This case was selected from Case studies in Retail Management, Volume 1, ICFAI

Centre for Management Research

Why this case?
Covers concepts related to
Differentiation based on type of Retail Formats
Pricing Strategies
Private Labels
Store Layout, Featured areas and Space Management

Introduction :

Background:
In 1998, the Tatas ventured into retailing, which was still in its nascent stages
by acquiring the Britain based Littlewoods stores and renaming it Westside
This provided an established supply chain and trained personnel for Westside
Type of Store: Department Store
Position within the Market: Westside is positioned to provide style with
affordability to fashion conscious customers.
Target Consumer: Westside targets fashion conscious middle and upper
middle class consumers.
In 2001, Westside had average sales of about Rs5000 per sq ft. in all its stores
In 2002, Westside reported a net profit of Rs.102.2 million and also reported
cash break-even

Introduction :

Venture into Food Retailing

By the end of 2003, announcement of entering the food retailing industry was
made and planned to establish a chain of 100 grocery and food stores under a
new brand name within 5 years
Announced that they would try to build their own brand in the food retailing
business but initially sell all brands

Issues addressed in the case:

Issues addressed in the case:

With the retail clothing industry predominantly unorganized, analysis of

the competition in the retail clothing and lifestyle products industry
Strategies recommended for Westside to position itself effectively against
the evolving competition including leading Indian business houses and
international players
Analysis if Westside should get into the food retailing industry or remain
focused on its current line of business

Reasons for Westsides decision to sell its own brands rather than
established brands along with its advantages and disadvantages

Would get more control over the manufactures, quality and distribution of its own
brand
Eliminate intermediaries and saved on intermediaries commissions leading to
comparatively higher margins
These savings were directly transferred to the customers by selling at much lower
prices thus reinstating its positioning, Fashion at Affordable Pricing
Opportunity to stand out from the crowd
Tested format since most international retailers had successfully implemented it
Offers unique valuable product to the customer

Advantages :

Disadvantages :

High returns
Increased store loyalty
Less restriction in terms of display,
price and promotion
Control on quality
Adds value to the customer by
offering better products for lower
prices
Number of players having their
own private label is low
Control on scrap and wastage

Indian retailers suffered on account

of poor economies of scale
Heavy investment in brand
building
Established brands attract higher
footfalls
Efforts go in generating demand
for the products
High in risk potential failure of
the product if effective strategies
have not been implemented

Westsides retail model: Retail layout, focus on market research and

customer feedback, positioning of its products, heavy advertising and
promotions
Private Labels Only
Leasing shop space (save costs on real
estate)
Focus on metro cities
Retail Layout:
Free form retail layout- Boutique layout (Overcome challenge of shortage of spacious
locations in metro cities)
Fixtures and aisle arranged asymmetrically
Spacious stores where merchandise displayed at 2 levels on a single floor
Merchandise kept in separate clusters
Space ranging from 10,000-20,000 sq ft

Westsides retail model: Retail layout, focus on market research and

customer feedback, positioning of its products, heavy advertising and
promotions
Retail business:

2 main divisions: apparels and products division

Every store had a stocking of about 30,000 SKUs
Centralized buying
63 days old stock days

Positioning:
Value for money
Value innovators: High quality for lower price
Products :
Placement: Focus on consumers comfort with pleasing store ambience and convenience
Product Categories: The company provides private label and branded products. Menswear
(casual and formal) Womens wear (Indian and western) Kids wear Footwear Cosmetics
Perfumes and Handbags Household Accessories and Gifts

Westsides retail model: Retail layout, focus on market research and

customer feedback, positioning of its products, heavy advertising and
promotions
Focus on market research and customer
feedback
High focus on market research with an in-house team of 5
Carried out market analysis while entering a new city
Studied the demand potential, buying patters, purchasing potential, car ownership and lifestyle
Also approached established companies for consumer details
Customer centricity: Expressing trust in the customer and focus on listening to the customer
for product enhancement

Analyzing the strategies contributed critically to the success of Westside

and how far are the advantages sustainable in the long run
Suitable Merchandise mix
They are catering to different age groups under one roof
This way they are able to build a huge customer loyal base. They have bed sheets,
kitchenware,jewellery, perfumes, babyproducts, household items,etc. This way a
customerwho enters Westside just to buy one or two items usually ends up buying a
lotmore. Stacked up to 30,000 SKUs providing a wide merchandise mix

Affordability
Price of brands available at Westside is not toohigh as compared to its competitors
brands. This is due to theircost effective supply chain management. They directlypick up
the goods from the manufacturer thus ensuring low price tag at their store

Analyzing the strategies contributed critically to the success of Westside

and how far are the advantages sustainable in the long run
Quality of its product offerings

Westside has been able tocreate a brand image andis consistently maintaining its
brand identity by new additions in products and catering to the market need.

Private labels allowed them to provide value products for lower prices.

Store Layout
Strategy to attract shoppers & keep them in stores which increases number of items
purchased
All the three floors are carefully structured. Ist floor and IInd floor caters exclusively to
Women and Men respectively. Thus givingthem privacy and morefreedom to look into
their products
Delightful in store experience- efficient and amicable staff

With the retail clothing industry predominantly unorganized, analysis of

the competition in the retail clothing and lifestyle products industry

As of 2003, India's retailing industry was essentially owner manned small shops. In 2010,
larger format convenience stores and supermarkets accounted for about 4 percent of the
industry, and these were present only in large urban centers
Retail productivity in India is very low compared to international peer measures: labor
productivity in Indian retail was just 6% of the labor productivity in United States
Total retail employment in India, both organized and unorganized, account for about 6% of
Indian labor work force currently - most of which is unorganized
Training and development of labor and management for higher retail productivity is
expected to be a challenge
Independent stores will close, leading to massive job losses

With the retail clothing industry predominantly unorganized, analysis of

the competition in the retail clothing and lifestyle products industry
Attributes

Shopper Stop

Shoppers Stop: The

Location
Ultimate Shopping
Experience
No. of cities
Number Of stores
24
Loyalty18,000sq
Program
Store Size
ft - 60,000sq
ft
Pitch Store Ambience
Shopping experience
Tagline

Lifestyle

Globus

Westside

Your Store. Your Style

Fashion for a changing

world

Fashion and affordable

pricing

13

29

1,00,000sq ft

1,00,000sq ft

10,000 to 20,000 sq ft

Trendy, youthful and

vibrant brand

Latest trends

Style and affordability

Format Type

Multibrands (brands
and private labels)

Multibrands (brands and

private labels)

Multibrands (brands
and private labels)

Exclusive Tata Trent

Group (only private
labels)

Loyalty Cards

First Citizen card

The Inner circle

Globus pluscard

Clubwest

Apparels share of
Sales

73%

65%

72%

79% (95% from private

labels)

Store Layout

Race track layout

Race track layout

Race track layout

Race track layout

Cluttered Arrangement

Target Segment

High Income Group

High Income Group

High Income Group

Upper middle and high

income group

Strategies recommended for Westside to position itself effectively against

the evolving competition including leading Indian business houses and
international players
Loyalty Cards: Clubwest classic and Clubwest gold for different target segments
Store Layout: It should have more open space to walk
Variety in apparel (Merchandise Mix) especially in Mens category: various price points
Differentiate the merchandise mix according to the planogram. For Example: Cosmetic
planogram should be different from apparel planogram
Good customer service
Location of Store
Special discount for TATA employees (Currently 2.5%)

Analysis if Westside should get into the food retailing industry or remain
focused on its current line of business

YES!
Industry Analysis:
According to a study on the food and grocery retail market by KSA Technopak, the
country's overall retail sales accounted for 44 per cent of its GDP
Food retail sales make up for close to 63 per cent of total retail sales. In absolute terms,
food retail sales have grown from Rs 3,81,000 crore in 1996, to Rs 7,03,900 crore in
2001.
Modern, or organised retail, accounts for just about 1.6 per cent of the total retail sales
in the country, estimated at Rs 18,000 crore
The sector had not seen too many big entrants
As of 2003, while Chennai has some five organised food and grocery retail chains, other
big cities such as Delhi, Bangalore, and Mumbai average only two-three such chains

Analysisif if
Westside
should
getthe
into
the
food industry
retailingorindustry
or remain
Analysis
Westside
should
get into
food
retailing
remain focused
on its
Analysis
if
Westside
should
get
into
the
food
retailing
industry
or
remain
focused
on its
current
line
ofits
business
focused
on
current
line
of
business
current line of business

YES!

Most food retail players have been region-specific as far as geographical presence is
concerned: RPG Group's FoodWorld, Nilgiris, Margin Free, Giant, Varkey's and Subhiksha, all
of which are more or less spread in the Southern region; Sabka Bazaar has a presence only
in and around Delhi; names such as Haiko and Radhakrishna Foodland are Mumbai-centric;
while Adani is Ahmedabad-centric.
Given that organised retail has been registering growth rates of approximately 40 per cent
over the last three years, it is expected to grow to about Rs 35,000 crore in 2005, and close
to Rs 70,000 crore in 2010.

Analysis if Westside should get into the food retailing industry or remain
focused on its current line of business

YES!
Internal Analysis:
Huge financial Base: Rs 2 Billion from sales of Lakme
Financial profits from the previous fiscal year: from 64.6 to 90.9 million
First Movers Advantage
Experience in retail business: Established supply chain along with trained personnel
Brand dilution wouldnt occur since they intend to enter the food retailing business under a
different name
Right marketing tools and strategies : in-house team for marketing research, customer
centricity, efficient employees, technology savvy

Analysis if Westside should get into the food retailing industry or remain
focused on its current line of business

No!
Industry Analysis
Real estate has been the big deterrent to growth of the retail sector with areas that may
require attention, consistency and radical change include area calculation, leasing costs
and practices, deposit levels, operating costs and outgoings, property purchase practices,
shopping mall building standards, and a legal framework
Lack of investors due to lack of players which wasnt portraying the business as a lucrative
one
none or little Government support
Lower margins

Analysis if Westside should get into the food retailing industry or remain
focused on its current line of business

No!

Consumers are not dissatisfied with existing shops where they buy ( Kirana stores)

For a pan India model, given the federal nature of the country, the weak infrastructure and
the major variances in eating habits in different parts of the country, one will have to
replicate the retail administration costs for at least each region and therefore the gestation
period of the project becomes huge.

While margins in the food and grocery business are only about 15 per cent, supply chain
management costs are very steep

Analysis if Westside should get into the food retailing industry or remain
Internal Analysis:
focused
on its current line of business

No!
Internal Analysis
No prior experience in retail of food items
No existing suppliers and distribution channel in the food retailing industry
Would need to acquire new competencies
Unaware of the market dynamics
Will take time to achieve economics of scale