RM - pantaloon

8/7/2019 RM - pantaloon

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Introduction

Industry Background

India, like Britain, is a nation of shopkeepers. With over 12 million retail outlets,India probably has the highest density of retail outlets in the world, with one for

approximately every 90 persons; little wonder that the country is the ninth-largest

retail market in the world, with estimated annual retail sales of around USD215

billion in 2005 (Rs 960,000 crore). At the same time, the share of organized trade in

this enormous market is currently very small. It is estimated at just USD8 billion (Rs

35,000 crore) in 2005, up from USD6.25 billion (Rs 28,000 crore) in 2004. This

accounts for less than 4 per cent of the total retail trade in the country.

An Underdeveloped Retail Market

Organized trade in India is very underdeveloped when compared with other emerging

markets in Asia, Latin America and Eastern Europe.

The Indian and Chinese markets are comparable in many aspects:

Both countries are not homogeneous. They comprise many markets within a single

country, with significantly varying cultures and customer preferences across regions.

There is a significant rural population in both countries, which has much lower

purchasing power compared to the urban population.

Both countries are geographically very large and unevenly developed, adding a

significant distribution and logistics dimension to the retail trade.


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The Size OfThe Opportunity

Research done by the Tata Strategic Management Group (TSMG) indicates that over

the next 10 years, the total retail market in India is likely to grow at a compoundedannual growth rate (CAGR) of 5.5 per cent (at constant prices) to USD374 billion (Rs

16,77,000 crore) in 2015. The organized retail market is expected to grow much

faster, at a CAGR of 21.8 per cent to USD55 billion (Rs 246,000 crore) in the same

time frame, garnering around 15 per cent of overall retail sales. Based on our

projections, the top five organized retail categories by 2015 would be food, grocery

and general merchandise apparel durables food service and home improvement.

Retailers inspired by the Wal-Mart story of growth in small town America are tempted

to focus on smaller towns and villages in India. However, a careful analysis of the

town strata-wise population, population growth, migration trends and consumer spend

analysis reveals a very different picture for India.

As per our estimates, the share of the 35 towns with a present population of greater

than 1 million in India's total population would grow much faster than their smaller

counterparts, from 10.2 per cent today to reach 14.4 per cent by 2025. Simultaneously,

the share of these towns in the overall retail market would grow from 21 per cent

today to 40 per cent by 2025.

Within these top 35 towns, an estimated 70 to 80 per cent of retail trade could be in

the organized sector. This is similar to the experience in China, where in cities like

Shanghai and Beijing, the organized sector accounts for 70 to 80 per cent of overall

retail trade in certain categories. Retailers should therefore focus on the top 37 towns

in the next decade, as the opportunity in smaller towns and rural India would be

smaller and more fragmented, compared to the larger towns. Organized retail market

in India


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There are a few key trends that one observes in international markets

TREND1: Convenience Stores And Hypermarkets Are Gaining Prominence

These are driven by a consumer need for convenience and lower prices / higher value

in mass categories, while the big box category killer stores are gaining importance in

the specialty retail categories. While supermarkets may emerge at the initial stages of

retail market development, in the long term they are unable to match the consumer

value proposition of convenience stores and hypermarkets.

TREND2: Private Label Brands Become Important

Private labels today account for 17 per cent of global retail sales, with the highest

share of 23 per cent in Europe and the lowest share of 4 per cent in Asia. M+M Planet

Retail data shows that private label penetration varies from 25 per cent to 95 per cent

among some of the largest retailers in the world. Growing acceptance among

consumers, increasing price competition, the need for differentiation among retailers

and the ability to offer higher margins are the key factors contributing to the growth

of private labels. Private labels provide the retailer an ability to offer a significant

price advantage to consumers, their prices being 16 to 32 per cent lower than

manufacturers' brands.


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Implications Of Indian Retailer

Global trends have important implications for Indian retailers. The Indian consumer

is very value conscious willing to spend money in most cases, but constantly cost

conscious, evaluating every rupee spent. It is therefore imperative for retailers to

offer a price advantage through sourcing and operat ional efficiency, as well as a

strong private label programme to attract customers. Existing and new entrants need

to achieve scale quickly to drive efficiencies in procurement, supply chain and

marketing. Else, they risk being marginalized by larger players.

Real estate and human resources will be the critical drivers to build scale. While there

are a few hundred malls under various stages of development across the country at

present, retailers will also need to think out of the box to ensure the availability of

real estate. This may include acquiring and developing the real estate themselves,

rather than wait for mall development. Given the rising demand for retail real estate,

retailers will need to take a long-term view on rentals and look at alternative options

like ownership or very long leases. Retailers that invest in training will be able to

ensure the availability of quality manpower in a rapidly growing market.

In conclusion, the retail market in India offers an opportunity for a large player to

build a Rs 40,000-crore retail business spanning multiple categories by 2015 (at

current prices). Compared to this, the revenue of the largest Indian retailer,

Pantaloon, grossed only Rs 1,085 crore in 2005. Little wonder that large domestic

business houses and international retailers have expressed a keen interest to enter the

retail sector in India. To capitalise on the opportunity, however, players need to be

aggressive in outlook and build scale quickly.


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Future Group:

Future Group is Indias leading business group that caters to the entire Indian

consumption space. Led by Mr. Kishore Biyani, the Future Group operates through

six verticals: operates through six verticals: Retail, Capital, Brands, Space, Media and

Logistics.

The companys leading formats include Pantaloons, a chain of fashion outlets, Big

Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain,

blends the look, touch and feel of Indian bazaars with aspects of modern retail like

choice, convenience and quality and Central, a chain of seamless destination malls.

Some of its other formats include, Depot, Shoe Factory, Brand Factory, Blue Sky,

Fashion Station, all, Top 10, MBazaar and Star and Sitara. The company also

operates an online portal, futurebazaar.com.

A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town,

a large-format home solutions store, Collection i.e. selling home furniture products

and E-Zone focused on catering to the consumer electronics segment.

Future Groups vision is to, deliver Everything, Everywhere, Every time to Every

Indian Consumer in the most profitable manner. The group considers Indian-ness

as a core value and its corporate credo is - Rewrite rules, Retain values.

Companys vision:

Future Group shall deliver Everything, Everywhere, Every time for Every Indian

Consumer in the most profitable manner.

Companys Mission:

We shall infuse Indian brands with confidence and renewed ambition. We shall be

efficient, cost- conscious and committed to quality in whatever we do. We shall

ensure that our positive attitude, sincerity, humility and united determination shall be

the driving force to make us successful.


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Pantaloon Company Profile

Pantaloon Retail (India) Limited, is Indias leading retailer that operates multiple

retail formats in both the value and lifestyle segment of the Indian consumer

marker. Headquartered in Mumbai (Bombay), the company operates over 5 million

square feet of retail space, has over 350 stores across 40 cities in India and employs

over 18,000 people.

Pantaloon Retail is the flagship company ofFuture Group, a business group catering

to the entire Indian consumption space.


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Characteristics:

Target market and Positioning of Pantaloons:

Pantaloons are positioned as a department store catering to the middle and upper-

middle class sections at each of its locations. Its core offering is branded merchandise,

retailing international, national and regional brands as well as private and proprietary

labels.

Today, a leader in Fashion Pantaloons promises Fresh Fashion for the entire family as

well as the young and the young-at-heart. The belief is that they will be the key

drivers of fashion. Thus it is a store focusing on providing a value for money

proposition as it provides quality fashion products at an affordable price as compared

to the competitors.

Store location :

The location of a retail store occupies an important place in retail strategy. It not only

conveys the image of the store, but also influences the merchandise mix and the

interior layout of the store. While the merchandise mix can be changed and prices can

be adjusted, it is difficult to change the decision on store location.

Accessibility of the market :

Accessibility of a market is defined in terms of the availability of public transport and

road/local trains connections to the markets. It is mostly located in posh locality in the

center of the city. Further the easy availability of transport facilitates makes the

location really accessible for shopping.

Visibility:

Pantaloons is situated very close to the main road. Pantaloons being a three floor

building have great visibility. To enhance the visibility pantaloons has put its sign

board on the top of the building.


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Total number of stores and the type of stores that exist in the area:

Its presence area encompasses stores like Lifestyle, Trent; Adidas.which directly

compete with Pantaloons. This is really disadvantageous for Pantaloons.

Product Mix Offered:

The kind of product mix to be offered by the retailer is another important

consideration. As mentioned earlier the main product line of Pantaloons is mens and

womens clothing and other accessories comprising a vigilant mix of private as well

as other labels... Since Pantaloons provides products to a potentially large number of

customers at affordable prices, it falls in the High Turnover - Low Margin Category.

Pricing:

Pantaloons visual merchandising is creative, innovative and outstanding which can be

seen from its own in house private brands such as John Miller.

All the merchandise is placed at both 360 degree and 180 degrees.

The new launched products are showed by prominent color back ground.

Window display is highly interactive for impulsive buyer.

Price range is average.

Store layout :

Pantaloons follows a free form store layout. No particular format is followed anything

is placed anywhere but strategically. Pantaloons fall under following categories-

Departmental stores, Malls, E-retailers Here when it comes to arranging the clothes,

same type of clothes are put up together in different sizes so that same clothes are

available for every size at one point only.

Being a department store, Pantaloons exhibits an arrangement of merchandise in a

freeform layout. Such a layout allows free movement and also encourages people to

browse and shop with convenience. The floor space is allocated on the basis of the


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contribution of a particular department to business. As such, the Mens department has

been assigned an entire floor. The total area of the entire store is approximately

50000sq.ft.

The layout of the store is modified on a regular basis by shifting the fixtures and

display of the merchandise so that the customers develop a feel of novelty in the store.


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Space Allocation and Utilization:

Furniture and fixtures:

Goods are effectively displayed on a variety of fixtures such as tables, other racks,

display cases and manufacturer point- of -purchase display.

Display Areas, Walkways & doors:

Approximately 75 % of first time customers remember a stores entrance, which

provides the first and last view of the stores interior. well designed entrance is

inviting to the customers and thats what pantaloons provides.

Pantaloons stores have very attractive display areas, in which they put the dummies,

accessories & all. They have a broad walkway & doorways.

Also there are small screens put up at various corners which are most visible, and

which they show case ads of their own as well as other brands available there. Here

each rack are placed in such a way so that consumers can easily take their wanted

products. Pantaloons have their own in house brands in Apparel as well as different

sections.

Pantaloons visual merchandising is creative, innovative and outstanding which can be

seen from its own in house private brands such as John Miller. All the merchandise

are placed at both 360 degree and 180 degrees. The new launched products are

showed by prominent color back ground. Window display is highly interactive for

impulsive buyer.

Visual merchandising:

Pantaloons have applied the concept of category management in its day-to-day

merchandising function as against the traditional brand management merchandising

practice followed by most retailers. Category managers look at sales and margins of

each brand in a category. The whole idea of category management is to create

products across length and breadth of a category at different price points, fabrics,

design, shape, seasons, color and size.


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They are characterized by a broad variety, deep assortment. The Category manager

develop a merchandising strategy for the category taking into consideration customer

profile, classification, resource structure, vendors, fashion trends, items and price

points. The category manager visit stores regularly to check assortments of

merchandise displays, stock levels and old season merchandise, consult with team

leaders and sales people on problems and suggestions. Although no concrete

information was provided with respect to the ways of forecasting the sales and

inventory planning, it was highlighted that a buffer stock of approximately 10-12% of

the total stock is maintained in the store.

One can come across campaign graphics in the store with merchandise places near

them. Mannequins are displayed with accessories to generate impulse purchases. Spot

lights are also focused on the visual merchandise so as to gain the attention of the

customers.

Pantaloon focuses on the latest fashion apparels. No rack is kept empty as it may

create a negative impression in the minds of the customers. E.g. Concerning the T

shirts department (especially in case of UMM Brand), one t shirt of a particular color

or design is displayed, while next to it, on a shelf the same T shirt but with different

colors is displayed.

Packaging:

The Products purchased by the Customers are packed in green colored Recyclable

Plastic Bags. The bag is sealed with a tape bearing a statement Thank you for

shopping ant Pantaloons on it.

Assortment and Variety:

Pantaloons typically fall in the High Assortment High Variety quadrant. Although

the assortment and variety in each of the categories is high, depth is emphasized upon

in case of core merchandise categories such as mens formal wear, mens casuals and

sportswear. Conversely, the typical fashion apparels and accessories are dominant on

the Width front.


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SWOT analysis:

Strength:

Brand equity and early mover advantage; Entrepreneur led, professionally managed

by an experienced team; Project execution and operations capabilities; Vast range oflifestyle and value retail products and services; Strong distribution and logistics

network and supply chain; strong distribution and logistics network, with our 21

distribution centers covering; and Large base of customers and Strong focus on

systems and processes; Retailing is a "technology-intensive" industry. It is technology

that will help the organized retailers to score over the unorganized retailers.

Successful organized retailers today work closely with their vendors to predict

consumer demand, shorten lead times, reduce inventory holding and ultimately save

cost. Example: Wal-Mart pioneered the concept of building competitive advantage

through distribution & information systems in the retailing industry. They introduced

two innovative logistics techniques, cross-docking and EDI (electronic data

interchange). On an average a super market stocks up to 5000 SKU's against a few

hundred stocked with an average unorganized retailer. It is the main sponsor in

Femina Miss India. Strong management team Brand recognition and reputation and

Diversity and variety in products offered on the web (foot wear, apparel, sporting

equipment etc.) Strong control over its own distribution channel No bad reputation

like child labor or environment pollution

Weakness:

Weaknesses found can be the opportunities of improvements. The No of outlets

available in the locations of pantaloons are very low. It does not have a strong

presence everywhere. Promotional Cost Vs Revenue Less Conversion level: Despite

high footfalls, the conversion ratio has been very low in the retail outlets in a mall as

compared to the standalone counter parts. It is seen that actual conversions of footfall

into sales for a mall outlet is approximately 20-25%. On the other hand, a high street

store of retail chain has an average conversion of about 50-60%. As a result, a stand-

alone store has a ROI (return on investment) of 25-30%; in contrast the retail majors

are experiencing a ROI of 8-10%. Customer Loyalty: Retail chains are yet to settle


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down with the proper merchandise mix for the mall outlets. Since the stand-alone

outlets were established long time back, so they have stabilized in terms of footfalls &

merchandise mix and thus have a higher customer loyalty base. High prices in some

products E-retailing is limited limited variety of products available online direct sale

to consumers is creating conflicts with its own resellers online customer service not

"helpful" or easy to find.

Opportunity:

the Indian middle class is already 30 Crore & is projected to grow to over 60 Crore by

2010 making India one of the largest consumer markets of the world. The IMAGES-

KSA projections indicate that by 2015, India will have over 55 Crore people under the

age of 20 - reflecting the enormous opportunities possible in the kids and teens

retailing segment. Organized retail is only 3% of the total retailing market in India. It

is estimated to grow at the rate of 25-30% p.a. and reach INR 1, 00,000 Crore by

2010. Percolating down- In India it has been found out that the top 6 cities contribute

for 66% of total organized retailing. While the metros have already been exploited, the

focus has now been shifted towards the tier-II cities. The 'retail boom', 85% of which

has so far been concentrated in the metros is beginning to percolate down to these

smaller cities and towns. The contribution of these tier-II cities to total organizedretailing sales is expected to grow to 20-25%.

Rural Retailing: India's huge rural population has caught the eye of the retailers

looking for new areas of growth. ITC launched India's first rural mall "Chaupal Saga"

offering a diverse range of products from FMCG to electronic goods to automobiles,

attempting to provide farmers a one-stop destination for all their needs." Hariyali

Bazar" is started by DCM Sriram group which provides farm related inputs &

services. The Godrej group has launched the concept of 'agri-stores' named "Adhaar"

which offers agricultural products such as fertilizers & animal feed along with the

required knowledge for effective use of the same to the farmers. Pepsi on the other

hand is experimenting with the farmers of Punjab for growing the right quality of

tomato for its tomato purees & pastes.


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Collaborate with other online retailers to offer its products Possibility of outsourcing

the web development and e-commerce to a third party developer new avenues for

opening of outlets. And Increase the promotional activities.

Threats:

Increase in the Price of Raw materials Pantaloon strong reputation in the apparel

industry Identify the Threats - competitors activities More number of outlets of

competitors available in the surrounding If the unorganized retailers are put together,

they are parallel to a large supermarket with no or little overheads, high degree of

flexibility in merchandise, display, prices and turnover. Shopping Culture: Shopping

culture has not developed in India as yet. Even now malls are just a place to hang

around with family and friends and largely confined to window-shopping.

Competition within vicinity:

Pantaloons is mostly located in same place as its competitors. Like in Baroda and even

in Pune is in a mall so its very much nearby its competitors. Its major competitors are

Westside, Globus, and central.

Marquees:

A special type of sign is used to display the name of the store. It is used to announce a

change in season, sale, a special event or a promotion.

Promotion Strategy:

Hoardings:

Pantaloon puts its hoarding at prime locations, featuring the upcoming Fashion events

or its brand ambassadors who are generally eminent celebrity.

Category manager plans promotions / brand or product building schemes. The

category manager identifies slow movers and also disposal plan for the same.


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Technology:

IT System:

IT system at Pantaloon stores is fully centralized; the report of daily sales is being

reported to head office in Germany. Pantaloon Retail selected the entire suite of

Connected Retailer solutions to take them into the future of retailing. They purchased

Connected Retailer Store, Merchandising, Planning, Sales Analytics, and CRM. At the

core of their systems is the Connected Retailer Merchandising Solution, which

streamlines operations, unifies asset management, and helps retailers learn the truth

about their business. This powerful retail enterprise solution features an open-

architecture design that provides unprecedented flexibility, scalability, power, and

control merchandisings centralized transactional database and support tools enable

retailers to make and execute better decisions based on accurate, current, and shared

information. By using consistent data to guide all processes, the solution automatically

synchronizes and integrates all key functions, including planning, ordering, pricing,

flow, sales, margins, and inventory management Connected Retailer.

Bar Coding and Scanners:

Point of sale systems use scanners and bar coding to identify an item, use pre-stored

data to calculate the cost and generate the total bill for a client.

Payment:

Payment through credit cards has become quite widespread and this enables a fast and

easy payment process.

CRM Systems:

Data warehousing & mining technologies offer consumer data and apply it to

business. This, along with the various available CRM (Customer Relationship

Management) Systems, allows the study of the buying behavior of consumers in detail

and grows the value of individual consumers to their businesses. SAP implementation

is not a single phase process. The project was divided into three phases.


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The first phase involved blueprinting existing processes and mapping them to the

desired state. In this phase, the entire project team worked on current processes within

the structure of the organization, analyzed and drafted them. This blueprint was later

used in the formation of new states of the solution. Since the SAP would combine all

the processes, each and every one of these had to be evaluated.

In the second phase, the SAP platform was developed with the help of Nova softs

template which was predefined by SAP after evaluation of Pantaloons needs and

expertise in retail solutions.

The last phase in this project was for stores to switch over to the new system and for

current data to be ported. Before the SAP implementation, all the data was

unorganized. This data had to be migrated to the new SAP application.

Maintenance & Hardware:

This application is currently being used by around 1,200 employees across the

organization. For maintaining this implementation and its related applications,

Pantaloon has an in-house team and it has outsourced ABAP resources. They are also

in the process of setting up a SAP CompetencyCentre. The system runs on a HP

Superdome server on HP UNIX 11i and the database is from Oracle. The cost of this

project was about $10 million.

Future projects :

After the successful implementation of SAP for its retail chain, Pantaloon plans to go

ahead with IT projects such as implementation of WMS with RFID, Customer

Intelligence and CRM. Inventory and Promotions Optimization will be pursued later

this year. More than eight years after it forayed into the retail business, PantaloonRetail decided to implement SAP to keep itself competitive in the rapidly growing

Indian retail market.


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Conclusion and recommendations:

Pantaloons are the best bet in retail. The store has been well maintained in accordance

with the latest demands of the consumers. However it still needs to focus on several

parameters which are posing hindrances towards its growth so that the store can retain

its current Numerous Uno position in the lifestyle segment. The organization must

strive for the development of new formats to facilitate a better shopping environment

for its customers. It can be undoubtedly stated the company has well planned retail

strategies currently but these must be updated with the continuously changing

environment so that it can sustain the competitive advantage.


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Bibliography:

www.pantaloonretail.in/companyinfo

www.wikipedia.org/wiki/Pantaloon_Retail_India.

www.business-standard.com/retail/pantaloon .

RM - pantaloon

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