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    Understanding Session 16 Retail Trade Market in India: ND TH

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    Surbhi Sabharwal
    The retail market in India is growing at 7.5% annually and includes many formats from small shops to supermarkets. The document focuses on Amit Kumar's goal to increase distribution and market share for NutriPack in Jalgaon District. Jalgaon has high growth potential as the 2nd largest district by population with above average income. However, their sole distributor Sachin Agency is underperforming, limiting NutriPower to only 46% of stores compared to their competitor's 89%. Kumar must convince Mandore to invest more in NutriPower by highlighting Jalgaon's market potential and addressing issues with Sachin Agency around margins, credit terms, and focus on smaller retailers.

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    Understanding Session 16 Retail Trade Market in India: ND TH

    Uploaded by

    Surbhi Sabharwal
    65 views5 pages
    The retail market in India is growing at 7.5% annually and includes many formats from small shops to supermarkets. The document focuses on Amit Kumar's goal to increase distribution and market share for NutriPack in Jalgaon District. Jalgaon has high growth potential as the 2nd largest district by population with above average income. However, their sole distributor Sachin Agency is underperforming, limiting NutriPower to only 46% of stores compared to their competitor's 89%. Kumar must convince Mandore to invest more in NutriPower by highlighting Jalgaon's market potential and addressing issues with Sachin Agency around margins, credit terms, and focus on smaller retailers.

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    Session 16

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    The retail market in India is growing at 7.5% annually and includes many formats from small shops to supermarkets. The document focuses on Amit Kumar's goal to increase distribution and market share for NutriPack in Jalgaon District. Jalgaon has high growth potential as the 2nd largest district by population with above average income. However, their sole distributor Sachin Agency is underperforming, limiting NutriPower to only 46% of stores compared to their competitor's 89%. Kumar must convince Mandore to invest more in NutriPower by highlighting Jalgaon's market potential and addressing issues with Sachin Agency around margins, credit terms, and focus on smaller retailers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    65 views5 pages

    Understanding Session 16 Retail Trade Market in India: ND TH

    Uploaded by

    Surbhi Sabharwal
    The retail market in India is growing at 7.5% annually and includes many formats from small shops to supermarkets. The document focuses on Amit Kumar's goal to increase distribution and market share for NutriPack in Jalgaon District. Jalgaon has high growth potential as the 2nd largest district by population with above average income. However, their sole distributor Sachin Agency is underperforming, limiting NutriPower to only 46% of stores compared to their competitor's 89%. Kumar must convince Mandore to invest more in NutriPower by highlighting Jalgaon's market potential and addressing issues with Sachin Agency around margins, credit terms, and focus on smaller retailers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Understanding

    Session 16

    Retail Trade Market in India

    • Growing at CAGR OF 7.5 % . The estimated revenue is $470 Bn in 2011 to $ 675 Bn in 2015

    • 6 million retail outlets

    • Multitude of retail formats such as pan shops, small family-owned shops, supermarkets etc.

    • At least 4-5 level of intermediaries

    • Tier II and Tier III cities are developing and preparing to compete with large metropolitan

    • Increase Focus of expansion to rural sector

    About Case

     Protagonist: Amit Kumar, who is now the Area Sales Manager of NutriPack
     Nutri pack India subsidiary of Nutri Pack Limited, a global U.S, - based food company. 
     Turnover- 7.5 billion 
     Market share – 12% 
     Main Products – Nutrijams and Nutri Power (71% contribution of the company’s revenue),
    Glucolin and Honeybeez. 
     Focus – 1. To increase the number of retail outlets
    2. Convince Mandore to invest more in Nutri Power. 

    Jalgaon District – Sachin Agency

     Major productive and agriculture center


     Population: 4.2 million, which is 16% of total pollution of central Maharashtra
     Major Operator: Sachin Agency, distributor of Nutri Power in entire Jalgaon area.
     Profit Margin Provided to Sachin Agency: 4.5%
     Jalgaon is growing at the rate of 15%, however, Sachin Agency is underperforming thereby
    the company is unable to increase its retail presence.

    Why Jalgaon?

     2nd in population, 4th in contribution.


     Per capita income is ranked third, this will result in high consumer demand, which means it
    is right time to penetrate into the market.
             
    District Value
    2011 Value Contribution
    Populatio Population CONTRIBUTION
    District Population Contri(INRmillion Ranking
    n (%) Ranking (%)
    )
    Aurangaba
    36,95,928 14 3 98 15.53 3
    d
    Jalgaon 42,24,442 16 2 54 8.56 4
    Dhule 20,48,781 8 5 39 6.18 5
    Buldhana 18,88,039 7 4 31 4.93 10
    Jalna 19,58,483 8 6 104.7 16.59 2
    Nashik 61,09,052 24 1 170 26.94 1
    Akola 18,18,617 7 8 33 5.23 8
    Washim 11,96,714 5 9 34 5.39 9
    Parbhani 18,35,982 7 7 35.3 5.59 6
    Hingoli 11,78,973 5 10 32 5.07 7
    Total 2,59,55,011       100  

    District Ranking
    as per
    Population ANNUAL Per
    per
    Growth Rate capita income
    Ranking as per capita
    growth rate income
    Aurangabad 27.33 1 222890.8 1
    Jalgaon 22.33 2 162102 3
    Dhule 14.71 9 101314 4
    Buldhana 19.96 5 89156 5
    Jalna 15.93 8 81051 6
    Nashik 21.84 3 202628 2
    Akola 11.6 10 79025 7
    Washim 19.43 6 60788 9
    Parbhani 17.23 7 56736 10
    Hingoli 20.18 4 68894 8

    NutriPower in Jalgaon

     NutriPower is a health drink and competes in the HFD category.


     The brand a successful market growth of 25% annually
     Cost of Product: Rs. 200 (higher the market price)
     Distribution: Sachin Agency is sole distributor in Jalgaon area, who gets a margin of 4.5%
     Nutripower, is market leader in Maharashtra with total coverage of 12,710 stores.
     However, in Jalgaon it has a reach of only 729 outlets which is 46% of the market, while the
    competitor brand i.e Healthy has a coverage of 1418 outlets i.e 89% market share.
     Growth of outlets distributing NutriPower is 3.6% annually.
     New competitor in the market is Kidenergy, which is priced at Rs. 300

    2008 2009 2010 2011


    NutriPower 662 680 704 729
    Growth (to total number
    to outlets) 49.96% 50.86% 49.09% 45.91%
    1325 1337 1434 1588

    Predicted Growth

    2011 2012 2013 2014 2015


    no of outlets 729 948 1280 1800 2150
    stores 1588 1757 1946 2154 2384
    coverage 46% 54% 66% 84% 90%

    growth 30% 35% 41% 19%

    Growth for NutriPower

     Kumar needs to assure Mandore about the market potential in the category, because in
    order to achieve the desired market share Mandore needs to invest more.

    Nutri Jam in Jalgaon

     Market Leader in Maharashtra, with volume share of 34%.


     Nutri Jam has a high Weighted Distribution, this means even though the number of outlets
    are less than the direct competitor Mazza, the sale of NutriJam is high per outlet.
     However, in Jalgaon its distribution is declining, and is only able to cover 25% of the market
    share with an untapped market of 75%

    2008 2009 2010 2011

    NutriJAm 419 369 353 342


    Growth/ Decline (to total 34.5182413 30.7759372
    number to outlets) 39.52830189 5 3 26.92913386

    1060 1069 1147 1270

    Reason for Decline in Jalagaon

     Sachin Agency is only focusing to fulfilling targets and doesn’t wish to take any risk or
    exposure.
     The agency does not want to invest more because the NutriJam is second in the market
    irrespective of the fact that the market coverage is just 25%
     They are a lot of small retailers whom the agency does not offer credit and therefore the
    brand is unable to reach the market.

    Issue of Credit

     NutriPack offer Sachin agency a credit period of 14 days.


     On the other hand, Sachin Agency offers a credit period of 15 days, that too only to large
    retailers.
     For small retailers it has to be pay on delivery.
     This has resulted in the reducing market share for NutriPack in Jalgaon
     NutriPack should increase the credit period for Sachin Agency by one day, i.e, 15 days, this
    will assure him that he doesnot have pay money out of his pocket. By doing so, Kumar could
    ask Sachin to give credit period to small retailers as well.

    Issue of Margin

     Kumar wishes to increase the market share in the Jalgaon district and to do so he needs
    Mandore to invest more.
     Kumar needs to assure Mandore about the market potential especially in case of NutriJam.
     NutriPack should also focus on increasing the margin for the distributor in order to get high
    investments. (assuming that the investment increases in terms of manpower and vehicle)

    Current ROI

    ROI Net profit/Average Investment


    22.73591549

    Sale per store 74074.07407


    Number of Stores 729
    Revenues 54000000
    Margin(4.5% of Investment) 2430000

    Vans 18000*2*12 432000


    Salary 4000*3*12 144000
    Bonus 1000*3*12 36000
    Driver 3000*2*12 72000
    Delivery 3000*2*12 72000
    Godown Keeper 3000*12 36000
    Godown Helper 3000*12 36000
    Comp Operator 7000*12 84000
    Computer 500*12 6000
    Printer 1000*12*2 24,000
    Internet 450*12 5400
    admin expense 500*12 6000
    Telephone 500*12 6000
    Interest on safety deposit 8% 80,000
    Rent 3000*7*12 252000
    Total Expenses 1291400
    NET PROFIT 1378600

    Net Investment (Capital Exp- Depreciation)


    Days Recievable 2250000
    Days Payable 2250000
    Trade Claims 180000
    Security deposit 1000000
    Avg, Gross Investment 5680000

    Increase in 30% investment and margin to 6% would result in profit for both the company as
    well as the distributor.

    2011 2012

    Number of Store 729 948

    margin 4.5% 6%

    our revenue 53,999,946 70,222,152

    distributor 2,429,998 4,213,329


    revenue

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