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Hamdard Institute of Management Sciences

“Why are supermarkets preferred over small retail stores”



. b.TABLE OF CONTENTS a. Acknowledgements Introduction Research Process -3-4-6-7-8. e. d.17 - 2 .15 - Flow Chart Of Research Process Background Analysis Of Questionnaire Hypothesis Testing Final Conclusion & Recommendations h. c. f.10 . g.

I would also like to thank Hamdard University for a great learning place with different academic and extra-curricular experiences. 3 . Thank You. Ms. Lastly I would like to thank our fellow classmates for making this learning experience a thoroughly productive and enjoyable one. I would like to thank Allah. Hopefully this report will serve a good purpose. who provided clear concepts and a strong foundation of understanding for the subject. then our parents and family who have always supported us in every good thing that we do.Acknowledgements All praise is to Allah who makes everything possible in the universe and beyond. all contributing to our growth as students. She made the course a valuable learning experience for all of us and made us grow as learned individuals. I am greatly thankful to our course instructor for Business Research Methodology. First of all. who helped me with everything and made everything come together. Qanita Imtiaz.

and other essential items including shelf medicines are available on HUTTIES. has traditionally been a small scale business. utility Store and canteen stores Department. meant mainly for small and less or not educated entrepreneurs. large scale retailing institutions like Super Markets. In the rural areas of Pakistan. the retailing still follows the same traditional "HUTTI' system — small shops which provide very necessary daily use items to the villagers from available stores. These days almost all grocery items.Introduction Retailing in Pakistan: Retailing in Pakistan. The CSD still remains a mutual benefit store but utility stores have been opened to general public. In late sixties. and for that matter in most of the Third World Countries. but back in fifties rather till late in sixties very few items could be procured from these HUTTIES. a super market chain with the name of COOP stores was introduced. In the urban areas of Pakistan. Tuesday or Sunday Bazaars 4 . gave new dimensions to modern retailing in Pakistan. in Lahore. almost all types of related outlets exist. Departmental Stores and Discount Houses were unheard of in Pakistan. Till late sixties. cosmetics. The chain of COOP store of Lahore was later taken over by Utility Stores Corporation of Pakistan. The main retail urban outlets are: • Small retailers • Large retailers/ wholesale retail stores • Department stores • Super markets • Utility stores • Cooperative stores • Medical & general stores • Specialty stores • Friday. are functioning since the time of independence. special emphasis was given to plan retail markets in a proper way. where a new residential locality had to be developed. The introduction of sector wise planned markets in the newly planned modern city of Islamabad the capital. a type of mini super markets. However. but these stores were mutual benefit stores for service of government servants and Defense Services personnel respectively. Thereafter almost in all other cities and new towns of Pakistan. vegetable ghee.

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are not available with most of them. Normally these types of stores are located in suburbs of the cities and towns and take care of the demands and requirements of the people living in that area. but most of these are more like mini super markets rather than full fledged supermarkets with intensive and extensive product mix. Recent consumer interest in Fair Trade has lead to a "rush to Fair Trade" by many retailers and supermarkets which is welcomed. Super Markets: A supermarket is a departmentalized food store. multinational companies dominate sales in the household care market. Role of Supermarkets: Supermarkets simply meet the needs of consumers as cost effectively as possible. but there is no saying whether it will last or not. Pakistan entered the super market era at a time when some western European countries were moving from super market to 'Hyper mart'. more carefully thought out rules on Trade Justice and allowable ethics in international trade could well reduce this. as supermarkets will always be ready to throw fair trade products out of the door to replace them with products that meet the needs of the next wave of consumer interest. This is 6 . The first supermarket in Pakistan was opened at Karachi in 1968. During last 27 years quite a few of them have sprung up. which they buy through supermarkets and hypermarkets in urban areas. Even food items like meat. Despite the low purchasing power of the majority of Pakistani consumers. therefore in large part their behavior simply reflects the desires of consumers and government. This is because those consumers who do buy household care products are affluent enough to afford the goods offered by foreign multinationals.Small Retailers: These are very similar to HUTTIES found in the rural areas of the country. while acting within the bounds of ever-extending legislation. The multinationals also benefit from the perceived higher quality of their goods. and the lack of domestic competitors. fresh fruits. Larger retailers do exert significant "buyer power" which can be destructive.

7 .underpinned by their capacity to invest more in advertising and promotional campaigns aimed at boosting consumer awareness of their products.

8 . Sampling unit will be households and sampling element will be individuals in the household who went to supermarkets. The research process included the following steps: At the initial stages I had an idea of growing trends of supermarkets in Pakistan. started the work of hypothesis testing.Research Process My research is based on several steps and through an entire process we have concluded certain results. The details of the exploratory research have been mentioned in the research proposal. After tabulation. which helped making research objectives and research questions and helped framing questions for the questionnaire. The initial research was conducted in terms of secondary research where articles on the internet and magazines were viewed which confirmed the increased trend of supermarkets and highlighted why people preferred going to supermarkets. Next step in the research process was to conduct various focus groups so that we have an idea about the general opinion of different people and what do they have to say about the increasing trends of supermarkets and also to gain their suggestions about the current scenario of supermarkets. Exploratory research helped to find out the alternatives and other concepts as to why people preferred going to supermarkets then small retailer shops. One of our aims was also to know the peoples opinion about the changes they would want to see in the supermarkets in the future. short listed the questions for the purpose of hypothesis testing. this was being seen as a problem for some and an opportunity for the others. The initial research helped to create hypotheses. finding out what people wrote in open ended blanks to rectify them and coding was done for further tabulation of the data. this defined our target population. I did the convenience sampling and got questionnaires filled. Then non probability sampling will be done due to cost /time constraints.

Research Process Exploratory Research Setting Research objectives and Designing research questions Focus Group Survey: Getting Questionnaires Filled Tabulation of Data: entry. Coding and editing Hypotheses testing Conclusion 9 .

According to the latest Pakistan Economic Survey. Research design: Research methods employed were: 1. It is estimated that in 2002. projected to grow to 17 million people by the year 2010. A few other retail firms are said to be in the process of entering into Pakistani market. about 6. To determine what other services can be added in supermarkets which consumers would prefer. To find the future of supermarkets in Karachi.7 billion. 4. Some European retail chains have shown interest in Pakistan. This of course is an opportunity for people wanting to open supermarkets in the future. Descriptive research 10 .9 per cent. and represented a grocery market worth $1. the Macro has entered into Karachi market. 2. the sector is growing at the rate of 9. Purpose of the research: The purpose of the research is to find out various reasons for people’s preference to shop in supermarkets rather than small retail shops. Exploratory research 2. This segment. Research Objectives: 1. To determine which reason dominates or stands out the most for consumer’s preference for superstores 3. A German retail giant.Background In Pakistan the retail and wholesale business accounts for over 25 per cent of the GDP with the share of trading even bigger than the manufacturing sector. The objective of this report is to analyze the extent of consumer preference for superstores.8 million of the 50 million people living in urban Pakistan belonged to the upper and upper–middle class. So far the Wal-Mart name has not come up on the list of companies aspiring to enter. is expected to be the first to switch to modern retail stores.

He gives many reasons for coming to this place to shop. "You find almost everything under one roof and that also on reasonable rates. notably supermarkets/hypermarkets and convenience stores. According to Agri-Food Past.Supermarkets are increasing in popularity and currently account for 10% of retail food sales. For many customers these supermarkets are really best place to visit for shopping. Throughout the country consumers will continue to demand basic household care products they know to be effective. "The staff is very customer friendly." says by a Customer of Makro. you can carry shopped goods through shopping trolleys direct to your vehicle and contrary to most other such Pakistani stores there are even washrooms for customers. even retailers now need to provide such facilities to customer if they want to remain in competition with such big shopping stores. Descriptive research: After doing exploratory research we further have done descriptive research to know what makes people prefer supermarkets over small retail outlets and to do so under descriptive research method." Other shopping-stores. superstore at Star Gate. Present & Future Report of Pakistan in August 2005 prepared by government of Canada . Also factors like continued migration of rural consumers to urban areas in search of work and an improved standard of living and the number of Pakistanis returning to the country having worked abroad will also fuel growth of urbanization. are expanding across Pakistan and giving rural and urban consumers access to a considerably wider selection of goods and services. surveys will be used to gather primary source data. Karachi. You will face no problems regarding parking of your vehicle.Exploratory research We have conducted exploratory research in terms of secondary data to clarify the purpose/problem of the research. the store is really big and you can bring family with you. demonstrating little interest in the short to medium term in highly advanced and expensive products or formats. Through secondary data we have found that supermarkets are being preferred and increasing in number throughout Pakistan. convenient products at highly competitive prices. which will be able to offer consumers a wide range of modern. The questionnaire is attached in the appendix. These factors will be underpinned by the increased penetration of supermarkets and hypermarkets in urban Pakistan. he says. Modern retail formats. 11 .

Other (please specify)_____________________ Options Agha’s super market Naheed supermarket Imtiaz Makro Others Total Results 11 08 09 06 16 50 Percentage 22% 16% 18% 12% 32% 100% 12 . Which supermarket(s) do you usually visit for shopping? a. Imtiaz d. Weekly c. Naheed supermarket c. Any Other periodicity (please specify)_______________________ Options Daily Weekly Twice a Month Once a Month Others Total Results 06 15 14 15 0 50 Percentage 12% 30% 28% 30% 0% 100% Q2. Makro e. How often do you go for shopping to supermarkets? a. Once a month e. Daily b.Analysis of Questionnaire Q1. Agha’s super market b. Twice a month d.

How far is the supermarket from your home? a. 50001-75000 d.Q3. 75001 Options Less than Rs. 11-20 minutes drive d. Walking distance(< 5 minutes) b. 25001-50000 Rs. 25000 b. Less than Rs. 5-10 minutes drive c. Rs. 50001-75000 More than Rs. Rs. 75001 Results 07 16 16 20 Percentage 14% 14% 32% 40% Total 50 100% Q4. Please specify the range of your TOTAL MONTHLY family income: a. More than Rs. More than 20 minutes drive Options Walking distance(< 5 minutes) 5-10 minutes drive 11-20 minutes drive More than 20 minutes drive Results 07 16 15 12 Percentage 14% 32% 30% 24% Total 50 100% 13 . 25001-50000 c. 25000 Rs.

Maybe/ Don’t know Options Yes No May Be / Don’t Know Total Results 26 12 12 50 Percentage 52% 24% 24% 100% Q6. Yes b.01 hrs to 3 hrs d. Maybe. Would you like to have home delivery service? a. sometimes Options Yes No May Be / Don’t Know Total Results 16 17 17 50 Percentage 32% 34% 34% 100% Q7. >3hrs Options Approximately 1 hr 1 hrs to 2 hrs 2. No c.Q5. 1 hrs to 2 hrs c. No c. On an average how much time do you spend shopping in supermarkets? a. Yes b. Will you still go to supermarket even if it is not near your home? a. Approximately 1 hr b. 2.01 hrs to 3 hrs >3hrs Total Results 21 21 05 03 50 Percentage 42% 42% 10% 6% 100% 14 .

Variety c. Afternoon c. Price d. Cleanliness Options 1 A B C D E F G H I J K L 1 0 2 1 1 11 0 23 3 19 0 0 2 4 0 0 6 1 12 3 5 4 12 13 1 Rating Scale 3 4 0 7 5 20 0 2 4 3 9 4 8 3 17 9 16 15 16 8 14 9 20 8 18 12 5 28 34 27 08 32 08 29 10 14 07 11 34 Q10. Pre-noon b. Car parking space f. More space to walk around j. (On a scale of 1-5. Evening d. At what time usually you prefer going to supermarkets? a. Choosing product yourself h. Night e. Service provided by sales force k. Status symbol i. One stop shop l. Late night Options Pre-noon Afternoon Evening Night Late night Total Results 06 10 17 12 05 50 Percentage 12% 20% 34% 24% 10% 100% Q9. Rate how much importance you give to the different aspects in supermarkets. 5 is the most important and 1 is the least important) a. Environment in general e. Deals/Discounts you get g. Do the supermarkets you visit have helpful and friendly sales force? 15 . Location b.Q8.

16 . Don’t care Options Yes No Don’t Care Total Results 29 10 11 50 Percentage 58% 20% 22% 100% Q12. Would you like to be served beverages while shopping? a. Yes b. Maybe c. Don’t care Options Yes No Don’t Care Total Results 32 11 07 50 Percentage 64% 22% 14% 100% Q11. No c. No Options Yes No Don’t Care Total Results 20 19 11 50 Percentage 40% 38% 22% 100% Hypothesis Testing Mega Hypothesis: Ho: People prefer super markets over retail stores Ha: people do not prefer super markets over retail stores. Would you like all the employees in supermarkets to have a specific dress code? a. Yes b.a. Yes b. No c.

Hypothesis# 2 Ho: There is no relation between Number of visit to supermarket and income level. Level of significance: α = 1% x (bar)=26 μ = 30 Ztab= -2.217 17 . Level of significance: α = 1% v = (nc-1) (nr-1) v = 12 Less than 25000 25001-50000 50001-75000 More Than 75001 Total Daily 0 0 01 05 06 Weekly 01 03 02 0 0 07 05 0 16 03 05 07 0 22 08 03 06 0 50 15 14 15 Twice a month 04 Once a Month 02 Others 0 Total X2tab = 26.156 Conclusion: We see that the value of test statistic does not fall in the critical region hence we can not reject our H0.Hypothesis# 1 Ho: At least 60% people prefer to go to supermarket even if it is far from there home.33 Zcalc= -1. Ha: There is relation between Number of visit to supermarket and income level. Ha: Less than 60% people prefer to go to supermarket even if it is far from there home. The data provide sufficient evidence to conclude that super markets are preferred over retail stores even if supermarket is far from there place.

18 .25 Conclusion: We see that the value of test statistic falls in the critical region hence we can reject our H0. Ha: More than 8 people on average preferred to go to supermarket. Ha: μ ≤ 8 Ho: μ > 8 Zα = Z0.01 = 2.X2calc = 13. More than 8 people on average preferred to go to supermarkets. There is no relation between Number of visit to supermarket and income level.33 Zcalc = 3. Hypothesis# 3 Ho: At most 8 people on average preferred to go to supermarket.66 Conclusion: We see that the value of test statistic falls outside the critical region hence we can accept our Ho.

People also prefer super markets over retail stores because of the price factor. 3. 4. 19 .000 AND ABOVE. People generally prefer supermarkets over retail stores because of deals and discounts they get. 2. THEREFORE WE CONCLUDE THAT PEOPLE FROM HIGHER INCOME BRACKET PREFER SUPERSTORES OVER SMALL RETAIL STORES. Supermarkets should continue to offer competitive prices because mostly people go there because of the price factor. Super markets are preferred over retail stores more because of variety as compared to location. ALL THE RESULTS OBTAINED FROM OUR SUB-HYPOTHESES AS MENTIONED ABOVE HELPED US TO PROVE OUR MEGA HYPOTHESES. Superstores should also consider car parking space as an important way to attract more customers. Super markets are preferred over retail stores because of convenient parking. Since majority of the people spend more than 1 hour in supermarkets beverages should be served while shopping 5. 5. 4. MOST OF OUR RESPONDENTS BELONGED TO THE INCOME GROUP OF RS. There has been a preference for children play area to be made. 3.50. 2. Final Conclusion Recommendations Our recommendations are as follows: 1. We recommend to the supermarkets that their employees should have a specific dress code. The number of visits made to supermarkets is dependent on the income of the people.After doing the hypotheses testing we have concluded the following results: 1.