A SUMMER TRAINING REPORT ON

CATCHMENT ANALYSIS AND CUSTOMER SATISFACTION STUDY OF SHOPPERS STOP

ACKNOWLEDGEMENT

I am highly indebted , for his generous support and help, which encouraged me to do the

work. I am indebted to him, for his personal and professional interest in moulding me to

my present personality.

I am also thankful to the staff members of Shoppers Stop for their valuable help.

This acknowledgement would be incomplete without a word of thanks to my friends for

extending their co-operation and all the respondents of my survey.

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INDEX

Introduction……………………………………………………...3

Objectives of the study……………………………………….….4

Industry Profile……………………………………………….….5

Company Profile………………………………………………….8

SWOT…………………………………………………………….15

Research Methodology (Catchment Analysis)…………………19

Research Methodology (Customer Satisfaction Study)..……....19

Findings and Interpretation(Catchment Analysis)………….....22

Finding and Interpretation(Customer Satisfaction Study)…....30

Recommendations…………………………………………….…..42

Bibliography………………………………………………….……43

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Introduction

Catchment Analysis :

Catchment Analysis is analyzing the areas and the customer profiles from attractive segments. Catchment analysis involves studying the demographics like lifestyles, social status, income levels, age, genders etc. This helps the organization to focus most of their marketing efforts to these segments or catchments.

Customers Satisfaction Study:

Customer Satisfaction Study helps in knowing the attitude of the customer towards the products/service of the organization. Customer Satisfaction is achieved when the company manages to reach the customers expectation and the customer get value for money. By requesting customers to fill up questionnaires, the organization can identify if it is reaching the customers expectations and how the customer perceives its services/products.

Objectives of the Study:

The main objective of the study is to

Identify the attractive segments/Catchments of Shoppers Stop.

Study in detail those segments/Catchments.

Identify the extent to which Shoppers Stop reaches its customers’ satisfaction level on various parameters.

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Industry Profile:

With a rapidly growing middle class and Indian consumer being the youngest in the world, the scene couldn't have been any brighter than this for the retail sector which is in a buoyant mood. Total private consumer spending has touched about Rs 18,90,619 crore with the organized retail sector getting Rs 15,96,802 crore of this spend. The forecast is the consumer spending will cross Rs 1,00,000 crore in another three years.

Another factor which has fuelled the rapid growth of the retail sector is the growing income as seen in a study by the National Council of Applied Economic Research (NCAER) which stated that the very rich with annual income of over Rs 2,15,000 have increased to 6.2 million households while the consuming class with annual income in the range of Rs 45,000 to Rs 215,000 has grown from a million to 90.9 million households.

All these developments have led to the rapid growth of the retail sector in the country which has 15 million retailers, most of them owning small mom and pop outlets though large corporates like Reliance, ITC, Tata, Pantaloon, Jubilant Group and Raheja too are investing huge capital in this sector.

Coupled with this, several leading Indian groups are going for tie-ups with world's leading retailers like Wal-Mart, Carrefour and Metro who too are equally keen on coming to this country.

As Harve Clec'h, Managing Director, Carrefour India and Gerard Freiszmuth, General Manager, Carrefour India Project, said of the scope for retail in India "there is a lot of opportunity in this sector for us since demand of the potential consumers are not being met under the existing facilities."

The visit of world's top retailers to this country and American retailer Wal-Mart's tie-up with leading Indian company, Bharti, are indicators of the shape that the retail sector would be taking in the coming years.

Clearly, Indian retail scene is undergoing a rapid change. It will see an investment of over Rs 20,000 crore by 2010 in quality retail space across the country. But, what is interesting is that most of the growth in the retail space is estimated to come from more than 1,000 tier-II towns and major rural hubs.

With the annual growth of the organized retail sector expected to be around 36 per cent, one of the major challenges is investment to enable it to maintain the current growth momentum over the next five years. A positive indication in this direction came with top

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corporate like shoppers stop, future group etc. who are into retail business announcing grandiose plans for investment.

Currently the Indian retail market is estimated at US$300 billion, and almost half of this is at present in rural India. With nearly 55 per cent of the total retail market being in rural India, this is a tremendous growth sector. Keeping this in view, companies like DCM, Godrej and ITC have begun focusing in the rural areas. DCM Hariyali Kisan Bazaars, Godrej Aadhars and ITC Choupal Sagar have branched off into the rural areas as also Tata Kisan Sansars and Naya Yug Bazaars.

The Hariyali Kisaan Bazaar is a pioneering micro level effort, which is creating a far-reaching positive impact in bringing a qualitative change and revolutionizing the farming sector in the country. Currently the chain is successfully running its business through 33 stores in five rural locations in North India. A typical centre caters to agricultural land of about 50,000 to 70,000 acres and impacts on nearly 15,000 farmers across India.

Though government has put on hold Foreign Direct Investment (FDI) in the retail sector, observers feel that the retailers would devise their own methods to bring in the necessary funds. According to available figures on the growth of organized retail, the three years from 2004 to 2006 saw immense growth from Rs 28,000 crore in 2004 to Rs 35,600 crore in 2005 and Rs 47,500 crore in 2006.

There was still further good news for the retail sector as according to data brought out by Reserve Bank of India (RBI Bulletin, January 2008), sales of private limited companies in the wholesale and retail trade registered a growth of 11.8 per cent during 2005-06.

This of course is no where near growth rates of companies like Pantaloons and Trent at 72.3 per cent and 47.7 per cent respectively during this same period. The sales of Pantaloons during 2006-07 jumped by around 90 per cent, while that of another leading retailer Shoppers' Stop rose by 40 per cent.

"The top line of these companies will see huge highs and the sales volumes will constantly increase as all of them are on an expansion mode," said Gibson G. Vedamani, Chief Executive Officer, Retailers Association of India.

With growth also comes its problems and though organized retail maybe growing rapidly, it is also now faced with the problem of fraud and shop lifting. It is estimated that loss from shrinkage accounts for nearly three to four per cent of an Indian chain's turnover, nearly double of what is faced by their counterparts in the West and this means a loss of about Rs 9,000 crore.

So, it is little wonder that those in the business are keen on investing on shrinkage control mechanisms, such as installing RFIDS, sensors, IT solutions and training employees.

Internal shrinkages are also on the rise. "Since employees know the business process,

they tend to become more adventurous. This leads to frauds such as cashier fraud,

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stealing products or cutting manual bills which are not recorded. Shrinkage has an

exponential effect on the bottom-line since the inventory costs are already accounted for

in the books," said IBM India business solutions executive (Retail) Sridhar Harihara

Subramanian.

Faced by these problems, retail chains have now begun investing on employee training,

to increase their emotional attachment and ownership with the store. "We share with

them inventory figures about a particular category and the loss from any shrinkage. The

idea is to develop internal peer pressure among the employees," Ebony Retail Holdings

CEO Lalit Kumar said with the company's annual budget on shrinkage control now being

Rs 50 lakh.

Another major problem being faced by the retailer is the practice of Shop-dropping -

where a local trader poses as customers and drop pamphlets or other promotional matter

in the retailer's merchandise. This may not lead to loss of inventory but the chain looses

out to valuable advertising revenue.

Company Profile:

Shoppers Stop was incorporated in 1991 by the K. Raheja Corp group of companies, one of the largest players in the country in the real estate development and hotel businesses.

In 1991, when retail in India was about shelf space, merchandise and prices, Shoppers Stop redefined every aspect of the shopping experience and offered the Indian consumer an international shopping experience. Shoppers Stop catered to the aspirational needs and lifestyle requirements of the Indian consumers of today who were well-traveled, well-read and a true global citizen. During the decade of the 90’s when air-conditioning, emphasis on lighting and superior customer service were considered a luxury, Shoppers Stop incorporated them as hygiene factors.

Shoppers Stop has many First’s to its credits such as:

First to create a store brand.

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First to create a retail loyalty program.

First to open its stores on Sunday’s.

First to launch a co-branded credit card in retail in the country.

First retailers to go to B-schools for recruiting fresh talent.

First Indian entry in the prestigious New York Art Directors Guild Awards for best campaign.

First to implement the state of the art retail ERP (enterprise resource planning) solution –JDA, JDA is the software name which is used for inventory and merchandise management.

VISION

To be a Global Retailer in India and Maintain No.1 position in the Indian Market in the Department Store Category.

MISSION

Shoppers Stop’s Mission Statement

"NOTHING BUT THE BEST"

VALUES OF SHOPPERS STOP

We will not take what is not ours.

The obligation to dissent.

We will have an environment conducive to openness.

We will have an environment for innovation.

We will have an environment for development.

We will have the willingness to apologize and forgive.

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We will respect our customer’s rights.

We will create an environment of trust.

We will be fair.

We will be socially responsible.

POSITIONING

Shoppers’ Stop is positioned as a family store delivering a complete shopping experience defined by its mission, vision and values.

Directors:

In accordance with the provision of the Companies Act, 1956 and Articles of Association of the Company, Mr. B.S. Nagesh and Mr. Shahzaad Dalal, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Mr. Govind Shrikhande, who has been appointed as an Executive Director and CEO of the Company for a period of 3 years w.e.f. July 29, 2006; is proposed to be re-appointed as an Executive Director and CEO of the Company for further period of three years w.e.f. July 29, 2009; subject to necessary approval of the Shareholders of the Company.

Mr. Nirvik Singh, was appointed as an Additional Director on the Board of the Company with effect from 16 June, 2008. The Company has received a notice in writing from a member of the Company under Section 257 of the Companies Act, 1956 signifying his intention to propose tie appointment of Mr. Nirvik Singh, as a Director of the Company.

A brief resume, expertise and details of other directorship and committee membership thereof of these directors are given in the explanatory statement annexed to the Notice convening the Eleventh Annual General Meeting

Customer Profile

Shoppers’ Stop’s core customers represent a strong SEC A skew. They fall between the age group of 16 years to 35 years, the majority of them being families and young couples with a monthly household income above Rs. 20000 and an annual spend of Rs.15000. A

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large number of Non - Resident Indians visit the shop for ethnic clothes in the international environment they are accustomed to.

Range of merchandise…

The stores offer a complete range of apparel and lifestyle accessories for the entire family. From apparel brands like Provogue, Color Plus, Arrow, Levi’s, Scullers, Zodiac to cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers’ Stop caters to every lifestyle need. Shoppers' Stop retails its own line of clothing namely Stop, Life , Kashish, Vettorio Fratini and DIY. The merchandise at Shoppers’ Stop is sold at a quality and price assurance backed by its guarantee stamp on every bill. Their motto: “We are responsible for the goods we sell”.

Customer Rewards – The First Citizen

Shoppers’ Stop’s customer loyalty program is called The First Citizen. The program offers its members an opportunity to collect points and avail of innumerable special benefits. Currently, Shoppers’ Stop has a database of over 12 lakh members who contribute to nearly 50% of the total sales of Shoppers’ Stop.

International Affiliations

Shoppers’ Stop is the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). The IGDS consists of 29 experienced retailers from all over the world, which include established stores like Selfridges (England), Karstadt (Germany), Shanghai No. 1 (China), Matahari (Indonesia), Takashimaya (Japan), C K Tang (Singapore), Manor (Switzerland) and Lamcy Plaza (Dubai). This membership is restricted to one member organization per country/region.

Acquisitions

The Organization, in 2000, along with ICICI ventures also acquired the reputed bookstore, “Crossword”, which offers the widest range of books along with CD-ROM, music, stationery and toys. Services like Dial-a-book, Fax-a-book and Email-a-book

enable customers to shop from their homes. Crossword currently has 18 Stores.

The IT Backbone

Realizing the role of IT way back in 1991, Shoppers’ Stop was among the first few retailers to use scanners

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and barcodes and completely computerize its operations. Today it is one of the few stores in India to have retail ERP in place, which is now being integrated with Oracle Financials and the Arthur Planning System, the best retail planning system in the world. With the help of the ERP, they are able to replicate stores, open new stores faster and get information about merchandise and customers online, which reduces the turnaround time in taking quick decision.

Supply Chain Management

Understanding the importance of distribution and logistics in ensuring the merchandise is available on the shop floors, has led Shoppers’ Stop to streamline its supply chain. The company has developed process manuals for each part of the logistics chain. These modules include vendor management, purchase order management, stock receiving systems, purchase verification and inventory buildup, generation and fixing of price and store tags, dispatch of stocks to the retail floor and forwarding of bills for payment.

Future Plans

Shoppers’ Stop aims to position itself as a global retailer. The company intends to bring the world’s best retail technology, retail practices and sales to India. Currently, they are adding 4 to 5 new stores every year.

ACHIEVEMENTS OF SHOPPERS STOP

AWARDS AND RECOGNITION:

shoppers stop has been conferred with the following awards and recognitions during the following years.

In 1994, First Citizen Club loyalty card launched.

In 1999, Implemented JDA Retail ERP (a global leader in retail ERP packages).

In 2000, Placed equity with external investors to raise Rs 600 mn

Acquired Crossword, one of India's leading book retailing chain, from India Book House in partnership with ICICI Trusteeship Services Limited (A/c ICICI Emerging Sectors Fund).

In 2001, Implemented Warehousing Module of JDA, Auto Replenishment and Auto Purchase Order system and business to business connectivity and Profit Linked Reward System (PLRS) introduced (for all the employees).

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In 2003, Received various industry awards from CMAI (including Best Retailer of the Year) and from Nasscom (Best IT Practice in Retail Category) and also Signed Austin Reed license for men's outerwear for India exclusively.

In 2004 taking total retail area to 752,848 sq ft Received Super brand status for 2003 and 2004 Received Images Retail award for the most favored retail destination of the year - September, 2004 Received the Organization With Innovative HR Practices award at the HR Excellence Awards organized by Mid-Day, Big Break & Daks - November 2004.

Received Top retailer 2004 India Bronze award given by Retail

Shoppers stop got the 'Retail Destination of the Year' at the Image Fashion Forum

In the year 2007 shoppers stop got the 'Most Admired Retailer of the Year' for technology applications at Image Retail Award.

Shopper stop got the 'Advertisement Campaign of the year' CMAI APEX Awards; 'Departmental Store of the year' at Star Retailer Award.

Shoppers stop got ‘the Emerging Market Retailer of the Year Award, at World Retail Congress, Barcelona, Spain.

In 2007 shoppers stop Signed a 50:50 Joint Venture with the Nuance Group for Airport Retailing Signed an MOU with the Home Retail Group of UK to enter into a franchise arrangement for the Argos formats of catalogue & internet retailing

Shoppers stop Awarded by Images retailer of India in 2008.

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SWOT ANALYSIS OF SHOPPERS STOP

STRENGTHS:

* First Citizens:-Shoppers stop First citizen members have been a driving force behind the growth of the Company. Company had over 12,00,000 First Citizen members as on 30th sep, 2008. First Citizens will continue to drive the company’s growth by increased average expenditure in their stores which will be aided by targeted promotional activities. first citizen contributes more than 50% in the total sale of the company.

* Strong focus on Systems & Processes:-Shoppers stop have a strong focus on systems and processes. shoppers stop have been able to capture its learning’s over the years and use them to create Standard Operating Procedures ('SOPS') for each of its activities, right from planning and setting up of, new stores to their day to day operations. Company’s SOPS are available on its Intranet, which helps their employees to access them whenever required helping company achieve consistency in their decision making process across the chain. company also have a Manual of Authority, outlining the framework of financial and legal decision making authority at all levels in the Company, right up to the Customer Care Associate & MD and the Customer Care Associate & CEO.

* Strong distribution and logistics network and supply chain:-Shoppers stop have created a strong distribution and logistics network, with their four Distribution Centers covering more than 300,000 square feet handling over 400,000 SKUs per year, and working 247.

* Enhancing the human capital:- Shoppers stop periodically assess their CCAs across all levels through assessment centers to identify competency gaps and use development inputs (i.e. training, job rotation etc.) to bridge them. Shoppers stop benchmarked their compensation and benefits through

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consultants, with the best in the industry to pay their associates accordingly.

* Strong understanding of the real estate business:-Shoppers stop benefit from their Promoters' association with the real estate business and their relationships with developers, which have helped shoppers stop to acquire preferred properties at competitive rates. And low rentals due to long lease contracts.

* Shopping Experience:-Shoppers stop pioneered the departmental store format in the Indian market when the Indian consumer was deprived of choice. Customers were drawn by the shopping experience. This is the differentiation that shoppers stop continues to bank on. Price is not essentially a differentiator for the shoppers stop, shopping experience is. Company imparts special training to its employees to ensure that service is not compromised on. With continued focus on service Company's stores continue to post increasing footfalls and conversion rates despite the mushrooming of shopping malls, hypermarkets and specialty stores.

* Management Strength:-Shoppers stop has a strong and well-established management team, headed by B.S. Nagesh, Managing Director. I believe that the CEOs of each business under the guidance of the MD will be the key to successful execution and expansion, and strong business growth.*

WEAKNESS (Risks and Concerns): -

* Execution: - (the act of accomplishing the aim) I believe the key risk to the company’s growth is execution risk. Shoppers stop has a strong execution team and I believe it has the capability to execute varied retail formats.

* Employee retention:- Modern retail is a new industry in India, which is only now gaining growth momentum because of the entry of new companies. Competition for reasonably experienced personnel has led to poaching between retailers. Shoppers stop has lost some management personnel and tried to stem the rise of attrition at the front end. I think that Company believes that this problem will persist until the industry reaches a steady growth phase.

* Delay in store delivery:- Majority of the new stores planned are in malls and any delays in the construction of the malls will delay the shoppers stop’s retail expansion plan.

* High retail lease rentals:- Rent is one of the largest components in a retail business' fixed costs, and the case is no different for the Company. Strong economic growth in the past three years in India has led to a boom in real estate prices and with it, an increase in retail rentals.

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* Store renovations:- In its constant attempt to deliver 'Nothing, But the Best' to its customers y shoppers stop needs to renovate its older stores. These renovations have a substantial impact on cash flows. Renovated stores also go through a gestation cycle before they ramp up to original performance levels.

* Government levies:- Retail is currently not viewed as an industry in India. Hence there are certain levies on the business which are proving to be a very large burden as there are no modes for the industry to recover or pass on these levies. Chief amongst these levies is Service Tax on lease rentals, etc.

OPPORTUNITIES: -

* Geographical reach:-Shoppers stop continues to increase its Pan-India footprint. The Company has plans to increase the number of departmental stores to 41 in the next 3 years. In addition the company will also continue to expand its various other formats.

* Hypercity:- An entry into mixed retail Company has entered the hypermarket segment, which is a high growth segment by acquiring a 19% stake in Hypercity. I believe that the scope for hypermarkets in India is immense. The store run by Hypercity has shown very impressive performance in the year gone by.

* Format diversification: -Shoppers stop, in its constant endeavor to capture wallet share, has diversified into multiple formats viz. Home Stop which retails hard and soft furnishings, Crossword for books, music and stationery, airport retailing by tying up with The Naance Group AG of Switzerland, and F&B formats comprising Brio and Desi Cafe, and Arcelia, which retails high end non apparel arid accessories for ladies.

* Preferred partner for foreign players:- Shoppers stop believes that by virtue of its presence across all lifestyle categories in the departmental format, it's strong brand value and its presence in the books and music segment, it is best placed to bring in international brands into the country, there by enriching the product bouquet for its customers and in turn increasing opportunities to product diversification and profit enhancement.

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THREATS :-

* Threat of new entrants:- With India becoming an attractive retail market and the gradual increase in foreign participation in the sector, Company expects many new entrants thus sharpening competition.

* Competitive rivalry in the industry:- There is intense rivalry among leading national retailers for new locations and quality real estate.

* Economic slowdown:- Retail is the 'last mile' and the impact of economic slowdown will be seeing a direct manifestation in lowered consumer spend.

Research Methodology:

Catchment Analysis:

For Catchment analysis I relied on my customer satisfaction survey to know the places from where Shoppers Stop gets most of its customers. I collected data from a few areas and intend to cover more areas.

I collected data about whether the area is a residential area or a commercial area or a combination of both. If it was a commercial area, what kind of offices do those places include. If it was a residential area what is the social status of people staying in those localities. And also the contact details of secretaries or managers of those localities. They can be contacted by Shoppers Stop for carrying out promotional activities in those localities about any offers or sale.

Then by inquiring about the flat rates in those areas I came to a rough estimate of the social class of people of that area. (If possible I inquire about their work details. But getting this kind of information if tough as no one wants to share these kinds of information). I then collected data about competition for Shoppers Stop in that particular area and also other data like restaurants and other entertainment sources.

Customer Satisfaction Survey:

For customer satisfaction survey, I made a tabular questioner asking the patrons to fill in the option they thought suited the question best according to them. The patrons were asked about their opinions on parameters like on parameters like layout, ambiance, brand variety, product variety, product quality, price, signage, location, ease of reaching the store, service by employees, billing etc.

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Questionnaire:

Age Group

Below 18 yrs 18-25 yrs 25-35yrs 35-45 yrs Above 45 yrs

How would you rate your shopping experience at Shoppers Stop?

Excellent Very Good good Average Poor

How would you rate the quality of products?

Excellent Very Good Good Average Poor

How would you rate the product display?

Excellent Very Good Good Average Poor

How would you rate the variety of product range?

Excellent Very Good Good Average Poor

How would you rate the variety of brands available?

Excellent Very Good Good Average Poor

How would you rate the pricing?

Affordable Decent Average Expensive Very Expensive

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How would you rate the shopping convenience?(Signage, space to move, ease of finding what you need etc)

Excellent Very Good Good Average Poor

How would you rate the ambience?( Lighting, music, Environment, Cleanliness)

Excellent Very Good Good Average Poor

How would you rate the employee service?(Courteous, helpful, effective)

Excellent Very Good Good Average Poor

How would you rate the billing process?

Excellent Very Good Good Average Poor

Location:

Summary:

The survey shows that most of the customers are below the age of 35 and a small percent of people are middle aged. Shoppers Stop manages to score well in parameter like products variety, product quality, brand variety, ambience, employee service, product merchandising, shopping convenience and overall experience with about 80% of the customers showing more than satisfactory delivery by shoppers stop. But Shoppers Stop scores less in pricing and billing process. During evenings in the weekdays and weekends, the number of cashiers is inadequate to ensure smooth billing. This leads to delay and frustration for waiting customers.

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RECCOMENDATIONS:

During weekdays, Shoppers Stop can have fewer cashiers in the mornings and afternoons and more cashiers in the evenings

During weekends, in the peak hours, and extra billing counter can be set up to handle long queues.

Shoppers Stop can bring up at least one expensive brand to cater to customers with lower budgets.

Shoppers Stop can have a short duration of discount sales exclusively for First Citizen members to encourage more customers to enroll for first citizen membership.

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BIBLIOGRAPGY:

Marketing management – Philip KotlerGrey Armstrong

Services Marketing - Valarie A. Zeithaml Mary Jo Bitner (Tata McGraw Hill)

Marketing Research - Aditya Pandit Charles Brown

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