Contents

1.0 Introduction....................................................................................................................................2

2.0 Key future trends and how these may impact on the Retail Industry of Sri Lanka........................2

2.1 Current trends of the Retail Industry..........................................................................................2

2.2 How these trends might change in the future............................................................................3

3.0 Identification of the current competitive strategy and value proposition at Keells Super Market
4

3.1 Cascade and Choices of Keells Super Market.............................................................................4

3.1.1 Winning Aspirations............................................................................................................4

3.1.2 Where will we play..............................................................................................................4

3.1.3 How will we play?...............................................................................................................5

3.1.4 How Keells’s competitive strategy has achieved competitive advantage........................11

4.0 Recommendations........................................................................................................................11

5.0 References.....................................................................................................................................13
1.0 Introduction
The retail industry of Sri Lanka plays a major component in the economy, and it is relevant to note that
national retail sales in Sri Lanka is approximately USD 13 Bn. As a heightening industry over the past
years, it sums up for around 23% of the GDP of Sri Lanka (Island.lk, 2022).John Keells Holdings (JKH) is
one of the major publicly traded corporations that is listed on the Colombo Stock Exchange. The
company has primary commercial interests in the areas of transportation, leisure, property, consumer
foods and retail, financial services, and information technology. The Keells supermarket chain is one that
can be found in Sri Lanka and is owned by John Keells Holdings. Together with Cargills Food City and
Arpico Super Center, it is one of the three retail operators that have the biggest market share on the
island. (JKH, 2022)

This report will be based on Keells Super Market in the retail industry of Sri Lanka.

2.0 Key future trends and how these may impact on the Retail Industry of Sri Lanka

2.1 Current trends of the Retail Industry

The opportunity for companies to gain from the evolution of social media is expanding. According to the
results of our survey, 81% of retailers plan to boost their use of digital sales channels within the next 12
months. As a result, businesses are always on the lookout for ways to streamline their customer
communication processes. (Souiden, 2019)

There is a heightened sense of caution among retailers due to the current economic scenario. For over
half (44%) of respondents, raising prices was the first thing that sprang to mind when considering their
plan of action in the case of a downturn. Raising prices requires careful consideration of the company's
essential operating expenses and the willingness of its customers to pay those expenses.

Buy now, pay later (BNPL) options improve the purchase experience, thus millennials are seeking them
out. According to the 2023 Future of Retail poll, 33% of retailers provide BNPL alternatives, while 41% of
Generation Z merchants aim to add BNPL to their payment options to improve in-store experiences. For
firms seeking younger customers, BNPL options may be worthwhile. (Rompas, 2020)

To meet the ever-evolving needs of their clientele, conventional shops are experimenting with novel
methods like selling on Instagram and launching web-based outlets. There has never been a more
interesting time to be a part of the omnichannel industry than right now, with 91% of retailers using
social media to sell.
It appears that the event will be held again in 2023. After two years of varying restrictions owing to
COVID-19, consumers are eager to experience their favorite brands in a fresh tactile way. While online
and digital interactions will always be crucial, most shops are shifting their attention back to the in-store
experience.

Seventy percent of retailers said that they want to improve support for innovative payment methods
including mobile checkout, VR/AR, and QR codes. For instance, using QR codes and other mobile
checkout options can frequently give a smooth experience for customers, which contributes to better
engagement and enjoyment. (Xue, 2019)

2.2 How these trends might change in the future.

The idea of making purchases via the internet is not new; nevertheless, during the epidemic, a much
higher number of individuals actively bought products and services by just pushing a button. The
proliferation of social media platforms has made it possible for companies to expand their operations at
a pace that was previously unimaginable. As part of a broader omnichannel strategy, retailers are
increasingly experimenting with live commerce in more innovative ways, which is creating excitement
among customers and offering up new options for them to make purchases. In today's multichannel
environment, a retail business needs more than simply an eCommerce website to be successful.
Companies need to be able to collect payments via a larger number of channels to engage their
audiences, as well as provide services such as live commerce. (Shankar, 2021)

Retail innovations such as live commerce, subscription services, and the blending of online and in-store
experiences have the potential to give businesses with new opportunities for expansion, profitability,
and customer loyalty. Using digital payment methods is essential to capitalizing on these paradigm-
shifting developments while also giving consumers the freedom to pay as they see fit. As merchants
work toward the goal of seizing these new possibilities, they will want a payments partner that can
provide them the flexibility and knowledge necessary to create a bespoke experience for their clientele.
(Inman, 2017)

A rise in the use of subscription services may also be attributed to the expansion of online retail as well
as the changes in work patterns that occurred during the epidemic. In some areas, the amount of
subscription commerce has more than quadrupled between 2017 and 2020. The nature of subscriptions
makes it possible for merchants to cultivate stronger consumer loyalty than ever before. Because
customers are expected to continue paying a set amount via recurring payments for an ongoing service,
it is essential for retailers to find a payments partner that enables them to accept recurring payments
using all major payment cards as well as regional cards in several different currencies.

Artificial intelligence technology is driving innovation in self-checkout systems by providing a safe

technique of scanning that also helps avoid stealing. It is able to function without the help of any
humans and provides clients with a greater degree of control over the purchasing experience. With the
new system, data on suspected shoplifters will be logged using AI authentication as the primary method.

Retail companies may have the ability to make educated choices based on data if they use artificial
intelligence, which can also enhance the management of retail firms and simplify their personnel. It is
expected that artificial intelligence would be responsible for automating menial operations and
optimizing more challenging labor, such as delivering, tracking, and scheduling. The implementation of
each of these innovations has the potential to simplify and expedite the performance of workers' tasks
significantly. (Roggeveen, 2020)

3.0 Identification of the current competitive strategy and value proposition at Keells Super Market

3.1 Cascade and Choices of Keells Super Market

3.1.1 Winning Aspirations

For the benefit of local entrepreneurs, the "Keells Podi Business Thena" initiative made available parking
lot space at several strategically placed "Keells" stores for the purpose of setting up temporary vendor
booths. Farmers were helped by the introduction of the "Imperfect Vegetables" variety, which is now
sold at 63 "Keells" stores, since it has reduced the number of times that consumers return their
purchases of imperfect produce. Around 300 farmers benefited from JMSL's facilitating the distribution
of fertilizer and the most essential agrochemicals to enable them to keep up with their normal
agricultural activities and maintain their livelihoods.

3.1.2 Where will we play.

Type of Segmentation Segmentation Criteria Target Segment
Geographic Region Domestic
Density Urban areas
Demographic Age All age categories
Gender Any gender
 Lifecycle All
Income Households and individuals in
the middle class and those with
lower incomes
Occupation Any
Behavioral Degree of Loyalty Nexus Members
Benefits Cost Advantage
Psychographic Social Class Lower, Middle and Working
class
Figure 1 Segmentation

Figure 2 Value Proposition Canvas

 3.1.3 How will we play?
 VRIN and VRIO Analysis

Table 1 VRIO Analysis

Keells Super Market V R I O N

Non-Core Competencies
Ease of access to ample HR
Unique Diversified Product Offerings
Availability of a set of private label brands
Sustainable Competitive Advantages
Inventory management systems built up for optimum efficiency
Strong Brand Value
Strong Bargaining Power
Availability of extensive access to customer data
Major Ecommerce operations

 PESTLE Analysis

Political Factors

Government agencies provide mandates that must be met by companies if they are to remain
competitive. Supply chain operations, the movement of raw materials and completed goods, taxes, and
other facets of business are all susceptible to government policy. Foreign direct investment (FDI)
restrictions in India, for instance, may be difficult to navigate for multinational retailers.

A country's political stability is a major element in the success of its business sector. If a country's
government is functioning smoothly, the economy will thrive. The flow of goods and services is
uninterrupted, and the company has little problems sourcing essentials like food and labor. Businesses
may function normally, and competition can be good if there is no political strife.

Economic Factors

To a large extent, retail sales are impacted by the state of the national economy. The purchasing power
of the general public may take a hit in times of economic growth, inflation, recession, and high
unemployment. When individuals are out of work, they tend to put more of their income away in savings
rather than spend it on other things.

Social Factors

Seventy percent of shops say that embracing innovative customer experiences is a major priority.
Providing convenient payment methods for mobile users, such as QR codes and mobile-friendly checkout
alternatives, may frequently lead to more repeat business and happier consumers.

As manual labor is reduced by automation, more time is available for customers to interact with your
business in a manner that best suits them. By computerizing processes like stock-taking, for instance,
clients may see what you have available without having to bother a member of staff. That way, neither
they nor your team will have to waste time inquiring or double-checking. (Steyn, 2004)

Technological Factors

Technology comes in many forms in today's modern retail establishments. in the manner of a cash
register. In addition to registers for handling money once a transaction has been made. This is the norm
for every retail establishment. To keep up with the times, shops constantly update their hardware,
software, and system configurations. For instance, many independent shops are switching to using
tablets or laptops at the cash counter. It may be used in a flash and with no effort. (Mankins & Steele,
2005)

There is now a trend toward fully automated businesses without any human cashiers at all. Artificial
intelligence (AI)-enabled sensors and technology at these shops make it easier for customers to shop
swiftly and easily, which in turn boosts the stores' potential to generate income, attract new clients, and
get insight into their own operations. Packages or goods may be delivered to consumers by autonomous
delivery robots, which are electric-powered vehicles.

Environmental Factors

Goods are the lifeblood of a store; therefore it stands to reason that protecting the environment is a
primary priority for retailers. The retail industry is affected primarily by two factors: the environmental
effect of raw material use and the risk of interruption to the supply chain. There is a growing public
interest in reducing the negative environmental effects of all uses of natural resources. Concerns over
deforestation have prompted businesses to seek for alternative supplies of palm oil, for instance. The
increase in product certifications based on sustainable features is one indicator of these worries. (Olson,
et al., 2005)

The environmental effects of a product may be seen at every stage of its existence, from the gathering of
raw materials through the ultimate stages of disposal. In the case of microbeads, for example, their
introduction into aquatic environments led to contamination and eventually led to a ban on the use of
these products. Although some are unavoidable, others, like the use of biodegradable packaging to
reduce the amount of plastic in the environment, are predictable and, in some circumstances,
preventable.

 Resources and Capabilities

The Carbon Footprint (MT) of the retail industry group has 36,018 in supermarkets and 212 in office
automations. When taking the human capital into consideration, the group has 6127 employees. The
Retail sector is dedicated to ensuring a risk-free work environment without sacrificing quality in any of its
products or services. (Knight & Cavusgil, 2004)

Figure 3 Contribution to the JKH group

Figure 4 Income Statement Indicators

 SWOT Analysis

Strengths

The Supermarket company participated in a variety of projects to encourage sustainable agricultural

methods, as well as to communicate information, discuss best practices, and foster a sense of
community among its many different farmer communities. This also helped to the growth of the local
economy and the improvement of people's livelihoods in the community. Considering the nature of the
operations, the Supermarket and Office Automation industries continue to have difficulty in retaining
their workforce. The provision of ongoing training opportunities to staff members is given a lot of
importance with the objective of enhancing workers' skill sets and raising their overall productivity. In
addition, chances for professional advancement are made available to staff in order to keep them, and
severe health and safety procedures are implemented in order to make the working environment as risk-
free as possible.

Some stores have used 'Scan & Go' self-checkouts, restaurant management systems, and self-checkouts
to improve operational efficiency; queue buster is a technology that allows for speedier check outs
during peak hours at outlets by issuing rapid response (QR) codes. (Orel & Kara, 2014)

Weaknesses

Since the super market may offer both inexpensive and pricey goods, there is no clear position for it in
the perceptions of the customers. Since it caters to customers in every possible area of the market, the
shop probably does not have any distinct advantages over its rivals in the form of distinct competitive
advantages.

Opportunities

The digitalization of their systems, processes, and major communication platforms has boosted the
efficiency of our operations, expanded the output of the services, and improved the speed of
communication between doctors and patients, which has led to better outcomes. The improvements
that have been made to the ERP system have helped to assist this process by linking all our platforms,
which has made it easier to function and monitor, and it has also reduced the clinical risks.

As a result of the COVID-19 pandemic, the Hospital has implemented additional digital platforms with
the goal of preventing the virus from spreading further and protecting all relevant stakeholders from
being exposed to it. Consultations between physicians and patients, laboratory examinations and the
dissemination of test results, and various choices for contact-free service, such as the purchase of
medications online are some examples of these. (Mardikian, 1995)

To satisfy the requirements of the healthcare sector and to keep Nawaloka one step ahead of its rivals,
the company's systems and procedures will need to be effective as well as current. In addition to this, it
guarantees a higher level of production across the board. We place a persistent emphasis on improving
both the functionality and efficacy of our processes and systems via ongoing development efforts.

Threats

Problems in sourcing because of bottlenecks in the supply chain, in particular shortages of specific stock
holding units (SKUs). Price limitations on critical goods like wheat, rice, and sugar made the effect even
more severe. The import prohibition on agrochemicals in April 2021 caused a scarcity of fertilizer, which
led to a decline in agricultural yields, which in turn caused considerable price hikes and a restricted
supply of fresh products.

Delays in construction caused by a significant rise in the cost of building materials and a lack of foreign
cash necessary for the importation of supplies led to increased strain on the business's intentions to
expand its number of retail outlets. Frequent interruptions to the electrical supply led to an increase in
the usage of generators at outlets, which contributed to greater operating expenses. Despite the fact
that the company has, up to this point, been successful in mitigating the effect on operations, the
situation has become much worse due to a lack of available gasoline throughout the nation.
 3.1.4 How Keells’s competitive strategy has achieved competitive advantage.
Keells Super Market PLC operates their modern retail outlets under the Differentiation strategy. The
process of differentiating goods or services from those of rivals by making them distinct from and more
appealing to consumers is known as differentiation. The manner in which JayKay can accomplish this
objective is determined by the specific characteristics of both the retail sector and the goods and
services themselves, but it will often incorporate aspects of consumers' brands that they value, such as
features, functionality, durability, and support. (Grundy, 2006)

Figure 5 Source of competitive advantage

4.0 Recommendations
Even though businesses operate in an environment that is defined by the VUCA framework, Keells Super
Market is able to maintain adequate levels of competitiveness in the retail sector with their current
strategy. On the other hand, it is impossible to deny that the retail industry is continually vulnerable to
the effect of new forces. This is something that cannot be rejected.

Keells Super Market is able to maintain acceptable levels of competitiveness in the retail market while
operating in an environment that may be defined as VUCA because to the strategy that they are now
using. In spite of this, it is incontestable that the retail industry is continuously being influenced by fresh
components.

Since the outbreak, many companies have turned to cutting-edge technology in order to improve their
connections with their customers. These improvements can take the form of a wider selection of
communication channels, more convenient delivery and pickup options, or more prominent cancellation
and refund policies. The time has come to analyze the degree to which your numerous marketing
technology solutions are interacting with one another and transmitting consumer data into a common
hub, such as a customer data platform. (Goi, 2009)

Customers want merchants to connect with them in a manner that is personal, targeted, and relevant to
their needs. To determine how far the brand can go in terms of personalization, one of the most
important factors to consider is the present degree of digital maturity your brand has. Regardless of
whether your technology and data management can enable segmented customization or deliver more
focused personalization at various points along the customer journey, the most important thing is to
avoid sending a blanket message to customers, as this is the thing that causes customers to leave your
business (Yang, et al., 2019). Your marketing depends on data collected from consumers' interactions
across channels in order to personalize their emails and automate their marketing procedures, which
ultimately results in clients who are more satisfied and loyal to your brand. Pop-ups, overlays, and
product recommendations are some examples of customized features that may assist you in
communicating vital information to your visitors and maintaining their interest in what you have to offer.
(Tan & Gligor, 2019)

In recent years, the SMS marketing approach has received a lot less attention than it ought to have
received. Moreover, it is projected that mobile commerce and tactics that prioritize mobile devices will
grow significantly over the next several years. The use of short message service (SMS) marketing and
texting with customers who have provided their authorization presents business owners with an
opportunity to capitalize on this trend. Establishing a presence on marketplaces, where the vast majority
of business-to-consumer (B2C) e-commerce transactions in the United States take place, may assist
businesses in reaching a greater number of potential customers. Retailers may be able to ease the load
on their supply chains, save money on marketing, and create a more simplified shopping experience for
their customers by participating in many marketplaces. In the meanwhile, retailers may respond to
customers' usage of search engines to identify known brand names by constructing their own search
engine optimization (SEO) strategy for their online marketplace. With the use of this data, we will be able
to better tune and personalize our digital interactions with the audience that we are targeting in the
market. (Mankins & Steele, 2005)

In this day and age of online commerce, omnichannel marketing is a terrific technique for turning one-
time customers into loyal patrons. This method can convert one-time customers into loyal patrons. It is
the process of coordinating messages across several channels in order to provide a cohesive experience
of a brand to its target audience. Alternative payment methods are more user-friendly, inexpensive, and
efficient than conventional means of trade. (Berman & Thelen, 2018) Traditional means of exchange are
characterized by their inefficiency. Although while many major retailers have been sluggish to adopt
mobile wallets, smaller stores have jumped on the bandwagon and are using them enthusiastically. If a
customer is used to paying with their phone at the register, they could have an unpleasant experience if
they attempt to do so at a huge box shop. To be able to take the mobile and contactless payments that
customers have grown to expect and that many smaller competitors are already delivering, retail
establishments will need to connect their point-of-sale (POS) systems with the rest of their digital
technology stack this year.

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