Retaill Industry in India Marketing

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RETAIL INDUSTRY IN INDIA

• RETAIL DEFINATION & MEANING

• RETAIL FORMATS

• EVOLUTION OF INDIAN RETAIL

• RETAIL TRENDS IN INDIA

• AN OVERVIEW OF INDIAN RETAIL

• STRUCTURE OF INDIAN RETAIL

• SIZE OF RETAIL SECTOR.

• FDI IN RETAIL

• MAJOR COMPONENTS IN RETAIL

• FUNCTIONS IN RETAIL OPERATION

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RETAIL DEFINITION

The word ‘retail’ is derived from the French word ‘retailer’, meaning ‘to cut a

piece off’ or ‘to break bulk’. It includes all the activities directly related to the

sale of goods and services to the ultimate consumer for personal or non-business use. In simple terms, it implies a first-hand transaction with the

customer

MEANING OF RETAIL

A retailer buys goods or products in large quantities from manufacturers or

importers, either directly or through a wholesaler, and then sells smaller

quantities to the end-user. Retailing involves a direct interface with thecustomer & the coordination of business activities from end to end- right from

the concept or design stage of a product or offerings, to its delivery & post-

delivery service to the customer. The world over the retail sector has grown

rapidly with increasing sophistication and modernization of the life-style of

households and individuals and with increasing globalisation of trade; India

has begun to cater up rather astonishingly rapidly. The industry has

contributed to the economic growth of many countries & is undoubtedly one of the fastest changing & dynamic industries in the India and world today.

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. 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 thesize of the Indian organized retail industry was estimated at around Rs.

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13,000 crore. Retail growth is already gathering momentum and the 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

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RETAIL

IntroductionIndia has often been called a nation of shopkeepers. Presumably the

reason forThis is; that, a large number of retail enterprises exist in India. In

2004, there were 12 million such units of which 98% are small family

businesses, utilizing only Household labor. Even among retail enterprises,

which employ hired workers.

Majority of them use less than three workers. Retailing is the

combination of activities involved in selling or renting consumer goods and

services directly to ultimate consumers for their personal or household use. In

addition to selling, retailing includes such diverse activities as, buying,

advertising, data processing and maintaining inventory. While sales people

regularly call on institutional customers, to initiate and conclude transactions,

most end users or final customers, patronize stores. This makes store

location, product assortment, timings, store fixtures, sales personnel, delivery

and other factors, very critical in drawing customers to the store. Final

customers make many unplanned. In contrast those who buy for resale or use

in manufacturing are more systematic in their purchasing. Therefore, retailersneed to place impulse items in high traffic locations, organize, store layout ,

trains sales people in suggestion , and place related items next to each other,

to stimulate purchase.

WHAT DOES THE RETAILING INDUSTRY INCLUDE?

Department Stores

Discount Stores

Clothing Stores

Specialty retailers

Convenience Stores

Grocery Stores

Drug Stores

Home furnishing retailers

Auto Retailers

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Direct Sales Catalog and mail order companies

Retailing consists of the sale of goods or merchandise from a fixed

location, such as a department store; shopping mall etc .The retailer buys

goods or products in large quantities from manufacturers either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail

establishments are often called shops or stores. Retailers are at the end of

the supply chain. Manufacturing marketers see the process of retailing as a

necessary part of their overall distribution strategy. In the retail outlet various

type of good and service are provide to the customer but all the goods and

services are generally homogenous in nature through all the other retail

outlets. Product and services of every company are available in every retail

outlet. It is also find that many customer only used to shopping in own decided

outlet rather from every outlets even there is homogenous among the product

and service offer by the

Every retail outlet .So This put the question in the mind of the every

retailer that is there is any gap between what customer expected from

retailers and what retailer provides to customer during shopping. No two

customers have the identical likes and preferences. Delivery value and

narrowing down the zone of tolerance is a tightrope walk for marketer in

organized retail sector. Especially in market like India the challenges is

formidable because organizations need to cater to a wide and diverse group

of customers .Thus building equity and generating volumes in such complex

market tapers down to the function of managing customer expectation.

Customers take their time to first sketch their needs and then arrive at a

specific decision. At the end of the day the question is what does the

customer expect? How to fulfill the glaring gap between need and

expectations? The answers to this question are “by delivering the value “

But in many case retailers are not aware of what their customer expect.

Hence they are unable to deliver the right value to the right customer and

satisfy them .Especially in this competitive scenario where the customer are

well informed, commanding and demanding at the same time it has become

imperative for the organization to be updated on the “WHAT”,”WHY”and

“HOW” of each and every customer. This calls for empathizing with the

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customer by indulging into their priorities and decision making. Even in the

case of a product as simple as beauty soap, customer have versatile

expectations like, good packaging fragrance, herbal or medical benefit,

glowing skin etc. and all this at an affordable price. A daunting task but

companies have no option but to offer the expected value, that too by keeping

the operating costs low.

Following general expectations of a typical customer

Value of Money

Availability and location

Service expectationsQuality in Product

Need based solution

So in other to deliver the value, Retail outlets in addition to providing

products and services, need to cater for a wide range of motives. The various

determinants of retail outlet preference include cleanliness, well-stocked

shelves, and range of products, helpful staff, disabled access, wide aisles, car

parking, multiple billing points and environmentally friendly goods. Thesediffering motives arise as retailers cater to different types of shoppers who

include economic consumers (concern with value), personalized consumers

(concern with relationships), recreational shoppers (shopping as a leisure

activity) and apathetic consumers (who dislike shopping). Retailers have to

satisfy budding customers, older consumers as well as time crunched

individuals whose motives all tend to be conflicting as well as different.

Retailers need to establish a good image to prevent customers from shopping

around. They must cater to shoppers need for pleasure and practicality. If

expressed as a calculation, customer satisfaction might look something like

this:

Customer expectations

Companies Performance/ Companies Satisfaction

Satisfaction is a consumer’s post-purchase evaluation of the overall

service experience. It is an affective reaction (Menon and Dubé, 2000) in

which the consumer’s needs, desires and expectations during the course of

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the service experience have been met or exceeded (Lovelock, 2001).

Satisfaction in this sense could mean that a supermarket has just barely met

the customer’s expectations, not exceeded nor disappointed those

expectations. The benefits of taking the customer’s response beyond

satisfaction at this level by exceeding expectations, is a competitive strategy

many retailers aspire to achieve. There is a recurrent struggle for existence

and survival in the wake of deep competition, drastically changing customer

attitudes and expectation levels. The study would enable us to understand the

impact of various factors that influence a consumer’s shopping behavior in a

departmental store. It would also help in knowing the magnitude and direction

of movement of these factors amongst each other. These factors have been

divided into three heads- Store, Situation and Shopper factors.

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companies may choose two different margin levels,and yet both may be

successful, provided the strategy and style of management are appropriate.

Margin Turnover ModelRonald R. Gist "Suggested a conceptual frame work, using margin and

turnover, for understanding the retail structure and evolving a retail strategy."

Margin is defined as the percentage mark tip at which the inventory in the

store is sold and turnover is the number of times the average inventory is sold

in a year. is a diagrammatic representation of the frame work and can be

applied to almost any type of retail business. Depending upon the,

combination of the two parameters, a retail business will fall into one of the

four quadrants. For instance L-L signifies a position, which is low on both

margin and turnover; whereas, H-L indicates high margin and low turnover.

Low Margin High Turnover Stores

Such an operation assumes that low price is the most significant

determinant of customer patronage. The stores in this category price their

products below the market level. Marketing communication focuses mainly onprice. They provide Very few services; if any, and they normally entail an extra

charge whenever they do. The merchandise in these stores is generally pre-

sold or self sold. This means that the customers buy the product, rather than

the store selling them. These stores are typically located in isolated locations

and usually stock a wide range of fast moving goods in several merchandise

lines. The inventory consists of well-known brands for which the manufacturer

through national advertising creates a consumer pull. Local promotion focuses

on low price. Wal-mart in the United States is an example and Pantaloon

Chain or Subhiksha are Indian examples of such stores.

High Margin Low Turnover

This operation is based on the premise that distinctive merchandise,

service and sales approach are the most important factors for attracting

customers. Stores in this category price their products higher than those in the

market, but not necessarily higher than those in similar outlets. The focus in

marketing communication is on product quality and uniqueness. Merchandise

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is primarily sold in store and not pre-sold. These stores provide a large

number of services

High Margin High Turnover StoresThese stores generally stock a narrow line of products with turnover of

Reasonably high frequency. They could be situated in a non-commercial area

but not too far from a major thoroughfare. Their location advantage allows

them to charge a higher price. High overhead costs and, low volumes also

necessitate a higher price.

Low Margin-Low Turnover StoresRetail enterprises in this category are pushed to maintain low margins

because of price wars. Compounding this problem is the low volume of sales,

which is probably a result of poor management, unsuitable location etc. such

businesses, normally get wiped out over a period of time. RETAILING

FORMATS (CLASSIFYING RETAIL FIRMS) Regardless of the particular type

of retailer (such as a supermarket or a department store), retailers can be

categorized by (a) Ownership, (b) Store strategy mix, and (c) Non store operations. Figure 1.3

illustrates this concept.

1. Form of Ownership

A sole proprietor, partners or a corporation can own a retail business

like any other type of business. A majority of retail business in India are sole

proprietorships and partnerships.

2. Independent Retailer

Generally operates one outlet and offers personalized service, a

convenient location and close customer contact. Roughly 98% of all the retail

businesses in India, are managed and run by independents, including barber

shops, drycleaners, furniture stores, bookshops, LPG Gas Agencies and

neighbourhood stores. This is due to the fact that into retailing is easy and it

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requires low investment and little technical knowledge. This obviously results

in a high degree of competition. Most independent retailers fail because of the

ease of entry, poor management skills and inadequate resources.

3. Retail Chain

It involves common ownership of multiple units. In such units, the

purchasing and decision making are centralized. Chains often rely on,

specialization, standardization and elaborate control- systems. Consequently

chains are able to serve a large dispersed target market and maintain a well

known company name. Chain stores have been successful, mainly because

they have the opportunity to take advantage of "economies of scale" in buying

and selling goods. They can maintain their prices, thus increasing their

margins, or they can cut prices and attract greater sales volume. Unlike

smaller, independent retailers with lesser financial means, they can also take

advantage of such tools as computers and information technology. Examples

of retail chains in India are Shoppers stop; West side and IOC, convenience

stores at select petrol filling stations.

4. Retail Franchising

Is a contractual arrangement between a "franchiser" (which may be a

manufacturer, wholesaler, or a service sponsor) and a "franchisee" or

franchisees, which allows the latter to conduct a certain form of business

under an established name and according to a specific set of rules. The

franchise agreement gives the franchiser much discretion in controlling the

operations of small retailers. In exchange for fees, royalties and a share of the

profits, the franchiser offers assistance and very often supplies as well.

Classic examples of franchising are; McDonalds, Pizza Hut and Nirulas.

5. Cooperatives

A retail cooperative is a group of independent retailers,that have combined

their financial resources and their expertise in order to effectively control their

wholesaling needs. They share purchases, storage, shopping facilities,

advertising planning and other functions. The individual retailers retain their

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independence, but agree on broad common policies. Amul is a typical

example of a cooperative in India.

Store Strategy MixRetailers can be classified by retail store strategy mix, which is an

integrated combination of hours, location, assortment, service, advertising,

and prices etc. The various categories are:

(A) Convenience Store :

Is generally a well situated, food oriented store with long operating

house and a limited number of items. Consumers use a convenience store;for fill in items such as bread, milk, eggs, chocolates and candy etc.

(B) Super markets :

Is a diversified store which sells a broad range of food and non food

items. A supermarket typically carries small house hold appliances, some

apparel items, bakery, film developing, jams, pickles, books, audio/video CD's

etc. The Govt. run Super bazaar, and Kendriya Bhandar in Delhi are good

examples of a super market. Similarly in Mumbai, we have Apna Bazar and

Sahakari Bhandar.

(C) Department Stores:

A department store usually sells a general line of apparel for the family,

household linens, home furnishings and appliances. Large format apparel

department stores include Pantaloon, Ebony and Pyramid. Others in this

category are: Shoppers Stop and Westside.

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(D) Speciality Store :

Concentrates on the sale of a single line of products or services, such

as Audio equipment, Jewellery, Beauty and Health Care, etc. Consumers are

not confronted with racks of unrelated merchandise. Successful specialitystores in India include, Music World for audio needs, Tanishq for jewellery and

McDonalds, Pizza Hut and Nirula's for food services.

(E) Hyper Markets:

Is a special kind of combination store which integrates an economy

super market with a discount department store. A hyper market generally has

an ambience which attracts the family as whole. Pantaloon Retail India Ltd.(PRIL) through its hypermarket "Big Bazar", offers products at prices which

are 25% - 30% lower than the market price.

Non Store Retailing

In non store retailing, customers do not go to a store to buy. This type

of retailing is growing very fast. Among the reasons are; the ability to buy

merchandise not available in local stores, the increasing number of womenworkers, and the presence of unskilled retail sales persons who can not

provide information to help shoppers make buying decisions The major types

of non store retailing are:

(A) In Home Retailing:

Where, a sales transaction takes place in a home setting - including

door-door selling. It gives the sales person an opportunity to demonstrate

products in a very personal manner. He/She has the prospect's attention and

there are fewer distractions as compared to a store setting. Examples of in

home retailing include, Eureka Forbes vaccum cleaners and water filters.

(B) Telesales/Telephone Retailing:

This involves contact between the prospectand the retailer over the

phone, for the purpose of making a sale or purchase. Alarge number of

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mobile phone service providers use this method. Other examples are private

insurance companies, and credit companies etc.

(C) Catalog Retailing: This is a type of non store retailing in which the retailers offers the

merchandise in a catalogue, which includes ordering instructions and

customer orders by mail. The basic attraction for shoppers is convenience.

The advantages to the retailers include lover operating costs, lower rents,

smaller sales staff and absence of shop lifting. This trend is catching up fast in

India. Burlington's catalogue shopping was quite popular in recent times.

Some multi level marketing companies like Oriflame also resort to catalogueretailing.

(D) Direct Response Retailing:

Here the marketers advertise these products/ services in magazines,

newspapers, radio and/or television offering an address or telephone number

so that consumers can write or call to place an order. It is also sometimes

referred to as "Direct response advertising." The availability of credit cardsand toll free numbers stimulate direct response by telephone. The goal is to

induce the customer to make an immediate and direct response to the

advertisement to "order now." Telebrands is a classic example of direct

response retailing. Times shopping India is another example.

(E) Automatic Vending :

Although in a very nascent stage in India, is the ultimate in nonpersonal, non store retailing. Products are sold directly to customers/buyers

from machines. These machines dispense products which enable customers

to buy after closing hours. ATM's dispensing cash at odd hours

(F) Electronic Retailing/E-Tailing : Is a retail format in which retailers communicate with customers and

offer products and services for sale, over the internet. The rapid diffusion of

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internet access and usage, and the perceived low cost of entry has stimulated

the creation of thousands of entrepreneurial electronic retailing ventures

during the last 10 years or so. Amazon.com, E-bay and Bazee.com

HDFCSec.com are some of the many e-tailers operating today. THE WHEEL

OF RETAILING Is a hypothesis that attempts to explain the emergence of

new retailing institutions and their eventual decline and replacement by newer

retailing institutions. Like products retailing institutions also have a life cycle.

According to this theory new retailers enter the market as, low margin, low

price,low status institutions. The cycle begins with retailers attracting

customers by offering low price and low service. Over a period of time these

retailers want to expand their markets and begin to stock more merchandise,

provide more services, and open more convenient locations. This trading up

process. Increases the retailers costs and prices, creating opportunities for

new low price retailers to enter the market. The evolution of the department

store illustrates the "wheel of retailing" theory. In its entry phase, the

department store was a low cost-low service venture. With time it moved up

into the trading-up phase. It upgraded its facilities, stock selection, advertising

and service. The same department store then moves into the vulnerability

phase, because it becomes vulnerable to low cost/low service formats, such

as full line discount stores and category specialists. Figure 1.5 illustrates this

theory. While the wheel hypothesis has a great deal of intuitive appeal and

has been borne out in general by many studies of retail development, it only

reflects a pattern. It is not a sure indicator of every change, nor was it ever

intended to describe the development of every individual retailer.

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RETAILING DECISIONSThere are many factors for retailers to consider while developing and

implementing their marketing plans. Among the major retailing decisions are

these related to (a) Target markets (b) Merchandise management (c) Storelocation (d) Store image (e) Store personnel (f) Store design (g) Promotion,

and (h) Credit and collections. This is shown diagrammatically in Figure 1.6 .

Target Markets:

Although retailers normally aim at the mass market, a growing number

are engaging in marketing research and market segmentation, because they

are finding it increasingly difficult to satisfy everyone. Through a carefuldefinition of target markets, retailers can use their resources and capabilities

to position themselves more effectively and achieve differential advantage.

The tremendous growth in number of speciality stores in recent years is

largely due to their ability to define precisely the type of customers, they want

to serve.

Merchandise Management :

The objective here is to identify the merchandise that customers want,

and make it available at the right price, in the right place at the right time.

Merchandise Management includes (i) merchandise planning (ii) merchandise

purchase, and (iii) merchandise control. Merchandise planning deals with

decisions relating to the breadth and depth of the mix, needed to satisfy target

customers to achieve the retailers return on investment. This involves sales

forecasting, inventory requirements, decisions regarding gross margins andmark ups etc. Merchandise buying involves decisions relating to centralized or

decentralized buying, merchandise resources and negotiation with suppliers.

Merchandise Control: deals with maintaining the proper level of inventory and

protecting it against shrinkage (theft, pilferage etc.)

Store Location:

Location is critical to the success of a retail store. A store's trading-area is thearea surrounding the store from which the outlet draws a majority of its

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customers. The extent of this area depends upon the merchandise sold. For

example some people might be willing to travel a longer distance to shop at a

speciality store because of the unique and prestigious merchandise offered.

Having decided on the trading area a specific site must then be selected.

Factors affecting the site include, traffic patterns, accessability, competitors'

location, availability and cost and population shifts within the area.

Store Image:

A store image is the mental picture, or personality of the store, a

retailer likes to project to customers. Image is affected by advertising,

services; store layout, personnel, as well as the quality, depth and breadth of merchandise. Customers tend to shop in stores that fit their images of

themselves.

Store Personnel:

Sales personnel at a retail store can help build customer loyalty and

store image. A major complaint in many lanes of retailing, is the poor attitude

of a salesperson. There is a growing trend now, to provide training to, thesesales clerks to convert them from order takers to effective sales associates.

Store Design:

A store's exterior and interior design affect its image and profit

potential. The exterior should be attractive and inviting and should blend with

the store's general surroundings. The term "Atmospherics" is used to refer to

the retailer's effort at creating the right ambience. Merchandise display isequally important. An effective layout guides the customer though the various

sections in the store and facilitates purchase.

Promotion:

Retail promotion includes all communication from retailers to

consumers and between sales people and customers. The objective is to

build the stores image, promote customer traffic, and sell specific products. Itincludes, both, personal and non personal promotion. Personal

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communication is personal selling - the face to face interaction between the

buyer and the seller. Department stores and speciality stores, emphasize this

form of promotion. Non personal promotion is advertising. The media used

are TV, Radio, Newspapers, Outdoor displays and direct mail, other forms of

promotion include, displays, special sales, give always and contests etc.

Credits & Collections:

Retailers are generally wary of providing credit, because of additional

costs-financing accounts receivables, processing forms and bad debts etc.

But many customers prefer some form of credit while purchasing. This

explains the popularity of different types of credit cards and debit cards.

EMERGING TRENDS IN RETAILING

In recent years the nature of retailing has changed dramatically, as

firms try to protect their positions in the market place. Many customers are no

longer willing to spend as much time on shopping as they once did. Some

sectors of retailing have become saturated, several retailers are operating

under high levels of debt and number of retailers after running frequent"sales", have found it difficult to maintain regular prices. Retailers are adapting

to*the shopping needs and time constraints of working women, dual earner

households and the increased customer interest in quality and customer

service:

Shopping Malls:

A growing number of shopping malls are coming up all over thecountry. In north India; there seems to be a proliferation of such malls

surrounding Delhi, in places like Gurgaon and Noida. In general they target

higher income customers, with their prestigious speciality shops, restaurants

and department stores.

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Factory Outlets:

Manufacturers are opening factory outlets to sell off surplus inventories

and outdated merchandise. This forward vertical integration gives

manufacturers greater control' over distribution, than selling the merchandiseto off price retailers. Mohini knitwear of Ludhiana (Punjab) and number of

woolen and hosiery manufacturers set up their outlets in Delhi during winters.

Non Store Retailing :

Non store retailing is accelerating at a faster rate than in store retailing.

This includes direct marketing. In Home shopping TV shopping and e-tailing

etc.

Diversification of Offerings:

Scrambled (unrelated products or services) merchandising is taking on

a broader meaning and inter type competition among retailers is growing. For

instance Citibank is organizing tourist trips and sending mail order catalogues

to its credit card customers.

Impact of Technology on Shopping Behavior:

The way retailers present their merchandise and conduct their

transactions are changing. Cable TV Channels are used to present

merchandise, Videos have replaced catalogues and computer linkages to

acquire information and make purchases are on the increase. Virtual

shopping through PDA's is another possibility.

Multi Channel Retailing:

Traditional store based and catalogue retailers are placing more

emphasis on their electronic channels and evolving into multi channel

retailers, because they can reach new markets and overcome limitations

posed by traditional formats,

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FIGURE 1.3



RETAIL TREND IN INDIA

Globally, retail is the largest private industry. However, in India, it is in

its nascent stages. The total retail market is estimated at Rs 900,000 Crores.

Organized retail at around 5% is estimated at Rs 28,000 Crores. The

organized retail share as per the estimates made by most consultants is

estimated to reach a level of 10% by 2010. In absolute terms this wouldamount to Rs 110,000 Crores. Retail is India’s largest industry, accounting for

over 10 percent of the country’s GDP and around eight percent of

employment.

Retailing in India is gradually inching its way to becoming the next boom

industry. The whole concept of shopping has altered in terms of format and

consumer buying behavior, ushering in a revolution in shopping. Modern retail

has entered India as seen in sprawling shopping centers, multi-storied malls

and huge complexes offer shopping, entertainment and food all under one

roof. India represents an economic opportunity on a massive scale, both as a

global base and as a domestic market. Indian Retail sector consists of small

family-owned stores, located in residential areas, with a shop floor of less than

500 square feet.

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

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FIGURE 1.4



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.

OVERVIEW OF INDIAN RETAIL SECTOR.

The India Retail Industry is the largest among all the industries, the

retail sector has helped in giving strong impetus to overall economic growth

as a significant driver of the growth of services sector, which contributes as

mush as 54 per cent of GDP. It has strong backward and forward linkages

with other sectors like agriculture and industry through stimulating demand for

goods and through mass marketing, packaging, storage and transport.

Moreover, it creates considerable direct and indirect employment in the

economy. Also, the consumers have benefited in terms of wide range of

products available in a market. The Retail Industry in India has come forth as

one of the most dynamic and fast paced industries with several players

entering the market. But all of them have not yet tasted success because of

the heavy initial investments that are required to break even with other

companies and compete with them

The total concept and idea of shopping has undergone an attention

drawing change in terms of format and consumer buying behavior, ushering in

a revolution in shopping in India. Modern retailing has entered into the Retail

market in India as is observed in the form of bustling shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment and

food all under one roof. With growing time constraints and choices, the

consumer is getting used to having options readily at hand when one steps

out to make the final purchase decision without much dissonance Need for an

enhanced look and feel of the shopping environment. With retail ambiences

getting upgraded, clearly the poky neighborhood kirana stores are becoming

part of the past for the hypermarket consumer, and one will soon find it

difficult to shop "regularly" at the dusty grocery shop.

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Today with the growth of malls and hypermarkets, consumers no

longer think "expensive looking" means "expensive". To actually establish

premium imagery through shopping environment is going to be that much

more difficult! Need for customer service to encourage consumers to come

back again and again and buy more. Quite contrary to the thought that

technology will dehumanize transactions, the truth is humans will make all the

difference.

It may seem that in a vast country like India, this is restricted to a few

urban towns. This could be myopic thinking. The revolution was brewing in

South India in the 90s but seems to have taken speed in the 21st century.

As "retail" brands see the value of volumes and with the ready

availability of both technologies for back-end management and real estate for

front-end face, business compulsions and opportunities will make them

expand faster than one can imagine.

Consumers moving up the "diminishing return" curve. After getting a

certain level of quality in many categories, consumers are unwilling to pay

more for incremental quality and so are ready to make do with "acceptablequality", which store brands offer very easily.

Media fragmentation makes its more and more difficult for mass

marketed brands to actually connect with consumers. So the battle moves to

the market place where by sheer ownership, store brands hold an edge.

They are cost advantage, because store brands operate on much less

overheads because their target markets are limited to the catchments area in

and around the store and so depend much less on "expensive" mass media

brand-building advertising. And above all there are fewer partners to share the

"margin goodies" with. A large young working population with median age of

24 years, nuclear families in urban areas, along with increasing

workingwomen population and emerging opportunities in the services sector

are going to be the key factors in the growth of the organized Retail sector in

India. The growth pattern in organized retailing and in the consumption made

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by the Indian population will follow a rising graph helping the newer

businessmen to enter the India Retail Industry.

In India the vast middle class and its almost untapped retail industry

are the key attractive forces for global retail giants wanting to enter intonewer markets, Clearly, the impact of this retail revolution could be bigger

than just the changing façade of the market place and enhancing consumer

buying experience. It is a looming threat to "mass brand marketers" and the

sooner they take cognizance of that, the better. Mass retailers may not only

redefine shopping experiences, but also redefine market spaces. The future

of the India Retail Industry looks promising with the growing of the market,

with the government policies becoming more favorable and the emergingtechnologies facilitating operations.

24



STRUCTURE OF INDIAN RETAIL SECTOR

The retail sector is classified broadly into two:

1. Organised Retail Sector and,

2. Unorganised Retail Sector

ORGANISED RETAIL

Organized retailing refers to trading activities undertaken by licensed

retailers, that is, those who are registered for sales tax, income tax, etc.

These include the corporate-backed hypermarkets and retail chains, and also

the privately owned large number of retailers, greater enforcement of taxation

mechanisms and better labour law monitoring systems. It is not just a stocking

and selling, but is more about efficient supply chain management, developing

vender relationships, quality customer service, efficient merchandising and

timely promotional campaigns. It, however, constitutes a very little share of at

around 5 per cent (Rs 500 billion) of the total retail market. According to the

Retailers Association of India, the share of organised sector to the overall

retailing market in India is expected to grow from 3 per cent to 20 per cent in

the next 10 years. The KSA Technopak’s estimate is that by 2005, the

organised retail sector would be employing in excess of 2, 50, 000 individuals

directly and perhaps 8-10 times as many indirectly in the supply chain. The

organised retailing has been successful in metropolitan cities so far, more so

in the south and west India. It is expected that the tier II cities would take

another 5 years to absorb modern retailing opportunities. Moreover, the case

for Indian retailers to explore rural markets is also strong due to the size of

rural population and agricultural income growth in last couple of years. A clear

indicator of this potential is the share of rural market across most categories

of consumption.

UNORGANISED RETAIL

Unorganized retailing, on the other hand, represents 97 per cent of the

total retail market is mainly characterised by typically small retailers,

25



traditional formats of low-cost retailing, more prone to tax evasion and lack of

labour law supervision. The local kirana shops, owner manned general stores,

paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.

Food retail trade is a very large segment of the total economic activity of our

country and due to its vast employment potential; it deserves very special

focused attention. Efficiency enhancements and increase in the food retail

sales activity would have a cascading effect on employment and economic

activity in the rural areas for the marginalized workers. India is one of the

largest unorganised retail markets in the world and more than 96 per cent of

the retailers work in less than 500 sq ft of area.

26

FIGURE-1.5



SIZE OF THE MODERN RETAIL SECTOR

A retail revolution is sweeping through India. Organized retail, which is 5% of

the whole currently, is in turn pegged to grow to Rs. 100,000 Crores by 2015.

And one consequence of all those investments will be the fact that India's

present two square-feet per capita retailing space will rise 15-20% by 2010.

The emergence of new formats and the evolution of modern retail in India has

attracted attention in recent years. The retail sector, currently, is said to

contribute 12 per cent of India’s GDP and is expected to grow at a robust rate

of 45 per cent per annum by the end of 2008 (Associated Chambers of

Commerce and Industry of India, ASSOCHAM). This growth would expandthe size of the market to over Rs 14, 79,000 crore from its current level of Rs

5, 88,000 crore. The Indian retail market is estimated at Rs 9,300 billion and is

expected to grow at a compounded rate of 30 per cent over the next five

years (Retailers Association of India). Moreover, the retail sector employs

over 7 per cent (21 million) of the national workforce, the second only to

agriculture. The retail density more than doubled between 1978 and 1996 and

the number of outlets per 1000 people at an all India level, increased from 6.5

in 2000 to 20.5 in 2005. For the urban sector alone, the shop density

increased from 12.6 per 1000 people in 1999 to 20.3 per 1000 people in 2005.

Until now, Indian retailers have very little bargaining power with

manufacturers, unlike in the case of retailers in developed countries.

With the growth of malls, multiplexes, and hypermarkets, the consumer is

being exposed to a new kind of shopping experience and services which is

quietly and surely redefining her expectations from shopping.

27

FIGURE- 1.6



A look at the statistics shows that the retail sector in India is worth USD 394

billion and is growing at the rate of 30% annually. Study has found that

retailing ($180 billion) contributes to 10 per cent of GDP and employs 7 per

cent (21 million) of the workforce. According to AT Kearney, India is given the

top ranking as the next foreign investment destination, as markets like China

become increasingly saturated. India is the 4 th largest economy as regards

GDP (in PPP terms) and is expected to rank 3 rd by 2010 just behind US and

China 1. Over the past few years, the retail sales in India are hovering around

33-35% of GDP as compared to around 20% in the US. The table gives the

picture of India's retail trade as compared to the US and China.

The last few years witnessed immense growth by this sector, the key driversbeing changing consumer profile and demographics, increase in the number

of international brands available in the Indian market, economic implications

of the government increasing urbanization, credit availability, and

improvement in the infrastructure, increasing investments in technology and

real estate building a world class shopping environment for the consumers. In

order to keep pace with the increasing demand, there has been a hectic

activity in terms of entry of international labels, expansion plans, and focus ontechnology, operations and processes. This has lead to more complex

relationships involving suppliers, third party distributors and retailers, which

can be dealt with the help of an efficient supply chain. A proper supply chain

will help meet the competition head-on, manage stock availability; supplier

relations, new value-added services, cost cutting and most importantly reduce

the wastage levels in fresh produce.

FOREIGN DIRECT INVESTMENT (FDI) IN RETAIL

The recent clamor about opening up the retail sector to Foreign Direct

Investment (FDI) becomes a very sensitive issue, the most important factor

against FDI driven “modern retailing” is that it is labour displacing to the extent

that it can only expand by destroying the traditional retail sector. This is

because the primary task of government in India is still to provide livelihoods

and not create so called efficiencies of scale by creating redundancies. As per

present regulations, no FDI is permitted in retail trade in India. Allowing 49%

28





Increased local sourcing.

Provide better value to end consumers.

Investments and improvement in the supply chains and warehousing.

Franchising opportunities for local entrepreneurs.

Growth of infrastructure.

Increased efficiency.

Cost reduction.

Implementation of IT in retail.

Stimulate infant industries and other supporting industries.

DRAWBACKS OF FDI IN RETAIL

Would give rise to cut-throat competition rather than promoting

incremental business.

Promoting cartels and creating monopoly.

Increase in the real estate prices.

Marginalize domestic entrepreneurs.

The financial strength of foreign players would displace the

unorganized players.

Absence of proper regulatory guidelines would induce unfair trade

practices like Predatory pricing.

Thus it can be said that this investment boom could change the face of Indianretail by offering quality goods at lower prices to the consumers. In addition to

30



this, the presence of global retailers will further enhance exports from India as

they would also source Indi

goods for their international outlets in a big way leading to a remarkable

increase in Indian exports.

······SWOT ANALYSISFOR RETAIL SECTOR

KEY SUCCESS FACTORS:

Price

Schemes

Customer Delight

Availability of all types/brands

31

78

80

85

90

91

92

93

94

95

96

97

98

99

00

01

02

75

150

225

300

FDI in retailallowed

Years

Retail sales grew @ 19.6% CAGR for the next 4 yearsafter the introduction of FDI in 2002

FIGURE-1.7



Quality of products

32



STRENGTHS:

1. Price – Lowest, full value

2. Schemes – innovative, targeting new and potential customers

3. Availability – availability of all items and maximum brands. This is because

of the different tastes and preferences of customers

4. Good Customer base and spreading word of mouth – Brand of

the future.

WEAKNESS:

1. Non enthusiastic staff at stores.2. Initial Bad image due to hiccups at launch or long speculation.

3. Quality problems.

4. Communication problems within the organization

OPPORTUNITIES:

1. The other retailers like Vishal Mega mart have set up the trend for these

types of retail outlets in a place where just around 9% of population goes to

supermarkets

2. The market itself which is growing at very fast rate.

3. The expansion of the city at a fast pace and new centers like City Centre,

Ansal Plaza, Omaxe and numerous other malls coming up in the city.

THREATS:1. The competitors are placed very well in the market and their

association with the customers.

2. The credit system provided by the Kirana and Departmental stores.

Therefore it becomes difficult for the customer to switch.

33



STRENGTHS

• Price – Lowest, full value

• Schemes – innovative,targeting new and potential

customers

• Availability – availability of all

items and maximum brands.

This is because of the

different tastes and

preferences of customers• Good Customer base and

spreading word of mouth –

Brand of the future.

WEAKNESS

• Non enthusiastic staff at stores.

• Initial Bad image due to hiccups atlaunch or long speculation.

• Quality problems.

• Communication problems within

the organization

THREATS

• The competitors are placed

very well in the market and

their association with the

customers.

• The credit system provided by

the Kirana and Departmental

stores. Therefore it becomes

difficult for the customer to

switch.

OPPORTUNITIES• The other retailers like Vishal Mega

mart have set up the trend for

these types of retail outlets in a

place where just around 9% of

population goes to supermarkets

• The market itself which is growing

at very fast rate.

• The expansion of the city at fast

pace and new centers like magnum

mall, Ishaniya mall and numerous

other malls coming up in the city.

34



Although the weakness quoted above can develop when the operations start,

but these have been stated above so that a proactive approach can be

adopted rather than a reactive approach. This will definitely help Reliance to

be excellent, both functionally as well as strategically .MAJOR COMPONENTS OF RETAIL SECTOR

The major components of the retail sector are: Food and Grocery, Fast

Moving Consumer Goods (FMCG), Consumer Durables, Apparel, Footwear

and leather, Watches, Jewellery, and Health and Beauty

The anatomy of the retail market has shown that the clothing and textiles

constitutes 39 per cent of the organised retail pie, followed by food and

grocery, which accounts for 11 Percent share of organised retail market.

Percentage Share Of RetailSegments in Total

Retail Sector

39

1159

8

7

7

383

Clothing and Textiles

Food and Grocery

Consumer Durable

Footwear

Furniture and

FurnishingCatering Services

Jewellery and Watches

Books, Music andGiftsMobile Handsets

Others

However, according to the survey conducted by KPMG for Federation of

Indian Chamber of Commerce and Industry (FICCI), among these, the food

and grocery is expected to witness the fastest growth followed by clothing as

the second-fastest growing segment .

35

FIGURE-1.8



CHANGING RETAIL FOOD SECTOR

1. Introduction

One of the major facets of globalization that is changing the foodmarketing system, both domestically in India and internationally in other

countries, is the emergence of supermarkets and hypermarkets4 into the

retailing sector. In other words, the retail sector has become more globalize.

In India, the development of these modern retail outlets has seen tremendous

growth since the 1990s. The pull factors driving the rise of hypermarkets

coupled with the multi-nationalization of supermarket chains include, among

others, the relaxation of investment and trade restriction and hence the influxof Fids to the country, and increase in urbanization and increase of population

and thus market density. At the global front, the saturation of and increased

competition and profit squeeze in food markets in Europe and North America

have forced the hypermarkets companies to expand their territories to the

Asia-Pacific Region which are enjoying buoyant economic growth. The

presence of these supermarkets and hypermarkets brought direct impact onto

the local scene affecting traditional market outlets, consumers, suppliers,trade and employment. Traditional markets are losing ground, but are still

important outlets for fresh fruits and vegetables. This paper attempts to

elucidate the India’s changing food retail sector. The first part reviews the

development of the food retail sector with emphasis on the emergence of

supermarkets and hypermarkets. This is followed by the identification of the

driving forces that drive the development of these modern retails outlets. This

is then followed by the discussion on the impacts of the modern retail sector

on traditional retail outlets, agricultural production and food quality. The final

part summarizes the implications of these changes on the policy.

2. Development of the Food Retail Sector

The food retail sector is made up of wet markets, dry markets, night

markets, sundry/provision shops, convenience stores, discount stores,

specialty stores, supermarkets, department stores, and hypermarkets. Thesedifferent channels cater to different segments of the Indian population.

36



Traditionally the provision shops made up the large segment of the food retail

sector. As time progress and due to various factors such as consumer

lifestyle, price disadvantage and limited working capital, the number of these

provision shops has been on the decline. Nevertheless, these segments still

contribute around 25% of all retail sales in India. The total numbers of retail

outlet (food/non-food) establishments in India increased from 126,385

establishments in 1999 to 139,960 in 2003 The retail outlets comprise

department stores, supermarkets, hypermarkets, convenience stores,

traditional stores such as independent grocers, etc. Food retail outlets made

up 75% of the total number of retail outlets in the country, the majority of

which were independent grocers. The structure of the retail sector has

changed with the increasing presence of hypermarket, supermarket and direct

selling. A survey on shopping habits in 1997 indicated that shoppers at

.2.1 Modern Retail Store

Modern retail stores such as supermarkets and hypermarkets are

mainly located in the majorurban centers and are continuing to grow in

numbers. The foreign-owned supermarkets isdominated by Giant, Tesco,

Makro, and Carrefour, while the local-owned is The Store, X-Tra, and Mydin.

Tables 3 and 4 show the profile of the supermarkets and their sales share,

respectively. The Government has recently introduced new guidelines on the

opening of new hypermarkets in an attempt to slow down their rapid growth

and to provide some level of protection for small retailers. More Indians are

shopping at these stores, particularly the affluent middle to upper income

consumers, because these large retail stores offer a wide range of

sophisticated food and beverage products. Their products are mainly made up

of high quality, branded goods sourced from both local and overseas

suppliers. These retailers are increasingly sourcing from local sources to

remain price competitive. For example, Tesco sources 95% of the products

from local suppliers.

37



2.2 Convenience Store

Convenience stores are still a fairly new retail store concept in India.

They have around 11% of the total retail sales. These stores are mainly

located in major urban centers and along the North-South Highway to capturebusy customers who seek convenience. They concentrate on selling a small

range of convenience foods in medium to small sized packaging, usually

single serve sizes. Imported products form a small proportion of their product

lines. More convenience stores such as petrol station stores have been

opening, particularly in major urban center and along the North-South

Highway. These store concepts are still at the early stage of introduction and

most shoppers do not automatically turn to these stores for their shopping

needs. The limited ranges of products offered by these stores also act as a

barrier to attracting more customers to these stores. The main convenience

store is 7-Eleven although other smaller local convenience stores exist.

2.3 Traditional Store

The traditional stores sub-sector is large but highly fragmented. It

includes provision shops, grocery shops, wet markets, mini markets and other similar retail outlets, which sell a limited range of food and beverage products

on a small scale. They generally sell local products and brands with low to no

presence for imported products, depending on the target customers and the

location of the store. The majority of Indians continues to shop from traditional

stores and still continue to command a significant share of the retail market,

as these types of outlets are conveniently located near to their homes or

places of work. Most of these retailers continue to source their products from

local suppliers to remain price competitive.

2.4 Future Scenario

Supermarkets and hypermarkets will continue to perform strongly over

in the future. It is very unlikely that independent grocery stores will be able to

bridge the pricing advantage and convenient and comfortable shopping

environment that these two types of outlets offer. Strong economic conditions

will ensure that there is a continued increase in demand for niche and value-

38



added products. Sales by food retailers on the whole are expected to achieve

a cumulative growth of about 28% over the 2003-2008 periods Sales through

hypermarkets are expected to reach a very similar level to that of

supermarkets.

3. Driving Forces for the Changing Retail Food Sector

a. Income growth

Supermarket chains are rapidly growing to meet the needs of more

affluent consumers. With rising affluence and education levels, consumers’

shopping and eating lifestyles have changed drastically over the years. Indian,

especially in urban areas, prefer to shop in modern retail outlets, which offer them one-stop shopping options. However, traditional stores such as

provision and grocery shops, which are conveniently located in residential and

workplaces are still popular.

b. Consumer tastes and changing behaviour

India’s consumer lifestyle has been evolving and changing due to in

part of rising income and education level. High profile international retailers

and the global mass media have also played a hand in shaping consumer-buying behavior. Foreign owned hypermarkets are fast gaining popularity in

India, attracting customers with their “one – stop” and “all under one roof”

concepts. Since then, foreign retailers have been expanding rapidly in India.

Indian consumers, particularly those in the 20-40 age group, who can afford

and are willing to pay for the price of convenience, have a preference for

semi-prepared foods and/or

takeaway meal. India is becoming urbanized. This has contributed to the

development of a country's modern retail sector.

c. Urbanization

Increase in urbanization and population has increased the market

density (thus increase ineconomies of scale of processing and retail units and

decrease in transaction costs). There was an increase of 3.13 million people

in the urban areas in 1991-2000.

39



d. Food Safety Concern

Together with improvement in education level and increase in income,

Indian is more aware of nutritional issues, and shifts in shopping habits

towards healthy eating.

e. Infrastructure and Advances in Technology

The good infrastructure together with advances in technology in India

has made the rapid rise of supermarkets in India possible. Besides, nearly

90% of the household in India have refrigerators, and the number of homes

with microwaves ovens around 15-20% and growing.

4. Impacts on Traditional Outlets

Independent grocers such as provision shops and mini-markets

gradually closed. Many would attribute this to the emergence of modern

retailing with supermarkets and hypermarkets. In 2003, retailers with an

annual turnover of at least RM1.25 million accounted for the largest share of

total retail sales in India. This was not the case before 2000, when retailers

with less than RM1.25 million in retail turnover, collectively, accounted for slightly more than 50% of total

retail sales.

5. Impact on Agricultural Producers

The differences between the hypermarkets marketing channel

compares to the traditional one are as follows: (i) under the traditional system,

the farmers produce has to go through a number of intermediaries before itreaches the consumers. Whereas in the case of marketing through the

hypermarket, the farmers could either sell their produce direct to or through

the processors who then sell it to the hypermarkets, hence shortening the

distribution channel;

(ii) under the traditional channel, the price is generally discovered through

“personal negotiation” while the sale to the hypermarkets are normally

formalized in the form of contract; hence price is determined by the hyper-retailer who then passes it down to the producer;

40



(iii) the transactions between the supplier and the hypermarkets are normally

done under contractual terms

(iv) producers or suppliers are subjected to rigorous quality standards as

specified in the contracts. There is no empirical study that has been carried to

evaluate the economic impacts of such arrangement on the producer as well

as on the marketing system in India. The preliminary observation on this

development suggests that invasion of MNCs into the food retailing sector has

redefined the supply chain management. It provides a new market outlet for

the producers

6. Consumers’ Preferences, Perception and Opinion of

Modern Retail Food Outlets

A total of 120 respondents were interviewed to obtain consumers’

preferences, perception and opinion of modern food retail outlets such as

supermarkets and hypermarkets. Although the number of respondents is

small, nevertheless, it provides some insight on the consumers

41



CHAPTER – 2

COMPANY PROFILE

• INTRODUCTION

• PRODUCT RANGE

• STORE BRAND

• COMPETATIOR PROFILE OF SPENCER

42



CHAPTER -2

COMPANY PROFILE

SPENCER’S HYPER(JAIPUR)

INTRODUCTION

Pencer’s Retail is one of India’s fastest growing retail stores with

multiple formats and retailing food, apparel, fashion, electronSics, lifestyle

products, music and books. Established in 1996, Spencer’s has become a

popular destination for shoppers in India with supermarkets, hypermarkets

and dailies spread all over India. RPG Enterprises comprises of more than20 companies spanning across 7 business sectors , Retail , Technology ,

Entertainment , Power, Transmission , Tyres and Specialties . It has a turnover

of US$ 3 billion.

Spencer’s has retail footage of over 1.3 million square feet and over 350

Spencer’s stores in 50 cities.

RPG enterprises• 40,000 + Employees

• 4, 00,000 + Shareholders

• R- RESPOND

43

FIGURE-2.1

http://www.rpggroup.com/bussectors/bizsectors.htm


http://www.rpggroup.com/bussectors/retail.htm


http://www.rpggroup.com/bussectors/itncomm.htm

http://www.rpggroup.com/bussectors/entertainment.htm

http://www.rpggroup.com/bussectors/power.htm

http://www.rpggroup.com/bussectors/tyres.htm

http://www.rpggroup.com/bussectors/specialities.htm



http://www.rpggroup.com/bussectors/itncomm.htm

http://www.rpggroup.com/bussectors/entertainment.htm

http://www.rpggroup.com/bussectors/power.htm

http://www.rpggroup.com/bussectors/tyres.htm

http://www.rpggroup.com/bussectors/specialities.htm



• P- PERFORMG- GROW

OPERATIONS

The company operates through the following formats:-Spencer’s

Hypermarkets :-

A fast growing retail, network of hypermarkets with large format

stores in Mumbai, Gurgaon,Ghaziabad, Luck now, Calicut, Hyderabad,

Vizag, Vijayawada, Aurangabad, Durgapur and Kolkata.

Spencer’s Super :-

One of the largest supermarkets Chain in the food and grocery

segment in India.

Spencer’s Daily :-

Small format store conveniently located with a range of

products to meet your daily household needs.

Spencer’s Express :-

Your food and grocery store to next door.

MILESTONES

2003 RPG crosses the 7000 Cr turnover mark reaching 7472 Cr in

sales.

2001 'Giant' hypermarkets are established .

2000 International Computers India Ltd (ICIL) becomes Zensar

Technologies Ltd .

Food world is established

1997 Music World and Health & Glow are formed

1996 RPG Netcom is established

44



1995 RPG Cellular commences its operations.

1988 HMV (His Master’s Voice) is acquired

1985 Saregama India (formerly the Gramophone of India Ltd) is

acquired

1983 RPG Life Sciences (formerly Searle India) is acquired

1979 Inception of RPG Enterprises by Mr. RP Goenka, a Rs. 700

million group, which comprises Phillips Carbon Black, Asian Cables,

Agarpara Jute and Murphy (India).

What is it that defines RPG Enterprises’ success and carries it onthrough generations?

The set of values and the visionary focus of its leaders, which forms

the distinct identity of RPG Enterprises, is what constitute its business

drivers.

45



IT’S VISION AND CORE VALUES ARE:

We shall be a leading Indian Group with a focus on market capitalization

through:

Leadership in profitability and revenue growth in our chosen businesses

Being a customer-centric organization and

Being the most exciting workplace .

People Orientation

Innovation & Entrepreneurship

Transparency & Integrity

Passion for Superior Performance

IT’S QUALITY POLICY

Group is to achieve customer satisfaction, through building trust and

confidence in our customers by anticipating, understanding and meeting in

full, customers' needs with a helpful attitude and supportive behaviour and

providing them with consistent quality products and services.

We will attain this as a team with the full involvement of our suppliers,

employees and partners."

46



MIAN MOTO’S OF THE COMPANY

S.T.U.C= Show that you care

SPENCER'S OPENS FIRST OUTLET IN MUMBAI

Spencer’s Retail today is the largest supermarket chain in India.

At Spencer’s there are extensive range of products and durables,

designed to satisfy all shopping needs. Today SPENCER’S has 350

stores across 50 cities covering a retail trading area of half a million

square feet and an astonishing 3 million customers a month. No

wonder, after more than 100 years, people continue to trust the name

Spencer’s. And this trust has been the outcome of a consistent high-

quality service.

In 1863, since we first opened our gates to the Indian consumer, But

our Endeavour, by which we still stand firm, has always been to

provide a pleasant and delightful shopping experience for you, our

valued customer. As RPG, when we took over Spencer’s, we

pioneered the retail revolution in India, by introducing the concept of

specialty stores like Food World, Health and Glow and Music World. In

2000, SPENCER’S introduced the Indian consumer to the first ever

Hypermarket .

SPENCER’S is having five type of Outlet for different need of different

type of customers.

SPENCER’S FRESH

SPENCER’S EXPRESS

SPENCRE’S DAILY

SPENCER’S SUPER

SPENCER’S HYPER

47

http://www.rpggroup.com/mediatemp.asp?newsid=240&media_id=1

http://www.rpggroup.com/mediatemp.asp?newsid=240&media_id=1



SPENCER’S WAY

Organized modern retailing which encompasses the four key

ingredients

Price

Product

Service

Ambience

WHAT WE SELL

We believe in presenting you with a unique experience that

compliments your shopping. An experience that can only be delivered

through valuing your time and making you feel special. These are the

values that we have internalized over the last 100 years to deliver what

we call,' Shopping, the Spencer's Way.'

Our endless choice of foods is what makes shopping at Spencer's sospecial. Exotic fruits & vegetables, sauces & supplies for your favourite

international cuisines, and imported foods. Added to these are a wide

range of diet food, organic food and specialty cuisines, giving you the

perfect reason to indulge your taste buds at Spencer's.

48





PG RETAIL – VISION

To be a customer focused differentiated, foods intensive retail

company with clusters of destination and convenience stores.

(Hyper, Super, Dailies)

To establish Spencer’s express & mass proliferate.

To set up Retail chains in focused verticals like music, books, mobility

solutions, apparel, footwear, luxury brands and life style brands where

domain knowledge exists or is acquired through partnerships.

To achieve pan India presence with 2000 store through current

verticals by 2009 & 5000 stores by 2011.

SPENCER’S RETAIL GROWTH

India’s largest Super market chain

350 Stores today and a new store every 2 days.

Hyper and super alone will be 150+ by 2011

50



SPENCER’S RETAIL- FOOD VERTICAL FORMATS

Area inSq.ft

Assortment Mix

Spencer

’s Daily

3000-5000 Fruits & vegetables, Beverages, staples, ready to eat,

processed foods, takeaways, bakery,

home & personal care, fish, meat,

Spencer

’s X-

Press

1400-1800 Store next door with essential SKU’S form above

Spencer

’s Super

10000-

18000

Full offering of daily’s + home, brown goods, select

apparels

Spencer

’s Hyper

30000-

75000

Full offering of super’s + full range HWP & Apparels,

white goods, electronics & electrical

51



BRAND STRATEGY FOR SPENCER’S RETAIL

• Customer’s focused, differentiated, foods intensive retail

company with cluster of “destination” and convenience store

• Brand strategy for Spencer’s retail has been mapped with strong

focus on “unique brand differentiators”

52



53



54

FIGURE-2.2



Retailgrowth

Favourabledemographics

55

Malls boom

Risingconsumers

FIGURE-2.3



“DIFFERENTIATION IS THE MANTRA”

PRODUCT RANGESPENCER’S HYPER (JAIPUR)

The company launched its first hyper store in Jaipur and plans to

expand in the city with six more stores - a super format in Vaishali Nagar, a daily

format in Bapu Nagar and four express formats in Bani Park, Jhotwara Road,

Adarsh Nagar, and Mansarovar each.

'There are 15 Spencer's stores due to be launched in Jaipur by the end of 2007',

said J H Mehta, president & CEO of Spencer's Retail.Mehta said that Spencer's hyper store in the city is spread across an area

of 20,000 sq.ft 'this will be the first organized retail format in Jaipur', he claimed

Spencer's hyper store offers almost 25,000 products under one roof. From

groceries, fruits and vegetables to personal care products, toys and appliances,

shoppers can choose from a plethora of merchandise. The store also has a

bakery, and food court.

Sumantra Banerjee, president & CEO of RPG Retail said, 'We aredelighted to bring an international shopping experience to the discerning

customers of Jaipur. Spencer's addresses the contemporary retail aspirations of

Jaipur, a city preserving its old-world charm.

RPG Retail has so far opened over 150 Spencer's outlets with 9

hypermarkets, 5 supermarkets, 3 fresh, 17 express and 116 dailies across 30

cities in the country. Spencer's currently has a national consumer base of over

35million people.

56



57

FIGURE-2.4



IN SPENCER’S HYPER MAIN SECTION ARE

1. FMCG

2. F&V3. STAPLES

4. HWP

5. Garments

6. Electronics & Electrical

FMCG

THERE ARE NINE MAJOR CATEGORIES IN FMCG-:

Ready food

Instant food

Chilli & frozen

Household needs

Beauty careToiletries

Beverages & severages

Fish & meat

Bakery & food serving

THERE ARE TWO TYPES OF SUBCATEGORIES-:

Food

Nonfood

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HWP

THERE ARE THREE MAJOR CATEGORIES IN HWP-:

1. Home

2. Work

3. Play

IN HOME SECTION WE HAVE NINE

SUBCATEGORIES-:

Kitchen ware

Pooja implements

Gift & novality

Home linen

Cleaning aids

Bath accessories

Dinner wareHome ware

Disposables items

IN WORK SECTION WE HAVE THREE SUB

CATEGORIES-:

Stationery

Tools kit

Luggage

IN PLAY SECTION WE HAVE TWO SUB CATEGORIES-:

Games

Soft toys

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60



F&V

F&V STAND FOR FRUIT AND VEGETABLES

THERE IS 2 MAJOR CATEGORY

1.Fruits

2.Vagetables

STAPLES

THERE ARE SEVEN MAJOR CATEGORIES IN

STAPLES-:

Pulses

Cereals

Spices

Non-Spices

Flour

Oil

Sugar & Salt

GARMENTS

IN GARMENTS WE HAVE THREE MAJOR

CATEGORIES-:

1. Kids wear

2. Man’s wear

3. Women’s wear

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ELECTRONICS & ELECTRICAL

All electronics and electrical items like Iron, Owen, T.V., Freeze,

Washing Machine, Mixer Grinder, Tube, Bulb etc.

STORE BRAND

Spencer’s to further its leading market position has developed its own

brand called Spencer’s Value which covers most product categories from

FMCG, HWP, Electronics, Staples and several other product categories.

In FMCG category they have Spencer’s value jam, Spencer’s Dipper,

and Spencer’s phenyl. IN HWP they have Spencer’s value double bed sheet,Spencer’s value kadai, Spencer’s value Tawa, Spencer’s value wet Tissues.

In HWP Section if we talk about Dinner set category they have their home

brand called RAK dinner set which come under top ten brand of Spencer’s

Hyper.With all the above, and an unparallel customer service focus,

Spencer’s home products have good image in consumers mind.

62

FIGURE-2.5



HOW THE FOUR P’S SHOULD BE THERE FOR SPENCER TO

OPERATE BETTER IN THE MARKET:

PRICE EQUIVALENT TO THE MARKET

PROMOTION STRONG AND AGGRESSIVE

PLACE EASILY ACCESSIBLE AND NEAR TO

RESIDENTIAL AREAS

PRODUCTS ALL VARIETIES AND GOOD QUALITY

These are the 4 P’s which should be as explained above when it launches

itself into the market and for the better and fast growth prospects of

SPENCER HYPER (JAIPUR) .

63





Reliance fresh is the retail chain division of reliance industries of India

which is headed by mukesh ambani. Reliance has entered into this segment

by opening new retail stores into almost every metropolitan and regional area

of India. Reliance plans to invest rs 25000 crores in the next 4 years in their

retail division and plans to begin retail stores in 784 cities across the country.

The reliance fresh supermarket chain is ril’s rs25,000 crore venture and it

plans to add more stores across different g, and eventually have a pan-India

footprint by year 2011. The super marts will sell fresh fruits and vegetables,

staples, groceries, fresh juice bars and dairy products and also will sport a

separate enclosure and supply-chain for non-vegetarian products. Besides,

the stores would provide direct employment to 5lakh young Indians and

indirect job opportunities to a million people, according to the company. The

company also has plans to train students and housewives in customer care

and quality services for part-time jobs.

RELIANCE FRESH IN MYSORE

In Mysore their are 4 outlets of reliance fresh:

1. NAZARBAD

2. N.R. MOHALLA3. K.D.Road

4. CHAMARAJA DOUBLE ROAD

On an average turn over is 50,000rs in Mysore, where as compare to

other cities it is too low. Their main aim is to provide good quality products in

lower price & customer service & customer satisfaction. According to reliance

fresh store manager they were satisfying 75% of customer expectations.

Reliance Retail Ltd. Launched its much awaited format and India's

largest hypermarket under the brand name 'Reliance Mart' at Iskon Mall, SG

Highway, Ahemdabad on August 15. After the successful launch of the

Supermarket format 'Reliance Fresh' and the consumer electronics concept

mega store 'Reliance Digital', the hypermarket is the third retail format

launched by Reliance Retail.

Spread across 165,000 square feet of shopping area, RelianceMart will

provide the shoppers a never before experienced shopping delight. The

65



hypermarket will carry a range of over 95,000 products catering to the entire

family. Shoppers will have the option to choose from the wide array of

products in every category ranging from fresh produce, Food & grocery, home

care products, apparel and accessories, non - food FMCH products,

consumer durables and IT, Automotive

Accessories, lifestyle Product, Footwear and much more. Commenting

on the launch of this new product, Shri. Mukesh Ambani, Chairman and

Managing Director, Reliance Industries Ltd. said, 'Organised Retail has

potential to trigger socio-economic transformation on an unprecedented scale

in our country and will bring about enormous spin-off benefits to the Indian

economy and its various constituents'. The launch of Reliance Mart is yet

another step by Reliance Retail towards providing an nternational shopping

experience to all our customers at unmatched affordability, guaranteed quality

and choice of products and services. RelianceMart marks the achievement of

another milestone in our effort to unleash a retail revolution in India.' Shri

Ambani added. RelianceMart offers some unique services to the shoppers like

tailoring, shoe repair, watch repair, a photo shop, gift services and laundry

services all within the store. The store also houses its own

Fresh bakery serving 'hot off the oven' bread and bread products

through out the day and local savories, an ice-cream train for the kids, a

chakki, ready-made batter and loose tea and pickle for housewives

RelianceMart will also sell fine jewelry and fashion jewelry as a part of its

Lifestyle section. RelianceMart will also house a health and wellness store

providing pharmaceutical drugs and other wellness products. For the

shopper's convenience, the store providing pharmaceutical drugs and other

wellness products. For the shopper's convenience, the store has a cafeteria

providing quality food and beverages for ready consumption, an ATM

machine and a consumer service / membership desk to provide the customer

a truly international shopping experience. The hypermarket also launched a

host of Reliance's own brands in select categories with superior quality and

affordable prices like 'First Class', 'Network, Netplay, Team Spirit' and Sparsh

in Men's and Women's Formal / Casual and Ethnic wear, 'DNM- X' in the

jeans category for men and women, 'Panda' for kids clothing and ' Grip' in the

66



luggage section. The footwear category will carry 'Zig' in formal wear. 'Hi

Attitude' for semi -formal, 'Tosco' as party wear and 'Monza' for the sports

V MARTEach single step is a new step, towards life, towards future. A story that

started with a small confident step is today exploring and Running the retail

revolution in India. Way back in 2003, V Mart opened its first store at Law

Garden, Ahmedabad and today boast of its presence in almost all the major

cities across India. With chain of 26 outlets in 22 cities V Mart is having pan

India presence, V Mart covers over 3,50,000 sq.ft. of area and delights 60,000

satisfied shoppers each day.V Mart is a multi-branded family store that workson the “Value for money” retail concept thus providing the masses with the

best quality at cheaper price.

The vast product range caters to every age and all the family needs

with Apparels for men, women & kids, Food & Home products, Health &

Wellness, Lifestyle Products, Footwear and Travel Accessories for men,

women and kids. The “Sabse Sasta, Sabse Achcha” Story. V Mart has

positioned itself in the “Value for Money” category thus providing customers

with the most economic and best of quality products. The Sabse Sasta, Sabse

Achcha theme says every thing about V Mart, the philosophy and the values.

One can find the best of products, quality, latest fashion and every thing that

keeps customers healthy and happy and of course the vast range to choose

from. company hopes to expand rapidly with similar format stores that offer a

fine balance between style and price retailing. V Mart targets to expand into a

100 outlets by March 2010.

Wal-Mart

World's largest discount retailer.

Headquarters :

Bentonville, AR 72716

Employees : 2,200,000+

CEO: Lee Scott

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When you think of Wal-Mart, think big! It's the world's biggest retailer

and also the biggest employer with over 2 million full- and part-time workers

worldwide -- 1.4 million in the U.S. It operates Wal-Mart stores along with

Sam's Club membership warehouses in the U.S. and 12 foreign countries.

Known for its low pricing and wide selection of goods, Wal-Mart has become

the undisputed king of retailing. It is also a feared giant for its sheer size and

pricing power.

As of May 2008, Wal-Mart had the following store count:

Retail Units Worldwide 7,343US Retail Units 4,195

Wal-Mart Stores 937

Super centers 2,527

Sam's Clubs 593

Neighborhood Market 138

International Retail Units 3,148

Wal-Mart Discount Stores average 107,000 square feet, employ an

average of 225 associates and offer 120,000 items.Wal-Mart Super centers

average 185,000 square feet, employ 350 or more associates on average and

offer 142,000different items.Each Sam's Club employs an average of 160 to

175 associates and offers approximately 5,500 different products. A

membership fee ($35 annually for businesses/$40 annually for individuals) is

required to shop at Sam's Club. There are 584 Sam's Club locations.

The company also operates Neighborhood Markets. Generally, they

are located in markets with Wal-Mart Super centers, supplementing a strong

food distribution network and providing added convenience while maintaining

Wal-Mart's Every Day Low Prices. First opened in 1998, the now more than

120 Neighborhood Markets, averaging 42,000 square feet, feature a wide

variety of products, including fresh produce, deli foods, fresh meat and dairy

items, health and beauty aids, one-hour photo and traditional photo

developing services, drive-through pharmacies, stationery and paper goods,

68



pet supplies, and household chemicals. Neighborhood Markets employ 95

associates on average and offer about 29,000 items.

Wal-Mart reported record revenues for 2007 of $378.7 billion. Wal-Mart

stores in the U.S. generated $239.5 billion in sales while Sam's Club reported$44.3 billion in revenues. International stores brought in $90.6 billion.

Membership fees and other income added $4.27 billion. Net income for the

entire company was $12.7 billion in 2007.

The company has recently begun to offer new health plans for

employees with lower fees and higher deductibles. Wal-Mart says 92.7% of all

employees now have health coverage with the company or through their

spouse.

The company said the average hourly wage for a regular full-time

hourly associate in the U.S. is $10.86 an hour al-Mart reportedly will cut 700-

800 jobs at its corporate headquarters this year in merchandising, real estate,

marketing and support divisions in its U.S. division and in the Sam's Club unit.

History

The first Wal-Mart store opened in tiny Rogers, AR in 1962 by brothers

Sam and Bud Walton. By 1964, Wal-Mart had 24 stores with $12 million in

sales and in 1969 Wal-Mart moved outside the state of Arkansas with stores

in Sikeston, MO, and Claremore, OK. The company was guided by founder

Sam Walton's passion for customer satisfaction and "Every Day Low Prices."

In 1970, the company opened its first distribution center and corporate

headquarters in Bentonville, AR, where it is located today. Wal-Mart also wentpublic the same year. In 1983, the first Sam's Club warehouse store opened.

In 1988, the first Wal-Mart Supercenter opened which featured a Wal-Mart

store with a full-scale supermarket inside.

Medical Coverage

Every associate who works in the United States can become eligible

for individual health coverage costing as little as $5 per month in some areas

69



and as little as $8 per month nationwide. As soon as an associate becomes

eligible for benefits, their children become eligible too. Today, more than 92

percent of associates have health insurance-either through Wal-Mart or

through other coverage. For our associates who choose coverage with Wal-

Mart, we also offer more than 2,400 generic prescription drugs for $4. This

includes prescription drugs to treat everything from diabetes to heart disease.

Wal-Mart associates will find more than 50 ways to customize their health

coverage. They can select from a menu of deductibles, health care coverage

options, and health credits and premiums.

We want associates and their families to have the peace of mind that

their healthcare needs will be met, especially when they need it most. Toensure that peace of mind, Wal-Mart's health coverage includes no lifetime

maximums on most health care expenses.

Exclusive, Everyday SavingsWe save Americans thousands of dollars a year. And our associates get even

more. Every Wal-Mart associate receives:

- 10 percent off regularly priced general merchandise in Wal-Mart stores or on

www.walmart.com with the associate discount card

- 10 percent off of fresh fruits and vegetables

- An additional 10 percent off eyewear at Wal-Mart Vision Centers

- Over 100 discounts on walmartbenefits.com - our associate-only website-for

everything from new cars to movie tickets.

We believe in our associates' futures. Last year, we put $870 million into

associates' Profit Sharing and 401(k) Plan accounts. We do this whether or

not an associate looses to contribute. We also make it easy for associates to

have an ownership in the company. The Associate Stock Purchase Program

allows associates to purchase stock without most brokerage fees. Plus, we

match a portion of their purchases.

Wal-Mart Success = Your Success

Every associate is eligible to receive performance bonuses based on the

performance of their store. We also offer a long-term service award, which

70



rewards hourly associates and assistant managers who have been with the

company for 20 years or more with an extra week of pay.

During the fiscal year ending January 31, 2008, Wal-Mart said it contributed:

- $724.4 million to 838,955 hourly associates in profit-sharing and 401(k)contributions.

- $50.1 million to 764,098 hourly associates toward the company's associate

stock purchase plan.

- $420.2 million in discounted merchandise to hourly associates and their

family members through the merchandise discount program.

71



Subhiksha

When R Subramanian became an entrepreneur and started a retail

chain called Subhiksha, there were not many entrepreneurs in India. In his

family too, there were no entrepreneurs. After obtaining an engineering

degree from the Indian Institute of Technology-Madras, he decided to join

Indian Institute of Management-Ahmedabad as he was sure about one thing --

that he would not leave India to go abroad. Ten years after Subhiksha was set

up, the retail chain has around 500 outlets all over India which Subramanian

wants to double by 2007-end. In an exclusive interview with Contributing

Editor Shobha Warrier , Subhiksha managing director R Subramnian talks

about his adventures, the success of his retail chain and also his future plans.

Starts his first company called Viswapriya

I wanted to start a company of my own and told Mr Viswanathan about

it. He asked me from where was I going to get the money? I had no idea. I

told him I would figure out. He then told me that he would give me money to

set up the company and I run it for him. As long as I could run the company, it

was fine with me. He provided me with the money, and in 1991, I set up myfirst company called Viswapriya. We got a galaxy of very good people on

board. We basically did three things. We bought debentures from thousands

of people who had them in very small numbers and consolidated as 1 lakh

(100,000) or 2 lakh (200,000) debentures and invested in mutual funds. And

the investors got a monthly income. Every time the money went to lakhs of

investors, it went from Viswapriya and that way our company's name became

popular. It was a good business to start and we were the pioneers in it. After we started, all the big guys got into the business. So it was good fun.

Entering the retail market ten years ago

There was no great logic behind entering the retail market in 1997. We

made a study of two areas: software and retail. Between software and retail,

we thought we were a bit late for software as Satyam, Infosys, Wipro, TCS,

etc had already established by then. We didn't want to be a small and lateentrant. In retail, we would be one of the early entrants, so we would have the

72



learning curve much to our advantage. We allocated a Rs 5 crore (Rs 50

million) corpus to it and entered the retail business. There was a lot of thought

process behind it. We wanted to attract not the top end customer but the aam

aadmi . From our research of three months, we found that consumers prefer

buying groceries from closer home. So, we decided to set up 1,000 sq ft

shops all across the city and not a 10,000 sq ft big store at one location in

Chennai. The next question was why would he come to our store abandoning

the existing store? It had to be the price, because ultimately there is no

difference between the branded products like say Boost or Surf or such

things. So, we decided to sell branded products at a lower price.

On starting Subhiksha

We looked at all sorts of names; and finally we chose the Sanskrit word

Subhiksha (prosperity) because it reflects the Indian ethos and it is a word

that can be understood all over India. What we were trying to do was different

from the western model; our model is truly Indian. Our theme was, why pay

more when you can get it for less at Subhiksha? In March, 1997, we opened

our first store in Thiruvanmiyoor in Chennai with an investment of around Rs

4-5 lakh (Rs 400,000-500,000). We opened it with the clear idea that it is part

of a larger system. We thought the day we opened, there would be a

stampede because the prices were low and we would sell goods of Rs 30-40

lakh (Rs 3-4 million) by the month end. But there was nothing of that sort! We

sold goods of only Rs 5-6 lakh (Rs 500,000-600,000) in the first month. Yes,

consumers were very surprised, and they gingerly looked at the products and

asked, are they seconds or old stock or defective products? In the first year,

we opened ten stores in Chennai. We also started selling medicines at a

discount. On the third day of our opening the pharmacy, there were about 100

people outside our store in the morning. We thought all of them were waiting

to buy from our store. What we were expecting on day one happened on day

three, we thought happily. But we soon found that they were not there to buy

anything; they were chemists from the neighbourhood who had come to do a

dharna (protest) saying we could not sell medicines at a discount.Finally we

had to go to court, and it was only in 1999 that the Supreme Court gave a

73



ruling that we could sell medicines at a discount. We were doing quite well on

the pharma front and we enjoyed all the attention we got. Another thing is the

medicines that we were selling at a discount were bought mainly by the

elderly who have no fixed income and they welcomed any discount. We were

quite happy to be able to help them in some way. Medicine retailing is more of

a service than business for us. Of course, it is good business for us too. But

our main motto is service.

On his expansion plans

By March 1999, we started expanding rapidly. From 14 stores, we

expanded to 50 stores by June 2000. In the next two years, we had 120-130

stores across Tamil Nadu. Another big thing was, in 2000, ICICI Venture

invested in our company. Today, we have 145 stores all over Tamil Nadu. We

saw to it that the moment we got into a city, we started as many stores as

possible there. Only that made business sense. Then, till 2004, we made sure

that we consolidated before we expanded, though there was a lot of pressure

on us to expand nationally. We decided to look at every part of India which is

significantly literate and is a significant consumption market. We wanted to be

everywhere. We looked at the telecom companies as our role model. They

employed capable regional managers and expanded. Our business is also

extremely local. We can't sit in Chennai and run a store in Chandigarh. We

decided to have very good quality people to run the region, area, town and the

store. In 2004-05, we decided to have 420 stores in places like Gujarat, Delhi,

Mumbai, Andhra and Karnataka by 2006. In 2005, we started recruiting

people in various regions. Today, we have 500 plus stores in all the places

that we had planned. It will go up to 600-plus by the month end. We arealready India's largest retail chain store with 500-plus stores. We plan to have

1,000-plus stores by the end of this year. India is a large country and there

are still opportunities to avail of. Though now, the thought of opening stores

outside India

Risk in retailing and expansion?

We are not mad risk takers. We are not producing movies. We do a lotof research before starting business in an area, and we have back-up plans in

74



place. We work with very good people, and if something goes wrong, we try to

take corrective steps. The big advantage we have is, we are not creating

products. So there are no worries about whether it would succeed or not.

Consumers are smart and they are all price-conscious and they want to finish

the work as fast as they can. They don't go to a provision store for fun.

On the entry of MNCs and Reliance in the retail market

Everybody has been asking me, are you worried about Wal-Mart

coming to India? Ultimately Wal-Mart is also going to be run by people like us.

The point is you need not worry about anybody's entry. There is a huge

potential for growth in India. There is potential for another ten people to come

in. Ultimately the share of the unorganised kiranas will come down and the

share of organised sector will go up because of the efficacy in buying and

distributing. Also, this is an extremely low margin business. Ultimately,

everybody has to sell within the cost. It is not that we are geniuses; we have

been in the business for ten years, and we have made enough mistakes and

learnt from them. I don't think any child will learn to walk without falling down

first, however good the parent is. We made our mistakes when we were small.

The bigger you are, the mistakes will cost you more.

Satisfaction

There are two kinds (of satisfaction) . We genuinely believe that through

efficiency, we are helping the consumers save more. We are also happy that

we are bringing in a model that is Indian, capable of supporting the middle

class of India.

75



On what he does other than thinking about Subhiksha

I would like to say I think of Subhiksha all the time, but I do not. I read a

lot, mainly online. I lead a reasonably balanced life. Working 12-13 hours a

day six days a week, is my working pattern. I keep Sunday evenings and

afternoons only for family. But I travel 12-15 days a month visiting all the

Subhiksha regions. I am a pretty cool person, relaxed all the time. I am not

hassled about anything.Personally I am not a very ambitious person; I am

happy with my curd-rice! What gives me a kick is to show that a business

model from India is superior to a business model imported from the West. We

are living in an age where we do not have to be taught by the West what we

should do in our country.

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Vishal Retail Ltd

What started as a humble one store enterprise in 1986 in Kolkata

(erstwhile, Calcutta) is today a conglomerate encompassing 183 showroomsin 110 cities / 24 states. India’s first hyper-market has also been opened for

the Indian consumer by Vishal. Situated in the national capital Delhi this store

boasts of the singe largest collection of goods and commodities sold under

one roof in India The group had a turnover of Rs. 1463.12 million for fiscal

2005, under the dynamic leadership of Mr.Ram Chandra Agarwal . The group

had a turnover of Rs 2884.43 million for fiscal 2006 and Rs. 6026.53 million

for fiscal 2007. The group’s prime focus is on retailing. The Vishal stores

offer affordable family fashion at prices to suit every pocket.

The group’s philosophy is integration and towards this end has initiated

backward integration in the field of high fashion by setting up a state of the art

manufacturing facility to support its retail endeavors. Vishal is one of fastest

growing retailing groups in India. Its outlets cater to almost all price ranges.

The showrooms have over 70,000 products range which fulfills all your

household needs, and can be catered to under one roof. It is covering about29, 90, 146 sq. ft. in 24 states across India. Each store gives you international

quality goods and prices hard to match. The cost benefits that is derived from

the large central purchase of goods and services is passed on to the

consumer Vishal Retail Ltd. has a factory in Gurgaon, Haryana. This factory

has morethan 700 imported machines that have a capacity to manufacturer

150000 pieces a month. The factory occupies 80000 sq ft of covered

space.The Vishal group indirectly gives employment to more than a 1000

people.

These people work in ancillaries that supply finished goods to the

company Our 10 warehouses cater to 183 showrooms in 24 states /110 cities

across India. It is covering about 29, 90, 146 sq. ft . 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 fashionstyling. Since 1986, our name has been synonymous with quality, value and

77



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. Our 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.

78



CHAPTER – 3

RESEARCH METHODOLOGY

• PROJECT TITLE & INTRODUCATION

• RESEARCH PROCESS

• SAMPLING METHOD

• SAMPLE SIZE

• SOURCES OF INFORMATION

• DATA ANLYSIS

79



CHAPTER-3

Research Methodology

PROJECT TITLE & INTRODUCATION

80

FIGURE-3.1



Customer Satisfaction

INTRODUCTION

From the beginning of the “customer service revolution” almost 20

years ago, a body of business research has focused on customer satisfactionand customer-focused organizations.1 Business consultants, corporations

and others have worked to identify the characteristics of organizations that

consistently please their customers, to develop tools for monitoring customer

satisfaction, and to build continuous, quality improvement systems that

respond to consumer feedback. Although much of the research has been

conducted by and for the corporate world, customer service and satisfaction is

not limited to the private sector. Publicly funded organizations that areincorporating practices developed in the business world provide a growing

body of experience and study. Increasingly, federal, state and local

government agencies are attempting to gauge their performance and the

effect on those they directly serve. Throughout the public sector, initiatives to

“reinvent” government—including education reform, privatization, and

managed care—have elevated customer service and satisfaction to new

priorities. Within the European Union, a shift is underway to re-think andreform social services with social inclusion and “user involvement” as driving

forces in quality improvement.

Customer Satisfaction:

Improving Quality and Access to Services and Supports in Vulnerable

Neighborhoods helped the Center identify effective approaches used by

market-driven organizations to monitor and improve customer satisfaction.

Further study examined strategies for applying customer-driven qualityimprovement strategies to public services, including European approaches

and experiences with user involvement and customer satisfaction

in social services. This paper provides a brief synthesis of this

formative research. Although it draws primarily from the business world’s

prolific study of market-driven organizations, it also provides public sector

examples and experiences. explores key components of customer-focused

organizations, including: Customer-oriented vision that is clearly defi ned and

communicated; Customer-oriented culture that embeds customer satisfaction

81



throughout organizational practices; Focus on the total customer experience;

and

Customer service standards and accountability. examines the critical

role of frontline staff and strategies for ensuring that employees have the

capacity to put customer service first, including training, employee

empowerment, and recognition and rewards for performance. describes tools

and strategies used to research and improve customer satisfaction,including

surveys, customer behavior research, complaint resolution approaches,

testersand “secret shoppers,” and continuous feedback loops. The conclusion

briefly describes the potential for applying customer satisfaction research and

customer service strategies in the public sector and among vulnerable

populations.

Why Organizations Focus on Customer Satisfaction

Businesses monitor customer satisfaction in order to determine how to

increase their customer base, customer loyalty, revenue, profits, market share

and survival. Although greater profit is the primary driver, exemplary

businesses focus on the customer and his/her experience with the

organization. They work to make their customers happy and see customer

satisfaction as the key to survival and profit. Customer satisfaction in turn

hinges on the quality and effects of their experiences and the goods or

services they receive.

What is Customer Satisfaction?

The definition of customer satisfaction has been widely debated as

organizations

increasingly attempt to measure it. Customer satisfaction can be experienced

in a variety of situations and connected to both goods and services. It is a

highly personal assessment that is greatly affected by customer expectations.

Satisfaction also is based on the customer’s experience of both contact with

the organization (the “moment of truth” as it is called in business literature)

and personal outcomes.

82





Neighborhoods It was the consensus of the groups that lack of information

often leads to low expectations. They further agreed that the process of obtaining a service and the way it is delivered can have a major impact on the

users’ experience. The qualities of relationships and staff were central to

positive outcomes.8 Because customer satisfaction is a highly variable

assessment that every individual makes based on his/her own information,

expectations, direct contact and interaction, and impact, it makes sense to

involve and consult consumers when designing customer satisfaction

approaches.

Service Quality

Research identifies many characteristics that are associated with

service quality.

Business researchers Benjamin Schneider and David Bowen assert that

“service

organizations must meet three key customer needs to deliver service

excellence:” security, esteem, and justice.9 Research identifies an array of

service quality factors that are important for customers, including: Timeliness

and convenience, Personal attention, Reliability and dependability, Employee

competence and professionalism, Empathy, Responsiveness, Assurance,

Availability, andTangibles such as physical facilities and equipmentand the

appearance of the personnel. Research shows that these characteristics also

apply to citizen satisfaction with public service quality. Timely service is an

especially strong determinant of quality across different types of public

services. Fairness and outcomes are additional factors important to public

service customers.10 Public sector quality improvement initiatives are on the

rise worldwide as contracting and private service provision has become more

common. At the same time, European and consumer-oriented services has

produced a quality gap: a gulf in perceptions of quality and the impact of

services on the end user. She calls for rethinking quality initiatives to interlink

quality improvement with user involvement and participation and with

83





Neighborhoods customer service. According to marketing expert Barry Feig, astrong mission statement both inspires and challenges employees.13 It can

also help employees feel that they are part of something important, another

operating principle of high-performing companies.14

A. It helps set and manage customer expectations.

The American

Airlines Customer Service Plan states: “We are in business to providesafe, dependable, and friendly air transportation to our customers, in the

hopesthat you will fly with us again and again.” The Customer Service Plan

then goes on to provide service goals, guarantees, and promises for

customers and employees. It is continually updated based on information

from customer research, including focus groups, discussions and surveys.

B. Total Customer ExperienceBusiness experts recommend focusing on the entire customer

experience with each service contact. “It is the totality of the buying

experience that will keep your customers coming back for more.”25 More than

just the basics of customer service create a favorable experience for the

customer; everything, conscious and unconscious, can affect it. Successful

service companies attend to every detail to ensure that the customer’s

physical, social, and psychological experience is pleasant.

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Personal Contact and Relationships

Research shows that, in an increasingly impersonal world, customers

want personalized service. It is essential to customer satisfaction. “Customers

experience service one-onone, subjectively, impressionistically. Anorganization looks like the people who greet them, write up their order, deliver

something to them … it sounds like the last person the customer talked to on

the phone.”26 Honeywell and Contracting Business Magazine conducted

consumer focus groups to determine customer expectations and perceptions

of heating and air conditioning contractors. They learned that reliance on

answering machines and interactive telephone-computer communications

were viewed as definite negatives.

Customers wanted not only a skilled technician, but also someone who

was easy to talk to, looked professional, enjoyed talking to the customer, and

respected the customer.27 Proven techniques for putting customers at ease

include simple courtesy, using each customer’s name, answering customers’

questions, and remembering their names, preferences, and personal things

about them. One way staff members at an exemplary Marriott Hotel in

California put customers at ease is by using the customer’s name several

times at every interaction.28 At the Crown Paradise Resort in Cancun,

Mexico,and other hotels, the concierge frequently calls guest rooms to see if

customers needfresh towels, new drinks in the refrigerator, or other services.

Walmart places a greeter

CUSTOMER-ORIENTED ORGANIZATIONS

In many areas, customer satisfaction ultimately boils down to the

customer’s contact with frontline staff. Capable, empowered frontline staff put

customer-focused mission statements, standards and culture into practice.

Thunderbird Samaritan Medical Center in the Phoenix suburb of Glendale

improved the satisfaction of hospital patients from the 10th percentile

nationally to the 90th percentile in two years. Hospital leaders created the

Service Excellence Initiative and shifted “from counting beans to caring for the

fieldworkers.” Here is how they summed it up: “Of the lessons learned in this

85



initiative, the most salient may be the importance of staying focused on the

most important asset: our people.”40

The Golden Rule: Treat Employees WellResearch consistently shows that the way employees are treated by

their management has a direct impact on the way those employees treat the

businesses’ customers.41 This translates in to a single principle that high

performing customer service organizations share: Treat your employees as

you want them to treat your customers. As Bill Marriott, Jr., chairman of

Marriott Hotels, says: “Motivate employees, train them, care about them, and

make winners of them. At Marriott we know that if we treat our employees

correctly, they’ll treat the customers right. And if the customers are treated

right, they’ll come back.”42 To satisfy customers, staff need tools, including

thorough training, flexibility and empowerment to solve problems and satisfy

customers. To know that the organization values them, frontline staff also

need recognition and rewards for strong performance.

A. Selecting and Preparing Customer Service Staff Hiring

The first step for focusing staff on customer service is hiring the right

people. For a growing number of companies and government agencies, a pre-

employment video narrows the applicant pool to those who will help the

organization accomplish its mission of customer satisfaction. For example, the

Emanuel Medical Center video makes the organization’s mission and

expectations clear by stressing the hospital’s “non-negotiable standards of

patient care.” It encourages individuals to proceed with the application

process only if they share Emanuel’s philosophy and standards.43 In the

U.K., recent social policies require that local government and public agencies

consult with those they serve when making decisions that affect them.

Increasingly, this consultation includes hiring decisions. The Hertfordshire,

England county council,

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Neighborhoodsin a collaborative effort with the adult care service agency and

the national health service, involves service users with learning disabilitiesand their family caregivers in the recruitment and selection of new staff. They

have developed a manual to guide managers onpreparing, training and

providing support needed to involve users in an effective way. 44

Orientation and Training

Customer service leaders place heavy emphasis on instilling a

customer-first culture throughout their organizations by training newemployees and reinforcing a customer focus with current employees.

Disneyland’s Disney University provides one of the premier examples of

employee orientation. It is provided after a candidate is offered a job and

includes discussions of company history and philosophy, where Disneyland

fits within the Disney Corporation, the standards expected of employees

(called cast members at Disneyland), and a tour of Disneyland. After this

initial phase, new employees go through division training, which introduces

the employees to their particular jobs. Then, actual job training begins.

Successful service organizations such as American Express, L.L. Bean,

Disney, Marriott, Nordstrom, and J.C. Penney all make a clear commitment to

training the employees who interact with the public, whether they provide

service by telephone or in-person. Their training programs include formal

classroom instruction that focuses on job skills and attitudes and the

expectations of management, as well as on-the-job training that allows staff to

learn about the organization and the work from interaction between

coworkers.45 The Ritz-Carlton, two-time winner of the Malcolm Baldrige

National Quality Award, provides 250 hours of training to first-year, frontline

employees, known as the “The Ladies and Gentlemen of the Ritz-Carlton.”46

American Express telephone service representatives spend five weeks in a

classroom, two weeks in on-the-job training, and three weeks in a training unit

before they are on their own.

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In lectures, listening, and role-playing, they learn basic operating

policies, how to calm angry customers, and how to help customers who need

immediate assistance.47 When MidState Medical Center shifted its entire

organization to a customer satisfaction focus, it made hiring and training top

priorities. Not only were new employees “indoctrinated” in customer service

expectations, values and behaviors; a reorientation program immersed

current employees in the new customer focus.48

B. Empowering Employees to Satisfy Customers

Hiring, orientation and training of staff are common ways of focusing

employees on customer service. Employee empowerment—giving employees

the flexibility and leeway to satisfy customers—is less widely practiced.

However, studies show that it can lead to improved customer service and

increased customer satisfaction and that it is energizing and highly motivating

for employees.

Removing Barriers to Customer Satisfaction

To empower employees, they must have the means to satisfy

customers, as well as the blessings of management. Any Ritz-Carlton

employee can spend up to $2,000 to resolve a problem or handle a

complaint.50 Similarly, employees of the San Antonio River Center Marriott

have flexibility and authority to enact the hotel creed, “Every guest leaves

satisfied.” Associates who encounter unhappy guests solve the problem on

the spot without going up the chain of command. They have an arsenal of

products and services at their disposal (including a free night’s stay, a free

dinner, or a gift certificate for a future weekend stay) to smooth over difficult

situations.51 Emanuel Hospital is also “breaking down the institutional barriers

that sometimes prevent employees from doing what they believe is the right

thing.”

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One step was the development of caring baskets. Each hospital

department has caring baskets full of movie passes, car wash certificates, and

restaurant vouchers. Any employee can use one of these gifts to make up for

customer service mistakes immediately.52 Nordstrom is another company

that allows employees to go to great lengths to satisfy customers. According

to Bruce Nordstrom, what distinguishes the company in customer service is

“its army of highly motivated, self-empowered people who have an

entrepreneurial spirit, who feel they’re in this to better themselves and to feel

good about themselves, to make more money and to be successful.”53

Nordstrom trains its employees and gives them the freedom to make

decisions. One of the most famous Nordstrom examples is the salesperson

who gladly accepted a returned set of automobile tires and gave the customer

a refund even though Nordstrom has never sold tires.

The customer purchased the tires from one of three stores in Alaska

that Nordstrom acquired in 1975. Instead of being reprimanded by

management, the employee became a company hero, and the story

reinforces the Nordstrom mystique of customer service and drives other

employees to exemplary performance.54 As this example illustrates,

Nordstrom, employees “are instructed to always make a decision that favors

the customer before the company. They are never criticized for doing too

much for a customer; they are criticized for doing too little.”55

Involving Employees in Organizational Planning and

Improvement

Customer-oriented organizations also empower and motivate

employees by involving them in essential organizational processes. When

everyone participates in developing.



Neighborhoods organizational plans and strategies for improvement, it adds

more ideas, increases employee buy-in, and contributes to a culture of

employee empowerment. The Ritz-Carlton involves all levels of employees in

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the company’s strategic planning process. After senior leaders identify

specific company objectives, they communicate those objectives to staff at

“lower levels” of the organization. The employees on those levels identify the

actions and deeds that if done will collectively meet the objectives.56

MidState Medical Center’s steps for engaging frontline staff in setting

customer service standards are another example of employee empowerment.

C. Recognizing and Rewarding Employee Performance

A common practice among successful service organizations is constant

recognition, reward and praise for employees who provide outstanding

customer service. This can take many forms; it does not always need to be

expensive to be effective. A Press Ganey survey asked hospital employees

how morale could be improved. More than half the responses were: smile,

thank them, recognize and appreciate them.57 Emanuel Hospital’scaring

baskets (described as a tool for resolving customer problems) can also be

used to motivate employees to provide exemplary service and allow

employees to encourage each other. Regardless of rank, any employee can

reward another employee with a movie pass, car wash certificate, or

restaurant voucher from the caring basket. Moreover, each month employees

who went “above and beyond” are praised in front of coworkers and

managers and given certificates and gifts from the caring baskets. Nordstrom

is among the many businesses that use inter-company and inter-store sales

competitions to motivate employees. Rewards include flowers, cash, dinners,

or trips.

In addition, the company constantly recognizes and praises its top

performers.58 MidState Medical Center established two highly visible

employee and team awards for quality and customer service. Informally,

hospital executives attend staff meetings to honor employees in front of their

co-workers. In addition, the hospital sometimes takes out newspaper ads and

billboards to congratulate staff on awards and outstanding customer survey

results.59

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CUSTOMER SATISFACTION

A. Introduction

Although companies conduct customer satisfaction research for

various reasons, the overall goal is to help them “stay as close to their customers as humanly possible.”60 Many leading edge companies and

research firms focus on obtaining useful feedback from customers and clients

and converting it into “actionable” steps to improve their performance. Some

want feedback from customers about existing or new products and services.

Others want to know how to target their resources on issues of concern to

customers. Still others want to demonstrate a commitment to listening to their

customers.As a by-product, customer feedback can provide actual examples of

good and bad practices for employee training and continuous improvement

efforts.61 The organization’s objectives define what it wants to learn from

customers and guides how the information is collected. Experts advise that

first defining measurable objectives will allow organizations to “learn the

effectiveness of your survey, and it will help you in reinvesting the information

you learned.”62 In general, the research focus is how reliably the organizationfulfills customer satisfaction and what can be done to improve. “The most

active verb when you speak in the vocabulary of customer satisfaction is to

improve .”63 How frequently an organization measures customer satisfaction

depends on the nature of its service and what it wants to gain. For instance, if

customers make daily decisions about the services offered, frequent

measurement is appropriate.

Many consumer product and service companies need this type of day-

to-day or weekly information. The National Performance Review (NPR) found

that “best-in-business” organizations solicit feedback from customers before,

during, and after service.64 The methods chosen for measuring customer

satisfaction depend on customer characteristics, time availability, costs, and

the information an organization hopes togather. Many of the top performing

companies identified by the NPR used sophisticated market research

techniques: “Feedback was obtained through customer focus groups,

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Customer Satisfaction :


Neighborhoods

B. Customer Satisfaction Surveys

Surveys and questionnaires are the most common marketing research

methods. Typically, they are used to: assess the level of customer satisfaction

with a particular product, service or experience; identify factors that contribute

to customer satisfaction and dissatisfaction; determine the current status or

situation of a product or service; compare and rank providers; estimate the

distribution of characteristics in a potential customer population; or helpestablish customer service standards.

Benefits and Challenges

Surveys allow an organization to quickly capture vital information with

relatively little expense and effort. A primary advantage of this method is its

directness: “the purpose is clear, and the responses straightforward.”66

Additionally, the information gathered by surveys can easily be analyzed and

used to identify trends over time. The public views consumer product pollsand pollsters in a generally positive manner compared to political and other

polls. One study found that at least sixty percent of the public feels that

market research about products and services has a positive impact on

society. Seventy percent consider the people who conduct such surveys to

have positive impacts on society.67 A major disadvantage of customer

surveys is that the responses may be influenced by the measurement itself

through various forms of bias. For example, most surveys are voluntary, and

some researchers have found differences between survey respondents and

non-respondents.

People who respond to surveys answer questions differently than those

who do not respond, and late responders answer differently than early

responders. Most demographic studies report that non-response is associated

with low education. One study found that non-respondents were more often

single males.68

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already used customer satisfaction surveys. A 2004 survey in the Oslo

community expanded on earlier studies in 1998 and 2001. It included

questions regarding: whether residents felt they were being treated

respectfully, whether staff was able and willing to provide informationand services to them, and the availability of and access to services. The

Dutch research institute Verweij-Jonker developed a computerised

system called SATER for measuring clients´ views on the effect of and

the satisfaction with individual social interventions. Social work agencies

have implemented pilots in a variety of settings including cities and rural

areas.

All clients whose cases are closed are asked to participate,

including those who drop out before the end of treatment. (People who

are negative about the services can provide especially relevant

information for improving the treatment.) Participants complete

anonymous, computerized questionnaires, even if they have no

previous experience with computers. The software routes participants to

specific questions based on their individual characteristics andcircumstances.

The computer procedure avoids the problem of socially correct

responses and allows clients to take all the time they need to read the

questions and fill in the answers. Most clients in pilot sites appreciated

the opportunity to complete the survey and found it easier to handle

than paper questionnaires. In some cases where it is not possible to

provide space for clients to use a computer or to arrange access to anoffice, the interviews were administered by telephone.

The questionnaire takes into account the following issues: the

clients´ personal defy nation of the situation, through an inventory of the

problems that they experienced at the start of the intervention; selection

of the four most important problems; assessment of the various stages

of the intervention process with opportunity to specify and elaborate on

negative experiences; satisfaction with the social worker and with the

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way they were treated by the social worker; and satisfaction with a

number of more general and physical aspects of the agency and the

treatment process.75

C. Complaint Monitoring and Resolution

While employee empowerment provides capacity for responding to

individual complaints, systems for monitoring and examining complaints

reveal patterns of organizational practices that need to be addressed. “Oops”

moments—those instances in which things do not go as smoothly as they

should for service organizations—offer opportunities for both ongoing learning

and immediate improvement.76 because problems can always arise, “servicerecovery” (remedying customer dissatisfaction) is vital for service excellence.

The federal National Performance Review found that “best-in-business

organizations actively encourage customer complaints.” 77 Research further

supports the importance of actively seeking customer input and involvement

rather than waiting for them to complain. Making it easy for customers to

complain and to resolve problems on the first contact is the ideal.

Benefits and Challenges

Systems for monitoring and responding to customer complaints can

capture a range of useful information. “Substantial evidence suggests that

complaint behavior is not just a function of the intensity of dissatisfaction but

of several other factors as well, such as consumer characteristics, consumers’

perceptions of the attributes of dissatisfaction, expectancy of outcomes,

economic costs involved, product type, etc.”78 Complaint response systemscan yield further benefits in positive customer and public perceptions.

Generally, only four percent of dissatisfied customers formally complain to a

company about an unsatisfactory product, service or experience. Instead, the

average dissatisfied customer voices displeasure to eight to ten other people,

each of whom will tell at least five others. Thus, at least 50 people can

eventually learn of one customer’s dissatisfaction without the company finding

out.79 In contrast, satisfied customers tell only five other people about their

95



pleasant experience with an organization—half thenumber who will hear

about a negative experience.80

Customer Satisfaction: Improving Quality and Access to Services and Supports in Vulnerable

Neighborhoods Some research has shown that customers who had

complaints that were resolved were more satisfied than customers who did

not have problems in the first place. “Customers who get their problems

satisfactorily and quickly solved tell their friends and neighbors.”81 At the

same time, complaint systems have inherent limitations. They are self-

selecting; only the most dissatisfied customers tend to complain, skewing theaccuracy of the data for judging overall customer satisfaction. Many

dissatisfied customers cease using a product or service without notifying the

company. While complaint systems are useful, they must not be the sole

feedback mechanism an organization employs. Instead they provide a

valuable supplement to more standard and reliable research methods.

Methods and ExamplesRetail stores use mystery shoppers to covertly test their services and

products. Some companies use video cameras to record consumer behavior,

and some customers even allow video observation in their homes. Television

research groups enlist viewers to keep track of what shows they watch for a

week or two. Viewers record when they watched television, what show they

watched, how long, etc. Customer ratings play a strong role in determining

which shows remain on the air and in developing ideas for future

programming. The Montgomery County Department of Health and Humans

Services (DHHS) Office of Planning, Accountability and Customer Service

worked with a number of Department divisions to develop a Customer Service

plan. DHHS used “secret shoppers” to assess the behavior of employees

responding to phone calls from residents, to visit service centerwaiting rooms,

and to observe interactions between workers and customers.

96



Panels of customers and other testers.

One research firm uses consumers todevelop new products for

companies. It tests consumers for creativity and selectsa certain number for

“Super Group” panels comprised of “idea-centric creatives.”90 Food servicecontract managers in hospitals have used taste testers to improve patient

satisfaction. Riverside Methodist Hospital in Columbus, OH, serviced by

ARAMARK, uses an internal Nutritional Services Quality Resource

Management team composed of managers, dieticians, supervisors, cooks,

and tray line personnel to sample food before sending it to patients. Food

quality scores by patients have increased as a result. An employee also visits

all new patients to describe the diet their physician ordered and provide

information about additional services.91

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Sophisticated product testing strategies .

Consumer Reports operates the National Testing and Research

Center in Yonkers, New York, the largest nonprofit educational and consumer

product-testing center in the world. The Center gathers data about productsand services, consumer demand, and what its subscribers plan to purchase.

The company purchases the products it will test and conducts laboratory

testing. For example, it has an auto-test track for car and truck testing. The

company has over 100 “testing experts” in seven technical departments:

appliances, autos, baby & child, electronics, food, health & family, and

recreation & home improvement. Additionally, it utilizes 150 anonymous

shoppers throughout the country. The laboratory tests use

E. Customer Behavior Research

Although all the strategies described above provide information about

customer perceptions, customer behavior research provided in-depth

information about how and why consumers make choices. Observing, probing

and analyzing consumer behavior can help organizations develop products

and services that fit the use patterns and preferences of their targetcustomers. Likewise, organizations can use their findings to develop customer

service standards and performance measures. McDonald’s provides a good

example of how customer knowledge can be used to improve services and

profits. In the late 1980s and early 1990s, McDonald’s customer satisfaction

ratings declined. Surveys showed that 60 percent of customers left the

restaurants dissatisfied. Consumer research revealed that the company’s

“heavy users,” who made up its largest customer segment visited their favorite

fast food restaurant six times a week, but McDonald’s was losing their

business. Because one more visit a week by these customers meant millions

of dollars in revenues, the company decided to focus

on these customers.

In response to research that focused on heavy users, McDonald’s

introduced its Value Menu packages, improved its drive-through service, and

cut minutes off in-restaurant service time. The result was dominance over the

competition.93 Usually; customer behavior research is an in-depth approach

98



that is intended to obtain detailed information. Although skilled researchers

are often required and those can be costly, relatively small numbers of

consumers are needed. Consequently, compared to the large scale surveys,

targeted customer behavior research can yield valuable data with limited

expense. A general lesson from customer behavior research is the

importance for companies and organizations to observe, listen and analyze

free of biases.

Methods and Examples

Observation.

A maker of frozen baby food wanted to research the behavior of consumers when buying frozen foods. She dressed in jeans and went

shopping with friends who were parents. Using consumers as informants, she

learned valuable information about consumer tendencies in the frozen foods

aisle.94

In-depth interviews .

A common method for talking to customers is the in-depth interview, aprivate 45 to 90 minute conversational interview “designed to uncover both

broad contextual information about participants and detailed information about

specifictopics.”95 An individual interview may be the best method for probing

personal opinions,


Improving Quality and Access to Services and Supports in VulnerableNeighborhoods beliefs, and values. Some large companies use group

interviews to brainstorm about product modifications and new products.

Focus groups.

Although focus groups are falling out of favor, they have been a very

popular method for obtaining in-depth information from customers and

consumersregarding the motivations and explanations behind their behavior.

99



Focus groups typically involve 8 to 12 people identified as highly involved with

purchase, usage, or brand decisions. In a session lasting about two hours,

researchers probe the participants’ attitudes toward brands, services, new

products and ideas, advertising, political issues and candidates, and a host of

other issues.

Research firms suggest that focus groups be used when companies want to

know how consumers perceive a product or service, why they behave in

certain ways, what issues are important to their customers, and what issues

should be the focus of further research. Like all methods, focus groups have

some disadvantages. Perhaps the primary drawback is that focus group

research cannot be generalized to an entire population. The information

gathered in a focus group lacks statistical precision and can lead only to

hypotheses that must be tested further.

F. Continuous Feedback Loops

For information about customer behavior, satisfaction and preferences

to be useful, it must be connected to organizational planning, day-to-day

practices, employee training and assessment, and performance monitoring.

The goal is a continuous improvement system that uses customer input to

plan, design, measure, assess and improve a product or service. Customer

satisfaction information is continuously gathered, analyzed and fed back into

quality improvement efforts. Customer satisfaction research strategies serve

as assessment tools, They provide a direct line connecting the organization’s

objectives, quality dimensions, measurement mechanism, and analysis—

together, these comprise the feedback loop. Thus, continuous feedback loops

are less a strategy than a performance-based approach to operating a

customer service organization.

Connecting with strategic planning .

High performing organizations closely tie customer satisfaction

information to the strategic planning process at all levels of the organization.

To make this connection, many private-sector organizations conduct “internal

environmental scans,” which survey all aspects of a company to determine

100



how well it is fulfilling objectives such as customer needs. The Federal

Benchmarking Consortium cited one governmental organization that uses its

customers (citizens of that community) to perform the environmental scans.

Customers were involved in determining the “how” as well as the “what” of the

organization and participated in discussions of the organization’s processes

and services. The result was “customerdriven process improvement.”96

Connecting with performance measurement.

As part of the constant process of improvement, senior leaders at the

Ritz-Carlton benchmark other recipients of the Malcolm Baldrige National

Quality Award to identify possible innovations.97 After the company won itsfirst Baldrige award, it committed itself to a target of “defect-free” experiences

for guests, “implementing a measurement system to chart progress toward

elimination of all customer problems, no matter how minor.”98

Connecting with ongoing performance improvement efforts.

Susquehanna Health System (SHS) began its customer-centered

program by researching patient expectations. The organization found that thetop fifteen expectations all had to do with customer intimacy and personal

service. SHS has implemented a number of programs aimed at improving

personal service performance, including: constantly monitoring customer

feedback regarding patient expectations and how they view their service

experiences; utilizing various training programs for its employees, and on-

going programs of recognition and reward for employees who exceed

expectations.99 Saint Luke’s Hospital (SLH) in Kansas City won a 2003Malcolm Baldrige National Quality Award for its “continuous-loop model,

known as the Performance Improvement Model,” which is used to “plan,

design, measure, assess, and improve the way it delivershealth care service.”

Employees in all departments learn the model during orientation and receive

training on its use. Known as the “Listening and Learning” process, it includes

surveys, focus groups, follow-up calls, daily conversations with patients,

families, and others—all to determine patient requirements. Simultaneously,

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A customer satisfaction research program continuously gathers

customer and market requirements and helps measure customer

satisfaction.100 To fully understand customers’ expectations, experiences

and perceptions requires an ongoing system of research. Single strategy or

inconsistent monitoring is not adequate. Ideally, customer-derived information

is consciously used to inform staff and improve services.

RESEARCH PROCESS-:

102

Setting the area underthe study

Setting of Objective

Design the method of data

Defining the samplesize

Collection of data

Interpretation andanalysis of collection data

Deduction andconclusion





E) Report research findings:

This phase marked the culmination of the marketing research effort. The

report with the research finding is a formal written document. The research

findings and personal experience will be used to propose by conveying theview of the Customers. The methodology used for the study was very

rigorous. Interviews with customers were held and various books and

websites were checked for any type of information related to the study.

SAMPLING METHOD:

Random Sampling method is used for the collection of data.

The sample size of the study is of 120

SOURCES OF INFORMATION:

PRIMARY DATA – The primary data are those, which are collected for

the first time hence they are fresh and thus happens to be original in

character. Primary data pertain to demographic and socioeconomic

characteristics of the consumer, attitudes and opinion of the respondent,

their awareness and knowledge and other similar aspects.

SOURCES OF PRIMARY DATA COLLECTION

Observation

Interviews

Opinions

The primary data for the present research work was obtained through the

observation

SECONDARY DATA - It includes those data, which were collected for

some earlier research work and are applicable in the study the researcher has

presently undertaken. The data collected from the websites and books was

good enough to be included in the study analyzed and concluded.

104



SOURCES OF SECONDARY DATA COLLECTION

Internet.

Company Website.

Other WebsitesBooks

Journals

Newspaper

DATA ANALYSIS:

Tables and Pie Diagrams are used for representing the data.

105



RESEARCH METHODOLOY

Marketing research is the systematic objective and exhaustive search

for and study of the forth relevant to any problem in the field of marketing asystematic approach is needed to solve the marketing problem. The approach

is needed to solve the marketing problem. The approach is planed and should

be analytical and objective which include the following steps .

Topic of Study :

Customer satisfaction at Spencer’s product:The Study is a sample survey. It consists of small size to facilitate the study

as also it is a pilot survey. It consists of small size of facilitate the study as

also it is a pilot research here the main emphasis is on view towards Spanscr

product. Customer satisfaction is the one most important things in marketing.

DATA ANALYSIS & INTERPRETATION: All the collected data was analyzed and interpreted to get theconclusion. The objective of analysis is to an organized integrated and

meaning feel whole.

Report formation :

It was the final stage of project formation. The collected data, which was

analyzed, and interpretation was systematically arranged and henceforth

printed in the form of a report is clear and understandable format.

106



1. Occupation of the consumer .

Occupation of the consumer No. of Consumer

Business 60

Service 30Housewife 20

Others 10

Interpretation:- The above graph shows that most consumers are belong to

Business group, and 30 consumers are servicemen rests of consumers are

housewife and others

107

60

30

20

10

010

2030

4050

60

N o .

O f C u s

t o m e r

Buss. Serv. Housewife Others

Occupation

Chart 1

CHART-3.1



2. Income group of consumer .

Income Group No. Of Consumer

Less then Rs.5000 p.m. 5

More than Rs. 5000 & less than Rs. 10,000 P.M. 25

More than Rs. 10,000 & less than Rs. 15,000 P.M. 60

More than Rs. 15,000 P.M. 30

Interpretation:-From the above histogram it is the clear that the sample size made from

4.16% are from whose monthly income is less than 5000 Rs PM. 20.83% from

more than 5000 but less than 10000 Rs. 50% customer from more than 10000

but less than 15000 Rs. 25% customer from whose monthly income is more

then 15000

108

5

25

60

30

0

10

20

30

40

50

60

No. of consumer

Below5000

5000-10,000

10,000-15,000

Above15,000

Income group

Chart 2

CHART-3.2





4. Frequency to visit to Spencer

Interpretation:- from the survey of 120 customers, major 50% consumer are

visit to spencer mall monthly. 25% weekly 20.83% after 2-3month & remaining

4.16% customers are visit to spencer mall 2-3 time in a week.

Frequency to Visit No. Of Customer

2 to 3 time in a week 5

Weekly 30

Monthly 60

After 2 to 3 Month 25

110

5

30

60

25

0102030405060

No. of customers

2 to 3time in a

week

Weekly Monthly After 2 to3 Month

Frequency to Visit

Chart 4

CHART-3.4



5. Purchasing product Every Visit From Spencer

Response No of CustomersYes 115No 5

Interpretation:- most of the customer i.e. 95.83% customers are purchase

something every time when they visit to spencer.

111

115

5

0204060

80100120

No. of Customers

Yes No

Responce

chart 5

CHART-3.5





7. Product you most like to purchase from Spencer

roduct No of customer

clothes 55

Grossly product 20

Electronic product 15

Sports & toys 15

Footwear 10

Others 5

Interpretation:- from the above histogram 45.83% customers are most likely

purchase cloths, 16.66% customer are most likely to purchase to grossly

product, & electronic as well as sports and toy are purchase by 12.5%

customer.

113

55

2015 15

10

50

10

20

30

40

50

60

N o .

O f C u s

t o m e

clothes Electronic Footwear

Purchasing Preferance

chart 7

CHART-3.7



8 why you give preference to spencer

Reason No of customer Good services 50Cost efficient 40

Availability of product 20Easily available 10

Interpretation:- above chat 41.86% customer prefer spencer due to its good

services, 33.37% due to cost efficient, 16.67% due to availability of every

product under a roof & remaining, 8.83% are prefer spencer due to easily

available of required product

114

50

40

20

10

0

10

20

30

40

50

No. Of Customer

Goodservices Costefficient Availabilityof product Easilyavailable

Responce

Chart 8

CHART-3.8



9 From which spencer mall you prefer to purchase mostly ?

Location No of customer

Vaishali Nagar 20Gaurav Tower 60Adarsh Nagar 10Mansarovar 30

Interpretation:- there are 4 spencer mall situated in different area of Jaipur

most of the consumer i.e. 50% of the customer are purchase from gaurav

tower branch,25% from mansurover branch,17% from vaishali nagar branchremaining 8% are purchasing from adarsh nagar branch of sprncer.

115

Chart 9

Gaurav Tower 50%

Mansarovar 25%

Adarsh Nagar 8%

Vaishali Nagar 17%

CHART-3.9





11. Spencer give offer time-to-time YES/NOT (if YES than) in

which offer you prefer to purchase?

Offer No of customer Off on p rint price 60Buy one get one 40

Lottery coupon offer 10Others 10

Interpretation:- From the survey,50% consumer prefer to purchase fromspencer due to off on print price, 33.33% due to buy one get one free & 8.33%

due to lottery coupon offer.

117

60

40

10 10

0

10

20

30

40

50

60

No. Of Customer

Off on printprice

Buy oneget one

Lotterycoupon

Others

Offers

Chart 11

CHART-3.11



12. At time of purchase product is not available you would

Response No of customer Wait for it 40Go to another branch of

Spencer

60

Purchase from other Retail

mall

10

Purchase from local Market 10

Interpretation:- from the survey, 50% customer are go for another branch of

spencer when any product is not available at the time of purchase, 33.33 are

wait for it, 8.33% purchase from another retail mart,& 8.33% purchase from

local market.

118

40

60

10 10

0102030405060

N o . O

f C u s

t o m e

Wait for it

Another

branch of spencer

Other retail

mall

Local

market

Responce

Chart 12

CHART-3.12



13. Price of product in Spencer are appropriate as compare to

other retail mart

Response No of customer Yes 118No 2

Interpretation:- From the survey, Most of the customers i.e.

98.33%customers are think that price of product in spencer are appropriate as

compare to other retail mart.

119

Chart 13

Yes98%

No2%

CHART-3.13



14. Say about the billing process of Spencer

Response No of customer

Attractive 80Good 20Average 15

Need to improvement 5

Interpretation:- Above chart show that 66.67% customers are say that billing

process of spencer is attractive, 16.67% say that good, 12.5% say that

average and 4.16% say that need of improvement.

120

80

2015

5

01020304050607080

N o .

O f C u s

t o m e

Attractive Good Average Needimprovement

Billing Policy

Chart 14

CHART-3.14



CHAPTER – 4

FINDINGS CONCLUSION SUGGESTION

• FINDINGS

• CONCLUSION

• SUGGESTION

• LIMITATIONS

• SWOT ANALYSIS

121





CONCLUSIONThe research has done on the study of view of consumers about

Spencer's product from the study. Some customer is not satisfied with the

price of. Benefits. Thus this study provides the overall view of consumer aboutSPENCER product.

In the Retail market Spencer ’s has better image in consumers

mind. Everyone likes to shop here. Spencer ’s providing fresh and

good range of Fruits, vegetables, Staples, Dairy, FMCG, Garments,

and general product.

In the Indian retail market many players like More, India Bulls,Subhiksha, are here. Spencer’s make good brand name among this

market. After having tough competition in retail market Spencer ’s

product range and d isplay of the products i s much bet te r as

compare to o ther retai l s tore and i f they want to catch more

customers then they have to work on promotion activities and they

have to p rovide more at tr ac tive o ff er s t o t he ir l oya lty ca rd

customers. Employees are very friendly to customers. Spencer ’s

has very good appearing shop. Customers are very interested to

come in Spencer’s due to its good service.

123



SUGGESTION

1. Packaging should be eco-friendly.

2. Delivery of Spencer products should be on time.

3. Servicing should be improved.

4. Proper inspection of all branches should be there.

5. Company should start free schemes and discount to customer.

6. Company should have to reduce price of some product etc.

7. There should be proper and continuous benchmarking, so the chances of

price & quality higher then others will be reduce.

8. CSA should be more attentive so then solve more query of customer andtell then about the offers and scheme of different products.

9. PCM (price change master) should be update properly and system should

show the different promo.

10.Offer simple choice by memorandum weekly and informed by “e” and

mobile [what in store and what is new].

11.Call back to customer and tell them what we have done for their

suggestion and compliant, those have written their views/ compliant aboutthe service.

12.Your view matter book should be properly filled by customers.

13.Their should proper coordination between marketing and operation person

the promos what they are giving, so their should be no confusion between

customer and operation person.

14.Offering more attractive Promotional schemes.

124



LIMITATIONS OF THE RESEARCH:A though the research was conducted in a way to ensure accurate

results but certain errors might have occurred due to some unavoidable

reasons.DATA COLLECTION

-Non-response by some of the respondents.

-Since the population is not homogenous, some biasness might have

creped up.

-Many persons were reluctant in responding.

FOR EMPLOYEES

A thought of Risk of loosing their jobs, if gave any company

information

Busy in Store operations Or with Customers

FOR CUSTOMERS

Insufficient time

Prejudice of taking the enumerators as some company’s employee.

Occupancy with Carry Bags or kids

Sharing their Addresses and Contact Numbers was a cumbersome

issue for people.

WAREHOUSE

MANAGEMENT

FINANCESYSTEM STORE

OPERA

TION

TRANSFERMANAGEMENT

ANALYSIS ANDPLANNING

PURCHASEORDER

MANAGEMENT

PRICE AND COSTMANAGEMENT

MERCHANDISERECEIPTS

125

FIGURE-4.2



ANALYSIS:-After see this bench marking we can say that “More” and “India Bulls”

Price Policy is high and Spencer’s and Reliance fresh pricing policy is low.

When I asked to the customer about Spencer’s quality and rate they said tome Spencer’s provide us good quality on good rate Spencer’s quality is good

in comparison of other stores we are satisfy for Spencer’s.

When I asked to customers about Reliance Fresh they said to me it

provide merchandise on cheep rate but it don’t have the quality and about

India Bulls and More customer perception is that they said they provide

merchandise on high rate. When we get good quality at cheaper rate in

Spencer’s why we should go in other stores.So we can say that Spencer’s have good Image in customer mind in

comparison of other stores. ALLOCATION OF BAY

Bay is combination of 5-6 rakes. There is mainly two types of bays is

used

1. A SHAPE : In this kind of bay we can put / display the

SKU on both side of bay. This type of bay is used in middle side

of floor and not to close the wall.

2. L SHAPE : In this kind of bay we can put / display the

SKU on one side of bay. This type of bay is used beside the

wall; it is because they have only one side display and other side faces to wall.

Allocation of bay is decided by the layout and type of which kind of

store. No. of bay is decided by mainly by layout and then by

merchandiser, it is because sometimes merchandisers need more bays

due to quantity of SKU.

126



DISPLAY OF GOODSDisplay of goods is followed by some rules and standards, they are;

1. There is increase in weight of SKU from “Left to Right”.

This is mainly followed by Staples & FMCG.Exp. 250 gm Channa Dal then 500 gm- 1kg- 2kg

2. There is increase in weight of SKU from “Small to Big”

that means small quantity at bottom and at top large quantity.

Exp. Biscuit 100 gm at bottom then 250 gm and 500 gm.

3. In HWP glass items are placed according to company

name means same company glasses are placed in one bay.

4. In F&V display of fresh fruits & vegetables, this is doneafter shorting.

SWOT ANALYSIS STRENGTH

♦ First Hyper retail outlet in Malviya Nagar.

♦ People are will to come.

♦ Specialty food and exotic vegetables are available.

♦ Value added service like Home delivery, delivery on Phone.

♦ Quality of product.

♦ Convenient to customer.

♦ Hygiene standard.

♦ High standard of display and shelf discipline.

♦ Customer is informed through leaflet, by daily or weekly offers.

127



WEAKNESS

♦ Cash team is not quick in billing.

♦ Promo is not well communicated by marketing.

♦ Proper benchmarking is not done.

♦ On weekend and on evening, CSA can not attend properly to customers.

♦ Complaint of customer should be fulfilling not on regular basis.

OPPORTUNITY

♦ Loyalty card customer will increase through proper communication.

♦ Value added service like replacement guarantee, money refund, and price

guarantee.

♦ Exclusive offers for loyalty card customer.

♦ More combo offers in all categories to increase ABV.

♦ Weekly & fortnightly offers for customer’s exp. Kids carnival, school

contact programme, etc.

THREAT

♦ More and more convenient store is coming.

♦ More price war from unorganized retail

128



APPENDIX

Questionnaire

Customer Satisfaction at Spencer in Jaipur

Name: ………………………… Address: ………………………..

Age: ………………………… Tel. No.: ………………………

Occupation……………………. …. Sex………………………..

A) Service b) Business c) Housewife

Q. 1 income group

a) Less than Rs. 5000 P.m.

b) More than Rs. 5000 & less than Rs. 10,000 P.M.

c) More than Rs. 10,000 & less than Rs. 15,000 P.M.

d) More than Rs. 15,000 P.M.

Q.2 How did you know about the product?

a) Print Media b) Exhibition of Fair

c) Dealers & Suppliers d) Local cable Network

Q. 3 what is Your Frequency it visit to Spencer mall?

a) 2-3 time in a week b) Weekly

c) Monthly d) After 2-3 Month

Q. 4 Do you Purchase something every time?

a) Yes b) No

Q. 5 Do you know about various product of Spencer?

a) Yes b) No

Q. 6 which product you like most of Spencer?

a) Cloths B) Grossly product

C) Electronic Product D) Sports & Toyse) Footwear and Othe

129



Q. 7 why do you prefer Spencer?

a)ood Services

b) Cost efficient

c) Availability of every product under a roof

d) Easily available

Q. 8 from which Spencer you prefer to Purchase mostly?

a) Vaishali Nagar b) Gaurav Tower

c) Adarsh Nagar d) Mansarovar

Q. 9 what do you think about the services given by the employee?

a) Better b) Good

c) Average d) Not Satisfactory

Q. 10 Do the Spencer give various offer time to time? If yes/ then Which type

offer you prefer to purchase from Spencer? (Yes/No)

a) Off on Print Price

b) Buy one get one free

c) Lottery Coupon offers

d) Others

Q.11 At the time of purchase if any product is not available you would-

a) Wait for it

b) Go for another branch of Spencer

c) Purchase from other retail mall

d) Go at local Market

Q.12 Are price of product in Spencer are appropriate as compare to other Retail Mart?

a) Yes b) No

Q. 13 what do want to say about the Billing Process of Spencer?

a) Attractive b) Good

c) Average d) Needs Improvement

Q. 14 your suggestion…………………………………………………………………………………………

130



BIBLIOGRAPHY

• Kotler Philip, Marketing Management, Prentice hall of India Pvt. Ltd.,

New Delhi.

• Kothari C.R. Research methodology, published by, Wishwa prakashan,

New Delhi.

• Shrivastava P.K. Marketing Management for a developing economy,

sterling,publishing,

New Delhi.

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