4. Case Studies
Global Top 3 retailers: Wal-Mart, Carrefour, Tesco
Indian Retailers: Future Group (Big Bazar), More, Reliance
Fresh,Spencers and Vishal Mega Mart Chapter 4
W a l - M a r t
"The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience. ” - Sam Walton, founder of Wal-Mart. ''Exceed your customer’s expectations. If you do they’ll come back over and over. Give them what they want - and a little more. Let them know you appreciate them. - Sam Walton, founder of Wal-Mart Brief about Retailer; In July 1962, Walton - an economics graduate from the
University of Missouri, established the first Wal-Mart Discount City in Rogers, a small town in the state of Arkansas, USA. Wal-Mart expanded rapidly by adopting acquisition and joint venture routes. Today Wal-Mart is the world’s number one retailer having operations spread in 14 countries with an employee base of
6, 80,000. Apart from USA, it operates mainly in Canada, South America, UK,
Japan, China and India. In 2009, Wal-Mart distributed $423 million for charities in cash and in kind. Wal-Mart environmental friendly goals are: merchandise having
100 percent renewable energy, creation of zero landfill waste and products sell maintaining sustained environment. In India, Wal-Mart has joined hands with
Bharati Enterprise and started B2B retail operations.
YEAR SALES (In US Dollars) NET INCOME STORES
1970 31 m nU S$ 1.2 mn 32 1980 1.2 bnUS$ 41 mn 276 1990 26 bnUS$ 1 bn 1528 2000 165 bn US$ 5 bn 2 9 6 0 2003 244.5 bn US $ 8 bn 3400 2009 4 0 5 .0 bn US $ 22 bn 4 3 0 0 Table 4.01: Title: Wal-Mart's Performance Milestones Source: Wal-Mart Annual Business Report, 2009
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Three Basic Beliefs and Values: Wal- Mart follows three Simple Things which makes them great.
1. Respect the Individual
2. Service to our Customers
3. Striving for Excellence
Custom er Focused Philosophy: Each week, about 100 million customers’ i.e. nearly one-third of the U.S. population, visit Wal-Mart's U.S. stores. Since its inception, Sam Walton had cultivated a customer-focused culture at Wal-Mart.
The customers are being viewed and treated as guests at Wal-Mart. The company is known for its ‘greeters’ who greets the customers with a warm welcome and a friendly smile, the moment they enter a store. They offer shopping carts to the customers and convey to them that Wal-Mart is glad to have them at their store.
Customer Centric Culture, Policies and Practices: Save Money. Live Better.
Wal-Mart does not have loyalty card schemes.
Sundown rule: For the benefit of customers “Sundown rule” is laid. “According to the Sundown rule, associates (Wal-Mart employees) have to resolve all service- related requests made by customers before the sunset. The rule aims at inducing a sense of urgency in meeting customer service requests. Quick response to customer demonstrates Wal-Mart’s dedication towards better customer service.
The 10 Foot Rule: It states that if a Wal-Mart associate gets within 10 feet of a customer’ he is supposed to look into the customer’s eyes, greet that customer and offer friendly assistance.
Grass Roots Process: Listen to your associates. They are the best idea creators.
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EDLP Pricing: Wal-Mart follows Every Day Low Price (EDLP) policy. Under
EDLP Wal-Mart would always provide a wide variety of high quality, branded and unbranded products at the lowest possible prices, offering better value for the customer’s money. A Wal-Mart advertisement makes a point: “Because you work hard for every dollar, you deserve the lowest price we can offer every time you make a purchase”. EDLP is extremely attractive to customers and over the years it has emerged as the key contributor to Wal-Mart’s success.
Rollback of Prices Scheme: To enhance* customer satisfaction, this scheme is introduced. Under the “rollback” program, Wal-Mart has made a commitment to its customers to reduce prices, whenever and wherever it could, and pass on the maximum savings to them. Whenever the company is able to reduce the procurement costs of products due to greater efficiency in its operations and supply chain management practices, it cuts prices and passes the benefits to the customers. Smiley logo appeares on the products in the store racks once prices are rolled back, a yellow rollback.
Purchasing Policies: Wal-Mart sources merchandise directly from manufacturers.
By eliminating the middlemen, Wal-Mart is able to sell to customers at lower prices, and in turn benefites from the large volumes of generated business.
Information Technology (IT) for Customer Delight: Wal-Mart has made a heavy investment in IT, such as Electronic Data Interchange (EDI), Data Mining, and Radio Frequency Indentification (RFID). In 1989, Wal-Mart started building a huge database of customer information in its data warehouse systems located at its headquarters at Bentonville, Arkansas. The company collects sales and customer related information from each store and feeds this information into the database system. Wal-Mart’s IT experts use 3-D visualization tool to make accurate estimates of products most likely to be bought by customers on the basis
95 Chapter 4 of parameters such as ethnicity, geographic location, weather patterns, local sports affiliations, and around 10,000 other varied parameters. To make shopping at Wal-
Mart a pleasant experience, Wal-Mart has installed customer information kiosks in its stores since 1996. The kiosks help customers to find out the price of any product and get a brief description of it.
Private Label: Wal-Mart views Private label as a value proposition. About 40% of the products sold in Wal-Mart are private labels.
“Wal-Mart does not use specific customer information, by customer name or profile. We use market basket information; by individual store. That gives us the ability to do what we think that we need to do, to understand what customers do or don’t buy from us, what percentage of customers are coming in. Wal-Mart surveys hundreds of thousands of customers monthly, asking them to rate their shopping experience”.
Lee Scott-CEO: Wal-Mart
THE WAL-MART CHEER; Wal-Mart associates cheer customers enthusiastically with cheer. They take cheer seriously — it is one way to show pride in company and how they value customers. Employees cheer customers with different words and languages, around the world. WAL-MART CHEER Give me a W! Give me an A! Give me an L! Give me a Squiggly! Give me an M! Give me an A! Give me an R! Give me a T! What’s that spell? W al-M art! What’s that spell? W al-M art! Who’s number one? THE CUSTOMER
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References
Book
SAM WALTON with JOHN HUEY, Made in America -My story
Web Sites
www.wikipedia.com
www.walmart.com
www.walmartstores.com
Report
Wal-Mart Annual business report 2009
Article
Zimmerman, Ann; Hudson, kris 'Managing Wal-Mart’, April, 2006
Journal
K.Prashanth, Vivek Gupta ‘Lessons in Customer Service from WAL-MART’ Icfai Center for Management Research, Mktg/080.
Lee Scott, Wal-Mart; Living up to New Expectations, ECR Journal, V01.6, No. L Spring 2006
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C arrefour
“To succeed, we have identified three strategic levers. First is ‘Client-Oriented culture’, second is ‘Transformation’ followed by ‘Innovation”.
LARS- OLOFSSON (CEO-Carrefour)
“Carrefour believes that customer loyalty is the result of the sum of customer’s positive experiences and not only the loyalty programs. ”
Brief about Retailer: Carrefour is Europe’s number One and World’s second
largest retailer having headquarters in Levallois-Perret, France. Carrefour was
founded in 1957 by Fournier and Difforey families. It started first retail store in
France. Carrefour means “crossroads” in French. Carrefour has achieved
phenomenal growth through expansion, tactical acquisitions and franchise
operations. Today it operates in 31 countries in Europe, Latin America, Middle
East and South East Asia with more than 15,430 stores. In 2009, the group has
achieved a revenue base of 108.62 Billion Euros with 4, 95,000 employees and
17.90 million square feet sales area. Their retail store formats include
Hypermarkets (1300), Supermarkets (2919), hard discount stores (6252) and
Convenience shoppees (4813). They launched Carrefour.fr website which offers
services in food and non-food items in France. Carrefour group supports
surrounding communities (social responsibility) to create a process of civic engagement everywhere it operates. The Carrefour group strives to limit the environmental impact of its activities. Carrefour has tie-ups with social and
environment protection organizations like WWF, UNESCO and EU commission
for energy and other well-known agencies. The French retailer is likely to
announce its Indian franchise partner and open its first cash-and-carry store by
December 2010.
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CARREFOUR VALUES
Dream: To make Carrefour a business that is recognized and loved for helping its customers and consumers enjoy a better quality of life, each and every day. To achieve this dream, as we go about our business, we ensure that every day we are-
Committed, Caring and Positive: These three values bring us closer to our customers and consumers and reflect our personality.
Committed: We are committed. We constantly strive to exceed everyone’s expectations by providing better value and finding new solutions for a better quality of life.
Caring: We are caring. Caring towards our customers and consumers. We are receptive to their needs, each and every day. We welcome them to our stores and meet their needs with kindness, warmth and attention to detail.
Positive: W e are positive. We rise to every challenge with energy, enthusiasm, and with fresh ideas. We help brighten the lives of our customers and our consumers. For them, for our employees, for the planet, we want the best, both today and tomorrow.
Strategic Orientation: The Carrefour group has one simple ambition: making Carrefour the preferred retailer wherever it operates.
Local Adoption Process of Carrefour: Even though Carrefour is successful internationally, they admit that it takes considerable time for a retailer to complete a local type of model. The countries into which it has entered and succeeded are those where traditional marketing and distribution system still remain, and where
low price orientation is strong among customers. On the other hand, in Britain,
Germany and USA, from which Carrefour withdrew shortly after their entry, it
was hard to demonstrate their innovative variation of a standard business concept
in competition with local companies. Carrefour have confronted with great challenges in the last 30 years. Carrefour is known for adoption of Glo-Cal
strategies (Global + Local), i.e. country specific strategies. Carrefour implements
99 Chapter 4 innovative schemes, trendy corners, specific themes, concepts like bazzar and mock-up to suit and match local customer’s taste, preference and tradition.
Customer centrickness to understand customer: To understand their customers,
Carrefour keeps track of them with the help of sources like media, market research, surveys, and focus groups. The following practices enable them to strategise their CRM and other marketing campaigns.
■ Demographic Trends
■ Products and Categories studies
■ Customer responses to offers
■ Customer studies and observation (Focus groups. In-store studies)
■ Customer Database (Loyalty card/Payment card, sales receipts analysis)
■ Daily interactions with customers (In-Store, Call centers. Mails)
■ Competition Image ( Awareness, Penetration, Share of Wallet , Pre-and
Post campaign Tests, competition watch)
■ Group also gets strategic information through loyalty programs like
Champion, Dia, SHOPI
CRM Philosophy & Practices; "‘‘Winning the Heart of each and every customer”.
To keep the customer delighted and satisfied, Carrefour banners have developed innovative store layouts, products and services. Carrefour’s success is due to successful implementation of 7 P’s strategies i.e. Product, Price, Place, Promotion,
Processes, Physical Evidence and People.
Product Range: Their expanded product line includes 850 plus own brand products (Private Labels). Product lines carry nutrient value tags which are displayed on products. Carrefour launches eco-freindly and socially conscious products. Their eco-friendly household cleaning products beam the Champlan Eco
Planete name i.e. enviroment-friendly certified products. 0>^1,
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Price Policy: Carrefour is committed to follow low prices as their core strategy. This is applicable in every country it operates. Carrefour is committed to lower its prices within 24 hours if a customer identifies a lower price in competitor’s store. During recessionary period, attractive pricing policy gets implemented. Campaign’s like ‘Shield the family budget’ is executed, which aims to stabilize the price of own- branded products for three months. In few countries, they executed “lowest price guarantee’ campaign.
Services: Carrefour introduced a powerful tool for attracting and retaining customers through their services. Since 2006, carrefour has added services such as mobile telephone offerings, financial and insurance services. Carrefour enhanced customer relationship through programs such as computer operating training, installation and repair services on 24 hours* 7 DaysAVeek basis for households.
A Care Hotline; Carrefour has set up a hotline which provides practical information for disabled and elderly individuals.
Loyalty Cards: In France, Carrefour has 12 million households who have a loyalty card. Loyalty “Club Dia’ program have 9 million customers in Spain, 2 million in Portugal, 1.5 million in Greece and 1 million in Argentina. Carrefour has plans to open up loyalty card programs in other countries.
Consumer Clubs: To retain customers, Carrefour has introduced a new concept clubs in France and Belgium. These Consumer clubs, offer more benefits such as beauty club, baby club, healthy living club, gourmet club to loyalty cardholders. Every customer can find a club to suit his/her lifestyle and needs. Club members receive practical advice from experts and exclusive offers in the form of discounts on targeted products through company web site.
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Website: Carrefour.com is the first website in the mass merchandising sector. The website has received the AccessiWeb label award for its high level of accessibility. Carrefour has reaffirmed its commitment to society by extending its fight to alleviate disability to the digital world. Carrefour has country specific web-sites. The website provides vital information of loyalty programs such as promotional offers, campaigns, schemes, tips, what’s new category. Through web site Carrefour promotes latest events, promotional offers and gift vouchers for all age groups. Carrefour conducts online contests, surveys and thereby keeps in touch with their customers all the time.
Delighting In-Store Experience: Carrefour provide free services such as, water cooler points and seating arrangement. To delight the customers, Carrefour provides free internet kiosks enabling customers to stay connected while shopping.
References Web Sites www.carrefour.com www.groupcarrefour.com www.wikepedia.com www.Livemint.com
Report Carrefour Annual Report 2008 Journal Jungyim Baek, ‘How Does the Global Retailer Localize its formar?’ Journal of Global Marketing, Haworth Press, 2004
Yin-Chearang Shiue, Der- Juinn Horng, ‘Carrefour’s Global Reach: A case study of its strategy’. The Journal of American Academy of Business, Vol.9,No.l, 2006
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T e s c o
“ Our mission is to earn and grow the lifetime loyalty of our customer”
-Sir Terry Leahy, CEO (TESCO)
“They (Tesco) know more than any firm I have ever dealt with how their customers actually think, what will impress and upset them, and how they feel about grocery shopping.”
-Jim Barnes, Executive Vice President of Bristol Group, a Canada- based Marketing Communications and Information Firm, and a CRM Expert
“Clubcard is not just a loyalty card; it is a business system” - Schultz, Board Member-Dunnhumby
Brief about Retailer: Tesco is world’s number three retailer. The Tesco story dates back to 1919 when Jack Cohen, set up a grocery business in London. The first store under Tesco was opened in 1929. The company grew rapidly in the years that followed. By 1930, around 100 stores were operating under the Tesco label. Throughout their journey, Tesco continued to grow through acquisition route as well by going international. By mid-2009, the company is operating 4811 stores in the UK, Hungary, Poland, the Czech Republic, and the Slovak republic, Thailand, South Korea, Taiwan, Malaysia, Republic of Ireland, Japan, China, and Turkey. Tesco is having the base of 4, 72.000 employees and 94 million sq. ft. retail stores area. Group sales have reached £ 62.5 Billion with £3.5 Billion operating profit. In 2010, Tesco donated over £60 million to charities- exceeding target to give the equivalent of 1% of profits to good causes. Tesco.com is one of the largest and profitable e-retailer in the world serving grocery and non-food items. In India, Tesco have an exclusive franchise agreement with Trent, the retail arm of the TATA group, supporting their Star Bazzar format.
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CRM -The TESCO Wav- To Gain and Sustain Leadership: CRM initiatives are a company-wide philosophy. Tesco regard customer value and customer satisfaction as values for the company (Yan Ma and Jianxun Ding, 2010). Tesco’ s clubcard plays the role in treating its customers respectfully as the God.
Tesco -Core Purpose & Values ______Creating value for customers, to earn their lifetime loyalty.______VALUES 1. No one tries harder for customers: • Understand customers better than anyone • Be energetic, be innovative and be the first for customers • Use your strengths to deliver value to our customers • Look after our people so they can look after our customers 2. Treat People how we like to be treated: • All retailers, there’s one team -The Tesco Team
• Trust and respect each other • Give support to each other and praise more than criticize • Ask more than tell and share knowledge so that it can be used • Enjoy work, celebrate success and learn from experience
Loyalty Card-Clubcard; “Helping you spend less everyday” Clubcard is our unique way to say thank you to our customers. Tesco’s CRM program, is one of the most sophisticated and extensive CRM program in the whole world. The biggest customer service initiative (and the first focused CRM drive) came in the form of clubcard loyalty card scheme in 1995. To ensure program’s success, company distributed over 140,000 educational videos about the program to its staff. These videos explained why the initiative was being
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undertaken, what the company expected to gain out of it, and why it was important for the employees to participate whole-heartedly in it. Under the clubcard loyaty card scheme, state of the art data mining techniques and analysis, captures over 8 million transactions every week enabling TESCO to accurately pin-point the time when purchases were made, the amount spent, kinds of products purchased. Based on the amount spent and frequency of shopping, customers are classified. Customers are classified based on types of products they purchase. The company also identifies primary life stage need segments based on the profiles of the customers.
Clubcard Reach and Special Drives; Today clubcard is operative in seven countries. In UK, it has 20 million active members under clubcard scheme. ■ Mass customized store magazine forwarded quarterly to millions of customers in UK in 150,000 variants. Magazine also features coupons. ■ Tesco has identified over 5000 segments based on the purchasing habits and behavior patterns of its customers. ■ Special privileges, such as valet parking and personal attention from store managers to its high value customers. ■ Special cards for students and mothers. Discounts are offered on select merchandise, and financial services venture. ■ Special attention given to expectant mothers in the form of personal shopping assistants, priority parking and various other facilities. ■ ‘Healthy Eating’ initiative is a path-breaking initiative, aimed at conveying the nutritional value of the company’s merchandise to the customers. ■ Tied up with airline companies and began offering points to customers in return for their clubcard use. ■ The company helps its customers in comparing prices by providing information on Tesco.com.
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Strategic Benefits of card information: The data collected through clubcard scheme allows Tesco to modify its strategies on various fronts such as pricing, inventory management, shopping analysis, customer acquisition, new product launches, store management, online customer behavior, and media effectiveness. Promotions are aimed at giving special rewards to loyal customers. Few promotions are targeted to specific target customers. Tesco began holding ‘customer evenings’ to interact with customers, gathering more information, and gaining new customers through referrals.
Customer Service Excellence Initiatives: In order to excel on customer service, Tesco created customer champions in the stores. Tesco backed up its CRM efforts by a strong operational framework and streamlining its supply chain. Tesco trained more than 20000 staff members to help them respond better to customer needs. Their “Every Comment Helps’ initiative, encourages customer to give instant feedback via text or email. Over 60000 customer’s response under this initiative, helped Tesco to improve offers and services. In 2001, Company introduced scheme called “Every Customer Offered Help (ECOH)”. ECOH drive consists of greeting the customers, offering them help and finally wishing them a good day. In 2003, Tesco launched the scheme for women customers called ‘Me time’ . This scheme was rather innovative since it allowed Tesco customers to redeem points accumulated at a large number of third party outlets like health spas, luxury gyms, beauty saloons and discounts on designer clothes, perfumes and cosmetics.
‘‘‘'The whole philosophy is in balancing the business in favor of the customer.That comes down to a mixture of company culture and customer insigh f\ -Crawford Davidson, Director (Clubcard Loyalty Program, Tesco)
Commenting on the philosophy behind Tesco’s CRM efforts, Edwina said “companies should be loyal to their customers- not the other way round".
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References
Magazine Betsy Spethmann ‘Loyalty’s Royalty’ © PRIMAMEDIA Business Magazine & Media Inc, 2004.
Report Tesco Annual Business Report, 2009
Journal Tesco: The Customer Relationship Management Champion’, ©Icfai Center for Management Research, March 2003
Yan Ma & Jianxun Ding ‘Delivering Customer Value Based on Service Process: The Example ofTesco.com’ International Business Research, Vol.3, No.2; April 2010
Web Site www.tesco.com
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Future Group [Big Bazar]
“Entrepreneurship is about thinking big, believing in your own ability and going ahead with huge risks even if you are aware that some of the ventures may not be successful. It’s also about making decisions, leadership and about making your colleagues believe in your dream. ”
Kishore Biyani- Founder, Future Group
“It is a moment of pride not just for our company, but for our whole country, India. It would have been more appropriate if we had got the award after global retailers had stepped into India. We are in no competition scenario currently but we excel in what we do to delight our Indian consumers”.
Kishore Biyani (While Receiving International Retailer Award, 2007)
Brief about Retailer: Future group is India’s leading organized multi-format retailer founded by Mr.Kishore Biyani. Future group is a pioneer in Indian hyper market. Presently Future group covers over 16 million sq. ft of retail space in 73 cities and towns and 65 rural locations. Today they operate 120 Big Bazar, 170 Food Bazar and 9 retail stores under their value retail format. Under life style retail, it has more than 20 malls and consumption centers. Today, future group caters to six business verticals such as Retail, Capital, Brands, Media, Insurance and Logistics. Pantloon has given Indian orientation to their retail operations successfully.
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 our conduct ■ Introspection - Leading to purposeful thinking ■ Operations- To be open to new ideas, knowledge & information ■ Valuing & Nurturing Relationships- To build long term relationships
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Philosophy; ''Rewrite Rules, Retain values"
Future group believes that their offerings provide a unique shopping experience to the customers.
Customer Friendly Marketing Initiatives:
■ Sabse Sasta Din: This Maha saving day, is a novel promotional theme now spans for five days. It became a turning point for Big Bazar. Unprecedented crowd across the stores has set a kind of benchmark for Indian retail industry.
■ Communication -Advertising, Publicity and Promotions: “Understand, Speak and Think the language of a common man” theme has been effectively implemented through various punchlines of big bazar. ''Is se sasta aur accha kahin nahin” -Big Bazar’s main one-liner has done wonders in creating space in consumers’ minds. "Chane ke bhaw kaju”, “Stall ke bhaw balcony”, “Ab asli paise bachaiye”- These kinds of phrases instantly appeal to the masses and create desired publicity through word of mouth mode.
■ Full-page Advertising flyers- Two full-page advertisement in major daily newspapers (English plus regional language) highlight savings on wide range of merchandise. It has become first of a kind advertising especially for retail industry in India. This print media advertising became a huge success and instantly became “Talk of the Town”.
During the discussion, store manager emphasized that “Big Bazar brought Indianness to modem retail”. Indianness is based on their deep understanding of multi-cultural, multi-regional and multiple communities’ aspect of India. Their
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retail orientation is successful due to understanding of local festivals, consumers’ tastes and preferences. Future group created vibrancy and bazar-like ambience in their stores, as Indians love shopping with people around them especially in Food and Grocery Stores.
References
Web Sites www.futurebazaar.com http: //pantloon. futurebazaar.com www.pantloonretail.in
Book
Kishore Biyani with Dipayan Baishya, IT Happened in India, Rupa & Co, 2007
Journal
Pravin Patil, ‘IT Happened in India’, Book Review: SIOM Research Journal, 2008
■ Observation and discussion with Big Bazar Store Managers
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M o r e
“More has been launched with the objective of providing the solution in every neighborhood'. ABRL - In Press conference
Brief about Retailer: Aditya Birla Retail Ltd (ABRL) is the retail arm of Aditya Birla Group, a US Dollars 28 Billion corporation. More operates 640 supermarkets and five hyper markets across the country with employee strength of 11,000. The Group works in 3700 villages and reaches 7 million people annually under their community initiative and rural development program.
Vision: "To consistently provide the Indian consumer complete and differentiated shopping experiences and be amongst India's top retailers, while delivering superior returns to all stakeholders".
Values: • Integrity • Conmiitment
• Passion -Seamlessness
• Speed
Store Design- ABRL involved design firm Fitch, to design their supermarkets. The design objective is to give better store experience through better visual merchandising, clear departmentalization, and well-lit, clean and tidy place. Visual audit is carried out to make more supermarkets more customer-friendly and ergonomic shopping format.
Value Proposition for Customers: “Gef More for Less ”
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■ Private labels (PL) - More offers value proposition to its customers through private labels in all categories. More’s Private label received ‘The most admired PL” golden spoon award at the food forum India.
■ Clubmore- More offers a membership program Clubmore, to reinforce its commitment of adding consistent value to customer’s shopping experience and to wish them thank you. Currently clubmore has over 1 million members. The benefits offered to members are life time membership, special promotion offers. It also provides reward points having 2 years validity.
■ Passbook Schemes- More has monthly passbook scheme & exclusive offers for members. More issues more reward points during festive shopping. Store manager chirpily says “Clubmore issues welcome points, double points on Wednesdays and exclusive offers for members”.
■ Media- Special bulletins and advertisements are run through local newspapers. “These bulletins feature product bundhng and special pricing which help us to attract customers”, says the store manager.
■ Clubmore staff wears smart dress with a tag of ‘customer service’ .
References Web Site www.morestore.com
Magazine Design, Retail Images, Vol.6 No 12 Dec 2007
■ Observation and discussion with More Store Managers
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Reliance Fresh
‘T/ze firm offers unmatched affordability, quality and choice of products & services to customers” - Mukesh Ambani “About 95% of India’s retail sector is made up of small, family-run stores and the sector has not been tapped by big businesses. Reliance Fresh aims to target & exploit this very segment in which it foresees hugh potential for further robust growth. ” Raghu Pillai- President (Operations & Strategy)
Brief about Retailer: Reliance Retail Ltd. is a subsidiary of Reliance Industries Ltd. RRL operates several ‘value’ & ‘specialty’ formats. The ‘value’ formats that RRL operates are: ‘Reliance Fresh’, a neighborhood concept, ‘Reliance Mart’, an all-under one- roof supermarket concept & ‘Reliance Super’, a mini-mart concept. The ‘value’ formats offer a wide range and assortment of products required for daily household needs. RRL has started their specialty stores. The ‘specialty’ formats are: Reliance Digital, Reliance Trends, ‘Reliance Wellness, Reliance Digital, and Reliance Jewels. Presently RRL runs its food and grocery business under Reliance fresh banner. Reliance Fresh has more than 560 outlets across 85 cities and towns.
Commitments: We care about
■ Quality ■ Research & Development ■ Health, Safety & Environment ■ Energy Conservation ■ Human Resource Development
Core Values: Honesty, Integrity, Respect, Fairness, Purposefulness, Trust, Responsibility, Citizenship and Caring
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“Reliance One” Loyalty Card: It all adds up! Reliance Fresh has introduced Reliance one loyalty card for its customers. Reliance one is the first of a kind card having benefit of free accident insurance. World of benefits include ■ Secured PIN based transaction ■ Transaction Alerts ■ Personal Relationship Manager ■ Earn reward & bonus points ■ Advance information on new products and services ■ Customized offers Customers however are sceptical about these benefits and say that initially the cardholders are getting regular calls/messages. However, over the time, we hardly get any benefits.
Private Label (PL): As a value proposition. Reliance Fresh offers PL in categories comprises of grocery, FMCG (Handwash, toilet wash, floor cleaner etc), milk, and salt. Branding done under heading such as Reliance Value, Reliance Active, Reliance Life, catches customer attention.
Farm to Fork Strategy: Reliance spokesperson says this idea is all about to source from farmers and sells directly to the consumer keeping middlemen out of the way. References Web Site www.ril.com
Case Study Dr. Debasis, Dr. Mangaraj (2008), 'Reliance Fresh Stores in Food Retailing', CS- 08-029, London School of Business
■ Store Observation and discussion with Store Managers, Customers.
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S p e n c e rs
‘To give customers a wider range of quality products at prices that doesn ’t pitch. We offer a host of our own products across food, home, and grocery. Go on....compare and save”
-Spencers on Private Lable
Brief about Retailer- Spencers Retail Ltd. is a part of RPG multi-format retailer group. Spencers has more than 400 neighborhood and 28 hyper stores across more than 50 cities in India with an employment base of more than 8000.
Vision; To build Spencers as the most prominently managed retail business in the company through ■ Excellence in all operating processes ■ Nurturing & facilitating learning & growth culture ■ Building a unique retail experience for the customers
RPG Group Core values ■ People Orientation ■ Innovation & Entrepreneurship ■ Transparency & Integrity ■ Passion for superior performance
Brand Positioning - ""Taste the World”
It embodies the unique approach promising consumers a fun-filled shopping environment with the best that the world has to offer in terms of interiors, ambience and merchandise.
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CRM Practices:
■ Private Label (PL): “ Be Smart, Save Money” Spencers has wallet-friendly private labels in all the categories from grocery, multipurpose need items and processed food under brand “Smart Choice” and “Right Value” . Selection of the PL has carefully chosen which influences positioning.
■ Loyalty Card: “ HSBC Spencer Happy Ties Card” Spencers has a strategic partnership with HSBC bank for loyalty card. Customer can redeem reward points at store or through HSBC website. Loyalty card offers - Complimentary welcome vouchers - Reward Points for every purchase
■ Loyalty Programs: Spencers have women connect program named as “At home with Spencers” . Under this program they conduct workshops on cookery, health, fashion and beauty. However, as per the customer’s response, the awareness and frequency of such programs is very low.
■ Visual Communication: Spencers have overhead LCD TV’s in their stores. This media is effectively used by Spencers, which other competitor convenience stores have not adopted yet. TV airs PL advertising, special offers, recipes and suppliers advertising all the time. Store streams FM radio in morning and evening time.
References ■ Web site - www.spencers.com ■ Observation at Spencers stores
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Vishal M ega M art
“/ imbibed the save more; spend less ethos from my family. It taught me that every single rupee matters. We took no credit and bought in bulk and fewer varieties, we got lower prices. It is a practice that we had continued till recently. Without this focus on the value of every single rupee, there would have been no business”
Ramchandra Agarwal Founder- Vishal Mega Mart
Brief about Retailer: Vishal Retail Pvt. Ltd (VRPL) is a conglomerate having 183 showrooms and pan-India presence in 108 cities in 24 states. Vishal Mega Mart is a discount store, offering wide assortment of goods. VRPL implemented the concept of the “Value Retail” targetting middle and lower middle income groups. VRPL intend to focus on expansion in Tier II and Tier III cities across India. VRPL has own strong apparel manufacturing base. Vishal mega mart also adopted franchise route for expansion in few cities.
Agreement with Times of India (TOI) Group: VRPL has made agreement with TOI group. Under the agreement, VRPL is entitled to fixed discounts for their advertisements in TOI print publications. In addition, the agreement would facilitate TOI group’s other media vehicles such as Internet, Radio and Television.
CRM Practices: SBI Vishal Card: VRPL have introduced a co-branded credit card in association with State Bank of India (SBI).
Loyalty Program: VRPL want to reward customer every time he makes a purchase at any of stores anywhere in India. Consumers can make purchases at any store and accumalate points at a central level.
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Reward Point Plus- Membership is beyond just reward points. The program empowers customers to accrue following benefits - Reward point on every purchase - Exclusive online shopping zone - Monthly lucky draw - Free home delivery
Private Label- VRPL has various PL brands in FMCG categories under brand names such as Vishal Clean, Vishal Mate, and Vishal Fresh. “Our FMCG and apparel PL is priced very competitively and attracts consumers especially from middle and lower middle class” says the store manager. Therefore, most of the shoppers are shoppers and are not just visitors.
Employee training and seek entrepreneurship- Vishal management belives in encouraging employees to learn on the job and seek their contribution either through ideas, personal networks or effective knowledge management.
References Web site www.vishalmegamart.net www.vishal.net
Report Vishal IPO prospects submitted to Sebi ■ Observation and discussion with Store manager
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