Slide4: Peace Frogs is a design and marketing company producing family oriented branded and private label clothing. The company has begun to expand into potential markets like India , at a sustainable pace, our already recognizable brand-Peace Frogs- and to leverage our brand equity and good name. At the heart of the Peace Frogs brand we desire to design and distribute merchandise to retailers, screeners, brands, re-sellers and corporations all over all metros of India and over the Asia-pacific.(We shall do this as a part of Peacefrogs and not as a outsider selling a dream).Our company would represent itself as the overseas wing of Peacefrogs and shall have the resources and the stamp to execute our business.


Slide6: The idea for Peace Frogs came to Catesby Jones when he was in his third year at the University of Virginia. He started out making pants and shorts that resembled flags of foreign countries and marketing them himself by wearing them out in the UVA campus. His most popular was the communist flag that was marketed as Iron Curtains. The brand gained free press when John F. Kennedy, Jr. was photographed sporting his Afghanistan shorts in the national press. Jones was even interviewed by Forbes Magazine as an up and coming Entrepreneur in his senior year of college. The idea for the Peace Frogs name came after listening to the Doors song with the same name. The frog is internationally recognized as an icon of peace and good luck and was thus deemed an appropriate logo for an internationally themed line of shorts. The frog logo eventually proved so popular that the focus was shifted from the flags to the frog.   As time went on Peace Frogs expanded into t-shirts, sweatshirts, boxers, hats, and a variety of accessories. The frog's combination of positive energy, whimsical attitude, and peaceful outlook has proven universal and enduring. Almost twenty years since its conception Peace Frogs is still growing, now found nationally in major department stores and theme parks.


Slide8: The company has received press in national publications such as Rolling Stone, People, Forbes, U.S. News and World Report.   Their corporate philanthropy and environmental activism with has been aired on CNN.   The company has accounts with Dilliards, Belk, Peebles, and Dawahares.   The company opened its first store in 1990.   The company owns over 1,000 pieces of Peace Frogs Art.


Slide10: Peace Frogs Marketing Efforts mainly focus on selling their branded apparel and private label apparel to retailers. This business to business market is larger, less capital intensive and less risky than the business to consumer market. We employ a group of independent sales representatives to reach these apparel retailers. The imprinted sportswear business is a $10 billion market. A smaller percentage of our marketing is focused on direct sales to consumers through our web page and through independent licensed Peace Frogs stores that we shall appoint all over the country. These marketing efforts are aimed at Generation Y (10 to 26 year olds). The market intelligence gained through marketing directly to the consumer, allows us to market better to the retailers. Because of our presence in the business to consumer market, we are able to see trends in their early stages. To achieve all of this ,we are looking forward to setting up base operations which will contain the ethos and the skills of the Peacefrogs brand name from here we are talking to the entire country and set up entrepreneurs ,who might want to be a part of this revolution. We scale out a matrix of the wannabe’s and screen out the unwanted and then we have the right associates.


Slide12: Peace Frogs Sales Strategy is based on a multi-channel distribution network. Peace Frogs sells products through 5 channels of distribution: 1) Wholesale to department stores and specialty stores. Majority of sales are obtained through independent sales representatives. 2) Traditional mail order catalog; 3) Licensed Retail stores 4) Licensing the Peace Frogs art to manufacturers; and 5) Via the internet


Slide14: Peace Frogs Major Competitive Advantages over other companies who market to the same demographics are as follows: 1) They have a clear recognizable logo and image that is appealing to people of all ages. 2) They own full rights to our brand image and to all images we create. 3) They manufacture overseas and have the lowest prices and highest quality. 4) They contract all manufacturing and can change what we produce at any time. 5) They look forward to good long term existing relationships with Theme Parks and all major department stores. 6) They manufacture and sell our own branded apparel which controls our image and provides us high margins and covers the majority of overhead. 7) They have multi-channel distribution which gives us many options to clear inventory. 8) They are in the market both as a direct retailer and a wholesaler which provides us with early market intelligence


Slide19: Retailing: An overview An overview Retailing World’s largest private industry US$ 6.6 trillion sales annually Indian retailing Largest employer after agriculture - 8%* of population Highest outlet density in world Around 12 mn outlets Still evolving as an industry Long way to go *www.etretailbiz.com/dec2002


Slide20: Retailing: An overview An overview Wal-Mart Topmost global Fortune 500 company(3 Consecutive Years) Annual Sales of over US$ 250 bn India’s two largest retail player turnover around US$ 158 mn (Bata) and US$ 102 mn (Shoppers Stop) Fortune 100 9 Retailers Carrefour, Ahold, Home Depot, Kroger, Metro, Kmart-Sears, Target, Albertsons’


Slide21: Evolution of Indian retail Historic/Rural Reach Traditional/Pervasive Reach Government Supported Modern Formats/ International Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls PDS Outlets Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency


Slide22: Evolution of Indian retail Indian retail Informal retailing Sector Typically small retailers. Evasion of taxes Difficulty in enforcing tax collection mechanisms No monitoring of labor laws Formal Retailing Sector Typically large retailers Greater enforcement of taxation mechanisms High level of labor usage monitoring


Slide23: Emerging Retail Growth Market Over 12 Million Outlets in India Organized Retail 3% Set to grow to 8 – 10 % by 2010 Organized Retail expected to be around Rs. 1,10,000 Cr. (USD 25 b) by 2010


Slide24: Categories of Indian retail Indian retail Corporate Houses Tatas: Tata Trent RPG group: Food World, Health and Glow, etc ITC: Wills Life Style Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc. Dedicated brand outlets Nike, Reebok, Zodiac etc Multi-brand outlets Vijay Sales, Viveks etc Manufacturers/ Exporters Pantaloons, Bata, Weekender


Slide25: Classifying Indian retail Indian retail Modern Format retailers Supermarkets (Foodworld) Hypermarkets (Big Bazaar) Department Stores (S Stop) Specialty Chains (Ikea) Company Owned Company Operated Traditional Format Retailers Kiranas: Traditional Mom and Pop Stores Kiosks Street Markets Exclusive /Multiple Brand Outlets


Slide26: Indian retailers Hypermarket Big Bazaar Giants Shoprite Star Department store Lifestyle Pantaloons Piramyds Shoppers Stop Trent Entertainment Fame Adlabs Fun Republic Inox PVR Large Indian retailers


Slide27: The changing Indian consumer Indian consumer Greater per capita income Increase in disposable income of middle class households 20.9%* growth in real disposable income in ’99-’03. Growing high and middle income population Growing at a pace of over 10%* per annum over last decade Affordability growth Falling interest rates Easier consumer credit Greater variety and quality at all price points †From Euromonitor Retail Survey


Slide28: The changing Indian consumer Indian consumer The urban consumer Getting exposed to international lifestyles Inclined to acquiring asset More discerning and demanding than ever No longer need-based shopping Shopping is a family experience Changing Mindset Increasing tendency to spend Post Liberalization children coming of age 100 mn 17-21 year olds*. Tend to spend freely. Greater levels of education *Data from NCAER


Slide29: Anticipated growth Anticipated growth Market size Current market size is roughly US$ 286 bn* 96% of the 12 Million stores are less than 500 Sq. ft. Forecast Growth rate for the retailing industry is roughly 8.3% for 2003-2008 Sales from large format stores would rise by 24-49%** Formal and modern format retailing would enjoy rapid growth *From ICICI Retail Report **From Euromonitor Retail Survey


Slide30: Industry dynamics Industry dynamics Low domestic competition Because of fragmented nature of industry Lack of exposure to global best practices Low entry barriers for unorganized retailing Moderate entry barriers for organized retailing Wholesale system under-invested leading to 20-40% wastage Non level playing field issues Wide differences in treatment of small and large retailers


Slide31: Real estate issues RE issues Highly distorted real estate market Pro-tenant laws Zoning laws Zoning laws also vary from state to state Non-availability of government land, and fragmented private holdings makes it difficult for retailers to acquire land Government is largest property owner in country Urban Land Ceiling act is archaic Stamp Duty and registration charges at high levels. Also vary from state to state


Slide32: Growth factors Growth factors Growth determining factors Government Policy Infrastructure development GDP growth Employment generation and job creation In several new sunrise industries Implies greater purchasing power


Slide33: The Indian advantage Advantage India India ranked 5th in the Global A.T Kearney Retail Development Index Second only to China in Asia Least saturated of all global markets studied The least competitive of all global markets studied Implies lower barriers of entry for global players Considering tremendous market size, excellent potential for foreign players India ranked 3rd in the Global A T Kearney FDI Confidence Index in 2004 Improved from Rank 6 in Year 2003


Slide34: International retailers in India: Strategies How they are present Franchise International company gives name and technology to local partner. Gets royalty in return In case master franchise is appointed for region or country, he has right to appoint local franchisees Nike, Pizza Hut, Tommy Hilfiger, Marks and Spencer, Mango Manufacturing Company sets up Indian arm for production Bata India. It also has right to retail in India


Slide35: International retailers in India: Strategies How they are present Distribution International company sets up local distribution office Supply products to Indian retailers to sell Also set up franchised outlets for brand Swarovski, Hugo Boss Wholesale trading Cash and Carry operations 100% FDI permitted Metro Cash n Carry


Slide36: Benefits to the government Benefits to govt. Increase employment levels FDI would result in market growth and expansion Employment generated at various levels Increased consumer demand implies employment generation across the value chain Does not need very high skill sets Needs high school graduates and other similar skill levels Currently this is a majorly unemployed demographic group Boom in employment Similar to job generation in ITES industry On a much larger scale But new jobs comparatively lower down the value chain


Slide37: Total wholesale and retail trade US$ bn 375 300 225 150 75 7 8 8 0 8 5 9 0 9 1 9 2 9 3 9 4 9 5 9 6 9 7 9 8 9 9 0 0 0 1 0 2 Years Retail sales grew @ 19.6% CAGR for the next 4 years after the introduction of FDI in 1992


Slide38: Retailers Retailers – Always healthier than ever Source: IL & FS Investment Managers Limited


Slide39: Global Retail Scenario 8 Global Retail Industry Is of Size USD 8 Trillion 1 Fortune 1 “Wal-Mart” Is a Retailer 50 Over 50 of the Fortune 500 Companies are Retailers 25 25 of the Asian Top Companies , are Retailers


Slide40: Indian Retail Scenario India’s increasing affluent middle class – 300 million Increasing proportion – higher disposable income 83,000 millionaires, India to be the fastest wealth wealth creator by 2010 The New Age Indian Youth modern, well – informed, but still entrenched in Indian value system – Price Sensitive


Slide41: Indian Retail Scenario ……cont’d Market Growth: 8 – 10% annual growth with 30% + growth rate for modern format retail. Strong Economy: Forth largest economy on Purchasing Parity Basis. Market Opportunities: Growing consumer aspirations together with very low penetration of modern format retailing. Infrastructure: Large amount of quality retail space being added.


Slide42: Consumer Expenditure in Organized Retail Source: Marketing Whitebook, 2006, Businessworld


Slide43: Hyper marts Large supermarkets, typically (3,500 – 5,000 sq. ft) Mini supermarkets, typically (1,000 – 2,000 sq. ft) Convenience store, typically (750 – 1,000 sq. ft) Discount / Shopping list grocer Traditional retailers trying to reinvent by introducing self-service formats as well as value-added services such as credit, free home delivery etc. Source: CII Report/Retail Scenario in India – Unlimited Opportunity Retailing Formats


Slide44: Hypermarket Big Bazaar Giants Shoprite Star Bazaar Department Store Lifestyle Pantaloons Pyramids Shoppers Stop Trent Entertainment Fame Adlabs Fun Republic Inox PVR Indian Retailers


Slide45: Indian Retailers ……..cont’d Franchise Nike Pizza Hut Tommy Hilfizer Marks & Spencer Mango Manufacturing Bata India Distribution Swarovski Hugo Boss Wholesale Trading Metro Cash & Carry Food Outlets McDonald’s KFC Pizza Hut Dominos


Slide46: The Changing Indian Consumer The Urban Consumer Getting exposed to International lifestyle Inclined to acquire asset More discerning and demanding than ever No longer need – based shopping Shopping is a family experience Changing Mindset Increasing tendency to spend Post Liberalization children coming of age 17 – 21 year olds*. Tend to spend freely. Greater levels of education Source: CII Report/Retail Scenario in India – Unlimited Opportunity


Slide47: Challenges of Retailing in India Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favors small retail businesses. Absence of developed supply chain and integrated IT management. Lack of trained work force. Low skill level for retailing management. Source: CII Report/Retail Scenario in India – Unlimited Opportunity


Slide48: Recommendations Grant full industry status to retail. Permit FDI in Retail in Phases. Invest in supply chain Infrastructure. Ease distribution – Infrastructure creation, octroi. Ensure single window clearance for retail chains. Organize market for real estate ~ Ensure proper rent laws; ~ Enforce zoning laws and city development plan; ~ Increasing land supply. Ensure flexibility of labour laws. Source: ICICI Bank


Slide49: Understanding the Indian youth


Slide52: Peace Frogs , VA Regional Master Franchisee – North India Regional Master Franchisee – East India Regional Master Franchisee – West India Regional Master Franchisee – South India 4 RMFs for entire India 4 Nos. Boutiques Owner 4 Nos. Boutiques Owner 4 Nos. Boutiques Owner 4 Nos. Boutiques Owner 4 Boutiques in each demarcated city / town


Slide53: Peace Frogs India demarcates India into four major regions: 1.       North – to constitute J&K, Himachal Pradesh , Punjab, Haryana, Uttranchal, Delhi, Uttar Pradesh. 2.       East- to constitute Bengal ,Bihar, Jharkhand ,Orissa ,Chhatisgarh ,Sikkim. 3.       West-to constitute Maharashtra, 4.       South- to constitute Karnataka Each region are supposed to have a Master Franchisee who would be a defacto stockiest and administrator for his entire region.


Slide54: a.       Storage space of about 15000sq ft. b.       A flagship boutique of about 5000 sft. c.       Administrative capability to handle a down chain of about 70-80 boutiques. The down line under the MFC for each region would be the Boutique owner; the boutique owners shall have the following capabilities: a.       Boutique space of about 300 sq.fts b.       Basic computer literacy. c.       Valid Passport and credentials.


Slide55: Target Customer – 13 years to 24 years. Sliding glass store doors, which give a clean view of the store, which is clean and brightly lit in white fluorescent lighting. The interiors are bright and yet with a huge amount of character and attitude. Interior colors are typically Peacefrogs, which are bright and eye-catching. Latest apparels on the store front. Handsome young sales attendant. The store basically stores everything on designer display slat wall ,Gondolas and cubes and the music which plays is retro rock like the Dave Mathews band. Different displays of the guys and girls sections and a crossover section which has the accessories. The store shall also have a space for the general goods of peace frogs branding. Every section has digital displays giving information about that section and a proprietary software sales attendant, wherein the customer just enters his name and the design number of what he wants to buy. The choice is automatically picked up the master ledger on the tellers desk. The other end of the store, which is the fun corner. the fun corner has a giant plasma screen which is live streaming contents on stores from the US and special announcements on discounts latest arrivals and fashion. A frog computing station will be available which picks up images of anyone in its dais and its asks you how would like to dress today and all you have to do is give a design number and it would give you a 3D image of what you would look like wearing that design.


Slide56: In the virtual showroom and customer can see our entire stocks without moving and customer could chat live with similar customer or store attendants in the USA and take live advice. After customer have made up their mind they could check in their final choices and log out. State of the art technologies ensure that process automation is involved in all areas of the store. All display areas shall have light /sound and ambience controls to suit the clients shopping pleasure. The Digiramp in the fun place is a happening place. Customer might want to check out a dress they would like and have high quality digital videos recorded through state of the art recording cameras and they could edit it and have DVD's recorded for themselves or they could even have it posted to their email ID or even posted on our free Peace frogs webpage. Our attendant could give them a live feed into our portal and point their window based devices to it and they could carry their peace frogs webpage wherever our customers goes. With every purchase customers make a score of points with the frog, and it’s registered at the boutique, PFI and PF too, Peace Frogs India monitors it and reward them for being our valued clients. This is multi directional and they could be rewarded from PFI and from PF too with gifts and freebies. Customers could redeem points for everything a teenager can think of, from dresses to scholarships in universities.


Slide57: All the stores are connected on a WAN, which is the first line of communication. High quality video conferencing will be the hallmark of the entire chain. Peace Frog India intend to use the tech savvy Indian teenagers, interest in technology to reach where they want them to, and through our web based programs, we shall be able to give much more to the clients' than just apparel, we shall give them a life style and add value to it at every step. MSI system shall be in place to track regional sales on a daily basis, which shall back up the administrative and logistic software, which would control the stocks and reserves. The proprietary software shall ensure that the operations have open ends within the business and communications are open, if sales of any store is lesser than augmented for, measures to boost that up shall be instantaneous.


Slide58: The investment pattern is as follows. After the initial process of selection and short listings the following heads of investment are to be catered to: MASTER FRANCHISEE Brand aligned signup: USD 50,000 (INR 20,00,000) Rolling store stocks: USD 3,50,000 (INR 1,40,00,000) Store setup, inclusive of hardware /software/automation/technologies/trademarks/license and statutory permits. : USD 5,00,000 (INR 2,00,00,000) BOTIQUE Brand aligned signup: USD 50,000 (INR 20,00,000) Rolling store stocks: USD 1,25,000 (INR 50,00,000) Store setup, inclusive of hardware /software/automation/technologies/trademarks/license and statutory permits. : USD 3,00,000 (INR 1,20,00,000) Renewal of the brand license shall be USD 30,000 (INR 12,00,000) on a yearly basis.


Slide59: Regional Master Franchisee: - Minimum Educational Qualification : - a Professional Degree is desirable; Financial Capability: - Should have sustainable Financial Back-up (Should have a minimum 50 crores); Business Experience: - Should have a minimum of 5 years of experience in the same business line or have 10 years of experience in other diversified business; Managerial Capability: - Should be a self motivator, Analytical, Strategy and Goal oriented, Tech savvy, etc.; Space Required: - 15,000 square feets (10000 for warehouse+5000 for flagship boutique); Network: - Should have a valid Passport, & strong relationships with banks & financial institutions Encouraging; Should be a good Team Leader; Should be a target oriented; Should be a good communicator; Should have good knowledge of logistics & distributions; Should possess a good knowledge regarding the dealer-network process.


Slide60: Boutique Owner: - Minimum Educational Qualification : - Should hold a Professional Degree; Financial Capability: - Should have sustainable Financial Back-up (Should have a minimum 30 crores); Business Experience: - Should have a minimum of 3 years of experience in the same business line or have 7 years of experience in other diversified business; Managerial Capability: - Should be a self motivator, Analytical, Strategy and Goal oriented, Tech savvy; Space Required: - 5,000 square feets (5000 for flagship boutique); Network: - Should have a valid Passport, & strong relationships with banks & financial institutions Encouraging; Should be a good Team Leader; Should be a target oriented; Should be a good communicator; Should have good knowledge of logistics & distributions; Should possess a good knowledge regarding the dealer-network process.


Slide61: Selection of RMFs & BOs Passing Interview session with the Consultant Visit to U.S.A. for further Training & Product Knowledge Examination & Evaluation License issued for resale in India India Operation starts Selection of Sales & other Staffs Training & Product Knowledge Full setting up of Peace Frogs India PFI Operation starts with RMFs & BOs Total Sales of 1st Year Realized Performance Appraisal Starts with the RMFs & BOs If O.K. , License reissued for the next year If not, then the entire process continues


Slide62: Steps: - Step 1: Selection of RMFs & BOs from different zones of India based on the Qualities & Capabilities of the Investor(s); Step 2: Then the selected Investor(s) have to qualify themselves through Interview Process for the final enrolment list in front of the Board Members (PFI & Infra Consultancy); Step 3: The shortlisted Investor(s) have to go through a detailed Training Process in terms of Product and Strategy knowledge in U.S.A.; Step 4: Training session will be followed by a Written and Oral Examination Process for final Capability Evaluation; Step 5: Successful Investor(s) will get the License for 1 year (renewal in each succession year based on the Performance Appraisal) for resale of Peace Frogs Products in India; Step 6: India Operations Starts based on the T&Cs of PF, V.A.; Step 7: Interview session for the selection of different Personnels, for the Managerial, Administration,Human Resource, Sales, etc.; Step 8: Shortlisted candidates have to go through a detailed Product Training; Step 9: Full fledged India Operations of Peace Frogs India will start; Step 10: After one year, Peace Frogs India will successfully achieve their targets in India through Hard & Smart working followed by a sensational workforce mobilized by unique strategies. The end result is “EARNING OF REVENUES”; Step 11: 1st birthday of Peace Frogs India will be celebrated through the Performance Appraisal of the Successful RMFs & BOs including entire Peace Frogs India Family Members (Workforce); Step 12: Successful RMFs & BOs will get the renewal license & the unsuccessful one will be replaced by the new comers in the banner of RMF(s) or BO(s).