ECONOMICS

DEMAND CURVE

ISSUE ANALYSIS:

1. SWOT ANALYSIS:-

S – Strengths

Shoppers Stop’s focus on a single format had led to better operational metrics and different formats simultaneously. Each new format, however, was being planned and executed as a separate strategic business unit (SBU) within the group.

Shoppers Stop was a conservative retailer, wary of the risks of inventory pile-up (which would increase costs) and low inventory turns ( which would reduce cash flow). The risk aversion stemmed from its grounding as an apparel retailer that purchased goods largely on an as-needed, consignment basis.

Shoppers Stop’s strong back-end systems provided real-time information to managers and had helped them to achieve operating metrics often considered the benchmarks for Indian retail (exhibit 14)

The company had adopted a customer-centric marketing campaign as opposed to the conventional product-based campaign (exhibit 15). Together with promotions that coincided with the seasonal fashions, the advertisements had helped to drive footfalls at a compounded annual rate of 16 percent and to maintain the conversion rate at about 27 percent.

Shoppers Stop had one of the most successful loyalty program among Indian retailers. First Citizen, which was introduced in 1994, had enrolled 630,000 members by march 2006. Membership had been growing by 10 to 15 % every year. The amount spent by the First Citizen card members was approximately twice the amount spent by other customers. The loyalty program provided the company with the competitive edge of a solid customer base and business certainty.

W – Weaknesses

The majority Shoppers Stop offerings were standardized and the scope for customization was limited. Young customers perceived the three competitor’s brands: Lifestyle, Pantaloon and Central

O – Opportunities

The company’s strategic goals and the necessity to connect with younger consumers. At more basic level, four factors were driving the retail revolution in India: changing demographics, an

upward migration of income, easy availability of credit and government impetus. “ A demographic dividend” is a rare social phenomenon led to opportunities for economic growth

because of a confluence of factors, such as decline in the birth rate, increase in the number of working adults and a decrease in the dependent population

T – Threats

This Perception seemed to harmonize with the characteristics of its core customer group, adults aged 25 to 45. But the study also showed disengagement with younger customers. Pantaloon and Central, which described as “fashionable,” “trendy,” “flashy,” “modern,” “sporty” and “lively” (ex1)

Any attempt on the part of Shoppers Stop to connect with younger consumers would neither detract from Shoppers Stop’s business focus, dilute its brand identity nor alienate existing customers.

A major driver for retail revolution was the Indian government’s decision in February 2006 to allow 51 % ownership be a foreign enterprise in a local retail venture of a “single” brand

Indian Woman, who preferred the cloths, cut and finish of their clothing to be offering an array of fabric designs and patterns and an army of tailors who created to individual tastes. The difficulty of a building a strong retail business in women’s clothing was the single largest bottleneck in the development of clothing superstores and of department stores in genral because women were often the main buyers of all clothing, including men’s clothing and accessories.

STRATEGIES

2. Ansoff matrix:

EXISTING PRODUCT NEW PRODUCT

EXISTING MARKET Market PenetrationA

Product DevelopmentB

NEW MARKET Market DevelopmentC

DiversificationD

A – Shoppers Stop opening its store in many parts of India.

B – Focusing on apparels for youngsters.

C – Shoppers Stop when came in India.

3. SEGMENTATION, TARGETING AND POSITIONING:

Urban and Rural. Urban used demographics as a combination of occupation and education, both of which shaped

not only the earning capacity of the “ chief wages earner” an urban household but also the self- image and social- image and social status of the household. SEC Urban comprised eight segments ( A1, A2, B1, B2, C1, C2, D1, D2, E1 and E2)

Rural comprised segment ( R1, R2, R3 and R4). The retail advisory group of Ernst and Young India, a management consultancy firm, published a

study of Indian youth, whom it referred to as “the main architects of Indian retail.” Classified youth into three segment : Dabblers, aged 13 to 21; Aspirers, aged 22 to 18; and Thrivers,

aged 29 to 35.

4.Driven by the vision of “ being India’s number one global retailer in the Department Store category, “ the company’s strategy had three elements:

Statement of problem :

Shrikhande needed to establish a fit between the company’s strategic goals and the necessity to connect with younger consumers. The company’s major competitors were all weighing their options for pursuing the youth market although none had yet formulated any specific, long term plans. He had to ensure that any attempt on the part of shoppers stop to connect with younger consumers would neither detract from the shoppers stop’s business focus, dilute its brand identify nor alienate existing customers. According to shrikhande, the youth market could be the future of the company. He thinks that Shoppers stop had limited experience catering to younger generation and would require a shift in mindset to be able to appeal to this consumer group & he thought that he should run the numbers first & then assess whether any change to be made from a business perspective.

Exhibits

From the exhibit 5 we can say that the growth of middle class is decreasing if the annual household income is below 90,000 & there is increase in growth if the income is more than 90,000 from the year 2002 to 2010.

Here the Exhibit 8 explains about the the India’s demographic dividend in the year 2001 & the estimations in 2011 & 2021.

The young population i.e., from the age group of 15 to 34 in 2001 is 347.68 & the projected population in 2011 & 2021 is 432.38 & 465.88.

And when it’s the case of working population, in the year 2001 it is 613.16 & the estimated population is 780.43 & 915.51. so the population is constantly increasing.

The total population in 2001 is 1,208.61 and the estimated population is also increasing from 2011 & 2021.

So, by this there is an increase in median age of the population & also the working population percentage is increasing. By this the dependent population is decreasing from 2001 to 2021.

The percentage of young population (15-34) may increase from 2001 to 2011 & it will decrease by 2021.

The Exhibit 13 shows the income statements of shoppers stop form the years 2002 to 2006. There is a constant increase in the income year by year & the profit after tax(PAT) is also increasing.

The Exhibit 14 shows the performance of the shoppers stop from 2003 to 2006. The number of stores has been increased from 9 to 20. The operating profit percentage is increasing from 4.2 to 8.4. Apart from 2005 & 2006 there was no inventory holding period which meant less expenditure

on inventory holding and that too there is decrease from 107 to 94, which explains that the stock has been reduced.

The footfalls which explains the number of customer entering the stores are increasing from 6.5 to 18.3.

The Transaction Size shows that there is a slight decline from 2003 to 2004 but overall sales of shoppers stop is increasing.

There is lot of increase in number of first citizens year by year.