Ignus Imtg Retail Varun

Mahindra Partners SectorMom & Me Retail Business

TEAM IGNUSINSTITUTE OF MANAGEMENT TECHNOLOGY, GHAZIABAD

AKHIL MIDHA 12DM-017 PGDM – 2 [email protected]

APAAR GUPTA 12DM-033 PGDM – 2 [email protected]

SAMEER DODA 12DM-126 PGDM – 2 [email protected]

VARUN MANGLIK 12DM-158 PGDM – 2 [email protected]

Executive Summary• Started in 2009

• Currently has 114 stores in 70 cities

Understanding Mothers

Retail Market

E-Commerce Market

Business Expansion

About Mom & Me

Current Size – Rs. 200 crore

Niche Audience

Positioned as -9 to +9 shop

Expansion by opening 60 more stores over next 2 years

Research Findings•Store Visits•In-depth Interviews•Consumer Survey

•Consumers extremely satisfied with Personal Shopper concept.•Cluttered Store Layout results in Brand dilution

Early Introduction of Brand

Avoid Clutter & Establish Trust

After 3 + years, child becomes major

influencer

Need shifts from trust to variety

New Touchpoints – Pediatric Clinics &

Playschools

Baby Care Market – Rs. 646 billion

Immediate Connect

Community Building

Emotional Connect

Gynecologists

Babycenter.in

Nursing Homes

Key Affinity Builders•Store Layout & Ambience•Quality of Service•Product Range Offered

CLV

•Avoid Multiple Websites•Better utilization of internet marketing tools•Mobile Commerce Integration

Centralized Logistics

Decentralized Logistics

•Establish Mom & Me Express

Tier 2 & 3 cities

Establish another 120 stores by 2018

Annual Sales of Rs. 1800 crore by 2018

114 Mom & Me Stores Across 70 Cities With Product Offerings From -9 To +9 In 11 Product Categories

Research Findings Understanding Mothers

Retail Market E-Commerce Market

Business ExpansionAbout Mom & Me

New Approach to Pregnancy and Baby

Care• Personal Shopper• Exceptional Customer

Service• Parenting Forums

Unique Shopping Experience

• Breast Feeding Room• Child Friendly Floor

Plan• Play Area• 60 % Customer

Conversion

Everything Under 1 Roof

• Product Offerings from -9 to +9

• 11 Product Categories

Value Proposition

2009 2010 2011 2012 2013 2014 (P)

318

4977

114

174No. Of Stores

Expansion Strategy

► Company Owned – 107 ► Franchise Model – 7

Location Strategy

► High Street & Malls► 5000 to 10000 sq. ft. Store Area

• Started Flagship Store

2009

• 18 Stores• 14 Cities

2010 • 114 Stores• 70 Cities• 200 Crore

2013

• 60 Additional Stores

2015

Specialty Store With Both Physical And Online Presence. Branded And Private Label Offerings For SEC A Moms.




Physical Store

Ecommerce

Specialty Store

Mass Merchandiser

C o m p e ti ti v e L a n d s c a p e

Target Group Customer

Upper Middle Class, SEC A1, A2 and A3 category

Age: 24 to 40 year Mom’s

Educated/ Working Mom’s

High disposable income

Digitally Active

P ro d u c t Pa r t n e r s h i p s

Shop in Shop Agreement

• Destination Maternity in 77 stores

Exclusive Distributorship

• Marimare• Cam & Tutty• Bambini

Exclusive Licenses

• Disney• Fisher Price

Research Through Store Visits, Personal Interviews, Customer Surveys And Industry Experts




Customer Survey

K

Means Cluster Analysis

Binary Logistic Regression

Target Group Survey*

Stores Covered

• NCR (9)• Mumbai (4)• Dehradun (1)

Personal Interviews

• Store Managers• Store Employees• Mom & Me GMC

Competitor Stores Visited

• Mothercare• Me & Mom• Catmoss

Interview with Founder of chhotu.in

India’s premier e-tailing logistics vendor

* Total Number of Respondents - 106

Company Details

Rental Expenses

Inventory Turnover

Salary Expenses

Coupon Hit Rate

Loyal Customer Purchases

Rs. 2 to 4 Lakh /

3000 sq. ft.2.5 months 8 to 8.5% of

Net Sales 12% 62%

Strengths And Weaknesses Based On Understanding Of The Business And Customer Insights




Strengths• Personal Shopper• Catalogue Shopping• Loyalty Program• Good Quality Products• Convenience: One Stop Shop

Weaknesses• Less footfall• Cluttered Store• No Fixed Planogram• Costly & Less Popular Licensed Brands • Product Portfolio: Less Variety for 4-9 years

Key Observations from the stores

Customer Insights

• Positioning Problem• Value for Money• Only 12.2% of survey customers knew that Mom &

Me had products for -9 to +9• Customer agnostic to brands. They Focus on Quality and

buy private labels happily• Low Visibility

• No one discovered the store through promotions• Store Location Strategy inside the Mall

Understanding Business

• ATL activities – Centrally coordinated• BTL activities – Local Store• Apparel is the backbone, high margin category• Turn Out for Mother’s workshop is a big problem• Store Staff engaged in promotional activities, thus no

effective promotion• No Promotion of e-commerce in the stores

The Primary Shopping Period For Expecting Mothers Is From -7 to -2. Introduce Brand Earlier Than Competitors.




Shopping Period

Information Gathering Continued Info Gathering and Loyalty Building Stage

Introduce Brand Associate with the Mother

CLUTTERMost Companies

approach Mothers in this period

1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month

F I R S T S O N O G R A M

• Baby becomes real to Mom• Baby Images are the initiator of

Mom’s Baby Shopping Process

By this time, 25% mothers have already chosen their favorite brands

Anxiety/Distress

• No need of shopping

• Information through online community, friends & family

No Shopping

Shopping by Husbands

Brand Trust Is Of Prime Importance. Word Of Mouth And Internet Are Primary Sources Of Information.




33%

19%16%

14%

10%

4%4%

Sources of Information*BooksFriends & FamilyInternetDoctorsChild Birth EducatorsMidwivesOthers

Behavioral Attitudes

Very Protective towards her child.

• Brand TRUST needs to be established early.

Friends and Family still play an important role.

• Referrals and Word of Mouth become powerful influencers.

Challenges faced by Today’s Mom

• Increasingly Mother’s work on their jobs right upto the last month of pregnancy.

• Leaves taken to ease physical discomfort, pain or medical issues.

• Wary of Prospected Expenses with additional member in family and growing Inflation.

• Clutter of Information over Internet.

* Based on Listening to Mothers Survey. www.childbirthconnection.org .

Moms using social media on a regular basis has jumped by more than 510% since

2006

Today’s moms spend around 8hrs/week online.

Key Takeaways Ideal Window for Brand Message is between the confirmation of pregnancy and the first sonogram

Less Clutter Early Establishment Of Trust

First Mover Advantage

Post Birth, Mother Is The Decision Maker till 2 years. The Influence Of The Child Increases With Age. After 4 years, the Child becomes the Decision maker.




0 to +2 month +2 month to 2 year 3 year 4 year 9 year

Sources of Information

Parenting Books

Immediate Family

Online Forums

Potential Touch Points

Pediatric Clinics Social Media

Mother is the major Decision maker

Child becomes a major INFLUENCER

Playschools

Mother’s not available

Child becomes the DECISION MAKER

• Approximately 44% of all mothers report physical and/or emotional impairment during the first 2 months after birth.*• Kids become Influencers at about 3 years age. Soon enough, they turn into Decision Makers.• Mothers look for Trust in the Brand. Kids look for Variety & Value for Money.

* Based on responses of 903 mothers. Declercq, ER and Sakala C, et al. New mothers speak out. The Childbirth Connection. 2008, pg. 18.

Mass MediaMagazines

Understanding The Growth Of The Industry And Age Wise Presence Of Competitors




OVERVIEW• Merchandise Retail – $500 billion• Corporate Retail - $38 billion• 27 Million child births in 2012• Overall Industry CAGR 17%

Cosmetics Baby Food Diapers Apparel Accessories Toys & Others0

100

200

300

400

500

600

700

7.9 5.4 1.9

586.1

27 19.3

Baby Care Market Size (Rs. 646 Billion)

CAGR 12% 10% 18% 18% 12% 18%

Pre-delivery period Toddlers (0-2 years) Kids (2-9 years)

Brands Present in Kids Apparels, Footwear & Accessories

COMPETITORS

•Mom & Me and Mothercare have product offerings in 11 categories.•The early introduction of brand provides an advantage

Building Connect With Mom At The Identified Touch Points Across 9 Months in order to Acquire new customers to the store.




Gynecologist

• Brand introduction on discovery of pregnancy

• Mom & Me branded informative pregnancy book and congratulation card• Discount Coupons• Product Catalogue• Store Information

Online Communities(Information Search)

• Strategic Partnership with babycentre.in• Advertise events & workshops

on the site• Utilize the customer information

for database marketing• Provide content to the site

Nursing Home / Hospitals (Delivery)

• Partner with Nursing Homes/Hospitals• Mom & Me branded gift pack

Immediate Connect

Community Building

Emotional Appeal

1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month

Other BTL activities

• Display catalogues in Clinics• Pamphlets in near by residential areas• Discount Coupons in Hospitals

The Cluster Centers Indicate The Importance Given By Each Segment To The Specific Attribute.




Ambience Store Layout Range of Products for Kids

Range of Products for Moms

Value for Money All Products under One Roof

Quality of Products Quality of Services0123456789

7 7 76

78 8 8

4 4

65

7 78

7

Cluster Centers of Loyal & Disloyal Customers

Loyal Disloyal

• Rated the store and products relatively higher• Higher Percentage of Loyalty Card Holders• Greater Interest in parenting workshops.

• Rated the store and products relatively less• Higher Percentage of Loyalty Card Holders• Did not find the parenting workshops useful.

Cluster 1 - Loyal Cluster 2 - Disloyal

Identified 6 Key Affinity Builders that are significant for Loyal Customers of Mom & Me.




Range of Products for BabiesRange of Products for Moms

Quality of ProductsComfort: 1-Stop Shop

AmbienceQuality of Service

Store Layout

0.00 5.00 10.00 15.00 20.00 25.000.23

10.1811.24

11.4013.96

15.01

21.99

Importance of Affi nity Builders

Key Affinity Builders Identified• Store Layout• Quality of Service

• Ambience• Comfort: 1-Stop Shop

• Quality of Products• Range of Products for Moms

Key Takeaway

• Store Layout, Ambience and Quality of Services are major differentiating factors between the loyal and disloyal customers.

• Standardize Store Planogram & reduce clutter in the store to retain loyalty.• Baby Products appeal to both the customer segments.

Increase CLV = Increase Gross Returns (Margins, Ticket Size &Frequency) + Increase Customer Lifespan (Engagement)




Business Objective

Customer Engagement

Marketing Objective

Understanding Change of Decision

Parameters

Store Attractiveness

E-commerce engagement

Different Color scheme

& Ambiance appealing toKids from 4-9

years

Kid becomes Decision Maker:Parameters change from TRUST to VARIETY & VFM

Increasing Customer Lifespan

1.Target Fathers to shop online.

2.Partner with Banks to get Database & offer discounts

Sponsor Playschool

Events& Competitions

Business Objective

Increase Margins

Marketing Objective

Increase Ticket Size

Increase Frequency of

Visits

Increase Product Portfolio

Regularly update

product variety

Cross-selling/Bundling

similar purchases

Increasing Gross Returns

1. Increase the number of Pvt. Labels.

2. Free floor space in store to add more products.

Increasing Customer Lifetime Value

E-tailing Market Is Booming And Indians Are Becoming More Comfortable With Online Purchases.




Reasons to Enter

• 50 million Indians shop online

• Can offer more variety through online channel

• The company already has a high local presence, virtual channels can simplify the purchasing process while services can be rendered through the outlet

• Weekdays – More Online Sales; Weekends – More Store Sales

• Higher Margins – up to 25-50% vs. 15-30% in retail

• In Future,• Retail outlets – Experiential Zones

• Online Stores – Access and Convenience2012 2017

0200400600800

1000120014001600

E-tailing Market

CAGR 50%

Competitors – Over 10 competitors operating in India

Firstcry.com – 36 stores across 31 cities & towns

Olive Tree Retail Pvt. Ltd. retail company has 17 stores in

Metropolitan cities

Click & Mortar Stores E-commerce Players

Established Since 2009Established Since 2010

Critical Analysis of momandme.in & momandmeshop.in




Store Locator tab not displayed prominently.

momandme.in momandmeshop.in Focus on discounts in direct conflict

with brand positioning.

Perceived Problem Solution

Multiple Websites create confusion. Create a single domain to avoid confusion and division of web traffic.

Multiple displays of Apparel overshadowing other product lines.

Display other product lines such as baby care products more prominently.

Discount offers on the first fold give a non premium feel to the website.

Avoid showcasing discounted offers which is in direct conflict with the premium positioning of the brand.

Online Chat Assistance is unique

and useful.

Multiple Displays of Apparel

overshadowing other product lines.

Website Comparison Suggests Better Use Of Internet Marketing And Social Media Integration




Parameters momandme.in momandmeshop.in firstcry.com babyoye.com babycenter.inDaily Visitors 1,550 3,818 37,926 36,120 13,923Daily Page Views 3,255 20,617 170,667 223,944 37,592Average Page/User 2.1 5.4 4.5 6.2 2.69SEO Score 63.3% 62.5% 68.2% 75.3% 72%Bounce Rate 51.3% 50.2% 41% 44.3% 58.7%Prominence to Social Media

X X X ✔ X

Online Chat Assistance

✔ X X X X

Testimonials ✔ ✔

Informative Content ✔ X X X ✔

•Need to promote website within the Mom & Me company stores•Better positioning of social media content on the Mom & Me websites•Bounce Rate of the website can be improved by:• Improving the site structure• Improving the structure of the URL

Firstcry.com and Babyoye.com drive more than 10 times the visitors on Mom & Me sites

Average page / user on momandme.in very low compared to other sites

No Prominence to Social Media on Mom & Me sites

The Bounce Rate for Mom & Me is more as compared to the industry standards• Improve Navigation

• Optimize Content

Centralized Delivery Model Leads To Longer Delivery Time And Higher Cost




Online Order Placed by Customer

Order Processed at Distribution Center

Order Shipped to Customer to be Received in 1-4 Days

Product Delivered, Payment Collected, Order Closed

Current Order Filling Process

E-commerce Business Unit is operating under

loses

Main Distribution Center – Mumbai

Regional Distribution Center – Delhi

Most Orders are inter-city transfers. High cost

on logistics and delivery.

Takeaways

Decentralized Delivery Model Can Provide Significant Cost Advantages Along With Better Service Delivery




PARAMETERS Centralized Decentralized

Delivery Cost High Low

Benefit to Customer None Lower Price

Last Mile Access Extensive Poor

Service Delivery Low High

Reverse Logistics High Cost Low Cost

Delivery Time 3-4 days 0-1 day

Store in same city

NO

Nearest MDC/RDC

Pass on Order to

nearest store. Same day Clearing

Yes

• High Involvement Products• Personalized Delivery for

Relationship Building

• Lower Cost using Intra-City Courier Service

• Low Involvement Products

KeyAccounts

RepeatPurchases

Customer Value Pyramid

Online Order

Delivery by domestic courier.

*Refer Appendix for Calculations

•Option of passing part of savings to customer•Faster Order Processing•Faster Inventory Turnover•Reduced reverse logistics cost

Advantages of Decentralized Model

Direct Savings of 49.36 % on logistics cost

Early Mover Advantage Opportunity In M-commerce In This Industry And Ensuring Constant Connect With Consumer




Link Loyalty Card with Mobile App

History of Purchases

available with customer

Monitor Purchase History

and Usage

Notify Customer to repurchase

fast moving items

Take Order from Mobile App

directly

Linking all Customer Data with App

Keep aware of our Product Offerings

Monitor Purchases made through Mom & Me. Give

targeted Offers

Incentivize to make e-purchase from Mom &

Me

Convenience of ordering

• Over 80% of top selling apps in education category target children• Since 2009, % of apps for children in every age category has risen, accompanied by a decrease in apps for adults.• Average price of children’s apps has risen by about a dollar, from $1.13 in 2009 to $2.14 in 2011• 47% of higher income parents have downloaded apps for their children in 2011

Educational Content for

Mom’s

Educational Contents for

Kids

Value Proposition in Mob. App

Inventory Monitoring & Mobile

Commerce

Recommendations For Use Of Internet Marketing To Drive Traffic To E-commerce




Increase web traffic & SEO by listings on Fast moving e-commerce sites Snapdeal & Flipkart have better reach than Mom&Me

*http://www.alexa.com/topsites/countries/IN

Use Facebook Ads to reach digitally active parentsDetermined by pages and apps connected

to, on facebook.

Publicize convenience of Ecommerce during the store experience

Promote Website via Search Engine Optimization

Mobile App Integration

► Exclusive coupons for slow moving goods

► Customer has option of availing coupon online or in-store

► Flipkart is ranked 10th and Snapdeal is ranked 18th on list of top sites in India*

► Location, Age and Gender - to reach out to target audience ► Targeting by Precise Interests

http://www.alexa.com/topsites/countries/IN

Establishment Of Mom & Me Express




Advantages1)Brand activation in smaller cities & towns2)Faster inventory turnover3)Lower levels of Capital required4)Higher Market Penetration5)Increased barrier to entry by competitive concepts6)First Mover Advantage to consolidate brand

Year 2009 2010 2011 2012 2013No. Of Stores 3 18 49 77 114YoY Growth 500% 172% 57% 48%

Geometric Mean (CAGR) 124%

Historical Store Expansion Strategy

CAGR of Mom & Me Stores has been 124%

Mom & Me Express

1)Establish only in Tier 2 and Tier 3 cities.2)Store only fast moving goods3)Store Size smaller than 2000 sq. ft.4)Increase presence supports e-commerce sales along with

decentralized logistics.

• Madurai• Rajkot• Anand• Agra• Surat• Patna• Gandhinagar• Varanasi• Jabalpur

• Jamshedpur• Dhanbad• Bhubaneswar• Srinagar• Jodhpur• Bikaner• Gwalior• Panjim

List of Cities for Mom & Me Express

Business Expansion Over The Next 5 Years : 2013 To 2018




Customer Base CAGR 20%

Ticket Size CAGR 10%

Store CAGR 39%

Growth Parameters AssumptionsIndustry Growth of 17% + Growth from Marketing Efforts

Growth of Economy & High Rate of CPI Inflation

Conservative Figure after Historical 124% Store Growth till 2013

•Focus on Marketing Efforts, Acquire more customers & make stores profitable•Build strong Brand Identity

•Document Standard Procedures to be replicated in other stores•Establish Mom & Me Express •Promote E-Commerce extensively

•Establish Mom & Me Express stores in Tier 2 & 3 cities.•Consolidate Mom & Me by establishing more stores in Metros

•Expand store presence in Tier2 & 3 cities. •Build strong database of loyal customers

•Establish 244 stores by 2018 which includes both Mom & Me stores and Mom & Me Express stores

2014 2015 2016 2017 2018

Based on these assumptions, Mom & Me to contribute Rs. 1800 Cr towards Mahindra Retail by 2018

Year 2013 2018

No. of Stores 114 244

Annual Sales Rs. 216 Crore Rs. 1800 Crore

THANK YOU !

Appendix – I : Cost Benefit Analysis for Decentralized Model

Daily Page Visitors 3967

Conversion Rate 1.5%

Actual Daily Customers 60

Sourced from statscrop.com

Standard E-Commerce Conversion Rate in India

Centralized Model

Decentralized Model

National Delivery Cost Rs. 115

Local Delivery Cost Rs. 50

No. of Daily Local Orders 15 60

No. of Daily National Orders 45 0

Total Local Delivery Cost Rs. 750 Rs. 3,000

Total National Delivery Cost Rs. 5,175 Rs. 0

Total Delivery Cost Rs. 5,925 Rs. 3,000

Centralized – All orders shipped from MumbaiDecentralized – Orders shipped from local stores

Standard E-Commerce Third Party Logistic Rates

Centralized – 1/4 orders from Mumbai Decentralized – All orders in cities with local stores

Key Takeaway – Savings of 49.36% on logistics cost

Appendix 2 : Projected Mom & Me Store Growth

YearNumber of

StoresRate of Growth

(YoY)Geometric Mean

(CAGR)

2009 3

2010 18 500%

2011 49 172%

2012 77 57%

2013 114 48% 124%

2014 (P) 144 26%

2015 (P) 174 21%

2016 (P) 199 14%

2017 (P) 224 13%

2018 (P) 244 9% 39% 2009 2010 2011 2012 2013 2014 (P)

2015 (P)

2016 (P)

2017 (P)

2018 (P)

0

50

100

150

200

250

300

318

49

77

114

144

174199

224244

Number of Stores

Appendix 3: Store Expansion Strategy

2013 2014 (P) 2015 (P) 2016 (P) 2017 (P) 2018 (P)

Week Days Customers 30 36 43 52 62 75Weekends Customers 115 138 166 199 238 286Customer Groups/week 380 456 547 657 788 946Customer Conversion @ 60% 228 274 328 394 473 567Average Ticket Size Rs. 1,600 Rs. 1,760 Rs. 1,936 Rs. 2,130 Rs. 2,343 Rs. 2,577Sales per week Rs. 3,64,800 Rs. 4,81,536 Rs. 6,35,628 Rs. 8,39,028 Rs. 11,07,517 Rs. 14,61,923Sales/year Rs. 1,89,69,600 Rs. 2,50,39,872 Rs. 3,30,52,631 Rs. 4,36,29,473 Rs. 5,75,90,904 Rs. 7,60,19,994Number of Stores 114 144 174 199 224 244

Stores Sales/Year Rs. 2,16,25,34,400

Rs. 3,60,57,41,568

Rs. 5,75,11,57,801 Rs. 8,68,22,65,122

Rs. 12,90,03,62,569

Rs. 18,54,88,78,465

CAGR Customer Base 25%Ticket Size CAGR 10%

Store CAGR 39%Assumptions

With the based assumptions, Mom & Me to contribute Rs. 1,800 Cr towards Mahindra Retail

Documents

Ignus Imtg Retail Varun