5/19/2012

MUHAMMAD AHMED ANJUM | SHOAIB HASSAN | MOHSIN ALI SADIQ

RETAIL MANAGEMENT TERM REPORT
HIGH END MODERN TRADE FASHION INDUSTRY

Table of Contents
INTRODUCTION ..................................................................................................................................... 3
High End Modern Retail Outlook The bright side ................................................................................. 3
Current High End Modern Retailers ........................................................................................................ 4
Business Sample .................................................................................................................................... 5
Khaadi ..................................................................................................................................................... 5
Operations ........................................................................................................................................... 5
Locations ............................................................................................................................................. 6
Type of Format .................................................................................................................................... 6
Employee Type and Density ............................................................................................................... 6
Merchandise Type and Density........................................................................................................... 6
Product Offering .................................................................................................................................. 8
Retail Space ........................................................................................................................................ 8
Amir Adnan............................................................................................................................................ 10
Operations ......................................................................................................................................... 10
Store Location ................................................................................................................................... 11
Employee Type and Density ............................................................................................................. 11
Merchandise Type and Density......................................................................................................... 11
Retail Space ...................................................................................................................................... 12
Historic Perspective .............................................................................................................................. 14
Problems ............................................................................................................................................... 16
Qualified HR ...................................................................................................................................... 16
The Need for an Industry Association Run By A Fulltime Board ...................................................... 16
Me-too ............................................................................................................................................... 17
PR Problems ..................................................................................................................................... 17
Conclusion............................................................................................................................................. 18

INTRODUCTION
This project builds on the previous assignments on fashion retail by the student
group. Previously, the team had studied the business models of StoneAge and Ego.
Using the same method, the team studied the businesses of Amir Adnan and
Khaadi.
Rationale for this approach was that it allowed the student group to have a sizable
sample size. Also, the four businesses studied are representatives of massive
change in the industry over the past two decades.
HIGH END MODERN RETAIL OUTLOOK THE BRIGHT SIDE
High End Modern Retailing in Pakistan remains highly fragmented and is dominated
by small number of national brands, which compete within their own geographic
areas in terms of price, personal relationships and product ranges. But now, we are
seeing a growing number of large retail brands opening multiple new stores every
month, especially in the major cities where there is a higher concentration of middle
and upper-income consumers. Despite the challenges, Pakistan has a great market
potential still waiting to be discovered.
Changes have occurred over the last decade in the for High End Modern Retail
sector in Pakistan such as new global brands entering the market, large scale
shopping malls opening up and several local retailers getting more organized and
growing significantly more than the rest of the pack. These trends are linked to the
broader socioeconomic changes, including growth in the urban middle class and
disposable incomes of certain segments in the market.
The bigger players have been able to achieve significant sales growth by creating
superior products and brand differentiations and implementing superior processes
and technology infrastructures. In the past, consumers did not have many choices in
terms of products or shopping experiences. Nowadays retailers, both local and
global, are setting benchmarks of superior product quality and customer service. In
order to compete the smaller players would have to improve their offering and
service. Due to the growing fragmentation in the consumer market there is still a lot
of opportunity. Its a matter of finding the right customer segments for your brand and
targeting them accordingly. Overall the majority of the retailers welcomed the
growing competition from both local and international brands as they see this as a
positive for the industry than as a threat to their individual brands. Interestingly, a
couple of retailers even admitted to seeing a surge in sales despite the success of
competing brands.
CURRENT HIGH END MODERN RETAILERS
Below is the list of some renowned high end modern retailers present in Karachi
- Khaadi
- EGO
- Stone Age
- Amir Adnan
- Timber Land
- Debenhams

BUSINESS SAMPLE
The following sections cover Khaadi and Amir Adnan only. StoneAge and Ego have
been covered in the previous assignment and thus are not a part of this report.
However, a table of cross-business analysis is at the end of this section.
KHAADI

Khaadi came into existence with the idea of reviving the craft of hand-woven fabric in
1998. In its six years of presence in the market, Khaadi has made its own niche with
its large palette of colors, finesse of the hand-woven fabric itself and an
overwhelming range of products. From a small number of weavers, Khaadi has now
expanded manifold, with numerous able hands crafting a wide array of products.
Operations
Khaadi has its own dyeing unit, where all the griege thread is dyed to keep the
quality of the thread upto the mark. Khaadi has an in-house stitching unit as well,
which facilitates the designers to create new designs in the products. Khaadi has a
fully equipped design studio, with a team of highly trained designers, who make sure
they bring out the best in their work, in order to make their products stand out.
Khaadi has five shops in three major cities of Pakistan, making it the only brand
which offers hand-woven fabric and other products nationwide.
As Khaadi produces every product on their own factory, the only thing they require is
the basic raw material to make all these products especially thread sequins. Khaadi's
warehouse is next to its factory in the SITE area. After production, goods are further
checked and if there is any default or any problem it is corrected on the spot before
further problems occur after the order is made. After the QC, merchandise is tagged.
Their price tags include the product name, product code, its price, sales tax and final
price after addition of sales tax. Unstitched suits are sent to the outlet without any
placement of order, as soon as some new design or color is produced. For the rest
of the products, warehouse managers use FIFO (first in first out) technique so that
the merchandise isn't outdated.
Locations
Khaadi is present in the following cities:
- Karachi - Zamzama, Park Towers and KDA
- Lahore
- Islamabad
Type of Format
Khaadi can be described as a specialty store since it focuses on one type of
merchandise i.e. khaddar. Their competitive advantage is their new range of
products, which are handwoven and act as a base line for creating a product
differentiation.
Employee Type and Density
The employees at Khaadi are skilled. Each level has at least one employee on duty
and when the customer flow is high at one level, more staff moves to that particular
floor to serve the customers.
Merchandise Type and Density
As it is an exclusive store providing unique products, therefore, the density of the
products is very low. Limited merchandise is available in all categories as described
in the merchandise hierarchy. This exclusivity is one of the reasons for higher
margins as well.

Product Offering
Following is the product offering of the brand:
- Clothing made from silk, cotton and cotton-mix. In winter they sell a thicker
form of khaddar. For men, the variety is not that vast.
- Table and bed linen
- Accessories
- Hand woven and embroidered handbags
- Scented candles
- Diaries and folders
- Hand woven rugs


Retail Space
The retail space comprises of partial wood floorings and shelves. The walls on every
floor are of different colors. Each shelf displays a unique item and overhead lighting
completes the overall look. Several items are also seen through an open-window
display. The ambiance has a traditional touch yet it is sleek.
Khaadi
Khaadi
Garments
Kaadhi Home
Khaadi
Accessories
Coordinated displays can be found specifically in the table and bed linen area where
a set of merchandise for tables and beds is available in different sizes and colour
schemes. Ladies Garments which are made up of three-piece suits and are available
in dark and bright colours are displayed on rods. In the middle of the ground floor
there are free stands, which display merchandise on stooping rods
The basic store layout is on a free-flow format but the layout plan of every level at
the Zamzama outlet is different; the table and bed linen section has a spine layout,
whereas the men garment's section has a herringbone format. The women's wear
section has a free-flow format. The hot spots in Khaadi are the ladies garments as its
main customers are women. The warm spots are the table and bed linen areas
where accessories and other impulse purchase items are kept. The cold spot is the
men garments area where men are not being catered to like other retail outlets such
as men's designer wear which deal exclusively with the gender.

AMIR ADNAN
While experimenting with diffusion to fit the demands of a contemporary market, the
name of Amir Adnan has always been associated with quality and elegance, their
forte deeply rooted in traditionalism. Amir Adnan, the name behind the label,
supervises the entire team of designers to maintain standards. After making his mark
in the Pakistani market, he has now taken his company into the international market
with carefully designed exports. Amir Adnan is the first company to step out with up-
market, high quality couture, produced in small and exclusive volumes. Today,
almost two decades later, Amir Adnan's design philosophy has evolved clearly,
making itself permanently on the map. His is the largest enterprise of designer
clothing in Pakistan.
Amir Adnan is able to provide value proposition to their customers by the help of
their state-of-the-art embroidery and material. As quoted by Mr. Amir Adnan himself,
"I take exquisite elements of our culture and synchronize them on modern
silhouettes-while ensuring that the price points back at the product!" So, giving the
customers value for their money is a top priority for Amir Adnan. Furthermore, they
believe that by creating a strong brand name in the minds of the customers, they are
able to create a distinct image of their brand in their minds.
Operations
Amir Adnan is a small manufacturing concerns producing approximately 200
different items of branded mens wear a day. The daily production varies from casual
daily wear, formal office attire to heavily embellish formal or grooms wear. Amir
Adnan follows an open-to-buy plan, which helps them to project and control future
buying so that sales meet anticipated demand. Even so, the demand of products is
greater than the supply. OTB helps them to have an ideal amount of raw materials. A
back-up plan is also available if there is any delay in the delivery of the required
materials.
Their planning differs according to the season. The highest sales are during the
month of December as it is wedding season and with changing trends, April, May
and June are now busy months too. So Amir Adnan comes up with the most unique
designs of sherwanis as well as a wide variety of turbans. They have monthly
forward sales planning which helps them to respond to changing trends.
Store Location
Amir Adnan's outlet is at the ground floor of Park Towers. Its location in a shopping
mall ensures existing mall traffic. The mall has large parking area and a clean
environment. The outlet of Amir Adnan at Park Towers is rental. The customer flow
on weekdays is 5 to 10 customers whereas on weekendsit's 10 to 15 customers. The
ratio between potential customers and browsers is 40% to 60%.
Employee Type and Density
Amir Adnan has four employees working at their outlet. Out of these four employees,
one is the manager. They provide on-job training to the salesperson under the
guidance of the outlet manager. The dressing of the employees is formal. Salesmen
are not allowed to wear casual clothes at the outlet. The educational criterion in
hiring of salesperson is at least intermediate.
Merchandise Type and Density
The category of the merchandise is basically clothing for men. Amir Adnan's
merchandise is narrow in product line but with a good depth. They specialize in
couture products. The merchandise range varies from ties to sherwanis. They also
have a variety of shalwar kameez for kids ranging of ages 1 to 14. A complete range
of men's clothing is available in all sizes. All their merchandise is on display in all
available sizes.

Retail Space
The entire outlet is carved wooden work giving an exclusive look to the space. The
outlet has mannequins for displaying merchandise. The shop has air fresheners to
maintain a pleasant and fresh odor. The combination of fixtures, colors, display
presentations, graphics, lighting and the entire theme creates an everlasting image
of the store.
Amir Adnan's displays include exterior and interior displays of the outlet. Amir Adnan
has an exclusive window display with closed backdrop. The displays are organized
to follow a seasonal theme. The freestanding displays at Amir Adnan display the
latest arrivals at the store. They change displays after every two days. There are
three mannequins in the outlet. Cascade and waterfall displays at Amir Adnan are
present in the entire store. Almost all the merchandise is displayed in this fashion.
Amir Adnan
Staple Goods
Couture wear
Accessories like
Turbans and
khussas
Convenience
Goods
Kameezain
Kurta Shalwar Suits
Impulse Purchase
Merchandise
Ties
Shirts
Kurtiyan
Overview of Businesses in the Sample
Business
Category
Amir Adnan Khaadi Ego StoneAge
Target Market
Men, boys,
children; From
ages 1 and
upward; SEC A+,
A
Men, Women,
Age 18-50, SEC
A+, A, A-
Urban Women;
Age 22-32; SEC
A+, A, A-
Young men and
women; teens,
20s and 30s, SEC
A+ to B (Factory
Outlets)
Merchandize
Clothing for men -
Sherwanis. Also
have a variety of
Shalwar Kameez
for kids ranging of
ages 1 to 14.
Range of
Men's clothing
available in all
sizes. Also
Accessories like
footwear and
headwear. Ties
shirts and kurtis
Men's wear, bed
linen, table linen,
Hand woven and
embroidered
handbags,
Table and bed
linen, Scented
candles, Diaries
and folders, Hand
woven rugs, bed
linen, ladies
garments,
Kurtis, Pants and
Lowers, Wraps,
Tights, Denim
Churidaar,
Shirts (Slim and
Aisle fitting)
T-shirts, Shirts,
Jackets,
Sweaters, Jeans,
Pants, Shorts,
Skirts, Shoes,
bags, shades,
belts
Material Varies
Silk, Cotton,
PolyCotton
Varies Varies
Merchandize
Density
Designs available
in all sizes but low
quantity can be
made to order
Very Low -
Exclusive
350 pieces per
design; 22
designs per month
200 designs in all
categories; 15-20
designs per
category;
Competitive
Advantage
Couture Wear,
Value Addition,
Special
Embroidery
Range of
handwoven
products
Casual Trendy,
Positioned for the
Modern Pakistani
Woman
Casual Trendy,
Western, Hip,
High Variety, One
stop shop for
apparel
Price High Markups Reasonable Reasonable Varies
Retail Space
Cascade and
waterfall displays,
effective window
display, ambient
music, space
carved out of
wood,
wooden antique
door at the
entrance,
Clean, thrift and
rustic. Vibrant look
with the use of
colors and the
lighting, simplistic
setting with the
latest designs
either displayed in
the window or
hung on hangers
or folded in
shelves.
Compact space,
separate sections
for men and
women, very
rugged and rough
ambience with
shelves,
mannequins and
hangers and
displays

HISTORIC PERSPECTIVE
Amir Adnan is credited with the revitalization of eastern wear for formal and informal
setting. During the early 90s when the norm dictated the groom wears a three-piece
suit, Amir Adnan brought back Sherwani as Couture with emphasis on embroidery,
design and fitting. This marked a massive change in the industrys approach to
fashion in general. It also introduced the concept of proper branding in couture.
Next came Khaadi in the late 90s. Before the brand emerged, Shalwar Kameez had
been declining in popularity with their use limited to Fridays and Eids.The brand
reiterated the concept of shalwar kameez as smart and flamboyant evening wear.
The distinguishing characteristics its product were the vibrant colors, simple design
and handwoven fabrics which have a softer feel. The success story of Khaadi further
consolidated the importance of brand and later inspired the likes of Junaid Jamshed
and Humayun Saeed to pursue and commercialize shalwar kameez as informal and
formal wear.
The next brand to have a significant impact on fashion retail is Ego. The brand took
the concept of fragmentation to a new level by targeting women of a particular
mindset. With emphasis on trendy, hip clothing which was a fusion of east and west,
Ego identified the most profitable niche.
Next in line was StoneAge. In 2006, the brand backed by Crescent Bahuman
brought back commercialism by targeting the youth with trendy casual wear. Youth
accounts for more than 50% of the Pakistani population. StoneAge became the one-
stop-solution of casual wear for people in their teens, 20s and 30s.


Timeline
1990
Amir
Adnan
1998
Khaadi
2005 Ego
by Aadil
Moosajee
2006 -
StoneAge
Revitalization of a traditional
garment into a viable fashion
Revived hand-woven trend with
dazzling spread of colors, textures
and styles in the purest cottons and
Silks and immediately claimed a
Niche clientele
Localized Casual Apparel
Brand with such a massive
Impact
Hip and trendy clothing
For Women. Combination
Of eastern and western
PROBLEMS
Qualified HR
They were a lot of issues that various leaders raised such as lack of retail expertise,
tax evasion, limited infrastructure and systems etc. But one issue, that was claimed
to be the biggest hurdle for retail growth, was the lack of qualified human resources
especially in back offices. In the interviews a lot of retailers mentioned improving
inventory management and increasing customer wallet as one of their biggest
challenges. Though they admitted lack of world class processes and IT systems was
one of the reasons for this but the core problem was the shortage of properly trained
employees, who could actually use these processes and systems to drive growth for
them. Interestingly the retail leaders believed that establishing a retail institution or
introducing retail related courses wouldnt entirely resolve this issue. They wanted
more people, especially from the younger generation, to choose retailing as a career.
A lot of the retailers claimed to be offering base salaries, benefits and career growth
with opportunities at par with the rest of the industries yet graduates considered
other industries such as banking, engineering, FMCGs etc to be better career
options
The Need for an Industry Association Run By A Fulltime Board
There always has been awareness in the for High End Modern Retail community
about formally forming a retail association, which would work in the collective interest
of the industry and focus on solving their common problems. A couple of retailers
mentioned the forming of a few segregated groups, which at times emerged in the
past to resolve one time issues, such as increased sales taxes. But these groups
tend to dismantle with time due to everyones busy schedules. Everyone admitted
this being as a result of lost focus due to everyday fires in their own businesses.
A solution is perhaps to follow the example of other industries such as IT where the
head of an industry association is a full time paid employee. Solving issues
mentioned above requires full time dedication and perseverance. Not only such an
association would have to bring retailers together but other organizations in the
ecosystems such as suppliers, universities, consultants etc as well. Everyone in the
value chain would have to contribute to ensure the continued growth of the industry.
There were many discussions around this topic and hopefully we would see
something concrete around this in the upcoming months.
Me-too
Investors seem to be attracted to the businesses that have already rolled out
successfully and have very little room for new entrants. An example of this
phenomenon is the Lawn business where each season, several old horses of the
industry try to tap the local market with their brands. Rather than taking the path of
entrepreneurship and offering something new, people with the finances like to bet on
proven businesses. Besides following in the footsteps of these businesses, the
wealthy investors tend to resort to the same marketing plans involving exhibitions
and OOH advertising. This me-too business philosophy ends up diluting the
business potential of a model.
PR Problems
Fashion industry of late has become a
target of social groups which question the
methods of product promotion on religious
and social grounds. This is a recent
initiative targeted specifically at lawn
manufacturers but has an impact on the
entire local fashion retail industry.



CONCLUSION
Despite political uncertainty and economic turmoil, experts believe that the outlook
for High End Modern retail in Pakistan remains positive. At the same time there are a
lot of unique, industry specific challenges such as lack of quality human resource
and limited infrastructure which are slowing down the growth of the industry as a
whole.
There is a huge opportunity in the market for both the existing players and the new
entrants. The key is it to identify the right focus area for your business, in terms of
consumer segments, and go about it in an organized fashion.
Moreover, there is a high level of awareness and consensus on all of the key
industry challenges amongst the leadership of various retailers, which is a positive
start. The next step now is to formalize a sustainable game plan to solve these
challenges through a common platform so that the impressive growth of the retail
industry could be sustained or even accelerated.