INDUSTRY: RETAIL
Background:
The Retail Industry in India is one of the fastest-growing industries in the world. It accounts
for over 8 percent of the country's employment and around 10 percent of total domestic GDP.
The Indian Retail Market has grown at an incredible pace and is expected to touch $1.1-1.3
trillion by 2025.
The COVID-19 outbreak has thrown a wrench in the wheels of brick and mortar setups and
turbo fuelled the e-commerce retailers, who were even before the pandemic gaining momentum
but at a steady pace. The struggling mom and pop stores are now gasping for air, even with the
ease in lockdown rules. This has now become a trend and a promising one at that for the e-
commerce sector. The imposition of a lockdown and social distancing protocols have heavily
impacted retail markets with many micro small and medium enterprises (MSMEs) facing
shutdowns.
In the case of physical shopping, Delhi and Bengaluru showed a dip of 43% while Mumbai
dipped by 46%. The spending on physical shopping also dropped by 89% in Delhi, 92% in
Mumbai, and 87% in Bengaluru during the period in which the strictest lockdown guidelines
were imposed.
Challenges:
The pandemic has presented a paradigm shift in consumer behaviour, whether it is in regard to
the daily lifestyle or spending on luxurious goods. You are consulting a high-end luxury brand,
which has branches in Mumbai, Delhi and Bengaluru as well as other metropolitan cities in
India and which sells a variety of unique clothing, bags and footwear.
The lockdown due to the pandemic has brought in a lot of challenges for brands, with payment
of rent being one of the major challenges. Brands usually try to offer the best customer
experience along with good quality products, this includes having a respectable
showroom/store that conveys the luxury nature of the brand.
This generally results in these stores being located in one of the most expensive real estate
areas of the city. This has become a big liability during the lockdown and coupled with the
decrease in sale of products, it has been difficult for companies to function at full capacity and
in paying employee salaries. This has further contributed to a decrease in sales, furthermore it
is also estimated that the global luxury sales could drop up to 35% by the end of 2020.
All about the company:
ABC Limited has around 2000 stores across the country. Running on a simple idea of rewriting
rules and retaining values, the business has expanded in the segment of food, FMCG, and
fashion, complementing the country’s modern retail networks. The company holds the vision
of serving its customers and stakeholders by creating and executing future scenarios in the
space of consumption that would lead to economic development.
The company aims to be trendsetters in delivery formats and evolving consumer brands by
making consumption affordable for all consumer segments. ABC Limited’s value chain
operates with its nation-wide network, attempting to reach the smallest cities and towns with
its sourcing and manufacturing units.
Currently, the company’s stores are divided into 3 categories - Street shops (which generate
50% revenue), Malls (which generate 35% revenue) and Airports (which generate 15%
revenue).
Even though a recognised brand in the country, the high cost of rent is driving their bottom
lines to the ground. As a part of the top management of the company, you have to devise a
strategy that will help the company overcome the issues.
What you need to do:
1. Which should be the action plan of the company for the coming year? Driving down
the costs or increasing their revenues or can the company do both at the same time?
2. Basis your selection in question one, suggest the change in the business model of ABC
limited to be able to do so.
3. Making necessary assumptions, also outline a communication strategy for ABC limited
to help them tell their customers and other stakeholders about the change that is going
to happen in the business and how it impacts everyone.
4. Determine what would be the added expenditure due to the change in business model
and the entire communication plan, what is the ROI and break even on the expenditure.
5. How can they position themselves as a socially aware firm that looks at the society and
the community as an important stakeholder?
Wishing you all the Best!