HYPOTHESIS OFFERING DISCOUNTS INCREASES THE SALES OF A PARTICULAR SHOP

1. DISCOUNT STORES STEAL THE THUNDER

DECEMBER 10, 2007 08:57 IST

They are considered the poor cousins of retailing. But discount stores that sell apparel and accessories
at 30-40 per cent lower than the marked price are giving the primary retail chains a run for their
money.
Consider this. According to India [ Images ] Retail Report prepared by Images, discount stores are
expected to grow 30-40 per cent every year. Of the total organised apparel, footwear and accessory
retail market of Rs 26,400 crore (Rs 264 billion), discount retailing already accounts for Rs 11,880 crore
(Rs 118.80 billion), or 45 per cent. Analysts said this segment will easily become a Rs 26,000-crore (Rs
260 billion) market in the next three years.
No wonder, discount retailers such as Future Group's Brand Factory, Arvind Brands' Megamart,
Provogue's Promart and The Loot, are planning to invest nearly Rs 1,000 crore (Rs 10 billion) and
launch nearly 500 stores by 2010.
The expansion, which will also include tier-II and tier-III towns, is based on research studies that
consumers in these towns aspire for good labels but at a cheaper price. Bipin Gurnani, chief executive
of Promart, said his aim is to create a huge "second rung of brand loyalists".Analysts said a plethora of
brands flooding the marketplace accompanied by rapidly changing trends have created a huge demand
for higher number of multi-brand discounted stores.
"More number of brands means higher surplus stock after the end of every season. So you have more
number of brands that need liquidity. That's feeding the demand for more discount stores," said
Purnendu Kumar, associate director of retail consultancy Technopak. However, Kumar has a note of
caution for discount stores, saying they will have to move beyond stocking surplus stocks of their own
company's brands and stock other brands as well."Having a number of national and international
brands will obviously draw more footfalls than only having your own brands at the factory outlets, Also
the discounts we offer at the shop attracts customers and thus footfall increases drastically after the
discounts are offered." he said. Higher volumes compensate for the lower margins. Naimish Dave,
director, OC & C Strategy Consultants, said, "if you sell 100 shirts a day at normal stores and sell 200
shirts even with a 50 per cent discount, the volumes take care of lower margins."
Megamart, the off-price stores of Arvind Brands, is at the forefront of the expansion drive of discount
stores. From 75 stores at present, the chain plans to open 200-plus stores, in the range of 3,000 sq feet
to 4,000 sq feet, in smaller cities in the next three years.The firm isn't ignoring the big cities and is
planning to open 30 stores (40,000 to 60,000 sq feet each) in the major cities by the same time. It has
earmarked an investment of Rs 400 crore (Rs 4 billion) for the expansion. Megamart witnessed a five-
fold increase in its topline from Rs 20 crore (Rs 200 million) in 2003-04 to Rs 100 crore in the current
financial year.
''It is a win-win situation for the company. While our discount stores clear our unsold inventory, the
main stores can launch new merchandise every season,'' says KE Venkatachalapathy, business head,
Megamart, the discount store of Arvind Brands.Pantaloon's [ Get Quote ] Brand Factory which
currently has only six stores plans to have 55 by 2010, with an investment of Rs 275 crore(Rs 2.75
million). Spread over an area of 70,000-1,00,000 sq ft each, these outlets offer close to 120 brands
such as Reebok, Levi's, Pepe, Wrangler, Provogue, Van Heusen, Esprit and Arrow.
Provogue India which opened its discount chain Promart in May this year plans 3-4 stores every
financial year with an investment of Rs 3.5 crore (Rs 35 million) per store. Another Mumbai-based
discount retail chain The Loot is planning to take the tally of its stores to 200 by 2010 from 25 now. Jay
Retailing and Merchandising Pvt Ltd, promoters of The Loot, is planning to go public in 2009.
"We are growing 20 per cent on the same store level. We plan to increase our turnover to Rs 200 crore
(Rs 2 billion) by 2010 from Rs 60 crore (Rs 600 million) now,'' said Jay Gupta, managing director, The
Loot.
Raghavendra Kamath in Mumbai
Source:


2. APNA BAZAAR CASE


SITE -http://www.managementparadise.com/forums/archive/index.php/t-6944.html
aartirjain
September 24th, 2006, 06:45 PM
CONSUMER
CO-OPERATIVES

Apna Bazar is probably the oldest and largest consumer co-operative multi-state society with a
customer base of over 12 lakhs. The Rs 140-crore retail chain that, for over 55 years remained largely
middle-class has 80 outlets in Mumbai, Thane and the neighbouring Konkan region. It has recently
opened its first shop outside the Maharashtra state, in Goa. Apna Bazaar has developed a strong brand
image in the mind of the consumers. It enjoys strong consumer loyalty. There are just 4%-5%
consumers who shift over to other retail stores.
Brand name Mumbai Kamgar Madhyavarti Grahak Sahakari Mandal Ltd
Date of Incorporation 9th May 1948
Constitution Multi State Co-operative Society
Sector Private
Industry Retailing
Registered Office 106-A, Govingi Keni Road, Naigaon, Dadar [East], Mumbai 400014
TRADE DISCOUNTS-
The purchases are made in bulk and the discounts received from the suppliers are passed on to the
consumers in various forms. Usually the benefits are passed on to the customers are in the form of
reduced prices on almost all the commodities at a discount of 5% on the MRP. Other than that if the
purchases exceeds Rs.3000/- in 3 months then the consumers are given 1% rebate i.e. they can take
home an article equivalent to that amount absolutely free of cost. Other than that consumers are given
Bonus points on the purchases. Besides if the purchases exceeds Rs. 500/- at a time than they are given
a gift on the spot.
FOOTFALLS-
In big stores, like the departmental store at Andheri, there are 2000 to 3000 footfalls in a day (on
weekdays) & on weekends there are around 3000 to 3500 footfalls. In small outlets there are around
100 footfalls on regular days .On weekends there are 200 to 250 footfalls. The footfalls are more
especially on Sunday. The footfalls are more in evening between 6.30pm. & 8.30pm .Whereas the
footfalls are comparatively low during the afternoon slot of 1.30-3.30 pm. Keeping this in mind stores
are closed down during this time. In this time the staff are rearrange the merchandise in the store.
SALES-In the financial year 2003-04 the organizations total sales amounted to Rs. 127 crores .Also the
Actual gross profits Rs.1215 (lacs)
CONCLUSION
Cooperatives are successful because they provide valuable services and save consumers money. Since
the primary goal of cooperatives is to meet needs, not generate profits, they can serve their members
at low cost.Thus attracting customers.








QUESTIONNAIRE

Q1.WHAT IS YOUR GENDER?
A. MALE B.FEMALE
Q2.WHAT IS YOUR AGE?
A.10-25 B.26-40 C.41-65 D.ABOVE 65
Q3. HOW OFTEN DO YOU SHOP?
A. ONCE A WEEK B. ONCE IN A FORTNIGHT C. ONCE A MONTH D. ONCE IN SIX MONTHS
Q4. DO YOU PREFER A DISCOUNTED STORE OVER COSTLY STORE OR MALL?
A. YES B.NO
Q5. DISCOUNT ON A PARTICULAR ITEM INFLEUNCES YOUR BUYING DECISION BY
WHAT PERCENTAGE?
A.0%-NO INFLUENCE B.50% - SOME INFLUENCE C. 100% -COMPLETE INFLUENCE
Q6. DOES A DISCOUNT, ON A BRANDED PRODUCT AVOIDS YOU FROM BUYING THAT
PRODUCT?
A.YES B.NO C.ITS ATTRACTS ME MORE
Q7.DO YOU END UP BUYING MORE BECAUSE OF THE DISCOUNTS BEING OFFERED AT
STORES?
A. YES B.NO
Q8. HOW MUCH MORE MONEY, DO YOU END UP SPENDING WHILE SHOPPING FROM
A DISCOUNTED STORE?
A.BELOW Rs1000 B.1000-2500 C.2501-5000 D.ABOVE 5000