Swot Analysis Retail

7/28/2019 Swot Analysis Retail

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SWOT Analysis The Strength-Weakness-Opportunities-Threat analysis of the Retail industry can be done as follows:Strengths: 1) Eliminates links in the purchasing chain (direct manufacturer-retailer-customer chain).2) Technology driven (hence less error prone)3) Consultative selling

4) Presence of big industry houses (Tatas, Rahejas etc.) which can absorb loses.5) Consumer service.6) Variety of products under one roof.7) Authentic products with Guarantee (some cases)8) Pleasant shopping ambience.9) Research driven plus competent manpower.Weaknesses: 1) Lowest per capita space in the world with 2 sq.ft/1000 (congestion)2) Prices more as compared to specialized shops (in India).3) Reluctance of people (Middle and lower class)4) Non-availability of huge land spaces at prime slots (especially in the metros)5) High overhead and labor costs.Opportunities:

1) Lifestyle changes or status consciousness (NRS Survey)2) Ready availability of real estate in smaller towns.3) Improved sourcing options.4) Increasing time pressure for Indian woman.5) Focus on more quality, variety and easy availability under one roof.6) Increase in disposable income (NRS Survey)7) Feel and touch shopping.8) No foreign competition.9) Increasing media exposure to brand.Threats: 1) Roadside bargains.2) Other retail outlets (organized and unorganized)3) Personal and homely attention at smaller Shops4) Availability of credit at other retail (unorganized) outlets.5) Competition from unorganized sector.6) Government policies.Problems Paucity of expert management and trained staff. Ban on FDI. Political considerations. Lack of recognization of importance of retailing as a driver of economic growth. High cost of real estate at hot locations . Complex regulatory regime. Population with diverse cultural background. Fragmented makeup of the consuming market, complex geographical &culture structure.

Poor infrastructural linkages.Ease of Entry and Exit by players Complex business that requires substantial skills in areas like logistics 2P s -Property and Personnel are the biggest problems to venture into retailing, since huge area (approx.1,00,000 square feet) is required for setting up a high- class retailing outlet. Also there s a dearth of skilledpersonnel in retailing since it is still thought of a low-class, low paying jobs. Huge marketing required after setting up an organized retailing shop (full-line stores) since competitionis with local retailers (unorganized) who are well acquainted with local needs. Huge infrastructure required for setting up an organized retailing shop (Power, logistics systems etc.)


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GROWTH DRIVERS FOR RETAILING SECTOR Organized retailing is spreading and making its present felt in different parts of the country. Severalgrowth drivers are responsible for this boom of retail industry.There has been an increase in the presence of MNCs. The industrial boom has led to the emergence of new residential areas with aggregation of professionals as well as rapid increase in the number of double -income households and growth of the rich/upper middle class with increased purchasing power.

This has been combined with the increasing need for touch and feel shopping, especially for the largemigrant population. All these factors have together acted favorably in nurturing the industry.One of the main influences in the growth of retail industry is the consumer pull. In fact this seems to bethe most important driving factor behind the sustenance of the industry.With the increase in double-income households, working women, there is an increasing pressure on timewith very little time available for leisure. So under these circumstances people are preferring theconvenience of one stop shopping. They are also seeking speed and efficiency in processing, as a result.Being more aware, consumers are on the lookout for more information, better quality, hygiene and as wellas increased customer service. These changes in consumer behavior also augur well for the retailindustry.ADVERTISING & PROMOTIONAL STRATEGIES Retail, today is a combination of revolution and evolution. The retail industry will continue to evolve andchange. With increasing interest in non-store retailing (catalogue shopping, online shopping, home

delivery), companies will have to redefine and plan new shopping environments that make shoppingexperience as enjoyable as possible. While unique displays add flavor to the store s interior,merchandising displays help the customer learn about a product and to promote an impulse purchase.The present study further confirms that displays play a very significant role in increasing sales.MERCHANDISING: Successful retailers today have found that they can dramatically increase their sales by merchandisingitems in a way that creates good impres sion. The term merchandising can be defined as the promotionof a product by developing strategies for packaging and displaying it. Effective merchandising can helpgenerate more customer traffic, amplify repeat business, increase no of customers who make purchasesand increase the size of the purchases that take place- all leading to increase sales. In-storemerchandising is no longer a commodities-driven method of organizing a product at retail, but rather thelast three feet of any comprehensive and integrated marketing plan. Merchandising plays a crucial role inleveraging brands, since it talks to the consumer when money, product and willingness to buy convergeat the retail outlet. The KSA consumer outlook study (2000) in India established that 75% of consumerslook out for attractive display in a store. The other important attributes wereSatisfaction with stores

Attributes % Of respondents looking out for this attribute in a retail outlet.Polite & courteous sales people 86.1Quality of products 85.9Non-intrusive sales people 76.2Value for money 75.1

Attractive displays 75.0Range of products 65.8Schemes & promotions 48.8Exchange/ return policy 44.1

A trial room 32.0 Acceptance of credit cards 25.1 An entertainment center for children 10.0The price is the most important influencer. It is almost doubly important than retailer suggestion (push).There is a very thin line between schemes and brand name. This means even a new brand backed bygood schemes and reasonable price can find favor with the customer. Also providing incentives to theretailer to push the brand may not be a sound strategy after all. Displays scored better than retailer suggestion. This implies eye-catching displays can do wonders to brand sales.Key success factors for a display are:


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Sales force must be aware of the objective of the display and the retailer must share the same.The retail outlet must fit the profile for the display strategy.All key elements of design and merchandising must be coordinated to get the right effect.Sales force must scan the surrounding environment to gauge the effect of climate as well as competitionon proposed place of display.The height of display must be such that it meets the eye level of customer.

Above all displays must be eye catching. Hence some time must be spent to maintain the display onrepeat visits by sales force.Currently, domestic discount formats within the organized retail market include The Home Stores SabkaBazaar, Giant, Big Bazaar and the Tirupati Group-owned Hum Sabka Dilli Bazaar and each of them isbang on course. Mr. Sanjeev Kapoor, Managing Director of the recently-set-up Dilli Bazaar, for example,intends to sell FMCG products at anywhere between 3-30 per cent below MRP. Offering flat rates onspecific days is also beco ming common at discount stores such as these. According to Mr Kapoor, Bulkbuying directly from the company cuts down on the distribution and dealer margins significantly, whichmakes such discounting possible. In order to survive in today s tough retail climate, companies must continually innovate in ways to createstronger, more direct links with their customers. At the same time retailers must focus on the mostdemanding customers who want customization, value and service. New store designs must assault theconsumer s sense of sight, sound, Taste, touch and smell -preferably all at the same time. In thisenvironment, merchandising and esp. displays is more important than ever, as being top-of-mind willkeep the brand growing.Impact of retail sector in India: In India, the retail sector is the second largest employer after agriculture. The retail industry in India isestimated to employ about 10% of the total labor force. The retail industry in India is enjoying boom timeand job opportunities in retailing have been increasing. In fact, retailing has emerged as a new stream of management curriculum, providing new areas of employment. The retailing sector in India is highlyfragmented and predominantly consists of small independent, owner-managed shops.Given the size, and the geographical, cultural and socio-economic diversity of India, there is no rolemodel for Indian suppliers and retailers to adapt or expand in the Indian context.Consumer perspective: Consumer response to supermarkets has been moderate because most do not have access totransportation to a supermarket and are still in the habit of buying fresh produce daily from local stores.This is mostly due to the proximity to homes and personal service of local stores. Self-serve supermarketsare a more recent phenomenon in India. These self-service stores stock a wide range of groceries,snacks, processed foods, confectionery items, and cleaning and personal care products.Many shoppers also have the perception that prices are higher at supermarkets because they are large,brightly lit, and air-conditioned. Higher-income consumers focus more on convenience and quality.In urban India, families are experiencing growth in income and dearth of time. More and more women arealso turning to corporate jobs, which is adding to the family income but making lifestyles extremely busy.Rising incomes has led to increasing demand for better quality products while lack of time has led ademand for convenience and service.Government Policies Government of India (or for that matter, any of the State Governments) do not even consider this sector worthy of being deemed as an industry status or to formulate any strategy or directive to support or

nurture it. Foreign Direct Investment (FDI) in the retailing sector is not permitted yet, in order to protect theinterests of the small retailers. There is a strong lobby of small traders that has been vocal on the issue of not permitting FDI into retail. The lobby is based on the premise that modern retail will impact thelivelihood of millions of small family-run businesses. Since 1997, the government has barred foreignparticipation in the retail sector, except for the cash-and-carry wholesale route where wholesalers cannotopen retail shops to sell to consumers directly, 100 percent foreign ownership is permitted, and for franchising. However, the Commerce Department is considering a proposal to allow 100% FDI indepartment stores and 5-star shopping arcades, as these would not compete with small retailers.Major Regulations and Licenses Required:


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Shop and establishment licenseNOC from Fire Brigade regarding fire safety normsConforming to Labour LawsLicense for fabrics, yarn and other inflammables like cosmeticsIPRS, PPLCONCLUSION

The task lying ahead of Indian retail is an onerous one. After grappling against the wild tides of the pastdecade, a few perseverant players have evolved into mature players and are confident of the way ahead.Plenty of opportunity exists and the formidable task is to tap this opportunity, in a unique country likeIndia.The huge potential can be tapped if the following three aspects are stressed: What does it take to make a customer walk into your store and buy productsHow many such outlets can we open across the country to achieve national status and more importantlyeconomies of scale.There should be a clear-cut vision and perseverance to dig in their heels and wait for the returns that willkick in only a few years later.The retail industry in India is witnessing a high level of organized business activity CRM, supply chainmanagement, visual merchandising & customer loyalty programs are now buzzwords in the industry. Nowhere is this transformation more evident than in the organized retail segment for apparel and lifestyleproducts which is expected to grow at more than 25% to reach Rs12850 crores by 2005.Retail may soon see FDI coming in.

After an initial set back, the Indian retailers are now coping up in a phased manner. The backend & frontend are equally geared up. The key players in the market have learnt to live up with the existing problemsand find innovative solution to work around them and the day is not far-off when organized retailingbecomes the primary way of selling.Future Prospects The size of the industry is estimated at 16,000 crore and is growing at the rate of 18-20 percent per annum. ETIG (Economic times estimate guide) estimates that the retailing industry will cross the 37,000crore sales mark by the year 2007 and could even exceed this level if the flow of investment in the sector accelerate. Departmental stores are coming up in most cities and many more are planned to be opening in thecoming years. An increase in purchasing power (NRS survey) of the urban population is leading to a higher demand for better lifestyle which is leading to a need for better shopping ambience, superior quality products andimproved service. All these factors form the basis for organized retailing. With the advent of modern technology, Indian retailers have been spending more on setting up ITsystems, which augurs well for the retail industry. If FDI is allowed into organized retail, it will be a defining moment into Indian retail as it will allow moreforeign players into organized retail, which will lead to increased competition and hence improvement inperformance and quality.Rural Market: Indian retailing is currently largely urban and based on models emulated from the US. What is missing isa clear connection to Indian realities. There is a huge untapped potential in the rural market for retailing.India s rural market stated as a percentage of world population is 12.2 percent. Rural households in India

form about 72 percent of the total households- a huge market. Even the current consumption of certaindurables and non- durables by rural customers is more than that of urban consumers. Also literacy ratesin villages have increased considerably, thus bringing about a shift in consumer tastes.The Hariyali Kisan Bazar (HKB), initiated by the Delhi-based DCM Shriram Consolidated Ltd, is onemodel catering to retailing in rural areas. It is located at a place close to Shahjahanpur, 167km fromLucknow. It is a retail store that specifically caters to rural people. It has targeted the farmers supplyingsugarcane to the sugar mill next door as the main customer. In addition to providing functional products, italso provides farmers with certain other value added services like computerized transactions, touch-


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screen info kiosk, technical advisory services. Thus, whoever would follow their footsteps and go for retailing in the rural areas stand to gain a lot.The time to shift the gears and accelerate the pace of retail development has arrived and it is up toretailers and potential investors to get their show on the roads. Some retailers are doing this and havemassive expansion plans in place. WE NEED MORE LIKE THEM.PROFILE OF SOME MAJOR MARKET PLAYERS

SHOPPERS STOP Shoppers Stop, a K. Raheja Group company, started its operations in 1991 with a mega retail store in Andheri, Mumbai. It is one of the major retailers in India with 13 stores across the country out of which 5are operational in Mumbai. Its main area of business consists of apparel and accessories. One of theexecutives of Shoppers Stop Mr. Rajesh Shetty, Department Manager of Chembur outlet providedvaluable information about the organization.Competitors:LifestyleBig Bazaar PantaloonsTarget segment: It is has been its strategy to target higher income group consumers. Although it has been quite a smaller group in India but they target the entire share of the consumer s wallet. Customer Policy: The USP of Shoppers Stop is customer service. It focuses on customer loyalty and tries to promoteshopping as an experience. Shoppers Stop boasts of being Third in the country in terms of loyal customer base with 3.5 lac customers to its credit. As it is, 60% of its sales are through loyalty programme calledFirst Citizen Club.HR Policies: Shoppers Stop generally recruits undergraduates for its floor operations. Like any other retail businessthey also suffer from higher attrition rate. It organizes meets and get-togethers for its employees.Future Plans: Shoppers Stop strategy about future expansion is that it intends to exploit the cosmopolitan cities in Indiato the fullest. In the next phase it would be expanding to the other major Indian cities. Keeping thisobjective in mind it is planning to increase its store line from 13 to 38 in the next year. In addition, it alsoplans to open its outlet in Dubai.WILLS LIFESTYLE Beginning with its initial offering of Wills Sport premium relaxed wear from the first store at SouthExtension, New Delhi in July 2000, ITC has in a short span of time expanded its basket of offerings to theformal segment with Wills Classic formal wear and to the social evening segment with Wills Clublife,evening wear. There are currently 48 stores in 38 cities across the length and breadth of the country andthese have established themselves as preferred shopping destinations in the prime shopping districts. Atthe Images Fashion Awards 2001, Wills Lifestyle was declared Most Admired Exclusive Retail Chain of the year. Wills Classic formal wear, launched in November 2002, is positioned as the brand for New AgeLeaders, who encourage teamwork, innovation and enterprise, breaking the shackles of hierarchy anddomination. ITC launched Wills Clublife in May 2003 in the growing eveningwear segment, therebystrengthening its portfolio in the premium segment. ITC launched its brand of men s apparel in thepopular seg ment, John Players , in December 2002.

TRENT STORES Introduction : Trent Ltd. s Westside stores promise customers an international shopping experience andvalue-for-money. High quality, contemporary designs and a plethora of products have been successfullybalanced to create the ultimate shopping experience.Location : What began as just one store at Bangalore has now expanded to other cities, such as Mumbai,Hyderabad, Chennai, New Delhi, Pune, Kolkata, Nagpur and Ahmedabad. The Westside stores haveseveral departments to meet the varied shopping needs of customers. These include the menswear,womenswear, lingerie, kidswear, household accessories, cosmetics and perfumes sections.Complementing the shopping ambience is a coffee shop, Caf West, managed by the Taj Group.


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Strategy : Trent has primarily focused on garments and accessories. It has decided to build in-storebrands rather than stock established brands. This would be beneficial for the company over long term, asmargins earned on own brands will be higher.Customer Policy : Trent has positioned its products in the value for money segment by offering premiumquality products at affordable prices. The company proposes to start 12 stores all over the country in thenext 2 years.

The company s business can be categorized into two divisions, namely, Apparels division and other products division. During FY 2000 the company s apparels division contributed 98% of the total sales of Rs336mn. (of the total turnover of Rs495mn Rs336 came from sales of goods and rest form income fromcurrent investments) rest 2% came from other products division. During the year FY00 the company sold1.23mn units of apparels at an average realization of Rs267 per unit. The realizations increased by 26%over that of previous year. During the year of the total sales 85.4% were finished goods purchases andrest was in-house manufacturing.

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Swot Analysis Retail