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Xaviers Institute of Business Management
Studies
RETAIL MANAGEMENT
Maximum Marks: 100
Note : (i) Attempt any three
questions from Section A.
(ii) Section B is compulsory.
(iii) All questions carry equal marks.
(ii) Section B is compulsory.
(iii) All questions carry equal marks.
SECTION
A
1. Define
retailing. Discuss the scope and prospects of retail sector in the Indian
context, describing the drivers of growth of retailing in the country.
2. (a) What
are the stages of consumer decision making and their impact on retail
strategies ? Explain with suitable examples.
(b) What
makes location decisions in retailing strategic in nature? Discuss with
suitable examples the factors necessary to consider before selecting a final
site for any store.
3. (a) How
important is the role of pricing in retail marketing mix ? Briefly discuss the
various retail pricing approaches available to the retailer.
(b) What are
loyalty programmes? What purpose do they serve in the overall retail business?
Explain.
4. Briefly
discuss the various types of non-store retailing currently in vogue. What are
their limitations?
5. Write
notes on any three of the following:
(a) Functions of Retailers
(b) Wheel of Retailing
(c) Responsibilities of Merchandising Manager
(d) CRM
(e) Ethical Responsibilities of Retailer
SECTION
B
6. Read the
case given below and answer the questions given at the end of the case.
Margin
Free Market Private Ltd. Subhiksha in
Chennai, Margin free in Kerala, Bombay Bazaar in Mumbai, RPG'S Giant in
Hyderabad, and Big Bazaar in Kolkata, Hyderabad, and Bangalore have one thing
in common - they all price their products below MRP. Discount stores are slowly
arriving in India and industry insiders feel they will spearhead a revolution
in organized retailing. On the list of top retailers in the world, quite a few
are discounters. Around 60% of the business abroad comes from this format.
Incidentally, the largest retailer in the world, Wal-Mart, is a discount store.
Margin Free
was registered as a co-operative society in 1993 in Kerala and entered the
supermarket business in 1994. It is run by the Consumer Protection and Guidance
Society, a charitable organization based in Thiruvananthapuram. Today, it has
emerged as India's number one supermarket chain with 150 stores and a turnover
of Rs. 450 crores. Margin Free purchases directly from manufacturers at
ex-factory price and sells at lower prices than the MRP, as it eliminates the
margin accrued in the traditional manufacturer-stockist-wholesaler-retailer
network.
Margin Free
takes extreme care while pricing the products through its entire stores. It has
employed software which evaluates the price by minimizing profits. Every store
is computerized and utilizes the software to determine the pricing. This helps
in ensuring that the products are rationally priced.
Margin Free
has found exceptional success in its scalable franchised model. It is now
looking to upgrade to a central warehouse concept. which will help it manage
growth further. The success of Subhiksha and Margin Free indicate that the
discount war will hot up in the coming months but it will be the customer who
will emerge as the final winner.
Margin Free
also gets an average credit of 20-22 days from suppliers, which it sells, on an
average in 10 days, thereby even earning a notional interest on its sales also.
Its strategy has made it flush with funds, which can finance further expansion.
Margin Free uses its customer base as a bargaining power to strike discount
deals. Any dealer who wants to set up a Margin Free store has to buy at least
rupees one lakh worth of share of the main Margin Free holding company. Margin
Free has a consumer base of 6 lakhs and it sells them consumer cards at Rs. 40
per year Customers who buy using this card get discounts on bulk purchases and
also on government subsidized products like Rs. 2 per kg rice.
The stores
are now opting for a major expansion drive. A key part of this is the
introduction of private labeling, which is the season's flavor in the retailing
industry. For the purpose they have shortlisted 15 items - all generic labels
like rice, sugar, etc. - and will add to the list in future.
Hence, they
will be in a better position to provide quality stuff at considerably low
prices within easy reach of an average middle-class family. For example, a
packet of tea which sells for an MRP of Rs. 120 at one of the corporate
retailers will be available for Rs. 90 at the Margin Free stores.
The chain is
now planning to open huge Margin Free hyper markets, The first such hyper
market, featuring an array of wares and spread over 50,000 square feet of well-laid
out space, is planned to open at Ernakulum. The two other hyper markets would
be opened in Thiruvananthapuram and Kozhikode.
If the
success of retail activity is measured in the number of outlets, the existing
240-odd chain of franchisees must have already made Margin Free the largest
'pure retail chain' (as distinct from retailers who are manufacturers) in the
private sector Even going by the number of footfalls, the Kerala-based retailer
must have already beaten competition by a handsome margin.
The hyper
markets will feature almost all conceivable retailing products under one roof -
textiles, leather, cosmetics, provisions, electronic goods, consumer durables,
grains; and grocery. As for ambience and class, they are most likely to
resemble the Giant retailing chain operating out of Hyderabad and other cities.
The hyper
market would not dabble in imported items - Chinese or otherwise - that are
flooding the retail market right now. The cooperative society is in the process
of mobilizing resources for the hyper market initiative. It plans to rope in
outside investments over and above what the Consumer Protection and Guidance
Society hopes to raise on its own.
The Society
chose Ernakulum first because it happens to be the most commercialized city in the
state Also, the comparable purchasing capacities are higher there. The
nomenclature for the hyper market has a Margin Free prefix to it, seeking to
build on the enormous trust that the discount chain has been able to build over
a span of eight years of existence.
The
management feels that the Margin Free retail chain has been able to earn the
wholesale trust of consumers in a very short span. However, in its journey to
success, the Margin Free stores have made life slightly uncomfortable for
entrenched interests who have, on one hand, been fleecing consumers and on the
other, resorting to indiscriminate under invoicing to avoid tax. The latter
leads to loss of crores of rupees in realizable revenue for the state
government.
Every month,
Margin Free is opening up to 12 stores and the number has grown to 241 at last
count. The chain has spread to literally all parts of Kerala. It has seven
franchisees in neighboring Tamil Nadu already and two in Karnataka. The overall
turnover has grown to Rs. 600 crore.
Questions
:
(a) What has
been the role of pricing strategy in the success of Margin Free Markets?
(b) What are
the salient features of Margin Free Market pricing strategy ?
(c) Analyze
the external and internal factors that have made it possible to sustain the
present pricing strategy of Margin Free Market.
(d) Discuss
the limitations of the existing pricing strategy of Margin Free Market. Suggest
appropriate changes.
Assignment Solutions, Case study
Answer sheets
Project Report and Thesis contact
ARAVIND – 09901366442 – 09902787224
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