Westside: The Indian Retailing Success Story

Abstract:
This case examines the reasons behind the success of an Indian retailing major - Westside. 

It provides a detailed examination of the business model adopted by Westside and its
merchandising policies in comparison to its competitors. 

The case also discusses Westside's store layout and its marketing strategies in detail.

Issues:

» Discuss the strategy behind the decision of retail stores to opt for store-owned brands, and
the merits and demerits of such a strategy

Keywords:

Indian, retailing, Westside, examination, business, model, merchandising, policies,

"Our biggest strength is that we keep on refining ourselves and improving our offering - both product - and
service-wise, correcting our mistakes, and this keeps us going."

- Simone Tata, Chairperson - Trent

"Being a brand retailer, we are able to develop our style and image in a manner whereby customers can build a
relationship with us."

- Himanshu Chakrawarti, General Manager - Trent

Westside Looks North

In 2002, Westside signed on a leading Indian cricket player, Yuvraj Singh, as its celebrity endorser for a period of
3 years.

Westside sources announced that Yuvraj Singh would promote Westside stores in Bangalore,
Chennai, Hyderabad, Kolkata, Mumbai, Pune and Delhi. 

Commenting on signing on Yuvraj Singh, Himanshu Chakrawarti (Chakrawarti), general

In addition to this, Westside launched marketing campaigns on television and in the print media, with an
allocated budget of Rs 200 million.1
According to company sources, the new media initiatives were aimed at increasing brand
awareness among consumers, and enhancing the image of Westside as a retailer offering
fashionable products at affordable prices. 

Analysts attributed Westside's success to its focus on styling, affordability and quality, and its
retail model. 

Unlike its competitors - Shoppers' Stop and Globus (Refer Exhibit I) - who targeted the upper
class, Westside focused on middle and upper middle class consumers, who constituted a large
portion of India's population.

In 1996 Lakme entered into a joint venture with Hindustan Lever2 for the marketing and
distribution of Lakme brands. In 1997, the Tatas sold their stake in Lakme to HLL for Rs 2
billion. After selling off their stake in Lakme, the Tatas scouted for business opportunities
and decided to venture into retailing. Retailing was at a nascent stage in the late 1990s, and it
was expected to be a booming business in India in the following decade (Refer Exhibit II for
note on retailing industry). In 1998, the Tatas ventured into retailing, acquiring the Britain-
based Littlewoods retail stores in Bangalore. The company was renamed, Trent Ltd., and the
Littlewoods stores were renamed Westside. Along with the Littlewoods stores, the Tatas
acquired the firm's warehouse and infrastructure.

These provided an established supply chain and trained personnel for Westside. By 1999, Westside had
expanded its operations to Chennai, Mumbai and Hyderabad, and by 2001 it had a second store in Mumbai, and
a store each in Pune, Kolkata and Delhi.

In 2001, Westside had average sales of just above Rs 5,000 per sq ft. in all its stores. By
2002, it had a store in Nagpur and a second store in Delhi. In 2002, Westside reported a net
profit of Rs 102.2 million (Refer to Exhibit III) and it also reported cash break-even in the
same year. Analysts felt that the surplus cash reserves from the sale of Lakme provided the
financial back-up for Trent-Westside. With cash reserves of around Rs 1.61 billion (on 31st
March 2000), Trent had the option of avoiding high interest debts for its expansion. The
company planned to increase its retailing space to 0.3 million sq ft. by 2003, from 0.12
million sq ft. in 2001. The firm wanted to expand Westside's operations to other cities. Trent
announced that it would enter food retailing by the end of 2003 with an estimated investment
of Rs 400 million...

EXCERPTS

The Westside Model

Before entering the Indian retailing segment, Westside conducted market research on retailing trends in the
domestic and international markets.

It was observed that in India, garment retailers generally stocked both store-owned brands and
other brands in the ratio of 30:70, as it was easy to attract customers for the established brands.
However, many major international retailers stocked only their own brands because of high returns,
increased store loyalty and less restriction in terms of display, price and promotion. Stocking of only
store-owned brands for Indian retailers posed certain problems, however. Though they offered high
margins, retailers suffered on account of poor economies of scale (until they established many
outlets) and heavy investment in brand building. While all major Indian retail chains stocked
established brands, Westside decided to push its own brand...

Promoting Westside

Westside gave a high priority to marketing in order to increase brand awareness among consumers. The
company focused on two parameters - style and affordability - to communicate to potential customers.

The company realized that these were the two pillars based on which it could make an impact on
customers. The stores were positioned on the 'fashion at affordable pricing' platform. The store level
promotions were integrated with external communication through advertising. In-store promotions
were used to give the shopper a feeling of getting greater value, to offer a good shopping
experience. Westside's total advertisement spending was 8 per cent of its sales. Westside did its
regular brand building through advertisements in the media and also through its in-house
promotions, which peaked during summer, Diwali and Christmas. During the Diwali season in 2000,
Westside launched a "Festival of Delights" program which gave each shopper a scratch-and-win
card...

Future Outlook

The greatest challenge for Westside is from the unorganized sector (98 per cent of India's retail garment
industry operated in the unorganized sector) and to a lesser extent, from similar organized players.

According to Chakrawarti, "The main job was to get people to visit organized stores such as Westside
instead of buying from unorganized players." The general perception in India is that organized
retailers are more expensive than unorganized ones. Westside responded to this by connecting price
to quality. 

It had to make customers realize that they were getting the latest style at very good prices, and in a
comfortable environment. The other challenge for Westside will be to compete with other retail
fashion businesses in India (both India and foreign) such as Wills Sport15, Raymond's (Be)16,
Globus17, Nike18, Crocodile19, Mango20 and Marks & Spencer 21.