Satish musti 04-customer satisfaction towards supermarket

ANALYSIS OF CUSTOMER SATISFACTION TOWARDS SUPERMARKET

M.P.B.I.M, Bangalore

1

A DISSERTATION

ON

“Analysis of customer satisfaction towards supermarket”

Submitted in partial fulfilment of the requirement for MBA

Degree of Bangalore University

BY

SATISH S MUSTI Register Number

04XQCM6080

Under the guidance of

Prof. Shinu Abhi

M.P.Birla Institute of Management

Associate Bharatiya Vidya Bhavan

#43, Race Course road,

Bangalore-560001



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D E C L A R A T A I O N

I hereby declare that the project report titled “Analysis of customer satisfaction towards

supermarket.” is a record of independent work carried out by me towards the partial

fulfillment of the requirements for the Masters Degree in Business Administration course of

Bangalore University, at M.P. Birla Institute of Management, Associate Bharatiya Vidya

Bhavan, Bangalore – 560001.

This has not been submitted for the purpose of any award or degree or diploma of any other

university or institution.

Place: Bangalore (Mr. Satish S Musti)

Date: 04XQCM6080.



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PRINCIPAL’S CERTIFICATE This is to certify that Mr. Satish S Musti, bearing registration no.04XQCM6102 has

undertaken a research project and has prepared a report titled

“ANALYSIS OF CUSTOMER SATISFACTION TOWARDS SUPERMARKET”,

Under the guidance of Prof. Shinu Abhi. This has not formed a basis for the award of any

degree/ diploma for any other university/Institution.

Place: Bangalore

Date: Dr.Nagesh.S.Malavalli



4

GUIDE CERTIFICATE

This is to certify that Mr. Satish S Musti, bearing registration no.04XQCM6080 has

undertaken a research project and has prepared a report titled

“ANALYSIS OF CUSTOMER SATISFACTION TOWARDS SUPERMARKET”,

Under my guidance. This has not formed a basis for the award of any degree/ diploma for any

other university.

Place: Bangalore

Date: Prof. Shinu Abhi



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A C K N O W L E D G E M E N T

At the very outset, I take the opportunity to thank Dr. Nagesh Malavalli, Principal, M.P.

Birla Institute of Management for providing me with the academic support. I express my

sincere regards and gratitude for every individual linked with my Research Work.

One such person is my guide for the semester Prof. Shinu Abhi, whose inspiring words

made me, put in all I had to offer. His continuous guidance and suggestions are the cardinal

aspects that have ultimately led me to see this fruitful end.

I would like to thank all the respondents and personnel for their co-operation and providing

the relevant data required.

I express my sincere gratitude to all my friends and well-wishers who helped me in

completing this Project Report.

Last but not the least; I would like to thank the Almighty for being there always in this

endeavor.

Yours truly

Mr. Satish S Musti



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CHAPTER

PATICULARS Page No.

1

EXECUTIVE SUMMARY

1-2

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INTRODUCTION TO RETAILING

• Retailing • Supermarket • Retailing in India • Indian retail market • Food retailing in India • FDI in retail • Developments in retail sector

3-35

3

REVIEW OF LITERACTURE

36-39

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DESIGN OF THE STUDY

• Research gap • Problem statement • Objective of the study • Scope of the study • Contribution from the study

RESEARCH METHODOLOGY • Research design • Sources of data collection

SAMPLING DESIGN • Sample technique • Sample unit • Sample description

RESEARCH ANALYSIS RESEARCH LIMITATIONS

40-43

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DATA ANALYSIS & INTERPRETATION

44-61

6

MAYOR FINDINGS OF THE RESEARCH

62

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RECOMMENDATIONS

63



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EXECUTIVE SUMMARY Amidst the competitive and complex market scenario in India, it is difficult to

analyze the changing attitudes, likes, dislikes and satisfactory levels of customers. The field is

such that only the ending and most outstanding will survive without being choked. The

attempt made here is to analysis the customer satisfaction level towards Supermarket.

On the outset itself the problem was identified and defined as to assess the customer

satisfaction towards food and grocery retailing and design marketing strategies for

enhancement of customer happiness in clear terms with the help of a pilot survey. The

researcher carried out this survey keeping in mind the need and importance of the proposed

study. And this has enabled the researcher to easily determine the scope and objectives of this

study. Descriptive approach was considered ideal for the study as it entailed the ever

changing opinion of the customers.

Simple random sample has been taken as 100 respondents with 20 respondents from

each of the retail outlet brands such as food world, subhiksha, spencers, fabmall and reliance

fresh. These outlets have been from mahalaxmi layout and rajaji nagar in Bangalore north.

They were considered adequate to represent the entire characteristics of the population for the

study. Primary data was collected using structured questionnaire as an effective instrument.

The collected data was tabulated for the purpose of consolidation and logicality, and the same

was analyzed and interpreted in a judicious way to facilitate systematic progression of the

subject matter of the study.

The findings were taken up for drawing logical conclusions. Based on the findings

suitable suggestions and recommendations were brought out for the benefits Supermarket.

The respondents were presented with a well structured questionnaire as a part of the

survey method, which was easy to fill up. And the opinions of the respondents were rated on

a percentage to arrive at the level of satisfaction. The main sources of data were the

questionnaire and the other relevant magazines, books and websites.



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Thus the survey centred on the features of Supermarket most preferred by the

customers. The survey indicates that most or all-most all the customers are satisfied with

provision store and it is because of its quality and availability of wide range of products, free

home delivery, replacement on dissatisfied products, good packing facilities, price reduction

on total purchase, friendly and helpful salesperson, good services, etc

However, it is observed that there is lack of good parking facilities, discounts,

coupons, ventilation, and lighting in some of the Supermarket to reach out genuinely to all

masses.



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RETAILING

Retailing includes all the activities involved in selling goods or services directly to

final consumers for personal, nonbusiness use. A retailer or retail store is any business

enterprise whose sales volume comes primarily from retailing.

Any organization selling to final consumers whether it is a manufacturer, wholesaler

or retailer is doing retailing. It does not matter how the goods or services are sold or where

they are sold.

TYPES OF RETAILERS

Consumers today can shop for goods and services in a wide variety of retail

organizations. There are store retailers, nonstore retailers and retail organizations. Perhaps the

Best-know type of retailer is the department store.

The most important retail-store types are described.

Speciality Store: Narrow product line with a deep assortment. A clothing store would be a

single-line store; a men’s clothing store would be a limited-line store; and a men’s custom-

shirt store would be a super speciality store

Examples: Athlete’s Foot, The body shop

Departmental store: Several product lines-typically clothing, home furnishings, and

household goods-with each line operated as a separate department managed by specialist

buyers or merchandisers

Examples: Sears, JC Penney.

Supermarket: Relatively large, low-cost, low-margin, high-volume, self-service operation

designed to serve total needs for food, laundry and household products.

Examples: Kroger, Food world, big bazaar.



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Convenience Store: Relatively small store located near residential area, open long hours,

seven days a week and carrying a limited line of high-turnover convenience products at

slightly higher prices, plus takeout sandwiches, coffee, soft drinks.

Examples: 7-Eleven, Circle K.

Discount Store: Standard merchandise sold at lower prices with lower margins and higher

volumes. Discount retailing has moved into speciality merchandise stores, such as discount

sporting-goods stores, electronics stores and bookstores.

Examples: Wal-Mart, Circuit city.

Off-price retailer: Merchandise bought at less than regular wholesale prices and sold at less

than retail; often leftover goods, overruns and irregulars.

Examples: Sam’s club, Max clubs.

Superstore: About 35000 square feet of selling space traditionally aimed at meeting

consumers’ total needs for routinely purchased food and nonfood items, plus services such as

laundry, dry cleaning, shoe repair, check cashing, and bill paying. A new group called

category killers carries a deep assortment in a particular category and a knowledgeable staff.

Examples: IKEA, Home Depot.

Catalog Show room: Broad selection of high-markup, fast-moving, brand-name goods at

discount prices. Customers order goods from a catalog, and then pick these goods up at a

merchandise pickup area in the store.

Example: Service Merchandise.

Levels of service: The wheel-of-retailing hypothesis explains one reason that new store types

emerge. Conventional retail stores typically increase their services and raise their prices and

less service. New store types meet widely different consumer preferences for service levels

and specific services.



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Retailers can position themselves as offering one of four levels of service:

1. Self service: Self service is the cornerstone of all discounts operations. Many

customers are willing to carry out their own locate-compare-select process to save

money.

2. Self-selection: Customers find their own goods, although they can ask for assistance.

3. Limited service: These retailers carry more shopping goods and customers need

more information and assistance. The stores also offer services (such as credit and

merchandise-return privileges).

4. Full service: Salespeople are ready to assist in every phase of the locate-compare-

select process. Customers who like to be waited on prefer this type of store. The high

staffing cost, along with the higher proportion of specialty good as and slower-

moving items and the many services, results in high-cost retailing.

MARKETING DECISIONS

In the past retailers held customers by offering convenient location, special or unique

assortments of goods, greater or better services than competitors and store credit cards. All of

this has changed. Today, national brands such as Calvin Klein, Izod and Levi’s are found in

department stores, in their own shops, in merchandise outlets and in off-price discount stores.

In their drive for volume, national-brand manufacturers have placed goods everywhere. The

result is that retail-store assortments have grown more alike.

Service differentiation also has eroded. Many department stores trimmed services and

many discounters have increased services. Customers have become smarter shoppers. They

do not want to pay more for identical brand, especially when service differences have

diminished; nor do they need credit from a particular store, because bank credit cards are

almost universally accepted.

Supermarkets have opened larger stores, carry a larger number and variety of items

and upgrade facilities. Supermarkets have also increased their promotional budgets and

moved heavily into private brands. Retailers’ marketing decisions in the areas of target



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market, product assortment and procurement, services and store atmosphere, price,

promotional and place.

Target Market: A retailer’s most important decision concerns the target market. Until the

target market is defined and profiled, the retailer cannot make consistent decisions on product

assortment, store décor, advertising messages and media, price and services levels. Some

retailers have defined their target markets quite well:

Product assortment and procurement: The retailer’s product assortment must match the

target market’s shopping expectations. The retailer has to decide on product-assortment

breadth and depth. The real challenge begins after defining the store’s product assortment and

that is to develop a product-differentiation strategy.

Here are some possibilities:

• Feature exclusive national brands that are not available at competing retailers. Thus

Saks might get exclusive rights to carry the dresses of a well-known international

designer.

• Feature mostly private branded merchandise: Many supermarket and drug chains

carry private branded merchandise.

• Feature blockbuster distinctive merchandise events: Bloomingdale’s will run month

shows featuring the goods of another country, such as India, throughout the store.

• Feature surprise or even-changing merchandise: Benetton changes some portion of its

merchandise every month so that customers will want to drop in frequently.

• Feature the latest or newest merchandise first: The sharper image leads other retailers

in introducing electronic appliances from around d the world.

• Offer merchandise customizing services: Harrod’s of London will make custom-

tailored suits, shirts and tries for customers in addition to ready-made menswear.

• Offer a highly targeted assortment: Circuit city’s decision to drop major appliances

gave it more than 200 square feet to stock more units of higher-margin electronics.

Remodeling also expanded total floor space by an additional 10,000 square feet,

providing even more for higher-margin home electronics.



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SERVICES AND STORE ATMOSPHERE

Retailers must also decide on the services mix to offer customers:

• Prepurshase services include accepting telephone and mail orders, advertising,

window and interior display, fitting rooms, shopping hours, fashion shows, trade-ins.

• Postpurchase services include shipping and delivery, gift wrapping, adjustments and

returns, alterations and tailoring, installations, engraving.

• Ancillary services include general information, check cashing, parking, restaurants,

repairs, interior decorating, credit, rest rooms, and baby-attendant service.

The services mix is a key tool for differentiating one store from another; so is

atmosphere. (See “Marketing for the New Economy: Extreme Retailing”.) Atmosphere is

another element in the store arsenal. Every store has a physical layout that makes it hard or

easy to move around. Every store has a “Look”. The store must embody a planned

atmosphere that suits the target market and draws consumers toward purchase.

PRICE DECISION

Prices are a key positioning factor and must be decided in relation to the target market,

the product-and-service assortment mix and competition. All retailers would like to achieve

high volumes and high gross margins. They would like high Turns x Earns, but the two

usually do not go together. Most retailers fall into the high-makeup, lower-volume group

(fine specialty stores) or the low-markup, higher-volume group (mass-merchandisers and

discount stores). Within each of these groups are further gradations).

Retailers must also pay attention to pricing tactics. Most retailers will put low prices

on some items to serve as traffic builders or loss leaders. They will run storewide sales. They

will plan markdowns on slower-moving merchandise.

Some retailers have abandoned “sales pricing” in favour of everyday low pricing

(EDLP). EDLP could lead to lower advertising costs, greater pricing stability, a stronger

image of fairness and reliability and higher retailer profits. Frank Feather cites a study

showing that supermarket chains practicing everyday low pricing are often more profitable

than those practicing sales pricing.



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PROMOTION DECISION

Retailers use a wide range of promotion tools to generate traffic and purchases. They

place ads, run special sales, issue money-saving coupons and run frequent shopper-reward

programs, in-store food sampling and coupons on shelves of at checkout points. Each retailer

must use promotion tools that support and reinforce its image positioning. Fine stores will

place tasteful full-page ads in magazines such as Vogue and Harper’s. They will carefully

train salespeople to greet customers, interpret their needs, and handle complaints.

PLACE DECISION

Retailers are accustomed to saying that the three keys to success are “location,

location and location”. Customers generally choose the nearest bank and gas station.

Department-store chains, oil companies and fast-food franchisers exercise great care in

selecting locations. The problem breaks down into selecting regions of the country in which

to open outlets, then particular cities and then particular sites. A supermarket chain might

decide to operate in the Midwest; in the cities of Chicago, Milwaukee and Indianapolis; and

in 14 locations, mostly suburban, within the Chicago region.

Retailers can locate their stores in the central business district, a regional shopping

center, a community shopping center, a shopping strip, or within a larger store.

• General business districts: This is the oldest and most heavily trafficked city area,

often known as “downtown”. Store and office rents are normally high. Most

downtown areas were hit by a flight to the suburbs in the 1960s, resulting in

deteriorated retailing facilities; but in the 1960s, a minor renaissance of interest in

downtown apartments, stores and restaurants began in many cities.

• Regional shopping centers: These are large suburban malls containing 40 to 200

stores. They usually draw customers from a 5 to 20 mil radius. Malls are attractive

because of generous parking, one-stop shopping, restaurants and recreational

facilities. Successful malls charge high rents and may get a share of stores’ sales.

• Community shopping centres: these are smaller malls with one anchor store and

between 20 and 40 smaller stores.



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• Strip malls (also called shopping strips): these contain a cluster of stores, usually

housed in one long buildings, serving a neighbourhood’s needs for groceries,

hardware, laundry, shoe repair and dry cleaning. They usually serve people within a

five to ten–minute driving range.

• A location within a larger store: Certain well-known retailers-McDonalds’s,

Starbucks, Nathan’s, Dunkin’ Donuts-locate new, smaller units as concession space

within larger stores or operations such as airports, schools or department stores.

In view of the relationship between high traffic and high rents, retailers must decide

on the most advantageous locations for their outlets. They can use a variety of methods to

assess locations, including traffic counts, surveys of consumer shopping habits and analysis

of competitive locations. Several models for site location have also been formulated.

Retailers can assess a particular store’s sales effectiveness by looking at four

indicators:

1. Number of people passing by on an average day.

2. Percentage who enter the store

3. Percentage of those entering who buy

4. Average amount spent per sale.



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TRENDS IN RETAILING

At this point, the main developments retailers and manufacturers need to take into

account in planning competitive strategies.

1. New retail forms and combinations: some supermarkets include bank branches.

2. Growth of intertype competition: Different types of stores–discount stores, catalog

showrooms, department stores-all compete for the same consumers by carrying the

same type of merchandise.

3. Growth of giant retailers: Through their superior information systems, logistical

systems, and buying power, giant retailers are able to deliver good service and

immense volumes of product at appealing prices to masses of consumers. They are

crowding out smaller manufacturers what to make, how to price and promote, when

and how to ship and even how to improve production and management.

Manufacturers need these accounts; otherwise they would lose 10 to 30 percent of the

market. Some giant retailers are category killers that concentrate on one product

category such as toys (Toys “R” Us), home improvement (home Depot), or office

supplies (staples). Others are super centers that combine grocery items with a huge

selection of nonfood merchandise (Kmart, Wal-Mart).

4. Growing investment in technology: Retailers are using computers to produce better

forecasts, control inventory costs, order electronically from suppliers, send e-mail

between stores and even sell to customers within stores. They are adopting checkout

scanning systems, electronic fund transfer, electronic data interchange, in-store

television, store traffic radar systems and improved merchandise-handling systems.

5. Global presence of major retailers: Retailers with unique formats and strong brand

positioning are increasingly appearing in other countries.

6. Selling an experience, not just goods: Retailers are now adding fun community in

order to compete with other stores and online retailers. There has been a marked rise

in establishments that provide a place for people to congregate, such as coffeehouses,

tea shops, juice bars, book shops.

7. Competition between store-based and non-store-based retailing: Consumers now

receive sales offers through direct mail letters and catalogs and over television,

computers and telephones. These non-store-based retailers are taking business away



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from store-based retailers. Some store based retailers initially saw online retailing as a

definite threat. Home Depot shocked its top vendors ( Black & Decker, Stanley tools,

etc) by issuing a memo implying that if they started to sell online, Home Depot might

drop them as suppliers; but now Home Depot is finding it advantageous to work with

online retailers.



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SUPERMARKET

Inside Le Marches shop in New Delhi. With 15 million shops, India has the highest density of

retail outlets in the world.

Large self-service shop selling food and household goods. The first, Piggy-Wiggly

was introduced by US retailer Clarence Saunders in Memphis, Tennessee, 19919.

Supermarkets have a high turnover and are therefore able to buy goods in bulk. This cuts

down the unit cost and, in turn, the price which further encourages business.

Classic self-service 4,000-20,000sq-ft with shopping carts as popularized in India by

‘Crazy Boys’ films with typical focus on regular groceries, household goods and personal

care products. Tesco and Safeway are famous chains. In India Nanz Food world and Nilgirils

are popular name.



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STRENGTHS OF SUPERMARKET FROM CONSUMER POINT OF VIEW:

Supermarket format of retailing try to fulfill these expectation through following

merits.

1. It saves the time because customer will get everything at a one place with self-service.

2. It provides perfect platform for comparison of a same product from different company

with a different brand name with complete information, which could be required to

compare the brands and take a best purchasing decision.

3. Multi brand department stores offer an intermediate solution with complete brand

choice to the customer and spacious shop, which allows the manufacturers to present

his product appropriately.

4. Sometimes customer also get discount because multi brand stores go for bulk

purchase and pass the earning of differences toward the customer.

5. Customers get a detail and computerize bill so there is no possibility of any

discrepancy in billing.



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CHALLENGES FACED BY SUPERMARKET

Though theoretically, supermarket stores offer a number of reasons to purchase goods

from supermarket instead of purchasing from traditional provision store. It will save the time,

give a spacious purchasing experience, provide platform to get variety scheme and services

and faultless and accurate computerized billing system etc. In spite of having all these

benefits, supermarket still has not proved itself successful in India market because still it is

struggling for survival and facing the following problems.

1. Very low sales volume.

2. According to experts, the real boom in organized retailing will come once

supermarkets starts selling daily need goods at 90% of the regular price that result into

low sales turnover because of that there is very low gross margin, low net margin and

very low turn over per sq feet compare to unorganized sector in Indian and organized

sector in foreign.

3. Another very important thing is gross margins return on investment. But the problem

of Indian retailing is to source on credit and sells on cash. Yet, retail margins in India

are lower than overseas. The large format players face high costs, especially in

comparison with traditional retailers that pay very little rent for real estate.

4. Competition from unorganized retail shop.

5. Typical mindset and psychology of Indian middle class. So, it would be a biggest

challenge to transform the psychology of Indian middle class segment.

6. From strategic decision point of view another biggest problem is to select a right retail

format to fight against unorganized retail organization. Thus, there is question

regarding very existence and survival of supermarket because still it has not proved

successful in India.

7. Still organized sector does not provide full satisfaction to customer in terms of

quality, quantity, competitive price and convenience in terms of various service,

assessable location and layout of supermarket.



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RETAILING IN INDIA

Retailing in India is gradually inching its way to becoming the next boom industry.

The whole concept of shopping has altered in terms of format and consumer buying

behaviour, ushering in a revolution in shopping. Modern retail has entered India as seen in

sprawling shopping centres, multi-storied malls and huge complexes offer shopping,

entertainment and food all under one roof. By 2007, an estimated 50 million square feet of

quality retail space will be available across India. This is in sharp contrast to the situation a

decade ago. Then, there was not one shopping mall in India. Today, in Delhi, Mumbai and

their suburbs, there are about 100 malls. Of the 700 new malls coming up all over India, 40

per cent are concentrated in the smaller cities. Organized retailing in small-town India is

growing at a staggering 50-60 per cent a year compared to 35-40 per cent in the large cities.

India's vast middle class and its almost untapped retail industry are key attractions for global

retail giants wanting to enter newer markets.

Traditional markets are making way for new formats such as departmental stores,

hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearing

in metros and second-rung cities alike, introducing the Indian consumer to an unparalleled

shopping experience.

As organized retailers carve out a bigger piece of the retail pie for themselves it’s an

exciting time for the retail sector.

With the growth of organized retailing estimated at 40 per cent (CAGR) over the next

few years, Indian retailing is clearly at a tipping point. India is currently the ninth largest

retail market in the world



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The Indian retailing sector is at an inflexion point where the growth of organized

retail and growth in the consumption by Indians is going to adopt a higher growth trajectory.

The Indian population is witnessing a significant change in its demographics. A large young

working population with median age of 24 years, nuclear families in urban areas, along with

increasing working-women population and emerging opportunities in the services sector are

going to be the key growth drivers of the organized retail sector.

Initially, this was about Indian corporate houses rolling out malls and supermarkets,

but with Wal-Mart coming into the Indian market, the era of the superstore is dawning.

Unlike the kirana stores that served us for decades, this new breed of retail chains is heavily

dependent on IT.

Wal-Mart, the world’s largest retailer, and Bharti Enterprises have signed a

Memorandum of Understanding (MoU) to explore business opportunities in the Indian retail

industry. This joint venture will mark the entry of Wal-Mart into the Indian retailing industry.



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THE INDIAN RETAIL INDUSTRY / MARKET

The Indian retail industry in valued at about $300 billion and is expected to grow to

$427 billion in 2010 and $637 billion in 2015.About 98% of the retail trade in India is in the

hands of 15-20 million unorganized small retailers. In our daily lives, we find them

everywhere, as kirana and pan shop vendors, hawkers, sellers of fruits and vegetables, either

at the street corner or carrying their wares in baskets or carts to deliver them at the doorstep

of the residents. They are invisible but omnipresent. They supply a wide variety of items that

we consume daily. They account for as much as 10 percent of the GDP. Only four percent of

the retailers in the unorganized sector have shops that occupy more than 500 sqft. Most of

them are so small that they occupy not more than 30-40 square feet. In a way, small retail

business in India helps absorb about sex to seven percent of the huge mass of the unemployed

for whom the gov’t agencies are struggling hard to find employment by investing thousand

crores of rupees every year.

Only three percent of Indian retail is organized. It is estimated at only US$ 8 billion.

However, the opportunity is huge—by 2010, organized retail is expected to grow to US$ 22

billion. It is expected to grow 25 per cent annually, driven by changing lifestyles, strong

income growth and favorable demographic patterns. It is estimated that 70 million Indians in

a population of about 1 billion now earn a salary of $18,000 a year, a figure that is set to rise

to 140 million by 2011. Many of these people are looking for more choice in where to spend

their new-found wealth.

Strong fundamental changes including the changing lifestyles of Indian people, rising

incomes etc have fuelled the growth of modern retailing and has attracted investment in this

sector.



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With the government being in the process of determining the level of FDI in Retail, a

number of foreign players including Wal-Mart, Carrefour, tesco have evinced interest for

entering India in a big way.

Retail in India has grown beyond mere retailing and now encompasses sectors such as

telecom, automobiles and finance.

Given the size, and the geographical, cultural and socio-economic diversity of India,

there is no role model for Indian suppliers and retailers to adapt or expand in the Indian

context



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FOOD RETAILING IN INDIA

Food and Grocery (F&G) Retail Market in India

Unlike in the past, the debate today is no longer whether food and grocery retail in India

would grow but rather how fast can it grow and what challenges need to be overcome. Tata

Strategic Management Group (TSMG) projects that organized F&G retail in India could grow

to Rs. 1750Bn (at current prices) by 2015 representing 11% of overall F&G sales. A recent

world bank report on India’s fruits and vegetables trade comes up with some sour facts India

producers 11 percent of the world’s vegetables and 15 percent of fruits at 53-63 percent of

global prices, but its share in global fruits and vegetables trade is 1.7 percent and 0.5 percent

respectively.

Key Challenges in Food Retailing

Demand Side

Penchant for fresh/home-made and value consciousness

The Indian consumer, unlike his western counterpart, has a penchant for freshly cooked food

over packaged food. This is a result of dietary patterns, poor electricity supply, low

penetration of refrigerators and a family structure where one of the primary roles of the

housewife is feeding the family. The Indian consumer is extremely value conscious. A

TSMG study indicates that packaged food players need to drive down prices by almost 35-

40% to be comparable on cost with home made food.

Diversity of tastes and preferences

Multiple cultures, languages and religions have a huge bearing on the tastes and preferences

of the Indian consumer. This will pose a challenge for players aspiring to develop a pan

Indian presence

Willingness to travel



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Given the current density of retail outlets in India, retailers will have to motivate the

consumer to trade convenience with price, range and ambience.

Supply Side

Sourcing base and efficiency

The fragmented agri supply base coupled with an inadequate legal framework make it

difficult for retailers and food processors to procure quality produce at competitive costs

directly from farmers. The small size of the food processing industry further limits the supply

options.

Real estate availability and cost

Rentals account for 7-7.5% of the total costs for organized retail in India against global bench

marks of less than 3%. Real estate availability and costs will continue to remain a challenge

in the retail industry with factors like adequate parking, ambience and proximity being the

key drivers of footfalls.

Manpower availability

As organized retail expands, there is expected to be a dearth of skilled manpower. The lack f

institutions and courses for different aspects of retail management will have an impact on the

overall supply of quality manpower.



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Emerging trends in food retailing

Big becoming bigger

Globally, retailers have realized that size drives profitability, not just through economies of

scale in operations but also through higher bargaining power leading to better margins. While

many players are entering the retail space in India currently, the growth stage will be

characterized by rapid expansion and consolidation among these players.

Rise of organic foods and health and wellness segment

Consumer attitudes and preferences are undergoing a shift owing to factors like increased

disposable incomes, changes in lifestyle patterns, shift in age structure, increased number of

working women and multi cultural exposure. These would lead to increasing health

consciousness in the future. Organic foods and wellness products would be emerging

opportunities in the years to come.

Increasing focus on private labels.

As competition in the organized retail market increases, discounts and promotions are

expected to play a critical part in generating footfalls. To counter the impact on profitability,

organized players will find it more attractive to promote private labels or store brands given

their higher margins. The consumer too would benefit from lower prices.



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Scope for innovation in food retail

As the organized food retail market matures in India, there would be an increased need for

players to differentiate through innovation. Innovations would largely come under two heads:

Innovation on Retail format - Players can innovate on formats in different ways:

By targeting specific customer segments and serving their needs better e.g. working

women, single office goers, etc

By changing the product mix e.g. entirely private label stores, exclusively fresh

produce stores

By offering new forms of convenience and wider range to the customer e.g. tele- retail

and internet retail

Technological Innovations - Employing cutting edge technology in retail could prove

to be the source of competitive advantage for retailers.

Self-scan checkouts have the potential of both reducing check-out time manpower

cost for the retailer

Using RFID tags can help track and reduce in-store inventory management costs and

give retailers better insights into customer in-store movement patterns

Web-enabled POS systems, e-SCM systems, e-Procurement systems and warehouse

management systems will enable food retailers in integrating the entire agri value

chain leading to efficient procurement and supply chain management.

Use of cutting edge analytics can bring insights into customer buying behaviour with

implications on store layout, pricing and promotions.



29

FDI IN RETAIL

FDI in retail is a subject that seems to rear up its ugly head

every now and than. It is not as though these that oppose it or

support it are consistent about what they say.

In India, the logic and ideology that go into either

supporting a reform or opposing it depends on whether the

concerned political party is in power or not. There is no clarity or

understanding of the ground retailers that should guide such

decisions.

In January 2006, UPA government allowed FDI up to 51% in single-brand multiple-

product retail business. This drives the foreign institutional investors would be permitted to

control equity in retailing up to even 100 percent.

Retailers of multiple brands can operate through a franchise or a cash-and-carry. But

allowing in the big multi-brand, international retail groups like Wal-Mart, Tesco and

Carrefour was considered a step too far. The gov’t has announced a partial opening of the

retail market, to single-brand retailers.” But beyond that, gov’t need to find a model that

doesn't displace the existing retailers. The Indian government has been conducting an impact

analysis of how the introduction of supermarket chains like Tesco and Carrefour would hit its

retail sector. An estimated 50% of the country's fruit and vegetables rot by the roadside

before they reach market.

For the first time, chains like McDonalds, Marks & Spencer, Body Shop and Ikea can,

if they want to, open and control their own operations in India.

Previously, many of them had gone down the path of working with franchise partners,

a policy followed by M&S which supplies clothes to eight "Planet Sports" stores.

They look like M&S stores on the inside, but they are owned by local retailers, and

the UK retailer has no plans for that to change.holesale model.

There are about nine million

small grocery shops in India



30

Challenges in organized retail

The first challenge facing the organised retail industry in India is: competition from

the unorganised sector. Traditional retailing has established in India for some centuries. It is a

low cost structure, mostly owner-operated, has negligible real estate and labour costs and

little or no taxes to pay. Consumer familiarity that runs from generation to generation is one

big advantage for the traditional retailing sector.

In contrast, players in the organised sector have big expenses to meet, and yet have to

keep prices low enough to be able to compete with the traditional sector. High costs for the

organised sector arises from: higher labour costs, social security to employees, high quality

real estate, much bigger premises, comfort facilities such as air-conditioning, back-up power

supply, taxes etc. Organised retailing also has to cope with the middle class psychology that

the bigger and brighter a sales outlet is, the more expensive it will be.



31

DEVELOPMENTS IN RETAIL SECTOR

India's first true shopping mall – complete with food courts, recreation facilities and

large car parking space – was inaugurated as lately as in 1999 in Mumbai. (This mall is called

"Crossroads").

1. $ 7 billion to be invested in retail by Bharti

Bharti enterprises plan to invest about US $ 7 Billion by 2010 to set up 200

hypermarkets and hundreds of small stores across India. This group had recently announced a

joint venture with the world’s top retailer, wal-mart stores; Inc. it expects to earn $1-2 billion

revenue from its retail business, which would constitute 10-20 percent of the group’s turnover

2010. The group aims to have 200 large stores and hundreds of small stores in the first phase.

Depending up on the company’s real estate and logistics business the company will invest

around US $ 7 billion by 2010. The group plans to enlist small retailers as franchises and also

decide whether the venture would undertake logistics or out source functions such as trucking

and cold chains. It would operate several hundred stores across the country within five years

and investment could run into billions of dollars.

2. Mother care India, the UK based retailer for expecting mothers and kids is on an

expansion mode in India. The company’s exclusive franchise, shoppers stop is now

expanding their retail network to 14 stores at a combined investment of about Rs-10 crores in

4 months.



32

3. Land mark books and music retailer

Books and music retailer ‘Landmark' launched its first store in western India at

Infiniti Mall, Andheri, Mumbai on April 26. Spread across 18,000 sq. ft Landmark is housed

on the 2 nd floor of the mall, with lavish interiors. This is the sixth Landmark store in the

country. Landmark so far had five stores – three in Chennai, one each in Kolkata and

Bangalore. The store has over 1, 00,000 plus book titles, 70,000-plus movies, a wide range of

stationery, toys, accessories, perfumes, diamond jewellery and an inviting, comfortable

environment, Landmark is a category killer in all focus categories. Later this year Landmark

plans to open stores in Delhi, Baroda, Pune and one more in Mumbai .

4. Prozone- omaxe in retail JV

As part of Prozone's plan to develop India’s largest shopping mall network, Prozone

Enterprises, the wholly owned subsidiary of Provogue, signed a JV with Omaxe Group, one

of the largest real estate developers in North India, to develop shopping malls in townships

owned by the latter.

In the first phase, a SPV promoted by the joint venture will invest Rs.1 ,500 crore to

develop 10 malls across north India and in the second phase invest Rs.5,000 crore to develop

30 properties owned by Omaxe.

Omaxe is building 30 townships and 14 malls, has projects worth Rs.12, 000 crore

under implementation and another Rs.10,000 crore under-pipeline projects. At present,

Omaxe is developing 4.1 million sq.ft of commercial development, mainly malls. Prozone is



33

developing over 12 million sq.ft. of modern retail space and plans to develop 50 retail malls

across the country focused on tier two cities which will come up in two years.

5. AFL launches India’s first ‘Convenience Services’ retail store

AFL, a leading provider of integrated supply chain services in India, has launched

AFL Touch World, India’s first ‘Convenience Services ' retail store in Mumbai. The various

services offered at the AFL Touch World store include Forex, money transfer, international

telephony, international and domestic courier, travel insurance and e-ticketing. It is for the

first time in India that such a wide range of ‘convenience services' is being offered under one

roof. The first Touch World store is located near Regal Cinema in south Mumbai and the

company plans to expand into all major Indian cities in the near future.

6. Calvin Klein Inc., the clothing design and marketing studio formed in 1968, is to set up a

retail operation in India. The clothing empire and Murjani India Ltd. have announced an

agreement for the latter to market and distribute the brand's various labels throughout India

and open dozens of retail stores planned for the subcontinent.

The agreement authorises Murjani to market the Calvin Klein lineup through

exclusive retail outlets and select department stores approved by the company. It includes the

original Calvin Klein Jeans line and the unisex ck Calvin Klein label, which the company

introduced in the mid-1990s.

7. Infiniti Retail, a 100-per cent subsidiary of Tata Sons, has launched the first mega store of

Croma, India’s first national chain of multi brand outlets for consumer electronics and

durable products. Ratan Tata, Chairman, Tata Sons, and Roger Corbett, Independent

Consultant, Woolworth’s, Australia, jointly launched the first Croma mega store in Juhu,

Mumbai , amidst a high-tech display of technology and human interface built around the

concept of 'See, Touch and Feel'. The sprawling store, spread over 20,000 sq ft of space, has

on display more than 6,000 products across eight categories, namely, home entertainment,

small appliances, white goods, computers and peripherals, communication, music, imaging

and gaming software. The store currently offers more than 180 national and international

brands.



34

8. Wadhawan Food Retail Pvt. Ltd. (WFRL), which operates 10 food retail outlets under

the brand name Spinach, has plans to open 60 food and grocery stores in Mumbai and Pune

by the end of this year. The company plans to expand further to the Eastern and Northern

states in another two years.

WFRPL launched its first store in Mumbai in February this year and targets to cover

1,54,000 sq.ft of retail space by the year end. These stores are mainly in supermarket format

and will be rolled out in three sizes -- Spinach Express of about 1,000sq.ft, Spinach Local of

3,000 sq.ft and Spinach Super of 6,000 sq.ft.

9. Bangalore based real estate developer; Prestige Group, plans to invest Rs.2,500 crore into

the mall development business over the next two to three years. The group has plans to set up

malls in Chennai, Hyderabad, Bangalore, Mangalore, etc. Each mall will entail an investment

of about Rs.200 to 300 crore and will be designed with the expertise of an in-house team and

a set of out sourced architects. The company plans to dedicate three million sq.ft of space

across the four cities.

10. Trinethra Super Retail Ltd. (TSRL), the Hyderabad-based retail marketing chain, will

invest Rs.1 billion over the next two years in order to expand business and open more outlets

in South India. The number of retail outlets would be increased to 205 by the end of current

fiscal from the existing 170. The number of outlets in Andhra Pradesh would be increased to

90 from the present 73, and 50 would be opened in Karnataka. TSRL will open 40 retail

shops in Tamil Nadu and 25 in Kerala by the end of FY`07. All the stores in Kerala would be

opened under the group's 'Fabmall' brand. By September end, there would be nine Fabmall

stores, including two supermarkets at Aluva and Kottayam and a supercentre at Kakkanad.

The company, which had a total turnover of Rs.2.4 billion in FY`06, has targeted turnovers of

Rs.3.6 billion by March 2007 and Rs.6.5 -7 billion by FY`08.

11. Kaya Skin Clinic, the beauty & wellness services chain from Marico Ltd., plans to open

55 outlets by the end of 2007. The company is hoping for a tally of 50 such outlets covering a

total retail space of 75,000 sq.ft across 18 cities by the end of FY 2006-07. Kaya Skin Clinics

– all owned and operated by the company – is targetting to touch a turnover of Rs.65 crore in

the current fiscal, growing from Rs.45 crore in the last year. The chain is also setting up Kaya



35

Skin Zones in malls across India to provide easy access for customers to Kaya range of skin

solutions. The company is aiming to establish 15 Kaya skin zones by end-2007.

12. New Delhi-based florist Ferns n Petals plans to add 15 more outlets to its existing 55

retail points across 32 cities by the end of the FY 2006-07. The company would be adding

11,000 sq.ft of retail space, with the cumulative total rising to 40,000 sq.ft, through this

expansion plan.

13. Corporate safety and security service provider, Zicom Electronic Security Systems Ltd.

(ZESSL) is planning to enter the consumer segment through its new division Zicom

consumer service group. Through this division, the company plans to launch 600 Zicom retail

stores in 100 cities across the country by 2008-09. The stores would retail Zicom Home

security systems priced between Rs.6,495-12,995 and Zicom Business security systems for

small and medium enterprises and retail outlets priced from Rs.54,995 to Rs.99,995.

In the first phase, the company plans to enter the retail market with 100-125 stores in

24 towns across all directions. Spread in 500-600 sq.ft area, the stores are targeted at high

footfall regions. Expansion will be through franchise route .The Company is planning to

invest Rs.10-15 lakh in the set up of each outlet. The cost would include investment in

leasing out spaces and doing up the outlet in terms of branding and interiors. The outlets will

then be handed over to franchisee for day-to-day operations. Franchisees would need to

invest in stocks while returns will be in the form of margins generated from sales. The retail

outlets will also provide add-on services like installation, after sales services, central

monitoring etc.to customers.

14. Vishal Group launched their first hyper market Vishal Mega mart in Udaipur this

month. Spread over 25,000 sq.ft, the store offers extensive range of men’s, women’s and

kids’ range of fashion clothing. Beside fashion attire, it will also have separate sections and

counters for watches, sunglasses, fashion accessories, gifts and novelties, electrical

appliances, digital diaries, perfumes, cosmetics and grocery items etc.

Currently, Vishal Mega Mart operates 29 fully integrated and self-owned stores

spread over a total shopping area of 5,70,000 sq.ft in 21 cities across India



36

15. RPG Retail is planning to foray into books retail, with the launch its own bookstores

“Books and Beyond” by October this year. “Books and Beyond” will follow the Music World

strategy for its expansion. The first standalone outlet will be launched in Kolkata before

moving ahead with pan-India expansion. “The outlets are to occupy spaces between 15,000-

18,000 sq.ft and will also include the concept of a Music.

Meanwhile, RPG is also planning to expand its retail brand Music World to the

Middle East market. The format would primarily target areas with a substantial chunk of

Indian population. “For the Middle East market.

16. Murjani India, a subsidiary of the Murjani Group, focuses on attracting international

brands and retail concepts to India. Murjani forged a separate deal with The Warnaco Group,

a New York-based apparel company, granting Warnaco exclusive rights to distribute the

Calvin Klein Underwear line of products in India and supply Calvin Klein Jeans to

Murjani.The broad plan is to open at least 40 Calvin Klein-branded stores during the first five

years of the operation, with construction beginning as early as March 2007.

17. EMKE group, the biggest retail chain based in the UAE with operations spread across the

Middle East is all set to enter the Indian retail sector with mega shopping malls and

hypermarkets. The group which has the flagship "LULU" Hypermarkets and department

stores chain with 48 branches in all major cities of Gulf, controls 34 per cent market share of

the Middle East retail sector. The proposed shopping mall is coming up in Cochin, the

commercial capital of Kerala. Apart from this one million sq. ft shopping mall, the project

also consists of a 250 room five star hotel and an International standard convention centre

which will be set up in the second phas

18. Pantaloon enters healthcare retail

Pantaloon Retail is preparing to enter the healthy & beauty segment with beauty salons and

diagnostic healthcare centres. The first retail outlet catering to the Big Bazaar profile

customers, “Star and Sitara”, will open in Bangalore in March. The salon would be spread

across 2,500 sq.ft and will offer services for both sexes. Thereafter Pantaloon plans to enter

Ahmedabad, Mumbai, Hyderabad, and other cities where the group would have a mall

presence through Kshitij The diagnostic centres will offer eye, skin, dental treatments and



37

preventive care. They will also include pharmaceuticals, beauty centres and will also provide

alternative treatments like ayurveda and homeopathy.

19. Pantaloon Retail & Liberty Shoes ink MOU on Large Format Footwear Retailing

Pantaloon Retail (India) Limited & Liberty Shoes Limited on September 2, entered into a JV

for setting up a chain of stores for footwear retailing and other accessories. PRIL will hold

51% and Liberty 49% stake in the new company; having an authorized capital of rs.25rore.

The company will set up a chain of large format footwear stores across the country, with each

store covering an area of 10,000-15,000 sq. ft.

The proposed JV will combine the property and retail expertise of Pantaloon with the design

sourcing & merchandising expertise of Liberty. This will provide a focused attention to the

footwear category, which today commands a sizeable portion of the consumer spending. The

MOU is only for retailing and not for manufacturing; it will retail all brands and products

sources from all over the world as well as India.

20. Deccan chronicle buys odyssey

Media group Deccan Chronicle Holdings (DCHL) on September 5 had acquired South India-

based retail chain Odyssey for Rs 61 crore, in an all-cash deal, and upped its revenue and

profit targets for this fiscal.DCHL, which went public earlier this year, said as part of the

deal, it has acquired 100 per cent equity of Odyssey, which currently has 40,000 sq.ft of retail

space in 12 locations in six cities -- Chennai, Hyderabad, Trichy, Coimbatore, Salem and

varnasi.

Odyssey has lined up major expansion plans, including growth in western and

northern India by March 2008. The retail chain sells books, music, toys, greeting cards and

FMCG products of leading domestic and international brands, including that of ITC,

Cadbury, Duracell, Parker and Penguin.

21. Oswal group targets 120 sensa stores



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Two years after the split of Ludhiana -based yarn manufacturer Oswal Group, a breakaway

group led by Ashok Oswal is foraying into retail with major expansion plans for the existing

fashion chain stores AO's and Sensa , through Amram Trading Pvt . Ltd.

Sensa, among India’s first multi-brand intimate wear retail chains with about 16

brands, plans to set up 120 stores by the next three years with total investment of Rs.30 crore.

22. Adidas India to expand retail in tier II & III towns

Adidas India is planning to expand its distribution network in North India, targeting the tier II

and III towns. To add on to the current 80 exclusive outlets, company plans to open 60 new

brand stores. Adidas India is following a franchise model and prefers to be located on high

streets and through stand alones.

23. US footwear major marks 2006 for India launch

The $325-million privately-owned fashion company and US footwear major Global Brand

Marketing, Inc. (GBMI) will launch retail operations in India next year, with the opening of

exclusive brand stores across the country.

Founded in late 1996, GBMI is the majority owner of Pony International, LLC, owner

of the Dry- shoD brand and retail store chain Global Feet and Global Feet Kids, and the

authorized global footwear licensee of Diesel, XOXO, Nautica, and Mecca. Based in

California, GBMI designs, develops and markets stylish apparel, footwear and accessories for

men, women and children, and is distributed in over 130 countries worldwide.

24. Derby Clothing to open Colombo shop-in-shop

Chennai-based apparel retailer Derby Clothing Pvt. Ltd is to open a shop-in-shop in

Colombo, Sri Lanka on November 15. The outlet is a new venture of DSI group Samson &

Sons Ltd. – the largest footwear brand in Sri Lanka. The launch is part of the current fiscal's

expansion targets for the company, which hopes to set up 12 more stores this year.

Derby Clothing currently has 14 exclusive stores, eight of which are company-owned

and six are franchised. The existing stores are spread over Tamil Nadu, Andhra Pradesh,



39

Kerala, Karnataka and Gujarat (one store at Ahmedabad). With typical store size of around

800 sq.ft. and median shop-in-shop space of about 150 sq.ft., average investment per store is

around Rs.25 lakh.

The company is also setting up two new manufacturing units at Chennai, to buttress

its current production capacity of 20,000 shirts and 9,000 trousers.

25. Dabur India is planning an entry into the consumer retail business especially in the area

of health and wellness. Presently their plan will be Focused and specialized with health and

wellness being the obvious option at the moment. The new business could be through dabur

India or a separate company. The idea behind the move is that the company would sell its

own brands and also offer a complete portfolio of products, catering to the health conscious

urban Indian. This model would be close to one followed by retailer boots in the UK.

Dabur India is still exploring various formats and working on possible store sizes. If

dabur ventures into this specialty format, it will have to set up stores measuring close to

2000-2500 square feet. The company may also in for an arrangement with one of the

upcoming multi-brand or hypermarket retail chains.

26. Redtape –Indians finest fashion footwear and lifestyle brand known for its international

style, quality and elegance and its core competency lies in providing excellent quality to its

customers. Red tape is one of the brands which have been able to get world wide recognition,

acceptance and admiration.

Globally, red tape is recognized as a stylish and high fashion brand. It is planning to

expand 50 retail outlets by the end of this year in India. Currently it has 40 retail outlets in

India & two international stores in sharjah & Dubai.

It has moved from men’s footwear to women’s footwear called ‘miss red tape’. It has also

diversified its brand in to men’s apparel and accessories like belts, wallets & so on. The

company is also planning to introduce women apparel line same time next year. It is also

planning to set up its own manufacturing base of customers



40

REVIEW OF LITERATURE

The retail sector in India is highly fragmented and organized retail in the country is at

a very nascent stage. Of the 12 million retail outlets, more than 80% are run by small family

businesses which use only household labour. China and Brazil, took 10-15 years to raise the

share of their organized retail sectors from 5% to 20% and 38% respectively. India too is

moving towards growth and maturity in the retail sector at a fast pace.

Value retailing: more hypermarkets in the offing

The hypermarket route has emerged as one of the most preferred formats for

international retailers entering India. In most emerging retail markets, such has Eastern

Europe, Latin America and china; hypermarkets have been the major high growth format.

Hypermarkets provide consumers with a combination of good prices, overall shopping

convenience and experience. Product range and quality. Currently there are less than 50

hypermarkets in India, operated by 4-5 big retailers. The report says that India’s 67 cities

with population of half a million or more have potential to absorb many more hypermarkets

in the next 4-5 years.

On the success of hypermarkets, the report draws a parallel between consumer

behaviour in India and china. It says that there is a similarity in the buying pattern of the

Indian and Chinese consumers. In china. Most hypermarkets are located with in the city

limits as consumers do their shopping more than once a week, have low passenger car

penetration and limited refrigeration space at home.

Malls to move beyond the metros

The boom in the retail sector is also associated with rise of malls across India. There

are 220 mall projects in the pipeline till 2007, 139 in the big 8 cities-including the metros-and

81 in other tier II cities. Increasing awareness levels in tier II cities are eroding the ‘urban

aspiration’ lead of the metros and the international brands have started looking at these

smaller cities to increase their penetration.

Organized retail penetration highest across footwear, clothing



41

The footwear and clothing categories have seen the highest organized retail

penetration (ORP). Footwear has a 22% ORP which is driven by high levels of franchising

activity and dominance of home-grown players as well as MNC retailer Batas dominant

market share. Clothing, with a 12% penetration, is also hotting up for further organized retail

presence due to high level of branding activities by apparel retailers and merchandising

spread across formats such as department stores, hypermarkets, own retail outlets and

franchises.

The report says that though the food & grocery segment contributes about 41%of

private consumption expenditure and about 77% of total retail sales, it is largely controlled by

the unorganized small outlet sector- penetration of organized retail is about 1% in this

segment. Other segments like books and music, jewellery, consumer durables, home

furnishings, medical care and health & beauty have seen limited penetration of organized

retail and will require innovative and aggressive plans on the part of Indian and international

retailers to fully exploit their potential.

Franchising is the way ahead

The report says multinational retailers are firming up their India entry strategies. If

they are already present here, they are undergoing rapid expansions. Franchising is gaining

steam with the retailers and franchisee activity in tier II cities is pegged to rise. The report

forecasts a number of strategic partnership opportunities between Indian and international

retailers. An international retailer looking to enter India needs to be extremely well versed

with local retail culture and know-how. The number of states and union territories in India

number 35 and languages, cultures; habits and consumer preferences are different in every

one of them. Companies have to understand and retain customers. A 5% reduction in

customer defections can treble profits.



42

Fraud and theft: an expensive affair

The report also lists fraud and theft as key challenges for the sector in the future.

Theft, including employee pilferage, vendor frauds and inaccuracy in supervision and

administration costs the Indian industry a huge amount every year. The implications and size

of this loss will be more significant as retailers continue to scale up and increase product

lines.

Shorted of talented professionals

Though the retail industry is expected to create 2 million jobs by 2010, shortage of

professionals remains a big challenge. There has been a rise in the number of retail

management programmes and institutes, which is expected to bridge the gap in availability of

talented professionals. However, talented professionals will put increased pressure on wage

costs. Therefore, operating margins, especially for mid-sized retailers are likely to come

under pressure.

An agile and adaptive supply chain is key

Logistical issues, constant changes in consumer preferences and patterns, crowded

marketplaces, efficient customer responsiveness and swiftly evolving retail formats are the

hallmarks of today’s retail environment in India and pose a huge challenge for driving

growth. As Indian and international retailers continue to grow their presence regionally, there

eill be a pressing need for a single, enterprise-wide IT platform to manage operations, which

will become increasingly complex.

In the last 2-3 years, several retailers, ranging from F&B operations to discount

clothing, have implemented Supply Chain Management (SCM) solutions to improve core

business processes such as global sourcing, distribution, logistics, innovation, transparency

and visibility in financials and inventory, compliances and management of point of sale

(POS) data. Going ahead, both FMCG and retail sectors are likely to see an increase in

the adoption of SCM.



43

Further the lack of a distribution sector and specialized distribution companies is a

major obstacle for retailers to fully utilize India’s retail potential. The report says private

logistics companies offering specialized services, refrigerated transport and warehouse

facilities across the country, along with timely distribution of supplies to retail outlets will

create some of the much needed back-end support for retailers to enhance operational

performance. If addressed urgently and seriously, infrastructure can translate into India’s

biggest opportunity.



44

DESIGN OF THE STUDY

RESEARCH GAP OR BACKGROUND OF THE STUDY In the competitive world super markets are increasing day by day. They are also

implementing newer methods of attracting the customers. This has resulted in enhancement

of customer satisfaction. Hence this has evoked me to do a research investigation in to the

analysis of customer satisfaction level towards supermarket.

RESEARCH TITLE: ‘‘Analysis of customer satisfaction towards supermarket”

PROBLEM STATEMENT: To assess the customer satisfaction level towards food and grocery retailing and design

marketing strategies for enhancement of customer happiness. This study will help the supermarket to ascertain their customer satisfaction level. Thus a

research titled “analysis of customer satisfaction level towards supermarket” was carried on.

OBJECTIVE OF THE STUDY

• To decide on the parameters which effect the customer satisfaction while shopping for

food and groceries.

• To measure these parameters.

• To analyze the existing marketing strategies of various retail brands.

• To know the quality of service.

• To suggest better marketing strategies to improve customer relations.



45

RESEARCH METHODOLOGY: RESEARCH DESIGN: Research design is a detailed blue print used to guide the research

study towards its objectives. The process of designing a research study involves many

interrelated decisions. The most significant decision is the choice of research approach as it

determines how the information will be obtained.

The type of research is descriptive approach which means asking questions to people

who are believed to possess the desired information. It measures the magnitude of people’s

knowledge, attitudes and buying behaviour. In survey method the data collection is through

structured direct interview. Structured direct interview is a formal questionnaire (i.e. set of

questions) that is structured and direct and the interviewer is instructed to ask the persons

those questions only in the order given in the questionnaire. This type of interview is referred

to as “Structured survey”. Its advantage is that, less skilled interviewers can be used resulting

in lower cost per interview. It gives standardized information and hence editing, tabulating

and analyzing of the data are more easily done.

SOURCES OF DATA COLLECTION: Primary data: It has been collected using the structured questionnaire with personal

interviews with the customers at the stores and through personal observations.

Secondary data: It bas been collected from various magazines, papers, Text books and related

websites.

SAMPLING DESIGN: SAMPLING TECHNIQUE:

Stratified random sampling: Under this sampling design item has an equal chance of

inclusion in the sample. All choices being independent of one another. It gives each possible

sample combination an equal probability of being chosen.



46

• SAMPLING UNIT: The survey was conducted at five food retail brands such as food

world, subhiksha, spencers, fabmall and reliance fresh.

• SAMPLE SIZE: Simple random sample has been taken as 100 respondents with 20

respondents from each of the retail outlet brands.

• SAMPLE DESCRIPTION: Sample is taken for this research is from Rajaji nagar,

Mahalaxmi layout of Bangalore north. Selection of respondents for the study

conducted review and feedback for 14 days. Each day I selected the random time slot

to go to stores for interviewing customer. The procedure I adopted to distribute the

questionnaire to all the customer present in the retail stores and interviewed who were

agreeable to answering questions. This way the above procedure ensured randomness

of respondents

RESEARCH ANALYSIS: The data so generated would be subjected to rigorous statistical treatment and the inferences

will be drawn accordingly. The basic analytical tools like bar charts and pie charts will be

used.

RESEARCH LIMITATIONS:

Sample size is small because of the time constraint.

Respondent may provide data from their memory recall, there may only be rough

estimates.

Survey is limited considering the wide spread location of customers over Rajaji nagar,

Mahalaxmi layout in Bangalore metropolitan.

The sample size is small hence arriving at an overall opinion of the supermarket is

difficult.



47

SCOPE OF THE STUDY:

It will help the supermarket to understand the level of customer happiness.

It will help the supermarket to retain the service.

It will help the supermarket strength and weakness.

This study will also reveal the customers attitude towards supermarket.

CONTRIBUTION FROM THE STUDY:

• This research study would help the supermarkets to improve the service.

• The study analysis the schemes employed by the supermarkets to influence the

purchase.

• The study would help to the stores in improving the existing level of satisfaction

among customers.

• The study seeks competitive analysis of pricing among retailers.

• The study contributes to identify problems if any in the field of customer satisfaction

in the grocery retail sector and come out with a solution.



48

DATA ANALYSIS AND INTERPRETATION

TABLE 1: FREQUENCY OF PURCHASE BY RESPONENDS TO STORE

Source: Field Study

GRAPH-1

INTERPRETATION

From the above table and graph it is clear that out of 100 respondents surveyed, 33% of them

purchase daily, 31% of them purchase weekly, 36 of them purchase monthly and there are no

respondents who purchase occasionally. This clearly shows that frequency of purchase by the

consumers is very high. Respondents who purchase regularly visit store weekly and monthly.

It is found that many of the respondents purchase on Saturday and Sunday.

SL.No. Particulars No. of Respondents Percentage 1. Daily 33 33 2. Weekly 31 31 3. Monthly 36 36 4. Occasionally 00 0 Total 100 100

05

10152025303540

No.

of R

espo

nden

ts

daily w eekly monthly occassionaly

Frequqancy of visit

Frequeancy of visit by consumers to store



49

TABLE 2: DATA SHOWING CUSTOMERS REGULAR PURCHASE FROM THE STORE

SL.No. Particulars No. of Respondents Percentage 1. Yes 86 86 2. No 14 14 Total 100 100

Source: Field Study GRAPH 2: Customer regular purchase from the store INTERPRETATION

The response given by respondents 86% buys regularly from the same store and 14% of

respondents don’t buy from the same store. As we can conclude that major of the customers

buy from the same store because supermarkets are near to respondent residence and avail

membership benefits from the store like offers, gifts apart from low prices.

Yes86%

No14%



50

TABLE 3: DATA SHOWING RESPONENDS PREFER OTHER STORE FOR SHOP

Source: Field Study

GRAPH 3: INTERPRETATION

The above chare shows that 12% of respondents prefer provisional store which is located

very near to their home and 2% of them prefer other supermarket. This clearly indicates that

the supermarket has the potential market in food retailing. Most of respondents do not

purchase entire grocery from supermarket and that it is because supermarket does not provide

price reduction on the items like rice, dhal etc which they usually buy in bulk quantity.

SL.No. Particulars No. of Respondents Percentage

1. Provisional Store 12 12 2. Other Supermarket 02 02 Total 14 100

Customer preference to other store

12, 86%

2, 14%



51

TABLE 4: DATA SHOWING CUSTOMERS RESPONSE OVER RESONS FOR SHOPPING

IN THE STORE

SL.No. Particulars No. of Respondents Percentage 1. Location & conveyance

31 31

2. Wide range of merchandises

24 24

3. Low prices 23 23 4. Ambience & services 13 13 5. Discounts 09 09 Total 100 100

Source: Field Study GRAPH 4: INTERPRETATION

It is depicted from the chart that,

31% of respondents say’s Location and conveyance, 21% of respondents say’s Wide range of

merchandises,3% of respondents say’s Low prices, 13% of respondents say’s Ambience &

services and 9% respondents say’s Discounts. From the analysis of chart we can conclude

that most of the respondents buy from the store because of location, wide range of products

and low prices.

Customer reasons for shopping in the store

05

101520253035

Loca

tion

Wid

e R

ange

of

Mer

chan

dise

s

Low

Pric

es

Am

bien

ce &

Ser

vice

s

Dis

coun

ts

No.

of R

espo

nden

ts



52

TABLE 5: DATA SHOWING THE RATINGS FOR DIFFERENT ATTRIBUTES OF

LOCATION & AMBIENCE

No .of Respondents

Ranking

SL.No

Particulars

Strongly Agree 5

Agree 4

Neither Agree or Disagree 3

Disagree 2

Strongly Disagree 1

Cumulative Score

1. Store location is convenient

55 30 00 15 00 425 5

2. Store looks modern & well equipped

66 29 00 05 00 456 3

3. Ambience is appealing

66 31 00 03 00 460 2

4. Well arranged, clean & ventilated

61 28 04 07 00 443 4

5. Store timings are convenient

69 31 00 00 00 469 1

Source: Field Study

Cumulative score = The Number of respondents * Weight = 55x5 + 30x4 + 15x2 =425 = 66x5 + 29x4 + 5x2 =456 = 66x5 + 31x4 + 3x2 =460 = 61x5 + 28x4 + 4x3 + 7x2 =443 = 69x5 + 31x4 =469



53


Store timings are convenient attribute is ranked as first by considering cumulative score.

Most of the respondents rated strongly agree by 69 respondents and agree by 31 respondents.

This indicates that customers are very much satisfied about time convenience of shopping.

Ambience attribute is rated as second. Most of the respondents rated strongly agree by 66

respondents and 31 of them rated agree. Store need to improve the space as they carry three

category sections in one store which results non convenience in shopping by customers

From the cumulative score the store looks modern & well equipped attribute has been ranked

third. 66 respondents consider modern and well equipped attribute strongly agree and 29 of

them felt agree. Store has to take measures in visual merchandising such as design, graphics

etc.

Well arranged, clean & ventilated attribute has been ranked as fourth as major of the

respondents said strongly agree, 28 of them felt agree and 7 of them rated disagree.

Vegetables need to be kept fresh as this is been purchased daily by customers and constitutes

more revenue to the store.

Convenient of store attribute ranked as sixth & is considered as strongly agree by 55

respondents and agree by 30 respondents. Study indicates there is a lot of market.

Rating for different attributes of Location & Ambience

425 456 460 443 469

5 3 2 4 10

50100150200250300350400450500

storelocation isconvenient

store looksmodern &

wellequipped

ambience isappealing

wellarranged,clean &

ventilated

storetimings areconvenient

Attributes

Cum

ulat

ive

scor

e

Cumulative scoreRating



54

.TABLE 6: DATA SHOWING THE RATINGS GIVEN BY RESPONDENTS FOR

DIFFERENT COMPONENTS OF QUALITY & MERCHANDISE

No .of Respondents SL.No

Particulars

Excellent 5

Good 4

Fair 3

Poor 2

Very poor 1

Cumulative Score

Ranking

1. Fruits & vegetables are fresh

57 25 18 00 00 439 3

2. Large varieties of fruits & vegetables

44 16 16 24 00 380 6

3. Well known brand names

48 23 26 03 00 416 4

4. Prices are reasonable

69 22 09 00 00 460 1

5. Display of products makes it easy to choose

62 28 10 00 00 452 2

6. Discounts on bulk purchase

46 24 19 11 00 405 5

Source: Field Study Cumulative score = The Number of respondents * Weight =57x5 + 25x4 + 18x3 =439



55


By using the cumulative score the prices are reasonable attribute is ranked as one. 69

respondents consider prices are reasonable component as excellent and 22 of them rated price

charged is affordable and only 9 of them price charged are high. Prices on certain food

product brands need to be priced low.

From the calculation by using cumulative score the weighate given for display of products

makes it easy to choose component is 452 & ranked second, as 62 respondents rated excellent

for display of products makes it easy to choose component, 28 of respondents felt good and

10 of them rated fair.

From the data of cumulative score fruits & vegetables are fresh component has been ranked

as third. 57 respondents consider Fruits & vegetables are fresh component as excellent, 25 of

them felt good, 18 of them rated fair and none for poor. Vegetables still need to be cleanly

washed and kept freshly.

Well known brand names component ranked as fourth and is considered as excellent by 48

respondents, 23 of respondents rated good and 26 of them felt fair. International brands have

to be kept in store.

439

3

380

6

416

4

460

1

452

2

405

50

50100150200250300350400450500

Cum

ulat

ive

scor

e

1 2 3 4 5 6

Componends

Rating for different components of Quality & Merchandise

Cumulative scoreRanking



56

A discount on bulk purchase component is ranked fifth. Most of the respondents rated

excellent by 46 respondents, 24 of them felt good and 19 of the respondent rated fair.

Customers who buys in bulky needs to be given better discounts especially for restaurants,

hotels and resorts. Discounts on the bulk purchase of certain brands have to be increased by

keeping competitive prices.

Weighate given for the large varieties of fruits & vegetables component is 380 and has been

ranked sixth.44 respondents consider large varieties of fruits & vegetables component as

excellent, 16 of them rated good and 16 of them felt poor. Some stores have to keep large

varieties of vegetables as customer purchase daily.

.



57

TABLE 7: DATA SHOWING THE CUSTOMERS RATING ON THE DIFFERENT SALES

PERSONNEL ATTRIBUTES

No .of Respondents

Cumulative Score

Ranking

SL.No

Particulars

Strongly Agree 5

Agree 4

Neither Agree or Disagree 3

Disagree 2

Strongly Disagree 1

1. Employees are knowledgeable & friendly

53 26 07 14 00 418 4

2. They give prompt services

59 38 00 03 00 453 3

3. Sales people are friendly & helpful

62 37 00 01 00 460 2

4. Sales staff are clean & presentable

73 27 00 00 00 473 1

Source: Field Study

Cumulative score = The Number of respondents * Weight =53x5 + 26x4 + 07x3 + 14x2 = 418



58

GRAPH 7:

INTERPRETATION

From the above cumulative data, it is clear that the rank given for the attributes of sales

personal are first for sales staff are clean and presentable, second for sales people are friendly

and helpful, third for they give prompt service and fourth for Employees are knowledgeable &

friendly. There are certain aspects like giving prompt services, offers information etc need to

be improved.

Rating for attributes of sales personal

418

453

460

473

4

3

2

1

Employees areknowledgeable

They give promptservice

sales people arefriendly & helpful

sales staff are clean

Cumulative score Rating



59

TABLE 8: DATA SHOWING THE RESPONSE GIVEN BY RESPONENDS ON RATINGS

FOR DIFFERENT COMPONENTS OF SERVICES

No .of Respondents

SL.No

Statements

Very Satisfied 5

Satisfied 4

Neither satisfied nor dissatisfied 3

Dissatisfied 2

Very dissatisfied 1

Cumulative Score

Ranking

1. Free home delivery is provided

58 19 00 03 00 372 7

2. Store is willingly handles returns and exchange the products

74 26 00 00 00 474 1

3. They respond through phones and mails

69 31 00 00 00 469 2

4. Billing services are fast and correctly

66 34 00 00 00 466 3

5. Post sales problems solved immedidetly

48 43 00 09 00 430 6

6. Store loyalty programmes

55 41 00 04 00 447 4

7. Parking is sufficient

61 27 00 12 00 437 5

Source: Field Study Cumulative score = The Number of respondents * Weight



60

GRAPH 8: INTERPRETATION Store is willingly handles returns and exchange the products component has been ranked first.

Stores need to be improved on the exchange of products by giving value gifts.

From the cumulative score they respond through phones & mails component has been ranked

second. Most of the satisfied respondents said there should be improvement in sending

weekly mails regarding offers available by stores.

By using cumulative score the ranking given for the attribute of billing services are fast and

correctly is three. Print on the bill need to be dark.

Store loyalty programmes component is ranked as fourth. Most of the respondents who are

daily customers said that loyalty programs such as party tickets and cinema tickets need to be

considered which it could add more in building relation ship and sales.

A chart depicts that parking is sufficient component is ranked as fifth. Though few

supermarkets have luxurious space in house store, it is also necessary to have parking

facilities for customers who comes by car.

Rating for different components of services

372

474469

466430

447437

7

12

3

64

5

0 100 200 300 400 500

1

2

3

4

5

6

7

Cumulative score Rating



61

A chart shows that post sales problems solved immedidetly component has been ranked as

sixth.48 respondents rated very satisfied for post sales problems solved immedidetly

component, 43 of respondents rated satisfied 9 for dissatisfied.

Free home delivery is provided component is ranked as seventh and considered as very

satisfied by 58 respondents and 19 of respondents rated satisfied. Free home delivery has to b

increased up to 4kms.



62

TABLE 9: DATA SHOWING THE OVERALL OPINION OF RESPONDENTS ON

SUPERMARKET

SL.No. Particulars No. of Respondents Percentage 1. Extremely satisfied 54 54 2. Satisfied 43 43 3. Not satisfied 03 03 4. Not at all satisfied 00 00 Total 100 100

Source: Field Study

GRAPH 9:

INTERPRETATION The above table clearly indicates that 54% of respondents are extremely satisfied and 43% of

respondents are extremely satisfied. The survey indicates that most or almost all the customer

are extremely satisfied tore and it is because of quality and availability of wide range of

products, free home delivery, replacement on dissatisfied products, good packing facilities,

price reduction on total purchase salesperson are friendly and helpful, good services, etc.

54

43

3

0

0 10 20 30 40 50 60

Extremely satisf ied

Satisf ied

Not satisf ied

Not at all satisf ied

Rating of customer satisfaction



63

TABLE 10: OCCUPATION OF THE RESPONDENT VISITING THE STORE

Source: Field Study GRAPH 10: Graph depicting occupation of respondents INTERPRETATION Respondent refer to the customer that have been selected for the study on random basis on the

basis of occupation. On the basis of survey I found that 26% of respondent who visit store are

professional, 23% of the respondent are business, 22% of them are employees, 21% of

respondent are housewife and only 8% who visit store are students.

SL.No. Particulars No. of Respondents

Percentage

1 Employees 22 22 2 Professional 26 26 3 Business 23 23 4 Housewife 21 21 5 Student 08 08 Total 100 100

22%

8%

21% 23%

26%

Employee Professional Business Housew ife Student



64

TABLE 11: DATA SHOWING THE RESPONENDS INCOME CATEDORY

Source: Field Study

GRAPH 11: INTERPRETATION The chart depicts that, out of 100 respondents 30 of respondent belongs to income group of

15-30 thousand per month, 25 of them belongs to below 15,000k, 16 of respondents belong to

30-50k, only 8 of them belong to above 50,000k and 21 of respondents don’t belong to any

income category as the respondents occupation are housewife and they are not earning.

No of Respondents SL.No Particulars Below 15k 15k-30k 30k-50k Above 50k

Total

1. Employee 06 07 06 03 22 2. Professional 11 09 06 00 26 3. Business 14 04 05 23 4. Housewife 00 00 00 00 00 5. Student 08 00 00 00 08 Total 25 30 16 08 79

Graph showing respondents income category

67

63

119

6

0

14

4

5

0 8

0 5 10 15 20 25 30 35

below 15k

15-30

30-35

above 50

Employee Professional Business Housewife Student



65

TABLE 12: RESPONENDS DISTANCE FROM HOME TO STORE SL.No. Particulars No. of Respondents Percentage

1 Below 2kms 67 67 2 2-5kms 24 24 3 5-10kms 09 09

Total 100 100 Source: Field Study

GRAPH 12: INTERPRETATION From the above chart it is clear that 67% of respondents distance from home to shop is below

2 kms, 24%of respondent are belong to 2-5kms and only 9%of respondents belong to radius

of 5-10 kms.

Graph showing responends distance from home to store

Below 2 kms67%

2-5 kms24%

5-10 kms9%



66

MAJOR FINDINGS OF THE RESEARCH

1. The people who visit supermarket belong to the higher group that is Rs 15,000-30,000

per month.

2. Customers who visit store are very regular and most of the customers who purchase

daily are of fruits and vegetables.

3. The survey indicates that major of the customers purchase regularly from the same

store as store staff identifies their daily customers and has good relationship

management by store.

4. It is evident that most of the respondents make their purchases weekly and monthly

and most of the customers shop on Saturday and Sunday.

5. The study reveals that some of the customers still prefer to buy in the tradition kirana

shop as they are located in the customer’s residential area.

6. Most of the respondents have mentioned that location conveyance, wide range of

merchandise and low prices are the main reasons for shopping in the store.

7. Location and ambience is rated as strongly agree and agree by majority of the

respondents in terms of attributes such as store location is convenient, store looks

modern & well equipped, ambience is appealing and store timings are convenient.

8. It is found that the most of the respondents has rated as excellent for the quality and

merchandise components. Some of the respondents said good and fair.

9. More then 75% of respondents have rated strongly agree and agree for the attributes

of sales personnel. Few of the respondents have said disagree for the attribute

employees are knowledgeable & friendly.

10. Service attributes has been rated very satisfied by most of the respondents. Some of

the respondents have rated satisfied for the service attributes. Few of the customers

felt dissatisfied with attributes such as post sales problems solved immedidetly and

parking is sufficient.

11. Most of the respondents are of the opinion that very much satisfied with shopping at

supermarket and 43% of the respondents rated satisfied at their shopping in

supermarket.



67

RECOMMENDATIONS

• Retailers should learn quickly to build a retail brand directly and not at factors

like priming location, value pricing or product assortment to build their

business.

• Retailers should maintain customer data and communication to build a

relationship among customers

• Education and tanning of staff needs to be done to enhance customer service.

• Retailers should use advertisement promotions to drive store traffic

For example: mailing a brad sheet to its customers giving them details of the

promotional offers available and price comparisions across brands.

• Retailers should also understand that the retail experience has become a

popular leisure activity and they are vulnerable to any new competition for the

customer’s entertainment.

• Retailers should build their brands with images that seek to entertain and

involve their customers.

• In an era of hyper competition retailers should adopt E- retailing which would

benefit to deliver better services, assortments, products information, speed,

price and so on.

• Retailers should maintain consistency in the visual imaginary for all products

and the other is colour coding of displays to aid easy recognition of sections

and departments.

• International brands should be made available in Supermarket.

• Supermarket should have more cash counters.

• Special offers should be notified through the e-mails.

• Improve on telephone booking and delivery.

• Supermarket should play music.

• Supermarket should display products in their corresponding sections



68

BIBLIOGRAPHY

TITLE AUTHOR

1) MARKETING MANAGEMENT PHILIP KOTLER

2) MARKETING AN INTRODUCTION GARY ARMSTRONG PHILIP KOTLER

3) LOGISTICS AND RETAIL JOHN FERNIE AND LEIGH SPARKS.

MANAGEMENT

4) BUSINESS RESEARCH METHODS COOPER AND SCHINDLER

MAGAZINES & JOURNAL:

1) RETAIL BIZ

2) INDIAN JOURNAL OF MARKETING

3) BUSINESS LINE (CATALYST)

4) ECONOMIC TIMES(BRAND EQUOTY)

5) BUSINESS WORLD

WEBSITES:

1) WWW.RETAILINDIA.COM

2) WWW.GOOGLE.COM

3) WWW.AMAZOM.COM

Documents

Satish musti 04-customer satisfaction towards supermarket