Operations Research

A
Thesis
Report on
“Strategies to overcome retailers’ woes”
(Supermarkets)
Submitted By
Chinna Raja Giri.M
Thesis ID: (FW79/01092/MKT)
Under the guidance of
Prof. Vijay Kumar Jayaram
At

The Indian Institute of Planning and Management
Chennai
Batch: PGP/FW/2007-2009

i

ABSTRACT
Leading Indian corporate giants have noticed the importance of retail and it’s
potential. They started setting up retail outlet all corners of the country but it’s
an unplanned expansion, which led to disaster. This has led to closure of
many outlets and resulted in loss of many jobs.

This thesis work contains research methodology like qualitative and
quantitative. Under qualitative techniques one can see direct and indirect
method. In quantitative techniques one can see descriptive techniques. Going
through the report will benefit the reader and provide understanding on
consumer behavior, retail strategy, market psychology and government rules
and regulations. This thesis work will give better understanding and insight to
reader as well as the presenter.

This report aims to give better options and solutions to the decision makers.

ii

THESIS APPROVAL BY GUIDE
I hereby signify that CHINNA RAJA GIRI.M of PGP/FW/07-09 of IIPM,
Chennai, has completed this thesis work with my guidance. The topic of his
thesis is “STRATEGIES TO OVERCOME RETAILER’S WOES
(Supermarkets)”. I hereby approve this thesis as a complete and final work
requiring no further alteration.

With Regards,

Prof. Vijay Kumar Jayaram

(Signature of the guide)

Faculty of IIPM, Chennai

iii

TOPIC APPROVAL LETTER

Prof.Vijay Kumar Jayaram" <prof_vkj@yahoo.com>
View contact details
To:
getto.chinna@yahoo.co.in

Dear Mr. Giri,

Received your request.

I hereby agree to guide you on your Retailing project subject to approval from
your Dean's office.

best wishes,
Prof Dr Vijay kumar Jayaram

PS. Your future work based on the synopsis should mention the name of the
Supermarket under study. The issues should be elaborated before
commencement of the research study.

iv

THESIS TOPIC APPROVAL (MKT) FW / 07-09

Dear Chinnaraja Giri,

I have received your synopsis as well as the confirmation that Dr. Vijay Kumar Jayram,
Founder - Director (SIMERF.ORG) & Management Consultant would guide you through
the thesis. This letter is a formal approval of the topic proposed by you “Strategies to
Overcome Retailers’ Sufferings (Supermarkets)”. Please go ahead with the thesis.
However, remember to focus on primary research based on an elaborate research
methodology taking into account an overall sample size of approximately 100 + samples,
spanning various sample segment groups, using appropriate sampling techniques.

Your Thesis Id is FW79/01092/MKT, since this is your unique identification number you are
advised to quote this id for any future correspondence.

Remember that all theses need to be submitted, within 3 months after the completion of 5th
trimester, as per the guidelines. I would like to inform you that for any late submission of the
thesis beyond the last date, the institute reserves the right to impose a fine, as applicable for
the batch. As per the last notification, late thesis submission fines are as follows: - The
penalty for all ex-students up to 04-06 batches is Rs. 5000. From 05-07 batches onwards it is
Rs.1000.

Furthermore, you are required to send me at least 6 Thesis Guidance Response Sheets in
all. Please ensure to send one response sheet for each interaction that you would have with
your External Guide during the course of the Thesis, say, once a week / 10 days. The format
of Response sheet is attached herewith.

Kindly also go through the attached guidelines for Thesis Viva Voce.

Kindly revert for any further clarifications.

Regards,

R. Krishnan

v

ACKNOWLEDGEMENTS
I take this opportunity to thank my academic dean Prof.R.Krishnan for
providing me necessary guidance and support.

I thank Prof.Vijay Kumar Jayaram for giving wonderful opportunity to work
with him and gave me direction throughout this thesis work. I express my
gratitude to Prof. Vijay Kumar Jayaram for spending his valuable time in
helping my thesis work.

I thank Mr.Tej (supplier of electrical and electronic items to Big Bazaar) for his
time and contribution toward the thesis work. I thank Mr. Yousuf (Store
Manager) Yesyesi supermarket, for his efforts and knowledge sharing.

I also thank Mr.Karthik (Marketing Executive) Big Bazaar for his indirect
support

I also take this opportunity to thank all the teaching staff, friends of IIPM,
CHENNAI for helping out to complete this thesis work

I thank respective consumers for filling up the questions and helped to
complete this thesis work.

vi

TABLE OF CONTENTS

SERIAL NO TABLE OF CONTENTS PAGE NO

1 Introduction 1

2 Literature review 4

3 Research Methodology 8

4 Data Analysis & Interpretation 13

5 Findings 29

6 Recommendations 33

7 Conclusion 37

8 Bibliography 39

9 Appendix 44

vii

LIST OF TABLES


1 Rank Order- Score Allocation 17

2 Rank Order- Points Calculation 18

3 Location of shopper’s 21

viii

LIST OF CHARTS


1 Movement of products in store 14

2 Sales people efficiency 15

3 Impulsive buying 15

4 Store opinion 16

5 Buying pattern 19

6 Loyalty program 19

7 Store rating 20

8 Positioning 20

9 Age of shoppers 21

10 Opinion about suppliers 22

11 Loyalty program acceptance level in India 23

12 Opinion about government 24

ix

Introduction
India is known for adapting the best things which are available around the
world. Many changes had taken place after opening up the Indian market.
Indian retail market is estimated to be around $350 billion, of which organized
segment has only four percent and it estimated to reach $521 billion by 2012 1.
Many products have entered into Indian market which enhanced the Indian
consumer way of living. Lifestyle of people has changed over the years with
introduction of many new things into their lives. Taking this change into
consideration, many retailers (Supermarkets) have started stores with the
objective of adding value to consumer lives and thought of capitalizing the
situation but time had different answers for retailers. Though retailers
visualized the potential of supermarket and its importance in future but they
failed to visualize the pitfalls and never had backup to pull things up, when
required. Supermarkets have started growing in India like our population
without giving any thoughts, whether there is enough food to feed their
growth. Many players have entered the market with the intention of providing
service and utilizing the opportunities. They started opening the supermarket
in important cities by taking the population and their purchasing power into
consideration but things never turned out profitable. As a result many unviable
stores were closed, man power reduced, pay reduction and cutting down
other cost.

Issues in current scenario
• Retailers visualized potential of market but failed to capitalize.

• Mismatch between retail format and strategy

• Differences in political will and amendment of legal act

• Infrastructure constraints like technology, financial security and
connectivity.

2

Aim
• To understand retail market and its potential

• Insight and understanding of consumer behavior

• Knowing the government initiative towards the retail industries

• Learning about infrastructure constraints

• Strategy followed by different retail giants to capture the market

• Consumer attitudes toward these retail giants

• Supplier initiative toward promotional activity

• Promotional activity carried out by retail giants

Scope
This research will include various strategy adopted by the retailers and at the
same time learning the government initiatives toward these industries. The
information collected from the consumer, management, experts and
government will help to formulate research plan.

This report provides information and various options available to decision
makers, to take decision.

3

LITERATURE REVIEW

4

Literature review

Future Group, Chief Executive Officer, Kishore Biyani said there is nothing
specific for this sector in the budget. Vishal Retail Group President Ambeek
Khemka said the budget as disappointing from the retail industries
perspective.2

Subhiksha once considered to be the successful retail enterprise in the
country but now closed due to non-availability of cash to run the business. It
needs Rs.300 crore from its lender and investor to bring back its operation.
Creditors of the company has moved to court to file wind up petition against
the company 3

The Indian government has restricted foreign investments on single brand in
the country in order to protect vote as well as not upsetting the small shop
owners and political factions. As a result, Sweden's IKEA, the world's biggest
furniture retailer, recently called off a $1 billion investment plan due to the
restrictions.4

The Government also fully recognizes the need to ensure that small retailers
are not adversely affected by the growing organized retail and that there is no
adverse effect on employment, said by Minister of State for Commerce and
Industry Jyotiraditya Scindia 5

Mr. Divyendu Shekhar, principal and partner at Retail Analytics quoted “This
is the time when the government should think of opening up even the front
end retail to foreign investment, rather than creating more regulatory hurdles.
This is under pressure from the trading community, but then protectionism is
not going to help anyone”6.

5

US-based deep discount retailer MyDollarStore Inc., founded by an American
of Indian origin, is the latest casualty of the economic slowdown in India that
has forced organized retailers to apply the brakes on ambitious expansion
plans. The country’s largest discount-store chain, Subhiksha, suspended its
operations after it failed to raise cash either through the stock market or from
banks. Other retailers including Pantaloon Retail (India) Ltd, Aditya Birla
Retail Ltd and Reliance Retail Ltd have closed stores and pruned expansion
plans.7

Spencer’s retail recently shut down loss making or unviable store. Spencer’s
reduced man power and cut down cost in order to reduce the loss. The
company have shut down nearly 150 unviable stores and given pink slip for
nearly 3000 employees, which led the company to save around Rs. 100
crore.8

It is estimated that up to 40 per cent of all the fruit and vegetables grown in
India rots on the way to market. Analysts blame bad roads, bullock cart
transport and an excess of middlemen. Also, there is very little refrigeration
along commercial supply chains.9

Parliamentary Standing Committee on Commerce (Committee) has laid down
conditions which includes (a) the products sold should only be of a single
brand, (b) the products should be sold under the same brand internationally,
and (c) single brand product-retailing would cover only products which are
branded during manufacturing 10

After three years of unplanned expansion, retailers are being forced to initiate
corrective steps, especially in the food and grocery space. Retail companies
are currently focused on bringing down distribution costs by eliminating
intermediaries and transport delays between the sourcing point and point of
sale11

The country is short by 10 million tonnes of cold storage capacity due to which
about 30- 40% of agricultural produce goes waste every year. According to

6

Assocham's latest study report, against a requirement of over 31 million
tonnes of cold storage, India has a capacity of nearly 21.7 million tonnes,
leading to a loss of about 40% of the agri-produce post harvest 12

Bharti Enterprises Ltd launched its much talked about retail venture with a few
stores in Punjab. Barely over a year into the business but the firm has already
shut two stores, one each in Amritsar and Karnal, out of its two dozen
outlets13

Reliance retail farm to fork initiative is in trouble with Punjab government. The
Punjab Cabinet terminated the MoU for setting up agricultural mega projects
in the State because the company had not complied with the terms of the
memorandum of understanding. The MoU was inked in August 2006 during
Congress Government led by Captain Amarinder Singh. The Akali Dal and the
BJP, now governing the State, had opposed the project now. 14

Rising food prices and poor rains have driven many state governments,
including Maharashtra, West Bengal, Madhya Pradesh and Rajasthan, to
impose stock limits. This led to cutting down the stocks as result it will push up
transaction cost and may eventually impact consumers as retailers will be
forced to pass on the higher cost to consumers.

“Referring to the Essential Commodities Act, which empowers
government to impose such limits, said there was a need to take a relook at
laws that were enacted in the 1950s when there was no modern retail in
India”-Kishore Biyani 15

7

Research methodology

8

Research Methodology

1 Problem definition/hypothesis
Indian retail market have faced and facing many problems these days. They
getting no support from any where and all the doors were shut, hoping for
miracle to happen to this industry. A sector which is second largest provider of
employment and contributes nearly 8-10% to GDP, still suffering under hands
of government rules and regulation

Retailers visualized the potential but failed to capitalize and forecast the
market behavior, which led to closure of many Supermarkets like, Spencer’s
retail, More for you, Reliance fresh, My Dollar store, Easy Day by Bharti. The
shut down has led to many job losses, halting the expansion plan, asking
government for tax reduction and infrastructure facilities.

In short “Retailers do not comprehend a clear strategy to combat the
recession and economic down turn”

Hypothesis 1

Visualized the potential but failed to capitalize

Hypothesis 2

Mismatch of format & strategy

Hypothesis 3

Apathy of government toward the retail sector

Hypothesis 4

Infrastructure disorder

9

2 Research Methodologies
Research methodology decides the mode of collection of data through
primary and secondary sources. It helps to solve the problem in systematic
way.

Two types research methods

• Qualitative

• Quantitative

3 Data survey
Primary data

Primary data will be collected from consumer purchasing at the supermarket.
Questionnaires will be handed over to the respondents and request them to fill
it up. Data is also collected from the management people or store manager or
supervisor or person involved with the supermarket. Information is also
obtained from the retail experts about the current scenario and future of retail
industry

Secondary data

Secondary data is collected from the journals, articles, and reports etc. In this
research, secondary data are mostly from newspaper and articles written by
experts.

3 Sample design
Sampling size

The sample size will be around 103 which consist of 1experts, 2 managers
and 100 consumers.

Sampling unit

10

In the case of sampling unit will be, household, manager, employee and
subject matter expert

Type of sampling

Simple random sampling or convenience sampling

4 Data collection
• Questionnaire

• Interview

Primary data is collected through questionnaire and experts view is obtained
through one to one interaction

5 Questionnaire Design
Two type of questionnaire were framed, one for the consumer and other for
store manger or supervisor or management experts.

6 Data analysis and interpretation
Data validity

The data is collected in the form of questionnaire and hence there is no
manipulation is possible

Data credibility

Information obtained through questionnaire is credit worthy because it was
collected in person and no manipulation is possible

Interpretation

Data collected is analyzed and placed in the form of charts and graphs,
conclusion is drawn from charts and graphs.

7Justification for choosing particular project
Retail industry is booming industry but it is always under estimated by the
government. Supermarkets enhance people day to day life by providing
humpty number of choice to consumers. I am always interested in learning
consumer behavior and there day to day activity.

11

Plenty of opportunities are available in the retail industries and lots of learning
is also available out here. Information collected from consumers through
simple and convenience sampling, expert view is obtained through one to one
interaction.

Information was also collected from store manager with the help of questions.

Questionnaire needs to be framed by keeping the current issue in mind, in
order to make sure that questionnaire is not out of track. Questionnaire is hard
to frame but helps to collect the information easily.

Since the industry is suffering with many problems, this research will help
them to put back on track.

12

DATA ANALYSIS
&
INTERPRETATION

13

Data analysis and interpretation

The study has been conducted on comparative basis by including many
retailers and there strategies. Stores taken are Big Bazaar, YESESI,
Spencer’s, More for you & Saravana Stores. To corner on one store and to
study there activities, Big Bazaar was chosen.

The study has been conducted on Big Bazaar outlet at Vadapalani

1 Movement of products in stores
In the below chart, the store products were listed and consumer preference
toward these products at Big Bazaar, compared to other stores

Analysis

14

• Big bazaar has huge product variety but shallow assortment

• Take a look at the graph, one can clearly understand that clothing &
apparel, Frozen foods, furniture, house appliance doing below the
expected level

• Items like, general groceries, toys, Veg/Fruits & dairy product are
seeing good demand compared to other products under Big Bazaar
portfolio

• Other outlets like, VIP, Lifestyle, Hi-style, SKC, Witco, Nike,
Pantaloons, McRennet, Globus, Shoppers stop, Adayar Bakery,
Landmark, Archives Gallery & odyssey. People use to shop at these
stores for buying baked products, clothes, and house appliance etc.

2 Sales people efficiency

Analysis

• Majority of the sales people are in a position to explain about the
product and the rest is not able to do it or shying away from
responsibilities

3 Impulsive Buying rate

15

Analysis

• Expect the unexpected things; most of the respondents are ready to go
for the products, which is not in the buying list.

• Product purchase will take place, if the products are attractive in the
following ways; price, health related, brand & good offers

4 Opinion about the store

Analysis

• The company needs to concentrate more on depth of product because
it has huge variety but shallow assortments, which limits the choice as
well as people purchase

16

• Consumer experience while shopping at Big Bazaar is good because
it’s something new to Indian consumer, shopping at big space

5 Ranking the store characteristics to find out the criteria
considered in choosing the store
• Rank 1 highest point and rank 9 lowest point

For the purpose of analysis, each rank has been assigned a point:

Rank 1: 9

Rank 2: 8

Rank 3: 7

Rank 4: 6

Rank 5: 5

Rank 6: 4

Rank 7: 3

Rank 8: 2

Rank 9: 1

Table 1 A
It shows the total number of times a particular criteria is chosen against rank

Rank/ Location Quality Product Services Price Parking Ambience Diet Opening
Criteria Variety products &
closing
Time

1 5 11 7 3 55 4 7 3 5

2 10 53 7 8 9 3 5 4 1

3 5 27 29 22 8 2 4 2 1

4 31 6 9 9 20 5 9 6 5

5 5 15 10 14 23 7 5 19 2

6 15 8 12 3 13 14 11 12 13

17

7 7 5 6 7 8 45 2 8 12

8 2 4 3 5 7 3 7 65 4

9 3 5 1 3 15 4 27 19 23

Table 1 B
The below table shows the total points of each criteria
Location Quality Variety Services price Parking Ambience Diet Opening
Products &
Closing
time

45 99 63 27 495 36 63 27 45
80 424 54 64 72 24 40 32 8
35 189 203 154 56 14 28 14 7
210 36 54 54 120 30 54 36 30
25 75 50 70 115 35 25 95 10
60 32 48 12 52 56 44 48 52
21 15 18 21 24 135 6 24 36
4 8 6 10 14 6 14 130 8
3 5 1 3 15 4 27 19 23
Grand 483 883 497 415 963 340 301 425 219
Total

Analysis

• It clearly shows shopper’s give more weight age to price, quality &
location. As a result, price, quality & location should be one bundle

6 Criteria listed below will help to get opinion about the store

18

Analysis

• Chart helped us to understand that promotional activity and quality are
good. In terms of product assortment & diet conscious product, it is
average

• For the parking lot criteria, it varies from store to store

7 Buying pattern during recession

Analysis

19

• Buying patterns have gone down due to recession. Though 70% have
reduced their spending habit and remaining sticking to same spending
habits due to offers and combo package

8 Loyalty program acceptance level in India

Analysis

• 70% say that loyalty program is good and the rest took opposites
stances. But the critical issue always lies in collecting consumer
personal information

9 Rating the store based on consumer experience

Analysis

• It clearly shows that Big Bazaar has long way to go, to capture the
consumer attention toward there shop and needs to work hard to
increase their satisfaction level.

20

• The rating clearly shows that nearly half of the consumer or customer
are nearly satisfied but not completely satisfied, it has to make sure
that it achieves the latter, as early as possible

10 Checking positioning

Analysis

• Positioning is not what you do to a product. Positioning is what you do
to the mind of the prospect

• Most of the consumer think that Biz Bazaar have great discounts &
offers

General Feedback
In general feedback, couple of questions was asked to the consumers.
Questions like, age, location or residence, budget & experiences in shopping
other than this outlet

1 Age of Shoppers

21

Analysis

• Big Bazaar needs to concentrate to increase the footfalls of
youngsters, in order to sell the apparels, book and other items

2 Locations

Location In & Around 2-3 Km Beyond 7- 10 Km

80% 20%

Analysis

• 80% of the shoppers to Big Bazaar are from in and around 2-3 Km
area. It is necessary to reach beyond that area.

Information collected from the management
The questionnaire was framed for the management, in order to get their
opinion about the present situation

1 Challenges faced by management during this hard time
Management and store manager have few common things between them like;

 Drop in sales

 Rent issue

 Supplier issue

 Regulatory Norms

 Rise in price of essential items

22

Analysis

 Industry as a whole is facing many problem, which can be solved
through collaborative efforts.

 Certain issues, which are beyond control and it needs government to
help, to sort things out. Government apathy toward these industries
has led to many problems

2 Management opinions about suppliers

Analysis

 The industry given mixed response toward the behavior of supplier on
this tough time. Problems like, flexible payments, rectifying goods and
pushing stock are causing disputes between supplier and retailer

3 Loyalty program acceptances level in India

23

Analysis

 Experts believe that loyalty program increases businesses but not
easy to collect data and loyalty program need not necessarily
increases loyalty among the shoppers

4 Management opinions about Government initiative

24

Analysis

 Industries expert feel that the government has not done enough for the
retail industries in the following areas; Tax rate, regulatory &
Infrastructure

Huff model
25

Without the huffs model the thesis is always incomplete. It will help to analyze
the footfalls, based on size of the store and time taken to reach the store

• Attraction of footfalls to the store is directly proportional to the size of
the store and inversely proportional to the time taken to reach the
store, having an exponent which could raise the levels of constraints

Let’s explain the formula below;
Pij = Sj / Tyij

∑n Sj / Tyij

Where

Pij = Probability that customer i shops at location j

Sj = Size of the store at location j

Tij= Travel time for the customer I to location j

Its necessary to know the population which are dwelled around the store and
number of competitor around the store

Chennai Demographic
• Chennai population- 41 Lacs

• Two wheelers – 15 lacs

• Car – 4.5 Lacs

• Population at vadapalani around 3 Km- 70,000

Big Bazaar store snap shot
Since the Big bazaar store was taken for the research purpose, it is necessary
to know there product portfolio and size of the store, for the calculation
purpose.

Study conducted on Big Bazaar (Vadapalani)

• Big Bazaar size – 13000 Sq. feet

• Foot falls- 8000 ( week)

• Total sales- Rs. 42,00,000 ( week)
Product portfolio - Variety

26

• Cloths ( Kids, youth, ladies & gents) 2500 Sq. feet

• White goods- 1300 Sq. feet

• Footwear- 900 Sq. feet

• Luggage & Bags- 800 Sq. feet

• Toys- 800 Sq. feet
• Supermarket – food, groceries, cosmetics & beverage -2300 Sq. feet

• Furniture- 1800 Sq. feet

• Decorating items (show case related items)- 1000 Sq. feet

• Kitchen & plastics items- (Plastics, non-stick pan, & mugs)- 900 Sq.
feet

Calculation
The probability calculation is carried out by taking the each categories size of
Big Bazaar and compared to the size of competitor. For Ex. Size of Viveks is
compared to size of electronic Bazaar not with entire Big Bazaar

1 Calculating car owner’s percentage
4.5/ 41 * 100 = 10.97%
2 Calculating Two wheelers percentage
15/41*100 = 33.33%
3 Calculating Two wheeler and car owners at the vadapalani population
around three kilometers
Car owners - 70000 * 10.97/100 = 7679
Two wheeler- 70000* 33.33/100 = 23331
Total- 31000

Calculation of footfalls
1 Probability of reaching Big Bazaar than Viveks
Viveks - 2200 Sq. feet & Time taken to reach- 3 minutes
Big Bazaar- 1300 Sq. feet & Time taken to reach – 12 minutes

1300 / 122

27

= ___________________________
(1300 / 122) + 2200 / 32

9
= ___________
253
= 0.03
= 930
Explanation: Big Bazaar Electronic should pull 930 footfalls a day for white
goods. In contrast Big Bazaar get only 2% of expected foot falls

2 Probability of reaching Big Bazaar Super Market than Nilgiris
Big Bazaar – 2300 Sq. feet & Time 12 minutes
Nilgiris- 2200 Sq. feet & Time 5 minutes

2300 / 122
= __________________
(2300 / 122) + 2200/ 52
16
= _____________
104
= 0.15
= 31000 * .15
= 4650
Explanation: Based on the size of Big Bazaar supermarket, it should pull
4650 foot falls a day. Instead of that it gets only 600 foot falls a day for his
supermarkets area

3 Probability of reaching Big Bazaar (Fashion Bazaar) than Mega Mart

28

Fashion Bazaar – 2500 Sq. feet & Time 12 minutes
Mega Mart- 1200 Sq. feet & Time 8 minutes

2500 / 122
= _________________
(2500 / 122) + 1200/ 82

17
= _____________
35
= .48
= 31000*.48
= 14880
Explanation: Fashion Bazaar needs to get 14880 for his cloths department
but it gets nearly 3% of the expected footfalls

29

FINDINGS

Findings

30

Whole Industries

• Problem at back end operation like; transportation, warehousing &
intermediaries

• Unable to collect consumer database due to lack of faith among
customers

• Unplanned expansion has led to financial crunch and pile up of stock

• Government apathy toward industries in the areas like; infrastructure &
government amendments

• Adapting incompatible strategies, formats & operational procedures

• Suppliers reducing the pay cycles and restricting credit payments

• Private label ratio is too high compared to branded label which is not
good and it will under estimate the store image

• Need to reconsider the applications of laws like Essential commodities
act 1955, Shop establishments act 1948, Standards weights and
measurements Act1976 & Consumer Act 1986

Specific Players

Big Bazaar

• Shallow assortments in the categories like, white goods, furniture &
cloths

• Too many private labels and with one or two brands in the all
departments

• Great potential for furniture and toys bazaar because non- availability
of any dominant player near the Vadapalani store

• Unable to collect consumer data through loyalty program because the
shoppers’ believe there information will be sold or shared with other
players.

31

• Area coverage is around 3 km, footfalls comes mostly form vadapalani
and some from Kodambakkam. Population strength combining both
area would be 1.5 Lacs but shopper’s are attracted from 70000
population of vadapalni (Not complete area)

• Consumer wants affordable price and good quality to be one bundle

Subhiksha

• Subhiksha stepped into non-core activities and wrong format which led
to confusion of subhiksha image

• Wrong strategy has led to pile of stock and cash crunch situation

• Suppliers & investors are unwilling to co-operate and demands
immediate payments. Ex. Zash Investments-Venture Capital ( Azim
Premji) & Kotak Mahindra moved to court for payments.

Spencer’s

• Spencer’s wrong location has led to closure of nearly 150 stores. Ex-
Triplicane store was shut

• Closing unviable store has led to pile of stocks and assets

Reliance fresh

• Reliance fresh outlet was closed in U.P because of political dominance
( based on amendment to APMC Act)

• Reliance farm to fork initiative is in trouble with Punjab government due
to political vengeance

Vishal Retail

• Vishal retail’s Mega Mart is in credit crunch due to excess stock and
under performing store

32

• Bad forecast of demand and ended up purchasing huge stock

• Unable to sell stock has led to debt of nearly Rs.750 Crores

33

Recommendations

Recommendations

To industries

34

• Work together at the back end operation in the areas like,
transportation, warehouse & common intermediaries. Share the
warehouse & logistics for movement of goods

• Initiate the farm to fork concept in order to reduce the intermediaries
which in return increases life of Veg/Fruits products

• Move the assets like, store racks, chairs & stocks to the competitors or
fellow players, who is at expansion mode

• Have common hierarchy & common pay around industries which will
reduce the manpower cost as well as reduces attrition rate

• Private label is new mantra for success and it gives huge margins. Its
better to have 60:40 ratio, means 60% private label & 40% branded
label in the areas like cloths, electronic items & white goods

• Good rapport with the supplier is must. Don’t buy goods from supplier,
who is providing great discounts at the same time demands payments
quickly

• Try to have investors on board, who shares common goals, patience &
provides long term commitments.

• Creation of a separate Ministry for Retailing in India

• Right time to buy properties at the cheap rate

• Get into agreement with the landlords on rent and sign a pact stating
that no increase in the rent for the next two years. Two years time will
stabilize the business. It’s better to have some rent rather than no rent
for property holders

To Players

Big Bazaar

35

• Concentrate on assortment for the categories like, white goods,
furniture and cloths.

• Furniture bazaar has great potential because of non-availability of
dominant player around the store. Promote the products around the
area and add medium assortments. Put sign board stating as new
arrivals

• Extend the area coverage beyond Vadapalni, and distribute products
catalogs with new products in the list and provide offers as well as
combo packing

• Attract youth customer by finding out the number of schools, college,
and other recreational spots. Distribute Pamphlet with latest products
and offers. Conduct contest, game show outside schools, colleges &
also provide birthday offers

• Try to provide 2 to 3 brands in the departments like, cloths, Luggage,
bags, shows, white goods & furniture

• Collect consumer information with assurance of not leaking or selling to
other players

Subhiksha

• In case of Subhiksha, only miracle should happen but Subhiksha can
seek government help

• They can sell the assets like, store racks, stock, and database to other
players and raise the money

Spencer’s

36

• Though being the early starter, they never utilized the condition. People
will always learn lesson in a hard way, hope Spencer’s learned from
there previous mistakes. Take decision by considering the lesson
learned during hard times

• Now it’s a right time to go for expansion mode because the real estate,
properties and rent rate have come down.

Reliance Fresh

• Don’t go too closer too any political parties and always try to be
diplomatic

37

CONCLUSION

Conclusion

38

Retail Industry has great potential to bring the technology, infrastructure and
enhance the people life style. Since the industry has experienced the bitter
past, now its time to take off. The industry as a whole need to concentrate on
few major things, which are listed below;

• It’s clear that unplanned expansion will lead to disaster; a good
concern will survive even during the hard times

• Back end operation needs to be worked in order to keep the cost in
tact. Only during hard times people will realize the mistakes. So
mistakes once committed and next time, have to make sure its not
repeated

• Be clear; distinguish yourself rather than being one among the lot.

• Push the Government to reconsider certain laws & in turn the
government needs to support the industry players in order to keep the
GDP growth in tact

• Private label always good but too many private labels will put the store
image under jeopardy

• Prepare for the unexpected things and keep all the tools like,
manpower, stock, and demand in tact to keep the recession away

• Next big thing is online purchase and concentrate on that

Supermarkets are back on track and ready for the expansion mode. Days
ahead, one can see clear sky for the retail industries.

39

BIBLIOGRAPHY
1 The Economic Times- “Indian retail sector to grow by 9 pc; to touch
$521 bn by 2012” on 23 Jul 2009-
http://economictimes.indiatimes.com/News/News-By-
Industry/Services/Retailing/Indian-retail-sector-to-grow-by-9-pc-to-touch-521-
bn-by-2012/articleshow/4812734.cms

2 Business Standard- “Retail sector disappointed; pins hope on
incentives” on 06 July 2009- http://www.business-
standard.com/india/news/retail-sector-disappointed-pins-
hopeincentives/66757/on

3 The Live Mint- “Subhiksha to seek stay on winding-up petitions next
week” on 10 July 2009-
http://www.livemint.com/2009/07/10204626/Subhiksha-to-seek-stay-on-
wind.html?h=B

4 Washington Post- “India's First Wal-Mart Draws Excitement, Not
Protest” on 13 July 2009- http://www.washingtonpost.com/wp-
dyn/content/article /2009/ 07/12/AR2009071202176.html

5 Business Standard-“India's retail trade to touch $590 bn in 2011-12:
Scindia” on 13 July 2009-http://www.business-standard.com/india/ news
/india %5Cs-retail-trade-to-touch-590-bn-in-2011-12-scindia/67522/on

6 Ndtv Profit- “Govt mulls regulator for cash & carry” on 22 July 2009

http://profit.ndtv.com/2009/07/21222304/Govt-mulls-regulator-for-cash.html

7 The Live Mint-“Slowdown-hit DollarStore shuts 41 stores” on 22 July
2009

http://www.livemint.com/2009/07/22213245/Slowdownhit-DollarStore-shuts
.html ?h=B

8 My digital- “Spencer to add 2.5 lakh sq ft of retail space” on 13 July 2009
http://www.mydigitalfc.com/news/spencer-add-25-lakh-sq-ft-retail-space-052

41

9 The Sydney morning herald- “Woolworths sees fresh hope in India” on 3
August 2009 http://business.smh.com.au/business/woolworths-sees-
fresh-hope-in-india-20090802-e5tr.html

10 Article By Satvik Varma - Principal Associate at the law firm Amarchand &
Mangaldas & Suresh A. Shroff & Co, India July 2009 http://www.halsburys.in/
retail-sector-bargaining.html

11 The Economic Times- “Retailers pool resources to beat slowdown
blues” 10 August 2009 http://economictimes.indiatimes.com/News/News-By-
Industry /Services/Retailing/Retailers-pool-resources-to-beat-slowdown-blues/
articles how/4875644.cms

12 FnB News- “India short by 10 million tonnes cold storage facility” 20
August 2009 http://www.fnbnews.com/article/detnews.asp?article id=25951
&sectionid=1

13 Live mint.com-“Retail stores continue to face slowdown troubles”

On 22 August 2009 http://www.livemint.com/2009/08/22002857/Retail-stores-
continue-to-face.html?h=B

14 Business Line-“Punjab Govt scraps deal with Reliance Retail” 25
August 2009
http://www.thehindubusinessline.com/2009/08/25/stories/20090825523 61
500.htm

15 The Economic Times-“Retailers reduce stocks to escape hoarding
charges” on 31 August 2009
http://economictimes.indiatimes.com/News/News-By-
Industry/Services/Retailing/Retailers-reduce-stocks-to-escape-hoarding-
charges/articleshow/4952376.cms

16 Wikipedia http://en.wikipedia.org/wiki/Supermarket

17 Wikipedia http://en.wikipedia.org/wiki/Piggly_Wiggly

18 Daily mail-“Recession Hits Tesco”
http://www.dailymail.co.uk/news/article-1091079/Recession-hits-Tesco-

42

Grocery-giants-sales-fall-lowest-figure-16-years-shoppers-turn-budget-
supermarkets.html

19 bNET-“Target Reorganizes Workforce, Attitude to Cope with
Recession”

28 January 2009 http://industry.bnet.com/retail/1000411/target-reorganizes-
work force-attitude-to-cope-with-recession/

20 Forbes.com-“Wal-Mart Scoffs At Recession” on 3 May 2009
http://www.forbes.com/2009/03/05/walmart-aeropostale-abercrombie-
markets-equity_retail.html

21 DNA Read the world-“Mum on service tax on rentals”

http://www.dnaindia.com/money/comment_mum-on-service-tax-on rentals
_127 1743

22 Business Standard-“India's retail trade to touch $590 bn in 2011-12:
Scindia” on 13July 2009 http://www.business-standard.com /india/news/india
%5Cs-retail-trade-to-touch-590-bn-in-2011-12-scindia/67522/on

23 The Economic Times-“No plans to open up retail sector further:
Minister” on 13 July 2009 http://economictimes.indiatimes.com/Economy/No-
plans-to-open-retail-sector-further/articleshow/4781016.cms

24 The Wall Street journal-“Pharmacy retailing to grow exponentially if
FDI norms eased” on16 August 2009
http://www.livemint.com/2009/08/16142 344 /Pharmacy-retailing-to-grow-
exp.html

25 Rediff Business – “Bata: Putting the best foot forward” on 31 August
2009

http://business.rediff.com/report/2009/aug/31/bata-putting-the-best-foot-
forward.htm

26 The wall street journal –“Retailers discover potential in the ‘back-to-
school’ market” on 3 August 2009 http://www.livemint.com/20
09/08/03223321/ Retailers-discover-potential-i.html?h=B

27 The economic Times-“Cookie Man basket now includes puffs,
pastries” on 21 July 2009 http://economictimes.indiatimes.com/News/News-

43

By-Industry/ Cookie-Man-basket-now-includes-puffs-
pastries/articleshow/4803883.cms

28 Business Standard-“High way on is menu” on Aug 2009
http://www.business-standard.com/india/news/highwayhis-menu/363793/

29 Business Line-“New Look to double retail clinics” 13 July 2009
http://www.thehindubusinessline.com/blnus/19131591.htm

44

APPENDIX
Meaning
The word retail is derived from the French word retailer, which means to
"cutting off, clip or divide the products, based on the consumer or customer
needs16. A supermarket is a grocery store which provides products that
satisfies daily needs of consumers, which is organized into departments. A
supermarket will have a minimum of 1500 to the maximum of 50000 SKUs
and traditional bigger than grocery store but small compared to hypermarket

Evolution
In olden days there is no such word called tailor made products to fulfill the
customer needs. In the beginning of 19th century there is only a market where
the buyers and sellers come together in one place and sell their products,
which is still being practiced in most of the rural area. In between 1920-50
things were changing in the west; more concentration was given for the
customer preference.

During 1st and 2nd world war many revolution taken place like, industry
revolution, technology, invention and innovation. These innovation and
invention has led to development in many industries and one among them
was retail industries.

Before the concept of self services introduced to the general public, it was
general stores taking care of the business of satisfying consumer. Then came
the revolution in the form of self services which was introduced by American
entrepreneur Clarence Saunders and his Piggly Wiggly stores17. It helped
to reduce the time taken by serving every consumer. Most of the products
never came in desired wrapped size rather than the merchants have to
measure the size based on the consumer needs and it took lot of time to
serve the consumer. Then self service concept was adopted by many
merchants who want to start a supermarket to capitalize the market. After that
many concept and types of services has evolved over the years, based on the
changing environment and economic condition.

46

Types of formats

Many formats have evolved over the years with a view of serving the
consumer and by adapting to the changing environment. Following are the
types of services evolved over the years;

47

FORMAT DESCRIPTION VALUE PROPOSITION

Supermarket • Self service retail outlet One stop shop which
provides consumer needs.
• Size- 20000 to 30000
Sq. feet

• SKUs- 20 to 40000

• Percentage of food- 80%

• Average price, variety
and assortments
Shop which provides
essential and staple goods
Limited
• Size 7–10000 Sq. feet and other stationary item.
Assortment
Supermarket • SKUs- 1000 to 1500

• Percentage of food- 90%

• Lowest price, narrow
variety & shallow
assortments

Hypermarket • Bigger than supermarket Low price, humpty choice
in terms of size, product and refreshing centre
range and mostly attached to it.
located outside the city
or edge of the city.
• Deep assortment, broad
variety & low price
• Size – 1 to 2 Lacs
• SKUs – 1 to 2 Lacs
• Percentage of food –
70%
Convenience • Small self services Extended hours of service
store format located in busy and convenient location.
urban areas

• Size-2-3000 Sq. feet

• SKUs- 2 to 3000

• Narrow variety, shallow
assortment & high price

Specialty • Focus on specific Large number of brands is
48
Store consumer need. provided.

• Size- 4 -12000

International Players
A) Tesco, world second largest retailer laid out strategy to beat recession

Advertising board placed outside the store18

B) Target has reorganized the workforce to beat recession and listed certain
measures to beat recession19

 Suspending salary increases for senior management, Ending share
repurchasing and Implementing store productivity improvements

 Reducing planned new store openings and cutting capital spending by
$1 billion

 Curtailing outside contractor support, travel, entertainment and related
headquarters operating expenses & Tightening up on credit cards

C) WAL-MART footfalls have increased during recession due to its low price
strategy, private label contribution and value for money20

Indian scenario
The Indian retail sector accounts 12% of GDP and employs 7.3 % of total
work force21. The retail trade is estimated to grow at 13 per cent per annum
from $322 billion in 2006-07 to $590 billion in 2011-1222. The organized retail
trade segment of the industry, which presently stands at just 4 percent, will
grow at a much faster pace of 45-50 percent, to grab a 16-percent share of
the market by 2011-1223

49

Market size snap shot

 India’s pharmacy retail market is estimated at $4.5 billion24

 The Indian footwear market is estimated to be about Rs 10,000 crore25

26
 The back to school market is worth around Rs500-650 crore

 The premium end biscuit market is worth of Rs 5,000 crore27

 Coffee chain market in the country is worth around Rs 400 crore28

 Indian organized health & wellness market estimated at Rs 250 crore 29

Indian retail players are listed below;
• REI AGRO LTD- 6ten Hyper and 6ten super, launched at last quarter
of fiscal year 06-07

• RPG Retail- Spencer’s daily-1996

• Pantaloon Retail – Big Bazaar 2001

• The Tata Group- Star India Bazaar- 2004

• K Raheja Corp Group- Hyper city – 2006

• Pyramid Retail- Trumart 2005 march

• Nilgiri’s- Nilgiris 1973

• Subhiksha retail trading ltd - Subhiksha

• Trinethra- Fab city super market

• Reliance Retail- Reliance fresh, Reliance super & Reliance mart- 2006

• Aditya Birla Group – More for you- 2006

Questionnaire
This is Chinna Raja Giri.M, doing survey on supermarkets. I would be grateful,
if you go through these questions and give your feedback.

Supermarket: Place: Time:
Date:

1 How often do you shop the following items?

50

Product Frequency Place/ store

Alcoholic Beverage

Baby Foods

Books& Magazines

Breads and bakery Products

CD/DVD

Clothing & Footwear

Dairy Products

Frozen Foods

Greeting Cards

General Groceries

House appliances

Luggage/ Bags

Snacks / Soft Drinks

Toys

Veg/Fruits

2 Do the sales people assist you during the purchase as and when required?

(a) Yes (b) No

3 Sometimes do you purchase beyond planned budget?

(a)Yes (b) No (c) Not sure/ May be ____________

4 Given below are sentence which followed by space. Please fill the space which
appropriately suits the sentence

Some one who purchase at this supermarket experience is_______________

Products at this supermarket are______________

Purchasing at this Supermarket____________

Sales people at this Supermarket are_____________

5 Please rank the criteria that is most important in choosing the supermarket

51

Criteria Rank

Place or location ----------

Quality ----------

Product variety ----------

Services ----------

Price ----------

Car/ Bike parking ----------

Ambience ----------

Health related product ----------

Opening & Closing Time ----------

6 Some criteria have listed below to describe Supermarket. Please select the best
option that describes this store

Excellent V.good Good Fair Poor

Product variety

Store ambience

Price

Service

Location

Parking space

Diet product

Loyalty program

Promotion activity

Easy to locate product

Quality

Food Coupon/Sodex

Billing counter

Offers/discounts

7 Has your buying pattern got affected by recession?

 Yes gone down by 40%

52

 Yes gone down 20-40%

 Yes gone down by 10-20%

 Yes gone down by < 10%

 No change

 Gone up by ______ %

8 Say few words about loyalty program_______________________________

9 How would you rate this store?

Probably Worst__________________________________________ Probably Best

10 20 30 40 50 60 70 80 90 100

10. What comes to your mind when you think of this store?

___________________________________________

General feedback:

Name:

Age: Location:

Questionnaire for Management
Supermarket:

Date: Place: Time:

Dear supermarket store manager/ supervisor/ store in charger, it is a great pleasure to be on
this reputed company. I would be grateful, if you help me in providing information for the
following questions.

Questionnaire

1 What challenge the company is facing during this hard time?

53

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

2Does the sales have come down?

(a) Yes (b) No

3 We would like to get your opinion about the suppliers. Please select the option that suits to
describe the suppliers

Agree Neither agree Disagree
- Nor Disagree

Suppliers are highly co-operative during this hard time

Suppliers accepts flexible payments

Delivery of goods is made on time

Damaged and expired goods are taken back

Ads aired by suppliers during this time is effective

Suppliers share losses

Suppliers are taking the feed back and rectify accordingly

Suppliers pushing stock or asking to overstock

4 Instruction: Please select the option which describes about loyalty program and it’s
acceptance in India

Agree Neither agree Disagree

Nor disagree

Loyalty program is an easy way to increase business

One way to collect the data

Increase the loyalty

Helps in selling more products

Difficult to convince the customer

54

6 Instruction: We would like to get your opinion about the government contribution towards
retail (Supermarket) development in the country. Please contribute your opinion about the
government initiative

Infrastructure provided by the government is __________________________________

Tax incentives by the government is _________________________________________

Rent and tax rate are______________________________________________________

Real estate constraints_____________________________________________________

Rules & regulation to start a supermarket is____________________________________

General feedback:

Name: Signature: Designation:

55

RESPONSE SHEET

Response sheet 1

Details of student

Name: Chinna Raja Giri.M

Batch: PGP/FW/07-09

Specialization: MBA (Marketing & Finance)

Phone no: 9840692752

Email Id: getto.chinna@yahoo.co.in or getto.chinna@gmail.com

56

Thesis Id: (FW79/01092/MKT)

Title of the thesis: “STRATEGIES TO OVERCOME RETAILER’S WOES
(SUPERMARKETS)”

Statement of Discussion: Conversation took place on the following area;
Issues, project aim, scope, store under study and time span required to
complete the work.

Date when the guide was conducted: 20/08/09

Response sheet 2

Details of student


Batch: PGP/FW/07-09


Phone no: 9840692752


57


(SUPERMARKETS)”

Statement of Discussion: Rough outline for the questionnaire were framed
and discussion were made on the area that needs to be touched in the
questionnaire.

Date the guide was conducted: 28/08/09

Response sheet 3

Details of student


Batch: PGP/FW/07-09


Phone no: 9840692752


58


(SUPERMARKETS)”

Statement of Discussion: Questions was handed over to the consumers and
management people to find out any difficulty in filling the questions.


Response sheet 4

Details of student


Batch: PGP/FW/07-09


Phone no: 9840692752


59


(SUPERMARKETS)”

Statement of Discussion: Changes were made and final questions was
given to the respondents


Response sheet 5

Details of student


Batch: PGP/FW/07-09


Phone no: 9840692752


60


(SUPERMARKETS)”

Statement of Discussion: Findings, recommendation and conclusion was
discussed in order to make the correction


Response sheet 6

Details of student


Batch: PGP/FW/07-09


Phone no: 9840692752


61


(SUPERMARKETS)”

Statement of Discussion: Final lay out was decided and final discussion
also included about the future of retail industries


62

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