its about Food and grocery industry in India and how it is struggling to convert unorganised sector to organised

1. Case Study :Penetrating Indian Retail Industry
Highest Quality By,
Largest Variety Vivek Verma
Consistent Professionalism DoMS,IISc
Visually Appealing 1

2. 2
Source: Technopak Advisors Pvt Ltd, Aranca Research

3. Source: Business standard, Business Monitor international (BMI),Winnin
in India’s Retail Sector, PWC, Aranca Research Notes: E – estimate for
2015, FDI – Foreign Direct Investment
3

4. Favorability to Food and Grocery Retail sector in India
4

5. 5

6. NOT STACKED
NOT STACKED
WELL STACKED ITEMS
WELL STACKED ITEMS
200 Sq.Ft. LOCATION
200 Sq.Ft. LOCATION
CLEAN ENVIROINMENT
CLEAN ENVIROINMENT
ONLY DRY ITEMS
ONLY DRY ITEMS
FRESH STOCK
FRESH STOCK
DAILY ITEMS ONLY
DAILY ITEMS ONLY
MORE VARIETY
MORE VARIETY
DIS.ON TOTAL COST
DIS.ON TOTAL COST
TRANSFORMATION LESS PRICE
LESS PRICE
NO PARKING
NO PARKING
PARKING FACILITY
PARKING FACILITY
NO LOYALTY
NO LOYALTY
PROGRAMS LOYALTY
LOYALTY
PROGRAMS
PROGRAMS
PROGRAMS
NO USE OF
NO USE OF
TECHNOLOGY BARCODE SYSTEM
BARCODE SYSTEM
TECHNOLOGY 6

7.  Largest retail destination which is expected to grow to US$ 637
billion by 2015
 It provides highest employment to the people after agriculture
 It is classified majorly into organized and unorganized retail market
 Over Rs.4,00,000 crores of retail market in un organized and
Rs.20,000 crores is organized.
 Reliance fresh, More ,India Bulls, Spencer’s are replacing the kirana
stores
 Retailing has evolved from local merchandising to modern e-tailing
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8. Indian middle class is constitutes 300 million people who are scarce in
spending with low PPP and Indian customers are not so resilient
Mall rental rates are high which is about 4% whereas its operating profit
margin is just 8%
Organized retailers are unable to match up with convenience offered by
traditional retailers.
While tending to expand, their debt equity ratio increasing constantly
High rental, high inventory levels and interest payouts together
squeezed the profit margin of retailers
 Mall culture induces the growth because total mall space availability is
increasing constantly.
 High disposable income in IT/ITeS has increased the standard of living.
 Increasing urbanization.
 Young working population and population of working women
is increasing.
 Easy availability of retail credits. 8

9. As Head of Strategic Marketing Division of UK based F&G
Retailer.
To Improve
Retail Penetration
Footfall
Retail Promotions
Average Spent per visit
Of in-store Customers in Mumbai, Delhi, Chennai, Bangalore,
Kolkata, Pune, Lucknow, Vizag, Ahemdabad
9

10. Strengths Weakness
•Emerging retails formats like malls, •Demographic differences between the regions
hyper/supermarkets and specialty stores which require a regionally adjusted to business.
provide products, services and entertainment at one •Presence of a significant number of strong and
place. well-established players in the sector limits
•Indian consumers have high disposable incomes, markets entry potential.
which translate into high consumption level. •Relatively small domestic market limits growth
•Large number of earning young population. opportunities.
•Growth of real-estate and improvement in •High real estates and distribution costs are the
infrastructures. obstacles for growth of retail in India
•Huge agricultural sector offering an abundance of
raw materials.
Opportunities Threats
•Increasing awareness of consumers about •Economic slowdown is having an adverse
products and services. effect on consumer spending.
•Changing consumers’ requirement and •Rigid government policies and regulations
lifestyles. restrict the entry of new players.
•Innovation for new product development. •Price competitions amongst retailer puts
•Private label has been boosted by economic downward pressure on margins.
downturn.
10

11. 11
Source: DAFF Australia

12. 12

13.  A segmentation based on few demographic parameters for 9 cities.
 For targeting select consumers the above parameters would play a key role.
For e.g. Highest purchasing power(local) is in Bengaluru.
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14. 14

15.  For Targeting consumer based on the clusters discussed above, select a city
and study the various demographic parameters area wise. For e.g. showroom
rent.
 Showroom rent along with average age , disposable income, number of
households and VALS segmentations would help in zeroing in on the select
customers . 15

16.  For an area like Hosur road, with a medium rent and young and medium
population, the primary target customer for this F&G retailer would be
Brand Working Couple
Conscious
Likes mall
High-Medium
culture
Disposable
Income
16

17. Scope for Food & Grocery Retail
 In 2011, ‘Food and Grocery’ accounted for nearly
59.5 per cent of total revenues in the retail sector
in India
 In 2011, 48 per cent of total household income in
India was spent on food and groceries
 Organized Retail Penetration (ORP) in India is
low (5 per cent) compared to other countries
such as the US (85 per cent)
 This indicates strong growth potential for
organized retail in India
 India’s ‘Grocery’ retail segment is the most
attractive in the world
17

18. Challenges for Food & Grocery Retail Marketing, positioning
is the process by which
Demand Side marketers try to create
Penchant for fresh/home-made and value an image or identity in
consciousness the minds of their target
Diversity of tastes and preferences market for
Willingness to travel its product, brand, or
organization.
Supply Side
Sourcing base and efficiency
Real estate availability and cost
Manpower availability
Emerging trends in Food and Grocery retailing
 Big becoming bigger
 Rise of organic foods and health and
wellness segment
 Increasing focus on private labels
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19. Successful mix
19

20. Ground-up Development
What is Service Marketing Mix?
Joint Venture?
Create a winning team
Versatile Retailing
Multiple Formats,
Multiple brands- A
comprehensive retail mix
 Building scalable model that is replicable across regions and extending models to
smaller cities and towns
 Passing on benefits of lower costs to consumers offering better value proposition
than what neighborhood stores offer.
 Home delivery to match the customer convenience offered by the unorganized
segment
 Better shopping environment benchmarked to international standard
 Focus on private label particularly for staple foods
 Loyalty Programs
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21. Distance to Nearest Market Analysis
It is important to consider that price is not the only means by which retail outlets compete- but
Consumers consider a range of factors when purchasing food and grocery products. These include:
price, store location, product range and quality, queuing time, opening hours and access to car
parking.
For stores such as supermarkets, price plays an important part in this mix.
Customer intimacy
Successful retailers focus on the importance of intimacy with the customer
Investments in display, storage and technology are made with a strong sense of purpose to enhance
the durability of the connection with the customer.
Category management
-To generate shopper enthusiasm for a product category.
-mine the overall retail sales value potential of the product line by effective use of shelf space,
promotional support and price competition where necessary.
Points of difference
Retailers compete on many planes for the loyalty of the consumer. Whilst ‘sales’, ‘specials’ and
‘lowest prices across the store’ are common marketing tools used by all retailers, each also strives
for a non-price point of difference based on a combination of service, quality goods, convenience,
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range and so on.

22. Leverage
Innovation on Retail format - Players can innovate on formats in different ways:
 by targeting specific customer segments and serving their needs better e.g.
working women, single office goers, etc
 by changing the product mix e.g. entirely private label stores, exclusively fresh
produce stores
 by offering new forms of convenience and wider range to the customer e.g. Tele-retail and
internet retail
Technological Innovations - Employing cutting edge technology in retail could prove to
be the source of competitive advantage for retailers.
 Self-scan checkouts have the potential of both reducing check-out time manpower
cost for the retailer
Using RFID tags can help track and reduce in-store inventory management costs
and give retailers better insights into customer in-store movement patterns
Web-enabled e-SCM systems, e-Procurement systems and
warehouse management systems.
 Use of cutting edge analytics can bring insights into customer buying behavior
with implications on store layout, pricing and promotions. 22

23. KIOSKS SABZI MANDI KIRANA SHOP
Existing Players
Food Bazaar
Metro Cash and
Carry
Reliance Fresh
More
Namdhari’s
Nilgiri’s
Spencer’s
STREET VENDORS
Foodworld
Subiksha
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Other infinitely many local players(98%)

24. Based on the cluster and segmentation and targeted group
Newspaper
TV
Banners
Electronic Ads
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25. 76 % / 8 sec.

26. 76% OF BRAND PURCHASE DECISIONS ARE MADE
IN FRONT OF THE SHELF IN APROX. 8 SEC.
Source:Neilen Survey
KEEP THE SHELF IN ORDER DECREASE OUT OF STOCK
SITUATIONS CUT COSTS – INCREASE SPACE SELL MORE
EFFICIENCY
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27. 27
Source:http://nptel.iitm.ac.in/courses/110105029/pdf%20sahany/Module.5%20-12.pdf

28.  It helps in forecasting consumer behavior which influenced the decision
making process and hence leads to increase in purchase decision.
 It helps to find loyalty of customer towards a specific product so that
they can buy same product again n again and increase the sell
 It helped to know how consumers’ process information and where
marketing money can be splurged more.
 The model is user friendly and is one of the few models which has been
used most commonly and tested in depth.
 Limitation lies in the fact that the various constructs cannot be
realistically tested; some of the constructs are inadequately defined, and
thus do not lend to reliable measurements
28

29. 29
Source:http://nptel.iitm.ac.in/courses/110105029/pdf%20sahany/Module.5%20-12.pdf

30.  Tries to integrate the body of knowledge of customer and enhance it
further
 Focus on the conscious decision-making behavior of consumers,
where the act of purchase is entirely based on consumer buying
decision is made after entering the shop and finally to shelf.
 The interference of firm in this model helped customer to know the
product and compare the brand and finally decide to buy.
 It contributed the step by step "funnel approach" which views
consumers’ movement from general product knowledge toward
specific brand knowledge and from a passive position to an active state
which is motivated toward a particular brand and comparing at shelf
with other brands.
 Limitations in the sense that the model proposes assumptions,
boundaries and constraints that need not be realistic.
 It has been argued that attitude, motivation and experience may not
occur in the same sequence.
 The mathematical testing of the model and its validity are questionable
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31. 31
Source:http://nptel.iitm.ac.in/courses/110105029/pdf%20sahany/Module.5%20-12.pdf

32.  The model incorporates many constructs that impact consumer
decision making by exposure to various brands of same product,
which helps him to make decision while moving around the shelf.
 It tries to explain clearly the interrelationships between stages in the
decision process and the finally coming to a single solution of
selecting a product. They attempted to relate belief-attitude-
intention.
 An attempt has been made to make customer to exposure to many
brands of same product and including the price comparison.
 However, the model fails to adequately explain as to how each of
these influences consumer decision making.
 Critics argue that there are too many variables;
-these have not been defined; the model is vague and complex; and
the validity of the model has been questionable
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33.  Gaining meaningful insight and actionable business intelligence at reasonable
costs
 It is now practical to develop extremely cost-effective and highly targeted
marketing campaigns
 Businesses now focus on knowing their customers as real people with real
needs and preferences, leading to better customer satisfaction and hence
attraction
 Behavior is a stable element on which to base a website as it evolves slowly
over time
 Businesses stop throwing away money spent on marketing to the wrong
customers as they can now known who their customers are and what they
desire
 Best point of contact for credible dialogue can be identified
 Loyal customers cost less than acquiring new ones and are a great source of
information to create new and innovative services
 By knowing their customers, a business can be assured of the fact that they
will always be kept ahead of their competition
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34. • VALS – A trademark psychographic market segmentation
methodology developed at SRI International. Stands for Values
Attitudes and Lifestyles.
• The main dimensions of the VALS framework are primary motivation
(the horizontal dimension) and resources (the vertical dimension).
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Image Source : SRI International

35.  Differs from other segments as F&V are perishable items.
 Segmentation based on income and purchasing power will not reflect true
nature of consumer preference.
 Underlying principle - even though a blue collar and a white collar worker
may earn the same level of income, differences of social class will compel
them to spend the income in different ways
 Owing to the heterogeneous nature of Indian consumer, VAL segmentation
methodology is highly relevant .
 VAL segmentation would offer the retailer detailed knowledge about
consumer preference and his/her taste.
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36. VALS and cluster analysis of consumer in 5 metropolises Mumbai, Kolkata,
Delhi,Chennai and Bangalore.
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Source : Journal of Asia Pacific Economy,Vol 13

37. 1. Market Attractiveness
a. Investment Potential (Global Retail Development Index)
India’s retail market attractiveness amongst the highest in the world and
organized retail is expected to by 15% 37

38. 1. Market Attractiveness
b. Foreign Direct Investments
Till 2008 the scenario was grim for FDI but situation for single brand retail
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improved post 2012. The issue still remain for multi-brand retail.

39. 2. Competitive Strength
a. Inducing Customer loyalty – Shopper Stop loyalty and credit card.
b. Promoting own brand – PRIL’s strategy to promote its own brand and
earn increased margin.
c. Shop in shop approach – Future group adopting this strategy to increase
revenue per sq ft.
d. E-tailing : Online retailing by offering products at lower cost due to
absence of middlemen and negligible stock holding cost.
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40. 3. Value added structures, people and organization.
a. Structure : With increased pressure and competitiveness (FDI), the retail industry have
focused on innovations and technology to optimize resources. Factors like these have driven
retailers to refocus on supply chain optimization and use new techniques like marketing
analytics to gain competitive advantage.
b. Organization : Reliance’s Sahakari Bhandar - With a strong brand name, well
trained staff and focus on good service, good products and value for money , the company’s
wing has been doing well even during market turbulence. With them, farmers also benefitted
by removal of middlemen.
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41. 1. The Indian retail industry although affected by the economic downturn is in its
growth stage and will be a huge attractive market for retail investors.
2. The organized sector in retail is set to grow by 15% over the next 8-10 years
which would mean increase in numbers of super markets/hypermarkets and
malls.
3. For any retailer, understanding the customer needs, behaviors and buying
patterns are key parameters to be studied before investing into any marketing
activities
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