DISSERTATION REPORT On CRM in Apparel Retail Sector SUBMITTED BY: KAPIL BHATI Enrollment No. : A0102107042 MBA (E&L) Class of 2009 Under the guidance of Mr. Jitender Kumar Professor , HOD Economics Department. In Partial Fulfillment of Award of Master’s Degree In Business Administration To AMITY BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH AMITY UNIVERSITY UTTAR PRADESH AMITY BUSINESS SCHOOL DECLARATION I, KAPIL BHATI student of Masters of Business Administration from Amity Business School, Amity University Uttar Pradesh hereby declare that I have completed Dissertation on ―CRM IN APPAREL RETAIL SECTOR‖ as part of the course requirement. I further declare that the information presented in this project is true and original to the best of my knowledge. Date: Name: Kapil Bhati Place: Noida Enroll No: A0102107042 Program: MBA (E&L) AMITY UNIVERSITY UTTAR PRADESH AMITY BUSINESS SCHOOL CERTIFICATE I, ………………………………..hereby certify that Kapil Bhati, student of Masters of Business Administration at Amity Business School, Amity University Uttar Pradesh has completed dissertation on ―CRM in Apparel Retail Sector ‖, under my guidance. Mr. Jitender Kumar Professor , HOD Economics Deptt. ACKNOWLEDGEMENT “No Project is ever a work of only one person and this one is no exception” This project is the product of many hands, and countless hours from many people. My thanks go out to all those who helped, whether through their comments, feedback or suggestions. It gives me immense pleasure to express my deep sense of gratitude to Ms. Varsha Khattri (Faculty guide) for her valuable guidance, constant supervision and above all her continuous encouragement & support during the tenure of this project. I am deeply indebted to all the Store Managers of different Lifestyle Stores, for providing me with best information and shared their vast knowledge and technical expertise for completing this project. Sincere thanks to all the people who have worked under this project. Lastly, no words could adequately convey my heartfelt thanks to the family members and friends who indirectly co-operated with us. Kapil Bhati A0102107042 MBA (E&L) CONTENTS Declaration Certificate from Faculty guide Certificate from Industry Guide Acknowledgement S.No. Chapter Name Page No. 1 Introduction 1. Industry Insight – Indian Retail Industry 1.1 Introduction 1.1.1 Growth in organized retail 1.1.2 Drivers for retail transformation in India 1.1.3 Challenges for organized retail 1.2 Evolution of Retail 1.3 Retailing Formats in India 1.4 Some Facts 1.5 Marketing segmentation of retail industry 2. Apparel Retail in India 2.1 Overview 2.2 Characteristics of Apparel retail sector 2.2.1 New Retail Entrepreneurs 2.2.2 Changing Consumer Behavior 2.2.3 From Franchise to Company Owned 2.3 Some Facts about Indian Apparel Industry 2.3 Major Players 2.3.1 Pantaloon Retail (India) Limited 2.3.2 Globus 2.3.3 Shopper‘s Stop Limited 2.3.4 Trent Limited 2.3.5 Lifestyle International (Pvt) Limited 2.3.6 comparison between different players 2.4 Managerial Challenges 2.5 Future Outlook 2.6 Retail Touch points 3. Customer Relationship Management 3.1 Introduction 3.2 Dimensions of CRM 3.3 Customer Retention Profile 3.4 CRM & IT 2 Literature Review 3 Problem Statement 4 Methodology 5 Results & Discussions 6 Suggestions & Conclusion References Annexure Industry Insight – Indian Retail Industry: The retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearing in metros and second-rung cities alike introducing the Indian consumer to a shopping experience like never before. The Indian Retail Sector The Indian Retail Sector is at an inflexion point, with changing demographics driving growth of organized retailing and driving growth in consumption. With an expanding economy, the country‘s overall retail sector will become a $450 billion (Rs20.85 trillion) business by 2015. At present India‘s modern retail business accounts for only about 5% of the country‘s annual retail business. Along the way, the modern retail business will create about 1.6 million jobs in the next five years acc. to McKinsey. Modern retailers will not only create employment opportunities but also would help raise India‘s overall economic productivity and could also result in lowering prices of goods. With changing demographic and economic profile of the Indian population, it is believed that India is expected to experience accelerated consumption over the next few years. Further, it is also believed that increase in consumer spending would be driven by nuclearisation of families, increasing population of working women and new job opportunities in emerging service sectors such as IT Enabled Services. With declining interest rates an average Indian is not averse to taking loans. Not only are the demographic factors becoming more favorable but also the growing media penetration is leading to a convergence of aspirations of various classes of consumers. Food and beverages, apparel and consumer durables are the top three categories of consumer spend and form 87% of the total retail sales in India. Source: 1) www.ibef.org/artdisplay.aspx?tdy=1&cat_id=60&art_id=20386 Growth in organized retail In sharp contrast to the global retail sector, retailing in India – though large in terms of size – is highly fragmented and unorganized. With close to 12 million retail outlets India has the largest retail density in the world. However, most of these retail outlets belong to the unorganized sector. The inability of the unorganized sector to offer a wide range of products along with artificially inflated costs due to various factors have presented opportunities for growth in the organized retail sector migration from unorganized to organized retail has been visible with economic development in most economies. The Indian retail industry is evolving in line with changing customer aspirations across product groups, with modern formats of retailing emerging. Organized retail derives its advantages in generating operational efficiencies while simultaneously catering to rising consumer aspirations. Size drives economies on procurement, and lowers logistics and marketing costs while delivering better value to customers in terms of lower price, better quality, greater selection, improved service and in store ambience. Drivers for retail transformation in India A number of factors that drive transformation in retail – such as income growth, changing demographic profiles and socio-economic environment – are already in place in India. However, organized retail has to overcome significant challenges in terms of regulations and infrastructural barriers in order to realize its full potential. Availability of quality retail space has been one of the main constraints for development of organized formats in India. In the past, negative yield spread on leased property and lack of bank funding due to unorganized property market resulted in a dearth of quality retail space in the country. The spread between yield on property and its financing cost has turned positive with the fall in interest rates. Attractive yields on investments have resulted in sharp increase in property development. Consumerism and brand proliferation has been another enabler for organized retailing in India. Most of the world‘s leading brands are now present in India. Source: www.indianmba.com/Faculty_Column/FC460/fc460.html Challenges for organized retail There exist differential sales tax rates across states in India .This adds to cost and complexity of distribution as this necessitates multiple warehouses and does not allow for centralization of certain 16 procurements given the incidence of local levies. At the same time, there is large-scale sales tax evasion by smaller stores who derive significant cost advantage through such evasion. The retail sector has not been granted industry status, limiting funding from banks and financial institutions. The capital requirements for a retailer are in real estate (which banks have historically restricted lending to) and for working capital requirements. While some of the leading retailers are still able to get bank funding, the smaller ones are constrained for growth funding. Similarly, equity options are also restricted with Foreign Direct Investment not being permitted in the retail sector. FDI restrictions have also restricted entry of international majors in retailing in India, which could have Otherwise helped the industry develop with funding as well as bringing in of best practices and systems. The availability of trained manpower poses a key risk for the retail sector. With growing opportunities in the emerging service sectors such as ITES, the ability of the retail business to hire and retain quality people is under pressure. Supply chain management efficiencies are essential to retailers to maintain and improve margins. In India, both vendor management and logistics management are still undeveloped. However, with growing size of operations, supply chain efficiencies will become a key differentiator of profitability in retail. Value Retailing These stores primarily retail primarily food and house hold items. These are primarily large stores with volume based discounted prices. The share of expenditure on food and grocery in a consumer‘s wallet, availability of a vide variety of products at a reasonable price are the main factors which has contributed to the growth of this segment. The larger chain of supermarkets and hypermarkets (namely Big Bazaar, Star India, Nilgiris, Food world) has presence in metros and mini metros. Lifestyle retailing These stores retail primarily non-food items such as apparel, footwear, accessories, cosmetics and household products. They stock multiple brands across product categories, though some of them focus on their in house store label (on the lines of Marks & Spencer‘s and St. Michael). These stores are found on high streets and as Anchor Tenants of shopping malls. Several local department store chains have opened shop in India in the past five years. The convenience factor coupled with the inspirational perception of shopping in a department store has contributed to their growth. The larger chains of department stores (Namely Pantaloons‘, Shoppers‘ Stop, Westside, and Lifestyle) have presence in the metros and mini metros. Evolution of Retail Source: 1) www.ey.com/india India’s five main consumer segments: Source: 1. www.scribd.com/doc/47945/McKinsey-MGI-india-consumer-full-report/ 2. Central Statistical Organization(CSO) & Technopak Analysis Retailing Formats in India: Malls: The largest form of organized retailing today. Located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7, 00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Examples include Shoppers Stop, Pyramid, and Pantaloon. Specialty Stores: Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors. Discount Stores: As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable/ non perishable goods Department Stores: Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even has its own in store brand for clothes called Stop!. Hyper marts/Supermarkets: Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales. Source: 1) http://www.scribd.com/doc/4782190/The-Indian-Retail-Snapshot Convenience Stores: These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium. MBO’s: Multi Brand outlets, also known as Category Killers, offer several brands across a single product category. These usually do well in busy market places and Metros. Some Facts: Global Retail industry is of size USD 8 Trillion Over 50 of the Fortune 500 companies are retailers 25 of the Asian Top 200 companies, are retailers Fortune #1 ―Wal-Mart‖ is a Retailer Over 12 Million Outlets in India Organized Retail < 3% Set to grow to 8-10% by 2010 Organized Retail expected to be around Rs.110,000 Cr(USD 25 b) by 2010 Share of all the segments in retail: Source: 1) http://www.scribd.com/doc/4782190/The-Indian-Retail-Snapshot APPAREL RETAIL: Moving Beyond Customer Expectations The influence of fashion clearly, fashion has also played an important role in shaping apparel consumerism. As lifestyles change, fashion in India is becoming more stratified, as in the West. Technology, ideas and lifestyles are moving concurrently, and quickly. Companies and brands that offered monotonous, mundane products for years have now tripled their product ranges and new appealing shapes and forms are being launched each Season. Top-notch fashion professionals came together four years ago to form the Fashion Design Council of India. Under the aegis of the Union textile ministry and in tandem with National Institute of Fashion Technology, FDCI now provides professional inputs for designing labels and is now working towards developing the fashion supply chain through backward linkages with suppliers and mills, and forward linkages with the retail and distribution network. The boom in domestic apparel, nevertheless, tells only part of the story. India has huge potential as a market for foreign clothing, given its large population and growing household incomes. A few significant foreign players—such as Levi Strauss, Benetton and Lacoste—have been selling their branded apparel in India for a number of years. But now, just like their Indian counterparts, global apparel brands are setting up their own apparel outlets, instead of just selling through departmental stores. Ralph Lauren, for example, has a limited range exhibited in generic department stores located in metro cities. Yet it has now set up its own stand-alone stores, which showcase all the company‘s brands. Now, with the government‘s proposal to let in branded retail players— brands like Benetton and Lacoste currently sell mostly through the franchise route—investments in India‘s apparel sector are likely to go up substantially. Indian Apparel Industry- an Overview: The apparel industry is one of India's largest foreign exchange earners, accounting for nearly 16% of the country's total exports. The 1996 Indian textile exports approximately amounted to Rs.35,000 crores of which apparel occupied over Rs14,000 crores. Source: 1) http://apparel.indiamart.com/lib/garments/indian07251998.html It has been estimated that India has approximately 30,000 readymade garment manufacturing units and around three million people are working in the industry. Today not only is the garment export business growing, enthusiasm in the minds of the foreign buyers is also at a high. Today many leading fashion labels are being associated with Indian products. India is increasingly being looked upon as a major supplier of high quality fashion apparels and Indian apparels have come to be appreciated in major markets internationally. The credit for this goes to our exporter community. Consistent efforts towards extensive market coverage, improving technical capabilities and putting together an attractive and wide merchandise line has paid rich dividends. But till today, our clothing industry is dominated by sub-contractors and consists mainly of small units of 50 to 60 machines. India's supply base is medium quality, relatively high fashion, but small volume business. Recent recession in Europe and the South Asian currency crisis have also contributed their own bits to the decimating Indian exports. Though these are expected to fizzle out soon, there is no reason for complacency on the part of Indian exporters or of the garment industry. The industry will be soon faced with open competition shorn of quotas or tariffs. Thus the need of the hour is to enlarge both manufacturing as well as the marketing base. Inculcation of a spirit of innovation by way of research and development and tapping new markets especially in South Africa, Central Africa, CIS, East European countries, Latin America and Australia is also mandatory for export growth. In India, clothing retail accounts for 36% of organized retail business. It is the largest Sector. Ready-made apparel accounted for an estimated 20% of domestic clothing sales in 2005. With growing working women wearing western wear to work, and pressed for time, market for good readymade clothes is likely to grow. India is a film-crazy nation, and the largest producer of films, with more than 1,000 every year. They provide entertainment and an escape from reality for India‘s masses, and set the popular fashion trend. Bollywood fashions have become pan Indian. They affect various sectors of the market including clothing, footwear, weddings and fashion accessories. With the advent of modern format retailers and the growth of plastic cards, affluent urban Indian women are shopping like never before. Source: 1) www.ibef.org They spend mornings browsing in stores looking for deals or latest styles. Upper income urban women are adopting ethnic chic. These are designer clothes that incorporate Indian motifs, ethnic fabrics and are a fusion of western and Indian styles. In the large urban centres, apparel retailers, like Shoppers Stop, Westside and Pantaloon have popularized their private labels, which have attracted urban shoppers. Westside carries only its own private labels, while for the other stores, 20-30% of their apparel turnover is from private labels. Customers have loyalty to a store rather than any particular garment brand. This has led to a thriving unbranded or local brand market for ready-to-wear clothes leading to severe competition. Hence organized retailers like Lifestyle, for instance, has a loyalty programme called `The Inner Circle', while Pantaloons offers a `Green Card' Rewards programmes, Westside has `Club West' to Woo the customers. Customers look to design and fit of the clothes, and use the shop‘s name as a quality standard. Indian textile and clothing industry during 2006 is estimated to be about INR1,511 billion ( USD 38 billion) , which includes apparel of men, women and kids . Characteristics of Apparel retail sector As apparel retail is led by fashion, a player needs to keep a close watch on fashion amongst teenagers as they are the trend setters. Role of Bollywood in spreading fashion needs to be understood. Seasonal variations on stocking pattern and need to clear inventory at the end of season should be understood by apparel retailer. Typically once an item is sold from the outlet, retailer ensures that there is no repetition of same. It gets replaced by different design, style, colour. Importance of store layout, décor is very critical. A browser visiting the store frequently likes to see changes in the layout otherwise he may carry the impression that stocks are not moving out of the store. Category management becomes very crucial function as transformation of design into production and delivery has to be completed before fashion or fad changes in the market. This highlights the importance of sales promotions- short term activities which induces trade or consumer to buy now rather than in future as the value of apparel after the season, goes down substantially and inventory carrying burden turns out to be very high. Apparel retailer needs to understand critical role of sales promotions. Attractive promotions induces purchase acceleration, stock piling and brand switching on the part of a consumer which substantially reduces retailer‘s financial and inventory risk and consumer‘s financial risk and psychological risk. If the customer will purchase first then only he/she can be loyal so in order to retail the existing & attracting the new ones, company should have best CRM strategies. Enter, the New Retail Entrepreneurs Delhi-based Ebony has commenced a massive expansion in northern India with eight new stores and a combined retail space of 150,000 square feet. Besides sprucing up exiting stores in Delhi and Punjab, the company is expanding to other north Indian states. Lifestyle, a part of the Dubai-based Landmark Group retail chain,earlier owns seven stores located across various metro cities, then company has doubled its presence to 14 stores in 2006, occupying a combined retail space of one million square feet. Mumbai-based lifestyle chain Pantaloon spends around US $ 840000 in a year to revitalize its brands and promote new brands. Bangalore-based Shoppers Stop –has more than 35 more Outlets. TCNS Clothing has more than 37 stores across the country. Spykar has set up approx 35 stores across the country in all the major cities. Branded apparel merchandising is gathering critical momentum in India, and that‘s a bit of a surprise in a country where preferences change every 25 km and loyalties change for a 10% difference in pricing. Source: 1) www.iimahd.ernet.in/publications/data/2007-07-01Preeta.pdf Changing Consumer Behavior But suddenly, brands have started shaping buying behavior. A large young working population with a median age of 24 years; growing numbers of nuclear families in urban areas; increasing working-women population and emerging opportunities in the services sector have increased the average consumer spend on branded clothing. Industry experts believe that apparel sales in retail stores posted a growth of between 25- 30 per cent in 2003 and according to an estimate by McKinsey, the branded apparel market—is now worth nearly $ 3 billion. Until recently, quality retailing was limited to high streets and standalone departmental stores. Now, across metros, apparel buying is the second biggest consumption category at malls, after food products. Without question, the consumer boom is being driven by a new openness about using credit cards. According to ICICI Bank, usage of credit card has increased a lot. Apparel retailing is no longer a metropolitan phenomenon; companies are now quickly branching to smaller cities in an effort to cash in on the consumer boom. From Franchise to Company Owned Larger textile manufacturers were the first off the block in the nineties, with big players like Raymond, Arvind Mills, Madura Garments and Zodiac Clothing building extensive retail networks. Because the market potential was still relatively small in the nineties, most players used the franchise route to expand. Now, companies are using their own funds to increase the capacities of their retail stores. Previously, the Arvind Mafatlal Group had a chain of below-1,000 sq ft stores to sell its flagship brand apparel: Arrow. Over the last two years, the company management has closed down a number of these small stores and gone in for bigger stores. The new stores have a minimum 1,500 square feet space, and nearly per cent of Arvind‘s apparel business comes from these outlets. Raymond‘s – the flagship brand of the Singhania Group-- is revamping its chain of 300 stores—known as Raymond‘s Shops—and focusing on readymades at a cost of around US $ 35 million. The logic: the contribution of readymade apparel to total sales has gone up 25-30 percent compared to the previous year. Likewise, Madura Garments has opened up a mega store in the heart of Bangalore that sells the company‘s flagship brand, Peter England. Spread over a carpet area of 1350 square feet, the store is designed to function at three levels—ground, semi-ground and mezzanine. Last year, this single store logged sales of nearly US $ 205,000. Encouraged by this success, the company has opened a second mega store and is planning a third in the near future. Spurred by these successes, a slew of new retail entrepreneurs chains are investing heavily to cash in on India‘s US $ 15 billion clothing market. Some Facts about Indian Apparel Industry: • India‘s top retailers are largely lifestyle, clothing and apparel stores. This is followed by grocery stores • Following the past trends and business models in the west retail giants such as Pantaloon, Shoppers‘ Stop and Lifestyle are likely to target metros and small cities almost doubling their current number of stores Source: 1.www.scribd.com/doc/2100112/Indian-Retail-Sector\ 2.www.ibef.org/artdisplay.aspx?tdy=1&cat_id=60&art_id=20386 • Even within the top income segments, there is a fivefold difference in per capita income in apparel Some of the major Indian Players: Pantaloons Globus Lifestyle Ebony Westside Shopper‘s Stop Metro Pyramid Introduction to some retail stores: Pantaloons: This Company was incorporated on October 12, 1987 as Manz Wear Private Limited. The Company was converted into a public limited company on September 20, 1991 and on September 25, 1992 the name was changed to Pantaloon Fashions (India) Limited and in the same year the Company made an initial public offering. Later they changed their name to Pantaloon Retail (India) Limited on July 7 1999. Source: 1) www.scribd.com/doc/47945/McKinsey-MGI-india-consumer-full-report 2) www.pantaloon.com/companyinfo.asp Pantaloons believes in managing customer expectation by offering them all the requirements for their entire family under one roof is the key to being a successful retailer, and hence have built their business model around ‗Family focus‘ rather than ‗individual focus‘. Pantaloons clearly define Lifestyle products under Private Labels and third party brands. They have a loyalty card programme with a name of ‗Green Card'. It is divided hierarchically into one star, three star and five star. Every point generated at all the levels is equivalent to Rs.1 It also stays in touch with its loyal customers through Mailers, SMS‘s E-mails and Telephone informing them about the developments and promotions. Globus : Launched in January 1998, Globus is a part of the Rajan Raheja group. The company opened its first store in 1999 at Indore followed by the launch of its second store in Chennai (T-Nagar). The Globus has a Privilege Club card which is very unique in a way that Members are immediately rewarded for purchases at any of their stores, in addition to a host of other privileges such as exclusive tie ups, promotion and special shopping hours. To each his own individual needs vary. This is why Globus offers 2 different card categories, each with it own benefits designed to suit the needs of the customers. Shopper’s Stop: Shoppers Stop is an Indian department stores promoted by the K Raheja Corp Group (Chandru L Raheja Group), started in the year 1991 with its first store in Andheri, Mumbai Shoppers Stop Ltd has been awarded "the Hall of Fame" and won "the Emerging Market Retailer of the Year Award", by World Retail Congress at Barcelona, on April 10, 2008 Shopper‘s stop has co-branded credit card tie-up with Citibank to provide its customers with exclusive benefits for shopping, The Company has launched a new consumer promotion called ‗Make Your Own Sale Day‘. Shopper‘s stop has a loyalty card program with the name of first citizen card wherein Every point generated at all the levels is equivalent to Rs.1 Westside: Established in 1998 as a part of TATA group. Westside idea is Club West, a customer loyalty programme launched in May 2001. The 30,000-plus members of this club get rebates at restaurants and on holiday packages from the Taj Group of Hotels, home delivery of alterations, and best of all, special shopping hours on the first day of any discount sales event organized by the chain. Lifestyle Lifestyle International (P) Ltd is part of the Landmark Group, a Dubai – based retail chain. With over 30 years‘ experience in retailing, the Group has become one of the foremost retailers in the Gulf. Positioned as a trendy, youthful and vibrant brand that offers customers a wide variety of merchandise at an exceptional value for money, Lifestyle India began operations in 1999 with its first store in Chennai. Lifestyle has a loyalty card programme Known as the ‗The Inner Circle ' For every Rs.50 spent at any of the stores, 1 point is earned. For every 100 points earned, gift voucher of Rs.100 is received. Source: 1) www.globus.in 2) http://www.chipsbooks.com/lifestyl.htm 3) en.wikipedia.org/wiki/Shoppers'_Stop Comparison Between different players: Store Name Pantaloons lifestyle Globus Shopper‘s Stop Westside Format Multibrand Multibrand Exclusive Multibrand Exclusive Tata Type own private Trent group labeled brand Positioning Family store Unique & high Fashion at Family store Style & quality Family afforfability affordability Store categories Apparel Apparel Apparel & Apparel Stylized accessories for accessories for accessories accessories for clothes, men, women & men, women & for men, women & footwear & children children men, children accessories women Average Rs.1800 Rs. 800 Rs. 300-999 Rs.1200 Rs199-1999 billing per customer Average 1000on 1200 in week 2000 in week 1200 in week 25-45 per hour footfalls weekday days & 6000 days & 7400 days & 7000 & 1500 to 2000 during week durin week during week on weekends, end end end holidays Sales promotion: 1. End of Yes No Yes Yes Yes season 2. Festive Yes Yes Yes Yes Yes Promotions (Diwali, Christmas etc) 3. Loyalty Yes Yes Yes Yes Yes card Programme 4. Special Yes (Exchange Yes No No No Promotion offer ) (event) 5. Joint No Yes No No No promotion 6. Media Hoardings,print, Hoardings, In Print & Hoardings, In Print, used electronic store electronic store electronic, (SMS, Email, media, hoardings, In POP Hoardings, In store store 7. Price off, free Lucky draw, gift vouchers, Discounts, Cause related Promotion gifts, exchange discounts, discount, combo gift vouchers, type offer contests, free contest,combo discount, gifts contest,combo, coupons 8. Sales, Quarterly Sales Sales, Sales, Quarterly Sales, Evaluation profit Quarterly profit Quarterly of profit profit promotion Future outlook Apparel sector is likely to grow with growing Indian economy. Many multinational players either have already plunged into Indian market or plan to do so in apparel sector. They will bring many promotional practices which they have been following in developed markets which will increase the use of sales promotion activities even further. Indian brands will have to withstand turbulent conditions and learn to survive. If the role of such activities is understood well it may help any player a long way to survive and grow. Retail Touch Points: Pull preferred over Push: A ―pull‖ supply chain driven by actual consumer demand is preferable to a ―push‖ supply chain driven by manufacturer and retailer promotion. Customers who are used to literally having the world at their fingertips, thanks to the Internet and personal electronic devices, are no longer interested in being told what products to buy. Using tools such as secure Web portals, insight-driven retailers propagate current consumer demand data throughout the supply chain, enabling maximum responsiveness and agility. This, in turn, increases customer satisfaction levels and market basket sizes, as well as decreases the amount of unsold inventory in the supply chain and even levels of ―safety stock.‖ Localized Product Assortments: By localizing the merchandising and assortment plans at the individual store level, a store can reap significant intangible benefits, such as improved customer satisfaction levels, as well as tangible benefits, such as higher margins and increased basket sizes. Retailers who embed customer SKU preferences into their profiling, forecasting and optimization practices can improve the accuracy of buying and allocating merchandise, creating 5 to 10 percent improvements in gross margin dollars and improved inventory turn Space Optimization : It allows retailers to use every square inch of selling space to its maximum profit potential. Optimization systems take in information such as store sales, customer preferences and product sizes to produce space plans based on business rules, forecasted demand, and profit potential. Assortment plans can thus be executed in a manner that maximizes the sales potential of floor selling space. Source: 1) Article from Oracle Retail by Dave Boyce. What is CRM ?? What ever the customer buys for him, Every experience should be completely satisfactory, some delightful. Best CRM strategies should be implemented helping the customers to save the money, time and heartburn by providing comprehensive customer reviews at a click. CRM stands for Customer Relationship Management. It is a process or methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends. Dimensions of CRM: Identifying the customers Acquiring the customers Retaining the customers A store should be customer-oriented - the technology, the supply chain, the design - everything should be geared to making the buying experience as good as possible. Also employees should be trained in much better way because if the employees will be loyal only then customers can be loyal. Loyal employees help bring in the business. Foremost thing for better CRM: Getting value out of real time customer information Today, retailers spend an excessive amount of time and money collecting, analyzing and trying to utilize customer data by turning it into information and knowledge that is actionable. Loyalty programs have allowed retailers to collect and analyze vast quantities of data on purchases by individuals. E-retailing has added to the avalanche of data. While this information is essential to understanding changing customer needs and expectations, it's important that the systems you use to gather this information are efficient and cost-effective. Now a days many retail outlets are using the IT advisory services that will enable them to gather and evaluate critical customer information, assess customer requirements and develop customer plans and strategies. Source: 1) http://www.creatingloyalty.com/story.cfm?article_id=625 2) http://www.pwc.com/ca/eng/main/home/index.html Every business organization depends on customers for sustenance, the question is how to create and maintain customer satisfaction. Every business communicates with their clients in many different ways, especially in our technology rich and information based society. How we treat all of this information is where CRM plays a key role. CRM acts as a central repository of information on clients and potential clients of any store. Customer Relation-Profile When mapping the quality of a customer relationship, the following model is being used symbolizing the communication and co-operation, and the Legs concern the responsibility and professionalism with which we implement or deliver the competencies we have agreed upon. Customer Relations Management (CRM) and Technology in Retail Over the years as the consumer demand increased and the retailers geared up to meet this increase, technology evolved rapidly to support this growth. The hardware and software tools that have now become almost essential for retailing can be into 3 broad categories. Customer Interfacing Systems Bar Coding and Scanners Point of sale systems use scanners and bar coding to identify an item, use pre-stored data to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept where the consumer pushes the full shopping cart through an electronic gate to the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. All that the consumer has to do is to pay for the goods. The new developments create an easy way for users to generate bar codes on demand for asset tracking, compliance labeling, document tracking, and other business productivity improvements. RFID (Radio Frequency Identification) is now the buzzword in retail. It is real time tracking of every single product, from manufacture to checkout and compared to Universal Product Code (UPC) bar coding, which RFID promises to replace, RFID proactively transmits information, eliminating the manual point-and-read operations needed with bar coding. This enhanced visibility could significantly decrease warehouse, distribution, and inventory costs; increase margins; and enhance customer service. The macro-areas where RFID can be utilized are: EAS (Electronic Article Surveillance) systems: The use of tags and antennas usually inside a retail setting for tracking articles. Portable Data Capture systems: portable RFID systems that can be used anywhere. Networked systems: fixed position readers those are directly connected to centralized information management system, while transponders are placed on moveable items. Positioning systems: Used for automated location identification of tagged items or vehicles Payment Payment through credit cards has become quite widespread and this enables a fast and easy payment process. Electronic cheque conversion, a recent development in this area, processes a cheque electronically by transmitting transaction information to the retailer and consumer's bank. Rather than manually process a cheque, the retailer voids it and hands it back to the consumer along with a receipt, having digitally captured and stored the image of the cheque, which makes the process very fast. Internet Internet is also rapidly evolving as a customer interface, removing the need of a consumer physically visiting the store. Operation Support Systems ERP System Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer better. CRM Systems The rise of loyalty programs, mail order and the Internet has provided retailers with real access to consumer data. Data warehousing & mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business. This, along with the various available CRM (Customer Relationship Management) Systems, allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers to their businesses. Advanced Planning and Scheduling Systems APS systems can provide improved control across the supply chain, all the way from raw material supplier‘s right through to the retail shelf. These APS packages complement existing (but often limited) ERP packages. They enable consolidation of activities such as long term budgeting, monthly forecasting, weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data. Strategic Decision Support Systems Store Site Location Demographics and buying patterns of residents of an area can be used to compare various possible sites for opening new stores. Today, software packages are helping retailers not only in their locational decisions but in decisions regarding store sizing and floor-spaces as well. Visual Merchandising The decision on how to place & stack items in a store is no more taken on the gut feel of the store manager. A larger number of visual merchandising tools are available to him to evaluate the impact of his stacking options. CRM MODEL The essence of this process is mutually to discover weak, strong and wanted sides of the organizations, in order to improve future relations. Using the Customer Relation Profile, organization should be able to identify the terms of relationship with others and the profile will indicate what to focus on if organization want to develop it further. If organization want an "easy to use tool" to realize how organization can maximize business relations, this is the tool for organization and organization. Customer Loyalty: It is becoming more and more evident to retailers that the customer shopping experience is a critical pathway to the financial success of the store. Setting aside unique location or competitive differences, stores with higher levels of customer loyalty should see higher same store sale increases year over year. Likewise, over a long period of time, bad customer service will result in brand and profitability erosion. Loyalty is most influenced by the shopping experience and the brand (the cumulative impact of many experiences over time). There are a lot of components to the shopping experience such as availability of parking, store cleanliness, friendliness and helpfulness of sales staff, easily located products, and checkout experience. It is not surprising that the personal interaction of store associates is a significant component of driving loyalty. Even in today's self-service retailing environment, customers still need to be guided into finding the right products. Without that help and support they become easily frustrated, and eventually shop at the competition. As busy consumers, we all face time and cost trade-offs. Surprisingly, price is an element we do not find to be a significant driver of loyalty. Not that pricing is inconsequential or immaterial to the consumer's choice of where to shop, but if price were the only thing driving loyalty we would all be frequenting garage sales and flea markets. There is nothing worse than having a great shopping experience, finding exactly what you want, and then being held hostage by the checkout process. Retailers figuring out the best ways to make the checkout process more effective through the use of technology are the most successful in the long run. One way to take action on customer feedback would be to develop training programs geared toward those responsible for fostering the customer experience in the store. These programs would teach what actions are necessary to improve low scores. It is not until a store is confronted with unacceptable scores that they take the time to understand what to do with the customer feedback information. Literature Review: Several studies on CRM and apparel retail sector are reported in the context of developed markets. A brief overview is presented below: According to Pine and Gilmore (1999) experiences can be described by two dimensions. The first dimension refers to the customer‘s degree of active participation in the creation of the experience. The second dimension of experience describes the degree to which the customer adsorbs or immerses the experience. Bitner and Zenithal (2003) stated that satisfaction is the customer‘s evaluation of a product or service has met their needs & expectations. In the recent information Week survey, of the companies actively implementing CRM, 93 percent claimed increased customer loyalty and customer Satisfaction would justify their CRM investment. The Second highest percentage, 83 percent, stated the need to demonstrate increased revenue. The implied, mandate for most of these early adopters seems to be ―customer loyalty at any cost-even is we don‘t see a return on investment.‖ Peppers and Rogers (1993) stated that to build the relationships with your individual customers, you need to sell maximum products over a long period of time and across different product lines. Deeter-Schmelz, Dawn R.; Moore, Jesse N.; Goebel, Daniel J, (2000) examined Prestige clothing shopping by consumers by a confirmatory assessment and refinement of the PRECON scale. Aspects studied include background on the symbolic aspects of consumption; prestige shopping behavior; reassessment and refinement of the PRECON scale and impact of income and age on prestige shopping. The paper concludes with managerial implications for the United States apparel retailers dealing in prestige clothing. Kincade, Doris H.; Woodard, Ginger A.; Park, Haesun (2002) studied Buyer–seller relationships for promotional support in the apparel sector which is critical for success. The purpose of the study was to define promotional support categories offered to apparel retailers by manufacturers, to identify the retailer's perceptions of the offering frequency and importance of the promotional support, and to investigate the relationship between offering frequency and perceptions of importance. Results indicated that monetary support was regarded as the most important promotional support.. A positive and significant correlation was found between items the buyers perceived as important and the frequency of offerings of these items. Liu, Yuping, (2007) found out the Long-Term Impact of Loyalty Programs on Consumer Purchase Behavior and Loyalty. Using longitudinal data from a convenience store franchise, the study found out that consumers who were heavy buyers at the beginning of a loyalty program were most likely to claim their qualified rewards, but the program did not prompt them to change their purchase behavior. In contrast, consumers whose initial patronage levels were low or moderate gradually purchased more and became more loyal to the firm. For light buyers, the loyalty program broadened their relationship with the firm into other business areas. Thus there is a need to consider patronage to decide rewards for loyalty programmes. In the context of French market, Meyer-Waarden, Lars; Benavent, Christophe. (2006) studied the Impact of Loyalty Programmes on Repeat Purchase Behaviour based on the Behavior Scan single-source panel which has been compared with the store data base . The double jeopardy phenomenon was present and loyalty programmes did not substantially change market structures. When all companies had loyalty programs, the market was characterized by an absence of change of the competitive situation. Hyllegard, Karen; Eckman, Molly; Descals, Alejandro Molla; Borja, Miguel Angel Gomez (2005), studied Spanish consumers' perceptions of US apparel speciality retailers' products and services. The study emphasized that speciality retailers' success in international markets is contingent upon their knowledge of culturally-defined values, norms and behaviour that influence consumer decision making and impact acceptance of products and services. The study examined consumers' store patronage and apparel purchase behaviour, acceptance of US apparel brands, perceptions of retailers' products and services, and perceptions of the impact of foreign retailers on local communities. It found out that the perceptions differed regarding quality, fashionability, product assortment, extent and quality of customer service, convenience of location, payment options, national brands and store layout. Consumers' acceptance of US apparel brands was a function of age, household income, apparel product country of manufacture and price. References: 1. http://apparel.indiamart.com/lib/textile/textile07301998.html 2. Hyllegard, Karen; Eckman, Molly; Descals, Alejandro Molla; Borja, MiguelAngel Gomez., ‖Spanish consumers' perceptions of US apparel speciality retailers' products and services ―Journal of Consumer Behaviour, Sep2005, Vol. 4 Issue 5, p345-362, 18p, 7 charts. 3. Kincade, Doris H.; Woodard, Ginger A.; Park, Haesun,‖, International Journal of Consumer Studies, Dec2002, Vol. 26 Issue 4, p294-302, 9p. 4. Liu, Yuping,‖ The Long-Term Impact of Loyalty Programs on Consumer Purchase Behavior and Loyalty,‖ Journal of Marketing, Oct2007, Vol. 71 Issue 4, p19-35, 17p. 5. Meyer-Waarden, Lars; Benavent, Christophe,‖ The Impact of Loyalty Programmes on Repeat Purchase Behaviour,‖ Journal of Marketing Management, Feb2006, Vol. 22 Issue 1/2, p61-88, 28p. 6. Lara, Pedro Reinares.,‖ Exploring the Benefits Obtained in a Loyalty Programme applied to Retailing,‖ European Retail Digest, Winter2005 Issue 48, p48-52, 5p. 7. Deeter-Schmelz, Dawn R.; Moore, Jesse N.; Goebel, Daniel J.,‖ prestige clothing shopping by consumers: a confirmatory assessment and refinement of the precon scale with managerial implications‖, Journal of Marketing Theory & Practice, Fall2000, Vol. 8 Issue 4, p43, 16p. 8. ―Consumer Lifestyles in India‖ Euromonitor, International Consumer Lifestyles Database(2005) 9. ―Global Apparel, Accessories and Luxury Goods‖ Datamonitor, (2006) 10. Zeithaml, V.A., (2000). Service quality, profitability, and the economic worth of customers: Wwhat we know and what we need to learn. Journal of the Academy of Marketing Science 28(1), 67-85 11. Sweat, Jeff. ―Lots of companies are thinking about customer relationship management, But progress can be very slow-CRM under scrutiny.‖ Information Week via COMTEX online, September 15,2000. 12. Peppers, Don and Martha Rogers. Ph.D., The one to one future: Building Relationships One Customer At a Time. New York:Doubleday,1993 13. http://www.scribd.com/doc/95637/Customer-Relationship-Management RESEARCH DESIGN Research objectives The survey was conducted among the customers shopping in the mall. To do the comparative analysis of different Lifestyle Stores on different store dimensions. To study the perception of customers towards the CRM strategies implemented by the different Lifstyle Stores. To study the association between the Customer‘s Services & the Customer Loyalty. To get an insight of the Retailer‘s perspective towards the customer‘s expectation in terms of CRM The research instrument The research instrument used was developed to measure both the expectations and perceptions of the customers of the Lifestyle Stores. The two questionnaire were developed hypothesis were formulated to reflect the associations between the different Lifestyle Stores and the customer service offered by them. Also to evaluate the different Gender‘s opinions towards the Customer services they are getting from the lifestyle stores & to evaluate the retailer‘s perception about the customer‘s expectations. The main body of the questionnaire included 11 questions reflecting customer service, identification, differentiation, interaction and customization. Use was made of a five-point Likert scale. Structured questionnaires, to measure the respondents‘ perceptions and expectations, were distributed to the people in a mall. A total of 200 questionnaires were distributed to the people. Statistical analysis The statistical treatment of the study included the determination of the association between the steps in the CRM model and the customer service offered by the organization. Use was made of Pearson‘s coefficient to determine the level of association between the store attributes, customer service & the customer loyalty. The level of association as measured by Pearson‘s co-efficient falls between -1.0 and +1.0, which indicates the strength and direction of association between the two variables. The measure was standardized through computation of reliability & validity. T-test was applied in order to compare significant difference between the store attributes of different lifestyle store. Qualitative Analysis of the Retailer‘s Perspective was done to get an insight of their perception towards the customers expectations & to study the CRM strategies implemented by them esp. the applications of IT. The companies serve two types of consumers: for the practical consumer, they provide sensible and affordable clothing whose styles will not change drastically from year to year, and for the fashion-conscious consumer, industry types will attempt to provide styles of clothing that will keep up with the current season‘s trends and for which they are able to command a price premium. The apparel industry exists in a very competitive environment where companies need to adopt new technologies in order to improve profitability and lower costs. One can come to the conclusion that the designer clothing industry is pretty volatile and subject to unpredictable swings which is reflected in the quality. The brand‘s recent revival was a result of several key strategic plans. Key strategic initiatives included: ―the much- valued positioning as a lifestyle brand, flagship stores and presence in high-end department stores, expansion of licenses into areas such as watches and sunglasses and a product mix toward accessories and gifts. For consumers Luxury means exclusivity. The store focuses on accessibility while maintaining its exclusivity and protecting its tradition and heritage while striving to be innovative and inspiring. CONCLUSIONS The luxury goods industry is unique in a sense that it relies solely on promotion and marketing to sell products and not so much on product attributes but on the individual images certain brands convey. It is also an industry that is well guarded and difficult to find any information on. However the lifestyle stores are is very fascinating and the products themselves signify prestige and status. But every customer has a different perception Although a select few are able to afford luxury goods, the vast majority of people who are exposed to advertisements for certain products generally have aspirations of being able to own these products someday. The demand for Apparels are affected by general economic trends . The lifestyle stores find customer loyalty to be of utmost importance and would do almost anything to attract new customers while trying to keep existing customers. In the past three years, luxury goods brands have been broadening their appeal to a wider consumer base. An example of this would be the Consumer‘s make a use of internet, companies have realized the importance of e-commerce and how the Internet can be advantageous for Lifestyle Stores to create and reinforce their brand image and at the same time increasing brand awareness. It is an idea of status and exclusivity that makes these brands sought-after by people from many different walks of life. For the wealthy, luxury goods reinforce their status as a member of the upper class, but for everyone else luxury goods are items that many aspire to be able to own someday. The allure for many designer products is people‘s desire for wealth and status, which is ultimately the end product that is consumed. RESEARCH DESIGN The study is exploratory in nature with survey method being used to complete the study. Both Exploratory & Causal Research Design were taken Research objectives: The survey was conducted among the customers shopping in the mall. To do the comparative analysis of different Lifestyle Stores on different store dimensions. To study the perception of customers towards the CRM strategies implemented by the different Lifstyle Stores. To study the association between the Customer‘s Services & the Customer Loyalty. To get an insight of the Retailer‘s perspective towards the customer‘s expectation in terms of CRM The Research Instrument The research instrument used was developed to measure both the expectations and perceptions of the customers of the Lifestyle Stores. The two questionnaire were developed hypothesis were formulated to reflect the associations between the different Lifestyle Stores and the customer service offered by them. Also to evaluate the different Gender‘s opinions towards the Customer services they are getting from the lifestyle stores & to evaluate the retailer‘s perception about the customer‘s expectations. The main factors in such a study were customer demographics, the presence of competition, physical store characteristics, sales promotions, quality, CRM technologies and the characteristics of Customer Service Representatives etc. The main body of the questionnaire included 11 questions reflecting customer service, identification, differentiation, interaction and customization. Use was made of a five-point Likert scale. Structured questionnaires, to measure the respondents‘ perceptions and expectations, were distributed to the people in a mall. A total of 200 questionnaires were distributed to the people. Statistical analysis The statistical treatment of the study included the determination of the association between the steps in the CRM model and the customer service offered by the organization. Use was made of Pearson‘s coefficient to determine the level of association between the store attributes, customer service & the customer loyalty. The level of association as measured by Pearson‘s co-efficient falls between -1.0 and +1.0, which indicates the strength and direction of association between the two variables. The measure was standardized through computation of reliability & validity. T-test was applied in order to compare significant difference between the store attributes of different lifestyle store. Qualitative Analysis of the Retailer‘s Perspective was done to get an insight of their perception towards the customers expectations & to study the CRM strategies implemented by them esp. the applications of IT. Discussion of the specific findings H1: Identifying new and existing clients increases the level of customer service. H2: Differentiating between the services offered to new and existing clients increases the level of customer service. H3: The level of customer service is increased if there is an active interaction with potential and offered according to each individual client‘s needs. DATA ANALYSIS 1) Occupation * How often do you make your purchase of Apparels? Cross tabulation How often do you make your purchase of Count Apparels? Twice in a Occasionall Weekly Monthly Month y Total Occupation Business 8 24 6 25 63 Service 7 53 21 6 87 Student 4 9 2 35 50 Total 19 86 29 66 200 Occupation Cumulative Frequency Percent Valid Percent Percent Valid Business 63 31.5 31.5 31.5 Service 87 43.5 43.5 75.0 Student 50 25.0 25.0 100.0 Total 200 100.0 100.0 Results: The service class people prefer to make the purchase of apparels monthly i.e. 44%. The business class people prefer to make the purchase of apparels occasionally but sometimes monthly too.i.e.31% While a student prefer to make the purchase of apparels occasionally.i.e.25% 2) Income * How often do you make your purchase of Apparels? Cross tabulation Count How often do you make your purchase of Apparels? Twice in a Weekly Monthly Month Occasionally Total Income <12 K 3 5 2 29 39 12-18 K 2 20 2 6 30 18-30 K 6 34 19 3 62 >30 K 8 27 6 28 69 Total 19 86 29 66 200 Income Cumulative Frequency Percent Valid Percent Percent Valid <12 K 39 19.5 19.5 19.5 12-18 K 30 15.0 15.0 34.5 18-30 K 62 31.0 31.0 65.5 >30 K 69 34.5 34.5 100.0 Total 200 100.0 100.0 Results: People from income group of 18-30 K prefer to make the purchase of apparels monthly i.e. 31%. People from income group of >30 K prefer to make the purchase of apparels occasionally.i.e.34% People from income group of <12 K prefer to make the purchase of apparels occasionally i.e.20%. People from income group of 12-18 K prefer to make the purchase of apparels monthly.i.e.15% 3) Gender * Do you owe Loyalty Cards? Cross tabulation Count Do you owe Loyalty Cards? Yes No Total Gender Male 74 30 104 Female 69 27 96 Total 143 57 200 Gender Cumulative Frequency Percent Valid Percent Percent Valid Male 104 52.0 52.0 52.0 Female 96 48.0 48.0 100.0 Total 200 100.0 100.0 Results: Out of 104, 74 Male respondents have the loyalty cards of different lifestyle Stores. Out of 96, 69 Female respondents have the loyalty cards of different lifestyle Stores. Finding: Females are prone to shopping that is why maximum females have loyalty cards.