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Retail Management Model Question Paper
N.B.: (1) Allquestions in Section I arecompulsory. (2)Attempt
any three more questions from
Section II.(3) Figures to theright indicate marks.
Section I
(1) Explain in detail following concepts: (any Five) (15)(a)
Mark up pricing. (b) Assortment planning. (c) Store design. (d)
Franchising. (e) Price
cost trade off. (f) Multi channel retailing.
(2) Case Study:
Vishal Retail: Not another Subhiksha (15)
With a humble beginning in 1986 from Kolkata, the conglomerate
currently operates 178
retail stores across the country. However, experts say, like
every other business houses, this
retailer of aam aadmi is having its tough times. No prizes for
guessing. India Retailing speaksabout Indias Premiere discount
retailer Vishal Retail.
If you go by the pace of growth initially shown by the retailer,
you will simply placeVishal as one among the fastest growing retail
groups in India. Its outlets cater to almost all
price ranges and offer over 70,000 product categories. Still,
something seems going wrong
and is pushing the industry to the back foot. India Retailing
attempted to study the journey of Vishal Retail, especially the
journey
during the last two financial quarters when every sunrise
brought a new twist to the company
and how it has overcome the situation. The company started the
third quarter of the financial
year 2008-09 with a very positive note after posting a net
profit of Rs. 40.76 million by theend of the second quarter. In the
second quarter ended on September 30, 2008, the total
income of the company stayed at Rs. 3607.55 million while the
total expenditure stood at Rs.3276.51 million. At that time, the
company had 154 stores across 97 cities covering a retailspace of
approximately 27.10 lakh square feet.
With the starting of the third quarter of the same financial
year in October 2008, the
company announced aggressive expansion plan to open 100 new
stores to have a total of 260stores across the country by March
2009. In sync with this policy, Vishal opened 11 outlets
within a time span of just 15 days in November 2008. However, in
mid December, it was in
news that the promoters of the company who hold around 63.93 per
cent stake in Vishal
Retail are evaluating options to sell the stakes. At that time,
the retailers shares fell to a life-time low of Rs. 55.60 on
November 21, 2008 from a peak of Rs. 1,001 on January 15, 2008.
But the company came out with a denial of stake sale and
clarified saying that all are
speculative and there is no chance of such happenings. The
quarter went by. The company started computing its balance sheets
to submit the
third quarter result. But surprisingly, after considerable sales
happenings during the quarter
backed by festivities, the company found the third-quarter
profit dropped 86 per cent to Rs.2.15 crore. However, the company
was found vibrant to beat unruly slowdown threats and
tried to keep the expansion rolling in its way.
But the company could not hide from the reality and sometimes in
the last part of January
2009, officially announced the shutting down of two of its
stores one at Color Scape
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Shopping Mall, Mulund, Mumbai and the other at Shyam Nager
Scheme, Pal Link Road,
Jodhpur in Rajasthan. At that point itself, the company was
found lagging long behind from
its projected growth of having 260 stores by March 2009, while
in actuality the count wasaround 180 stores.
The struggle started. The retailer was desperately looking for
alternatives to compete with
the rule of the game. Besides adopting
franchisee-owned-franchisee operated model andshop-in-shop formats,
it has identified resizing and relocation of existing stores as a
viable
alternative to compete with the situation. Further, in a major
development, the company
brought the property owners on the table sometimes in February
this year for renegotiation of
rentals and came out quite successfully getting the job done.
The approach turned quitesuccessful and the company managed to
reduce rentals by about 25 per cent across 40 stores
nationally.
Speaking to India Retailing, Ambeek Khemka, group president,
Vishal Retail, said, Wespend approximately Rs. 9 crore (Rs. 90
million) on rentals annually and with this
achievement we can save a considerable amount this year. This
money will not only help
make the company capital-strong in this economic slowdown but
will also help fund the
future expansion plans of the company. When India Retailing
squeezed Khemka to learn whether or not the decision of
relocating
the stores was to avoid tough competition from other retailers
in the adjoining areas, Khemka
said, There are various factors that contribute to business
decisions like relocation andresizing. It is a strategic decision
to cope up with the current economic scenario to cut down
the expenses of rents and other liabilities,. Besides, in some
places, the format of the store
needed change. Its not competition; rather we consider
competition as driving force toexcel.
India Retailing further delved deep and found that Vishal has 20
private labels under its
brand portfolio eight in apparel and six each in FMCG and non
apparel category. When theprivate label apparel category
contributes 35-40 per cent margin as against 30 per cent in
branded apparel, 20 per cent of FMCG sales come from private
labels including V Fresh, V
Klean, V Needs and Skin & Body and the remaining 25 per cent
of its turnover comes fromnon apparel category that includes
footwear and luggage, home furnishing, toys, games,
stationery and consumer durables. In total, about 20 per cent
sales come from private labels
and the margin is as high as 40-50 per cent, as against 15-20
per cent on the other brands it
sells. Also, the company operates around 70 per cent of its
stores in tier III towns and citieswhere the prices of land are
going down day by day.
Despite all such things at its favour and successfully managing
all the nuances of
business, the company was found shutting its stores at regular
intervals. Experts say, the company, at any cost, wants to survive
the next two quarters, and to do
so, it will have to shut down some of its unviable stores. But
no one in retail industry wants
to see Vishal to be another Subhiksha in India.
Questions:
(a) Why is the company finding it very difficult to keep
expenditures under control?
(b) Is shutting down of stores remain the last ditch option open
to it?
(c) Do you think Vishal mega mart will also face same
consequence like Subhiksha? Giveyour opinion on the same?
