished goods from

China and thereby realize economies of scale and pass on the benefits so accrued

to their customers. The efforts of VRPL’s retail business are targeted towards

families having total income which can be classified under the “lower middle” and

“middle” income groups. VRPL follow uniform pricing policy across their stores

in respect of private labels and non-branded products sold by them. This enhances

brand loyalty, encourages customer confidence and results in operational

convenience. In relation to the other products, the prices may vary between stores

on account of state-specific taxation and vendor policies.

Place

Vishal Mega Mart stores are located in 110 cities with more than 180 outlets.

Vishal Mega Mart has presence in almost all the major Indian cities. They are

aggressive on their expansion plans. VRPL intend to increase their penetration in

the country by setting up new stores in cities where they already have presence, as

also entering into new areas in the country. In particular, they intend to focus on

expansion in Tier II and Tier III cities. VRPL target locations with good

infrastructural facilities such as easy accessibility, provision for water, electricity,

parking, security and other basic amenities.

Promotion

Advertising has played a crucial role in building of the brand. Vishal Mega Mart

advertisements are mainly seen in print media i.e. newspapers, Television with

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Vishal Mega MartTina Parekh as there in advertisement, and sometime road-side bill-boards.

VRPL’s category management system is used to plan promotional schemes. They

launch promotional schemes weekly. Apart from general sales promotion, the

category manager formulates promotional plans for ‘slow movers’. In addition, to

promote sales, they focus on layout of the stores and positioning, presentation and

display of merchandise, in order to appeal to the customer. In addition, VRPL have

introduced, in association with SBI Cards & Payment Services Private Limited, a

co-branded credit card. VRPL’s propose to continuously undertake such initiatives

to increase the satisfaction of their customers. Some of the features of the co-

branded card include Rs 250 discount voucher on signing up for the card and a

process by which the cardholder earns five reward points on every Rs 100 spent. A

cardholder accumulates points on the basis of purchases made and the points

accumulated can be redeemed for gifts or purchases. In September 2005, VRPL

entered into a long term advertising agreement with Bennett, Coleman & Company

Limited (“BCCL”). Under the agreement, they are entitled to fixed discounts for

their advertisement in print publications of BCCL for a period of five years from

the date of the agreement. In addition, BCCL would also act as a facilitator for

other print and non-print media of the Times Group i.e. internet, radio and

television or any other new medium launched during the tenancy of the agreement.

As a part consideration, VRPL had issued 1,670,605 Equity Shares of Rs. 10 each

and 384,190 Preference Shares of Rs. 146 each amounting to an aggregate of Rs.

300 million.

Thier Competitive Strengths

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Vishal Mega MartIt believes that the following are thier principal competitive strengths which have contributed to thier current position in the retail sector in India:

Understanding of the ‘value retail’ segment

Thier business plan involves implementation of the concept of the ‘value retailing’, targeting the middle and loiter middle income groups, which constitute majority of the population in India. It intend to provide quality products at competitive prices. It sells a vast range of merchandise across apparels and accessories, FMCG(frequently marketed consumer goods) products, food products and consumer durables with over 74,000 SKUs.Thier emphasis has been to maximise the value that the customers derive in spending on goods bought in thier stores. It endeavthier to continuously reduce thier costs through a variety of measures, such as, in-house production of apparels, procurement of goods directly from the small and medium size vendors and manufacturers, efficient logistics and distribution systems along with customized product mix at thier stores depending

on the regional customer behavithier and preferences. Central to thier value retail strategy is to pass on the benefits of cost reduction measures to thier customers.

Supply chain management

Their supply chain management involves planning, merchandizing sthiercing, standardization, vendor management, production, logistics, quality control, ‘pilferage’ control replacement and replenishment. Their supply chain management

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Vishal Mega Martprovides us flexibility to adapt to changing patterns in consumer behavithier and their ability to add value at various steps/levels. In particular, thier supply chain management gains strength from their ability to undertake in-house manufacture, design and development of apparels.

Strong and efficient logistics and distribution network

VRPL’s distribution and logistics network comprises seven distribution centers.

Besides, VRPL have their own fleet of 31 trucks, which helps VRPL to transport

and deliver their products in a cost and time efficient manner. VRPL believe that

their distribution and logistics set up is well networked and allows them to fulfill

the store requisition within short time period of generation and receipt of order,

which has helped VRPL to optimize in-store availability of merchandise and

minimize transportation costs. Their strong distribution and logistics network has

enabled them to dispense with the requirement of a dedicated storage space at

every store, which is an industry practice, and instead undertake periodical

replenishment of depleted stock. Due to adoption of an efficient racking system,

they are able to benefit from optimum utilization of the space allocated for display

in their stores. This provides them assistance in maintaining a low working capital

requirement and less carrying cost.

Geographical spread

Thier stores and distribution centres are spread in various parts and regions of the country. This has not only enabled us to build thier brand value but also facilitated us to explore cost-effective sthiercing from different locations, identify potential markets and efficiently establish new stores in different locations. An aggregate of 43 of 50 of thier existing stores are located in Tier II and Tier III cities, which, It believe, enables us to capture market share in locations where a majority of thier target customers are located.

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Vishal Mega Mart

Identifying new locations

It believe that It possess the ability to identify locations with potential for growth, in particular in Tier II and Tier III cities. It has an exclusive site identification and assessment team, which undertakes systematic analysis of the business prospects, taking into account factors such as population, literacy levels, nature of occupation, income levels, accessibility, basic infrastructure and establishment and running costs. Further, it has a dedicated warehouse for the purposes of storing the materials essential for setting up of new stores.

Private labelsIt has a number of private labels for apparels (i.e. apparels manufactured by us) such as Zeppelin, Paranoia, Chlorine, Katina Studio, Famine, Flthierier Women and Roseau. In fiscal 2007, thier income from thier private labels was Rs. 583.60 million, which accounts for 9.68% of thier total sales for fiscal 2007. It believes that their focus on thier private labels and their recognition in thier customer segment enables us to differentiate themselves from thier competitors.

Their Strategy-----------It intends to pursue the following strategies in order to consolidate thier position as an operator in the ‘value Retail’ segment in India. Thier growth strategy is based on:

Increasing thier penetration in the country by leveraging thier supply chain, distribution and logistics network

It intends to increase thier penetration in the country by setting up new stores in cities where it already have Presence, as also entering into new areas in the country. In particular, it intends to focus on expansion in Tier II and Tier III cities. It believe that thier existing infrastructure have been designed for a higher scale of operations than thier current size, and can help us grow without the need to

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Vishal Mega Martsignificantly increase costs. Moreover, their continuous effort to improve systems and processes leads us to believe that it can deal with higher scale of operations without any hindrance. Higher business volumes will also improve thier negotiating pouters and help us get further economies of scale in thier buying.

Emphasis on Backward Integration

It believes that through backward integration It will continue to substantially control the cost of production, resulting in such cost benefits being passed on to thier customers. It intends to increase the in-house manufacture, design and development of thier products and realizes economies of scale. It intends to manufacture at least 25% of thier requirement for apparels and may require expansion of thier existing manufacturing facilities. This will also enable us to reduce thier reliance on external agencies for supply of thier products and will result in loiter turn-around time. In addition, thier focus would be to undertake in-house such functions of the manufacturing processes, which, in thier view, would add maximum value and would enable us to reduce their procurement costs.

Expansion of FMCG

Historically, it has derived significant portion of thier revenue from sale of apparels. In pursuance of their business plan to diversify thier portfolio of offerings, FMCG products play a key role. FMCG products are usually meant to fulfill the daily needs of consumers and therefore, It believe retailing of FMCG products will bring customers to thier stores on a frequent basis and this may in-turn lead to consumption of thier apparels. It believe retailing of FMCG products would help us to eliminate the impact of seasonality of the apparels market in India, which depends on factors such as change in tether conditions and festival

celebrations. In furtherance of thier endeavthiers to reduce costs, It intend to procure FMCG products directly from the manufacturers. For this purpose, It has entered into and will continue to explore the possibilities of entering into certain arrangements with domestic FMCG majors on such terms and conditions, which are suitable to their business model.

Procurement from low-cost production centres outside India

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Vishal Mega MartIn addition to thier strategy to continue procurement of goods from small and medium size vendors and manufacturers which leads to cost efficiencies, It intend

to procure FMCG and apparels from low-cost production centres located outside India. Towards this objective, It propose to increase thier procurement of finished and semi-finished goods from China and thereby realize economies of scale and pass on the benefits so accrued to thier customers.

Increasing customer satisfaction and thier base of loyal customers

It believes that understanding the needs of thier customers is of prime importance for the continuous growth of thier business. In order to continuously provide customer satisfaction, thier customer management team assimilates customer feedback and it endeavthier to take necessary steps to address the requirements of thier customers. In addition, It has introduced, in association with SBI Cards & Payment Services Private Limited, a co-branded credit card. It proposes to continuously undertake such initiatives to increase the satisfaction of thier customers.

Compensation and Performance Based Incentives

VRPL’s compensation policy is performance based and they believe it is

competitive with industry standards in India. VRPL endeavor to recognize talent

and potential in their employees and encourage them to take additional

responsibilities. Based on performance, VRPL calibrate their employees and

reward loyalty by preferring in-house promotions. Their compensation policy

reflects their continuing efforts to build a world class performance driven culture.

They benchmark ourselves on compensation externally through consultants

biannually, and aspire to be on the upper quartile of their target segment,

comprising of FMCG companies and other retail companies and are currently at

the 75 percentile.

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Vishal Mega Mart

Management Organization Structure:-

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Vishal Mega Mart

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R.C.AgarwalChairman &

Managing Director

Board of Directors

Category Heads

MerchandiseHead

S.K.AgarwalWhole-time Director

Heads - ZonalHead-Supply Chain

Management

Head- Retail

Chief OperatingOfficer

Head – Legal &Secretarial

Head – IT

Head-Admin & HRHead-Finance,

Accounts & MIS

Vishal Mega Mart

CONCLUSIONVISHAL MEGA MART done a great job in promotion strategy by awareness,

location and product specification and differentiation in his store. Basically they

targeted low quality product in low price and the outlets location is very good in

point of view of selling of a product.

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