CONSUMER SALES PROMOTIONS OF APPAREL RETAIL STORES

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Acknowledgement
I, Mr. Parinay Shashikant Matkar (Swayam Siddhi College of Management and
Research, Bhiwandi), would like to thank my project guide, Prof. Tushar Chakravarty
for his valuable guidance and support which has helped me immensely in completing
this project.
I also want to thank the college director Mr. Nilesh Chatterjee and other professors,
my friends and colleagues, who have directly or indirectly helped me out in the
completion of my project.
Lastly, I would like to thank the entire staff of all the stores for their cooperation
during my project work.
Executive Summary
In a market like India, there is a constant clash between challenges and opportunities
but chances favour those companies that are trying to establish themselves. To sustain
in such a volatile market, companies have to bring innovative solutions. With the
advent of modern format retailers and the growth of plastic cards, affluent urban
Indians are shopping like never before.
As apparel retail is led by fashion, a retailer needs to keep a close watch on fashion
amongst teenagers, as they are the trend setters. Seasonal variations on stocking
pattern and need to clear inventory at the end of season should be understood by
apparel retailer. This highlights the importance of sales promotions- short term
activities which induces trade or consumer to buy now, rather than in future, as the
value of apparel after the season goes down substantially and inventory carrying
burden turns out to be very high. Apparel retailer needs to understand critical role of
sales promotions.
The topic of the project is to perform a study on consumer sales promotion activities
of the apparel retail stores in Mumbai. To accomplish the above, three apparel retail
stores of different well known business groups, located in Mulund (W) area of
Mumbai were surveyed and interviewed. The responses were analyzed and results
were obtained. The core purpose of the survey was to study the sales promotion
activities performed by apparel retail outlets which results in stimulating product
interest, trial, purchase and stock clearance.
Introduction to retailing
The revolution in retailing industry has brought many changes and also opened door
for many Indian as well as foreign players. In a market like India, there is a constant
clash between challenges and opportunities but chances favour those companies that
are trying to establish themselves. Thus, to sustain in a market like India, companies
have to bring innovative solutions. Indian market has potential to accommodate many
retail players, because still a small proportion of the pie is organized.
Retailing is still in its infancy in India. In the name of retailing, the unorganised
retailing has dominated the Indian landscape so far. According to an estimate, the
unorganized retail sector has 97% presence whereas the organized accounts for
merely 3%. Industry has already predicted a trillion dollar market in retail sector in
India by 2010. However, the retail industry in India is undergoing a major shake-up as
the country is witnessing a retail revolution. The old traditional formats are slowly
changing into more complex and bigger formats. Malls and mega malls are coming up
in almost all the places, be it metros or the smaller cities, across the length and
breadth of the country.
A McKinsey report on India (2004) says organized retailing would increase the
efficiency and productivity of entire gamut of economic activities, and would help in
achieving higher GDP growth. At 6%, the share of employment of retail in India is
low, even when compared to Brazil (14%), and Poland (12%). Govt of India’s plan of
changing the FDI guidelines in this sector speaks of the importance attached to
retailing. Recent moves by big corporate houses like Reliance Industries has further
fuelled the major investments in retail sector. A strategic alliance, land acquisitions in
prime areas give the essence of the mood in this sector. Both MNCs and Indian firms
want to get their share of this burgeoning pie. Notable in Indian firms are Pantaloons
Retail & Big Bazaar, Trent’s Westside, Shopper’s stop, Reliance, Subhiskha, Wills
Lifestyle stores, Cafe Coffee Day, which are present in India in different retail
formats. Wal-Mart stores have just started operations in India. Some leading retail
coffee chains of the world like Starbucks, Barnies are planning to expand in a major
way in India.
The Indian retail sector
India is the country having the most unorganized retail market. Traditionally it was a
family’s livelihood, with their shop in the front and house at the back, while they run
the retail business. More than 99% retailer’s function in less than 500 square feet of
shopping space. The Indian retail sector is estimated at around Rs 900,000 crore, of
which the organized sector accounts for a mere 3 per cent indicating a huge potential
market opportunity that is lying in the waiting for the consumer-savvy organized
retailer. Purchasing power of Indian urban consumer is growing and branded
merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages,
Food and even Jewellery, are slowly becoming lifestyle products that are widely
accepted by the urban Indian consumer. Indian retailers need to take advantage of this
growth and aiming to grow, diversify and introduce new formats has to pay more
attention to the brand building process. The emphasis here is on retail as a brand
rather than retailers selling brands. The focus should be on branding the retail
business itself. There is no doubt that the Indian retail scene is booming. A number of
large corporate houses —Tata’s, Raheja’s, Piramals’s, Goenka’s — have already
made their foray into this arena, with beauty and health stores, supermarkets, selfservice
music stores, new age book stores, every-day-low-price stores, computers and
peripherals stores, office equipment stores and home/building construction stores.
Today the organized players have attacked every retail category.
Apparel retail industry
In India, clothing retail accounts for 36% of organised retail business. It is the largest
sector. Ready-made apparel accounted for an estimated 20% of domestic clothing
sales in 2005. With growing working women wearing western wear to work, and
pressed for time, market for good readymade clothes is likely to grow. India is a filmcrazy
nation, and the largest producer of films, with more than 1,000 every year. They
provide entertainment and an escape from reality for India’s masses, and set the
popular fashion trend. Bollywood fashions have become pan Indian. They affect
various sectors of the market including clothing, footwear, weddings and fashion
accessories.
With the advent of modern format retailers and the growth of plastic cards, affluent
urban Indian women are shopping like never before. They spend mornings browsing
in stores looking for deals or latest styles. Upper income urban women are adopting
ethnic wears. These are designer clothes that incorporate Indian motifs, ethnic fabrics
and are a fusion of western and Indian styles.
In the large urban centres, apparel retailers, like Shoppers Stop, Westside and
Pantaloon have popularised their private labels, which have attracted urban shoppers.
Westside carries only its own private labels, while for the other stores, 20-30% of
their apparel turnover is from private labels. Customers have loyalty to a store rather
than any particular garment brand. This has led to a thriving unbranded or local brand
market for ready-to-wear clothes leading to severe competition. Hence organized
retailers like Lifestyle, for instance, has a loyalty programme called `The Inner
Circle', while Pantaloons offers a `Green Card' Rewards programmes, Westside has
`Club West' to woo the customers. Customers look to design and fit of the clothes,
and use the shop’s name as a quality standard.
Characteristics of Apparel retail sector
As apparel retail is led by fashion, a player needs to keep a close watch on fashion
amongst teenagers as they are the trend setters. Role of Bollywood in spreading
fashion needs to be understood. Seasonal variations on stocking pattern and need to
clear inventory at the end of season should be understood by apparel retailer.
Typically once an item is sold from the outlet, retailer ensures that there is no
repetition of same. It gets replaced by different design, style and colour. Importance
of store layout, décor is very critical. A person visiting the store frequently likes to see
changes in the layout otherwise he may carry the impression that stocks are not
moving out of the store. Category management becomes very crucial function as
transformation of design into production and delivery has to be completed before
fashion or fad changes in the market.
This highlights the importance of sales promotions- short term activities which
induces trade or consumer to buy now rather than in future as the value of apparel
after the season goes down substantially and inventory carrying burden turns out to be
very high. Apparel retailer needs to understand critical role of sales promotions.
Attractive promotions induces purchase acceleration, stock piling and brand switching
on the part of a consumer which substantially reduces retailers’ financial and
inventory risk and consumers’ financial risk and psychological risk.