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Guidelines & Cautions to Indian Food & Grocery Retailers - A Research Paper by Ganesh Kumar - RA

Guidelines & Cautions to Indian Food & Grocery Retailers - A Research Paper by Ganesh Kumar - RA

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Published by Ganesh Kumar
This paper will give solid insight to indian food & grocery convenience format retailers. This research paper talks about the future of hyper market & convenience format chain, customer migration, and suggestive actions for convenienve format retailers to survive in competitive indian market.
This paper will give solid insight to indian food & grocery convenience format retailers. This research paper talks about the future of hyper market & convenience format chain, customer migration, and suggestive actions for convenienve format retailers to survive in competitive indian market.

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Published by: Ganesh Kumar on Sep 29, 2008
Copyright:Attribution Non-commercial

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Guidelines & Cautions to Indian food & grocery
“Convenience format”
Retailers__________________________________________________________________Guidelines & Cautions to Indian
food & grocery
“Convenience format” Retailers ©_________________________________________________________________1Guidelines& Cautions to Indian food and grocery “Convenience format” retailers
Ganesh Kumar
September 2008
 
The main objective of this paper is to help food and grocery retailers, researchers, managersand students to understand current and future shopping behaviors of customers, and furnishrecommendations to improve efficiency, reduce costs, retain customers, andensure sustainability in the market.
 
Guidelines & Cautions to Indian food & grocery
“Convenience format”
Retailers__________________________________________________________________Guidelines & Cautions to Indian
food & grocery
“Convenience format” Retailers ©_________________________________________________________________2Guidelines& Cautionsto Indian food and grocery “Convenience format
1
retailers
Ganesh Kumar
2
Abstract
This paper discusses finer points of Indian retail industry and throws light on the “Conveniencestoreformat
1
adapted by retailers in the food and grocery sector.The organized
1A
retail industry in the food and grocery sector in India has existed for over 12years
3
. It has been observed that very few retail stores in this sector have been able to reach abreak-even point. Even so, the organized retail industry has expanded multifold and differentformats of stores have been established.Dramatic changes have been observed in the shopping preferences of customers.Thenumber of customers, shopping for food & grocery, from kirana stores to convenience stores(c-store)hasincreased. On the other hand, the migration of customers preferring to shop from larger stores(Hyper Markets) as compared to convenience stores has been swifter.Conveniencestores and hyper marketsmaintain a different set of standard for facilities andservices offered by them to sustain in market competition. It has been found through researchthat 78 percent
4
of food & grocery customers (c-stores) are willing to try any new organizedretail store. This is indicative of the customers’ expectations being much higher than what isbeing offered to them by c-stores. A greatchallenge is posed to convenience store retailers tocapture a consistent customer base.Convenience stores must now attempt to focus on certain significant factors like storelocation,stocking the right merchandise mix, understanding demographic profiles of prospectivecustomers, providing value added services, providing a great shopping experienceand others.It has been endeavored to create a guideline and alertconvenience store retailerstowards themigratory progression of the customers, to ensuring customer loyalty.
 
Guidelines & Cautions to Indian food & grocery
“Convenience format”
Retailers__________________________________________________________________Guidelines & Cautions to Indian
food & grocery
“Convenience format” Retailers ©_________________________________________________________________3
INTRODUCTION
India tops the AT Kearney's Annual Global Retail Development Index (GRDI) for the thirdconsecutive year
5
. The Indian retail market, which is the fifth largest retail destination globally,is estimated to grow US$ 427 billion by 2010
6
.In this growing market, organized retail has awhopping growth rate of 49.73 percent
8
. A reportby Images Retail estimates the number of operational malls to be more than 412 by 2010 andfurther 715 malls by 2015 in spite of rising real estate costs. In India, currently eighteen retailers
9
are playing in the food and grocery convenience format store and some more are expected to jointhe race. The numbers of convenience format retail stores of almost all the retailers are growingtremendously. Bigplayers like Reliance Retail, RPG Group, Future Group, Tata, WadhawanFood Retail, Aditya Birla Group, Subhiksha and others are on a nationwide expansion mode; wecan expect over 15000 c-stores by 2010
10
.From the consumer’s perspective, the expenses on food and grocery are highest in their monthlyhousehold budget. The sales volumes, of stores in general, depend a lot on this factor. MGIresearch quotes that the expenditure on necessities
11
(food, beverages & tobacco) will reducefrom 42 percent
12
in 2005 to 25 percent in 2025. This makes the fate of c-stores quite uncertainand questions arise as toa) How long this convenience format retail chain lead over other formats?b) Will convenience retail stores lead as long as kirana stores had led in India?c) Do better prospects lie forhypermarkets?The answers lie in the forthcoming sections. A look at the GDP chart gives us a fair idea aboutthe relation between GDPgrowth rate and retail sales.
13
GDP, Private Final Consumption Expenditure and Retail SalesGrowth
, 1994-07(Compound Annual Growth Rate)
1994-95 to 1999-00 2000-01 to 2002-03 2003-04 to 2006-07
Real GDP 6.6 4.7 8.7Real private final consumptionExpenditure 5.7 4.0 6.7Retail sales 13.6 4.8 10.9As GDP growth rate is indicative of the retail sales growth and income of households. Itis likelythat the shift from convenience format to hyper market will be much swifter provided the growthrate of GDP remains as itis today.

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