RETAILOPERATIONS

TOMMYHILFIGER FRMLEVEL1 SUBMITTEDBY: PRACHIRATHI DISHAJAIN MEDHAVINIRAI

PEARLACADEMYOFFASHION

ACKNOWLEDGEMENT
Weoweagreatthankstothepeoplewhohavehelpedandsupportedustomake thisProjectReportonAnalysisonTommyHilfiger. Our Deepest thanks to Mrs. Bhavna Chaddha and Mr. Bharat Rishi who have mentoredusandcorrectedourvariousdocumentswithattentionandcare.They have taken pains to go through the project and make necessary changes when required. We would also thank our institution and faculty members without whom the projectwouldnothavebeenadistantreality. PrachiRathi DishaJain MedhaviniRai

CONTENT

S.NO.
1. 2. 3. 4. 5. 6.

TOPICS
INTRODUCTION STOREGROWTH KPI STOREALLOCATION RECOMMENDATIONS REFERENCES

PAGENUMBER
37 814 1520 2128 2930 31

CHAPTER1 INTRODUCTION

 Tommy Hilfiger is the worlds leading premium lifestyle brands that deliver superior styling, quality and value to consumers worldwide. The brand celebrates the essence of Classic American Cool and provides a refreshing twist to the preppyfashiongenre. Sinceitsdebutin1985,theTommyHilfiger grouphasbecomeaUS$4.6billionapparel andretailcompanybyofferingconsumersa breadthofbeautifullydesigned,highquality products including mens, womens and childrensapparel,sportswear,denim,andarangeoflicensedproductssuchas accessories,fragrancesandhomefurnishings. Under the leadership of Founder Tommy Hilfiger and Chief Executive Officer FredGehring,thebrandcanbefoundinleadingdepartmentandspecialtystores, aswellasinitsownexpandingnetworkoffreestandingretailstores,worldwide. When PVH Corporation acquired the Company in May 2010, Gehring also assumed the role of CEO of PVHs international operations, while Hilfiger remainstheCompany'sPrincipalDesignerandprovidesleadershipanddirection forallaspectsofthedesignprocess. TommyHilfigertodayhasbecomeaglobalbrandwithstrongrecognitionanda distribution network in over 90 countries and more than 1,000 retail stores throughoutincludingtheirpremierflagshipretaildestinationsinNorthAmerica, Europe, Central and South America and Asia Pacific. It is a Public Company, whichwasincorporatedin1992.ItsstockexchangesaredoneinNewYork. TheTommyHilfigerflaglogoisrecognizedaroundtheworldasthesymbolfor highquality,quintessentialAmericanstylewithaclassic,cooltwist.

 CompanysPerspectives: TheTommyHilfigerCorporationisdedicatedtolivingthespiritoftheAmerican dream.Webelieve:thespiritofyouthisourgreatestinspiration;resourcefulness is the key to value and excellence; in making quality a priority in our lives and products;byrespectingoneanotherwecanreachallculturesandcommunities; andbybeingboldinourvisionwecontinuallyexpandourboundaries. The two chosen stores of Tommy Hilfiger are from Westgate Mall, Rajouri and KhanMarket.ThecompetitorchosenforthebrandisEspirit.

TOMMY HILFIGER WESTGATE

TOMMY HILFIGER KHANMARKET

COMPETITOR ESPRIT

OPENING

DATE 29th 2009

September 2007

OFTHESTORE LOCATION

WESTGATE

KHANMARKET 4+1(Manager)

SHOPPERS STOP RAJOURIGARDEN 5

NUMBER STAFF AREA

OF 8+1(Manager)

1700squarefeet

700squarefeet

750squarefeet

KIND OWNERSHIP SEGMENT

OF Franchisee

Franchisee

Companyowned

Premium lifestyle Premium lifestyle Premium lifestyle brand brand brand

Table1.1
5

WestgateTommyHilfiger

KhanmarketTommyHilfiger

CompetitorEsprit

CHAPTER2 STOREGROWTH

 A set ofquantifiable measures that a company or industry uses to gauge or compareperformanceintermsofmeetingtheirstrategicandoperationalgoals. KPIs vary between companies and industries, depending on their priorities or performance criteria. Following are the KPIs, which a store calculates to know wheredotheystand,andaretheymeetingtotheirsetstandardsornot. 1)SELLTHROUGH: Sell through is very useful in evaluating item performance as it provides a compositemeasureofsalesandinventory.Inmostcasessellthruforanitemis compared in recent periods like current week and last week, as well as in aggregate across several months or even a year. A higher sell through value reflectssalesvelocityassterling.Theformulaappliedtocalculateitis:

%OfUnitSold=UnitSold/UnitBought

2)SALESPERSQUAREFEET: A popular sales metric used in the retailing industry. Sales per square foot are simply the average revenue a retail business creates for every square foot of salesspace.Theformulaappliedtocalculateitis:

Sales/TotalAreaOfStore

3)LIKETOLIKEGROWTH: TheGrowthofcurrentyearascomparedtolastyear.

(CurrentYearLastYear/LastYear)*100

 4) MONTH ON MONTH GROWTH:

(CurrentMonthLastMonth/LastMonth)*100

TOMMYHILFIGER WESTGATE

TOMMYHILFIGER KHANMARKET 30,00,000 35,00,000

COMPETITOR ESPRIT 16,00,000 14,00,000

TARGETAUG11 SALEAUG11

25,00,000 33,10,000

%TARGET ACHIEVEMENT SALEAUG10 LIKE TO

132% achievement) 29,60,000 LIKE 12%

(over 117% achievement) 20,00,000 75%

(over 88%

18,00,000 (22%)

GROWTH SALEJULY11 MONTH ON MONTH 50% GROWTH SALES PER SQUARE 1947.06 FEET SELLTHROUGH% 5000 1,867 94% 8% 22,00,000 18,00,000 13,00,000

Table2.1

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 Asstatedintable2,LikeToLikegrowthofTommyHilfigeratWestgateis12% whereasatKhanMarketitis75%.ThesalesforAug2011ofKhanMarketis morethanthatofWestgate.Thereasonsforahugedifferencetoitareasfollows: 1) WestgatesTommyHilfigerfocusesonsellingHIGHPRICEproductsi.e.,their AVUishigher.Itimplies,theysellhighpricedproductsoneachbill. 2) KhanMarketsstoreis4yrsoldwhereasWestgatesstoreisjust2yrsold.So, according to us it will take time to reach the level where khan market is alreadyrunning. 3) Khan markets sale has increased tremendously in the year 2011 as comparedtoWestgate.ThereisamajorreasonbehinditasinWestDelhi2 morePointOfSaleswereaffixedwhichwerePacificMall,TagoreGarden& TommyHilfigeratShoppersStopwhichhadthesametargetmarketbutgot distributed amongst the 3 different stores, which became a reason of Westgates Degrowth. At Khan Market there are very few competitors of TommyHilfigerso,theirliketolikegrowthishigherthanthatofWestgate. As stated in table 2, Month on Month growth of Tommy Hilfiger at Westgate is 50%whereasatKhanMarketitis94%. 1) The stock rotation at Khan Market is faster than that of Westgate. As khan marketkeepslessofmerchandiseandthattobeLowPriceProductssoitis morethanthatofWestgate. 2)Ithappenedduetoaseasonalrevamp.

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KHANMARKET

WESTGATE

12

KHANMARKET(SALESINLAKHS)

WESTGATE

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CHAPTER3 KEYPERFORMANCEINDICATORS

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 1) AVERAGETRANSACTIONVALUE(ATV): The average transaction Value is calculated by dividing the Value of all transactionsbythenumberoftransactionsonadaily,weekly,monthly,or annualbasis.

TotalSales/NumberOfBills

2) AVERAGEVALUEUNIT:

TotalValue/Quantity

3) CONVERSION: This is the percentage of visitors who comes to the store and actually buystheproduct.Itisthepercentageofbillmadefromfootfall.

Bills/Footfalls*100

4) UnitPerTransaction Total number of units sold in a given period divided by the number of customers or transaction for the same period.

Quantity/Bills

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TOMMY HILFIGER WESTGATE

TOMMY HILFIGER KHANMARKET 35,00,000 1087 1717 2005

COMPETITOR ESPRIT

SALESAUG11 BILLSAUG11 QTYAUG11 FOOTFALL AUG11 ATV UPT CONVERSION AVU

33,10,000 1003 1805 5290

14,00,000 660 2,640 1650

3300 1.8 30% 1833

2589 1.5 54% 1695

2,121 4 40% 530

Table 3.1

Asstatedintable3.1,conversionrateofWestgatesTommyis30%whereas inKhanitis54%. 1) When we look at the footfalls of Westgate it is 5290, which is much more than that of khan, which is only 2005. But bills made at Westgate are less than that of khan, which is 1003 at Westgate, and 1087 at khan. So to conclude this we think that people who are

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 enteringkhanmarketstorehaveahighPurchasingpowerthanthatof Westgate and whosoever enter do buy a product. So there is a high conversionrateatKhanMarket. 2) In West Delhi there are 3 Point Of Sales, which reduces the conversionrateatTommyHilfiger,WestgatewhereasatKhanMarket itfaceslesscompetitionasthereareveryfewbrandswhoaremajor competitors. Asstatedintable3.1,AverageTransactionvalueofWestgateishigherthan thatofkhanmarketbecauseinWestgatethenumberofunitsboughtismore, which is high price. There the merchandise is more as compared to khan market, whereas in khan market number of units bought is less. Westgates Tommy Hilfiger focuses on selling HIGHPRICE products i.e., their AVU is higher. It implies they sell high priced products on each bill. Khan Markets ATV is 3300 and Westgates is 2589. Westgates ATV is higher because its UPT & AVU which is unit per transaction and average value per unit respectively.Westgatesellsmoreunitspereachtransactionascomparedto thatofKhanMarket. So, to summarize we think that if khan market wants to increase their ATV,theycanincreasetheirsaleforimpulsiveproducts. Asstatedintable3.1,UnitPertransactionofWestgateishigherthanthatof khanmarket,becausethequantitysoldoneachbillatWestgateismuchmore thanthatofKhanMarket,whichalsoleadstoanincreaseinHigherAverage ValueperUnit. Asstatedintable3.1,AverageValuePerUnitofWestgateis1833andofKhan Market it is 1695. The reason for a higher AVU at Westgate is because they aresellingproductsatahigherpriceascomparedtoKhanMarket.

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 OPPORTUNITYLOSS The value of a lost chance or a potential profit that was not realized because a courseofactionwastakenthatdidnotpermittheinvestortoobtainthatprofit. Itisreckonedasfollows: Stepstoidentifyopportunityloss/Performance 1) Checkconversion 2) CheckAverageTransactionValue 3) CheckUnitPerTransaction 4) CheckAverageValueUnit. Sales=Bills*ATV ATV*Quantity=Value Highestunitpertransaction(UPT)value*AverageValueperUnit(AVU) =AverageTransactionValue(ATV).

TOMMYHILFIGER WESTGATE

TOMMYHILFIGER KHANMARKET 1695 1.5 2589 3051 462

AVU UPT ATV DESIREDATV OPPORTUNITY LOST

1833 1.8 33,00 3300

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Westgate Tommy store is a benchmark for khan market. Therefore, if average value per unit of khan market is multiplied with the highest UPT, the desired ATVisobtained. Hence,khanmarketlosstheopportunityby462.

RENTFEASIBILITY The sale per square feet data is most commonly used for planning inventory purchases&isusedtodeterminerentonaretaillocation.Soforeachsquarefeet how much inventory should be purchased keeping in mind the rental for each squarefeetisveryvital.

TOMMYHILFIGER WESTGATE

TOMMYHILFIGER KHANMARKET Rs.888

Rentpersquarefeet

Rs.300

AREA

1700squarefeet

750squarefeet

TOTALRENT

Rs.510000

Rs.666000

TOTALSALES

Rs.3310000

Rs.3500000

Rentpercentagein termsofsale

15%

19%

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 And in general, rent should never exceed 15% of the total sales. Therefore, Tommy Westgate is more financially viable than Tommy Khan market. Also, COGSis40%forthestoresofTommyHilfiger.Therefore,

COSTOFGOODSSOLD

1324000

1400000

MARGIN (SALESCOGS) Profit (MarginRent)

1986000

2100000

1476000

1434000

From the above, Tommy Westgates profit less rent is higher than that of khan market,whichmeansthatWestgatestoreascomparedtotheKhanmarketstore isdoingreallywell.

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CHAPTER4 SPACEALLOCATION&PRODUCTIVITY

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Itistheamountofshelfspaceinaretailoutlet,reservedfordisplayofaproduct. SalesperLinearFootofShelfSpaceiscalculatedtoknowthewallunitsofaretail storeandothershelfspacewhichitmightwanttousetodetermineaproductor productcategory'sallotmentofspace.

TotalNetSales/LinearFeetOfshelving= SalesPerLinearFeet

Itdependsuponthefollowingfactors: 1) Footfalls: The ratio of men to women in a store reflects in the sales contribution as well. Hence, while allocating space the gender receiving higher percentage of footfalls is given due importance while space allocation. For Tommy Hilfigers both the stores the due importance is giventoMEN.Thisbrandismendominated.InKhanMarketfootfallsis 2005andinWestgateitis5290. 2) Sale Contribution: it affects the buying budget and the gender contributing maximum percentage in sales is bought a lot more as compared to the other. Hence, space required to display that product is more.

3) Benchmark: Many a times brands have standard figures in terms of

spaceallocationfordifferentproductcategories.

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CALCULATIONOFLINEARSHELVINGOFKHANMARKET
KHANMARKET MEN WOMEN Numberofwalls 3 1.4ft*8ft Wallsizes 2.10ft*8ft 3.8ft*8ft 4ft*6 Total:24linearft. 10ft*15 Linearshelving Total:150linearft. 8ft*12 Total:96linearft. TOTALLINEAR SPACE 270linearft. 1.4ft*8ft 2.10ft*8ft 3.2ft*8ft 4ft*6 Total:24linearft. 10ft*15 Total:150linearft. (2ft*5) Total:10linearft. 184linearft. 24linearft. 4ft*6 Total:24linear ft. 1.4ft*8ft 3 1 DENIMS

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LINEARSHELVINGOFKHANMARKET

1.Total sales: 35,00,000 2.Total linear space: 478 linear feet 3.Sales per linear square feet of shelving: Rs7322.17 per linear feet

KHAN MARKET TOTALLINEAR SPACE

MEN WOMEN 270linearft. 184linearft. 24linearft. DENIMS

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CALCULATIONOFLINEARSHELVINGOFWESTGATE

WESTGATE MEN WOMEN Numberof walls 5 1.10ft*8ft 2.8ft*8ft 3.8ft*8ft Wallsizes 4.10ft*8ft 5.10ft*8ft 10ft*17 Total:170linearft. 8ft*12 Total:96linearft. Linear shelving 8ft*12 Total:96linearft. 10ft*12 Total:120linearft. 10ft*12 Total:120linearft. TOTAL LINEAR SPACE 602linearft. 300linearft. 230linearft. 96linearft. 1.8ft*10 Total:80linear ft. 1.8ft*10 Total:80linear ft. 1.10ft*14 Total:140linear ft. 1.10ft*19 Total:190 linearft. 1.4ft*10 Total:40linear ft. 1.8ft*12 Total:96 linearft. 1.8ft*8ft 2.8ft*8ft 3.10ft*8ft 1.10ft*8ft 2.4ft*8ft 1.8ft*8ft 3 2 1 KIDS BAGS

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LINEARSHELVINGOFWESTGATE

WESTGATE MEN WOMEN TOTALLINEAR SPACE 602linearft. 300linear ft. 230linear ft. 96linearft. KIDS BAGS

1.Total sales: 33,10,000 2.Total linear space: 1228 linear feet 3.Sales per linear square feet of shelving: Rs2695.43 per linear feet

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ESPRITSPACEALLOCATION
1.Totalsales:14,00,000 2.Totallinearspace:160linearfeet 3.Salesperlinearsquarefeetofshelving:Rs8750perlinearfeet

TOMMY HILFIGER WESTGATE

TOMMY HILFIGER KHAN MARKET

ESPRIT

Salesperlinear squarefeetof shelving Area Totallinearspace

2695.43

7322.17

8750

1700sqft 1228

700sqft 478

750sqft 160

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CHAPTER5 RECOMMENDATIONS

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1. KhanmarketTommyHilfigerstoreshouldmoresellitshighpriced productsthatisshouldincreaseitsaveragesellingpricesoastoincrease itsprofitmargin. 2. Alsotoincreasethefootfalls,khanmarketstoreshouldmorefocusonits windowdisplayalsothevisualsofthestoresoastoattractcustomers. 3. Khanmarketstoreshouldalsokeeplimitedwomenbags.Theycando colorsegmentationfortheirmerchandise.Thatisstorecanmaintain samecoloredbagswiththesamelookingmerchandise. 4. TommyHilfigerasawholecanattractmorecustomersbyprovidingthem withmore.Theycandophotoshootswhichwillleadtohigherfootfalls, therebyleadingtomoresales. 5. KhanmarketstoreshouldincreaseitsmerchandiseformenasTommyis amencentricstore.

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REFERENCES TommyHilfigerWestgateandkhanmarket SimarKaurWestgatemall NehaKhanmarket www.google.co.in

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