A project report on identifying the opportunity for apparel retailing in south east bangalore


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A project report on identifying the opportunity for apparel retailing in south east bangalore

  3. 3. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” EXECUTIVE SUMMARYThe project title: “Identifying the opportunity for apparel retailing in South EastBangalore”.The primary objectives were to identify whether the specialty retail stores arerequired in suburban areas – South East Bangalore and to identify the customerattitude towards apparel shopping and the customer buying behavior. The secondaryobjectives to identify the real estate requirement for setting up such stores.The sample taken up was 200 and places covered for the study is South EastBangalore, which includes areas like Whitefield, Kormangala, Marathalli,Bannerghatta Road, Electronic city, HSR Layout, Hosur etc. These areas have retailoutlets and shopping malls – Forum, Globus, factory outlets etc.The research covered call centre professionals, fresh graduates, middle and seniorlevel executives and housewives.The outcome of the research says that there is a need for such retail outlets in SouthEast Bangalore and the retail sector opening up for foreign investment will lead tomany challenges. The availability of space in terms of real estate is very challenging.In future, there is a huge opportunity for the developers to built more shopping mallsand maximize their revenues.Babasabpatilfreepptmba.com Page 3
  5. 5. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” INTRODUCTIONRetail is Indias largest industry, accounting for over 10% of the countrys GDP andaround 8% of the employment. The retailing industry in India is estimated atRs.930,000 crore (2003-04) is expected to grow at 5% p.a. Booming IT and BPOsectors with rising incomes, emergence of profitable retail models, availability ofretail space, increasing interest of foreign retailers in India, all have led to the growthof retail sector. In this growth where the preferences of the people are shifting, newretail outlets and shopping malls, coming up should be properly planned as the realestate retail space availability is low and calls for huge capital expenditure.The objective of the research is to study the market for branded apparels in SouthEast Bangalore, as it is one of the growing areas in Bangalore and lot more isexpected to happen in terms of real estate. Thus, helping Jones Lang LaSalle to caterto their clients effectively and maximise the returns.Babasabpatilfreepptmba.com Page 5
  6. 6. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” COMPANY PROFILEJones Lang LaSalle was formed by the 1999 merger of LaSalle Partners Incorporatedand Jones Lang Wootton. Building on Jones Lang Wootton’s international strengthsin Europe and Asia Pacific and LaSalle’s depth in North America and its position as aleader in real estate investment management services, Jones Lang LaSalle bringstogether two organizations with rich histories of client service.Jones Lang LaSalle is a leading global provider of integrated real estate and moneymanagement services. The Company serves clients locally, regionally and globallyfrom offices in more than 100 markets on five continents. Approximately 19,300employees stand ready to provide each client with comprehensive investment,transaction and management services.Company’s real estate money management business, LaSalle InvestmentManagement, is one of the worlds largest and most diverse, with approximately US$23 billion of assets under management.Jones Lang LaSalle Hotels, hotel and tourism specialty, is the first fully integratedglobal hotel real estate investment banking services group delivering advisory,transaction, financial and management services.Jones Lang LaSalle’s Research function lies at the heart of their business, trackingand interpreting the market forces and economic trends that affect the business tosupport the professionals as they provide the best-informed solutions to meet ourclients needs.Working from three geographic regions— America, Asia Pacific and Europe—theCompany delivers management, transaction and advisory services to real estateowners, occupiers and investors.Babasabpatilfreepptmba.com Page 6
  7. 7. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”The branches across the world support multinational clients with the assistance oftwo management functions: Global Client Services and Strategic Consulting.These groups coordinate client activities and ensure consistent, high-quality servicesacross geographic regions and among businesses by offering clients a single point ofcontact at Jones Lang LaSalle.Jones Lang LaSalle is the worlds only autonomous globally integrated real estateservices and money management firm. Wherever Jones Lang LaSalle’s employeesare located, they report to the same ownership and management structure. As a result,the Company can deliver a consistent and comprehensive range of fully integratedservices to the clients, wherever their needs arise. The ability to combinecomplementary services allows the Company to develop and implement real estatestrategies that meet increasingly complex business and financial needs.Jones Lang LaSalle’s presence:Babasabpatilfreepptmba.com Page 7
  8. 8. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” Organization Structure:Jones Lang LaSalle has a flat organization structure. However, each Country followsthe below organization format: National Director Associate Director Senior Manager Manager Senior Executive Analyst / ExecutiveBabasabpatilfreepptmba.com Page 8
  9. 9. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Services:The Global Client Services function assists clients who require multiple services, arelooking for coverage in more than one region, or need help determining whichservices will best serve their real estate objectives. Global Client Services alsoensures that operations worldwide work and interact at the consistently high levels.The Company believes that their investments in people, research, technology andknowledge not only helps them create and expand enduring client relationships, butalso enables them to continually strengthen their service capabilities. Whether theclient requires one real estate service in a single location or broader support across ageographical region or around the world, the Company has the people, resources andsystems in place to deliver effective solutions with consistently high levels of serviceand skill.AGENCY LEASINGFrom portfolios of smaller properties to the worlds most recognizable landmarkbuildings, the leasing specialists are dedicated to achieving the highest possible rentalrates while exceeding lease-up schedules.The leasing activities are characterized by: • Extensive experience with assets of all types and sizes. • Strong relationships with brokers in markets around the world. • Dedicated research professionals in all major markets. • Excellent track record for achieving top-of-market ratesBabasabpatilfreepptmba.com Page 9
  10. 10. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”CAPITAL MARKETSJones Lang LaSalles Capital Markets combines the in-depth local knowledge of over370 investment and corporate finance professionals based in 100 markets around theworld with the industry’s most respected property research capability.By integrating real estate expertise in structuring, arranging and managing financialtransactions, and harnessing both local and cross-border capital flows, whichmaximise returns from real estate holdings, and create valuable new opportunities toserve the needs of investors, owners and users of real estate.Capital Markets services include: • Investment Sales: A leader in the sale of single assets, portfolios and loan notes, the Company supports their clients at all stages of the sales cycle: from pre-offering due diligence, to marketing campaigns, negotiations and due- diligence support, and on through closing. • Investment Acquisitions: The Company represents clients at all stages of the acquisition process for single assets and portfolios, from research-based advice on sector and location, through opportunity sourcing, stock selection, due diligence and acquisition. • Corporate Finance: We offer clients a range of specialist real estate investment banking services that provide strategic advice and implementation on indirect vehicles. The Company is active in the areas of limited partnerships, equity raising, mergers and acquisitions, securitisation, joint ventures, structured finance, corporate disposals and real estate sales and financing transactions including sale/leasebacks, synthetic leases and other net lease structures. • Debt Capital Markets: Specialists in large, structured debt transactions, the Company represents clients in single-asset financing, development financing, loan note sales, portfolio financing and credit facility financing. • Equity Capital Markets: The Company is skilled at raising project and entity level equity, developing balanced financial structures with an optimal mix of flexibility, control and exit strategies.Babasabpatilfreepptmba.com Page 10
  11. 11. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” • Workouts and Advisory: The Company also conducts complex, confidential analyses supported by the industry expertise, research and local and global market knowledge to create effective solutions for owners, investors and creditors. • International Capital Group: Extends the reach and impact of existing local and regional Capital Market teams, delivering consistent, high-quality investment sales, acquisition, and financing services between the major markets and capital flows of all three regions – Europe, Americas and Asia-PacificCORPORATE FINANCEDecisions about whether to own, lease, sell or finance corporate properties—and howto structure such transactions—depend on many factors. The Company work’sclosely with owners and occupiers to explore available options and select thealternative that best addresses specific real estate and business objectives.Corporate Finance activities encompass:• Sale/Leasebacks: The Company advises corporations on structuring and executing sale/leasebacks, enabling them to re-deploy capital to core business priorities while continuing to occupy premises as long-term tenants with full control of property operations.• Synthetic Leases: The Company help corporations structure net-lease financings at low cost and with attractive ongoing purchase options.• Net Lease Financing: The Company assists in placing debt that is secured by the corporations credit and is typically priced at less expensive levels than typical mortgage debt.• Dispositions: The Company provides clients with comprehensive pre-contract property due diligence, marketing services and an aggressive sealed-bid process.• Consulting: To bring discipline to the real estate decision function and make real estate support broader corporate business and financial goals, the Company develops portfolio strategies that focus on the appropriate balance sheet role of corporate real estateBabasabpatilfreepptmba.com Page 11
  12. 12. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”CORPORATE PROPERTY SERVICESThe Company delivers property, asset and operational management and propertymanagement services to corporations and institutions that outsource the managementof their occupied real estate. The facilities manage range from corporate headquartersand data centres to educational and industrial sites.The core services include: • Facility Management • Occupancy Planning • Engineering and Operations • Sourcing and Procurement • Facility LineGLOBAL CLIENT SERVICESThe Global Client Services team works with clients to determine, and then act on, themost effective ways in which Jones Lang LaSalle can support their needs. A GlobalClient Services professional serves as a single point of client contact for Jones LangLaSalle resources across a region or around the world, assembling appropriate peopleand expertise and serving as a client advocate to ensure service quality andtimeliness.GOVERNMENTThe Company uses a collaborative approach to develop and implement real estatesolutions that help the public sector address its real estate challenges and priorities: • Improving the quality of life for military families • Maximizing real estate assets • Reducing costs • Managing facilities effectivelyBabasabpatilfreepptmba.com Page 12
  13. 13. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”The government practice comprises a dedicated team of public sector specialists withfull access to global network of resources. The Company combines private sectorexpertise with public sector experience to deliver integrated real estate solutions thatare focused on the unique needs of government agencies. The areas of expertiseinclude: • Asset Management • Development and Project Management • Facilities Management • Portfolio Strategy and Management • Public-Private PartnershipsHEALTHCAREThe Company delivers the highest quality service to healthcare clients in anextremely dynamic and challenging environment. Our healthcare real estateprofessionals develop strategies to meet the needs of investors, hospitals andphysicians, offering strategic insight into the doctor/hospital relationship andhealthcare delivery systems. Access to capital from varied sources enables to developfinancial solutions for a wide range of healthcare facilities.The specialized services for the healthcare industry include: • Financing • Acquisitions and Sales • Development • Property Management • LeasingBabasabpatilfreepptmba.com Page 13
  14. 14. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”HIGHER EDUCATIONThe Company is the leader in delivering comprehensive real estate services andsolutions to colleges and universities. The unique needs of educational institutions arewell understood, and have helped administrators worldwide successfully addressimportant real estate needs and concerns. The Company’s professionals develop a fullunderstanding of each institutions mission, objectives and challenges to formulateand implement strategies that add value to real estate assets and facility operations.The range of services to the higher education community, includes: • Campus Operations Assessments • Commercial Leasing Analysis • Development Feasibility Studies • Master Plan Financial Analysis • Lease versus Buy Analysis • Project and Development ManagementHOTELSJones Lang LaSalle Hotels is the worlds largest and most qualified specialist hotelreal estate investment advisor. Working through 16 dedicated offices and the globalJones Lang LaSalle network, provides clients with value-added investmentopportunities and advice, helping them achieve maximum value from their hotel andtourism property assets.The firsthand experience in local markets and financial expertise lead to superiorsolutions across a range of disciplines: • Valuation and Appraisal • Transactions • Mergers and Acquisitions • Financial Advice and Capital Raising • Asset ManagementBabasabpatilfreepptmba.com Page 14
  15. 15. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” • Strategic Planning • Operator Assessment and Selection • Industry Research • Project and Development ManagementFocusing on these areas, the Company helps clients maximize investment return,minimize risk, increase operational efficiencies and synergies, and tap innovativefunding sources on a global scale.INDUSTRIAL SERVICESThe Industrial Services practice leverages the firms extensive global resources tocontrol costs, improve effectiveness and enhance the value of industrial real estateholdings.The worldwide capabilities for industrial users, investors and owners include: • Acquisition and Disposition • Project and Development Services • Strategic Consulting • Portfolio Management and AdministrationINVESTMENT MANAGEMENTLaSalle Investment Management, Inc., a member of the Jones Lang LaSalle group, isa leading global real estate money manager with approximately US$23 billion ofpublic and direct real estate assets under management.The investment strategy is shaped by three priorities: • Developing and executing customized investment strategies that meet the specific investment objectives of each of our clients. • Providing superior performance for all clients. • Delivering uniformly high levels of service.Babasabpatilfreepptmba.com Page 15
  16. 16. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”The Company offers separate accounts and co-mingled funds, for direct real estate aswell as public real estate securities in the United States, Europe and Asia: • Private Investments in Real Estate Properties: The Company oversees the acquisition, management, leasing, financing and disposition of real estate investments across a broad range of property types. • Investments in Public Equity and Debt Securities: The Company also offers clients the ability to invest in separate accounts focused on public real estate, debt and equity securities.LEISURE SERVICESThe Company creates and implement innovative real estate solutions for the leisureand entertainment industries. In Europe, the specialist teams provide managementadvice on over 2 million square feet of leisure and lease over 3 million square feet ofcommercial leisure developments.The range of Leisure Services includes: • Investment Funding • Finance • Valuation • Leasing and Development • Consultancy and Research • Management • Professional ServicesOFFICEWith a presence in more than 100 of the worlds leading property markets, JonesLang LaSalle has the expertise to enhance the value of their clients office properties.The network of professionals provides a full complement of services to officebuilding owners, occupiers and investors worldwide.Babasabpatilfreepptmba.com Page 16
  17. 17. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”PROJECT AND DEVELOPMENT SERVICESThe Company provides a full range of services that address all aspects of thedevelopment, construction, refurbishment and occupancy of buildings. The diverseclient base and consequent experience extend to property types ranging from officesand industrial to warehousing. In addition to meeting or surpassing the agreedobjectives of each project, the goal is to add value to the clients position by applyingour expertise and best practice methodology.The core service activities include: • Building Surveying • Development Advisory • Development Management • Interiors Project Management • Move Management • Multi-Site Program Management • Privatisation • Renovation and RehabilitationThe Company delivers added value to their clients by relieving demand on internalresources, maximizing client purchasing power and utilizing state-of-the-arttechnology systems to monitor schedules and control costs.PROPERTY MANAGEMENTIn a deregulated financial climate, real estate assets must be aggressively andprofessionally managed if they are to achieve the best possible returns for owners andinvestors, and compete effectively for investment capital. Owners across the globeentrust their diverse real estate investments - large and small assets and portfolios,new development and renovation, and urban and suburban properties.Babasabpatilfreepptmba.com Page 17
  18. 18. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”The goal is to enhance clients property values through active day-to-daymanagement that focuses on maintaining high levels of occupancy and tenantsatisfaction, while lowering property costs.From due diligence and financial underwriting to environmental and engineeringservices, we have the broad base of experience and knowledge needed to provide thetechnical, operational and construction services that achieve the clients objectives.RESIDENTIAL DEVELOPMENT AND INVESTMENTThe Company provides marketing and sales services for major residentialdevelopment projects in Australia, Asia and select European markets. The Companyoffers a philosophical approach to marketing clients residential projects, which onkey points differs from the traditional agents model of project marketing.Jones Lang LaSalle has: • The financial strength to provide the services offered throughout the life of the project • The skilled human resources and experience vital to sales and marketing success • The international network, widening the market • The corporate commitment to its particular approach to the marketing of major residential developmentsRETAILThe Company’s network of specialists provides retailers and retail property investorsin the worlds leading markets with a full complement of services: • Leasing • Specialty Leasing • Acquisition and Disposition • Property Management • Project and Development ServicesBabasabpatilfreepptmba.com Page 18
  19. 19. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” • Construction Management • Consumer Marketing • Tenant Representation • Strategic ConsultingSALES AND ACQUISITIONSThe Company is a market leader in the sale and acquisition of large, institutional-quality office, retail, industrial and mixed-use properties. Located in every majormarket in the world, our professionals are positioned to market propertiesinternationally, using first-hand local knowledge to provide valuable insights intowhat occupiers and investors are seeking in the marketplace.STRATEGIC CONSULTINGThe Company ensures that real estate is positioned to support the clients businessobjectives.A network of 150 professionals in three regions allows them to share best practicesglobally, invest in R&D, and assemble global teams. The professionals havebackgrounds in real estate, business, finance, design and corporate strategy.Strengthening corporate real estates contribution. The Company ensures thatcorporations get value and efficiency from their real estate. Services include: • Aligning real estate with corporate objectives • Positioning real estate to accommodate changes in business needs • Creating best-in-class real estate departments • Disposing of redundant facilities quickly, at highest price • Providing better facilities using less capital • Assisting in location selectionBabasabpatilfreepptmba.com Page 19
  20. 20. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Designing development strategies. Working with developers, investors,corporations and governments. Services include: • Regeneration and master-planning • Repositioning vacant or under-utilized properties • Disposals and acquisitions • Strategic marketing • Transport related development • Development for arts, culture, education & sport facilities • Mixed-use schemesProviding sound strategies for investors. The Company objectively analysesinvestment opportunities to examine risks and returns associated with diverseportfolios. They work with investors to: • Explore cross border opportunities • Advise on acquisition and divestment strategies • Achieve value enhancement and risk reduction, for single assets and portfolios (including NPL and distressed assets workout strategies and REITs emerging in many markets) • Advise on portfolio structuring and positioningOffering solutions for retail clients. The Company works with retailers, owners anddevelopers to maximise the performance of retail outlets. The advice ranges fromrefining retail portfolios to developing and repositioning the retail offers in majorcities. By using consumer led research, and provide all of the above for retailers.TENANT REPRESENTATIONThe Company develops strategic alliances with clients with complex real estaterequirements while partnering with them to evaluate and execute transactions thatmeet their ongoing occupancy needs. The multi-discipline approach supportsoccupancy strategies that are linked to the clients core business objectives.Babasabpatilfreepptmba.com Page 20
  21. 21. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”The Company works to help clients lower their real estate costs, minimize occupancyrisk, improve occupancy control and flexibility, and create more productive officeenvironments. In the process, they define space requirements, identify suitablealternatives, recommend appropriate occupancy solutions and negotiate lease andownership terms with third parties.Our transaction services encompass: • Portfolio Occupancy Strategy • Business Location Strategy • Acquisition • Disposition • Contact Centres • Mergers & AcquisitionsThe Company also provides clients with the knowledge needed to consider thedevelopment of new facilities, weigh the benefits of purchase or lease decisions andevaluate long-term financing options for every asset type including industrialproperties. We also represent clients in large, complex transaction assignments thattypically involve relocations of headquarters facilities or major office consolidations.VALUATIONSFrom commercial office buildings, retail outlets and factories, to retirement villages,hotels and hospitals, occupiers and owners in the public and private sectors benefitfrom the proven valuation experience.The services—which may focus on a single property or a global portfolio of multipleasset types—help clients determine accurate values of office, retail, industrial andmixed-used properties in the areas of: • Strategic Disposition Analysis • Investment and Market Analysis • Hold-Versus-Sell Analysis • Due Diligence • Feasibility StudiesBabasabpatilfreepptmba.com Page 21
  22. 22. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” • Securitization • Asset Valuation • Bond Financing Cash Flow Feasibility • Asset Review and Market Surveys • Highest and Best Use Studies • Strategic Reviews • Acquisition Advice and Analysis • Valuation for Sale/Leaseback • Portfolio Valuation • Debt and Equity Financings • Mergers and Acquisitions • PrivatisationThe valuation service fulfills the need for maximum accountability at the highestprofessional level. The professionals work with clients to ensure comprehensiverecording and full utilization of property resources, regular revaluation of assets toreview performance and ascertain the best use of a property, and rapid evaluation ofproperty assets in any measurement of a companys valueBabasabpatilfreepptmba.com Page 22
  24. 24. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”RETAILING: WHAT IS RETAILING …….?“Retailing consists of those business activities, which are involved, in the sale ofgoods or services to consumers for their personal, family or household use.” It is thefinal stage in the distribution process for goods and services from manufacturers tofinal consumersFigure 1 A Typical Distribution ChainSource: -Ron Hasty, James Reardon - Retail ManagementRetailing involves:- Interpreting needs of the consumers- Developing good assortments of merchandise- Presenting them in an effective manner so that consumers find it easy and attractive to buy.Retailing differs from marketing in the sense that it refers to only those activities,which are related to marketing goods and/or services to final consumers for personal,family or household use. Whereas marketing, according to American MarketingAssociation, refers to "the process of planning and executing the conception, pricing,promotion and distribution of ideas, goods and services to create exchanges thatsatisfy individual and organizational objectives."Organizational buyers purchase in order to perform a task or sell a producteffectively, efficiently and at a profit. They could be industrial buyers or intermediarybuyers. Industrial buyers are those who purchase goods and services to be used in orto aid manufacturing process. Intermediary buyers are those (i.e. wholesalers andBabasabpatilfreepptmba.com Page 24
  25. 25. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”retailers) who buy merchandise for resale. Retailers include street vendors, localsupermarkets, department stores, restaurants, hotels, barbershops, airlines and evenbike and car showrooms. Still retailing may or may not involve the use of a physicallocation. Mail and telephone orders, direct selling to consumers in their homes andoffices and vending machines - all fall within the purview of retailing. In addition toit, retailing may or may not involve a "retailer." Manufacturers, importers, non-profitfirms and wholesalers are acting as retailers when they sell goods and/or services tofinal consumers.Whatever the form of retailing, a retail marketing strategy defines the execution ofthe marketing process and facilitation of customer satisfaction. This retail marketingstrategy involves selecting a retail target market (i.e. the carefully/exactly identifiedgroup of final consumers that a retailer seeks to satisfy) and then implementing thecorresponding retail marketing mix (i.e. a combination of product, price, promotionand distribution strategies that will satisfy the retail target market). The elements ofthe marketing mix encompass the facets shown in the table below. The table depictsconsumer service as the crux of the whole activity.Retail Marketing Mix Product Branding Price Packaging Cost of goods Product Design Business Expenses Assortment Gross Margin Services Profit Promotion Distribution Advertising Logistics Personal Selling Store Location Sales Promotion Site Evaluation Public Relations Transportation Visual Merchandising Storage of goodsSource: -Ron Hasty, James Reardon - Retail ManagementBabasabpatilfreepptmba.com Page 25
  26. 26. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Importance of RetailingSo far, it has been seen that retailing is a vital and involuntary action performed bythe living structure of the market economy (as opposed to the case in a bartereconomy). In a barter economy, barter transactions take place between consumersthemselves. Consumers interact directly whereas in a centralized market economy,transactions taking place at a larger scale (both in terms of volume and variety)necessitate an interface between the manufacturers and final consumers. Hence wereinforce the fact that retailing is not a new deal. This industry is extant as aninterface between production and consumption, from times immemorial, benefitingus - consumers or producers in the various ways discussed above.Our study concentrates on organized retailing, which consists of shopping malls,super markets, Factory outlets stores, and like. In the last few years a shift hasoccurred in India from individual retail outlets owned separately and manageddistinctively to professionally managed retailing. This is an industry, which has nowstarted attracting better investments and talent. Things changed primarily because ofthe rising expectations of Indian consumers and the corporate responding quickly.Today, the industry (in India) seems to be functioning somewhere between theaccelerated development and maturity stages, with high growth rates, intensecompetition and moderate profitability. For reference, the table, depicting the variousstages of the Retail Life Cycle is given in order to get an idea of the magnitude of theissue we are dealing with, we look at the international scenario. During 1992, thelargest 100 retailers in the world generated over $1.1 trillion in revenues.Retailing is the second largest industry in the world, one of the largest employers ofthe world and an index of economic growth. In India there are about 5 million retailoutlets varying in sizes and nomenclatures. India has the highest number of retailoutlets per capita in the world but has the lowest retail space per capita in the world(2 ft / person). Out of these 5 million outlets 96% are smaller than 500 sq. ft. in area3. There are about 3 million outlets in Indias 3700 designated towns and more thanBabasabpatilfreepptmba.com Page 26
  27. 27. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”6,00,000 villages. About 350 million people live, within one-minute walk of theseretail shops According to retail census conducted by market researcher ORG-MARK,Rs.4,79,568 crore worth of products were sold through these 5 million retail outletsManufacturers owned and retail chain store are springing up in urban areas to marketconsumer goods to the middle class in a much similar style as malls around the globe.At present about 8% of the Indian population is employed in the retailing industry asagainst 20% in USA. As India moves towards the service oriented economy, a rise inthis percentage is expected. The number of the retail outlets is growing at about 8.5%annually in the urban areas and in towns with population between 1,00,000 to 1million; the growth rate is about 4.5%.According to Kurt Salmon Association, a global management consulting firm,organized retailing seems all set to power ahead from Rs. 5000 crore currently toabout Rs.30,000 crore in next five years. A.T.Kearney reports that organized retailingwill account for about 20% of the total $8 trillion retail market in India in the next 5-7 years as against 1-2% today.Consumer Spend by 2005 (in Rs. crore) Unorganized Retailing 7,08,836Organized Retailing Food and grocery 5,956 Non food 23,886Source: Shah, Jindal " Shop at Leisure" Economic Times (4th Feb 2000)In India, organized retailing is catching up fast. Yet retailing is to be recognized asfull-fledged industry in the India. Organized retailing is bound to grow tremendouslyprovided the right marketing strategies are adopted.Babasabpatilfreepptmba.com Page 27
  28. 28. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” Even though the big retail chains are concentrating on the upper segment and selling products at higher prices like Crossroads, Akbarallys and Shoppers Stop, retail stores are sprouting that cater to the needs of the middle class. With a huge middle class population, the retailers like RPGs Food World are tapping this market. The market is flooded with products - branded and unbranded. The customers are in a dilemma as to pick which one! The organized retail chains, display all the products and the most attractive product catches the customer attention. Gone are the days of customer loyalty with increasing number of products of similar quality hitting the market. Differentiation plays the lead role. According to Mr. Simon Bell of A.T.Kearney, there is a close relation between the growth of brands and the growth of the organized retailing. "Companies selling branded products prefer to have big and organized retail outlets such as supermarkets where there can be differentiated from unbranded products" he opines. India is going through that phase in retailing, which the US experienced in 80s and early 90s. From product based shopping, the importance has shifted to experience based shopping. The customers of the 21st century would expect to pick his/her own products from an array of choices rather than asking the local kirana wallas to deliver a list of monthly groceries. Thus the way of distribution of products has gained importance in the past decade.Babasabpatilfreepptmba.com Page 28
  29. 29. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” BUYING BEHAVIOR: Consumer decision making varies with the type of buying decision.the decision to buy a toothpaste, tennis racket, a personal computer and a new car are all very different. Complex and expensive purchases are likely to involve more buyer deliberation and more participants. Henry Assael distinguished four types of consumer buying behavior, based on the degree of buyer involvement and the degree of differencec among brands. High involvement low involvement Complex buying behaviour variety-seeking buyingSignificantdifferences BehaviourbetweenbrandsFewdifferences Dissonance-reducing habitual buyingbetweenbrands buying behaviuor behaviour Complex Buying Behavior: Complex buying behavior involves a three-step process. First, the buyer develops beliefs about the product. Second, he or she develops attitudes about the product. Third, he or she makes a thoughtful choice. Consumers engage in complex buying behavior when they are highly involved in a purchase and aware of significant differences among brands. This is usually the case when the product is expensive, bought infrequently, risky, and highly self-expressive, like an automobile. Babasabpatilfreepptmba.com Page 29
  30. 30. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”The marketer of a high-involvement product must understand consumer’s informationgathering and evaluation behavior. The marketer needs to develop strategies thatassist the buyer in learning about the product’s attributes and their relativeimportance, and which call attention to the high standing of the company’s brand onthe more important attributes. The marketer needs to differentiate the brand’sfeatures, use print media to describe the brand’s benefits, and motivate salespersonnel and the buyer’s acquaintances to influence the final brand choice.Dissonance-Reducing Buyer Behavior:Sometimes the consumer is highly involved in a purchase but sees little difference inbrands. The high involvement is based on the fact that the purchase is expensive,infrequent, and risky. In this case, the buyer will shop around to learn what isavailable. If the consumer finds quality differences in the brands, he or she might gofor the higher price. if the consumer finds little difference; he or she might simplybuy on price or convenience. Marketing communications should supply beliefs andevaluations that help the consumer feel good about his or her brand choice.Habitual Buying Behavior:Many products are bought under conditions of low involvement and the absence ofsignificant brand differences. Consider salt, consumers have a little involvement inthis product category. They go to the store and reachfor the brand. If they keep reaching for the same brand, it is out of habit,not strongbrand loyalty. There is good evidence that consumers have low involvement withmost low-cost, frequently purchased products. Consumers do not search extensivelyfor information, evaluate characteristics, and make a decision. Instead, they arepassive recipients of information in television or print ads. Ad repetition createsbrand familiarity rather than brand conviction. After purchase, they may not evenevaluate the choice. For low-involvement products, the buying process begins withbrand beliefs formed by passive learning and is followed by purchase behavior, whichmay be followed by evaluation.Babasabpatilfreepptmba.com Page 30
  31. 31. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Variety-Seeking Buying Behavior:Some buying situations are characterized by low involvement but significant branddifferences. Here consumers often do a lot of brand switching. Think about cookies.The consumer has some beliefs about cookies, chooses a brand of cookies withoutmuch evaluation, and evaluates the product during consumption. Next time, theconsumer may reach for another brand out of a wish for a different taste. Brandswitching occurs for the sake of variety rather than satisfaction.The market leader and the minor brands in this product category have differentmarketing strategies. The market leader will try to encourage habitual buyingbehavior by dominating the shelf space, avoiding out of stock conditions, andsponsoring frequent reminder advertising.Individuals are subject to a number of influences that tend to distort their perception;some of these are discussed are below:Physical appearances:People tend to attribute the qualities they associate with certain people to others whomay resemble them, whether or not they consciously recognize the similarity. For thisreason, the selection of models for print advertisements and for televisioncommercials can be a key element in their ultimate persuasiveness. Studies onphysical appearance have found that attractive models are more persuasive and have amore positive influence on consumer attitudes and behavior than average lookingmodels; attractive men are perceived as more successful businessmen than average-looking men. Some studies suggest that models influence consumer perceptions ofphysical attractiveness and through comparisons their own self-perceptions.Stereotypes:Individuals tend to carry “pictures” in their minds of the meanings of various kinds ofstimuli. These stereotypes serve as expectations of what specific situations, people orevents will be like and they are important determinants of how such stimuli aresubsequently perceived.Babasabpatilfreepptmba.com Page 31
  32. 32. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Irrelevant cues:When required to form a difficult perceptual judgment, consumers often respond toirrelevant stimuli. For example, many high-priced automobiles are purchased becauseof their color, style or luxury options, rather than on the basis of mechanical ortechnical superiority.First impressions:First impressions tend to be lasting; yet, in forming such impression, the perceiverdoes not yet know which stimuli are relevant important, orpredictive of later behavior. A shampoo commercial effectively used the line,” you’llnever have a second chance to make a first impression. “Since first impressions areoften lasting, introducing a new product before it has been perfected may prove fatalto its ultimate success; subsequent information about its advantages, even if true, willoften be negated by the memory of its early performance.Jumping to conclusions:Many people tend to jump to conclusions before examining all the relevant evidence.For example, the consumer may hear just the beginning of a commercial message anddraw conclusions regarding the product or service being advertised. For this reason,some copywriters are careful to give their most persuasive arguments first.Babasabpatilfreepptmba.com Page 32
  33. 33. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”POSTPURCHASE BEHAVIOURAfter purchasing the product the customer will experience some level of satisfactionor dissatisfaction. The marketers’ job does not end when the product is sold to thebuyer, marketers must monitor post purchase satisfaction, post purchase actions, andpost purchase product usesPOSTPURCHASE SATISFACTIONThe buyer’s satisfaction is a function of the closeness between the buyer’sexpectations and the products perceived performance. If performance falls short ofthe expectations then the buyer is disappointed, and if it meets the expectations thenthe customers is satisfied, and if the performance exceeds the consumers expectationsthen the consumer is delighted, these feelings makes a difference in weather thecustomers buys the product again and talks favorably or unfavorably about theproduct.POSTPURCHASE ACTION:The consumer’s satisfaction or dissatisfaction with the product will influencesubsequent behavior. If the consumer is satisfied then he or she will exhibit a higherprobability of purchasing the product again. And he may also tend to speak goodabout the brand. Dissatisfied consumers may abandon or return the product orsometime they may also take public actions.Babasabpatilfreepptmba.com Page 33
  34. 34. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” INDUSTRY ANALYSISENVIRONMENTAL ANALYSISIn order to understand the industry we undertook two differentenvironmental analyses. The first is the PEST Analysis where thepolitical, environmental social, and technological aspects arelooked into. In the Porters Five Forces the competitiveenvironment of the industry is analyzed.I) PEST Analysis:Now, in a particular geographic region, the environment thereaffects the retailers in the region in various ways. We have studiedthe effects under the following heads:- Political environment- Economic Environment- Social (Socio-Cultural) Environment- Technological EnvironmentBabasabpatilfreepptmba.com Page 34
  35. 35. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Political Environment:With the opening up of the economy, more and more MNCs havepervaded the Indian Business arena, through joint ventures,franchisees or even self-owned stores. The very first MNC gettinginto the business was Spencers, a tie up between the RPG Groupand the Dairy Farm International, a $10 bn Hong Kong basedcompany, and a part of the Jardine Mathenson group.Government uses regulation to prevent development ofmonopolies, which results in restricted competition and fixedprices. (MRTPC). Government also propounds price competitionlaws and unfair trade practice laws. Retailers must understand whatrights they have in pricing merchandise, what provision theyshould make for customer relations, what rights andresponsibilities they possess when making a sales, what rights theiremployees have and what liabilities they may face while sellingproducts to the consumers.Economic Environment:The type of economic system (capitalism or socialism etc.) existingin a country has a direct bearing on the potential for and thedevelopment of the retailing industry in that country. A retailercannot escape the effects of the factors in the macroeconomicenvironment, be it domestic or global that influences the localmarket.Babasabpatilfreepptmba.com Page 35
  36. 36. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Inflation, unemployment, interest rates, tax levels, the GDP and therate of real growth in GDP (Inflation adjusted) are some aspects ofthe economy which a retailer must cope with.Real growth makes more income available to people who then tendto spend more, leading to higher sales and more profits for theretailers.However growth also leads to higher competition in the long run.As the economy expands, higher demand levels lead more firmsinto the market, trying to fulfill the consumers needs. The inflation(i.e. increase in price) leads to less goods being bought at higherprices. As the retailers cost of goods increases, they attempt topass on this increase to the consumers. However, it is often notpossible to pass on the entire amount to the consumer, henceresulting in cuts in the retailers profits.With the increase in Purchasing Power Parity (PPP) and thedisposable income of the Indian consumer, retailing is catching upat a very fast pace in the country.Social Environment:As discussed under the title demographic and lifestyle trendsabove, the demographic trend and lifestyle patterns, of the societythat a retailer intends to serve, decide the retailers strategy.Babasabpatilfreepptmba.com Page 36
  37. 37. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Traditionally, children seldom accompanied their parents whilegrocery food shopping. Shopping for children was confined to thatduring festivals when dresses were brought for them. But, in thepresent day, due to scarcity of time, working parents prefer tospend as much time as possible with their children and thisincludes their shopping hours also. As the organisation retail sectoroffers the option of entertainment along with shopping, theyounger couples opt for these retail outlets for shopping.Speaking at KSA Retail Summit, 2000, Peter Lau, Chairman ofGiordans International, Hong Kong, said, "It is the format ofconsumer expectation that changes, not the goods or services theywant. " This is depicted in the following diagram:KSA Technopark conducted a study on consumer attitude towardsshopping in association with the market research firm ORG-Babasabpatilfreepptmba.com Page 37
  38. 38. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”MARG in January and February 1999. The study was spread overthe four zones of India viz. North, South, West and East andcovered a random sample of 7300 respondents in twelve cities.The results of this study clearly reflect that the buying patterns dovary according to the customs and lifestyle of a region. In the southapproximately seven hours are spent on shopping per week. Thisfigure is the highest amongst the four zones, which probablyexplains the more spurt of new malls and supermarkets in the souththan in the other zones. Further, the study has attempted to find outwhat a customer expects out of a store. Here, the six attributesdesired by most number of people (65% and above) are polite andcourteous salespeople, quality of products, non intrusive salespersons, value for money, attractive displays and range ofproducts. Although desired by a very low percentage of people(only 10%) yet the attribute of an entertainment centre for childrenhas also figured in.That is to say, apart from quality and range of products, value formoney and attractive displays, the human touch has a vital role toplay. Smart, polite and courteous sales people might make all thedifference for a store, which is like any other in terms of itsproduct offerings.There is also emphasis on schemes and promotions, which, as thestudy ratifies, do pull customers. Further the trend is towards moreconvenience and flexibility in terms of exchange/ return policies,which play a vital role in encouraging the purchase.Babasabpatilfreepptmba.com Page 38
  39. 39. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Technological Environment:Technology is probably the most dynamic change agent for theretailing industry. The computerization of the various operations ina retail store, including inventory management, billing andpayments as well as database (of customers) management,widespread use of bar coding, point -of-sale terminals andManagement Information System has changed the face of retailingdrastically. Apart from providing the retailers with better andtimelier information about their operations, the technology alsodoes the job of preventing theft, promoting the stores goods andcreating a better shopping atmosphere. These can be done with thehelp of closed circuit televisions, video walls, in-store videonetworks, kiosks and other forms of interactive applicationsranging from CD-ROMs to virtual reality to let customers selectand buy products.They make the customers life a lot easier by facilitating the use ofdevelopments like credit cards. Toll free 800 numbers havebrought about a revolution in consumers ordering and feedbackmechanisms. These also pave way for tele-shopping and net-shopping. Emerging technologies will also facilitate just-in-timemanagement of certain products within the store. These trends arealready visible in the music and greeting card industries.Babasabpatilfreepptmba.com Page 39
  41. 41. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”RETAIL SECTOR OVERVIEWRetail is Indias largest industry, accounting for over 10% of the countrys GDP andaround 8% of the employment. The retailing industry in India estimated atRs.930,000 crore (2003-04) is expected to grow at 5% p.a. in line with predictionsmade in 2002. However, the size of organised retailing market stands at Rs.28,000crore in 2004, thereby, making up a mere 3% of the total retailing market. It is waybehind the development curve when compared with modern economies like the USwhere organized retail forms about 85% of total retail sales. India also lags behindother emerging markets in Asia (Taiwan, Malaysia, Thailand, Indonesia, China),Eastern Europe (Poland) and South America (Brazil) where significant progress hasbeen made in the last two decades.But the story is set to change. Moving forward, organised retailing in India isprojected to grow at the rate of 25-30% p.a. and is estimated to reach an astoundingRs.100,000 crore by 2010. Its contribution to total retailing sales is likely to rise to9% by the end of the decade.Retail industry in India is at the crossroads. It has emerged as one of the mostdynamic and fast paced industries with several players entering the market. It isgradually inching its way toward becoming the next boom industry. The wholeconcept of shopping has altered in terms of format and consumer buying behavior,ushering in a revolution in shopping in India. Modern retail has entered India in theform of sprawling shopping centres, multi-storied malls and huge complexes thatoffer shopping, entertainment and food all under one roof. The Indian retailing sectoris at an inflexion point where the growth of organized retailing and growth in theconsumption by the Indian population is going to take a higher growth trajectory.The changing demographics of the Indian population can be attributed to thisphenomenon. A large young working population with a median age of 24 years andemerging opportunities in the services sector are going to be the key growth driversBabasabpatilfreepptmba.com Page 41
  42. 42. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”of the organized retail sector in India. The last few years have seen the emergence ofseveral factors that will drive growth going forward; Booming IT and BPO sectors with rising incomes Emergence of profitable retail models Availability of retail space Increasing interest of foreign retailers in India Surge in capex spend of Indian retailers1. Booming industry and increasing incomesThe growth in our economy has resulted in growth of urbanization, which is only setto grow further, producing younger families with both spending capacity and thedesire to spend. The continuously evolving consumer segment in India is theyoungest in the world with a median age of 24 years as compared to countries like theUSA where the ‘baby boom’ generation is now nearing retirement. The young Indianconsumer is willing to spend on lifestyle-oriented products and services and aversionto credit is now a thing of the past. Further, consumers are spending on a wider rangeof products and services because of which non-conventional product categories likecell phone ringtones (estimated at Rs.400 crore) and Valentine’s Day gifts (Rs.1,500crore) have evolved in very small time spans.Growth drivers: • Urban households spend 2.5x more than rural families. • Urban population in India expected to grow by 85 million over the next 10 years, the second highest in the world after China. • The middle class (family income between Rs.2-10 lakhs p.a. as per NCAER), currently estimated at about 92 mn, is expected to be around 153 mn by 2010. • Real incomes expected to grow by 5-6% p.a. resulting in significant improvement in purchasing powerBabasabpatilfreepptmba.com Page 42
  43. 43. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”These positive macro trends will add to the large pool of young, urban consumerswith higher disposable incomes and the right mindset to shift towards an organisedretailing experience.2. Profitable retail modelsThe last few years have seen development of various retail models across productcategories. Hypermarkets, food supermarkets and discount retailers are the key valueretail formats in India. Only in the recent years have private sector retailersrecognised the growth potential. Standalone supply models have started to appearwhile others have started to open in the malls that are mushrooming all over thecountry. The enclosed table gives a snap shot of the key domestic retailersSegment Key domestic retailersFood, grocery and tobacco Pantaloon (Big Bazaar, Food Bazaar), RPG (Spencers, FoodWorld), Subhiksha, Nilgiris, Marginfree, Trent (Star India Bazaar), Barista, Café Coffee, Fuel retailers (BPCL, Reliance)Clothing Trent (Westside), Pantaloon (Big Bazaar, Pantaloons), Lifestyle**, ITC (Wills Lifestyle), Shoppers Stop, Ebony, Globus, Pyramid, Raymond, Arvind Brands (Arrow, Lee, Wrangler), Indian Rayon (Madura Garments- Louis Philippe, Van Heusen, Allen Solly, Peter England), Provogue, Reliance (Vimal), Bombay Dyeing, Zodiac, Indus LeagueConsumer durables Vijay Sales, Viveks, BPL, Videocon, Onida, Philips, Samsung, LG India, Whirlpool etcJewellery and watches Titan (Titan showrooms + Tanishq (jewellery)), Pantaloon (Gold Bazaar)Home décor & furnishing, Lifestyle**, Welspun, Himatsingka Seidehousehold goods (Atmosphere), Bombay Dyeing, Durian Industries, Zuari Industries, Featherlite, VIP, Home Stores, KK Birla Group (Style Spa)Beauty & other healthcare Marico (Kaya), HLL (Lakme salons), RPG (Health &Babasabpatilfreepptmba.com Page 43
  44. 44. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” Glow)Medical care & health Subiksha, Apollo Pharmacy, RPG-Dairy Farm (Healthservices & Glow), Dr. Morepen (Lifespring)Footwear Liberty, Lakhani, Woodlands, ActionBooks, music & gifts Archies, Landmark, ITC, Ebony, Shoppers Stop (Crossword), Times of India Group (Planet M), RPG (Music World), Oxford (Apeejay Group)Source: HSBCCurrently, footwear and clothing have a large penetration in the organised retailsegment. Bata – the oldest MNC retailer, commands a market share of 15% in thedomestic retail footwear market. Foreign players in this category like Reebok,Adidas, Nike also marked a significant presence through franchisee agreements.Outlets of these companies are mostly seen in malls due to the easy availability ofspace along with amenities and the trend is expected to continue.While lucrative opportunities exist across product categories, food and grocerypresent the most significant potential in the Indian context, as consumer spending ishighest on food. Further, ‘wet groceries’ i.e. fresh fruits and vegetables is the mostpromising segment within food and grocery as very few organised retailers havetapped this opportunity inspite of wet groceries being the preferred choice of mostIndian households.Opportunities galore • Home improvement: Potential exists for specialty retailing in the home improvement segment with formats such as consumer durables retailing. • Electronics: Home and electronics-related sectors have performed better and gained a higher share of the overall retail cake across the world. Electronic gadgets like mobile phones, digital cameras, PC software and games, and, for the more extravagant, PDA’s, notebook computers, and Apple’s stylish iPod have undoubtedly stolen retail spend from apparel, acting as a new way to make a fashion statement.Babasabpatilfreepptmba.com Page 44
  45. 45. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” • Wholesale trading: These cash-and-carry stores attract large volumes from a sizeable number of retailers who do not have to maintain relationships with multiple suppliers for their every need. • Rural Retailing: This poor-cousin has of late caught the eye of retailers looking for new areas of growth. These malls offer a diverse product range including soaps, detergents, toothpastes, televisions, DVDs, sewing machines, grinders, etc attempting to provide farmers a one-stop destination for all needs. • Baby care and Mother care segment: Huge potential also exists in these segments where consumers are seeking “all under one roof” solutions i.e. high quality products required for mothers (20 - 39 years) and child (0 - 6 years) with a deeper product assortment than what most kids specialty stores today offer. The opportunity in this segment is highlighted by the fact that currently no infant accessories brand has exclusive retail presence in India.3. Availability of retail spaceUnavailability of good quality real estate has hindered organised retail in India. It isone reason why some of the first modern-format retailers have been real estatedevelopers (e.g., Shoppers’ Stop of Rahejas Group, CrossRoads of Piramals). But inthe last three years, organised retail space development in India has gone through asignificant change. With the rental yield on malls (12-15%) being much higher thanon commercial properties (7-12%), mall developers across the country are creatingsuperior real estate options at a frenzied pace.From 35-40 operational malls currently occupying approximately 6 mn sq ft of retailspace, India is expected to have around 200 new malls by 2006 end, thereby addingretail space to the tune of 35-40 mn sq ft. Further, by 2010, 500-600 malls occupying~120 mn sq ft are at various stage of planning. While the six metros are expected toaccount for a majority of these malls, they are expected to spread across 60 cities by2010.Babasabpatilfreepptmba.com Page 45
  46. 46. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Many mall developers, in a bid to offer distinctive value propositions, are planning‘specialty malls’, which will emerge as one-stop destinations in their chosen productcategories. The Delhi-based Aerens Group is one such exclusive jewellery mall. Anumber of analogous developments like a ‘Wedding Mall’ by Omaxe Group,‘Automobile Mall’ etc are also in the offing. ‘Home Malls’ offering the entire rangeof building and interior decor solutions are also coming up. Concepts like a ‘ToysMall’ exclusively for kids and a ‘Factory Outlet Mall’ offering branded apparel atthrow away prices, which are popular in developed economies are likely to crop up inIndia.The fast-paced growth of mall development has been further fuelled by governmentauthorities like the Delhi Development Authority (DDA) beginning to release realestate space for retail development in prime retail areas. In Mumbai a large supply ofdefunct textile mill land is being released for development.Is acquiring space really simple?Getting good quality real estate in central locations is a tough game. Fragmentedprivate holdings, zoning laws and archaic regulations – all hinder development. Butthe hope lies in state governments, which are expected to see retail as an opportunityto reduce ballooning state fiscal deficits through sale/rent of land and throughgeneration of tax revenues that are easy to collect.The lack of organised institutional capital also is a hindrance to the development ofmalls in India. Most of the developers work on the “Design, Sell, Construct, MoveOn” model, which has resulted in clustering of a large number of malls in a relativelysmall geographical area. A chief example is Gurgaon where over 20 new malls arelikely to become operational in the next two years. This unhealthy concentration ofsupply in a suburban zone with a limited catchment population will lead to malldevelopers burning their fingers as their plans are not backed by the requisiteplanning and market research. Also, with ownership being fragmented, a lot of mallmanagement issues are creeping in.Babasabpatilfreepptmba.com Page 46
  47. 47. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”With the government opening up of 100% FDI in construction in Feb ‘05, it isexpected that joint ventures between Indian and foreign developers would increase,which would in turn result in opening up of new malls. The entry of institutionalcapital should result in ensuring unified ownership and thereby professional mallmanagement.4. Foreign retailers eyeing the Indian marketsThe last few years saw the entry of a multitude of international brands into the Indianmarket on the strength of rising affluent levels of the young Indian population alongwith the heightened awareness of global brands and international shoppingexperiences and the increased availability of retail real estate space. Luxury brandssuch as LVMH, Ermenegildo Zegna, Bvlgari, Escada, Hugo Boss, Tommy Hilfiger,Cartier, etc have entered the Indian market with presence mostly in five-star hotels.Many others are firming up plans to set up shop in the country to offer new-ageglobal Indians an aspirational lifestyle they have demanded for long.Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle, etc arestepping up their sourcing requirements from India and moving from third-partybuying offices to establishing their own wholly owned/wholly managed sourcing andbuying offices which will further make India an attractive retail opportunity for theglobal players.5. Surging capex spendsRetail majors and manufacturers have laid out aggressive capex plans for the next fewyears for expansion as well as renovation and maintenance of existing stores. In itsrecent IPO, Shoppers’ Stop has raised about Rs.1.6 bn of which more than Rs.1.1 bnwould be used to finance new store capex. Pantaloons has been aggressivelyacquiring prime real estate. It has recently made three strategic investments at a spendof Rs.730 mn, by diluting 4.5% equity stake.Babasabpatilfreepptmba.com Page 47
  48. 48. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Trent, the retailing unit of the Tata Group has recently announced a Rs.1.18 bn issueof preferentially convertible debentures to finance expansion. It has drawn up plansaggregating an investment of ~Rs.1.25 bn between FY06-FY08. Its plans involve theestablishment of 16-18 new stores, upgrade of existing stores and strengthening of thewarehouse infrastructure.These are just a couple of examples of Indian companies that have aggressiveexpansion plans over the next few years.Should foreign players be allowed to step-in?India has the potential to become a giant in food processing and textiles as itsagricultural production is the lowest cost in the world, and textile labour is thecheapest internationally. Allowing FDI in retail trade, especially in groceries andgarments marketing, provides the linkage effects of a modernised, globalised retailtrade.Allowing foreign players into India would bring in better managerial practices andIT-friendly techniques to cut wastage and set up integrated supply chains to graduallyreplace the present disorganized and fragmented retail market. It is estimated thatIndia wastes nearly Rs.50,000 crore in the food chain itself. These international retailoutlets can help develop the food processing industry, which requires $28 bn ofmodern technology and infrastructure.Allowing entry of market-savvy and intelligent corporations like Wal-Mart, Tesco,Carrefour, J C Penny etc into the country would also help in generating demand forexports, which would in turn contribute towards the targeted GDP growth of 8 – 10%per year.Babasabpatilfreepptmba.com Page 48
  50. 50. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”OBJECTIVES OF THE STUDYPRIMARY OBJECTIVES: • To identify whether the specialty retail stores are required in suburban areas – South East Bangalore. • To identify the customer attitude towards apparel shopping and the customer buying behavior.SECONDARY OBJECTIVES: • To identify the real estate requirement for setting up such stores.HYPOTHESISNull Hypothesis:H0: The specialty retail stores are only good for the sub-urban areas.Alternative HypothesisH1: The specialty retail stores are not good for the sub-urban areas.STASTICAL TOOLSThe statistical tool used in this study for analysis is z-test, as the sample size is morethan 30.RESEARCH DESIGNSAMPLINGSAMPLING METHOD: The sampling method used for the research purpose isStratified Random sampling which helped in defining the strata, then randomlyselecting the sample.SAMPLE SIZE: The sample size taken for the study was 200, which includes Callcenter executives, fresh graduates, Middle and Senior level executives andhousewives.Babasabpatilfreepptmba.com Page 50
  51. 51. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”RESEARCH METHOD:The tool used for the research was Interview method.TOOL: The tool used for the data collection was Questionnaire.A structured questionnaire was prepared and was administered personally.SOURCES OF DATA COLLECTION:PRIMARY DATA:The primary data will be collected on the basis of questionnaire. • Firstly there will be a set of questions for the consumers in Bangalore for identifying their attitude. • Secondly there will be a different set of questions for the people who stay in the semi-urban areas about their beliefs. • Thirdly there will be a different set of question for the local marketers on the affect of these stores. • Interview with the managers of these stores about what they feel about the market of these stores.SECONDARY DATA: Secondary data is collected from the business journals,research reports and Internet.SCOPE OF THE STUDY: • The place covered for the study is only South East Bangalore, which includes areas like Whitefield, Kormangala, Marathalli, Bannerghatta Road, Electronic city, HSR Layout, Hosur etc. • The survey is undertaken to know the buying behaviour only for clothing.Babasabpatilfreepptmba.com Page 51
  52. 52. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”ASSUMPTIONS:The annual income level’s are assumed as • Call Centre professionals and fresh graduates - Rs. 96,000 to 2,40,000 • Middle and Senior level executives – more than Rs. 2,40,000 • Housewives – No income, but from families with good income.LIMITATIONS OF THE STUDY: • Strict boundaries were not followed in terms of data collection. • Time given is very less.Babasabpatilfreepptmba.com Page 52
  53. 53. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”ANALYSIS Categories of respondents ⇒ Call center executives and fresh graduates 28% ⇒ Middle and Senior level professionals 46% ⇒ Housewives 26% ⇒ The sample interviewed were from different fields like Call center executives, fresh graduates, Middle and Senior level professionals and housewives wherein 46% of the respondents were Middle and Senior level executives, 28% Call center executives and fresh graduates and 26% of Housewives. The concept behind this was to have a set of diverse people in the study living and working in South East Bangalore so that the result which is derived from the study can be more accurate. CATEGORIES OF RESPONDENTS 24% Middle and Senior Level Executives 48% Call Center and Fresh Graduates Housewives 26%Babasabpatilfreepptmba.com Page 53
  54. 54. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” Frequency of shopping ⇒ The frequency of shopping varies as per the categories of the sample. This is important for positioning of the product. Frequency of Shopping 60% 52% 50% 40% 26% 30% 22% 20% 10% 0% Once a week Once in a month Often ⇒ The analysis shows that around 52% people go shopping once in a week, whereas 26% of people go very often for shopping. ⇒ The observation showed, Housewives usually go shopping twice in a week, whereas call center and fresh graduates do shopping once in a week usually weekends and Middle and Senior Executives go shopping once in fortnight.Babasabpatilfreepptmba.com Page 54
  55. 55. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” Preference of attributes while shopping ⇒ The attributes like – Price, Quality, brand and look & feel are considered while making a purchase decision, to know what is more important for the purchase. ATTRIBUTES PREFERENCE 70% 58% 60% 50% 40% 30% 20% 20% 12% 10% 10% 0% Price Quality Brand Look and FeelThe data collected shows that 58% of the people consider price as an importantattribute and while shopping the second is quality followed by brand, Where as theleast preferred is design.⇒ Inference:The data collected showed that people are very price conscious. This is the first thingwhich the consumers look for when they go for shopping.Further, it was observed that Call Center professionals and fresh graduates prefer lowprice, whereas Senior Executives prefer quality and branded clothing for Housewiveslook and feel is more important.Babasabpatilfreepptmba.com Page 55
  56. 56. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” Preference of location for shopping ⇒ To know the preference of location as people go for shopping to main city areas or nearby their work place or residents or any other specific areas. ⇒ The concept behind this is to identify where do the people go out for shopping, whether they travel long distance and buy from city areas or they do it in their own areas. Location for Shopping 11% 41% City areas Nearby areas Others 48% ⇒ As per the analysis, 48% of the respondents do their shopping in nearby areas, where as 41% of the people prefer shopping from city areas. ⇒ Many people do not go to city areas for shopping so there is a wider scope for the lifestyle stores in such kind of areas. And they also look for good variety of clothes in their own area.Babasabpatilfreepptmba.com Page 56
  57. 57. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Place of Shopping ⇒ This question aims at finding out which store they prefer for shopping – Factory outlets/exclusive showrooms, shopping malls or local shops. Location for Shopping 50% 47% 41% 40% 30% 20% 12% 10% 0% Factory Outlets Shopping Malls Local shops ⇒ The analysis showed that 47% of people make their purchases from factory outlets/exclusive showrooms, whereas 41% of them from Shopping malls and 12% from local shops.Babasabpatilfreepptmba.com Page 57
  58. 58. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Consumers visits to Specialty retail stores ⇒ At this stage the respondents were screened to those who have visited and those who have not visited a specialty retail store. ⇒ From the data we got 93 of the respondents had visited a specialty retail store and 7 had not. The data is given below. percentage of respondents actually visited life style store 100 93 80 60 Series1 40 20 7 0 visited Not visitedBabasabpatilfreepptmba.com Page 58
  59. 59. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Striking features ⇒ The question aims at the attributes that attracts the consumers to this stores, that is to find out the striking features of the stores – Brands, Variety, Convenience or Price. Striking Features 40% 35% 35% 30% 30% 28% 25% 20% 15% 7% 10% 5% 0% Brand Variety Convenience Price ⇒ From the analysis, it was found that variety and convenience are the most preferred attributes or striking features of the stores. ⇒ From this we can infer that people are now looking for more and more variety, availability of brands and convenience when they visit any store.Babasabpatilfreepptmba.com Page 59
  60. 60. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Price perception ⇒ This question aims to find out what is the perception of the consumers regarding the pricing at these stores. It was to take their opinion about whether the products sold by them are expensive or reasonable. Price perception 70% 70% 60% 50% 40% 27% 30% 20% 3% 10% 0% Very Expensive Expensive Reasonable ⇒ From the data collected it was found that 70% of the respondents are of the opinion that the products are very expensive. Whereas 27% of the people were of the opinion that the products are expensive and 3% said that the products are reasonable. ⇒ The perception of the people is that these stores are very expensive. So the stores should position themselves in the mind of the consumers in such a way that these stores signify value for money, quality, provide excellent service and relationship marketing should be followed.Babasabpatilfreepptmba.com Page 60
  61. 61. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Spending pattern: ⇒ The idea is to find out how much do people spend on shopping of clothes in a month. Thus, the demand for such stores can be estimated. Average spending per month < 5000 62% in Rs. 5000-10000 27% > 10000 11% 0% 10% 20% 30% 40% 50% 60% 70% ⇒ From the data collected it was found that 62% of the people spend less than Rs. 5,000 per month and 38% of the people spend around Rs. 5,000-10,000 per month. ⇒ From the analysis, its clear that the average spending is good enough for the stores to be profitable.Babasabpatilfreepptmba.com Page 61
  62. 62. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Schemes and Offers ⇒ The idea behind this question is to find out whether the schemes and offers drive the customers to the stores. Schemes and Offers 13% Yes No 87% ⇒ The results show that maximum of people would be driven to the stores because of schemes, offers, discounts or sale and make the purchase decision.Babasabpatilfreepptmba.com Page 62
  63. 63. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” Influencers ⇒ The idea behind this is to find out who are the influencers in the buying decision process as they also have an important role to play in the buying decision making process. Influencers 60% 53% 50% 40% 30% 27% 20% 20% 10% 0% Spouse Children Friends/Relatives ⇒ From the data collected it was found that 53% of the respondents get influenced by their Children and spouse or friends/relatives play the secondary role. ⇒ However, the friends score higher on influencing where the respondents were bachelors.Babasabpatilfreepptmba.com Page 63
  64. 64. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”Experience of the consumers ⇒ Through this question we try to identify what are the experiences of the customer at these stores. And what do they perceive about these stores. It helps us to find out their attitude towards these stores. ⇒ By the data collected it was found that around 56% of the people’s experience was satisfactory and 20% of the people were extremely satisfied and there were no dissatisfied customer. ⇒ Inference: by this we can say that people are really satisfied by these stores. the variety in these stores and the services also play a very important role in adding to the experience and ensure a second visit or recommendations to other customers. experience of consumers 56 60 50 40 30 20 17 Series1 20 10 0 0 0 SATISFACTORY SATISFACTORY DISSATISFIED DISSATISFIED NETURAL EXTREAMLY VERYBabasabpatilfreepptmba.com Page 64
  65. 65. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE” Do you think these stores can make you feel comfortable in sub-urban areas? ⇒ The concept behind this question is to see weather these stores are only good in central city areas like highly crowded and commercial areas etc or they also do well in semi-urban areas. ⇒ From the data collected it was found that 71% of the respondents said that these stores can also do good business in sub-urban areas as these people will not be able to go for leisure shopping during the weekdays and most of the respondents do not prefer traveling as well as get into the busy & crowded traffic during the weekends, they feel its waste of time. Money and energy. 80% 70% 71% 60% 50% 40% 30% 20% 29% 10% 0% Yes NoBabasabpatilfreepptmba.com Page 65
  66. 66. IDENTIFYING THE OPPORTUNITY FOR APPAREL RETAILING IN SOUTH EAST BANGALORE”FINDINGS • The people go for shopping frequently in suburban areas, especially on weekends. There are only few people who do their shopping very often. • The sample considered for the research is moving towards the new trends of the new age and ready to accept the quick changes in the retail segment. • The sample is moreover looking for the comfort and an easy way to hangout as well as to shop. • People have become more lifestyle oriented and brand conscious. • Visiting and shopping in specialty retail stores has become a dignity and high class showoffs. • Family oriented people would like to take their family for a long drive so that they feel comfortable and spent lot of time with the family. • There is a segment which would like to shop during the weekdays as they do not prefer entering crowded city malls and lifestyles. • According to the real estate boom and the residential areas coming up in these areas shows us a new ray of opportunity to these specialty retail stores. • Word of mouth can spread faster in case of influencers being friends and relationship marketing plays a very important role in spreading the word of mouth as rightly said “one satisfied customer gets ten customers” • The respondents who have visited life style stores are really satisfied and had a good experience shopping there. • The people really want these stores to come to sub-urban areas and here lies a great opportunity for these stores to come and set themselves in these areas. • As per the hypothesis it is also proved that this concept will do well in sub- urban areas.Babasabpatilfreepptmba.com Page 66