Retail Store Operations Arindam Pal

Course Outline Store Formats and Store Location Terminologies and Measurement Parameters Store Profit and Loss, Operational Expenses Store Operational Responsibilities Store Merchandising Store Layout, Planogramming Energy Costs in Retail Retail Store Processes Marketing in Store Operations Analytics in Store Operations Customer Service in Store Operations Retail Store Operations

Organized Retail What is Organized Retail? Trading activities undertaken by licensed large retail chains It contributes to roughly 4% of retail in India Retail Store Operations

Indian Economy Retail Store Operations Pantaloon Retail Annual Report 07-08 Retail Store Operations

Consumption Spending Pie Retail Store Operations

Organized Retail Pie Food and Grocery Business Under-indexed ICICI white paper Retail Store Operations

What is in it for Customers Wider Assortment Fresh Products Assured Quality Better Pricing Convenience – under one roof Shopping Experience Ambience Self Service Family Time Retail Store Operations

What is in it for Manufacturers Consumer Touch Point Range Visibility Display of entire range of products Space available for hiring Branding/New Product or Category Introduction Retail Store Operations

Retail Store Operations

What is in it for Manufacturers Branding/New Product or Category Introduction Sampling / Product Experience Experience Zone Promotions Premiumization Retail Store Operations

Retail Store Operations

Retail Store Operations

Retail Formats Size Location Assortment Ambience Pricing Hours of Operation Min Quantity of purchase Retail Store Operations

Retail Formats Convenience Store 500 – 2000 sft in size Usually located in societies, under apartments, right in the middle of residential areas Limited Assortment No focus on ambience Competitive pricing Long hours of operation Meant for smaller quantities of purchase In & Out, Spencers Daily, Arambag, 9 – 11 Size Location Assortment Ambience Pricing Hours of Operation Quantity of purchase Retail Store Operations

Retail Formats Super Market 2000 – 20000 sft in size Central location, wider catchment Extensive assortment of Foods, Grocery, Health and Beauty Some representation of General Merchandise Ambience is better than Convenience Stores Discount pricing in core segments, extensive promotions Normal hours of operation Meant for Pantry loading of Foods, Grocery and Health n Beauty (weeks purchase/ bi weekly purchase) Food Bazaar, Reliance Super, Easy Day Size Location Assortment Ambience Pricing Hours of Operation Quantity of purchase Retail Store Operations

Retail Formats Hyper Market Greater than 20000 sft in size Located in Major Hubs Extensive assortment of Foods, Grocery, Health and Beauty, General Merchandise Some representation of Apparels and Consumer Durables, Books, Accessories Ambience depends on positioning Extensive promotions, combi packs, discounts on larger packs Normal hours of operation Meant for Monthly Purchase Big Bazaar, Spencers Hyper, Reliance Mart, Spar, Hypercity, Total Size Location Assortment Ambience Pricing Hours of Operation Quantity of purchase Retail Store Operations

Retail Formats Departmental Stores Greater than 20000 sft in size Located in Major Hubs Extensive assortment of Apparels, Accessories, Home Needs, Health and Beauty Products Some representation of Books, Consumer Durables Great focus on ambience, lighting, visual merchandise Intermittent promotions Normal hours of operation Destination store for target categories Shoppers Stop, Westside, Globus, Lifestyle Size Location Assortment Ambience Pricing Hours of Operation Quantity of purchase Retail Store Operations

Retail Formats Specialty Stores Less than 5000 sft in size Located in Major Hubs, Malls Extensive assortment of Single Product Line, Best assortment in that product line Good on ambience, lighting, visual merchandise Intermittent promotions Normal hours of operation Destination store for target categories Little Shop, Proline Fitness, Steel Junction Size Location Assortment Ambience Pricing Hours of Operation Quantity of purchase Retail Store Operations

Retail Formats Cash and Carry Size Location Assortment Ambience Typically greater than 1 lac sft in size Located in places where rentals are low Extensive assortment of Foods, Grocery, Health and Beauty, General Merchandise Good range of Apparels, Accessories, Perishable Products, Liquor, Home Needs. Low on ambience Strong on pricing in bulk purchases Normal hours of operation Quantity Limitation is there, meant for Retailers not Customers Walmart, Metro, Carrefour Size Location Assortment Ambience Pricing Hours of Operation Quantity of purchase Retail Store Operations

Are these formats viable? Retail Store Operations

Store Location Types of Retail Locations Freestanding Location In the Business District In the Shopping Centre Retail Store Operations

Identification of Market Range – Maximum distance a consumer is willing to travel for a particular product or service Threshold – Minimum amount of consumer demand that is necessary for a product or service to be viable Retail Store Operations

Range Retail Store Operations

Market Evaluation Herfindahl Herschman Index (HHI) Addition of squares of market shares of competitors HHI increases when Number of players in the market are low Disparity between the size of players HHI > 1800 – Concentrated HHI between 1000-1800 – Moderately Concentrated HHI < 100 - Unconcentrated Retail Store Operations

Market Evaluation Index of Retail Saturation IRS = H * RE / RF H – Number of Households in the area RE – annual retail expenditure per household RF – total square footage of retail available in the area Higher the IRS, the higher the chances of success for a new entrant Retail Store Operations

Market Evaluation Reilly’s Law of Retail Gravitation (Ba/Bb) = (Pa/Pb)*(Db/Da)2 Gives the ratio of sales between two alternatives Retail Store Operations

Market Potential Determination of Market Potential Demographic Profile House Hold analysis Competition Catchment area analysis Core Catchment Secondary Catchment Tertiary Catchment Retail Store Operations

Site Identification Footfalls Accessibility Retail Concentration Competition Amenities Intended Product Mix Retail Store Operations

Store Viability Area – 1000 sft Required Sales/sft – Rs 1200 Revenue – Rs 1200000 Average Bill Value – Rs 100 Number of Bills – 12000 per month Number of Bills – 400 per day Conversion – 90% Footfalls required – 445 per day Retail Store Operations

Thank You Retail Store Operations