On

By The design of a retail store by employing Quality Function Deployment (QFD)

Submitted by

GAUTAM ACHARYA S-25 GOPAL YADAV S-26 HARJOT SINGH S-27 JATIN KUMAR BARUI S-29

As a project assignment of

OPERATIONS MANAGEMENT PAPER

MBA (PT) PART I SEM II

Faculty of Management Studies University of Delhi

ABSTRACT
Today, the Indian retail industry is booming with activities. The retail industry in India has undergone a massive change ever since liberalization (imminent grant of foreign investment in retail sector of India). It has witnessed a significant transformation with rapid growth of IT and digitalization of commerce. A high level of competition among retail marketers is extremely healthy for the consumer and national competitiveness. This project has been executed to pen out an ideal layout design for retail stores to attract as much business as possible. For this purpose, Quality Function Deployment (QFD) has been used to identify the performance indicators and to reach the conclusion for the study.

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ACKNOWLEDGMENT
We would like to express our greatest gratitude to the people who have helped and supported us throughout our project study. First of all, we would like to thank our survey mentor Mr. Siddhant Sahu, Research Analyst of LIGANOVA. He has been a phenomenal help in getting our survey done. He has also provided us with the data that was helpful for our project study. Second, a special thank of ours goes to our family who allowed the team members to squeeze out enough time to complete this robust study. Last, we would like to thank our professor, Dr. Debadyuti Das, for providing us with the opportunity to work on this project. GAUTAM ACHARYA GOPAL YADAV HARJOT SINGH JATIN KUMAR BARUI

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TABLE OF CONTENTS
ABSTRACT ACKNOWLEDGMENT TABLE OF CONTENTS INTRODUCTION
THEORETICAL BACKGROUND

2 3 4 5
5

EMPIRICAL STUDY
OBJECTIVES OF THE STUDY METHODOLOGY OF THE STUDY STAGE I: SURVEY OF STORES
STORE 1: CONNAUGHT PLACE, NEW DELHI STORE 2: CONNAUGHT PLACE, NEW DELHI STORE 3: SELECT CITY WALK, SAKET, NEW DELHI STORE 4: SOUTH EX I, NEW DELHI STORE 5: SOUTH EX I, NEW DELHI

7
7 7 8
9 11 13 15 17

STAGE 2: DEMANDED QUALITIES & QUALITY CHARACTERISTICS

LIST 1: DEMANDED QUALITIES (WHATs OR CUSTOMER REQUIREMENTS) LIST 2: QUALITY CHARACTERISTICS (HOWs OR FUNCTIONAL REQUIREMENTS)

19
19 19

STAGE 3: QUALITY FUNCTION DEPLOYMENT ANALYSIS

FIGURE 1: LEFT EXTERIOR WALL AND CEILING OF THE HOUSE FIGURE 2: RELATIONSHIP BETWEEN WHATs AND HOWs FIGURE 3: ROOF OF THE HOUSE FIGURE 4: COMPLETE QFD ANALYSIS DIAGRAM

20
20 21 22 23

CONCLUSION
RELATIVE RANKING OF QUALITY CHARACTERISTICS (HOWs) STRONG POSITIVE CORRELATED PAIRS OF QUALITY CHARACTERISTICS (HOWs) POSITIVE CORRELATED PAIRS OF QUALITY CHARACTERISTICS (HOWs)

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24 25 25

RECOMMENDATIONS
WINDOWS DISPLAY CAMPAIGN VISUAL MERCHANDISING INSTORE COMMUNICATION AND STORE CONCEPT OVERALL APPROACH

26
26 26 27 27

WORKS CITED
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INTRODUCTION
The focus of Indian retail chains has been shifting from domestic competition to foreign competition. As Government mulls over foreign direct investment in Indian retail industry, existing big players of Indian retail industry are getting jittery and upgrading their own retail stores experience for the customer. In this sturdy study, the authors have executed an empirical field study using QFD on fashion and lifestyle stores of Raymonds in New Delhi, India.

THEORETICAL BACKGROUND
Although India has emerged as one of the worlds most attractive markets, the country is grappling with critical infrastructure and policy issues. India is currently facing the worlds most dynamic combination, of highly informed and demanding consumers on one hand, and of rapid increasing consumption levels across various retail product categories and geographies on the other. The Indian retail sector is at an inflection point, with organized retail poised for an approximately 35 per cent compounded annual growth (CAGR) for the next few years. The valuation of Indian retail is USD 320 billion, which is relatively small by global standards (Kearney). The Indian retail sector is an interesting proposition from management point of view. Along with effervescent atmosphere, consumer behaviors are changing quickly. A brief of todays consumer buying habit is given below (LIGANOVA, 2010): 80% of the young consumers intend to buy a BRANDed item, not only a product. 95% of consumers make their purchase decision at the point of sale (POS). Only 30% of the consumers with purchase intention focus on a certain brand Digital natives are growing up: A modern information society, globally connected and up to date 24X7, base their decisions on recommendations from their society.

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This has led to a scenario where competition has increased many fold, retail landscape is changing rapidly and existing brands and retailers are under pressure. This interesting mix has attracted the authors team to work on Raymonds fashion and lifestyle retail stores that have young consumers as their target. Raymond group has been one of the most prominent business houses in Indian fashion and lifestyle retailing. The group has been operating since 1925. It owns prestigious award winning brands such as Raymond, Park Avenue, Colorplus, and Parx. With increased competition, the Raymond group is aggressively pursuing to capitalize on its historical head start over new entrants in Indian fashion and lifestyle retail business with an expansion plan to open 289 stores by the end of 2011 (Raymond). The groups model has many challenges to overcome before becoming competitive to the standardized and successful model of worlds big retailers. One of the main roadblocks to Raymond groups aim to improve consumer experience is layout design of its retail stores. The layout design of a retail store is very crucial for the success of a retail store. A well designed store could improve visibility of brand DNA, communicate consistent brand message, and create an aura of brand experience in the store. This translates into an overall improvement of consumer experience of the store. The Quality Function Deployment (QFD) has been exclusively used by industry managers to study and examine the trends, impacts and implications of the structural changes taking place in retail sector, balancing customer needs and working of facility layout most suited for its stores. The alluring management challenges along with authors responsibility to complete a project study on The design of a Retail store by employing Quality Function Deployment (QFD)as part of an assignment for the completion of Operations Management paper of Master of Business Administration (MBA) program, provided the authors with an excellent opportunity to conduct an empirical study highlighting the importance of layout design of retail stores.
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EMPIRICAL STUDY
The empirical data is necessary to substantiate the findings of a study. The objectives and methodology of the study are described in this section.

OBJECTIVES OF THE STUDY

Raymond faces increased competition from international brands entering the Indian market. To keep the leading market position, Raymond needs to deliver a consistent brand communication and experience to its customers at the Point of Sale (POS). To achieve that, the current Visual Marketing and Merchandising standards must be upgraded. The authors have voluntarily conducted a detailed store audit in Delhi to analyze the existing situation using the QFD analysis. This report would provide the reader with a list of prioritized items as per their importance to the successful implementation of layout design for a fashion and lifestyle retail store. Specifically, the objectives are: 1. To identify the Demanded Qualities and Quality Characteristics for a system that would meet the customer requirements 2. To sequence, categorize, and prioritize these design characteristics to ensure customer satisfaction, retention, loyalty and patronage. The QFD technique was applied to achieve above mentioned objectives.

METHODOLOGY OF THE STUDY

The study was conducted in three stages using QFD. In the first stage, the research was conducted by interacting with consumers, employees and store managers/owners at five stores of Raymond across New Delhi over a period of four weeks. In the second stage, a thorough analysis was conducted on the raw findings of the first stage. This analysis provided the authors with the relevant information to form a list of apt Demanded Qualities and corresponding Quality Characteristics for a retail store. In the last stage, QFD analysis was undertaken on the above
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mentioned attributes. Finally, a prioritized list of attributes as per the QFD analysis is prepared. This list would help in structuring and developing the design of retail store to build a brand consciousness among consumers and enhance the overall retail experience.

STAGE I: SURVEY OF STORES

The authors visited five Delhi stores of Raymond. This study was done mostly on weekends and on certain weekdays. The following criteria were followed for the onsite store surveys for an effective and efficient understanding of the Raymond stores needs and challenges. It should be noted that not all of the data was available, but the authors received enough information to get a good understanding of the Raymond business. STORE DATA CRITERIA: 1. Store location and format (Franchise/company owned) 2. Store net size 3. Age of store (Renovation) 4. Average walk-ins 5. Average conversion rate (estimates) 6. Average revenue generated per week 7. Human Resource / Sales staff and its knowledge 8. Customer shopping behavior VISUAL MARKETING CRITERIA: 1. Windows display design & implementation 2. InStore visual merchandising presentation 3. In-store fixtures and flexibility 4. In-store signage & orientation 5. Stock calculation & density & availability 6. Product assortment
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The findings of the surveys for five stores are given below:

STORE 1: CONNAUGHT PLACE, NEW DELHI

TYPE: WALK INS: AVG SALE (INR): AGE: Hi Street Company Owned store Weekday 70 Weekend 120 Weekday 100,000 Weekend 175,000 STORE SIZE: CONVERSION: STAFF: 1700 sq ft 25% 13

1968 established, renovated 5 months back

FINDINGS Store data sheet reports poor performance because the store was under construction Renovation of store done every six years 8 sizes of trousers always on display No differentiation in suits, brands are intermixed 60% sale is from fabric and 40% is from apparel Store also has an exotic fabric collection which is displayed separately Fabric has a margin of 35% as compared to apparels which is 28% Music within the store was loud Window display was very poor, shirts and trousers were kept on window floor Windows need drastic improvement Windows should be attractive, modern and eye catchy Window has a very poor visibility Store has a very poor visibility No signage outside to show Raymond store BRAND AND SERVICE are major strengths of the Raymond stores Windows should focus on products
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 This store is the most profitable store of New Delhi Less space in the store as compared to the sales it offers Very small stock room, can hold only 5-10% stock Made to measure is missed out in the store because of wrong store layout

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STORE 2: CONNAUGHT PLACE, NEW DELHI

TYPE: WALK INS: AVG. SALE (INR): AGE: Hi Street, Franchise Owned store Weekday 40 Weekend 70 Weekday 80,000 Weekend 150,000 25 years old CONVERSION: STORE SIZE: STAFF: 50% 2200 sq ft 12

FINDINGS: Sale is in proportion of 65% fabric and 35% apparel Festival visual merchandising and window displays are very necessary Windows should be product related Thematic windows are welcome but they should be product focused Stylish theme in window is appreciable Shop should be visible through window Signage to help in welcoming customers inside the store Customer in this store always need assistance Raymond and Park Avenue garment have dispatch problems Awareness that Raymond sells readymade garments is absolutely missing 70% of people do not know that Colorplus belongs to Raymond Apparels have fit problems (not of proper Indian standard fit) Only received 30 pieces out of 220 booked for women collection this season Women collection price range is too high No breathing space in the store Gondolas within the store are too busy Dont like the tables
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STORE 3: SELECT CITY WALK, SAKET, NEW DELHI

TYPE: WALK INS: AVG. SALE (INR): AGE: Hi street Store, Company Owned Weekday 70-80 Weekend 125-130 Weekday 175,000 Weekend 250,000 2 years old CONVERSION: STORE SIZE: STAFF: 60% 5200 Sq feet 15

FINDINGS Sale display done according to sizes. Brands mixed in sale Small inefficient size indicators stuck to the shelves and gondolas Made to Measure section on first floor Shelves always have shirts on top and suits below Matching shirts and ties displayed together Tie display was color coordinated Non Sale Area Suits are distributed style wise Merchandise replenishment cycle 10 to 15 days Collections 2 (Spring Summer + Autumn Winter) Delivery at store divided into months Good props used at stores Store is made on the new store concept Same display look used across the whole store not exciting Folded shirt quantity 3 shirts always in store promotions Art exhibition/display within the store interesting MTM presentation good and effective

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STORE 4: SOUTH EX I, NEW DELHI

TYPE: WALK INS: AVG SALE (INR): Company Owned Weekday 70-80 Weekend 125-130 Weekday 50,000 Weekend 200,000 CONVERSION: STORE SIZE: STAFF: 25% 2,000 Sq feet 14

FINDINGS Lots of empty space in the entire store Wide black stripe with mannequin display at the entrance Gondolas cramped very tightly within the store Display according to sizes due to sale season, no signage however to show this Confusion within the store in terms of signage In peak season sales shoot up to INR 500,000 a day Windows need refinement Good window size and window display opportunity Store sells the most expensive chairman collection fabric as well. (240 counts) Chairman fabric presented very poorly 1-2 enquiries in a year Poor dressing rooms Sells 60% fabric and 40% apparel

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STORE 5: SOUTH EX I, NEW DELHI

TYPE: WALK INS: AVG SALE (INR): Franchise Owned Weekday 30-40 Weekend 70-80 Weekday 65000 Weekend 250000 CONVERSION: STORE SIZE: STAFF: Not estimated 3,000 Sq feet 8

FINDINGS Brand wise and style size distribution of suits in non sale area 22 units of suits per Gondola Balance 1500 sq feet has 6000mt of meters of fabric to be sold 40% fabric and 60% apparel sold in the store 600 sq feet of wall display dedicated to fabric display Collection updated / deliveries received every 15 days Fabrics are always displayed in cold white light. Apparel in warm yellow light within the same store Communication within the mall needed to increase sales says Store Manager Outside mall communication should be strong - says Store Manager Weekend offer by Van Heusen was very successful in the mall because of their within mall publicity and offering - says Store Manager Windows need drastic Improvement - says Store Manager Windows are not thematic Gondolas are too busy and tightly packed Garments on the windows are changed every 3 days Cash counter has no proper communication, its too small Park avenue should be moved towards window and kids should go back
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 Changing room placement is not proper, they block the view of the brands kept at the back Only once you enter the store then you realize that there are more brands inside Window display is too busy from outside Would like to have a standard smell within the store says Store Manager Music is standard at the store

An overall summary of the data is tabulated below:

LOCATION CITY
Connaught place, Delhi Connaught place, Delhi Select City Walk, Delhi South Ex I, Delhi

MODEL

SIZE (ft2)

Staff

Walk-ins weekdays

Turnover weekday (INR)

100000

Walk-ins weekends

Trunover weekend (INR)

175000

Estimated Conversion

Turnover per week (INR)

850000

Turnover per staff per week

Turnover per ft2 per week (INR)

500

Company Run

1700

13

70

120

25%

65385

Franchise

2200

12

40

80000

70

150000

50%

700000

58333

318

Company Run

5200

15

70-80

175000

125-130

250000

60%

1375000

91667

264

Company Run

2000

14

70-80

50000

125-130

200000

25%

650000

46430

325

South Ex I, Delhi

Franchise

3000

30-40

65000

70-80

250000

825000

103125

275

BEST LOW RESULTS PERFORMANCE

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STAGE 2: DEMANDED QUALITIES & QUALITY CHARACTERISTICS

The above findings were analyzed meticulously to arrive at lists of 10 broad demanded qualities and 15 broad quality characteristics. The lists are given below:

LIST 1: DEMANDED QUALITIES (WHATs OR CUSTOMER REQUIREMENTS)

Performance Convenience Information Personalization Interaction Reliability and trust Security Aesthetics Post sales service Accessibility to store and parking space

LIST 2: QUALITY CHARACTERISTICS (HOWs OR FUNCTIONAL REQUIREMENTS)

Easy accessibility of products and services Sufficient number of trial rooms Simple and unambiguous purchase transaction and ease of billing Ease of navigation and search of brand RFID tag for each unit Holistic interior designing of the outlet Merchandising and visual standard guidelines Availability of customer service representatives Highlight product placements within the brand Price signage / Differentiation Clear vision and position in regards to customized tailoring and ready to wear section Separate space for kids play room (Crche) Promotion or sales announcements High quality of products Location of the store and availability of the space

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STAGE 3: QUALITY FUNCTION DEPLOYMENT ANALYSIS

Developed by Mizuno and Akao, the Quality Function Deployment (QFD) Technique is a structured approach for integrating the voice of the customer into both the product or service development process. The purpose is to ensure that customer requirements are factored into every aspect of the process. Listening to and understanding the customer is the central feature of QFD (Stevenson). The exterior walls on the left of the QFD diagram represent the Demanded Qualities (WHATs), the customer requirements. The ceiling of the house represents the Quality Characteristics (HOWs), the functional requirements. The rows, representing the Demanded Qualities, and the columns, representing the Quality Characteristics, cut across each other, creating the cells or interior walls of the house, which represent the relationship between the items of the Demanded Qualities and the items of the Quality Characteristics. The authors have inculcated their Demanded Qualities and Quality Characteristics lists in QFD Chart (Figure 1).

FIGURE 1: LEFT EXTERIOR WALL AND CEILING OF THE HOUSE

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Numeric relative importance scores to the various customer requirements, from the lowest to the highest, on a scale from 1 to 3, are assigned. The authors expressed, in numeric values, the strongmoderate-weak relationship between the demanded qualities (WHATs) and the quality characteristics (HOWs), on a scale of 9, 3, and 1. After this, scores for each of the columns was computed. The absolute values were computed for each column, and the respective quality characteristics (HOWs) were then ranked relatively (Figure 2).

FIGURE 2: RELATIONSHIP BETWEEN WHATs AND HOWs

After an integrative process that focuses on first establishing relationships between the Demanded Qualities (WHATs or customer requirements) and the Quality Characteristics (HOWs or representing the design characteristics), the next stage is to relate the quality characteristics themselves (roof of the house), arriving finally at a set of design characteristics to best satisfy the customer requirements (Figure 3).

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FIGURE 3: ROOF OF THE HOUSE

A correlation analysis was done to identify the interrelationship between the different design characteristics and the correlated pairs were identified (QFDonline.com). The objective of QFD is to understand customer needs, prioritizing the design characteristics in an order that most effectively meets these needs; and then to design a product or a service system to ensure customer satisfaction.

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FIGURE 4: COMPLETE QFD ANALYSIS DIAGRAM

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CONCLUSION
After analyzing the QFD, the authors have arrived at the following conclusions:

RELATIVE RANKING OF QUALITY CHARACTERISTICS (HOWs)

RELATIVE RANK I II III IV V VI VII VIII IX X XI QUALITY CHARACTERISTICS Availability of customer service representatives Location of the store and availability of place Simple and unambiguous purchase transaction and ease of billing Price signage/differentiation High quality of products Easy accessibility of products and services Ease of navigation and search of brands Holistic interior designing of the store Separate place for kids play room Promotion or sales announcements RELATIVE WEIGHT 15.6 13.3 10.8 9.7 8.3 7.5 6.3 5.4 4.8 4.7

Clear vision and position in regards to customer tailoring and ready to 3.6 wear section Merchandising and Visual standard guidelines 3.6 2.7 2.2 1.6

XIII XIV XV

RFID tags for each unit Highlight product placements within the brands Sufficient number of trial rooms

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STRONG POSITIVE CORRELATED PAIRS OF QUALITY CHARACTERISTICS (HOWs)

Price signage/differentiation AND Ease of navigation and search of brands
Price signage/differentiation AND Simple and unambiguous purchase transaction and ease of billing

Easy accessibility of products and services AND Ease of navigation and search of brands Easy accessibility of products and services AND Holistic interior designing of the store

POSITIVE CORRELATED PAIRS OF QUALITY CHARACTERISTICS (HOWs)

Easy accessibility of products and services AND Simple and unambiguous purchase transaction and ease of billing Easy accessibility of products and services AND Merchandising and Visual standard guidelines Easy accessibility of products and services AND Price signage/differentiation Sufficient number of trial rooms AND Holistic interior designing of the store Simple and unambiguous purchase transaction and ease of billing AND Simple and unambiguous purchase transaction and ease of billing Ease of navigation and search of brands AND Holistic interior designing of the store Ease of navigation and search of brands AND Merchandising and Visual standard guidelines Ease of navigation and search of brands AND Highlight product placements within the brands Ease of navigation and search of brands AND Promotion or sales announcements Holistic interior designing of the store AND Separate place for kids play room Merchandising and Visual standard guidelines AND High quality of products Availability of customer service representatives AND Promotion or sales announcements

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RECOMMENDATIONS
Along with first hand ground level knowledge of retail business and the analysis of QFD, the authors mark out following recommendations for designing a retail store.

WINDOWS DISPLAY CAMPAIGN

Below mentioned strategic window display concept with a holistic Brand & Product driven approach is necessary to overhaul a retail stores perception in the mind of consumers. Set up a Strategic Seasonal Visual Marketing Calendar Window Theme Changes every 6 / 8 weeks The Window Campaign should inspire the consumer / first sight attraction Need a very strong creative approach, emphasis on Brand DNA: What does Brand stands for Window campaigns need to have the right balance between Brand Message, various Product Presentation and Pricing Window campaign execution should be based on a generic guideline with all the essential Visual Standards and Merchandising systematic such as: Product & Props Positioning Mannequins Positioning & Styling Pricing & Signage Presentation Lighting & Housekeeping Standards A generic window hardware system could solve many problems and establish one common format for all windows. Campaign change-outs follow one concept and will be easy to execute and cost effective.

VISUAL MERCHANDISING
A new generic basic visual merchandising & marketing guideline is required. The Guideline needs to cover all important Visual Merchandising aspects on an up to date level. It needs to be split in 2 parts: Franchise and Own Retail Basics VM rules ( including Basic Product Placement within the various BrandsWindow decoration rule Store layout segmentation and Brand placement Customer navigation ( Branding & Signage's) Highlight Product Placement within the various Brands Product Rotation on floor within the various Brands Product Presentation within Brands Price signage Store Fixture explanation
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End of season sales rules Customer POS activation tools for the various Brands Training & Education program Fabric / Tailoring section guidelines

INSTORE COMMUNICATION AND STORE CONCEPT

The following recommendations are pen down for in-store communication and store concept: A common Branding and Signage concept is needed for an overall Raymond Store approach Within the stores, Branding and Signage specification for guidance through the Brand segmentation Consumer Navigation system / Directory needed Promotion or sales announcements should have a unified concept Generic POS holders for freestanding fixture, wall units & display tables needed A generic flexible store fixture system is needed

OVERALL APPROACH
Implement THE IDEAL STORE CONCEPT where all the above recommendations can be implemented and tested. The IDEAL STORE CONCEPT needs to have the following rough criteria for the conception: Achieve Brand Position and Objectives within the next few years to increase awareness about all the brands of the company and their respective positioning Sufficient number of sales representatives for giving personal attention to each customer Location of store should be chosen carefully to ease the accessibility of the store and availability of the parking space Holistic interior designing of the store with crche and trial rooms Adapt the needs based on your customer target and demand Include the new Generic Visual Merchandising Guideline and In Store Communication Based on the season, implement a Generic Window System Monthly window updates should be easily produced and implemented and each store should have the same standard Clear vision and position in regards to Customs Tailoring & ready To Wear Brands Unified look and feel Simplification of themes in regards to design / adaptation / production and implementation Better control & planning of the Budget allocation to the monthly updates/ changes Integrate all important learning's generated from the experience in retail field

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WORKS CITED
Kearney, G. M. Retail in India: Getting organized to drive growth. Confederation of Indian Industry (CII). LIGANOVA, A. e. (2010). QFDonline.com. (n.d.). Retrieved from http://www.qfdonline.com Raymond, C. P. (n.d.). Mumbai. Stevenson, W. J. Operations Management. New York: The McGraw Hills Companies.

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