A Case On Indian Retail Commerce Essay

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The Indian retail format is highly fragmented with 96% of its business being run by about twelve million retail outlets in the unorganized sector , like the traditional family run Kirana stores, the organized retail in the few years had made an impressive appearance mostly in the metros, cities and towns across the India ; as seen in sprawling shopping centers ,multi storeyed malls and huge complexes that offer shopping experience ,entertainment, food and many more things under one roof.

Indian retailing market compromises of both the organized and the unorganized retail formats, India's retail market is estimated to be worth USD 350billion.

Organized retail is estimated at USD8 billion, organized retail is growing at over 30%on yearly basis.

Of India's (12) million retail outlets , almost 80% are operated by the small family businesses using household labor.

The retail industry represents 13% of GDP and accounts for 6% of the India's workforce Burgeoning growth rates in the retail industry are attributed to:

· Growth in India's economy,

· Changing consumption and expenditure patterns,

· Rising incomes

INDIAN SPORTS GOODS INDUSTRY

The Indian Sports Goods Industry is nearly a century old and has flourished due to the skills of its workforce. Being labor-intensive in nature, the Indian sports goods industry provides employment to more than 5,00,000 people .The sports and leisure goods retail market in India was valued at US$ 17.7 billion for 2007-2008. The market grew at the rate of 18 per cent over 2006-2007 in value terms, primarily due to outlet expansions by industry players. The nucleus of the industry in India is in and around the states of Punjab and Uttar Pradesh. Jalandhar and Meerut together account for nearly 81.8 per cent of total domestic production with more than 3,000 manufacturing units and 130 exporters present in these two towns. About 60 per cent of the sports goods manufactured in Jalandhar are different kinds of inflatable balls and provide direct employment to more than thousands of workers

Sports Wear Market in India

With rapid economic growth, huge population base, rising income levels, changing lifestyle and consumer preferences, India has witnessed tremendous growth in its sportswear industry over the past few years. The country has been exploiting its favorable demographics, which make it one of the most attractive destinations for both domestic and international sportswear players to cash on the highly lucrative market. As a result, all the international players, including Nike, Adidas and Reebok, are striving hard to grab a share of the money-spinning market. “Sports Wear Market in India” anticipates the current size of the Indian sportswear industry worth over INR 355 Billion, which is expected to grow at a CAGR of around 45% between 2010 and 2012. The current market estimates and future projections are entirely based on the set of feasible market trends and Indian demographics, which take into consideration consumer behavior and spending patterns that may affect growth of the sportswear industry.

The report has studied the Indian sportswear market by segmenting it into various subsections - sports footwear and sports apparel, rural/urban divide and gender-wise demand projections. Our extensive research on this industry has found that the current sportswear market is dominated by the sports apparel sector, but future growth will be driven by the sports footwear segment.

Our research also elaborates the fact that there remains a vast difference in the buying habits and purchase decision making of Indian consumers if we segment them on the basis of urban/rural divide. A similar change in the consumer behavior and buying patterns also hold true in case of how the industry players are targeting the men or women sportswear segment. All such scenarios have been thoroughly covered in the report.

“Sports Wear Market in India” provides comprehensive information and rational analysis of the sportswear market in India. It gives an insight into the current market trends together with future projections considering all the macroeconomic and other factors. Factors which are fueling growth in the Indian sportswear market have been discussed in detail along with the challenges that could obstruct smooth running of the industry. Besides, the report also offers rational analysis of key sportswear companies in the country

Playwell sports

We understand u, we care for u

Why sportswear retail?

India is one of the fastest developing countries in the world. The economic condition of people is improving day by day and the consumer behavior is shifting very rapidly. The consumer is becoming more and more brand conscious. The Indian youth starts doing a job in early twenties and firmly believes in work-life balance this has resulted in fast spreading of gymnasiums and health clubs. The demographics are changing and baby boomers are in retiring phase. All these factors are favorable to increase the demand of quality goods in the Indian market. India is well known for manufacturing of sports equipments all over the world, but most of production is exported to developed countries for there is more demand of sports equipments in developed countries as compared to developing countries. India cricket team is fast becoming the world power in terms of performance more and more people like to see Tendulkars' Dhoni's in their kids as compared to the scenario a decade ago. India is doing well in other sports as well so there is huge opportunity in this sector

Retail store name: The name of our retail store is “playwell”.

Ownership: is the state or fact of exclusive rights and control over property.

Though there are various options available to us regarding the ownership like

Ø Independent

Ø Partnership

Ø Corporate

Ø Franchisee

We will run our business on the partnership basis. We are two partners in this business. By having a partnership the power and authority will not get diluted.

VARIETIES:-

Regarding the varieties we are going to have lot of options in this section. When we see the retail store from various points of views, we are having many varieties of national brands of sports equipment and sportswear for our store like

1. Addidas

2. Rebbok

3. Slazenger

4. Jonex

5. spartan

6. Nike

7. Dick's

Further we will introduce our in-house brand under the name we will sell high quality apparels, footwear, cricket bats , hockey sticks, etc. the manufacturing of these products will be outsourced to those manufacturing units which manufacture for national brands like Adidas, Nike, Puma, Slazenger, jonex etc.

ASSORTMENTS:-

We have deep assortment of merchandise in our store. The merchandise mix includes all the apparel for all kind of sports and all the equipment needed in cricket, hockey and tennis also selected equipments will be made available in our stores.

SERVICES:-

We think customer relationships, not just customer service. We provide those better services to our valuable customer which generally other retail does not provide to their customer. So the services which we provide to our customer are; Credit purchase, gift wrap, delivery service, seating areas, in-store events or after hours shopping central air - conditioning, beautiful rest rooms, , large car parking, in - store café, and other services such as, exchange services.

MULTI CHANNEL DECISIONS

Establishing more than one way for customers to shop for their products, is a method for us to attempt to grow monthly revenues and gain new customers. Currently; we are having only the store as a channel and In future for implementing multi channel we will sell the products through mail orders, catalogs as well as we through online i.e. through internet.

We will start using the Internet in an attempt to improve the efficiency and effectiveness of marketing, provide customers access to information about products and their availability, build brand value, and to offer customers a convenient medium to make purchases online. Our main focus to sell our products through online will be because online sportswear retailing is a well established sales channel in most parts of our country.; Comparing the data of previous years about 20% sale of sportswear (dominated by footwear) was made through online facilities. So we will try to use mostly sell our products through online in future because it is one of the cheapest or best way to sell product which helps lot to the consumers or retailer as well.

The retail business is a competitive field; Before starting our own store we have to understand the dynamics of this industry and the factors affecting demand for shoes.
Operational Plan

Format of retail store

The retail format for sporting goods would be like something which can be easily accessible and approachable to the customers. It is a kind of specialty store which would be located near to city. Specialty stores are those stores which provide limited number of products at high prices. But we will provide sportswear at more reasonable prices.

In this store we are having different sections for different merchandise. There are sections within the store which are having specific merchandise. There is footwear section, apparel section and equipment section. These sections are further divided according to the type of store they are used in. There is cricket gallery, futbol gallery, hockey gallery, “tennis court” and there are physical fitness section including rowing machines, treading mills, dumbbells, etc. This store will be situated at the location which can be easily approached by the potential customers

Target market:

Our target markets are teens, young adults, health and fitness enthusiasts, cricketers, footballers, shutters, hockey player, baby boomers who go for morning walks and are health cautious. School going kids and today young, energetic woman

Location:

We evaluated various location options on the basis of access to target market, age income and life style, transportation costs, availability of retail space etc. After the evaluation of these options17,sector Chandigarh. This location is easily accessible from Jalandhar , which are manufacturing hubs of sportswear. There are various advantages of this location. Associated with advantage, comes some disadvantages as well. These advantages and disadvantages are tabulated below.

Advantages Disadvantages

Easy access to target market

High rentals

More upper class people

Presence of competitors

Large number of schools

Warehouse charges

Low transportation costs

Traffic jams

High dispensable income

High operational costs

For our retail operations will take retail space on lease basis. The lease will be on the basis of fixed-rate lease. With the growth of our business we will explore nearby markets as well. we are planning to open the retail chain under the name “playwell”.

SUPPLY CHAIN

Since to run a store effectively, Logistics and Supply chain should be maintained properly .An utmost care should be taken while dealing with the suppliers as the future of any business depends on them. .we are directly going to approach the manufacturers directly, so that process will take less time and we satisfy the customer very well. By using this supply chain we maintain lower inventories than traditional retail.

The suppliers from which we are going to get our inventory are :

1. Addidas

2. Slazenger

3. Rebbok

4. Jonex

5. Nike

6. Dick's

7. Local manufacturers

8. Kashmir sports equipment association

CUSTOMER BUYING BEHAVIOUR:-

The consumer buying is a complex process as many internal and external factors have an impact on the buying decisions of the consumer.

Before purchasing any product or service a customer goes through many processes like

1. Problem/Need Recognition

Need is the first step towards a buying process as it a desire in a customer to buy a product .when a consumer r faces a problem in the absence of any product this generates a need in consumer for that product.

2. Information search

To get his problem solved /to fulfill his need the consumer starts to get information search to help him through their purchase decision. There are various sources of information for every consumer . Sources of information could be family, friends, neighbors who may have the product the consumer having in mind, and alternatively they suggest the consumer about that product

3. Evaluation of different purchase options.

After getting the information about the product the next step- is followed by the evalution of the different brands of the product available in the market . Consumers allocate attribute factors to certain products, almost like a point scoring system which they work out in their mind over which brand to purchase. This means that consumers know what features from the rivals will benefit them and they attach different degrees of importance to each attribute.

4. Purchase decision

Through the evaluation process discussed above consumers will reach their final purchase decision and they reach the final process of going through the purchase action e.g. The process of going to the shop to buy the product,- which for some consumers can be as just as rewarding as actually purchasing the product. Purchase of the product can either be through the store, the web, or over the phone.

Post Purchase Behavior

Post purchase behavior is a common trait amongst purchasers of products. Manufacturers of products clearly want recent consumers to feel proud of their purchase; it is therefore just as important for manufacturers to advertise -for the sake of their recent purchaser so consumers feel comfortable that they own a product from a strong and reputable organization. This limits post purchase behavior. i.e. they feel reassured that they own the latest advertised product.

Factors Affecting Demand for Shoes

As a retailer, the first rule is to understand the triggers for purchasing our product. Knowing the factors -affecting demand for shoes enables us to respond more quickly to the needs of the market.

Below are the common factors affecting demand for sportswear:

Price: Indian consumers are extremely price conscious and value driven. The essence of consumers demand response is to buy less at high prices and more at lower prices. Consumers are generally price-conscious when they are going to buy anything. But we are targeting to middle & high class customers in which generally come youth. So we offer fewer prices for our products but not so less..

Demographics: The characteristics and size of the population also impacts the demand for sportswear. Heavily populated areas like cities have greater demands for sportswear relative to smaller towns.

The demographics of the area surrounding the store also impact the selection of the merchandise.In the middle of the busy downtown area or business section of a town; it is found national brands shoes are in greater demand relative to other brands

Changes in Disposable Income. Income dictates the choice and frequency of purchase of sportswear. A family with increasing incomes may find itself having more money available for the purchase of sports and leisure equipments. A family with shrinking income,- however, may find sportswear purchase at the bottom of their priority.

For a high-income area, one can expect a strong demand for brand names, particularly high-end types of sportswear, equipment as well as apparels and shoes. Low-income areas are more likely to be price-conscious: our customers will demand good quality products at affordable prices.

Weather: Weather is a major determinant in the selection and choices of sportswear. In the summer months indoor games are preferred more as compared to outdoor games due to scorching heat of the sun. Knickers, Sandoz, will find greater demand in these months. In the autumn footballers will visit to our shop in large numbers while as cricket is played almost throughout the year. while boots are in great demand during the colder months our inventory needs to take into account the seasons in buying our inventory.

Target market: the target market specifically their age and buying power also shapes the look, feel, styles and product offerings of ones sports store. Baby boomers as well as older members of the Generation Y- typically have greater wealth, and can therefore, afford to buy more expensive apparel and shoes. Today s younger generations including teenagers have greater spending money (e.g. parent's credit cards, higher allowances) and can afford to shop shoes for themselves.

Economic Factors. The industry typically follows the volatility of economic swings and downturns. A surging economy often leads to good sales, while sales may take a nosedive during economic recessions and bust.

Human Resource:

Human resource management can be the basis of sustainable competitive advantage for three reasons; first labour costs account for a significant percentage of retailer's expenses, thus, effective management can produce a cost advantage. Second, the experience that most customers have with a retailer is determined by the activities of employees who select merchandise; provide information and assistance and stock display and shelves. Thus, employees can play a major role in differentiating the retailer's offering from its competitors. Third, these potential advantages are difficult for competitors to duplicate.

Organisation structure

Since ours is a small organisation as compared to other retailers present in the market, initially we will have limited number of employees. I will be working as owner-manager and my partner will look after accounting department. We will together perform the roles of merchandise managers for some time and after some time will hire services of a professional in this field. Human resource expertise will be given the duties to look after store management and human resource management. I will look after the distribution department. Twelve sales man and 2 helpers will be employed initially on the contractual basis.

Fig: Organization structure

Designation

Allotted to

Owner manager

Younis Hamid (me )

Accountant

Yasir Hamid (partner)

Merchandise manger

Yasir Hamid

Advertising manager

Younis hamid

Store manager

To be employed

Sales people

12 numbers, to be employed

Helpers

2, to be employed

Motivating employees:

A critical task of human resource management is to motivate employees to work towards achieving the firm's goal and implementing its strategies. We will use two methods to motivate our employees' activities

1. Incentives

2. Organization culture.
Marketing Plan

RETAIL MARKETING STRATEGY

A retail strategy is a statement identifying retailer's target market, the retail format to meet the need and requirements of the customers of target market and finally to build a sustainable competitive advantage.

Target market:

Our target markets are teens, young adults, health and fitness enthusiasts, cricketers, footballers, shutters, hockey player, baby boomers who go for morning walks and are health cautious. School going kids, today's young, energetic woman.

PENETRATION STRATEGY
PUSH STRATEGY

We are providing the quality sportswear at relatively lower prices than the other local market players (by lowering down the margins) so as to build a strong competitive advantage. There are services provided to consumers along with the products so as to gain their loyalty such as good dedicated staff to handle their queries .there queries will be solved in just one click at website.

Pricing:

As we are not going to introduce any new product in the initially in our retail store, the price of our products will be somewhat predetermined, the only thing in pricing would be that we will lower down the margin as compared to our competitors. This will give us a competitive advantage over our competitors.

We will use mark up method of pricing, for national brands the margin will be mere 5% while 20% margin will be kept on our in-house brand, consisting of quality sportswear and equipment.

PROMOTION AND COMMUNICATION-MIX DECISIONS:-

Promotion decision:-

Promotional mix is a very important aspect of each and every business organization. Our promotional mix will be dominated by sales promotions. As a part of differentiating our product offerings from that of other competitors in the market we will focus on sales promotional tools and personal relations conduct events and promotion campaigns to combine entertainment with shopping. We will sponsor sports events in colleges and schools. We will also distribute free cricket and football kits under our own brand name in the schools and among local area sports clubs. We will also include advertisement in our promotion mix. Advertisement can be in the form of print and electronic media. In electronic media the advertisement will be carried in local television channels and fm radio stations. Print media will include advertisement in local news papers, hoardings, banners, etc. we will also install a large LCD in the front office showing live cricket matches and also some of the India's greatest moments such as Olympic gold medals in hockey and boxing, cricket world cup 1983, t20 world cup 2007 etc. hockey's Surprise Sale and, , Campus Stoppers and Valentine Promotion. As internet also becomes one of the main sources in retailing so we promote our products through internet also.

Ø Festival offers: In this we are going to offer certain discounts as per the price of the product during festivals. The discount rates will be

Up to rs.1000 ……. 5%

Up to rs. 2000……..8%

Above rs.3000……10%

Ø Gift Coupons: will be given to consumers who are going to shop above Rs.3000 at one time.

Ø Scratch cards: will be given to a loyal consumer, it will carry the lucky no. for a tour outside the state for one week.

Communication mix:-

As Consumers are loudly demanding to be able to access relevant information through the channel of their choice, which means that the more channels an organization offers their customers, the better response they will get. So for this we contact consumers is by a combination of channels such as a piece of direct mail, Television home shopping, skill full employees, mobile phone or http://kona.kontera.com/javascript/lib/imgs/grey_loader.gif

with a choice of channels for the response mechanism, or an SMS with an online voucher code, all these possibilities help hone in on our understanding of what makes the customer tick.

FINANCIAL PLAN

Financial system is an integral part of retailer's market strategy. For every organization finance is of utmost importance in other words it acts blood for the organization. The financial decision is taken keeping different things in mind like the starting expenses, the inventory cost, the future extension of the business.

As we are going to run our business on the partnership basis and keeping all these things in mind we have decide to invest Rs.4 crores (2 crores by partners ), for the rest of money we are going to approach the bank.

Financial objective:

Our financial objective is to earn 15% return on the investment. We will collectively work to achieve this financial goal.

Societal objectives;

Our societal objective is to provide the young sports enthusiasts with better and competitive equipments and help young buds to perform well in the field of sports.

Personal objective:

Personal objective is be a renowned name the sports circle of India. This will only happen when our business will expand throughout the country.

Starting expenses:

Since for establishing a business a certain cost is incurred in the initial phase before sale, so our business of retail store will also incur certain starting expenses.An initial cost of one cr. will be incurred on acquiring retail space on rent basis. Monthly rent of 20000 will be paid to the owner all legal formalities will be done with the consent of Delhi high court. These expenses will be incurred on following things.

After acquiring retail space some expense will occur on the store Construction and Design. These expenses are as follows:

Store construction: remodeling (flooring, painting, carpentry, etc.) Interior design and decorating costs

Fixtures and Leasehold Improvements (fire alarms, restroom upgrade, heating, air conditioning, etc.)

Installation costs (lighting, etc)

Displays, showcases, shelves/racks, sales counters and sales registers

Back-office furniture, shelving and fixtures

Type of work

Estimated cost

Store construction: remodeling (flooring, painting, carpentry, etc.) Interior design and decorating costs

5 lac.

Fixtures and Leasehold Improvements (fire alarms, restroom upgrade, heating, air conditioning, etc)

2 lac.

Installation costs (lighting, etc) Displays, showcases, shelves/racks, sales counters and sales registers Back-office furniture, shelving and fixtures .

2 lac.

Occupancy Costs

* Rent

* Utilities and other deposits (telephone, water, electricity/gas, cleaning)

* Insurance (fire, theft, etc.)

* Fees and Permits

* Legal fees -

* Licenses and permits-

* Professional fees -

* Merchant account fees (for accepting and processing credit cards)

Promotion Expenses

* Store signage ,

* Advertising and promotion for launch

* Visuals.

Operating Expenses

* Opening Inventory ,-

* Bags and boxes with store logo .

* Gift wrapping supplies (if gift wrapping is offered)

* Cash (reserves and on hand)

Administrative Costs

* Office Supplies ,

* Sales receipts ,

* Cleaning supplies (window cleaning, trash cans, mop)

* Miscellaneous

Employee Costs

* Salaries and wages,

* Payroll-added costs

Equipment

* Computers, copy machine

* Point of sales systems (Credit card and check processing machines, bar code reader, cash drawer, cash register, POS software, etc.)

* Fax machine

* Security cameras and equipment including fire extinguishers

* Sales floor equipment (baskets, bags, shopping carts, customer seating areas, specialty lighting)

* Mirrors

* Other signs (Exit, restroom and store hours signs)

* Other equipment (drink fountains)

Miscellaneous

* Unplanned expenses

* Miscellaneous fees

*Customer relationship management:

CRM (customer relationship management) is a business philosophy and set of strategies, programs and systems that focuses on identifying and building loyalty with a retailer's most valued customers.

There are four important characteristics that CRM system may offers:

1. First it will track and report every interaction with a customer, describing the customer's purchase, interest or demand. It will report also the changing needs of the customer and the way our business reacts effectively to them.

2. Furthermore, the CRM will be a universal instrument for collecting data about the service requests, order entry, satisfaction and billing.

3. Third, the CRM will be able to measure the performance of the business on the basis of internal benchmarks.

4. Last the CRM will facilitate the working processes by emphasizing on the positive and exclude the negative practices in dealing with our consumers.

As all we know that consumer is the main focus of all kind of business. So our main focus is also to satisfy the consumer very well, so that if consumer wants to purchase again he will prefer to come only in our store. For this we develop CRM programs on time to time basis which will help us to develop good consumers and then converting these consumers into high ltv (life time value) consumer.

We give special services to our ltv customers also like:

1. We give credit purchase facility to our consumer

2. We give special discounts or gifts on time to time to our ltv consumer.

3. We also provide home service to our consumer.

INFORMATION SYSTEM INSTALLATION DECISION

The internet is a powerful tool to keep up with the competition. At Zs footwear store, CRM software and regular promotional emails will be used. Building relationships is done better this way. So, this is one factor which is very important is the technology which in turn has only a supportive role in selling footwear.- Our store is very concerned about technology. Computerization and effective software systems have been implemented to handle the heavy, daily transactions. The company's website which is www. Zs.com is being used to ensure better footwear display and increased customer database. Media and PR agencies will be hired to allow better customer reach.- We have also a privilege cards system (platinum, gold & silver) for our esteemed clients who get regular updates on novelties, promotion and seasonal offers via Sms, email and mailers.

A footwear company faces the task of maintaining, and accounting large number of footwear items in a single store. So most footwear business- owners enquiring about implementing RFID which offers unique possibilities to the challenges facing the footwear industry.

A well designed RFID sportswear solution opens new opportunities into gathering customer trending for sportswear retail business like our store.- A defected piece which is placed poorly will create problems among the thousands of units displayed in the store. RFID can implement a detection system that could register each time a design is being requested over the counter up to the point the sale is completed.

Other than this no other information systems are used in our store because this is a new store opening i.e. in its initial or growing stage. So cannot use many systems which would be expensive for us. And which could decrease our profits as well.

CONCLUSION

India consumer is becoming more and more brand cautious and looks for quality products. Changing life styles of both urban and rural Indian is fast changing. It is more and more following the trend as in developed countries. With the growth of sports culture in the country, the demand of sportswear and sports equipment is always going to grow. The sportswear retail provides huge opportunity so investing in this business will be a profitable venture.

After evaluation of the location options to me Chandigarh is a place popular for shopping especially in sportswear. Also our store is in initial stage so I need to think properly, do research of market and industry before opening and moving further. Our budget is going to be somewhat higher. I need staff has been employed initially because if I gain profits then only I will expand more. At first we will not look for the competitors but to mark a place in the mind of the consumers to make them loyal in the long run. Then store management is also done accordingly as store is large and high finance is available. But one thing is for sure that we would create a friendly, clean, cooperative environment and staff so that customers feel delighted in every visit to our store. They would love to visit us again and will become our loyal customers. And to make brand image is our primary concern and after that is to gain profits.

BIBLIOGRAPHY

www.Powerhomebizz.com/vol136/shoestore

www.Indianretailnews.com

htpp://Learnmarketing .net/con

www.Crm2day.com/highlights/50594.php

www:Highered.mcgraw-hill.com/sites/007301978x/student

htpp://Toostep.com/idea/improving-customer-relations

References through books:

· Retail Management by Levy and weitz

· Retail behavior by deli. Hawkins

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