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
Customers are not
much involved in
Low sales building material
and low as their choice is
majorly influenced
margin of by contractors,
just 8%. architects and
designers

Women are not

Cannot beat
much involved
traditional
or interested in
market in terms
this stage of
of price.
home building.
 No requirement of
any particular
Low involvement
environment or
Product
simulation for
purchase

Major contributors to
revenues and margins
Consumer Profiling
are furnishing,
has changed
hardware and
electrical products
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
80
60
40
20
0
-20

Budgeted Sales Actual Sales Growth in %

 Sales Analysis Cont...
Display
Category Purchase Purchase/Space Rank
Space
Bathroom Fittings 20 18 0.9 6

Furniture 15 2 0.1 9
Kitchen and Kitchen
15 23 1.5 3
Appliances
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