Group 4

Muebles: The Home Building Store

• Has largest retail density in world• Contributes 10%-11% to GDP• Home building market highly fragmented• Home & Building Store was broadly

divided into two categories• Building Materials Segment• Soft Furnishing Segment

• Competition very high due to entry of foreign players

Indian Retail Industry

• Mission• To reduce the trauma of home building

• A home building & Improvement Store• Part of Casa Mobalje Group• Strategically located at Ahmedabad• Communicaton mix in both English &

Gujrati languange.

Muebles

• Completely Customer Centric (all segments)• Provided CAD/CAM assist to choose

better designs• Provided differentiated branded products• Had ample safety stock to meet the

demand• Concept of Shop-in-Shop• No invisibles present in the store

The Store

• Mr. Muebles of Yesteryear• Homebuilder• Renovator• Apartment Owner• Professionals

• Today’s Mr.Muebles• Young & Educated professional• High Income level• Maintained a status in the society

Changing Customer Profile

• Repositioning Strategy

• Change in merchandise & delivery mechanism

• Entry of international competitor like IKEA

Concern

Market Size also

includes roads and

other projects

which are not the

customers of Muebles

Customers are not much involved in

building material as

their choice is majorly

influenced by contractors, architects

and designers

Cannot beat traditional market in terms of

price.

Women are not much

involved or interested

in this stage of home building.

Low sales and low

margin of just 8%.

Yes Building materials should be moved completely out of the store

Low involvement

Product

No requirement of any particular

environment or simulation for

purchase

Consumer Profiling has

changed

Major contributors to revenues and margins

are furnishing, hardware and

electrical products

Space UtilizationGMROF can’t be used as a metric on silo basis since positioning is of one stop shop.

Conversion rate for each segment/category is an important factor.

Seasonality of a particular category.

The categories which needed more display such as lighting has to be given more space in comparison to for ex paints etc.

Items in destination categories can be placed at upper floors so that on the way customers may glance through other items.

• Current:• 4 employees/floor• Grid format• DIY Model• 30% floor space allocated to partners

• One stop shop format- wide range of merchandise• Focus on value, convenience, variety and better

shopping experience• Friendly ambience • Emphasis on unique value added services• Destination store for Ahmadabad and nearby towns• Unique shopping experience- assured quality, wide

range of products at competitive price

Format

• Strategic location- near national highway• Cheaper land availability, low rental costs• Visibility from a great distance• Service like parking space • Better logistics

Location

• Stocked product under 5 major category• Simulated conditioning to give feeling of complete set

of offering• Branded product along with Mumbles store brand to

fill category• Offered narrow and deep selection• Judicious mix of one off and recurring purchase item• Mix of imported and domestic goods • Appeal to both consumer and professionals

Merchandising

•Varied across the product categories•Competitive and benchmarked against traditional hardware and home building material store•Charged premium price for destination product category•Loss leader, for traffic building

Pricing

• Multi pronged approach for communication• Judicious mix of media for brand and tactical advertisement• Used regional language to reach out to their target segment• Separate package depending upon awareness• Educating home builder and rewarding their purchase• Packages involved direct mails and tie-ups with companies• Targeted HR department of companies with special deal

Promotion

Target Market: People who are rich and the consuming class.

Target and Positioning

Target Segment

Income No of Household in 1994’

No of Household in 2005’

Very Rich 3,90,000 1 6

Consuming 81,000 – 3,90,000

30 75

• After Removing Building Material from the store• “A one stop shopping experience for

Home improvement solution at affordable prices for whole family”

New Positioning

• Environment:Growing Consumer Base: New

Customers.

Changes

Changes Implication

Growing consumer base No of Customers Growing

More Affluent Increase in purchasing power

Change in Lifestyle Positive Attitude towards improvement and renovation

Urbanisation Modern Outlook

A New Mr. Muebles Knows Muebles and considers Muebles as a Quality Store

MonthBudgeted

SalesActual Sales Growth in %

Feb-01 30 35  

Mar-01 35 38 8.6

Apr-01 38 40 5.3

May-01 40 42 5.0

Jun-01 58 55 31.0

Jul-01 68 75 36.4

Aug-01 75 84 12.0

Sep-01 50 75 -10.7

Oct-01 55 75 0.0

Nov-01 73 80 6.7

Dec-01 96 96 20.0

Jan-02 104 112 16.7

SalesIn Rs. lakhs

• In the past 7 months, the store has exceeded its expectations and achieved higher sales than budgeted.

• A slump in sales and expectations in sept and oct because of rainy season and winters. Otherwise a steady and stable growth

Sales

Feb-

01

Mar

-01

Apr-0

1

May

-01

Jun-

01

Jul-0

1

Aug-

01

Sep-

01

Oct-0

1

Nov-0

1

Dec-0

1

Jan-

02-200

20406080

100120

Sales Figures

Budgeted Sales Actual Sales Growth in %

Category Display Space Purchase Purchase/Space Rank

Bathroom Fittings 20 18 0.9 6

Furniture 15 2 0.1 9

Kitchen and Kitchen Appliances 15 23 1.5 3

Lighting 12 10 0.8 8

Hardware 15 13 0.9 7

Electrical Appliances 12 16 1.3 5

White Goods 4 6.7 1.7 2

Paints 3.5 5 1.4 4

Others 3.5 6.3 1.8 1

Sales Analysis Cont...

As suggested by data above, the sales per unit space for white goods and others is very high as compared to Kitchen, bathroom and furniture. So we suggest reducing the space for white goods and others and increase space for furniture (to encourage its sales) so as to implement and maintain our positioning of a home improvement store

• Mr Muebles: • Home Builder• Renovator• Apartment Owner• Professional

• Mr. Muebles thinks that Muebles is an Exclusive and Expensive Store.• That perception is needed to be broken

by the new positioning and communication

Customer Profile

• Young Professional, Well Educated, Post Grad, earns more than 30,000.• Car, Credit Cards, Consumer Durables,

Likely to replace TV/Fridge and buy a laptop.• 74% of Mr. Muebles are Professionals or

Business Men• 60% of them are either renovating or

refurnishing their house. 20% are building it

Changing Customer Profile

• Mainly buying accessories for Kitchen, Bathroom or electricals (57% of all sales)• Considers his own and his spouse’s choice.• Associates Muebles with quality and finds all he

needs at Muebles. But doesn’t consider that he is getting value for money at Muebles.• High expectations with Muebles. Frequently visits

the store• Majority of them owns a house.• Nearly all of them has Washing M/C and an air

conditioner. 75% have VCD, PC and Microwave. This shows that Mr. Muebles has nearly all the modern consumer durables he needs for utility as well as entertainment

Changing Customer Profile..

FORMAT• Current:• 4 employees/floor• No interference• Grid format• DIY Model• 30% floor space allocated to partners

• Suggested Format:• Freeflow Layout near check out with impulse

items• Maze format on other floors to induce travel

and spending more time• Floor wise product category segmentation to

provide experience• Family friendly with enough space and cafes,

kids corner, etc.

FORMAT

Location

• Ideally located outside main business district• Land availability for big store along with

ample parking space• Near major traffic intersection providing

space for billboard advertisement

Merchandising• Include some variety in consumer durables

to pull new professionals• Increase the price range and depth to cater

to more diverse customer needs• Reduction in space allocation to low GMROI

products like furniture,etc.• More stress on aesthetics to improve

experience

Pricing and Promotion• Pricing:

• Loss leader in low margin items to draw in customers

• Sell premium branded items at high margin with excellent after sales service

• Promotion:• Majorly through local newspapers, radio and local

channels• Billboard advertisement near building material

markets and the store• Through special magazines like Construction

World, Master Builder, etc. read by prospective customers

• Promote your services and after sales support to reduce dissonance regarding price.

Personnel• Training to be seen as investment, not as a

cost• Personnel to be made more solution

oriented making them believe that they are selling a solution, not a product• Include some female staff to make female

customers feel more comfortable• Workdays adjusted to take care of spikes

on weekends• Increase number of employees due o

continuous increase in footfalls