Here is a compilation of top four case studies on retail management.
1. Case Study on Garuda Transport:
Garuda Transport Limited (Garuda Transport Corporation limited) was established in year 1962 at Bangalore. Over a period they have established 14 transhipment warehouses at different places. At present their business volume is around two lakh metric tons of dry cargo, mostly in packed commodities.
They have established a good clientele. Out of two Lakh tons of cargo movement nearly 40,000 tons are from South to North, 25,000 tons from North to West, 60,000 tons from West to South, 40,000 tons from West to North, 25,000 tons from North to South and hardly 10,000 tons is from North to East as well as South to East.
Most of the consignments are part loads booked by various clients. The rates quoted by them for transportation is around Rs. 15 per ton per kilometre for part loads and Rs. 11.30 for full loads. In addition to the above freight charges they also charge for handling and other service charges as 20% of the invoice value as documentation charges.
However, the time period for the delivery is not guaranteed even though they informally agree for a stipulated time period for delivery. Since, most of the consignments are booked by the companies on consignee basis either as freight-to-pay or freight-paid, the consignee has to collect the material from the transporter’s godown.
GTC Ltd. will try to consolidate the load for a particular destination on daily basis and if the consignment is not of full load then they will club it with the loads for other locations in order to get the full loads. For example, on a particular day if the consignment to Bangalore from Delhi is not of full load then they will club the Bangalore consignment with the consignments to Pune.
The Pune transhipment warehouse will receive goods and club it with the consignments from Pune to Bangalore. This is mostly being done with the instructions to all the booking warehouses that any consignment booked should be dispatched within 48 hours but the destination to which the consignment is to be delivered is not the sole criteria.
The individual transhipment warehouse will receive the material and deliver the goods to various delivery points located within the vicinity. In addition to that, the transhipment warehouses at Bangalore or Chennai may send it to the delivery outlets either at Cochin or at Coimbatore or at Trichur or any other place.
So in effect the transhipment warehouse will make a secondary freight in order to ensure the goods are received for the delivery at designation locations. The company expects a minimum return of 20% profit on all their bookings.
The company owns hardly 40 trucks. These 40 trucks are available in Pune, Mumbai and Bangalore, which cater to the specified destinations like Pune-Bangalore, Pune-Mumbai, Mumbai-Indore, Bangalore-Chennai, Bangalore- Hyderabad, etc. The rest of the consignments booked are transported through outside transporters (through transport brokers) who place the vehicles for transport.
Recently, a company preparing chemicals for water treatment and affiliate treatment plants (factory location at Khopoli) requested the transporter to submit a comprehensive proposal for transportation, warehousing and distribution to their dealers.
Presently the chemical company’s demand at various locations is as follows:
1. Southern region — 30,000 tons covering entire Tamil Nadu, Karnataka and Kerala per annum.
2. 40,000 tons to Gujarat (Baroda, Ahmedabad, Bhuj and other locations), per annum.
3. 20,000 tons towards Gwalior (Indore and Jaipur), Delhi and Ghaziabad per annum.
4. 25,000 tons towards West Bengal, Bihar and Orissa, per annum.
These consignments are to be delivered to their dealers and the dealers will actually supply to the industries according to their demand. The dealers will be paid six per cent as sales commission and two per cent as warehouse charges. The warehousing charges are presently paid since the company delivers full truck load to the dealers even though the actual requirement is not a full load.
The chemical consignments are of 25 kg. bags or 20 kg. carbon. Presently the transportation charges incurred by the chemical manufacturer is approximately six per cent of its invoiced value (out of a turnover of Rs. 280 crores nearly Rs. 16.8 crores is towards transportation charges). Further in view of higher inventory at the dealer’s warehouses, the inventory carrying cost works out to 20%.
In other words, the company is incurring interest on the inventory (26,000 tons x Rs. 30 /Kg – Rs. 78 crores, 20% Int. 15.6 crores). The transport charges are on the basis of full load to each dealer. Even though the marked price is Rs.42/Kg. The dealers can offer a discounted price based on market demand.
The company wants the transport organization to be a C & F service provider by taking the goods from the plant to their own C&F warehouse and deliver it to the dealers as per the requirement. The invoice will be prepared at the C&F warehouse by the service provider and payment received in the name of the chemical company.
2. Case Study on Argos:
Organized retailing, though booming, is still nascent and evolving in India. Beset with skyrocketing real estate prices and extreme shortage of skilled manpower and thin margins, it could look at catalogue showroom retailing as a retailing format that cannot only be setup fast at low cost but could also be quickly scaled up across the country.
K Raheja Corp are the pioneers in organized retail in India by taking a first giant step to successfully establish a retail store know as Shopper’s Stop. In 2006, it then ventured out in a hypermarket format with HyperCity and Argos.
HyperCity Argos is the brand licensed to Gateway Multi channel Retail India Ltd, a joint venture, following franchise agreements with HyperCity and with Home Retail Group (India) Private Ltd, a subsidiary of Home Retail Group in the UK which owns the Argos brand. Argos, for the first time will offer a unique multi-channel shopping experience to consumers in Mumbai (Thane, Mulund, Airoli).
This integrated multi-channel capability encompassing stores, home shopping and the Internet will give consumers a new and convenient way to shop. Customers can choose from over 4,000 products from the comfort of their home either through a Hyper-City Argos catalogue or by going online at the website. Customers have the opportunity to choose from a wide range of products, make informed decisions through product and price comparisons and above all save time.
Argos is one of the leading players of catalogue retailing in the UK. It is a unique retailer recognized for choice, value and convenience. It sells general merchandise and products for the home throughout the UK and Republic of Ireland, online and over the telephone. In the last financial year, Argos sales grew eight per cent to £4.2 billion and it employed some 34,000 people across the business.
Argos Product Mix:
The products include personal care, kitchen and laundry, furniture, sound vision and electronics, garden DIY and leisure appliances, toys and games, jewelry watches and accessories, etc. It is well said, that a retailer should not play his game with just one format. It is not advisable to put all your eggs in one basket.
Kinds of Outlet:
Catalogue stores (size 5,000-10,000 sq. ft.) and call & collect stores (size 300-500 sq. ft.). This has been created specifically for customers in India as they like to view the products before a major purchase. The catalogue store will offer customers the facility to browse through and view the products before they buy.
High involvement and high investment products across categories would be available on display. The centrally located neighborhood call & collect stores will have the option to browse through the catalogue and buy. These stores hold limited products. Customers have the option to either order and collect their product the next day, or have it home delivered.
Unlike a self-serve retail store, in a catalogue showroom (store) most of the items are not displayed; customers are asked to view the products from printed or online catalogs in the store and are asked to fill out an order blank.
The order is then brought to the sales counter, where an associate arranges to retrieve the items from the warehouse or if so desired by the customer assures to deliver the same at call and collect center of the customer’s choice upon receipt of payment. Thus, catalogue serves to act as an interface between the product and the customer.
Stores have an advantage of allowing the customer to get the merchandise immediately after they pay and buy it. Paying up for a product online through a credit card and waiting for the product for a week or so mellows down the customer satisfaction.
Indian customers are different. They want to touch, feel and smell various products like staples, apparels etc. Otherwise customers don’t get convinced about the product quality.
Store shopping can be a stimulating experience for some people, providing a break from the routine and enabling them to interact with people and friends around. This experience is evidently missing in this kind of format. Argos is winding up its two year trial operations in India that includes five stores in Mumbai and telephone and internet ordering service, which it was offering in conjunction with HyperCity.
3. Case Study on Crossroads:
On August 28, 1999, Mumbai witnessed the launch of a world class shopping mall and entertainment complex that would set new standards in multipurpose high-rise shopping complexes. The 1,50,000 sq.ft., Internationally styled Crossroads in Mumbai, in the hub of India’s business activity, redefined shopping in India.
Sprawled across separate buildings, under Asia’s second largest roof, Crossroads had several uncommon features like a terrace car parking with two automatic elevators for transporting vehicles. It also had aerial bridges, or crossovers, to interlink all the facilities.
The sheer size and spread of the place presented a stupendous challenge. While one building in Crossroads is five stories in a centrally air-conditioned shopping complex called pyramids; the other two buildings house the public entertainment area and individual outlets where big merchandising names have set up shops. It is further divided into five clusters for easy access by the shoppers.
In the first week of August 2000, visitors to Crossroads, a retail mall, saw a polite notice informing them that a mobile phone, a credit card or a club membership card would act as an entry ticket. People without these new age accessories would have to pay Rs.60 as entry fee, for a coupon redeemable against purchases made at any time.
Within days, the number of visitors to the mall fell by more than 70%. Many of the visitors felt it very insulting to prove that they possessed a credit card or a mobile phone. Traffic continued to fall even after the ban was lifted two months later. It hovered around 6,000-8,000 a day, as against the initial walk-ins of 30,000-40,000 on weekdays and up to a lakh on weekends.
Disappointed with the low traffic, Fountainhead, a bookstore, opted out of Crossroads. Shyam Ahuja, famous for his carpets and dhurries, vacated two-thirds of the space. Other unhappy tenants too started renegotiating rentals. To deal with this situation, Crossroads initially relied on using anchor tenants like McDonald’s and Pantaloons to attract crowds. The management reasoned that the shoppers at these outlets would then disperse to the other outlets of the mall. But this plan did not work out as expected.
However, traffic-dependant outlets like bookshops and music stores were highly disappointed with the new development. For instance, Fountainhead needed at least 1000 walk-ins every day, with daily sales of about one lakh, to cover its monthly expense of Rs. 8 lakh. But, there were days when just 100 people walked-in. Monthly sales fell to Rs. 12-15 lakh. Soon, Fountainhead opted out of Crossroads. Many of the other tenants also started demanding lower rentals from the prevailing Rs. 250 per sq.ft.
Falling traffic was not the only reason for Fountainhead’s opting out. There were also problems with the mall’s layout. Books offered very little margins, unlike jewelry or electronic goods. Also, they were mostly impulse- purchases and hence needed more traffic. The greatest disadvantage for the store was that it was on the fourth floor.
People hardly went up to the fourth floor just to browse through. The store would have been a little better off at the entrance or on the first floor. The only two tenants who were not complaining were McDonald’s and Pantaloons. McDonald’s sold around 8,000 meals a day, which made it one of the most successful outlets in Mumbai.
The success of these outlets could not be completely attributed to the mall. Originally, it was expected that the onus for drawing traffic would lie with the mall management. But, soon after inception, the relationship between mall management and the tenants soured. The recreation arcade of the mall was also facing problems. In 2006, the group sold it to Future group for over Rs. 300 crores which plans to open Central, the only seamless mall of India.
4. Case Study on Hidesign:
Founded in 1978 as a two-person artisan workshop, Hidesign is now a global company. Hidesign’s commitment to craftsmanship, technical innovation and rebellion against uniformity and mass production has made it the ‘brand of choice’ for a loyal following of customers throughout the world.
Hidesign is driven by the passion of a multi-cultural design-oriented team. It first started selling in small alternative shops in London and San Francisco and quickly expanded into adventurous department stores in London, California and Australia. Today, Hidesign is available at department stores at over 50 Hidesign stores across the world.
Hidesign started as a small workshop in the late 1970s. Gradually the business expanded with the company winning a number of export contracts. Although initially, the firm experienced hiccups in developed markets like, the UK and the US. But its good quality, distinctive designs, and aggressive marketing strategy helped it succeed in carving out a niche for itself.
It went in for marketing tie-ups with distributors and high-fashion retail chains. Later, it entered into joint ventures and sold its products through franchised outlets in several overseas markets.
In the 2000s, with business expanding, it started opening wholly-owned exclusive retail outlets in overseas markets. In 2000, Hidesign decided to exploit the growing Indian domestic market. It first opened wholly- owned exclusive retail outlets and then moved towards selling its products through organized retail chains to increase the volumes.
Hidesign aimed to establish itself as a “luxury brand” across the world. The brand was promoted worldwide in fashion magazines and trade journals. In 2006, Hidesign employed over 2,300 people in its tannery, buckle factory, and leather goods manufacturing units.
It sold a wide range of products including briefcases, work casuals, travel bags, handbags, computer bags, wheeled luggage, backpacks, and accessories such as belts, jackets, and wallets, through 2,500 outlets in more than 18 countries (as of April 2006).
The name Hidesign was formed by merging the words “hide” and “design”… And true to its name, Hidesign went on to become a premier design house for leather goods, gaining acceptance even in the highly competitive western markets.
Hidesign products were priced high and were aimed at the mass luxury market. The target market consisted of people aged between 20 to 50 years, belonging to high income households, who traveled frequently, often internationally and insisted on high quality products. Hidesign brand products used only full grain leather. The leather was tanned using the vegetable tanning process.
Hidesign’s Distribution Network:
In its overseas markets, Hidesign graduated from a firm fulfilling export contracts to selling through distributors and then through high-fashion retail chains like Selfridges. In later years, it even started wholly-owned concept stores.
On the other hand, in India, Hidesign started its distribution operations by opening wholly-owned stores (in 2000). This was followed by tie-ups with retail chains like Westside in 2003 and subsequently Shoppers Stop, Landmark, etc. In late 2005, it announced plans to open exclusive franchised outlets.
Initially, Hidesign was an exclusively export-oriented outlet, fulfilling orders from European and American distributors. It concentrated on taking small orders and fulfilling them to high quality standards and delivering on time. This proved crucial in building its reputation among high-end overseas customers and in gaining their initial goodwill.
In the early 1980s, Hidesign entered the UK through local distributors. However, initially, the leather and luggage shops in the UK were not keen on stocking an Indian brand. Since Dilip Kapur, founder and president of Hidesign, intended to sell high-fashion leather products, he had to prove his credentials. But the ‘Made in India’ tag didn’t help. He says, “Yes, at first, people stopped and thought for a while…”
Hidesign started its retail operations in India in 2000 when it opened its first wholly-owned exclusive retail outlet in Bangalore. The Indian market too proved receptive to the high quality leather goods of Hidesign and the business boomed. “Ever since we began retailing in India, we have registered a 60% annual growth every year,” says Kapur.
Hidesign went in for a major expansion in India in 2002- 2003. The fact that the global market for luxury goods was facing a slowdown while the Indian fashion market was buoyant and that there were no major competitors in the same category, prompted Hidesign to exploit the huge opportunity.
As Kapur says, “In India, we have two distinct advantages. One, our economy is still growing at six per cent and two; there is no competition in leather at the top end of the market. So we are filling up the vacuum”.
The organization planned to use the bag in its promotional campaigns. According to Kapur, the bag would be taken on a tour across India and displayed at Hidesign retail outlets. It would also be displayed on special occasions, like new store openings.
Sustaining excitement is the success of a luxury product and depends as much on its ‘coolness factor’ as on an appropriate distribution network. Therefore, Hidesign put in a lot of effort into creating new products and a buzz around the brand.
In November 2002, Hidesign launched Cathy — a range of high class trendy ladies’ handbags, as part of its city range. These were designed for daily use and were priced at Rs. 895, making them quite affordable. With a wide range of color options like black, biscuit, tan, light blue, dark blue, red, etc. the range was targeted at young working women who might find it interesting to match the range of bags with their wardrobe.
In the early 2000s, the Hidesign brand underwent an image makeover after a customer opinion survey in 2001 revealed that while the brand was highly valued for its quality, it was perceived as “boring” and not “cool” enough. In an attempt to change this image, Hidesign unveiled a two-part ad campaign in 2002. The ads were designed to give the brand a trendier image, to appeal more to the younger prospects.
In the campaign, Hidesign was promoted as a “fashion forward” brand that customers in any part of the world could relate to. According to Kapur, the ads were designed to “go straight to the heart and change the image that we are boring”. The ad campaign targeted the upwardly mobile, educated, international-minded executives and focused more on women.
The company remained optimistic about the prospects for further growth in the domestic market. Kapur felt Indians were as choosy about quality and style as the westerners and didn’t shy away from buying something that appealed to them. And the sales figures seemed to support his views.
In 2000-2001, when the firm started retailing in India, the domestic market contributed only six per cent to its total business whereas in 2004-2005, the figure was 35%. Analysts were of the view that the non- apparel market, comprising categories such as handbags and footwear, was likely to log high growth rates in the near future as a result of easy purchase opportunities and the growth of organized retailing.