St.

Joseph’s Institute of Management (JIM)

St.Joseph’s College (Autonomous), Tiruchirappalli – 620 002.

Summative Assessment – April 2020

Time: 2 Hours Maximum Marks: 60
SEM SET PAPER CODE TITLE OF THE PAPER

IV 2018 18PBA4202 RETAIL MANAGEMENT

Questions aim to help students demonstrate critical analysis and formation of independent
thinking.

Read the cases given below and answer the questions that follow. (3*20 = 60 Marks)
Case 1: THE NEW GENERATION COFFEE CAFES
The new generation coffee cafes that have come up in our cities in recent years are a good
example of differentiating on experience. They have been proliferating at a face pace,
promoting ‘out- of- home consumption of coffee ‘among the urbanites. They rely on creating a
unique, engaging experience-----a memorable experience--- that extends well beyond the
actual sipping of the coffee at the café. It could be said that in a country where space to interact
is in short supply, the cafes have the natural propensity to emerge as the social nerve center
for the local community , bringing them together around the coffee. The point is these cafes
differentiate themselves from the others are:
1. They choose the lifestyle-oriented consumers as their target; the well –to-do, urban
consumer ; youth/ student forming the dominant part
2. They make coffee an ‘experience’ and provide a special experience to the chosen
segment.
These cafes are essentially ‘experience brands’. They not only differentiate themselves as a
class from the general category hotels/ coffee-shops but also differentiate themselves from the
other cafés in in their own category. In both the cases, they differentiate on the basis of
‘experience’.
Proliferation of the cafes
First, let’s have a look at this new industry and the players. By mid-2012, India had around 2000
coffee cafes, all café brands put together. The projection is that India will have at least 5000
cafes in the next five years.
Café coffee Day
The coffee café revolution started in India in 1996 with the first café coffee Day (CCD) outlet of
the Amalgamated Bean Coffee Trading Co (ABCL) coming up in Bangalore. In 2005, it had 300
stores. By mid-2012, it has a total of around 1,200 coffee outlets including the lounge format
stores in 139 cities in the country, besides four in Vienna and two in Karachi. It plans to open
more highway and drive – through cafes through tie-ups with petroleum companies.
CCD chain has been expanding at four outlets a week in the last two years and has single-
handedly pushed up coffee demand manifold. Five years ago, CCD had a 70-75 per cent share of
the market in terms of outlets. The share came down by 2012 and is poised to come down
further in the next few years as many brands have entered the business in the later years. Still
CCD will continue to have a dominant place for some years to come, at least 40 to 50 per cent
CCD chain service more than 600,000 customers per day. It is looking forward to reaching a
total of 2,000 outlets by 2014 with lounges accounting for 100. It had lounges by October 2012.
The Café coffee day Lounge format also serves coffee-based products and other beverages,

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but was a specially created for coffee lovers. It would offer distinct coffee blends prepared by
special alternative brewing techniques in the presence of customer. The ‘Coffee Day Square’ is
a further extension from the concept of the lounge format; the Square focuses on alternative
brewing and mixology together with Western food. The older format CCD cafes continue their
value offering.
Barista Coffee Today, sterling Group’s Barista Coffee Company has over 550 coffee bars in
India spread over 35 cities. Italian Lavazza group has acquired it and it is now known as Barista
Lavazza. It is present in 80 other countries. It plans to have around 800 outlets in India by 2014
and take a leadership position in the coffee café business.
Costa Coffee Costa Coffee, UK’s leading coffee chain, has also set up shop in India. It entered
the Indian market in September 2005. The plan was to be present in all major cities with 300
outlets by 2014. In the UK, costa opened 80 new cafes last year. The same pattern could be
repeated in India too. Costa, at present, has 550 outlets worldwide, out of which 430 are in
Britain. India will be a very important market for costa. In the long run, it may even become No.
1 market for it.
Barnie’s Coffee US chain Barnie’s Coffee has also come to India. The first Barnie’s outlet was
opened in Noida.
Starbucks Among the café brands, Starbucks is a class unto itself in using customer experience
to distinguish its cafes. Globally, superior customer engagement is the secret of the
phenomenal success of Starbucks. Tata Starbucks joint venture is already operating Starbucks
cafes under the Quick service Restaurant Category. Tata Starbucks Ltd will spend 400 crore
initially and open 50 Starbucks cafes within three years.
Dunkin’ Donuts The US-based foods chain opened its first outlet in Delhi by October 2012.
Jubilant Food Works, which holds the franchisee right for Dunkin Donuts, has plans to scale up
Dunkin operations by setting up 100 stores over the next five years.
Selling the Experience … and the Ambience
The customer of these cafes does not see the coffee as a product or beverage, but as an
experience. They integrate the ambience of the place with the coffee experience. Most of them
cite ambience or the atmosphere as the main attraction for their visiting the cafes. They see
them as nice places to hang out where they can incidentally enjoy the coffee experience.
Positioning the Cafes
Attracting College Students
The Café chain is targeting students in particular and is trying to establish a space in
their lives. In many outlets of all these chains, students are already the main customer
group. CCD, for example, has estimated that presently 60 per cent of the footfalls in its
300 outlets belong to students between the ages of 15 and 24 years. Barista has
estimated students’ share of footfalls across its 130 bars at around 40 per cent.
Student Towns CCD has designated many of its outlets in urban centres as ‘student
towns’ in view of the high degree of student patronage at these outlets. Presently,
around 50 of the 300 cafes are designated as ‘student towns’. Students account for 85
per cent of the footfalls in these CCD outlets. They are located in towns like Pune,
Ahmedabad, Dehradun, Manipal and Mangalore. Barista opened their bars at the
entrance of premier Institutes like IIM-Indore and IIT-Chennai and other colleges.
Student Focused Marketing Mix The marketing strategy and mix in these outlets are
student focused to a large extent. Everything from the décor and the menu to the
music has been planned keeping students as the target. For instance, recognizing that
students do not go for straight coffee like espressos, lattes and cappuccinos, these
coffees with add-ons like chocolate sauce, whipped cream, honey and almond flake.
Most of the Barista campus outlets provide Wi-Fi and the demand is constantly
increasing with many students bringing their laptops. It’s not just all work and no play!

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The students make full use of the guitars and chessboards on the bars. The bars play
peppy music preferred by the students.
Differentiating the Experiences in Many Innovative Ways
The cafes differentiate the ‘experience’ in many innovative ways. They give the
youth/students an impression that something is always happening in the coffee joints
and that they should be part of it. They whip up buzz among the youth /students with
fashion events, music concerts, and new product lines.
Eighty per cent of the young customers of CCD like listening to youth oriented music
.And so, what did CCD do? Play music of their choice? Yes; but not just that. It went a
step further and got the Bangalore group Aurko to shoot its music video Pooche yeh dil
se in one of its cafes , the story being about a couple who meets in a CCD outlet, takes
up jobs, drifts apart and then gets together again in the café. CCD is also retailing the
video.
For those focused on the coffee proper, the innovation comes through the product.
Barista has been introducing at least one new coffee drink every month. It has also
created a premium coffee segment under the banner Barista Cream. CCD is breaking
the monotony of the basic- coffee by offering a combination coffee called Viennese
Waltz—Large coffee in a Grande mug, topped with whipped cream and chocolate
caramel sauce.
In collaboration with the Will’s Lifestyle clothes, Barista organized an in-café
competition in Delhi, Mumbai, Bangalore, Pune and Kolkata where the young
customers could fill up a five-word from on why they found coffee fashionable drink.
The winner from each city was flown to Delhi to get a makeover by elite modeling
agency and supply of a new wardrobe created by the design house H2O Cue.
Nuancing the experience to suit the climate – summer and winter
Climate tends to swing the way coffee is consumed. The cafes manage the coffee
experience, suiting he climate by introducing the right variations for the summer and
the winter. Barista, for example, offers special cold coffee topped with ice cream and
chocolate sauce during the summer. While in the winter, cold coffee accounts for only
34 cups out of every 100 cups of coffee consumed, the ratio goes up to 66 in the
summer. CCD attracts custom in summer by highlighting the better – cooled air-
conditioned ambience of the cafes. It projects its cafes as a place where the youth can
hang out. Could there be a better place to hang out on a hot summer day than the air –
conditioned CCD cafes!
They also sell coffee….!
Indications are that the experience brands, which the cafes represent, are going to
make a growing business in the country. Interestingly, it seems the premium segment
dominated by starbucks and, at the popular segment led by Café Coffee Day are not
only going to coexist, but grow together, each keeping its space, and both keeping ‘
experience’ as the differentiator. In fact, the cafes place so much emphasis on the
experiential elements that the entire competition is towards excelling on that front.
People, while referring to the cafes, have started saying: “They also sell Coffee”!
Questions
(a) What are the unique strengths of Café Coffee Day? (5)
(b) Location is the prime success factor for any retail chain. Present your views with
respect to location of CCD outlets. (5)
(c) Discuss the atmospherics and aesthetics of CCD. (5)

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(d) How should CCD respond to the global competitors in India? (5)
Case 2: NALLI SILKS
Nalli Silks Private Limited (Nalli Group), a family-owned and -operated business
that retailed Indian ethnic wear – had enjoyed impressive growth , with a $95 million
turnover and a 22-store retail print, and had outdone its competitors by being the only
player in its segment to have a national presence. In 2011, however, Kuppuswamy, the
Chairman felt that the market and the competitive landscape were changing. Over the
years, the business had become more complex to manage because of the growth in the
number of stores, the increase in product categories, and the proliferation in the
number of Stock Keeping Units (SKUs) that had to be managed. The company was also
starting to face intense competition not only from large Indian and multinational
corporations that were aggressively entering the Indian apparel market, but also from
small, privately owned stores that were offering heavily discounted products to entice
customers. As a reaction to changing marketing conditions, the Nalli group earlier that
year had announced a $25 million expansion plan and proposed the opening of 12 new
stores over a period of two years. Given such aggressive expansion plans, Kuppuswamy
also recognized that the Nalli group might need to revisit its pricing strategy,
merchandising process and product assortments in order to increase its own
competitiveness. Kuppuswany was also acutely aware that much of Nalli’s past growth
had been due to the company’s strong culture and zealous emphasis on customer
service, and he wondered what impact the expansion plans would have on overall
customer experience. He reflected on the next steps he should take to keep the Nalli
group competitive.
Questions
a) Analyse the business model of Nalli Silks. (6)
b) Do you think uniform pricing strategy will work in the long run for Nalli Silks?
Consider the variables discussed in the class, evaluate them and critically
analyse the same. (7)
c) Formulate a retail marketing strategy for Nalli Silks which will include pricing,
location and vendor management. (7)
Case 3: IMPACT OF COVID19 ON INDIAN RETAIL
The world is currently experiencing a pandemic due to the highly infectious virus
known as the coronavirus, or COVID-19. In an attempt to slow the spread of the virus,
the Government of India has announced countrywide lockdown from March 25 to May
3, 2020. The outbreak of coronavirus is having a severe impact on people, economy and
business. Every retail outlet - except grocery stores and pharmacies - has shut their
doors and there is a precarious drop off in physical footfall in retail outlets. The demand
for essential goods is on a surge and the supply chain is disrupted. The survival of
retailers is under threat.
Questions
a) Analyse the impact of COVID19 on Indian Retail Sector. (7)
b) How could this pandemic change future buying habits of the consumers? (6)
c) Suggest strategies for Indian retailers to revive their business after this
outbreak. (7)
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