Retail

Indian online stores getting hooked to e-community culture. More often than not, it’s being argued that online shopping is convenient but yet an isolated activity. This format of easy-to-order-easy-to-deliver has been catching up with the tech-savvy buyers but it has always been looked upon as option out of necessity and not pleasure. In order to break this monotony, the concept of e-socializing was introduced to the online buying experience.

Apart from a few established online stores, most of new entrants and the upcoming e-retail ventures are banking heavily on the rising popularity of social networking within the online shopping domain. There are a number of major international e-stores who initiated the coupling of online shopping with social networking. Online giants like e-bay started their buyers’ “Community” which was then followed by arch-rival Amazon’s popular “Daily Blog” section. The e-community trend has now moved-in to the Indian shopping terrain as well.

Most of the upcoming Indian online stores and the Indian counterparts of the already established inter-nation e-retail brands are reaping in the benefits of shoppers’ community and the latest Web 2. 0 technology to create a loyal consumer base out of their readily generated user traffic on the sites. Some of the popular community-based Indian shopping portals for your reference include: – ebay India: The global retail giant’s Indian venture has a shoppers’ community dedicated to registered users willing to chat, discuss, ask questions, leave messages and even leave feedback for the portal. Retailsdirect: This site is arguable India’s first interactive store ever. If you have anything to share, discuss, ask or answer on any issue/subject including shopping, this site has it. It also has video conferencing, (or Video-Voice Text-Chat facility, as they term it) and is based on Web 2. 0 technology. – Hindustanlink: A site where you can do a lot more than shopping, including activities like Forum discussions, Blogging and Questions-Answers section as well. All in all, Indian shopping portals need to take a leaf out of their international counterparts’ online strategies.

After the emergence and expansion of global shopping portals like eBay, Kaboodle, Zebo etc. , there many e-stores of Indian origin which need to incorporate the concept of social networking to add that ‘zing’ lacking in them. Until then, the aforesaid e-stores are there to bring in your friends and favorite brands while you choose to laze around at home (no offense intended). Why not to shop at the malls again!! Before I start off with this lens, I would like to ask you as to when was the last time you went shopping to your nearest shopping mall?

A week ago, a month back, and some would probably say that they have these virtual stores to shop for them and deliver goods like a trained pet, right? Hence, the question arises that with so much that an online store has to offer, do we really need shopping malls at all? As the famous saying goes, “There is nothing permanent in this world except change”, it can be easily applied to the ever-changing trends in the retail industry. The whole ‘sale and purchase’ idea got a new meaning with the advent of online version of shopping. Today, it would not be advisable for any educated online shopper to hop back to shopping at the malls.

The big players in the online retail scene in India are trying every trick in their bags to convert online users into traffic and then converting it into visitors, then into buyers and finally, into a loyal consumer base. For this, the focus has shifted from merely providing products online to social communities and special offers which can only be availed at these virtual stores. With the prospects of becoming a long-term successful industry, major e-stores like Indiamart, Futurebazaar, Retailsdirect and Indiaplaza are relying heavily on the online retail boom.

They are leaving no stone unturned in accelerating the conversion rate of its user traffic. The most bankable factor for drawing in consumers from the offline domain is the ‘convenience’ factor of online shopping. The most effective strategies of the major Indian e-stores are as follows: – Indiamart: It is a common platform for the online buyers and sellers, i. e. , a B2B marketplace. Highlights – Upcoming trade shows, divergent industry updates, international trade leads, tender notice via emails etc. – Futurebazaar: The finest brands online, user-friendly and simple design.

Highlights – Clearance sales, buying in bulk offers – Retailsdirect: India’s first interactive store with a Video-Voice-Text-Chat facility. Highlights- Group Bargains (Savings of upto 33% on products by creating groups to bargain), Cafe Retail (Earn redeemable RD coins, upload videos and photos) – Indiaplaza: US based shopping portal meant for trading and shipping to India and worldwide. Highlights – Airtel gift certificates, Gifts to India. The above strategies are a clear indication that the trend of online shopping is not merely restricted to the selection and buying process.

One can use the wide reach and accessibility of the internet and various social media tools to develop interest and loyalty among the customers. So the next time you feel like shopping, chuck out shopping at the over-crowded malls and rather catch up with friends online and relax while you shop for your favourite products. Why are Indians apprehensive to online shopping? The Internet provides a progressive dimension to most of the industries on global platform. The retail industry has also benefited from its online version which has resulted in the growth and expansion of the sector worldwide.

In India, e-commerce has been on a slow track in comparison to other parts of the world. There has been a visible growth in the e-retail sector yet the industry is being seen in its incipient stage. Earlier, the reasons cited for the weak response towards online shopping was blamed on the lack of Internet facilities and inadequate online transaction facilities available in the market. Since then, there has been technological boom in India. Now, the Internet is easily accessible to urban India and even rural pockets are getting Internet accessibility at select places.

Growth in the credit card industry and other online transaction methods has also been a boon for e-shopping. Despite the recent developments, response to online trading and transaction has been feeble in this part of the world. Some of the reasons which potentially work against the industry in India include:

• Bargaining is not possible
• Product trial is generally unavailable
• Insecurity surrounding the credibility of a shopping portal
• Delays in product delivery
• Lack in the variety of products
• Social networking is restricted
• Preference to real-time shopping for get-togethers

The above mentioned reasons clearly indicate that apart from online activities like travel ticket booking and online broking, e-commerce still has a long way to go before earning the faith of the consumers. More innovative and tangible options are still awaited before the shopaholic appetite of the quintessential Indian is satisfied by these virtual stores. What is Your Brand Personality? How would you differentiate Nike’s ‘Just do it’ from Reebok’s ‘I am what I am’? Both sell the same products, at almost the same prices and hold the same target audience.

Still Nike’s ‘Sweat and Beauty’ sells more than Reebok’s ‘We know you suck’. Needless to say that in such markets people don’t turn to these brands for their offerings but because of the attitude these brands represent. These brands no longer offer mere products now, they are living experiences and identities in the minds of the consumers. Consumers now view these brands as a ‘living entity’ – an entity that speaks its mind, reflects its attitude and acts as an aide in acknowledging their eccentricities and whims.

The catch for this new generation of consumers is ‘ Be their friend’. The clutter and pressures of today’s lifestyle has left the consumer flustered and beclouded. Loneliness is another hazard. However, the good news is people cling on to where they find value and stay where they find comfort. Therefore without infusing a feeling of security, accountability and ‘liking’ in the mind of the consumer, brand loyalties are difficult to achieve. How to render a personality to your online brand?

If your goal is to generate sales through your venture then the first step will be to initiate an exhaustive research about your domestic as well the world market, determine SEO strategies, optimize shopping cart and navigation functionalities along with other e-paths.  Your homepage is your first interface with the visitor. Ensure that it makes him to stick to it by giving him what he wants, there itself. Banners displaying your core product or benefits for your consumer will act as a bait to hook him into reading more about it.

Colorful pictures, layouts, interactive templates follow suit. The most important element in building a brand, online as well as offline is ‘trust’. The more real your conversations are with your consumers, the more accountable your business becomes in their mind. Internet is still in its nascence as far as this interactivity is concerned. If feasible, allow your consumers to raise requests and receive relevant suggestions based on those requests. Your site content should be presented to your customers almost immediately.

Content segregation in the form of bullets points, captions and brief paragraphs work best. Most importantly, visual presentations of messages are very helpful in creating an impression in the mind of the consumers. Internet provides you with a flood of information in a no-pressure environment, with reigns solely in the hands of the users. Therefore traditional monotones of creating hype lose their credibility in this medium, where consumer behavior is regulated by product/price comparisons, variety and features.

As mentioned above, people associate a brand with the experience it gives to its customers. In e-commerce environment, there is no space or time for frustration. Information should be easily digested. Ordering should be quick and smooth and loading time almost instantaneous. The idea is to catch the whim of the consumer and make him feel ‘special’ and ‘cared for’. That’s when a brand attains its own personality and becomes the consumer’s friend. The rise and rise of Online Retail! The globe is finally at your fingertips. Human numbers may be expanding by the second but distances have finally shrunk.

Investing money is a tradition. Investing time is the newest wrinkle. People don’t mind spending the almighty rupiyah for a pair of Levi’s Red Loop jeans if buying the same from an online store takes just a few minutes. Else driving an hour to reach the high street to buy it seems nothing less than a sluggish idea. Time and time alone stands as the new age currency today. And taking this as an opportune pedestal to climb higher, entrepreneurs have finally entered the new arena of Online Retail. Say, you had already seen your favourite digital camera at a store in a mall.

What say if you found the same product at a much better price in the comfort of your home- on the web, at half the time you spent shopping offline?? Well, the web is serving all this and more to its online customers. According to the Report, India expects a massive mass of internet users. Even the big brands have already found their space on web. Whether it is the Luxury Retail, Kids Retail, Mobile Telephony or other Consumer Electronics, the high street e-stores are on a roll. The challenge however is to engage that portion of the mob, which visit the sites but go away without spending any bucks.

The reason? Their distrust. This section of online turf is not comfortable transacting on the net because of their fear of e-stores mishandling their precious information. This population is almost half of the total online populace. If online retail portals begin to instill a security factor in the minds of their consumer base, half their battles will be won! expresss your opinion.

Introduction

Wal-Mart, the famous business in the world, offers an outline for a global economic order. Its success in the competitively business world has been driven by the effective use of control mechanisms such as control cycle, management audit, budgetary control and financial controls.

The Control cycle: Wal-Mart incorporates control cycle mechanism standardized and constantly evaluated to satisfy the needs of its clients, workers and suppliers. It also enables the corporation to successfully flourish as well as improving the workers and supplier confidence.

Management Audits: Management audits are significant for corporation success. Management audits help Wal-Mart reduce prices, moreover, enhancing its competitive edge. Since Wal-Mart’s is a large corporation, management standards are audited continuously to increase revenue. It also helps to ensure the corporation is audit compliant.

Budgetary Controls: Budget control is crucial in Wal-Mart, due to central organization funding cut backs and increasing costs. Budgeting is a management tool used for controlling and monitoring process. Separate budget are usually prepared for recurrent and capital expenditure. There is clear rule for ordering materials and services and also purchasing practices is being reviewed periodically. Read also “Is WalMart good for America” essay

Financial Controls: Financial control in Wal-Mart help establishing processes, systems and controls to ensure efficiency in the utilization of the resources and that the corporation programs are accountable to the general public. Audited financial statements and management assurances, have intensified the focus on enhancing financial processes and internal controls within the organization (Drzerniecki & Augustini, 1993).

Reference:

Drzerniecki, J.H. & Augustini P., (1993). The coming electric Wal-Mart. Public Utilities Fortnightly, 28-30.

Sanjeev Bhanga BRIEF India has made lot of progress in agriculture & food sectors since independence in terms of growth in output, yields and processing. It has gone through a green revolution, a white revolution, a yellow revolution and a blue revolution. Today, India is the largest producer of milk, fruits, cashew nuts, coconuts and tea in the world, the second-largest producer of wheat, vegetables, sugar and fish and the third-largest producer of tobacco and rice.

Now the time is to provide better food processing & its marketing infrastructure for Indian industries to serve good quality & safest processed food like ready to eat food. It is opening a new window in world scenario as far as taste & acceptance is concerned. Therefore, Indian Government is providing more infrastructure for this sector. Excise duty is now ZERO % on RTE and 100 % tax deduction for the first 10 years for new units. This allows manufactures to bring down their prices & spreads its flavors to the world.

The retort processed foods do not require rehydration or cooking and can be consumed straight from the pouch with or without pre-warming, depending upon the requirement of the users and the weather conditions. These foods meet the specific needs of convenience, nutritional adequacy, shelf stability, storage, distribution to the centers and have become very popular after the Year 2002. Some of the mouth-watering dishes in retort pouches include sooji halwa, upma, chicken curry, mutton curry, fish curry, chicken madras, chicken kurma, rajma masala, palak paneer, dal makhnil, mutter paneer, potato-peas, mutter mushroom, vegetable ulav chicken pulav, and mutton pulav, etc. The pioneer introduction of retorting technology has made the sale of ‘Ready-to-Eat’ food products commercially viable with great taste.

Ready to Eat Meals like already cooked or prepared lunch & dinner are relatively new products which came in market only a few years back and are now sold through retail general stores in especially made sealed aluminum laminates. The retorting or sterilization process ensures the stability of the Ready-to-Eat foods in retort pouches, on the shelf and at room temperature.

The application of sterilization technology completely destroys all potentially harmful micro-organisms, thereby making sure that the food product has a very long shelf life of over 12 months and needed no refrigeration.  When customer needs to eat, the food item pouch is either put in microwave oven to warm it or keep in heated water for a few minutes and then serve to eat.  Such ready to eat meals have been especially given to soldiers in army of many countries who require carrying their rations while on war front or while located far away from their main unit. The advertisements like, “Hungry Kyaa” are adding zest to the market by popularizing such food items which are precooked and free from any preservative, and yet have a long shelf life of over 12-months. These food items are normally selling in pouches, well packed in cardboard printed boxes of small book size and carry about 300 grams of cooked food at a price of about Rs. 40 to 200 in foreign market depending upon the type of dish packed. One packet of vegetable dish is normally sufficient for one meal for three persons and therefore falls in economic zone of consumer’s preferences.

Why Ready to Eat Food

Globalization of Indian food and its culture are the core factors for popularization of ready to eat foods. Main motivation for these ready to eat foods is fast growing foreign market. Retail outlet culture is now growing rapidly in India. Shelf life of these foods are at least 12-18 months. Quality, Taste and Flavor of these foods remains as good as fresh up to the expiry date. Women wanting to spend more time out of the kitchen. More working bachelors staying away from homes.

Cost effective in comparison to the Indian cuisine served by the restaurants in foreign countries. The water retort is an equipment or vessel or sterilization module through which steam (at 130 degree centigrade for 25 minutes) is applied on food products packed in retort pouches. The retorts use water or steam/air combination as processing medium to heat the container/packages. Compressed air or additional steam is introduced during the processing cycle to provide the overpressure (any pressure supplied to the retort in excess of that which can be normally achieved under steam at any given retort temperature). Overpressure is important in preventing package damage or loss of seal integrity (like bursting), during the heating process.

Retort pouches is a flexible packaging material that basically consist of laminates or bounded layers of different packaging films of Polyster-Nylon-Aluminium-polypropylene that can withstand high process temperature & pressure. Their most important feature is that they are made of heatresistant plastics unlike the usual flexible pouches. This makes the retort pouches unique which are suitable for the processing of food contents at temperatures around 120 degrees Celsius. That is the kind of ambient temperature prevalent in the thermal sterilization of foods.

There is lesser time to spend in cooking food themselves and so ready to eat foods are preferred. To get the food of different cultures, taste etc, it is important that food has good shelf life so that it can be made available at far off places too and then can be conveniently consumed also.

Advantages of Retort Packaging

Pouch laminates permits less chance to overcook during the retorting thus products having better color, texture & less nutrients loss.  It requires less energy for sterilization.  It requires less disposal & storage space.  Low oxygen & moisture permeability. Shelf stable for longer time & requires no refrigeration. Sun light barrier, light weight, easy to open.

Market & Its Growth

The popularity of ready to eat packed food now is no longer marks a special occasion. Peoples want value for time, money in terms of quality and variety. The food processing industry is one of the largest industries in India and it is the ranked fifth in terms of Production, Consumption, Export & Expected growth. Processed food market in India accounts for 32% that is Rs. 1280 billion or 29. 4 billion US $ in a total estimated market of Rs. 990 billion or 91. 66 US $. Euromonitor International, a market research company says that amount of money Indian spend on ready to eat snacks & food is 5 billion US $ in a year while on abroad Indian or Indian subcontinents spend 30 billion US $ in a year. Ready to eat packaged food industry is over Rs. 4000 crore or 1 billion US $ and it is growing at the rate of 20 % per annum. Ready to eat food market is developing specifically in UK, USA, Canada, Gulf & South Asian Countries with the growth rate of over 150 % per annum.

What is retort packaging? Retort packaging is a self stable flexible package What is the shelf life of retort food? – The shelf life of a retort package is a year plus. What are the shipping advantages?  A retort package will not break or dent and weigh less. Where do you display the package in the retail store?  You can display at room temperature at any corner of the retail store What are some of the main reasons, a packager of consumer products would like to go from a conventional package material to a flexible retort pouch?  The package provides a flat surface for graphics and text, needs no refrigeration and is microwave compatible.

What’s the difference between foil and non-foil retort structures?  Non-foil retort packaging can be put in the micro wave. What about taste of products in a retort package?  People say that products packaged with retort material taste fresher and maintain a more natural flavor. What about shelf appeal?  Retort pouches are more space efficient and provide a larger surface for graphics and text. What kind of food products can be packed in retort packaging ?  All kind of veg & Non- veg food products.

Marks, Manna, Jamming Kola Kathy, Oakum, Googolplex aka Pain, Mil aka Amman and Clearer, was launched last year with the theme of home made Indian healthy drinks/ Hector Beverages Pet. Ltd. , is a disruptive entrant to the industry with the aim to change this. Priced at RSI 30 for a mall pack, thanks to its innovative packaging and low overheads, the drink is trying to create a space for itself with the customers of different category. As of now, Distribution channel for selling paperboard is direct sales in MAT market and Distributor model in GET market. So, there is no particular distribution channel for Samos. The broad objective of the Short term project Hector Beverages Pet. Ltd. Is to suggest different segments of retail stores where paper boat’s presence can be created to increase its sales.

The major objectives of this project were 1) As a new beverage company known for wide product portfolio Hector gave the task of Segmentation of retail channels in the Oneida region of NCR and developing a go-to market strategy for increasing penetration in this area. 2) Developing database of different stand-alone modern trade stores , traditional read stores and other outlets in Oneida 3) Analyses of various areas of Oneida and its stores 4) During the course of the project covered 80+ outlets in Oneida and recommended 30 outlets along with appropriate the sales promotions strategy. For this we started with the process of segmentation of the stores on the basis of various parameters.

The first one being the target group , and we defined the target group based in the interviews we had with the retailers and customers in the Oneida region. Target group : Based on our interviews with the retailers in Oneida region we cached a basic of the typical customers of paper boat in this region. Age: 17 College goers and first Jobbers , people who like to try new beverages and flavors. These people are more health conscious than soda guzzling consumers. One reason is the fact that they are out everyday and mostly consume at least one beverage outside the house, either with a meal or Just hanging out with friends over conversation. Hence, these people also look for variety as they are tired of having the same flavors overtime.

The most preferred flavors that unanimously all retailers aid sold the most were Am Rasa , Am pain and Clearer. Segmentation : on the basis of presence of target Audience in the vicinity. 1) Perfect Fit – Places where the entire customer base fits into the target group of paper boat. These places have a lot of potential to help increase sales tremendously. College canteens – ASS College , Jayvee college , ABBES college Amity Office cafeterias – -arcs , park , Barclay These stores are visited daily by the same customers and the frequency with which these customers buy beverages is very high, almost one everyday. Hence , these are he best places to reach to our target group.

Not only should these places be tapped and paper boat’s presence should be made paper boat can be placed and since the customers visit everyday they are likely to try new flavors and get hooked to them ultimately. Sales in these places will ultimately results into popularizing the flavors through word of mouth and customers will start eventually buying paper boar not Just for themselves but to take back home , for family and friends. 2) Almost there – Places where at least 70 percent of the customer base fits into the target group. These are places not inside the institutes and offices but around them. The retail store that most of the college shops from outside , the street snack store that every one goes to once in a while.

This would include at least 40 street vendors outside offices park , Barclay in areas like sec 62, 63,58 . 3) Will get there – Places where at least 50% of the customer base fits into the target group. These include both retail stores and eateries . Eateries and coffee shops like those in Oneida , Apparatus and sec 25 which offer a wide variety of food and and the customers usually like it to be accompanied with a average. Matthias shops which serve light snacks like Samos and other Indian variants of it , also fall in the same category. So do the bakeries . All these places , along with the food do sell some beverages and their sales are huge. Paper boat should benefit highly from being present in these places.

Another category here are the retails stores in the areas which are frequented by our target group like the ones in B block market of sector 62 , TOT mall , Sector 25 market. Also kiosks on the metro stations – cafe buddy come under the same category. 4) Get in the house This refers to the Modern trade stores. This is not for our target group specifically , this is the route to get into customers home and achieve a status of being on the shopper’s list. Big bazaar in sec 18 , Spencer and easy day would all fall in this category. Segmentation : on the basis of sales This will help us Judge the potential a particular place/segment has to increase the sales of paperboard. To get the Judgment right we have categorized stores into three stores.

To understand the potential that the store might have paperboard we have marked the stores on the basis if the sales of coco cola since that is one beverage each one of Hess stores stocked and no other beverage was uniformly present in all the stores. Total coco cola sales will help us understand the amount of sales that can be generated for a beverage in these stores and paper boor needs presence in these stores to take a share of those sales . On these basis we have distributed the stores in to three categories 1) High 2) Medium 3) Low The names are self explanatory and depend entirely on the sales volume of coca cola from these stores. All stores are marked on the high medium low scales in the excel , so please refer to the excel to get a better understanding of the individual store status.

Anyone who ever had a home will agree that remodeling, decorations and renovations are often undertaken in order to enhance their homes (NRHA, p. 1), even Oprah has Nate Berkus to help Americans improve their homes. Sellers in this industry retail a wide range of home repair and maintenance commodities including hardware, equipment, plumbing and electrical goods, lumber and structural material, some are even venturing into appliances. The mainstreams of goods supplied by this business are purchased by consumers and contractors.

The industry comprises enterprises known as home centers primarily engaged in retailing a general line of new home repair and improvement materials and supplies. Major players of the market include The Home Depot, Lowe’s Companies, & Menard, Inc. to name few. These retail stores have evolved from being hardware con home improvement centers to become a one stop shop experience for all buyers. Now even tutorials and advise counters are available in some of the stores, making it a real all round store.

It can be said that the industry is getting bigger and wider, with a growing market of aging baby boomers that chooses to spend their monies in new home investments, women buyers who seem to attain the knack for remodeling houses. An uncanny population adapting the trend of do-it-yourself projects (Nelson 2006, p. 3). This paper will attempt to analyze the factors that affect success of such home improvement centers thru a review of companies that succeeded and failed in their endeavors in this industry. I. Successful Company

An example of a successful retail company is that of ACE HARDWARE CORPORATION. According to its website http://www. acehardware. com, Ace is a company of small beginnings, started as Ace Stores, Inc. in Chicago operated by a small group of retailers that started its operations in 1942. From Chicago it moved its corporate headquarters to Bedford Park, IL in 1961 giving the company 450,000 square foot of much needed space for its warehouse and headquarters offices. By the end of the 1960s Ace had established stores in Northern California and Georgia, and continues to grow.

From 1973 to 1976 the company was transitioned into a retail cooperative giving Hesse $6 Million in hefty profit. By 1975, Ace started venturing internationally opening its first international store in Guam. 1980’s brought Ace to the manufacturing arena thru Ace Paints and Roger Patterson signing in to be its president in 1996. The boom of the ‘big box’ chain of competitors in the 90’s moved Ace to launch its “new retail age of ace” campaign to ensure the company’s growth. Before the decade ended its CEO Roger Peterson retired leaving a strong legacy of commitment to excellence.

The new millennium brought new hopes for Ace Hardware launching its vision for the new millennium, “vision21”, and signing on Lou Manfredini as Ace’s new helpful handyman and boosting retail sales and customer satisfaction. Ace Hardware is a retailer owned cooperative and its ownership belongs to its individual store owners, and since this is so, it is not a publicly traded company. Ace Hardware stores, home centers, and lumber and building materials are located in all 50 US states and about 70 other countries.

(Hoovers’ online, n. d.), Ace is committed to its adage of being a helpful hardware for its consumers (mywire news, 2007) and strives continuously to provide better services for its customers. Pay ‘N Pak was a leading retailer in the industry in the 60’s till the 80’s, but as more competitors emerged the company proved to be unable to keep up. The company started in 1961 by establishment of a plumbing and electrical supply store in the Washington State. During this early years, Pay ‘N Pak experienced rapid growth opening an average of 2 stores per year, having franchises as far as California.

Its’ merger with 2 other plumbing and electric company gave the company more than $15 Million in revenues coming from a total of 27 stores including that of the franchised ones. By mid ‘70s the company has established itself in the home improvement market. By the 80’s Pay ‘N Pak was running 107 stores and had topped $300 M in revenue, proving the vitality of the home improvement market, which now was a $50 billion business. Seeing the potential of this lucrative market, many large retailers branched out into the home improvement industry and Pay ‘N Pak began to suffer from the propagation of competitors.

In response to the growing competition, Heerensperger insisted on maintaining Pay ‘N Pak’s market share resulting in loss for the company. A price war soon developed among the home improvement retailers, which further eroded Pay ‘N Pak’s earnings. In 1987, a hostile takeover of Pay ‘N Pak was initiated but failed due to a management-led buyout that cost the company a considerable amount of its resources and left it saddled with a hefty debt.

Unable to pay its $12.5M debt eventually led the company to file for bankruptcy in September 1991, the bankruptcy judge granted $100M debtor-in-possession financing package enabling it to restock some of its 74 stores, and initiate a new merchandising plan that placed a greater emphasis on home design products. But less than a year after Pay ‘N Pak filed for bankruptcy, it liquidated its inventory and closed the entrance to the company’s stores by September 1992, concluding 31 years of business in the do-it-yourself industry (Funding Universe).

We restricted ourselves to two potential furniture suppliers: a UK-based company,Habitat, with what appears to be a fairly conventional business model, which provides fairly stylish, relatively expensive furniture, and ‘kea, a Swedish furniture retailer with a less conventional business model, with much less expensive furniture, perhaps less stylish. I thought that we would probably end up buying nearly all our furniture from Habitat, whereas actually Kea was our main supplier.

Whilst buying this furniture, a number of interesting points about Kike’s business model became apparent: o Most of Kike’s products are delivered as “flat-pack” self-assembly kits. Habitat also supply goods in that format, primarily it seems, to ease shipment (and reduce associated costs). However, Kike’s products had been designed not only to reduce shipment costs, but also to minimize production assembly costs. Clever design had been used to produce goods which can be assembled by the purchaser with minimal skill (use of a screwdriver and pner only), from parts manufactured by machine with little human effort in the production plant.

The design also ensured a robust, stylish piece of furniture despite the limited skills of the assembler. Much of the work involved in manufacturing the piece of furniture had been moved from the factory, to the customer. The reduction in cost had also been passed onto the customer. For at least this customer, there was also a significant feeling of achievement in assembling the table or chair. The result – a high quality piece of furniture at low-cost, but with a lot more work for the customer, but tit a resulting sense of achievement. There are differences in the retail outlet model as well. Habitat provides a conventional Main Street retail outlet, with room to display the goods, and attentive sales staff to discuss the furniture. Kike’s out-of- town, large-scale outlet had the space to attempt something different. The products were displayed in a number of room mock-ups so that pieces could be seen in relation to other products, with ‘design stations’ to help the customer to build their own design. Kea staff were on hand, but not as sales assistants, more to advise on sign, check whether stock was available, etc.

This approach helps with the interior design aspects of selecting furniture, again for this customer at least, a difficult aspect of buying furniture. O Distribution: It is here that the most obvious differences with a conventional retail store occur: – You have to pick the goods from the warehouse yourself deliver (though there is a 3rd-party delivery service at a cost). All this may appear to be poor customer service, but again, it takes out a lot of cost from the distribution process, and this is passed on to the customer. Customer Direct Transactions: If you think about it for a minute, because Kea wont take orders, it is key that customers can find out if Kea has a particular item in stock. (You don’t want to go to an out-of-town store, to be told that what you’ve come for isn’t in stock and the store doesn’t take orders. ) Kea have recognized this and so provide an automated phone service to allow you to check whether the item you want is in stock. That item is number 1 in the automated service menu – first plus mark.

There are a large number of stores I use which I wish provided a similar service. Next, I’d like you to think what ATA you’d ask a customer for if you were designing a ‘check-in-stock’ transaction. Well, it’s obvious isn’t it – you ask for the stock code. Well Kea don’t think it’s obvious to a customer and when you use their service you recognize that they’re right. Instead, they ask you for a catalogue page number, and then the price of the item you’re interested in. They then tell you the items on that page at that price and you confirm which one you want.

A pretty weird transaction by IT standards, but customer-friendly. If you’re a customer interested in stock levels, you’re very likely to have the catalogue open. The page number is meaningful to you, is short and easy to enter on a phone keypad (all digits). The price is also meaningful, again short and easy to enter (all numeric). No company I’ve ever worked for has simple stock-codes. Someone has designed this transaction with the end-user (the customer) in mind. What, if anything has this to do with CRM??

In my view, a lot: o Kea have chosen to change from a conventional business model to reduce prices significantly, by placing a lot of burden onto the customer. CRM is not necessarily about better customer service, but about giving the customer a better value reposition, or ‘increased value for money’. O Their change in business model leads to a need for a new transaction for the customer. That transaction is designed to be simple and fast for the customer to use. In Ken’s words (nearly) in this week’ newsletter – they’ve listened to their customers.

Marks & Spencer currently is one of the leading retail clothing and food stores in the UK. Established in the early 1880s, M&S with its simple business model derived off basic principles managed to enjoy the leading position in the industry for nearly a century. Over the years, M&S built a brand that offers high quality merchandise at a reasonable price. Along with its continued success, M&S also fostered a “we know best” culture that was strongly inculcated in the entire organization. Thus, the M&S strategy, strongly supported by its organizational culture was “The Formula” for success.

However, this status quo changed during early 90’s when the retail industry, like most other industries in UK became more competitive. With consumer demands and preferences changing, organizations needed to alter their strategies to compete in the rapidly changing environment. Thus, trying times for M;S began in mid 90’s; with sales dropping and profits shrinking, M&S’s share prices began to fall. The management realized that they had a problem to fix.

During 1998 to 2001 M;S went through a number of changes in terms of organization structure, processes, resourcing etc. as part of the efforts to solve the problem. But, these efforts were futile as they failed to identify the fundamental issue that was standing in their way to sustain market position – the culture of the organization. This report is intended to explore the culture of M;S and to analyze its bearings on the organization’s strategy. This report will also examine the failed solutions derived by the management of M&S during early 2000 to establish the core problem faced by the retail giant.

The success of Marks & Spencer Marks & Spencer had a winning formula; a simple operating model which ensured high quality merchandise that was sold at a reasonable price. M&S clearly had the first mover advantage and they were able to sustain it for over a century. In early 1900, when M&S started operations transforming from a penny bazaar to a retail store their strategy was to offer an attractive product to the consumer at an affordable price. This was during an era when there was the up market product which the majority could not afford and the low priced products where the quality was a concern. Hence, M&S products were well received by a large majority.

Also, up until the 80’s competition was not aggressive in most industries compared to 2000. Thus, for decades M;S had no battle to fight to retain the leading position. This placed them in a very comfortable position where they could insist on quality with their supplier and better pricing.

Another factor that worked in M;S’s favor is majority of the consumers were not fashion conscious as they are today. Thus, M&S was able to design and sell what they thought was best for the consumer – the “classic wearable clothes”. To the contrary, starting early 90’s the operating environment changed. With globalization consumers demands and preferences changed, competition started to kick in. But, M;S continued with their success formula and kept oblivious to the changing environment.

Strategic Drift and the organization’s culture Over the years M&S had developed a culture around the way things were done and how its competencies were built. This was one of M&S’s key strengths which led to its success in the past. M;S’s culture can be analyzed with the aid of the cultural web as follows. Stories : CEO preferred classic wearable clothes, Reputation for quality, The thickness of the carpet represented the status of the occupant Symbols : M&S logo, St. Micheals brand name, Male dominant management cadre Power Structure : Autocratic learership, Top down management.

Power is centered at head office, Male dominant Organisational Structure : Highly hierarchical and tall structure, Operations are centralized Control system : Insist on conformity, long service was rewarded with promotions, no system to evaluate individual store performances Rituals and routines : “Head office knows best”, a generalized view of the market Paradigm : “We know best”, “We are the best” The cultural web on M&S indicates that it had a culture that largely revolved around the thinking that they was the best in the market and their way of doing things has proven to be the best.

This culture can be seen to be a reflection of taken for granted fashion and suffers from a rigid thinking that ‘head office knows best’. This is evident in the way M&S has been operating in terms of centralized buying, over dependency on British suppliers, the identical store layout and of course the inherent lack of interest in catering to the latest fashions and trends. M&S had been embedded in their traditional risk-averse formula and ignored the dynamism of a changing environment. Whilst their competitors forged ahead, the fundamental problem at M&S was their culture which did not foster change.

In a changing environment M&S failed to align their strategy with changes in environment putting M&S through a strategic drift. It is evident that M&S did not have a culture that fostered change, and such resistance to change is due to the organization being rapt in its paradigm. What M&S needed to withstand these problems they were facing was a shift in the paradigm, which would have been difficult to achieve given the nature of the organizations culture.