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ADITYA BIRLA RETAIL LTD

INDUSTRIAL PROFILE
RETAIL INDUSTRY
Retailing is one of the pillars of the company .It consists of the s
ale of goods or merchandise from a fixed location ,such as a department store ,b
outique or kiosk , or post ,in small or individual lots for direct consumption b
y the purchaser.
Retailing may include subordinated services, such as delivery. Purchasers may be
individuals or businesses. In commerce, a ‘’retailer ‘’ buys goods or products in large
quantities from manufacturers or importers, either directly or through a wholes
aler, and then sells smaller quantities to the end –user.
Retail establishments are often called shops or stores. Retailers are the end o
f the supply chain. Manufacturing marketers see the process of retailing as a ne
cessary part of their overall distribution strategy. The term ‘’retailer ‘’is also appli
ed where a service provider services the needs of large number of individuals, s
uch as a public utility, like electric power.
Shops may be on residential streets, shopping streets with few or no houses or i
n a shopping mall. Shopping streets may be for pedestrians only. Sometimes a sh
opping street has a partial or full roof to protect customers from precipitation
. online retailing , a type of electronic commerce used for business –to-consumer
(B2C) transaction and mail order , are forms of non –shop retailing .
Shopping generally refers to the act of buying products. So
metimes this is done to obtain necessities such as food and clothing; sometimes
it is done as a recreational activity. Recreational shopping often involves wind
ow shopping (just looking, not buying) and browsing and does not always result i
n a purchases.
The pricing technique used by most retailers is cost – plus pricing. This involves
adding a markup amount (or percentages) to the retailer’s cost. Another common te
chnique is suggested retail pricing. This simply Involves charging the amount su
ggested by the manufacturer and usually printed on the product by the manufactur
er.
In western countries, retail prices are often called psychological prices
or odd prices. Often prices are fixed and displayed on signs or labels. Alternat
ively when prices are not clearly displayed, their can be price discrimination,
where the sale price is dependent upon who the customer is.
RETAILING INDUSTRY IN INTERNATION SCENARIO

The latter half of the 20 th century, in both Europe and North America, has seen
the emergence of the supermarket has the dominant grocery retail form. The rea
sons why supermarkets have come to dominate food retailing are not hard to f
ind. The search for convince in food shopping and consumption, coupled to car
ownership, led to the birth of the supermarket. Has incomes rose and shoppers so
ught both convince and new tastes and stimulation, supermarkets where able to ex
pand the products offered. The invention of the bar code allowed a store to man
age thousands of items and their prices and led to ‘just-in-time’ store replenishmen
t and the ability to carry tens of thousands of individual items. Computer ope
rated depots and logistical system integrated store replenishment with consume
r demand in a single electronic system. The superstore was born.
On the Global Retail Stage, little has remained the same over the last decade.
One of the few similarities with today is that Wal- Mart ‘s was ranked the top
retailer in the world then and it still holds that distinction .Other than Wal –M
art ‘s dominance, there’s little about today’s environment that looks like the mid -
1990s . The global economy has changed, consumer demand has shifted, and retaile
rs’ operating systems today are infused with far more technology than was the case
six years ago.
Saturated home markets, fierce competition and restrictive legislation have rel
entlessly pushed major food retailers into the globalization mode. Since the mid
-1990s, numerous governments have opened up their economies as well, to the fre
e markets and foreign investment that has been a plus for many a retailer. Howev
er, a more near –term concern, has been the global economic slowdown that has resu
lted from dramatic cutback in corporate IT and other type of capital spending. C
onsumer themselves have become much more price sensitive and conservative in the
ir buying, particularly in the more advanced economies. Concerns in 2003 have
turned to deflation, lack of pricing power, global over –capacity, low interest ra
te, economic stagnation, slump in the world tourism and declining consumer confi
dence. But, even before the global economic slowdown that forced retailers into
monitoring costs more effectively, technological advances were a way of life in
retail into organizations.
Technology has become the real enabler for retailer over the last s
ix years. Supply chain innovations for retailer were particularly strong in th
e second half of the 1990s and have continued into today. With all the emphasis
on technology and cost –cutting, a major thrust of retailer continues to be demand
based: finding new markets through globalization efforts. Four years ago, mo
re than half (53 percent) of the top 200 retailers operated in only one country.
Today, only 44 per cent remain single- country merchants.
This globalization trend can only intensify in the years ahead. The benefits of
increased sales and greater economies of scale are too large to be ignored.
The global retail industry has traveled a long way from a small beginning to an
industry where the world wide retail sales alone are valued at $ 7 trillion. The
top 200 retailers alone account for 30% of worldwide demand .Retail sales b
eing generally driven by people’s ability (disposable income) and willingness (con
sumer confidence) to buy , compliments the fact the money spent on household co
nsumption worldwide increase 68% between 1980 and 2003 . The leader has in –disput
ably been the USA where some two- thirds or $ 6.6 trillion out of the $ 10 trill
ion American economy is consumer spending. About 40% of that ($ 3 trillion) is s
pending on discretionary products and services. Retail turn over in the EU is ap
proximately Euros 2000 billion and the sector average growth looks to be followi
ng an upward Pattern.
The Asian economies (excluding Japan) are expected to grow at 6% consistently t
ill 2005-06. Positive forces at work in retail consumer markets today include hi
gh rates of personal expenditure, low interest rates, low unemployment and very
low inflation. Negative factors that hold retail sales back involve weakening co
nsumer confidence.
The Far East Experience
The food Retail Industry in the Far East has evolved into what could be called
‘the breeding ground ‘ for emergency models with countries like Singapore being t
he home to some of the bi players in the industry in these parts of the world .
The presence of all the major players in the industry is found in Singapore . S
ingapore has 2 hypermarkets, one run by Carrefour and the other by Giant Hyperma
rkets, part of Dairy Farm International . According to the government, there a
re slightly more than 11000 market stalls operating in 150 markets located all a
cross Singapore Island.
The markets further spread to China , Thailand , and Malaysia thanks to the m
ajor support that the local government provided in creating the necessary regul
atory framework in establishing their presence .Singapore , Malaysia and Thaila
nd not only fueled the retail industry with in the country , but also attracted
hordes of tourists to experience the shopping “experience” that they created in t
hese islands . The markets are now saturated with no additional space for new en
trant and expected to consolidate within the next few years.
Apart from Singapore, which is more recent development, Japan enjo
ys an active spot on the retailers’ map. The retail industry is a huge as US $ 1
008 Billion , with a split of US$ 594.8 Billion in the non food segment and US $
493.2 Billion in the food –retailing sector .The leaders in sale are Ito-Yokado
, Aeon ,Daiei , Takashimaya ,and Uny , in that order . Several retailers, howeve
r, have made recent improvements in their warehousing and distribution technolog
ies to make their presence felt in the Japanese market. Convenience stores, whic
h are small and suitable in a country where land is very expensive, continue to
do well.
Food, in fact, has been one of the few sectors that have experience
d growth over the last several years. A period of shake up in the industry is li
kely now that Wal –Mart has entered Japan .Numerous smaller, less efficient retail
ers may become takeover targets .The entire Japanese retail sector will likely
undergo some form of restructuring over the next decades as a result of overcap
acity, dismal profits and the Wal –Mart factor . In Mainland china, the retail mar
kets have mushroomed over the year of intense economic development to a very con
siderable size. The total volume of retail sales for consumer goods and food
increased by 10.6 percent in china over the last couple of years which shows
tremendous growth . Consumer spending has held strong.

A decade ago, the top five retail enterprises in China were a


ll traditional merchandise companies, but now the top five are mainly supermarke
ts and chain stores. The world is enamored with China‘s potential and opportunitie
s. But in medium –sized and small cities and rural areas, traditional retailing me
thods, such as department stores and local retailing networks, will be sufficien
t, as consumption is lower.
In Indonesia, Wet markets and supermarkets remained the major distribution ch
annels for food products. Although these retail sub –sector also offered non –food p
roducts, such as household goods, food products remained dominant in terms of th
e number of items. Wet markets ‘distribution of food products tended to be much gr
eater than non-food as these retail channels mainly provided fresh produce. Conv
ersely, supermarkets had an almost equal distribution, with food taking up the g
reater proportion. On the other hand, the distribution of non-food items, such a
s supermarkets, hypermarkets, and convenience stores. These retail outlets provi
ded some basic non –food products, such as tooth paste, soap, or detergent. Howeve
r, non –food retail provided food items, expect certain departments stores or drug
gists.
In Malaysia , a majority of food retailer outlets offer food and non-food it
ems , with at least a 70:30 distribution systems in Thailand is through so cal
led ‘wet markets ‘ which sell fruits , vegetables , meat and fish , together with s
mall ‘mom and pop’ food stores which distribute dry goods . However, the rapid grow
th of the economy, particularly during the decade before the financial crisis be
gan, has led to dramatic changes in the structure of the food –retailing sector. M
odern supermarkets, superstores, hypermarkets and convenience stores developed a
t breakneck pace to service the growing middle class with their demand for more
sophisticated food store and a greater variety of products many of which were im
ported.
RETAIL IN INDIA
Though with a population of a billion and a middle class population o
f over 300 millions organized retailing (in the form of food retail chains) is s
till in its infancy in the Country. India has been rather slow in joining the Or
ganized Retail Revolution that was rapidly transforming the economies in the oth
er Asian Tigers. This was largely due to the excellent food retailing system th
at was established by the kirana (mom-and –pop) stores that continue meet with a
ll the requirements of retail requirements albeit without the convenience of t
he shopping as provided by the retail chains ; and also due to the highly fr
agmented food supply chain that is huge value loss and high costs . This supplem
ented with lack of developed food processing industry kept the organized chains
out of the market place.
The correction process is underway and the systems are being esta
blished for effective Business –to – Business ( farmer-processor , processor –retail
er ) solutions thereby leveraging in the core competence of each player in t
he supply chain .
Spread of organized Retailing in India
Organised retailing is spreading and making its presence felt in dif
ferent parts of the country . The trend in grocery retailing , however , has bee
n slightly different with a growth concentration in the South India such as N
ilgiri’s as early as 1904 , the retail revolution happened with various major b
usiness houses foraying into the starting of chains of food retail outlets in
South India with focus on Chennai Hyderabad and Bangalore markets , preliminari
ly . In the Indian context , a countrywide chain in food retailing is yet to b
e established as lots of Supply Chain issues need to be answered due to the vas
t expanse of the country and also diverse that are present .

Retail Models in India: Current and Emerging


The Indian food retail market is characterized by several co –existing types and
formats. These are:
1. The road side hawkers and the mobile (pushcart variety) retailers.
2. The kirana stores ( the Indian equivalent of the mom – and – pop stores o
f the US ) , within which are:
a. Open format more organized outlets
b. Small to medium food retail outlets
Modern trade – the organized retailers
With in modern trade, we have:
1. The discounter ( Subhiksha , Apna Bazaar , Margin Free)
2. The value – for – money store ( Nilgiris)
3. The experience shop ( Food World ,Trinethra)
4. The home delivery (Fabmart)
While the focus of this note is on modern organ
ised retail trade, we hereunder present insights into the smaller, semi and unor
ganized retailers
Hawkers – ‘mobile supermarkets’
The unorganized sector is characterized by the lari –galla vendors (al
so known as “mobile supermarket”) seen in every Indian by lane and is, therefore, di
fficult to track, measure and analyze .But they do know their business – these low
est cost retailers can be found wherever more than 10 Indian collect – a rural pos
t office, a dusty roadside bus stop or a village square. As far as location is c
oncerned, these retailers have succeeded beyond all doubt. They have neither vil
lage nor city – wide ambitions or plans – their aim is simply a long walk down the e
nd of the next lane. This mode of ‘’mobile retailers” is neither scalable nor viable o
ver the longer term, but is certainly replicable all over India.
Most retailing of fresh foods in India occurs in Mandis and roads
ide hawker parks, which are usually illegal and entrenched. These are highly org
anised in their own way. Hawking of food products , cooked food and FMCG product
s is a very interesting model of retailing .Much has been written about these
roadside “malls “ – from social security issues to their nuisance value . However , i
f put these hawkers together , they are akin to a large supermarket with little
or no overheads and high degree of flexibility in merchandise , display , price
and turnover . While shopping ambience and trust factor maybe missing, these ha
wkers sure have a system that works.
Kirana/ Grocers/ Provision / Mom –and- Stores
Semi –organized retailers like kirana (mom-and-pop stores), g
rocers and provision stores are characterized by the more systematic buying – from
the mandis or the farmers and selling – from fixed structures. Economies of scale
are not yet realized in this format, but the front end is already visibly cha
nging with the tines. These stores have presented Indian companies with the chal
lenge of servicing them ,giving rise to distribution and cash flow cycles as n
ever seen elsewhere in Asia .
The model is very antithesis of modern retail in terms of the
buyer (retailer) - seller (FMCG) equations. It is not unknown for MNC leaders t
o link the supply of one line of products to another slower moving line of produ
cts. These retailers are not organizes in the manner that they could challenge t
he power of the sellers, most protests have been in the form of boycotts, which
really haven’t hit any company permanently.
INTERGATION OF FOOD INDUSTRY –THE KEY DRIVER OF FOOD RETAIL IN INDIA
India is the world’s second largest grower of fruits and vegetables a
fter Brazil and China. While the agriculture sector has witnessed several leaps
of innovation and technological advancements, the processing sector is still in
its infancy. Even with less than 4% processing of fruits and vegetables, the Foo
d Processing Industry sector in India is one of the largest in terms of produc
tion, consumption within India, export and growth prospects.
The government has accorded it a highly priority , with a number of fiscal reli
efs and incentives , to encourage commercialization and value addition to agric
ulture produce ; for minimizing pre /post harvest wastage , generating employm
ent and export growth . As a result of several policy initiatives undertaken sin
ce liberalization in early 90’s, the industry has witnessed fast growth in the mos
t of the segments. In the following few paragraphs , it can be noted that the p
rocessed food market for India is vast and the amount of scope that retail cha
ins would be exposed to is phenomenal taking into consideration the demograph
ics and raise in standards of living .
Retailers could throng the market with all these processed and packaged f
oods with their private labels. With the emergence of the big private corporate,
NGOs (Non –Government Organizations) and Government organizations into the food p
rocessing scene, India is making big in roads into the Food Processing Industry.
These corporate and NGOs have reached out to the farmers and provided them with
timely advice and help in the up gradation of farm practices with valuable in
puts on various areas of farming from sowing to harvesting which includes quali
ty seed procurement , manures , fertilizers and pesticides etc.
Some of the successful models are that of ITC‘s e –choupal a model that helps the
soya bean farmers in contract producing for ITC for its commodity trading busine
ss. The PEPSI experimenting with Punjab farmers in growing the right quality to
mato for its tomato purees and pastes. Some of the leading food retail chains wo
rking with farmers for contract growing greens for supply to their retail outlet
s etc. These successful models are being replicated with required changes all ov
er the county and the food industry is getting integrated more strongly.
India has also seen a flurry of food chain major like Mc Donald’s, Pizza Hut and
Kentucky Fried Chicken finding their place among the Indian consumes. The trend
still follows for food chains in India to spread to almost all cities and towns
.
These advancements have revolutionized the integration of the Indian Food Indust
ry and have played a vital role in solving, to large extent, major supply chain
issues that prevailed. The trend is that these successful institution interventi
on models be replicated and spread in all segments of the food industry far and
wide through the country that benefit all the incumbents of the chain evolve. Th
is finally helps the retailer as his supply chain becomes much leaner and vertic
ally integrated. He is in a position to offer a wide variety and highest degree
of convenience to his customer.

ECONOMY
Economic growth at over 5.5% over the last eight years, forex reserve
s of over $100 billion and a stable government has helped India to look more p
rogressively towards future. The economic development was largely attributed to
its dominance in the Information Technology Sector in the global market place an
d its large English speaking population that made it the ideal choice for back o
ffice operations for MNC’s world ove. The manufacturing sector also provided its m
ight to the economic development by doing global hitherto restricting to export
of raw materials or intermediaries that has not graduated to supply of end produ
ct be it Pharmaceuticals or Consumer Vehicles .

All this has translated in higher income levels and more surpluses for the mi
ddle class segment that is getting ploughed into the retail sector ; again fueli
ng the economy to higher levels .The last five years have seen PPP of average In
dian middle class (over 300 millions) go up several times unleashing the power o
f purchasing . The retail sector was the greatest beneficiary .The need for a sh
opping experience combined with the convenience of shopping for the upwardly mob
ile middle class has been on the major factors for retail boom in India.
THE INFORMATION CONSUMER
Over the years, the increasing literacy in the country and the exposure
to developed nations via satellite television or by way of the overseas work exp
erience, the consumer awareness has increased on the quality and the price of th
e product / service that is expected. Today more and more consumers are vocal o
n the quality of the products / service that they expected from the market. This
awareness has made the consumer seek more and more reliable source for purchase
s and hence the logical shift to purchases from the organised retail chains tha
t has a corporate background and where the accountability is more pronounced. Th
e consumer also seeks to purchase from a place where his/her feedback is more
valued.
EVOLUTION OF ORGANISED RETAILING
Retailing, one of the largest sectors in the global economy, is going through a
transition phase in India. For a long time, the corner grocery store was the onl
y choice available to the consumer, especially in the urban areas. This is slowl
y giving way to international formats of retailing .The traditional food and gro
cery segment has been the emergence of supermarket / grocery chains , convenienc
e stores and fast – food chains.
The traditional grocers, by introducing self – service formats as well as value –ad
ded services such as credit and home delivery, have tried to redefine themse
lves. However, the boom in retailing has been confined primarily to the urban ma
rkets in the country. Even there, large chunks are yet to feel the impact of org
anised retailing. There are two primary reasons for this. First, the modern reta
iler is yet to feel the saturation ‘effect in the urban market and has, therefore,
probably not looked at the other markets as seriously. Second, the modern retai
ling trend, despite its cost effectiveness, has come to be identified with lifes
tyle.
In order to appeal to all classes of the society, retail stores would
have to identify with different lifestyles. In a sense, this trend is already vi
sible with emergence of store with an essentially ‘value for money ‘image. The attra
ctiveness of the other stores actually appeals to the existing affluent class as
well as those who aspire to be part of this class. Hence, one can assume that t
he retailing revolution is emerging along the lines of the economic evolution of
society.
It was only in the year 2000 that the economists put a figure to it Rs. 400000 c
rore (1 crore =10 million) which is expected to develop to around Rs .800000 cro
re by the year 2005 – an annual increase of 20 per cent. Retailing in India is uno
rganized with poor supply chain management perspective. According to a recent su
rvey by some of the retail consulting bodies, an overwhelming proportion of the
Rs. 400000 crore retail markets are UNORGANISED. In fact, only a Rs. 200000 cror
e segment of the market is organised. As much as 96 per cent of the 5 million – pl
us outlets are smaller than 500 square feet area. This means that India per capi
ta retailing space is about 2 square feet (compared to 16 square feet in the Uni
ted States). India’s per capita retailing space is thus the lowest in the World.

Currently the retail landscape is filled with Supermarket chains with ove
r 1000 outlets all over the evolution of hypermarkets in the country prominent a
mong them are Giant, Metro, Big Bazaar models .While the average bill value at a
supermarket is in the range of Rs. 300 per bill, the average bill amount at t
he a Hypermarket is in the range of Rs. 750-1000, indicating that the model is i
n the tune with the global models where the average spend is increasing with the
shopping experience.

Impact of Organised Retail


Organised retailing is spreading and making its presence felt in different parts
of the country. The trend in grocery retailing, however, has been slightly diff
erent with a growth concentration in the South. Through there were traditional f
amily owned retail chains in south India such as Nilgiri’s as early as 1905, the r
etail revolution happened with the RPG group starting the Food world chain of fo
od retail outlets in South India with focus on Chennai, Hyderabad Bangalore mark
ets, preliminarily.
The experiment has reaped rich dividends and the group is now foraying into othe
r territories as well. Owing to the success of Food world model of RPG group, se
veral new models such as Trinethra, Subhisksha, Margin Free and others have made
their foray into this sector albeit at regional levels. Today the food retail
sector in India is about Rupees Ten Lakh Crores (USD 200 billions) of which the
organised food retail segment is about 1 per cent and increasing at a pace of ov
er 20% y-o-y.
To be successful in the food retailing in India essentially means to draw away s
hoppers from, the roadside hawkers and kirana stores to stores to supermarkets.
This transition can be achieved to some extent through pricing, so the success o
f food retailer depends on how best he understands and squeezes his supply chain
. The other major factor is that of convenience shopping which the supermarkets
has the edge over the traditional kirana stores. On an average a supermarket sto
cks up to 5000 SKU’s against few hundred’s stocked at an average kirana stores.
Through with excellent potential, India poses a complex situation for a retailer
, as this is a country where each State is a mini- Country by itself. The demogr
aphy’s of a region vary quite distinctly from others. In order to appeal to all
classes of the society, retail stores would have to identify with different life
styles. Hence we may find more of regional players and it would take enormously
long time before nationwide successful retail chains emerge. This is the main
reason as to why the successful retail chains in the country today operate at re
gional segments only and are not aiming at nationwide presence, at least for the
time being.
In the organised retail industry, the gestation periods are long, institutional
finding is difficult, and there is none or little Government support. But the b
elief among top retailer chains in the country is that the industry will see lar
ge investments coming once the current ban on foreign direct investment is lifte
d. But that could be two –three years away. Food and grocery retailing is a toug
h business in India with margins being very low, and consumers are not dissatisf
ied with existing shops where they buy. For example, the next – door grocery shopk
eeper is smart and delivers good customer service, though not value.
As of now , while Chennai has about five organised food and grocery retail chain
s , other big cities such as Delhi , Bangalore ,and Mumbai average only two –thr
ee such chains . Almost all food retail players have been region – specific as far
as geographical presence is concerned in the country. To illustrate with exampl
es , the RPG Group’s food World , Nilgiris , Margin Free , Giant , Varkey’s and Sub
hiksha , all of which are most or less spread in the south region ; Sabka Bazaa
r has a presence only in and around Delhi ; names such as Haiko and Radhakrishn
a Foodland are Mumbai –centric ; while Adani is Ahmadabad – centric . Industry top
ography in India is such that spreading presence across cities going is a tough
call. As pointed out by many experts, organised food and grocery retailing chai
ns going national requires significant investments. Retailing within this sector
is not just about the front –end, but involves complex supply chain and logistics
issues well.
The trend and mindset of the present retailer chains in India can be understood
by studying Food World as an example, which came in the first in the food and gr
ocery retailing sector. The chain has no plans to venture beyond the southern ma
rkets and achieve saturation. The intention is that by 2005, they could look at
the other regions. Subhiksha, a Chennai based discount chain, too wants to be th
e principal store of purchase for at least 40 per cent of all consumers living w
ithin 500-750nmeters of the store, that is, within walking distance.
This make the point very that the strategy among most existing retail chains of
various formats is to completely saturate the markets where they are already est
ablished players and then move on to virtually untouched areas where the challen
ges of sourcing resource and extending their supply chain model to best suit the
size and expense of the market would be challenging task.
Meanwhile, the RPG group plans to take its new formats such as Giant Hypermarke
ts national over the next three years. Grocery is large component of this format
, but not the only one. To elaborate on the hurdles of going pan- Indian, fundam
entally, the way a basic grocery retailing model works is that the high set – up c
osts in terms of setting up buying / distribution infrastructure is gradually am
ortized over a larger number of stores. The back – end costs without distribution
centre costs, or what in retailing jargon is called retail administration casts,
should stabilize at around 2.5 per cent of sales.
It can be explained that the obstacles of looking at a pan –India model for grocer
y are several. Given the federal nature of the country , the weak infrastructure
and the major variances in eating habits in different parts of the country , o
ne will have to replicate the retail administration costs for at least each r
egion and therefore , if one is to attempt a pan –India grocery foray , it will h
ave to be in the hypermarket format with its attendant investment numbers and r
isk profile .
It can be explained that the obstacles of looking at a pan –India model for grocer
y are several. Given the federal nature of the country, the weak infrastructure
and the major variances in eating habits in different parts of the country, one
will have to replicate the retail administration costs for at least each regiona
l and therefore the gestation period of the project becomes huge. However, if a
model is in place where the upfront store revenues scale very rapidly, then it
is possible .Therefore, if one is to attempt a pan- India grocery foray, it wil
l have to be in the hypermarket format with its attendant numbers and risk profi
le.
If a close look is taken at the nature of the Indian Retail Markets, it can be s
een that there is so much potential to extract from individual regions, that pl
ayers are in no tearing hurry to spread out. Based on recent study by a renown
ed government institution in India , in the six major metros , Delhi has the h
ighest per capita consumption of food and grocery , among supermarkets . Chenna
i , ‘’ the Mecca of retailing ‘’ , comes at fourth place . This shows the high potenti
al the sector presents .Chennai has some five supermarkets chain , and each o
f these are doing well for themselves . So there is enough scope to expand even
in one single city in India .
Sabka Bazaar , a supermarket chain restricted to Delhi alone, is now generating
sale of about Rs . 11 crore from its 19 stores which best illustration the pote
ntial of each individual city . This explains the reason for delay in intention
of retailers to spread far and wide .
Pantaloon Retail (India )Ltd , which operates two type of retail formats , made
its maiden foray in food and grocery retailing in North India in mid – 2003 . Big
Bazaar , Pantaloon group’s discount store chain , has taken off to a roaring st
art in Delhi . The pantaloon Big Bazaar in Delhi is the sixth for the group , an
d the first in North India .
It has been found that existing Big Bazaar stores in cities such as Hyderabad ,
Bangalore and Mumbai attract average football of 20000 to 25000 per day , more
so during weekends . While Big Bazaar is essentially a discount store retailin
g preoduct categories ranging from food and grocery to appeal to footwear to h
ome and interior products , food and grocery retailing forms a significant par
t of the chain’s business . Typically , while food and grocery retailing does we
ll at the beginning of the month , the apparel sector sees maximum off take duri
ng festivals .
It can be observed that the most popular retail format in India is the ‘supermarke
t’ , beside the corner shop/ grocery store / ‘mom and pop’ store . Hypermarket have v
ery recently come into being and negligible in number though most retail chains
do intend to expand their presence through this format as well very soon . ‘Disco
unt chains ‘ are also substantial in number and are growing at a fast pace throu
gh the country , predominantly , in the southern region .
Given that organized Retail has been registering growth rate of approximately
40 per cent over the last three years , it is expected to grow to about RS. 350
00 Crore in 2005 , and close to Rs 70000 crore in 2010 . If projections were
to be made considering the current trends in food retailing in India , some yea
rs down the line , food and grocery stores will become dominating trade partn
ers for the food industry , which , in turn , will be forced to offer special d
iscount and trade terms for them to get the shelf space in such stores . Also ,
once established , in – store label brands will become a real threat to the indu
stry as manufacture will have to complete with store label brands that are ge
nerally very price- competitive .
As f or the spread geographically , strong chances stand that the major cha
ins would spread to the next grade of cities in the country over the next 5 year
s or so and then progressively start covering every corner of the country . M
ost chains have already started developing there own unique supply chains that
would suit their needs precisely . Replicating the success stories of the big
names of the Western nations may still be a distant dream for Indian food and gr
ocery retailers, but at least the winds are blowing in the direction of growth
.

Decadal Analysis of the Food Retail Sector


Retailing is a sunrise industry in India with many challenges like exclusion o
f small farms , management of processing and distribution chains . Evolution of
supermarkets and fast food chains is a recent phenomenon in India . Various dema
nd and supply side factors have contributed towards this growth .
Supply side:
The liberalization of the economy in the 1990s led to a boon in the “consume
r Goods” Industry with reductions in custom duties and shift from quota to tariff
based systems . Entry barriers on multinationals were largely removed after w
hich Food Industry majors like Kellogg’s , Heinz , Tropicana ,etc ., entered the I
ndian food industry . This gave rise to tremendous development of sophisticated
supply chain & logistics which eventually and gradually has led to the growth i
n the food processing & packaging industry.
Demand side:
The increase in the income levels of middle and higher income groups in the 199
0s coupled with the reduction in poverty levels was a major factor in contrib
uting to the increasing in demand for high quality food retailing services . Ch
anging consumer lifestyle with the steep increase in time value , wide spread ch
ange in the Indian family structure from vast Join Hindu families to more manag
eable nuclear families and increasing level of quality awareness has also helped
the cause of the Food Retailing Industry considerably .Another major factor th
at has accelerated the growth of the Indian Food Retailing sector has been the
advent of cable television and the increasing instances of overseas travel by In
dians for various reasons .
Government Policy on Food Retailing – India
100% FDI in retailing in not allowed per say , foreign retailers can operate in
India through joint venture , where the Indian partner is a export house , Franc
hising / Local manufacturing /Sourcing from small –scale sector ,cash and carry
operations . The McKinsey report states FDI will help the retail businesses to g
row from the present $200 billion to $460 -470 billion by 2010.
Growth of supermarkets in most developing countries (Brazil ,China etc ) took of
f in the 1990s after FDI was allowed in this sector which is not in the case in
the Indian scenario. Retailing is not regarded as an industry very few banks are
willing to invest in this sector . The shortage of warehousing facilities ,
cold storage and large scale processing units has obstructed the growth of F
ood Retailing Industry in India . As supply chain is fragmented & marked by exis
tence of large number of intermediaries , organised retailing has been a very to
ugh proposition . India is still in the second and third party logistic provid
er mode while fourth party logistic models have become global standards for log
istic providers.
Retailing is subject to a plethora of laws and regulations at central , state a
nd municipal / local levels , some of which have listed below :
-Restrictive zoning legislation limits availability of land for retail / commer
cial purpose
-Restrictions on interstate movement of food grains deprive farmers from getting
remunerative prices .
-Restrictive Labor laws
-Urban land ceiling regulation , restriction on shop opening timings requirement
s for shops to close once a week
- There is no uniform tax structure –multiple layers of taxes
Supplier Retailer Relationships
Traditionally the supplier – retailer relation in India comprised sever
al layers such as the national distributor , the regional wholesaler and the end
retailer . However this scenario is fast changing with the organised retail inc
reasing its presence in the country where the relationship is directly with the
manufacturer . However this new model has been affecting the relationships that
the manufacturer enjoys with the traditional system which is still the most do
minant in the entire retail sector .
The issue of differential pricing is being taken up at several forums and t
he growing dissatisfaction among the traditional retailers is being addressed by
the manufactures . However we see that in the long term , the role of a nationa
l distributor would slowly fade away or get restricted to the rural / upcountry
regions .
The supplier – retailer relationship would come under severe pressure as each part
y would try to squeeze maximum margins out of the other .
Innovations in Transportation Logistics
The logistics service providers have been innovating several interesting fo
rmats and models for the retail sector . As of now , organised retail chains in
India do not , by far , outsource logistical requirements , they develop their
own network . This was basically due to the fact that the supply – chain Was still
in its infancy stage , which has begun to mature and the systems are being wel
l defined . As retail chains begin to focus more and more on the retail end ,the
logistics support would begin to get outsourced.
The logistics service providers have begun to come out with innovative customize
d solutions for the retail chains such as GATI’s model for distribution of Alphon
so mangoes throughout the country with the Information Technology support .
Formats
Currently the retail sector in India is populated with the traditional mom-and –po
p stores and some 1000 odd supermarkets under organized retail chains. A daring
few ventured into the Hypermarket segment will successful results and this forma
ts is being fast replicated by other players. This experience indicates that t
he Indian consumer has matured to the next level of shopping experience . Given
the Indian conditions and the vast diversity a single format may not be possibl
e for the national presence , but region specific formats may evolve .
An interesting observation is that of lack of presence of organised retail cha
ins in the rural /semi – urban centers as over 60% of Indian population is still
in these parts . An ideal “no frills “model to start with , would to start with , wo
uld be ideal for the rural markets , this would help to take them to the next l
evel of supermarket experience .
Social Trend
Social trends o a country have impact on the scheme of growth of food retailing
in a country . India is country that is vast geographically and drive cultural
ly . This has taken its toll on food retailing with retailers having to adapt
to the local cultures and palates of the area in which they have established or
plan to establish .This is a major reason for many or most retailing chains r
estricting their operations to a certain part of the country . But the trends no
w are slowly moving towards cultural integrations where people of all states an
d diametrically opposite culture tend to try out foods and materials of other s
tates and communities . This movement towards social integration would make it v
ery feasible in the near future for retailing chains and erstwhile local chains
to spread across the country .
Increased income levels and more women willing to make use of their education by
joining work as increasingly affected the shopping pattern that is moving towar
ds fulfilling the need of convenience shopping in the form of supermarkets (now
graduating to hyper format ) home deliveries . Indian consumer is quality and pr
ice conscious and this awareness would drive the retailers to rework their suppl
y chain relationships.
A recent analysis shows that countries go through a distinct food consumption ev
olutionary pattern . In the first stage the focus is on obtaining basic dietary
inputs , the second stage focuses on improving and building basic food , befo
re moving to the third stage of adding premium food to the diet . Most of urban
India has already move to the third stage and it is a great avenue for food reta
ilers, if they could slowly introduce the rest of India to it .
The future would witness creation of specific models / formats one for the upwa
rdly mobile urbanite and other for the rural markets. Also since the taste habit
s change from place to place in India, there would emerge a leading .
Online Retailing
The single most important most evolution that took place along with the retailin
g revolution was the rise and fall of the dotcom companies . A sudden concept
of “non store “ shopping emerged , which threatened to take away the potential of t
he store . More importantly the very nature of the customer segment being addre
ssed was almost the same . The computers –savvy individual was also a sub segmen
t of the ‘store’ frequenting traffic .Internationally the concept of Net shopping is
yet ti be proven . And the poor financial performance of most of the companies
offering virtual shopping has resulted in store –based retailing regaining the upp
er hand .
The forms of non store shopping including various formats such as catalogue /m
ail order shopping , direct selling , and so on are growing rapidly . However ,
the size of the direct market industry is too limited to deter the retailers .
For all the convenience that it offers, electronic retailing does not suit produ
cts where ‘look and see’ attributes are of important , as in apparel , or where the
value is very high , such as jewellery , or where the performance has to be te
sted , as of consumer durables . The most critical issue in electronic retailing
, especially in a country such as ours , relates to payments and the various se
curity issue involved.
However , using the internet to be able to source products and also check for av
ailability of stock among store of retail chains has been proven to be effective
and cuts down on wastage by a vast amount . It makes logistical support very ea
sy and efficient . The trend in India such that usage of the electronic medium
for business purpose and integrating it into the systems is increasing . This
would slowly spread into the retailing sector as well . It has already started i
n the case of some large retail houses where the affects has here to see . This
again would result in the supply chain getting leaner and vertically integrat
ed . Though the initial costs to implemented these systems are high , in the in
the long run it results in cost reduction where as this privilege can be passed
on to the final consumer .
Impact of Technology
The other important aspect of retailing relates to technology . It is widely
felt that the key differentiator between the successful and not so successful r
etailers is primarily in the area of technology . Simultaneously , it will be t
echnology that will help the organised retailer score over the unorganized playe
rs , giving both cost and service advantages .
Retailing is a ‘technology – intensive ‘ industry . It is quoted that everyday at le
ast 500 gigabytes of data are transmitted via satellite from the 1200 point – of –sa
le counters of JC Penney to its corporate headquarters . Successful retailers to
day work closely with their vendors to predict consumer demand , shorten lea
d times , reduce inventory holding and thereby , save cost .Wal –Mart pioneered th
e concept of building a competitive advantage through distribution and informat
ion systems in the retailing industry . They introduced two innovative logistics
techniques –cross –docking and electronic data interchange . Today , online system
link point – of –sales terminals to the main office where detailed analyses on sal
es by item , classification , stores or vendors are carried out online . Besides
vendors , the focus of the retailing sector is to develop the link with the co
nsumer .
‘Data Warehousing ‘ is an established concept in the advanced nations . With the he
lp of ‘data retailing ‘, information on existing and potential customers is tracked
. Besides knowing what was purchased and by whom , information on softer issues
such as demographics and psychographics is captured .
Retailing is at a nascent stage in India . Most organised players have manage
d to put the front ends in place , but these are relatively easy to copy . The r
elatively complicated information systems and underlying technologies are
in the process of being established . Most grocery retailers such as Food Wo
rld have started tracking consumer purchases through CRM .The lifestyle ‘retai
lers through their ‘affinity clubs ‘ and ‘reward clubs’ are establishing their process
. The traditional retailer will always continue to exist but organised retailer
s are working towards revamping their business to obtain strategic advantages
at various levels – market , cost , knowledge and customer .With differentiat
ing strategies – value for money , shopping experience , variety , quality , disco
unts and advanced systems and technology in the back – end , change in the equilib
rium with manufacturers and a through understanding of the consumer behavior , t
he ground is all set for the organised retailers .

Food safety Issues :


As awareness grows about food safety issues , the need for countries to provide
greater assurance about the safety and quality of food also grows . The inc
rease in the world food trade and the advent of the Sanitary and Phytosanitary
(SPS) Agreement under the World Trade Organization (WTO) have also raised intere
st in food safety requirements. To ensure a strong presence in global markets
,India realize the need to meet these challenges and keep pace with internatio
nal developments.
In India , it has come to the notice of general public of late that very “popular
“ food companies could also go wayward as far as food – safety and public health i
s concerned . This has triggered off a drive by the public and the government t
o put more stringed food safety and public health measures in place while manuf
acturing , storing and packing of foodstuffs takes place . Most foodstuffs pass
through the organised retail channels on their way to the purchase baskets of
consumers and therefore the retailers are beginning to realize the need for foo
d safety and security . Grading and standardization measures are being taken a
t various stages of the manufacturing , processing , packaging , and storing of
all kinds of food materials .
To ensure food safety and maintain product integrity from the source to the cust
omer (farm –to-plate ) the Food Retailing Companies would have to establish a tota
lly integrated infrastructure and service package . This connects and maintain
s the flows of food from the source (farmers/ food growers, farm service centers
, market yards ,processors , importers ) to the customer (foodservice outle
ts , food processing units , food retailers and food exporters ). This package
will help eliminate or prevent identified hazards or reduces them to acceptable
levels . This trend is slowly beginning to take shape with the efforts to inte
grate and consolidate the supply chain in Indian Food Retailing .
The Codex , HACCP (The Hazard Analysis Critical Control point ) and food – hygiene
standards have been adopted by the Bureau of Indian standards , the national
standard body in India .Food processing units are being encouraged to adopt
these systems on a voluntary basis .
Organization like VOICE(Voluntary organized in the interest of Consumer Educatio
n ) have undertaken the responsibility to document the existing level to implem
entation of National Laws concerning labeling and packaging of imported food pro
ducts , to analyses and compare with the Indian made food products and similar i
mported food products in terms of adherence of the National Laws , to prepare a
well- documented camping kit for the consumer groups in India on the study to
sensitize and build awareness among consumers on seeking and demanding mandato
ry information on all packaged food products .
India’s Top Food Retailers
Food world Hs become India’s largest and fastest growing supermarket chain . Toda
y , over 89 stores offer customers a variety of brand at a reasonable price.
Food world in India is an alliance between the RPG group in India with Diary Far
m International of the Jardine Matheson Group . Food world aims at establishing
100 stores all over Tamilnadu, Andhra Pradesh Karnataka and Maharashtra by mid –
2004 with a turnover of Rs . 500 crores
It a is a supermarket chain that has predominant presence in the southern state
of Andhra Pradesh with 66 stores spread over 8 districts of the state. Their
turnover was Rs. 78.8 crores for the year 2002-03.This figure is expected to t
ouch the Rs. 100 crore mark by 2003-04 . The Trinethra group came into being as
a single store in the year 1986. They plan to saturate their presence through o
ut the state of Andhra Pradesh before venturing into two more southern states o
f the country . The group plans to venture into the lower level regions like sma
ller towns and mandals by using the franchisee – model . They are also very clear
that they would be setting up three hypermarkets in the state soon
Apna Bazaar , the Rs 140 - crore consumer co-operative society with a custome
r base of over 12 lakh , plan to Cater to an upwardly mobile urban population – a
first for the 55-year-old chain that has mostly been identified with the ‘middle
class ‘ . The plans include trimming and training the workforce , opening new out
lets and focusing on the FMCG sector . Now , the co-operative has 80 outlets in
Mumbai , Thane and the neighboring Konkan region . It has recently opened its f
irst shop outside the state in Goa . The avenue target for 2003-04 is Rs .150
crore . The chain plans to remain open all day of the week and this itself is ex
pected to fetch about Rs 10 crore a year .
Big Bazaar -Pantaloons, After Bangalore , Hyderabad and Kolkata , BIG Bazaar
, a division of pantaloon Retail (India ) Ltd has stretched its brand to Mumbai
by opening three hypermarket in the city . Offering discount ranging from 5 per
cent to 60 per cent , discount stores is still a nascent concept in India . Big
Bazaar launched its stores in Bangalore , Hyderabad and Kolkata. Marking an
investment of Rs 10 crore into this new division , Pantaloon is expects to rec
ord the highest turnover from its Mumbai stores to the tune of almost Rs 80 c
rore from Mumbai alone within the first year operations . But the turnover from
its other Big Bazaar stores in Bangalore , Hyderabad and Kolkata is Rs 50 crore
this year . Big Bazaar claims to be India’s first chain of hypermarket discount
stores.
Margin Free – The Kerala based Margin Free disc ount stores , the ‘pure retail ‘ chai
n with arguably the largest presence in the country . The retail store is unifor
mly spread across the 240-odd Margin Free franchisees in Kerala , Tamil Nadu and
Karnataka .Margin Free draws inspiration from the undying loyalty of its cust
omers who have wholeheartedly welcome all its growth plans in the past . Margi
n Free palns to open huge hypermarkets (50.000sq.ft each ) in Ernakulam , Thiva
ndrum , and Kozhikode in the immediate future .
Subhiksha The Chennai – based retail food and pharmacy chain subhiksha supermark
et and pharmacy is in expansion model . It plans to go national and have 400
stores in the next two years . Currently , Subhiksha has a strong presence onl
y on in Tamil Nadu and Pondicherry with over 150 stores . The decision to expa
nd outside Tamil Nadu , is because the city has reached saturation and also ,
the purchasing power is high in large metros . Subhiksha stores sell household
s items and medicines at significant discount to normal prices. The retail ch
ain earned a total revenue of Rs . 235 crore in 2002-03 . The first Subhiksha s
tore was opened in Tiruvanmiyur in Chennai in March 1997 . Today, the chain has
about 164 outlets in Tamil Nadu and Pondicherry . In 1997-98 Subhiksha was mak
ing a turnover of Rs 12 crore and a profit of Rs 10 lakhs . In 2003 it has gro
wn to Rs 224 crores turnover and Rs 3 crores profit . Major plans are on in Kar
nataka to open 40 stores in Bangalore in the next nine months and another seven
stores in Mysore in the same period . In all , it is intended to open at least
250 stores by 2005 . The group is looking at extending operations in Karnataka a
nd also venturing into the Maharashtra , Andhra Pradesh and Gujarat markets .
Nilgiris Muthusamy Mudaliar opened a small bunk shop in Ooty That was in 1905 an
d the beginning of a long story in procurement and customer satisfaction . In 1
936 , the shop moved to Bangalore with its registered office on Brigade Road, a
small shop exactly where the huge mother store is now located . The first expan
sion happened when Muthusamy Mudaliar’ son Chenniappan , also the chairman , est
ablished Nilgiris as a modest store carrying Nilgiris’ own products , mostly dairy
and bakery . Eventually , it evolved into a supermarket when Mr , Chenniappan
visited the U.S. and Europe and was influenced by the old supermarket concept i
n the west . This chain has now blossomed to cover a vast region in South India
with 26 outlets and annual sales of about Rs . 2300 Millions . They plan to ope
n an additional 30 outlets in their next phase of expansion .
MTR –The MTR Group of companies promoted by the family of MAIYAS took birth in t
he year 1924 with the commencement of a Restaurant in Bangalore . Later In 19
76 , MTR ventured into the business of retailing of Groceries and other househol
d general items by opening a Department stores .MTR first bought a packaged , pr
ocessed food product. Subsequently , efforts were made to extend the distribut
ion of the above products to few other prominent Retail stores in Bangalore , s
uch as Nilgiris , Vijaya Bakery , Shivananda Stores , Home Needs etc. The respo
nse was found to be very encouraging in terms of sales of the above products. C
onsequently , a major step with respect to marketing was taken by the group in
the year 1983 . It was during 1983 that MTR appointed Distributors in Bangalor
e , Madras , Hyderabad and Vijayawada with a view to capture business opportun
ities in the said markets .

Janatha bazaars & HOPCOMS – Cooperative Departmental stores were started with Gov
ernment patronage in the early 1960’s at a time when shortage of basic goods wa
s the order of the day . Poor marketing strategies hindered their progress in
the field . Total membership 11680 farmers , with 100 tonnes of horticultural
produce being traded per day in eight districts . In 1998, each cooperative soci
ety was made independent , sixteen of which were subsequently federated at the s
tate level , as members of the Karnataka Horticulture Federation .
Presence of MNC chains
Metro AG – opened its first Indian outlet in Yeshwanthpur , Bangalore on a sprawli
ng 6500 square metres area . Proposed to open one more centre in Bangalore durin
g November 2003 . Capital expenditure for these two centres in Rs 176 crores (
35 million euros ). Employ 300 local people and head quarter will employ 750 lo
cal people .
Retailing In Kerala
Retailing in Kerala is a subject too subtle and relevant ; as Kerala is know of
more as a consumer state rather than a producer state . The introductions of Ma
rgin Free Markets have turned out to be grand success resulting in it becoming
one of the largest retail chains in the country .
Reliance Fresh
It is the convenience store format part of the retail business of Reliance Indu
stries of India which is headed by Mukesh Ambani . Reliance plans to invest in
excess of Rs 25000 crores in the next 4 years in their retail division . The
company already has in excess of 560 reliance fresh outlets across the country .
These stores sell fresh and vegetables , Staples , groceries , fresh juice bars
and dairy products .
A typical Reliance Fresh store is approximately 3000-4000 square feet and cate
rs to a catchment area of 1-2 km .
Varkeys Bakery and Supermarkets
It is the leading supermarket chain in Kerala , India . Keeping pace with the g
rowing customer needs the first Discount Hypermarket- “V – Mart’ was started in 2004
at Cochin , Kerala ,India . Both Varkeys Bakery and Supermarket and V –Mart , Hyp
ermarket comes under the banner Varkey Retail Ventures Pvt .Ltd
The stores and its concept have played a vital role in revolutionizing the t
aste & shopping patterns of the people of Kerala . Providing all the needs of a
households under one roof , it has made its mark as a “single stop shop “ for
its customers . With an approach that beats the traditional stores .
This idea made itself big in 1984 when Mr. Ittiachan foresaw that the household
shopping pattern would swing from traditional stores to Supermarkets. The sto
res provide a medium for the consumers to witness a wide variety of products ava
ilable in the market , both manufactured as well as imported . Our network of s
upply chain and manufacture has grown gradually over the years with human reso
urce , machinery and vehicles . The years of practical know –how sets apart in e
very manner we execute the details of the job . The stores follow a uniform “poli
cy “ emphasizing importance on the Quality , Price , Service.
Margin Free Markets
• Margin Free Markets is the largest retail chain in the state Kerala one of the
leading retail chains in India .
• The first outlets of this chain started functioning on 26th January 1994 at Triv
andrum .
• Currently more than 275 franchisees of Margin Free Markets spread all over sout
h India .
• The outlets are franchises and are not actually owned by the chain
• Currewntly controlled by The consumer protection & Guidance Society
The consumers are assured of quality , quantity and the fair price of the go
ods sold through the Margin Free Markets . These shop deals with goods like gr
ocery , food and non- food FMCG items , fruits and vegetables , consumer goods
& households articles .
Margin Free outlets are typical discount stores , offering one-stop-shop conven
ience and self – service facility at significant discount to its customers . Most
of these customers, in time turn out to be its permanent customers , by taki
ng discount cards , which permit them to obtain larger discounts than the non –
card holders.
The necessity of offer protection against the rising prices gave birth to the i
dea of’ Margin Free Markets’ . An enthusiastic entrepreneur named Mr. N . Ravikum
ar conceived the idea .The idea turned out to be an instant success in Kerala e
specially because Kerala is more of ‘consumer ‘ state than a ‘producing ‘ state .
Kerala depends on her neighboring states for her consumer needs . Due to the la
rge number of intermediaries involved and the transportation costs, the price
are high and there is a wide fluctuation in prices of groceries , fruits and veg
etables . Groceries and FMCG goods are brought directly from the production unit
s of the neighboring states .
In the process of direct purchase from farmers and manufactures , the intermedi
aries are removed and a part of the margin or ‘profits’ earned is disbursed among th
e consumers. The distribution to the different outlets under the chain is taken
as a collective responsibility and is done with the objective to reduce the tot
al transportation costs .
Food World
Food World is one of the biggest retail chains in India .The RPG group opened t
he first Food World outlet on May 9th 1996 at Chennai . It is the only national
chain , having Foreign Direct Investment to the extent of 49% that is permitted
in India .
Food World , operates as a 51:49 joint venture with Dairy Farm International of
the Jardine Matheson Group ,as US $ 4.5 billion retail giant operating in the
Asia –Pacific markets with the requisite experience .
Food World has decided to concentrate more on local areas rather than to go for
a nationwide presence in its expansion plans at the beginning .
Food World product Portfolio includes grocery of all kinds ,. Fresh foods via .,
fruits and vegetables in fresh / chilled /frozen form , food that can be direc
tly consumed , food and non – food FMCGproducts , general merchandise required in
homes like buckets , cups , shelves etc. Indian Made Foreign .
To source its daily requirements of fruits and vegetables , Food World particip
ants in the early morning autions at the major wholesale markets and has a set o
f suppliers who then grade , clean , packand label the products in the time for
early morning dispatch to the stores . At peak season , the Fruit & vegetables s
helf in a food world store stocks around 125 items ; making it the widest range
available under one roof in this category .
Food World’s share of the organized retail market in the cities in which it opera
tes is 62% clearly a dominant share . The firm expects the number of Food World
stores to increase to 125 by the end of 2005 . A smaller version , Food World
Express is also planned to be launched in future .
Supply Co
The kerala state civil supply corporation (supplyco) , is a statutory body estab
lished in 1974 .
Procures rice, wheat products , sugr ,pulses, vegetables and a range of consumer
goods . It has a network of 663 retail outlets called Maveli stores, 11 superma
rkets in district headquarters and 21 mobile Maveli vans operating on designated
routes .
The Government decides the price of articles sold by Supplyco through these shop
s , and has used it as highly effective mechanism , cutting out middleman and
controlling prices in the open market. Its effect on the market are most eviden
t during the festival season s.
E tendering introduced by the Corporation , enables participation of more tender
s from anywhere in the world , thereby increasing competition . This ensures th
e entry of genuine suppliers from the production centers of other States . The i
ntroduction of a payment system at the receiving depot itself spot pyment to sup
pliers . The suppliers will get ready payment on the same day as delivery of goo
ds through a demand draft couriered to them . This reduces unnecessary delay an
d complexity in payment procedure , which again results in the reduction of purc
hase cost
INFERENCE

COMPANY PROFILE
A US $28 billion premium conglomerate, the Aditya Birla Group is the League
of Fortune 500. It is anchored by an extraordinary force of 100000 employees,
belonging to 25 different nationalities .The Group has been adjusted “The Best
Employer in India and among the top 20 in Asia “by the Hewitt-Economic Times and W
all Street Journal study 2007. Over 50 per cent of its revenues flow its ove
rseas operations.
The Group operates in 25 countries –India , UK, Germa
ny ,Hungary , Brazil, Italy ,France ,Luxembourg , Switzerland , Australia ,USA
, Canada , Egypt, Thailand , Laos , Indonesia, Philippines , Dubai , Singapore,
Myanmar, Bangladesh , Vietnam , Malaysia , and Korea.
Globally the Aditya Birla Group is
A metals powerhouse, among the world’s most cost –efficient alumin
um and copper producers.
Hindalco –Novelis is the largest aluminum rolling company.
It is one of the 3 biggest producers of primary aluminum.
In Asia
• No.1 in visoose slaple fiber
• The 4th largest producer of carbon black
• The 11th largest cement producer
• Among the world’s top 15 BPO companies and among India’s top 4
Among the best energy efficient fertilizer plants
In India
• A premier branded garments player
• The 2nd largest player in viscose filament yarn
• The 2nd largest in the Chlor – alkali sector
• Among the top 5 mobile telephony companies
• A leading player in Life Insurance and Asset Management
• Among the top 3 super market chains in the Retail business
Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where succ
ess does not come in the way of the need to keep learning afresh, to keep experi
menting.
Beyond business –The Aditya Birla Group is:
• Working in 3700 villages
• Reaching out to 7 million people annually through the Aditya Birla Centre for C
ommunity Initiatives and Rural Development , spearheaded by Mrs.Rajashree Birla
• Focusing on : health care , education , sustainable livelihood , infrastructure
and espousing social causes
• Running 41 schools and 18 Hospitals.

Aditya Birla Retail Ltd


Retailing consists of the sale of goods or merchandise from a fixed location ,
such as department store, boutique or kiosk , or by post , in small or individu
al lots for direct consumption by the purchaser . Retailing may include subordin
ate service , such as delivery .
Purchasers may be individuals or business . In commerce , a “retailer “ buys goods
or products in large quantities from manufacturers or importers, either directl
y or through a wholesaler , and then sells smaller quantities to the end –user .
Retail establishments are often called shops or stores.
Retailing are at the end of the supply chain . Manufacturing marketers see the p
rocess of retailing as a necessary part of their overall distribution strategy .
The term “retailer’’ is also applied where a service provider services the needs of
a large number of individuals , such as a public utility , like electric powe
r .
Shopping generally refers to the act of buying products . Sometimes this is done
to obtain necessities such as food and clothing ;sometimes it is done as a recr
eational activity . Recreational shopping often involves window shopping (just l
ooking , not buying ) and browsing and does not always result in a purchase.
ABRL , the nation’s biggest retail company now operates 640 more supermarkets and
2hypermarkets all over India .
After years of commitment & passion to turn around they now have an incredible
position in Indian retail industry . They become the pioneer in this sector by
beating its competitors . The company has around 11000 employees and pan India
presence .
• Largest industry in India
• Employment of around 8%
• Over 10% of the country’s GDP
• 5th largest retail destination globally
Company Overview
• 1987- Mr . Anjaneyalu founded Trinethra super retail
• 1999-Foundation of Fabmall
• 2004- india value Fund acquire Trinethra and Fabmall and established Trinethra
Super Retail Private Ltd .
• 2007- Aditya Birla group entered into retail business ,established Aditya Birla
Retail ltd and they acquire Trinethra Super Retail Pvt LTD .
• 2007- Aditya Birla group launched its first supermarket ‘more for you’
• 2008 – The company has set up 640 supermarkets and two hypermarkets . All the sup
ermarkets (including the former Trinethra stores) are now branded MORE and hyper
markets are branded MORE Mega store . The company has around 11000 employees and
has a pan India presence .
ORGANISATIONAL STRUCTURE
Lead – time cost
This is the stock required to meet orders expected between the times that the ne
w order is placed and new supply is received .

Safety stock
This is the stock required to meet orders in the event of any error in estimatin
g the proper level of working stock .

Economic Order Quality (EOQ)


EOQ is the size of the order to be placed at any time for a given product in the
company Accepting the supply of the product less than EOQ size is not economic
and will mean operating in loss .EOQ is the size of an order which gives maximu
m economy in procuring materials and ultimately contributes towards maintaining
materials at a minimum cost.
Storage (Inventory location and warehousing)
Warehousing – It is designed and operated by a firm for long term storage of
finished products .
Distribution centers – It operates essentially to consolidate the finished product
s and arranges the dispatch of products to customers .
Materials handling ,quality checking , packaging and labeling
Materials handling is the important activity in the physical distribution . It i
nvolves receiving , moving , storing and assembling of products to customer req
uirements . Certain products need almost care to avoid damage . Products that a
re packaged in bottles cans and other soft materials must combine into larger un
its to protect them by corrugated boxes , plastic or wooden containers to avoid
damage during the logistics process.
Quality control is a process employed to ensure a certain level of quality
in a product or service . It may include whatever actions a business deems neces
sary to provide for the control and verification of certain characteristics of
a product or service . The basic goal of quality control is to ensure that the
products , service , or processes provided meet specific requirements are depend
able , satisfactory ,and fiscally sound .
Packaging – Its major function is to protect the product inside it , but at the s
ame time it must be attractive . Like a product design , style aesthetic appeal
, the packaging of the product must also look attractive . An intact and styli
sh package design may draw the attention and instant recognition of buyers at
showroom shelves . The attractive package design my have high self impact
Following are the important features of packaging ;
• To protect the product inside from the damage
• Be convenient to handle and durable for repeat uses
• Attractive design and stylish look
• Create a feeling of pride in owing the product / brand
• Have a label which provides detailed information about the product

Labeling – It is a part of packaging . Everyday packaged product must have a labe


l pasted or printed on it . It carries the brand name of the product and provide
information about its contents and features. It may even provide instruction to
the users .
Following are the features of labeling
• Provide detailed information about the contents and features of the including ex
act net weight if it is processed food or health drink item
• It should mention the item
• Warnings , legal restrictions in using the product and safety of the product in
use should be mentioned
• It should note life of the product , product price , product quality , warranty
and service after sales .
• It may provide information about any other benefit such as gifts or rebate at th
e retail point
• Any information that is valuable to consumers should also be mentioned .

Transportation and customer delivery


It is an important function in the physical distribution . The logistical syste
m must be designed in such a way as to minimize the transportation cost . It in
cludes fifty per cent of the products price . An efficient logistical management
must balance two things
• Minimizing transportation cost
• Speed delivery to satisfy the consumer
ABRL using private carriage for transportation purposes to the different supe
rmarkets
What will more . for you deliver to it’s shoppers?
The more. for you advantage is it promise a world – class pleasurable shopping e
xperience to Indian consumers in their very own neighborhood
Delivery cornerstone of more ?
• More . Quality
Every product at more. Goes through a through quality check process ensuring 10
0 per cent more. Satisfaction
• More . Variety
Apart from a large range of national brands , shoppers will also find a section
called the Best of India , which is an assortment of unique products sourced f
rom across India . The wide range of fresh fruits and vegetables along with priv
ate label offering under brand names value , select and premium ensures that mo
re . Variety is a promise delivered across the store
• More . convenience
Convenient locations within easy reach of consumers and a neat , cheerful and fr
iendly layout , enough isle space , signage that speaks the consumer’s language ai
ding in identifying what she has come to shop for easily , all go a long way
in ensuring more. Convenience
• More . value
More . promises best in market pricing . Linking up directly with farmers to so
urce fresh fruits , vegetables and staples ensure great quality as well as great
price . Add ti this, the membership program Clubmore , which provides convenien
ce , customized shopping
Solutions and savings ,’and the more.value promise becomes all the more evident.

More supermarket

More . for you – conviently located in neighborhoods , more. Supermarkets cater to


the daily . weekly and monthly shopping needs of consumers . The product offeri
ngs include a wide range of fresh fruits and vegetables , groceries , personal c
are , homecare , general merchandise and a basic range of apparels . Curently ,
there are over 600 more . Supermarkets across the country .
More . Hypermarket
More . hypermarkets – is a one –stop shopping destination for the entire family . B
esides a large range products across fruits and vegetables , groceries , FMCG pr
oducts , more. MEGASTORE also has a strong emphasis on general merchandise app
arels and CDIT .

SUPERMARKET
With a vision is to be among the leading retail players in India Aditya Birla Re
tail launched its first supermarkets, more. For you in May , 2007. Since its lau
nch , the more. For you has as aggressive roll out , reaching a total count of
over 600 stores across India today .more . for you is a neighborhood supermarket
to customer which take care of very day household needs and more . Spread acr
oss a wide range of fruits and vegetables , staples , personal care , home care
, household care products , general merchandise , and dairy products .
More . for you provide a onestop solution for you grocery shopping needs , Also
in store are essential such as , innerwear , kids essential , and a pharmacy ,
bakery and a mobile store. With a range of over 4000 products , they are able t
o fulfill the customers daily shopping needs all under one roof , at a conveni
ent location .
The more . for you promises a world class shopping experience , with a modern s
tore layout , easy to shop with friendly staff at hand to provide assistance , e
lectronic billing facilities and a colorful ambience . At more . for you they o
ffer branded food and grocery products sourced from the leading brands from all
over India , along with private label brands from their own portfolio – available
in a broad selection for customers always giving the best possible value for m
oney .

Product and services


At more, for you they are committed to deliver quality & value to customers an
d have a range of private label brands as well as commercially branded product
s , offering -100% satisfaction on the quality of the product & services offered
.
More. For you hosts a range of private label brands across various categories
that follow stringent quality norms , and are available in attractive prices a
nd packaging . Its premium products give the customer the opportunity to enjoy t
he difference and quality that is equal to or better than the market’s leading , b
ut at competitive prices.
Recently their private label brands received the coveted “ The Most Admired Pri
vate Label “ Golden spoon award at the Food Forum India .
More. for you offer a wide range of assortment of over 4000 products , ranging
from fresh food to beverages , grocery to households care products . Their ran
ge covers everything , from day –to –day essentials to traditional favorites , fro
m delicious treats , to healthy alternatives

To ensure the freshest supply of fruits and vegetables for customers ,they have
built direct linkages with the farmers for daily supplies of farm fresh produc
e .
The stores are built with a modern and comfortable ambience , air conditioned a
nd with speedy automated cashiering to help shop better . They also have friend
ly in –store policies on exchange and returns that help shop with ease and compor
t .
To make shopping experience more rewarding , at more . for you a membership prog
ram Clubmore. Which reinforces their commitment to consistently add value to sh
opping experience .As a clubmore . Member , customers are entitled to special b
enefits ,besides the regular offers and promotions at more . for you . Club mo
re. members will also have the benefit of receiving exclusive SMS alerts for sp
ecial offers on their products and service . Currently Clubmore has over 1
million members enrolled for its loyalty program .
The table below is the product categories available in more stores :
• Bakery
• Beauty concepts
• Beverages
• Basic Apparels
• Cutlery &cookware
• Fruits & vegetables
• Frozen & Dairy products
• FMCG Products
• Grocery
• General Merchandise
• Home care products
• Home Needs& Home Upkeep
• Home Decor products
• Mobile store
• Personal Care & cosmetics
• Processed food
• Ready to Cook/ Prepared Food
• Small White Appliances
• Staples
• Stationery
• Women’s Accessories
What is unique about more?
• Modern retail design
• Private label brands
• Loyalty programme to customers called Club more
• Attractive incentives schemes to frontline staffs
• Customer centre organization
• Unique employee engagement programmes for all staff

Store experience
• Good ambience
• Neat , cheerful and friendly layout
• World class shopping experience
• Private label brands
• Enough space
• Very clean and well organized stores
• Customers takes their to browse the store
• Create attraction
STRATEGIC INTENT
Vision
“To consistently provide the Indian consumer complete and differentiated shopping
experience and be amongst India’s Top retailers , while delivering superior retur
ns to all stskeholders”.
Mission
To change the way people shop and given them more
Quality policy
ABRL is committed to assure consumers of quality of products and services on a c
onsistent basis and earn consumer trust and recognition of ABRL as India’s premie
r retail organization . The above will be achieved by :
1. Ensure that the products available at the stores meet the regulatory and
statutory requirements through implementation of best practice (Good Manufactu
ring Practice , Good Hygienic Practices, Good House Keeping etc)at every stage a
nd in every operation.
2. Ensuring that for ‘Own Brand ‘ the products meet stringent specification req
uirements ; while at processing sites and extended supplychain , the manufacturi
ng practices and processes meet the highest standards of GHP & GMP at every stag
e andin every operation .
3. Ensuring that manpower resource are committed , competent , fully traine
d and working in a seamless manner .
4. Ensuring that different functions including buying & merchandising , su
pply chain , management , operations and business partners understand and share
concern for quality .
5. Implementing a rigorous , credible & efficient assessment , inspection
, testing & certification system.
6. Striving for continuous improvement through dynamic review process .
ABRL is also committed to respecting our Corporate Social and Environment respon
sibilities
Values
People contribute when they relate to an organized and they relate , when they
understand the organization . People understand an organized through its value
, by experiencing the culture that values create and by using the systems an
d processes that the values define. In large organizations , such shared underst
anding cannot be created through leadership of individuals alone ; it requires l
eadership of principles , of beliefs , of conviction . These together constitute
what they call “ Value” . It comprises;

• Integrity
• commitment
• passion
• seamlessness
• speed
INTERGRITY
At Aditya Birla Group , Intergrity is defined as :
Acting and taking decisions in a manner that these are fair , honest , followin
g the highest standards of professionalism and are also perceived to be so . It
is not only financial and intellectual integrity , but in all other forms as
are commonly understood .
Key words that connote Integrity are :
• Ethical
• Truthful
• Principal transparent
• Upright
• Respectful
COMMITMENT
At Aditya Birla Group , commitment is defined as:
On the foundation of Integrity , doing whatever it takes to deliver value to all
stakeholders .In the process, taking ownership for own actions and decisions .
Key words that connote are :
• Accountability
• Discipline
• Responsibility
• Results- Orientation
• Self- Confidence
• Reliability

PASSION
At Aditya Birla Group , Passion is defined as
As missionary zeal arising out of emotional engagement with the organization
that makes work joyful and inspires each one to give or her best . Relentless p
ursuit of goals and objectives with the highest level of energy and enthusiasm
, that is voluntary and spontaneous .
Key words that connote are :
• Intensity
• Innovation
• Transformational
• Fire –in-the-belly
• Inspirational
• Deep Sense of Purpose

SEAMLESSNESS
At Aditya Birla Group , Seamlessness is defined as : Thinking and working togeth
er across functional silos, hierarchies , businesses and geographies. Leveraging
the available diversity to garner synergy benefits and promote oneness through
sharing and collaborative efforts .
Key words that connote are:
• Teamwork
• Integration
• Involvement
• Openness
• Global Learning from the best
• Empowering

SPEED
At Aditya Birla Group ,Speed is defined as :Responding to internal and external
customers with a sense of urgency . Continuously seeking to crash timelines and
choosing the right rhythm to optimize efficiencies.
Key world that connote are ;
• Response time
• Agile
• Accelerated
• Timelines
• Nimble
• Prompt
They are all equally important and no Value will take precedence at the cost o
f the other . It is in the harmonization of the five that they see the prospect
of greater value creation for all stakeholders .

OWN BRAND PRODUCTS


Own label Food Brands
-feasters Kitchen’s Promise
-Feasters biscuits
-Feasters great taste
-Selrcta atta
-Selecta tea powder
-Silectra rice etc.
Home and Personal care brands
-Enriche bath soap
-Enriche sunscreen lotion
-Enriche body mist
-110% detergent bar
-110% powder
-110% surface cleaner
-110% toilet cleaner
-Pestex
-Paradise
-AU 79 Deodrant
-Germe
-kara-tissue paper
-Prathana –agrarbathies

DEPARTMENT FUNCTON
The main objective of the study is to familiarize with all the department of the
origination . The study also enabled to understand the various functions and r
esponsibilities which are assigned to them .
The department helps in specialization of work I each field . It helps in better
planning and better concentration in the particular work handled by a particul
ar department .In Aditya Birla Retail Ltd , mainly three departments are there
• Buying and Merchandising Department
• Supply chain Management Department
• Business development Project Department
• Commercials Department
• Human Resource Management Department
• Marketing Department
• Information Technology Department
• Loss prevention Department
• Operation excellence Department

SWOT ANALYSIS

STRENGTHS
• Support of Aditya Birla Group
• Friendly services
• Modern retailing
• Variety of brands with in a product line
• Good infrastructure
• High quality products
• Innovative store location
• More promotional activity
• Customer services
• Good location
• Quality checking
• Private brand label
• Unique Selling Proposition
• Visual merchandising
• Attractive Offers
• Home delivery
• Loyalty programme
• Touch screen billing
• Paper carry bag
WEAKNESS
• Absence of research department
• Payment issues
• People prefer window shopping
• Less product choices
• Existence of shrinking and dump
• Lack of in- depth knowledge about the need of the local people
• Low investments

OPPURTUNITIES
• Arrival of new technologies
• An unfulfilled customer needs
• Personal shoppers
• Product line expansion
• Increasing work women population
• Changing life styles
• Winding up of competitors store
• Change in taste and attitude effect of globalization
• Nuclear families in urban India
• Heavy influx of FDI
• Favorable demographic patterns
• Increase in the young working population
• Existing Indian middle classes with an increased purchasing power.

THREATS
• Reliance fresh
• Globalization
• Nilgiris
• Varkey’s supermarket (local)
• Margin Free Markets
• Emergence of substitute products

PORTER’S FIVE FORCE ANALYSIS


Porter’s five force analysis is a framework for the industry analysis and busines
s strategy development developed by Michael E. Porter of Harvard Business School
in1979. It uses concepts developed in Industrial Organization (IO) economics
to derive five force which determine the competitive intensity and therefore a
ttractiveness of market . Attractiveness in this context refers to the overall
industry profitability . An “unattractive ‘’ industry is one where the combination of
forces acts to drive down overall profitability . A very unattractive industry
would one approaching “pure completion “ . The porter’s five force analysis tool is
a simple but powerful tool for understanding where power lies in a business si
tuation. This is useful , because it help you understand both the strength of yo
ur current competitive position , and the strength of a position you are looking
to move into. Five force analysis there are five important forces that determin
e competitive power in a situation . These are
• The threat of substitute product
• The threat of the entrants
• The intensity of competitive rivalry
• The bargaining power of customers
• The bargaining power of suppliers

THREAT OF SUBSTITUES
• Buyer inclination to substitute
• Price –performance

THREATS OF NEW ENTRANTS


• Absolute cost advantages
• Government policy
• Economies of scale
• Capital requirements
• Brand identity
• Access to distribution
• Expected retaliation
INTENSITY OF COMPETITIVE RIVALRY
• Exit barriers
• Industry concentration
• Industry growth
• Product differences
• Brand identity
• Diversity of rivals

BARGAINING POWER OR CUSTOMERS


• Buyer volume
• Buyer information
• Brand identity
• Price sensitivity
• Threat of backward integration

BARGAINIG POWRER OF SUPPLIER


• Supplier concentration
• Importance of volume to supplier
• Impact of inputs on cost or differentiation
• Presence of substitute inputs
• Cost relative to total purchase in industry
Porter’s five force analysis in ABRL
Porter’s five forces framework helps to make a qualitative evaluation of a firms s
trategic position . By conducting this analysis we should be able to understan
d that the final external influence upon the organization is the competitive env
ironment . We should also be able to understand that the competitive strategy of
an organization and the need to secure particular competitive advantage over co
mpetitors are important . We will find that an appraisal of the competitive envi
ronment is vital before plans laid down.
TREATS OF SUBSTITUTE PRODUCTS
Buyer inclination to substitute and Price –performance are the main problem . In
ABRL retail stores the company provides own brand products like feasters tasty
biscuits , selecta atta, selecta rice, Enriched bath soap etc. Its substitute
products are established brand like LUX soap , Sabari tea powder etc. The brand
loyalty problem arises in such a case but the trend of brand loyalty is less in
nowadays . So the problem of substitute products can be managed.

THREATS OF NEW ENTRANTS


Retail industry is a profitable industry that yield high returns . This will dra
w new firms to the market . New entrants to an industry are important because ,
with new competitors , the intensity of competitive rivalry in an industry gene
rally increases. This is because new competitors may bring substantial resource
s into the industry and may be interested in capturing a significant market shar
e.
If a few competitor brings additional capacity to the industry when products d
emand is not increasing, prices that can be charged to consumers generally will
fall . One result may be a decline in sales revenues and lower returns for many
companies in the industry .

INTENSITY OF COMPETITIVE RIVALRY


The number of competitors of ABRL is large in size. The strategies applied by th
ese competitors are thoroughly evaluated and counter action are taken immediate
ly in order to maintain the market leadership. In Kerala ABRL’s main competitors
are Reliance fresh, Varkeys Supermarket
Unlike other competitors ABRL has private brand product private brand label
ing . This will give a greater advantage to the company .
The fund for advertising and sales promotion is very limited for when compared
with giant firm,Amul . ABRL is able to capture the target market as it has inve
stment background of Aditya Birla Group . In case of ABRL word of mouth publicit
y is more than the advertisement . So there is no any difficult to attain and r
etain the market leadership .

BARGAINING POWER OF CUSTOMERS


While the industries seek to maximize their return on invested capital(and earn
above average returns) , buyers are interested in purchasing products at the low
est possible price (the price at which sellers will earn the lowest acceptable r
eturn ). To reduce cost or maximize value , customers bargain for higher quality
or greater levels of service at the lowest possible price by encouraging compe
tition among companies in the industry .
ABRL cannot ignore the consumers and aim for maximum profit . Before applying
any strategies like price strategy , it has to analyze that market demand and
customer needs and wants . If the price is increased , the consumers may switch
to other brands or substitute . So price has to be increased carefully . This i
s done mainly due to the bargaining power of the consumers .
BARGAINING POWER OF SUPPLLIERS
Suppliers are powerful when company profitability is reduced by supplier’s action
. Suppliers can exert their power by raising prices or by restricting the quant
ity and/ or quality of goods available for sale . The bargaining power of supp
liers plays a very important role in ABRL . In the case of vegetables , company
has direct connection with the manufactures . So the suppliers are powerful rela
tive to ABRL . Suppliers goods are critical to the firm’s marketplace success .ABR
L is maintaining a good relationship with its suppliers .
ADITYA BIRLA RETAIL LTD

INDUSTRIAL PROFILE
RETAIL INDUSTRY
Retailing is one of the pillars of the company .It consists of the s
ale of goods or merchandise from a fixed location ,such as a department store ,b
outique or kiosk , or post ,in small or individual lots for direct consumption b
y the purchaser.
Retailing may include subordinated services, such as delivery. Purchasers may be
individuals or businesses. In commerce, a ‘’retailer ‘’ buys goods or products in large
quantities from manufacturers or importers, either directly or through a wholes
aler, and then sells smaller quantities to the end –user.
Retail establishments are often called shops or stores. Retailers are the end o
f the supply chain. Manufacturing marketers see the process of retailing as a ne
cessary part of their overall distribution strategy. The term ‘’retailer ‘’is also appli
ed where a service provider services the needs of large number of individuals, s
uch as a public utility, like electric power.
Shops may be on residential streets, shopping streets with few or no houses or i
n a shopping mall. Shopping streets may be for pedestrians only. Sometimes a sh
opping street has a partial or full roof to protect customers from precipitation
. online retailing , a type of electronic commerce used for business –to-consumer
(B2C) transaction and mail order , are forms of non –shop retailing .
Shopping generally refers to the act of buying products. So
metimes this is done to obtain necessities such as food and clothing; sometimes
it is done as a recreational activity. Recreational shopping often involves wind
ow shopping (just looking, not buying) and browsing and does not always result i
n a purchases.
The pricing technique used by most retailers is cost – plus pricing. This involves
adding a markup amount (or percentages) to the retailer’s cost. Another common te
chnique is suggested retail pricing. This simply Involves charging the amount su
ggested by the manufacturer and usually printed on the product by the manufactur
er.

In western countries, retail prices are often called psychological prices


or odd prices. Often prices are fixed and displayed on signs or labels. Alternat
ively when prices are not clearly displayed, their can be price discrimination,
where the sale price is dependent upon who the customer is.
RETAILING INDUSTRY IN INTERNATION SCENARIO
The latter half of the 20 th century, in both Europe and North America, has seen
the emergence of the supermarket has the dominant grocery retail form. The rea
sons why supermarkets have come to dominate food retailing are not hard to f
ind. The search for convince in food shopping and consumption, coupled to car
ownership, led to the birth of the supermarket. Has incomes rose and shoppers so
ught both convince and new tastes and stimulation, supermarkets where able to ex
pand the products offered. The invention of the bar code allowed a store to man
age thousands of items and their prices and led to ‘just-in-time’ store replenishmen
t and the ability to carry tens of thousands of individual items. Computer ope
rated depots and logistical system integrated store replenishment with consume
r demand in a single electronic system. The superstore was born.
On the Global Retail Stage, little has remained the same over the last decade.
One of the few similarities with today is that Wal- Mart ‘s was ranked the top
retailer in the world then and it still holds that distinction .Other than Wal –M
art ‘s dominance, there’s little about today’s environment that looks like the mid -
1990s . The global economy has changed, consumer demand has shifted, and retaile
rs’ operating systems today are infused with far more technology than was the case
six years ago.
Saturated home markets, fierce competition and restrictive legislation have rel
entlessly pushed major food retailers into the globalization mode. Since the mid
-1990s, numerous governments have opened up their economies as well, to the fre
e markets and foreign investment that has been a plus for many a retailer. Howev
er, a more near –term concern, has been the global economic slowdown that has resu
lted from dramatic cutback in corporate IT and other type of capital spending. C
onsumer themselves have become much more price sensitive and conservative in the
ir buying, particularly in the more advanced economies. Concerns in 2003 have
turned to deflation, lack of pricing power, global over –capacity, low interest ra
te, economic stagnation, slump in the world tourism and declining consumer confi
dence. But, even before the global economic slowdown that forced retailers into
monitoring costs more effectively, technological advances were a way of life in
retail into organizations.
Technology has become the real enabler for retailer over the last s
ix years. Supply chain innovations for retailer were particularly strong in th
e second half of the 1990s and have continued into today. With all the emphasis
on technology and cost –cutting, a major thrust of retailer continues to be demand
based: finding new markets through globalization efforts. Four years ago, mo
re than half (53 percent) of the top 200 retailers operated in only one country.
Today, only 44 per cent remain single- country merchants.
This globalization trend can only intensify in the years ahead. The benefits of
increased sales and greater economies of scale are too large to be ignored.
The global retail industry has traveled a long way from a small beginning to an
industry where the world wide retail sales alone are valued at $ 7 trillion. The
top 200 retailers alone account for 30% of worldwide demand .Retail sales b
eing generally driven by people’s ability (disposable income) and willingness (con
sumer confidence) to buy , compliments the fact the money spent on household co
nsumption worldwide increase 68% between 1980 and 2003 . The leader has in –disput
ably been the USA where some two- thirds or $ 6.6 trillion out of the $ 10 trill
ion American economy is consumer spending. About 40% of that ($ 3 trillion) is s
pending on discretionary products and services. Retail turn over in the EU is ap
proximately Euros 2000 billion and the sector average growth looks to be followi
ng an upward Pattern.
The Asian economies (excluding Japan) are expected to grow at 6% consistently t
ill 2005-06. Positive forces at work in retail consumer markets today include hi
gh rates of personal expenditure, low interest rates, low unemployment and very
low inflation. Negative factors that hold retail sales back involve weakening co
nsumer confidence.
The Far East Experience
The food Retail Industry in the Far East has evolved into what could be called
‘the breeding ground ‘ for emergency models with countries like Singapore being t
he home to some of the bi players in the industry in these parts of the world .
The presence of all the major players in the industry is found in Singapore . S
ingapore has 2 hypermarkets, one run by Carrefour and the other by Giant Hyperma
rkets, part of Dairy Farm International . According to the government, there a
re slightly more than 11000 market stalls operating in 150 markets located all a
cross Singapore Island.
The markets further spread to China , Thailand , and Malaysia thanks to the m
ajor support that the local government provided in creating the necessary regul
atory framework in establishing their presence .Singapore , Malaysia and Thaila
nd not only fueled the retail industry with in the country , but also attracted
hordes of tourists to experience the shopping “experience” that they created in t
hese islands . The markets are now saturated with no additional space for new en
trant and expected to consolidate within the next few years.
Apart from Singapore, which is more recent development, Japan enjo
ys an active spot on the retailers’ map. The retail industry is a huge as US $ 1
008 Billion , with a split of US$ 594.8 Billion in the non food segment and US $
493.2 Billion in the food –retailing sector .The leaders in sale are Ito-Yokado
, Aeon ,Daiei , Takashimaya ,and Uny , in that order . Several retailers, howeve
r, have made recent improvements in their warehousing and distribution technolog
ies to make their presence felt in the Japanese market. Convenience stores, whic
h are small and suitable in a country where land is very expensive, continue to
do well.
Food, in fact, has been one of the few sectors that have experience
d growth over the last several years. A period of shake up in the industry is li
kely now that Wal –Mart has entered Japan .Numerous smaller, less efficient retail
ers may become takeover targets .The entire Japanese retail sector will likely
undergo some form of restructuring over the next decades as a result of overcap
acity, dismal profits and the Wal –Mart factor . In Mainland china, the retail mar
kets have mushroomed over the year of intense economic development to a very con
siderable size. The total volume of retail sales for consumer goods and food
increased by 10.6 percent in china over the last couple of years which shows
tremendous growth . Consumer spending has held strong.
A decade ago, the top five retail enterprises in China were a
ll traditional merchandise companies, but now the top five are mainly supermarke
ts and chain stores. The world is enamored with China‘s potential and opportunitie
s. But in medium –sized and small cities and rural areas, traditional retailing me
thods, such as department stores and local retailing networks, will be sufficien
t, as consumption is lower.
In Indonesia, Wet markets and supermarkets remained the major distribution ch
annels for food products. Although these retail sub –sector also offered non –food p
roducts, such as household goods, food products remained dominant in terms of th
e number of items. Wet markets ‘distribution of food products tended to be much gr
eater than non-food as these retail channels mainly provided fresh produce. Conv
ersely, supermarkets had an almost equal distribution, with food taking up the g
reater proportion. On the other hand, the distribution of non-food items, such a
s supermarkets, hypermarkets, and convenience stores. These retail outlets provi
ded some basic non –food products, such as tooth paste, soap, or detergent. Howeve
r, non –food retail provided food items, expect certain departments stores or drug
gists.
In Malaysia , a majority of food retailer outlets offer food and non-food it
ems , with at least a 70:30 distribution systems in Thailand is through so cal
led ‘wet markets ‘ which sell fruits , vegetables , meat and fish , together with s
mall ‘mom and pop’ food stores which distribute dry goods . However, the rapid grow
th of the economy, particularly during the decade before the financial crisis be
gan, has led to dramatic changes in the structure of the food –retailing sector. M
odern supermarkets, superstores, hypermarkets and convenience stores developed a
t breakneck pace to service the growing middle class with their demand for more
sophisticated food store and a greater variety of products many of which were im
ported.
RETAIL IN INDIA
Though with a population of a billion and a middle class population o
f over 300 millions organized retailing (in the form of food retail chains) is s
till in its infancy in the Country. India has been rather slow in joining the Or
ganized Retail Revolution that was rapidly transforming the economies in the oth
er Asian Tigers. This was largely due to the excellent food retailing system th
at was established by the kirana (mom-and –pop) stores that continue meet with a
ll the requirements of retail requirements albeit without the convenience of t
he shopping as provided by the retail chains ; and also due to the highly fr
agmented food supply chain that is huge value loss and high costs . This supplem
ented with lack of developed food processing industry kept the organized chains
out of the market place.
The correction process is underway and the systems are being esta
blished for effective Business –to – Business ( farmer-processor , processor –retail
er ) solutions thereby leveraging in the core competence of each player in t
he supply chain .
Spread of organized Retailing in India
Organised retailing is spreading and making its presence felt in dif
ferent parts of the country . The trend in grocery retailing , however , has bee
n slightly different with a growth concentration in the South India such as N
ilgiri’s as early as 1904 , the retail revolution happened with various major b
usiness houses foraying into the starting of chains of food retail outlets in
South India with focus on Chennai Hyderabad and Bangalore markets , preliminari
ly . In the Indian context , a countrywide chain in food retailing is yet to b
e established as lots of Supply Chain issues need to be answered due to the vas
t expanse of the country and also diverse that are present .

Retail Models in India: Current and Emerging


The Indian food retail market is characterized by several co –existing types and
formats. These are:
1. The road side hawkers and the mobile (pushcart variety) retailers.
2. The kirana stores ( the Indian equivalent of the mom – and – pop stores o
f the US ) , within which are:
a. Open format more organized outlets
b. Small to medium food retail outlets
Modern trade – the organized retailers
With in modern trade, we have:
1. The discounter ( Subhiksha , Apna Bazaar , Margin Free)
2. The value – for – money store ( Nilgiris)
3. The experience shop ( Food World ,Trinethra)
4. The home delivery (Fabmart)
While the focus of this note is on modern organ
ised retail trade, we hereunder present insights into the smaller, semi and unor
ganized retailers
Hawkers – ‘mobile supermarkets’
The unorganized sector is characterized by the lari –galla vendors (al
so known as “mobile supermarket”) seen in every Indian by lane and is, therefore, di
fficult to track, measure and analyze .But they do know their business – these low
est cost retailers can be found wherever more than 10 Indian collect – a rural pos
t office, a dusty roadside bus stop or a village square. As far as location is c
oncerned, these retailers have succeeded beyond all doubt. They have neither vil
lage nor city – wide ambitions or plans – their aim is simply a long walk down the e
nd of the next lane. This mode of ‘’mobile retailers” is neither scalable nor viable o
ver the longer term, but is certainly replicable all over India.
Most retailing of fresh foods in India occurs in Mandis and roads
ide hawker parks, which are usually illegal and entrenched. These are highly org
anised in their own way. Hawking of food products , cooked food and FMCG product
s is a very interesting model of retailing .Much has been written about these
roadside “malls “ – from social security issues to their nuisance value . However , i
f put these hawkers together , they are akin to a large supermarket with little
or no overheads and high degree of flexibility in merchandise , display , price
and turnover . While shopping ambience and trust factor maybe missing, these ha
wkers sure have a system that works.
Kirana/ Grocers/ Provision / Mom –and- Stores
Semi –organized retailers like kirana (mom-and-pop stores), g
rocers and provision stores are characterized by the more systematic buying – from
the mandis or the farmers and selling – from fixed structures. Economies of scale
are not yet realized in this format, but the front end is already visibly cha
nging with the tines. These stores have presented Indian companies with the chal
lenge of servicing them ,giving rise to distribution and cash flow cycles as n
ever seen elsewhere in Asia .
The model is very antithesis of modern retail in terms of the
buyer (retailer) - seller (FMCG) equations. It is not unknown for MNC leaders t
o link the supply of one line of products to another slower moving line of produ
cts. These retailers are not organizes in the manner that they could challenge t
he power of the sellers, most protests have been in the form of boycotts, which
really haven’t hit any company permanently.
INTERGATION OF FOOD INDUSTRY –THE KEY DRIVER OF FOOD RETAIL IN INDIA
India is the world’s second largest grower of fruits and vegetables a
fter Brazil and China. While the agriculture sector has witnessed several leaps
of innovation and technological advancements, the processing sector is still in
its infancy. Even with less than 4% processing of fruits and vegetables, the Foo
d Processing Industry sector in India is one of the largest in terms of produc
tion, consumption within India, export and growth prospects.
The government has accorded it a highly priority , with a number of fiscal reli
efs and incentives , to encourage commercialization and value addition to agric
ulture produce ; for minimizing pre /post harvest wastage , generating employm
ent and export growth . As a result of several policy initiatives undertaken sin
ce liberalization in early 90’s, the industry has witnessed fast growth in the mos
t of the segments. In the following few paragraphs , it can be noted that the p
rocessed food market for India is vast and the amount of scope that retail cha
ins would be exposed to is phenomenal taking into consideration the demograph
ics and raise in standards of living .
Retailers could throng the market with all these processed and packaged f
oods with their private labels. With the emergence of the big private corporate,
NGOs (Non –Government Organizations) and Government organizations into the food p
rocessing scene, India is making big in roads into the Food Processing Industry.
These corporate and NGOs have reached out to the farmers and provided them with
timely advice and help in the up gradation of farm practices with valuable in
puts on various areas of farming from sowing to harvesting which includes quali
ty seed procurement , manures , fertilizers and pesticides etc.
Some of the successful models are that of ITC‘s e –choupal a model that helps the
soya bean farmers in contract producing for ITC for its commodity trading busine
ss. The PEPSI experimenting with Punjab farmers in growing the right quality to
mato for its tomato purees and pastes. Some of the leading food retail chains wo
rking with farmers for contract growing greens for supply to their retail outlet
s etc. These successful models are being replicated with required changes all ov
er the county and the food industry is getting integrated more strongly.
India has also seen a flurry of food chain major like Mc Donald’s, Pizza Hut and
Kentucky Fried Chicken finding their place among the Indian consumes. The trend
still follows for food chains in India to spread to almost all cities and towns
.
These advancements have revolutionized the integration of the Indian Food Indust
ry and have played a vital role in solving, to large extent, major supply chain
issues that prevailed. The trend is that these successful institution interventi
on models be replicated and spread in all segments of the food industry far and
wide through the country that benefit all the incumbents of the chain evolve. Th
is finally helps the retailer as his supply chain becomes much leaner and vertic
ally integrated. He is in a position to offer a wide variety and highest degree
of convenience to his customer.

ECONOMY
Economic growth at over 5.5% over the last eight years, forex reserve
s of over $100 billion and a stable government has helped India to look more p
rogressively towards future. The economic development was largely attributed to
its dominance in the Information Technology Sector in the global market place an
d its large English speaking population that made it the ideal choice for back o
ffice operations for MNC’s world ove. The manufacturing sector also provided its m
ight to the economic development by doing global hitherto restricting to export
of raw materials or intermediaries that has not graduated to supply of end produ
ct be it Pharmaceuticals or Consumer Vehicles .
All this has translated in higher income levels and more surpluses for the mi
ddle class segment that is getting ploughed into the retail sector ; again fueli
ng the economy to higher levels .The last five years have seen PPP of average In
dian middle class (over 300 millions) go up several times unleashing the power o
f purchasing . The retail sector was the greatest beneficiary .The need for a sh
opping experience combined with the convenience of shopping for the upwardly mob
ile middle class has been on the major factors for retail boom in India.
THE INFORMATION CONSUMER
Over the years, the increasing literacy in the country and the exposure
to developed nations via satellite television or by way of the overseas work exp
erience, the consumer awareness has increased on the quality and the price of th
e product / service that is expected. Today more and more consumers are vocal o
n the quality of the products / service that they expected from the market. This
awareness has made the consumer seek more and more reliable source for purchase
s and hence the logical shift to purchases from the organised retail chains tha
t has a corporate background and where the accountability is more pronounced. Th
e consumer also seeks to purchase from a place where his/her feedback is more
valued.
EVOLUTION OF ORGANISED RETAILING
Retailing, one of the largest sectors in the global economy, is going through a
transition phase in India. For a long time, the corner grocery store was the onl
y choice available to the consumer, especially in the urban areas. This is slowl
y giving way to international formats of retailing .The traditional food and gro
cery segment has been the emergence of supermarket / grocery chains , convenienc
e stores and fast – food chains.
The traditional grocers, by introducing self – service formats as well as value –ad
ded services such as credit and home delivery, have tried to redefine themse
lves. However, the boom in retailing has been confined primarily to the urban ma
rkets in the country. Even there, large chunks are yet to feel the impact of org
anised retailing. There are two primary reasons for this. First, the modern reta
iler is yet to feel the saturation ‘effect in the urban market and has, therefore,
probably not looked at the other markets as seriously. Second, the modern retai
ling trend, despite its cost effectiveness, has come to be identified with lifes
tyle.
In order to appeal to all classes of the society, retail stores would
have to identify with different lifestyles. In a sense, this trend is already vi
sible with emergence of store with an essentially ‘value for money ‘image. The attra
ctiveness of the other stores actually appeals to the existing affluent class as
well as those who aspire to be part of this class. Hence, one can assume that t
he retailing revolution is emerging along the lines of the economic evolution of
society.
It was only in the year 2000 that the economists put a figure to it Rs. 400000 c
rore (1 crore =10 million) which is expected to develop to around Rs .800000 cro
re by the year 2005 – an annual increase of 20 per cent. Retailing in India is uno
rganized with poor supply chain management perspective. According to a recent su
rvey by some of the retail consulting bodies, an overwhelming proportion of the
Rs. 400000 crore retail markets are UNORGANISED. In fact, only a Rs. 200000 cror
e segment of the market is organised. As much as 96 per cent of the 5 million – pl
us outlets are smaller than 500 square feet area. This means that India per capi
ta retailing space is about 2 square feet (compared to 16 square feet in the Uni
ted States). India’s per capita retailing space is thus the lowest in the World.

Currently the retail landscape is filled with Supermarket chains with ove
r 1000 outlets all over the evolution of hypermarkets in the country prominent a
mong them are Giant, Metro, Big Bazaar models .While the average bill value at a
supermarket is in the range of Rs. 300 per bill, the average bill amount at t
he a Hypermarket is in the range of Rs. 750-1000, indicating that the model is i
n the tune with the global models where the average spend is increasing with the
shopping experience.

Impact of Organised Retail


Organised retailing is spreading and making its presence felt in different parts
of the country. The trend in grocery retailing, however, has been slightly diff
erent with a growth concentration in the South. Through there were traditional f
amily owned retail chains in south India such as Nilgiri’s as early as 1905, the r
etail revolution happened with the RPG group starting the Food world chain of fo
od retail outlets in South India with focus on Chennai, Hyderabad Bangalore mark
ets, preliminarily.
The experiment has reaped rich dividends and the group is now foraying into othe
r territories as well. Owing to the success of Food world model of RPG group, se
veral new models such as Trinethra, Subhisksha, Margin Free and others have made
their foray into this sector albeit at regional levels. Today the food retail
sector in India is about Rupees Ten Lakh Crores (USD 200 billions) of which the
organised food retail segment is about 1 per cent and increasing at a pace of ov
er 20% y-o-y.
To be successful in the food retailing in India essentially means to draw away s
hoppers from, the roadside hawkers and kirana stores to stores to supermarkets.
This transition can be achieved to some extent through pricing, so the success o
f food retailer depends on how best he understands and squeezes his supply chain
. The other major factor is that of convenience shopping which the supermarkets
has the edge over the traditional kirana stores. On an average a supermarket sto
cks up to 5000 SKU’s against few hundred’s stocked at an average kirana stores.
Through with excellent potential, India poses a complex situation for a retailer
, as this is a country where each State is a mini- Country by itself. The demogr
aphy’s of a region vary quite distinctly from others. In order to appeal to all
classes of the society, retail stores would have to identify with different life
styles. Hence we may find more of regional players and it would take enormously
long time before nationwide successful retail chains emerge. This is the main
reason as to why the successful retail chains in the country today operate at re
gional segments only and are not aiming at nationwide presence, at least for the
time being.
In the organised retail industry, the gestation periods are long, institutional
finding is difficult, and there is none or little Government support. But the b
elief among top retailer chains in the country is that the industry will see lar
ge investments coming once the current ban on foreign direct investment is lifte
d. But that could be two –three years away. Food and grocery retailing is a toug
h business in India with margins being very low, and consumers are not dissatisf
ied with existing shops where they buy. For example, the next – door grocery shopk
eeper is smart and delivers good customer service, though not value.
As of now , while Chennai has about five organised food and grocery retail chain
s , other big cities such as Delhi , Bangalore ,and Mumbai average only two –thr
ee such chains . Almost all food retail players have been region – specific as far
as geographical presence is concerned in the country. To illustrate with exampl
es , the RPG Group’s food World , Nilgiris , Margin Free , Giant , Varkey’s and Sub
hiksha , all of which are most or less spread in the south region ; Sabka Bazaa
r has a presence only in and around Delhi ; names such as Haiko and Radhakrishn
a Foodland are Mumbai –centric ; while Adani is Ahmadabad – centric . Industry top
ography in India is such that spreading presence across cities going is a tough
call. As pointed out by many experts, organised food and grocery retailing chai
ns going national requires significant investments. Retailing within this sector
is not just about the front –end, but involves complex supply chain and logistics
issues well.
The trend and mindset of the present retailer chains in India can be understood
by studying Food World as an example, which came in the first in the food and gr
ocery retailing sector. The chain has no plans to venture beyond the southern ma
rkets and achieve saturation. The intention is that by 2005, they could look at
the other regions. Subhiksha, a Chennai based discount chain, too wants to be th
e principal store of purchase for at least 40 per cent of all consumers living w
ithin 500-750nmeters of the store, that is, within walking distance.

This make the point very that the strategy among most existing retail chains of
various formats is to completely saturate the markets where they are already est
ablished players and then move on to virtually untouched areas where the challen
ges of sourcing resource and extending their supply chain model to best suit the
size and expense of the market would be challenging task.
Meanwhile, the RPG group plans to take its new formats such as Giant Hypermarke
ts national over the next three years. Grocery is large component of this format
, but not the only one. To elaborate on the hurdles of going pan- Indian, fundam
entally, the way a basic grocery retailing model works is that the high set – up c
osts in terms of setting up buying / distribution infrastructure is gradually am
ortized over a larger number of stores. The back – end costs without distribution
centre costs, or what in retailing jargon is called retail administration casts,
should stabilize at around 2.5 per cent of sales.
It can be explained that the obstacles of looking at a pan –India model for grocer
y are several. Given the federal nature of the country , the weak infrastructure
and the major variances in eating habits in different parts of the country , o
ne will have to replicate the retail administration costs for at least each r
egion and therefore , if one is to attempt a pan –India grocery foray , it will h
ave to be in the hypermarket format with its attendant investment numbers and r
isk profile .
It can be explained that the obstacles of looking at a pan –India model for grocer
y are several. Given the federal nature of the country, the weak infrastructure
and the major variances in eating habits in different parts of the country, one
will have to replicate the retail administration costs for at least each regiona
l and therefore the gestation period of the project becomes huge. However, if a
model is in place where the upfront store revenues scale very rapidly, then it
is possible .Therefore, if one is to attempt a pan- India grocery foray, it wil
l have to be in the hypermarket format with its attendant numbers and risk profi
le.
If a close look is taken at the nature of the Indian Retail Markets, it can be s
een that there is so much potential to extract from individual regions, that pl
ayers are in no tearing hurry to spread out. Based on recent study by a renown
ed government institution in India , in the six major metros , Delhi has the h
ighest per capita consumption of food and grocery , among supermarkets . Chenna
i , ‘’ the Mecca of retailing ‘’ , comes at fourth place . This shows the high potenti
al the sector presents .Chennai has some five supermarkets chain , and each o
f these are doing well for themselves . So there is enough scope to expand even
in one single city in India .
Sabka Bazaar , a supermarket chain restricted to Delhi alone, is now generating
sale of about Rs . 11 crore from its 19 stores which best illustration the pote
ntial of each individual city . This explains the reason for delay in intention
of retailers to spread far and wide .
Pantaloon Retail (India )Ltd , which operates two type of retail formats , made
its maiden foray in food and grocery retailing in North India in mid – 2003 . Big
Bazaar , Pantaloon group’s discount store chain , has taken off to a roaring st
art in Delhi . The pantaloon Big Bazaar in Delhi is the sixth for the group , an
d the first in North India .
It has been found that existing Big Bazaar stores in cities such as Hyderabad ,
Bangalore and Mumbai attract average football of 20000 to 25000 per day , more
so during weekends . While Big Bazaar is essentially a discount store retailin
g preoduct categories ranging from food and grocery to appeal to footwear to h
ome and interior products , food and grocery retailing forms a significant par
t of the chain’s business . Typically , while food and grocery retailing does we
ll at the beginning of the month , the apparel sector sees maximum off take duri
ng festivals .
It can be observed that the most popular retail format in India is the ‘supermarke
t’ , beside the corner shop/ grocery store / ‘mom and pop’ store . Hypermarket have v
ery recently come into being and negligible in number though most retail chains
do intend to expand their presence through this format as well very soon . ‘Disco
unt chains ‘ are also substantial in number and are growing at a fast pace throu
gh the country , predominantly , in the southern region .
Given that organized Retail has been registering growth rate of approximately
40 per cent over the last three years , it is expected to grow to about RS. 350
00 Crore in 2005 , and close to Rs 70000 crore in 2010 . If projections were
to be made considering the current trends in food retailing in India , some yea
rs down the line , food and grocery stores will become dominating trade partn
ers for the food industry , which , in turn , will be forced to offer special d
iscount and trade terms for them to get the shelf space in such stores . Also ,
once established , in – store label brands will become a real threat to the indu
stry as manufacture will have to complete with store label brands that are ge
nerally very price- competitive .
As f or the spread geographically , strong chances stand that the major cha
ins would spread to the next grade of cities in the country over the next 5 year
s or so and then progressively start covering every corner of the country . M
ost chains have already started developing there own unique supply chains that
would suit their needs precisely . Replicating the success stories of the big
names of the Western nations may still be a distant dream for Indian food and gr
ocery retailers, but at least the winds are blowing in the direction of growth
.

Decadal Analysis of the Food Retail Sector


Retailing is a sunrise industry in India with many challenges like exclusion o
f small farms , management of processing and distribution chains . Evolution of
supermarkets and fast food chains is a recent phenomenon in India . Various dema
nd and supply side factors have contributed towards this growth .
Supply side:
The liberalization of the economy in the 1990s led to a boon in the “consume
r Goods” Industry with reductions in custom duties and shift from quota to tariff
based systems . Entry barriers on multinationals were largely removed after w
hich Food Industry majors like Kellogg’s , Heinz , Tropicana ,etc ., entered the I
ndian food industry . This gave rise to tremendous development of sophisticated
supply chain & logistics which eventually and gradually has led to the growth i
n the food processing & packaging industry.
Demand side:
The increase in the income levels of middle and higher income groups in the 199
0s coupled with the reduction in poverty levels was a major factor in contrib
uting to the increasing in demand for high quality food retailing services . Ch
anging consumer lifestyle with the steep increase in time value , wide spread ch
ange in the Indian family structure from vast Join Hindu families to more manag
eable nuclear families and increasing level of quality awareness has also helped
the cause of the Food Retailing Industry considerably .Another major factor th
at has accelerated the growth of the Indian Food Retailing sector has been the
advent of cable television and the increasing instances of overseas travel by In
dians for various reasons .
Government Policy on Food Retailing – India
100% FDI in retailing in not allowed per say , foreign retailers can operate in
India through joint venture , where the Indian partner is a export house , Franc
hising / Local manufacturing /Sourcing from small –scale sector ,cash and carry
operations . The McKinsey report states FDI will help the retail businesses to g
row from the present $200 billion to $460 -470 billion by 2010.
Growth of supermarkets in most developing countries (Brazil ,China etc ) took of
f in the 1990s after FDI was allowed in this sector which is not in the case in
the Indian scenario. Retailing is not regarded as an industry very few banks are
willing to invest in this sector . The shortage of warehousing facilities ,
cold storage and large scale processing units has obstructed the growth of F
ood Retailing Industry in India . As supply chain is fragmented & marked by exis
tence of large number of intermediaries , organised retailing has been a very to
ugh proposition . India is still in the second and third party logistic provid
er mode while fourth party logistic models have become global standards for log
istic providers.
Retailing is subject to a plethora of laws and regulations at central , state a
nd municipal / local levels , some of which have listed below :
-Restrictive zoning legislation limits availability of land for retail / commer
cial purpose
-Restrictions on interstate movement of food grains deprive farmers from getting
remunerative prices .
-Restrictive Labor laws
-Urban land ceiling regulation , restriction on shop opening timings requirement
s for shops to close once a week
- There is no uniform tax structure –multiple layers of taxes
Supplier Retailer Relationships
Traditionally the supplier – retailer relation in India comprised sever
al layers such as the national distributor , the regional wholesaler and the end
retailer . However this scenario is fast changing with the organised retail inc
reasing its presence in the country where the relationship is directly with the
manufacturer . However this new model has been affecting the relationships that
the manufacturer enjoys with the traditional system which is still the most do
minant in the entire retail sector .
The issue of differential pricing is being taken up at several forums and t
he growing dissatisfaction among the traditional retailers is being addressed by
the manufactures . However we see that in the long term , the role of a nationa
l distributor would slowly fade away or get restricted to the rural / upcountry
regions .
The supplier – retailer relationship would come under severe pressure as each part
y would try to squeeze maximum margins out of the other .
Innovations in Transportation Logistics
The logistics service providers have been innovating several interesting fo
rmats and models for the retail sector . As of now , organised retail chains in
India do not , by far , outsource logistical requirements , they develop their
own network . This was basically due to the fact that the supply – chain Was still
in its infancy stage , which has begun to mature and the systems are being wel
l defined . As retail chains begin to focus more and more on the retail end ,the
logistics support would begin to get outsourced.
The logistics service providers have begun to come out with innovative customize
d solutions for the retail chains such as GATI’s model for distribution of Alphon
so mangoes throughout the country with the Information Technology support .
Formats
Currently the retail sector in India is populated with the traditional mom-and –po
p stores and some 1000 odd supermarkets under organized retail chains. A daring
few ventured into the Hypermarket segment will successful results and this forma
ts is being fast replicated by other players. This experience indicates that t
he Indian consumer has matured to the next level of shopping experience . Given
the Indian conditions and the vast diversity a single format may not be possibl
e for the national presence , but region specific formats may evolve .
An interesting observation is that of lack of presence of organised retail cha
ins in the rural /semi – urban centers as over 60% of Indian population is still
in these parts . An ideal “no frills “model to start with , would to start with , wo
uld be ideal for the rural markets , this would help to take them to the next l
evel of supermarket experience .
Social Trend
Social trends o a country have impact on the scheme of growth of food retailing
in a country . India is country that is vast geographically and drive cultural
ly . This has taken its toll on food retailing with retailers having to adapt
to the local cultures and palates of the area in which they have established or
plan to establish .This is a major reason for many or most retailing chains r
estricting their operations to a certain part of the country . But the trends no
w are slowly moving towards cultural integrations where people of all states an
d diametrically opposite culture tend to try out foods and materials of other s
tates and communities . This movement towards social integration would make it v
ery feasible in the near future for retailing chains and erstwhile local chains
to spread across the country .
Increased income levels and more women willing to make use of their education by
joining work as increasingly affected the shopping pattern that is moving towar
ds fulfilling the need of convenience shopping in the form of supermarkets (now
graduating to hyper format ) home deliveries . Indian consumer is quality and pr
ice conscious and this awareness would drive the retailers to rework their suppl
y chain relationships.
A recent analysis shows that countries go through a distinct food consumption ev
olutionary pattern . In the first stage the focus is on obtaining basic dietary
inputs , the second stage focuses on improving and building basic food , befo
re moving to the third stage of adding premium food to the diet . Most of urban
India has already move to the third stage and it is a great avenue for food reta
ilers, if they could slowly introduce the rest of India to it .
The future would witness creation of specific models / formats one for the upwa
rdly mobile urbanite and other for the rural markets. Also since the taste habit
s change from place to place in India, there would emerge a leading .
Online Retailing
The single most important most evolution that took place along with the retailin
g revolution was the rise and fall of the dotcom companies . A sudden concept
of “non store “ shopping emerged , which threatened to take away the potential of t
he store . More importantly the very nature of the customer segment being addre
ssed was almost the same . The computers –savvy individual was also a sub segmen
t of the ‘store’ frequenting traffic .Internationally the concept of Net shopping is
yet ti be proven . And the poor financial performance of most of the companies
offering virtual shopping has resulted in store –based retailing regaining the upp
er hand .
The forms of non store shopping including various formats such as catalogue /m
ail order shopping , direct selling , and so on are growing rapidly . However ,
the size of the direct market industry is too limited to deter the retailers .
For all the convenience that it offers, electronic retailing does not suit produ
cts where ‘look and see’ attributes are of important , as in apparel , or where the
value is very high , such as jewellery , or where the performance has to be te
sted , as of consumer durables . The most critical issue in electronic retailing
, especially in a country such as ours , relates to payments and the various se
curity issue involved.
However , using the internet to be able to source products and also check for av
ailability of stock among store of retail chains has been proven to be effective
and cuts down on wastage by a vast amount . It makes logistical support very ea
sy and efficient . The trend in India such that usage of the electronic medium
for business purpose and integrating it into the systems is increasing . This
would slowly spread into the retailing sector as well . It has already started i
n the case of some large retail houses where the affects has here to see . This
again would result in the supply chain getting leaner and vertically integrat
ed . Though the initial costs to implemented these systems are high , in the in
the long run it results in cost reduction where as this privilege can be passed
on to the final consumer .
Impact of Technology
The other important aspect of retailing relates to technology . It is widely
felt that the key differentiator between the successful and not so successful r
etailers is primarily in the area of technology . Simultaneously , it will be t
echnology that will help the organised retailer score over the unorganized playe
rs , giving both cost and service advantages .
Retailing is a ‘technology – intensive ‘ industry . It is quoted that everyday at le
ast 500 gigabytes of data are transmitted via satellite from the 1200 point – of –sa
le counters of JC Penney to its corporate headquarters . Successful retailers to
day work closely with their vendors to predict consumer demand , shorten lea
d times , reduce inventory holding and thereby , save cost .Wal –Mart pioneered th
e concept of building a competitive advantage through distribution and informat
ion systems in the retailing industry . They introduced two innovative logistics
techniques –cross –docking and electronic data interchange . Today , online system
link point – of –sales terminals to the main office where detailed analyses on sal
es by item , classification , stores or vendors are carried out online . Besides
vendors , the focus of the retailing sector is to develop the link with the co
nsumer .
‘Data Warehousing ‘ is an established concept in the advanced nations . With the he
lp of ‘data retailing ‘, information on existing and potential customers is tracked
. Besides knowing what was purchased and by whom , information on softer issues
such as demographics and psychographics is captured .
Retailing is at a nascent stage in India . Most organised players have manage
d to put the front ends in place , but these are relatively easy to copy . The r
elatively complicated information systems and underlying technologies are
in the process of being established . Most grocery retailers such as Food Wo
rld have started tracking consumer purchases through CRM .The lifestyle ‘retai
lers through their ‘affinity clubs ‘ and ‘reward clubs’ are establishing their process
. The traditional retailer will always continue to exist but organised retailer
s are working towards revamping their business to obtain strategic advantages
at various levels – market , cost , knowledge and customer .With differentiat
ing strategies – value for money , shopping experience , variety , quality , disco
unts and advanced systems and technology in the back – end , change in the equilib
rium with manufacturers and a through understanding of the consumer behavior , t
he ground is all set for the organised retailers .

Food safety Issues :


As awareness grows about food safety issues , the need for countries to provide
greater assurance about the safety and quality of food also grows . The inc
rease in the world food trade and the advent of the Sanitary and Phytosanitary
(SPS) Agreement under the World Trade Organization (WTO) have also raised intere
st in food safety requirements. To ensure a strong presence in global markets
,India realize the need to meet these challenges and keep pace with internatio
nal developments.
In India , it has come to the notice of general public of late that very “popular
“ food companies could also go wayward as far as food – safety and public health i
s concerned . This has triggered off a drive by the public and the government t
o put more stringed food safety and public health measures in place while manuf
acturing , storing and packing of foodstuffs takes place . Most foodstuffs pass
through the organised retail channels on their way to the purchase baskets of
consumers and therefore the retailers are beginning to realize the need for foo
d safety and security . Grading and standardization measures are being taken a
t various stages of the manufacturing , processing , packaging , and storing of
all kinds of food materials .
To ensure food safety and maintain product integrity from the source to the cust
omer (farm –to-plate ) the Food Retailing Companies would have to establish a tota
lly integrated infrastructure and service package . This connects and maintain
s the flows of food from the source (farmers/ food growers, farm service centers
, market yards ,processors , importers ) to the customer (foodservice outle
ts , food processing units , food retailers and food exporters ). This package
will help eliminate or prevent identified hazards or reduces them to acceptable
levels . This trend is slowly beginning to take shape with the efforts to inte
grate and consolidate the supply chain in Indian Food Retailing .
The Codex , HACCP (The Hazard Analysis Critical Control point ) and food – hygiene
standards have been adopted by the Bureau of Indian standards , the national
standard body in India .Food processing units are being encouraged to adopt
these systems on a voluntary basis .
Organization like VOICE(Voluntary organized in the interest of Consumer Educatio
n ) have undertaken the responsibility to document the existing level to implem
entation of National Laws concerning labeling and packaging of imported food pro
ducts , to analyses and compare with the Indian made food products and similar i
mported food products in terms of adherence of the National Laws , to prepare a
well- documented camping kit for the consumer groups in India on the study to
sensitize and build awareness among consumers on seeking and demanding mandato
ry information on all packaged food products .
India’s Top Food Retailers
Food world Hs become India’s largest and fastest growing supermarket chain . Toda
y , over 89 stores offer customers a variety of brand at a reasonable price.
Food world in India is an alliance between the RPG group in India with Diary Far
m International of the Jardine Matheson Group . Food world aims at establishing
100 stores all over Tamilnadu, Andhra Pradesh Karnataka and Maharashtra by mid –
2004 with a turnover of Rs . 500 crores
It a is a supermarket chain that has predominant presence in the southern state
of Andhra Pradesh with 66 stores spread over 8 districts of the state. Their
turnover was Rs. 78.8 crores for the year 2002-03.This figure is expected to t
ouch the Rs. 100 crore mark by 2003-04 . The Trinethra group came into being as
a single store in the year 1986. They plan to saturate their presence through o
ut the state of Andhra Pradesh before venturing into two more southern states o
f the country . The group plans to venture into the lower level regions like sma
ller towns and mandals by using the franchisee – model . They are also very clear
that they would be setting up three hypermarkets in the state soon
Apna Bazaar , the Rs 140 - crore consumer co-operative society with a custome
r base of over 12 lakh , plan to Cater to an upwardly mobile urban population – a
first for the 55-year-old chain that has mostly been identified with the ‘middle
class ‘ . The plans include trimming and training the workforce , opening new out
lets and focusing on the FMCG sector . Now , the co-operative has 80 outlets in
Mumbai , Thane and the neighboring Konkan region . It has recently opened its f
irst shop outside the state in Goa . The avenue target for 2003-04 is Rs .150
crore . The chain plans to remain open all day of the week and this itself is ex
pected to fetch about Rs 10 crore a year .
Big Bazaar -Pantaloons, After Bangalore , Hyderabad and Kolkata , BIG Bazaar
, a division of pantaloon Retail (India ) Ltd has stretched its brand to Mumbai
by opening three hypermarket in the city . Offering discount ranging from 5 per
cent to 60 per cent , discount stores is still a nascent concept in India . Big
Bazaar launched its stores in Bangalore , Hyderabad and Kolkata. Marking an
investment of Rs 10 crore into this new division , Pantaloon is expects to rec
ord the highest turnover from its Mumbai stores to the tune of almost Rs 80 c
rore from Mumbai alone within the first year operations . But the turnover from
its other Big Bazaar stores in Bangalore , Hyderabad and Kolkata is Rs 50 crore
this year . Big Bazaar claims to be India’s first chain of hypermarket discount
stores.
Margin Free – The Kerala based Margin Free disc ount stores , the ‘pure retail ‘ chai
n with arguably the largest presence in the country . The retail store is unifor
mly spread across the 240-odd Margin Free franchisees in Kerala , Tamil Nadu and
Karnataka .Margin Free draws inspiration from the undying loyalty of its cust
omers who have wholeheartedly welcome all its growth plans in the past . Margi
n Free palns to open huge hypermarkets (50.000sq.ft each ) in Ernakulam , Thiva
ndrum , and Kozhikode in the immediate future .
Subhiksha The Chennai – based retail food and pharmacy chain subhiksha supermark
et and pharmacy is in expansion model . It plans to go national and have 400
stores in the next two years . Currently , Subhiksha has a strong presence onl
y on in Tamil Nadu and Pondicherry with over 150 stores . The decision to expa
nd outside Tamil Nadu , is because the city has reached saturation and also ,
the purchasing power is high in large metros . Subhiksha stores sell household
s items and medicines at significant discount to normal prices. The retail ch
ain earned a total revenue of Rs . 235 crore in 2002-03 . The first Subhiksha s
tore was opened in Tiruvanmiyur in Chennai in March 1997 . Today, the chain has
about 164 outlets in Tamil Nadu and Pondicherry . In 1997-98 Subhiksha was mak
ing a turnover of Rs 12 crore and a profit of Rs 10 lakhs . In 2003 it has gro
wn to Rs 224 crores turnover and Rs 3 crores profit . Major plans are on in Kar
nataka to open 40 stores in Bangalore in the next nine months and another seven
stores in Mysore in the same period . In all , it is intended to open at least
250 stores by 2005 . The group is looking at extending operations in Karnataka a
nd also venturing into the Maharashtra , Andhra Pradesh and Gujarat markets .
Nilgiris Muthusamy Mudaliar opened a small bunk shop in Ooty That was in 1905 an
d the beginning of a long story in procurement and customer satisfaction . In 1
936 , the shop moved to Bangalore with its registered office on Brigade Road, a
small shop exactly where the huge mother store is now located . The first expan
sion happened when Muthusamy Mudaliar’ son Chenniappan , also the chairman , est
ablished Nilgiris as a modest store carrying Nilgiris’ own products , mostly dairy
and bakery . Eventually , it evolved into a supermarket when Mr , Chenniappan
visited the U.S. and Europe and was influenced by the old supermarket concept i
n the west . This chain has now blossomed to cover a vast region in South India
with 26 outlets and annual sales of about Rs . 2300 Millions . They plan to ope
n an additional 30 outlets in their next phase of expansion .
MTR –The MTR Group of companies promoted by the family of MAIYAS took birth in t
he year 1924 with the commencement of a Restaurant in Bangalore . Later In 19
76 , MTR ventured into the business of retailing of Groceries and other househol
d general items by opening a Department stores .MTR first bought a packaged , pr
ocessed food product. Subsequently , efforts were made to extend the distribut
ion of the above products to few other prominent Retail stores in Bangalore , s
uch as Nilgiris , Vijaya Bakery , Shivananda Stores , Home Needs etc. The respo
nse was found to be very encouraging in terms of sales of the above products. C
onsequently , a major step with respect to marketing was taken by the group in
the year 1983 . It was during 1983 that MTR appointed Distributors in Bangalor
e , Madras , Hyderabad and Vijayawada with a view to capture business opportun
ities in the said markets .

Janatha bazaars & HOPCOMS – Cooperative Departmental stores were started with Gov
ernment patronage in the early 1960’s at a time when shortage of basic goods wa
s the order of the day . Poor marketing strategies hindered their progress in
the field . Total membership 11680 farmers , with 100 tonnes of horticultural
produce being traded per day in eight districts . In 1998, each cooperative soci
ety was made independent , sixteen of which were subsequently federated at the s
tate level , as members of the Karnataka Horticulture Federation .
Presence of MNC chains
Metro AG – opened its first Indian outlet in Yeshwanthpur , Bangalore on a sprawli
ng 6500 square metres area . Proposed to open one more centre in Bangalore durin
g November 2003 . Capital expenditure for these two centres in Rs 176 crores (
35 million euros ). Employ 300 local people and head quarter will employ 750 lo
cal people .
Retailing In Kerala
Retailing in Kerala is a subject too subtle and relevant ; as Kerala is know of
more as a consumer state rather than a producer state . The introductions of Ma
rgin Free Markets have turned out to be grand success resulting in it becoming
one of the largest retail chains in the country .
Reliance Fresh
It is the convenience store format part of the retail business of Reliance Indu
stries of India which is headed by Mukesh Ambani . Reliance plans to invest in
excess of Rs 25000 crores in the next 4 years in their retail division . The
company already has in excess of 560 reliance fresh outlets across the country .
These stores sell fresh and vegetables , Staples , groceries , fresh juice bars
and dairy products .
A typical Reliance Fresh store is approximately 3000-4000 square feet and cate
rs to a catchment area of 1-2 km .
Varkeys Bakery and Supermarkets
It is the leading supermarket chain in Kerala , India . Keeping pace with the g
rowing customer needs the first Discount Hypermarket- “V – Mart’ was started in 2004
at Cochin , Kerala ,India . Both Varkeys Bakery and Supermarket and V –Mart , Hyp
ermarket comes under the banner Varkey Retail Ventures Pvt .Ltd
The stores and its concept have played a vital role in revolutionizing the t
aste & shopping patterns of the people of Kerala . Providing all the needs of a
households under one roof , it has made its mark as a “single stop shop “ for
its customers . With an approach that beats the traditional stores .
This idea made itself big in 1984 when Mr. Ittiachan foresaw that the household
shopping pattern would swing from traditional stores to Supermarkets. The sto
res provide a medium for the consumers to witness a wide variety of products ava
ilable in the market , both manufactured as well as imported . Our network of s
upply chain and manufacture has grown gradually over the years with human reso
urce , machinery and vehicles . The years of practical know –how sets apart in e
very manner we execute the details of the job . The stores follow a uniform “poli
cy “ emphasizing importance on the Quality , Price , Service.
Margin Free Markets
• Margin Free Markets is the largest retail chain in the state Kerala one of the
leading retail chains in India .
• The first outlets of this chain started functioning on 26th January 1994 at Triv
andrum .
• Currently more than 275 franchisees of Margin Free Markets spread all over sout
h India .
• The outlets are franchises and are not actually owned by the chain
• Currewntly controlled by The consumer protection & Guidance Society
The consumers are assured of quality , quantity and the fair price of the go
ods sold through the Margin Free Markets . These shop deals with goods like gr
ocery , food and non- food FMCG items , fruits and vegetables , consumer goods
& households articles .
Margin Free outlets are typical discount stores , offering one-stop-shop conven
ience and self – service facility at significant discount to its customers . Most
of these customers, in time turn out to be its permanent customers , by taki
ng discount cards , which permit them to obtain larger discounts than the non –
card holders.
The necessity of offer protection against the rising prices gave birth to the i
dea of’ Margin Free Markets’ . An enthusiastic entrepreneur named Mr. N . Ravikum
ar conceived the idea .The idea turned out to be an instant success in Kerala e
specially because Kerala is more of ‘consumer ‘ state than a ‘producing ‘ state .
Kerala depends on her neighboring states for her consumer needs . Due to the la
rge number of intermediaries involved and the transportation costs, the price
are high and there is a wide fluctuation in prices of groceries , fruits and veg
etables . Groceries and FMCG goods are brought directly from the production unit
s of the neighboring states .
In the process of direct purchase from farmers and manufactures , the intermedi
aries are removed and a part of the margin or ‘profits’ earned is disbursed among th
e consumers. The distribution to the different outlets under the chain is taken
as a collective responsibility and is done with the objective to reduce the tot
al transportation costs .
Food World
Food World is one of the biggest retail chains in India .The RPG group opened t
he first Food World outlet on May 9th 1996 at Chennai . It is the only national
chain , having Foreign Direct Investment to the extent of 49% that is permitted
in India .
Food World , operates as a 51:49 joint venture with Dairy Farm International of
the Jardine Matheson Group ,as US $ 4.5 billion retail giant operating in the
Asia –Pacific markets with the requisite experience .
Food World has decided to concentrate more on local areas rather than to go for
a nationwide presence in its expansion plans at the beginning .
Food World product Portfolio includes grocery of all kinds ,. Fresh foods via .,
fruits and vegetables in fresh / chilled /frozen form , food that can be direc
tly consumed , food and non – food FMCGproducts , general merchandise required in
homes like buckets , cups , shelves etc. Indian Made Foreign .
To source its daily requirements of fruits and vegetables , Food World particip
ants in the early morning autions at the major wholesale markets and has a set o
f suppliers who then grade , clean , packand label the products in the time for
early morning dispatch to the stores . At peak season , the Fruit & vegetables s
helf in a food world store stocks around 125 items ; making it the widest range
available under one roof in this category .
Food World’s share of the organized retail market in the cities in which it opera
tes is 62% clearly a dominant share . The firm expects the number of Food World
stores to increase to 125 by the end of 2005 . A smaller version , Food World
Express is also planned to be launched in future .
Supply Co
The kerala state civil supply corporation (supplyco) , is a statutory body estab
lished in 1974 .
Procures rice, wheat products , sugr ,pulses, vegetables and a range of consumer
goods . It has a network of 663 retail outlets called Maveli stores, 11 superma
rkets in district headquarters and 21 mobile Maveli vans operating on designated
routes .
The Government decides the price of articles sold by Supplyco through these shop
s , and has used it as highly effective mechanism , cutting out middleman and
controlling prices in the open market. Its effect on the market are most eviden
t during the festival season s.
E tendering introduced by the Corporation , enables participation of more tender
s from anywhere in the world , thereby increasing competition . This ensures th
e entry of genuine suppliers from the production centers of other States . The i
ntroduction of a payment system at the receiving depot itself spot pyment to sup
pliers . The suppliers will get ready payment on the same day as delivery of goo
ds through a demand draft couriered to them . This reduces unnecessary delay an
d complexity in payment procedure , which again results in the reduction of purc
hase cost
INFERENCE

COMPANY PROFILE
A US $28 billion premium conglomerate, the Aditya Birla Group is the League
of Fortune 500. It is anchored by an extraordinary force of 100000 employees,
belonging to 25 different nationalities .The Group has been adjusted “The Best
Employer in India and among the top 20 in Asia “by the Hewitt-Economic Times and W
all Street Journal study 2007. Over 50 per cent of its revenues flow its ove
rseas operations.
The Group operates in 25 countries –India , UK, Germa
ny ,Hungary , Brazil, Italy ,France ,Luxembourg , Switzerland , Australia ,USA
, Canada , Egypt, Thailand , Laos , Indonesia, Philippines , Dubai , Singapore,
Myanmar, Bangladesh , Vietnam , Malaysia , and Korea.
Globally the Aditya Birla Group is
A metals powerhouse, among the world’s most cost –efficient alumin
um and copper producers.
Hindalco –Novelis is the largest aluminum rolling company.
It is one of the 3 biggest producers of primary aluminum.
In Asia
• No.1 in visoose slaple fiber
• The 4th largest producer of carbon black
• The 11th largest cement producer
• Among the world’s top 15 BPO companies and among India’s top 4
Among the best energy efficient fertilizer plants
In India
• A premier branded garments player
• The 2nd largest player in viscose filament yarn
• The 2nd largest in the Chlor – alkali sector
• Among the top 5 mobile telephony companies
• A leading player in Life Insurance and Asset Management
• Among the top 3 super market chains in the Retail business
Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where succ
ess does not come in the way of the need to keep learning afresh, to keep experi
menting.
Beyond business –The Aditya Birla Group is:
• Working in 3700 villages
• Reaching out to 7 million people annually through the Aditya Birla Centre for C
ommunity Initiatives and Rural Development , spearheaded by Mrs.Rajashree Birla
• Focusing on : health care , education , sustainable livelihood , infrastructure
and espousing social causes
• Running 41 schools and 18 Hospitals.

Aditya Birla Retail Ltd


Retailing consists of the sale of goods or merchandise from a fixed location ,
such as department store, boutique or kiosk , or by post , in small or individu
al lots for direct consumption by the purchaser . Retailing may include subordin
ate service , such as delivery .
Purchasers may be individuals or business . In commerce , a “retailer “ buys goods
or products in large quantities from manufacturers or importers, either directl
y or through a wholesaler , and then sells smaller quantities to the end –user .
Retail establishments are often called shops or stores.
Retailing are at the end of the supply chain . Manufacturing marketers see the p
rocess of retailing as a necessary part of their overall distribution strategy .
The term “retailer’’ is also applied where a service provider services the needs of
a large number of individuals , such as a public utility , like electric powe
r .
Shopping generally refers to the act of buying products . Sometimes this is done
to obtain necessities such as food and clothing ;sometimes it is done as a recr
eational activity . Recreational shopping often involves window shopping (just l
ooking , not buying ) and browsing and does not always result in a purchase.
ABRL , the nation’s biggest retail company now operates 640 more supermarkets and
2hypermarkets all over India .
After years of commitment & passion to turn around they now have an incredible
position in Indian retail industry . They become the pioneer in this sector by
beating its competitors . The company has around 11000 employees and pan India
presence .
• Largest industry in India
• Employment of around 8%
• Over 10% of the country’s GDP
• 5th largest retail destination globally
Company Overview
• 1987- Mr . Anjaneyalu founded Trinethra super retail
• 1999-Foundation of Fabmall
• 2004- india value Fund acquire Trinethra and Fabmall and established Trinethra
Super Retail Private Ltd .
• 2007- Aditya Birla group entered into retail business ,established Aditya Birla
Retail ltd and they acquire Trinethra Super Retail Pvt LTD .
• 2007- Aditya Birla group launched its first supermarket ‘more for you’
• 2008 – The company has set up 640 supermarkets and two hypermarkets . All the sup
ermarkets (including the former Trinethra stores) are now branded MORE and hyper
markets are branded MORE Mega store . The company has around 11000 employees and
has a pan India presence .
ORGANISATIONAL STRUCTURE

Lead – time cost


This is the stock required to meet orders expected between the times that the ne
w order is placed and new supply is received .

Safety stock
This is the stock required to meet orders in the event of any error in estimatin
g the proper level of working stock .

Economic Order Quality (EOQ)


EOQ is the size of the order to be placed at any time for a given product in the
company Accepting the supply of the product less than EOQ size is not economic
and will mean operating in loss .EOQ is the size of an order which gives maximu
m economy in procuring materials and ultimately contributes towards maintaining
materials at a minimum cost.
Storage (Inventory location and warehousing)
Warehousing – It is designed and operated by a firm for long term storage of
finished products .
Distribution centers – It operates essentially to consolidate the finished product
s and arranges the dispatch of products to customers .
Materials handling ,quality checking , packaging and labeling
Materials handling is the important activity in the physical distribution . It i
nvolves receiving , moving , storing and assembling of products to customer req
uirements . Certain products need almost care to avoid damage . Products that a
re packaged in bottles cans and other soft materials must combine into larger un
its to protect them by corrugated boxes , plastic or wooden containers to avoid
damage during the logistics process.
Quality control is a process employed to ensure a certain level of quality
in a product or service . It may include whatever actions a business deems neces
sary to provide for the control and verification of certain characteristics of
a product or service . The basic goal of quality control is to ensure that the
products , service , or processes provided meet specific requirements are depend
able , satisfactory ,and fiscally sound .
Packaging – Its major function is to protect the product inside it , but at the s
ame time it must be attractive . Like a product design , style aesthetic appeal
, the packaging of the product must also look attractive . An intact and styli
sh package design may draw the attention and instant recognition of buyers at
showroom shelves . The attractive package design my have high self impact
Following are the important features of packaging ;
• To protect the product inside from the damage
• Be convenient to handle and durable for repeat uses
• Attractive design and stylish look
• Create a feeling of pride in owing the product / brand
• Have a label which provides detailed information about the product

Labeling – It is a part of packaging . Everyday packaged product must have a labe


l pasted or printed on it . It carries the brand name of the product and provide
information about its contents and features. It may even provide instruction to
the users .
Following are the features of labeling
• Provide detailed information about the contents and features of the including ex
act net weight if it is processed food or health drink item
• It should mention the item
• Warnings , legal restrictions in using the product and safety of the product in
use should be mentioned
• It should note life of the product , product price , product quality , warranty
and service after sales .
• It may provide information about any other benefit such as gifts or rebate at th
e retail point
• Any information that is valuable to consumers should also be mentioned .

Transportation and customer delivery


It is an important function in the physical distribution . The logistical syste
m must be designed in such a way as to minimize the transportation cost . It in
cludes fifty per cent of the products price . An efficient logistical management
must balance two things
• Minimizing transportation cost
• Speed delivery to satisfy the consumer
ABRL using private carriage for transportation purposes to the different supe
rmarkets
What will more . for you deliver to it’s shoppers?
The more. for you advantage is it promise a world – class pleasurable shopping e
xperience to Indian consumers in their very own neighborhood
Delivery cornerstone of more ?
• More . Quality
Every product at more. Goes through a through quality check process ensuring 10
0 per cent more. Satisfaction
• More . Variety
Apart from a large range of national brands , shoppers will also find a section
called the Best of India , which is an assortment of unique products sourced f
rom across India . The wide range of fresh fruits and vegetables along with priv
ate label offering under brand names value , select and premium ensures that mo
re . Variety is a promise delivered across the store
• More . convenience
Convenient locations within easy reach of consumers and a neat , cheerful and fr
iendly layout , enough isle space , signage that speaks the consumer’s language ai
ding in identifying what she has come to shop for easily , all go a long way
in ensuring more. Convenience
• More . value
More . promises best in market pricing . Linking up directly with farmers to so
urce fresh fruits , vegetables and staples ensure great quality as well as great
price . Add ti this, the membership program Clubmore , which provides convenien
ce , customized shopping
Solutions and savings ,’and the more.value promise becomes all the more evident.

More supermarket
More . for you – conviently located in neighborhoods , more. Supermarkets cater to
the daily . weekly and monthly shopping needs of consumers . The product offeri
ngs include a wide range of fresh fruits and vegetables , groceries , personal c
are , homecare , general merchandise and a basic range of apparels . Curently ,
there are over 600 more . Supermarkets across the country .
More . Hypermarket
More . hypermarkets – is a one –stop shopping destination for the entire family . B
esides a large range products across fruits and vegetables , groceries , FMCG pr
oducts , more. MEGASTORE also has a strong emphasis on general merchandise app
arels and CDIT .

SUPERMARKET
With a vision is to be among the leading retail players in India Aditya Birla Re
tail launched its first supermarkets, more. For you in May , 2007. Since its lau
nch , the more. For you has as aggressive roll out , reaching a total count of
over 600 stores across India today .more . for you is a neighborhood supermarket
to customer which take care of very day household needs and more . Spread acr
oss a wide range of fruits and vegetables , staples , personal care , home care
, household care products , general merchandise , and dairy products .
More . for you provide a onestop solution for you grocery shopping needs , Also
in store are essential such as , innerwear , kids essential , and a pharmacy ,
bakery and a mobile store. With a range of over 4000 products , they are able t
o fulfill the customers daily shopping needs all under one roof , at a conveni
ent location .
The more . for you promises a world class shopping experience , with a modern s
tore layout , easy to shop with friendly staff at hand to provide assistance , e
lectronic billing facilities and a colorful ambience . At more . for you they o
ffer branded food and grocery products sourced from the leading brands from all
over India , along with private label brands from their own portfolio – available
in a broad selection for customers always giving the best possible value for m
oney .

Product and services


At more, for you they are committed to deliver quality & value to customers an
d have a range of private label brands as well as commercially branded product
s , offering -100% satisfaction on the quality of the product & services offered
.
More. For you hosts a range of private label brands across various categories
that follow stringent quality norms , and are available in attractive prices a
nd packaging . Its premium products give the customer the opportunity to enjoy t
he difference and quality that is equal to or better than the market’s leading , b
ut at competitive prices.
Recently their private label brands received the coveted “ The Most Admired Pri
vate Label “ Golden spoon award at the Food Forum India .
More. for you offer a wide range of assortment of over 4000 products , ranging
from fresh food to beverages , grocery to households care products . Their ran
ge covers everything , from day –to –day essentials to traditional favorites , fro
m delicious treats , to healthy alternatives

To ensure the freshest supply of fruits and vegetables for customers ,they have
built direct linkages with the farmers for daily supplies of farm fresh produc
e .
The stores are built with a modern and comfortable ambience , air conditioned a
nd with speedy automated cashiering to help shop better . They also have friend
ly in –store policies on exchange and returns that help shop with ease and compor
t .
To make shopping experience more rewarding , at more . for you a membership prog
ram Clubmore. Which reinforces their commitment to consistently add value to sh
opping experience .As a clubmore . Member , customers are entitled to special b
enefits ,besides the regular offers and promotions at more . for you . Club mo
re. members will also have the benefit of receiving exclusive SMS alerts for sp
ecial offers on their products and service . Currently Clubmore has over 1
million members enrolled for its loyalty program .
The table below is the product categories available in more stores :
• Bakery
• Beauty concepts
• Beverages
• Basic Apparels
• Cutlery &cookware
• Fruits & vegetables
• Frozen & Dairy products
• FMCG Products
• Grocery
• General Merchandise
• Home care products
• Home Needs& Home Upkeep
• Home Decor products
• Mobile store
• Personal Care & cosmetics
• Processed food
• Ready to Cook/ Prepared Food
• Small White Appliances
• Staples
• Stationery
• Women’s Accessories
What is unique about more?
• Modern retail design
• Private label brands
• Loyalty programme to customers called Club more
• Attractive incentives schemes to frontline staffs
• Customer centre organization
• Unique employee engagement programmes for all staff

Store experience
• Good ambience
• Neat , cheerful and friendly layout
• World class shopping experience
• Private label brands
• Enough space
• Very clean and well organized stores
• Customers takes their to browse the store
• Create attraction
STRATEGIC INTENT
Vision
“To consistently provide the Indian consumer complete and differentiated shopping
experience and be amongst India’s Top retailers , while delivering superior retur
ns to all stskeholders”.
Mission
To change the way people shop and given them more
Quality policy
ABRL is committed to assure consumers of quality of products and services on a c
onsistent basis and earn consumer trust and recognition of ABRL as India’s premie
r retail organization . The above will be achieved by :
1. Ensure that the products available at the stores meet the regulatory and
statutory requirements through implementation of best practice (Good Manufactu
ring Practice , Good Hygienic Practices, Good House Keeping etc)at every stage a
nd in every operation.
2. Ensuring that for ‘Own Brand ‘ the products meet stringent specification req
uirements ; while at processing sites and extended supplychain , the manufacturi
ng practices and processes meet the highest standards of GHP & GMP at every stag
e andin every operation .
3. Ensuring that manpower resource are committed , competent , fully traine
d and working in a seamless manner .
4. Ensuring that different functions including buying & merchandising , su
pply chain , management , operations and business partners understand and share
concern for quality .
5. Implementing a rigorous , credible & efficient assessment , inspection
, testing & certification system.
6. Striving for continuous improvement through dynamic review process .
ABRL is also committed to respecting our Corporate Social and Environment respon
sibilities
Values
People contribute when they relate to an organized and they relate , when they
understand the organization . People understand an organized through its value
, by experiencing the culture that values create and by using the systems an
d processes that the values define. In large organizations , such shared underst
anding cannot be created through leadership of individuals alone ; it requires l
eadership of principles , of beliefs , of conviction . These together constitute
what they call “ Value” . It comprises;

• Integrity
• commitment
• passion
• seamlessness
• speed
INTERGRITY
At Aditya Birla Group , Intergrity is defined as :
Acting and taking decisions in a manner that these are fair , honest , followin
g the highest standards of professionalism and are also perceived to be so . It
is not only financial and intellectual integrity , but in all other forms as
are commonly understood .
Key words that connote Integrity are :
• Ethical
• Truthful
• Principal transparent
• Upright
• Respectful
COMMITMENT
At Aditya Birla Group , commitment is defined as:
On the foundation of Integrity , doing whatever it takes to deliver value to all
stakeholders .In the process, taking ownership for own actions and decisions .
Key words that connote are :
• Accountability
• Discipline
• Responsibility
• Results- Orientation
• Self- Confidence
• Reliability

PASSION
At Aditya Birla Group , Passion is defined as
As missionary zeal arising out of emotional engagement with the organization
that makes work joyful and inspires each one to give or her best . Relentless p
ursuit of goals and objectives with the highest level of energy and enthusiasm
, that is voluntary and spontaneous .
Key words that connote are :
• Intensity
• Innovation
• Transformational
• Fire –in-the-belly
• Inspirational
• Deep Sense of Purpose

SEAMLESSNESS
At Aditya Birla Group , Seamlessness is defined as : Thinking and working togeth
er across functional silos, hierarchies , businesses and geographies. Leveraging
the available diversity to garner synergy benefits and promote oneness through
sharing and collaborative efforts .
Key words that connote are:
• Teamwork
• Integration
• Involvement
• Openness
• Global Learning from the best
• Empowering
SPEED
At Aditya Birla Group ,Speed is defined as :Responding to internal and external
customers with a sense of urgency . Continuously seeking to crash timelines and
choosing the right rhythm to optimize efficiencies.
Key world that connote are ;
• Response time
• Agile
• Accelerated
• Timelines
• Nimble
• Prompt
They are all equally important and no Value will take precedence at the cost o
f the other . It is in the harmonization of the five that they see the prospect
of greater value creation for all stakeholders .

OWN BRAND PRODUCTS


Own label Food Brands
-feasters Kitchen’s Promise
-Feasters biscuits
-Feasters great taste
-Selrcta atta
-Selecta tea powder
-Silectra rice etc.
Home and Personal care brands
-Enriche bath soap
-Enriche sunscreen lotion
-Enriche body mist
-110% detergent bar
-110% powder
-110% surface cleaner
-110% toilet cleaner
-Pestex
-Paradise
-AU 79 Deodrant
-Germe
-kara-tissue paper
-Prathana –agrarbathies

DEPARTMENT FUNCTON
The main objective of the study is to familiarize with all the department of the
origination . The study also enabled to understand the various functions and r
esponsibilities which are assigned to them .
The department helps in specialization of work I each field . It helps in better
planning and better concentration in the particular work handled by a particul
ar department .In Aditya Birla Retail Ltd , mainly three departments are there
• Buying and Merchandising Department
• Supply chain Management Department
• Business development Project Department
• Commercials Department
• Human Resource Management Department
• Marketing Department
• Information Technology Department
• Loss prevention Department
• Operation excellence Department
SWOT ANALYSIS

STRENGTHS
• Support of Aditya Birla Group
• Friendly services
• Modern retailing
• Variety of brands with in a product line
• Good infrastructure
• High quality products
• Innovative store location
• More promotional activity
• Customer services
• Good location
• Quality checking
• Private brand label
• Unique Selling Proposition
• Visual merchandising
• Attractive Offers
• Home delivery
• Loyalty programme
• Touch screen billing
• Paper carry bag
WEAKNESS
• Absence of research department
• Payment issues
• People prefer window shopping
• Less product choices
• Existence of shrinking and dump
• Lack of in- depth knowledge about the need of the local people
• Low investments

OPPURTUNITIES
• Arrival of new technologies
• An unfulfilled customer needs
• Personal shoppers
• Product line expansion
• Increasing work women population
• Changing life styles
• Winding up of competitors store
• Change in taste and attitude effect of globalization
• Nuclear families in urban India
• Heavy influx of FDI
• Favorable demographic patterns
• Increase in the young working population
• Existing Indian middle classes with an increased purchasing power.

THREATS
• Reliance fresh
• Globalization
• Nilgiris
• Varkey’s supermarket (local)
• Margin Free Markets
• Emergence of substitute products

PORTER’S FIVE FORCE ANALYSIS


Porter’s five force analysis is a framework for the industry analysis and busines
s strategy development developed by Michael E. Porter of Harvard Business School
in1979. It uses concepts developed in Industrial Organization (IO) economics
to derive five force which determine the competitive intensity and therefore a
ttractiveness of market . Attractiveness in this context refers to the overall
industry profitability . An “unattractive ‘’ industry is one where the combination of
forces acts to drive down overall profitability . A very unattractive industry
would one approaching “pure completion “ . The porter’s five force analysis tool is
a simple but powerful tool for understanding where power lies in a business si
tuation. This is useful , because it help you understand both the strength of yo
ur current competitive position , and the strength of a position you are looking
to move into. Five force analysis there are five important forces that determin
e competitive power in a situation . These are
• The threat of substitute product
• The threat of the entrants
• The intensity of competitive rivalry
• The bargaining power of customers
• The bargaining power of suppliers

THREAT OF SUBSTITUES
• Buyer inclination to substitute
• Price –performance

THREATS OF NEW ENTRANTS


• Absolute cost advantages
• Government policy
• Economies of scale
• Capital requirements
• Brand identity
• Access to distribution
• Expected retaliation
INTENSITY OF COMPETITIVE RIVALRY
• Exit barriers
• Industry concentration
• Industry growth
• Product differences
• Brand identity
• Diversity of rivals

BARGAINING POWER OR CUSTOMERS


• Buyer volume
• Buyer information
• Brand identity
• Price sensitivity
• Threat of backward integration

BARGAINIG POWRER OF SUPPLIER


• Supplier concentration
• Importance of volume to supplier
• Impact of inputs on cost or differentiation
• Presence of substitute inputs
• Cost relative to total purchase in industry
Porter’s five force analysis in ABRL
Porter’s five forces framework helps to make a qualitative evaluation of a firms s
trategic position . By conducting this analysis we should be able to understan
d that the final external influence upon the organization is the competitive env
ironment . We should also be able to understand that the competitive strategy of
an organization and the need to secure particular competitive advantage over co
mpetitors are important . We will find that an appraisal of the competitive envi
ronment is vital before plans laid down.
TREATS OF SUBSTITUTE PRODUCTS
Buyer inclination to substitute and Price –performance are the main problem . In
ABRL retail stores the company provides own brand products like feasters tasty
biscuits , selecta atta, selecta rice, Enriched bath soap etc. Its substitute
products are established brand like LUX soap , Sabari tea powder etc. The brand
loyalty problem arises in such a case but the trend of brand loyalty is less in
nowadays . So the problem of substitute products can be managed.

THREATS OF NEW ENTRANTS


Retail industry is a profitable industry that yield high returns . This will dra
w new firms to the market . New entrants to an industry are important because ,
with new competitors , the intensity of competitive rivalry in an industry gene
rally increases. This is because new competitors may bring substantial resource
s into the industry and may be interested in capturing a significant market shar
e.
If a few competitor brings additional capacity to the industry when products d
emand is not increasing, prices that can be charged to consumers generally will
fall . One result may be a decline in sales revenues and lower returns for many
companies in the industry .

INTENSITY OF COMPETITIVE RIVALRY


The number of competitors of ABRL is large in size. The strategies applied by th
ese competitors are thoroughly evaluated and counter action are taken immediate
ly in order to maintain the market leadership. In Kerala ABRL’s main competitors
are Reliance fresh, Varkeys Supermarket
Unlike other competitors ABRL has private brand product private brand label
ing . This will give a greater advantage to the company .
The fund for advertising and sales promotion is very limited for when compared
with giant firm,Amul . ABRL is able to capture the target market as it has inve
stment background of Aditya Birla Group . In case of ABRL word of mouth publicit
y is more than the advertisement . So there is no any difficult to attain and r
etain the market leadership .

BARGAINING POWER OF CUSTOMERS


While the industries seek to maximize their return on invested capital(and earn
above average returns) , buyers are interested in purchasing products at the low
est possible price (the price at which sellers will earn the lowest acceptable r
eturn ). To reduce cost or maximize value , customers bargain for higher quality
or greater levels of service at the lowest possible price by encouraging compe
tition among companies in the industry .
ABRL cannot ignore the consumers and aim for maximum profit . Before applying
any strategies like price strategy , it has to analyze that market demand and
customer needs and wants . If the price is increased , the consumers may switch
to other brands or substitute . So price has to be increased carefully . This i
s done mainly due to the bargaining power of the consumers .
BARGAINING POWER OF SUPPLLIERS
Suppliers are powerful when company profitability is reduced by supplier’s action
. Suppliers can exert their power by raising prices or by restricting the quant
ity and/ or quality of goods available for sale . The bargaining power of supp
liers plays a very important role in ABRL . In the case of vegetables , company
has direct connection with the manufactures . So the suppliers are powerful rela
tive to ABRL . Suppliers goods are critical to the firm’s marketplace success .ABR
L is maintaining a good relationship with its suppliers .