Business plan (Phase-2)

A report

Submitted to

Prof. K. Dasaratharaman

In partial fulfillment of the requirements of the course

Retail Management

On

01.09.2013

By

Anasua Banerjee (B12007)

Priyajit Mishra (B12031)

Puja Jaiswal (B12033)

Trisha Chakrabarty (B12053)

1 | P a g e

TABLE OF CONTENT

SRNO CONTENT PAGE NO1 Positioning platform for

global players

2-6

2 Positioning platform for

Indian players

6-7

3 Reasons for positioning platform of our brand “Upahar”

8-10

4 The Pentagon Triangle model 11-14

5 Model EBITDA for store 15-18

6 CAPEX assumption and

inventory policy

19-21

7 Inventory and working

capital decisions

21-22

PHASE 2

2 | P a g e

UPAHAR-A Class apart - This is the name that we have thought of our brand and it will be a diamond jewellery outlet in the heart of Kolkata.

Positioning platform for Global players

1. Positioning Strategies of Tiffany & Co.

Segmentation Approaches

The company services high-end shoppers who are typically Generation X women who have

the means to pay for high-quality goods; baby boomers who purchase first-class goods despite

having limited disposable funds; and Generation Y women who enjoy mimicking the latest

celebrity trends. The social classes between these various groups of women range from

middle or upper-middle class to upper-upper class. As noted, women are the primary users of

the product, but the company also services other businesses. Tiffany & Co. will sell its

products to businesses looking to incentivize a program or give gifts to deserving employees.

These products include trophies and classic collection products, which are not gender

specific. Tiffany & Co. will also donate its products to non-profits for charitable causes.

Recently, Tiffany’s donated exclusive marathon necklaces to the Nike Women’s marathon in

San Francisco, which supported finding a cure for cancer.

Target Markets

Overall, Tiffany & Co.’s primary target market is upper-upper class women. The marketing is

always geared towards women even though men contribute to a decent percentage of the

profits. In this case, women act as influencers on the men. The secondary and tertiary target

markets are women who aspire to be ‘upper-crust Tiffany’s women’ and indulge every so

often. Most of the company’s marketing and promotions are focused on concentrated target

markets because it specializes in a specific area and services a select group of people

Positioning

Tiffany & Co. uses several strategies to position itself against competitors like Signet Group

PLC—which owns Jared and Kay Jewellers. The company is very selective about where to

opens its retail locations, how to price its products to fit with its incomparable image, and

how to market without losing its high-end shoppers. The company relies on its familiar blue

colour to represent the brand and buzz words, such as “precision, innovation, and refinement”

3 | P a g e

to distinguish itself. Due to its unifying marketing campaign, customers will relate Tiffany’s

with fine craftsmanship and a customized service experience. In addition, Tiffany’s is usually

at the centre of high-society functions and charities, which reinforces the company’s

sophistication and exclusivity.

2. Positioning Strategies of Blue Nile Inc corporation

The company has adopted the differentiation strategy in that it has made an effort to develop

as well as market unique products for different clientele segments. Further, being an online

retailer of unique and rare diamonds and gemstones, Blue Nile Inc. offers shoppers useful

information as concerns the different products and services they may desire. This is the best

strategy the company can adopt since it has very few or in other cases, no competitors thus

enjoying competitive advantages, managing to sustain expensive advertising campaigns. On

the other hand, focus strategy is whereby a company or organization concentrates its

resources on expanding or attempting to enter in a narrow industry or market segment. Blue

Nile Inc. has employed this form of strategy as it is aware of its segment and has products

capable of satisfying its needs competitively. By going online, the company focuses on

smaller, specific niche of clients as compared to focusing on segments across the entire

market.

3. Positioning strategies of Signet Jewellers

It positioned itself as the jewellery that brings happiness to customers and helps them to offer

love. They have four brands.

Kay jewellers

‘Every kiss begins with KAY’

Kay Jewellers is the top specialty retail jeweller in the US based on sales and targets the

middle market. Kay’s target customer has a household income ranging from $35,000–

$100,000.

Jared

‘He went to Jared!’

Jared is the leading off-mall destination specialty jeweller in the US, serving the upper middle

market. Jared’s target customer has a household income ranging from $50,000–$150,000.

4 | P a g e

H. Samuel

‘Helps you say it better’

H. Samuel is the top specialty jewelry brand in the UK by number of stores and targets the

middle market, with an average household income target ranging from £15,000–£40,000

Ernest Jones

‘Love & Life’

Ernest Jones is the leading upper-middle market jeweller by number of stores, with an

average household income target ranging from £30,000–£50,000.

4. Positioning strategies of Zale Corporation

They positioned themselves as a wide range of products and prices offering store. They have

six brands

Zales

‘The diamond store’

Basically it is positioned as bridal or marriage jewelry

Zales outlet

‘Diamond store outlet’

They are belonged to top quality jewelry products.

Gordon jewellers

‘Celebrating relationships since 1905’

They use trained and friendly jewelry consultants who help the customers to make a proper

choice of their product. This friendly behaviour helps them in customer retention.

Peoples

‘Canada’s diamond store since 1919’

They are expertise in Canadian diamond and hence could easily gain trust among the

customers.

5 | P a g e

Mappins

‘Fine jewellers since 1935’

They symbolize themselves as diamonds designed to celebrate special moments. They also

render a personal touch with the customers.

Piercing Pagoda

‘A Zale Corporation Brand’

They positioned themselves as ‘fine jewelry for everyone’

Positioning platform for Indian Players

TBZ -TBZ has successfully positioned itself as a modern and innovative jewellery maker.

They are now the jewellery destination of choice for every occasion, from a woman’s

everyday wear to delicately crafted pieces for the biggest day of her life.

Gilli- This brand positioned itself as a brand for working women with new innovative styles

and affordable price so that the consumers can switch from traditional jewellery shop to

modern jewellery shops

Tanishq- They have positioned themselves as the most reliable diamond stores by providing

some kind of authenticity stating the cartage ,colour and clarity of the stone so that the

customers are able to find out what is the quality of the product for which they are paying so

much.

Anjali Jewellers- They have positioned themselves as a product for the middle class family

who are conscious about style, heritage and taste.

Sangini- They have positioned themselves as a premium diamond jewellery brand that

targets the first time buyers at the beginning of their relationship and retains their loyalty

forever. They focus on women to buy diamond jewellery and persuade men to support their

beloved’s desire.

6 | P a g e

Asmi- A brand for women of spirit – They have positioned themselves as a brand for women

who are independent and who like take their decisions on their own. They want to express

themselves as power of feminity, reflection of confidence and attitude and the inner spirit of a

woman. They have launched many new innovative designs in their product range which are

specifically targeted at the younger female generation.

Nakshatra- Nakshatra is being positioned as the Goddess of good luck and they want to promote that if you possess a jewellery of Nakshatra brand then Good luck is with you

Position here “UPAHAR”

Upahar - A class apart- Now Upahar is our brand and we want to position it as a product

which is affordable but at the same time if you possess a jewellery of our brand then you

belong to a high class just because the designs are unique which will give you a sense of

superiority. Our Tagline is “A class apart” which signifies what we want to position our

brand as. We want to target the people of Kolkata who belong to SEC A and B section.

7 | P a g e

Single categoryMulti-category category

LUXURY

Affordable

Reasons for positioning platform

1. To give a sense of belonging to a high class to the customers at an affordable price.

2. To attract the young working women segment as well as the men segment who want to gift something unique to their beloved ones.

3. Upahar means gift and as India is a land of festivals so our positioning is such that this is the best gift that one can give to someone on some special occasion.

Key aspects derived from the positioning

Product- Now in our store we will provide a premium quality product and there will be a wide range of products available.

Firstly there will be 3 segments

1. A wedding jewellery segment for women

2. A casual jewellery segment for women

3. A jewellery segment for men

In each of these segments various ornaments will be available

1. A wedding jewellery segment-

a. Rings

b. Earrings

c. Pendants

d. Necklaces

e. Bangles

f. Bracelets

g. An exclusive Bridal Set

2. A casual segment-

a. Rings

b. Earrings

c. Necklaces

8 | P a g e

d. Bracelets

e. Pendants

f. Bangles

3. A men’s collection-

a. Rings

b. Bracelets

Price- The jewellery present in our store will be unique in design and very attractive but the price will be affordable.

The range of our products will be from Rs 10000 to around 10 lacs.

The price will be a little less compared to brands like Asmi, Nakshatra etc.

Place - We will start with one big store at Ballygunge, an up market and elite locality in

South Kolkata. The place is inhabitant of affluent and "modern" Bengali family. We chose

this place because there are other reputed jewellery shops in this place like Tanishq, PC

Chandra jewellers and many traditional jewellery shops. People who till now visited the other

jewellery outlets will also visit our outlet and we will get exposed to their customers also and

this will help for viral marketing or word of mouth marketing by those customers as we hope

to get a good name as we will be providing stylish ornaments at affordable price.

Promotion- Our product’s personality will be: Innovative, stylish, contemporary, modern,

fresh, approachable and elegant to target customers with these kinds of personalities.

A few promotional tactics will be as given below-

Word of mouth via networks of friends, and customers

Unique visual displays in storefront

Providing discount offers to the customers during particular occasions or festivals

Direct mails to the customers who have visited our store about new kind of offers

Use of social media for publicity

9 | P a g e

Distributing flyers at well known clubs at Kolkata : Calcutta Club, Golf Club,

Hindustan Club

Distributing flyers at well known shopping malls at Kolkata : South City shopping

mall, Mukti world mall, Inox Forum Mall

Provide hoardings in nearby areas to attract crowd

Create a website provide catalogues of ornaments available and provide online

booking facilities

Providing ear and nose piercing free of cost.

The Pentagon Triangle model

10 | P a g e

The pentagon elements

1. Place:-

Location: We will start with one big store at Ballygunge, an up market and elite locality in

South Kolkata. The place is inhabitant of affluent and "modern" Bengali family. We chose

this place because there are other reputed jewellery shops in this place like Tanishq, PC

Chandra jewellers and many traditional jewellery shops and other outlets like The Gucci

Fashion Valley, Pantaloons Store, The Raymond Store, Mukti World Mall and Haldiram

Food City. People who till now visited the other jewellery outlets and other stores will also

visit our outlet and we will get exposed to their customers also and this will help for viral

marketing or word of mouth marketing by those customers as we hope to get a good name as

we will be providing stylish ornaments at affordable price.

Size: Size of our store will be 1500 square feet.

11 | P a g e

Place

Product

PeopleValue

Communication

Systems

Logistics Supplier

Layout :

2. Product: Now in our store we will provide a premium quality product and there will be a wide range of products available.

Firstly there will be 3 segments

1. A wedding jewellery segment for women

2. A casual jewellery segment for women

3. A jewellery segment for men

Mix :

12 | P a g e

Cash counter

Office of owners

Casual segment

Wedding jewellery segment

Men’s Jewellery segment

Waiting area

Store room

Wash-room

Entranc

During wedding season : 40% of the total space will be used to display

wedding collection and 60% of the total space will be used to display casual

collection.

During other time of the year : 30% of the total space will be used to display

wedding collection and 70% of the total space will be used to display casual

collection.

3. People:

The target customers for our jewellery store will be high end customers of age group 18 – 55 years. We will target young working women as well as men who want to gift something unique to their beloved ones.

4. Value:

Price- The jewellery present in our store will be unique in design and very attractive but the price will be affordable.

The range of our products will be from Rs 10000 to around 10lacs

The price will be a little less compared to brands like Asmi, Nakshatra etc.

Quality: We will provide the best quality product available in the market at the

given price range.

5. Communication:

Our product’s personality will be: Innovative, stylish, contemporary, modern, fresh,

approachable and elegant to target customers with these kinds of personalities.

A few promotional tactics will be as given below-

Word of mouth via networks of friends, and customers

Unique visual displays in storefront

Providing discount offers to the customers during particular occasions or festivals

Direct mails to the customers who have visited our store about new kind of offers

Use of social media for publicity

13 | P a g e

Distributing flyers at well known clubs at Kolkata : Calcutta Club, Golf Club,

Hindustan Club

Distributing flyers at well known shopping malls at Kolkata : South City shopping

mall, Mukti world mall, Inox Forum Mall

Provide hoardings in nearby areas to attract crowd

Create a website provide catalogues of ornaments available and provide online

booking facilities

Providing ear and nose piercing free of cost

The triangle elements

Suppliers:

Diamonds: We will procure diamonds from Diamond India Limited (DIL),

Mumbai.

Gold and silver: We will procure these materials form J J Gold House

(Kolkata).

Systems:

Customer acquisition process: Initially, we will acquire customers with the

help of clubs, tie ups with different stores in shopping malls. Later on word of

mouth will work for our store.

Customer buying process: Knowledgeable saleswomen will assist our

customers to choose from a variety of products from our store. Apart from that,

we will provide an online portal. Customers can see the catalogue and can order

the products online.

Logistics:

We will need logistics services for procuring materials from suppliers. We will use one

vehicle to transport finished products from workshops to our store.

14 | P a g e

Model EBITDA for store

Store layout:

The total size of our store is 1500 sq ft. Rent per square feet is Rs. 160 and it will be located

in Ballygunge, Kolkata. The average size of store of Gitanjali is 500 to 5000 sq ft, Tanishq is

1000 to 1500 sq ft and for Nakshatra it is 1000 to 2000 sq ft.

The display area would be divided into three segments which would be further divided into

sub segments. The three segments will be wedding collections and casual collections and

men' collection. The further sub division would be into various categories in which we would

be present .The area allocated to these categories would be sorted according to price and size

of the jewelleries.

The store would be divided into various sections as storage (where a safety locker would be

kept of 42 inch), displays and shelves which would be fitted into the walls and shelves would

be used to display jewelleries, equipment and machines fitted in the store, cashier, washroom,

sitting area and walk through areas and office. The space allocated for each would be:

The carpet area is 1200 square feet.

Displays and shelves: We will be providing 50% of the area of store for displays and shelves.

Cashier or Point of Sale: A cashier would be placed along with a computer, printer and point

of sale machines which would be provided by the banks. Area allotted for this is 4%.

Sitting area: This would comprise of the sitting area of the salespersons, cashiers and the

customers which would amount for 25%.

Walk through: The walkthrough area for walking would be 10%.

Washroom: A washroom would be present in the area of 2%.

Office or chambers of owners: A small office would be present with the space area of 5% for

the owners to sit in.

Storage: This will be 2% of the space and a safety locker would be kept for keeping

jewelleries and cash.

15 | P a g e

Refreshment area: This area will be 2% of the space and coffee machine would be kept here

along with other refreshments for the customers and employees.

A security guard will be sitting outside the store.

EBITDA Calculation

Below is the Template EBITDA Model for our store Upahar and the two competitor’s store

in Diamond business.

Template EBITDA Model (figures are in Crores)  Upahar Gitanjali Jewellers Tribhovandas Bhimji ZaveriSales 25 7755.47 1385.47GM% 5% 7% 35%RGM 1.25 542.8829 484.9145Total Opex 0.486 155.1094 360.2222Ebitda 0.764 387.7735 124.6923Ebitda% 3.06% 5% 9%

Store EBITDA Model (figures in Rupee)

Expenditure Outlay Per month Per annum

Per square feet (1500 square feet)

Net Revenue 20833333.33 250000000 166666.6667GM% 5% 5% 5%RGM (Net revenue * GM %) 1041666.667 12500000 8333.333333       OPEX:-      Rent per month 240000 2880000 1920Rent of workshop (500*20) 10000 120000 240Salary 100000 1200000 800Power per month 25000 300000 200Marketing cost 20000 240000 160Others 10000 120000 80       Total OPEX 405000 4860000 3240       Store EBITDA (RGM-Total OPEX) 636666.6667 7650000 5100Store EBITDA % 3% 3% 3%

We decided to take the store size of 1500 square feet as the average size of store of Gitanjali

is 500 to 5000 sq ft, Tanishq is 1000 to 1500 sq ft and for Nakshatra it is 1000 to 2000 sq ft.

16 | P a g e

Since we are opening a single store in single city, we decided to keep the store size medium.

The store will be in Ballygunge area thus the rent is Rs. 160 per sq ft. that is the market price

of that area. Thus the annual rent comes to Rs. 240000.

There will be a workshop for converting the raw diamond into finished jewellery. This will

be the size of 500 square feet and the rent per square feet is Rs. 20 per sq ft.

Sales will be 25 crores in a year. It will be very low as compared to our competitors as we are

a new player in the market.

Employees break up: The total cost of employees is coming to Rs. 100000 per month and Rs.

1200000.

Manager for retail store: The manager would be managing the entire store in day to day

activity and would be paid the salary of 15000/month.

Salesperson: There would be 6 salespersons for displaying and convincing the customers for

the jewellery. The average salary would be Rs. 4500/month. Thus a total of Rs. 27000 would

be paid to them.

Cashier: There will be 1 cashier handling the cash and making invoices and will also be

handling the accounting part of the store. The salary would be paid Rs. 8000/month.

Guard: There will be 1 guard for security and will be paid 3000/month.

Technician: 1 technician would be employed for checking the appropriateness of jewellery at

the salary of 6000. He would be assisting in the retail store as well as in the workshop where

the diamonds would be cut and designed accordingly.

Supervisor in workshop: There would be 1 supervisor present in the workshop who would be

assisting the workers and the transportation of jewellery to the retail store. The salary paid to

them would be Rs. 8000/month.

Workers in workshop: There would be 5 workers in the workshop who would be paid Rs.

15000/month. (5 workers @ Rs. 3000 each)

Designer: There will be 1 designer designing the jewellery and would be paid Rs.

6000/month.

17 | P a g e

Driver: There will be 1 driver for transporting the jewelleries from workshop to the retail

store at the salary of Rs. 4000/month.

Maintenance people: 1 housekeeping staff will be employed at a monthly salary of Rs. 2000

per month in order to maintain the store, serve the employees, etc.

Web page developer and marketer: 1 person will be employed to develop the web page of our

store and do social media marketing and will handle the online sales of our brand and will be

paid Rs. 6000/month.

Salary Break up

Employees No. of employees Per month Per annum

Manager 1 15000 180000

Salespersons 6 27000 324000

Cashier 1 8000 96000

Guard 1 3000 36000

Technician 1 6000 72000

Supervisor 1 8000 96000

Workers 5 15000 180000

Designer 1 6000 72000

Driver 1 4000 48000

Maintenance people 1 2000 24000

Web page developer 1 6000 72000

Total 20 100000 1200000

The power consumption would be Rs. 25000 per month on an average. It will include 6 AC,

CC TV camera, lightings, electronic equipments, etc.

The marketing cost will be around Rs. 20000 per month which would include advertisements

and promotions in newspapers, radio, hoardings, etc.

Miscellaneous expenditure Rs. 10000 per month and it would include phone bill, stationery,

overheads, transportation, and insurance premium.

CAPEX assumption and inventory policy

18 | P a g e

The retail store is rented so it is not under the capital expenditure.

The CAPEX is divided into 4 main heads:

CAPEX

Registration of partnership firm 5000

Trade license 3550

Hallmark Licensing 30000

Software 500000

Furniture and fixtures

321500

0

Equipments 300000

Vehicles 50000

Miscellaneous 50000

Total CAPEX

415355

0

Registration and licensing cost: We are opening the retail outlet under partnership deed and

there would be 4 partners having equal profit sharing ratio and thus registration of partnership

firm would cost Rs. 5000 and a trade license would also be required to obtain. For jewellery

store of area 1500 sq ft. the trade license fee is Rs. 3550 and is valid for only one year and

needs to be renewed every year. Hallmarking license needs to be obtained from BIS for gold

and silver as we would be using them as base for making diamond jewellery and the license

fee will cost Rs. 30000 and would need to be repaid after every 3 years.

Registration and Licensing cost

Registration of partnership firm 5000

Trade license 3550

Hallmark Licensing

3000

0

Total

3855

0

19 | P a g e

Hardware: The software would cost around Rs. 500000.

Hardware cost

Software 500000

Total 500000

Furniture and fixtures: It includes the cost of furniture used for the store for example, mirrors,

jewellery display stands, showcases and shelves, sofas and chairs, AC, inverter, lighting and

decorative etc. the furniture is calculated as 50% of store area is used for furniture and fittings

i.e. 750 sq ft. at a cost of fittings to be at the market price of 4000 sq ft. Thus the total amount

will be as Rs. 3000000. There will be 6 air conditioners at the cost of 25000 each, one

inverter for power backup, lighting and decorative for nice interior looks.

Furniture and fixtures

Furniture 3000000

AC (25000*6) 150000

Inverter 15000

Lighting and Decorative 50000

Total 3215000

Equipments: It includes a computer, a printer, weighing machine, smoke detectors, security

alarms, coffee machine, and safety locker of 42 inch which would be used to keep the cash

and jeweller safely and these would amount to Rs. 300000.

Equipments

Computer 15000

Printer 8000

Weighing machine 50000

Safety locker 100000

Safety alarms and CC TV camera 100000

Coffee machine 7000

Others 20000

20 | P a g e

Total 300000

Vehicle: there will be 1 vehicle for transporting the jewellery from workshop to the retail

outlet.

Miscellaneous expense will be Rs. 50000 for uniforms provided to the salespersons, for

promoting social media marketing and for developing the website for our brand, etc.

Inventory and working capital decisions

Depending upon the sales of the month, inventory decisions would be taken.

Inventory would include diamond, gold and steel.

Calculation of Raw Material:

Diamonds: We will procure diamonds from Diamond India Limited (DIL),

Mumbai.

Gold and silver: We will procure these materials form J .J. Gold House

(Kolkata).

It is seen that raw materials are 90 % of sales of Gitanjali Jewellers and Tribhovandas Bhimji

Zaveri thus we have also take the raw materials to be approx 90 % of sales. (90% of 25

Crores is 225000000)

We will be buying Diamonds 4000 carat in a year. It would be bought 4 times a year. The

assumption for price calculation is that we are showing the price at current market value. (1$

= 66) We will be buying gold 15000 carat and silver 500 kg in a year, twice a year. ₹

Calculation of Raw Materials in a year

Materials Quantity Price Price in Rupee Market price per unit

Diamond 4000 99000000 24750 $375/karat

Gold 15000 99000000 6600 $100/karat

Silver 500 26651500 53303 53303/kg₹Total 19500 224651500    

Note: Diamond and golds are in carat while silver is in kg

21 | P a g e

The raw materials would be bought in cash as credit facility would not be available to us

being a new player in the market and also this facility usually does not prevail in the industry.

The number of days in working capital for us will be 120 days and number of days in

working capital for Gitanjali Jewellers and Tribhovandas Bhimji Zaveri is 187 days and 81

days respectively.

The inventory turnover ratio of Gitanjali Jewellers is 5.72 and for Tribhovandas Bhimji

Zaveri is 2.76.

For my business I am assuming the inventory turnover ratio to be around in the ratio of 3 – 4.

22 | P a g e