Development of model for merchandising and category management in large format stores

Abstract

The Indian retail sector is all set to double over the next few years as we witness the emergence of international players in this fast growing market. Most of the modern retailing action is still concentrated at metros and cities. Along with that we also see firms targeting rural retailing in innovative ways (e.g. ITC’s e-choupal, HLL’s Shakti and Mahamaza). All the indicators point to one fact that with the increasing disposable income in India there is a great opportunity for retailers in India. The real question though is whether the retailers are prepared to handle the demand posed by the Indian consumer. Another query to ponder for the retailers is regarding whether they can learn about efficiency from international players and leverage domestic expertise to come up with a model that works effectively in Indian markets. On one hand it is being projected that the malls in India are heading towards over capacity. On the other hand core operations like merchandising, supply chain management and category chain management need a lot of focus in the current retail space. Lack of skilled resources, fragmented channels as well as ever-changing regulations are other obstacles in harnessing the full potential of the booming retail industry. Most of these retail stores esp. hypermarkets like Big Bazaar follow innovative themes targeting the middle class segment. The theme of ‘organized chaos’ pioneered by big Bazaar is one innovative way to entice the Indian consumer. However it is interesting to note that sales vary per category thought the year which is quite peculiar to only Indian market. The most important factors behind these fluctuations are seasonality, festivals, price and quality. The Indian consumer is increasingly becoming aware of the variety of products in the market and hence wants to buy the best at the cheapest price. Such a complex and diverse scenario demands a model for understanding the sales of large format stores, with the changing preferences of the Indian consumer. The study describes the merchandising and category management of one such hypermarket i.e. Big Bazaar in order to study the fluctuations in consumer behaviors and how best the large format stores can respond to such changes by augmenting their merchandising and category management functions.