FHDL
"ENVISIONING KOUTONS"
By:
Tripti Gambhir
Kamlesh Jha
Paras Kochhar
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Declaration:
I hereby declare that the Project Work Entitled “Envisioning Koutons” Submitted to
IRF Rising Star challenge, is a record of an original work done by us under the
guidance of our Faculty Member Mr. Atul Gautam, (Future Innoversity Delhi
Campus), and this project work has not been performed as the basis for the award of
any degree or diploma /Associate ship/Fellowship.
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Acknowledgement
Apart from the efforts of team Udaan, the success of any project depends largely on
the encouragement and guidelines of many others. We take this opportunity to
express my gratitude to the people who have been instrumental in the successful
completion of this project.
We would like to show our greatest appreciation to Mr. Atul Gautam. We can’t say
thank you enough for his tremendous support and help. We feel motivated and
encouraged every time we attend his meeting. Without his encouragement and
guidance this project would not have materialized.
The guidance and support received from all the members who contributed and who
are contributing to this project, was vital for the success of the project. We are
grateful for their constant support and help.
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Table of Content:
Introduction
5
History of Koutons
6
Koutons Mission, Vision, Mantra
6
Existing Business Model
7
Kooutons Brands, Products Assortments
8
Koutons Marketing Strategies
10
Market Survey Data Analysis
11
Summary of finding, suggestions and recommendations
15
Re-Structuring Koutons Business Plan
Objectives
16
Shop in Shop Business Model
17
Selection of Retail Format
18
Criteria for selection
18
Why Big-Bazaar
19
Advantages
20
Financial Plan per store
21
Summary and Conclusion of the Study
22
Bibliography
24
Attachments
25
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Introduction:
“Koutons Retail India Limited” is gurgaon based apparels enterprise which was
established in 1993 with a seed capital of just Rs. 400 thousand. Company was
established by Devinder Pal Singh Kohli and present Chairmen of the company. The
portly 51 year old chairmen of the 1046 crore company, who had once dreamed of
making Koutons a 100 Crores brand some day, has beaten his own expectation by
becoming a serious competitors to many established Brands in the country. Main
theme of the company is “Value to money, but high on fashion.
However, in the recent times this fairy tale story has taken a sharp beating in the
current scenario after the global economic meltdown which hit during year 20092010. Every facet of the business was affected, coupled with the increased pressure
from the market as well as the banks, and shrunken pocket size of the Indian
customers, Koutons has been finding it very difficult to move its merchandise faster,
which has lead to dropped sales as well as has brought the company on the brink of
total meltdown. The banks added pressure to repay the money, has further added
tremendous pressure on the company, which in turn caused a massive collapse in
the share prices.
This case study tried to highlight the History of koutons, its rise to greatness, and the
inevitable decline due to increasingly worsening market competition as well as
tremendous competition from other market player.
After analysing the data, we have been able to show what went wrong, and have
also tried to provide a viable solution for the company, which it may find useful to
increase its sales, recapture its market and improve its Brand image once again.
We have put together a business plan that outlines the restructured business model
and provides an insight into new ways to capture as well increase its present market
share.
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History of Koutons:
Koutons Retail India Ltd. is the leading retailer of readymade and fashion wear brand
in the country today. With more than 1400 outlets across India, it has a wide range of
apparel designs suited for all segments including corporate, formal and casual
dressings. Koutons aptly creates the conducive environment for a family outing,
making family shopping the best experience at an affordable price - all at one place.
Koutons was born in 1991 as Charlie Creations and are now Koutons Retail India
Ltd. Koutons started primarily as a denim brand but are today manufacturing and
selling complete men, women and kids wardrobe under the brand name Koutons,
Les Femme and Koutons Junior respectively. Another brand from the stable of
Koutons is Charlie Outlaw, which caters to the teens of the country with apparels
including jeans, T- shirts, jackets etc. Koutons Brand is catering to the Upper &
Upper Middle Class of Society with a vast target age group between 18-60 years.
"Value for Money and High on Fashion" being their USP, Koutons has given the
brand an extension delving into specific consumer segments. The garments are
made keeping in view the overall need of the niche market and the basic/fashion
demand of the Indian masses. Our product range also caters to the tastes of all
segments. Our Brand is placed as the most dynamic brand of India.
Mission & Vision:

To emerge as the most profitable retailer in India by being the most efficient

To provide contemporary fashion at affordable prices.

To cut away all areas of distribution and value chain that does not benefit the
consumer.
Mantra:

Fashion & Quality @ Affordable Prices

Respect for the customers views

Use our vast experience and insights for improved products.

Stay abreast with international developments

Achieve volume and sale to be globally competitive.

Growth through leadership.
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Existing Business Model:
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Koutons Brands and Product Assortment:
Koutons Men’s ware.
The well known apparel house, Koutons Retail India Ltd. has unveiled their latest
collection of menswear. This collection offers a wide range of formal and informal
clothing for men for the age group of 18 years and above. Known for their comfort
and durability the brand has become synonymous with 'fashion and quality' at
affordable price'. The collection caters to men which includes the working
professionals.
The collection includes the shirts, T-shirts, pull overs, sweat shirts, denim and nondenim trousers, cargo and shorts for men in trendy yet formal shades the collection
also offers a variety of fabrics to choose from. The basic formal shirts are available in
linen and cotton fabrics. The range is also available in blended fabrics. The special
product range wrinkle resistant flaunts ten to twelve colors to choose from. Using
wrinkle-resistant technology the company has sought to introduce a new breed of
weaved hundred percent cotton fabric and blended cotton.
The latest collection of Koutons menswear is a range created for today's generation
of men who wear what they like and firmly believe in themselves. The collection is for
those who like to blend comfort with style.
Koutons “Les Femm” For Women
Koutons Retail India Ltd. has unveiled its women wear collection named "Les
Femme". Les Femme collection offers a wide range of formal and casual wear for
women. The collection Les femme caters to young women in the age group of 16-34
yrs of age and includes apparels like t-shirts, party wear, Lycra, semi formal shirts,
denims, caprice, tunics, and cargos denims. The collection makes a fashion
statement with Knits T-Shirt, shirts for formal and casual attire available in full, half
and 3/4th sleeves etc.
Les Femme offers the new high fashion range which has lot of sequence and
bedded work done on the apparels. Satin and Lycra are presented in dazzling colors
and reminiscent patterns. The collection makes a fashion statement in itself at
affordable prices.
The range is in sync with the changing moods of the youth and working class, which
go in for care free and relaxed lifestyle, Les Femme provides them with comfortable
but classy wear. Les Femme is a brand created for a generation of women who wear
what they like and firmly believes in individual personality. Almost every piece
designed and created for 'Les Femme' collection depicts timeless creation blended
with sophisticated simplistic detail.
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“Koutons Junior” for kids”
All set to redefine the kids wear market in the country, Koutons Retail India Ltd. has
unveiled the Koutons Junior collection exclusively meant for the fashion conscious
kids of 21st century. The collection offers a wide range of trendy and playful apparels
for kids. Known for their comfort and durability, the brand has become synonymous
with 'fashion and quality at affordable prices'. Koutons Junior offers a wide range of
apparels t-shirts, shirts, night wear, caprice, cargos, denims, dangris to denim skirts
for boys and girls in the age group of 2-15yrs.
Right from providing formals and casual for boys and girls, Koutons Jr. Offers a
youthful and trendy blend of bright shades and wintery hues along with playful cuts
and patterns for kids. The yarn used in Koutons Jr. 100% cotton, 100% acrylic,
lamb’s wool blend. The all new kids range is made from superior quality fabrics
keeping in mind the delicate and sensitive skin of children so the natural fibers used
in the apparels are soft in feel for young kids.
Koutons Besides the normal range of apparels a special range of accessories is also
available which includes bags, sun glasses, swim glasses, pencil boxes, bottles,
caps, belts ties and many more.
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Koutons Marketing Strategies:
Koutons is a brand built on a very unique strategy - deep discounting. Deep
discounting is a pricing strategy where the brand offers huge (often mind-blowing)
discounts on an unusually high MRP (Maximum Retail Price). So the consumers are
attracted towards the product seeing the huge discounts which are actually not a
discount (in pure sense).
Koutons has a popular discount scheme known as 50% + 40 % off. So there is a
50% off on the MRP and then another 40% off on the discounted price. So the
consumers obviously are delighted to get a shirt with an MRP of Rs 1500 for as low
as Rs 450. Another very successful offer was “Buy 4 garments for the price of one ".
Seeing these unbelievable offers, consumers flock into the showrooms and buy
whatever that is available.
Along with the deep discounting strategy, the brand also invested some money in the
brand building. Koutons has the tagline “The way ahead, always “. It has campaigns
featuring foreign models and usually the showrooms are located in upmarket malls
thus giving the impression that Koutons are a premium brand. They hire foreign
modals instead of hiring Indian celebrities, which helps them to show that there
product is on international quality. Moreover it helps them to minimize cost for
advertising, which lead to price elasticity of their product.
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Market Survey Data Analysis:
Section A
You shop @ KOUTONS mainly for
HOW LONG HAVE YOU BEEN USING KOUTONS BRAND
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What is your Opinion about Kouton’s Restructuring as A Shop-In-Shop Store
Format?
What is your Opinion about Kouton’s Restructuring as A Shop-In-Shop Store Format?
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WHAT DO YOU FEEL ABOUT KOUTONS PRODUCT QUALITY
SECTION B:
WHY ARE YOU NOT BUYING FROM KOUTONS?
Sales
Other Competition
11%
Lack of store
knowledge
18%
Quality Issues
39%
Negative Brand
Image
32%
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Summary of finding, suggestions and recommendations:
Summary of findings:

It was found that most of the consumers who participated in the survey have
negative perception of Koutons As a brand due to the deep discount policy.

It was found that most of consumer prefer formal wear than casual wear

It was found that most of the consumer expresses their dissatisfaction toward
the quality of the product.

It was found that most of the consumers found Koutons products affordable
yet low in quality.

Many consumers expressed their confusion regarding the knowledge of the
stores locations as well as brand visibility.

Consumers responded positively to restructuring of Koutons and extending its
current business model toward the SHOP-IN-SHOP format and a healthy tieup with Future Group.
Suggestions:

Koutons must change its selling strategies, and instead of offering deep
discounts for the entire year, it must focus on keeping its MRP low and must
sell on actual MRP.

Kouton my go for restructuring its existing business model, and tie-up with
Future group and take advantage of the large exposure and footfall through
SIS (Shop-In-Shop) business model.

The SIS business model will ensure a reduced capital requirement for the new
business model.

In research we found that all the costumer is accepting the repositioning of
kouton to SIS (Shop-In-Shop) stores in Big Bazaar.

Kouton must increase its range of products.

Kouton must change its image from discounted good to superior goods.
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Restructuring KOUTONS:
New Objective:

To restructure and rejuvenate the Brand Kouton in the market.

To meet the consumer expectations from the Brand.

To maximize the profitability by reducing the overall cost and investment in
infrastructure.

To change customers perceptions regarding the products quality and
offerings.

To maximize its sales through taking advantage of the vast exposure by tying
up with future group.
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SHOP IN SHOP Business Model
What is Shop-In-Shop?
A Shop in Shop is a format which is operates within a retail concept such as
Hypermarkets, Supermarkets, Departmental Stores, etc, and provides an additional
brand and product assortments to cater its customers better.
There are two types of Shop-in-Shop Business Model.
1. Consignment shop in shop:-In this the a consignment is made between the
vendor and the owner of shop that the vendor will give a certain perctange of
his total sales to the owner say for eg.-30% to 35.Eg:-Brands like
and,remanika,109 in pantaloons are examples of consignment shop in shop
model.
2. Concessional:-In this the stock is purchased from the vendor and so all the
liabilities of stock lie actually on owner.For eg.-lakme SIS counters in
pantaloons or big bazaar.
Our strategy will be to introduce the wide range of products offered by Koutons in
most promising retail formats.
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Selection of Retail Formats:
The selection of retail format is strategically important decisions, as it will decide the
future success and the failure of Koutons.
Prior to the selection of retail formats, it is important to analyze all the available
options, where Koutons can be successfully placed.
Criteria for selection:
1. Number of locations of the retail store.
2. Footfall in any given location.
3. Least competition from the available players and maintaining the USP
of Koutons.
4. Presence in the Key locations.
5. Brand Perception and brand image of retail store in the minds of the
customers.
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Final Choice: Big-Bazaar:
Why we chose Big-Bazaar?
1. The biggest reason for selection of big bazaar to re launch Koutons as a SIS
format its Brand Visibility and the Number of retail outlets which spans 150
Hyper Stores across 80 Cities in India.
2. The average footfall of a typical Big-Bazaar Hyper Store in any given month
is approximately 30 Lakhs; this ensures huge market potential for Koutons.
3. The product assortments in apparels in Big-Bazaar can be improved, with
introduction of Koutons.
4. Big-Bazaar and Koutons cater to the same market segments that are the
lower as well as the upper income groups.
Advantages:
To Big Bazaar:
1.
2.
3.
4.
Huge improvements in the product assortments.
Improvements in the product quality.
Ensure good sales through the tie up of a well known brand.
Generation of Additional Revenues.
To Koutons:
1. A Tie-Up with Big-Bazaar will rejuvenate Its Brand Image in the market.
2. Low Capital Investment and minimum operating cost.
3. Increased visibility of the Brand will ensure maximum sales and increased
funds.
4. Lower advertising costs.
5. Access to the high footfall.
6. Lower manpower requirement.
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Financial Plan per Store
Expenditure
Per Month Estimate
Actual Total
Yearly Total
Location
Revenue Share 70:30
Revenue Share 70:30
Fixture Rent
Rs. 2,000
Rs. 2,000.00
Rs. 24,000.00
Manpower
Rs. 5,000 x 2
Rs. 10,000.00
Rs. 1,20,000.00
Advertising
Rs. 40,000.00
Rs. 50,000.00
Rs. 6,00,000.00
Legal & Insurance
Rs. 35,000.00
Rs. 35,000.00
Rs. 4,20,000.00
Logistics Expenses
Rs. 40,000.00
Rs. 40,000.00
Rs. 4,80,000.00
Operating
Grand Total
Rs. 16,44,000.00
20
Expenses
1.45
7.2
29.19
Fixture
36
Manower
Advertising
Legal Exp
25
Logistics
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Summary & Conclusion of the Study:
Koutons is a brand story which has gone sour. This 1000 crore corporate brand is
now facing the worst period of its existence- facing mounting debt and bad press
regarding the financial position and the stock price moving southward.
Koutons, the brand owned by Koutons Retail India Ltd was born in 1991. The original
name of the company was Charlie Creations which was later rechristened as
Koutons. Koutons is both the corporate brand and an individual brand. The company
has a range of ready-mades with the brand name Koutons. Along with it, the
company also has other brands of clothing’s like Charlie Outlaw, Le Femme etc. .
The company was founded by Mr. DPS Kohli. Mr Kohli and his family owned a
television manufacturing business which was destroyed during a riot. Mr. Kohli had
to suffer huge financial losses from that even and had to work as an insurance
surveyor for long. Later he ventured into the retail textile business.
Koutons grew really fast. The company became India's largest retail apparel chain in
a span of 10 years. In 2009, the company had around 1400 Exclusive Brand Outlets
(EBO) making it the largest apparel chain. The company had a turnover of around
Rs 1000 crore in 2008-2009.
Koutons was a brand built on a very unique strategy - deep discounting.
Along with the deep discounting strategy, the brand also invested some money in the
brand building. Koutons has the tagline “The way ahead, always “. It had campaigns
featuring foreign models and usually the showrooms are located in upmarket malls
thus giving the impression that Koutons are a premium brand. But frankly no one
really knows whether Koutons really sells a shirt for Rs 1500.
But nobody was complaining because consumers got a feeling to getting a good
bargain and that is what matters. So this model worked well for the firm for more
than 20 years. As usual, 20 years is pretty long time for consumers to learn the
discounting model. The sales started drying up and the cost and inventory started
building up. More discounts followed and revenues started sliding. The company
landed itself into a financial trouble.
The brand really was able to tap the "value for money” psyche of the Indian
consumer. Indian consumers like a good bargain and for long years, the firm was
able to capture profit out of it. But the popularity of other discount outlets of
established brands and the quality issues of Koutons paved the way for the
downside for the brand. According to news reports, the company faced the issue of
inventory mis-estimates and huge debts.
In the deep discounting model, the brand is secondary. What matters is the
attractiveness of discounts and high media expenses announcing the discounts. It is
not the brand that pulls the customers but the perceived bargain. Of course the
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consumers should feel that the brand is aspirational. So it is a kind of a very risky,
clever strategy. Project aspirational image and use discounts to pull the consumer in.
Koutons as a company is in financial trouble and the fate of the brand depends on
how the company survives the crisis. The deep discounting model will work in a
market like India as long as the firm is able to project the aspirational image. It lacks
the glamour of brand-building but may work for short-term. In the long term such
deep discounting has only backfired and will most likely kill the brand.
Thus it has become very important for Koutons as a brand to refocus its strategies
on re-inventing its brand image and change with the changing consumer tastes and
take advantage of the new types of business models opening up in the retail
industry. So in order to keep the company afloat this company can most definitely
look to tie-up with other major brands like Future Group in order to benefit both the
companies in the longer run.
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Bibliography:
www.bplans.com
www.koutonsparivar.com
www.moneyguru.com
www.wikipedia.com
Anatomy of Business Plan by Linda Pinson / Jerry Jinnet
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Attachment: The survey form used to collect data about brand image of Koutons.
STUDY ON KOUTONS RESTRUCTURING
We, the students of FHDL, Future Innoversity are conducting a survey on Restructuring
and Rejuvenating Koutons. Your personal information will be kept confidential and data is
used only for our academic project.
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Thank You.
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