VISHAL MEGA MART(RETAIL) INTRODUCTION OF INDIAN RETAIL INDUSTRIES: In the background of high consumerism and income of the urban consumers, in recent year there are a number of companies have expressed their interest towards retail sector outlets. As a result numbers of shopping malls have started their operations in metro and urban areas. Pantaloon, big bazaar, Vishal Mega Mart, Reliance Fresh are the best known examples of retail sector outlets in India. Retailing is the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. A retailer is one who stocks the producer’s goods and is involved in the act of selling it to the individual consumer, at a margin of profit. As such, retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. Some of the key features of retailing include: Selling directly to customers with out having any intermediaries Selling in smaller units / quantities, breaking the bulk Present in neighborhood or in the location which is quite convenient to the customers. Very high in numbers Recognized by their service levels Fitting any size and or location
Transcript
VISHAL MEGA MART(RETAIL)
INTRODUCTION OF INDIAN RETAIL INDUSTRIES:
In the background of high consumerism and income of the urban consumers, in recent year there are a number of companies have expressed their interest towards retail sector outlets. As a result numbers of shopping malls have started their operations in metro and urban areas. Pantaloon, big bazaar, Vishal Mega Mart, Reliance Fresh are the best known examples of retail sector outlets in India.
Retailing is the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. A retailer is one who stocks the producer’s goods and is involved in the act of selling it to the individual consumer, at a margin of profit. As such, retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. Some of the key features of retailing include:
Selling directly to customers with out having any intermediaries Selling in smaller units / quantities, breaking the bulk Present in neighborhood or in the location which is quite convenient to the customers. Very high in numbers Recognized by their service levels Fitting any size and or location
It is assumed that due to the entry of a number of retail outlets in the urban and semi urban areas, the mindset of the existing customers have undergone drastic changes. Besides it is also reported that the traditional retailing such an age old Grocery shops have directly faced competition with the organized retailing sector. In some parts of the country, it is reported that the traditional retails are resisting the entry of organized shopping malls. For instance the traditional retails of Bhubaneswar with the active support of the consumers at large didn’t allow reliance Fresh to start outlet initially.
The Retail Sector is the largest sector in India after agriculture, accounting for over 10 per cent of the country’s GDP and around 8 per cent of the employment. India has themost unorganized retail market in the world. Most retailers of the unorganized retailmarket have their shop in the front and house at the back. The Retail Industry in India istoday amongst the fastest growing industries with several players entering the market.Currently, the organized retail sector accounts
for only 2 per cent indicating a huge potential market opportunity. India is being seen as most
attractive market by retailinvestors from all over the world. Retail is clearly the sector that is
poised to show thehighest growth in the next five years. The sector i s set for a revolution, as
both the present players and new entrants are gearing up to explore the market. The present size of the organized retailing sector is approximately 3% and is expected to grow to 25-30% bythe year 2010. There are about 300 new malls, 1500 supermarkets and 325 departmentalstores currently under construction. Many players are coming up with huge investments,due to which the present 12 million mom-and-pop shops and kirana stores fear losingtheir business. Most predictions say that the sector might reach to US$ 400-600 billion bythe year 2010.Global retail giants such as Wal-Mart, Tesco, Germany's Metro AG and many others areready to enter the retail markets. The rising demands of branded products and increase in purchasing power have lured these companies to enter the market. Modern retaildevelopment in India is focused on the cities like Mumbai, Pune, Ahmedabad, Delhi andthe National Capital Region, Chennai, Banglore, Hyderabad, Kolkata. The leading Indianretailers are Bata India Ltd, Big Bazaar, Crossword, Vishal Mega Mart., Food Bazaar,Globus Stores Pvt. Ltd., Liberty shoes Ltd., Music World Entertainment Ltd., PantaloonRetail India Ltd., Shoppers Stop, Subhiksha, Titan Industries etc
RECENT TRENDS
Retailing in India is witnessing a huge revamping exercise as can be seen in the graph India is rated the fifth most attractive emerging retail market: a potential goldmine. Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes
up 3 percent or US$ 6.4 billion As per a report by KPMG the annual growth of department stores is estimated at 24% Ranked second in a Global Retail Development Index of 30 developing countries drawn
up by AT Kearney.
RETAILING IN INDIA: THE PRESENT SCENARIO
The present value of the Indian retail market is estimated by the India Retail Report to be
around Rs. 12,00,000 crore($270 billion) and the annual growth rate is 5.7 percent. Retail
market for food and grocery with a worth of Rs. 7, 43,900 crore is the largest of the different
types of retail industries present in India. Furthermore around 15 million retail outlets help
India win the crown of having the highest retail outlet density in the world. The contribution
of retail sector to GDP has been manifested below:
Country Retail Sector's share
in GDP (in %)
India 10
USA 10
China 8
Brazil 6
As can be clearly seen, retailing in India is superior to those of its contenders. Retail sector is
a sunrise industry in India and the prospect for growth is simply huge. There are many factors
that have stimulated the rise of the shopping centers and multiplex-malls in a jiffy. Some of
them can be listed as follows:
RISE IN THE PURCHASING POWER OF INDIANS-
The rise in the per capita income in the last few years has been magnificent. This has led to the generation of insatiable wants of the upper and middle class. The demand of new as well as second hand durables has risen throughout the country thus providing the incentive for taking up retailing.
FAVORABLE TO FARMERS- retailing has helped in removing the middlemen and has thus
enhanced the remuneration to farmers. This is a new revolution in the agricultural
sector in India and will go a long way in amending the condition of agriculture, a
major concern among policy makers.
USE OF CREDIT- a typical Indian is most conversant with using credit cards than carrying
money. These have led to a shift of the consumer base towards supermarkets and
make the payments in the form of credit.
COMFORTABLE ATMOSPHERE- a visit to a retail store appears to be more soothing for the
generation-Y. People and kids prefer to shop in an air conditioned a tech savvy
manner. The retail industry is the second largest employer in India. It currently employs about
7 percent of the total labor force in India. Finance Minister P. Chidambaram's recent
statement “salaries ought not to be legislated” is a welcome move as most of the
organized retail is in private hands. However only about 4.6% of the total retail trade
is in organized sector. It generates about Rs.55, 000 crore ($12.4 billion). The major
and minor players desperately need to work hard in this direction so that next time the
figures look more decent. The government must also make an attempt to ameliorate
the situation as political instability and infrastructure namely power and roads are the
major roadblocks in the path of smooth functioning of the market.
COMPONENTS OF RETAIL SECTOR
The major components of the retail sector are:
Food and Grocery, Fast Moving Consumer Goods (FMCGs), 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
of the total retail market.
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.
In the background of high consumerism and income of the urban consumers, in recent year, a number of companies have expressed their interest towards retail sector outlets. As a result, numbers of shopping malls have started their operations in metro and urban areas. Pantaloon, big bazaar, Vishal Mega Mart, Reliance Fresh are the best known examples of retail sector outlets in India. Retailing is the interface between the producer and the individual consumer buying for
personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. A retailer is one who stocks the producer’s goods and is involved in the act of selling it to the individual consumer, at a margin of profit. As such, retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. Some of the key features of retailing include: -Selling directly to customers without having any intermediaries -Selling in smaller units / quantities, breaking the bulk -Present in neighborhood or in the location which is quite convenient to the customers. -Very high in numbers -Recognized by their service levels -Fitting any size and or location The objective of this article is to study the Marketing Mix and Shareholding pattern of Vishal Mega-Mart, a renowned name in Retail Industry of India. Keywords: Retail, Consumerism, Manufacturing, Individual, Selling, Marketing-Mix, Shareholding. 1. Introduction Last few years India has witnesses’ radical changes in the developing of shopping centers leaving behind the traditional high street shops. Indian real estate developers picked up models from the west, changed them to suit the Indian context to arrive at a rapidly growing number of home-grown malls. Indigenous factors such as availability of physical space, population densities and city planning and socio economic parameters have contributed to this mall surge in the Indian www.sciedu.ca/jms Journal of Management and Strategy Vol. 1, No. 1; December 2010 Published by Sciedu Press 111 market. Although the primary purpose of a mall is to cater to the retail requirements of its clientele; entertainment and food courts are sometimes attached to provide a complete shopping, eating and entertainment experience. In India, the first operational mall was opened in Mumbai in 1999. In the same year, Ansal Plaza was started in New Delhi. Over the past six years, those first malls have grown into 6 million square feet of operational shopping mall space in Mumbai, Delhi, Bangalore and Hyderabad. Big developers like Unitech, DLF, TDI, Ansals. Omaxe and Parsvanath, Aerens and BPTP have already realized the potential of these malls. To offer something new to the customers, developers have been experimenting with different retail formats like specialty stores, hypermarket, convenience stores and supermarket. New malls are coming up in tier II and tier III cities. Compared to the large cities, organized retailing in small towns is growing at a staggering rate of 50 to 55 per cent. More than 700 new malls are being planned all over India. In this competitive environment, Vishal Mega Mart has also created a space and image in the mind of customer
GROWTH OF RETAIL SECTOR:-
The following are the reasons for growth of retail sector in India- Increase in disposableincome of consumers, Increase in consuming desire, Low share of organized retailing.Purchasing power of Indian urban consumer is growing and branded merchandise incategories like Apparels, Accessories, Food, and even Jewellery, are slowly becominglifestyle products. Retailers are taking benefit of this growth and accordingly are aimingto expand. Indian retail is expanding at a fast pace. India's retail industry, which iscurrently valued at nearly $350 billion, is expected to double in size by 2015. The IndianRetail Industry is gradually moving ahead towards becoming the next boom industry.Modern Large-Format retail, efficiently connects the producers and the consumers and ishelpful to both in the long run. In India there is a huge wastage of fresh fruits andvegetables. In this scenario, the Large-Format Retail provides all importantinfrastructures to carry the farm produce to the consumers with lesser wastage. In thisway the farmers get better returns and the consumer better quality and price
GROWTH OF RETAIL IN INDIA:-
Organized Share of retail sector is expected to increase to 8-9 percent in 2010-11 from 6 percent in 2008.
The Indian retailing market, it is a very fast growing sector. One reason that can be attributed to this rapid entry of the foreign retail giants is that the Western Countries have reached a point of saturation in their retail sector. Another reason as already mentioned earlier is the change in the tastes and preferences or the psychographic of the consumers that is bent in their favour.
Although the retail sector in India contributes to about 10% in the GDP, it is the most underdeveloped sector in terms of investments that are made in this sector. The organized sector is growing at 25-30 % per annum. Developed market in US, Taiwan, Malaysia is still a dream to the Indian retail market. They have registered a growth of 50% per annum.
GROWTH DRIVERS IN INDIA FOR RETAIL SECTOR
Liberalization of the Indian economy
Increase in spending Percapita Income.
Rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes.
Introduction of dual income families also helps in the growth of retail sector.
Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.
Consumer preference for shopping in new environs.
Technology-savvy/Youth population.
Foreign companies' attraction to India is the billion-plus population.
Existing Indian middle classes with an increased purchasing power
Rise of upcoming business sectors like the IT and engineering firms
Change in the taste and attitude of the Indians
Effect of globalization
Heavy influx of FDI in the retail sectors in India.
FUTURE OF RETAIL IN INDIA:-
India Retail Report for the third-quarter of 2010, forecasts that the total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014. With the expanding middle and upper class consumer base, there will also be opportunities in India's tier II and III cities. The greater availability of personal credit and a growing vehicle population to improve mobility also contribute to a trend towards annual retail sales growth of 11.4 per cent. Mass grocery retail (MGR) sales in India are forecast to undergo enormous growth over the forecast period. BMI further predicts that sales through MGR outlets will increase by 154 per cent to reach US$ 15.29 billion by 2014. This is a consequence of India's dramatic, rapid shift from small independent retailers to large, modern outlets. consumer electronic sales at US$ 29.86 billion in 2010, with over the counter pharmaceutical sales at US$ 3.28 billion. The latter is predicted to be the fastest growing retail sub-sector and BMI forecasts that sales will reach US$ 6.18 billion by 2014, an increase of 88.5 per cent.
China and India are predicted to account for almost 91 per cent of regional retail sales in 2010 and by 2014 their share of the regional market is expected to be more than 92 per cent. Growth in regional retail sales for 2010-2014 is estimated by BMI at 72.2 per cent, an annual average of 14 per cent. India should experience the most rapid rate of growth in the region, followed by China. For India, its forecast market share of 13.9 per cent in 2010 is expected to increase to 14.3 per cent by 2014.
CHALLENGES OF RETAILING IN INDIA
The first challenge facing the organized retail sector is the competition from unorganized sector.
In retail sector, Automatic approval is not allowed for foreign investment.
Taxation, which favors small retail businesses.
Developed supply chain and integrated IT management is absent in retail sector.
Lack of trained work force.
Low skill level for retailing management.
Intrinsic complexity of retailing- rapid price changes, threat of product obsolescence and low margins.
Organized retail sector has to pay huge taxes, which is negligible for small retail business.
ORGANIZED RETAIL IN INDIA:-
The Indian organized retail industry is valued at about $300 billion and is expected to grow to $427 billion in 2010 and $637 billion in 2015. Retail Market India today is the second fastest growing economy of the world after China. Indian economy will grow larger than Britain's by 2022, Japan by 2032 and by 2050 will become the second largest economy of the world after China. Indian market has become the most lucrative market for retail investment in the world. Some of the factors which have contributed to the growth of organized retail in India are: increase in the purchasing power of Indians, rapid urbanization, increase in the number of working women, large number of working young population.
Today people look for better quality product at cheap rate, better service, better ambience for shopping and better shopping experience. Organized retail promises to provide all these. The Industry The various formats of organized retail are: Hypermarkets: They store products of multiple brands comprising food items and non-food items. Supermarkets: These are self service stores selling food and personal care products. E.g.: Departmental stores: Retails branded goods in non-food categories. E.g.: Shoppers Stop. Specialty Chains: These stores focus on a branded product or a product category. E.g.: Bata
Convenience stores: These are small self service outlet located in crowded urban area. Malls: A huge enclosures which has different retail formats. e.g.: Nucleus Key players in organized retail are: Pantaloon Retail: It was started by Kishore Biyani- India's largest retailer. The various formats of pantaloon retail are: Pantaloons, Big Bazaar, Food Bazaar, Central etc. RPG Retail: Its various formats are: Food World, Music World, Health & Glow, Spencer's Tata Retail (known as TRENT): Its various formats are: CromaWestsideStar India Bazaar K Raheja Corp. Group: Shoppers' Stop, Hyper city, Crossword, InOrbit Mall Reliance Retail Job Opportunities: Retail accounts for 8% employment in the country. In the next 2 years the sector is set to provide 2.5 lakh job opportunities.
UNORGANIZED RETAIL IN INDIA
Unorganized retailing is characterized by a distorted real-estate market, poor infrastructure and inefficient upstream processes, lack of modern technology, inadequate funding and absence of skilled manpower. Therefore, there is a need to promote organized retailing.
Facing stiff competition from corporate retail outlets, hawkers and small shopkeepers are not only witnessing decline in business but also increased harassment and eviction drives. The 400 hawkers and 100 shopkeepers surveyed across five cities by India FDI Watch and Action Aid, about 85% of them said their business was on a slide. Competition (from corporate retail outlet) was the number one reason cited by the respondents for the decline of their business.
Shopkeepers have increased their work hours to compete with big retailers. About 60% of hawkers and 64% of shopkeepers are working 10-12 hours per day, while 24% worked for 13 hours or more. Incidents of extortion and eviction have also increased because of the entry of big retailers, the study pointed out. 45% of those surveyed said the levels of harassment and/or evictions had increased recently.6%said it was a cause of decline in business.
India FDI Watch also slammed a think-tank’s report that says the organized and unorganized sectors can co-exist. Just because organized retail might grow nationwide does not mean that it will grow and co-exist with unorganized retail especially given the anti-competitive practices that corporate retailers are already employing.
VISHAL RETAIL PVT. LTD. HISTORY
“Future is thinking beyond horizon” & in order to keep its pace with the modern retail, Vishal Retail Limited is spreading its wings. Instead of resting on its laurels the Group are busy identifying new avenues of growth by venturing in other formats like cash & carry, convenios as well as specialty stores and inspiring local retailers to grow along with the big names. The group has tied up with HPCL to open corner stores at their petrol pumps and in addition to the above Vishal has come up with an institute to train manpower for the service industry.
As of December 1, 2010, it operates 172 retail stores, including two stores which are operated by their franchisees. These 172 stores are spread over about 24,00,000square feet and are located in 24 states across India. In its efforts to strengthen thier supply chain, it has set up seven regional distributions centres and an apparel manufacturing plant.
Today Vishal Retail Limited, Flagship Company of Vishal Group, engaged in Hyper Market stores with an average area of 25,000 to 30,000 sq. ft.
According to Mr. Ram Chandra Agarwal, CMD, Vishal Retail Limited, the group owes its origin to a small 50 sq ft shop in Kolkata's Lal Bazaar that started selling readymade garments. In tune with the pulse of the market, he envisioned a mega store that would sell garments at prices none other could match. . The first big store opened in Calcutta's Esplanade area in 1997, under the banner of Vishal Garments. He was involved in all the aspects of the business: right from sourcing the garments to interacting with customers. And this led to his greatest finding “The Vishal Group.”
After identifying the immense market in fashion garment for the masses, He moved to Delhi in 2001 and opened his first store in Delhi’s Rajouri
Garden by the name of Vishal Mega Mart (The jewel in Vishal Group’s crown) and then there was no looking back for Mr. Ram Chandra Agarwal. At present, in addition to garments, Vishal Mega Mart stores retail the entire range of household products, FMCG and electronic goods. Vishal's prices are roughly 15 to 20 per cent less than other mass market garment labels.
Mr. Ram Chandra Agarwal, CMD, Vishal Retail Limited believes that the shopping habits of Indians are changing due to their growing disposable income, higher aspirations, relative increase in the younger population, and the change in attitudes towards shopping. The emphasis has changed from price consideration to design, quality and trendy. Age is also a major factor that affects the spending decisions of an individual. Consumer spending is an important factor that affects the economic growth and development in a country. As a trend, consumer is more
educated. He has access to all reforms taking place through various arrays of communication. He is becoming a “value shopper” everyday.
Keeping this in mind, the group is now looking for franchisees to join hands with Vishal and grow under common banner. This partnership will help small retailers to survive the onslaught of organized retail as it will enhance their competitiveness. Small stores can avail of the benefits on account of the economies of scale, a key advantage for big retailers.
As per the plans, Vishal Retail will completely take over the supply chain of its franchisees and provide them with technology, new practices, visual merchandising skill and special promotional schemes, besides its brand and customer base.
Some of the Franchisee exclusive business categories are:
Mens Fashion Ladies and Kids Footwear Toys and Games Home – General Convenience (FMCG) CDIT Watches Mobile
It follows the concept of value retail in India. In other words, their business approach is to sell quality goods at reasonable prices by either manufacturing themself or directly procuring from manufacturers (primarily from small and medium size vendors and manufacturers). It endeavour to facilitate one-stop-shop convenience for their customers and to cater to the needs of the entire family. It
believes this concept has helped them grow to thier current size within a short time frame of their years. Mr. Ram Chandra Agarwal has been ranked as the 28th most pitiful person in the Indian retail industry.
In order to reduce costs and take advantage of economies of scale it has embarked on backward integration of their products. Thier apparel manufacturing plant is located at Gurgaon, Haryana.
For ensuring efficiency in supply chain, it has set up seven regional distribution centres located around Kolkata, Thane (Maharashtra), Jaipur (Rajasthan), Ghaziabad (Uttar Pradesh), Ludhiana (Punjab), Gurgaon (Haryana) and Delhi. Further, it has focussed on developing a cost and time efficient distribution and logistics network, which currently comprises seven distribution centers and a fleet of trucks for transportation.
“Retailing is an engine for taking merchandise to the end-users. There is a lot of opportunity in this sector for us since demand of the potential consumers are not being met under the existing facilities. Therein lies the road to success.” says Mr. R C Agarwal
THE FOUNDERS:-
Mr. Ramchandra Agarwal Mrs. Uma Agarwal
VISION STATEMANT:
We share the vision and belief that our customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development
MISSION STATEMENT:
We shall deliver Everything, everywhere, everytime for every Indian Consumer in nthe most profitable manner.
VRPL’s BUSINESS:-
VRPL started as a retailer of ready-made apparels in Kolkata in 2001. In 2003, VRPL acquired
the manufacturing facilities from Vishal Fashions Private Limited and M/s Vishal Apparels.
Subsequently, with evolution of retail industry in India and change in consumer aspirations,
VRPL diversified their portfolio of offerings to include other retail goods. Currently, VRPL sell
ready-made apparels and a wide range of household merchandise and other consumer goods such
as footwear, toys, watches, toiletries, grocery items, sports items, crockery, home furnishing,
beverages, drinks, gift and novelties.
VRPL follow the concept of value retail in India. In other words, VRPL’s business approach is to
sell quality goods at reasonable prices by either manufacturing themselves or directly procuring
from manufacturers (primarily from small and medium size vendors and manufacturers). VRPL
endeavor to facilitate one-stop-shop convenience for their customers and to cater to the needs of
the entire family. VRPL believe this concept has helped them grow to their current size within a
short time frame of 10 years.
In order to reduce costs and take advantage of economies of scale VRPL have embarked
on backward integration of their products. VRPL’s apparel manufacturing plant is located at
Gurgaon, Haryana. For ensuring efficiency in supply chain, VRPL have set up seven regional
distribution centers located around Kolkata (West Bengal), Thane (Maharashtra), Jaipur
(Rajasthan), Ghaziabad (Uttar Pradesh), Ludhiana (Punjab), Gurgaon (Haryana) and Delhi.
Further, VRPL have focused on developing a cost and time efficient distribution and logistics
network, which currently comprises seven distribution centers and a fleet of trucks for
transportation.
MARKETING-MIX OF VISHAL MEGA-
Mart 7P Marketing Mix is more useful for services industries and knowledge intensive industries. Successful marketing depends on number of key issues. The seven keys issues are explained as:
PRODUCT
VMM offers a wide range of products which range from apparels, food, farm products, furniture, child care, toys, etc. Products of all the major brands are available at VMM. Also, there are many in house brands promoted by VMM. Vishal Mega-mart sold over 300,000 pairs of jeans, 50,000 DVD-players
and 25,000 microwave-ovens. In all, the fashion, electronics and travel segments made up about 70% of sales. Last year, these categories made up only about 60%.
1. IN-HOUSE MANUFACTURING HELP SUSTAIN MARGIN
Vishal Retail operates two manufacturing facilities with a capacity of 1.5 mn pieces each. The Gurgaon manufacturing facility began operations in 2004 and currently operates at 80% utilization. The Dehradun facility, currently operating at 40% utilization, commenced operations in September, 2007. The company also makes FMCG products, like napkins, farsans, ketch-ups, etc., through a bakery in Gurgaon. The in-house manufactured products enable improvement in operating margin. In FY 06, the products manufactured by company contributed 9.7% to sales. This contribution is decreasing every year due to inclusion of other categories in the product mix. We expect the share of manufactured products to reduce further due to further addition in categories going forward.
2. CHANGING PRODUCT MIX
Vishal Retail commenced operations with the retailing of readymade apparels for kids, women and men. Gradually, it expanded its product portfolio to include non-apparels and FMCG products. With over 100,000 SKUs, apparel (63.2% in FY07) is the largest contributor to sales. However this mix is expected to change with the increase in the variety of products. We expect the share of apparels to reduce to 50% over the next two years. Consequently the share of non-apparels and FMCG collectively is expected to increase to 50%. The change in the product mix will enable the company to reduce seasonality, attract more footfalls and maintain margins.
PRICE
They work on the model of economics of scale. There pricing objective is to get "Maximum Market Share". The various techniques used at Vishal Mega-mart are: - -
Value Pricing (EDLP - Every Day Low Pricing): Vishal Mega-mart promises consumers the lowest available price without coupon clipping, waiting for discount promotions, or comparison shopping.
-Promotional Pricing: Vishal Mega-mart offers financing at low interest rate. The concept of psychological discounting (Rs. 99, Rs. 49, etc.) is used as promotional tool. Vishal Mega-mart also caters on Special Event Pricing (Close to Diwali, Holi, Raksha- Bandhan and Durga Pooja).
-Differentiated Pricing: Time pricing i.e. difference in rate based on peak and non-peak hours or days of shopping is also a pricing technique used in Indian retail, which is aggressively used by Vishal Mega-mart. –
Bundling: Selling combo-packs and offering discount to customers. The combo-packs add value to customer.
PLACE Vishal Mega-mart stores are located in 129 cities with 172 outlets. VMM has presence in almost all the major Indian cities. They are aggressive on their expansion plans
Vishal Retail targets cities with urban population of 1 million people or above or can be classified as Tier-2 and Tier-3 cities. In Tier-1 cities, the company opens retail outlets on the outskirts, rather than the prime area. Its target market includes people with middle income and lower income levels. This enables the company to overcome competition to some extent due to its first mover advantage (as competitors have relatively less space in tier-2 and tier-3 cities) and helps to lower rental cost. As at 3Q FY08, 78% of the company’s 82 stores are in Tier-2 and Tier-3 cities . The company plans to maintain the ratio of Tier-2 and Tier-3 to Tier-1 cities at 80:20.
PROMOTION
Advertising has played a crucial role in building of the brand. VMM advertisements are seen in print media, TV, Radio (FM) and road-side bill-boards. Vishal Mega-mart started many new and innovative cross-sell and up-sell strategies in Indian retail market. The various promotion techniques used at VMM include: -5 Din Ki Maha Bachat -2 din Ki Maha Loot -Dhan-teras Dhamaal -Great Savings Vishal Mega Mart Gift Voucher Rs. 1000. -Discount Offers At Various Festive occasions -Grand Winter Sale – 50% & 60% discount for 2 days -Paise Bachao Aandolan – 9 Din Ki Maha Loot -Vishal Reward Plus: Consumers can make purchases at any store and accumulate points at
a central level. These points are redeemable at any of our stores. -Cross category promotions are now catching up where discounts are being offered on
grocery purchases, redeemable against purchase of apparel and household products.
SWOT ANALYSIS OF VISHAL MEGA MART
STRENGTHS Demographic favour. Rising disposable income Increase in number of people in earner
category. Urbanization Shopping convenience Low labour cost of skilled ones.
OPPORTUNITIES:-
Potential for investment.
Location advantage.
Sectors with high growth potential.
Fastest growing format.
Falling real estate cost.
Retail franchising.
Poor inventory turns and stock availability measures.
WEAKNESS:-
Policy related issues
Lack of industry status for retail.
Numerous licence, permits and registration.
Requirement.
-farmer and retailer unfriendly APMC act.
Limited consumer insight.
THREATS:-
Political issues.
Social issues.
Inflation.
Nostalgia.
Lack of differentiation among the malls that are coming.
VISHAL MEGA MART PRODUCTS :-
P R O D U C T S
FOODMART
Beverage Cooked Indian Cooked Chinese Drinks Fruits & Vegetables
FOOTWARE
Boys Girls
Shoes Slippers
Sandals Sandals
Ladies Men’s
Shoes Shoes
Slippers Slippers
HOUSEHOLD
Acrylic Ware Copper Steel Dinner Set Jug Cake Server Glass Ware Thermo Ware PorcelainHome Aids Pressure Cooker Non Stick Floor Wiper Cooker Handi Sanitary Brush Pressure Pan Dosa Tawa Cup Tiffin Cup & SaucerGeneral Plastic Goods Electrical App. Bone China Coffee Mug Chopper Soup Set Bucket Microwave Oven Dessert Set Lemon Set Container etc.
LADIES ACCESSORIES
Personal Items Nail Polish Cosmetics
Cap(LCA) Necklace Lip Gloss Socks(Las) Ring
LIFESTYLE
Time Zone Opticals Gifts & Novelties Ladies Wrist Watch Ladies Sun Glass Flower Vase Mens Wrist Watch Mens Sun Glass Key Chain Mens Accessories Electric & Electronics Perfume/Deo Belts Battery(ABT) Spray Wallets Calculator(EEC) Deo
