Term Paper presentation as part of the Retailing Management course in IIM Bangalore.

1. Term Paper
Retail Management
Group No. 9
Monika Tanwar (1211116)
Prachi Patil (1211203)
Tonmoyee Saikia (1211153)
Anusha S. (1211011)
Vishrut Shukla (1211314)

2. > Agenda
Coffee Retail Industry in India
• Current and Future Trends
• Porter’s 5 Forces Analysis of Industry
Secondary Research : Competitive Landscape
• Study of different players in Coffee Retail Industry
• Study of Consumer Behaviour
• Major players in Coffee Retail Industry
Primary Research: Detailed Analysis of Cafés of Select Brands
• Café Coffee Day ( Regular)
• Barista Lavazza Espresso Bar
• Costa Coffee
Primary Research:
• Factor Analysis
• Discriminant Analysis
• Results
Quantitative Analysis

3. > Coffee Retail Industry in India
TRENDS
Size of
Market
in 2012
$230
million
Number of
Specialty
Coffee Shops
in India : 2100
PORTER’S FIVE FORCES ANALYSIS
Number
will
double
to 4000
by 2015
CHALLENGES
• High Operational Costs
• High Rental Charges
• Brands competing for limited real
estate
• Attrition of store workforce
MODERATE
MODERATE
HIGH
MODERATE
HIGH

4. > Competitive Landscape in India
First movers
New entrants
Other players

5. > Competitive Landscape in India
Café Coffee Day
• Division of Amalgamated
Bean Cofee Trading
Company , Karnataka
• ~40% Market Share
• 1,534 stores
Multiple Formats
• Lounge
47 stores
• The Square
3 stores
• Café
1, 484 stores
Barista Lavazza
• Owned by Chennai-based
Sterling Infotech under
Brand Barista
• Acquired by Italian
coffee maker Lavazza
Group in 2007
• Second Largest Coffee
Chain
• 230 stores in 2011
• Plans to open 500 by 2014
Costa Coffee
•
UK-based coffee retailer
•
100 cafes
•
Presence in Tier-I cities,
plans to grow in Tier-II
cities in long term
•
Plans to expand to 1000 by
2015-16

6. > Consumer Behavior
Change in Needs from
Functional to Experiential
Traditional Consumers :
Frequent Independent Coffee
Houses like India Coffee House
which account for 96% of total
value sales in 2011
Consumer Motivations :
• Past Experience
• Convenience of Location
• Choice of Café by Friends &
Family
95% consumers in India drink
their coffee on-site (in café)
Young consumers : Spend
long time in cafes , hanging out
and socializing
Consumers want Value – for
Money Services

7. > Detailed Analysis of Café Brands
Café Coffee Day (Lounge)
Customer
Demography
• Teens to middle-aged,
upwardly mobile
Loyalty Program
• Café Moments Card that
gives cashback
Offers
• Discounts given to
cardholders at times,
communicated through
digital marketing
Product Mix
Merchandise
Menu
• Hot and cold coffee of different flavours and origins, shakes, tea,
sandwiches, mini eats, desserts – available in 2 sizes
• Very detailed Menu – different menu for food and beverages
Method of preparation: Freshly prepared, customization allowed
Order - Staff comes to take order and deliver (15-20 minutes for
delivery)
Merchandise
• Coffee mugs, sippers, cookies, coffee beans, coffee percolator,
special festive/new merchandise.
• Items on display have quantities and prices clearly marked on
placards, display on wall fixture and over counter

8. > Detailed Analysis of Café Brands
•
•
•
•
•
•
•
•
•
Ownership - Company owned
Store front - Prototype store - Typical red brand signage along
with distinct color for Lounge to differentiate it from regular CCD,
Display window induces customers to enter flaunts the interiors of the
store with bright light giving a premium look
Brightly lit walkway, extended glass gallery
Store locality - Store located on a busy main road in Koramangla, in a
semi-residential area close to some offices
Store layout - Indoor seating, sofas, chairs and tables arranged along the
walls and some in the centre
Furniture - Tiled and laminated flooring with wood panels, sofas and
cushions that match the color scheme
Lighting - Bright white and yellow light, lamps in all the corners to
make the area look bigger, spotlights above tables
Comfort / Feel – Upscale, formal, ideal for business meets
Entertainment - Soft music playing, brand promos on TV

9. > Exhaustive Set of Retail Parameters
• Choice and availability of
beverages & snacks
• Availability of full meals
Well lit ambience
Colors, wall art
Quiet, calm mood
Can sit comfortably for
long hours
• Facilities like restroom,
smoking area etc.
•
•
•
•
• Contemporary,
comfortable seating
• Space for small meetings
• Meeting like-minded
people for socializing
• Loyalty programs
• Discounts, coupons,
offers
• Branded merchandise
• Mood/Feel in the café
• Attachment/belonging
• Location and ease of
access
• Availability of parking
•
•
•
•
Newness of the menu
Flexibility of offering
Simplicity of menu
Price /value for money
• Books, newspapers,
magazines Music
playing in the café
• Video entertainment
• Internet access
• Quick, prompt service
• Warmth and
hospitality by staff
• Convenient timings

10. > Reduced Set After Factor Analysis
Purpose - Fun, conversations, meeting
friends, hanging out, passing time
•
•
•
•
•
•
•
Convenience of locations
Fresh, flexible, contemporary menu for food & beverages
Availability of full meals in the menu
Internet Access, Books, Magazines etc. in the café
Branded merchandise (eg: coffee mugs, t-shirts, sippers)
Music + Video entertainment in café
Ambience (Wall arts, graphics, youthful colors) of café
Statistics: KMO: 0.606 and Bartlett’s Test of Sphericity: Significant for Chi-Square at given dof
Purpose - Family visits, serious talks,
personal visits & business meetings
•
•
•
•
•
•
Quality of service and amenities in the café
Fresh, flexible, contemporary menu for food & beverages
Opportunity of networking with peers, community
atmosphere
Loyalty programme, discounts, coupons and rewards
Music + Video entertainment in café
Convenient pricing and value-for-money offerings in café
Statistics: KMO: 0.606 and Bartlett’s Test of Sphericity: Significant for Chi-Square at given dof

11. > Discriminant Analysis
Objective
• Build a statistical model to understand which factors contribute significantly to superior café experience for 4 brands
• Predict how a new store of a particular café brand will fare on customer satisfaction based on ratings of retail factors.
Methodology
• Each café brand rated on identified reduced set of factors (Independent Variables) for each purpose of visit
• Discriminant Analysis run for each (Café Brand, Purpose of Visit) combination (Results below)
• Summary Analysis of the customer satisfaction data (1 to 5) done to obtain basic Customer Experience Score for brands
Purpose
Café Brand
Determinant Equation for EXPERIENCE_RATING : ‘Exp’ (1=Good, 2=Bad)
CCD Regular
Exp = (.469*LC)+(.125*M)+(.058*FM)+(.379*IBM)+(.491*BM)-(.080*MVE)+(.306*AW)
Barista
Exp = (.509*LC)+(.250*M)+(.003*FM)+(.077*IBM)+(.280*BM)-(.538*MVE)+(.404*AW)
Exp = (.735*LC)+(.254*M)-(.055*FM)+(.359*IBM)+(.076*BM)-(.161*MVE)+(.290*AW)
CCD Regular
Family visit,
serious talks,
own time, bmeetings
CCD Lounge
Costa Coffee
Fun talks,
meet friends,
hang out pass
time
Exp = (.034*LC)+(.672*M)+(.170*FM)-(.323*IBM)+(.418*BM)+(.131*MVE)+(.521*AW)
Exp = (.665*QOS)-(.206*M)-(.481*NWC)+(.240*LDC)+(.246*MVE)+(.789*PVM)
CCD Lounge
Exp = (.340*QOS)+(.763*M)+(.310*NWC)+(.166*LDC)-(.489*MVE)+(.552*PVM)
Barista
Exp = (.428*QOS)+(.125*M)+(.367*NWC)+(.318*LDC)-(.786*MVE)+(.619*PVM)
Costa Coffee
Wilk’s Lambda is too high and chi-square value is not significant due to fewer responses.

12. > Customer Experience Scores

13. That’s it folks!
Thank
You!

14. APPENDIX
Detailed Analysis of Café Brands
Café Coffee Day (Regular)
Barista Lavazza Espresso
Costa Coffee

15. Detailed Analysis of café brands
– Café Coffee Day (Regular)
Demographics
Teenagers, young mobile
Loyalty
programs
Café Moments Card that gives cashback of Rs.500 for every Rs.
5000 spent
Promotional
offers
Customer
Special Birthday/ Anniversary SMS & emails and discounts to
loyalty card holders
Menu
Product
Mix
Coffees, Smoothies, sundaes, cakes, Finger Foods, Pastas, Momos,
Pizzas, Sandwiches, Desserts etc., Combo deals (beverage +
snacks)
Freshly Prepared, customization is allowed
Merchandise
Price
Method of
preparation
Coffee Mugs , Variety of Coffee Beans , Coffee Powders, Coffee
Machines, Apparel, Gift Items
Pricing
Pricing is same for all the CCDs - Rs. 450 for two people
(approx.) VAT extra

16. Detailed Analysis of café brands
– Café Coffee Day (Regular)
Delivery
Order
Staff comes to take order and deliver (15-20 minutes for delivery)
Raw material
sourcing
Delivery
frequency
Once in 3 days, CCD’s own logistics service, cold storage
Quality check
Operations
Sourced from vendor, Furniture etc. made by CCD itself
Weekly checks from ISI, dedicated executive for hygiene
maintenance
Appearance & 3-4 members with proper clean uniforms, helpful and have
attitude
knowledge about products
Staff
attributes
Service and
behavior
Courteous staff , take/deliver order with a smile, enthusiastic and
prompt, 10th/12th-pass staff trained at CCD’s own training
institute

17. Detailed Analysis of café brands
– Café Coffee Day (Regular)
Ownership
Company owned
Preparation
area
Visible, however, platform is comparatively high so as to not keep
it too visible
Store front
Prototype store; Typical red brand signage with tagline on purple
board to identify the store; Display window induces customers to
enter flaunts the interiors of the store with red and yellow light –
not so premium but casual look
Locality
Store
attributes
Located on main roads, near malls, corner etc
Layout
Indoor + outdoor seating area, - wooden chairs and table – not
so premium; Open assortment of snacks besides counter, Menu
displayed above eye level
Furniture
Entertainme
nt
Lighting
Store timings
CCD makes its own furniture - Laminate Flooring, Leather
Couches, Plastic Chairs, Granite Tables
Music
Adequate yellow lighting in the store, spotlights on furniture,
wall arts
8AM-1AM

18. Detailed Analysis of café brands
– Barista Lavazza Espresso
Demographics
Teenagers, young mobile
Loyalty
programs
Newly launched in NCR
Customer
Menu
Italian based menu: Appetizers, Sandwiches , Quaker oats,
muffins, puffs & rolls, pasta, lasagne, Teas & Coffees , Soups &
Salads , Pastries & Bakery , Desserts, Mocktails (Juice, shake,
refreshers), combo meals (for 1, for 2)
Price
Method of
preparation
Only beverages are freshly Prepared - General customization is
possible in drinks. (Only customization is adding more/less
sugar, sugar free etc.).
Merchandise
Product
Mix
Coffee Mugs , Variety of Coffee Beans , Coffee Powder –
comparatively less merchandize; Also, merchandise is not
displayed properly
Pricing
Prices are also different across outlets. Some outlets are inside
corporate offices. The prices are generally cheaper there (because
of absence of rent and negotiation by the corporate for lower
prices) - Rs. 300 for two people (approx.) VAT extra

19. Detailed Analysis of café brands
– Barista Lavazza Espresso
Delivery
Order
Raw material
sourcing
Operations
Delivery
frequency
Self service
Sourced from national vendor
Once every day – since readymade sandwiches etc are also
sourced; (Food items generally have life of one day. If it is not
sold, then it is disposed-off and entered as ‘damaged goods’ in
the system. Other ingredients generally last for 6-12 months)
Quality check
Monthly surprise checks from internal audit agency &
immediate suspension if found guilty
Appearance &
attitude
Proper uniforms – clean
Light colored orange
Staff
attributes
Service and
behavior
Courteous staff , take/deliver order with a smile, enthusiastic
and prompt

20. Detailed Analysis of café brands
– Barista Lavazza Espresso
Ownership
Company owned
Preparation
area
Visible, to customers
Store front
Prototype store; Typical orange brand signage with distinct
name Lavazza; Display window induces customers to enter
flaunts the interiors of the store with red and yellow light – not
so premium but casual look
Locality
Store
attributes
Layout
Furniture
Entertainme
nt
Lighting
Store timings
Located on main roads, near malls, corner etc
Indoor + outdoor seating area, - Metal Tables & chairs, orange
lights– not so premium; Open assortment of snacks besides
counter; Menu displayed above eye level
Laminate Flooring, Metal tables and chairs Couches,
Music
Orange Yellow light – not so premium
8AM-11PM

21. Detailed Analysis of café brands
– Costa Coffee
Demographics
Customer
Loyalty programs
Promotions
Menu
Product
Mix
Youth and high income group
None
Collaborates with online deal sites such www.crazydeal.in to offer
Buy 1 Get 1 free offers. 15% off on a minimum billing of Rs 300 on
CitiBank Cards
Coffee (Hot+ Cold), Ice Tea, Croissant, sandwiches, cakes and
pastry, wraps (beverage + snacks)
There is no menu for food. Everything is on display. The beverage
menu is simple to understand.
Only beverages are freshly Prepared - General customization is
possible in drinks. (Only customization is adding more/less
sugar, sugar free etc.).
Merchandise
Price
Method of
preparation
Costa Coffee Mugs
Pricing
Prices are same across all outlets. (approx Rs.450 for two)

22. Detailed Analysis of café brands
– Costa Coffee
Delivery
Order
Raw material
sourcing
Operations
Delivery
frequency
Quality check
Appearance &
attitude
Customers need to place the order, but is served by the staff
Sourced from vendor
Delivery is done every morning
Food authority and internal inspection
Area Manager carries regular inventory management and
orders are placed carefully to ensure that there is no leftover
waste.
Proper uniforms – clean
Staff
attributes
Service and
behavior
Courteous staff , take/deliver order with a smile, enthusiastic
and prompt

23. Detailed Analysis of café brands
– Costa Coffee
Ownership
Preparation
area
Store front
Locality
Store
attributes
Layout
Furniture
Entertainme
nt
Lighting
Store timings
Company owned
There is open area where all items are prepared.
Preparation is visible to customers. But the platform is
comparatively high so as to not make it too visible
Prototype store
Typical maroon and white combination brand signage
with distinct font Costa Coffee
Display window induces customers to enter flaunts the
premium looking interiors of the store
Located on main roads, near malls, corner etc
Indoor + outdoor seating area, - couch, cushions –
premium look
•Open assortment of snacks and beverages besides
counter with huge quantity
Laminate Flooring, Leather Couches, Jute Chairs,
Granite Tables
Music
Red and white light – premium look
8AM-1AM