Retail Management Case Studies (With Conclusion)

Here is a compilation of retail management case studies along with their conclusions.

1. Case Study on The LOOT:

Apparel and accessories retailing is the largest segment of organised retailing in India, constituting 38.9% of the total organised retailing business, which currently stands at about Rs. 55,000 crore (USs 12.4 billion) at current price. Some prominent brands like Lacoste and Benetton had also preferred this when they entered the market.

In fact, a large number of Indian brands have also adopted the franchisee route for expansion due to the relatively lower level of investment involved. Despite the relaxation in FDI norms in case of single brand stores, a large number of foreign brands have opted to enter the Indian market through shop-in-shop arrangements with leading department store chains, like Shoppers Stop, Lifestyle and Westside.

Middle-class buyers have traditionally depended on end- of-season sales to buy their annual quota of clothes, which lasts enough till the next sale. Now, they need not wait for a whole year to replenish their wardrobes as retailer, by the name of the Loot is leveraging the demand for branded clothing and accessories and is offering these products at discounted rates throughout the year.

Based on the success stories of discount stores such as Ross and TJMaxx abroad, the Loot is offering Spykar, Levis, Reebok and many more brands at throw away prices round the year. The discount stores are targeting the youth and families currently shopping at the malls. “Our competitors are the likes of Shoppers Stop, Globus, and Pantaloons etc.” says Jay Gupta, Managing Director, The Loot, the Mumbai based Rs.75-crore discount store chain.

Product Mix Strategies Adopted by The LOOT:

The chain of stores is able to buy cheap since they purchase in cash, in odd sizes, end-of-season and surplus products.

The store retails brands like Adidas, Nike, Puma, Reebok, Fila, CAT, ID, Skechers, Red Tape, Marco Ricci, Nautica, Umbro, New Balance, Spykar, Kappa, Bossini, Wrangler, Lee, Lee Cooper, Pepe Jeans, Rifle, Ragz jeans, Recap, SF jeans, Parx, Park Avenue, Van Huesen, Allen Solley, Arrow, Thomas Scott, Colours, Tuscan Verve, W, Welspun, Lilliput, Giny and Jony, Disney, Ruff Kids, Lee Youth, and international brands like Mercedes.

The company stocks 140 brands across categories of apparel, footwear, home decor, jewelry and accessories. The apparel manufacturer offers end-to-end apparel specialization — from fashion forecasting to design to sourcing and finally manufacturing.

Eccentrics and Bus-stop are the company’s private labels accounting for a quarter of sales. The company is soon planning to spin off these labels as EBO’s. Originally, the Loot was essentially a youth-centric store and the products ranged from apparels to shoes and accessories. However, now the company has added a number of other products including home linen etc.

Mr. Gupta started off as a franchisee of various brands and later moved into the current format of ‘Value Retailing’ in mid-2004. The store retails brands and sells them at discounted rates of up to 60%. The price range for apparels is between Rs. 99 and Rs. 995. A typical branded jean would cost about Rs. 495. Prices of many of the products after discount are all under Rs. 1,000.

Reasons for Success of The LOOT:

According to India Retail Report 2007, just three segments, footwear, clothing and accessories account for close to half the Rs. 55,000 crore of organized retail market. Gupta says his research show 45% of the branded goods are sold in discounts, which translate to a Rs. 12,000 crore opportunity. There are not many organized retailers in the discount format. A discount store offers a wide range of options in brands and it works because of low brand loyalty.

In the year 2005, the store was nominated in “India Fashion Forum” for the best value store in India and again in 2006, it was nominated in “India Retail Forum” for the best value store in India.

In the “India Retail Forum” 2007, it was nominated in the below mentioned categories:

1. Most Admired Retailer of the Year:

Retail Marketing Campaign.

2. Most Admired Retailer of the Year:

Retail design and visual merchandising.

3. Most Admired Retailer of the Year:

Innovative concept.

As per The Franchising World (2008), it is amongst the top 50 business opportunities in India. The Loot was selected one amongst the 12 ‘Small ideas big changes’ series in The Hindustan Times in Mumbai in 2008.The Loot has been confirmed amongst the top 30 start-ups from 600 entries in the TATA NEN hottest start-up awards.

Recently, the Loot has been awarded with:

1. “Star Entrepreneur Award” at the International India Innovation Summit held on 23rd & 24th January, 2009.

2. “Critics’ choice for Pioneering Effort in Retail Concept Creation” award at the Images Fashion Awards 2009.

3. “Young Retail Achiever of the Year Award” at the Reid and Taylor Awards for Retail Excellence on 3^rd February, 2009.

4. “Star Youth Achiever Award” on 4^th February 2009 at the Global Youth Marketing Forum.

The company differentiates itself on the basis of 25-60% discount it offers on aspiration brands on merchandises that are not defects of seconds. “Last year, our turnover was Rs. 52 crore. This year, with the new stores coming up we are looking at a turnover of at least Rs. 80 crore. Gupta adds that they spend about 3-5% of their total sales on marketing depending on the season and till date the only media vehicle they had explored are print and outdoors. Now they plan to include radio as well”.

Gupta said the company had created a niche for itself by offering a minimum of 25% and going up to 60% reduction in the maximum retail price of branded apparels and footwear. The company buys apparels or footwear in large quantities from brand owners and offers the goods to customers at discounted prices.

The company competes with the discount sale offers by the brand owners themselves or with the ‘owned outlets’ where the merchandise is offered at reduced prices. He added that the Loot will score over these options on the strength of its ability to offer a greater variety of products and more attractive prices. “We will stock the entire range of fresh merchandise, albeit after a time lag of three to six months.”

He said the present pattern of introducing new designs every season has created a huge opportunity for the company as newer stocks can be picked up every three to four months. “There is a very small section of consumers who buy and wear designs only when it is in season; the rest look for well-known brands with a lowered price tag,” Gupta said.

Promotion Strategies Adopted by The LOOT:

The Loot has roped in actor Gulshan Grover as its new brand ambassador. It is a chance to encase on the ‘Bad Man’ image of Grover, sharing tricks of the trade for the benefit of the consumer. The creative concept revolves around the villainous character which has a knack to loot and who makes leading international and domestic brands available at discounted rates.

Bollywood’s original bad guy created history in cities like Pune, Surat, Ahmedabad, Jabalpur, Raipur, Amritsar, Jalandhar, Bangalore, Mysore etc. As he and his entourage of bikers crashed the carton wall barricade of the Loot and proceeded to fill his gunny bag with goodies offered at unbelievable prices.

Surprisingly no one seemed to mind as this was part of the dramatic and unique launch of India’s first multi-branded discount store in these respective cities. The distinctive inauguration act was unlike what any one and seen before, with the loot sequence based on the store’s integral message — Great Steals on Big Brands.

The store aims to leverage the negative shades of Gulshan to influence the customer’s desire for great steals on big domestic and international brands. Gulshan says, “I think it’s very gutsy of the company to forego a conventional hero and to have someone like me who is known for his villainous roles.”

Bollywood star Irfan Khan and top model Anchal Kumar shocked the guests present at the Loot store as they crashed in the store glass driving in the jeep. It was a promotional gimmick by the store to announce their new initiatives and a big sale at the store.

The multi-brand retail chain, while celebrating its third anniversary launched its Loot Ko Loot Lo scheme, which officially gave everyone the license to Loot. To avail this scheme one had to fill the registration form available at the loot stores in order to get a license to loot as much as one could in a minute.

Fifty selected people from each location participated in the lucky draw that gave them the freedom to loot in one minute and get numerous things. The lucky draw was held at the Marine Lines store.

Besides this scheme, Loot is also giving promotional offers like:

1. Buy 1 Get 1 free, Buy 2 Get 3 free etc.

2. Get denims for Rs. 499 to Rs. 599 each on purchase of two denims from brands like Spykar, Lee Cooper, Eccentrics and SF.

3. Buy merchandise worth Rs. 1,500 and above and get a cap Free worth Rs. 199.

4. Buy merchandise worth Rs. 2,500 and above and get a T-shirt Free worth Rs. 295.

5. Buy merchandise worth Rs. 3,500 and above and get a watch/bag Free worth Rs. 695.

Post the success of these promotions,

6. The Loot has done many tie-ups with companies like Cafe Coffee Day, Club Mahindra, SBI bank, and Barclays Bank giving additional five per cent discount.

7. With MTV on contests like Loot Woot contest and Gangster of the Year.

8. Yoko’s and Kobe’s – printed table mats.

9. Time Out- Gift vouchers for the readers.

10. College events and other sponsorships.

11. Tie-up with Barista.

Future Prospects of The LOOT:

The company, closed last fiscal with Rs. 52 crore and hopes to close this fiscal with a top line of Rs. 80 crore an is now ready with big roll out plans. Their target is to have 200 stores by 2010, covering almost a million sq. of retail space. Half the stores would be company owned, with the other half operated by franchisees.

To fund the roll outs, Gupta, in the near future is looking at raising about Rs.100 crore through private equity by offloading about 25% equity. They plan to go public with an IPO in 2011 and would raise a similar amount.

On the company’s expansion plans, Gupta said they would follow a strategy to ensure its presence in state capitals, places near airports and at places where the population is above five lakhs. “These are the places where we have customers who understand our value proposition,” he said.

Of the three formats the Loot has, by 2010, extra-large (8,000 sq.ft. plus) ones would number 20, large (4,000-8,000 sq.ft.) would be 70, and medium (2,500-4,000 sq.ft.) would be about 130. The extra large format soak up investments worth Rs. 3-5 crore and large and medium ones from Rs. 1.5 crore to Rs. 75 lakh each.

In order to push up its average bill ticket size of Rs. 1300, Gupta is toying with the idea of introducing designer labels in his store, which, like other products in the store, would be available at a 25-60% discount to the sticker price. The Loot has tied up with over 100 brands and in a first of sorts, Eccentric & Busstop are its private labels that account for a quarter of overall sales and the same would soon be spun off into national brands.

Apart from the metros, Loots are planning to open outlets in mid-sized cities including Surat, Baroda, Jamnagar, Ludhiana, Pune, Hubli, Gangtok etc. While some would be company owned, others would follow the franchisee model.

Explaining the Loot’s ability to offer substantial discounts, Gupta said, “We do a lot of opportunity buying, that is purchasing excess production of companies. Besides, our supply chain management is such that it results in cost savings.” Advertising, which accounts for 7-8% of the budget of garment companies, is another area where we save.

Conclusion:

All in all, Mumbai-based the Loot (India) Pvt. Ltd aimed expand its retail chain to 100 from the present 92 by March 09, an investment of Rs.150 crore. The expansion will be partly funded by debt, and the rest would be through Gupta’s personal contribution.

2. Case Study on DLF Emporio:

DLF Emporio, the country’s first luxury mall in Delhi, will house 130 brands, including 70 international brands. Many of these brands would make a debut in India with their stores in this mall. DLF is in the final stages of talks with some of them, including Armani and Dolce & Gabbana, for an equity joint venture.

Armani, Versace, Hugo Boss, Louis Vuitton, Christian Dior, Dolce & Gabbana, Escada, Cartier and several other tony brands would be available under one roof at this mall.

Emporio would house brands across several product categories- apparel and fashion, (Tods, Dolce & Gabbana, Canali, Louis Vuitton, Christian Dior, Fendi), accessories, watches, perfume and jewelry (Cartier, Harry Winston, de Grisogono, Gem Palace, Ganjam). Almost 30% of Emporio’s selling space would be occupied by men’s exclusive brands such as Paul Smith, Hugo Boss, Armani, Corneliani and Versace.

Another striking feature would be a watch zone, the first of its kind in India. At least 12 international watch brands would occupy 15,000 sq.ft. space. Piaget, Chopard, Vacheron, IWC, Harry Winston, Vertu, Jaeger, Breguet, AP and Rolex are some of the big names to come up in the mall. The mall measures 3.5 lakh sq.ft.

Opportunities Offered by DLF Emporio:

The mantra is that if you have it, flaunt it. Aspirational shoppers are giving a fillip to luxury retailing in India. And if statistics are anything to go by, India will soon emerge as the biggest consumer market for luxury goods globally. Not surprising that over 200 international luxury brands are making a beeline for the sub-continent.

The 2007 Asia Pacific Wealth Report, released by Merrill Lynch and Cap Gemini, says India has recorded the world’s second fastest growth in the number of high net-worth individuals (HNIs) at 20.5%, making it a lucrative luxury market.

Luxury seems to be the buzzword today. According to an estimate, 200-300 international luxury brands are trying to make an entry into India. As of now, the luxury market is worth Rs.2,400 crore (Rs.24 billion) and continues to grow at 30-32%. It is expected to climb up to Rs.5,000 crore (Rs.50 billion) by 2010.

India’s tryst with luxury brands changed gears. With high disposable incomes and a penchant for all things luxury amongst affluent Indians on the rise, the country is emerging as the next stopover for global luxury brands. Indian consumers are well travelled.

They have access to international brands. According to consulting firm AT Kearney’s estimate, the luxury product market in India is worth $377 million at present and likely to grow at a CAGR of 28% for the next three years. Mumbai, Delhi and Bangalore are said to be the top three markets for luxury products in India.

Merrill Lynch and Cap Gemini’s World Wealth Report 2008 says India, China and Brazil had the highest high net-worth individual (HNI) growth at the country level. Not just that, in 2007, India actually led the world in HNI population growth at 22.7%, exceeding gains of 20.5% in 2006.

Mall Promotions of DLF Emporio:

DLF India’s biggest real estate developer, which is preparing a wide promotional campaign for the mall, plans to rope in Hollywood and Bollywood stars for this mega initiative. DLF mall would reflect retro Indian opulence. From architecture and interior to ambience and tenant mix, the mall has tried to retain the stamp of Indian luxury. DLF also has 34 Indian designers for the first time under one roof.

Future Plans of DLF Emporio:

DLF Ltd., which is building a mall for foreign and local luxury brands in New Delhi, plans to come up with five more such malls to cash in on a burgeoning market for high-end goods currently stymied due to a lack of space. DLF opened its first luxury mall, Emporio, in the Vasant Kunj area of New Delhi. DLF has already acquired land in Mumbai, Kolkata, Bangalore, Chennai and Hyderabad and the projects are in the planning stage.

DLF plans to focus on opening such malls in second-rung Indian cities such as Pune and Ludhiana. “In a 10-year time line, we see the luxury sector penetrating into smaller cities,” Singh says. But getting the much-needed space is just one part of the problem.

Conclusion:

The number of rich Indian millionaires is increasing by the day and thus, it is evident that the luxury market in India is soaring. More and more luxury brands are now heading to India either to expand their existing outlets or to setup shops. With the opening of Emporio and UB city prestige malls, luxury brands have even more reasons to rejoice.

However, Indians are still not well aware of the difference between luxury and premium brands as most of them perceive them to be the same. Also, luxury brands will have to equate their prices here with the ones abroad as the new age Indian is well travelled and a little price conscious. As the prices here are higher than the ones abroad, Indians prefer picking up their luxury products while travelling or holidaying abroad.

3. Case Study on Akbarallys:

Journey of Akbarallys:

A century of trust with loads of innovation added early on when the market for organized retail was not even conceived, the legacy of India’s oldest department store that brought with it the idea of convenient shopping under one roof — Akbarallys is a name that begs no introduction in Mumbai.

Akbarallys was established 112 years back in 1897. Now it has two full line department stores in Mumbai having pioneered the department store concept of convenient shopping under one roof in India after the British owned department stores like White way Laid-low, Evan Fraser, Hall & Anderson, Army Navy Stores closed down.

It was in early 1897 that a young man by the name of Akbarally Ebrahimji bought a 30 sq. ft. space near Gunbow Street in Mumbai and started a department store. The difference that he brought in the store was fixed pricing concept, there was nothing that could be bargained.

Then, the store was called Akbarally Ebrahimji and it dealt primarily with toiletries and a few food items. The initial journey was started by the current chairman Fakruddin T. Khorakiwala’s uncle. Khorakiwala’s father, Taherbhai Ebrahimji, became a part of the business a couple of years later when Ebrahimji expired. The junior Ebrahimji spread the store to three more locations in South Mumbai.

Apart from looking after the three stores, Ebrahimji was involved in importing tea from Darjeeling. He later went on to bring out a pesticide called Akshir and a balm called Akbar Balm.

The father and son duo (Taherbhai Ebrahimji and Fakruddin Khorakiwala) went ahead with expanding their business, which led to Khorakiwala giving up his ambition of pursuing the field of law. In between, along with two of his colleagues, Khorakiwala got also involved in marketing of the brand Amul and establishing it across the country.

Private Label of Akbarallys:

Private label now play an integral role in the strategy to entice customers and the company has launched the Allys range of shirts targeted at the upper bracket. The launch of Allys followed the existing Troika range of shirts and trousers. With a range of offering for men’s apparel, the brand earlier did face some hurdles to gain acceptance.

Troika was generating just two per cent from the total sale of men’s apparel. Today, the brand has grown by 50 per cent. The Troika brand includes shirts, belts, handkerchiefs, underwear and ties for men. Everything under Troika is outsourced.

The quality of Troika is at par with any of the international brands available. Akbarallys do not spend on advertising on the brand; the benefit is passed to customers whereby the brand is available at half the price as against any other brands. The company is also in talks with that manufacturer of home appliances to launch toasters, fans and pressure cookers under its brand name. Offering discounts has never been a practice at Akbarallys but the retail chain is looking to give freebies on purchases made by the customers.

Competition Faced by Akbarallys:

Competition in the form of large format stores has popped up in Mumbai. Akbarallys is a general merchandise shop stocking everything from apparel and accessories to non-apparel items like home furnishings and accessories, consumer durables, etc. Organised retail in Mumbai has seen players like Shoppers Stop, Pantaloon, Westside, Globus, the Loot, Levis, etc.

Till 1992, Akbarallys had absolutely no competition. It was considered to be a status symbol to shop at Akbarallys. With the mall culture setting in, this store slowly lost popularity. The younger population today does not remember Akbarallys; they are more inclined towards shopping at malls because of the ambience and also the variety offered.

Every day the Fort store attracts around 500-600 customers and their conversion rate is about 42%. The average billing is around 650. The shops are kept open between 9 am to 11 pm except on Sundays. The store is closed on Sundays. The turnover of Akbarallys last year was approximately Rs.25 crore. Currently, the advertising budget averages around two per cent of the annual turnover. Although Akbarallys has been a pioneer, today it is screaming for attention to regain its popularity.

Expansion Plan of Akbarallys:

Despite being the first mover in the department store business, Akbarallys today finds itself open to the market forces of competition. With new players in the fray, Akbarallys realised that the initiatives are imperative to ensure that the century-old legacy is not forgotten in the labyrinth of the retail market playground.

Therefore, it has adopted a quiet gameplan to further its reach. The century-old brand has set up small super markets in the city and is planning to take this initiative across Maharashtra. It has outlined an investment of over Rs.20 crore for its expansion plans, which will be implemented in the next two years. Realising that it needs to refurbish the look and feel of the department store, Akbarallys is looking at people, product-mix and ambience as three important parameters to acquire a new look.

Under its expansion plans, Akbarallys has set up supermarkets of 1,000-2,000 sq. ft. in various part of Mumbai suburbs. The supermarkets are aimed at catering to the daily provision needs of consumers. An interesting concept introduced is that of setting up convenient stores at petrol pumps — these are like mini-supermarkets. Branded as ‘Convenio’, these stores are doing very well. In the coming years, Akbarallys plans to set up more such outlets in Mumbai.

For the supermarket initiative, the company is not making any investment in properties, but has entered into agreements with owners of properties in various suburbs of Mumbai. The agreement is based on a percentage sales basis with the land owners.

Mr. Salim Dalal says “We are purely a retailer and, therefore, operate on very low margins. Entering into percentage of sale agreement remuneration with the land owners enables us to control our fixed costs. Expansion did not happen as expected simply because of various reasons especially lack of human resources.”

CRM:

Akbarallys customer loyalty program is called “VALYOU” card. This program offers members an opportunity to avail a variety of special benefits by amassing points on their purchases, and it also offers them privileged shopping experiences. Akbarallys at present has a data base of more than 9,000 loyal members.

Offering freebies, is viewed as ensuring client loyalty and giving consumers value for the money spent on purchases. As part of loyalty program, Akbarallys has tied up with various banks under the ‘buy now pay later’ scheme. The scheme enables consumers to make purchases without paying on the spot. Payment can be done through installments without paying any interest.

Conclusion:

What can department stores do to stay relevant and survive? They will either have to offer distinctive products, provide exceptional service, or compel the loyalty of high-purchase, multi-trip shoppers with customized programs and rewards. Without these types of improvements, department stores face either expansion, consolidation or acquisition. Thus, the winds of change are slowly sweeping across Akbarallys and one hopes the changes will enable it to hold its ground in times to come.