Sales & Distribution Management

Group Project- Part B

Apparel (Readymade)

Submitted To:

Prof. Manoj Motiani

Prof. Kapil Khandeparkar

Group: 6 Section: FH
Aakash Raisinghani 2013IPM131
Amrita Sarna 2013IPM015
Bhavini Jha 2016PGP443
Naman Ahir 2013IPM055
Sharath Madhulika 2013IPM083
Shrunga Hede 2013IPM090
Suraj Kumar Azad 2016PGP399
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COMPANY RAYMOND GROUP.................................................................................................................3
BACKGROUND.........................................................................................................................................3
DISTRIBUTION CHANNEL.........................................................................................................................4
SALES MANAGEMENT..............................................................................................................................5
PICTORIAL REPRESENTATION...................................................................................................................7
COMPETITOR COMPANY BLACKBERRYS.................................................................................................7
BACKGROUND.........................................................................................................................................7
DISTRIBUTION CHANNEL.........................................................................................................................8
SALES MANAGEMENT..............................................................................................................................9
SUGGESTIONS...........................................................................................................................................10
REFERENCES..............................................................................................................................................11

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 COMPANY RAYMOND GROUP

BACKGROUND

Raymond Limited is a leading Indian Lifestyle, Textile and Branded Apparel Company, with
interest in the Engineering (Files, Power Tools, AutoComponents) and FMCG sectors. The
Group has its corporate headquarters at Mumbai. The textile and apparel industry conditions in
the home country, India, are most conducive for it to be one of the leading textile industries in
the world. This has, in fact, been one of the key contributors of Indias manufacturing segment
as it contributes considerably to the economy, be it in terms of employment generation or in
terms of foreign exchange revenue. Raymond is a leading Indian textile company incorporated
in 1925. It is a part of the Raymond Group, a global conglomerate. Besides being in the textile
industry, the company has also diversified into engineering and aviation. It is also the worlds
largest manufacturer of steel files, accounting to 30% market share. In 1959, Raymond was the
first company to introduce a new kind of polywool blend in India. This helped them create the
worlds finest suiting fabric, the Super 240, made from superfine 11.6 micron wool. The
companys textile plants are currently located in Thane, Vapi and Chhindwara which have
certifications such as ISO 9001 for quality management systems and ISO 14001 Environment
Control Systems. The Raymond Premium Apparel crossed 1 billion rupees mark, and launched a
brand called Makers pan India in 2013. The companys steady growth is driven by strong
performance across all their brands. Multiple strategic initiatives were undertaken to reduce
input costs and improve design and quality. This has resulted in improved efficiency and a more
effective supply chain management The Companys growth and profitability has led to the
launch of its 600th Raymond shop outlet in 2011.During the financial year 2016, despite the
challenging business environment in the country, Raymonds total textile sales registered a
growth of 5.82%, with the net revenue being Rs. 2683.21 crore, as opposed to net revenue of
Rs. 2535.59 crore in the financial year 2015. The increase in sales was a result of a growth in the
B2C shirting business. Raymond has maintained its dominance over the Indian Apparel Market-

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Cloth & Readymade for suits, shirts and pants. Increasingly, the company is now venturing into
casual wear also. As is explained in the report also, the size and brand of Raymond are
important considerations in the choice of its distribution channel and its sales strategy.

DISTRIBUTION CHANNEL

Primary Research- Franchise Store in Rajwada, Indore.

As per the source mentioned above, the data that we had collected from our interaction with him points
to the following insights

The company generally follows 2 types of distribution channels depending on the type of retail outlet.
For EBOs (Exclusive Brand Outlets i.e. Company Owned Stores & Franchise Stores, a direct distribution
channel is followed. In this direct channel the company delivers the goods from its factory in Bangalore
& Saidhara to individual outlets and the company bears all costs for transportation of goods as well as
damage of goods on the way. In case of damage, the store owner immediately clicks a picture of the
damaged item and sends it to the Head Office and the company agrees to take the particular item back.
For the MBOs (Multi Brand Outlets) i.e. Shoppers Stop etc. the company follows an indirect
distribution channel and a central distributor is involved who then distributes the goods to retailers
across many cities. The reason for choosing these different distribution channels could be the difference
in the level of control that the company wants in these two locations. The company owned outlets as
well as the franchise stores are an extension of the brand itself and thus it is important to maintain a
certain service level in these outlets. Thus, to establish control, the company turns to direct distribution
channels which bring the required control but also bring responsibility attached with it. In dealing with
the distributors, the company is discharged with the responsibility and since a lot of control is not
required in a MBO, it does not make economic sense for the company to invest a large quantum of
resources and go through all the trouble and hence a distributor is engaged for this purpose. There were
also some other factors which are important to select a distribution channel that we identified from our
interaction with the store owner.

Payment System- The franchise owner mentioned that it is easier dealing directly with company
regarding payment issues rather than dealing with the distributor.
Commission The Company saves a lot on margin if the middleman (distributor) is removed
from the supply chain. Thus, some companies prefer a direct distribution channel. This is more
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 likely to be chosen by big brands like Raymond in our case because a consistent and reliable
brand image and service level is extremely important to them.
Emergency Demand In case the retail outlet faces a sudden surge in demand, it is easier to get
the necessary stock in case of the indirect model rather than the direct model. Hence, in case of
Raymond, the outlets are often left with excess stock.

SALES MANAGEMENT

Primary Research- Franchise Store in Rajwada, Indore.

We have divided this segment into two parts for better presentation of data

1) Salesforce Planning

The hiring of salesperson in the case of an EBO as well as a MBO is done by the owner of the retail
outlet. Everything regarding their compensation structure, incentive structure (if any) is determined by
the retail outlet owner and the company does not interfere in that. In this particular industry, the target
is set for retail outlet as a whole, some franchise owners do pass that on to the salespersons at the
counter and divide it among them, others dont but the industry practice is the latter option. The only
part where the company is involved is the salesperson training. It is standard practice in the industry for
the salespersons to go through 2-3 days training. This is done from the companys end to ensure a
standard level of knowledge and competency in salespersons in various retail outlets. The measurement
of performance of salespersons also comes under the purview of the franchise owner. The reporting
chain is the salesperson to the franchise owner and the franchise owner to the ASM. The ASM tries to
drop in on a random day and have a chat with the salesforce if they are facing any problems and the
changes that they would like to see. This phenomenon is more likely to happen in an EBO rather than a
MBO.

2) Sales Planning

This part contains the details about the sales target planning, sales strategy, promotions, reporting
structure. The sales targets are generally divided into two parts Business Plan (BP) and Operational
Plan (OP). The BP is a fixed theoretical number fixed by the company and is communicated to the retail
outlet via the ASM. This is done on an annual basis. However, situations keep changing in the market and

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sometimes internally also, for example- store might be going through renovation and in the readymade
apparel industry particularly, seasonal factors lay a heavy role. Thus to take all these factors into picture,
the operational plan is prepared and is given to the outlets on a monthly basis, it is generally on the
lower side as it contains a more realistic number as compared to the BP. In case the company is not able
to achieve its targets and some stock is leftover, it has complete freedom to do whatever it wishes to
with it. It can sell it to other stores or to other markets. The company does not interfere with this and it
does not take the leftover stock back. However, if the franchise over achieves, then an incentive might or
might not be possible depending on the particular situation. It is not written in the contract.

The sales force currently comprises of 5 sales people. These sales people are currently depoyed in 4
different sections of the outlet, these sections being accessories, formal clothing, casual clothing and
the custom tailored clothing. There are 3 sales people each deployed in accessories section, casual
clothing sectiona and custom tailored section, while 2 sales people have been deployed in the formal
clothing section due to its high demand and sales. The sales people were well informed about the
product in each of their sections and were able to answer the various questions put in front of them.

The sales strategy is communicated to the outlets via the ASM. For example, if the company is looking to
promote a particular product range, they are given a base selling price and a base discount structure and
the individual owners then tweak it according to the demand estimation for the upcoming quarter and
the region in which they are serving. If there is particular promotion or advertising that is to be done for
a particular product line then the franchise owner will bear the expenses out of his pocket. The reporting
is done quarterly because the demand estimation is also done quarterly and thus these two processes
remain in line. The ASM remains as the common point of contact between the franchise owner and the
company addressing issues for both.

A pictorial representation of the sales management process has been given on the next page for better
understanding.

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 PICTORIAL REPRESENTATION

Business Plan Annual,

Theoretical No. The sales data is reported to the
ASM on a monthly basis who
forwards this data to the company
Company sets HQ.
targets

If sales target is achieved, then

Operational Plan Monthly,
company might give incentive, if not
Real data
then leftover stock is not taken back
by the company.

COMPETITOR COMPANY BLACKBERRYS

BACKGROUND

Blackberrys is an Indian formal wear company owned by Mohan Clothing Co. Pvt. Ltd, which
was founded in 1991 and is based in Gurgaon, India. It was established in 1991 as a small
clothing store in Chandni Chowk, Delhi. It mainly caters to men with a wide range of products
such as trousers, suites, jackets, shirts, and accessories. It went for a rebranding exercise in
2005, widely increasing its popularity. As of August 2011, the Blackberrys brand has 21
franchise stores, 94 company owned showrooms and is present in over 900 multi-brand outlets.

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The brands core focus has always been to create something new and provide the Indian Man
with the best wardrobe solutions. Starting with Suits and Jackets for formal occasions, to
bringing in Khakis, a wide range of Shirts, and now growing into innerwear, shoes and
accessories brand, as quoted by the companys website. It sells its products through retail
outlets, company owned showrooms, and large format stores in India.

The company defines their personality as Dynamic, Sharp, Discerning and Witty. The same is
reflected in their clothing ideas, design and material. The same is highlighted through their
employees whose average age group is given as 35 years old on the company website.
Blackberrys refers to their brand as for those who make success happen. Every time. All the
time.

The company plans on rapid expansion in the Indian clothing segment through acquisitions to
widen its audience base. In addition to that, the senior management plan to focus their
attention to the Indian market only, and not internationally.

DISTRIBUTION CHANNEL

Primary Research Malhar Mega Mall Store Outlet

While, there is an obvious difference in the product offerings and trends followed, the mode of
distribution wasnt very distinguished from that of Raymond stores. Blackberry follows a franchise model
or company owned outlets for the EBO business just like every other readymade garments competitors
one can find in Indore and follows a similar pattern of supply chain and delivery methods. In case of
MBOs, the company prefers to go for an indirect channel with a distributor involved which entails lesser
costs and lesser control as well. The company controls most of the operations in relation to the
readymade garments while the franchise thus established in the city handles the operations mostly at
the counter. The distribution channel is thus very similar to that of Raymond but some differences that
we could observe were-

1) The costs associated with the promotions, rent, electricity and other operational expenses for
the franchise outlet are actually borne by the company rather than the franchise owner. The
latter is the case with Raymond.
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 2) Blackberrys does however maintain significant control over store layout etc. which was also
there in case of Raymond.

SALES MANAGEMENT

Primary Research Malhar Mega Mall Store Outlet

The franchise has to follow numerous mandates set by the company in relation to the store
maintenance, research on trends and supply of stock which is mostly season bound. As the trends
change according to seasons, the merchandise team at the headquarters of manufacturing gets in touch
with the store managers and analyses the customer preferences and issues guidance accordingly. The
company also follows a CRM (Customer Relations Management) system to gauge customer preference
with respect to the demand and expectations for the next season/quarter. The stock hence supplied is
decided by the manufacturer or Blackberry as a company itself. The CRM system also proves to be handy
to set sales target for the season to be catered to and the franchise has to ensure that these targets are
met. The capacity at the Blackberry franchise as they call their sales target is decided firstly on the
basis of season, then the targets achieved in the previous stock period and then on various aspects
including style, color, size and trends. The stores in communication with the merchandising team at
Blackberrys send out orders so that the company can analyze the effectiveness of the companys
offerings. The price of the product is also decided on the basis of the novelty and the status quo of
Blackberrys clothing. Discounts and promotions if any are also communicated by the company to the
franchise, and the Franchise has no autonomy with regard to this. The sales targets are fixed monthly as
well. For example, for the month of February 2017, the targets were Rs 25,00,000 lakhs worth of sales in
which the franchise achieved Rs 20,00,000 Lakhs worth of sales. Theyve currently set a target of Rs 17
Lakhs worth of sales for the month of March of which the store has already achieved Rs 5 lakhs worth of
sales. Although the targets are set and the salesmen are trained to push products, at times the demand
is not forecasted appropriately. The information regarding the leftover stock is often communicated to
manufacturing unit. The Franchise then is ordered to revert all of the leftover pieces (in exact numbers)
to the main warehouse. The company then decides whether to destroy the material and make new ones
or distribute it off to other small distributors based on the criteria theyve set for themselves. This
criterion is not known to the franchise owners. In case the franchisee fails to send the exact number of
stock communicated in the invoice, they are asked for explanation for the missing stock to ensure perfect
information prevails and policy compliance is maintained.
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Moreover for the salesforce, they are trained regularly as seasons change and new stock is
manufactured. Theyre provided guidance on each new product so that they can serve the customers
better. Theyre trained at a maximum of 2 days in one go. The company also calculates the appropriate
salary for each of the salesperson and communicates it to the franchise. The franchise is bound to pay
this amount every month to its over-the-counter personnel.

The differences in comparison to the Raymond process are as follows

1) The hiring of salespersons is done by the company rather than being done by the franchise
owner which was being done in case of Raymond Group.
2) The compensation of the salesperson is also centrally decided rather than being decided by the
franchise owner.
3) The leftover stock, if any, is bought back by the company which was not done in case of
Raymond. In Raymond, the outlet has the freedom to decide what to do with the leftover stock.

SUGGESTIONS

1) There are delivery and billing issues when the retail outlet is dealing with the company. The
products often dont arrive on time. This issue, interestingly, does not come in the case of
distributor based model. Also, in case of sudden surges in demand, company owned outlets
suffer even more because of the late delivery issue. They then have to turn to distributors to get
the required stock, this entails more cost because the distributor charges higher margins. Thus,
the company should work on making an arrangement between the distributor who is currently
only serving the MBO and start working on a mixed structure serving the EBO also, although
with a small proportion.
2) The training of the salesperson and the compensation of the salesperson are being handled by
different players, this might create a problem. One entity should be involved with both the
decisions. Hence, it should be entirely left to the company because it is the one involved in the
training process as well.
3) Raymond Group is expanding its presence in the premium segment with brands like Made-to-
Measure and Colour Plus. At the same time, since e-commerce is booming, Raymond is also
contemplating whether to go online or not. As of now, it has minimal online presence. However,
if and when it does decide to go online, the channel management would be a major issue. First
of all, the customer base for the two segments is in stark contrast to each other. The brand

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 image which the group is so keen on maintaining also takes a hit. Finally, the current franchise
owners and company owned outlets would resent the move. Although we dont have a
suggestion as this problem is not currently being faced by the company, it is definitely an
imminent threat and it would impact the sales and distribution strategy in every aspect.
However, given the corporate and brand objectives, Raymond Group is not likely to jump on the
online bandwagon in the near future.

REFERENCES
1) http://www.raymond.in/index.asp
2) http://www.zeebiz.com/companies/news-raymond-to-launch-online-tailoring-concierge-
services-in-select-cities-soon-12965
3) http://www.blackberrys.com/about-us#about-blackberrys

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