Research Proposal

on

Grocery Shop Anish Store, Chhota Govindpur

(Serving the Bottom of the Pyramid Customers)

Under Guidance of: Dr. Angshuman Ghosh

(XLRI, Jamshedpur)
27th June 2014
Submitted by (Group No.):1) Anshuman Dey (MP12009)
2) Anupam Ghosh (MP12011)
3) Banani Bhattacharjee Ms (MP12014)
4) Debashish Kr Dutta (MP12017)
5) Jahir Alam Chowdhury (MP12026)
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Executive Summary:
This project has been undertaken as a part of UC group research project under guidance of Dr.
Angshuman Ghosh, Professor Marketing XLRI Jamshedpur. We would like to thank Prof.
Angshuman and XLRI management for providing such opportunity and enriching our learning.
While selecting the project topic few excellent ideas came into our mind. But all these were not
relevant for basic understanding of the course and quite complex. Finally we consulted with professor
Angshuman and he suggested us to choose some small but very relevant topic for this study. With
this clue and after lot of brainstorming we selected a small Grocery Shop in Chhota Govindpur
for this research. This shop (Name: Anish Store) is located in interior part of Chhota Govindpur,
managed by single shop owner and serving bottom of the pyramid customer within 2km of the store.
The salient features behind choosing this topic are:

To understand the business model of this small shop owner. Like capital investment, sales,
profitability, turnover etc.
The variety of goods offering, inventory management/ stock replenishment system.
Its customer profile, their taste, preferences and buying behaviour.
Type of wholesalers or distributors supplying to this shop.
Above all The current business problem or challenges faced by the shop owner.
Using the Business research techniques, finding out most appropriate solution to the
significant business problem of shop owner.
Sharing the findings with shop owner and take his agreement in implementing the same.
If Suggestions are implemented, track the performance of shop owner and record his
feedback.
Provide support if any further research or suggestion is needed by the shop owner.
Investigate whether the findings of this research could be generalized to similar shop owners
or further research is needed

Throughout this research we shall be referring the methodology taught in our UC class and the
reference book of Market Research by Naresh K. Malhotra. Our scope of research will limit only to
this grocery shop (i.e. Anish Store, Chhota Govindpur) and its business processes. The main focus
will be to understand the business problem of shop owner and then find the most appropriate solution
using the market research techniques.
The content and sequence of the research is mentioned in the next page.

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Contents
1. Environment
Grocery Store
Anish Store, Chhota Govindpur
2. Research Objective
Problem Identification
Decision Area/Problem
Research Problem
3. Research Approach
Deriving dependent/independent variables
Research Questions
Hypothesis
4. Research Design:
Research Method
Sampling Method
5. Data Collection
6. Data Analysis
7. Results and Findings
8. Recommandations or Conclusions
9. Limitation and Further Research Scope

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1) Environment:
Grocery Store:A grocery store is a retail store which primarily sells food or food products. The food products are
normally not perishable in nature which includes rice, dal, spices, cooking oils, detergents, biscuits,
milk etc. Based on its size and goods offering it can be categories in following types:1) Convenience store: Small store nearer to residance offer daily usable food products.
2) Delicatessen: A type of store where fine foods are sold.
3) Greengrocer: Sells fresh vegitables, fruits, milks and ready to cook or eat items.
4) Health food store: Stores which sells fresh goods, organic products and food supplements.
5) Milk Bar: Stores offer Milk, Confectionary items and ready to eat food.
6) Super Market: A large form of traditional store which offers food products and house hold
goods
7) Hyper Market: A hypermarket is a superstore combining super market and departmental store
Hyper Market

Super Market

Delicatessen

Convenience Store

Greengrocer

Milk Bar

In India 80% of Grocery are sold through Convenience Store. These stores have unique advantages
like proximity to customers, easy to access, extends credit facility, maintains good relationship,
understand specific needs of customers etc. In Big cities and towns lot of super market and hyper
market are also available to the consumers. Whereas, in semi urban area and villages consumers
are heavily dependent on these convenience stores for buying their daily useable and grocery items.
These store possess unique business model as they are run by the owner himself, have very limited
capital/resources, handle local customers base and faces lot of issues in functioning the business.
To understand these we have selected similar store in nearby locality, i.e. Anish Store , Chhota
Govindpur, for this research.
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1) Environment:
Anish Store, Chhota Govindpur:Small Grocery Store, Located in outskirt of East Jamshedpur; Subash Nagar, Chhota
Govindpur. Mr. S.K. Gupta, shop owner himself manages the business and earns his
livelihood from this shop. Other details of this business are: Total investment made by the shop owner is Rs.80,000.00 and the entire asset value
including the shop is around Rs. 2,50,000.00
Mainly grocery store, sells items like Rice, Dal, Spices, Cooking Oils, Soap, Detergents,
Cold drinks etc. Total SKUs is around 250Nos and item category, 80Nos
Customer Profile; mostly villagers within 2Km of the Shop having income < Rs.8000.00
per month. Grocery purchase is almost 40% of their income.
Customers prefers to buy on weekly basis, very price sensitive, purchases small packets
or quantities of goods at a time, high involvement in purchases, full aware of market
information and competitor offerings.
Sale is around 1Lakhs/Months (12Lakhs/Annum), Maximum sale is done on credit and
payment cycle is weekly. Credit to Cash Sales ratio is 65% : 35%
Average Profit is 8 to 10%. Highest margin of 20% comes from Cold drink and
confectionary items whereas FMCG goods have lowest margin of 3 to 4%.
The shop owner has fixed expenditure of Rs. 2500.00/month for running the business.
The shop owner purchases goods from small wholesaler or distributors who also extends
credit facility. Goods are delivered to the shop on FOC basis.
Few companies like Godrej, Britannia, Sunfeast, Hindustan Lever, Tata tea, Coke,Pepsi
have purchased small spaces in racks for displaying their products.

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2) Research Objective:
The shop owner Mr. Gupta faces various business problems while running his shop. All problems
may not be so relevant and critical for functioning the business. Our research objective is to
Identify most significant problem of shop owner and find out the appropriate solution
using the market research technique.
Problem Identification:We visited this shop on Dt: 22.06.14 and had a detailed interview with the shop owner Mr. Gupta.
Our agenda was to understand his business model and find out the problems which the shop
Owner is currently facing. Followings are the list of problems came out from the discussion:1) Credit collection: Most of the Customer dont pay 100% of their previous bills before taking
further goods on credit for next period. Due to this working capital gets blocked.
2) Low inventory turnover ratio presently it is 5.5, compared to Market trend of 10
3) Very low profit % in FMCG and branded goods i.e. 3 to 4%. Volume discount are available but
blocks capital.
4) Owner is single person who is managing the shop, availability throughout the day is an issue.
Shop remains close 5 to 6 day in a month due to personal issues of shop owner
5) Sales is almost stagnant since last 3Yrs. (i.e. 12 Lakhs/Yr), Avg. Profit: 8 to 10%
6) Current Fixed cost Rs.2500/Months which is increasing @ 7 to 8% per annum.
7) Low purchasing capacity of individual customers as income<Rs. 8000.00/month. But customer
power is high due to competitive market scenario.
8) Supplier power is strong as the shop owner purchase is very low, puts pressure on margin.
9) Huge variety of goods, stock of non-moving goods blocks capital and erodes profits margin.
10) Sales are distributed unevenly, 65 to 70% sales happen in the weekends.
11) Cost of expiry goods are born by the shop owner, which increases the operating cost.

Decision Area/Problem:After reviewing the current business problems of shop owner it appears that the most Significant
problem area is Credit Collection & Inventory turnover. So we can conclude the Decision Area
for the shop owner as: How to Improve Credit Collect & Inventory Turnover

Research Problem
Since the shop owner decision area is very clear & precise we can derive the research problem
As What Needs to be done to improve the cash conversion cycle and Inventory Turnover
Ratio considering the scope of business remains same and other thing being constant.

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3) Research Approach:
Deriving Dependent & Independent Variables: The first step in research approach is to find
out the dependent and independent variables from the Research Problem. With the help of
these variables we can construct research questions, develop hypothesis and design the
research. Following table summarizes the process of deriving variables for this research:-

C1: Income
C2: Demographic Profile
C3: Purchase Volume
C4: Social Reputation
C5: Substitute Shop
C6: Buying Volume
C7: Payment Cycle
C8: Demand of Goods
C9: Shop Owner Reputation
C10: Market Trend
C11: Total Variety of SKUs
C12: Min. Stock Qty.
C13: Reorder Lever
C14: Time for stock replenishment
C15: Space availability
C16: Avg. Monthly/daily sale
C17: Distribution of Sale
C18: Demand of Regular customer
C19: Demand of New Customers
C20: Capital Investment details
C21: Total Capital Req.
C22: Payment Collection Pattern
C23: Payment issuing pattern
C24: Fixed Vs Recurring Expenses
C25: Avg. Inv. of Non-moving items
C26: % of Non-moving items
C27: Obsolance value/month
C28: Similar Business CCC & IT
C29: Nearby competitor data
C30: Internal Factor (Knowledge
level, skill, competencies etc.)
C31: External Factor (PESTEL)

Intermediate Variables
(Dependent)

Output Variables
(Dependent)

R1: Credit worthiness of

Customers

R2: Supplier Credit Facility

R3: Inventory pattern of High

Value SKUs

R4: Review of Sales/demand

pattern

R5: Working capital management

system

Cash Conversion Cycle & Inventory Turnover

Input Variables
(Independent)

R6: Non Moving & Obsolete

Stock Position

R7: Market Trend or Study of

Similar business

R8: Any other Factors

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3) Research Approach:
Research Questions: From the above table (Input/ Output variables) we can summarize the
research questions as follows:R1: What is the level of customers Credit worthiness?
R2: To what extent the Supplier provides Credit facility?
R3: How the Inventories of High Value SKUs are maintained?
R4: How the demand/sales of goods are changing throughout the week?
R5: What is the level of investment made and how it is managed?
R6: How inventory of Non-moving & Obsolete items are managed?
R7: What is the CCC & ITR of similar business, trend?
R8: Any other Factors leading to high CCC & ITR?
Hypothesis: There are two approaches of developing hypothesis. Either we can develop
hypothesis against each of the research question or else one single hypothesis for the research
problem. For the sake of simplicity we have decided to follow the later approach and
summarizes the hypothesis as:H0: Present Cash Conversion Cycle and Inventory Turnover Ratio of Anish Store are as per
the market Trend.
Ha: Present Cash Conversion Cycle and Inventory Turnover Ratio of Anish Store are different
from the market Trend.

4) Research Design:
Research Method:
The set of information we are looking from the research questionnaire i.e. from R1 to R8 are
sensitive and may lead to socially desirable response if asked directly from the shop owner. Further
the purpose of this study is first to understand Why the shop owner have problem with Cash
Conversion Cycle and Inventory Turnover Ratio?. Considering these two factors we find that Indepth Interview/Case Study research method is most appropriate for this research. Following
Diagram summarizes the selection process of research technique:-

Research Questionnaire
(From R1 to R8)

Input Variables
(From C1 to C31)

Sensitive Information
+
Understand CCC & ITR

Research Technique
In-depth Interview/
Case Study

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5) Research Design:
Sampling Method:
Since this is an In-depth Study our sampling type will be Non Probablistic - Quota Sampling.
Selection criteria of quota are based upon convenience, type of information & the input variable
we are looking for. Following table summarizes the sampling selection process:-

S.N.

Input Variables

C1
C2
C3
C4
C5
C6
C7
C8
C9
C10
C11
C12
C13
C14
C15
C16
C17
C18
C19
C20
C21
C22
C23
C24

Income
Demographic Profile
Purchase Volume
Social Reputation
Substitute Shop
Buying Volume
Payment Cycle
Demand of Goods
Shop Owner Reputation
Market Trend
Total Variety of SKUs
Min. Stock Qty.
Reorder Lever
Time for stock replenishment
Space availability
Avg. Monthly/daily sale
Distribution of Sale
Demand of Regular customer
Demand of New Customers
Capital Investment details
Total Capital Req.
Payment Collection Pattern
Payment issuing pattern
Fixed Vs Recurring Expenses

C25

Avg. Inv. of Non-moving items

C26
C27
C28
C29
C30
C31

Type of Information

Sample
Description

R1: What is the level

of customers Credit
worthiness?

Current
1) Customer Buying>
Customers of Rs2000/Month
Anish Store 2) Associated with > 6Months

R2: To what extent the

Supplier provides
Credit facility?

Major
Suppliers

Selection Criteria for Quota

No. of
Samples

10

1) Supplier Good Value >

Rs10000/Month
2) Have relation> 6Months

R3: How the

Inventories of High
Value SKUs are
maintained?

Shop Owner

Shop owner is the only sample.

Physical Verification of stock

R4: How the

demand/sales of
goods are changing
throughout the week?

Shop Owner

Shop owner is the only sample.

Physical Verification of sells
data

R5: What is the level

of investment made
and how it is
managed?

Shop Owner

Shop owner is the only sample.

Physical Verification +
Estimation

Shop owner is the only sample.

Physical Verification

R6: How inventory of

Non-moving &
Shop Owner
% of Non-moving items
Obsolete items are
Obsolance value/month
managed?
R7: What is the CCC
Similar Business CCC & IT
Closest
& ITR of similar
Competitor
Nearby competitor data
business, trend?
Internal Factor (Knowledge level, R8: Any other Factors
Shop Owner +
skill, competencies etc.)
leading to high CCC
Society
External Factor (PESTEL)
& ITR?
Total Sample (Including Shop Owner)

Grocery Shops within 2KM of

Anish Store & Serving Similar
Customer
Shop Owner
People staying nearby but not a
customer

5
21

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