KEY POINTS

THE BRIEF:

We were told to devise a plan which allows P&G to enter retail and carve a 25%
market share in any segment within 3 years.

P&G – Where we stand

Strengths
• Reaches 4B people worldwide (large scale ops)
• Largest producer of household cleaning products
• Diversified brand portfolio (more than 300 brands and revenue of $79B)
• Product innovation (spent $2B for R&D in 2009, while Unilever spent $1.3B)
• Distribution channels all over the world
• New billion dollar brands
• Strong market infrastructure
• Already has retail in Fekkai (hair salons & products), The Art of Shaving
(customized shaving and grooming for men), Carnett’s Car wash (using Mr.
Clean detergent), dry-cleaning stores (Tide branded)

Weaknesses
• Top brands are losing market share
• Health and beauty women only
• Lagging in online media presence and leadership
• Refuses to manufacture private label products for its retail customers
• Slow, process heavy culture

Opportunities
• Health and beauty for men
• Doubling environmental goals for 2010-09-20
• Utilizing online social networks
• Going green/eco friendly
• New acquisition opportunities
• Selling directly to consumers (retail)

Threats
• Substitute brands that have a cheaper price
• Private label growth
• Slowdown in consumer spending
• Increase in raw material price
• Competition like – Reliance, Spencer’s (RPG), Future Group, Tata Retail,
Birla’s More, Bharti-Walmart EasyDay

RETAIL INDUSTRY IN INDIA – What the market is like

Strengths
• Cheap labor
• Growing economy
• Entry of big players into organized retail (Reliance, Future Group, RPG, etc.)
• Retail is the largest employer in India after agriculture. Employs 7% of the
total workforce and contributes 14% to the national GDP.
• Perceived as a status symbol (aspirational) to shop at malls and
supermarkets.
• Ability to source indigenous goods like rice, pulses, etc.
• Work in tandem with farmers to give them better returns.

Weaknesses
• Tax and regulatory structures. Slow and complicated process of setting up
stores that need large number of permits. (Setting up a store in Mumbai
needs 29 permits that take over 6 months to get. Setting up a second store of
the same chain needs all the 29 permits to be applied for afresh.)
• Getting products to stores is a big problem. Supply chain and distribution
need to be modernized.
• Dearth of warehousing and distribution centres nationwide.
• Poor transport links
• No cold supply chain for perishables. Currently estimated that up to 40% of
perishables are lost during transport.
• Current retail market has low productivity, low capital and technology

Opportunities
• Indian population is rapidly approaching 1.5 billion. This population will
become the world’s fifth-largest consumer market by 2025.
• 290 million Indians are expected to move up from BPL status to the middle
class, making the middle class reach 600 million by 2025. They have
household incomes between $4,400 to $22,000 (on the basis of purchasing
power parity).
• India’s total retail spend is slated to reach 860 billion by 2018.
• India’s economy is set to double in size by 2015.
• More than 90% of India’s food market is unbranded.
• Almost 50% of the Indian population is under the age of 30 years. They are
young and belong to the liberalization era. They are willing to spend rather
than save.

Threats
• Indian population is rapidly approaching 1.5 billion. Growth must be socially
inclusive to be successful.
• There are groups that have entrenched interests. They will resist what they
call the Walmart Invasion.
– Farmer’s groups
– Traders
– Middlemen
• Rural sensitivities in the Indian heartland (800 million people living in 600,000
villages)
• Limited consumer understanding
• Talent shortage. Need a new generation of retail managers.
UNDERSTANDING THE CONSUMER – Young earners who want to
spend!
- Young shoppers (by 2015 there will be 800Cr Indians between 15-60 years)
- Higher incomes (1.6 million households in India earning around Rs 45 lakh per
year)
- Easy finance (credit cards)
- Urbanization (it converts the local population from net savers to net spenders)
- Organized retail lure (malls and supermarkets are enticing consumers)

THE COMPETITION: Future, Raheja, RPG, Reliance, Bharti-Wal-

Mart, Tata
The Early players:
- Raheja Corp
- Future Group
- RPG

The Heavyweights:
- RIL
- Tata
- Bharti-Wal-Mart

Future Group Pantaloons, Big Bazaar, Food Bazaar

Central (malls), Home Town (home
improvement), EZone (electronics)
Depot (Books and music),
Futurebazaar.com (online shopping)

K. Raheja Corp Shopper’s Stop (department stores),

HyperCity (hypermarkets), Crossword
(bookstores), HomeStop (lifestyle stores)
Inorbit (malls)

RPG Spencer’s Retail, Health & Glow

(wellness), MusicWorld (music),
FoodWorld (food stores)

Reliance Reliance Fresh, Reliance Mart

(hypermarket), Reliance Digital, Reliance
Trendz (clothing), Reliance Footprint
(shoes), Reliance Wellness, Reliance
Jewels, Reliance Timeout (watches)
Reliance Super (mini-mart), Reliance
AutoZone, Reliance iStore (Apple
products)

Bharti-WalMart Cash and Carry stores

Tata Westside, Landmark (books and music)
Star India Bazaar (low-price
 hypermarkets), Under Infiniti Retail
Croma (electronics)

GAPS IN THE MARKET

a) No cold supply chain for perishables transfer (30% of perishables lost on
transport)
b) Dearth of trained retail professionals
c) Untapped rural market
d) Organic food retail – there is a demand but no supply

BUSINESS STRATEGY
P&G retail stores in USA:
- The Art of Shaving – High end men’s grooming
- Fekkai – high end hair salons
- Carnett’s - Carwash
- Dry-cleaning

P&G’s strategy while entering into retail:

1) Provide services that fit in with the existing product line
2) Do not go head-to head with large retail chains by selling exclusive P&G products
3) Go after particular niches where there is no undeniable retail leader

The tie-up with Tata Group’s Trent & Infiniti Retail Ltd.
P&G and Tata create a joint venture to create a new brand of pan-Indian retail stores
selling:
- Luxury goods
- Food & perishables
- Clothes, footwear and accessories
- Books, music, stationery
- Electronic goods
- Groceries
- Jewellery
- Hair salon (Fekkai)
- Men’s grooming (The Art of Shaving)

P&G needs to create a cold supply chain for perishables:

- As they are a large FMCG company, they already have the knowhow to create a
cold supply chain
- They have a presence in the rural market

Why they need to create a cold supply chain:

- They need to make this investment as no one else in India has a cold supply chain
- They will attain low-cost leadership in food retail
- This will help the tie-up with Tata as they will be the only ones with a cold supply
chain

The tie-up with Tata Motors Ltd.

P&G and Tata Motors create car-wash facilities for cars, LCVs and HCVs at every
Tata Motors service center:
- This will mirror the service run by P&G in the US (Carnett’s)
- Use P&G products for cleaning (Mr. Clean)

The retail outlets will be in the following formats:

Hypermarkets (25,000 sq. ft.)

Titan, Fastrack, Westside, Landmark, Croma, Tanishq outlets
Fekkai hair salon
The Art of Shaving store
Foreign brands
Food & groceries market (private label food products)

Supermarkets (15,000 sq. ft.)

Other multibrand retail
Food & groceries market (with private label and multi brand food products)

Rural format:
- Tata Motors has already opened 600 small outlets for the Tata Ace in rural and
semi-urban markets. It has also tied up with 117 public sector, gramin and co-
operative banks to help small entrepreneurs buy the vehicle.
- These outlets can be upgraded to sell a variety of low-cost goods that rural people
can use
- To get organic food to the cities (where there is a demand for it) the group can tie
up with farmers directly and help them grow certified organic produce that can be
transported to cities via the cold chain and warehouses. This will benefit the farmers
by cutting out the middlemen and benefit the retail group by lowering costs.
- At the same time, initiative need to be taken that will bring prosperity to the rural
sector. These can be setting up vocational training courses, providing microfinance
through tie-ups with local cooperative banks, etc.

Why this format?

- This tie-up needs to have a share in every rupee that the Indian consumer spends
- Needs to address all ranges of Indian consumers
- Needs to empower rural Indians (India 2.0) to be able to gain 25% plus market
share

Why should P&G tie-up with Trent and Infiniti Retail?

1) The Tata Group also has FMCG products like tea and salt
2) Trent runs Westside, Croma and Landmark retail outlets
3) Trent has a deal with DLF to buy about 1 million sq.ft. of space for its retail outlets
4) Tata Realty and Infrastructure has signed up with Jafza International (a Dubai-
based company) to build 7 logistics parks in India

Why should Tata tie up with P&G?

- P&G will have the only cold supply chain in India
- P&G will bring in their US-based retail chains to India (exclusively for the
hypermarket format in major cities)
- P&G has in-depth understanding of the FMCG market in India
- The tie-up will allow the Tata Group to have a share in the profits of FMCG sales
- Through the tie-up, the JV will be able to attain low-cost leadership in food retail

Roll-out format:
- The retail outlets will be launched in Gujarat, Punjab, Andhra and Maharashtra first
as these states have the highest purchasing power
- After this, the outlets will hit Southern India
- Finally the chain will launch in the whole country

Year 1 target:
8 hypercity malls
300 Easyshop stores
500 Kisan Malls

Year 2 target:
5 hypercity malls
400 Easyshop stores
500 Kisan Malls

Year 3 target:
1 hypercity mall
100 Easyshop stores
300 Kisan Malls

SETTING UP THE COLD CHAIN

Capital expenditure:
Warehouses
Cold Storage Equipment
Pack Houses
Truck fleet
Office and logistics systems
Expenditure estimate: Rs. 500 Crore

Uncertainties:
Demand risk
Electricity fluctuations and charges
Fuel for the trucks
Objections from the trucker’s lobby
Objections from the wet market operators in Mumbai
Political interference

SUPPLY CHAIN
- P&G will source directly from farmers and bypass all the middlemen. This
will cut costs and allow the farmer to have a greater share of the profits.
- P&G’s cold storage supply chain will allow the perishables to be stored
and keep fresh for longer
- The Tata group’s logistics parks will allow P&G to make use of their
logistics infrastructure and deliver more efficiently to their retail outlets

MARKETING PLAN

Objectives
Generate over Rs. 850Cr in sales by the end of year 1.
Increase sales by 100% by the end of year 2.
Target market
Maximus HyperCity
Age: 1 to 50 years (Kids, Teens, Young people, middle age groups)
SEC group: A & B
This store format will not just provide a great shopping experience, but
also be a fun and exciting place to hang out. With its food bazaars, foreign
brand showrooms, excellent infrastructure and great ambience, this will
be the weekend destination for families. For shoppers, it will provide:
- Everything under the sun, all in one place
- Clean, fresh and cheap foods, especially organic brands
- A lifestyle statement

Maximus EasyShop
SEC group: All
Age: 1 to 50 years (Kids, Teens, Young people, middle age groups)
The size of Easy Shop stores will vary from 2,000 to 4,000 sq ft and will have a
product mix that is slightly different from what is available in supermarkets like
Spinach, Foodland Fresh, Reliance Fresh, Spencer’s etc. Easy Shop has been
positioned itself as the convenience neighbourhood store, offering variety of fresh
produce, grocery, meals-to-go, dairy products, bakery items among others.

Kisan Mall
SEC group: B, C, D
Age: 1 to 50 years (Kids, Teens, Young people, middle age groups)
The Kisan Malls will contain all the products that middle income group
families need like FMCG products, groceries, apparel, etc. The displays
and promotions will cater to the rural target audience. There will be a
carnival/mela like atmosphere with continuous promotions and discounts
on offer.

Our target market is divided in to 2 sections:

- Rural population (800 million)
- Urban, semi-urban population (200 million)

Positioning

Maximus HyperCity
- Everything under the sun, all in one place
- Clean, fresh and cheap foods, especially organic brands
- A lifestyle statement
- Luxury mall

Maximus EasyShop
- Utilitarian and easy to shop
- No hassles shopping
- Quick and easy to access

Kisan Mall
- Utilitarian and friendly
- Place of attraction in rural areas

RETAIL BEST PRACTICES

Distinctive brand personality

More than the products strong companies sell, their brand personalities are what
distinguish them from less remarkable concepts in their categories. The personalities
of these brands are distinct and memorable.
The brand is in the entire shopping experience – from the visuals to sensory stimuli
to product assortment to customer service to tone of voice in messaging. The
strength of execution on brand depend on marketing, merchandising, and store
operations are all working together to deliver a distinctive personality which
permeates the entire customer experience.

Value added services and content

Great retailers deliver more value than their product alone. Some add value to their
products through the stories and details they provide about their products. Some
inform their shoppers about the origins, cultural significance, and manufacturing
processes behind their products. In doing so, they enable customers to buy into
shared values and significance. Others show how to use their products.

Cross-channel shopping experience

Earlier retailers could distinguish themselves by offering the option of ordering a
product online and then picking it up in store.To really stand out and serve
customers well, retailers must take the cross-channel shopping experience to the
next level.
Retailers add the brand value of simplicity and streamlining, including options such
as:
- Order online, call when you’re on the way to the store, and get the product
delivered to your car when you arrive.
- Use a scanner instead of a shopping cart to select your items in store and get the
products delivered to your home.
Retailers allow you to create shopping lists online but they produce itemized print-
outs indicating where you can find the items in store. They also inform you whether
or not the product is in-stock at your local store.

Strong organizational culture and values

Almost all of the top retail companies have strong organizational cultures and values.
And these are manifested in a superior customer experience. They are renowned for
how well they treat their employees. Sometimes the value companies places on
social responsibility is a primary reason why people buy the brand.

Sales promotions
Great retailers clearly communicate their product and brand stories, and their
features and services. In addition to traditional methods, these companies integrate
their brand promotion into the actual customer experience. Through pages on their
websites, in their catalogues, and in their in-store collateral, they actively promote
what makes them different and better than other companies.
They also execute and live up to their promise and this is the priority for any
company