LOYOLA INSTITUTE OF BUSINESS ADMINISTRATION

(LIBA)
A Jesuit Business School
Loyola College Campus | Chennai 600034 | TN India

RETAILING

ASSIGNMENT – I
OUTBOUND ACTIVITY

GROUP – III

ANAND CHUNKAPURA – F19008

MURUGAIYAN V S – F19044
CHRISTUS COLMAN – F19084
K RAHUL RAO – F19120

[Date: 03-08-2020]
1. Keep a diary of where you shop, what you buy and how much you spend for 2 weeks.
How much did each retailer meet your shopping needs? Watch your parents/elders to
do the same. Tabulate your results by type of retailer. Are your shopping habits
significantly different or are they similar to those of your parents? Do you and your
parents’/elders shopping habits differ? How is it different?
Shopping Habits of Me

Amount Spent / 2
Place of Shop Product Purchased
weeks
Notebooks and Stationery
Pop and Mom Stores
Chocolates and Snacks
500 - 800
Daily Essentials & Toiletries
Online
Glasses and Electronics

Shopping Habits of Parents

Amount Spent / 2
Place of Shop Product Purchased
weeks
Kirana Stores Rice alone
Fruit Shop & Shandy Fruits & Vegetables 2000 - 2500
Super Markets Weekly Home Purchases

My shopping habits are significantly different from that of my parents as my shopping need
has always circulated around convenience and their needs revolve around the privilege to
touch, feel and select items looking for purchasing of products from the places which serve
them at utmost quality. They have always preferred offline buying over the online purchase
which has been changed during the pandemic, yet they maintain their preference of hygiene
and quality in the product intact.
2. Describe how the supermarket where you shop is implementing organic, locally
grown, ethnic and private label merchandise. If any of these categories of merchandise
are missing, explain how this could be a potential opportunity for growth for this
supermarket.

Whenever we enter a super-market, the produce department is usually the first thing we lay
our eyes upon. This is because the department is usually located in the front of the
supermarkets and the variety in colours is what visually attracts the customer. This visual
presentation stimulates the customers and makes them have a positive perception about the
quality of the supermarket. Organic merchandising has gained ground in the developed
countries and is slowly entering into the realms of the developing countries as well.
Customers have become more aware than ever. Most shoppers these days prefer to consume
healthy and fresh foods incubated in a protected environment. Therefore, fresh organic
produce options have been noticed in and around super-markets. The product presentation is
of crucial importance as it provides a visual stimulation to the customers. Studies have even
shown that 62% of the customers buy items on an impulse based on visual merchandising of
products. This is known as display psychology. The supermarket near my house is fairly big
in size and has made excellent use of this concept. They have utilised the concept of colours
brilliantly. Brighter colour products were displayed in the frontline of the store and the duller
ones were kept at the back. Packaging was another factor that wowed me. A general
observation shows that a product is considered high quality/healthy when its packaged
rightly. The supermarket I’ve visited uses environmental free wrapping for such products.
Funnily enough, it obtains its wrapping from its recycling subsidiary itself thus avoiding extra
costs.

Private labelling merchandise is basically a third-party producing a product to later on be

modified and then rebranded by a different company. Products like Heinz baked beans are
actually produced by TESCO but are branded as Heinz to enjoy a good reputation. Both the
super-markets I’ve visited have utilised private labelling very efficiently. They have fixed
contracts with 3rd parties to produce a plethora of FMCGs like milk, grains, pulses etc and
then they package and brand it under their own brand. These commodities are usually
cheaper than the regular branded items since they are in control of the discounts offered
without compromising on the quality. A very good example that I have noticed are the pulses
offered by Ratnadeep. Their average price per kg is much lower than the branded pulses I
have witnessed in the market. Another example is Heritage Dairy; they have contracts with
farmers who supply them with milk. This milk is further processed and sold in their retail
stores at a much lesser price than other branded dairy products.

Ethnic merchandise is something that I have not witnessed in many super-markets. This
concept works better in areas where minorities aren’t represented properly despite being a
decent chunk of the population. India fortunately has most of the minorities needs covered in
the supermarkets I’ve visited.

Therefore, a conclusion can be drawn about the fact that a majority of well to do super-
markets have taken these parameters seriously thus deriving huge benefits from them.

Supermarkets Inferred: Ratnadeep, Heritage, SoFresh.

3. During your visit to your supermarket keep an eye for the activities being done by the
supermarket to add onto their incomes. List down the same in detail.

 Retail displays and In-store initiatives

o Vibrant windows, large signs and eye-catchy products on the display.
o The displays are multidimensional with varied visual elements.
o The displays are focal point oriented to ensure the customers see the exact
detail or item and get influenced.
o Best products are displayed on the front and/or in the center.
o Displays are updated regularly to make them look fresh and coping up with
the trends.
o If these in-store efforts are driving results, then the revenue could even be
doubled by them.

 Reducing the Waiting Line

o Keep the store with adequate number of staff, particularly during the peak
hours and busy seasons.
o They manage power perimeters to engage the customers who are waiting by
offering the products at a discount.
 Merchandise Management
o Keeping the track on inventory for reordering and arranging of products on
the shelves.
o Sometimes, they maintain lesser SKUs to influence the customers to buy the
next higher SKU at a minimum discount.
 o Forecast the demand from the current footfalls and trends.
o They ensure not to lose out on stock.
 Store Management
o Store Layout is arranged in such a way it is convenient for the customers to
locate the products.
o Shelf arrangement of products is made sure to attract the customers which
influence their buying behaviour helping them to locate the product easily. For
example, the pathway of shopping has been arranged in an anticlockwise
circulation. This places the right hand, which is more active, in the proximity
of products so that the reflexes of curious consumers would make them pick
up and read through the product offerings.
o Indian consumers are more comfortable and easily relate to their regional
language. Thus, products are labeled in their regional language on the
shelves of groceries and dry fruits are presented in their regional languages for
making it convenient to the customers.
o Consumers prefer the privilege to touch, feel and select items offered at a
large pool of variety and range of products which is ensured is most of the
cases.

 Word of Mouth
o Salespeople talking about your business and the quality of the products. It
could be used for driving more traffic to the retail stores.
o Consumers in India are generally not open to trying out new products. Trial
Marketing / Sample Marketing is done to make the consumers use it.
 Relevant Discounts
 o Purchases of Indian Consumers are hugely linked with festivals. Retailers
make use of this behaviour and offer festive discounts in order to attract more
customers. Offers on bulk purchase also attract Indian consumers more.
o The behavior of Indian consumers is significantly influenced by their culture,
tradition and customs. Therefore, products are in line with their cultural
practices for natural increase in purchases.
 Customer Service
o Customers are welcomed and guided throughout their purchase not only to
enhance their satisfaction but also to influence their buying behavior.
o Incase of defects, the sales force exchanges the defective product with a new
product. If the customer seems unsatisfied, the store manager also provides a
discount to ensure the customer revisits.

5. Choose a U.S. - based retailer that wants to open a new store outside the united states
for the first time. Which country should it pursue? Why?

BEST BUY – INDIA

About Best Buy:

Best Buy Co., Inc. is an American multinational consumer electronics retailer headquartered
in Richfield, Minnesota. It was originally founded by Richard M. Schulze and James Wheeler
in 1966 as an audio specialty store called Sound of Music. In 1983, it was re-branded under
its current name with an emphasis placed on consumer electronics. Best Buy operates
internationally in Unite States, Canada and Mexico.

Best Buy sells consumer electronics and a variety of related merchandise, including software,
video games, music, mobile phones, digital cameras, car stereos, and video cameras, in
addition to home appliances (washing machines, dryers, and refrigerators), in a non-
commissioned sales environment. Under the Geek Squad brand, Best Buy offers computer
repair, warranty service, and accidental service plans. Best Buy provides an online
community forum for members, where consumers can discuss product experiences, ask
questions and get answers from other members or retail product experts.

Traditionally, electronics stores displayed products that were locked to shelves. Hands-on
trials were constrained. Rather than grouping products by brand, they were grouped by type.
While this made intuitive sense and allowed for literal side-by-side comparison, it didn’t
work so well in practice. The crammed displays limited how much manufacturers could
highlight the specific features of their products. The brands meshed together and so did their
products.

Best Buy is going in the opposite direction. The store is like a showroom, inviting companies
like Samsung, Apple and Microsoft to set up unique branded areas within the store to
showcase products.

The mini shops are true to global branding. The Apple area takes the sleek wooden tables
from their Apple Stores and brings them into Best Buy, integrating the design into the greater
store with a unique eye for continuity.

Overall, the sleek areas allow for more space and more opportunity for shoppers to interact
with the brands – the products and the sales staff are finally freed up to offer exciting In-Store
Shopper Moments.

Why India:
Consumer electronics topped India’s online shopping list last year, accounting for 17 percent
($4.5 billion) of the total $29 billion consumer electronics retail sales in the country.
Growth in the Indian consumer electronics market can be attributed to increases in demand
from households, changing lifestyles of individuals, easier access to credit, and rising
disposable incomes. Intentional reduction by the Government in the import bill, coupled with
government and corporate spending is anticipated to complement the positive demand in this
market. The India consumer electronics sector has attracted several strong investments in the
form of merger & acquisition policies practiced by key participants of the global market and
other FDI inflows.

Purchasing expensive electronics is not something consumers take lightly. They spend time
researching products, comparing prices and finding the right fit for their needs. A lot of this
research takes place online. But there’s opportunity and need for more education on the store
floor.

Best Buy recognized this need and their in-store advantage and invested in their customer
support staff. They retrained employees so that they could provide informed customer service
and better educate shoppers. If they can follow the same idea in India, Indian consumers are
going to love the retailer.

Apart from the online presence, Best Buy’s stores provide consumers important physical
interaction with products. This is something Indian customers always wanted and never got
of much attention from the retailers in India. Croma and Reliance are the only major players
who are actually doing this order online and pickup at store strategy in India. They are not
widely promoting it as the

These physical stores can serve as warehouses and distribution centres, as Best Buy uses its
store inventory to fulfil online orders. Additionally, physical stores allow consumers to
purchase online, but not have to wait for products to be shipped to their home. As they can go
and pick it up without any delay.

6. Think of your top five favourite retailers. Are they regional, national, or global
companies? Could any of the regional or national companies have success in the future
in a global market? Explain your response. What countries were the original home for
global retailers? What contributed to the success of the expansion from the home
country to an international market?

Top five favourite retailers:

1. Walmart Inc.
2. IKEA
3. Alibaba
4. Reliance Retail
5. The Chennai Silks

Are they regional, national, or global companies?

Global Company National Company Regional Company

Walmart Inc. Reliance Retail The Chennai Silks
IKEA
Alibaba

Could any of the regional or national companies have success in the future in a global
market?

Reliance Retail
Reliance retail is the only Indian retailer to be featured in the top 100 global retailers. The
Retail vertical of Reliance group has seen phenomenal growth in recent years and is said
expected to grow further with its plans to acquire future retail. The Reliance Retail’s revenue
has compounded at 37% over the past years and it is the largest retailer in India
operating over 11,300 stores pan India with ~26 million square feet of retail space and is
growing rapidly. Reliance Retail has adopted a multi-prong strategy and operates
neighbourhood stores, supermarkets, hypermarkets, wholesale cash & carry stores, speciality
stores and online stores and has democratized access to all types of products and services
across all segments for all Indian consumers and has established exclusive partnerships with
many revered international brands such as Armani Exchange, Diesel, Superdry, Hamleys,
Spencer and many more. Yes, with the enormous growth potential and expansion strategy
Reliance Retail will have success in the global market.

The Chennai Silks

The Chennai silks is the largest retail chain in South India and is based in Tirupur. The
Chennai Silks has emerged as an integrated textiles company and registers 30000-40000
footfalls a day. It has 17 showrooms and these stores together amount to Rs. 10 crores
revenue daily. Apart from catering to the domestic market the group also exports to countries
like the US, Europe, Japan amongst others. It also manufactures products for brands like
Marks & Spencer, Disney, Hanes, Decathlon, Walmart, and many others. This division
generates close to Rs 350 crores of revenue per annum. The Chennai Silks lacks in its retail
presence across India with very few retail outlets compared to its competitors. Expanding its
retail business across the nation would be the first stepping-stone to a successful global
presence in the future. The company could also take advantage of its export business and its
tie-ups with international brands to go global. At the near future, it would be ambitious for
the company but yes with proper strategy and a prominent national presence, the company
has good prospects of being successful in global markets.
What countries were the original home for global retailers? What contributed to the success
of the expansion from the home country to an international market?

Walmart Inc.
Origin - Arkansas, United States
The company had lost significantly against its competitors and the one simple way was to go
international. American stores were struggling, Walmart planed and focused more on the areas
where there was a potential to expand. Few factors like price leadership, enhanced e-
commerce operations had priority and the company had identified that there was a significant
and sustainable growth opportunity in China. China had a major potential market for retailers,
but the challenge was rules and regulations associated with the business. Walmart conducted
a series of experiments to understand the consumers and presented different store formats
such as a supercenter, a wholesale warehouse, and stores that targeted specifically the male
market. Walmart opted to buy over 85% of its supplies through Products manufactured in
China by global suppliers and Products from local suppliers. This arrangement was made to
adjust the craving of neighbourhood clients for quality United States-made merchandise and
the weight from nearby governments to buy domestic products.
Walmart adopted the below strategy which led to its success and presence in international
markets.
The first approach for Walmart is to acquire a dominant player
This is a strategy the company used recently while being introduced to Germany when it
acquired the Wertkauf hypermarket chain of 21 stores and one of the most profitable in the
country.
Walmart spent an estimated two years contemplating acquisitions including Britain’s Tesco,
Germany’s Metro, and the Netherland’s Marko. Wertkauf stores are very similar to
Walmart’s with a format of high-quality employee teams and locations. The stores are
already larger than any average German market.
The second approach for Walmart is to acquire the weaker companies
This proved to be an effective approach. The global economy has the potential to turn a weak
player into a more prominent company in a short time, so Walmart looks into this as a
potential.

IKEA
Origin- Älmhult, Sweden
Rising from a very small domestic market in Sweden, Ikea’s managers aspired the growth to
happen outside the home borders. Right from the beginning international expansion was part
of the strategy. Patience was the key to its global expansion. The second stored opened only
afters years following the first which was opened in the United States. It had postponed the
opening of that first India store several times as the company does not follow "open first,
figure it out later “unlike other competitors. The overall ambience and business model had
been very consistent while adapting to local taste levels and cultures. The company has
adopted customization of its products based on the regions of its operations. The products are
country neutral. The simple, straightforward design aesthetic works almost anywhere, the
majority of its products that are consistent across international borders. The global product-
sourcing model is followed by buying merchandise from around the world and not just from
China and India. Ikea had developed a cost-efficient and timely system to get its products
from factory to selling floor, regardless of where that floor is. These factors had led to the
success of the expansion from the home country to an international market.

Alibaba
Origin - Hangzhou, China
The inception of Alibaba was towards the end of dot.com frenzy. Jack Ma learnt of the
internet when he went to the United States in the early 1990s. Unlike the United States, China
was used to the internet platform. There was growth potential and hence with an initial
investment of $ 5 million Alibaba’s online retail platform was launched. The launch of
Alibaba’s online retail platform was very well-timed, and the consumer internet boom had
only just arrived in China. With a funding of $ 21 billion from SoftBank, a very positive note
for growth and a rise in e-commerce platform was noted. Post this investment, the money
kept pouring in. A year after this influx of cash, Alibaba launched Taobao.com. Looking at
the positive response received, the company ventured to various other platforms. Having
secured a funding of $ 25 billion, Alibaba was declared the largest and the most profitable e-
commerce platform in the world by the year 2016. With a market value of $ 231 billion, there
was no stopping this company. The informal employee beneficial policy at Alibaba was a
major reason for this stupendous growth.