CHAPTER 1 EXECUTIVE SUMMARY
In India the growth of private labels have been phenomenon and is slowly gaining more store space. According to a FICCI-Ernst & Young 2007 report, as quoted in The Marketing White book 2009-10, the retail sector in India was worth $280 billion, of which organized retail comprised 5% at $14 billion. This study focuses on Consumer Beliefs, Attitude and motivation towards Private Labels. The study gives an insight into the different attributes and parameters considered by consumer for evaluating a in store brand. Consumer beliefs of Private labels across various categories reflecting on purchasing pattern were also discovered which emphasized on the key opportunity category for private labels and also addressed the category on which private labels needed to work upon. To accomplish the task, a survey was carried in and around Mumbai city (retail outlets) with a sample of 40 respondents taken on a random basis approaching the customers who walked in retail outlets. A structured questionnaire was prepared and administered and the data so collected was analyzed both by percentages and statistical methods. Though, private labels at present constitute about 5% of the organized retail business, experts feel they can grow up to 30% once retail brands develop in the country
CHAPTER 2
1 INTRODUCTION FOR THE PROJECT
2.1 Statement of the Problem:- • The retailer desires to understand consumers approach their beliefs and attitude towards In Store brands which can help them in better positioning and designing marketing strategies to accelerate sales of their consumer attitudes, beliefs about private labels • What are the key aspects that motivates customers to go for Private labels vis-a- vis Brands.
2.2 Objectives:- • To analyze the consumer approach towards private labels
• To understand the reasons behind the evolution of the PLs, their status in the Indian retail industry and to analyze the strategies of retailers in competing with the national brands • To analyze the future prospects and challenges of PLs in India with the prospective changes in the retail industry
2.3 Research Methodology:-
1. Research Design: The chosen research design was Descriptive Cross Sectional Study 2. Sources of Data: Primary Data 3. Data Collection Technique: Survey 4. Data Collection tool: Questionnaire (attached)
2.4 SAMPLE DESIGN
2 1. Sample Procedure: Convenience Sampling 2. Sample Frame: The respondents were working professionals & housewives 3. Sample Size: The study was conducted based on sample size of 40
2.5 Limitations Certain limitations do creep in a research study due to constraints of the time, money and human efforts, the present study is also not free from certain limitation, which were unavoidable. Although all effort were taken to make the result of the work as accurate as possible as survey but the survey have following constraints. 1. Some customers were not willing to give information due to their busy schedule. 2. Due to very large size of the population, only a selected sample of customer could be contacted. 3. The research was conducted in Mumbai. Hence it could not represent the entire population. 4. Also impossible for company to prove information which is confidential 5. Due to fast pace of life, some customers were not able to do justification to the questionnaire. 6. Personal biases might have come while answer the questionnaire. 7. As per company rule many information was not disclose as the manager are busy in their daily schedule. It is not possible for us to spend more time in interaction with them.
CHAPTER 3 REVIEW OF LITERATURE
3 The review of literature has been collected concerning the research topic on “Private labels as a marketing strategy – A Study of Big Bazaar”. The abstracts of research work done by different researchers are as below:- Nirmalaya Kumar and Jan-Benedict E.M Steenkamp in his book “Private Label Strategy” states that “the success of any consumer goods packaged company increasingly depends on how to handle the private label challenge and the retailer relationship. Private label strategy offers interesting insight and illuminating perspective on the role of and opportunities for brand manufacturers.”
Kishore Biyani (2007), in the book “It Happened in India” by Rupa publications pvt ltd states that the initial Big Bazaar sourcing model was entirely dependent on consolidators. These people were dedicated traders. They did not have fancy educational qualifications or work experience with a blue-chip company, but understood the market far better than the so-called professionals. Apart from apparel there was hardly any category in which we had a superior knowledge base. Consolidators were people who knew the intricacies of a particular category very well and had an industrial background. Consolidators were given a free hand and they helped us develop this knowledge base. The consolidators were not just involved in procuring our goods, they also warehoused it and transported it to the Big Bazaar outlets. While the big categories were handed over to consolidators there were categories like optical, pharmacy, books, tailoring and crockery for which we roped in strong local retailers. Research for marketing decisions by Paul E Green, Donald S Tull and Gerald Albaum, Prentice- Hall of India pvt ltd emphasizes on modern analytical tools like multivariate analysis has been incorporated in design & conduct of marketing research. It includes decisional research orientation, strong treatment of analysis, extensive coverage of measurement and scaling techniques. Advertising express, IUP publications, September 2010 CHAPTER 4 INDUSTRY BACKGROUND
4 4.1 Introduction The word "Retail" originates from a French-Italian word. Retailer-someone who cuts off or sheds a small piece from something. Retailing is the set of activities that markets products or services to final consumers for their own personal or household use. It does this by organizing their availability on a relatively large scale and supplying them to customers on a relatively small scale. Retailer is a Person or Agent or Agency or Company or Organization who is instrumental in reaching the Goods or Merchandise or Services to the End User or Ultimate Consumer.
4.2 Indian Retail Industry: Indian retail industry is the largest industry in India, with an employment of around 8% and contributing to over 10% of the country's GDP. Retail industry in India is expected to rise 25% yearly being driven by strong income growth, changing lifestyles and favourable demographic patterns. It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion. India retail industry is one of the fastest growing industries with revenue expected in 2007 to amount US$ 320 billion and is increasing at a rate of 5% yearly. A further increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption. It has further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion. Shopping in India has witnessed a revolution with the change in the consumer buying behaviour and the whole format of shopping also altering. Industry of retail in India which has become modern can be seen from the fact that there are multi- stored malls, huge shopping centers, and sprawling complexes which offer food, shopping, and entertainment all under the same roof. Indian retail industry is expanding itself most aggressively; as a result a great demand for real estate is being created. Indian retailers preferred means of expansion is to expand to other regions and to increase the number of their outlets in a city. It is expected that by 2010, India may have 600 new shopping centres. In the Indian retailing industry, food is the most dominating sector and is growing at a rate of 9% annually. The branded food industry is trying to enter the India retail
5 industry and convert Indian consumers to branded food. Since at present 60% of the Indian grocery basket consists of non- branded items. Indian retail industry is progressing well and for this to continue retailers as well as the Indian government will have to make a combined effort. Indian retailing industry has seen phenomenal growth in the last five years. Organized retailing has finally emerged from the shadows of unorganized retailing and is contributing significantly to the growth of Indian retail sector. Indian retail industry is going through a transition phase. Most of the retailing in our country is still in the unorganized sector. The spread out of the retails in US and India shows a wide gap between the two countries. Though retailing in India is undergoing an exponential growth, the road ahead is full of challenges
With more than 12 million retail outlets, India has one of the highest retail densities in the world. The retail landscape in India is dominated by mom-pop stores and though organized retail is emerging, it still constitutes a minuscule 3 per cent of overall retail in the country. But last 4–5 years has seen many Indian companies making a entry into organized retail, with a few multinationals entering in the cash-and-carry formats and others tying-up with Indian companies. Most prominent ones are Reliance, Futures group, Spencer‘s, and A.V. Birla Group. The BMI India Retail Report for the third-quarter of 2010, forecasts that the total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014. With the expanding middle and upper class consumer base, there will also be opportunities in India's tier II and III cities. The greater availability of personal credit and a growing vehicle population to improve mobility also contribute to a trend towards annual retail sales growth of 11.4 per cent. Mass grocery retail (MGR) sales in India are forecast to undergo enormous growth over the forecast period. BMI further predicts that sales through MGR outlets will increase by 154 per cent to reach US$ 15.29 billion by 2014. This is a consequence of India's dramatic, rapid shift from small independent retailers to large, modern outlets.
6 China and India are predicted to account for almost 91 per cent of regional retail sales in 2010 and by 2014 their share of the regional market is expected to be more than 92 per cent. Growth in regional retail sales for 2010-2014 is estimated by BMI at 72.2 per cent, an annual average of 14 per cent. India should experience the most rapid rate of growth in the region, followed by China. For India, its forecast market share of 13.9 per cent in 2010 is expected to increase to 14.3 per cent by 2014. Established retailers are tapping into the growing retail market by introducing innovative store formats. Spencer's Retail, More (owned by Aditya Birla Group) and Shoppers Stop (owned by K Raheja Group) already plan to expand. According to a McKinsey & Company report titled 'The Great Indian Bazaar: Organized Retail Comes of Age in India', organized retail in India is expected to increase from 5 per cent of the total market in 2008 to 14 - 18 per cent of the total retail market and reach US$ 450 billion by 2015.India continues to be among the most attractive countries for global retailers. Foreign direct investment (FDI) inflows between April 2000 and April 2010, in single-brand retail trading, stood at US$ 194.69 million, according to the Department of Industrial Policy and Promotion (DIPP)
4.2.1 Key Challenges:
7 ➢ Location:
"Right Place, Right choice" Location is the most important ingredient for any business that relies on customers, and is typically the prime consideration in a customers store choice. Locations decisions are harder to change because retailers have to either make sustainable investments to buy and develop real estate or commit to long term lease with developers. When formulating decision about where to locate, the retailer must refer to the strategic plan:
○ Investigate alternative trading areas.
○ Determine the type of desirable store location
○ Evaluate alternative specific store sites
➢ Merchandise: The primary goal of the most retailers is to sell the right kind of merchandise and nothing is more central to the strategic thrust of the retailing firm. Merchandising consists of activities involved in acquiring particular goods and services and making them available at a place, time and quantity that enable the retailer to reach its goals. Merchandising is perhaps, the most important function for any retail organization, as it decides what finally goes on shelf of the store.
➢ PRICING: Pricing is a crucial strategic variable due to its direct relationship with a firm's goal and its interaction with other retailing elements. The importance of pricing decisions is growing because today's customers are looking for good value when they buy merchandise and services. Price is the easiest and quickest variable to change
➢ TARGET AUDIENCE:
"Consumer the prime mover" "Consumer Pull", however, seems to be the most important driving factor behind the sustenance of the industry. The purchasing power of the customers has increased to a great extent, with the influencing the retail industry to a great extent, a variety of other factors also seem to fuel the retailing boom
4.2.2 Size of Indian retail
8 • 720 million Indians to join consuming age by 2010
• 55% of the Indian population will be under 20 years of age by 2015
• 32% rise in urbanisation by 2008
• 10% annual growth in Retail market since 2000
• 7% of the population is engaged in retailing
• A booming US$ 300 billion retail market in India
• 5.5 retail outlets per 1000 population, highest in the world
• 25-30% annual growth in retail loans and credit cards
4.2.3 Retail Formats in India:-
• Hypermarts/supermarkets: large self-servicing outlets offering products from a variety of categories. • Mom-and-pop stores: they are family owned business catering to small sections; they are individually handled retail outlets and have a personal touch. • Departmental stores: are general retail merchandisers offering quality products and services. • Convenience stores: are located in residential areas with slightly higher prices goods due to the convenience offered. • Shopping malls: the biggest form of retail in India, malls offers customers a mix of all types of products and services including entertainment and food under a single roof.
9 • E-trailers: are retailers providing online buying and selling of products and services. • Discount stores: these are factory outlets that give discount on the MRP. • Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and other small items can be bought via vending machine. • Category killers: small specialty stores that offer a variety of categories. They are known as category killers as they focus on specific categories, such as electronics and sporting goods. This is also known as Multi Brand Outlets or MBO's. • Specialty stores: are retail chains dealing in specific categories and provide deep assortment. Mumbai's Crossword Book Store and RPG's Music World are a couple of examples.
4.2.4 Drivers of change in retailing ➢ Changing demographics and industry structure ➢ Expanding Computer technology ➢ Emphasis on lower cost and prices ➢ Emphasis on convenience and service ➢ Focus on productivity ➢ Added experimentation 4.2.5 Essentials of Retailing • Customer orientation- The retailer makes a careful study of the needs of the customer and attempts to satisfy those needs. • Goal orientation – The retailer has clear cut goal and devises strategies to achieve those goals. • Value driven approach- the retailer offers good value to the consumer with merchandise having the price and quality appropriate for the target market. • Coordinated efforts- Every activity of the firm is aligned to the goal and is designed to maximize its efficiency and deliver value to the consumer
4.3 Scope of the Indian Retail Market: The scope of the Indian retail market is immense for this sector is poised for the highest growth in the next 5 years. The Indian retail industry contributes 10% of the country’s GDP and its current growth rate is 8.5%. In the Indian retail market the scope
10 for growth can be seen from the fact that it is expected to rise to US$ 608.9 billion in 2009 from US$ 394 billion in 2005. The organized retailing sector in India is only 3% and is expected to rise to 25- 30% by the year 2010. There are under construction at present around 325 departmental stores, 300 new malls, and 1500 supermarkets. This proves that there is a tremendous scope for growth in the Indian retail market. The growth of scope in the Indian retail market is mainly due to the change in the consumer’s behaviour. For the new generation have preference towards luxury commodities which have been due to the strong increase in income, changing lifestyle,and demographic patterns which are favourable. The scope of the Indian retail market has been seen by many retail giants and that’s the reason that many new players are entering the India retail industry
4.4 Top players in Indian Retail Industry:-
4.4.1 Pantaloon Retail: It is headquartered in Mumbai with 450 stores across the country employing more than 18,000 people. It can boast of launching the first hypermarket Big Bazaar in India in 2001. An all-India retail space of 5 million sq. ft. which is expected to reach 30 mn by 2010. It is not only the largest retailer in India with a turnover of over Rs. 20 billion but is present across most retail segments - Food & grocery (Big bazaar, Food bazaar), Home solutions (Hometown, furniture bazaar, collection-i), consumer electronics (e-zone), shoes (shoe factory), Books: music & gifts (Depot), Health & Beauty care services (Star, Sitara and Health village in the pipeline), e-tailing (Futurbazaar.com), entertainment (Bowling co.) One of their recent innovations include e-commerce’ hybrid format of ’small’ shops , the area for these stores will be 150 sq. ft. fitted with 40 digital screens. Customers will be encouraged to browse through the entire range of products on digital screen. They will be able to place the order, the delivery of which will be arranged by the shop to their homes within a few hours 4.4.2 K Raheja Group
11 They forayed into retail with Shopper’s Stop, India’s first departmental store in 2001. It is the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). They have signed a 50:50 joint venture with the Nuance Group for Airport Retailing. Shoppers Stop has 7, 52, 00 sq ft of retail space with a turnover of Rs 6.75 billion. Crossword brand of book stores, Homes stop a store for home solutions, Mothercare a concept stocking merchandise related to childcare are also owned by them. Recently, Raheja’s have signed an MoU with the Home Retail Group of UK to enter into a franchise arrangement for the Argos formats of catalogue & internet retailing. 4.4.3 Tata group: Established in 1998, Trent - one of the subsidiaries of Tata Group - operates Westside, a lifestyle retail chain and Star India Bazaar - a hypermarket with a large assortment of products at the lowest prices. In 2005, it acquired Landmark, India's largest book and music retailer. Trent has more than 4 lakh sq. ft. space across the country. Westside registered a turnover of Rs 3.58 mn in 2006. Tata’s has also formed a subsidiary named Infiniti retail which consists of Croma, a consumer electronics chain. It is a 15000-17000 sq. ft. format with 8 stores as of September 2007. 4.4.4 RPG group: One of the first entrants into organised food & grocery retail with Foodworld stores in 1996 and then formed an alliance with Dairy farm International and launched health & glow (pharmacy & beauty care) outlets. Now the alliance has dissolved and RPG has Spencer’s Hyper, Super, Daily and Express formats and Music World stores across the country. 4.4.5 Landmark group: Lifestyle stores were launched in 1998 in India. Lifestyle is spread across six cities, covering 4.6 lakh sq. ft. with a turnover of Rs 3.5 billion in 2005. A new division named Lifestyle International has emerged for their international brands business comprising Bossino, Kappa and Springfield in their portfolio. Their retail mix includes Home solutions (Home centre), fashion (lifestyle, landmark International), value retailing (max retail), hypermarkets & supermarkets (Max), kids entertainment (Funcity).
12 4.4.6 Piramal Group In September 1999, Piramal Enterprises announced their arrival into retail with the launch of three retail concepts: India's first true shopping mall of international standards, called Crossroads; a lifestyle department store named Piramyd Megastore; and a family entertainment centre known as Jammin. Piramyd Megastore and Jammin were anchor tenants for Crossroads (recently sold to Pantaloon for Rs 4 billion). In 2001, the group entered the business of food & grocery retail with the launch of TruMart supermarkets in Pune. 4.4.7 Subhiksha Subhiksha is a Chennai-based, decade old, no frills, food, grocery, pharma and telecom, discount retail chain. ICICI Venture Capital holds 24% in the equity capital of Subhiksha. It has more than 500 stores across the country covering a retail space of more than 1 million sq ft with a registered turnover of Rs 3.34 bn in 2006. It has a planned investment of Rs.300 crores to ramp up its operations to 1200 stores by 2008. 4.4.8 Bharti-Walmart Their plans include US$ 7 bn investment in creating retail network in the country including 100 hypermarkets and several hundred small stores. They have signed a 50:50 percent joint venture agreement with Walmart. Wal-Mart will do the cash & carry while Bharti will do the front-end. 4.4.9 Reliance India’s most ambitious retail plans are by reliance, with investments to the tune of Rs. 30,000 cr ($ 6.67 bn) to set up multiple formats with expected sales of Rs 90,000 crores ($20 bn) by 2009-10. There are already more than 300 Reliance Fresh stores and the first Reliance Mart Hypermart has opened in Ahmedabad. The next ones are slated to open at Jamnagar, followed by marts in Delhi / NCR, Hyderabad, Vijaywada, Pune and Ludhiana. 4.4.10 AV Birla Group They have a strong presence in apparel retailing through Madura garments which is subsidiary of Aditya Birla Nuvo Ltd. They own brands like Louis Phillipe, Van Heusen, Allen Solly, Peter England, Trouser town. In other segments of retail, AV Birla Group has announced investment plans of Rs 8000 - 9000 crores in the first 3 years till 2010.The acquisition of Trinethra (food & grocery) chain in the south has moved their
13 tally to 400 stores in the country. Their “More” range of 15 supermarkets are slated to open at Nashik, Pune and other tier II cities in Western India in 2007.
4.4.11 Indian consumption cosmos
During past decades private final consumption expenditure has been the key driver economic growth in India.
The headquartered in Mumbai the company operates over 12 million square feet of retail space as over one thousand stores across 71 cities in India and employees over 35,000 people. The companies leading formats include Pantaloons a chain of fashion outlet, Big bazaar, uniquely Indian hypermarket chain, food Bazaar a supermarket chain blends he look, touch and feel of Indian Bazaars with aspects of modern retail like choice convenience and quality and control a chain of seamless destination malls
14 CHAPTER 5 COMPANY PROFILE
5.1 Future Group
Future Group is one of the country’s leading business groups present in retail, asset management, consumer finance, insurance, retail media, retail spaces and logistics. The group’s flagship company, Pantaloon Retail (India) Limited operates over 10 million square feet of retail space, has over 1,000 stores and employs over 30,000 people. Future Group is present in 61 cities and 65 rural locations in India
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 10 million square feet of retail space, has over 1,000 stores across 61 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 Indian bazaars with aspects of modern retail like choice, convenience and quality and Central, a chain of seamless destination malls. Some of its other formats include Depot, Shoe Factory, Brand Factory, Blue Sky, 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 E- Zone 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.
5.1.1 Major Milestones 1987- Company incorporated as Manz Wear Private Limited. Launch of Pantaloons trouser, India’s first formal trouser brand.
15 1991- Launch of BARE, the Indian jeans brand. 1992 - Initial public offer (IPO) was made in the month of May. 1994 - The Pantaloon Shoppe – exclusive menswear store in franchisee format launched across the nation. The company starts the distribution of branded garments through multi-brand retail outlets across the nation 1995 - John Miller – Formal shirt brand launched 1997 - Pantaloons – India’s family store launched in Kolkata 2001 - Big Bazaar, ‘Is se sasta aur accha kahi nahin’ - India’s first hypermarket chain launched. 2002 - Food Bazaar, the supermarket chain is launched
2004 - Central – ‘Shop, Eat, Celebrate in the Heart of Our City’ India’s first seamless mall is launched in Bangalore.
2005 - Fashion Station - the popular fashion chain is launched all – ‘a little larger’ - exclusive stores for plus-size individuals is launched
2006 - Future Capital Holdings, the company’s financial arm launches real estate funds Kshitij and Horizon and private equity fund Indivision. Plans forays into insurance and consumer credit. Multiple retail formats including Collection i, Furniture Bazaar, Shoe Factory, EZone, Depot and futurebazaar.com are launched across the nation. Group enters into joint venture agreements with ETAM Group and Generali.
5.1.2 Some of the awards given to Pantaloon Retail (India) Limited: Images Retail Awards 2005 PRIL - Most admired retailer of the year Central - Retail launch of the year Mr. Kishore Biyani - Retail Face of the year Big Bazaar - Best Value Retail Store Readers Digest and Awaaz Consumer Award Big Bazaar - Best Retail Destination Readers Digest Platinum Trusted Brand Award
16 Big Bazaar - Earning a trusted Place in the everyday lives of consumers Food Bazaar - Retailer of the year (food and grocery Big Bazaar - Most preferred, large, Food and Grocery store
Partner companies Joint Ventures Companies Pantaloon Industries Ltd. Planet Retail Holdings Ltd. Home Solutions Retail (India) Ltd. Foot mart Retail Future Capital Holdings GJ Future Fashions Converge M Retail (India) Ltd. CapitaLand Retail India
HIERARCHY
17
FUTURE GROUP
CAPITAL BRANDS SPACE RETAILS MEDIA LOGISTICS
LIFE STYLES VALUE RETAILING RETAILING VENTURE
FASHION STATION 5.1.3 Line Retail of Business
The company is present across several lines of business which have various formats (stores) operational under it. These include:
• Food – Food Bazaar, Chamosa, Spoon
• Fashion - Pantaloons, Central, aLL, Brand Factory, Blue Sky, Top 10
• General Merchandise - Big Bazaar, Shoe Factory, Navras, Electronics Bazaar, Furniture Bazaar
• Home & Electronics - Home Town, eZone, Collection 1
• E-tailing (Online Shopping) - www.futurebazaar.com
• Books & Music - Depot
• Leisure & Entertainment - Bowling Co., F123 Wellness - Star & Sitara, Tulsi
5.2 Big Bazaar
Big Bazaar is a hypermarket consists of extremely large self-service retail outlet with a warehouse appearance, currently with 75 outlets in India. It is owned by the Pantaloon Retail India Ltd, Future Group. It works on the same economy model as Wal- Mart and has considerable success in many Indian cities and small towns. The idea was pioneered by entrepreneur Kishore Biyani the CEO of Future Group. Currently Big Bazaar stores are located only in India. It is the biggest and the fastest growing chain of hypermarket stores and aims at being 350 stores by the end of year 2010. Tag line - Is se sasta aur achha kahin nahi
5.2.1 Different categories-
1. Apparel, fashion and accessories
2. Books and magazines
3. Bike and automotive
4. Camera and photo
5. Desk top, lap top and accessories
18 6. Furniture and decor
7. Gift and credit card vouchers
8. Health beauty and personal care
9. Jewellory and watches
10. Kitchen and home appliances
11. Mobile and service provider
12. Music and mp3 player
13. Software cds and vcds
14. Toys sports and video games
15. Other miscellaneous items
5.2.2 Big Bazaar’s Commitment
Our commitment is to deliver sustained growth, through empowered people, acting with responsibility and building trust with customers. Here’s I am explaining what this means:
Sustained Growth is fundamental to motivating and measuring our success. Big Bazaar’s quest for sustained growth stimulates innovation, places a value on results, and helps us understand whether today’s actions will contribute to our future. It is about growth of people and company performance. It prioritizes making a difference and getting things done.
Empowered People means we have the freedom to act and think in ways that you feel will get the job done, while being consistent with the processes that ensure proper governance and being mindful of the rest of the company’s needs.
Responsibility and Trust form the foundation for healthy growth. It’s about earning the confidence that other people place in us as individuals and as a company. Our responsibility means we take personal and corporate ownership for all we do, to be good stewards of the resources entrusted to us. We build trust between ourselves and customers
19 by talking not by mouth but by our superior customer service and being committed to succeeding together.
5.2.3 Target Audience: Big Bazaar targets higher and upper middle class customers
The large and growing young working population is a preferred customer segment
Targets specifically working women and home makers who are the primary decision makers
5.2.4 Core Values: Indianness: Confidence in ourselves
Leadership: To be a leader, both in thought and business
Respect & Humility: To respect every Individual and be humble in conduct
Introspection: Leading to purposeful thinking
Openness: To be open and receptive to new ideas, knowledge and information
Valuing and Nurturing relationship: To build and maintain long term relationships
Simplicity & Positivity: Simplicity and positive approach in though, business and actions
Adaptability: To be flexible and adaptable, to meet challenges
5.2.5 BIG BAZAAR-USP: 1Billion population.
Availability of Liquid Cash \Disposable Income among Young Generation
Affordable man power
Craze, Passion among Mr. Customer (Consumer)
More products ….Under ONE roof
Affordable price
20 Sentiments -To infuse confidence in Indian brands
Schemes-Buy 01 gets one free, 20% discount
5.2.6 STRATEGIES: To minimize Retailing cost:
Operating: Fewer staff on the floor-one person for every 500 sq ft
Minimize the Furniture cost
Sourcing: Cut Down 25-30 %
Channel-Cut Down 15-20%
Saving Shelf Space
Way to deal unsold stock off
Plans to have In-Store promotions as well slow-moving products off
To ensure enough pull to snatch away customers from the neighborhood
“Today’s Price”:Everyday a chosen product is being sold at lower than usual price
Big Bazaar’s New Marketing Strategy: Big Bazaar has launched new marketing strategy which is based on Guerrilla Marketing. Guerrilla marketing warfare strategies are a type of marketing warfare strategy designed to wear-down the enemy by a long series of minor attacks, using principles of surprise and hit-and-run tactics. Attack, retreat, hide, then do it again, and again, until the competitor moves on to other markets. Herein guerrilla force is divided into small groups that selectively attack the target at its weak points. Corporate like Coke, Pepsi, etc have been using the same for quite some time now and the latest entrant is ‘Future Group’- Big Bazaar, Pantaloons, Future Bazaar, eZone are all part of this group and they are taking on the biggies like Shoppers Stop, Lifestyle, and Tata’s Westside.
In order to do the same, Future Group have come up with 3 catchy/cocky and cheeky ad campaigns which surely do catch our eyes and surely one can’t resist appreciating the same.
Keep West-Side. Make a smart choice!
21 Shoppers! Stop. Make a smart choice!
Change Your Lifestyle. Make a smart choice!
Big Bazaar Wholesale Club:
✔ Now Save, Even more: The Big Bazaar Wholesale Club brings to an opportunity to save in bulk as the customers buy in bulk. In line with the Big Bazaar tradition of providing best deals at best prices, the Big Bazaar Wholesale Club provides the customers bulk deals at wholesale prices.
✔ An extension of Big Bazaar, the Big Bazaar Wholesale Club offers multi- packs and bulk packs of a select range of merchandise at wholesale prices. The merchandise categories range from Food & FMCG to Home Linen and many more. Customers will not find any merchandise being sold loose/single unit (except fresh) at a Big Bazaar Wholesale Club.
✔ A typical Big Bazaar Wholesale Club is located adjacent to a Big Bazaar in the form of a separate section. The look and feel of a wholesale market is evident in the stores from the stacking styles and use of a lot of hand written signage by chalks on black slates.
It has created ‘Fashion @ Big Bazaar’, a sub-brand, to position the format as much more than food or general merchandise.
5.3 Environmental Analysis
5.3.1 7P’s of Marketing "Marketing" is the promotion of products, especially advertising and branding. Marketing practice tends to be seen as a creative industry, which includes advertising, distribution and selling. Marketing mix is a deciding factor in formulating marketing techniques for the success of a particular brand, commodity or company. The components of marketing mix are: • Product
22 • Price • Place • Promotion • People • Process • Physical evidence
5.3.1.1 PRODUCT: Big Bazaar offers the maximum variety for each category of product. The product is the same in every store in the city but the brand options are more in Big Bazaar. Also, the quantity for each product is not limited to large packs only. The commodities sold by the retail chain also includes its “own products” (Private Labels) which get a ready distribution network. The own products of Big Bazaar include My World fashion magazine which is not available anywhere else. So costs are low for such products.
5.3.1.2 PRICE: Price is the critical point in a competitive industry. Big Bazaar works on a low cost model. It considers its discounted price as its USP. There is an average discount of 7-8% on all items in respect to their MRP. Prices of products are low because it is able to secure stock directly from the manufacturer. There are huge synergies in terms of bulk purchasing, central warehousing and transportation. These all factors help this retailer to keep low prices. • Low margin, High sales volumes • Low Interest Financing • Centralized sourcing • Discount pricing • Value pricing: Big bazaar promises its consumers the lowest available price without coupon clipping, waiting for discount promotions, or comparison shopping • Promotional pricing: Big bazaar offers financing at low interest rate. The idea of using psychological discounting (at rs. 99 , rs. 49) is used as promotional tool. They also caters on special event pricing. ( close to diwali, gudi padwa etc.)
23 • Differentiated pricing- Time pricing i.e. difference in rates based on peak and non peak hours or days of shopping is also a one kind of pricing strategy • Bundling
5.3.1.3 PLACE: Place means the location of the business. Big Bazaar has always worked on low-cost locations. It targets semi-urban population with its placement. Its strategy is to find a cheap location and it never goes for hot spots in the city. It relied on promotional activities to make up for unattractive locations. Another strategy used by Big Bazaar to overcome location disadvantage is use of internet. It has launched a merchandise retailing website www.futurebazaar.com which targets high-end customers ready to use credit cards. The promotion of this website is done through advertisement on Google. The website is put as sponsored link. Initially identifies future/potential development areas Acquires such areas at an early phase before the real estate value booms Designed to look crowded
5.3.1.4 Promotion: Big Bazaar has huge promotion budgets. The biggest idea behind all advertisements is to make people do bulk shopping. There are 2 types of promotional strategies of big bazaar. One is the holistic advertisement (Above the line) which promotes the brand and creates awareness among people. It is not targeted at promoting each store but only creates an image of Big Bazaar as low-cost shopping option. The store has advertised through TV, road shows and also started reality show-typed promotional campaign “The Big Bazaar Challenge.” Promotions like “Sabse Sasta Din” are a very successful strategy to get footfall. In these products across categories such as apparels, furniture, electronics, utensils and food products at the lowest possible prices, coupled with attractive promotional schemes. Some of the most attractive offers being a 20-litre branded microwave oven with grill for Rs 2,499, jeans and trousers for Rs 199 and HCL laptops for Rs 22,990. Other type of promotion is the particular store oriented promotion (Below the line) which includes speaking on the loudspeaker in nearby blocks. Leaflets are given in local newspaper. There are promotional efforts even inside the store. Buy 2 Get 1 Free types of
24 promotions are very common. Original prices are cut down and new prices are shown, of which customer takes quick notice. There are loyalty schemes which reward regular clients. Promotion is also done through co-branded credit cards with ICICI bank.
5.3.1.5 People: Big Bazaar has well trained staff; well suited for retail industry. Its employees are motivated to think out of the box, to take innovative steps and employees close to 10000 people and recruits nearly 500 people every month. It makes Use of technology like scenario planning for decision making.
5.3.1.6 Process The good dispatch and purchasing area has certain silent feature. It has multiple counters with available trolleys to carry item purchased. It also has Proper display/ posters of the place and Home delivery counters are now opened at many place.
5.3.1.7 Physical evidence It deals with the final deliverable or the display of written facts. This includes current and available facilities
5.3.2 SWOT Analysis :-
5.3.2.1 STRENGTHS: LOW PRICE/Different discount scheme: The Big Bazaar Outlets sold a variety of products at prices which is lower than the market price. Almost everything has some kind of discount in Big Bazaar. Consumers accept the fact that they come from faraway places because it is cheap in Big Bazaar for bulk shopping. Big Bazaar is able to secure stock directly from the manufacturer which they are selling as Private label. Big Bazaar gets some extra benefits from manufacturer like display income, Manufacturer discount and Extra Distributor Discount. There are huge synergies in terms of bulk purchasing, central warehousing and transportation. Big Bazaar provides discounts ranging from 6-8%to the market and
25 offers special discounts and offers up to 60% of 1,60,000 products 365 days a year. Price is the basic value propositions at Big Bazaar. HUGE DISPLAY AREA, avg 30,000sq/ft: Big Bazaar displays all their grocery and all other product that customer can touch and feel the quality. They offer self service. PRODUCT DIVERSITY: Big Bazaar offers the maximum variety for each category of product and this is cited by the customers as one of the main reasons why they like shopping at the Big Bazaar (Range of apparels, accessories, baby accessories, cosmetics, grocery, vegetables, crockery, dress material, suiting, shirting, footwear, toys, house hold appliances, home textiles, luggage, linens, saris, large product mix. Stocks about 30000 items in over 20 product categories). The product is the same in every store in the city but the brand options are more in Big Bazaar. They have a huge carpet area in an average of 30,000 square feet. Huge promotional activities undertaken to ensure enough footfall Infrastructure Ambience of the Big Bazaar is not like the hypermarket in West, which follows liner layout. It is not only providing good parking ,AC ambience to create a “ no hassle “shopping experience but also designed in a way that it provides a traditional bazaar like environment, where the most Indian feel comfortable. The customers trust retail chains with quality of the product. They feel food products of Big Bazaar will have no adulteration. This quality is not assured in a kirana store. High Brand Equity
5.3.2.2 WEAKNESSES: Store unable to meet the growing consumer demand. General Perception of consumer. Depend on distribution channel of Brands for products like FMCG. Lack of strong supply chain like other big player Perception among consumers
5.3.2.3 OPPORTUNITIES:
26 Early Entry in Indian Retail Organized retail Evolving consumer preferences Targeting area more prone to developments Global Expansion In-Store Experience improvements
5.3.2.4 THREATS: Government policies like complex sales and excise policies. Unorganized retail. Large Foreign Competitors like Wal-Mart, Metro and Domestic player like Reliance. Burgeoning real estate prices which leads to high rentals. Economic Conditions Lowering Margins
5.3.2.5 CORE COMPETENCIES: A choice of more than 20,000 products
Delivery across more than 1500 cities and towns in India covering around 16,000 pin codes
Fast deliveries – tie ups with world leaders in logistics & transportation services
A dedicated Customer Care helpline for any queries
Always offering Manufacturer’s guarantee as opposed to Seller’s guarantee, which most of the other online shopping sites offers
Talks of Quality and Cost
Special emphasis on apparels and life style products
Providing interesting discounts
27 5.3.2.6 Positioning
5.3.2.8 Life cycle of Big Bazaar
28 CHAPTER 6 PRIVATE LABELS
6.1 What are Private Labels? Private Labels refer to products that are sold under the name of a specific retailer’s brand. These are also called ‘store brands’ or ‘private brands’. They are available in just about every food and non food category: fresh, frozen and refrigerated food, canned and dry foods, snacks, ethnic specialties, pet foods, health and beauty care, over-the-counter drugs, cosmetics, household and laundry products, lawn and garden chemicals, paints, hardware, auto aftercare, stationery and house wares, among other sections of the store. In the markets of the west the private labels are almost matured and have higher penetration levels. Store brand products encompass all merchandise sold under a retail store's private label. That label can be the store's own name or a brand name created exclusively by the retailer for that store. In some cases, a store may belong to a wholesale buying group that owns labels which are available to the members of the group. These wholesaler-owned labels are referred to as controlled labels. A private label product is required (a) to be sold in a unit package and (b) should carry the name of the retailer or its own brand name. These private label products are sourced in different ways. Private Label Manufacturer’s Association (PLMA) classifies private label manufacturers into four categories as follows: i. Large national brand manufacturers that utilize their expertise and excess plant
29 capacity to supply store brands ii. Small, quality manufacturers, who specialize in particular product lines and concentrate on producing store brands almost exclusively. Often these companies are owned by corporations that also produce national brands iii. Major retailers and wholesalers that own their own manufacturing facilities and provide store brand products for themselves iv. Regional brand manufacturers that produce private label products for specific markets 6.2 PRIVATE LABEL GROWTH IN INDIA
The role of private labels is gaining significance in the developing markets too. In India there is a growing trend towards acceptance of private label brands and thus their penetration is on the rise especially in the apparel, consumer durables, home care and FMCG segments. India is still an under-branded country and in each category there is still a lot of scope for growth, this is where the private label comes in and the story is looking good so far. For instance, Future Group has already tasted the success with its Tasty Treat brand which is just behind Frito Lay in the potato chips segment. Its Care Mate in the baby diaper segment has left behind Huggies in the in-store sales. At Spencers, diapers and agarbattis sell more than market leaders across the store chain.Experts comment that when it comes to local tastes and preferences, private label brands have an advantage over national brands and this reflects in the increasing percentage share of these goods in Indian retail chains As the figure shows, among the major Indian players, the degree of private label penetration is the highest in Trent with 90 per cent, followed by Reliance Retail (80 per cent) & Pantaloon (75 per cent)
30 6.3 PRIVATE LABEL SCENARIO
6.3.1 Global Picture
The market for Private labels in the global arena has seen rapid growth in the late twentieth century and has grown at an even faster rate in the first decade of the twenty first century. The well established markets for private labels such as Australasia (greater than 50% growth), North America (growth greater than35%) and Western Europe (greater than 50% growth) are still growing increasingly and will continue in the same fashion. The other lessdeveloped private label markets such as Japan and the emerging economies like India and China are expected to grow at a rate exceeding the established markets in terms of private label share, though the baselines are far below in comparison. These economies are tipped to have the growth rate of private labels in double digits owing to the growth in the economy as a whole and primarily due to the increase in consumer acceptance of such products. It is estimated that $17 out of every $100 is being spent on private label products across the world, encompassing Europe, North America, Asia Pacific, the emerging markets and Latin America. Europe leads the world private
31 label sales with a 23% share, followed by North America with a 17% share. The market for private label products in the food and nonfood segments of U.S. is about $86.4 billion. In almost all markets of the world the private label products are flourishing at the expense of the manufacturer brands, whereas in Latin America, despite a healthy growth rate of 5% for the private labels, the manufacturer brands grew by 7%, which is the highest for any region worldwide.
6.3.2 The Indian Picture
Though the surge of private label products started way back in the western markets, India is seeing that kind of a revolution among many other things only in the recent past. The present environment seems more competitive and even more dynamic than it was in the past. The Indian retail industry is about $400 billion, out of which only 7-8% constitutes the organized retail, with nearly 95% being in the hands of unorganized retailers. Simultaneously there is debate going on in the country about the entry of Foreign Direct Investment (FDI) in the retail sector. With all these happening the opportunities are overwhelming in the retail sector than ever before Amidst these conducive conditions for the growth of retail market in India, the nascent and few organized retailers are looking ahead to compete with the national and multinational brands that are existing in the country, with their own set of private labels. As the case was with the introduction of private labels in the western markets, Indian retailers are almost through with the rough of patch of their private labels being looked at as cheap, low quality cousins of the existing brands. Now there is initiative from the private label manufacturers to emulate the quality of their product lines, matching the brands and this has been reflected in the increased acceptance from the customers. Retailers are increasingly wanting to improve their profits and are turning to the customers for the same. At the moment private label products constitute 10 – 12% of the organized retail product mix and in turn a relatively smaller share in the total retail market in India.
6.3.3 Factors behind the growth of Private Labels
32 The very existence of the private labels and their consequent rapid growth may be attributed to the following factors:
i. The emergence of more organized retailers in the past decade; the consolidation happening in the retail market
ii. The single major factor is the attraction provided by the profit margins associated with the private label products
iii. Retailers’ focus of increasing the quality of the private labels in order to bring in product differentiation to their own products
iv. Decline in prices within the retail industry, has prompted retailers to compete more with the brands
6.4 Private Labels in Various Retail Sectors
In India private labels are found in a variety of segments within the retail industry, the predominant ones being the Apparels, Food & Grocery, Fast Moving Consumer Goods (FMCG), and increasingly in Consumer Electronics segment too. Food and Apparel industry are the major segments which have hosted an array of private labels with more and more retailers targeting, accounting on the indifference shown by the consumer in these areas in comparison with the national and multinational brands.
6.4.1 Apparel Segment
The apparels segment has been the major contributor to the retail sales along with the food and FMCG segments. Private labels are predominant in the apparels segment with a lot of retailers jumping into their own brands differentiating them from the rest. This might be partly because of the margins associated with private labels in this segment. The private labels in this segment offer more than 40% margins to the retailer, which is
33 almost double when compared with the other brands. The famous apparel retailers that are into private labels are, Shopper’s Stop, Pantaloon Retail, Globus, Max, Lifestyle, Westside and so on. According to Salil Nair, the customer care associate and COO of Shoppers Stop, five years back their private label brands were around 17.5% in terms of sales and today they are almost 22.5%—a 5% increase. So now they have started dedicating a bigger space for private labels. All their brands have had good representation in their stores. The treatment that their in-house brands get is equal to what other brands would get at Shoppers Stop. On the other hand, Pantaloon Retail India Ltd., has its own apparel brand called the Pantaloons, which accounts for almost 85% of its sales. The other players in the market also have prominent private labels that are very much capable of attracting more penetration in the coming years. Westsitde has almost 100% represented by its private labels.
6.4.2 Food and Grocery Segment
The Food and grocery segment of retail is another area where there has been good penetration from the private labels point of view. The margins associated with the private labels under this segment ranges from 20 – 25%. The major players in the private labels of this segment are, Pantaloon Retail India, Reliance, Specncer’s Retail and so on. Pantaloon Retail India is using its private labels of Big Bazaar and Food Bazaar to help offer cheaper prices and attract consumers. Private brands help them in saving 15 per cent in retailer margin, 7 per cent in distributor margin, and close to 5 per cent in marketing fees since they do not use costly media to advertise their brands. So they pass on this overall 27 per cent saving to consumers, which help them grow even at stagnant categories. Hence the top-line also grows. Reliance and Spencers’s Retial have their own food and grocery brands. Reliance Retail has ventured into the high-volume, low-margin (3-5%) segment of retailing liquid milk through its own brand ‘Dairy Pure. But Reliance is expected to face tough competition from Amul, which is the national leader in Rs.15000 crore branded packaged milk market. Spencer's sells private labels under the Spencer's Smart Choice name.
34 It is targeting 20 per cent market share across the categories in the next three years. Their private labels have double-digit market share in food (10-20 per cent) and beverages (8- 10 per cent), home care (10 per cent) and personal care (10 per cent). Aditya Birla Retail's Feasters Noodles Family pack contributes 40 per cent of the revenues from the category. Kitchen's Promise pickles are outselling Mother's Recipe, and sales of Feaster's Instant Drink Powders are more than double those of Tang sales
6.5 Commercial Objectives behind Launching Private Labels
There are certain objectives that a retailer has in mind before getting into private label goods 1. Higher Margins Private label goods are cheaper to produce than branded goods. Besides, due to the lack of advertising and marketing expenses they provide double advantage to the retailer when it comes to the profit margins. While majority of branded goods provide margins in the range of 6-12%, private label goods can offer margins up to 40% . Not only they give a higher margin to the retailers, private labels have also changed the balance of power between brand manufacturers and retailers, giving the latter a decided advantage when negotiating terms with the brand manufacturers. 2. Stronger Customer Loyalty As the private label offerings increase and the quality is assured, a high sense of loyalty is cultivated among its customer base. This customer loyalty is the result of an affinity with the retailer brand which implies that the development of private label brands can tangibly enhance the retailer‘s brand itself. So in the long run, the private labels become an important tool for the retailer to establish its positioning and strategically attract the target customers to its outlet. Numerous studies have also shown that private label buyers are more store-loyal and not as easily influenced as brand buyers. 3. Differentiation
35 Through private labels, retailers get a chance to bring in unique products in their supply chains that have not been branded before. So if a retailer can cater to the local tastes and preferences of the consumers well by top quality private labels then they can differentiate themselves from other stores and become destination stores. In effect, it‘s a win-win situation even for the producers who get a chance to display their produce. 4. Freedom with Pricing Strategy A retailer promoting a private label has the added benefit of greater freedom to play with pricing strategies, as a result of which these are overall cheaper than brand leaders. For instance, in USA, some private labels are 25 percent cheaper than leading brands. In addition, since it is an own private label, the retailer has the freedom to create its own marketing strategy and have more control over its stock inventory. This command of all the stages that a product goes through, gives the retailer high flexibility in pricing. 5. Positioning during economic downturns The growth of private labels is likely to continue in the current financial environment as cash-strapped consumers' perception of the products as a cheaper option changes. The price advantage of private labels leads to the belief that these score in times of economic meltdown, and further that this newly-acquired market share is maintained even as the recession swings out. Even after the economy bounces back, consumers will naturally gravitate towards products marked at lower prices yet offering the same quality, especially where the retail name is a trusted national or regional player
6.6 Implications for Indian Retail Marketer
1. Identify the needs of your customer base The private label should provide the required functional as well as emotional attributes and benefits. Keeping in mind that it already has a price advantage, this ensures that it takes into account needs that are important to consumers and hence, offers a reliable point of difference from other category players. By offering a differentiated value proposition, a private label utilizes the approach that national brands use to arrive at a holistic benefit proposition rather than the specific positioning they use. This furthers its promise that has been already informed by the competition, confirming its category
36 membership, but is clearly not a me-too expression. It is also successful as it demonstrates a commitment to offer consumers multiple choices and varieties with distinct attributes, benefits and price points.
2. Leverage the Consumer Connection A successful private label has the ability to own the consumer connection and has the capacity to strike a chord with consumers in multiple categories of products. Unlike national brands, private labels are offered exclusively through a specific retailer and can easily surpass specific categories because they have a consumer focus rather than a product focus as their brand foundation. These brands instigate trustworthiness and allegiance from their loyal consumers that the parent store becomes their conscious and obvious retail source for certain categories. Moreover, these categories may be the reason that consumers are initially drawn into the store, but once they get there, the store also has the prospect of encouraging them to spend more on impulse purchases. Therefore, the private labels not only reinforce enduring loyalty and positive feelings for the retail brand, they also enable the retailer to capture a more significant share of the consumers ‘heart, wallet, mind space and lifestyle than a national brand.
3. Communicate at the Point Of Sale Retailers need to be more cognizant of the significance of the communication with the consumer at the point of sale. They own the canvas consumers shop on and thus, through store environments, in-store messaging (like signage), merchandising systems, and packaging as well as external messaging like circulars, catalogs and advertising in a congruent manner, the retailer is able to create a lasting impression in-store, at shelf, at the time of purchase and during usage. Retailers need to make sure that they send out the right message at these interaction points. Moreover, many of these messages do not require revolutionary change for extended periods of time, so they perpetuate a persuasive branded voice and don‘t require constant investment from the retailer.
4. Collaborative category management Category management is instrumental for a retailer to realize its own-brand goals and aspirations. To maximize the efficiencies of product flow throughout the distribution
37 system, a retailer must be aligned with the supplier. The relationship between the retailer and trade should become increasingly about cooperation and lesser about the retailer negotiating with the manufacturer or supplier on price. By joining hands, they can strengthen their trade relationships and ensure that the category as a whole remains profitable and emotionally appealing to the customer resulting in both private label and branded goods as winners. They can collaborate in understanding and deciding how to optimize the product lines and Stock Keeping Units (SKUs) that will progress the category definition as a whole and determine planograms and shelf allocations to rally the greatest degree of category interest and excitement from consumers.
5. Manage Brand Architecture the right way Brand architecture is a critical consideration for private label marketing. Once the brand proposition solidifies, the brand architecture strategy enables decision makers to promote this promise at the store level in order to stimulate a sense of familiarity, recognition and trust. Also, private labels have broader set of aisles than national brands. Because of this, it becomes more and more important to differentiate its attributes and benefits on an aisle, category and product basis. So the implication for the retailer is to strike the right balance of similarities and differences with brand messaging and portfolio offerings
6.7 Private Label Strategies The retailers place themselves with their private labels at par with the national and international brands by adopting the following strategies
Branding Strategy Private labels play an important role in retailers’ strategies beyond adding value through convenient pricing for consumers. Many retailers consider private labels as key in their effort to create consumer loyalty and to differentiate themselves from the competition. This may explain retailers’ intensifying involvement in new product developments, which has further fuelled the market share growth of private labels. Thus they were building up their own brands in front of the customers
Product Strategy
38 Private label manufacturers are increasingly becoming informed of what the customer needs, thanks to their experience in dealing with the customers. This has helped them in clearly defining the area in which they are capable of reaping benefits by introducing private labels. With constant stress placed on their store brands regarding the quality aspect, they are now competent enough to compete with the manufacturer brands in the quality front too.
Pricing Strategy Pricing has been the major advantage that private label manufacturers have been able to leverage to the fullest. As they are sure about ‘what to produce’ and ‘how much to produce’, it saves much of cost, in the form of elimination of the middleman, huge logistics cost and so on, which they are able to pass on to the consumer. They also save cost by eliminating the huge advertising costs and the cost of building the brand.
Sourcing Strategy Several corporations source an extremely wide range of products from specialized manufacturers, which may or may not own their brand. The reasons for this business practice is that a company, having identified a business opportunity in a new product or groups of products, may assess that setting up their own production line or facility may require a substantial investment in equipment, human resources, patents and so forth. In many cases, a viable alternative is to source from a specialized company that has already made such investments and that has spare production capacity. If the two companies find that the market situation allows avoiding or minimizing direct competition without stealing each other's market share then both companies may find an agreement whereby the specialized manufacturer supplies the goods to the other
39 CHAPTER 7 DESIGN OF THE STUDY
7.1 Data Collection Method
Data collection was done by exploring primary and secondary resources
7.1.1 Secondary Data:
Secondary Data was collected through different books such as and private label strategy by Nirmalaya Kumar and Kishore Biyani’s book “It happened in India” was a great source of information for the research. Also information froms, internet sites and journals was of great help for research.
7.1.2 Primary Data:-
Primary data in this research was collected by meeting manager in Big Bazaar and interviewing them. Also survey with a structured questionnaire was done for finding out the consumer behaviour of big bazaar customers.
• Personal Interview: Interview of managers of Big Bazaar were taken. Open Ended Questions about private labels were asked to them, their suggestions and problems were noted down
• Survey with a structured questionnaire: To determine the consumer approach towards private labels in Big Bazaar customers a survey with structured questionnaire was carried out. The sampling design is discussed below.
7.2 Sampling design for the survey:-
7.2.1 Defining the Universe:-
The first problem in any sampling procedure is to define the universe. The universe for this sampling procedure is the people who regularly shop in retail malls.
40 7.2.2 Sampling Frame:-
Sampling frame in this survey was the retail mall shoppers in Thane. Thane has lot of retail malls like Star Bazaar, MORE, Big Bazaar, Central etc
7.2.3 Sampling Units:-
Of all the shoppers only the customers of Big Bazaar was taken as a sample to study and the survey was done with a questionnaire
7.2.4 Method of Sampling:-
Non probability sampling method was used for the survey, where no particular method for selecting the units of the sample is adopted. Only the people who visit Big Bazaar are surveyed.
7.2.5 Sample Size:-
Total of 40 respondents were taken for the survey. Survey was conducted outside the retail outlet of Big Bazaar.
CHAPTER 8 ANALYSIS OF DATA AND GRAPHICAL REPRESENTATION
1. PROFILE OF RESPONDENTS
41 Interpretation: The above diagram shows the gender of respondents. 55% of respondents were male while 45% were females. Maximum respondents consist of male
2. AGE GROUP
Interpretation: The above diagram shows the age group of respondents. Maximum people fall in the category of 25-35 years
3. MONTHLY DISPOSABLE INCOME
42 Analysis: The above diagram shows the distribution of income level of customers coming in to big bazaar. Least number of customers visiting Big bazaar are the higher income level people that constitute only 20%. The lower income level of people coming to big bazaar constitutes of 50%. Interpretation: Big bazaar is the hub of shopping for middle level income group people because of its reasonable price on its each product category. The higher level income group people don’t prefer to do shopping in big bazaar as it doesn’t deal with branded products. The higher level income group people are very status conscious and their psychology is such type that they don’t prefer much to visit big bazaar as it is a discounted store. The lower income group people come in to big bazaar as they get goods at a discounted price. Hence big bazaar should include branded products in its product category which will encourage higher income group people to come in to big bazaar. 4. CUSTOMERS VISIT BIG BAZAAR
Interpretation: From this I interpret that in big bazaar 34% customers visit monthly, 29% customer visit weekly 23% customers visit quarterly and 14% customers visit on planned basis , it means mostly customers visit weekly and monthly basis for purchase their requirements.
5. PURPOSE OF SHOPPING AT BIG BAZAAR
Analysis: People are mostly encouraged to come to big bazaar because of its cheap price and availability of variety of products. Around 32% of the total respondent said they are mostly encouraged to come to big bazaar as it is value for money. Even most of the customers said that they get goods there in a discounted price and so they come in to it. Around 28% of customers also said that quality is also another factor which leads them to
43
No. of Responses come to big bazaar. Brand image is rated at 23% which encourages the customers to come to big bazaar.
Interpretation: From this analysis it is also clearly known that big bazaar sales its goods at a discounted price as compared to the market. Even it provides a good service and ambience to its customers which encourages them to visit big bazaar more and more times. Big bazaar should try and produce more qualitative products so that customers can get more satisfaction and would never think of not doing shopping in big bazaar.
6. TIME SPEND BY EACH SHOPPER AT BIG BAZAAR
Inferences:- Most of the respondents spent 1 – 2 hours shopping at Big Bazaar. Very less people shop more than 2 hours in Big Bazaar.
7. FACTORS INFLUENCING TRAIL OF IN-HOUSE BRAND
Inferences:- Price discount is the major factor that influenced respondents for an In- House trial followed by Promotions and Add on at the same Price
44 8. MOST PREFERRED IN STORE BRAND CATEGORY
Inferences: - Food Bazaar is the section where respondents spent most of the time and then at Apparels, with few of them in Electronics Appliances.
CHAPTER 9 FINDINGS 1. Most of the customers buy their requirement in Big Bazaar on the basis of Weekly and monthly basis. Customers realized that Big Bazaar stores provide qualitative products/service with reasonable price.
2. At present time Big Bazaar provide different types of product assortments to the customers
3.Continuously opening of Big Bazaar chains in different major cities, increasing quantities of the customers & profit show that Big Bazaar most accepted name in organized retail chain in India.
4. Big Bazaar mainly deal with middle income group people who want qualitative product with reasonable cost.
5. Big bazaar has a good reputation of itself in the market. 6. Big bazaar has positioned itself in the market as a discounted store.
45 7. Big bazaar holds a huge customer base. The majority of customers belong to middle class family. 8. Impulse buying behavior of customers comes in to play most of the times in big bazaar. 9. There are more than 50 big bazaars in different cities of India, it seems that there is a vast growth of big bazaar lying as customers demand is increasing for big bazaars.
10. Big bazaar is a hypermarket as it provides various kinds of goods like apparels, grocery, stationary, food items, electronic items, leather items, watches, jewellery, crockery, decorative items, sport items, chocolates and many more. It competes with all the specialty stores of different products which provide goods at a discounted rate all through the year.
11. The major players in retail industries are Big bazaar, The Tata Groups (Croma), Vishal Retail Group, Reliance Retail, Kirana stores & Sabka Bazaar etc
46 CHAPTER 10 CONCLUSIONS
Big bazaar is a major shopping complex for today’s customers. It is a place where customers find variety of products at a reasonable price. Big bazaar has a good reputation of itself in the market. It has positioned itself in the market as a discounted store. It holds a huge customer base. The majority of customers belong to middle class family. The youth generation also likes shopping and moving around big bazaar. Volume sales always take place in big bazaar. Impulse buying behavior of customers comes in to play most of the times in big bazaar.
Big bazaar is a hypermarket as it provides various kinds of goods like apparels, grocery, stationary, food items, electronic items, leather items, watches, jewellery, crockery, decorative items, sport items, chocolates and many more. It competes with all the specialty stores of different products which provide goods at a discounted rate all through the year. It holds a large customer base and it seemed from the study that the customers are quite satisfied with big bazaar. It seems that there is a vast growth of big bazaar lying as customers demand is increasing for big bazaars.
Big bazaar is a hypermarket store where varieties of products are being sold on different product category. It has emerged as a hub of shopping specially for middle class people. Most of the people do their monthly shopping from big bazaar. People not only visit big bazaar to do shopping but also visit for outing purpose as it provides a very nice ambience to its customers. As people go to malls they just tend to move around big bazaar whether it is for shopping purpose or for outing purpose. Grocery, apparels and food items are the products which are demanded most by the customers in big bazaar. As it is surveyed it seems that the biggest competitors of big bazaar are the kirana stores, discounted specialty stores like Vishal mega mart, The Tata Groups (Croma), Reliance Retail, & Sabka Bazaar etc.
47 The growth of private labels in the Indian retail industry is inevitable but retailers do need to keep a few things in mind. Promotion of own label and allocation of large shelf space at the expense of well-marketed national brands can depress the overall size and value of the category while on the other hand, joining hands with them and following principles of category management can create a win-win situations for both. Retailers need to realize the importance of consistent brand message and should ensure that the product quality backs it well. Moreover, when used as an umbrella brand, the brand portfolio should be managed properly as to avoid any negative impact on the store brand. To conclude it is quite evident that as the Indian retail industry consolidates over next decade, retailers will look to differentiate among themselves and private labels will form a highly significant part of their strategies.
CHAPTER 11 SUGGESTIONS
• Big bazaar should include more of branded products its product category so as to attract the brand choosy people to come in to big bazaar.
48 • Big bazaar should provide large parking space for its customers so that they can easily park their vehicles. • It should make different cash counters for different customers. Cash counter and credit card payment counter should be placed differently in order to reduce the rush and save the customer’s time. This will be a kind of motivator for the customers of big bazaar. • The service of the sales person is needed to be improved. Personal care should be taken by the sales person for the customers so that the customers feel good. • During the off peak hour’s big bazaar should provide some offers to its customers so that people would be encouraged to come to big bazaar during off peak hours. The customers who are present in the mall during the off peak hours of big bazaar will definitely go in to big bazaar if surprise offers are made at that time. • Customer care department is needed to take proper care of customer complaints and queries. The person sitting at the help desk of big bazaar should be able to provide all necessary information to the customers whenever it is required. • The infrastructure is needed to be changed a bit during weekends as heavy crowd comes in to big bazaar during those days.
ANNEXURE
1. Name: ______
2. Gender Male Female
3. Age 20yrs- 25 yrs 25yrs-35yrs
49 35-50 yrs Above 50yrs
4.Marital Status Married Single
5. Occupation Housewife Service Business Profession Student
6. Monthly disposable income Below Rs 25000Rs 25000-50000 Above Rs 50000
7. How often do you shop?
Daily Weekly Bimonthly Monthly Occasionally
Vegetables
Grocery
FMCG
Garments
Electronics
8. Are you Brand conscious? Yes No At times
9. If No, have you tried the stores in-house products?
50 Yes No
10. Are you aware of Big Bazaar?
Yes No
11. Have you ever shopped from Big Bazaar?
Yes No
12. Are you aware that Big Bazaar has its own private label?
Yes No
13. Are you satisfied with the brands at Big Bazaar?
Yes No
14. You find Big Bazaar to be
Low cost Value for money Expensive
17. Rate the below attributes on the Brand Image Prestigious Healthy Packaging Fresh Risk-Free Value for Money Quality
18. Your preference for brands available would be
Strongly Moderately Strongly Disagree Disagree Agree Agree Agree
51 Excellent Quality Value for money
Not risky
Fresh Excellent Packaging
Healthy Excellent Image
19. Which among the below factor can help induce trial for an In House Brand. Price Discount Add ons at the same price Promotions Others
20. In case you were to try an ‘In’ store brand which category you would prefer among the below and Why? Food Products Apparels Electronic appliances Others
21. Give any other experience or factor that makes you prefer private label products
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BIBLIOGRAPHY
52 1. “It happened in India” by Kishore Biyani 2. “Private label strategy” by Nirmalaya Kumar 3. Advertising Express, September 2010 4. Research for marketing decisions by Paul E Green, Donald S Tull and Gerald Albaum 5. www.google.com 6. www.bigbazaar.co.in
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