TERM PAPER OF RETAIL MANAGEMENTCourse code:-MGT533 Topic:- Retail store----Furniture & Furnishing. Submitted to:Mr. Rajbir Singh Sethi Deptt of Mgt LSB Submitted by:Vikas Kumar Reg no;- 10811383 Sec:- RR1807 Group:-(BG1) ACKNOWLEDGEMENT This term paper is the valuable contribution of many persons to whom, I remain in debt. I am especially grateful to Mr Rajbir Singh Sethi for his consistent guidance and constructive criticism. My special thanks also to lovely professional university for providing the term paper . . This term paper bears the imprint of many people therefore I would like to thank all of them who gave their valuable times as well as information regarding my term paper . Without their immense help the term paper would not have proven meaningful. VIKAS KUMAR INTRODUCTION TO RETAIL INDUSTRY IN INDIA Retailing involves all activities incidental to selling to ultimate consumer for their personnel family and household use. It does this by organizing their availability on a relatively large scale and supplying them to a customers on a relatively small scale. Retailer is any person/organization instrumental in reaching the goods or merchandise or services to the end users .Retailer is a must and cannot be eliminated. The Indian retailing industry is becoming intensely competitive, as more and more payers are Vying for the same set of customers. The major retail players are Pantaloon Retail, Shoppers Stop, Reliance, etc.., Retailing is one of the biggest sectors and it is witnessing revolution in India. The new entrant in retailing in India signifies the beginning of retail revolution. India's retail market is expected to grow tremendously in next few years. According to AT Kearney, The Windows of Opportunity shows that Retailing in India was at opening stage in 1995 and now it is in peaking stage in 2006. India's retail market is expected to grow tremendously in next few years. India shows US$330 billion retail market that is expected to grow 10% a year, with modern retailing just beginning. India ranks first in 2005. In fact, in 2005 and 2006, India is the most compelling opportunity for retailers, because now India is in peaking stage. SHARE OF ORGANISED RETAIL 1999 2002 2005 Total Retail (in billion INR) 7000 8250 10000 Organized Retail (in billion INR) 50 150 350 % Share of Organized Retail 0.70% 1.80% 3.5% The organized sector is expected to grow faster than GDP growth in next few years driven by favorable demographic patterns, changing lifestyles, and strong income growth. This organized retail sector mix includes supermarkets, hypermarkets discounted stores and specialty stores, departmental stores. For example, Spencer network has 69 stores, which includes seven Spencer hypermarkets, three Spencer super markets and 49 Spencer Dailys. Now the company is planning to open 20 stores in 10 cities in six months. The top 10 retailers account only for 2% of total market, today modern retailing is expected to enter a boom phase, which has major players and these players might capture 10% of total market, within next five years. The retail sales in India for future are shown below (data from 2005-2008 is based on estimates): PRESENT INDIAN SCENARIO * Unorganized market: Rs. 583,000 crores * Organized market: Rs.5, 000 crores * 5X growth in organized retailing between 2000-2005 * Over 4,000 new modern Outlets in the last 3 years * Over 5,000,000 sq. ft. of mall space under development * The top 3 modern retailers control over 750,000 sq. ft. of retail space * Over 400,000 shoppers walk through their doors every week INTRODUCTION TO INDIAN FURNITURE INDUSTRY: The Indian furniture market is estimated to be worth Rs 350,000 million. Within this, the wooden furniture accounts for Rs 60,000 million. Of this the imported furniture market is currently worth Rs 6000 million and is growing at 50 - 60% each year. The furniture sector in India only makes a marginal contribution to the GDP, representing about 0.5 per cent of the total GDP. The furniture and fixtures industry encompasses that manufacture household, office, store, public building, and restaurant furniture and fixtures. The Census to track the movement of goods and services within the economy. FURNITURE RETAIL STORE RETAIL FORMAT:HYPER MARKET Retail format of Furniture store Hyper market retail stores:- this retail store offering multiple branded products belonging to the different category product . Typical size sq feet: 80,000-220,000. Interior:- combination of light purple, and white color Varity of product :• • • • • Household Furniture Office Furniture Public Building and Related Furniture Partitions, Shelving, Lockers, and Office and Store Fixtures Miscellaneous Furniture and Fixtures. The household furniture manufacturing industry consists of producers of wood furniture accounting for 42 percent of household furniture industry shipments in upholstered furniture accounting for 30 percent of shipments; metal furniture accounting for ten percent of shipments; and miscellaneous furniture accounting for four percent of shipments. This industry is comprised of the production of many different types of products including wood household furniture, metal household furniture, mattresses, machine cabinets, shelving, and lockers. Because the items produced vary greatly in design depending upon the type of material used, style, price, and final use, the different types of machinery used in the various phases of production can reach into the hundreds or even thousands. This diversity of products provides a challenge for most manufacturers. Production lines for assembling furniture are costly, and because of this most manufacturers do not supply an exceptionally large range of items. To combat this problem, many firms specialize their production processes, allowing facilities to fill a specific niche in the market while still retaining flexibility in their manufacturing area. Manufacturers may specialize depending on the product manufactured, the product group, or the production process. Specialization has also allowed manufacturers to focus on quality by more carefully monitoring the entire production process, from raw material to finished product. Because covers such a diverse group of products. PRODUCTS AND SERVICES OFFERED OUR COLLECTION: • • • • • • Wood Household Furniture, Wood Household Furniture, Wood Television, Radio, Phonograph, and Sewing Machine Cabinets Wood Office Furniture Public Building and Related Furniture Wood Office and Store Fixtures, Partitions,Shelving, and Lockers. MULTICHANNEL DECISSION: • • • STORE CATALOG WEBSITE STORE CHANNEL: • • • • Browsing Touching and feeling products Personal service Cash payment WEBSITE CHANNEL: • • • Broder selection More information to evaluate merchandise Personalization Today, online consumers think nothing of shopping across a retailer’s stores, Web site and catalog. As a consequence, online product research is actually driving more land-store sales than online sales. The Multi-Channel Retailing decision consider the factors that are contributing to make online product research a vital driver of offline retail sales. Any retailer who isn’t using the online channel to promote offline sales—as well as online sales—is missing a huge opportunity. In 2007, eMarketer estimated that store sales influenced by online research totaled $471 billion. Comparatively, retail e-commerce sales were $136 billion. Another way to look at it is that for every $1 in online sales, the Internet influenced $3.45 of store sales. From 2007 to 2009 , Webinfluenced store sales are forecast to grow at a 19% average annual rate, compared with a 12% rate for retail e-commerce. Multi channel decision means how to promote the product through different channels. It may be real or virtual. In this case of Arena we should go for Store Format and by Internet.In this due course of technology we should definite go for e-marketing. E-marketing provide immense market potential for Arena as the reach in increased through the means of Internet. One should easily go through the product and features as well as price. The main thingh is that the consumer get virtual demonstration of the product through easy accessibility, the best use of the new new technology through which we can increase our market share by providing quality product to the perspective consumer. We should go for good web designing of the website which is user friendly and helps in easy accessibility for the demonstration of different product. CONSUMER BUYING BEHAVIOR Consumer behavior refers to the mental and emotional process and the observable behavior of consumers during searching, purchasing and post consumption of a product or service. Consumer behavior involves study of how people buy, what they buy, when they buy and why they buy. It blends the elements from psychology, sociology, sociopsychology, anthropology and economics. It also tries to assess the influence on the consumer from groups such as family, friends, reference groups and society in general. Buyer behavior has two aspects: the final purchase activity visible to any observer and the detailed or short decision process that may involve the interplay of a number of complex variables not visible to anyone. Factors Affecting Consumer Buying Behavior Consumer buying behavior is influenced by the major three factors: 1. Social Factors 2. Psychological Factors 3. Personal Factors. A. Social Factors Social factors refer to forces that other people exert and which affect consumers’ purchase behavior. These social factors can include culture and subculture, roles and family, social class and reference groups. Example: By taking into consideration Reference group, these can influence/ affect the consumer buying behavior. Reference group refers to a group with whom an individual identifies herself/ himself and the extent to which that person assumes many values, attitudes or behavior of group members. Reference groups can be family, school or college, work group, club membership, citizenship etc. Reference groups serve as one of the primary agents of consumer socialization and learning and can be influential enough to induce not only socially acceptable consumer behavior but also socially unacceptable and even personal destructive behavior. For example, if fresher student joins a college / university, he/she will meet different people and form a group, in that group there can be behavior patterns of values, for example style of clothing, handsets which most of group member prefer or even destructive behavior such as excessive consumption of alcohol, use of harmful and addictive drugs etc. So, according to how an individual references him / herself to that particular reference group, this will influence and change his/her buying behavior. B. Psychological Factors These are internal to an individual and generate forces within that influence her/his purchase behavior. The major forces include motives, perception, learning, attitude and personality. Example: Attitude, is an enduring organization of motivational, emotional, perceptual and cognitive processes with respect to some aspect of our environment. Consumer form attitude towards a brand on the basis of their beliefs about the brand. For example, consumers of Sony products might have the belief that the products offered by Sony are durable; this will influence those customers to buy Sony products due to this attitude towards the brand. C. Personal Factors These include those aspects that are unique to a person and influence purchase behavior. These factors include demographic factors, lifestyle, and situational factors. Example: Lifestyle is an indicator of how people live and express themselves on the basis of their activities, interests, and opinions. Lifestyle dimension provide a broader view of people about how they spend their time the importance of things in their surroundings and their beliefs on broad issues associated with life and living and themselves. This is influenced by demographic factors and personality. E.g. A CEO or Manager is likely to buy more formal clothes, ties and shoes or PDAs and less informal clothes like jeans as compared to a Mechanic or Civil engineer. So according to their lifestyle and profession, the buying behavior of people differ from one another. FACTORS AFFECTING THE PURCHASE BEHAVIOUR OF CONSUMER THROUGH SURVEY The consumer segment chosen for this study is Males in the age group of 25 to 40 years, working professional and married. The internal factors that influence the purchase decision of these Furniture Product:1. Need for the Furniture Product (whether need is physiological or esteem) 2. Personality of the buyer: whether he is extrovert or introvert, open to experiment, etc. 3. Level of Involvement of the buyer with the Furniture Product. 4. Motivation towards the furniture . 5. Emotions towards the furniture: which dimension will it satisfy amongst the pleasure, dominance and arousal. 6. Brand personality as perceived by the buyer and how he relates it to his own personality. 7. Attitude of the buyer towards the Product or the brand. 8. Self-concept of the buyer: his thoughts and feelings towards the Products/brands having reference to himself as an object. 9. Loyalty towards a particular brand. 10. Positioning of a particular brand in the mind of the buyer in the mind of buyer RETAIL FORMAT:The retail format for furniture retail chain would be in such a format which can be easily accessible and approachable to the customer. We will launch a website for our customers to make it a ease to find and chose the choice of product and many more JUST IN ONE CLICK.this wiil be a competitive edge to us too.our retailing format will be according to the analyzed Indian market scenario .we will make these as benchmarks and work accordingly. • • Launch online website. Any furniture product in one click. Marketing online and penetration strategy. Push strategy at starting. • • RETAIL MARKETING STRATEGY:- A retail strategy is a statement identifying retailer’s target market, the retail format to meet the need and requirements of the customers of target market and finally to build a sustainable competitive advantage. PENETRATION STRATEGY PUSH STRATEGY We are providing the furniture of good at relatively lower prices than the other local market players so as to build a strong competitive advantage. There are services provided to customers along with the products so as to gain their loyalty such as good dedicated staff to handle their queries. there queries will be solved in just one click at website. Financial Strategy: The cost of establishing a new store 50 Lakh when considering: • • • • • Building acquisition, layout and design Human resources Establishing local supplier links Advertising and promotion of the new location (catalogues are expensive) Stocking the new store Location strategy of retail store; You might have heard people say that location is the most important thing for a business. Then, the next most important is ... location, and so on. For many businesses, getting the right location can make the difference between success and failure. Can think of a shop or restaurant near where you live that has closed down, maybe because it was in the wrong place? OUR STORE LOCATION G.T. ROAD, JALANDHAR (PUNJAB) Why I choosing this location:There are lots of different reasons why I will choose this location . my retail store location will be based on these reasons . Here are some reasons why I will choose this location Customers • • • This retail store will be there to be able to reach its customers. For a retail shop, you might want potential customers to be walking past all the time. An Internet business might be able to locate almost anywhere! Language • As businesses become more global, I need people who can speak the same language as my customers. This is one reason why, for example, India has been successful in attracting call centres and software development from the UK and North America. Image • • This retail store need to be in a location that suits their image. Remember, though, high class locations tend to have high rents! Competitors • This retail store will be where , there is less competition . Labour • • • • • Workers must be available locally, or must be willing to travel to work at the business. These workers must have the right skills. If there is high unemployment locally, I might find it easier to recruit workers, and maybe I won’t have to pay them as much as I would elsewhere. But if there is high unemployment, local people may not have as much to spend with my business. Often a location becomes a centre for related industries - Staffordshire for potteries, Sheffield for steel, and the local people have particular skills. Land/buildings • The right amount and type of land and buildings must be available. • • For some businesses, you need a lot of space - perhaps your business is noisy or creates fumes and needs to be well away from where people live. The ratail store need to be near their customers, or to their suppliers. Transport and communications links • • • There workers need to be able to travel to work. I might need to be able to transport materials and products in and out of my business. Telephone, postal and Internet services might be better in cities than in the countryside. Human Resource: It is a part and partial of our store.The HR manager will lead to conduct a lot of analysis,feedback and performance oriented works.because we are starting this store at a lower level so there will not be too much need of HR but HR professional will be needed for maintaining the internal operations of the staff and many more.the staff will be• • • • • • IT professional-2 Operations and supply managers-4 Guard and peons-3 Staff-6 Clerks-2 Accountant-2 SUPPLY CHAIN: supply chain management is the delivery of economic value to customer through the management of the flow of physical goods and associated information from vendors to customers.we will have PULL SUPPLY CHAIN.a supply chain in which orders of Furniture will be generated at the store level on the basis of sales data. The supply of Furniture will be from different Furniture markets situated in PUNJAB and in different parts of North Zone if India.we are preferring only North Zone of India because if we cover whole India it will be very costly for us,first we will grab N Indian market then accordingly will have expantion plans. The supply of furniture will be from: • • Local Furniture dealers From professional Furniture markets. PRICING, PROMOTION AND COMMUNICATION-MIX DECISIONS:Pricing: LOW PRICING: This strategy emphasis the continuity of retail prices at a level somewhere between the regular non sale price and deep-discount sale price of high low retailers. I have choosen the LP because • • • It assures customers of lower prices. Reduces advertising and operating expenses. Reduces stockouts and improves inventory management. Promotion decision:As a part of differentiating our product offerings from that of other major lifestyle stores we conducting many events and promotion campaigns to combine entertainment with shopping. These included advertisement through add on T.v, newspaper, through internet websites. As internet also becomes one of the main source in retailing so we promote our products through internet also. Communication mix:As Consumers are loudly demanding to be able to access relevant information through the channel of their choice, which means that the more channels an organization offers their customers, the better response they will get. So for this we contact consumers is by a combination of channels such as a piece of direct mail, Television home shopping, skill full employees, mobile phone or with a choice of channels for the response mechanism, or an SMS with an online voucher code, all these possibilities help hone in on our understanding of what makes the customer tick. CUSTOMER RELATIONSHIP MANAGEMENT AND SERVICES:- CRM (customer relationship management) is a business philosophy and set of strategies, programs and systems that focuses on identifying and building loyalty with a retailer’s most valued customers. There are four important characteristics that CRM system may offer you: 1. First it will track and report every interaction with a customer, describing the customer's purchase, interest or demand. It will report also the changing needs of the customer and the way your business reacts effectively to them. 2. Furthermore, the CRM will be a universal instrument for collecting data about the service requests, order entry, satisfaction and billing. 3. Third, the CRM will be able to measure the performance of the business on the basis of internal benchmarks. 4. Last the CRM will facilitate the working processes by emphasizing on the positive and exclude the negative practices in your customer relations center. As all we know that customer is all in all in any kind of business. So our main focus is also to satisfy the customer very well, so that if customers want to purchase again he will prefer to come only in our store. For this we develop CRM programs on time to time basis which will help us to develop good customer and then converting these customers into high ltv (life time value) customers. We give special services to our LTV customers also like: 1. We give credit purchase facility to our customer. 2. We give special discounts or gifts on time to time to our LTV customer. 3. We also provide home service to our customer. CONSUMER BEHAVIOUR AND PRESENT MARKET SCENARIO: The Effect of the Internet in the Furniture Retail Market There are many new challenges for small businesses in the 21st century, especially the extensive use of Internet. It leads that the competition of small businesses, such as the Furniture retail market, is fierce and getting fiercer. How the internet affect on the Furniture retail market 1. Introduction About ten years ago, dealing with the retail trade was wonderfully simple for publishers. They had their own dedicated retail outlets that actually in the main sold only Furniture. Meanwhile for buyers there were only two ways to buy a Furniture, either order it via a catalogue or Furniture club or, more commonly, simply go to a shop, pay money and take it home in a bag. Now following an explosion in the use of the internet, the buyers and sellers have been affected by this expansion. “The Internet has changed the way your customers shop, and that means you must change the way you market your store.” 2. The effect of the Internet Nowadays, customer can visit the onlin furniture, browse through the shop’s collection, make a selection, and pay for the furniture product online. The furniture may be delivered physically or, in some cases, downloaded onto the buyer’s computer. And as many of the orders are international, this raises challenging issues for existing furniture retail market. Reducing costs The Internet market can reduce costs, including fixed costs and variable costs, for both buyers and sellers. To buyers, these costs include the opportunity cost of time spent searching, as well as associated expenditures such as driving, telephone calls, computer fees and magazine subscriptions. Similarly, sellers face costs in identifying qualified buyers for their products, such as market research, advertising, and sales calls. For instance, quite a few internet-based technologies lower buyer search costs. Many sites help buyers identify appropriate seller offerings. However, on-line agents help buyers identify the most desirable prices and product offerings without requiring them to take specific action. Internet can also lower the cost to buyers of acquiring information about the reputations of market participants. Such reputations may be provided as part of the marketplace. The Internet lowers seller search costs as well, by allowing sellers to communicate product information cost effectively to potential buyers, and by offering sellers new ways to reach buyers through targeted advertising and one-on-one marketing. By reducing costs on both sides of the market, it appears likely that buyers will be able to consider more product offerings and will identify and purchase products that better match their needs, with a resulting increase in economic efficiency. But the reduction in costs combined with new capabilities of information technology can set off more complex market dynamics too. HOW TO GET EXTRA CUSTOMERS FOR YOUR RETAIL BUSINESS Every business needs to have customers for the survival of the business as well as for the prosperity of the business. In retail business also customer plays a key role to improve the business and for the frequent sales. Always there will be an alternative supplier for the same product in the same center, same city or even on the internet. The success of a retail business lies in the satisfaction of the customer and this success will help you in getting the customer again and again. Customer satisfaction is important because a satisfied customer recommend the business to other as they have confidence in the retailer. So retailer who is focused only on price will distract the customer from the business as the customers finds that there is nothing to match between their expectations and what actually happens. Here are the seven ways to attract customers to your retail business: (1) Know Your Customer: In a retail business personalized service with a smile is more important. You have to create a lasting impression in the mind of each customer. Firstly create a friendly atmosphere by calling them by name because people like to be known. Secondly remember the things purchased by the customers generally and show new items of things they are interested in. The care given by the retailer will definitely bring the customers back to the same shop. Finally you can boost up the enjoyment of positive shopping experience of the customer with a warm smile. (2) Follow the Trends: You have to follow the trends to keep up-to-date. If you know the industry well, you will gain more customers because you can give what they want. So for accomplishing the goal, you must be committed to learn the trends that are changing daily. (3) Convenience: Accessibility of the store is also important to create a positive shopping experience. The customer service, payment options, trading hours, home delivery or product assembly are all plays a role in customer satisfaction. Every one want to save their time also i.e. nobody wants to waste their time in shopping. Customers definitely go for those shops which have respect on their time and those which offer them most convenient shopping. (4) Innovative Ideas and Recommendations: Most the customers are interested in the use of the products but some retailers have a wide range of products and do not have any knowledge about the products displayed in the shop. In this age of technology most of the customers know about the product they going to buy. Such customers expect the sales people to know more about the product and assess the information they have taken from the internet and also be able to review the claims of the products. Retailers who provides innovative or interesting ideas, explains the benefits of the products they have and show how these product can compliment each other will definitely win extra customers than the competitors. (5) Performance as Promised: Every customer are expecting from the retailer to do the expected and then to do the unexpected. Basic expectations of a customer should be satisfied and should meet the promises that have been made by the retailer. Retailer can give the unexpected as a bonus of his appreciation of the sale. (6) Value of the product over price: Customers always need a fair price for the products and the use of the products should match the price. If the retailer gives a product at a cheap price won’t bring back the customer who had a bad experience with the product of previous sale. Quality of the product always provides customer satisfaction but price necessarily not. (7) Post sales Relationship: Customer satisfaction can be attained by guarantees and warranties. Delivery or installation of a product in a good condition also gives a positive view toward the retailer. The relationship with the customer can be continued through the notification of new product or add-ons. You can also check the performance of the purchased products through follow up calls. References: http://multichannelmerchant.com/retailchannel/ Retailing Managent Book by LEVY Marketing Management Book by KOTTELER, KELLER & JHA