Demand Forecasting in Indian Retail Industry

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Demand Forecasting in Indian Retail Industry

• Vijay Gabale (07305004)
• Ashutosh Dhekne (07305016)
• Piyush Masrani (07305017)
• Sumedh Tirodkar (07305020)
• Tanmay Mande (07305051)

Applied Economics Course Project
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Motivation

• The A.T. Kearney Global Retail Development Index
  shows India on the top of the list.
• Multi-outlet retail concept has gained
  acceptance. A report by Images Retail predicts
  Over 400 malls by 2010
• Competition Survival of the fittest!
• Forecasting of demand!

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Indian Retail Industry

• Retail - The sale of goods or commodities in
  small quantities directly to consumers.
• Retailers in India
• Shoppers Stop
• Westside (Trent)
• Pantaloon (Big Bazaar)
• Lifestyle
• RPG Retail (Foodworld, Musicworld)
• Crossword

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Challenges in Demand Forecasting

• Scale of forecast
• Erratic demands
• Introducing new goods
• Changing price
• Restocking period
• How do we resolve them?

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Techniques

• Judgmental
• Unaided
• Delphi
• Expert Systems
• Simulated interactions
• Quantitative
• Extrapolation
• Data mining Least Square Regression

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Existing Surveys

• The Indian Retail Report 2007 released by Kamal
  Nath on January, 09, 2007
• The India Retail Report 2007, Amitabh Taneja,
  Chief Convenor of India Retail Forum
• An article by Tata Strategic Management Group
  in September, 2006
• India has huge population
• The forecasting plays major role in quantifying
  trends
• Sophisticated tools or expert analysts

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Our Survey

• We visited Haiko, a division of the Lakewood
  Malls Pvt. Ltd. at Hiranandani Gardens.
• Mr. Gaurav Purohit (Business Manager)
• Haiko
• Small scale retailer
• Do not use sophisticated tools but historical
  data to analyze trends

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What are the key aspects of a forecasting
exercise?

1. Beginning Early
2. Taking expert inputs
3. The tools used for demand forecasting cannot
   replace domain expertise
4. Thinking of multiple solutions
5. Being on the field

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Questionnaire

• How is the forecasting done?
• Past data and Targeted growth
• Tastes and trends are subjective terms
• What are some tips for developing a forecasting
  model for new product?
• try out different forecasting techniques
• What is the period of time in the future for
  which you do forecasting?
• a six monthly basis, place orders at 2 months in
  advance
• Could you share with us an example story?

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Questionnaire

• Does the volume of sale have a bearing on the
  rack space you allocate to a good?
• They have a fixed rack space and that dictates
  how much they can stock.
• For all the analysis do you use software?
• Could you relate a failure story?
• The detailed interview in report!

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Conclusion

• The increasing competition in Indian Retail
  Sector is compelling retailers to use demand
  forecasting tools.
• Retailers who have their own brand labels use the
  forecasting techniques of the kind we study in
  theory.
• On the other hand, small scale retailers can
  employ qualitative techniques on the historical
  data and considering the behavior trends in the
  market.

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References

• Images retail. http//www.imagesretail.com/india
  retail report.htm.
• Tata Strategic Management Group. Retail
  revolution. http//www.tata.com/tata
  strategic/articles/20060925 retail.htm.
• A.T. Kearney. Global retail development index
  (GRDI) 2004-2007. http//www.atkearney.com/.
• Kamal Nath. India retail report.
  http//commerce.nic.in/pressrelease/pressrelease
  detail.asp?id1895.
• Namita Singh, S. Jason Olasky, Kellie S. Cluff,
  and Jr. William F. Welch. Supply chain demand
  forecasting and planning. http//www.patentstorm.u
  s/patents/7080026-fulltext.html.
• Software Consulting Services to the Consumer
  Goods Industry. Demand forecasting model.
  http//www.ibsw.com/demand.htm.