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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?
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Section - II
(3) Attempt any THREE out of FOUR: (30)
(1) What do you mean by store layout? What are various types of store layout?
(2) What are various pricing strategies made available with the retailers?
(3) Explain in detail various types of retailers operating in the market?(4) Explain in detail growth strategies adopted by retailers in national an international
market?