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