Retail branding - Reliance Fresh


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  • US-based Wal-MartGermany's Metro Cash & Carry UK's Tesco France's Carrefour SA: Cash and Carry stores
  • Earlier aadhar was owned by goorej30000 population like Tinsukia and BoondiSangli, a town of about 400,000 people in Maharashtra known as the "turmeric city
  • Reliance one – insurance benefits, discounts; First Google search on Reliance-One gives a HR recruiting firm – Reliance-One.comReliance fresh – 981 complaints – mostly bout customer service and rude staffBig Bazaar – 922 complaints – mostly about bill related problems and specific product related problemsSpencer – 500 (included Marks & Spencer also).Spencer retail - 10More for you – 16 complaints since the Retail store influences the perception of the consumer. Thus everything about the store (easy access, bundling of products, service personnel) should together communicate value for money.
  • Gwyn Sundhagul from Tesco
  • – COO, Shoppers’ Stop
  • Retail branding - Reliance Fresh

    1. 1. Group 6<br />Akanksha Singh 0911004 Saurabh Chandra 0911047<br />Sumit Kumar 0911057 Arvind Choudhary 0911085<br />Bhawna Jain 0911301 Ganeshram K 0911309<br />Shikha Rawat 0911344<br />Retail Branding<br />
    2. 2. Facts in India<br /><ul><li>Retail market growing at 13% per annum
    3. 3. Organized retail penetration -14% by 2015
    4. 4. 5 mn sq feet (2010) -> 20 mn sq feet (2011)
    5. 5. Food retail - 60% of the total retail market </li></ul>But - <br /><ul><li>40% perishables lost due to bad supply chain
    6. 6. regulatory policies (29 licenses required to start a hypermarket in Mumbai)
    7. 7. high real estate prices (10-15% of operating costs in India; 5% in other countries)</li></ul>Growth Drivers<br /><ul><li>Rising living standards.
    8. 8. Favorable demography: more than half the country is under 25 years of age
    9. 9. Consumer mindset: Mandi to Market
    10. 10. By2025, India will be 5th largest consumer market (60 mn people in Indian middle class)
    11. 11. More working women; More plastic money</li></ul>Entry of global giants in India through multiple tie-ups! Aggressive growth plans of domestic players!<br />
    12. 12. Retail in Rural India<br />Future of Kirana Stores?<br /><ul><li> “Kirana store is for emergency shopping, supermarket is for necessities and the hypermarket is for family outing. There will still be a role for the itinerant street hawker on the 21st century Indian shopping landscape, but it will be diminished one”. – Sanjay Bhade, senior VP at Aditya Birla Retail
    13. 13. Future of kirana stores also depends on inclination of next generation in running family businesses. There are better employment opportunities available in small towns now.</li></ul>Numbers Speak<br />Reality Speaks<br />Rural Indian spends 52% of his income; Urban Indian 50%<br />Expanding rural consumption at 12 % for last 6 quarters; Urban demand trails at 7%<br />2012: 52% of retail spending from rural India<br />Better roads - better distribution network. <br /><ul><li>Only 1200 retail outlets in these areas!
    14. 14. Bharti Wal-Mart stores near cities only
    15. 15. Tata & Reliance have no ready plans too.
    16. 16. Fragmented customer base
    17. 17. Opposition from market middle men
    18. 18. Consumers prefer kirana stores (buy on credit, home delivery, proximity to home)</li></ul>But Big Bazaar rises in hinterlands! <br /><ul><li>95 stores in tier-3 towns (pop.-1 lakh); Acquired Aadhar - gone into towns with 30,000 population
    19. 19. In a Big Bazaar outlet in Sangli - a family ran up a bill of Rs 1.25 lakh!
    20. 20. In Alwar, Big Bazaar store had annual sales of over Rs 18 crore. Sale of small stores has dropped 8%.
    21. 21. “Treat catchment area like constituencies - just the way political parties don’t ignore ethnic communities."
    22. 22. Concepts built specially for rural India - stocking aluminium vessels in Muslim dominated communities, tapping local trader & women SHG for food items to address local preferences.
    23. 23. All this added with competitive prices, good ambience & aspirational needs of middle class!</li></li></ul><li>Reliance Fresh – 7P framework <br />
    24. 24. <ul><li>Inseparability & Perceived Risk – Medium
    25. 25. Product Variety – customers want a one-stop shop. So fruits & vegetables + staples, grocery & household products.
    26. 26. Product Quality – Though low price, but customers want best quality.
    27. 27. Product Stock – should remain fresh 24*7
    28. 28. Customer complaints – about Reliance Fresh not being “fresh”
    29. 29. More.: Instead of displays 5 Coke and 5 Pepsi bottles it displays 4 each and fits its private label as third brand to increase variety</li></ul>Product<br /><ul><li>Price Estimation – easy
    30. 30. Ability to price premium – difficult
    31. 31. Reliance Fresh plays on “value for money”
    32. 32. Gives volume discounts
    33. 33. Achieved cost cutting – private labels
    34. 34. Price is no longer a POD. Is more of a hygiene factor </li></ul>Price<br /><ul><li>Physical location – close to consumers
    35. 35. Neighborhood store: In small commercial complexes close to 3-4 big residential areas; Close to cross roads
    36. 36. Scale & replicate – immediate priority
    37. 37. Moving towards owning the store than leasing it out to control real estate price
    38. 38. No franchisee to lower risk
    39. 39. More. To reduce operating costs, shifted from fixed rentals schemes to revenue sharing
    40. 40. More.: Before launching any hyper mart, senior executives visit at least 35-40 families near a store and have a FGD to know neighborhood’s preferences</li></ul>Place<br />
    41. 41. <ul><li>Nature of advertising – newspapers, radio, catalogs, SMS
    42. 42. Focus – functional benefits & discounts
    43. 43. Weekend – discount day
    44. 44. Festive season discounts
    45. 45. Rebates & Premiums focusing on bill value
    46. 46. Reliance One: customer loyalty program
    47. 47. Target to get its loyalty program in top 10 loyalty card base in worldwide retail sector by 2012 – currently 3 mn customer base
    48. 48. Home delivery of groceries
    49. 49. No website;
    50. 50. Customers not aware of discounts; Big Bazaar: purana do naya lo; Wednesday - hafte ka sabse achcha din
    51. 51. Less in-store promotion.
    52. 52. Reliance One – can accumulate points only after 6 months; More. – welcome points for new enrolment!
    53. 53. Word-of-mouth important. Track social media (981 complaints). </li></ul>Promotion<br /><ul><li>Need for evidence – high
    54. 54. Consciously segregated non-vegetarian items – “Delight”
    55. 55. Different billing counter for < 8 items
    56. 56. Stores open at 07:00 am
    57. 57. Physical infrastructure - important
    58. 58. Stale fruits and vegetables!
    59. 59. Understaffed billing counters!
    60. 60. Diff between quoted & billing price
    61. 61. Bad layout & floor maintenance
    62. 62. More. – standard stores design by Fitch – intl retail design firm</li></ul>Physical Evidence<br /><ul><li>Degree of customer involvement – high
    63. 63. Process very important in ensuring customer satisfaction and delight
    64. 64. Currently process of interaction is standardized and staff not able to handle varying customer problems
    65. 65. Transparency in billing etc missing</li></ul>Process<br />
    66. 66. <ul><li>Culture – Process driven
    67. 67. Skill sets required – Advanced
    68. 68. Compensation – Not high
    69. 69. People – Most important
    70. 70. Staff uniform – red, green and blue
    71. 71. 1 week training to staff
    72. 72. Needs to be courteous, well trained and informed - more of a generalist
    73. 73. New CEO – focus increasing on customer satisfaction (Aapki Khushi Hamari Khushi)
    74. 74. Reliance Fresh lacking on people front. Numerous customer complaints on bad service, staff not informed on discounts & prices and un courteous staff (highest on
    75. 75. More.- drive comes from top management. Even CEO has to spend 8 days a year as CSA.</li></ul>Brand as Organization<br /><ul><li>Role – Facilitator
    76. 76. Role expectation – Doer
    77. 77. Personification – Educated middle class housewife
    78. 78. Attitude – Value for money
    79. 79. Age – middle class
    80. 80. Relationship with customer – Friend</li></ul>Brand as Person<br /><ul><li>Typical slogan – “Friendly neighborhood store”
    81. 81. Typical sponsorship - Cookery show (events around housewives and young women)
    82. 82. Adjectives – useful, convenient</li></ul>Brand as Symbol<br />
    83. 83. Report Card<br />FY 2010<br />Comparables<br />*Figures in Rupees Crore, Assumed USD 1 = Rs 45<br />
    84. 84. Policy & Regulatory Framework<br />Troublesome<br />If relaxed norms on FDI in multi-brand retail:<br />Not much opposition from other retailers<br />Increased competition; More pressure on prices and margins<br />TRAI rule – National Do Not Call Registry – further hindrance to promotional activity by Reliance Fresh<br />Possibility of Government intervention to protect interests of street vendors<br />Other challenges: Rise in real-estate, electricity & transportation costs<br />GST - Something to be happy about <br /><ul><li>Abolition of Central Sales Tax is likely to warrant a re-evaluation of procurement and distribution arrangements.
    85. 85. Removal of excise duty on products - cash flow improvements, since GST will be paid on sale/supply rather than on the product.
    86. 86. Elimination of tax cascading is expected to lower business input costs and improve profitability. </li></li></ul><li>The Future<br />Demand is not a problem. <br /><ul><li>Cost structure and Supply chain –2 variables will make or break you!
    87. 87. Train your staff – customer service becomes imperative especially with the threat of international retailers coming in</li></ul>Eventually who will survive? <br />Retailers with deep pocket<br />Integrated and efficient back end supply chain<br />National presence including in rural areas<br />
    88. 88. Conclusion<br />Why will Reliance Fresh Survive<br />To-Do<br /><ul><li> Work on customer satisfaction & in-store experience
    89. 89. Better trained staff
    90. 90. Effective communication to consumer needed (hafte ka sabse achcha din)!
    91. 91. Go lean (Aldi)</li></ul>Seamless supply chain infrastructure <br />JV with Wincanton (specialist in logistical & dist. services), to effectively manage back-end operations <br />Cutting costs<br />Merged operational management and sourcing for Reliance Fresh, Reliance Hyper & Reliance Super stores. <br />Consolidated back-office operations, pruning superfluous facilities<br />Farm-to-fork model: If done efficiently, price to consumer will be only 10% above farm-gate prices!<br />Not-To-Do<br />Don’t lose focus from “neighborhood store” . Don’t dilute it by adding apparel in stand alone Reliance Fresh stores<br />Private Labels<br />“Profits earned from them are almost double than those from third-party brands” – COO, Shoppers’ Stop<br />Reliance Fresh: 30% revenue from private labels. In future, also plans to sell its private label products (“dairy pure”, “reliance select”, “reliance value”) to small independent local stores<br />
    92. 92. Learnings from Aldi - World Leaders<br />Unique cart system to save labor time<br />Carries only 1400 fast moving grocery items instead of 30,000!<br />Less inventory, rent and electricity costs<br />All products are placed in shipping boxes directly on the shelves to save labor time.<br />Get your own bags – saves cost<br />95% private labels<br />Website<br />Promotions<br />
    93. 93. Even Wal-Mart advertises!<br /><br />
    94. 94. Simple and neat layouts<br />
    95. 95. Minimal decoration<br />
    96. 96. Thank You<br />Acknowledgement <br /><ul><li>Mr. Rajesh Kadati – Store Manager, Reliance Fresh, Bannerghatta Road, Bangalore</li></ul>References <br />India Brand Equity Foundation:<br />Centre for Monitoring Indian Economy<br /><br />Business Today <br />India Today<br />Aditya Birla Group’s Pressroom Section<br />India’s Store Wars – by Geoff Hiscock<br />Company websites of Reliance, Aditya Birla Group & Future Group<br />
    97. 97.
    98. 98. What competitors are doing?<br />Positioning<br />More. – Hamesha extra - international experience at Indian prices<br />Big Bazaar – Issesastakuchnahi- all products at one place at cheaper prices – Modern Mandi<br />Private Labels<br />More. – <br />Is pushing hard its private labels. <br />Stocked 18% of a store in Vishakhapatnam with FMCG private products (general standard is 5%). <br />Only private labels are being pushed by audio-video advertising.<br />Currently 19% of revenue comes from private labels and this number is slated to increase to 30% by 2015<br />Big Bazaar – full assortment concept formats – private labels is just another choice for customers <br />
    99. 99. The Detail in Retail<br />Hype & Interest of Retail in India<br />Is Big Retail making money?<br />Casualties: Shubhiksha, Vishal Retail, Indiabulls!<br />Spencers’ loss: Rs 300 crore in 2008-09. Is still losing Rs 12-13 crore a month. Downsizing (<1 million square feet now)<br />Shoppers Stop’s loss: Rs 64 crore in 2008-09<br />ABG’s More Chain (2007) hopes to become positive in 2012-13<br />Pantaloon highly leveraged (Rs 4,000 crore of debt)<br />Reliance Retail: loss of Rs 700 crore in 2008-09 & Rs 450 crore in 2009-10. <br />
    100. 100. Value percentage of total retail space ( including unorganized)<br />
    101. 101. Comparative Financial Measures<br />Spencer’s<br />Aditya Birla Retail<br />Reliance Fresh<br />All figures in Rupee Crore<br />