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Muebles: The Home

Building Store

Group 4

Indian Retail Industry

Has largest retail density in world Contributes 10%-11% to GDP Home building market highly fragmented

Home & Building Store was broadly divided into two categories

Building Materials Segment Soft Furnishing Segment

Competition very high due to entry of foreign players

Muebles

Mission

To reduce the trauma of home building

A home building & Improvement Store Part of Casa Mobalje Group Strategically located at Ahmedabad

Communicaton mix in both English & Gujrati languange.

The Store

Completely Customer Centric (all segments)

Provided CAD/CAM assist to choose better designs

Provided differentiated branded products

Had ample safety stock to meet the demand

Concept of Shop-in-Shop No invisibles present in the store

Changing Customer Profile

Mr. Muebles of Yesteryear

Homebuilder Renovator Apartment Owner Professionals

Today’s Mr.Muebles

Young & Educated professional High Income level Maintained a status in the society

Concern

Repositioning Strategy

Change in merchandise & delivery mechanism

Entry of international competitor like IKEA

Yes Building materials should be moved

completely out of the store

Market Size also includes roads and other projects which are not the customers of Muebles Low
Market Size also
includes roads
and other
projects which
are not the
customers of
Muebles
Low sales
and low
margin of
just 8%.
Customers are not
much involved in
building material
as their choice is
majorly influenced
by contractors,
architects and
designers
Women are not
much involved
or interested in
this stage of
home building.
Cannot beat
traditional
market in terms
of price.

Low involvement

Product

No requirement of

any particular

environment or simulation for purchase

Consumer Profiling

has changed

Major contributors to revenues and margins are furnishing, hardware and electrical products

GMROF can’t be used as a metric on silo basis since positioning is of one stop
GMROF can’t be used as a metric on silo basis since positioning is of one stop
GMROF can’t be used as a metric on silo basis since positioning
is of one stop shop.
Conversion rate for each segment/category is an important
factor.
Seasonality of a particular category.
The categories which needed more display such as lighting has
to be given more space in comparison to for ex paints etc.
Items in destination categories can be placed at upper floors so
that on the way customers may glance through other items.

Format

Current:

4 employees/floor

Grid format

DIY Model

• • 30% floor space allocated to partners

One stop shop format- wide range of merchandise Focus on value, convenience, variety and better shopping experience Friendly ambience Emphasis on unique value added services Destination store for Ahmadabad and nearby towns Unique shopping experience- assured quality, wide range of products at competitive price

Location

Strategic location- near national highway Cheaper land availability, low rental costs Visibility from a great distance Service like parking space Better logistics

Merchandising

Stocked product under 5 major category Simulated conditioning to give feeling of complete set of offering Branded product along with Mumbles store brand to fill category Offered narrow and deep selection Judicious mix of one off and recurring purchase item Mix of imported and domestic goods Appeal to both consumer and professionals

Pricing

Varied across the product categories Competitive and benchmarked against traditional hardware and home building material store Charged premium price for destination product category Loss leader, for traffic building

Promotion

Multi pronged approach for communication Judicious mix of media for brand and tactical advertisement Used regional language to reach out to their target segment Separate package depending upon awareness Educating home builder and rewarding their purchase Packages involved direct mails and tie-ups with companies Targeted HR department of companies with special deal

Target and Positioning

Target Market: People who are rich and the consuming class.

Target

Income

No of

No of

Segment

Household in

Household in

1994’

2005’

Very Rich

3,90,000

1

6

Consuming

81,000

30

75

3,90,000

New Positioning

After Removing Building Material from the store

“A one stop shopping experience for Home improvement solution at affordable

prices for whole family”

Changes

Environment:

Growing Consumer Base: New Customers.

Changes

Implication

Growing consumer base

No of Customers Growing

More Affluent

Increase in purchasing power

Change in Lifestyle

Positive Attitude towards improvement and

renovation

Urbanisation

Modern Outlook

A New Mr. Muebles

Knows Muebles and considers Muebles as a Quality Store

Sales

In Rs. lakhs

Month

Budgeted Sales

Actual Sales

Growth in %

Feb-01

  • 30 35

   

Mar-01

  • 35 38

 

8.6

Apr-01

  • 38 40

 

5.3

May-01

  • 40 42

 

5.0

Jun-01

  • 58 55

 

31.0

Jul-01

  • 68 75

 

36.4

Aug-01

  • 75 84

 

12.0

Sep-01

  • 50 75

 

-10.7

Oct-01

  • 55 75

 

0.0

Nov-01

  • 73 80

 

6.7

Dec-01

  • 96 96

 

20.0

Jan-02

104

112

16.7

Sales

In the past 7 months, the store has exceeded its expectations and achieved higher sales than budgeted.

A slump in sales and expectations in sept and oct because of rainy season and winters. Otherwise a

steady and stable growth

Sales Figures

120 100 0 -20 80 60 40 20 Growth in % Budgeted Sales Actual Sales
120
100
0
-20
80
60
40
20
Growth in %
Budgeted Sales
Actual Sales

Sales Analysis Cont ...

Category

Display

Purchase

Purchase/Space

Rank

Space

Bathroom Fittings

20

18

  • 0.9 6

 

Furniture

15

2

  • 0.1 9

 

Kitchen and Kitchen Appliances

15

23

  • 1.5 3

 

Lighting

12

10

  • 0.8 8

 

Hardware

15

13

  • 0.9 7

 

Electrical Appliances

12

16

  • 1.3 5

 

White Goods

4

6.7

  • 1.7 2

 

Paints

3.5

5

  • 1.4 4

 

Others

3.5

6.3

  • 1.8 1

 

As suggested by data above, the sales per unit space for white goods and others is very high as compared to Kitchen, bathroom and furniture. So we suggest reducing the space for white goods and others and increase space for furniture (to encourage its sales) so as to implement and maintain our positioning of a home improvement store

Customer Profile

Mr Muebles:

Home Builder Renovator Apartment Owner Professional

Mr. Muebles thinks that Muebles is an Exclusive and Expensive Store.

That perception is needed to be broken by the new positioning and communication

Changing Customer Profile

Young Professional, Well Educated, Post Grad, earns more than 30,000.

Car, Credit Cards, Consumer Durables, Likely to replace TV/Fridge and buy a laptop.

74% of Mr. Muebles are Professionals or Business Men

60% of them are either renovating or refurnishing their house. 20% are building it

Changing Customer Profile ..

Mainly buying accessories for Kitchen, Bathroom or electricals (57% of all sales) Considers his own and his spouse’s choice.

Associates Muebles with quality and finds all he needs at Muebles. But doesn’t consider that he is getting value for money at Muebles.

High expectations with Muebles. Frequently visits the store Majority of them owns a house.

Nearly all of them has Washing M/C and an air conditioner. 75% have VCD, PC and Microwave.

This shows that Mr. Muebles has nearly all the modern consumer durables he needs for utility as well as entertainment

FORMAT

Current:

4 employees/floor No interference Grid format DIY Model 30% floor space allocated to partners

FORMAT

Suggested Format:

Freeflow Layout near check out with impulse items

Maze format on other floors to induce travel and spending more time

Floor wise product category segmentation to provide experience

Family friendly with enough space and cafes, kids corner, etc.

Location

Ideally located outside main business district

Land availability for big store along with ample parking space

Near major traffic intersection providing space for billboard advertisement

Merchandising

Include some variety in consumer durables to pull new professionals

Increase the price range and depth to cater to more diverse customer needs

Reduction in space allocation to low GMROI products like furniture,etc.

More stress on aesthetics to improve experience

Pricing and Promotion

Pricing:

Loss leader in low margin items to draw in customers

Sell premium branded items at high margin with excellent after sales service

Promotion:

Majorly through local newspapers, radio and local channels

Billboard advertisement near building material markets and the store Through special magazines like Construction

World, Master Builder, etc. read by prospective

customers

Promote your services and after sales support to reduce dissonance regarding price.

Personnel

Training to be seen as investment, not as a cost

Personnel to be made more solution oriented making them believe that they are selling a solution, not a product

Include some female staff to make female customers feel more comfortable

Workdays adjusted to take care of spikes on weekends

Increase number of employees due o continuous increase in footfalls