RESEARCH REPORT

MARGIN-FREE STORE AT IIMK -

STUDYING ITS NEED, REASONS
FOR EARLIER FAILURES, AND
BEST PROPOSITIONS FOR FUTURE
SUBMISSION BY

SECTION E GROUP 1

APOORVA PRABHU - 254

AYUSH GOEL - 259

PANKHURI SETHIYA - 282

SAI PRANEETA - 283

SHEKHAR SHRIVASTAVA

- 296

TUSHAR MAHESHWARI

303

VATSAL MAHESHWARI -
TABLE OF CONTENTS
Introduction.....................................................................................................................................................................2
Problem Statement..........................................................................................................................................................2
Research Objectives........................................................................................................................................................3
Social Implication............................................................................................................................................................3
Managerial Implication...................................................................................................................................................3
Benefits of the Study........................................................................................................................................................3
Time Frame......................................................................................................................................................................4
Research Design and Data Analysis...............................................................................................................................4
Tools and Statistical methods to be used for analysis..................................................................................................5
Literature Review............................................................................................................................................................5
Analysis of data................................................................................................................................................................8
Inferences from the survey...........................................................................................................................................14
Inferences from the interviews.....................................................................................................................................15
Conclusion......................................................................................................................................................................16
Limitations.....................................................................................................................................................................16
Recommendations for future research........................................................................................................................16
References.......................................................................................................................................................................16
Appendix.........................................................................................................................................................................18
INTRODUCTION

Grocery and confectionery shops can be found easily in the nooks and corners of a city. People
tend to purchase their daily need of goods from these shops because of the convenience of time
and accessibility. Many supermarkets and large retail chains have opened up who provide free
delivery to add to the convenience of customers. The free delivery facility is provided only above
a certain amount of order. So, for small value purchases, customers tend to prefer nearby grocery
and confectionery shops. For a small city like Kozhikode, these delivery options are rarely
available.

The schedule of MBA students is believed to be very hectic, which provides them with little to
spend on shopping grocery and confectionery items. Students stay awake till late nights and have
limited or no option to satisfy their hunger. Most of the students rely on confectionery items, but
they hardly get time to shop these. Therefore, most of the B-schools and also engineering schools
have in-house grocery and confectionery shops for the convenience of the students.

Grocery and confectionery shops are mostly run by contractors who pay a minimal charge to
college authorities. Their motive for opening a store on a college campus is to earn easy profits.
The needs of college students are particular, so it becomes essential for contractors to sell those
specific items to earn profits.

PROBLEM STATEMENT

IIM Kozhikode houses more than 1200 students in its residential programs and more than 200
staff members including, faculties and their families. It used to have an in-house grocery shop,
which was a margin free shop. A few months back it was shut down permanently for reasons not
known to many. Due to this, the IIM Kozhikode students now have to go to nearby stores like
Reliance Fresh, to purchase their daily use items and grocery. It wastes the time of the students
and also takes a toll on their pockets because of the non-availability of free transport.

We, as a group, want to find out the possible causes of the shutdown of the margin-free shop and
to explore the opportunity of opening up a new shop along with its ideal location in the IIM
Kozhikode campus. We would also like to analyse the requirements and expectations of the IIM
Kozhikode community from such a shop to find out the required product mix to sell at the shop to
be profitable and sustainable.
RESEARCH OBJECTIVES

The objective of the research would be to find answers to the questions-

1. What were the reasons for shut down of margin-free Shop?
2. Is there a need for margin-free shop? If yes, what are the expectations of students?
3. What should be the location of margin-free shop, and what product mix should it have to
satisfy needs and be profitable?

SOCIAL IMPLICATION

The IIMK Community, in the absence of a supermarket in the campus, spends a considerable
amount of money and time to go to nearby markets, sometimes hiring private transport to
commute to and fro, to purchase even the most basic necessities. Understanding the business
problem that affected the performance of the earlier supermarket through this study would
facilitate future lessees to take corrective steps and set up their business yet again at campus, thus
benefitting the business as well as saving effort, fuel and money for the IIMK Community.

MANAGERIAL IMPLICATION

As a result of this study, the lessees of the margin-free store, both past and future, would be able to
understand the customer preferences in the market sub-segment of IIMK Community and the
stocking requirements. It will also give the management the best-suited location for the store that
would ensure high footfall and visibility. Most importantly, it would let the management know the
possibility and way forward for achieving profitability.

BENEFITS OF THE STUDY

i. The study will help in understanding the reasons behind the failure of margin free shop
without any direct competition inside the IIMK campus.
ii. It will also help to identify the constraints from side of shop owners, IIMK administration
and students for a general store inside IIMK campus.
iii. It will get better understanding of the needs, expectations and purchasing preferences of
the students of IIMK.
 iv. It will help identify and ideal location for opening such a shop with respect to students and
administration.
v. The items to be placed in the store can be identified which will maximise profits keeping
in mind the needs of students and constraints from administration and store owners.
vi. It will also help in identifying what other alternatives can be looked into to satisfy the
needs of the students if a general store does not turn out to be feasible.

TIME FRAME

Activities
A. Planning & setting the objectives (4 days)
B. Literature review (2 days)
C. Develop proposal (2 days)
D. Development of research design (3 days)
E. Interviews (Students, administrations, professors, shop vendor & staff) (4 days)
F. Focused group discussions (4 days)
G. Preparation of questionnaire (2 days)
H. Survey of all stakeholders (3)
I. Discussion with the vendors outside the campus (5 days)
J. Code data and analysis (5 days)
K. Report writing suggestions/recommendations (4 days)
L. Management decision (2 days)

RESEARCH DESIGN AND DATA ANALYSIS

Phas
Objective Collection Methodology and Sample
e

1 Understanding the reasons for  Interview with the shop vendor

  Survey among students to understand the issues they
shutting of the margin free shop faced
in campus  Interview with the administration to understand any
issues from their end

 Questionnaire to understand the requirements of the

Analysing the requirement of a students for commodity store in campus
2 store in campus and if yes,  Focus group discussion to identify potential locations
analysis on potential locations and if possible, using optimisation techniques to find
the feasible location

 Understanding the product mix of commodities and

3 Consumer Preference Analysis variety amongst each product used by students at daily/
monthly level using a survey

 Discussion with vendors around the campus to

Sustainability analysis of the understand the margin kept on various commodities by
4 business model for a them
commodity store in campus  Understand price range students are willing to pay for
products using survey

TOOLS AND STATISTICAL METHODS TO BE USED FOR ANALYSIS

NVivo, Microsoft Excel, R-Studio will be predominantly used for the analysis. In qualitative data
analysis, we plan to understand the frequency of words and implementing sentiment analysis. For
quantitative data, we would like to analyse the central tendency, dispersion, skewness along with
performing statistical tests like t-test, z-test (wherever arespondentsicable) and understand the
variations using ANOVA.

LITERATURE REVIEW

Factors  influencing college students’ purchase behaviour

Research on Chinese University students with a sample of students in the age-group of 21-22
years showed that social-cultural context, personal demographic factors, situational influences,
and objective characteristics of products, i.e., quality, package, durability, hazard-free, price,
promotional tools and brand influences the on-campus branded grocery purchasing decision (Gao,
2017). 

Factors Affecting Customer Shopping Behaviour

These factors affecting consumer behaviour are studied in a detailed manner. Store atmospherics,
personal factors, marketing communications, service, retail outlet perception, time availability and
display at the stores are some of the most important factors found while determining the shopping
patterns and behaviours of the consumers. Various factors affecting customer buying decisions
have been categorized as (a) External stimuli (b) Internal perceptions (c) Buying behaviour and (d)
Demographic variables. Also, it was noted that the least amount of time was spent on the purchase
of confectionary items, which is in line with the existing theory of knowledge (Attri, 2018).
Other factors directed their purchase such as debit card usage. More than half of the consumers
mentioned that the use of debit cards made them purchase more than what is needed. Concerning
the number of people in the shop, students mentioned that they like to shop while there is a huge
crowd, while only 9% of the business class agreed that they like purchasing in crowded places. By
looking at the disparity between preferences of students and business classes, it can be inferred
that the demographics and occupation play a major role in determining the shopping behaviour in
any community (Rekha, 2018).

Store Facilities
A study on the shopping behaviors of generation Z states that they prefer the convenience of
having all its needs met in one place, irrespective of the size of the store. According to them, all-
inclusive stores would be more convenient for saving them time and making their shopping
experience more comfortable.
The primary reason they might choose to go to a larger grocery store is because of the variety and
wide range of products that they offer. Employee availability is also one of the important services
that a grocery store must provide according to generation Z. They like it when employees are
around to answer a question, provide a quick checkout process, and are friendly while doing so.
According to the study, the preferred mode of payment for this sample is credit or debit cards.
Using mobile wallets comes second, and they seldom wish to use cash to pay. The generation also
showed the least interest in getting a retailer membership card.
When it comes to the mode of shopping for groceries, most of them would not be open to trying
an online grocery delivery service according to the research. They prefer going to the store and
having more control over what items are being chosen for their basket. 
The results of the study also show that they would like to see their grocery store practicing
sustainability, being encouraged by the store to use reusable bags or bring their own bags and
containers. (Madelyn Olsen, 2017)

Shopping Behaviour in Generation Z

On average, Generation Z goes shopping every 13 to 16 days with a shopping time average of 22
minutes each. They do not get bothered much by the stock-outs either and would try to get the
item again after a week or so. The number of items in their shopping carts does not make them
conscious either. They also gravitate more towards healthier options, either by nature or by
friends’ influences. Too much crowd or restocking of the store in the middle of the day are some
aversions to shopping mentioned in the study. (Madelyn Olsen, 2017)
College students generally make more frequent trips that meet the immediate requirements in less
time. The college students are generally in a hurry and have less time and hence they go for
smaller purchases and smaller amounts.

Product choice
The foremost factor that affects the purchase decision is quality, and students regard package,
price as well as appearance as indicators of a product’s quality (Gao, 2017).
The quality of a product is evaluated first by the students and then the price, in the case of grocery
purchasing. Lower price, while other qualities remaining constant, maybe the best offer for
students, highlighting the importance of promotional offers. Students tend to spend time choosing
the fresher ones among the perishable products. Students also tend to see through the tactics of
shopkeepers of keeping fresher items at the back-end of the rack and may even get offended by
such practices. (Gao, 2017). 
The shop decorations and the weather too influence the students’ purchasing decisions (Gao,
2017). 

Perceptive quality of the product

The perceptive value of a product has a substantial impact on the purchasing decision of the
customer. Marketing managers could improve the packaging or promotional offers on the product
to improve the perceptive value of the product. (Gao, 2017).

Attributes contributing to store selection

The attributes that contribute to store selection can be broadly classified into value-related factors
and cost-related factors. Cost related factors can be further split into monetary aspects like cost
and promotional offers and non-monetary factors like location. The attributes can also be split into
three broad themes of service, price, and convenience. Service can include friendly and
knowledgeable personnel, quality and variety of the products, fast checkout, extended opening
hours, and the tidiness of the store. Price refers to the supply of products at the best possible price,
and lastly, convenience refers to time and distance to reach the store and transportation. (E.
Savelli, 2018)

Attributes contributing to store satisfaction

Store satisfaction can be broadly classified as transaction-specific satisfaction and cumulative
satisfaction. The transaction-specific store satisfaction is dependent on the specific encounter with
the organization, whereas the cumulative satisfaction accumulated across a series of experiences,
which results in a change in perception over time. However, the definition of customer satisfaction
is subjected to a lack of consensus.  The significant attributes that contribute to store satisfaction
are price, product assortment, product quality, and store service. In-store convenience also plays a
crucial role in determining customer satisfaction. It has been observed that the customer
perception of store attributes has a positive correlation with store satisfaction. Therefore, it is safe
to assume that the factors affecting store selection are also relevant in the context of store
satisfaction. (E. Savelli, 2018)

Relating informal retailers and customers in India

Small informally organized grocery retail stores, also called as kiranas are market dominant
entities (98% value share) in the Indian business context while facing tricky competition from the
formally organized retailers. To explore the practices that gave the kiranas competitive advantage
over the organized retailers, strategy as a practice was employed enriched with the social exchange
theory concepts of trust and reciprocity (Pathak, Kandathil, 2019). The practice of free delivery by
the kiranas depends on the reciprocity process, which involves a great deal of continuous trust
between the parties. The practice and the exchange process provides dual identity to the one
observing the process, which in turn invigorates a positive feedback loop of a successful
relationship between the two entities. This entanglement of mutual trust is the source of significant
competitive advantage for the kiranas. Here, the competitive advantage is some strategy that the
competitors are unable to copy and would be sustainable for a more extended period. Within this
cyclic relationship, an inimitable enactment of a strategic practice can be a crucial source of
competitive advantage for informally organized small retailers over large FORs (Pathak,
Kandathil, 2019).

ANALYSIS OF DATA
INFERENCES FROM THE SURVEY

 96.7% of the respondents visited the margin free store in campus

 More than 50% (53.4%) of respondents were indifferent to which day they shopped on,
however 36.2% of people preferred weekends of shopping.
 Majority of the respondents (79.3%) visited margin free store 1-2 times a month. The
average spending in the margin free store per visit was Rs. 220/- (218.76) 
 The most frequently purchased item in the store was stationery followed by personal care
products and room essentials.
 37 respondents (63.8%) had one or more concerns with respect to the margin free store -
̵ Majority of the respondents were not satisfied with the variety. 14 respondents were very
bothered with the options available at the store, and 6 respondents (16.2%) stopped
visiting the store due to unsatisfactory product variety. Respondents would like to have
fruits in addition to the existing items in the store. It was followed by dairy products and
cold beverages. Average score: 3.486
̵ Availability of items at the store emerged as one of the top two concerns – 45.9%
respondents were very bothered about the availability levels - Average score: 3.324
̵ Given the convenience it would have otherwise brought, the non-integration of the
payment process at the store with mess account is yet another major concern for the
respondents – As many as 78% respondents were bothered by the same. Average score:
2.864
 ̵ Operational timing is also an important concern– 35.13% respondents were slightly
bothered or unhappy with the timings, whereas 10.8% respondents completely stopped
visiting store due to their inconvenient timings. Average score: 2.8108
̵ Price appears to be of a lesser concern – 29% respondents felt no impact of the price
levels on their shopping decision at the store, whereas 35% respondents were unhappy
but were ok to accommodate the concern. Average score: 2.459
̵ Unhappiness with the staff’s behaviour brought out interesting insights. A very divided
response emerged from the survey – While 32.4% respondents felt no impact on their
purchasing decisions due to the staff, almost equal number of respondents i.e. 27.02%
were very bothered by it. Average score = 2.5405. As high as 50% of female respondents
were concerned with staff behaviour.
 Nearby supermarkets were perceived as an alternative by 95% of respondents. Variety and
availability are top two reasons for choosing the alternative options.
 Average spending in nearby supermarkets is Rs. 542.27/- which is almost double the spending
in the margin-free store.
 63.3% of people see a need to reopen the margin free store on campus
 The most preferred location is D landing (56.7%) followed by watch tower (11.7%) 

Facilities expected in the re-opened store, in order of respondents’ perceived importance -

 Digital payments - Average score: 4.233. (38.3% respondents feel it is very important and
45% respondents feel it is mandatory)
 Integration with mess account - Average score: 3.6 
 Room delivery – Average score: 3.2. (40% respondents feel that it is very important)
 Availability - Average score: 2.95
 Membership card - Average score: 2.11

INFERENCES FROM THE INTERVIEWS

Administration

Erstwhile Shop-owner
 Revenue and Profit Forecast (in INR)
  Previous scenario With increased variety
No. of Students 900 1,020
Students visiting Margin Free shop (%) 97% 97%
Students visiting Margin Free shop 870 986
Average revenue per student 454 1,459
Total Expected Revenue 3,94,770 14,39,529
Average Profit (%) 10% 10%
Total Expected Gross Profit 39,477 1,43,953
Average Electricity charges per month 2,000 5,000
Average operating charges (incl. 3 employees) 36,000 36,000
Monthly Rent 10,000 10,000
Net Profit (8523) 92,953

CONCLUSION

From the results of questionnaire and the interviews conducted by us, it can be concluded that
students did not prefer margin-free shop due to availability and variety of the things required by
the students. Further, from the interviews it understood that the students visited the shop only
when they first arrived on the campus for room essential items and personal care products. Price
does not seems to be a concern for the students. Students visited the nearby stores due to variety
and availability and spends twice more as compared to margin free shop and the main reason for
the same is variety.
Most students agree that margin free shop can be reopened at the D landing area but the interview
from the administration department suggests that there is an issue with the site. Further, with
nearby stores now coming up with on the call orders, the future of margin free store needs to be
further analysed.

In nutshell, based on the responses, margin free store can be re-opened.

LIMITATIONS
RECOMMENDATIONS FOR FUTURE RESEARCH

1. The location specific needs further analysis from the administration side.

2. The effect of taking orders on the call from the near-by stores will have an impact on the
margin free shop and the same needs to be further analysed.

3. The margin free store was used by both the students as well as by staff at IIM K. This
research does not encompass the aspect of staff. Hence, future researches can focus on the
staff’s perspective towards the margin free shop.

REFERENCES

1. Attri, Rekha; Jain, Vinay.IUP Journal of Marketing Management; Hyderabad Vol. 17, Iss.
1
2. Atul Arun Pathak, George Kandathil (2019): Strategizing in small informal retailers in
India: Home delivery as a strategic practice. Asia Pacific Journal of Management, ISSN:
1478-3363

3. Elisabetta Savelli, Laura Bravi, Giancarlo Ferrero, Linda Gabbianelli & Tonino Pencarelli
(2018): Food attitudes and factors affecting food behavior of Italian college students in a
grocery context, Total Quality Management & Business Excellence
4. Gao, Ziyin (2017). Factors influencing on-campus branded grocery purchase: Behaviors
among university students in China. Advances in Economics, Business, and Management
Research (29), 346-350.
5. Makhitha (2014), The Importance of Supermarket Attributes in Supermarket Choice
among University Students, 1760
6. Olsen, Madelyn ( 2017). Shopping with Strangers: Grocery Shopping Behaviors of
Generation Z. Honors Theses. 2899., 11-32.
7. Vanderburgh-Wertz (2013), An On-Campus Community Grocery Store, 97
8. Zulqarnain, Zafar & Shahzad (2015), Factors that affect the choice of Consumers in
selecting Retail Store, for Grocery Shopping, 5
 APPENDIX

Questionnaire for survey

Section I

Section II - To understand why the margin free shop was closed in IIM K campus
Section III - Concerns of Margin-free shop
Section IV - Preference to shops other than on-campus margin free
Section V - Expectations from the new store at IIM K