Retail Marketing

Project Report

Introduction

The Indian textiles industry is extremely varied, with a hand-spun and hand-woven sector at one end of the spectrum, and the capital intensive sophisticated mill sector at the other. India’s textiles sector is one of the largest contributing sectors of India’s exports contributing about 11 per cent to the country’s total exports. The industry realised export earnings worth US$ 41.57 billion in 2013-14. The Indian Textile Industry contributes approximately 5 per cent to GDP, and 14 per cent to overall Index of Industrial Production (IIP).

India is the world's second largest producer of textiles and garments and accounts for 63 per cent of the market share of textiles and garments. In addition, India accounts for about 14 per cent of the world's production of textile fibres and yarns (largest producer of jute, second largest producer of silk and cotton; and third largest in cellulosic fibre).

The textile industry has two broad segments, namely handloom, handicrafts, sericulture, power looms in the unorganised sector and spinning, apparel, garmenting, made ups in the organised sector.

Market Size

The Indian textiles industry, currently estimated at around US $108 billion, is expected to reach US $ 141 billion by 2021. The industry is the second largest employer after agriculture, providing direct employment to over 45 million and 60 million people indirectly.

The Indian textile industry has the potential to grow five-fold over the next ten years to touch US$ 500 billion mark on the back of growing demand for polyester fabric, according to a study by Wazir Advisors and PCI Xylenes and Polyester. The US$ 500 billion market figure consists of domestic sales of US$ 315 billion and exports of US$ 185 billion. Apparel exports from India have registered a growth of 17.6 per cent in the period April—September 2014 over the same period in the previous financial year.

The close linkage of the Industry to agriculture and the ancient culture, the traditions of the country make the Indian textiles sector unique in comparison to the textiles industry of other countries. This also provides the industry with the capacity to produce a variety of products suitable to the different market segments, both within and outside the country.

Investments

The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted foreign direct investment (FDI) worth US$ 1,522.51 million during April 2000 to December 2014.

Snapdeal has partnered with India Post to jointly work on bringing thousands of weavers and artisans from Varanasi through its website. Giving Indian sarees a ‘green’ touch, Dupont has joined hands with RIL and Vipul Sarees for use of its renewable fibre product Sorona to make an ‘environment-friendly’ version of this ethnic ladieswear.

Raymond has launched ‘Regio Italia’, a luxurious, elite and finest Italian fabric for its customers. Regio Italia is a fine collection of fabrics from Italy with the latest designs that is carefully woven and specially handpicked assortment of the best designs in formal and occasion menswear suiting fabrics.

Government Initiatives

The Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic route.

The proposal for imposing duty on branded items was dropped providing relief to the entire value chain. The Ministry of Textiles, Government of India plans to enter into an agreement with Flipkart to provide an online platform to handloom weavers to sell their products.

Detailed arrangement for purchase of cotton from the farmers by the Cotton Corporation of India Ltd (CCI) under the Minimum Support Price Operation was monitored. 343 purchase centres were finalised in consultation with the State Governments after meetings with officers of CCI and the cotton producing states, resulting in streamlining of operations.

Road Ahead

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. The organised apparel segment is expected to grow at a compound annual growth rate (CAGR) of more than 13 per cent over a 10-year period.

E-Commerce Industry

E-commerce industry has witnessed tremendous growth and attention in last 2 years and its rampant increase in scale and coverage has set “the growth story” next best to rapid expansion of software industry in early 90s.

Going by the extensive studies on the growth of this mysterious giant in making called “ecommerce”, the primary reasons can be attributed as follows:

Rapid increase in internet penetration Availability of much wider product range compared to what is available at brick and

mortar retailers More convenience offered in online shopping. Lower price and more discount offers available in online channels Evolution of intermediary and marketplace model reducing cost even further &

scope of increasing product depth and width.

The main reason for choosing Jabong and Pantaloons is to identify the difference between an online e-commerce store and a brick and mortar store. The other elements are almost

similar. The product category offerings of both Jabong and Pantaloons are quite similar. Both the stores believe in high fashion

Jabong

Jabong was launched in early 2012 by Praveen Sinha as an e-commerce portal to cater the fashion needs of men, women and kids across footwear, apparel, jewellery and accessories.

Jabong has the tag line of “Be You” and caters several categories of branded listings. They were late in entering the fashion e-commerce market, but something differentiated them from their competitors. First, they introduced right brands on their platform, mostly those that were not available offline in many parts of the country. Secondly, they worked with user friendly features like express delivery; 30-days return policy and open box delivery which gave them better customer experience. And, finally, they indulge themselves in fashion curation and thus came closer to the fashion community in the country.

According to a report from internet analytics firm ComScore in September 2012, Jabong.com had the second-highest volume of traffic among Indian e-commerce websites, in just a few months of its launch. The platform counted 1.9 million gross orders in the first quarter of the financial year 2014, according to a disclosure by Kinnevik, an investor in Jabong.

The report further indicated that Jabong, in March 2014, had a total customer base of 2.9 million, as opposed to one million in the corresponding month last year. In December 2013, Jabong crossed $25 million in revenue. The fashion e-commerce market in India is currently valued at $20billion and is expected to touch $35 billion by 2020.

The Big Idea of Jabong

Jabong was founded in the year 2011; however it started its operation in January 2012. When most of the e-commerce players were focusing on offering huge deals and discounts on the products, Jabong focused on varieties, increasing categories, widest assortment, express delivery and excellent customer services. This, over time has led to the strong customer base.

Business Model

Jabong.com follows both inventory model and a controlled marketplace model. In inventory model, products are sourced from brands and stored in the Jabong warehouse. In controlled marketplace model, Jabong doesn’t store the inventory but takes care of the Fulfillment, customer Service, and Returns if any. Interestingly, Jabong (like any other Rocket Internet business) is built by consulting people, rather than hard core operations professionals.

Marketing Strategies

Currently 90% of the company’s budgets are going towards digital and rest 10% are invested in TV and OOH. Jabong is using digital marketing to enhance the transactions and revenues and social media to increase engagement. Off-line media are used to generate awareness in small towns and cities.

• Jabong used affiliate marketing to add advantage to the business and ran cost per sale (CPS) campaigns with many affiliate networks in India. The payout being offered to the affiliates was upto 10 percent of any sale.This ensured Jabong getting huge number of customers only through affiliate marketing.The sale is processed within 15 days after month end. The payments to the affiliate marketers would be made on the basis of the Final Validation Report and within 60 days of after activity month.

• Further, Jabong distributed shopping vouchers worth Rs 2500 to the users for first sign-up.

• In order to retain its members and make them visit again and again, Jabong adopted an impressive tool that was email marketing. Jabong used to send promotional emails every day to each of their members about new offers for sale. Their E-mailer to registered users talks to customers on the promotional aspect and try to engage the audience to get the click.

• Jabong also regularly posted interesting articles on their blogs to increase brand awareness and engagement.

• Jabong utilized Facebook marketing opportunity efficiently. Within few months of their launch, it crossed over lacs of fan following on their Facebook fan page.

• Jabong also used banner advertisement to get new visitors on the website.

• In Jabong’s digital strategy its Facebook page has recently crossed 3.6 million likes, and has 119K+ followers on Twitter. They publish 10-12updates a day and almost all of them are self-promotional but still are able to engage the audience.

Pantaloons

Pantaloon Retail (India) Limited is India’s largest leading retailers. It operates on multiple platforms like Value and life style segment in the Indian consumers market. Company headquarters located in Mumbai. As on Feb 2009 Company operates over 12 million square feet of retail space, 1000 stores in 71 cities with employee strength of 30,000 people. The company is in aspect of giving retailing a modern look with reachable for middle and middle lower class people. Retailing includes retail formats like Pantaloons, Big bazzer, Food bazzar, brand factory, Blue sky, and Top 10, Star & sitar and e zone. The company also operates on online future bazzar.com for upper class that can get internet connectivity. Home Town a large-format home solutions store.

Pantaloon Retail is the flagship company of Future Group, a business group catering to the entire Indian consumption space. Future Group led by its founder and Group CEO, Mr. Kishore Biyani, is one of India’s leading business houses with multiple businesses spanning across the consumption space. While retail forms the core business activity of Future Group, group subsidiaries are present in consumer finance, capital, insurance, leisure and entertainment, brand development, retail real estate development, retail media and logistics.

The company was established in 1987 as Manz wear private Limited launched its first product Pantaloons rousers. In May-1992 company offered Initial public offering. The company enters in modern retails business in 1997 from Kolkata with 8000Sq.ft store. In 2002 company initiated a lunch of food chain market Food bazzar. In 2004 central mall was lunched to concentrate on India one sector launched near brigade road in Bangalore.

In 2005 group moves beyond retailing starts diversification and in organic growth by acquiring galaxy entrainment, Indus League clothing and Planet retail. In 2006 company starts finical facilitation company to help internal need Future capital Holdings. Starts its first Home building and improvement product retailing in Bangalore. Starts joint ventures with Staples, US based company and with Genreali a Italian Insurance major.

In 2007 Group had turnover of $1 billion. Specialized companies in retail media, logistics, IPR and brand development and retail-led technology services become operational. In 2008 big bazaar crosses 100 malls

The company observes retail customer trend and changing consumption tastes. Organization is customer driven opposed to product driven .Company is very conscious about culture and regional consumption pattern. Strategies change frequently due to orient

to the customer’s needs. The continues of learning, unlearning and relearning is applied to update the quick changing strategies across the organization. As Kishore Biyani MD Pantaloon retail India LTD says “Retail is like riding bicycle. In uphill if you stop pedaling you will slide down”. The statement express the need of continues learning process to form the strategies.

Based on analysis its business strategies can be categorized in 3 major groups. They are

Diversification strategy Classes destination strategy Maximum market shares strategy

Diversification strategy

The company started its business as textile manufactures but growth in modern organized retailing attracted the company to switch diversify to the next consumption pattern.

The company diversified and acquired a large business in organic and inorganic way. But company did not forget ripe its strategy and values in the diversified company. In every new business company started to rewrite the rules by retaining values. The company in latter stage organized to support each other by physical material flow if required.

Classes destination strategy

Future group has diversified its business keeping the retiling as common goal. To set and concentrate on one stratum is main objective of this strategy. Each business is set to operate on defined strata. Company has divided Indian customers in three different groups. INDIA ONE, INDIA TWO, INDIA THREE. Each has different values, products and quality requirements.

INDIA ONE or consuming class .The population of this constitutes only 14%.Till recent times the modern retiling formats is offered for this class. According Maslow’s theory of hierarchy the 14% people are in self-actualization and Esteem needs in the pyramid. For this class

pantaloon patterned Future bazaar, E zone, Central, brand factory, Home town and star Galaxy entertainment.

INDIA TWO or the serving class it includes people like house hold helpers, office peon etc. This is the people who make service INDIA ONE class. The population of this class is more than 30%. In the needs hierarchy they are located in for Social and security .Earning capacity of this class is 60% lesser than INDIA ONE. For this class as the big bazaar, Food bazaar, Future money and other retail formats are presented.

INDIA THREE or struggling class. The class led life on hand to mouth existence. They can’t afford for beater living style. This segment doesn’t contribute much in the contribution cycle. The need of the segment is local as they are finding it cheaper. The present business model is not addressing this class.

Figure shows change in consumption patter by different class in 2001-02 and 2007-08.INDIA ONE has changed from 25% to 35% normally the total profit in this segment will comparatively 20% more than they are sold in next segment. As ambiance is factor and other pleasuring non value added services are necessary. INDIA TWO has not changed it conception level. INDIA THREE has seen 10 % decline.

Maximum market shares strategy

The retail chain by pantaloon in all business patterns tries to achieve maximum market share in all the products or service it provides .The Company does not bothers about short term profit or loss by a strategy. This are considered as learning. The business will sell at marginal profit some times to attract the new customer who will prove potential customers in future. The strategy achieved by focusing pricing factors in INDAI TWO and on service and quality in INDIA ONE.

Pricing strategies

Pricing is strategy used by Pantaloon retail chain to attain maximum market shares. The company offers numerous schemes to attract the new customer as well as to retain the present customers.

The company’s schemes are categorized in following groups

Value pricing

This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales. The product value will be associated with external factors.

Promotional pricing

Pricing to promote a product is a very common application. The application of this done by BOGO (Buy one Get One), BTGO (Buy Two Get One Free) etc.

Bundling

Bundling is marketing tool sell two or more complementary product as a package with attractive price. The price is will lesser then individual selling price.

Example: A Person needs one soap for a period of time

But bundling with attractive price with more than 3 soaps can attract them.

Low interest rate financing

Future money helps in asset purchase at 0% interest.

Physiological discounting

In India this approach is called as Bata rating system. Organization utilizes this approach when product has emotional value rather than rational value.

Example a product is priced for 99 instead of 100.When board shows price reduction from 100 to 99, Consumer looks at 3 digits to 2 digits rather than exact value.

Time pricing

The innovative way of attract the customer is Timely pricing it is known that during holidays rate of customer is more. Reduction of profit margin with lot of advertisement will invite new customers. The company has learnt it from strategy made on public holiday 26-Feb. When the turnover of the day reached 30 cores where average is 5 cores.

With such experience crowded management is essential so to divert potential customers “Wednesday bazaar” where it will offer less profit margin sales.

PANTALOONS:

The typical store layout of Pantaloons is as follows:

The store layout, the design and display of the store and the planogram of the store are generally decided by the head office of Pantaloons in Mumbai. The head office trains the people of other stores before changing the display of the store. This is generally done 2 times a year. They have identified a periodic change of fashion and identified two periods namely the spring-summer (march-july) and autumn-winter. The discounts are generally given in the period of spring-summer. This is generally known as the sale period. The display of the store during the sale period is completely different from the display of the store in the non-sale period.

Customer Insights:

JABONG:

Website and App home gives look and feel of a fashion magazine. They even have a blog within jabong where they write about beauty, celebstyle, fashion. There is also monthly e-magazine called juice mostly for women.

The color and feel of the website also reflects the bright and fresh view of a lifestyle stores as pantaloons.

Category listing is both product wise and brand wise (for browser mode or magpie mode). For customers in blinkered mode, there is the search bar.

PANTALOONS:

Manual counting ticker with the security guard Customers at men’s section – mostly come in “browser mode Only 3 out of 10 customers in Men section comes alone. Rest either comes with a

lady (mothers, girlfriends or sisters) Apparel are arranged in neat rows and columns of same color. The newest

fashions are hanged or worn over dummy model The color of the sections at the walls sends a signal of the mood of the product.

The men formals had a sophisticated black with grey stripes, the sports section has bright yellow style highlighting active lifestyle. The men’s innerwear section had a totally black wall which reinforces the “for men” feel.

In entrance there are perambulators and wheelchairs

WAY AHEAD FOR PANTALOONS:

The brick and mortar apparel retailers like pantaloons are facing a serious threat from their rivals in the e-commerce segment. The decision made by pantaloons to form strategic tie-ups with e-tailers like Jabong, Trendin, Flipkart is an important move to counter the e-commerce.

Pantaloons started to sell its private label brands on these websites by forming strategic ties. The advantages of this are:

It can have a presence on e-commerce and increase the target audience by improving its customer reach.

It can convert its private label brands into venture brands by selling on multiple channels instead of selling only in their stores.

The model implemented by pantaloons can also be implemented by other retailers so that it would be an advantage to them to stay in the intense competition of apparel industry.