MKT 103 _ Marketing Management

Group 8 _Offline Grocery Retail

Submitted to Prof. Prithwiraj Mukherjee

Group Members
Heer Shah AU2210274
Aashi Ved AU2210294
Chunrry Nevatia AU2210333
Sahil Narayani AU2210262
Parth Patel AU2210277
Vinit Patel AU2210278
 Table of Content

1. Acknowledgment
2. Introduction
3. Overview of the Sector
4. Product and Process Strategy
5. Pricing, Revenue, and Cost Strategy
6. Promotion and Advertising Strategy
7. Challenges and Future Outlook
8. Conclusion
9. References
 Acknowledgment
Firstly, I would like to thank and express our gratitude to our mentor, Prof. Prithwiraj
Mukherjee, who pushed us to think and encouraged us to do this project. Moreover, his vast
knowledge, experience, and expertise in the field of marketing helped us a lot. We are in great
debt to him for teaching us some of the important marketing concepts that helped us in the
completion of this project. I would also like to thank our TA, Anjali Dubey, for her support in
completing the project on time.
I would also like to thank Ahmedabad University for providing us with an opportunity to explore
the field of marketing. At last I would like to thank all my friends and the University Library for
their assistance in successfully completing this project.
 Introduction
In India, the most common stores that are present almost everywhere, let it be in rural areas or
urban areas, are grocery stores. These stores are commonly known as Kirana Stores. There are
more than lakhs of stores you would find in the entir country. Mostly, the poor people and lower-
middle-class families depend heavily on these stores for their routine things such as food grains,
pulses, soaps, shampoo, etc. In the earlier days entire population was depended on this let it rich,
royal families or the poor families. However, things have changed nowadays. In this fast
growing world, many multinational and rich companies have entered this sector. Few of the
examples are Avenue Supermart, which run D-Mart, Reliance who have Reliance Smart under
their Retail sector, The Future Group who owns Big Bazaar, and many more. These companies
carter services to rich and royal families, the upper middle class and middle-class families. The
biggest advantages these companies give to the customers is that they buy good in whole sale
and sell the same in retail at price lower then the MRP. This lower prices attract the customers.
In this report we would discussing various thing like product and process strategy, pricing,
revenue, and costing strategy, challenges and future outlook, and promotion and advertising
strategy of Grocery Retail sector, mainly by taking example of Reliance Smart which is run by
Reliance under their retail sector.

Overview of the Sector

Introduction of the Sector:

Offline grocery retail in India constitutes the traditional method of purchasing groceries from
physical stores, which has been deeply ingrained in the country's consumer culture. With a vast
and diverse population, India's offline grocery retail sector caters to a wide range of consumer
preferences and demands, making it a crucial component of the nation's retail landscape.
Historical Development of the Sector:

The grocery market in India has evolved significantly over the years. Previously, small family-
run "kirana" shops were the dominant players, serving their local communities with a basic
selection of products. However, with the liberalisation of the Indian economy in the 1990s, large
international retailers entered the market and revolutionized the industry. This led to the
emergence of supermarkets and hypermarkets across the country, offering customers a wider
range of options and a more contemporary shopping experience.

Unique Characteristics of the Sector:

The grocery retail industry in India stands out because of the prevalence of kirana stores. Even
with the growth of modern retail options, kirana stores still hold significant sway, particularly in
urban and rural settings. These stores provide individualized attention and cater to the unique
requirements of their customers. The rich culinary heritage of India and varied regional
preferences also influence the selection of products in offline grocery stores, leading each store
to tailor its stock to suit local tastes.

Key Players and Participants in the Sector:

In the Indian offline grocery retail sector, several key players have emerged, encompassing both
traditional kirana stores and modern retail chains:

1. Reliance Retail: A subsidiary of Reliance Industries Limited, Reliance Retail operates one
of the largest chains of supermarkets and hypermarkets in India under the brand names
Reliance Fresh and Reliance Smart.
Future Group: Future Group, led by Kishore Biyani, is a prominent player in the Indian retail
sector, with formats like Big Bazaar and Easyday catering to the mass market segment.
2. D-Mart: Owned by Avenue Supermarts Limited, DMart is known for its focus on value
retailing and operates a chain of hypermarkets across India, offering a wide range of
groceries and household essentials.
 Spencers Retail: Spencer's Retail, a subsidiary of the RP-Sanjiv Goenka Group, is another
major player in the offline grocery retail sector, with a presence in multiple cities across
India.
3. Kirana Stores: Traditional kirana stores continue to thrive alongside modern retail chains,
leveraging their proximity to customers, personalized service, and flexibility in
operations.

These key players, along with numerous regional and local players, collectively contribute to the
dynamic and competitive landscape of offline grocery retail in India (Ram, 2022).

Product and Process Strategy

In the fast-growing world, many people don’t get time to buy groceries offline or find it difficult
as they have to go to different stores to find different things. This problem is addressed by online
grocery shopping websites or offline grocery retail chains. One such fast-growing offline grocery
retail chain that has gained a name is Reliance Smart.
Reliance Smart is the fastest-growing offline grocery retail store in India. The advantage of this
retailer is that it provides various items like groceries, FMCG products, dairy products, and fruits
and vegetables at just one stop. Moreover, there are various offers available to customers 365
days a year, and the prices are below MRP all the time. Their main aim is to provide the best
products to the customer at lower prices, which helps the customers in “Badi Bachat” (Reliance
Retail, n.d.).
There are various products available for sale at Reliance Smart, including basic, expected,
augmented, and potential. The basic products include normal grocery products like pulses, rice,
etc. There are certain expected products like FMCG products available for sale. The augmented
products include fruits and vegetables, which are not sold in any other retail chain store except
Reliance Smart. This adds an advantage to them as it is their unique feature.
There are various competitors, such as More Retail, Spencer’s Retail, Metro Cash and Carry, etc.
However, some famous retail chains that can give tough competition are D-Mart, Star Bazaar,
and Big Bazaar. However, Reliance Retail has an edge over all its competitors, as none of its
competitors provide sales of fruits and vegetables, which helps them have an upper hand overall
(Sharma et al., 2024).

The process blueprint of offline grocery retail is that it must have fresh products. This is because
there is a high risk of markdown and risk, which makes it important for store management to
forecast the demand accurately and manage fresh products. Moreover, it also requires efficient
goods handling and optimization of inventory flow. While precise forecasting is still necessary,
replenishment for long-shelf life products does not have to match demand exactly at all times,
which allows the supply chain's inventory movement to be balanced for optimal capacity use
(Småros, n.d.).

Pricing, Revenue, and Cost Strategy

Pricing Strategy:
Reliance SMART’s incredible value proposition rewards shoppers more for bigger purchases,
every single time they shop, with 100% assortment being offered below MRP all year round. All
this while delivering superior quality products, best of the brands, latest launches and a world-
class shopping experience.(Reliance Retail, n.d.).
Reliance Retail stores offer goods at extremely competitive prices. In a place like India, where
there are about 7 million retail stores, pricing plays a big factor of differentiation.With setting up
big and attractive supermarkets, the number of people coming inside wish to buy in bulk.
Reliance offers them a price which is generally lower than general stationery stores. This
strategy is mostly applied in the FMCG sector. This is possible from getting the products directly
from suppliers in bulk and their connection with the farms. (Team, Reliance Retail Marketing
Strategy & Marketing Mix (4PS) 2019)
Reliance will use the EDLP(Everyday low price) strategy for its numerous private labels and
associate brands (those owned by other companies) that will be sold in hypermarkets. It is
partnering with companies directly to procure the merchandise, thereby avoiding the various
supply chain layers. This will give you much more control over your margins and allow you to
offer competitive pricing to your customers.( Mukherjee, Reliance Retail adopts Wal-Mart's
pricing policy 2007).

Revenue Stream:

Reliance smart is a subsidiary under Reliance Retail Ltd. which is a largest

retailing outlet that offers foods, groceries, apparel, footwear, toys, home
improvement products, electronic goods, and farm implements and inputs
products. Reliance Smart is the biggest retail grocery store chain in the nation,
running 7-Eleven, Fresh Signature, Freshpik, Smart Superstore, Smart Point, and
Smart Bazaar outlets. We discuss grocery segment revenue briefly, Reliance Smart
has seen YOY growth of 33% average in a declining market over the past few
years depicting the sales force from feeder markets in smaller towns like Nokha,
Sikar in Rajasthan, Armoor and Banswada in Telangana, and Raygada and
Simliguda in Odisha, which shows the great presence of the company in the nation.
The company highlighted that demand was strong during the festivals in the
quarter. In the June quarter of 2023, the grocery business had reported a YOY
growth of 59% as a single segment.
The grocery segment grew by 33% year on year, with the Smart and Smart Bazaar formats
leading the way. The company highlighted that it had reported. However, in the April-June
quarter of this year, the grocery business reported a YoY growth of 59%.(Goel, Reliance retail
Q2 results: Fashion, grocery biz lead growth; focus on expanding private labels - et retail 2023)

Cost Structure:

Cost Structure: There are various types of cost which are:

1) Fixed Cost: There are various types of cost which remain constant regardless of sales
and production. For Reliance Smart it includes rent of the store, salaries of employees,
utilities, insurance and administrative expenses.
2) Variable Cost: These costs vary directly in proportion to the volume of production and
sales. Here it may include Cost of Goods Sold(COGS), packaging, transportation and
sales commission.
3) Marketing and Advertising Cost: It includes expenses related to promoting business,
such as advertising campaigns, promotions and marketing material.
4) Technology and Infrastructure Cost: This category includes expenses for maintaining
and updating technological infrastructure, such as point sale systems, inventory
management software and online platforms.
5) Supply Chain Cost: These includes expenses for product sourcing, inventory
management, warehousing and distribution.
6) Quality Assurance and Compliance Cost: Reliance Smart must ensure that their
products meet quality standards and adhere to regulations. This may include quality
control procedures, testing and adherence to health and safety standards.
7) Customer Service and Support Cost: This category includes expenses related to
providing customer support, processing returns and managing customer inquiries.
8) Miscellaneous Expenses: Other costs like legal fees, taxes, depreciation of assets and
unforeseen expenses come under this category.
 Promotion and Advertising Strategy

The promotional technique of the Reliance enterprise is a mixture of all types of theories, along
with pamphlets, verbal communications and digital advertisementsts. Reliance additionally
focused 360 branding and brand promotion. They use the tagline “Growth is Life” and feature
encapsulated their sentiments about taking human beings together. (Pocketful Fintech Capital
Private Limited, n.d.)

When it comes to making high-quality emblem awareness, Reliance Smart has followed an
aggressive marketing approach inclusive of launching advertising campaigns on television, radio,
newspapers, magazines, and social media structures like Instagram, Facebook, Twitter, and
YouTube. They additionally have used movie industry stars and celebrities’ strength to show the
appearance of their commercials and become joined with their emblem. It has been a regular
sponsor of the sports activities and has bought in an IPL that is a cricket group. It additionally
holds numerous rehabilitation programs for oppressed humans. With its different marketing
blend, Reliance Industries strategically positions itself through more than one channel, from
Reliance Fresh and Reliance Mart’s distribution method to the progressive advertising efforts
seen in Reliance Jio and Reliance Life Sciences. The retail arm, Reliance Footprint, and Reliance
iStore make contributions to the general advertising approach of Reliance Industries, reflecting
its dedication to excellence across diverse sectors, inclusive of reliance sun projects. (Bhasin,
2024)

One of the primary components of Reliance Smart's marketing method is its emphasis on the
digital structures. Recognizing the developing significance of online channels, the agency invests
in virtual advertising campaigns throughout social media platforms, engines like google, and e-
commerce websites. Through focused commercials, enticing content material, and strategic
partnerships with influencers, Reliance Smart guarantees a sturdy online presence and maximizes
its reach amongst tech-savvy clients. In addition to digital advertising, Reliance Smart also
makes use of conventional mediums consisting of tv, radio, and print to enhance its logo
message. Television commercials, especially, play a substantial position in building emblem
focus and communicating promotional offers to an extensive target market. By leveraging the
visible and auditory appeal of television commercials, Reliance Smart efficiently captures the
attention of viewers and drives them to go to its shops or discover its online offerings. (Småros,
n.d.)

By leveraging a multifaceted approach encompassing digital advertising and marketing, social

media engagement, and traditional advertising channels, Reliance Smart has efficiently reached
its target audience and communicated its price proposition. Through strategic partnerships,
progressive campaigns, and a focus on patron enjoyment, the brand has cultivated a sturdy
presence within the aggressive retail landscape. By continually adapting to evolving customer
possibilities and marketplace trends, Reliance Smart stays poised for sustained boom and success
inside the dynamic retail enterprise.

Challenges and Future Outlook

In today's dynamic retail landscape, Reliance Smart faces several challenges that require
strategic adaptation to remain competitive and meet evolving consumer demands. One
significant challenge is the increasing competition from both traditional brick-and-mortar
retailers and online e-commerce giants. With the rise of online shopping platforms offering
convenience and competitive pricing, Reliance Smart must find ways to differentiate itself and
provide unique value propositions to attract and retain customers. For example, the convenience
of online grocery delivery services like Amazon Fresh poses a direct challenge to Reliance
Smart's traditional store model, requiring the company to enhance its online presence and
delivery services to stay relevant in the market (VIJAYARAGHAVAN, 2023).

Another challenge for Reliance Smart is the changing consumer preferences and shopping
behaviours influenced by factors such as technology, sustainability, and health consciousness.
Today's consumers are more tech-savvy, environmentally conscious, and health-focused,
demanding products and services that align with their values. Reliance Smart must adapt its
product offerings, marketing strategies, and store experiences to cater to these changing
preferences. For instance, the increasing demand for organic and sustainable products requires
Reliance Smart to source and promote such items to meet the evolving needs of its customer
base.
Moreover, the ongoing COVID-19 pandemic has presented operational challenges for Reliance
Smart, impacting store operations, supply chains, and customer footfall. Adapting to new health
and safety protocols, ensuring adequate stock levels of essential items, and managing customer
flow in stores to maintain social distancing are critical challenges faced by the retailer.
Implementing efficient click-and-collect services, enhancing online ordering options, and
ensuring a safe shopping environment are essential strategies for Reliance Smart to navigate the
challenges posed by the pandemic and meet the needs of its customers in these unprecedented
times.

As we know that reliance is further expanding in online store as Jio mart and its likely to grow its
product, service and further offering with prioritising technological changes and artificial
intelligence. furthermore, reliance smart many introduce some sustainable and ecofriendly
product in order to meet its growing demand for sustainable practice and product they are likely
to improve more customer satisfaction and more retail store around the world.

In addition, Reliance Smart's future prospects could entail ongoing expenditures on institutional
culture and personnel enhancement, along with Reliance Industries' overarching plan. Reliance
Smart is expected to solidify its position as a top retail brand by focusing on generating shared
value and advancing the social and economic advancement of India through the cultivation of an
innovative, trustworthy, and customer-centric culture. Reliance Smart is positioned to transform
into a customer-focused retail powerhouse by combining technology, sustainability, and a strong
business ecosystem to promote development and success in the retail landscape. The company
places a great emphasis on generating value for customers and exceeding their expectations.