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Retail Term EndProject

Consumer Durables Sector

Submitted By-

Group 4

Arup Sarkar (063010)

Harsh Rakesh (063016)

Mansee Saxena (063024)

Pooja (063035)

Ritu Agarwal (063041)

Table of Contents1. Introduction......................................................3

1.1 Consumer Durables.............................................3

1.2 Indian Consumer Electronics Retail Sector.....................41.3 Trends in Consumer Durable Retail.............................6

2. Macro Environment Analysis........................................72.1 PEST Analysis.................................................7

2.2 SWOT Analysis.................................................72.3 Scenario matrix...............................................8

2.4 Rural Opportunities...........................................93. Government Initiatives - Policy Support..........................10

4. Major Modern Retail Store........................................104.1 EZONE........................................................11

4.2 Reliance Digital.............................................154.3 CROMA........................................................27

4.4 Company Owned Stores/ Exclusive Stores.......................314.5 Perceptual Positioning.......................................35

5. Recommendations..................................................366. References.......................................................37

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1. Introduction

1.1 Consumer Durables

Consumer Durables involve any type of product that is intended for a long period of regular use. As opposed to short term consumption, it would take several years before this good is replaced.

Figure 1: Consumer Durable Classification

Consumer Durables – Key Products

Televisions

CTVs are the largest contributors to this segment Market size was estimated at 23.0 million units in 2012 Introduction of HDTVs is set to drive demand growth from affluent

consumers LCD sales in India is expected to touch 9.9 million units in 2012 The price decline due to relatively low import duty on LCD

panels, higher penetration levels, and the introduction of small entry-size models are key growth drivers in the segment

Refrigerators

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Consumer DurablesConsumer electronics1) Televisions2)Audio and video systems3)Digital cameras4)CD and DVD players5)LaptopsConsumer appliances1)Air conditioners2)Refrigerators3)Washing machines4)Electric fans5)Microwave ovens6)Cleaning equipment

Refrigerator sales stood at 12.0 million units in 2011 This segment makes up 18.0 per cent of the consumer appliances

market The market share of direct cool and frost free segment is 76.3

per cent and 23.7 per cent respectively Key growth drivers are lower prices and rising demand for frost-

free refrigerators

Air conditioners (ACs)

The Indian ACs market accounted for sales of 3.2 million units in2012

ACs are perceived as high-end products; current penetrationstands at 3 per cent

The segment had a 13.0 per cent share (2010) in the consumerappliances market

High income growth and rising demand for split ACs are the keygrowth drivers

Washing appliances

Washing machines are the second largest contributor to theconsumer appliances market (after refrigerators); in 2011 totalsales was 6.0 million units

Fully automatic washing machines are garnering an increasingshare of the market due to reduction in prices and higherdisposable incomes

Electric fans

Production of fans in 2011 stood at 36.2 million units This is a highly penetrated market Electric fans are an essential utility for more than six months

of the year in most parts of the country

1.2 Indian Consumer Electronics Retail Sector

The Indian retail industry has experienced growth of 10.6% between2010 and 2012 and is expected to increase to USD 750-850 billion by2015. Consumer Electronics makes up 3% of this volume.

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60%6%

4%3%8%3%5%

11%

Indian Retail Market

Food and Grocery Mobile and telecom

Jewellery Pharmacy Appareal Consumer

ElectronicsFood service Others

Source: India Retail Report2013

Organized Retail is expected to grow by 8%, which is much higher thanthe traditional retail.

11%

11%

6%4%

33%

8%

7%

20%

Orgainized Retail

Food and Grocery Mobile and telecom

Jewellery FootwearAppareal Consumer

ElectronicsFood service Others

Source: India RetailReport 2013

Within retail industry, consumer electronics are worth of Rs. 297,285million with a YOY growth rate of 13.3%. Traditionally the unorganizedretailers dominated consumer durables segment but huge growthpotential is attracting large corporate organisations to expand theirretail operations into this territory. Until recently majority of5 | P a g e

sales in consumer electronics were originating from urban centers butwith change in demographics and increasing exposure, the growth insales volume from rural areas are projected to be higher than urbanareas. With the revival of western economy after the recession beingslower than anticipated, large global retailers are also lookingforward to expand their business in India. Also with increase inawareness, Indian customers are increasingly demanding more value formoney both in terms of quality of durables and convenience of buying.

2012 2015E

7.3

12.5Consumer Durables

19.6% CAGR

2012 2020E

69.6

400Electronics demand

24.4% CAGR

India is set to become the fifth largest consumer durables marketin the world

By 2025, India would rise from the twelfth to the fifth largestposition in the consumer durables market in the world

India is one of the largest growing electronics market in theworld

1.3 Trends in Consumer Durable Retail

Increasing presence of organized retail

The Indian retail market is currently worth USD516 billion and islikely to expand at a CAGR of 18.8 per cent to USD866 billion by 2015

The penetration of modern retail is 12.0 per cent in consumer durables segment

The sector is witnessing the emergence of modern durable retail chains and e-retailers like Tata Croma, Reliance Digital, Ezone

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Expansion into new segments

Companies are expanding their product portfolio to include products like high-definition televisions (HDTVs), tablets and smart phones, etc, demand for which are rising with consumer’s income, easy availability of credit and wide use of online sales

Increased affordability of products

Advancement in technology and higher competition are driving price reductions across various consumer durable product segmentssuch as computers, mobile phones, refrigerators and TVs

Focus on energy-efficient and environment-friendly products

Leading companies have introduced star-rated, energy-efficient ACs and refrigerators

Companies also plan to increase the use of environment-friendly components and reduce e-waste by promoting product recycling

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2. Macro Environment Analysis

2.1 PEST Analysis

Political

FDI Policy : Though 51% FDI consumer electronics has been allowed, the present scenario is not good

Change of Political parties at center and state level have effected and led down to roll backs of decision in retailing

Economic

Disposable Incomes have increased with both rural and urban consumers

Demand for energy efficient and good quality product is on rise

Various Financing options like ‘Buy on EMI’ and ‘Low Interest Rates’ have increased consumer spending in this sector

Social

Increasing nuclear families has led to rapid growth in demand for electronics like TV and refrigerators

Electricity cuts in rural areas is a major negative issue

Technological

Energy efficiency rules have become stringent last month, leading to need for better technology at low prices

2.2 SWOT Analysis

Strength

Distribution networks are well developed in both rural and urban areas

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Easy availability of Finance Rapid Urbanization Increasing Share of Organized Retail

Weakness

Ambiguous retail investing laws Increase in raw material prices leading to low margins for

retailers Demand is seasonal and is high during festive season Poor government spending on infrastructure

Opportunity

Penetration of White Goods is lower as compared to other developing countries

Unexplored Rural Markets Increase in buying power

Threat

Intense Competition among major players Poor electricity conditions

2.3 Scenario matrix

The following scenario matrix helped us to identify key future actionswhich the following stakeholder groups must take into consideration tofructify in coming future.

Customers

Buyers of consumer durables in India consider energy efficiencyas the top most image criteria for retail companies.

The Indian middle class defines a substantial part of its statusthrough the consumer durables that it possesses.

Indian consumers are most demanding in the world in terms ofafter sales service

Suppliers

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Consumer durable manufacturing companies are solely dependent onthe distribution networks of their distributors to reach the endconsumer.

Consumer durable manufacturing companies offer highly customizedproducts for the Indian markets

Competitors

All domestic retail companies have strong collaborations withglobal retail players.

Retailers compete with each other through the hiring of seniorexecutives.

Society at Glance

The Indian society strongly promotes the use of energy efficientappliances

Retail management seen as a lucrative career opportunity

Government

The Government of India (GOI) operates its infrastructureprograms only through Private- Public Partnership models.

The GOI provides special tax incentives for retail companies witha high penetration rate in the rural areas of India

The GOI has implemented a unique identity number to every Indianmaking it easier for financial institutions to determine theircredit worthiness

2.4 Rural Opportunities

Consumer durables market expected to expand at a CAGR of 14.8 per centto USD12.5 billion in FY15 (from USD7.3 billion in FY12). Demand fromrural and semi-urban areas is expected to expand at a CAGR of 25 percent to USD6.4 billion in FY15 from USD2.1 billion in FY10. By FY15,rural and semi-urban markets are likely to contribute a majority ofconsumer durables sales.

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Rural 35%

Urban65%

Rural 51%

Urban49%

Increasing rural income with higher non-farm income is the major reason for such a tremendous change in the purchasing power of the rural market. Lower penetration of durables in rural market is another reason of generated huge demand for first time buyers in that market which is a big opportunity of durables manufactures. They are increasing their distribution networks to these towns so that they cantap these markets as well. Various companies are coming up with customized products which suits for the rural market. They try to makethem user friendly and energy saving.

3. Government Initiatives - Policy Support

Customs duty relaxation

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Electronics sector the first in India to be allowed complete customs exemption on certain items used for manufacturing electronic goods

The peak rate of basic customs duty is 10 per cent and 217 tarifflines (under the ITA-1) are exempted from duty

Reduced central excise

The mean rate of excise duty is 12.0 per cent Excise duty is being reduced to 6.0 per cent on LED lamps and

LEDs required for manufacture of such lamps

Encouragement to FDI

100 per cent FDI is permitted in electronics hardware-manufacturing under the automatic route

FDI into single brand retail has been increased from 51.0 per cent to 100 per cent; the government is planning to hike FDI limit in multi-brand retail to 51.0 per cent

EPCG, EHTP schemes

EPCG allows import of capital goods on paying 3.0 per cent customs duty

EHTP provides benefits, such as duty waivers and tax incentives, to companies which replace certain imports with local manufacturing

National Electronics Policy 2012

Aims to create an ecosystem for a globally competitive electronicmanufacturing sector and to achieve a turnover of about USD400 billion by 2020, including investments of about USD100 billion, as well as to provide employment to around 28 million people

4. Major Modern Retail StoreThe following table shows the presence of Modern Retail stores acrossthe country.

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Croma Ezone RelianceDigital

No. of stores >54 >44 >75Percentage storein cities withpopulation >1mn

96.00%

90.60% 80.00%

% stores in citieswith pop > 1mn &states supporting

68.50%

67.40% 40.00%

Using E- Commerce Yes Yes Yes

4.1 EZONE

eZone is a lifestyle electronic retailer by the Future group. eZone is

committed to enable smarter living though the use of technology. eZone

offers wide range of product portfolios to its customers, allowing the

customers to choose from the latest in technology, best suited to

individual lifestyles.

It offers a wide range of national and international brands in a wide

range of product categories such as mobiles, computers, laptops,

tablets, digital cameras, LCD & LED televisions, refrigerators, air

conditioners, washing machines, air coolers, fans and also includes

kitchen appliances comprising of electric cookers, induction cookers,

food processors, juicer mixer grinders, juicer mixer grinders,

microwave ovens, etc.

Expansion Strategy

Number of stores

eZone currently has 38 stores across the country. eZone exited about a

dozen cities in 2011-12 and is now focused on six cities including

Mumbai, Pune, Kolkata, Bangalore, Chennai and parts of the National

Capital Region.

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Future Strategy

Future Group plans to merge the formats of eZone (consumer

electronics) and Hometown (furniture and lifestyle) to drive

efficiencies and improve profitability for both businesses. It has

consolidated them under a single head. eZone’s performance in durables

segment has been under pressure with the slowdown and it was forced to

move out of 22 unviable locations in cities such as Delhi, Surat and

Ahmedabad. Hometown as a format has also been struggling to make money

and its convergence with eZone is expected to help improve its

margins. There would be bundled offers from both formats to offer

better prices for consumers as well. For instance, if one were to buy

a television from eZone, there would a discount on the furniture

bought from Hometown and vice versa.

Retail Marketing Strategy of eZone

Location

eZone is present across India in malls, high streets and within other

group formats such as Home Town, Big Bazaar, etc. It also offers an

ecommerce model to its customers as well as a direct selling model

where the customers can call and order products.

Merchandize Plan of eZone

eZone houses the best national and international electronics brands

across categories like Audio, Accessories, Communications, Computing,

Home Entertainment, Home and Kitchen Appliances, Imaging, Personal

Entertainment & Gaming.

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Advertising and Promotion Plan

eZone has introduced yearly sale properties such as 'BlindFold Sale'

every January and August and 'Zero Margin Sale’. Some of the other

forms of promotion include:

Easy Exchange/ Smart Swap: Walk in to an eZone store and exchange old

electronics for new and offers double the value for old electronics.

Extended Warranty/ Smart Choice: eZone offers an extended warranty

with a hassle free service even after manufacturer’s warranty is over.

Reward Points/ PAYBACK: eZone is the sole electronics retail partner

on PAYBACK and offers the customers to earn and redeem PAYBACK points

on purchase.

Other Services Offered

Instant Finance/ Smart Finance: eZone makes latest technology

affordable throughout the year with the Smart Finance options.

Masterclass: eZone offers Masterclass facility which helps the

customers demystify technology and offer expert advice from across the

tech domain I n a range of category ranging from photography to

culinary delights and even tips & tricks for Smartphones and Home

Entertainment systems

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Data Transfer/ Magic Move: eZone stores provide data backup facility

and upgradation of devices

Gift Vouchers/ Gift Vouchers: eZone stores offer gift vouchers in

various denominations for any occasion

Customer Service

eZone promises good and efficient customer care to its customers. It

offers a toll free number along with a customer care email id.

Following are some reviews that suggest that the eZone has not been

able to provide the customer service promised:

Hello Insane Ezone Staff and Management,

I recently wanted to buy a Sony Tipo for my friend’s birthday. I was at Ezone, Bangalore Central,

Bellandur.

Asked for a Dual Sim Sony Tipo Black. Service Representative said that he does not have a dual

in stock and can give me a single sim one.

Finally he got a box and billed it. Here’s the catch. When enquired, about converting the HDFC

card’s amount into EMI, he said that you can convert it to interest free EMI for 6, 9 and 12

months.

But the feedback as observed on various portals suggests that the retail store is unable to keep

its promise.

We decided on 9 Months and it was billed.

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Box opened and we find a WHITE PHONE. When asked he says he will check if he can replace

with a black one. Goes around the mall and came back saying that ezone are out of stock for

the model everywhere in Bangalore.

I had to settle for a phone which I never wanted.

Here’s another catch. 

Couple of days later I receive a bill with additional 1700/- odd extra changes for converting it

into 9 months EMI.

YOU people PLEASE KNOW WHAT YOU ARE SELLING and BE KNOWLEDGEBLE enough ABOUT

BILLING.WITH NO THANKS, 

NEVER BUY FROM EZONE

Source: Mouthshut.com

I went to buy a refrigerator in e zone, Chennai, morning at 11 am. I entered the

store, I could only hear the t.v sound and no one bothered to attend. I searched for someone

and after a few minutes   a sore staff came and showed the refrigerators. I had to ask him

many questions, he was least interested to market the product. Anyway I selected an L.G

refrigerator and paid the money . He said the product will be delivered the next day evening,

but recd a call from the stores saying that they won’t be able to deliver today, since the product

has to come from the godown. And since I insisted that the fridge shoul be delivered by 8 p.m .

So they agreed . But after half an hour  I received a call saying that it is not possible and can

deliver only in th next day morning .few minutes later I called again to find wat time they will

deliver . He says he can deliver only at 12 in the afternoon . I have to wait for him at home all

the time . Wat a poor service .when they are not able to serve properly they should close this

type of stores. All their mobiles are always engaged, since they chat with their friends all the

time. Our calls are waiting, least bothered to attend.I should have seen the reviews before going

to this store. I will advice, no one should buy things from this store hereafter. I made a mistake

buying from here.

Source: Mouthshut.com

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4.2 Reliance Digital

Reliance Retail

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Reliance Retail IndustriesRELIANCE DEPOTRELIANCE RETAILRELIANCE DIGITALRELIANCE LIVINGRELIANCE SUPERRELIANCE MARTRELIANCE AUTOZONERELIANCE JWELLRELIANCE TIMEOUTCOMERELIANCE TRENDRELIANCE FOOTWEAR

Reliance Digital

Your one stop shop with cutting edge technology for the entire rangeof household electronics, appliances, computers, gaming and telecomproducts brought to you in a demystifying, enjoyable & experientialambience supported by the highest quality of service and value.

Reliance digital is a Stand-alone store which was formed on 23rd

October, 2007.Basically, Stand-alone stores are shopping mall or shopping centerwhich has satellite buildings located either on the same tract of landor on one abutting it, on which it is located. Reliance digitalfollows CDIT format (consumer durable in technology)

With over 150 international and national brands and over 4000 productsat amazing prices, they have the largest display of models to help youfind the right solution that fits your lifestyle. The range atReliance Digital spans, Audio and Video products (TV's, DVD players,Car Audio players), Electronic Musical Instruments and DigitalCameras, Gaming Consoles and Games, Computers and Peripherals, Mobileand Fixed line instruments, Durables like, Air Conditioners,Refrigerators, Water Purifiers, Kitchen and Home Appliances.

At Reliance Digital, you get to touch, try and feel every productbefore you make your decision. Their specially designed ExperienceZones (for high-end entertainment systems like home theatres,

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televisions, home and car music systems) simulate exact conditions tofamiliarize customers with their products.

With a vision to generate inclusive growth and prosperity for farmers,vendor partners, small shopkeepers and consumers, Relaince RetailLimited (RRL), a subsidiary of RIL, was set up to lead RelainceGroup’s foray into organized retail. Based on its core strategy ofbackward integration, RRL has made rapid progress towards building anentire value chain starting from the farmers to the end consumers.

Across India, Reliance Retail serves over 2.5 million customers everyweek. Its loyalty programme, "Reliance One", has the patronage of morethan 6.75 million customers.

Reliance Digital has 40 stores in all over India. One Reliancedigital’s outlet is in korum mall at Thane Mumbai. Another outlet isat Vashi Navi Mumbai.

Approximate Financial records

Weekly Sales Approx 85 lacs. Monthly sales approx 4 cr. Yearly sales approx 50 – 60 cr.

Footfalls

Weekends 2000 customers Weekdays 1000 customers

Reliance digital also receives rent from Kodak and Vodafone, which arelocated inside the store

Monthly Rent from Kodak – Rs. 75,000 Monthly Rent from Vodafone – Rs. 25,000

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Organisational Structure of Reliance digital

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Reliance DigitalOperationsHome ApplianceWashing machine,Microwave,Toaster,RefrigeratorConsumer Electronics LCD,LED,Home theater,Camera Information TechnolgyLaptop,Dektop,Printer,Gaming TelecomWire phonesWireles phonesSupportCRMMaterials Material inword,Material outwordCommercial Cash finance,Store expense,Budget

Reliance Digital provides various offers from time to time.

1. SUMMER CARNIVAL

To enjoy the summer season, RELIANCE DIGITAL has AMAZING offers for its customers in product categories - AC, Refrigerator,Cameras,Laptops, HIGH END TVs. Various Finance options are available according to cities.

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2. WINdia! India wins, You win!

Reliance Digital gives offers in world cup too. Through the exciting WINdia card, a customer gets to score runs with every purchase above Rs 7,000/- and wins instant cash discounts of upto25%. Customers could win gift vouchers of upto 75% of the bill value, in case India continued its winning streak in the Quarter Finals, Semi Finals & the Finals of the World Cup the purchase were free.

3. Anything and Everything @ Rs 26/

Reliance Digital celebrated India’s Republic Day with its ‘Anything and everything @ Rs 26/-‘offer, an excellent opportunity for customers who were looking out for a product in Consumer Electronics/Home Appliances and who would like to pay in EMIs. The customer purchases his favorite product by paying only Rs. 26 and has the flexibility to pay the balance

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in easy EMIs.

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Reliance Digital offers GIFT CARD to those niche customers whodon’t know what to gift or are confused. So its an end of all hassle of deciding what to gift. This is an all time solution of gifting

Reliance Digital is backed by Reliance ResQ, the service arm that isavailable for support all 7 days and fully geared to provide end to end solutions.For example, our qualified engineers will visit site (even before you purchase) to study not just the right AC requirement but the best installation solution and carry out proper installation that will go well with the décor of the room where it is installed. Reliance digital has extended warranty plans which give customers peace of mind even long after the company warranty

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period has expired (so, they are with customers before the purchase,during the purchase and long after the purchase).

Benefits of ResQ backing are quite a few

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1. Interior design

Reliance digital has a standard format which is followed by them in all their outlets.

Flooring: they have anti-slipping tiles which is been cleaned once in every month by ( Eureka Forbes )

It has fully centralized air condition. It has plain ceilings. They have white focus lights used in the outlet. The Walls colour were light cream colours. Background music : They have collection of Hollywood & bollywood

copyrights which are played in the store. Handicap people can easily enter the store from back of the

outlet they have made a slope by keeping in mind the differently abled people.

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RETAIL FORMATVISUAL MERCHANDISINGLOCATIONINTERIOR DESIGNEXTERIOR DESIGNMERCHANDISEPLANNINGPRICINGLAYOUTPROMOTIONSPERSONAL SELLINGSERVICE

There are separate washrooms for customer and staff. Drinking water facility: They have kent purifier uv +ro kept

inside Reliance Digital for the customers Sections in reliance digital:

a) While entering the store the first section is of camera section, the reason for keeping this section at the start is because it is a fast moving product.

b) Next is laptop section, it is basically customer oriented.c) Next is mobile section which is in centre of the store, it is

kept at centre because it is the most attractive section and it should be visible from everywhere.

d) Next is home appliance which is to the left of the store.e) Next is consumer electronics which is to the right of the

store.

Planogram

A Planogram is structure followed by Reliance Digital which allowsplanning of the arrangement of merchandise on a given fixtureconfiguration to support sales through proper placement of merchandiseby Style, Option, Size, Price points, etc. It also enables a chain ofstores to have the same merchandise displayed in a coherent andsimilar manner across the chain.

The main purpose is to support ease of applicability to themerchandiser while also increasing selection & enhancing themerchandise display in a neat and organized manner.

2. Exterior design

They have an attractive Signboard which is in red & blue color and made up of glass.

The sign board portrays good image of the store and is appropriate and goes well with the stores image.

The Outer Walls of the outlet is fully made up of glass. There are always two security guards at the door. The entry and exit is both in the same dimension and the doors

are made of glass.

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They have a small parking place inside the compound of their building where 3-4 cars can only be parked and there is one more security guard located there for opening the gate.

3. Merchandising planning

Reliance Digital follows Auto indent, it is a system which includes stock keeping units (SKU) and distribution centre (DC)

This system helps keeping appropriate record of inventory and makes easy availability of the required stock.

There are two types of product delivery a) Grab & go: It consist products like mobile, printers, laptops

etc. when a product is sold out then it is replaced by Distribution Centre. If the product is mobile then it is replaced directly from vendor.

b) Distribution centre delivery: All the heavy products like washing machines, refrigerators, air conditioners etc are replaced directly from Distribution centre within 7 days whichis located in BhiwandiThe required orders are replaced on every Saturday and Wednesday.

There is an opportunity loss if the following criteria’s are not fulfilled: a) When a customer asks for a product which is not available, b) When competitors offer is better than our offer, c) Product is in display but out of stock ,d) When it is not possible to deliver the product in any

particular area. Daily report is maintained on opportunity loss so as to improve

on achieving the targets. They set their targets every month and try to achieve those

targets on weekly and daily basis. They have briefing sessions twice in a day which helps motivate

employees towards the targeted goals and keep them focused.

4. Pricing

Price is generally based on competitor’s price.

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Psychological pricing: These kind of pricing are offered to showthat the price is low but actually it is same. For eg. 2999, 3999, 4999.

Combo product pricing: Two or three products are clubbed togetherand offered at a certain price.

Shelf edge label: Discount price and MRP both are labeled on the product.

Price guarantee: If a customer gets better price than offered in Reliance Digital within 15 days of purchasing, than the product can be returned to the store.

If certain products are not sold out within their age limit, thenReliance Digital offers them with low price or discount offers sothat the products move out.

There is also Bulk Out done when any product is not sold after giving discounts then extra discount is given on the already discounted product so as to move out that particular product.

5. Layout

Display and walking area: There is 1.5 tiles distance between display and walking area.

Storage area: It is based on second floor and there are two back stores.a) Back store 1: It contains portable products.b) Back store 2: It contains big products like home theatres,

washing machines etc

6. Promotions

Advertisement is done on newspapers like Times of India. Television advertisement is carried on Star news, Zee news,

Marathi news channel and most of the South Indian channels. There are various promotional activities throughout the year like

summer carnival, republic day offer, independence day offer, world cup offer etc

7. Personal selling

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The sales associates in reliance digital attend their customers and provide them with every help possible in selecting the product and finally purchasing it.

There are several sales associates in reliance digital and they carry their job efficiently.

Customers are generally of upper level and thus the expected service is provided by Reliance Digital.

8. Service

Reliance digital is the only authorized service centre of Apple. Reliance digital has its own service brand named as Res Q which

is opened 365 days. Pre service: Pre service is provided to the customer before they

purchase the product. A person from reliance digital visits to the customers place to assist in deciding the appropriate product. For eg. Air condition size to be purchased according to the room size and also the place to fit it.

Post service: After sale service is available.

9. Visual Merchandising

Visual merchandising is the activity of promoting the sale of goods, especially by their presentation in retail outlets.

Visual merchandising is one of the final stages in trying to set out astore in a way that customers will find attractive and appealing and it should follow and reflect the principles that underpin the store’s image. Visual merchandising is the way one displays 'goods for sale' in the most attractive manner with the end purpose of making a sale. "If it does not sell, it is not visual merchandising."

On every section there is a board written how to buy a particularproduct.

If a product is not sold out even after various discounts are offered than it is the duty of the V.M to locate the product in such a way that it is attracted to any customers.

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4.3 CROMA

The electronics retail giant from the house of TATA (Infiniti Retail),Croma is the nation's first large format specialist retail chain forconsumer electronics and durables. In 2014, it reaches to its seventhyear and is all set to open its 100th store soon in India. It has beenall strategy that has allowed Croma to survive the nascent market ofelectronic retail stores in India. The problems of eZone of FutureGroup have been visible to the country, where they have to closed manystores due to their loss-making. Surviving in such tough situationshas now made Croma one of the stalwarts in electronic retail stores.

Expansion Strategy1. Number of Stores: Croma, in 2013 planned to open 7 new stores in

2013, making their number of stores 100. Sticking to their plan,in the dawn of 2014, they are all set to open their 100th storefor which they are preparing their customers through variousinitiatives (discussed later). In the year 2010, Croma planned toopen 4 stores each month, but with the boom in internet space,they had to cut down their plans and had to invest in onlinespace. They plan to add another 7 to 8 stores by the end offiscal year 2014.

2. Croma Zip stores and Croma in hypermarkets: These are compactstand-alone shops of Croma that are lesser in dimensions thanCroma megastores. This move enables Croma to expand quickly withlesser required space. Croma in hypermarkets are still biggerthan Croma Zip stores and yet smaller than Croma megastores.

3. Spread of Croma: In 2013, Croma had retail outlets in 16 citiesacross the country. As mentioned, they plan to open seven newstores in Chennai, Hyderabad, Mumbai and Delhi. Still, throughtheir online venture, Croma is touching lives in 293 cities andtowns. They continue to reach people through their online format.

4. Revenue and Profits: Croma (retail brand name under Infiniti),expects its turnover to grow by 30% in FY 2013 over its last FY.Croma in FY 2012, reported a turnover of ₹ 2500 crore. It expectsit to become ₹ 3300 crore this FY. Besides, from the private

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labels, Croma expects to generate revenue of ₹ 250 crore in FY2013.

This growth rate with this number of stores is attributed to itsexpansion in the e-tailing arena through cromaretail.com.

Retail Marketing Strategy of CromaTarget Audience: Croma Megastores are targeted to all the people whohave or don’t have knowledge of electronic goods but are looking tobuy new items, know about them or want to compare prices. Croma zipstores, on the other hand attract the young and the restless generationof gadget-lovers. Thus, even the design and format of these stores aredifferent from Croma megastores. Cromaretail.com, the e-tailing websiteof Croma is for the people who want to buy new gadgets or compareprices but either don’t have Croma in their town or don’t want tovisit the store.

Locations and format of Croma: Croma megastores and Croma zip stores arestand-alone retail stores which are not a part of any other store.Croma also is present in other hypermarkets to boost their revenuessuch as inside Star Bazaar. They are present with the same name butwith different look.

Merchandising Plan of Croma: Croma has over 6000 products across eightcategories that include Phones, Camera, Computers, Entertainment, HomeAppliance, Kitchen Appliance, Gaming and Accessories.

Figure 2: Global brand offerings of Croma

Besides offering global brands, Croma offers private label brandsunder the name Croma Life Accessories. The following image shows theCroma offerings under its private label:

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Figure 3: Private label offerings of Croma

Pricing Strategy of Croma: Being a retailer that has its own privatelabel, Croma has to follow different strategies for different labels.

a) For all labels: For all labels Croma follows differentstrategies. Its basic strategy is value pricing. They offer bestproducts with most reasonable prices; they offer lowest downpayments and easy EMIs and even warranties and guaranties as toone’s likings. To boost sales, sometimes Croma followspromotional pricing strategy such as time pricing and pricebundling. Price bundling is often used in this regard becausebundling is common practice in electronic items. They even followHi-Lo Pricing Strategy, where at times they introduce a productat a high price but later they reduce the prices or even offerdiscounts during off-seasons.

b) Private Labels: The private labels of Croma are outsourced fromWoolworths that allows Croma to have private labelled products atpar with international standards. But the strategy of Croma is tohave aggressive penetration pricing. This means, Cromadeliberately lowers the prices of its private labels by 10-15%while offering products at par with international brands. To havea fair competition, Croma follows a simple strategy that, salesfrom private labels should not exceed 25% of overall sales.

Advertising and Promotion plan: Like other retailers, Croma followsboth above the line and below the line promotion strategies.

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a) Above the Line: For above the line advertising, Croma uses TVs,radios and even print media. There is a need here to speciallymention online presence of Croma.

Online presence of Croma: Croma through its websitecromaretail.com reaches about 293 cities and towns. This isa huge achievement in terms of a retailer with only 100stores and that to in selected areas. This, along withstrong promotion through social media such as Facebook,Twitter and Youtube, Croma is one of the few retailers thathave strong online presence. Today, on Facebook it has about97193 likes and 1957 are talking about this, on Twitter ithas 11040 followers and 651 subscribers in Youtube.

b) Below the Line: Croma recently tied up with State Bank of Indiato introduce Tata Croma Credit Cards that are in Gold andPlatinum variants and are available to all the customers in everyCromoa stores. This is a sort of loyalty program by Croma.Besides this Croma offers discounts, gifts, prizes to be wonthrough competitions et cetera to its customers.

Customer Services to be provided: TATA Croma provides customerservices to its customer through various means. The customer servicenot only means servicing customers post sales but also at the point ofsales. The point of sales is not only Croma megastores, Croma zipstores and Croma stores in hypermarket but also at the online stores.Here as part of the analysis, we will present two cases:

a) At the stores: Croma has a very positive feedback from thecustomers who visit their physical stores at various places. Theknowledge of the staff members, the technology used to help thecustomers and the hospitality of staff members have impressed thecustomers. The modern retailers like Croma are using technologyas a means to reach out to the customers. Real time order taking,real time price updation and real time showcasing of the productsthat the customers want are the benefits of using technology.Here is a positive review taken from Business-Standards:“Sarah Jones, a 23-year-old professor staying in Mumbai, was pleasantly surprised whenshe recently went to shop for a mobile phone. As she visited the Croma store lastweekend, at Phoenix Mill in Mumbai, instead of browsing through the entire floor to find

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the phone she needs, a sales representative handed her a Samsung tablet for browsingthe products available at the store.‘But the best part was that I did not have to stand in the long queue to make thepayment. The Samsung tablet had an attached hand-held device that allowed me toswipe my card and make instant payment. I was out of the store in 30 minutes. That tooon a weekend,’ said Jones.”

b) Online Stores: E-tailing in electronics industry is a difficulttask. People generally don’t want to buy durables through e-tailing websites. But the trust of TATA made cromaretail.com oneof the successful e-tailing websites. Still there are somegrievances regarding the delay in the delivery of products afterordering. The lack of tracking the order is another negative oftheir online services. The following grievances taken fromindianconsumercomplaints.in shows the problems that Croma onlineservice users are facing: “I have purchased Nikon S4300 Compact Camera from http://www.cromaretail.com on10/10/2012. As per company policy product should shipped within 2 days.But product isdispatched on 16/10/2012 .I am taking followup from company regarding delivery. Butnow Courier Company(Blue Dart ) says that product will delivered on 19/10/2012. Cromaretail doesnt have any tracking system for their Delivery vendor.So customer have onlyone option wait and watch, because customer is fool who purchased product fromthem.The value of costumer is Zero in Croma retail company.Once they sold a productno relationship for customer. I expect... Nothing.” (Sic).Still Croma is one of the few retailers in electronic industryarena who have taken a pain to have a website to provide theirservices.

c) After Sales Services: Croma reaches customers through variousmeans. One can reach Croma customer service through post, phones,mails and the website as well. The details of the same is shownin the following image:

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Figure 4: Postal, phone and e-mail means of customer services

Through website, Croma offers the services in following way:

Figure 5: Croma reaching through its website

Store Atmospherics:

a) Croma Megastores: Croma megastores are 12,000 sq ft in size.These megastores have a neutral display with a marquee showingthe name of the store as Croma and the other details such as “aTATA enterprise”. It is the policy of Croma to remain neutral toall the brands that it has in its collection.

b) Croma Zip stores: Croma zip stores are generally 3000 sq ft insize. These stores, as mentioned earlier are meant only for theyouth customers who have good knowledge about the items they are

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POSTAL

E-mail ID

Toll-Free and

buying. These stores might have some other displays based on thescheme going on in the store.

c) Croma in Hypermarkets: In hypermarkets, Croma has entered withstores of the size of about 4,000 sq ft to 8,000 sq ft. Thesemid-sized Croma stores are launched so as to add to the revenueof the Infiniti.

4.4 Company Owned Stores/ Exclusive StoresA retail store associated with and usually owned and operated by an industrial company. A store usually extending limited amounts of credit from which employees of a company may and are sometimes required to buy their groceries and other merchandise.

For example: Sony Centre, Godrej, Panasonic, LG, Samsung etc

The case in point taken is Sony Centre.

SONY Centre

Sony Centre is a chain of stores in Europe which sell electrical goodsmade by manufacturer Sony. Sony has built a favorable brand image in India, where it continues to see remarkable growth, and is working to enhance its presence.

Expansion Strategy

1. Number of Stores : In India, Sony has its footprint across all major towns and cities in the country through a distribution network of over 10,400 dealers and distributors, 270 exclusive Sony outlets and 23 direct branch locations. Moreover, Sony's 19 sales branches cover a total of 450 cities. It has established 30warehouses across the country to manage its supply chain effectively.

2. Spread of Sony Centre: Sony is building on operational strengths in an assertive bid to attract middle-income consumers. As India is geographically large, it is critical to operate in the most suitable way that fits each city and region. Sony classifies the Indian market into three categories ranging from small cities to large metropolitan areas. Their 19 sales branches cover a total

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of 450 cities. To ensure their customers can use Sony products without concern, they have also developed a network of 250 service centers across the country. As transport can be difficultdue to the state of many roads and taxes on interstate sales, they have established 30 warehouses nationwide, ensuring their ability to manage their supply chain effectively. Building on this robust operational structure, there are accelerating effortsto expand our marketing activities beyond their traditional customer base—India’s 40 million affluent citizens—in an assertive bid to attract consumers in the country’s middle class,which is expected to see further growth in the years ahead.

3. Sales and Revenue : Consolidated sales and operating revenue in fiscal year 2012 rose 4.7% to 6800.0 billion yen, reflecting the positive impact of the consolidation of Sony Mobile Communications as a wholly-owned subsidiary, favorable foreign exchange rates and the above mentioned increase in financial services revenue. Combined, these factors more than offset the negative impact of decreased unit sales of many key electronic products, as well as diversified business.

Retail Marketing Strategy

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1. Target Audience : Sony Centre are targeted to all the people who have or don’t have knowledge of electronic goods but are looking to buy new items, know about them or want to compare prices. It organizes it stores in a well planned manner which is distinct from the franchisee and other retail stores. The layout is not cluttered hence gives people an ease to navigatethrough the various products.

2. Locations and format of Sony Centre : Sony Centre has stand-alone retail stores which are not a part of any other store. It is present in the busy markets and malls where it can get maximum footfall. It has its website sonycentre.com where consumers can search for the products online.

3. Mechandising plan of Sony Centre: Sony believes in providing complete solutions to lifestyle needs, like creating an integrated entertainment experience with products that work together perfectly; and making sure that image capture and video is supported by the right management, storage and display devices. It has a range of products from home entertainment, superior sound, cameras, laptops and mobile phones etc.

4. Pricing Strategy of Sony Centre: To boost sales, sometimes Sony Centre follows promotional pricing strategy such as time pricing and price bundling. Price bundling is often used in this regard because bundling iscommon practice in electronic items. They even follow Hi-Lo Pricing Strategy, where at times they introduce a product at a high price but later they reduce the prices or even offer discounts during off-seasons. But the strategy of Sony Centre is to have aggressive penetrationpricing. This means, Sony Centre deliberately lowers the prices of its private labels by 10-15% while offering products at par with international brands. To have a faircompetition, Sony Centre follows a simple strategy that,

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sales from private labels should not exceed 25% of overall sales.

Advertising and Promotional plan: Like other retailers, Sonyfollows both above the line. i. Above the Line: For above the line advertising, Sony Centre

uses radios and print media. There is a need here tospecially mention online presence of Sony Centre.Online presence of Sony centre: Sony through its websitesonycentre.com comes up with various offers. It reachesabout 300+ cities and towns. This, along with strongpromotion through social media such as Facebook, Twitter andYoutube, Sony is one of the few retailers that have strongonline presence. Today, on Facebook it has about 1.8 millionlikes and 16,542 are talking about this, on Twitter it hasnearly 2 million followers.

Customer Services to be provided

Sony Centre provides customer services to its customer through variousmeans. The customer service not only means servicing customers post sales but also at the point of sales. Here as part of the analysis, wewill present two cases:

a) A very personal service: At your local Sony Centre, helpful displays and interactive demonstrations show you how different products combine to become integrated entertainment, computing and imaging solutions. And expert staff members are always on hand to offer expert advice and solutions.But if one prefers an even more personal one-to-one experience, one just needs to book a Sony Centre product specialist to give you a customized guided tour of the options available. Keep an eye out for in-store demonstrations and product workshops at your nearest Sony Centre too.

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b) Flexible ways to pay: They want to make your Sony Store experience as convenient and hassle-free as possible. So onecan choose from a number of flexible payment options in store. Sony Centre accepts VISA, MasterCard, American Express and Diner's Club as well as eftpos payments, chequesand cash.

c) After-sales service: The Sony Centre experience doesn't end as one leaves the store. Sony Centre 24-7 assist* covers alloperational issues that relate to standard operations of PCs bought and includes 24 hour, 7 day over-the-phone support.

And if one has any any questions or queries about operating their products, they can simply drop into Sony Centre and ask any member of the team. They'll do their best to help the customers, or refer them on to a specific product specialist.

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Product/ ServicesHigh

PricesHigh

PricesLow

Products/ServicesLow

4.5 Perceptual Positioning

The map showing the positioning of various retail stores which showed their presence in modern retail. It also showed the positioning of various company- owned stores from a customer point of perception.

Here we can see that the consumers perceive modern retail stores as aone point of purchase of wide variety where they can compare the

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quality, features and prices of other competitive products undercommon roof.

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5. Recommendations

1) In order to be build capabilities to compete with globalretailers domestic players should players should currently focuson 

Collaborating with foreign players

o Form joint ventures with global majorso Leverage their expertise to improve the effectiveness of

logistics

2) Retailers should focus on following aspects to counter thechallenge of shortage of talented human resources.

1. Develop Talent Pool2. Targeting fresh graduates and projecting retail as lucrative

career option for them3. Career growth of employees: In-house training to build

employee capabilities4. Retention of employees

3) Success of retail operations depends on the penetration of theirdistribution network. Retailers should therefore focus onfollowing aspects to increase the reach of the distributionnetwork

1. Collaboration with 3rd party logistics service providers2. Increase the presence in Tier 2,3 cities and rural areas3. Increase the investment in IT technology to manage large

distribution networks

4) Retailers should focus on following aspects to attract Indiancustomers would be one of the most demanding customers in theworld.

1. Expanding after sales service to both urban and rural areas2. Increasing the availability of private label brands in rural

market3. Extending credit facilities

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5) With middle class associating social status with the consumer,durables possessed by them retailers should concentrate oncatering to these customers by providing innovative andintegrated home solutions. They could concentrate on thefollowing aspects to cater to these markets

1. Develop relationships with innovative manufacturingcompanies

2. Increasing the integration with suppliers to developcustomized products

6. References

India Retail report 2013 www.ibef.org www.ezoneonline.in www.cromaretail.com www.reliancedigital.in www.economictimes.com www.sony.co.in/

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