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E.Schrodinger and the First Store in India

CASE STUDY, MARKETING MANAGEMENT
XLRI Case Development Centre, 8 Pages
AUTHOR(S) : Narasimhan Raj Kumar, Associate Professor, XLRI Xavier School of Management, Jamshedpur and Smitu Malhotra, Associate Professor, XLRI Xavier School of Management, Jamshedpur

Case Preview

E.Schrodinger and the First Store in India

 

As Rohit C. Suresh (Rohit), Vice President, Real Estate at E.Schrodinger (India) (Pvt.) Ltd. (ESI) looked down at a map of Arcadia spread on his desk, he thought over his presentation scheduled for the senior managers of his company. The senior management at E.Schrodinger, a large German retailer, had finally decided to make its foray into India by setting up shop in Arcadia. Arcadia, one of the largest metropolitan cities in the country, was at the forefront of the retailing revolution. On the map were marked seven locations of prospective sites for the Schrodinger retail store. As Vice President, it was Rohit’s responsibility to recommend to the company where to open E.Schrodinger’s first store in Arcadia.

Background

In 1957, Gunther Schrodinger opened a small pick’n’ pay store called “Einzenl handel Schrodinger” in Hamburg, Germany. Unlike its competitors, Schrodinger’s store was uncluttered and organised. The store only stocked a few product categories but the assortment was very deep. The store quickly became very popular, and after its success, Schrodinger replicated the same model across a number of German cities. During the initial years of expansion, Schrodinger would stay in each of the cities he planned to enter in order to understand consumer behavior..................

Looking Beyond Boundaries

By the early 1990s, with 126 stores across Germany, E.Schrodinger began to witness the first signs of saturation in the German retail industry. It was then that the company decided to explore new markets. By 1997, E.Schrodinger had set up five stores outside Germany. Despite being a largely European chain, Schrodinger realized that the real action was happening in Asia. With a bustling economy and rising income levels, India in particular, was emerging as the blue- eyed-baby of retailing.................

The City of Arcadia

Located on the banks of the river Yamuna, Arcadia was one of the largest metropolitan cities in India and was one of the largest commercial and financial centers of Northern India. Spread over 1530 square kilometers, the city was divided into ten wards for administrative purposes (Exhibit I). Each of the wards had a distinct population mix and identity. The wards in the centre constituted the central business district of the city...............

City Demographics Population

Due to the migration of people from across the country, Arcadia had a unique blend of cultural fabric which represented the diversity of its population and the traditions they followed. A high degree of urbanization coupled with the influx of progressive thought had turned Arcadia into a bustling city..............

Education

With a thriving education system, literacy rates were higher than India’s average. As opposed to national standard of literacy of 74% (2011 census), the average literacy rate in Arcadia stood at 82%. Such a high literacy rate could be attributed to a well-developed private school system...........

Income

In 2014, Arcadia had a per capita income of INR73,238 at current prices. While this made Arcadia one of the most affluent cities in the country, there was a great deal of disparity in incomes within the city. The average per capita income of the household in the Southern ward stood at..........

Economy

Arcadia’s economy had traditionally relied on small-scale industries for sustenance. However, this changed drastically after 2003, when the government began enforcing stricter zoning laws.. These small-scale industries, which were earlier located in the heart of the city, were forced to move out to the suburbs. The exodus created a vacuum in the city center, which had earlier contributed close to 85% of the city’s annual domestic product...........

The Retail Market

Until the early 2000s, the Arcadian retail market was predominantly unorganized, comprising almost 70,000 small kirana stores very similar to the “Mom and Pop” stores in the United States. These kirana stores, which were littered across the city, usually operated in a floor area of not more than 100 square feet. These stores provided a livelihood to close to 4,60,000 households within the city and were critical to the stability of the Arcadian economy................

The Competition

As a part of the $570 million organized retail industry in Arcadia, E.Schrodinger would face strong competition from mainly two competitors – Big Mart and Sid’s...........

Big Mart

Big Mart, one of the largest chains of hypermarkets in India was the key competitor for E.Schrodinger. In April 2006, Big Mart opened its first hypermarket in Arcadia at the Sunnyside Mall in Ward 1.............

Sid’s

Sid’s was the first retailer in India to experiment with the supercenter format. Supercentres were large stores usually of floor areas of 20,000 square feet specializing in food and daily consumer goods (Exhibit VI). Sid’s Supercentre was located in Ward 5 – the central business district of Arcadia.............

The Road Ahead for E.Schrodinger

As Rohit stared down at the map of Arcadia, he went over all the points in favor of choosing the Southern wards (Ward 1 and 2) in his mind. His rationale was very clear. These were the wards where affluent people lived............

Exhibits

Exhibit I: Detailed Map of Arcadia

Exhibit II: Ward-wise Monthly Overheads per sq. ft. for a 40000 sq. ft. Store

Exhibit III: Ward-wise Demographic Information

Exhibits IV: Available Store Formats and Stipulated Store Sizes

Exhibits V: Ward-wise Average Ticket Sizes

Exhibits VI: Format-wise Product Categories

Exhibit VII: Travel time in Minutes from Wards to Actual and Prospective Store Locations

Teaching Note Preview

E.Schrodinger and the First Store in India

 

Synopsis

The caselet is about an international retail chain, E.Schrodinger, planning an entry into Arcadia, a city in northern India. The company has identified seven  prospective location sites and Rohit, the Vice President, Real Estate, had to recommend to the company its first location in the country. The company’s most operated and favored was the hypermarket. The location of the first store was a crucial decision from the company’s perspective since the right location would give the right head start to the company and set the foundation for future location decisions.

The location decision must take into account several issues, including convenience to customers and the company’s revenue and profitability goals. The caselet deals with analyzing factors, both qualitatively and quantitatively, both at the city and site level to help choose the right location for the first store.

Expected Learning Outcomes

Retail location strategy has two dimensions:

  • • Which city to enter?
  • • Which site in the city should the store be located in?

 

This caselet caters to the second dimension. Therefore, the objective of the caselet is to highlight the process and the main decision areas that need to be focused upon to identify the location for a retail store.

In general, the teaching objectives include:

  • • Familiarize about the importance of location decisions in retail
  • • Outline the process of identifying the right location keeping in mind customer requirements as well as organizational goals
  • • Familiarize with various approaches to location choice and the merits and demerits of each
  • • Understand the role of exogenous factors like competition, infrastructure, etc., on location decisions
  • • Discuss Huff ’s law of retail location

 

Case Positioning and Setting

The caselet may be used in MBA Programs – elective course in Retail Management for a module on – location planning and site selection. The caselet can also be used in an Executive MBA Program to discuss site selection.

Assignment Questions

  • I. Why is location critical for profitability of stores? How does it affect the food and grocery formats especially hypermarkets?
  • II. What are the factors that the company must consider while taking the decision?
  • III. What approaches retailers to identify location have traditionally used? What are their merits and drawbacks? Therefore, which of the available methods should the company use to identify a suitable location?
  • IV. ...............

 

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Product code: MKTG-1-0054, MKTG-1-0054A

Abstract

The case study is about an international retail chain, E.Schrodinger, planning an entry into Arcadia, a city in Northern India. The company has identified seven prospective location sites and Rohit C. Suresh, the Vice President, Real Estate, had to recommend to the company its first location in the country. The company’s most operated and favored was the hypermarket. The location of the first store was a crucial decision from the company’s perspective since the right location would give the right head start to the company and set the foundation for future location decisions.

The location decision must take into account several issues, including convenience to customers and the company’s revenue and profitability goals. The case study deals with analyzing factors, both qualitatively and quantitatively, both at the city and site level to help choose the right location for the first store.



Pedagogical Objectives

  • To familiarize about the importance of location decisions in retail
  • To outline the process of identifying the right location keeping in mind customer requirements as well as organizational goals
  • To familiarize with various approaches to location choice and the merits and demerits of each
  • To understand the role of exogenous factors like competition, infrastructure etc., on location decisions
  • To discuss Huff ’s law of retail location

Case Positioning and Setting

The case study may be used in MBA Programs – elective course in Retail Management for a module on – location planning and site selection. The case study can also be used in an Executive MBA Program to discuss site selection.



This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
$5.48
Rs 0

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