Professional Documents
Culture Documents
On
THE MARKETING STARTEGY OF VISHAL MEGA MART
By
KARAN GUPTA
A3104612016
CERTIFICATE
DECLARATION
KARAN GUPTA
A3104612016
B COM(HONS) ACCF 2012-2015
ACKNOWLEDGEMENT
Apart from my efforts, the success of any project depends largely on the encouragement and guidelines of
many others. I take this opportunity to express my gratitude to the people who have been instrumental in the
successful completion of this project. I express my gratitude to my esteemed guide, DR. Puja Singhal
Faculty of AMITY UNIVERSITY Noida for her valuable critiques, assistance and encouragement, which
enabled me to carry on the project successfully. She gave me a wonderful opportunity to work on this
project. Her time-to-time guidance and incessant support helped me to broaden my outlook on the project. I
am highly obliged for her support throughout the dissertation.
Lastly, no words are enough to express my heartiest gratitude to my parents whose blessings are inspiration
in the foundation of my work.
TABLE OF CONTENT
1. ABSTRACT
2. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3. INDUSTRY OVERVIEW.
10
19
4. COMPANY PROFILE
5. RESEARCH OBJECTIVES.
.33
34
6. RESEARCH METHODOLOGY
36
7. LITERATURE REVIEW .
9. SUGGESTIONS
10. CONCLUSION
11. BIBLIOGRAPHY .
61
62
64
ABSTRACT
VISHAL MEGAMART is a retail house in India. As of April 30, 2007, it operates 50 retail stores, including
two stores, which are operated by their franchisees. These 50 stores are spread over about 1, 282,000square
feet and are located in 18 states across India. In its efforts to strengthen their supply chain, it has set up seven
regional distributions centers and an apparel manufacturing plant.
It started as a retailer of ready-made apparels in Kolkata in 2001. At the time of Incorporation, the registered
office of their Company was situated at 4, R. N. Mukherjee Road, Kolkata 700 001 . In 2003, it acquired the
manufacturing facilities from Vishal Fashions Private Limited and M/s Vishal Apparels.
It follows the concept of value retail in India. In other words, their business approach is. to sell quality goods
at reasonable prices by either manufacturing themself or directly procuring from manufacturers (primarily
from small and medium size vendors and manufacturers). It facilitate one-stop-shop convenience for their
customers and to cater to the needs of the entire family. It believes this concept has helped them grow to
their current size within a short time frame of their years. Mr. Ram Chandra Agarwal has been ranked as the
28th most pitiful person in the Indian retail industry.
This project report is the study of various activities and strategies of Vishal Mega
Mart. It also helps us in understanding the different technologies being used by
VRPL.
INTRODUCTION
In the background of high consumerism and income of the urban consumers, in recent year there are a
number of companies have expressed their interest towards retail sector outlets. As a result numbers of
shopping malls have started their operations in metro and urban areas. Pantaloons, big bazaar, Vishal Mega
Mmt, Reliance Fresh are the best known examples of retail sector outlets in India.
Retailing is the interface between the producer and the individual consumer buying for personal
consumption. This excludes direct interface between the manufacturers and institutional buyers such as the
government and other bulk customers. A retailer is one who stocks the producer's goods and is involved in
the act of selling it to the individual consumer, at a margin of profit. As such, retailing is the last link that
connects the individual consumer with the manufactming and distribution chain.
It is assumed that due to the entry of a number of retail outlets in the urban and semi urban areas, the
mindset of the existing customers have undergone drastic changes. Besides it is also reported that the
traditional retailing such an age old Grocery shops have directly faced competition with the organized
retailing sector. In some parts of the country, it is reported that the traditional retails are resisting the entry of
organized shopping malls. For instance the traditional retails of Bhubaneswar with the active
support of the consumers at large didn't allow reliance Fresh to start outlet initially.
INDUSTRY OVERVIEW
Introduction of Indian Retail Industries:
Retail is India's largest industry, accounting for over 10 per cent of the country's GDP and around eight per
cent of the employment. Retail industry in India is at the crossroads. It has emerged as one of the most
dynamic and fast paced industries with several players entering the market. But because of the heavy initial
investments required, break even is difficult to achieve and many of these players have not tasted success so
far. However, the future is promising; the market is growing, government policies are becoming more
favorable and emerging technologies are facilitating operations. Retailing in India is gradually inching its
way toward becoming the next boom industry. The whole concept of shopping has altered in tenns of format
and consumer buying behavior, ushering in a revolution in shopping in India. Modem retail has entered India
as seen in
Sprawling shopping centers, multi-storied malls and huge complexes offer shopping, entertainment and food
all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing
and growth in the consumption by the Indian population is going to take a higher growth trajectory.
The Indian population is witnessing a significant change in its demographics. A large young working
population with median age of 24 years, nuclear families in urban areas, along with increasing workingwomen population and emerging opportunities in the services sector are going to be the key growth drivers
of the organized retail sector in India.
Retailing is the final step in the distribution of merchandise - the last link in the Supply Chain - connecting
the bulk producers of commodities to the final consumers. Retailing covers diverse products such as foot
apparels, consumer goods, financial services and leisure.
A retailer, typically, is someone who does not effect any significant change in the product execs breaking the
bulk. He/ She are also the final stock point who makes products or services available to the consumer
whenever require. Hence, the value proposition a retailer offers to a consumer is easy availabilities of the
desired product in the desired sizes at the desired times.
In the developed countries, the retail industry has developed into a full-fledged industry where more than
three-fourths of the total retail trade is done by the organized sector. Huge retail chains like Wal-Mart, Carr
four Group, Sears, K-Mart, McDonalds, etc. have now replaced the individual small stores. Large retail
formats, with high quality ambiance and courteous.
10
Retailing is the interface between the producer and the individual consumer buying for personal
consumption. This excludes direct interface between the manufacturer and institutional buyers such as the
government and other bulk customers. A retailer is one who stocks the producer's goods and is involved in
the act of selling it to the individual consumer, at a margin of profit. As Such, retailing is the last link that
connects the individual consumer with the manufacturing and distribution chain.
Retailing has been identified as a thrust area for promotion of textiles, processed foods, agricultural and
horticultural produce. Retail Sector can be divided into organized and unorganized sectors:
Unorganized Retail:
Unorganized retailing is characterized by a distorted real-estate market, poor infrastructure and inefficient
upstream processes, lack of modem technology, inadequate funding and absence of skilled manpower.
Therefore, there is a need to promote organized retailing.
Unorganized Retail:
Unorganized retailing is characterized by a distorted real-estate market, poor infrastructure and inefficient
upstream processes, lack of modem technology, inadequate funding and absence of skilled manpower.
Therefore, there is a need to promote organized retailing.
agricultural base to an industrialized nation. The first shopping center was opened, which would eventually
be a significant factor in the decline of downtown Retailing in the 1960s and 70s. JC Penney and Sears
began their national mass retailing expansion, and the use of credit cards as Major retail chains began.
The 1950s witnessed the reaffirmation of the traditional family. The first planned mall and franchised food
restaurant opened. As people continued to flock to the suburbs, the downtown areas began to decline. Larger
suburban malls were created and anchored by traditional downtown department store merchants. Freeways
were expanded and the sales of private automobiles grew, giving the consumer a wider accessible area in
which to shop. Discounters were born, Korvetta being one of the firsts.
The 1960s witnessed the growth of enclosed shopping centers, with department stores anchors and specialty
retail chains. The baby boomers were teenagers at this point, leading to the growth of juniors-oriented stores
and vendors. Women became targets not just as mothers or wives as they entered the workforce and
consumers became more demanding in their expectation of quality and service.
In the 1970s, promotional pricing started to pick up the department stores as off-price retailer emerged. The
growth of retail space slowed, as sales increase came- at-the expense of competition, not of market growth.
This competitive market led to the under performance of several retailers as gross margins experienced
downtown pressure from increased competition. Retailers in large upscale markets recognized the time
shortage created by dual-career families and began to offer more services to assist in saving time.
The 1980s witnessed the growth of off price retailing as a distinct, enduring retail format. Retailers began to
drop low profit lines. Acquisitions and mergers were actively utilized as growth strategies, private brands
were redeveloped to enhance umqueness and margins and offshore sourcing was developed to compensate
for margms
Broadly the organized retail sector can be divided into two segments, In-Store Retailers, who operate fixed
point-of-sale locations, located and designed to attract a high volume of walk-in customers, and the nonstore retailers, who reach out to the customers at their homes or offices.
It was only in the year 2000 that the economists put a figure to it: Rs.400,000crore (1 crore = I 0 million)
which is expected to develop to around Rs.800,000crore by the year 2005 ---- an annual increase of 20 per
cent. Retailing in India is unorganized with poor supply chain management perspective. According to a
recent survey by some of the retail consulting bodies, an overwhelming proportion of the Rs.400,000crore
retail markets are UN ORGANISED. In fact, only a Rs. 20,000crore segment of the market is organized. As
much as 96 per cent of the 5 million-plus outlets are smaller than 500 square feet area. This means that India
per capita retailing space is about 2 square feet (compared to 16 square feet in the United States). India's per
capita retailing space is thus the lowest in the world (source: KSA Technopak (I) Pvt Ltd, the India operation
12
Currently the retail landscape is filled with Supermarket chains with over 1000 outlets all over the country to
increase to around 5000 by the 2005. The success of a couple of hyper mart's indicating the evolution of
hypermarkets in the country prominent among them is Giant, Metro, Big Bazaar models. While the average
bill value at a supermarket is in the range of Rs.300 per bill, the average bill amount at a Hypermarket is in
the range ofRs.750-1000, indicating that the model is in tune with the global models where the average
spend is increasing with the shopping expenence.
EXTRA BENEFITS
As well as the usual employment benefits, you may be eligible for discounts from your employer which are
a great boost to your salary. Discounts can help with anything from the cost of your regular grocery bills to
major items or treats such as the very best equipment for your favourite sport or hobby.
JOB SECURITY
Retail is a growth sector, even during the recent recession retailers continued to employ an increasing
number of people. The internet means more retailers are selling outside the UK. This provides great job
security and opportunity for people who love retailing and become good at it.
Not only that, the skills you develop are easily transferred to other sectors. Most sectors have customers of
one sort or another.
RETAIL IS EVERYWHERE
Where there are people there are retailers and retail career prospects. You can take your retail knowledge
and experience abroad.
Traditionally Indian Retail can be traced back from Weekly Markets, Melas, and Village Fairs in Small
towns and villages to Kirana stores, PDS outlets, Khaki Bhandaar, co-operative stores in Urban cities. The
wave of retail began with various textile manufactures like Bombay Dyeing, Raymond's, S Kumar's, and
Grasim foraying into selling the product through their outlets and competition among FMCG players driving
the forces towards retailing. The evolution of retailing lead to an emergence of various formats like
Shopping malls, Super-marts, Hyper-marts, Departmental Stores, Apparel Stores, etc. catering to majority all
sectors of society providing the all-important 3Vs- Value, Variety and Volume.
India is the country having the most unorganized retail market. Traditionally it is a Family's livelihood, with
their shop in the front and house at the back, while they run the Retail business. More than 99% retailers
function in less than 500 square feet of shopping space. Global retail consultants KSA Technopak, have
14
estimated that organized retailing in India is expected to touch Rs 35,000 crore in the year 2005-06.
The Indian retail sector is estimated at around Rs900,000 crore, of which the organized sector accounts for a
Mere 2 per cent indicating a huge potential market opportunity that is lying in the waiting for the consumersavvy 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
advantage of this growth and aiming to grow, diversify and introduce new formats have 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. In their preparation to face Fierce competitive
pressure, Indian retailers must come to recognize the value of building their own stores as brands to
reinforce their marketing positioning, to communicate quality as well as value for money. Sustainable
competitive advantage.will be depended on translating core values combining products, image and
reputation into a coherent retail brand strategy.
The 1960s witnessed the growth of enclosed shopping centers, with department stores anchors and
specialty retail chains. The baby boomers were teenagers at this point, leading to the growth of
juniors-oriented stores and vendors. Women became targets not just as mothers or wives as they
entered the workforce and consumers became more demanding in their expectation of quality and
service.
compromising Metro Delhi, Mumbai, Calcutta, Jyfini Metros Hyderabad, Chennai, Bangalore,
Mini Metros Ahmedabad and Pune, Tier l cities of Kanpur , Nagpur, Surat and Ludhiana, Tier II
cities Coimbatore, Chandigarh, Lucknow, Kochi, Jaipur and Tier III cities Vadodara, Vizag, Indore,
Vijaywada, Thiruvananthpuram, Bhopal, Nashik and Madurai.
Organized retail has been established in Metros and Tier 1 cities, other cities having
negligible level of penetration.
16
Kiranas:
These are food and non-food neighborhood counter stores, also called 'mom and pop stores'
westem
in
retail
segment These are family-owned and- run retail-outlets picking the goods from wholesalers totaling
to around 12 million stores across India.
Mandis:
These are the largest chunk of unorganized retail catering to urban and rural masses. Mandis are
physically located at different regions to enhance convenient shopping. The sellers bring across
various products like eatables, vegetables and fruits, pulses, cereals, spices etc. The most prominent
of them are sabzi mandis found in most of the localities across India.
Village Haats:
This form is operating in rural areas where buyers and sellers gather once in a week or month from
nearby villages and small towns to cater their livelihood and leisure needs. These haats are a
source of entertainment and socialization among rural
masses.
vegetables, and other eatables, from which mostly housewives makes purchases that too on credit.
The
group's
philosophy is
integration
and
towards
this
end
has initiated
art
Company Background:
Vishal Retail was incorporated on July 23, 2001 as Vishal Retail Private Limited as
17
business of 'M/s
2003 , the
The
groups
fulfills
needs , and
all
your household
can
in India.
covering about 2059292 lac sq. ft. in 18 states across India. Each
international
18
to
cost
COMPANY PROFILE
Introduction of Vishal Retail Ltd.:
Vishal Retail Ltd,
a leading player in
the
a pioneer in
discount retailing and is focused on tier II and III cities in the country. It has a strong
presence in manufacturing and retailing of readymade garments (apparels); retailing of
non-apparels and
products. The
company has
pan-India
presence with 108 mid-sized hypermarket format stores as on April 28, 2008 covering
about 2.3mn sq ft retail space area. Vishal is supported by strong manufacturing
set-up
in
Gurgaon,
Dehradun
and
Manesar
with
pieces per day in each unit. It also has 29 warehouses located in 8 key cities in India
covering over 1.1mn sq ft area.
today
store enterprise m
conglomerate
encompassmg
Situated
in
1986
in
Kolkata (erstwhile,
opened for
the
Indian consumer by
the national capital Delhi this store boasts of the singe largest
The group had a turnover of Rs. 1463.12 million for fiscal 2005, under the dynamic
leadership of Mr. Ram Chandra Agarwal. The group had of turnover Rs 2884.43 million
for fiscal 2006 and Rs. 6026.53 million for fiscal 2007.
19
THE FOUNDERS
20
factors affect retailing in India. However, if one were to Single out the single biggest
of real estate. The high cost of real estate in India, in spite of the fact that the per capital income is
one of the lowest in the world, makes the country a land of contradictions. In fact so exorbitant is
the cost of property in almost every town
laws have
compounded the
situation
of
even
further and unless immediate and serious steps are initiated in this direction it would be fairly
long before the benefits of this concept reach the public at large.
Unplanned cities
Rampant corruption
21
VISION STATEMENT
We share the vision and belief that our customers and stakeholders shall be served only by
creating and executing future scenarios in the consumption space leading to economic development
Because of increasing number of nuclear families, working women, greater work pressure
and greater commuting time, convenience has become a priority for Indian customers.
They
want ever thing under one roof for easy access and multiplicity of choice. The growth and
development of organized retailing is driven by two main factors - lower prices and benefits the
customer can't resist. India is rapidly involving into a competitive market place with potential
target consumers in the niche middle class segments. The market trend indicates
tremendous
growth
opportunities.
MISSION STATEMENT:
We shall deliver Everything, everywhere, everytime for every Indian Consumer in the most profitable
manner.
VRPL's BUSINESS:-
VRPL started as a retailer of ready-made apparels in Kolkata in 2001. In 2003, VRPL acquired the
manufactming facilities
Private
Limited
Subsequently, with evolution of retail industry in India and change in consumer aspirations, VRPL
diversified their portfolio of offerings to include other retail goods.
made apparels
footwear,
toys,
and a wide range of household merchandise and other consumer goods such as
watches, toiletries, grocery
items,
sports
fumishing,
VRPL follow the concept of value retail in India. In other words, VRPL's business approach is to
sell quality goods at reasonable prices by either manufacturing
themselves or directly
VRPL
endeavor
(primarily
customers and to cater to the needs of the entire family. VRPL believe this concept has helped
them grow to their current size within a short time frame of 10 years.
In order to reduce costs and take advantage of economies of scale VRPL have embarked on
23
backward integration of their products. VRPL's apparel manufacturing plant is located at-Gur.gaon,Haryana. For ensuring efficiency in supply chain, VRPL have set up seven regional distribution
centers located
Ghaziabad
(Maharashtra),
Jaipur
(Rajasthan),
(Uttar Pradesh), Ludhiana (Punjab), Gurgaon (Haryana) and Delhi. Further, VRPL have
focused on developing a cost and time efficient distribution and logistics network, which currently
comprises seven distribution centers and a fleet of trucks for transportation.
)>
Selection o(location
In selecting
primarily cities/towns which may be classified as Tier II or Tier III cities. In this regard, an
analysis of the demography, literacy levels, nature of occupation and income levels. Within a
city/town, VRPL target locations with good infrastructural facilities such as easy accessibility,
provision for water, electricity, parking, security and other basic amenities. VRPL prefer to locate
their stores in areas where real estate is available at reasonable prices. The efforts of VRPL's retail
business are targeted towards
"lower middle" and "middle" income groups. Accordingly, VRPL plan their strategy to search
for areas within cities where such customers are domiciled in large numbers and make efforts to
locate themselves within the reach of such customers.
VRPL believe that adoption of standard fonnats for their stores has led to their brand establishment
and identification among their customers and will increase their base of loyal customers. In pursuance
of this, they have adopted standard parameters for store planning and establishment.
For ensuring
standardized formats of their stores, VRPL consider various factors, such as internal and external decor
and colour schemes, allocation of store space, stock mix and pricing and accounting
methods.
>Insurance
VRPL
maintain
Sundaram
facilities
and
comprehensive msurance
IFFCO-TOKIO for
and trucks.
coverage
with
Tata
AIG,
distribution
Bajaj
Allianz, Royal
centers, manufacturing
equipment, fire and special perils and burglary. Further, VRPL has filed a claim of Rs. 22.50 million
on account of fire in their store at Meerut as on July 7, 2006. In this regard, they have received
Rs. 7.50 million as an interim
payment.
>Factories
VRPL's existing manufacturing facilities are located at Plot No. 224, Phase 1 Udyog Vihar, Gurgaon,
for which they have leasehold interest until May 4, 2009. In addition, VRPL have recently acquired
freehold interest in relation to a land admeasuring 7.24 acres in Dehradun, Uttaranchal, where
they are exploring the possibilities for establishment of another manufacturing facility.
25
VRPL formulate annual merchandising plan for each division of merchandise taking into
stores
resources,
(established
and proposed),
likely
customer
fashion
tastes
and
trends,
in-house
production
vendor management and price. Each division is further divided into major categories
(for instance, men's apparel as a division is further divided into three major categ01ies, namely,
upper, lowers and sports and ethnic wear). These major categories are in tum segregated into various
subcategories. For example, men's upper as a major category would be further divided into several
sub-categories such as formal shirts, casual shirts, party wear etc. Each sub-category consists of
pre-defined SKUs, which are classified on the basis of price point, brand, style, pattern and size.
VRPL draw annual sales projections for different SKUs and, accordingly, ascertain their sourcing
requirements. Based on such information and lead time estimates for supplies, purchase orders
with delivery schedules are issued. The inventory position for each SKU is reviewed fortnightly
taking into account
the actual sales and variations from the budgeted plans. Regular visits to
the stores are made by the category merchandising team to identify the slow-moving-SKUs
and explore the options to expeditiously dispose of them.
For certain non apparel categories, their merchandise planning and scheduling also depends on
introduction of new products and schemes by the vendors. For instance, if a branded home appliance
manufacturer replaces a product with a new version, then their planning for the product would need
to be reviewed based on th e acceptability of
the new version.
In-house Manufacturing
VRPL benefit
from
backward
and their experiences from manufacturing enable them to negotiate better tenns from
VRPL currently have an apparels manufacturing plant at Gurgaon, Haryana. The manufacturing
plant is well-equipped with fully automatic machines--fol"- fusing, buttoning, embroidery and welt
26
plant was commissioned in 2004 and achieved a capacity utilization of 80%. It has 450 machines
and is operated by 500 workers. Further, VRPL are exploring the possibilities for establishment of
another manufacturing facility, for the purposes of which they have acquired certain portions ofland
admeasuring 7.24 acres in Dehradun, Uttaranchal.
In addition to in-house manufacturing, they have outsourced some parts of the manufacturing
to "job workers" who work in their factory premises. VRPL undertake quality control measures by
way of random sampling to ensure the pre-determined quality standards are met. To verify that the
quantity of supplies is as per the order, they undertake count-check for every receipt of the goods.
VRPL's manufacturing team works closely with their design team to understand trends, develop
products, value engineer and finally create season wise collection that cater to regional tastes.
Purchasing
Purchasing or vendor management
assumes
one
has to deal with multiple products. VRPL have in place a vendor management system, under
which they identify vendors all over the country and overseas and seek to develop alliances and
arrangements with them. They regularly interact with the vendors and share information such that
the vendors remain familiar with their goals and targets. It has been their strategy to procure goods
from small and medium sized vendors and manufacturers, which they believe has led to reduction in
the cost of goods the sell and increase in their profitability.
Upon ascertaining the procurements needs based on each SKU, VRPL explore the various options
for sourcing the products. They continuously strive to procure goods from the place of origin to reduce
the costs and control the quality. For identifying the vendors, VRPL assess the various
possible
options on factors such as capacity, credibility in the market, quality awareness and experience.
27
After identifying the vendors for the goods, VRPL place purchase orders based on their SKU-wise plan,
estimated lead time of each vendor and-quantity to be procured from each vendor. VRPL follow a
policy of 'payment on delivery' to negotiate better prices with the vendors and in certain cases they also
release payments in advance. To ensure quality of supplies, VRPL check quality by way of random
sampling at the time of receipt of the goods. To verify that the quantity of supplies is as ordered, they
undertake count-check for every receipt of the goods. For FMCG products, VRPL procure from
large as well as small and medium size manufacturers. For procurement from the large manufacturers or
their distributors, they endeavor to enter into fom1al arrangements for supply of products to all VRPL
stores, such that they are able to derive fixed margins from sales of such products, irrespective of
the locations. Under these agreements, they benefit from special discretionary discounts and offers
directly from the manufacturers or their distributors.
28
company stores in 24 states I 110 cities in India. The Vishal brand is known for great modem style
for men, women and children. Vishal offers high level fashion styling. Since 1986, our name has
been synonymous with quality, value and fashion integrity. We offer an unparalleled collection of
clothes for the entire family. Each garment is hand selected for quality and contemporary styling.
Vishal manufactures majority
of its own
garments
quality supervision. This enables us to offer the lowest possible and most reasonable prices.
Our goal is to provide a range of fashion wear to suit every pocket. Our product mix represents the
most current fashion trends in tops, bottoms, formals and accessories for men, women and kids. Our
courteous staff will ensure that consumers get a perfect fit.
29
Zeppelin:
Mens Shirts & Trousers
Blues
&
Paranoia:
T-Shirts, Undergarments.
Massa Bay: Mens
Trousers
& Bermudas
Apparel Manufacture
The basic raw materials required for the manufacturing process of apparels includes fabrics
accessories. VRPL merchandising teams
depending upon their production
VRPL
source
various
other components
and
from
VRPL's distribution
dispatched in right quantities and at right time to reach stores with sufficient time
in hand
to
They have built a system to monitor the inventory position on a real-time basis at each store, under
which
levels are reached. The re-order levels for stores are determined based on factors such as display
levels, lead time for replenishment and average daily sales. VRPL review these re-order levels on
continuous basis to factor in variances in demand based on seasons, trends and promotional schemes.
VRPL have seven distribution centers over approximately 385,0lisquare feet. These distribution
centers are located
Ghaziabad
around
(Uttar
Pradesh),
Ludhiana
(Punjab),
(Maharashtra), Jaipur
(Rajasthan),
Delhi). VRPL have clearly demarcated the stores which will be serviced by each distribution center.
The reorder levels for distribution centers are ascertained on the basis of factors like average daily
sales of all the stores services, lead time for replenishment and buffer stock, which caters to
both the existing and proposed stores to be fed. As for the stores, they regularly review these
re-order levels.
VRPL's
distribution
connection
through
centers
and stores
broadband
manage
They primarily utilize their own vehicles to transport the inventory to their stores from the dist1ibution
centers.
In addition,
and optimize
transportation
through
costs.
Distribution
centers operations
have
been
streamlined
31
the
SWOT ANALYSIS
STRENGTHS:
We can encase brand image ofVishal Retail Ltd. to sell its new product.
Garment sector of the Vishal is much more superior to other retail stores.
It is the only store in Lucknow where you can exchange the goods after purchase. (On
selected items).
The Vishal Mega Mart is situated at the big market place.
It segments on middle and lower middle income groups, which constitute majority of the
population in India.
WEAKNESSES:
Need t o
incorporate
many
new
features
as
per
customer
Requirement.
t he p e o p l e is quite low, because from my consumer behavior survey 1 have found out
32
that most of r e s p o n d e n t s think that Vishal Mega Mart is not providing good
offers/discounts on FMCG in comparison of Big bazaar.
People are not so modern In Lucknow and their perceptions are quite advance.
OPPORTUNITIES:
No other big competitor in that area.
To increase the customer satisfaction by providing different variety of products.
Z-line (Manufacturing unit of Vishal) if we create the brand image of it. It will get additional sales in
the future.
Coming era is of knowledge and information if we sell our manufacturing unit product through
THREATS:
Big bazaar, Spencer, Reliance and Globus are the main competitors.
RESEARCH OBJECTIVES
OBJECTIVES OF THE STUDY
To understand the different marketing strategies being followed by Vishal
Mega Mart.
To learn their marketing mix.
Proper understanding and analysis ofVISHAL MEGA MART
33
Conduct a survey on a sample selected from the customers of VISHAL MEGA MART and to
RESEARCH METHODOLOGY
Research methodology is the way to systematically solve the research problem .It may be under stood
as a science of studying to how research is done scientifically. In it we study the various steps that
are generally adopted by a researcher in studying his research problem along with the logic behind
them.
behind the methods we use in the content of our research study and explain why we are using a
particular method and why we are not using others so that research results are capable of being
evaluated either by the researcher himself or by
others.
Secondary data are those which have been collected by someone else and which have already been
passed through the statistical process.
classified.
collection instruments that fit diverse experiences into predetermined response categories. They
produce results that are easy to summarize, compare, and generalize. Quantitative research is
concerned with testing hypotheses derived from theory and/or being able to estimate the size of a
phenomenon of interest. Depending on
assigned
to
different treatments.
the
research
question, participants
may
may
be
randomly
collect data on
participant and situational characteristics in order to statistically control for their influence on the
dependent, or outcome, variable. If the intent is to generalize from the research participants to
a iarger population, the researcher will employ probability sampling to select participants.
quantitative data gathering strategies include:
Experiments/clinical trials.
34
Typical
such as randomized
controlled
uncontrolled trials;
surveillance studies;
and simpler
designs
as case series
controlled
and single
studies,
case
reports
and
or
as case-control, cross-sectional
such
or
retrospective,
interventional
or
methods have alternative names, and many studies employ nearly limitless combinations of these
attributes
Primary data used in this project is mainlv collected through questionnaire which has been taken with
the help o(sample size which has been taken and atier that the entire data has been manipulated.
Secondary data:
Secondary data originally collected for a different study, used again for a new
Research question.
Service
District
Statistics including
basic
client
social conditions and lots of program information (analogous to public schools and scheolt@aGh@rs, who constitute some of the most accountable of public servants).
Other
Social
and
Economic
Indicators,
Budgets
Through internet
35
Consumer
Price
Index, unemployment
LITERATURE REVIEW
MARKETING ANALYSIS
SUMMARY
Marketing help to define the business for the customer's interests, not your own. It is the process of
learning what customers want or need and determining how to satisfy those wants or needs. It is
also used to confirm whether the customer reacted to a marketing program as expected. The benefits
of market research include:
Learning how to reach your customers and how frequently you should try to communicate
with them.
Learning which advertising appeals are most effective and which ones get no
response.
return on investment.
Vishal Mega Mart has been the pioneer of retail revolution. Its first fight was against local 'Kirana'
stores. The task was to change the mindset of consumer to bring about changes in their shopping
patterns. It wanted people to do bulk shopping for their
monthly ration instead of going to the shop each week.
36
Vishal Mega Mart offers a wide range of products which starts from apparels to food items, footwear
to home furnishing, crockery to sport items, child care products to toys, watches, drinks etc. There
are many in house brands promoted by Vishal Mega Mart. In pursuance of their business plan to
diversify their portfolio of offerings, FMCG products play a key role. FMCG products are
usually meant to fulfill the daily needs of consumers and therefore, VRPL believe retailing of
FMCG products will bring customers to their stores on a frequent basis and this may in-tum lead to
consumption of their apparels. VRPL have a number of private labels for apparels such as
Zepplin, Paranoia, Chlorine, Kitaan Studio, Famenne, Flourier Women and Roseau.
37
PRICE
Vishal Mega Mart promises its consumers the lowest available price. The concept of psychological
discounting (Rs. 99, Rs. 49, etc.) is used as promotional tool. Vishal Mega Mart also caters on
Special Event Pricing (Close to Diwali, Christmas, New Year etc.). Selling
combo-packs and
offering discount to customers. The combo- packs add value to customer. Through Bundling, they
also reduced the price of the products. In addition to VRPL's strategy to continue procurement
of goods from small and medium size vendors and manufacturers which leads to cost efficiencies,
VRPL intend to procure FMCG and apparels from low-cost production centers located outside
India. Towards this objective, VRPL's propose to increase their procurement of finished and
semi-finished goods from China and thereby realize economies of scale and pass on the benefits so
accrued to their customers. The efforts of VRPL's retail business are targeted towards families
having total income which can be classified
groups. VRPL follow unifonn pricing policy across their stores in respect of private labels and nonbranded products sold by them. This enhances brand loyalty, encourages customer confidence and
results in operational convenience. In relation to the other products, the prices may vary between
stores on account of state-specific taxation and vendor policies.
Vishal Mega Mart stores are located in 110 cities with more than 180 outlets. Vishal Mega Mart has
presence in almost all the major Indian cities. They are aggressive on their expansion plans. VRPL
intend to increase their penetration in the country by setting up new stores in cities where they
already have presence, as also entering into new areas in the country. In particular, they intend to
focus on expansion in Tier II and Tier III cities. VRPL target locations with good infrastructural
facilities such as easy accessibility, provision for water, electricity, parking, security and other
basic amenities.
Promotion
Advertising has played a crucial role in building of the brand. Vishal Mega Mart advertisements
are mainly seen in print media
promotional
from
schemes
formulates promotional
weekly.
Apart
They launch
layout of the stores and positioning, presentation and display of merchandise, in order to appeal to
the customer.
In addition, VRPL
Services Private Limited, a co- branded credit card. VRPL's propose to continuously undertake
such initiatives
to increase the satisfaction of their customers. Some of the features of the co-
branded card include Rs 250 discount voucher on signing up for the card and a process by which
the cardholder earns five reward points on every Rs 100 spent. A cardholder accumulates points on
the basis of purchases made and the points accumulated can be redeemed for gifts or purchases. In
September 2005, VRPL entered into a long tenn advertising agreement with Bennett, Coleman &
Company Limited ("BCCL"). Under the agreement, they are entitled to fixed discounts for their
advertisement in print publications of BCCL for a period of five years from the date of the
agreement. In addition, BCCL would also act as a facilitator for other print and non-print media of
the Times Group i.e. internet, radio and television or any other new medium launched during the
tenancy of the agreement. As a part consideration, VRPL had issued
1,670,605 Equity Shares of Rs. 10 each and 384,190 Preference Shares of Rs. 146
each amounting to an aggregate ofRs. 300 million.
It believes that the following are their principal competitive strengths which have
contributed to their current position in the retail sector in India
It endeavthier to continuously reduce their costs through a variety of measures, such as,
39
in-house production of apparels, procurement of goods directly from the small and medium size
vendors and manufacturers, efficient logistics and distribution systems along with customized product
mix at their stores depending on the regional customer behavior and preferences. Central to their
value retail strategy is to pass on the benefits of cost reduction measures to their customers.
sthiercing, standardization,
vendor management, production, logistics, quality control, 'pilferage' control replacement and
replenishment. Their supply chain management provides us flexibility to adapt to changing patterns in
consumer behavior and their ability to add value at various steps/levels. In particular, their
supply chain management gains strength from their ability to undertake in-house manufacture,
design and development of apparels.
VRPL's distribution and logistics network comprises seven distribution centers. Besides, VRPL
have their own fleet of 31 trucks, which helps VRPL to transport and deliver their products in a cost
and time
efficient
manner.
VRPL
believe
networked and allows them to fulfill the store requisition within short time period of generation
and receipt
of order,
merchandise and
which
has helped
VRPL
to
optimize
in-store
availability
of
minimize transportation costs. Their strong distribution and logistics network has
enabled them to dispense with the requirement of a dedicated storage space at every store, which is an
industry practice, and instead undertake periodical replenishment of depleted stock. Due to adoption of
an efficient racking system, they are able to benefit from optimum utilization of the space allocated
for display in their stores. This provides them assistance in maintaining a low working capital
requirement and less carrying cost.
Geographical spread
Their stores and distribution centers are spread in various parts and regions of the country. This
has not only enabled us to build their brand value but also facilitated us to explore cost-effective
sthiercing from different locations, identify potential markets and efficiently establish new stores in
different locations. An aggregate of 43 of 50 of their existing stores are located in Tier IT and Tier ill
cities, which, It believe, enables us to capture market share in locations where a majority of their
target customers are
located.
40
It believe that It possess the ability to identify locations with potential for growth, in
particular in Tier II and Tier III cities. It has an exclusive site identification and assessment
team, which undertakes systematic analysis of the business prospects, taking into account factors
such
as population,
infrastructure and establishment and running costs. Further, it has a dedicated warehouse for the
purposes of storing the materials essential for setting up of new stores.
Private labels
It has a number of private labels for apparels (i.e. apparels manufactured by us) such as Zeppelin,
Paranoia, Chlorine, Katina Studio, Famine, Flthierier Women
income from their private labels was Rs. 583.60 million, which accounts for 9.68% of their total
sales for fiscal 2007. It believes that their focus on their private labels and their recognition in
their customer segment enables us to differentiate themselves from their competitors.
Their Strategy
It intends to pursue the following strategies in order to consolidate their position as an operator in the
'value Retail' segment in India. Their growth strategy is based on:
Increasing their penetration in the country by leveraging their supply chain, distribution and logistics
network
It intends to increase their penetration in the country by setting up new stores in cities where it
already have Presence, as also entering into new areas in the country. In particular, it intends to
focus on expansion in Tier II and Tier :m cities. It believe that their existing infrastructure have been
designed for a higher scale of operations than their current size, and can help us grow without the
need to significantly
processes leads us to believe that it can deal with higher scale of operations without any hindrance.
Higher business volumes will also improve their negotiating pouters and help us get further economies
of scale in their buying.
It believes that through backward integration It will continue to substantially control the cost of
41
increase the in-house manufacture, design and development of their products and realizes economies
of scale. It intends to manufacture at least 25% of their requirement
require
expansion
of their
for
their reliance on external agencies for supply of their products and will result in loiter tum-around
time.
In addition, their focus would be to undertake in-house such functions of the manufacturing
processes, which, in their view, would add maximum
procurement costs.
Expansion of FMCG
Historically, it has derived significant portion of their revenue from sale of apparels. In pursuance of
their business plan to diversify their portfolio of offerings, FMCG products play a key role. FMCG
products are usually meant to fulfill the daily needs of consumers
and
therefore,
It
believe
retailing of FMCG products will bring customers to their stores on a frequent basis and this may intum lead to consumption of their apparels. It believe retailing ofFMCG products would help us to
eliminate the
impact of seasonality of the apparels market in India, which depends on factors such as change in
tether conditions and festival celebrations. In furtherance of their endeavthiers to reduce costs, It
intend to procure FMCG products directly from the manufacturers. For this purpose, It has entered
into and will continue
domestic FMCG majors on such terms and conditions, which are suitable to their business model.
42
In addition to their strategy to continue procurement of goods from small and medium size vendors
and manufacturers which leads to cost efficiencies, It intend to procure
low-cost
production
their procurement of finished and semi-finished goods from China and thereby realize economies of
scale and pass on the benefits so accrued to their customers.
It believes that understanding the needs of their customers is of prime importance for the continuous
growth of their business. In order to continuously provide customer satisfaction, their customer
management
team
assimilates
address the requirements of their customers. In addition, It has introduced, in association with SBI
Cards & Payment Services Private Limited,
co-branded
credit
card.
It proposes
43
to
buying behavior
in FMCG sector
considering retail market in India. The impact of various impulse buying factors like sales and
promotions,
placement
of
products,
window
etc. on
customer impulse buying behavior has been analyzed. A hypothetical model has created in this paper
which has been taken into consideration for our research work on impulse buying behavior of the
consumers.
The study is based on the primary data collected from Vishal Mega mart from the area of DELHI
and NCR regions with the help of structured questionnaire on ricer scale. Data analysis has been done
using SPSS software. The statistical analysis method employed
After the through analysis of the available data it has been found out that since income of individual
is increasing and more and more people are moving towards western culture in dressing sense, in
eating etc. so the purchasing power of the people has really gone up and thus the impulse buying
of the commodities is on a great increment mainly due to pricing strategies of retail players and full
of festivals throughout the year. Under the social environment effect hoping to usher in a socioeconomic revolution VISHAL MEGAMART is all set to create at least 500,000 jobs through its
jumbo Rs.80 billion investment in retail network to be launched in the two north Indian states.
furnishings
in
VISHAL MEGAMART. Community facilities including a health center and phantasy, and a
vocational training center to assist
avenues
would also be
provided at these centers. Sixty-eight Town Centers, each spread over 130,000 sq. ft. would be in
place in most of the 70 district headquarters of Uttar Pradesh by the end of next year.
Poised to usher a new paradigm in rural areas, the agri-business vision of VISHAL MEGAMART
is to build infrastructure for efficiency, value addition, logistics and market access to improve farm
incomes, create an efficient market place for the true price discovery of farm produce, drive major
initiatives
to bring the best technology and thereby bring about drastic improvements in farm
practices
LEGAL IMPACT
44
In this environment govt. plays his legal role to develop the mentioned industry. He makes suitable
law for the multi-dimensional growth of the industry. Govt. has
also fixed a limited FDI in this sector, no body will invest more money from this
limit, but after liberalization govt. changes his policy.
Liberalization of the Indian economy and rationalization of business procedures have already
ensured a high economic growth with a rapidly expanding base for the manufacturing and hiend services sectors. Fresh avenues for gainful employment to a predominantly young and talented
population have created high disposable incomes that translate in to higher consumption and thus
better opportunities for all verticals of retail to flourish. The country's dynamic retail landscape
presents a grand opportunity to investors from across the globe, to use India as a strategic
hub prices than what
business
like ITC, Godrej, VISHAL MEGAMART, AV Birla and many others have already established the
farm linkages. Indian farmers are finally making good money, after centuries of social and economic
exploitation. The Indian government
ECONOMIC IMPACT
Asian Markets Securities report on Vishal Retail IPO
VRL's focus is on tier II and tier III cities, which account for 87% of its total retail space. Of the 50
stores, Vishal Retail has 43 stores located in Tier II and Tier III cities. An average store is 20,00030,000 sq.ft. in size generating sales of Rs 7500 per square feet.
VRL's business model is based on value retailing, where by it offers quality products at reasonable
prices to customers
products of household needs, ready-made apparels, footwear, toys, watches, toiletries, grocery items,
sports items, crockery, gift and novelties.
North India accounted for 62% of FY 2007 sales, east India 19%, west India 15% and south India 4%.
In FY07, the apparel business contributed 63% of revenues, while the non-apparel business contributed
22% and the FMCG sector 15%.
45
Strong Infrastructure
VRL's distribution and logistics network comprises seven distribution centers with a total area of
471,426 sq. ft. The company also has its own fleet of 41 trucks, which helps in transport and delivery
of products in a cost and time efficient manner. The company is in the process
SAP to connect
and distribution
centers
of implementing
which will help it to efficiently manage the network of outlets throughout the country.
Outlook and Valuation
Vishal compares well in terms of profit margins & Mcap I Sales, although its average sales per square
feet is very low compared to its peers because of its presence mainly
in smaller cities.
At the upper price band of Rs 270 per share, the PIE would be 24.1 times the FY 2007
EPS of Rs 11.15 on post-issue equity of Rs 22.40 crore. The leading players like Pantaloon
Retail, Shopper's Stop and Trent (India), enjoy very high valuation with the PER of around 90, 80
and 40, respectively. Although VRL does not fall in to that league due to its value retail business
model focused on smaller towns & cities, nevertheless, retail being a high growth industry,
Vishal Retail will also do well & command good valuation.
VISHAL
MEGAMART expect the company to post sales & PAT growth of 60% & 70%
respectively over FY07-09. Valuing conservatively at 18- 20x FY2009 EEPS of Rs 29.91, VISHAL
MEGAMART see the stock scaling up to Rs 538-600 levels over next one year. Investors can
certainly subscribe to this growth stock.
46
POLITICAL IMPACT
This environment is very important from the view of these particular topics, because every way
would pass through the political corridor. The Government of India has succeeded in its reform
process; the economy is poised to grow at an annual rate of 5% during 2005-2010. The reforms
include policies to woo foreign investors, make import duties in compliance with WTO commitments
and customize the EXIM policy to boost imports.
Due to some political region at least three major cities saw protests in May against Reliance,
India's
largest
corporation,
entering
the
business
of
retailing
through its brand Reliance Fresh. In Ranchi and Indore, the protests had political backing and
turned violent.
The protestors, mostly street vendors, fear the company's low prices will destroy their market. While
it is too early to know if their fears are founded in reason or hype, the protests also stem from the
fact that they feel cheated by a government that is in a hurry to promote large retail businesses
and refuses to keep its promises made to small vendors and retailers, who control about 95 per
cent of the country's overall retail business. India has an estimated 12 million street vendors in its
cities- the 2004 National Policy for Urban Street Vendors pegs it at 10 million-and roughly 2.5
per cent of each city's population is engaged in vending on streets.
Many visible corporate brands are into the retail business: VISHAL MEGAMART, Bharti, Big
Bazaar, Godrej and Subhiksha. India has not allowed FDI in multi-brand retailing. But international
behemoths like Wal-Mart, which has a deal with Bharti, are raring for joint ventures. (Wal-Mart
is world's largest retailer and the second largest
groups,
and
corporation.
Labour unions,
women's rights
grassroots organizations have long argued that the reason for Wal-Mart's cheap
prices is how shoddily it treats its employees. Wal-Mart had to leave Germany and South Korea
because it did not get the kind of room for its policies as in the US and other
countries.)
TECHNOLOGICAL IMPACT
India's organized retail industry, constituting 3 per cent of the total retail, is indeed on a growth path.
It has necessitated the development of sophisticated IT solutions to enable more profitability,
47
efficiency and an enriching customer experience. Retailing is the second largest income generator in
India after agriculture and constitutes 38 per cent to gross national income. Dynamic Vertical Solutions
Pvt Ltd, based in Gurgaon, has already made a mark in the field by providing complete end-to- end
solutions for different types of retailers. Atanu Ghose, Technology Head at DVS and an IT veteran
with 37 years of experience, who was in Bangalore recently to attend FR02008 -the Franchise
and Retail show -shares some of his perceptions on IT deployment in retail sector.
Technology is a one-time investment but the return on investment is continuous. For the first three
years ROI may not be there but then onwards there is no cost. Many of the large retailers spent
crores of rupees on doing up their premises but buy some cheap software at Point of Sale (PoS) for
computerized invoicing. I think it is a wrong strategy because it doesn 't help you to find out who
your customers are, it doesn't generate information on stocks and shelf space analysis is very critical.
Why do some products move faster while others don't? Mere PoS computerization is not going to
help in these matters.
Technology-driven companies like Wal-Mart have minute information, even to the point, let us
say, which truck will reach their warehouse in next 45 minutes. Proper supply chain is essential
and customer experience is very critical for retail success. The retailer has to ensure that customer
is not required to hang around or take too much time to spot his product.
retailer, even a one percent saving makes a huge difference. The problem with ordering through
phone is that it may not be properly registered or the person concerned might forget about the call 15
minutes later. If you can't provide the product or service, the customer will go lo next shop.
48
49
50
51
52
53
54
55
56
57
58
59
60
SUGGESTIONS
3. Making stalls in corporate meals like trade fair, maybe beneficial to create
brand image of its product.
8. Maintained proper display to create impulse. (It is assumed that near about
70% sales comes from impulse marketing and if proper display is not maintained impulse
cannot be created).
61
CONCLUSION
After completing this research we come to know that Only Big Bazaar is ahead of Vishal Stop
because of its prime Location and higher product range. Shoppers' Stop is new in Lucknow as
compared to Vishal Megamart and it is slowly covering its market. But there are few areas
where these malls needs amendments and these suggestions are mentioned in these malls.
Advertising is an important factor of getting sales promotion and Vishal Megamart is ahead of
Shoppers' Stop in that case, but Product Quality of Shoppers' Stop is better than Big Bazaar.
Product Range of Shoppers' Stop is better than that of Big Bazaar.
Overall Vishal Megamart is ahead of Shoppers' Stop and Globus Retail, but just little behind to
Big-Bazaar.
62
1. Sometime respondents are not taking interest in such type of surveys therefore there is chance
that they might be giving wrong information.
2. The respondents are free from all barriers so he/she can give his/her opinion which may not
be true in many occasions.
3. The staff of the Vishal only provides/ communicates the merits of its products.
63
BIBLIOGRAPHY
BOOKS REFERRED:
RETAILING MANAGEMENT
(PRADHAN,SWAPNA)
PHILLIP KOTTLER
WEBSITES:
http://www.dare.co.in/people/featured-entrepreneur/entrepreneur-of-the-month-ram-chandraagarwal-vishal-retail-limited.htm
VISHALMEGAMART.NET
TIMESOFINDIA.INDIATIMES.COM
http://www.studymode.com/essays/Vishal-Mega-Mart-Price-Gap-Analysis-394730.html
64