Sales promotion strategies in apparel retail industry

(A report submitted towards the partial fulfillment of the requirements of the two years

full-time Post Graduate Diploma in Management.)

 

ASIA-PACIFIC INSTITUTE OF MANAGEMENT

3, Institutional Area, Jasola, New Delhi 110025

SUBMITTED TO:                  SUBMITTED BY:

Dr. Ashish Chandra Sudip Kumar Mahato

2K10MKT43

TABLE OF CONTENT

CHAPTER NO. TITLE OF THE CHAPTER

EXECUTIVE SUMMARY

1. INTRODUCTION TO RETAILING

2. STUDY OF RETAIL STORE IN DELHI/NCR

3. RESEARCH METHODOLOGY

4. DATA ANALYSIS

5. COMPARATIVE STUDY

6. SUGGESTION

7. CONCLUSION

BIBLIOGRAPHY

Executive Summary

In a market like India, there is a constant clash between challenges and opportunities but chances favour those companies that are trying to establish themselves. To sustain in such a volatile market, companies have to bring innovative solutions. With the advent of modern format retailers and the growth of plastic cards, affluent urban Indians are shopping like never before.

As apparel retail is led by fashion, a retailer needs to keep a close watch on fashion amongst teenagers, as they are the trend setters. Seasonal variations on stocking pattern and need to clear inventory at the end of season should be understood by apparel retailer. This highlights the importance of sales promotions- short term activities which induces trade or consumer to buy now, rather than in future, as the value of apparel after the season goes down substantially and inventory carrying burden turns out to be very high. Apparel retailer needs to understand critical role of sales promotions.

The topic of the project is to perform a study on consumer sales promotion activities of the apparel retail stores in Delhi. To accomplish the above, three apparel retail stores of different well known business groups, located in Delhi NCR were surveyed and interviewed. The responses were analyzed and results were obtained. The core purpose of the survey was to study the sales promotion activities performed by apparel retail outlets which results in stimulating product interest, trial, purchase and stock clearance.

Literature Review:

Several studies on apparel retail sector and usage of promotions are reported in the context of developed markets. A brief overview is presented below:

Deeter-Schmelz, Dawn R.; Moore, Jesse N.; Goebel, Daniel J, (2000) examined Prestige clothing shopping by consumers by a confirmatory assessment and refinement of the PRECONscale. Aspects studied include background on the symbolic aspects of consumption; prestige shopping behavior; reassessment and refinement of the PRECON scale and impact of income and age on prestige shopping. The paper concludes with managerial implications for the United States apparel retailers dealing in prestige clothing.

Kincade, Doris H.; Woodard, Ginger A.; Park, Haesun (2002) studied Buyer–seller relationships for promotional support in the apparel sector which is critical for success. The purpose of the study was to define promotional support categories offered to apparel retailers by manufacturers, to identify the retailer's perceptions of the offering frequency and importance of the promotional support, and to investigate the relationship between offering frequency and perceptions of importance. Results indicated that monetary support was regarded as the most important promotional support.. A positive and significant correlation was found between items the buyers perceived as important and the frequency of offerings of these items.

Liu, Yuping, (2007) found out the Long-Term Impact of Loyalty Programs on Consumer Purchase Behavior and Loyalty. Using longitudinal data from a convenience store franchise, the study found out that consumers who were heavy buyers at the beginning of a loyalty program were most likely to claim their qualified rewards, but the program did not prompt them to change their purchase behavior. In contrast, consumers whose initial patronage levels were low or moderate gradually purchased more and became more loyal to the firm. For light buyers, the loyalty program broadened their relationship with the firm into other business areas. Thus there is a need to consider patronage to decide rewards for loyalty programmes.

Chapter 1

Introduction to retailing

Introduction to retailing

The revolution in retailing industry has brought many changes and also opened door for many Indian as well as foreign players. In a market like India, there is a constant clash between challenges and opportunities but chances favour those companies that are trying to establish themselves. Thus, to sustain in a market like India, companies have to bring innovative solutions. Indian market has potential to accommodate many retail players, because still a small proportion of the pie is organized.

Retailing is still in its infancy in India. In the name of retailing, the unorganised retailing has dominated the Indian landscape so far. According to an estimate, the unorganized retail sector has 97% presence whereas the organized accounts for merely 3%. Industry has already predicted a trillion dollar market in retail sector in India by 2011. However, the retail industry in India is undergoing a major shake-up as the country is witnessing a retail revolution. The old traditional formats are slowly changing into more complex and bigger formats. Malls and mega malls are coming up in almost all the places, be it metros or the smaller cities, across the length and breadth of the country.

A McKinsey report on India (2010) says organized retailing would increase the efficiency and productivity of entire gamut of economic activities, and would help in achieving higher GDP growth. At 6%, the share of employment of retail in India is low, even when compared to Brazil (14%), and Poland (12%). Govt of India’s plan of changing the FDI guidelines in this sector speaks of the importance attached to retailing. Recent moves by big corporate houses like Reliance Industries has further fuelled the major investments in retail sector. A strategic alliance, land acquisitions in prime areas give the essence of the mood in this sector. Both MNCs and Indian firms want to get their share of this burgeoning pie. Notable in Indian firms are Pantaloons Retail & Big Bazaar, Trent’s Westside, Shopper’s stop, Reliance, Subhiskha, Wills Lifestyle stores, Cafe Coffee Day, which are present in India in different retail formats. Wal-Mart stores have just started operations in India. Some leading retail coffee chains of the world like Starbucks, Barnies are planning to expand in a major way in India.

The Indian retail sector

India is the country having the most unorganized retail market. Traditionally it was a family’s livelihood, with their shop in the front and house at the back, while they run the retail business. More than 99% retailer’s function in less than 500 square feet of shopping space. The Indian retail sector is estimated at around Rs 900,000 crore, of which the organized sector accounts for a mere 3 per cent indicating a huge potential market opportunity that is lying in the waiting for the consumer-savvy organized retailer. Purchasing power of Indian urban consumer is growing and branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to take advantage of this growth and aiming to grow, diversify and introduce new formats has to pay more attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling brands. The focus should be on branding the retail business itself. There is no doubt that the Indian retail scene is booming. A number of large corporate houses —Tata’s, Raheja’s, Piramals’s, Goenka’s — have already made their foray into this arena, with beauty and health stores, supermarkets, self- service music stores, new age book stores, every-day-low-price stores, computers and peripherals stores, office equipment stores and home/building construction stores. Today the organized players have attacked every retail category.

Apparel retail industry

In India, clothing retail accounts for 36% of organised retail business. It is the largest sector. Ready-made apparel accounted for an estimated 20% of domestic clothing sales in 2011. With growing working women wearing western wear to work, and pressed for time, market for good readymade clothes is likely to grow. India is a film- crazy nation, and the largest producer of films, with more than 1,000 every year. They provide entertainment and an escape from reality for India’s masses, and set the popular fashion trend. Bollywood fashions have become pan Indian. They affect various sectors of the market including clothing, footwear, weddings and fashion accessories.

With the advent of modern format retailers and the growth of plastic cards, affluent urban Indian women are shopping like never before. They spend mornings browsing in stores looking for deals or latest styles. Upper income urban women are adopting ethnic wears. These are designer clothes that incorporate Indian motifs, ethnic fabrics and are a fusion of western and Indian styles.

In the large urban centres, apparel retailers, like Shoppers Stop, Westside and Pantaloon have popularised their private labels, which have attracted urban shoppers. Westside carries only its own private labels, while for the other stores, 20-30% of their apparel turnover is from private labels. Customers have loyalty to a store rather than any particular garment brand. This has led to a thriving unbranded or local brand market for ready-to-wear clothes leading to severe competition. Hence organized retailers like Lifestyle, for instance, has a loyalty

programme called `The Inner Circle', while Pantaloons offers a `Green Card' Rewards programmes, Westside has `Club West' to woo the customers. Customers look to design and fit of the clothes, and use the shop’s name as a quality standard.

Characteristics of Apparel retail sector

As apparel retail is led by fashion, a player needs to keep a close watch on fashion amongst teenagers as they are the trend setters. Role of Bollywood in spreading fashion needs to be understood. Seasonal variations on stocking pattern and need to clear inventory at the end of season should be understood by apparel retailer. Typically once an item is sold from the outlet, retailer ensures that there is no repetition of same. It gets replaced by different design, style and colour. Importance of store layout, décor is very critical. A person visiting the store frequently likes to see changes in the layout otherwise he may carry the impression that stocks are not moving out of the store. Category management becomes very crucial function as transformation of design into production and delivery has to be completed before fashion or fad changes in the market.

This highlights the importance of sales promotions- short term activities which induces trade or consumer to buy now rather than in future as the value of apparel after the season goes down substantially and inventory carrying burden turns out to be very high. Apparel retailer needs to understand critical role of sales promotions. Attractive promotions induces purchase acceleration, stock piling and brand switching on the part of a consumer which substantially reduces retailers’ financial and inventory risk and consumers’ financial risk and psychological risk.

Seasons of Retailing

Summer Season • It is usually from May to July. • Low sales are recorded during this period. • This season is good for promotions and launching new advertisement campaigns.

Fall Season • August and September are important months. • Retailers are provided a good opportunity to increase their share. Holiday Season • It begins usually at the end of October and carries through the fourth quarter ending in January. • Festivals like Dusherra, Diwali, Christmas and New Year Eve bring more customers. • Usually it is the best time for retailers. Spring Season

• It lasts from February to May • Fewer footfalls are recorded in malls.

Customers

Men • While men tend to prioritize fashion to a lesser degree than women, “right- look” and the “descent” image is still important to them. • Men tend to spend more money on electronic gadgets, food, sports goods and music.

Women • “Teen” girls represent a lucrative opportunity for retailers. They are going to become the future buyers. • “Teen” girls are more trend savvy. It is not just the clothes and accessories, but the whole look that the teen girls aspire to define. • Women spend more on jewellery and household items and thus they contribute a lot more in terms of revenue.

Major Players in apparel retail

Shopper’s Stop Pantaloon Retail (I) Ltd. Westside Lifestyle International Pvt. Ltd. Globus Wills Lifestyle

Sales Promotion

Sales promotions are short-term incentives to encourage the purchase or sale of a product or service.

Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes

Sales Promotion Strategies

There are three types of sales promotion strategies:Pus h,Pull, or acom bination of the two.

A push strategy involves convincing trade intermediary channel members to "push" the product through the distribution channels to the ultimate consumer via promotions and personal selling efforts. The company promotes the product through a reseller who in turn promotes it to yet another reseller or the final consumer. Trade-promotion objectives are to persuade retailers or wholesalers to carry a brand, give a brand shelf space, promote a brand in advertising, and/or push a brand to final consumers. Typical tactics employed in push strategy are: allowances, buy-back guarantees, free trials, contests, specialty advertising items, discounts, displays, and premiums.

A pull strategy attempts to get consumers to "pull" the product from the manufacturer through the marketing channel. The company focuses its marketing communications efforts on consumers in the hope that it stimulates interest and demand for the product at the end-user level. This strategy is often employed if distributors are reluctant to carry a product because it gets as many consumers as possible to go to retail outlets and request the product, thus pulling it through the channel. Consumer-promotion objectives are to entice consumers to try a new product, attract customers away from competitors’ products, get consumers to "load up" on a mature product, hold & reward loyal customers, and build consumer relationships. Typical tactics employed in pull strategy are: samples, coupons, cash refunds and rebates, premiums, advertising specialties, loyalty programs/patronage rewards, contests, sweepstakes, games, and point-of-purchase (POP) displays.

Reasons for Sales Promotions

This could be a way of monitoring the performance of product management. Since sales promotion can possibly provide immediate impact on consumer sales, it is not unusual to use these strategies to attain their sales objectives.

Companies have to cope with pressure on sales margins which they can achieve through paying closer attention to cost-effective sales volume. Since the results of using sales promotional techniques can be determined accurately, sales volumes can be easily predicted.

More importantly, sales promotions are not only effective in attaining short- term sales; they are also more cost-effective compared to other integrated marketing communications tools such as advertising. The progressive fragmentation of audiences and the increase in media costs have tipped the balance in favor of sales promotion techniques which are more likely to deliver demonstrable results. Popularity of Sales Promotions

The reason sales promotions are gaining popularity is due to the fact that product and sales management are very confident in their ability to handle the techniques of sales promotion. Other forms of integrated marketing communication tools need to go through a lot of thought and internal debates before funds are allocated or decisions are arrived at.

Product managers also are more in control of the determination and implementation of sales promotional activities. They have a freehand when it comes to what sales strategies to use.

The importance of sales promotions as an integrated marketing communications tool could be attributed to the increase in number of specialist sales promotions agencies operating in certain places. In the past, sales promotion was viewed as part of other marketing communications techniques. Today, it is one of the stand-alone effective marketing tools.

Disadvantages of Sales Promotions

On the downside, the sales promotions, unlike other integrated marketing communication tools, work often on a short-term basis only. Unlike advertising or public relations, for instance, sales promotions strategies may have no lasting impact on the brand

Chapter 2

Study Of Retail Stores In Delhi NCR:

Study Of Retail Stores In Delhi NCR:

Pantaloon Retail (India) Limited, is India’s leading retailer that operates multiple retail formats in both the value and lifestyle segment of the Indian consumer market. Headquartered in Mumbai (Bombay), the company operates over 12 million square feet of retail space, has over 1000 stores across 71 cities in India and employs over 30,000 people. The company’s leading formats include Pantaloons, a chain of fashion outlets, Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain, blends the look, touch and feel of Indianbaz aars with aspects of modern retail like choice, convenience and quality and Central, a chain of seamless destination malls. Some of its other formats include Brand Factory, Blue Sky, aLL, Top 10 and Star and Sitara. The company also operates an online portal, futurebazaar.com- a subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a large-format home solutions store, Collection i, selling home furniture products and eZone, focused on catering to the consumer electronics segment. Pantaloon Retail was recently awarded the International Retailer of the Year 2007 by the US-based National Retail Federation (NRF) and the Emerging Market Retailer of the Year 2007 at the World Retail Congress held in Barcelona. Pantaloon Retail is the flagship company of Future Group, a business group catering to the entire Indian consumption space.

Future Group manifesto

“Future” – the word which signifies optimism, growth, achievement, strength, beauty, rewards and perfection. Future encourages group to explore areas yet unexplored, write rules yet unwritten; create new opportunities and new successes. To strive for a glorious future brings group’s strength, ability to learn, unlearn and re-learn ability to evolve. The Future Group will not wait for the Future to unfold itself but create future scenarios in the consumer space and facilitate consumption because consumption is development. Thereby, the future groups will effect socio-economic development for the customers, employees, shareholders, associates and partners. The customers not just get what they need, but also get them where, how and when they need. Future Group will not just post satisfactory results, but will write success stories.

Future Group will not just operate efficiently in the Indian economy, will evolve it. Future Group will not just spot trends, group will set trends by marrying their understanding of the Indian consumer to their needs of tomorrow.

It is this understanding that has helped Future Group succeeds. This will help group succeed in the Future. The group shall keep relearning and in this process, do just one thing.

“Rewrite Rules. Retain Values”

Group Vision

Future Group shall deliver Everything, Everywhere, Every time for Every Indian Consumer in the most profitable manner.

Group Mission

To share the vision and belief that the customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development.

To be the trendsetters in evolving delivery formats, creating retail realty, making consumption affordable for all customer segments – for classes and for masses.

To infuse Indian brands with confidence and renewed ambition.

To be efficient, cost- conscious and committed to quality in whatever we do.

To ensure that positive attitude, sincerity, humility and united determination

shall be the driving forces to make the organization successful

Formats, Group Companies & JV of Pantaloon Retail India Ltd

Analysis report:

SWOT Analysis of Pantaloon Retail (India) Ltd

Strength Industry leader

First Mover Advantage

Higher Bargaining Power to higher

number of store and good coverage Highest number of formats of stores

Easy to attract talent

Highest market share in Organized retail

Strong Good Will in market which helps them in raising money for expansion,forming JV, entering new market or new format.

Diversified business

Stronger private label brands

Weakness Government rules and regulations are

not favorable

FDI policy not so favorable for tie- ups

Cannibalization within the formats

Recession and global melt-down affected the performance of the book

Shrinking margins due higher input cost

Opportunities Luxury brand segments untapped by pantaloon Tie-up with foreign player to bring in Technical expertise and funds to

expands aggressively Smaller formats should expand more

aggressively in tier II and tier III cities

Scope of Private labels Integrating supply chain with other

retailers License agreement with foreign

brands

Threats Rapid expansion by current players

like Trent, Shoppers Stop, Reliance, More, Bharti and Spencers

Tie-up of competitors with foreign retail giants. For example Bharti & Walmart

Market conditions highly volatile last year due to meltdown

Sales Promotion techniques at Pantaloon Retail (I) Ltd.

1.Price-off offer:

Under this offer, products are sold at a price lower than the original price. This type of scheme is designed to boost up sales in off-season and sometimes while introducing a new product in the market.

Example: Buy 2 men T-shirts at Rs. 599/- and 1 T-shirt at Rs. 399/- (MRP: Rs.399/Tshirt).

Buy 2 men T-shirts at Rs. 749/- and 1 T-shirt at Rs. 499/- (MRP: Rs.499/Tshirt).

Buy 3 men round neck T-shirts for Rs. 399/- (MRP: Rs.199/Tshirt).

Buy 2 men V neck T-shirts at Rs. 499/- and 1 T-shirt for Rs. 299/- (MRP: Rs.299/Tshirt).

Buy 3 women T-shirts at Rs. 399/- (MRP: Rs.199/Tshirt).

Buy 1 woman top and get Rs. 100/- off on the bottoms. 2. Discounts:

Under this, the products are sold at a discounted price with percentage discounts on the original price. This type of scheme is designed to boost up sales in off-season.

Example: 30% off on all the men formal shirts and trousers.

30 % off on all the women formals and casual outfits

3. End of season sale:

End of Season sale or stock Clearance sale is been conducted at Pantaloon Factory Outlets. They are offering surprising discounts as if you buy 2 any items of garments and you will get 3 more with your choice absolutely free. These offers are given as celebration of New Year.

4. Seasonal offers:

Pantaloon provides the customers with various discounts and price-off offers at the stores and factory outlets on the seasons like winter and monsoon. This type of scheme is designed to boost up sales in these seasons.

5. Festive offers

Pantaloons have come up with festive offer during Diwali and Christmas by giving away gifts for purchases that are made at the store for cheaper price. If you shop for Rs. 4500 you get a Strolley bag worth Rs. 1299 for Rs. 149 only. If you shop for Rs. 2400 and above you get a lemon set, which is said to be imported, worth Rs. 649 for Rs. 99 only.

6. New Year offers:

Pantaloons offers gifts for purchases that are make at the store during the New Year for cheaper price. If you shop for Rs. 3500 you get a Imported Designer Glass Set for Rs. 249 only. If you shop for Rs. 2500, you get a 3 nights and 4 days holiday package for a couple on an International cruise.

7. Discount Coupons:

Pantaloon offers 25% discount on its large range of apparels. The coupon is valid for limited period. This coupon is valid for 25% off on any product purchased from www.pantaloon.futurebazaar.com.

8. Gift Vouchers:

Pantaloons Fresh Fashion offers many Pantaloons vouchers ranging different denominations like Rs100, Rs.250, Rs.1000 and Rs.2000. These Pantaloons vouchers are exchangeable with the products by the customers at all the Pantaloons Showrooms in India. The vouchers are a better option rather than gifts for the employees and customers as they are not bound for a particular thing to accept. They are given free choice for choosing better gifts for themselves by using vouchers.

Pantaloons vouchers offer a wide range of products and services for shopping. It has got coverage in 15 cities including 22 outlets. It thus offers good gift vouchers to its customers, clients and sales force also to keep good relationships amongst each other. The most famous Gift Vouchers by Pantaloons Fresh Fashion are Trendsetters and Connoisseurs Choice.

Trendsetters Gift Voucher: This Pantaloons voucher to the customers for the products of value of Rs.500 at all showrooms of Pantaloons all over India. This voucher is valid for all apparels only. The amount of the products bought have to be within the face value of the voucher, if it exceeds the actual amount the customer has to pay the exceeded amount after the shopping. This gift voucher is valid till 1 year from the issue date. It can not be exchanged to part or full cash. Connoisseurs Choice: This Pantaloons voucher is available for the products valued at Rs.500 at all Pantaloons showrooms. This is known to be as good as the cash under Pantaloons. This is valid for one year after issuance. The voucher can not be exchanged neither it can be encashed. The voucher can be converted for once. Any balance

on voucher will not be exchanged as cash or any product. The pantaloons all over India have got this facility so that the customers can avail it any time any where.

9. Pantaloon loyalty program (Green card):

Green Card is a passport to a whole new world of exclusive benefits and privileges to the customers.

Instant discounts for every time you shop at Pantaloons.

Exclusive shopping days to get hold of latest merchandise.

Regular updates on collections and promos via catalogues, sms and email.

Special invites to the most happening events.

Extended exchange periods and complimentary drops for alterations.

Exclusive billing counters and much more.

Shopper’s Stop Ltd., has redefined retail in India, taking it to the next level. From being just the sale of goods to consumers, the company has created a unique aura around retail and turned it into an experience, an indulgence. The pioneer of organized retail in India, Shopper’s Stop Ltd., has been instrumental in bringing about a retail revolution in the country and has become the highest benchmark for the industry. With its growth plans firmly in place and undeniable leadership in the field, Shopper’s Stop Ltd., is well on its way to raise the bar of performance even higher. Shopper’s Stop Ltd. has made this purchase of goods extremely pleasurable. The stores have redefined shopping by making it more than just a transaction. The entire shopping process is the coming together of an amazing array of offerings, warm but unobtrusive service and special privileges and benefits that translate every visit into customer delight

Since its inception in 1991, Shopper’s Stop Ltd., which was founded by the K Raheja Corp. Group (Chandru L Raheja Group), one of the leading players in the country in the business of real estate development and hotels, has been offering premium and luxury value for the entire family. Shopper’s Stop Ltd. has metamorphosed from being a chain of retail stores to emerging as a Fashion & Lifestyle destination, which now includes retail concepts such as bookstores, cafés and high-end lifestyle merchandise for the growing affluent middle class in India. Today, its name is synonymous with superior quality product, services and above all, an international shopping experience.

In order to enhance the level of customer service and gain insight into new and emerging practices followed internationally, Shopper’s Stop Ltd. is a member of the Inter Continental Group of Department Stores (IGDS). It is the only Indian member along with 29 other experienced retailers from all over the world. Leveraging expertise, excellence and experience, Shopper’s Stop Ltd. has become a benchmark for the Indian retail industry to follow. A pioneer of organized retail in India, Shoppers’ Stop today, is the country’s biggest Department Store Chain. It offers customers an international shopping environment and a world-class shopping experience through its 20 stores in 11 cities. It houses a host of international and domestic brands across categories such as apparel, accessories, cosmetics, home & kitchenware as also its own private brands. Shoppers’ Stop offers a wide range of brands (more than 400 brands) for the entire family to choose from. Exclusive and

Men Section

established brands share shelf space to offer an array of choices customers across all ages, tastes and occasions. Shoppers’ Stop is the single largest retailer for Levi’s Strauss, Pepe, Lee, Arrow, Zodiac, Ray-Ban, Swatch, among others.

Private Labels

Shoppers Stop has a range of Private Labels across Men's casual wear to formals to Women's wear. Private Labels contribute a mere 20% to its Total Sales. Here are the Private Labels Sold in Shoppers Stop outlet,

Kashish - Mens's Ethnic Wear Stop - Western Wear - Men & Women Life - Mens Casual Wear , Jeans Wear Mario Zegnoti - Men's Formal Wear Acropolis - Men's Formal Wear Push and Shove - Eye Wear Vettorio Fratini - Premium Men's Wear

SWOT ANALYSIS OF SHOPPERS STOP

Strengths

Variety Range Different Brands Pioneer Loyal customer Low risk Good financial position Presence across various segments Parikrama the festival

Weakness

Very high prices Less Schemes Less Discounts Competition from standalone stores Late entry into value retailing Store makeover expenditure

Threats

Government polices Nnterance of new player High attrition Less consumer spending Entry of foreign player Unorganised sector Independent stores

Opportunities

Awearness about brands Quality Youngsters Higher disposal income Collaborate Private levels Tier2 & tier 3 cities Enter new consumer goods segment

Sales Promotion techniques at Shoppers stop

1.Price-off offer:

Under this offer, products are sold at a price lower than the original price. This type of scheme is designed to boost up sales in off-season and sometimes while introducing a new product in the market.

Example:

Buy 2 men T-shirts at Rs. 799/- and 1 T-shirt at Rs. 499/- (MRP: Rs.499/Tshirt). Buy 3 women T-shirts at Rs. 999/- (MRP: Rs.499/Tshirt).

2. Discounts:

Under this, the products are sold at a discounted price with percentage discounts on the original price. This type of scheme is designed to boost up sales in off-season.

Example:

20% off on all the men formal shirts and trousers.

20 % off on all the women formals and casual outfits.

3. End of season sale:

End of Season sale or stock Clearance sale is been conducted at Shopper’s stop. They are offering surprising discounts upto 50% on all the men and women apparels. These offers were given last year for limited period in the month of September.

4. Seasonal offers:

Shopper’s stop provides the customers with various discounts and price-off offers at the stores on the seasons like winter and monsoon. This type of scheme is designed to boost up sales in these seasons. Different offers are provided by the stores during these periods from June to January

5. Festive offers:

Shopper’s stop have come up with festive offer during Diwali and Christmas by giving away gifts for purchases that are made at the store for cheaper price or free. If you purchase men apparel worth Rs. 6000/-, the you are entitled to get a Polo bag worth Rs. 2000/- absolutely free.

6.Gift Vouchers: Shoppers Stop offer Gift Vouchers of denomination ranging from Rs. 250 to Rs. 5000.

7. Republic Day offer:

Shopper’s stop conducted 3 Day Surprise offer on the occasion of Republic Day, giving flat 20 percent discount coupons on purchase of goods worth Rs. 3000/-, which can be redeemed on the next purchase.

8.Contests:

Shoppers Stop has announced a 101-day Shopping Bonanza to pull in customers into the stores. Lucky draw winners of the contest will get to see one of the seven wonders of the world and two lucky couples who get the grand prize will be treated to a round- trip which will cover all the seven wonders of the world.

9. Shopper’s stop loyalty program (First Citizen Citibank credit card)

As s First Citizen Credit card member, you get the benefits of the Shopper’s Stop loyalty program, First Citizen. The First Citizen membership entitles you to exclusive privileges such as product previews, priority billing and other special benefits. Add to this, the fabulous experience of shopping at the premier Shopper’s stop outlets across the country.

WESTSIDE

Style, affordable prices, quality these are the factors that have shaped Westside's success story in the retail fashion stores business. Launched in 1998 in Bangalore, the Westside chain has, ever since, been setting the standards for other fashion retailers to follow.

Established in 1998 as part of the Tata Group, Trent Ltd. operates Westside, one of

India's largest and fastest growing chains of retail stores. The Westside stores have numerous departments to meet the varied shopping needs of customers. These include Menswear, Women’s wear, Kid’s wear, Footwear, Cosmetics, Perfumes and Handbags, Household Accessories, lingerie, and Gifts. The company has already established 36 Westside departmental stores (measuring 15,000-30,000 square feet each) in Ahmedabad, Bangalore, Chennai, Delhi, Gurgaon, Ghaziabad & Noida (to be considered as 1 city), Hyderabad, Indore, Jaipur, Kolkata, Ludhiana, Lucknow, Mumbai, Mysore, Nagpur, Pune, Rajkot, Surat, Vadodara and Jammu. The company hopes to expand rapidly with similar format stores that offer a fine balance between style and price retailing.

Trent ventured into the hypermarket business in 2004 with Star Bazaar, providing an ample assortment of products made available at the lowest prices, aptly exemplifying its ‘Chota Budget, Lambi Shopping’ motto. At present Star Bazaar has 4 stores in 3 cities located in Ahmedabad, Mumbai and Bangalore. This store offers customers an eclectic array of products that include staple foods, beverages, health and beauty products, vegetables, fruits, dairy products, consumer electronics and household items at the most affordable prices. This story began circa 1998 when The Tatas acquired Littlewoods – a London based retail chain.

This acquisition was followed by the establishment of Trent Ltd (a Tata enterprise that presently operates Westside). Littlewoods was subsequently renamed Westside. In a rapidly evolving retail scenario, Westside has carved a niche for its brand of merchandise creating a loyal following. Currently, the company has 36 Westside stores measuring 15,000-30,000 square feet each across 20 cities. With a variety of designs and styles, everything at Westside is exclusively designed and the merchandise ranges from stylized clothes, footwear and accessories for men, women and children to well-co-coordinated table linens, artifacts, home accessories and furnishings. Well-designed interiors, sprawling space, prime locations and coffee shops enhance the customers’ shopping experience

SWOT ANALYSIS OF WESTSIDE:

Strengths

Growing at the faster pace Brand name of TATA’s. Good customer base. Apparels are cheaper Attractive promotional schemes and

heavy discounts Quality and branded stuff only Location advantage

Opportunities

Huge untapped market Rising disposable income Urbanization

Weakness

Not much product range for middle class

Facing problems due to political environment

Need help in taking over properties and real estate

Need some concessions from labor laws

Lack of differentiation Poor inventory turns and stock

availability .

Threats

Competition from organized retail players

Competition from local retailers

:Private levels

Private label products or services are typically those manufactured or provided by one company for offer under another company's brand. Private label goods and services are available in a wide range of industries from food to cosmetics to web hosting. They are often positioned as lower cost alternatives to regional, national or international brand. Westside has many private labels in its merchandise portfolio. Private labels in Westside include-

2F4U SRC Gia Urban angel Intima David Jones Ascot

All these brands are produced for Westside only and can be found in Westside only. These apparel brands are given separate space for displaying their merchandise and more

promotional offers are there on them to increase their sales. At some places, these private brands are mixed with branded clothes so in that case these private labels are put in lower shelves. At eyesight level, branded clothes are put.

Sales Promotion techniques at Westside

1. Festive offers:

With this Diwali Delight offer from Westside if you shop from their store for Rs. 5000 and above you get a gift voucher from them for Rs. 1000 for free. And if you shop for Rs. 2500 and above you get a free gift voucher worth Rs. 400. This is valid only if you purchase their in-house merchandise or brands only and not valid if you chose to buy other brands available at their store.

2. End of season sale

End of Season sale or stock Clearance sale is been conducted at Westside. They are offering surprising discounts upto 50% on all the men and women apparels. These offers were given last year for limited period in the month of January and July.

3. Gift Vouchers: Westside offers Gift Vouchers of denomination ranging from Rs. 100 to Rs. 10000.

4.Westside loyalty program (Club west card program):

An assuredreturn- and-ex cha ng e policy reinforces customer confidence in the chain. Another winning Westside idea is Club West, a customer loyalty program launched in May 2001. The 30,000-plus members of this club get rebates at restaurants and on holiday packages from the Taj Group of Hotels, home delivery of alterations, and best of all, special shopping hours on the first day of any discount sales event organized by the chain.

5. Contests

Shop for Rs 1,000 at Westside, participate in the lucky draw and win the grand prize - a complete holiday packages for two to Macau. You could also win holiday packages to breathtaking beach destinations in India including Goa, Kovalam, Puri and Pondicherry.

6. Discounts:

Under this, the products are sold at a discounted price with percentage discounts on the original price. This type of scheme is designed to boost up sales in off-season.

Example: 20 - 50% off on all the men formal shirts and trousers. 20 – 50 % off on all the women formals and casual outfits.

Chapter 3Research Methodology

Research Methodology

Topic:

“Sales promotion strategies in apparel retail industry.”

Objective:

To study the sales promotion activities conducted by the modern apparel retail outlets in Delhi-NCR region.

Sub-Objectives To study the current scenario of the retail industry in Delhi-NCR.

To study the current scenario of the apparel industry in Delhi-NCR. To understand the importance of sales promotion activities.

Methodology:

1. Type of Research

Research is an original contribution to the existing stock of knowledge making for its advancement. This research is an amalgamation of both formularize as well as descriptive research.

2. Research approaches

There are two basic approached to research, quantitative approach and the qualitative approach. The former involves the generation of data in quantitative form, which can be subjected to rigorous quantitative analysis in a formal and rigid manner. This approach is further sub-divided into inferential approach is to form a database from which to infer characteristics or relationship of a population. This usually means survey research where a sample of population is studied using questionnaire to determine its characteristics and it is then inferred that the population has the same characteristics.

Qualitative approach to research is concerned with subjective assessment of attitudes, opinions and behaviour. Research in such a situation is a function of researcher’s insight and

impressions. Such an approach to research generates results either in non- quantitative form or in the form, which are no subjected to rigorous quantitative analysis.

Qualitative approach was been adopted in this study where data was collected by personally interviewing the staff(n=4) of the selected stores(n=26)

3. Sources of Data

The first part of the project was to study the current trends and the future of retail and apparel industry in India and also to gain some basic knowledge on sales promotion. This consisted of doing a secondary research about the industry with the help of some text books and also through the internet.

Once the secondary research was done, a personal visit was conducted to the three well known apparel retail outlets in Delhi/NCR namely, Pantaloon Retail (I) Ltd., Westside and Shopper’s stop. The sales promotion activities conducted in the stores were minutely observed. Personal interviews with few of the staffs of each store were conducted to gain the in-depth knowledge about the seasonal and non-seasonal sales promotion activities conducted by the stores.

Sampling Plan:

(1) Population and Sampling unit

Here the sample unit is the apparel retail outlets in Delhi/NCR region.

(2) Sample Size

For the purpose of this study, a sample size of three apparel retail outlets of Shoppers Stop is selected n=26, all of which are located in different parts of Delhi -NCR

(3) Sampling Procedure

Random sampling.

(4) Sampling tool

Interview and survey through Questionnaire .

Scope of study:

Apparel industry is one of the fastest growing and profitable industry in retail sector hence their is a stiff competition between various good brands. Companies time to time use different promotion strategies to attract customer and enhance their sales by which they survive in market .

The scope is to study and understand the apparels retail sector their promotion strategies. How they differentiate themselves and attract customers in spite of same product. The target customers ,segments and strategies.

Chapter 4

Data analysis

Data analysis

Q1 USP of company :

(a) Price (b) Quality (c) Design (d) Variety in products (e) Location (f) Other

It has been found that people prefer Shoppers Stop for its variety.But alongside quality is the second priority.

Q2 Number of employees :(a) 1-10 (b) 10-20 (c) 20-30 (d) 30 – 40 (e) 40- 50 (f) More than 50

It has been found that Shoppers Stop has employee around more than 50 in maximum outlets in Delhi/NCR. Few stores have less than 50.

Q3Sales promotion technique (a) End of season (b) Loyalty card Programme (c) Special Promotion (event)

(d)Joint promotion (e) )Other (specify)

Its has been found that Shoppers Stop uses end of season to promote & clear old stocks.

Q4 Promotion type (s)(a) Discount (b) Free gifts (c) Exchange offer (b) Festive offers (d) Gift vouchers

It has been found that Discount is given more priority to generate more revenue.

Q5Average billing per customer (Rs.)(a) 0 – 500 (b) 500 – 1000 (c) 1000 – 1500 (d) 1500 – 2000 (e) More than 2000

It has been found that average billing of Shoppers Stop goes above 2000 as the prices of the apparel in Shoppers Stop is quiet expensive.

Q6Average footfall (per day ) :(a) 0 – 500 (b) 500 – 1000 (c) 1000 – 1500 (d) 1500 – 2000 (e) More than 2000

It was found that during foot fall between 500-1000(per day) as the survey was conducted during period of January-February.

Q7Media used (a) Hoardings (b) Print (c) Electronic (SMS, E-mail) (d) POP (e) In-store media

(f) Other (specify)

It was found that Electonic media is used most for promotion because due to rise in usage of internet.

Chapter 5

Comparative Study

Comparative Study

Sales Promotion Pantaloon Westside

Shopper’s Stop

End of season

Yes Yes Yes

Loyalty card Programme Yes Yes Yes

Special Promotion (event) Yes (Exchange

offer) NoYes (Exchange offer)

Joint promotion No No No

Media used Hoardings,print,electronic (SMS, E-mail),POPIn-store media & interactive media

Print,electronic,hoardings,In-store media

Print,electronic,hoardings,In-store media

Promotion type Price off,free gifts,exchange offer,Festive offers,End of season sale,Loyalty program

Game show

Gift vouchers,discount, contest,End of season sale.

Discounts,gift vouchers,free gifts,End of seasonsale,Loyalty, exchange offerprogram

From the above table, it is clear that all three stores engage in end of season sale. This reinforces the fact that seasonality affects apparel sector and hence it becomes critical for a retailer to clear off the stocks at the end of season, otherwise, he may have to

incur substantial inventory carrying costs, allocate scarce shelf space and out of fashion apparels maybe worthless. Thus stock clearance seems to be very important objective for apparel retailer in using end of season sale wherein discount given is upto 50% of the MRP (Maximum retail price).

All the three stores use loyalty cards to reward loyal users and encourage them to visit the store often and buy more by offering wide range for men, women and children. Some store also offer home furnishings, accessories and footwear, thereby providing convenience for one stop shopping.

Joint sales promotion involves tieing up with other brands like, MacDonald, Havmore, Gold’s (local) Gym and Kaya skin clinic, etc. None of the three stores has yet explored avenue of joint sales promotion. Such joint promotions have advantages in terms of sharing costs of promotions, cross selling opportunities to each other’s customers, higher visibility etc.

In terms of type of consumer sales promotions, almost everyone used discount, coupon programmes and lucky draws, contests, gift, buy one get one free type of promotions. Pantaloon and Shopper’s Stop uses exchange offer.

Chapter 6

Suggestions

Suggestions Joint sales promotion involves tieing up with other brands like, MacDonald,

Havmore, Gold’s (local) Gym and Kaya skin clinic, etc. None of the three stores has yet explored avenue of joint sales promotion.

Online Promotions and selling would take retail outlet direct to home.

Special offers should not only be restricted for festive season.

Chapter 7Conclusion

Conclusion

Usage of sales promotion activities has a direct impact on consumer behaviour as it motivates a consumer to buy now rather than in future, enhances value of an offer temporarily till the promotion period, encourages switching, reinforce or reward loyalty etc.

Broadly, objectives set for these activities are;

• To generate store traffic,• To move excess inventory,• To enhance store image and• To create a price image (high or low).

Traffic building is achieved by special event promotions like Diwali, Rakshabandhan promotions; inventory reduction through end of season sale; creation and building store image through feature advertising and displays and price image by highlighting the discounts. It helps consumer reduce not only financial risk but also psychological and social risk by making consumer confident of his/her purchase, conformation to group norms by shopping at famous stores/brands and possibility of acquiring well known branded apparel during promotions. Promotions may induce non buyers to walk in to the store and loyalty programmes may encourage them to buy more, more often or upgrade to better quality. Exciting promotions also have tendency to generate positive word of mouth and help consumer feel a smart shopper. Thus, not only provide utilitarian benefits like, saving of money, time or quality up gradation but hedonic benefits like feeling confident, feeling of excitement and entertainment etc.

Execution of the sales promotion activities also require proper coordination of selling effort and availability of promoted merchandise.

Apparel sector is likely to grow with growing Indian economy. Many multinational players either have already plunged into Indian market or plan to do so in apparel sector. They will bring many promotional practices which they have been following in developed markets which will increase the use of sales promotion activities even further. Indian brands will have to withstand turbulent conditions and learn to survive. If the role of such promotional activities is understood well, it may help any player a long way to survive and grow.

Bibliography

www.google.com

www.pantaloon.com

www.mywestside.com

www.shoppersstop.com

www.futurebazaar.com

http://besteoffers.blogspot.com/2009/12/free-discount-coupon-off-25-of.html