Final Retail 1 Prjt

8/7/2019 Final Retail 1 Prjt

1/47

Retail Marketing Towards pantaloon

CHAPTER 1

INTRODUCTION

Running a successful retail enterprise is a formidable task. Dealing With multiple

products and ensuring their availability at the right place at the right lime and in

the right quantities can be complex indeed. Perhaps the best way to understand the

intricacies of retailing is to learn from the experiences of those who have made a

mark in the industry. We take a look at Pantaloon's expertise in merchandising, we

go through the Intense planning process emphasizes that having great products is

fine but having a specific focus is more essential and sourcing expertise shows

how the right mix of products is a perfect match for success.

Future Group

Future Group is one of the countrys leading business groups present in

retail, asset management, consumer finance, insurance, retail media, retail spaces

and logistics. Future Group companies includes, Future Capital Holdings, Future

General India Indus League Clothing and Galaxy Entertainment that manages

Sports Bar, Brew Bar and Bowling Co. Future Capital Holdings, the groups

financial arm, focuses on asset management and consumer credit. It manages

assets worth over $1 billion that are being invested in developing retail real estate

and consumer-related brands and hotels.

Pantaloon Retail (India) Limited

Pantaloon Retail (India) Limited, is Indias leading retailer that operates

multiple retail formats in both the value and lifestyle segment of the Indian

consumer market. Headquartered in Mumbai (Bombay), the company operates

over 7 million square feet of retail space, has over 1000 stores across 53 cities inIndia and employs over 25,000 people.

The companys leading formats include Pantaloons, a chain of fashion

outlets, Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a

supermarket chain, blends the look, touch and feel of Indian bazaars with aspects

of modern retail like choice, convenience and quality and Central, a chain of

seamless destination malls. Some of its other formats include, Depot, Shoe

Factory, Brand Factory, Blue Sky, Fashion Station, all, Top 10, mBazaar and Star

and Sitara. The company also operates an online portal, futurebazaar.com.

1


2/47


A subsidiary company, Home Solutions Retail (India) Limited, operates

Home Town, a large-format home solutions store, Collection i, selling home

furniture products and E-Zone focused on catering to the consumer electronics

segment.

2


3/47


CHAPTER 2

CORPORATE IDENTITY

Corporate Identity

1) Corporate Credo

At Pantaloons, they take pride in challenging conventions and thinking out

of the box, in traveling on the road less traveled by. The corporate doctrine

Rewrite Rules, Retain Values is derived from this spirit.

Family Vs. an individual

Unlimited choice Vs. limited

Create a pan Indian model Vs. get something from the west

Enter and grow the industry Vs. enter a growth industry

Top line and bottom line Vs. only top line

Manufacture Vs. outsource

Build your own brand Vs. sell others brand

Mass customers Vs. class customers

2) Logo and Tagline

The logo of Pantaloons primarily consists of the color green which

represents freshness. This is perfectly in sync with their tagline which is

Fresh Fashion. There are also elements like green leaves that have been

adapted to create a fresh approach to the design. Advertisements which are

targeted to the youth keep fashion in the foreground to be able to enforce the

tagline into the minds of the customers. Advertising agencies are also told to

center the creative concept of the ad campaign around the constant new and

changing trends in fashion, thus remaining in sync with the tagline ofPantaloons as well as what they believe in and offer to their customers.

3


4/47


3) Mnemonic

Since Pantaloons stands for Fresh Fashion, the color green reinforces the

same. The green leaf on shopping bags, membership cards, signages, shelf

talkers such as sales and discount notification, promotional offers etc.

4) Mascot

The mascot of Pantaloons Retail (India) Ltd. comes from the logo of the

mother company the Future Group which has an orange bird which

signifies optimism, growth, achievement, strength, beauty, rewards and

perfection.

5) Collateral Design

Any form of communication like faxes, e-mails, direct mailers has the logo

of Pantaloons as given below.

6) PR/ Promotional kits:

a) Marketing Calendar

The events are organized on the basis of occasions which come on a

yearly basis. In total there are 14 special occasions listed in a year for

e.g. Holi, Diwali, etc. the events are decided after the mark down budget

has been made in the marketing plan (made on a yearly basis)

a) Among the in-house celebrations/events conducted by Pantaloon,

the recent example of Womens Week could be considered

wherein every woman who comes and shops for Rs.1500 andabove would be awarded with a voucher of Rs.800. Apart from

this provision was made for them to get their photographs clicked.

The best photo was then awarded with a voucher of Rs.2000 from

Cygnus

b) They also conduct the End of Season Sale on a periodic basis

which is also used to generate remaining sales apart from the

events mentioned above. The End of Season Sale also accounts

4


5/47


for being the most successful sale/promotional event for

Pantaloons

PR Events Pantaloons Femina Miss India 2008 : Window

displays had a beige theme with mannequins wearing crowns.

i. Contestants shopped at Pantaloons which was telecast on

Zoom TV

ii. Pantaloons clothes used for one round

iii. There was one round called the Fresh Face

iv. Pantaloon clothes are also shown in movies which have a

style quotient like Race, Tashan

b) Office Uniforms - The HR Manager of the Pantaloons retail outlet at

Lower Parel, Soni Jha discloses that the uniform for the staff varies

depending on the department and brand that they work for. It is done for

easy recognition and identification of the staff working in the store. For

instance, the uniform for the in-house brand aLL is white formal shirtand black trouser for male and female staff. This decision is taken by the

Operations team.

c) Vision - To deliver Everything, Everywhere, Every time to Every Indian

Consumer in the most profitable manner. The group considers Indian-

ness as a core value and its corporate credo is - Rewrite rules, Retain

values.

d) Mission - We share the vision and belief that our customers andstakeholders shall be served only by creating and executing future

scenarios in the consumption space leading to economic development.

We will be the trendsetters in evolving delivery formats, creating retail

realty, making consumption affordable for all customer segments for

classes and for masses. We shall infuse Indian brands with confidence

and renewed ambition. We shall be efficient, cost- conscious and

committed to quality in whatever we do. We shall ensure that our

positive attitude, sincerity, humility and united determination shall be thedriving force to make us successful.

5


6/47


e) Stationery - The price tags, letter heads, envelopes, visiting cards, cello

tapes, pens, etc. have the element of green incorporated in some way or

the other; all of these also carry the logo of Pantaloons on them.

f) Office design The Head Office located at Andheri East has orange andwhite interiors. This is in sync with the color combination of the logo of

the parent company Future group. The company follows an open door

policy. This is evident by the office layout which has small cubicles and

very few cabins.

6


7/47


BRAND IDENTITY

ii)Brand Name

In 1987, the company incorporated as Manz Wear Private Limited. It launched

Pantaloons trouser, Indias first formal trouser brand. Then in the year 1994, The

Pantaloons Shoppe exclusive menswear store in franchisee format launched

across the nation. The company started the distribution of branded garments

through multi-brand retail outlets across the nation. This was followed by the

launch of Pantaloons Indias family store in Kolkata.

Brand architecture

a) Competitive Environment

The Managing Director of Pantaloons Retail (India) Limited, Mr. Kishore

Biyani, states that the competition in the fashion segment would be Shoppers

Stop, Trent and Lifestyle to start with. But Pantaloons also faces competition from

Globus, Westside and the stand alone stores in shopping malls and streets. The

strategy to fight competition is to not only capture customers share of wallet but

also share of time.

b) Greater chunk of wallet

Pantaloons has explored new concepts such as aLL, which sells clothes to

plus-sized customers and MeLa, which targets home-owners with furniture and

home textiles. This is in pursuit of its strategy to sell everything to everybody. It

does not, however, seek to be the Jack of all trades. The joint-venture with Liberty

Shoes for footwear retailing, association with Unitech Enterprises for home

solutions retailing, and the stake it has acquired in Planet Sports and Galaxy

entertainment, reflect its efforts to rope in those with category expertise.

c) Target

Pantaloon targets the large and growing upper-middle and middle class of

Indian society. This segment is very price conscious and always looks out for

value for money. Pantaloons, with its focus on fresh look, feel and attitude

offers, trendy and hip collections that are in sync with the hopes and aspirations of

discerning young and young-at-heart consumers.

d) Insights

7


8/47


We asked a few people who have shopped from Pantaloon the reasons of

preference. The insight thus gained from this was I want to be in sync with the

latest trends and styles

e) Benefits

The functional benefit that Pantaloon offers is an extensive and exclusive

variety of the latest fashion and trends across its product categories such as

apparel, accessories, footwear, etc. The emotional benefit as quoted by Anil

Bumb, Marketing Executive that, Pantaloons offers is the entire retail experience

and the feeling of pride with which the customer walks out after having shopped

from Pantaloons.

f) Values and Personality

Pantaloons is known to have a youthful persona and its own distinct sense

of style that appeals to millions. In accordance with the positioning paradigm of

Pantaloons mantra of Fresh Fashion and perpetually reinventing itself with

seasonal fashion wear, Pantaloons is associated with Bobby Deol and Lara Dutta

to endorse its brand. This is the intention to rub off the inherent style-icon status

and turbo-glam allure to forge a better connect with a Bollywood-crazed Indian

GenNext; as quoted by Sanjeev Agarwal, CEO, Pantaloons, Lara Dutta, being aMiss Universe, carries her own style statement, while Bobby Deol is a celebrity

who is always well-turned out at social gatherings. Pantaloons has an association

with The Femina Miss India pageant and an ex-Miss India and Miss Universe adds

its own charisma to the brand.

Pantaloons Fresh Fashion, as it is known, stands for a fresh look, feel and

attitude. Says Agarwal, Bobby Deol and Lara Dutta, who are very stylish actors

of today, will help enhance the fashion imagery of the Pantaloons brand.

Pantaloons will leverage the duos universal appeal, which is not limited to merely

metropolitan cities, but also extends to smaller cities and towns. The ever-

changing and fast moving fashion pace is a driving force for Pantaloons to come

up with its seasons on a four-six week basis.

1) Reasons to Believe Pantaloons stands for fresh fashion by

upgrading its stock every three months. It also has tie-ups with

brands that are style icons. For e.g., movies like Race, Tashan, etc.

8


9/47


2) Discriminator Pantaloons offers Fresh Fashion. People feel

proud to have shopped from Pantaloons.

The range offered under Fresh Fashion, be it in terms of apparel,

accessories, cosmetics, etc. consists of an extensive variety which is not found inany of the competitor brands (for e.g. Shoppers Stop, Lifestyle, Westside etc.).

Recently, Pantaloons Femina Miss Indias exclusive range was offered to the

customers, as part of the promotion for the event in addition to extending

sponsorship. The stock is never outdated in terms of the latest trends and styles in

the market. As quoted by Ajay Kamble, Warehouse Executive Every style (stock)

has a turnover of 90 days. After 90 days the stock goes back to the warehouse.

Only core styles are stocked throughout the year. Pantaloons stands out as a

fashion trendsetter, on the lines of how fashion is followed internationally.

g) Essence

The core value of the store is the experience it offers to the customers in

terms of latest trends in fashion apparels and accessories with a visually

stimulating environment.

h) Product Design

Pantaloons is a lifestyle store which offers a variety of products ranging

from fashion apparels, footwear to fashion accessories for men, women and kids.

i) Packaging design

The shopping bags are plastic, green in color and carry the logo of

Pantaloons printed on them thus increasing the recall value of the brand. These

bags are available in two sizes.

9


10/47


Environmental Identity

a) Retail space design

The criteria for selection of a location for the Pantaloon outlets is a

series of surveys followed by market research along with analysis of the

locations that have been selected; before the final decision is taken.

b) Scientific store planning and layout

The Store design lays emphasis both on placement of various sections

as well as the brands. The store has various sections such as Mens Wear,

Womens wear, Perfumes and cosmetics etc. These sections are further

divided according such as the Mens wear section will include Formal wear,Casual wear, Ethnic clothes etc.

The sections are as follows:

I. Apparels

i. Mens Wear

o Casual Wear

o Ethnic Wear

o Formal Wear

o Club Wear

ii. Womens Wear

o Casual Wear

o Ethnic Wear

o Formal Wear

o Lingerie

iii. Active Weariv. Kids Wear

v. Non-apparels

II. Perfumes

III. Jewellery

IV. Toys

V. Footwear

VI. TimewearVII. Mobiles

10


11/47


12/47


12

Floor Product Category Brands

Ground

Floor

Timewear Citizen, Fastrack, Fossil,

Giordano, Guess, Oakley, Police,

Titan,Tommy Hilfiger

Bags In-House: Meow and Pick-me-up

Other brands: United Colours of

Benetton, Baggit and Fiorelli

Perfumes Chanel, Calvin Klien, Davidoff,

Ralph Lauren, YSL, Azzaro,Escada, Mont Blanc, Dunhill,

Cartier, Paco Rabanne, Versace,

Burberry, Police, Adolfo, Agua

Brava, Antonio Banderas, So,

Jennifer Lopez, Joop, David

Beckham, Lanvin, Bvlgari, Hugo

Boss, Luciano Soprani

Cosmetics Revlon, Maybelline, Lakme,Neutrogena, Ponds, Chambor,

Loreal, H2O, YSL, Dalton, Toni

& Guy

Pen Parker, Cross, Waterman,

Sheaffer

Fashion Jewellery Sarah, Jazz, Flip, Tribal Zone

Diamond jewellery DDamas, Sangini, Cygnus,

Nakshatra, Nirvana, Sparkles,Gili, Ishis, Sia, Ola, Infinity

Ladies Western Wear Annabelle, Bare, Honey, Umm,

Rig, Scullers, Jealous21, Urban

Yoga, Akkriti, Ajile, AND, 109

degree F, Remanika, Lee Cooper,

Levis, Pepe, Spykar

First Floor Kids Wear Bare, Chalk, Akkriti, Provogue,

Id, Lilliput, Gini & JonyLadies Ethnic Wear ALL, Taal, Kavitas, Krishangs,

Ananya, Kavisha, Trishaa, Payal,

Chitralekha, Krsna, Anmol

Kakad, Rangmanch, Isvarah,

Biba, Etam

Lingerie Etam, Lovable, Jockey, La Senza

Sports Section Black Panther, Converse, Adidas,

Reebok, Nike, PumaToys Hot wheels, Fisher-price

Footwear Provogue, ID, Catwalk, Lilliput,

Kittens

Second

Floor

Mens Wear John Miller, Lombard,

T2000, Ajile, Bare denim, Umm,


13/47


Floor Plan

The floor plan demarcating the different sections and their placement is

made by the concept, design and visual merchandising team at the head office and

is implemented by the zonal are made according to the revenue per square foot ofeach section and brand. The revenue per square foot shows which section and

which brand is giving the most business to the retail outlet. For example the Mens

Denim section gives an average of 1500 Rs. per square foot per month while

Mens Formals gives 1800 Rs.teams. The plan changes after each End of Season

Sale (EOSS) i.e. the Autumn-Summer ( August) and Autumn- Winter (February)

sales. Changes

The Perfume section is always kept at the entrance in every Pantaloons store

because the fragrances tap the olfactory senses of the customers passing by and

enhances their shopping experience. The Brands are placed according to the

expected sales. The new brands or the brands that relatively slow moving are

placed at the focal points near the aisles and the trial rooms where there is a higher

chance of the consumer browsing through the merchandise. For example in the

Lower Parel store brands like Remanika and AND which are more contemporary

and designer in their look are placed at focal points to help sales.

Apart from these focal points, there are highpoints which aim at attractingthe consumer by displaying the latest and in merchandise. These highpoints

have mannequins dressed in the garments or accessories recommended by the

design team to the visual merchandising team. The mannequins could be stand

alone or may have a backdrop to increase the appeal of the display. For example

currently the store displays blazers in case of John Millers.

The store also has clusters at entry and exit points. Clusters usually consist

of 2 male and 2 female mannequins which are dressed in a variety of garments.Sometimes if a promotion is going on the cluster may be altered. For instance

since Pantaloons was sponsoring Femina Miss India Pageant the cluster consists

only of female mannequins.

13


14/47


Floor Layouts

Ground Floor Layout

14


15/47


First Floor Layout

15


16/47


Second Floor Layout

16


17/47


Ambience characteristics

1) Lights : The lights used are yellow to keep the ambience

mellow. Spotlights are used in the display window and at focal points to

enhance the look of the mannequins.

2) Music : It is considered to be an integral part of the

shopping experience. The music played is usually subtle in the mornings

and afternoons while it is peppy in the evenings

3) Color : Extensive use of the color green to give a fresh feel.

Also a number of visuals are used which portray nature.

4) Furniture/fixtures : The merchandise is displayed with the

help of Gondolas, Nesting tables, Display tables and Waterfall hangers.

The gondolas are of 3 types:

o All Stacking : Used for shirts

o Half stacking Half hanging

17


18/47


o All Hanging

Visual Merchandising

1)Merchandise Display : A light to dark color story is always followed whiledisplaying the merchandise. The store usually also follows a color theme.

For example if the color theme is pink then the garments at the focal points,

on the clusters etc. will be within the pink palette. Smaller, quick pick up

products such as hairbrushes, clips, toys etc are kept near the billing counter.

Merchandise is also displayed on the mannequins (either stand alone or

clusters) by mixing clothes and accessories of different brands to put

together a complete look. There are A4 sized shelf talkers that tell the

customer which product is from which brand.

2) Window Display : The windows in each store are segregated and have

different themes for display. One of the windows is dedicated to Fashion

Friday. Fashion Friday is a concept by Pantaloons since they believe in

fresh fashion and say that they bring something new to the customers every

week.

Windows may also be designed according to the ongoing promotion. The

Pantaloons Femina Miss India theme can be taken as an example here. SincePantaloons also does fashion for movies the windows may also be designed

accordingly. For example the stores will have displays of Tashan starting 10th of

April. Sometimes the store may also sell the windows. For example last year the

window was given to Red FM through the Future Media Group and the display

was done accordingly. Other themes that may be used for display are festivals and

seasonal collections.

The display always follows a color theme. The maximum time for which a

display may be put up is a month though usually they try and change it every

fortnight.

a) Point of Sale

b) Promotions and Signage: Various schemes are promoted in

the store through announcements and A4 or A5 sized sheltalkers and

cards on the gondolas. Other promotional materials such as those with

the brand ambassadors etc are given to various stores by the head office.Future media screens are also placed at various points in the store which

18


19/47


either play Pantaloon advertisements or display the various in-store

promotions and schemes. Signage giving various instructions and the

store directory are placed at various strategic locations in the store.

c) Shopping Bags: The bags are green in color with the brandname and the customary leaf design. There are no immediate plans to

change the design though Pantaloons is planning to change to paper

from plastic.

Service Identity

Service Culture Pantaloon values customer feedback. They have avisitors book called Share With Us. Customers can give their suggestions or

register their complaints in this book which is reviewed by the customer service

desk manager daily. A weekly report is then submitted to the Store Manager who

acts on the suggestions made.

The staff at the store is trained to interact with the customers by giving a

thorough knowledge of the products and the brands that they handle. The

Department Manager is responsible for the training of a new team member. Thistraining takes place on the job. They ensure that the fresher gets an overall

exposure to all the sections of the department that he has been assigned. Under the

guidance of the Store Manager the staff gets trained in four specialized areas:

sales, product knowledge, grooming and customer query management. Soni Jha,

HR Manager shares with us the procedure for sales training for Akruti, an in-house

brand which has formal and casual wear. The Management trainee is shifted from

one section of Akruti to the other for a better understanding whereas the training

for Visual Merchandising is done through handing over experience from a seniorlevel to the lower level.

19


20/47


As far as sales training is concerned, it is divided into ladies ethnics and

western wear since it involves different selling skills. The training period for each

section is usually one week.

Selection criteria for employees:

a) Management trainee The minimum level of education for a

management trainee is being a graduate.

b) Managers The selection criteria for managers is more experience and

knowledge based than education.

c) Team members The minimum level of education for a management

trainee is being an HSC pass.

d) Recruitment A preliminary round is conducted by the HR team after

which candidates are short-listed for the next round. The second round is

conducted by the department managers and they decide on the selection

for the desired position.

e) Hierarchy and Responsibilities:

i. Team member

ii. Team leader

iii. Assistant Department Manager

iv. Department Manager

v. Assistant Store Manager

vi. Store Manager

At the Lower Parel store, there is one Store Manager who handles the store

targets and to whom two Assistant Store Managers report. The responsibility is

divided between the ASMs floor-wise. One team comprises of team members and

leaders. Team Leaders are seniors with more experience and Team Members

report to them. The Team Leaders report to Assistant Department Manager.

20


21/47


g) Employee Entertainment : There is a monthly calendar plan for each

store which has all the activities planned like an annual picnic.

The Lower Parel store has a Funzone at the terrace for recreational activities

of the staff. Employees can watch TV, play carom, avail the facility of a pantry.On Saturdays there is a staff meeting where in employees are updated on the

progress of the store. This is then followed by games like open house

h) Employee Benefits: Termed by the HR Manager, Soni Jha employee

benefits are motivational benefits which consists of

a) Gift vouchers for new borns

b) Gift vouchers on marriage of an employee

c) Birthdays cake cutting, cards

d) Medical benefits

e) Employee of the month

i) Promotions and Incentives: The promotions and incentives given to anemployee is decided by the Operations Team and is implemented by the HR

Team. As told to us by Chetan Shedye, Senior Executive, HR & Admin Senior,

the appraisal is based on performance and target achievement of the employee

which is tracked on a daily basis through punching, registers and musters, Staff

IDs and tracking software called management information.

21


22/47


Merchandise Management

Efficient merchandising methods prevent stagnancy and propel a retailer

towards growth. This is something that Pantaloon firmly believes in. And this is

where the company has made a difference. Against the traditional brand

management merchandising practice followed by most retailers, Pantaloon has

employed the concept of product (which it calls category management)

management in its day-to-day merchandising function 'The core assumption

Pantaloon makes is that customers are more product-driven than brand-driven,

when they go shopping', says Kishore Biyani, MD, Pantaloon Retail. Pantaloon's

internal studies confirm this out of every 100 customers that enter a retail store to

buy a specific product, 98 are not very particular about the brand. This is primarily

because there are various factors like price, quality of the garment, texture, colour

and so on that influence a customer's choice of merchandise. So the customer's

preference for a particular brand gets overshadowed by these other aspects, which

lead to his ultimate decision. Thus, management of a category of merchandise is a

more effective tool than managing individual brands. 'The whole idea of category

management as implemented by Pantaloon is to create products across the length

and breadth of a category at different price points, as in fabric, design, shape,

seasons, colour and sizes, without special importance being given to any particular

brand, says Nikhil Chandra, senior category manager, Pantaloon Retail. The aim

22


23/47


is to create products, which are traffic builders and margin managers within the

store, rather than brands that compete with each other The Pantaloon system does

not lay any emphasis on the brand and does not require the creation of shops in

shops. Therefore, excessive building or spending on brands becomes unnecessary.

Instead, the company stresses on promoting a product category, thus making brand

marketing a secondary function.

The Brand-Category Link

Pantaloons merchandising team is divided into the category management teamand the merchandise management team. There is also a special design team. To

understand the functions of each, let us first look at the type of merchandise

presented by the company. The Pantaloon model differs from the others on

category management especially for the apparel segment. Most other models start

with category management individual selection of products across various classes,

sub-classes and brands. Thus, brands do play an important role in the

merchandising function of the store in other models. This is also due to the fact

that most other storesdeal with multiple

brands and not with

own store labels. What

we have done is

segregate the functions

of the brands, with no

brand cannibalising on

the function of the otherbrands, says Bina

Mirchandani, chief

category manager

(ladies & kids). For

example, John Miller is

formal and semiformal

shirts, Dare is denim

and casual wear, thePantaloon brand

23


24/47


represents only trousers, Knighthood is evening wear, Annabelle is western wear

for women over 25, while Y? western wear for women aged between 18 and 25.

Thus, the significance of the brands is limited and even at the stage of brand

management, the company deals mainly with a product category.

The merchandise developed by Pantaloon is of three types. The first is

classic - these are products that last for one or two seasons. Then there is fashion

or style or standalone type - mainly fashion- related merchandise that stays for one

or two months. Finally, there is the collection or the stories type. Collections,

especially in womens wear, are part of fashion merchandise. In the womens

segment, close to 60 per cent is 1fashion category. For men, 40 per cent of

formals, 30-40 per cent knits and 20 per cent of casuals fall under the fashion

category - the rest is all core. There are coordinated collections of tops, blousesand trousers in women and shirts, T-shirts and trousers in men, which complement

each other and can be bought as sets. For example, a typical story for women

would include two blouses, two T-shirts, one trouser, one Capri and one Skirt. The

collections category follows a theme and Pantaloon has several running during the

year in the different seasons. For the January-March season, the company is

planning themes like Desert Song, Ocean Blues, Blue Fin and Spirit in womens

wear. Desert Song is merchandise in earth colours and batik prints - typical of a

desert Ocean Blues has products in various shades of blue with water relatedprints, while the Spirit collection is mainly embroidered white and beige garments.

For men, the collections are usually based on colours and fabrics. Symphony on

Ice and Cloud Nine are some of the themes in menswear. Often, accessories are

developed to match with the theme. The collections are part of fashion

merchandise and enjoy a shelf life of one or two months.

24


25/47


The lines are developed in such a way that they appeal to all age groups. In

womenswear, Pantaloons in-house design teams forte is western wear for ethnic

clothing; the company mainly depends on external labels. Sometimes, the category

manager for ethnic wear may offer suggestions on the type of merchandise

required and the vendors develop this for the store. The company does not haveany brand in this segment and the goods are sold under the vendors labels. This

saves on the double excise levy, which it would have had to pay if it used its own

name.

Before

moving on, let us

first understand

how the

merchandise

functions are

monitored at

Pantaloon (see

chart Down to the

Last Detail). It

has nine

departments,

representing the

25


26/47


various products housed by the store - menswear, womenswear, household

articles, jewellery, cosmetics and fragrances, books, music and stationery, toys

and footwear. Each department has sections within: for instance, menswear is

classified into formal and casual wear. This is where category management comes

in. Each sub-department is further divided into categories. Thus, formal wear is

grouped into shirts and trousers and so on. Category managers are appointed for

each of these. Currently, Pantaloon deals with 16-17 categories. Then there are

sub-categories, which primarily deal with details like stripes, checks and plains.

Each sub category is further divided into classes, which cover fabrics like cotton,

blends and so on. Sub- classes focus on styles as in sleeves and collars, among

others. Here the final stock-keeping unit (SKU) is arrived at. In apparel itself, any

Pantaloon store at any point in time, deals with as many as 17,000 different SKUs.

There are 3,000 options (classes) in apparel, each of which has at least 5 styles

(sub-classes). Overall, any store stocks as many as 36,000 different SKUs.

To keep a track of the performance of the SKUs, the company has evolved a

coding system. Each SKU is allotted a 14-digit code. The first 4 digits represent

the department and the sub-department, the next 2 stand for the price point the

next is the seasons collection and the last 7 digits symbolise the design, shape,

colour and size of the product. The company now plans to replace this code by the

Universal Product Code (UPC), which is followed internationally.

26


27/47


27


28/47


PLANNING PROCESS

The Planning Process

Planning at Pantaloon is a top-down, bottom-up process. The top management

forecasts the sales for each store and category and decides the space allocation for

each category based on which targets are set for sales, gross margins, inventory

turnover, discounts, mark-ups, stock levels and net margins for each store and each

category. The category managers take a more micro approach wherein they study

the categorys past performance and trends in the marketplace. This helps them

prepare a range plan, procurement plan and distribution plan, The range plan deals

with the merchandise mix that the category manager feels would sell in the coming

year. Based on the range, its procurement and distribution plans are laid. Thecategory manager here performs the twin functions of vendor development and

sampling of SKUs, which would finally go into the merchandise mix of the stores.

This is known as an assortment plan. The objective is to try and achieve the sales

and return per square foot target laid down by the top management. The category

manager also provides feedback to the top management on the ability of the

category to match the sales target. We now closely examine how the entire

planning process happens once the top management lays down the sales forecast.

The Merchandising Process

First, the design team develops the design or a new pattern. The team is led

by the visual merchandising head and has 20 designers for product development.

The design department depends on fashion forecast magazines, exhibitions and

may also visit leading retailers in the city to understand the latest styles. Designs

are developed not only for the fashion and collections category but also for the

classic segment so that there is something new every season, The new designs are

presented to the category management team, which consists of close to 40 people

handling 16-17 categories of merchandise. The category captain and his team is

given the entire years budget and sales target for the category based on which he

decides whether to experiment with a new design or not. If yes, then the category

manager will first establish the total purchase quantity of that design and the stores

in which this should go. This is the most crucial stage where the category manager

prepares the merchandise control chart (see table Keeping a Tab on Tags).

28


29/47


Table:KEEPING A TAB ON TAGS

This chart gives the details to be ordered from each vendor and the total cost andrevenue it would generate. It also puts out the style code for the design for all

future reference. This code gives information on the style, brand, the season for

which it is ordered and the vendor. The merchandise control chart is attached to

the catalogue which describes all the styles and designs, colour options, visual

merchandising and mood of the merchandise and all the categories within which

the given style has to be manufactured. For Desert Song, for example, the

catalogue gives the various colours and fabrics to be used, the number of blouses,

trousers, skirts, capris and so on which would be made under the collection, thevisual merchandising plan and the mood plan. The mood for the line comes from a

single dried out tree standing in the midst of the desert with major use of earth,

brown, beige and maroon colours and big prints. Thus, the entire selection of

colours, designs and patterns revolves around this mood.

Table :SORTING OUT SIZES

29


30/47


Then the merchandise team comes into the picture. Each category team has a

merchandiser who helps in sourcing the right kind of material as per the

specifications given by the category manager and is responsible for the quality and

timely delivery of the merchandise. They also negotiate for prices with the

vendors. At Pantaloon, almost 70 per cent of the menswear and 50 per cent ofwomenswear merchandise is produced by Pantaloon Industries - a group company.

The company has 25-35 private vendors. The category manager is involved in the

negotiation process with external vendors whereas for in-house vendors,

merchandisers handle the entire deal.

Along with the details on the products to be manufactured, the category manager

also has to give the time and place of delivery to the vendor, which emerges from

the micro-merchandising chart. This chart details the product category, description

of style, style number (reference number), category of merchandise - story or

classic or fashion, ratio of sizes, colour, store of allocation, time and place of

delivery to the warehouse or the store. The column listing total number of pieces

helps in tracking the movement of merchandise across the stores (see table How

Much of What Goes Where & When). The micro-merchandise chart is the

allocation plan of the company and is based on the ratio of sizes in each

merchandise category (see table Sorting out Sizes). For example in womenswear,

Pantaloon has 4 sizes - small, medium, large and extra large. The merchandise

control chart is the basis of opento-buy (OTS), which defines the month-on-month

30


31/47


or season-on-season purchases by each store, based on the opening stock and

closing stock situation.

Thus, Opening stock + sales - closing stock = Open to buy.

The company makes the 0Th for the season on which the micro-

merchandising chart is based. The basis of OTS is the merchandise control chart

which, in turn, is derived from the inputs received from the designers for the

forthcoming seasons of the year and the analysis of past performance.

The table Sorting out Sizes shows the OTB for the past season. Here the key is

the analysis of the closing stock of merchandise. Pantaloon follows a principle that

the closing stock of the merchandise should be equivalent to, at least two-month,

sales. This rule is based on the past studies of the merchandise mix and theaverage requirement of stock. So if the season was for 4 months then the two-

month sale for each size is given. The table clearly shows that while small size

has the right proportion of closing stock, the medium and large sizes are under-

stocked and the extra large size is over-stocked. This implies that Pantaloon may

have missed out on some potential sales in the medium and large categories

whereas the buying decision for the extra large size was totally wrong. This forms

the basis of next seasons ratio between sizes. Now, the company would see to it

that it buys higher quantities of medium and large sizes and lower quantities ofextra large sizes in ladies blouses, irrespective of the story it is presenting in the

store. So the design team decides which design will sell whereas the quantities that

should be purchased are calculated by the category management team based on

their analysis of past sales performance across various styles and sizes. This

analysis is also done on month-to-month and store basis so that the company can

generate the revised OTB for every month and every store based on the movement

of each style. The revised OTB is then matched with the original merchandise

control chart OTS and the original micro-merchandising chart to check:

1) The movements of merchandise as compared to the plans.

2) Any serious deviations from the original plan.

3) The performance of each store as compared to the projections.

4) For new trends that are emerging in any store.

31


32/47


Vendor Management

Marketing channels are often conflict ridden as manufacturers haggle to get the

most for their goods and services and retailers pit vendors against one another to

get the lowest possible prices. In recent years, this process is changing.

Manufacturers and wholesalers have come to realise that selling merchandise to

retailers accomplishes little if those retailers cannot resell it to customers who will

consume the goods. Thus, their emphasis has shifted to satisfying the customer

and retailers are now less concerned with getting the lowest possible price and

more with maximising the long-term returns for all parties. This new perspective

has fostered a much closer association between retail buyers - the people who

purchase the items - and vendors/salespeople - those who sell the merchandise to

buyers. As a result the consumers now get what they want at the right time and

price and all members of the channel benefit.

This is the driving force behind Pantaloons vendor management policy. The key

aspects that the company looks a while selecting a vendor are

1) Price points

2) Timeliness and quantities of deliveries

3) Quality of goods

4) Credit period given

5) Type of inputs the vendor can provide to Pantaloon

6) His production capacity and whether he has sales tax registration.

Pantaloon does not employ a vendor who does not have a

minimum of 20-25 machines.

7) His financial strength and the level of dependence he would have

on Pantaloon

8) The relation he keeps with Pantaloon,

32


33/47


9) His ability to keep back-up in terms of fabric and garments, which

would also depend on his ability to do repeat business

While some of these factors are important in the introduction process, the others

decide the long term relationship with the vendor. Usually, the vendor approaches

the company and if approved the quality control team conducts a survey of its

facilities. The vendor is also asked to fill in a registration form, The lead-time for

any consignment right from the design stage to delivery is 270-300 days. The

company takes six months to develop the design. 45-60 days for procuring the

fabric and 30 days for manufacturing. The company also takes into account 10-15

days for delays in transit. The company is planning a system of order cancellation,

where if the order gets delayed by over 15 days, it can get cancelled or the vendor

would have to shell out 7-15 per cent discount. It is also introducing rules in terms

of excess supplies. Typically1 in case of fashion garments, the vendors tend to

supply more than the ordered quantity due to availability of extra fabric. The

company will now start a policy of accepting only + 5 per cent variance in

quantities. It has also successfully introduced the system of getting shelf-ready

merchandise in 60 per cent of the western womenswear category. This is expected

to help the company bring in concepts like cross docking at the warehouses. The

company is also developing a statistical programme to measure vendor

performance against select parameters and throw up serious deviations. This

would influence the companys decision on retaining vendors and on training

them.

33


34/47


34


35/47


On-shelf Strategies

All the planning and strategies undergo the ultimate test when the merchandise

actually reaches the shop floor. The company plans for two major seasons -

spring-summer and festive season. During January-February and July-August the

company has clearance sales, which do not just include unsold merchandise but

some fresh stock too. Thus, Pantaloon makes clearance sales an event for which

special merchandise is planned.

In terms of on-shelf strategies, Pantaloon has a clear policy for each category of

merchandise. The company gets weekly reports on Tuesdays, which it calls dump.This data is analysed to see the movement of various types of goods. The tracking

is done based on the merchandise category classic, fashion or collection. Every

month, the company identifies the good and bad sellers. According to company

policy, a bad seller is a product that stays on the shelf for more than 60 ways In

case of any slow moving goods, the company analyses the results in context of

price, style, colour and size. The company believes that if the style or colour is not

right no amount of discount will help sales. So if the merchandise does not move

during its shelf life, it is just removed and kept at the warehouse for end of seasonsale. If the price appears to be a deterrent, the company corrects it right away and

marks down the price immediately. The company has been able to reduce the

amount of wrong decisions in classics as it has an in-built learning on this range.

But at times it does falter on the fashion and the collections series, in which case it

just removes the goods from the stores and sells these at a discount. To its

advantage, the company is present in three formats the Pantaloon department

store, the factory outlet and the Big Bazaar. A slow moving good is often moved

to the factory outlet or the Big Bazaar, where it is discounted and sold. The factoryoutlet stores also hold sales to dispose off the merchandise. In each of these cases,

the company takes the approval of the vendor and often, the vendors take part in

the sales. The company discounts the goods -- from 10-40 per cent at the factory

outlet to get rid of the stock. Thus the factory outlet acts as a liquidation agency

for the Pantaloon department store.

If the goods move very fast, then the companys action depends on the timing andtype of merchandise. In the collections range, the companys sole aim is to get rid

35


36/47


of the goods. So even if the merchandise does really well, the company does not

reorder the goods. The performance of each story is documented for future

reference, On the other hand, for the classic or fashion categories, if the company

can gauge the demand in the beginning of the season, it immediately increases the

order sizes of future consignments. But if it is end of the season, it just allows the

merchandise to exhaust and documents the earnings for the next season. In any

case, the company follows a policy of base stock levels for classics and so

whenever the stocks touch that point, which is about two months sales, the order

for replenishment is placed directly by the supply chain management team.

Merchandise Performance Evaluation

Finally, the company completes the season with a strategic review meeting that it

conducts every 6 months. The meeting is attended by the CEO, category

managers, assistant category managers, zonal heads, heads of various departments

and the store managers. The idea of this meeting is to sort out all the

miscommunications and gaps in the functioning of the merchandise department

and the stores. All the performance data for the season is presented to bring out the

reasons for under or over- performance. The highlight of this meeting is the

learning process. New insights on the customer, merchandise or other aspects ofthe business are revealed and general issues like competition, international

retailers and world-class practices are discussed. The company plans to have these

meetings on a three-monthly basis. It is also in the process of implementing a

balanced scorecard approach. This would bring out department-specific

performance on key quantitative and qualitative parameters. For example, a typical

scorecard for the category managers would include:

1) Targeted versus achieved gross and net sales in the category

2) Stock turns in the category

3) Mark-downs in the category

4) Percentage of private label sales versus other

5) label sales (The company has a policy that private label sateshould not be less than 75 per cent of total sales)

36


37/47


6) Gross and net return on capital targeted versus actual

7) Gross and net margins

8) Year-on-year growth of that category

9) Addition of new stores and same store growths in the category

10) Mind to market - the amount of time the manager took In

introducing new designs

11) Sourcing leadership - this is a qualitative factor

A rough version of the balanced scorecard was used in the March 2001

strategic review meeting and the company is in the process of further streamlining

this approach.

37


38/47


Supply Chain Infrastructure

The function of the supply chain management (SCM) department starts where the

functions of the category management and merchandise management departments

end The SCM team is given the entire delivery schedule of the merchandise and

the store

allocation

schedules with

exact dates. This

team handles

several regional,

zonal and city

warehouses along

with the store

warehouses (see

chart Taking

Stock where the

arrow lines show

the

communication

links between the various warehouses).

Each store has a warehouse, which is around 10- 15 per cent of the size ofthe store and holds around 7 days inventory. The stores deal with either the zonal

38


39/47


or city warehouse for replenishments. Pantaloon has 3 zonal warehouses in

Bangalore, Kolkata and Mumbai and one city warehouse in Hyderabad. The city

warehouse can, in turn, deal with the zonal warehouse for some of its

requirements. The zonal and city warehouses store 7 days inventory and use the

central warehouse for refills. The company has three central warehouses - two in

Mumbai and one in Tarapore. In the future, one central warehouse in Mumbai will

be used to form a zonal warehouse. The central warehouse keeps 2 weeks

inventory. Pantaloon also has its own manufacturing base in one of its group

companies - Pantaloon Industries.

This company has a manufacturing warehouse which deals individually with each

of the other warehouses. However, the company is now in the process of

streamlining all communications and plans to link the manufacturing warehouse

with only the central or zonal warehouse. In all, the company maintains one-month

inventory plus the inventory in transit.

This maze of warehouses is not without reason. The company was mainly present

in western and southern India, with a store in Kolkata. Since Kolkata was a verydifferent market, the company needed to source material from the region and so

had a zonal warehouse. Sangalore was too far to feed the Hyderabad market,

where the company now has major interests. Thus, Hyderabad has its own city

warehouse. The role of the zonal warehouse is mainly to house the goods procured

from the region, so that these do not have to travel all the way to the central

warehouse. Of course, the future plan is to move to a more zone-specific structure.

Here, there may be only one central warehouse to receive common goods and each

zonal warehouse would procure goods from its region to sell not only in storesbased in the zone, but to other stores as well. As of now, the entire structure and

the communication pattern is very fluid and should become more concrete with

more stores coming up. Today, a lot of material is centrally procured - this may

change with time and so would the role of the zonal warehouses.

Bar coding of the merchandise is done at the zonal warehouses. Roughly 50 per

cent of the goods that Pantaloon receives today is pre bar coded - this means thatthis merchandise is available in shelf- ready form. In this case, only one entry is

39


40/47


made at the zonal or central warehouse. The goods are then dispatched to the

respective store warehouse or are held at the zonal or city warehouse. Here, a

quality check is conducted and the goods are bar coded and sent to the stores. This

entire process takes at least 3 days. The company is now moving towards cross

docking and is training its vendors to send shelf-ready goods to reduce the cycle

time. The key sources of merchandise for Pantaloon are:

1) Pantaloon group companies manufacturing the in house brands

2) Vendors manufacturing only the Pantaloon in-house brand

3) Vendors manufacturing external labels like Free look

Almost 70-80 per cent of the stocks in the store is Pantaloon in-house brands and

this makes supply chain management much simpler The SCM team, on receipt of

the delivery schedules (micro-merchandising chart) from the category managers,

receives the goods, checks their quality, bar codes them and sees to it that they

reach the respective stores on time. In case of fashion and new merchandise, the

purchase invoice is raised by the category management department since the goodsare under test of performance. But for regular goods and replenishments, the SCM

team raises the invoice and informs the category management department

accordingly. 60-70 per cent of the SKUs in the store are regular goods. Usually,

vendors for various goods are given the plan 3-4 months in advance. The

merchandise team normally works for three seasons.

After the goods are made shelf ready at the zonal or after they are ready for

shipping at - the central warehouse, the SCM department arranges for the

transporters and courier companies. These are decided according to the weight of

the shipment and the destination. The company has a host of transporters

managing vehicles of various sizes. It is usually the transporters responsibility to

arrange the entire truckload and the reverse loads as well. Once the goods reach

the zonal warehouses, the company has its own set of vehicles to transport the

goods to stores in the area. If the stores are in different cities, they are transported

through third party transporters. Replenishment is mainly done either at night (at

40


41/47


Big Bazaar, for example) or early morning (Pantaloon departmental store).

Replacements during the day are done from the store warehouse.

Use of IT

Pantaloon has employed ERP software Baan to better manage its merchandising

functions. The aim was to get ahead of the competition by a clear 18 to 24 months

and set benchmarks in (faster) response, lower inventories and (quicker) cycletime turnarounds. Pantaloons mantra is to build upon its existing retail network by

41


42/47


adding more space in cities where it already has a presence, as well as moving to

fresh markets. The company used Baan simple, flexible, open-ended software to

incorporate latest business practices like category I, management. Not easy for a

retailing operation generating two mn transactions per month through 46 retail

shops across the country, totalling a data size of 15GB every month.

The main challenge was tracking dispatch and replenishment of stocks to all

the stores in the country. These werent merely challenges, but primary sales

drivers as well, as the company knew it was registering lost sales due to mistimed

stock allocations to various retail outlets and inability to meet customer demands.

Fixing this was critical for Pantaloon.

In Pantaloon, each department was divided into categories; the product lines

too were converted into categories based on the revenue generated by t each of

them. The categories were then mapped to seven levels in the category master in

Baan and 14-digit items were assigned to these. Managing business at the category

level helps the organisation to stay focused, as each category is treated as a

business unit and therefore run as a separate business. The seven levels of category

master capture the attributes of the consumer buying process and the entire supply

chain is linked to these levels (see chart Getting Tracking on Track).

42


43/47


Pantaloon went live on BaanlVS2 in a quick ten months and the systems are

online at the transaction levels. A business transaction at the head office and

central warehouse is effected online in an integrated environment and all modules

- finance, distribution, purchase, sales and manufacturing - have been implemented

in one go. A leased line has also been drawn up from the central warehouse at

Goregaon to connect to the Baan server at the head office in Andheri to enable

online information sharing. This should connect the diverse operations of the

company and makes information easily accessible. In fact, Pantaloon is the first

customer of Baan in the retail LOB to go online anywhere in the world and the

second global Baan customer in garment manufacturing.

The implementation happened in the following manner:

Category Management: Pantaloon implemented category management

through Baan with massive customisation. Eighty per cent was customised

independently and the rest via Baans process module. The softwares open-ended

architecture enabled implementation and the seven levels were mapped to Baan.

The company used baans ORT module extensively to define the lengthy 14-digititem code structure that classifies each product. Integration: Prior to Baan,

Pantaloon was on Lotus Notes. Baan discussion databases on Lotus Notes

facilitated a higher level of integration across functional users.

DEM Tool

The implementing team at Pantaloon used the Dynamic Enterprise Modeler

extensively to map the companys processes and linked the roles, responsibility

and accountability of the various functional users. This simplified processes and

clarified authorisation issues in day-to-day operations.

43


44/47


Interfaces

Pantaloon operates in a

very complex and

highly processor-oriented environment.

Currently, it has 46

retail shops across the

country and plans to

open ten more in the

current year. The

company has 65,000

14-digit items in itsitem data master

Because of this complexity and usage of various middleware, the company

developed 11 interfaces with Baan that were built in the sales, stock transfers,

delivery, receipts and between the central warehouse and all the retail shops.

These interfaces ensure accurate MIS to top management (see chart Knowing is

Rewarding).

The company has achieved the following operational effectiveness through Baan:

More Control: The major gain is in efficient allocation of materials to various

product lines. The company has 15 work centres in Mumbai. Earlier, due to faulty

allocation, they were actually cancelling purchase orders. With Baan, the company

has attained very high visibility, which enables it to pinpoint the exact workload ateach centre and the capacities are optimally utilised. The company has achieved 60

44


45/47


per cent more accurate material allocation after going online with Baan. Other

incremental benefits include:

1. Timely delivery to various retail outlets and absolutely no overloading;

hence space which is at a premium at the retail outlets is used effectively

2. A great deal of money otherwise incurred in shipping materials to-and-

fro between work centres and retail outlets has been saved.

3. Because of the visibility in data flow, the company now has the

flexibility of reallocating and changing the work centre to meet a

particular demand.

Fewer Losses: By implementing a greater retailing concept - category

management - a lot of workflow initiatives have been automated. With Baan, the

company has detected almost 30K dead items which constitute 5 per cent of the

total stock in the warehouse. Raw materials like buttons, tags, zips 9 and collars,

which were either misplaced or lying unused, were utilised

Better Systems: With Baan, Pantaloon understood that it was operating in a high

growth environment and clearly wanted to establish top class systems and

processes to handle moving targets and manage growth effectively. The spin-offs

are many:

1. Cycle-time turnaround is reduced by half. Currently, stock turns are once

every quarter

2. Safety stock levels have been recalibrated to be updated every month

3. Data visibility and information sharing is better. The company is now

getting proper MIS reports.

4. There is an integrated information flow across various departments of the

company and more transparency.

45


46/47


5. Currently, requirement of fabrics, MRP and production orders for

finished goods are automated and generated from the Baan system. The

company now manufactures garments with online integration with the

supply chain process.

6. The company balance sheet is prepared through Baan.

The company has developed its POS software in house and this has been

integrated with Baan to cull out useful data. Since the ERP software does not help

the company in undertaking intelligent analysis of the vast data generated by the

system, company executives manually analyse all the data to understand the

trends. The company is in the process of implementing business intelligencesoftware called Adaytum, which it has developed in- house. With this software,

the company will be able to generate custom-made reports. Using Adaytum, the

company claims that it would be in a position to decide the exact shelf to display a

particular product in every store. The software will create a range plan catalogue,

which would help the company to present to the store all the merchandise it can

expect in the next season. The floor staff would be trained accordingly on the

merchandise, its fabric and features so that they are better prepared to assist

customers. This software will enable the convergence of visual merchandisingefforts of the company with its allocation plans. Moreover, it will help in dynamic

planning and would further reduce the gaps between results, actions & plans.

46


47/47


Final Retail 1 Prjt

Documents