Case Studies on Retail Sectors: Top 3 Case Studies | India

Here is a compilation of top three case studies on retail sectors in India.

1. Case Study on Domino’s Pizza:

Branded pizza market stands at about Rs.275-325 crore. We have close to 60% share of the delivery market. But if you look at the total market, that is delivery plus dining plus takeaway; we would have a 40 per cent market share” — Rakshit Hargave, Domino’s Pizza India Ltd.

Just a decade ago, it might have been hard to imagine that the take-out food of choice for millions of Indians would be a baked food of an Italian origin. Post-globalization in India, the organized food service industry has finally made its mark. The total out-of-home consumption is estimated at Rs.40,000 crore, while the organized food retail services market is estimated at Rs.3,000 crore.

The pizza industry is about Rs.450 crore, growing on par with the fast food industry at a healthy rate of 25-30%. The category is still in the growth stage and the country can take about 500 more stores.

A booming economy, coupled with a growing affluent middle class, has significantly increased the purchasing power of people. The lifestyle habits have shifted from austerity to self-indulgence. These are some of the several changes in the demographic structure of the country that are changing several trends, food being only one of them.

Domino’s Pizza Inc. is an international fast food pizza delivery corporation headquartered just outside Ann Arbor, Michigan, United States. Domino’s Pizza began in 1960 when Tom Monaghan and his brother James bought “Dominick’s Pizza”, a small pizzeria in Michigan. The deal was secured by a $75 down payment and the brothers borrowed $500 to pay for the store.

Eight months later, James quit the partnership and traded half of his business to Tom for a used Volkswagen Beetle. With Tom as the sole owner of the company, Dominick’s Pizza became Domino’s Pizza. As of 2006, it had 8,000 corporate and franchised stores in more than 54 countries. It was the second-largest pizza chain in the United States.

Until 1996, pizza in India was synonymous to only a bready dough base slathered with some ketchup. Domino’s and Pizza Hut, the two big US fast food chains entered India in 1996. Each claimed it had the original recipe as the Italians first wrote it and tried desperately to create brand loyalty.

Smokin Joe’s was the first chain to open in Mumbai, before Pizza Hut and Domino’s set shop. Domino’s and Pizza Hut tried to grab as large a slice of the pizza pie as possible. While Pizza Hut relied on its USP of “dining experience”, Domino’s USP was a 30-minute delivery frame. To penetrate the market, both the players redefined their recipes to suit the Indian tastes.

Domino’s grew from one outlet in 1996 through a franchise agreement with Vam Bhartia Corp. Domino’s Pizza India Ltd. was incorporated in March 1995 as the master franchisee for India and Nepal of Domino’s Pizza International Inc. of the US.

Moreover, the company holds the master franchise rights for Sri Lanka and Bangladesh through its wholly owned subsidiary. Mr. Shyam S. Bhartia and Mr. Hari S. Bhartia of the Jubilant Organosys Group were the promoters of the company.

Today Domino’s has grown from one outlet to 205 outlets in 39 cities. Pizza Hut too, which began with just a single outlet in 1996 had 137 outlets in 2008. Initially, the company operated company-owned outlets. However, keeping in line with its worldwide policy where Pizza Hut was gradually making a shift from company-owned restaurants to franchisee-owned restaurants, Pizza Hut made the shift in India too.

Pizza Hut had four company-owned franchisees – Universal Restaurants Pvt. Ltd. (Delhi, Uttar Pradesh and Rajasthan), Specialty Restaurants Pvt. Ltd. (Punjab), Dolsel Corporation (Gujarat, Karnataka and Andhra Pradesh), Pizzeria Fast Food Pvt. Ltd. (Pune and Tamilnadu) and Wybridge Holdings (Mumbai).

Localizing the Menu by Domino’s Pizza:

Domino’s constantly strives to develop products that suit the tastes of its customers, thereby bringing out the Wow effect (the feel good factor). It’s strongly believes in the strategy of ‘Think local and act regional’. Thus, time and again Domino’s has been innovating toppings suitable to the taste buds of the local populace and these have been very well accepted by the Indian market.

Since its entry into India, Domino’s introduced nine new toppings for Pizzas to cater to the local tastes. Different flavors were introduced in different parts of India. Advani said, “The Indian palate is very definitive — people are extremely finicky and choosy, not too willing to experiment. Food tastes vary from region to region”.

To capture the market, we had to localize flavors. Thus, Deluxe Chicken with Mustard Sauce’ and Sardines were confined to the East, mutton ghongura and chicken chettinad to the South and chicken pudina to Mumbai. Butter chicken, makhani paneer and the chatpata chana Masala were confined to the North.

The company has also announced a new butter flavour with special herbs ‘Sicilian Wheat Treat Pizza’. It’s for the first time wheat is being used in an Indian pizzeria chain, according to Domino’s. However, atta might be used as a bait for the health conscious elsewhere. At Domino’s they are introducing it for its other virtues, primarily the familiarity of the flour and the preference that Indians have for the taste.

The chain is also likely to spend about Rs.20-25 crore this year on advertising (80% of which will be reserved for TV commercials), of which Rs. five crore is to be spent on selling the new Sicilian Wheat Treat Pizza. Domino’s has recorded a growth of 55% in revenues in last quarter.

1. Positioning:

Ever since it was established, Domino’s Pizza in India has maintained its position of market leadership with its constant product innovation and maintenance of stringent service standards.

More importantly, it has established a reputation for being a home delivery specialist capable of delivering pizzas within 30 minutes to its community of loyal customers anywhere in the country. Domino’s followed an 11-minute schedule-one minute for taking down the order, one minute for Pizza-making, six minutes oven-time, and three minutes for packing, sealing and exit.

Customers can order their pizzas by calling a single countrywide number. In fact, Domino’s was the first one to start this facility for its customers. Domino’s vision is focused on “Exceptional people on a mission to be the best pizza delivery company in the world!”

2. Pricing and Promotions:

For the first time, Domino’s has attempted to strike an emotional chord with its viewers by shedding its ‘hungry kya?’ tagline and launching an ad which plays on compassion rather than humor. While, the new tagline goes well with the power idea, that is, ‘khushiyon ki home delivery’, the ad has a serious tone. In India, pizzas have been positioned as a fun-time meal for youth.

With this ad, Domino’s has tried to break that proposition and tried to net the not-so-young consumers too as their target audience. Domino’s Pizza has introduced a seven-inch Rs.35 pizza option across the stores in the country.

3. Brand Building & Locations:

Domino’s launched the ‘Hungry Kya?’ (Are You Hungry) sequence of advertisements on television. A company official said, “We realized that a Pizza couldn’t be slotted — it could be a snack; then again, it could also be a complete meal” The only definitive common link between Domino’s Pizzas and eating was the hunger platform. The launch of ‘Hungry Kya?’ campaign coincided with Domino’s tie-up with Mahanagar Telephones Nigam Ltd. (MTNL) for the ‘Hunger Helpline’.

The helpline enabled the customers to dial a toll-free number from any place in India. Dominos targets consumers in smaller towns. The Domino’s Pizza delivery man will be knocking wore the doors of fast food lovers in towns such as Panipat, Patiala, Karnal and Mysore. Delhi claimed maximum number of outlets followed by Mumbai.

Reliance ADAG group’s gaming entertainment company Zapak Digital Entertainment has launched this unique initiative in partnership with the Domino’s chain to popularize gaming as a concept and drive their customers to their portal Zapak(dot)com. Every Domino’s Pizza customer who opts for the combination meal receives a complimentary Zapak Gaming CD (worth Rs.450) with pre­loaded games.

In addition, consumers will also receive a scratch card that entitles them win goodies at the gaming portal. The pizza joint has sold around 40,000 ZaPizza combos across 31 outlets in the two weeks since the offer was launched. The chain estimates another 40,000 ZaPizza combos to be sold.

2. Case Study on Amul’s Ready-to-Eat Pizza:

“Innovative marketing and focus on the masses are our strengths against our rivals.” B.M. Vyas, Managing Director, Gujarat Cooperative Milk Marketing Federation (GCMMF), which owns the Amul brand, asked one of the cooperative’s food technologists to take a course in pizza making. Soon Moitriyee Mukherjee, the food technologist, was out tasting pizzas at all the major fast-food outlets in Gujarat and learning how to prepare different kinds of the popular food item.

Once she had mastered the art, 25 more women were recruited and groomed as pizza trainers. Armed with Amul’s pizza cheese, the trainers then spread out to 200 towns across India to conduct Amul’s “Teach and Treat” classes. In over 15,000 classes, Amul taught housewives how to make pizzas.

This wasn’t a ploy by Amul to change the food habits of the Indians. It was a project to test and create a market for low-priced pizzas. The painstaking efforts paid off. Launched in 25 cities in July 2001, Amul’s six-inch pizza worth Rs. 20 was an instant hit. Amul conducted regular quality checks at the franchisee outlets that sell the pizzas.

In Delhi alone its 96 franchise outlets sell an average of 50 pizzas a day on week days and 600 on a single day on weekends. Amul plans to spread out to 3,000 outlets across 100 cities and sell three lakh pizzas a day.

Vyas, who stepped into the shoes of Amul’s celebrated founder Verghese Kurien in 1993, says, “We first study the strategies of our competitors and then devise our own strategy based on small innovations before launching a product.”

The sale of pizzas had been estimated 1, 00,000 pieces a day. Pizzas by themselves were a small category than even namkeens. The GCMMF’s objective in launching the pizza was aimed at consolidating its position in the cheese market further, where it already enjoys 75 per cent of the total sales. Part of Amul’s aggression is driven by compulsion.

The dairy sector is no longer protected. Not only are domestic companies and MNCs now allowed to enter the sector, from April 2008 imports of dairy products too have been freed from licensing. While that has multiplied the choice for consumers, it has intensified competition for Amul.

Britannia, Le Bon and Nestle are already challenging Amul’s commanding control over the butter and cheese markets. And imported brands like Laughing Cow and Kraft have hit the shelves in metros. The heightened competition has had a telling effect on Amul’s sales. The initial success of the pizzas and good margins (Rs. 8 per pizza) mean that they may be able to recover the cost in about two months. Being a price warrior, Amul prices its products cheaper than its competitors, making them instant successes.

Market Thrust Strategy by Amul:

The Rs. 300-crore pizza market in the country will see a savage upheaval with the opening of the outlets. And this will just be a part of the first phase. The cannon ball that has sent MNCs scurrying is the price at just Rs. 20 for a six- inch pizza.

Bangalore’s 50 outlets are expected to sprout just within a fort night; the first three were inaugurated in Malleswaram, Wilson Garden and Seshadripuram. “The outlets in Ahmedabad, Delhi, Mumbai and Pune have been a runaway success. In Ahmedabad, we sold more than 1,000 pizzas on the first day of the launch. We are confident of performing the feat in a cosmopolitan city like Bangalore,” says B. Vyas.

To introduce the swadeshi tang, the company is providing all of its franchisees with a pizza recipe book prepared by Amul’s in-house connoisseurs. The only investment on the part of our retailers would be an oven worth Rs.3,500. “All the ingredients including the special mozzarella cheese will be supplied by us,” maintains Vyas. Amul, with a 75% market-share in cheese, introduced genuine mozzarella cheese for the first time in the country two years ago.

“Amul pizza cheese has moist, soft, elastic texture and a has fresh sheen. It has a slightly salty blandish taste and pleasant aroma. Because of the stretchability, this cheese is the ideal topping on pizzas. When baked along with the pizzas, it melts uniformly, succinctly blending all other ingredients on the pizza surface,” says Pawan Kumar Singh, the Brand Manager of the company. Amul’s simple logic is to sell more cheese so as to expand the pizza market. The 70,000 pizzas sold by around 150 outlets across the country is expected to dramatically increase with the entry of Amul.

Pricing & Profit of Amul:

The other major ingredient is the base material, which can be supplied at bulk for Rs.2.50-3.00 each. Add to this, the expenses on vegetables and the gravy sauce, the total cost per pizza would be hardly Rs.11 or 12. The retailer can easily make a margin of Rs.8-9 per pizza. All he has to invest is around Rs.4,000 on an oven.

Goof-Ups Led to Failure Faced by Amul:

Pizzas well to be sold in a new ‘Snowcap’ rather than under the ‘Amul’ brand. This was a separately registered brand name for the new product line, which apart from pizza, included softies, sandwiches, burgers, paneer snacks, etc. Umbrella branding refers to branding of products, services or ideas under the mother brand name.

Mostly, when the mother brand is very successful, then the company extends this name to other new product lines and may be to the entire product mix. Amul should have used its own name or it should have created its own brand image. The name itself is not convincing. Snowcap resembles to something cool and calm but not hot, fresh and tasty. The staff serving the pizzas well not served properly. It was not promoted through aggressive and continuous advertising.

Knock-Out Punch Competition Faced by Amul:

Innovations in menu and service offerings have been the key to Pizza Hut’s success in India. Aggressive marketing and tie-ups with local and popular brands have been the other key seasons. Pizza Hut has increased its visibility by launching a well-received TV campaign aimed at the young crowd. It has formed partnerships with recognized brands such as Nestle and Pepsi. It also holds regular promotional campaigns targeted at children and uses these alliances to offer packages during these campaigns.

In India, Pizza Hut has 137 restaurants across 36 cities, including Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Pune, and Chandigarh amongst others and it is in the process of opening restaurants at many more locations to service a larger customer base across the country.

Pizza Hut understood that their offering of fast food in a clean, casual setting could work and it has worked indeed. The growing middle class with increased disposable income and a desire to experiment has made India a lucrative option for several international restaurant brands.

Building and maintaining, a healthy brand requires a well-defined understanding of its components and their implementation as per customer demands. There are a large number of consumers who have always wanted to come to Pizza Hut to experience the great service and inviting ambience.

The menu also includes wide range of pizzas comprising Veggie Taka Tak, Teekha Paneer Makhani, Peshawari Chana Paneer, Tandoori Paneer Chutneywala, Chicken Tikka Makhani, Tandoori Chicken Chutneywala, Malai Seekh Kebab and Shahi Shammi Kebab.

3. Case Study on Malls in Mumbai:

Mumbai is witnessing a massive mall boom. Almost 250 malls will be soon available for occupation. Of these, 60 lakh sq.ft. is already functional and other 30 % will soon come in market in various areas of Mumbai and its suburbs.

It is truly said that change is an essential part of life. Nothing exemplifies this more than the mall mania that is sweeping Mumbai’s suburban areas. There is a proliferation of shopping malls and supermarkets are on the anvil with the organized retailer sector developments in Mumbai set to take off over the next year.

Close to two million sq.ft. of retail space is expected to come up in Mumbai. With the infusion of entertainment, these places are rewriting the rules of the retail frame and converting the fundamental activity of shopping into a lifestyle statement.

This retail revolution is also an indicator of the sea change that has taken place in the suburbs. The upward shift in resident profile and rising disposal income levels have triggered off a demand for top-class retail outlets, which combine shopping with entertainment facilities to make it a family outing of sorts.

This has a positive impact on all commercial activities in their vicinity. Just as amenities add value to a residential locality, a high profile retail establishment also substantially enhances the visibility of the locality as a whole. Most of the new mall retail development in the central suburbs is taking place in Mulund on the L.B.S Marg and in its vicinity.

Mulund, close to Thane is one of the prosperous suburbs of northeast Mumbai. It has a population of more than 8.5 lakhs and has an extra importance and flavor by its history ranging from ancient era to the 21st century.

Shopping centers are located mainly in Mulund(west). It is situated 29 kms from the main Mumbai city on the Eastern express highway, just three kms. short of Thane. Today Mulund is known as a residential hub, majority of the people are Gujaratis, Madrasis and Maharashtrains. Mulund has a great connectivity to other areas of Mumbai.

Mulund, inspite of being a major residential hub, maintains a close approximation with all the industrial sectors. Some of the big societies are Runwal Heights, Nirmal Lifestyle, Vasant Garden etc. Around 5-7 new societies are coming up with 800 new flats. Today all major retailers have presence in the Mulund area. There are five hyper markets are in the Mulund area within a vicinity of three kilometers.

The Nirmal Group is setting up a five lakh sq. ft. mall at its Nirmal residency project, while the Runwal Group is putting up one measuring three lakh sq.ft. Marathon Realty has launched Marathon Max, a two lakh sq. ft. commercial complex-cum-super market and entertainment centre.

Even Crossroads is setting up shop there. There are dozens of malls expected to bring in a host of new brands. The one being set up by the Nirmal Group has a list of prominent names including Shoppers Stop, McDonalds, Pizza Hut, Arcus, the one stop shop for construction materials, an interior amusement park by Appu Ghar and a six-screen multiplex.

Some of the major malls are:

1. R-Mall, located in Mulund houses the R-Adlabs multiplex.

2. Nirmal Lifestyle Mall, located in Mulund – the largest mall in the central suburbs, also houses the PVR multiplex.

3. Huma Mall, located in Kanjurmarg – Mostly factory outlet stores, also houses the Huma Adlabs multiplex.

4. Akurti mall developed by, Nirmal – the builders.

5. Magnet mall by Neptune developers.

6. Dreams mall by HDIL properties.

7. Centrix shopping center at Nahur.

As a recent India Retail Review Report by Knight Frank India points out, the success of large malls has encouraged a number of developers to join the retail bandwagon. However, the report also points out that though rentals achievable are marginally higher than high street rentals, there are a number of challenges that these developers will face.

In Mumbai, for example, malls will have to compete with thousands of local corner shops that pay nominal rents on account of protected stature. The other major issue is of ease of purchase. Groceries and other domestic supplies from these corner shops can be availed telephonically in conjunction with credit periods ranging randomly from 30 to 45 days.

Although the commercial premises and complexes are still hard to sell, rates have gone up by 35%. The trend in commercial premises is not as encouraging as is residential premises but natural appreciation is constant throughout the country. Today malls in the Mulund locality are not attracting the crowds even in the weekends. If you happen to go on weekends it’s like a week days.

There are hundreds of commercial complexes coming up in Mumbai, Navi Mumbai and Thane. To encourage such developments, the Andhra Pradesh government is contemplating to provide sales tax concessions within uniform floor rates to various industry segments. The concept of speciality stores and restaurants is growing. After the bust of dot com boom, the retail sector developments in Mumbai are set to accelerate.

It seems the lifestyle of people is changing, be it shopping or entertainment. This type of development is adding to valuable properties and is good for the property market and hence must be encouraged. The government and local bodies e.g. municipal authorities must take positive and co-operative approach while sanctioning such projects, charging concessional property taxes on them.

The success of malls and multiplexes depend solely on the availability of space at rational lease rents. In Mumbai, the introduction of a property tax system based on the market value of the property as against the earlier practice of calculation based on the age of the property, may lead to high rate of property taxes.

This will discourage the parties to take the space in malls and multiplexes. Rationalization of levies and taxes should be taken up on priority basis to encourage the development of retail properties.

Mall management has been identified as a critical factor for the success of malls and the retail industry across the world. Until very recently, mall management was synonymous with facility management in the minds of most Indian developers.

Malls which have right tenant mix like hypermarket, department stores, food court, fun and entertainment zone and good infrastructure are attracting more customers. Today few malls in Mulund have right tenant mix and a good infrastructure and only those malls are attracting customers. Most of the malls are finding it difficult to pull the crowd.

The realization that they are different and that professional mall management will affect the long-term viability and success of a mall is sinking in gradually and is being accepted across developers, landlords and retailers.

To overcome the issues pertaining to shortcomings in mall management, developers have identified professional mall management practices which include rigorous feasibility exercise, market research to facilities, ambience and finance management of a mall.

Is there a future for malls? Yes, of course there is, on the conditions that they provide the wonderful ambience associated with them internationally as well as the right tenant-mix. It is the ‘experience’ factor that will ultimately differentiate a successful mall from a run-of-the-mill one.

However, a lot of factors have come together to make this experience enjoyable, including a clean environment, a wide range of shops that complement each other, adequate restaurant facilities and ample car parking space.