The Growth of Retail Business in India - Article Example

The Growth of Retail Business in India A - Area of Study Next was founded by Joseph Hepworth in Leeds in 1864 as a tailor under the name of Joseph Hepworth & Son. Next Plc is a FTSE-100 retail company employing over 40,000 people across the UK and Europe, and increasingly in Europe. The Head Office and Next Directory Contact Centers are based in Leicester in the East Midlands. It has 500 stores and numerous Distribution and Warehouse operations. It is a British retailer marketing clothing, footwear, accessories and home products. In India the growth of retail business is at its budding stage. Organized retail business has a grasp of nearly 7% in Indian Market and there is umpteen opportunity for its development. Off late big brands and fashion houses are aiming towards the Indian market. Due to the immense cross culture factor or globalization, trends from across the globe are getting accepted by far and large. Even in India, people are getting influenced by various other cultures and the Indian crowd is happily embracing it. Apparently growth of retail business in Indian market is at its best. Under such circumstances, it would be the accurate time for Next to hit the Indian market. Even though it has three branches in India, it should start eyeing other locations in India. Not many people are aware of Next plc, so Next should keep in mind of having phenomenal launch in India. Lot of retail chains are getting established in India. Indian players like Future Group, RPG Group, reliance Retail, and global players like Wal-Mart, Metro etc are having their presence in India. Still the organized retail sector in India is not very big. Hence Next can enter into Indian market and it has lot of potential to grow with its wide product range. I have considered area of study to be clothing. There is lot of competition in apparel industry because people have started becoming more brand conscious in clothing segment. Hence it is very important to position yourself well in such an industry. B - PLC Stage PLC (Product Life Cycle) is the course of product’s sales and profits over its lifetime. It involves five distinct stages. Product Development Introduction Growth Maturity Decline Clothing is a necessity for every human being. In a country like India the scope for branded product (in clothing) is very high. India is a country which is fast developing and the purchasing power of people in India is increasing. So the share of wallet for branded apparels is surely increasing. That is the reason why all big names in the clothing segment exist in India. But the entry of these companies has happened recently and they have still not captured the market. Next in India is at introduction stage. As it has entered the Indian market recently and at the moment has only three stores in India. As far as Boston’s Matrix is concerned “next” has low market share but the market they are in has high growth. So “next” is in the question mark quadrant. C - Target Market India is one of the emerging markets and it is becoming more and more important buyer in our global economy. India has a nice percentage of world total population so if not right now, in few years, India will be one of the most important buyers in the world (sayeconomy.com). Hence it is very important to choose the right segment in Indian market to succeed. “Next” has three stores in India (Two stores at Delhi/Gurgaon and one store at Mumbai). This clearly shows that the segment they have targeted is the urban/metro segment. The purchasing power of people in these area is comparatively more than those who stay in small cities and villages. “Next” has also targeted the middle class and upper middle class. When you sell products which are luxurious item and not necessarily necessities, then an organization usually target middle class and upper middle class segments. This segment is considerably increasing in India hence targeting such segment will bear good result. This can clearly be justified by the pricing and the location of their products/stores. The segmentation criteria used in targeting these markets are measurable, accessible and actionable. This is because metro and middle class/upper middle class segments can be measured (in terms of size and purchasing power), accessed (effectively reached and served) and can be actionable (effective program can be formulated to attract the segments). With this kind of a target segmentation, Next an eye other big cities like Bangalore, Pune, Kolkata, Hyderabad, Chennai etc. These cities also will give next lot of opportunities to grow. D - Product Repositioning Re-positioning involves changing the identity of a product, relative to the identity of competing product, in the collective minds of the target market. (Rise A & Trout J) E - Pricing Strategies Price is a key factor for any industry/product. In a price sensitive market like India correct pricing strategy for a product becomes very important. At present if you look at the price of the products available at Next, you will assume that the pricing strategy they use is value based pricing. Because they prices are considerable more that the cost price. This is not the best strategy because if you look at PLC (Product Life Cycle) the products available at next are at introduction stage. Hence value based strategy wont really work as people need to understand the products and brand first and then will pay more. So at the moment the best strategy that should be used by the company is cost plus strategy. Cost plus strategy is the best pricing strategy as the product is in introduction stage. Cost plus pricing is the simplest pricing strategy. The firms after finding out the cost of producing a good add a percentage (profit) to that price to give the selling price. Such a strategy is very important for a product in the introduction stage. Because in introduction stage a product has to be used by number of customers hence the price has to be kept very minimal so that number of people will be interested in buying the same. F - Distribution Strategies For any product to do well in a particular market (Generate profitable revenues for the company) it is very important that the distribution of the product needs to be very good and effective. Distribution/Place is defined as the process of making a product or service available for the consumer to use. The increase in fuel price is major issue all over the world. It can have a very bad impact on any organization. For an organization like Next.plc it can be worse. Because in India Next has only three stores (one in Mumbai and two in Gurgaon/Delhi) hence the distribution cost per product will be considerably high. The following strategies can help to improve the above situation. a) Next can increase the number of stores in India and thus can decrease the distribution cost per product. Some the cities which can be targeted by next are Bangalore, Kolkata, Pune, Chennai, Hyderabad, etc. b) It can have a Warehouse where it can stock its products. By stocking lots of products in the warehouse the distribution cost will be reduced. G - Ethics Marketing ethics is the systematic study of how moral standards are applied to marketing decisions, behavior and institutions. (Kotler) Ethics is very important in a country like India which is a cross cultural country with lots of religion and languages. Because the segment chosen here is urban class and middle and upper middle class hence it is very important for NEXT to compromise on ethics. Product – Next should not sell any product which can have an adverse effect on mankind. Cheap and inferior quality product should also not be used. Clothing is a segment where the product has to be taken proper care during manufacturing. Pricing – Price fixing is important as this is a retail segment. Also the price should be consistent around the globe. Advertising - The advertising should not be vulgar and should not hurt sentiments of any particular caste or religion. India being a secular country where people from different regions are present the marketer should be doubly careful. Distribution – Distribution should be taken proper care of the vehicles used for distribution should be of the best quality. Consumer - False insurance claim, recording of music and videos, misredemption of voucher, etc should be strictly avoided. Bibliography Kotler 2010 Rise A & Trout J 2010 Wikipedia.com Dictionary.com Nextplc.co.uk Next.co.uk Google.com Scribd.com Tutor2u.net Moneyterms.co.uk jpec.org marketsegmentation.com forseechange.com ibef.org retail.frachiseindia.com cci.in enotes.com dspace.iimk.ac.in decisionanlyst.com sayeconomy.com Read More