This section presents a comprehensive idea about the company’s current marketing strategies as well as the possible future strategies that should be developed during the period of 2010-2013. The section includes details of the present marketing objectives as well as the possible future objectives. Strategies are discussed in the context of 7 Ps of service marketing as retail sector is basically a part of the service sector.

Objective

5.2.3. Target Market (Mass Market)

The target market of Pantaloon includes people who belong to upper-middle and middle class in the society. All the people who are young at heart are targeted by the company. The target customers of Pantaloon are also characterized as urban and semi-urban, young and young adult who look for fresh fashion. Being a national organization, Pantaloon is well-aware of its target customers’ needs and demands, choices and tastes. Furthermore the company knows that the population of India is young as most of the people fall under the age group of 15-35 years. With the growing economy of the country, purchasing capacity of this young population is also improving on a continuous basis. As a result they are likely to spend significant amount of their income in fashion and lifestyle. This is an important fact that has significant influence on Pantaloon’s decisions regarding its target customers. As far as income group is concerned, Pantaloon stores are mainly visited by those who earn at least INR 10,000 per month. Merchandises are designed and sold to both men and women. Pantaloon selects the locations of its stores on the basis of the demographics of the people. At present, most of Pantaloon’s target customers live in the metro cities in India. However, there are several medium and small sized cities along with the six metro cities. As the overall economy of the country is growing at a fast rate, it can be expected that in the near future the medium sized cities will turn into metros and small sized cities will become medium sized. With the development of these cities, people who are living there are also likely to become more developed in terms of financial capacity. People, who do not have enough purchasing power to shop at a Pantaloon store, are expected to fall in the target customer group in the near future. As a result the target market of Pantaloon is likely to expand throughout the country. Considering such facts, Pantaloon is going to expand its physical presence by increasing the number of stores across the country.

Read the full post(Requires Facebook Login)

As far as Pantaloon is concerned, it is mainly challenged by Raheja Group’s Shoppers Stop and Tata’s Westside. However, there are different competitors for different lines of business of the company. According Mr. Kishore Biyani (CEO of the company), Pantaloon faces competition from both regional as well as national companies. In an interview he said that in the fashion section, Pantaloon’s major competitors include Shoppers Stop, Lifestyle and Trent. On the other side in the hypermarket business format, the company is challenged by RPG group’s Spencer’s, Star India Bazaar etc. Furthermore, in food business the company faces competition from regional players like Food World and Subhiksha. Pantaloon is well aware of the fact that new and growing competition from domestic as well as potential international players might affect its profitability and competitive position. With the rise in the intensity of competition, each and every player will be almost forced to reduce the prices of the products. This is likely to affect the revenue and profitability of the domestic players like Pantaloon. The global players, if allowed to enter the market, may be in better competitive position to deal with any kind of price war. Foreign players due to their efficient and effective cost structures can reduce the prices to a greater extent as compared to domestic players.

In addition to competition for the general products, companies also compete for real estate resources. In India, retail companies face severe problems regarding infrastructures, and lack of proper real estate resources is one of most important among them. Pantaloon faces tough competition from those players who are ready to make huge investment to acquire the scarce resources regarding real estates, as a result the process of renewing the licenses or leases may be affected. According to the company, “competitors may even provide attractive terms to concessionaires who currently operate from our stores which may reduce our ability to attract concessionaires” (Pantaloon Retail (India) Limited, n.d.).

Read the full post(Requires Facebook Login)

India is seen as one of the fastest growing countries in the entire world. Prior to the recent global recession, Indian economy was growing at a rate of almost 9-10%. Such an economic growth is actually the reflection of the sound financial health of various industries in the country. Retail industry, one of the most important industries in the country, has also grown at a significant rate over the past few years. The industry is expected to grow at a rate of 25% annually. The obvious response is that, the retail industry is now seen as a sea of opportunities by individuals as well as organizations which make it one of the most competitive industries in the country.

Four to five years back, 98% of the country’s retail sector was dominated by unorganized retail stores that mainly included street vendors and counter-stores. There were hardly any big players in the industry. With inadequate infrastructure and a population that believe in saving rather than in spending, the Indian retail sector was not considered as attractive by the large corporations. However, situation started to change when it was realized that actually it is a USD 320 billion industry that is growing at a rate of 5% (Compound Annual Growth Rate) and making significant contribution (39%) in the country’s GDP (Stanford, 2007). Such interesting figures gradually made the large organizations of the country show interest in the industry. During 2006-07, only 2% of the Indian retail sector was captured by the organized retailers. However, the sector is growing at a whopping rate of 35%. It is expected that by the end of 2010, the industry would cross the INR 1000 billion mark. In 2007, it was predicted that the organized retail in India will become a 66.43 dollar industry by 2010. Furthermore, it is also expected that by 2025, India will be the world’s fifth largest consumer market. In 2007, overall retail industry in the country was expected to grow by only 40-45%, but the organized retail industry, on the other hand was expected to grow by almost 200% by 2010 (Arnette, 2007). Such exciting figures and expectations have made the regional as well as global organizations give more and more attention to the Indian retail especially to the organized retail industry.

Read the full post(Requires Facebook Login)

Implementation of the growth plan can be the biggest risk: The organization intends to become around 10 times bigger than its current size in terms of floor area. However, in this expansion planning there are a number of factors which affect the organization’s plan. For most of the companies, the delivery to the shopping stores is delayed from their schedules. Due to the tough financial situation, the clearances for the new stores got bunched up. This can proved to be a bottleneck for the organization.

Shopping Culture: Although the situation is improving quickly, the shopping culture in India is still in the development phase. Even now a good number of people in India go to malls just to hang out with their families and friends and thus is largely limited to window shopping. However, the shopping culture in India is changing its characteristics. This can hinder the organization from making more sales in the shopping malls. In near future, India will see more people shopping at malls and shopping stores.

Unorganized retailers: If all the unorganized retailers come together, they can compete with a large supermarket with negligible overheads, greater flexibility in the products, prices of the merchandises, display and turnover. If this happens, that can be a threat to the retail organizations like Pantaloon.

Rising resource cost: Rising resource cost can be a threat for the organization. The employee cost and the property values are quickly moving in the upward direction. This, in turn, would increase the pressure on the retail industry.

SWOT analysis requires a systematic approach to identify and analyze the factors which are external to the organization and aligning them with the organization’s capabilities. Merely performing the SWOT analysis can be no use to define the best strategy; implementation is of utmost importance. There are some requirements of the implementation. First of all the organization must be ready for change. Managers must have a respectful position among the employees. Moreover, the employees must personally feel the need for change and become motivated towards the same.

Read the full post(Requires Facebook Login)

Higher Inventory Turns: In any retail chain management the products must move quickly from the store shelves. This can only be attained by keeping lower inventory levels and at the same time higher asset turns. The inventory level in Pantaloon is towards an upward direction mostly because of the expanded shopping store space. The organization maintains 40 % of their collection as per the recent fashion in market which piles up the stocks of the older ones. The asset turns of Pantaloon do not look impressive as of now. However in near future one can hope for improvement.

Less Conversion Level: Despite of high number of people, the conversion ratios have been very low in the malls than those in the standalone shopping stores. People go to mall to roam around with their families or friends and shopping takes the secondary place. On the other hand a standalone store has fewer footfalls, but can expect higher conversion rates. This can be a pitfall for Pantaloon, as many of its stores are located in the big shopping malls. Selling can go on a toss if the consumers maintain the same shopping characteristics in near future.

High Employee Turnover: Despite the human resource management processes, Pantaloon is experiencing a high employee turnover. This, in turn, is increasing the employee cost for the organization.
Dilution of equity to fund growth: The organization is on an expansion spree and would need a considerable amount of capital for setting up new shopping stores and other growth plans for the next few years. Pantaloon would also need funds from external sources to strategize and implement its growth strategies. Some dilution has already happened back in the year 2007.

Strain on the management bandwidth: Over the last few years, the company has expanded into multiple formats at multiple locations. Adding to it, the company has been investing in a number of various non-retailing businesses. In a few years, the organization could face the management bandwidth shortage. Decision making in the organization is decentralized with the power being distributed to the line managers. However, as the organization grows, the company must remember to strengthen its management information system (MIS), risk management and internal auditing system to ensure effective management of such a large business entity.

Read the full post(Requires Facebook Login)

The leverage of geographical spread: The shopping stores and distribution centers of Pantaloon are strategically spread in a number of regions in India. This has been quite significant to create the brand value. At the same time this also enables the company to look out for the cost effective sources of the different supply materials. In this way the company is also able to identify the potential markets so as to establish the new stores in various different regional locations. Most of the shopping stores of Pantaloon are located in the Tier I and Tier II cities. Pantaloons’ stores are set up in customer dense locations.

Capability to identify a number of new locations so as to foster promotion of new business plans: One of the significant factors behind Pantaloon’s success is its ability to find out the appropriate locale for its shopping stores and distribution centers, particularly in the tier I and tier II cities. Pantaloon has a dedicated identification and assessment team who undertakes the analysis so as to decide on these locations after analyzing the growth potential, specifically the cities where the target customers are located. Factors such as population, education level, infrastructure, occupation standards, accessibility, income level, fixed and variable costs incurred to establish and run the stores are some of the significant factors which are considered by the organization while looking for exclusive and appropriate locations. Pantaloon also has a dedicated warehouse to store the materials required for setting up the new stores. These are some of the reasons why Pantaloon has been able to establish its brand name in the Indian retail industry. Regional stores and distribution centers have helped the company to be more conscious of the people’s need and provide their quality service accordingly.

Strong and competent logistics and distribution network: The distribution and logistics network of Pantaloons comprises of seven distribution centers. Adding to it, the company owns its own fleet of 31 trucks which assists in transporting and delivering a number of merchandises in a cost as well as time efficient manner. The network is well developed and allows the organization to fulfill the consumers’ requirement in a punctual manner. The network allows the organization to acquire stores in a short span of time. The system maintains a timely generated ‘receipt of order’, which allows it to optimize the store’s ability to merchandise and reduce the transportation cost. The strong and efficient distribution and logistics network has enabled the organization to get rid of standard distribution storage space, which has been the industry practice in this retail segment. Instead of that, the organization undertakes periodical replacement of depleted stock. This has allowed the company to have the appropriate merchandises on board for its consumers. Apart from this, the organization has an efficient racking system which allows for optimized utilization of space, available for display. The whole system has enabled the organization to do with a low working capital. The carrying cost requirement is also quite low for the organization as all the systems are extremely efficient to carry on their work in a timely manner.

Read the full post(Requires Facebook Login)

SWOT analysis is a significant tool for understanding the interdependence between the organization and its surrounding environment. In order to attain the objective, many other techniques like strategic issue analysis, competitor analysis, capability analysis and market analysis are used to influence the input components of the SWOT analysis. The analysis considers the strengths, weaknesses, opportunities and threats of the organization. This establishes a framework that appraises the strategy, directs and positions the firm. The analysis is also applicable to versatile domains including business planning, competitor evaluation, strategic planning and business and product development. A SWOT analysis is a subjective appraisal of the data, organized in a logical SWOT format which injects understanding, discussion, presentation and decision making.

The SWOT analysis offers a brief overview of the significant, relevant and necessary information about both the internal assets and the market audits. This helps to derive the significant success factors and evaluates the strengths to find out competitive advantages and weaknesses. Using the analysis, the organization exploits the opportunities to have an edge over its competitors. In the process the organization is able to reduce and in turn remove the weaknesses and turn them into strategic opportunities. Furthermore, the company would be able to diminish the unfavorable situations like threats. SWOT analysis offers a number of strategic directions to the organization to develop the strategies and align it with the business objectives.
Consequently, the SWOT analysis of the organization is applicable to a number of theories like Boston Consulting Group Portfolio (BCG Portfolio), Balanced Scorecard (BSC) and other strategic management tools. Using the information offered by the SWOT analysis of the organization, new strategies are evolved to defeat the competition and to be ahead of the competitors.

SWOT analysis has been applied to analyze the strengths, weaknesses, opportunities and threats of Pantaloon so as to understand its competitive advantages and future opportunities. A comprehensive understanding of the weaknesses and an awareness of the threats are very significant for the organization to avoid and reduce the impact of both. The SWOT analysis of Pantaloon is discussed below.

Read the full post(Requires Facebook Login)

Company Overview

Pantaloon Retail (India) Limited is the country’s largest retail company that is publicly traded. It operates several retail formats in the lifestyle and value segment of the consumer market in the country. Headquarter of the company is located in Mumbai, the financial capital of India. Pantaloon, at present, operates in more than 16 million square feet of space. There are over 1000 stores that are located at 73 cities of the country. According to the recent annual report of the company, it employs more than 33,000 people (Pantaloon-b, n.d.). Throughout the country almost 190 million customers choose Pantaloon as their shopping destination. Pantaloon was founded by Kishore Biyani in 1997. From then on the company has been led by him. It is believed that Biyani has changed the face of Indian organized retail. Currently, he is the managing director as well as he Group Chief Executive Officer of the entire Future Group. As far as retail formats are concerned, Pantaloon operate retail chains in fashion segment, has a chain of hypermarket and a chain of supermarket. The fashion retail chain is renowned as Pantaloons, the hypermarket format operates under the name of Big Bazaar and the supermarket chain operates under the brand name of food bazaar. In addition to these formats, the company also deals with other retail chains like Brand Factory, aLL, Blue Sky, Star and Sitara and Top 10. Furthermore there is an online portal named futurebazaar.com.

Read the full post(Requires Facebook Login)

People: A significant and necessary component to any service provision is its people and staff. Undoubtedly, recruiting the right staff with the proper set of skill and providing them with the appropriate training is of utmost importance to deliver the services efficiently. This helps the organization to attain a competitive advantage. The consumers make their own judgments and form perceptions based on the service provided by any retail chain and their staffs the consumers interact with. The staff base therefore must possess the required interpersonal skill including the appropriate attitude for the job. The employees must have the service knowledge to offer the service that consumers are paying for. A number of organizations in Europe apply for ‘Investors In People’ accreditation (LearnMarketing, n.d.). The customers are actually lead to believe that the human resource is well equipped and have the necessary training to handle fragile customer issues.

Process: Processes are the systems which offer assistance to the organization so that it is able to deliver the service efficiently. Punctuality and quality of service are the two most important factors, which must be offered by an effective process or system. Competent and resourceful processes are expected to foster consumer loyalty and confidence in the organization.

Physical Evidence: Physical existence of the service offering is another significant factor of the service marketing mix. For instance, when one enters a restaurant, he or she expects it to be clean and having a proper ambience. In a retail chain, a customer would like to have clean floor and sufficient space with proper display of products.

Read the full post(Requires Facebook Login)

Many theories have been proposed to define the process of service marketing. Among these, the most significant theory is ‘service marketing mix’ that comprises 7 Ps that includes Product, Price, Place, Promotion, People, Process and Physical Evidence.

Product: Earlier, the notion was that a good product is capable enough to sell itself in the market. However, in today’s competitive world, no product is perceived as bad product. Organizations are even offering the right to the consumers to return the products, if it fails to satisfy them. Therefore the product must be developed in accordance with the customers’ requirements. The characters must be chosen cautiously to satisfy the target consumer base.

Price: Price is a significant determinant that establishes consumer demands. The marketing manager is the one who decides the pricing strategy of a product. The decisions must be consciously taken so as to be ahead in the competition by attracting more consumers towards the organization. Competing on price level is very much popular in retail marketing. Customers are still sensitive to price discounts and special offers. Price also has a strange perception on the consumers’ minds; something, which is expensive, must be good. Volume discounts and wholesale pricing can be used in retail marketing and also as a potential pricing strategy. Some organizations offer discounts on cash or early payments. Many products and services have seasonal pricing. Businesses can compete on the basis of price discrimination.

Read the full post(Requires Facebook Login)