Joint Ventures

The Switzerland based The Nuance Group is the global market leader in the travel retail industry, operating 340 shops across 50 airports and 16 countries around the globe and employing 4500 staff. In addition to its duty and tax free operations the Nuance portfolio comprises specialist shops as well as food & Beverages operations, distribution in flight services and shops in other travel retail channels.

The second joint venture is with Time zone Entertainment Private Limited. Time zone is a leading fun family interactive entertainment center that offers up to date and the latest range of attractive and popular interactive games. Time zone is a joint venture with LAI (Leisure & Allied Industries) of Australia LAI, Australia have more than 200 such centers in Australia, New Zealand , Indonesia, Singapore, China, Philippines, and India. As on March 31, 2007 Time zone operated five gaming centers with a retail space of over 35,000 sq ft.

UK’s leading home and improvement retail group. Home Retail Group Plc has drawn a Joint venture to develop its Argos retail format with Shopper’s Stop and Hyper city Retail India. Under this agreement Argos will provide its brand concept and multi-channel expertise and IT support to the joint ventures. The stores will be named Hyper city – Argos and will start in Mumbai later this year.

In the year 2007, Shopper’s Stop Ltd achieved a gross retail turnover of Rs 8996 million and an operating profit of Rs 787 million, which are higher by 33% and 39% respectively than those achieved in the previous year. The consolidated turnover was recorded at Rs 9283 million and Profit after Tax at Rs 242 million.

Shopper’ stop also runs one of largest retail loyalty programs in the country with a First Citizen base of over one million members. In the next sections of the case, we examine how various functions are organized within the organizations.

Buying and merchandising

Merchandise Planning is a centralized function. The corporate objectives determine the turnover to be achieved. This determines the targets to be achieved by the various categories and that becomes a category benchmark.

While Category Management from the theoretical perspective is not in practice in the organization, the company defines a category as an amalgamation of products or the coming together of certain products, which serve a certain basket. In real terms, the business is looked upon as basket offering to the customers and the merchandise caters to those customers. The whole process of Category Management is looked upon as a methodology of satisfying customers. The Trading Manager, the merchandiser and the buyer work together to achieve the objectives of each category.

In order to understand the process of buying and merchandising in the organization it is necessary to understand the method in which categories are defined and handled.

Budgeting is done at the sub department, chain level. Once the budgets are frozen the off takes are determined in terms of value and quantity. This is the starting point of the Assortment Planning process. Thus, if women’s wear has a budget of Rs 100 crores to be achieved the departmental break ups would first be determined. Departments in women’s wear are Indian wear, western wear, Lingerie and night wear. The merchandise in each department is then classified into sub departments. For example in women’s western wear – tops would be sub department. First the brands mix of the total number of tops required is determined. Then the fabric mix and the color mix are determined. This is the starting point of Range Panning.

The B&M department uses the Merchandise Management system functionality of a JDA packaged software solution to support the planning exercise. The system helps the merchandiser determine margins, costs and quantities. Tools on the same system for Option Management will be implemented in 2004.

Planning at SS is based on two seasons — autumn winter and spring summer typically dens six months in advance. As the budgeted numbers available, an analysis is done of the past seasons sales. Other important factors taken into considerations are:

1) Projections for the various brands.
2) WGSN forecasts for trends that can be adapted to suit Indian tastes, skins and sensibilities

The direction for a particular category is then determined. The key to efficient B&M is assortment planning and then its implementation.