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IRF

LOCOMORE Business Proposal

8/20/2013

Aditya Vikram Bharadwaj

Chirag Sachdeva

Shrey Tandon

Purpose

To provide one-stop solution of quality products at low cost to the middle, upper-middle and upper class segment of people, who have increasing aspirations and look for value for money.

The purpose of LoCoMoRe is best captured in the tagline “At the price you asked for, just lesser”.

It signifies to the audience that LoCoMoRe provides quality products to them at a price not just lower than other retail stores, but lower than what they themselves may ask for, thus accentuating its value for money image.

Business Overview

Established in 2003, Locomore has become a household name in Indian market. Locomore is a leading hypermarket retail chain, second only to ‘Big Bazaar’, and at present caters to Indian customers only. With an annual gross turnover of INR 8000 crores ($1.33 billion) in 2012, Locomore serves the Upper, Middle and Upper Middle class through its 168 stores.

HISTORY:

Established in 2003, LoCoMoRe experienced a tremendous growth owing to the convenience it provided to customers. Being a one-stop solution of quality products at low cost, it encouraged customers to do their entire shopping in one go at LoCoMoRe itself. Catchy advertisements and store name helped in getting customers to try it out.

Starting with a single hypermarket store in Delhi, to a 168 store 10 years later, LoCoMoRe has experienced enviable growth, largely as a result of its strategy of providing convenience to customers.

Product categories

There are a variety of product categories that LoCoMoRe offers at its various retail stores. All of them are mentioned below:

Packaged Food, Beverages, Garments, Fruits, General merchandise, appliances and Electronics, bed and bath, furniture, fast food and leisure and entertainment.

The product assortment at the retail chain across the categories in India is as follows:

Product Assortment

Packaged Food

Packaged food contains a plethora of items such as chips, Maggi, noodles, tomato ketchup, jams, butter, cheese, masalas, wheat, biscuits, ready to eat meals and other packaged products that can be consumed as such.

The choice of the customer has been kept in mind and a minimum of 4 varieties in brands of each product has been kept in stock at all times for the customer to have multiple choices to choose from.

Also it has been made sure that each and every variant that is being offered in a particular sub category has been kept in store for excellent customer experience and him having the options to buy what he needs.

Beverages

Beverages include all the drinks and juices offered by various brands like Coke, Pepsi, Hector beverages, Dabur juices, Tropicana (Pepsi), RC Cola and a private label called as LoCoMoRe drink.

It has been ensured that the customer has choices to pick up drinks of different sizes and packs and various offers have also been made such as party packs or bulk packs such that customer purchases in bulk.

Garments

Famous brands such as Van Huesen and all the other brands of Madura garments have been kept at the store with extra 10% discount if they buy from LoCoMoRe. Other brands such as

US POLO assn., Levis, UCB have also been kept with different sections for men, women and kids section.

In addition to it a fashion brand L’More has also been launched which is a private label and provides good quality fashionable garments at prices that are lower than other brands and have been kept in line with the company’s tagline.

Fruits

Good quality fresh fruits and vegetables have been kept that will be chopped and cut instantly in front of the customer at a very low economical price such that the time of the customer is saved and he can procure fresh farm vegetables as well.

The vegetables have been straight at the door, such that when customer enters he can order what he needs and collect it by the time he shops for other items at the store.

Electronics & Appliances

All types of electronics items in addition to the kitchen appliances from top quality manufacturers have been kept in the shelves as needed. Top brands such as Morphy Richards, Apple, Dell, HP, Lenovo. Samsung, Nokia, HTC, Philips, Bajaj, Wipro have been stocked to ensure quality delivery to the customer at market prices. There has also been kept a private label as LoCo appliances that offer a little cheaper products as and when compared to the brands.

Items such as TV, AC, Refrigerator, LCD, Laptops, desktops, mobile phones, accessories are some of the items that are there in addition to other regular used items in the house.

Furniture

Home furniture, office furniture have been under the private label of Locomore that offers beds, beddings, sofa sets, computer table, laptop table, tv trolley, chairs, dining table set and other items among many.

There are various wooden furniture items as well as steel almirahs available sourced from local suppliers in major cities which do maintain uniformity across locations.

Fast food

Another attracting point for the customer is fresh farm food like eggs, cheese of different types in the shop, foods such as dosa mix, fresh boiled noodles, chopped vegetables, half- baked pizzas and burgers, and chapattis as well. These will be a big pulling point for IT people and people who do not have much time to devote to kitchen and can purchase these items from the store.

The target market for the chain is the middle income segment groups and also lower upper middle income segment that can afford such items and shop in bulk.

The current status for the chain is that it is ranked no 2 in India after big bazaar and the current revenues total to Rs. 10,000 crore across India.

Growth plans- Expansion

In the coming years, LoCoMoRe should focus on acquisitions as a form of organic growth to

stand any chance of being the next Wal-Mart coming out of India. The reason for planning an

expansion strategy at this point is the recent changes in government regulation pertaining to

the retail industry and the positive impact it is bound to have on the organized retail, and the

potentially large segment of population to which it can cater and hasn’t been doing up-till

now. Locomore will reach places where Big Bazaar and others have refrained from

venturing. For this, LoCoMoRe should adopt Blue Ocean Strategy by acquiring smaller retail

stores/chains in countries where the established big players like Wal-Mart, Carrefour etc are

not present (For eg in countries like Peru, Colombia, Ethiopia, Malaysia, Thailand, etc).

Other attractive markets are Vietnam, Morocco and Egypt. Middle East retail sector is

undergoing unprecedented growth since the past few years that making this region one of the

fastest growing retail environments in the world. The Middle East retail market is benefited

by the high oil prices and increasing retail space in the region, thus it is expected that, the

retail sales will also flourish in coming years. Organized retailers, large retail formats, and

discounters are increasing here expense of small autonomous retailers and family businesses.

The main reason for the organized retailing in the Middle East is high summer temperatures,

which is a big motivator for people to approach air conditioned malls as social hubs for

shopping and also for socializing / meeting people.

Rather than directly confronting established players, this strategy would enable high growth by riding on the wave of increasing adoption of organized retails in these areas.

Growth plans- Multiple Formats

In India, where it is presently operating, as well as the countries where Locomore plans to reach, it will expand to multiple formats, and not restrict itself to Hypermarket only. Along the lines of “Big Bazar”, which entered into “Furniture Bazar” concept, Locomore would enter into jewellery, electronics, auto-service specialty store category, starting from metro cities (LoCoMoRe-Electronics and LoCoMoRe-Jewellery).

Going forward, Locomore is formulating an expansion plan which it aims to realise in the next 10 years. From 168 stores at present it aims to increase its presence on domestic front and establish a global footprint. It plans to serve the Global customer base with almost 3000 retail stores, having made a foray into other retail formats as well. On the Gross turnover front, it plans to increase the number from current figure of $1.33 billion to $100 - $150 billion. To achieve such a phenomenal growth target, Locomore will look beyond the realms of organic growth, and will make alliances to tap maximum customer base. The strategy of Locomore is to become a one-stop station for its customers, which will continually boast about ‘low-costs’ for all its goods. The above expansion targets have been calculated by taking into account the growth potential of Indian retail industry, organized retail as a part of it, and the potential global footprint which Locomore aims to establish.

Subsequently all stores in a country would function independently, with minimal guidance from the headquarters at Delhi. By bypassing major competitors, and choosing growth geographies like the Middle East as expansion opportunity, Locomore would achieve tremendous growth.

USP of LoCoMoRe

USP of Locomore would be that it provides a one-stop solution for its customers, providing

them with convenience not offered by other retail stores. Providing quality products would

satisfy the customers, while the “lower than hoped for” cost for such products would ensure

continued trust, commitment and loyalty from customers.

There would be a high focus on monitoring customer buying behaviour by capturing eye

movement, footprints of the masses at large. Superior monitoring of customer behaviour

would be extremely beneficial to the companies such as P&G, and they would pay to buy

such collective information.

Higher focus on visual merchandising and category management to ensure convenience to

customers will again be another USP of Locomore.

Apart from that, there would be regular discount seasons, festive sales, contests for all age

groups (kids to adults) with products/merchandises as the winning prizes.

Trade channel mix: The company follows a certain and a very different trade channel mix having different channel members for different stages.

It starts from the manufacturer, then product is stored by the C&F agents, then to the company’s warehouse and ultimately moved to the stores using a hub and spokes model.

Segmentation

Locomore stores would have products for all age groups, and thus segmentation would not be

on the basis of age, neither on the basis of gender.

The segmentation would be three tiered, wherein 1 st tier comprises of upper income group,

2 nd tier upper-middle and middle income, while the 3 rd tier the lower income group.

Despite the low price of Locomore, its positioning is not of providing cheap product. It

provides greater value for money, for quality goods. Hence the target audience is the tier 1

and tier 2 group.

Sourcing

There are various sources from where the store buys its products; all the branded products are obtained directly from the manufacturers or through the company warehouses. The orders are placed to the company as and when the need arises and replenishment happens in real time.

For the private label products, company has been able to gather supplies from the local players near major cities.

For example, for cheese and butter it has been able to procure products from nearby dairy farmers and vendors.

Proof of Concept

The concept when elevated is first to be tested in Mumbai city where all the suppliers lie close by and the target segment is also apt for the chain. Hence, if the concept runs and wins the battle in the city of dreams, it can be expanded in other cities and hence go international.