ROLE OF PROMOTIONAL OFFERS IN THE GROWTH OF RETAIL INDUSTRY

~ Role Of Promotional Offers In The Growth Of Retail Industry ~

Agenda Indian Retail Industry- Introduction Statistics Organized Retailing Unorganized RetailingSales Promotion Description Why Sales Promotion? Various Strategies AppliedOperation Workout Excerpts From The Interaction Insights & Conclusions

Indian Retail Industry

Hailed as one of the most promising & sunrise sectors

Is among the Top 5 retail markets in the world by economic value

Market Size Is Estimated to be around 22 Lakh Crores (2012)

Expected to grow at a CAGR of above 20% and reach 30+ Lakh Crores by 2015

Indian Retail Industry

• Interesting fact is more than 95% of this market is occupied by unorganized retailing (Refers to the traditional formats of low-cost retailing, for example, hand cart and pavement vendors, the local kirana shops, owner manned general stores, convenience stores etc)

Indian Retail Industry

• Remaining 1,00,000 Crore comes under Organized Retailing

(Organized retailing, in India, refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the publicly traded supermarkets, corporate backed hypermarkets and retail chains, and also the privately owned large retail businesses.)

~Sales Promotion is the process of communication with individuals or groups by proper informing and persuading them to accept the proposed products~

WHY SALES PROMOTION ?

• Creating Interest• To attract new customers & to induce old

customers to buy more• It helps to remain competitive• Useful for the clearance of Inventory• To stimulate the people to make the buying

decision quickly

Various strategies applied

• Store Markdowns ( 10% off on entire product range till -- -- ----)

• Freebies (Buy 1 Get 1)• Loyalty Schemes ( Earn 100 reward points by

buying ------)• Coupons (Show this coupon and get 5% off on the

purchase)• Contests , Scratch n Win offer etc (Buy xxxxx before

xxxx to stand a chance in winning Laptop etc)

Operation Workout

• In the quest of studying the role of promotional offers practically , I have visited Mega Mart store , which is in my reach

• MegaMart is the retail wing of Arvind Brands , a division of Arvind Ltd , The retail conglomerate

• It offers Brands like Arrow , Lee , Wrangler , Flying Machine , New Port , US polo, Excalibur etc

MegaMart (Tenali Store)

• Mr Srinivas partnering with Mr Ravikanth took the franchisee ship of MegaMart before 1 ½ year and established the store in Tenali on April 2011

Excerpts From The Interaction

• All the promotions are initiated by the company on behalf of its franchisee stores

• All the hoardings regarding offers are supplied by the company , even the Advt cost for any regional/local newspapers is covered by them

Excerpts From The Interaction

• When asked about various promotions offered by the store during the year , he stated –

• In January , Flat 50% off on 3 or more Garments ( New Year Offer)

• During Ugadi , Buy 2 Get 2 Free on Trousers and Shirts (on selected items) , Also offered 3 T – Shirts worth 1099 at 399

Excerpts From The Interaction

• During April to July 1) Clearance Sale (25-30% off on selected items 2) Flat 20% off on Fresh Arrivals

• Now , Dussera Diwali Super Dhamaka Offers (From last month 16th onwards) - On every purchase of above 5000rs they are

offering Mossimo Bag worth 1499 for FREE - Upto 50% off , varying across brands (Wrangler

40% off, Lee 40% ,Cherokee 50% , Excalibur 30% ,Flying Machine 30%)

Excerpts From The Interaction

- On every purchase above 5000 , customer is eligible to participate in a draw where 6 Volkswagen Polos are offered

Takeaways

• When asked about avg bills per month during non promotion period (last year , current year)

• After Inception Initially they used to get subdued response at around 80 bills per month (last year)

• This year they got around 120 bills per month on avg basis from july to october

Takeaways

• When asked , if he can quantify that amount of bills , he mentioned around 2lks per month hesitatingly

• When asked about the walk-ins during non promotional period over promotional period(precisely during this dussra, diwali season), he said -

Takeaways

• Definitely more number of people are visiting the store due to festive season & limited period offers , also being the major branded apparel store in the city , walk - ins are growing every month and from last 20 days it was very high

Takeaways

• When asked about the turnover from the past 20days - he isn't sure about the exact figure but he mentioned that they are doing 13k-15k daily from the past 3weeks

• (Even more during the days near festival)

Conclusions

• We can clearly conclude from the above takeaways that promotional offers play a vital role in the growth of retail stores

• That too when they are attractively tied during special occasions , sales are subjected to dramatic variance on positive side

Conclusions

• One more thing worth mentioning is – As far as I can observe MegaMart (Tenali) is

less aggressive in taking these promotions into public

They are ignoring the fact that- Promotions + Occasions when combined with

Strong Advertising campaign do WONDERS(Be it on Walk- ins , Sales , Store Image etc)

Conclusions

• Finally I conclude by quantifying my case-In this case during promotions sales recorded

60% growth over non promotional period-No of walk ins are significantly higher during

promotional period when compared to regular one