GROUP CASE STUDY -“SPENCER RETAIL LIMITED : Repositioning in a Changing

Retail Environment”
Group 6

Problem Statement
Spencer retail is facing the dilemma of moving away from their current brand
positioning of “ Taste the World (TTW)” to the proposed “Makes Fine Living
Affordable”(MFLA). The existing brand positioning had helped Spencer drew
customers from India Sec A population. TTW positioning helped to establish
Spencer as a Lifestyle store and helped to reinforce the top quality image which
Spencer already had. However the downturn of this positioning was that Spencer
was viewed more as a costly retailer which turned away the larger middle class
(Sec B & Sec C) segment. Since Sec B & Sec C represented the future growth area
for organized retail, Spencer had decided to change the positioning to MFLA.
Whether the changeover was successful is the problem statement of this study.

History
Spencer has a rich history in Indian retail market. It started its operations in
Chennai in 1863. Currently the brand is owned by RP-Sanjiv Goenka group.
Spencer’s approach to retail is through four store formats – Spencer’s Express,
Spencer’s Daily, Spencer’s Super and Spencer’s Hypermarket. Spencer had a
strong presence in AP & West Bengal with a total 180 stores in the country. The
number of Hyperstores were 28 as on 2011-12. 67% of the total sales of Spencer
came from Sec A1 & A2 customers who represent 10% of the Indian Urban
population. Spencer’s sales from Sec B & C segment of customers who
represented 37% of Indian Urban population was only 33% of its total revenue.
This segment represented the future growth in the organized retail.
Competition
 1. Big Bazaar was owned by Future Group and had 162 Big Bazaar stores and
43 Food Bazaar stores across 93 cities in the country. Big Bazaar utilized a
low price and high volume strategy.
2. Reliance Retail included Reliance Fresh, Reliance Retail and Relaince Mart.
Their core strategy was focussed on backward integration.
Brand Positioning and Challenges.
The goal of the existing positioning Taste the World(TTW) was to provide the
Indian Shoppers a Futuristic and International Shopping Experience. Main
takeouts of this positioning are
1. High Quality and Service image.
2. Differentiating elements like Gourmet centre.
3. Exclusion of opening price points and rare price promotion.
However TTW positioning lead to following concerns.
1. Preception of high prices and ‘not my store’ image among Sec B & C
customers.
2. Only a small segment of customers were loyal to Spencer.
3. Large segment of shoppers shifted across retailers.
4. Big bazaar was perceived to be a better value for money store.
Consumer satisfaction survey done by Spencers at their South City Hyperstore
revealed that in factors like Value for money and Low-end product availability,Big
bazaar was considered better than Spencer.
New Positioning : Make Fine Living Affordable
Spencer wanted the new positioning to balance both quality and price and to
make Spencer as a value for money store. Main components of this positioning
are
1. Aggressive pricing and judicious use of private labels.
2. Known Value items pricing – match Kirana store prices in household
goods.
3. Opening price point in value-sensitive categories
4. Spencer’s private label at competitive prices.
In the in-store communication tools used under MFLA, only PYCT wall and
Spencer Quality Seal had the maximum visibility and purchase impact.
Inference
The margin calculation under TTW & MFLA branding is shared below.
Margin Calculation - Brand Positioning
TTW MFLA
Contr. To
store sales Margin Wgt. Margin Margin Wgt. Margin
Staples 22 0.22 4.84 17.52 3.85
F &V 11 0.21 2.31 19.4 2.13
FMCG - F 12 0.24 2.88 19.88 2.39
FMCG -N F 26 0.22 5.72 22.88 5.95
Total contribution 71
Total Margin in % 15.75 14.32

The overall margin in MFLA is 14.32% which is less the 15.75% in TTW. In order to
ensure that the overall profitability in value remains the same, Spencer has to
increase its turnover by 10% in MFLA. The changeover has resulted in a turnover
growth of 13.5% as shown in exhibit 11. Hence we can conclude that the new
MFLA brand positioning was successful.