The Meaning of Perception

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					                          EXECUTIVE SUMMARY

The main purpose of conducting this research is to study the perception of
housewives towards supermarkets. Also we have made an attempt to study
which are the most important factors that influence the process of selecting either
a supermarket or a nearby kirana store for day-to-day purchases.

In order to achieve our desired objectives we have conducted a 2 month long
research, covering all the aspects of Marketing Research. To aid us in our
research we have also referred many books, magazines, journals, websites that
has given us a lot of valuable information.

We have also designed a questionnaire for this study and targeted 100
respondents, from different locations in western Mumbai targeting the
housewife of the household, preferably who makes most buying decisions in
terms of Food & Grocery. We would use statistical tools like excel and SPSS to
aid us in data interpretation.

          2.        INTRODUCTION


To do a comparative study of the perception of housewives towards kirana stores
vis-à-vis supermarkets.


1) To study the factors affecting the perception of   housewives towards kirana
stores and supermarkets
2) To study the impact of the location of the supermarkets or proximity to the
3) To study the impact of the mind set of housewives regarding the price pattern
of consumer products on their buying behavior


Hypothesis Statement

1) H0: Housewives prefer kirana stores over supermarkets
  H1: Housewives do not prefer kirana stores over supermarkets

2) H0:   Housewives perceive that kirana stores sell cheaper as compared to
   H1: Pricing of consumer products does not impact buying behavior of


The Meaning of Perception

Perceptions vary from person to person. Different people perceive different
things about the same situation. But more than that, we assign different
meanings to what we perceive. And the meanings might change for a certain
person. One might change one's perspective or simply make things mean
something else.

This is a famous picture. What does it look like to you?

Some people see a young lady looking away. Others see an old lady looking
down. Depending on how you look at it, part of the picture might be the young
woman's nose and eyelash, or it might be a wart on the old woman's nose. What
is the young woman's ear might be the old woman's eye. What is the young
woman's necklace might be the old woman's mouth. The picture hasn't really
changed. You just emphasize different parts of it and assign them different

Look at these two arrows. Which horizontal line is the longest?

They are exactly the same size. However the top one looks longer than the
bottom one. It is on optical illusion tricking us into assigning a different meaning
to what we see.

We fill in a lot of blanks with our minds. If we have incomplete perceptions,
which we practically always do to a certain extent, our minds fill in the rest.

Are those letters? Or are they just lines and blotches on the paper? How do you

Do you see a vase or do you see two faces looking at each other?

The meaning of something will change when you look at it differently. You can
look at anything differently and it will have a different meaning.

There is no fixed meaning to anything. You can always change perspectives and
change meanings. Why not change them to what you prefer them to be?

In psychology and the cognitive sciences, perception is the process of acquiring,
interpreting, selecting, and organizing sensory information. It is a task far more
complex than was imagined in the 1950s and 1960s, when it was proclaimed that
building perceiving machines would take about a decade, but, needless to say,
that is still very far from reality. The word perception comes from the Latin
perception-, percepio, , meaning "receiving, collecting, action of taking possession,
apprehension with the mind or senses."1 Methods of studying perception range
from essentially biological or physiological approaches, through psychological
approaches through the philosophy of mind and in empiricist epistemology,
such as that of David Hume, John Locke, George Berkeley, or as in Merleau
Ponty's affirmation of perception as the basis of all science and knowledge.

There are two basic theories of perception: Passive Perception (PP) and Active
Perception (PA).

Types of perception

         Amodal perception
         Color perception
         Depth perception
         Form perception
         Haptic perception
         Speech perception
         Perception as Interpretation
         Numeric Value of Perception

Amodal perception is the term used to describe the full perception of a physical
structure when it is only partially perceived. For example, a table will be
perceived as a complete volumetric structure even if only part of it is visible; the


internal volumes and hidden rear surfaces are perceived despite the fact that
only the near surfaces are exposed to view, and the world around us is perceived
as a surrounding void, even though only part of it is in view at any time.

Modal completion is a similar phenomenon in which a shape is perceived to be
occluding other shapes even when the shape itself is not drawn. Examples
include the triangle that appears to be occluding three disks in the Kanizsa
triangle and the circles and squares that appear in different versions of the
Koffka cross.

Color vision is the capacity of an organism or machine to distinguish objects
based on the wavelengths (or frequencies) of the light they reflect or emit. The
nervous system derives color by comparing the responses to light from the
several types of cone photoreceptors in the eye. These cone photoreceptors are
sensitive to different portions of the visible spectrum. For humans, the visible
spectrum ranges approximately from 380 to 750 nm, and there are normally three
types of cones. The visible range and number of cone types differ between

A 'red' apple does not emit red light. Rather, it simply absorbs all the frequencies
of visible light shining on it except for a group of frequencies that is perceived as
red, which are reflected. An apple is perceived to be red only because the human
eye can distinguish between different wavelengths. Three things are needed to
see color: a light source, a detector (e.g. the eye) and a sample to view.

The advantage of color, which is a quality constructed by the visual brain and
not a property of objects as such, is the better discrimination of surfaces allowed
by this aspect of visual processing. In order for animals to respond accurately to
their environments, their visual systems need to correctly interpret the form of
objects around them. A major component of this is perception of colors. Depth
perception is the visual ability to perceive the world in three dimensions. It is a
trait common to many higher animals. Depth perception allows the beholder to
accurately gauge the distance to an object. In modern terminology, stereopsis is
depth perception from binocular vision through exploitation of parallax. Depth
perception does indeed rely primarily on binocular vision, but it also uses many
other monocular cues to form the final integrated perception. There are
monocular cues that would be significant to a "one-eyed" person, and more
complex inferred cues, that require both eyes to be perceiving stereo while the
monocular cues are noted. This "third" group relies on processing within the
brain of the person, as they see a full field of view with both eyes.

Speech perception refers to the processes by which humans are able to interpret
and understand the sounds used in language. The study of speech perception is
closely linked to the fields of phonetics and phonology in linguistics and
cognitive psychology and perception in psychology. Research in speech
perception seeks to understand how human listeners recognize speech sounds
and use this information to understand spoken language. Speech research has
applications in building computer systems that can recognize speech, as well as
improving speech recognition for hearing- and language-impaired listeners.


"To perceive means to immobilize... we seize, in the act of perception, something
which outruns perception itself." - Henri L. Bergson

"To see what is right, and not do it, is want of courage, or of principle." -

"Nothing exists until or unless it is observed. An artist is making something exist
by observing it. And his hope for other people is that they will also make it exist
by observing it. I call it creative observation. Creative viewing." - William S.

"You are only as wise as others perceive you to be." - M. Shawn Cole

"If the doors of perception were cleansed everything would appear to man as it
is, infinite. For man has closed himself up, till he sees all things thru chinks of his
cavern." – William Blake

"However, no two people see the external world in exactly the same way. To
every separate person a thing is what he thinks it is --in other words, not a thing,
but a think." - Penelope Fitzgerald

"Perception is a mirror not a fact. And what I look on is my state of mind,
reflected outward." - A Course In Miracles

A Study on Housewives' Perception, Interest and Consumption of Health
Drinks Made in a Health Food Stores.

Department of Food and Nutrition, Mokpo National University, Chonnam,

Data was collected from 518 housewives in Chonnam province. Among many
items which housewives perceived about health drinks, three factors of
'preference health-care', 'quality convenience' and 'price' were found to be
represented.2 Housewives' perception of 'preference health-care' was negatively
correlated with nutritional knowledge. However, a positive correlation between
the 'quality convenience' and eating habits was found. Consumption of health
drinks was positively correlated with the diet management score, the perception
and interest in health drinks. However, the inverse relationship between
consumption of health drinks and nutritional knowledge was observed. Multiple
regression analysis showed that the interest and factors of perception of health
drinks. Consumption of health drinks was not based upon accurate knowledge
concerning nutrition, but was based upon the consumers' perception of taste
preference and healthful quality. Therefore, there is a need to educate consumers
about the nutritional value of health drinks and how to use nutritional


The Current Scenario
Indian retailing industry has seen phenomenal growth in the last five years
(2001-2006). Organized retailing is finally emerging strongly compared to the

 Reference: Korean Association of Medical Journal Editors
This study was conducted to investigate housewives' perception, interest and consumption of health drinks
made in a health food stores, and to assess the relationship between nutritionally-related-variables and the
consumption of health drinks.

unorganized retailing and is contributing significantly to the growth of Indian
retail sector. In India, retail has traditionally been the last refuge of the poor or
the unskilled. But now the situation is changing. The $270 – billion Indian retail
market now has corporate giants gearing up and it is just a matter of time before
a retailer becomes India‘s largest company. Some of the major global players to
enter the retail sector include Wal Mart, Starbucks, French luxury brand LVMH‗s
Sephora cosmetic retail store chain3. Points to consider –

      1. Organized retail will form 10% of total retailing by the end of this decade
      2. Cultural and regional differences in India are the biggest challenges in
          front of retailers. This factor deters the retailers in India from adopting a
          single retail format.
      3. Hypermarket is emerging as the most favorable format for the time being
          in India.
      4. The arrival of multinationals will further push the growth of hypermarket
          format, as it is the best way to compete with unorganized retailing in
The operations of the top three companies can be briefly viewed as follows –
Shoppers’ Stop – It is a Mumbai based company owned by realtors K. Raheja
Group. The company is one of the pioneers of organized retail in India. It started
its first store in Mumbai in 1991. Today it has 22 stores. It now plans to keep pace
with competition and double its numbers of stores by 2010.

Reliance Retail – It is a subsidiary of petroleum giant Reliance Industries (RIL)
based in Mumbai. It entered the foray only in November 2006 with Reliance
Fresh, its fruits and vegetable store in Hyderabad, the company has scaled up in
a rush and has already set up about 80 Fresh stores in the Metros. It acquired

    Retail Biz, March 2007

Gujarat based Adani Group‘s retail chain of 54 assorted stores. It has budgeted
almost Rs. 90,000 crore to set up a national level chain of all types of retail stores
(hyper markets, departmental stores, discount stores, fresh food stores, etc). In 3
years it plans to employ 1 million people and hopes to generate revenues equal
to the size of the current retail market. It is also trying to acquire stakes in Paris
based Carrefour (Europe‘s largest retailer) and J. Sainsbury, a London based food
Westside – It is owned by the Mumbai based Tata Group company Trent. This
eight year old retail chain has increased its store count from handful a couple of
years ago to 25. The Tata Group has also set up a new company, Infinity Retail,
to set up 100 ‗Croma‘ stores to sell consumer durables.

Organized and unorganized retail sector in India

Organized retailing is finally emerging strongly compared to the unorganized
retailing and is contributing significantly to the growth of Indian retail sector The
organized retail comprises of 4.6% of the total Indian retail industry. It already
includes many big players and many more are planning to enter the retail
industry. Among these the top five are Shoppers‘ Stop, Reliance Retail, Westside
(Trent), ITC‘s Wills Lifestyle and Piramyd Retail4. The modern format of
organized         retail   includes     supermarkets,   hypermarkets,   discount   stores,
departmental stores and specialty chains. The Indian retail categories can be
illustrated as follows

          Corporate Houses
              Tatas: Westside & Croma ( Tata Trent)
              RPG group: Food World, Health and Glow, etc

    Cygnus- Global Industry Monitor, April 2007

         ITC: Wills Life Style
         Rahejas: Shoppers‘ Stop, Globus etc
      Dedicated brand outlets
         Nike
         Reebok
         Zodiac etc
      Multi-brand outlets
         Benzer
         Vijay Sales
         Sony Mony
         Options etc
      Manufacturers/ Exporters
         Bata etc
Projected growth rate for the organized segment is about 40 per cent for year
2007 – and with major global players and Indian corporate houses entering the
fray, this growth is likely to touch 45 per cent per annum over the next three
years. Organized retailing in small-town India is growing at 50-60 per cent a
year, compared to 35-40 per cent in the large cities. About 200 tier-III cities with
population of less than 2 million and another 500 rural towns have the potential
to be the hub for rural markets, where organized retailing can effectively set base
– each of these 700 centres will on an average be catering to about 1,000 villages.
Pantaloon plans nearly 30 million square feet of retail space by 2010; RPG, four
million square feet by 2010; Piramyd, 1.75 million square feet in next five years;
Trent to add one million square feet of space in the next 12 DLF malls; Vishal
Group to take its cumulative retail space to five million square feet by 2010.

The unorganized sector mainly comprises of the kirana stores (traditional mom
and pop stores). The percentage of unorganized retail in India is 95.4%. India is a
nation of shopkeepers with around 12 million retail shops, majority of them

occupying areas under 500 Sq feet. The shop density is highest in the world with
11 shops for every 1000 persons. These shops operate in localized environments,
with localized terms and conditions including credit facility, and are on beck and
call of customers, always ready to service them in the most convenient way or as
desired by the customers. In India the population density is very high; it is 332
persons per Sq KM. That means that people are concentrated almost everywhere
thereby creating huge opportunities for goods and services of various kinds.
This led to mushrooming of kirana and other small stores focused on local tastes
and preferences. Since concentration of population meant more consumption
opportunities, a cluster of small general stores developed to cater to the entire
basket of consumer needs. As a result of this, within an area of one square
kilometer, there are approximately 40 small shops collectively capable of catering
to 90% of consumer needs. This means another thing also. In a low income
country like India, unlike countries with low population density, the
concentration of population means enough business for these small shops to earn
their livelihood. The omnipresence of small shops in the neighborhood catering
to virtually all needs makes the concept of buying everything under one roof
redundant, unless there is an extraordinary cost benefit along with hassle free
shopping as per the whims and fancies of the consumer. This spread of kirana
stores and other small shops and their stranglehold on the Indian retail market is
like big banyan tree; it has entrenched its roots deep down the psyche of Indian
consumer and it would be extremely difficult if not impossible to uproot this vast
network of unorganized retailers.


Indian retail is estimated to be worth around $270 Billion. Of these, 95.4% is
unorganized retail made up Mom & Pop stores, Kirana stores, Paan shops, etc.
Only about 4.6% is in organized retail with players like Pantaloon, Shopper‘s
Stop, Subhiska, Food Bazaar etc. And currently an extraordinary interest is being
shown by big players like Reliance as well MNC giants like Wall Mart to enter
this market. In fact, Reliance is ready with a coffer of Rs 3000 Crore and target
revenue of Rs 90000 Crore by 2010. And the organized retail segment is
estimated to capture 10-12% of the retail market by 2010. This means capturing at
least around Rs 110000 Crore of business from small local stores or the stores that
are scattered around the town. And considering the fact that most of the thrust in
coming years will be in metros, mini-metros, and bigger towns, the biggest brunt
of this organized retail onslaught would be the small stores in big cities.
Definitely in a country of over 12 million unorganized retail outlets, this could be
a crucial blow. Thus the future of these small unorganized retail outlets which
employs roughly 40 millions people in India and is the highest contributor to
India‘s GDP from service sector hangs in the balance as of now.

    The Indian retail industry estimated at US $350 billion
    Indian retail is expected to grow 25% annually
    Worth US$ 427 billion by 2010
    Accounts for 8% of employment

   Source: Mc Kinsey Quarterly

    Over 12 million outlets in India
    95% of outlets are smaller than 500 sq ft
    Highest number of outlets per person (7 per thousand)
    Indian retail space per capita at 2 sq ft/ person is lowest in the world
    Indian retail density of 6% is highest in the world
    One of the most fragmented markets in the World

   Source: FICCI Retail Report 2007

       Evolution of Indian retail
                                                                            Modern Formats/
      Historic/Rural        Traditional/Pervasive     Government
          Reach                    Reach               Supported

                                                                            Exclusive Brand Outlets
                                                                            Hyper/Super Markets
                                                                            Department Stores
                                                                            Shopping Malls
                                                    PDS Outlets
                                                    Khadi Stores
                         Convenience Stores
                         Mom and Pop/Kiranas

    Weekly Markets
    Village Fairs

                                                      Availability/ Low
           Source of            Neighborhood                                       Shopping
                                                     Costs / Distribution
         Entertainment        Stores/Convenience                              Experience/Efficiency

Organized Retail In India

    The share of organized retail is around 4% of the total retail market:
        Expected to be 20% by 2011
    The size of modern retail is about US$ 8 Billion and has grown by 35%
        CAGR in last five years
Source: Retail News, Ernst and Young LLP, Spring 2006
 100%                                                                                      3%
                                                                         20%       20%
                                                  36%        30%
  80%                                    40%
  60%     85%      81%



           US     Taiwan    Malaysia   Thailand   Brazil   Indonesia    Poland    China   India
                           Traditional Channel                         Modern Channel
Factors driving Indian Retail growth
    Growth of Indian Economy: Second fastest growing economy in the world
    Increase in the young working population
    Changing Cultural Habits
    Middle class dwelling revamped
    Low share of organized retailing

Supply Chain: Outcome of Core Capabilities

                                  Always available

              Reliable and                                   Fast and
               Repeatable                                  Responsive
          e.g. Core Products,                             e.g. Short Life
            Continuity lines                           cycles, Promotional
                                 “The Basics”-                 Lines
                                Core Capabilities                            Higher

          Cheap and Cheerful                             Unique Products
           e.g. Special Buys                                    and
               and deals                                      Services
                                                        e.g. Home Delivery

                                  Minimum Acceptable

Supply Chain: Overview

Second-tier         First-tier                   First-tier        Second-tier End
 supplier           supplier                     customer           customer customer

        Supply side                                    Demand side

                     Purchasing and       Physical distribution
      Information        supply              management
      flow            management                       Logistics
      flow                   Materials management

                            Supply chain management

Supply Ch Supply Chain Complexity ain Complexity

                                        On Shelf

    Format Innovation
                                                                   New and evolving
                                                                    Sales Channel
                                      Supply Chain
                                      and Increased

        Changing Customer                                Faster replenishment
           Requirement                                    smaller quantities

    Supply Chain: Peculiarities

    Indian farmer trapped in
         a vicious cycle of
                                         Trader      Wholesaler      • Large number of
    •       Low landholding                s             s            retailers which are small
    •       Low and uncertain      Farmer                    Retailer and fragmented
            income                    s                         s    •  Low volumes
    •       Low productivity                                         • Low bargaining power
    •       Weak market
            access                              Commission
    •       Low value addition                    Agents

    •   Low margin
    Government support
        prices and lack of         Numerous intermediaries
        market access                lead to cost addition
        discourage crop
                                    without value addition

Why Supply Chain is Critical Factor in Retail
        •   Supply chain represents 40% to 70% of a retailer‘s operating cost5
        •   May comprise of as much as half of all company assets
                –   Especially in food retail
        •   High emphasis on Supply Chain efficiency in retail
                –   To prevent profit leakage from
                       •   Lost sales due to lack of stock
                       •   Reduction in margins due to excessive stock

    Reference: Creating Competitive Advantage In Retail, David Sharpe, Accenture

Traditional Vs Modern Food Supply Chain
R                          Farme      Trader         Com. Agent            Wholesaler         Retailer
I       Addnl. Cost                    5.0%               2.5%                5.0%             10.0%
I        Wastage                      10.0%                                  10.0%             25.0%
N        Mark-up                      25.0%               5.0%               50.0%             75.0%
L         Price              100        125                131                 197               344

                             Farmer     Growers Co-op                Distribution Co.         Retailer
    O     Addnl. Cost                            10.0%                     40.0%               25.0%
    E      Wastage                                2.0%                     2.0%                 2.0%
            Mark-up                              13.2%                     50.0%               50.0%
              Price           100                 113                       170                  255

                                                  Source: TechnoPak Retail Research, 2007

        Changing Consumer Requirements
        1991                            2004                           •    Food and Grocery
                                                                       •    Clothing

    •   Food and Grocery       •    Food and Grocery                   •    Footwear

                               •                                       •    Consumer durables
    •   Clothing                    Clothing
                                                                       •    Expenditure on DVDs and
    •   Footwear
                                    Consumer durables                  •
                                                                            Home linen
    •   Consumer durables      •    Home accessories                   •    Home accessories
    •   Home linen             •    Accessories                        •    Accessories
    •   Movies and theatre     •    Take-away/ Pre cooked meals
                                                                            Take-away/ Pre cooked / RTE
    •   Eating out             •    Movies and theatre                      meals
                               •    Eating out                         •    Movies and theatre
                               •    Entertainment parks                •    Eating out

                               •    Mobile phones and service
                                                                       •    Entertainment parks
                                                                       •    Mobile phones and service
                               •    Household help
                                                                       •    Household help
                               •    Computer Peripheral & Internet     •    Travel packages
                                                                       •    Club membership
                                                                       •    Computer Peripheral & Internet
                                                                       •    ???
                                                                       •    ???
           Trends of 80% of Consumer Spending                          •    ???

Big players – Plans and Investments

Future           Group           will      now         focus   on   lifestyle      and
non-food/grocery segments to retain higher margins

The Future Group is fine-tuning its strategy to increase profit margins, by
focusing more on the high-margin lifestyle segment. At present, food and
grocery contributes to 60% of the total business and lifestyle retail contributes
towards 40% of the business. In effect, Future Group is staying clear of Reliance
Retail‘s ambitious plan for food and grocery retailing.

Margins in the food and grocery segments are usually around 12-15%, while
lifestyle product margins are 45-50%. Future Group plans to make the non-
grocery segments the bulk of its business in the future. Kishore Biyani, CEO and
MD of the Future Group, said, “We are looking at business margins at the end of the
day. We have to be in grocery retail which is a significant part of consumer spends, but
the business will be clearly coming in from lifestyle retail. Food and groceries get the

Reliance Fresh does better than some kirana stores

Reliance Retail has won over many kirana store owners7, with several shop
owners doing their shopping at Reliance Fresh stores to resell the products such
as edible oil, rice and other items at their own stores. With Reliance Fresh selling
fresh vegetables at less than 50% of the price than mandi rates. In less than 10

    Reference: The Economic Times, February 09, 2007

    Business Standard, February 08, 2007

days that Reliance has been operating in a Delhi suburb, one store has over 3,000
customers a day and sales of over Rs. 400,000.

Aditya Birla Group

The Aditya Birla Group announced that it will be operating its retail business on
its own and not tying up with any international retailer, as was being speculated.
The company recently acquired south based supermarket chain store Trinethra,
giving it a head start on its competitors. Kumara Manglam Birla, Group
chairman said that the company would be announcing its detailed plans in the
next two months.8

Reliance to focus on niche retail formats

Reliance Retail is looking to create niche retail formats along with its existing
formats. According to Raghu Pillai, President and CEO (Operations and
Strategy), "We are looking at opening 250 Reliance Fresh outlets by February or
March in cities like Pune, Bangalore, Hyderabad and Mumbai, and in some cities
in Gujarat. We will also start opening our standalone niche retailing stores that
would include formats like consumer durables and apparels, amongst others.
The hypermarket outlets will also come up in the same time span." 9

The company will also be staring a home delivery service at its Fresh outlets for
customer within a range of up to 3 kms. Reliance Retail now has 3 Ranger Farm
outlets, its B2B format store, in Hyderabad and Jaipur. The company is also
creating its own private label and is currently conducting testing on products.

    The Economic Times, February 05, 2007

    The Hindu Business Line January 29, 2007

Reliance Retail opens 9 stores in NCR; plans additional 100 stores

Reliance Fresh opened nine stores in the National Capital Region (NCR) taking
the total number of stores to 50. Now the company will be opening 100
additional stores in the NCR in the next 4 months. Fifty of these stores will be in
Delhi and the remaining will be in surrounding areas of Noida, Greater Noida,
Faridabad, Ghaziabad and Gurgaon. Reliance aims to have 1,000 Reliance Fresh
stores by the end of the year in 35 cities, covering a total space of 4 million sq ft.
According to Raghu Pillai, President and CEO of Reliance Retail (operations and
strategy), ―It will be very hectic for us till March. We are planning to open 250
Reliance Fresh stores in Punjab, Delhi, Karnataka (Bangalore), Kerala, Gujarat,
and Maharashtra (Pune and Mumbai).‖ 10

Wal-Mart considering leasing store space

US based retailer Wal-Mart is reportedly considering several models of acquiring
space for its stores, including a rental model due to the high prices and lack of
availability of retail space11. The company is also in talks with several real estate
developers to sign up space as anchor tenants in malls, whereas Wal-Mart‘s
stores usually are standalone stores. Bharti-Wal-Mart have begun acquiring real
estate and has already got close to 150,000 sq ft in cities such as Delhi, Noida,
Gurgaon, Hyderabad, Bangalore, Ahmedabad and Chandigarh. The company
will be operating on two strategies, one for small cities where they would own
hypermarkets and one for large cities where they would go for long lease due to
shortage of retail space, which is a potential threat for all retail giants in India.

     Reference: Business Standard January 30, 2007
     The Economic Times, January 29, 2007

Reliance Retail opens in Chennai

Reliance Retail opened 12 Reliance Fresh stores in Chennai, its third city after
Hyderabad and Jaipur. The company is marketing its Fresh stores as
neighborhood stores, which will stock fresh fruits and vegetables, food staples
and grocery and dairy products. Fresh stores will stock roughly 150 products
and target approximately, 3,000 households in the immediate vicinity of 1-2 kms.

In total, the company now has 40 stores in three cities. Reliance Retail will be
opening stores in Vijaywada and Vishakapatnam also this week. Procurement
centers have been established in Thiruvallur, Maduranthakam, Oddanchatham
and Kodaikanal for agricultural produce such as vegetables, which are then
taken to its processing centre at Puzhal, which is located north of Chennai. At the
opening of the stores, Gunender Kapur, Head of Reliance Retail addressed a
press conference, where he said that, "We are developing the Reliance Fresh
chain as a neighbourhood food store, with each store coming up between 2,000
sq ft to 4,000 sq ft of space. We will be relevant for all income groups in a
neighbourhood."12 The company is also introducing its own private label
products under the Reliance Select brand, which is at present only for stapes and
will be added for other categories too.

     Reference: The Economic Times,, January 24, 2007

General Trends & Information

Kirana stores happy to give stores to modern format retailers

Not all kirana store owners are worried about their future, some are quite
overjoyed at the rise in real estate prices that the retailing boom has brought
about and are all to happy to lease out their premises to modern format stores.
One of the biggest problems that the fledgling retail industry is facing is the
severe shortage of retail space within cities, especially in central areas, where the
kirana stores are already established. So instead of competing with the organized
retailer, kirana storeowners are opting to lease space to them, giving them a
readymade market and local customer base.13 Food and grocery retailers are
signing long leases with kiranas that are over 1,000 sq ft in space.

Indian retailers are Asia’s most aggressive in real estate

Retailers in India are said to be the most aggressive in pursuing real estate
transactions as a method of expanding operations. According to the 3 rd annual
Jones Lang LaSalle Retailer Sentiment Survey-Asia, which was conducted in
three Asian sub-regions, India, greater China and South East Asia, 45% of Indian
retailers were expanding rapidly, followed by 27% in greater China and 6% for
South East Asia. Only 5% felt their business would weaken. Home furnishing,
sports apparel, department stores, jewelry stores and food retailers were the
most confident on expansion plans. 14

     The Economic Times, February 05, 2007

     Business Standard, February 06, 2007

Retail majors face pressure to improve margins

The top six retail companies in the country reported an increase in net sales by
46% for the quarter, while net profits only rose 29% for the period. Top line
growth was 59% for Pantaloon, 29% for Shoppers‘ Stop, 28% for Trent and 43%
for Titan15, but profits were not as impressive due to rising staff and real estate

Pantaloon Retail reported sales growth of 63% for its value retail segment and
37% for its lifestyle retailing segments, adding Rs. 270 million with its home
furnishings concept segment. Interestingly, the growth came from new stores,
while older stores growth rates stood at 14% for value retail and 15% for lifestyle

Organized retail sector to cross $22 billion by 2010

India‘s organized retail sector is expected to cross $22 billion by 2010, a
significant increase from its current value of $4 billion. The increase in size of the
organized retail sector will also require over 220 million sq ft of space. These
results were reported according to industry organization Assocham. The total
retail industry in India is worth $16 billion at present, of which the organized
retail sector accounts for only 25%16. The organized sector is expected to grow in
large part due to the fast pace of growth in small towns, where it is growing at
50-60% as compared to 35% in larger cities. There are close to 600 malls coming
up in metros and large cities. Another 1000 malls are being planned for smaller
towns where land is available and consumers have access to increasing incomes.

     The Economic Times, February 09, 2007
     The Economic Times, February 02, 2007

Retailers keen on private labels in beauty products

Retailers such as Pantaloon, Reliance and Bharti-Wal-Mart will soon be
launching their own private labels for beauty products. The companies are in
talks with VLCC, a fitness, health and beauty products company to manufacture
private label beauty products. Pantaloon Retail are already in the health and
beauty business, with a service format of beauty salons, called Star and Sitara
and have also started retailing beauty products through its new outlet called
Turmeric17. The company is waiting VLCC to take care of manufacturing its
private labels for them.

Eleven retailers gearing up for IPOs

It is estimated that 11 retailers are gearing up to offer IPOs this year, raising
approximately Rs. 20 billion. According to market monitoring firm, Prime
Database, retailers such as Vishal Retail, Ebony Retail, Great Wholesale Club,
Hidesign, Hotspot, Koutons, Landmark, Maheshwari Mega Ventures, Multiple
Zones, Radhakrishna Foodland and Talwalkars are all planning IPOs. The
domestic retail sector is so attractive and full of opportunity that retailers just
cannot afford to give it a miss. In the 2006, besides Gitanjali Gems and Kewal
Kiran Clothing, there weren‘t any major IPOs. In 2005, there were several mega
IPOs including Shoppers‘ Stop, Provogue, Piramyd, Bombay Rayon Fashions
and Celebrity Fashions. According to Arvind Singhal, Chairman of Technopak
Advisors, ― Smaller players now have to compete with bigger players entering
the market. When they realise their own funds and bank credit is insufficient for

     The Hindu Business Line, February 02, 2007

expansion, they go for IPOs. The existing retail companies are giving handsome
returns. That would be another driving factor.‖ 18

Organized retail giving farmers incomes a big push

Farmers in Punjab are expected to significantly increase their incomes with the
arrival of large retailers on the agri-scene, who are creating a huge demand for
fresh fruits and vegetables. Several companies such as ITC, Reliance and
Subhiksha have signed agreements with farmers to source products directly from
them. As there are less intermediaries between us and the farmers they get
higher returns on their produce.

Around 70 farmers in Sangrur, Hoshiarpur, Fatehgarh Sahib and Ropar have
turned to net-house cultivation to produce high-value and off-season crops that
are in high demand with the retailers, with technical help from the Punjab
farmer‘s commission and financial help from the State Bank of India.19 In
Nawashahar and Jagraon, Centurion Bank of Punjab has teamed up with
Chambal          Fertilizers      to       finance   200   farmers   to   grow   potatoes.

Small grocery firms fight back against takeovers from larger firms

Several small and independent supermarket and grocery stores are fighting back
against being taken over by larger retail chains. One of the early entrants to the
organized food and grocery retail phenomenon, KD‘s Loprice Supermarket in
Andheri (W) has noticed the difference in traffic since Food Bazaar and Spinach
have opened within a 1 km radius. Once the lowest prices in the region, the
standalone store has felt a serious threat to its USP. By reducing their catchment
     Business Standard, January 23, 2007

     Business Standard, January 17, 2007

area from 4km to half a kilometer, the store began to target their immediate
neighbors as customers. KD‘s also increase their stock of high-margin items from
65% to 72% and saw an increase from Rs. 300 to Rs. 375 per customer ticket in
just a year. 20

Fresh’ name is no longer fresh

With several retailers adding the word ‗Fresh‘ in their brand names, the word is
no longer unique in the food and grocery sector. Reliance Fresh was the most
high profile brand that seems to have spawned a chain reaction. Besides the
word ‗fresh‘, several retailers are even using the red and green colors that
Reliance Fresh uses21. Is it just a coincidence or rival companies trying to make
use of subliminal ways to attract customers? ITC has Choupal Fresh and
Heritage Foods has Fresh@, with the location name of the location added at the
end. Subhiksha doesn‘t have the word ‗fresh‘ in its brand but does use the same
shade of red and green in its signs and logos.

Adaptation critical to global retailers’ success in developing countries
Speaking at a discussion on ―Innovation at Retail‖ at the World Economic
Forum, the Secretary for the Commerce and Industry ministry, Ajay Dua said
that global retailers must adapt different business models to be successful in
developing countries. He added that each country required a ―unique country
characterization‖ instead of using the same strategy that has worked elsewhere.
On the peaceful co-existance of organized retail and mom and pop stores, he
said, ―While organised retail formats in all the emerging markets are growing,
given the rise in disposable incomes and rapid additions to the middle class, they

     The Economic Times, January 19, 2007
     The Economic Times, January 31, 2007

will have to co-exist with the traditional mom-and-pop stores which have their
own place.‖22

Big Bazaar’s annual promotion brings in the crowds

The Future Group‘s hypermarket division, Big Bazaar is pulling out all the stops
for its annual ‗Sabse Saste 3 Din‘ promotion from Jan 26-28. Products from
categories such as apparel, furniture, electronics, food etc will be sold at their
lowest possible prices. The company netted Rs. 430 million from 24 Big Bazaar
outlets during its three day sale last year.23 This year the company is expecting
one million footfalls in the Big Bazaar and Food Bazaar stores. Due to the large
number of customers who come for the sale, Big Bazaar will be getting some help
in crowd control by the police. To ensure that no one is waiting in lines at cash
counters, the company has set up 250 cash counters in each of its 43 Big Bazaar
stores. It has also widened the aisles to de-congest them and moved certain
products that are not on special offer so that there is convenience of operations.

Provogue raises Rs. 1.46 billion

Provogue India Ltd announced that it had raised Rs. 1.46 billion in preference
shares with 6 investors at Rs. 450 a share. The six investor companies are New
Vernon, Blackstone, Fidelity, Genesis Capital, Artis Capital and Liberty
International, who have bought 3.25 million shares of the company. Provogue
has recently tied up with Liberty International to set up a retail infrastructure
venture, where Liberty had bought 25% of Prozone, a division of Provogue, for

     The Economic Times, January 27, 2007

     The Hindu Business Line, January 26, 2007

Rs. 2.02 billion24. According to Mark Rubin, CFO of New Vernon Capital,
―Provogue with its brand strengths and the knowledge and experience from its
strategic partners is ideally poised to lead growth in branded retail & shopping
mall development space.‖

International Players

Euroset, Russia’s largest mobile handset retailer gets ready to come to India

Russia‘s largest mobile handset retailer will be opening its outlet in India by end
of February25. Euroset plans to set up 5,500 retail stores across Indian in the next
two years. The company is reportedly in talks with real estate development
company Ansals to partner with for its operations in India.

Wal-Mart, Tesco may lose due to political confusion

Congress leader Sonia Gandhi‘s letter cautioning the Prime Minister on opening
retail FDI too soon, might have deep repercussions on the retail industry in
India. Reportedly formulation of rules and policy consultation on FDI in retail in
specific sectors such as stationary, sports goods, building equipment and
electronics has now been halted for the present. A senior government official said
that until there is further communication from senior leaders, additional sectors
will not be added. 26

     The Economic Times, January 22, 2007

     The Telegraph, February 04, 2007

     The Economic Times, February 08, 2007

Carrefour close to coming to India

French retailer Carrefour is likely to sign a deal with an Indian company to start
operations in the country, according to India‘s commerce and industry minister,
Kamal Nath. He added that the company was in talks with the Wadias of
Bombay Dyeing, one of the top business families of the country. Neither
Carrefour nor Wadia Groups spokesperson was available for comment. The
competition to enter India‘s booming retail market is hotting up, with Wal-Mart
recently tying up with Bharti Enterprises. Other retailers such as Tesco and
Metro are also pushing to enter its retailing front. Metro has been operating in
India via its cash-and-carry wholesale stores. There are reports that Carrefour is
also holding talks with other Indian companies and not just the Wadias.
According to Ajay Dua, Secretary in the department of Industrial Policy and
Promotion, "The information we have got is that they are talking to various
companies to look for a partner but they are yet to finalise its name." 27

Kingfisher looks to enter India’s retail market

UK‘s home improvement retailer Kingfisher is looking to join India‘s retail sector
with an initial investment of $250 million28. According to reports, a team from
Kingfisher is in India looking for partners as well as locations for its stores. The
Indian government had recently announced that it would consider allowing FDI
in specialty retail, which is where Kingfisher would fit in, as they sell appliances,
tools, hardware, garden supplies and DIY (do-it-yourself) products.

     Reuters, The Economic Times, February 01, 2007

     The Economic Times, February 01, 2007

ADAG in talks with Carrefour, Tesco

The Anil Dhirubhai Ambani Group (ADAG) is reportedly holding talks with
three major global retailers in an effort to form a partnership. The three
companies are Tesco and Carrefour, which are both food and grocery retailers
and Radio Shack, which is a consumer electronics, focusing on mobile equipment
and accessories, which will tie in nicely with ADAG‘s current chain of Reliance

Tesco in talks with Tatas and Landmark Group

UK based retail firm Tesco is reportedly interested in tying up with an Indian
company to start operations in the country. Tesco‘s global chief, Sir Terry Leahy
will be coming to India later this month, and according to market buzz, he will
be meeting with Tatas and the Landmark Group. Tesco‘s rival companies are
either in the country or will soon be in the market; Wal-Mart has recently tied up
with Bharti Enterprises and Carrefour is on the verge of tying up according to
media reports.30

Pantaloon on the lookout for European partners

With its tie up with Starbucks almost complete and talks on with US fast food
giant Burger King, Pantaloon is now keen on forming some joint ventures in the
apparel segment. The company is looking to establish joint ventures with
European firms for the menswear and kids wear segments. If a JV deal cannot be
reached at, then a licensing deal will be explored with the companies who are all

     The Economic Times, February 01, 2007

     The Economic Times, February 03, 2007

well established brands. The company has already formed a JV with French
retailer ETAM to form ETAM Future Fashions India for the 22-30 age bracket
women‘s wear segment. The company will be opening 42-50 standalone stores in
the next 18 months with the company. In the meantime, Pantaloon has launched
its lingerie line in three of its stores. According to Susil Dungarwal, a retail
analyst, Pantaloon is possible going to become the leader in multi-segment
retailing, adding that, "In the last 2-3 years, Pantaloon has tried every option in
multi-segment retailing either directly or through acquisitions. Before FDI was
allowed in single brand retailing, the company was lobbying with the
government to give higher preference to domestic retailers. After that, they are
trying to form JV with foreign brands in every possible category. They are
already present in more than 25 categories which will defiitlely add to their

Starbucks to enter via single brand format

Starbucks coffee will be entering India via a partnership with New Horizons
Retail Pvt. Ltd, a newly formed Indian company, where Kishore Biyani, MD of
Pantaloon Retail will hold 49% of stake. The remaining stake will be held by P T
Mitra, Chief Executive of Indonesian specialty retailer Adiperkasa. The JV states
that the company would develop and manage a chain of Starbuck Cafés in
India.32 Starbucks will form a JV via its Singapore based division, Starbuck
Investor and initially hold only 18% stake in the company. The company has
applied for approval from the FIPB to invest $1.12 million, for the 18% stake,
with       an     option     to    increase      its   state   to   51%   at   a   later   time.

     Rediff Money, January 16, 2007
     The Hindu Business Line, January 18, 2007

Retailers look for talent in rural areas

The search for retail talent is making retailers look deep in the rural areas of the
country. While there are no specific figures on the number of people required,
the requirement is huge. An average 50,000 sq ft store requires a minimum of 250
people to run it, while at least 10 are required to run a food and grocery
supermarket format store. Reliance Retail is planning to have 100 million sq ft of
space by the year 2010-11 and the Future Group is planning to double its 30,000
headcount by next year.33 Future Group prefers to select local population due to
knowledge of language and consumer preferences. For its operations in Delhi
and Mumbai, the company is looking for talent in the North-East, where
knowledge of English is good. One popular Reference of talent has been the
Livelihood Advancement Business Schools (LABS) that are run by Dr Reddy‘s
Foundation, which train poor rural high school students in employable skills.
McDonald‘s, Big Bazaar and Reliance Fresh have all hired manpower from here.

Shoppers’ Stop ties up with business schools to train and retain staff

Shopper‘s Stop will be tying up with business schools such as Symbiosis and
Manipal Institute, so that its ground level staff can earn professional degrees.
According to Govind Shrikhande, CEO, Shoppers‘ Stop, "All this time we have
had upgradation programmes, but now we intend offering them on a bigger
scale. There is a proposal to even offer two-year MBA programmes and we are
talking to universities and B-schools such as Symbiosis and Manipal to structure
the course and the financing options.''           34   The company has been doing salary
corrections in an effort to retain its staff, with most salaries increasing by 20-35%.

     The Economic Times, February 10, 2007

     The Hindu Business Line, February 01, 2007

The reality or retail in India

Even though everyone is going crazy about the retail boom in India, just as there
are several Indias, there are also several sides to the retail boom. While specific
segments such as the value and discount retail are thriving, other segments such
as middle to high end retail are not doing so well. Walk into any mall during the
week and you will see stores with barely any customers at all, while stores such
as Big Bazaar are busy at all times of the day. This is the paradox that is India.
While real estate developers have been going crazy setting up malls, there aren‘t
enough takers as yet, and definitely not enough buyers. A great shake-out awaits
the Indian retail industry. According to Deepankkar Sanwalka, KPMG‘s
executive director, "If the spending power of consumers is high in a locality, it
could sustain two-to-three large players." 35

Rural malls are taking off

The concept of rural malls is picking up and retailers are all rushing to set up
stores in rural areas. Consumers in rural areas spend an estimated Rs. 8000
billion each year. In some areas, there is no electricity or drinking water, but
villagers are tracking commodity indexes via the ATM. Companies such as DCM
Shriram Group are setting up 50 rural retail outlets called Hariyali Kissan
Bazaars seeing this vibrant demand. ITC has set up 12 Choupal Sagars in three
states and Reliance is also making plans to enter the sector. Hariyali Kissan
Bazaar‘s have 400 walk-ins a day, with a 70-80% repeat visitors and generate Rs.
140 million annually.36

     Rediff Money, January 19, 2007

     CNN-IBN, February 01, 2007

India’s dollar stores

As major retailers such as Wal-Mart, Tesco and Carrefour make plans to come to
India, a US retailer My Dollarstore is already in India and is doing unexpectedly
well. While US dollar store chains are located in low-rent strip mall, My
Dollarstore lets up shop in prime locations and targets big spenders. My
Dollarstore opened in Mumbai in 2004, is run by Sankalp Retail Value Stores. 37

Pantaloon and Alpha open their first duty free shop this week at Delhi's IGI

The Alpha-Pantaloon JV will be opening its first duty free shop at Delhi's Indira
Gandhi International Airport this week. The store was fully operational by 18-20
January, 2007. The company decided to open its first store in Delhi as the city has
higher international arrivals and the amount spent is also of a higher amount.
The duty free store at the airport will be located at the arrival terminal and will
cover 2,000 sq ft initially, expanding to 7,000 sq ft in a month's time. A store will
also be opened at the departure terminal by the end January 200738.

Alpha Airports Group Plc has designed over 140 retail stores in over 40 locations
in UK, Europe, USA and South Asia. Alpha runs three duty free stores in Cochin
Airport. Its store in Delhi will feature some of the leading brands of the world,
such as Gucci, Armani, Christian Dior, Calvin Klein, Nike, and Swatch among

     The Wall Street Journal, January 23, 2007
38, January 15, 2007

Food & Grocery

Nirulas open outlets in new formats.

Delhi‘s most famous fast food chain, Nirula‘s is shaking things up. The company
that has long been the leader for fast food in north India, will be launching three
new formats to connect with niche customers. Nirula‘s Express will be its
takeaway format and will be in outlets of 200 sq ft, located in airports, railway
stations, malls and metro stations. The first of these outlets opened at the Delhi
Airport. The third new format are Nirula‘s ice cream kiosks that will be located
in air-conditioned locations and would sell sundaes, shakes, sodas, tea and
coffee, besides ice creams. Nirula‘s currently has 42 outlets, all in north India.
The company was acquired last year by Navis Capital Partners, a Malaysian
based private equity firm, and Mr. Kuckreja39. The company also operates hotels
and restaurants under the Nirula‘s name and casual dining outlets under the Pot
Pourri name.

Starbucks to focus on Delhi and Mumbai

Starbucks will be focusing on Delhi and Mumbai as its starting points for its
India operations with Pantaloon. A company official said that Starbucks will be
opening outlets by the end of 2007 either in Delhi or Mumbai. While media and
other reports have said that Starbucks has already tied up with Pantaloon, there
is yet to be a confirmation from either of the companies.40

     The Economic Times, January 22, 2007

     Business Standard, January 15, 2007

Congress President Sonia Gandhi cautions PM on retail FDI

In an unprecedented move, Congress President Sonia Gandhi has reportedly sent
a letter to the Prime Minister Manmohan Singh cautioning him on opening the
foreign direct investment (FDI) for retail41. The main reason for the concern is
based on small-scale operators who are likely to be affected by large international
retail firms entering the market. So far, the government has been planning to ease
restrictions in FDI in specific sectors, such as sporting goods and electronics.

UK to increase investments in food and agri retail sectors

UK companies that are part of a 150 member business delegation have
committed to invest in the food processing, agri-retail and manufacturing. The
delegation was led by Karan Bilimoria, chief of Cobra Beer, and met several high
leaders of the government including Finance Minister P. Chidarmbaram and
Planning Commission deputy chairman Montek Singh Ahluwalia.

The delegation was accompanied by UK trade and industry secretary Alistair
Darling and is a precursor of the UK Chancellor of the Exchequer and future
Prime Minister Gordon Brown's visit to the country. The delegation also met
with Bhupinder Singh Hooda, the chief minister of Haryana on investing in some
Special Economic Zones (SEZ) in the state42.

     Telegraph, The Economic Times, February 06, 2007

     The Economic Times, January 17, 2007

                   Technology in Retail

Hypermarkets like Big Bazaar have an added complexity: on an average, there
are more than 25,000-30,000 stock keeping units, as compared to 5,000-8,000 stock
keeping units for a supermarket. Controlling merchandise, stocks and the supply
chain without an IT system is impossible. That's why they decided to make an
upfront investment in a robust ERP-enabled IT system (a smaller system that can
be scaled up to do enterprise resource planning. Officials reckon a good IT
system will cost Rs 4-5 crore. More than eight years after it forayed into the retail
business, Pantaloon Retail decided to implement SAP to keep itself competitive
in the rapidly growing Indian retail market.


SAP retail solutions supports product development, which includes ideation,
trend analysis, and collaboration with partners in the supply chain; sourcing and
procurement, which involves working with manufacturers to fulfil orders
according to strategic merchandising plans and optimise cost, quality, and
speed–variables that must be weighted differently as business needs, buying
plans, and market demand patterns change; managing the supply chain, which
involves handling the logistics of moving finished goods from the source into
stores and overseeing global trade and procurement requirements; selling goods
across a variety of channels to customers, which requires marketing and brand
management; managing mark-downs and capturing customer reactions,
analysing data, and using it to optimise the next phase of the design process.

            In a Nutshell

             Aim                    : To     deploy       a   robust
                                      transaction       management
                                      system & an enterprise-wide
                                      platform to run its operations.

             Solution               : SAP retail solution

             Implemented by         : SAP team with the help of
                                      Novasoft, Singapore

             Number of users        : Around 1,200

             Time taken             : About six months

             Cost                   : About $10 million

          Source: The Financial Express

Customer Interfacing Systems
      Bar Coding and Scanners

       Point of sale systems use scanners and bar coding to identify an item, use
       pre-stored data to calculate the cost and generate the total bill for a client.
       Tunnel Scanning is a new concept where the consumer pushes the full
       shopping cart through an electronic gate to the point of sale. In a matter of
       seconds, the items in the cart are hit with laser beams and scanned. All
       that the consumer has to do is to pay for the goods.

      Payment

       Payment through credit cards has become quite widespread. Electronic
       cheque conversion, a recent development in this area, processes a cheque
       electronically by transmitting transaction information to the retailer and
       consumer's bank. Rather than manually process a cheque, the retailer
       voids it and hands it back to the consumer along with a receipt, having
       digitally captured and stored the image of the cheque, which makes the
       process very fast.

     Internet

      Internet is also rapidly evolving as a customer interface, removing the
      need of a consumer physically visiting the store.

Operation Support Systems
     ERP System

      Various ERP vendors have developed retail-specific systems which help in
      integrating all the functions from warehousing to distribution, front and
      back office store systems and merchandising. An integrated supply chain
      helps the retailer in maintaining his stocks, getting his supplies on time,
      preventing stock-outs and thus reducing his costs, while servicing the
      customer better. The ERP system caters to two principal functions—
      buying and merchandising. It also interfaces with a B2B portal to fulfill the
      information needs of its supply chain partners.

     CRM Systems

      The rise of loyalty programs, mail order and the Internet has provided
      retailers with real access to consumer data. Data warehousing & mining
      technologies offers retailers the tools they need to make sense of their
      consumer data and apply it to business. This, along with the various
      available CRM (Customer Relationship Management) Systems, allows the
      retailers to study the purchase behavior of consumers in detail and grow
      the value of individual consumers to their businesses.

      Advanced Planning and Scheduling Systems

       APS systems can provide improved control across the supply chain, all
       the way from raw material suppliers‘ right through to the retail shelf.
       These APS packages complement existing (but often limited) ERP
       packages. They enable consolidation of activities such as long term
       budgeting, monthly forecasting, weekly factory scheduling and daily
       distribution scheduling into one overall planning process using a single
       set of data.

Strategic Decision Support Systems
      Store Site Location
   Demographics and buying patterns of residents of an area can be used to
   compare various possible sites for opening new stores. Software packages are
   helping retailers in their locational decisions but in decisions regarding store
   sizing and floor-spaces.

      Visual Merchandising
   The decision on how to place & stack items in a store is no more taken on the
   gut feel of the store manager. A larger number of visual merchandising tools
   are available to him to evaluate the impact of his stacking options. The
   SPACEMAN Store Suit from AC Neilsen and ModaCAD are example of
   products helping in modeling a retail store design.

Business tools
With the base IT infrastructure in place (ERP system), Big Bazaar is looking at
investing in business intelligence tools like data warehousing, data mining and
business intelligence tools. Answers to questions, such as the location a
particular product is selling more, the period when demand spikes and in which
store, can be given by a business intelligence tool.

Wal-Mart uses Radio Frequency Identification (RFID) readers to reduce stock
outs. As soon as goods are sold, RFID tags automatically update the database. A
software monitors which stock will be depleted and automatically generates a
list of items that need to be replenished. The biggest advantage of RFID is a
particular item can be tracked from the warehouse to the retailer. However, in
India, the trend is yet to catch on. This is because, a single RFID tag today costs
as much as Rs. 3043
Radio frequency identification, or RFID, is a generic term for technologies that
use radio waves to automatically identify people or objects. There are several
methods of identification, but the most common is to store a serial number that
identifies a person or object, and perhaps other information, on a microchip that
is attached to an antenna (the chip and the antenna together are called an RFID
transponder or an RFID tag). The antenna enables the chip to transmit the
identification information to a reader. The reader converts the radio waves
reflected back from the RFID tag into digital information that can then be passed
on to computers that can make use of it44.

     Reference: The Retail Association of India


E-tailing offers the widest range of products at ‗lowest prices –

Having pioneered the retailing business in India, PRIL has now decided to
revolutionize the consumer e-commerce business in India. It intends to provide
customers with a streamlined, efficient and world class personalized shopping
experience, which will be supported with the best technology platform.

Buying products is a 3 step simple process. All one has to do is Search, Register
and Buy. Here you can expect a shopping experience akin to shopping at an
actual bazaar but with added simplicity & everyday low prices and an assurance
of 'your product' will be delivered within 7 days of purchase.

Future Bazaar named as the Best Indian Website 2007 in the Shopping category
by PC World.

Future Bazaar won the top spot after beating other established players like
Rediff, Indiatimes, Sify, ebay, Indiaplaza, Chennai Bazaar and India Mall. The
award was presented to Future Bazaar for its "decent, no-nonsense approach,
while providing a good shopping experience".

Retail outets v/s kirana supply chain

The supply chain, which is designed to reach the neighbourhood `kirana' store,
involves products being taken from the manufacturing unit to the clearing and
forwarding agent, then to the distributor, and then the wholesaler and the semi-
wholesaler before reaching the retailer. Everyone on the supply chain doing
almost the same job adds absolutely no value, only costs. The maximum retail
price (MRP) takes this inefficiency into consideration, providing money to each
link. For Big Bazaar, which cuts costs by stripping and improving this supply
chain, the MRP has no meaning. They offer products at our operating price.There
are also advantages for the manufacturers who do not have to go through layers
of distributors before reaching out to the end consumer. There are no distributors
here and there is no cost incurred on intermediaries. The biggest shift is the way
the distribution system has changed for organized retail for which the drivers of
success are totally different and so is the logistics chain. Modern trade does not
operate through the traditional distributor-stockist channel but now companies
find there's a layer less to deal with when they interact directly with a large
retailer. Companies are one step closer to the customer now.

In the traditional system of distribution, companies need to worry only about
stockists and they can exert pressure on them to liquidate or push stocks, but
modern trade needs to be treated as a customer45. They can push back unsold
stocks or dispense with meaningless promotions. And, today, company
executives can't merely be content with keeping track of their own stocks as in
modern trade products on shelves need to sell themselves rather than have a
retailer push it. Category managers need to understand sales of competing
products; it is no longer enough if salespeople alone know the retailer; the brand
manager and everybody up the supply chain need to know the retailer.




     Target Population
      1. Elements- Housewives (non-working, married women) of the
         household, preferably responsible for most of the shopping for the
         household. Age: 18- 60 years
      2. Sampling Units- Households
      3. Extent- Western Suburbs of Mumbai ( Dahisar- Malad)
      4. Time- 2007

     Sampling Frame
      As the sampling frame is the representation of the elements of the target
      population, it consists of a list or set of directions for indentifying the
      target population. A sampling frame of housewives being difficult to
      obtain, we used alternative techniques like obtaining lists of kitty groups
      and other women organizations in the locality, these being the sampling

     Sampling Technique
      The research group used the sampling technique of sampling without
      replacement, where once an element is selected for inclusion in the sample
      it is removed from the sampling frame and hence cannot be selected
      Simple Random sampling was used to draw samples.

      Sample Size :
       Here the desired confidence interval is 95%. The associated z value is 1.96.
       We assume the acceptable error as 9% as the sample size is small. This
       formula takes into account that 70% of the housewives feel that there will
       be a positive impact of the supermarkets and 30% think otherwise.
       Hence p = 0.7 and q = 0.3

       n = Z2 pq
         = (1.96)2 x (0.7) (0.3)
       n = 100


The research group will use the DESCRIPTIVE research design where the main
technique will be a survey method. This method will be used because it will help
us to get an analysis of many factors like age group and income groups of
housewives visiting different retail formats. The survey will provide us an
insight as to the Awareness, Expectation and Perception of housewives visiting
these stores. Descriptive Research would facilitate the understanding of the core
factors that influence the perception of housewives and offer a detailed study of
their perception.

EXPLORATORY Research would facilitate us ascertain the perception of
housewives towards kirana stores vis-à-vis supermarkets. As many of the factors
are ambiguous, we conduct Exploratory Research. The Exploratory Research is
needed to find out the impact of retail boom on the housewives.


A. Primary Source
      Personal Interviews
      Surveys through questionnaire.

B. Secondary Source
Journals/ Newspapers         Websites                Reports
Retail Biz                Economic    Times-    Retail
                                                     Sector Overview
India Mart              Retailing Scenario in India-
                       A CII Report
Cygnus, Global Industry            McKinsey Quarterly, Apr
                                                     FICCI Retail Report 2007
Creating     Competitive
                                                     Retail News, Ernst and
Advantage In        Retail,   Young LLP, Spring 2006
David Sharpe, Accenture
                                                     Technopak Retail Research,
The Economic Times      2007
Business Standard
Hindu Business Line
The Telegraph
The Wall Street Journal
The Financial Express

The data analysis process will begin with:

1. Editing:
The process includes the review of the data to ensure maximum accuracy and
with no ambiguity. Careful editing early in collection process will often catch
misunderstanding of instructions, errors in recording and other problems at a
stage when it is still possible to eliminate them from the later stages of the study.

2. Coding:
The process includes careful interpretation and good judgment of the data to
ensure that the meaning of the response and the meaning of the category are
consistently and uniformly matched.

Contact Methods
      Telephone Interviewing
      Personal In-Home Interviews
      Email Surveys

Software                                          Statistical Tools
      Excel                                        Correlation
      Minitab                                       Z- Test
      SPSS                                          T- Test
      NUDIST                                        Chi- square

Research Instrument

The research instrument used in collecting primary data was a questionnaire.
The questionnaire was prepared on the basis of the secondary information
gathered and concepts read about in the preliminary data collection. All the
questions are a mix of open and close-ended questions and the interview was
conducted in the most versatile method in order not to restrict the discussion to
the questionnaire only. The three specific objectives of the questionnaire were:

      It must translate the information needed into a set of specific questions
       that respondents can and will answer,
      It must motivate the respondent to become involved in the interview and
      It should minimize error.

In addition, suggestions from the project guide Dr. Vijay Wagh, Faculty; Market
Research has confirmed the content validity of the questionnaire items. Thus, the
instrument provides adequate coverage of the topics included in the study. The
suggestions from the guide and colleagues were useful in generating and
constructing the final questionnaire that appeared to have no significant
ambiguities and problems, which were then distributed to target respondents.

Hypothesis Testing:
H0: Housewives perceive that supermarkets sell cheaper as compared to kirana
H1: Pricing of consumer products does not impact buying behaviour of

The hypothesis taken by the researchers have been taken to be true if 60% of the
respondents have a favorable reply for the hypothesis. The level of significance is
taken to be 0.05. p=70% q=30% n= 100 Therefore,
Sigma (Standard Deviation) = ((0.7 * 0.3) / 100) ^0.5 = 0.049
z = (0.63- 0.6) / 0.049 = 0.652

From the above analysis we can say pricing of consumer products does impact
buying behaviour of housewives. Hence, Null Hypothesis (H0) is accepted.


     In possible cases the respondent might have been unable to comprehend
      the question correctly inspite of our best efforts and this would have
      hampered her reply.
     Time available was one of the limiting factors due to which we had to
      restrict our sample size, geographical reach to look for diversity within the
      sample for the survey.
     Limited choice of application based software.
     Limited expertise in analysis of data through use of application based
     Though we have been successful in gaining valuable information from the
      samples, the infamous practice of surveying had worked against our
      concrete efforts to make it a comfortable experience for our samples.


There are many different retail stores in India- convenience stores, supermarkets,
hypermarkets, departmental stores, brand stores and discount stores. The
housewife (consumer) can choose between different stores for different needs.
On the other end of the spectrum there are the unorganized retail stores.

The management of the kiranas involves minimal labor costs since the entire
family works there. The focus is on creating and retaining clients, since it the
only source of livelihood. The business passed hands down generations. As a
result, shopping at a kirana, where the owner knows one‘s shopping habits
personally, has been ingrained in the psyche of the Indian housewife.

In contrast a retail outlet appeals to a housewife because of its pleasant
surroundings, better product display and the availability of a wide variety of
brands. The store has accurate measure controls and allows economies of scale. S
housewife also has the option of shopping for all household necessities under
one roof.

Hence it may be said that although supermarkets are spreading their wings
gradually in the Indian market, they have a long way to give a tough fight to the
kiranas. However due to the novelty of the mall concept and tempting offerings
to the customer, housewives do, in general have a positive perception towards
the supermarkets. An in- depth analysis of the data collected is been represented
with the help of graphs and pie charts for better understanding in the pages to

   1. Where do you make most of your grocery purchases from?

              Near by kirana store
              Specific kirana store
              Retail Outlet/ Supermarket
              Any other : ____________________

                            Most Purchases Made From



              Nearby kirana store   Specific kirana store   Supermarket   Others

It can be inferred from the above pie chart that majority of the housewives prefer
to buy from the local grocery stores and many prefer a specific store only due to
long standing relationship with the kirana store. However considering organized
retailing industry is at the nascent stage, the preference for supermarkets is
indeed worth taking notice.

2. Which of the following would you prefer in terms of the following

                                     SUPERMARKET                KIRANA STORE

PRICE                                     □                                   □

PROXIMITY                                 □                                   □

QUALITY                                   □                                   □

VARIETY                                   □                                   □

DELIVERY                                  □                                   □

                             Housewives' Preferences





        in %

               50                                                                 kirana stores





                     Price   Proximity   Delivery    Quality        Variety
  Supermarket         84         8          6          74             95
  kirana stores       16        92         94          36              5

The graph above depicts preferences of a housewife considering certain key
parameters. As far as price, variety and quality, there is a common perception
that supermarkets are superior; though kiranas still score on the grounds of
proximity and delivery and other services like credit facilities.

3. What do you think of the recent increase in the number of supermarkets all
   over the city?

             Will certainly benefit the Consumers
             May benefit the Consumers
             Cant Say
             Will not benefit the Consumers


                                           34%              Will certainly benefit the

                                                            May benefit the
          11%                                               Consumers

                                                            Cant Say

                                                            Will not benefit the


This graph clearly shows that there is a positive response for the supermarkets
from the housewives. The general belief is that the advent of supermarkets will
largely benefit the consumers. However, around 30% respondents feel negative
or unsure about the advantages of the supermarkets for the consumer.

4. On the scale of 1-5, give marks to the following:
   Very Important- 5, Important- 4, OK-3, Not Important-2, Not needed- 1.
           A. Location
           B. Ambience
           C. Service
           D. Discounts
           E. Promotional Offers

                              Which Factor is Important to you?





  Average ratings




                          Location   Ambience   Service   Discounts
          Series1           4.2        2.7        3.9        2.1          1.4

The data reveals that housewives are mostly driven by location and service
aspect of retailers and they seem to be indifferent on promotional offers and
discounts that retailers have on their stands. This is probably where kirana stores
still manage to hold their customer base as proximity and services like delivery
are valued most by the housewives. But newer retail formats like Subhiksha
which focus on kirana store format intend to capitalize on this strength.

5. How frequently do you visit a Supermarket to make your purchases?

             Daily
             Once a week
             Twice a week
             Once a month
             Twice a Month

           Frequency of Shopping from Supermarkets



           in % 20


                                Once a    Twice a Twice a      Once a
                                 week      week    Month       month
           Series1       3         11        20        28        38

The frequency of the visits to the supermarkets will help us decide how often
housewives prefer to shop from these stores. As much as 38% housewives limit
their shopping trips to the supermarket to once a month while only 3%
housewives visit supermarkets daily. Around 20% respondents visit the
supermarket twice a week which is a promising trend. This can be enhanced by
planning the location of such stores and providing better delivery services.


   Retail outlets should work on customer loyalty programs to avail them of
    various benefits including credit facility.

   They can also work on the concept of drive-ins, wherein the customers can
    place the order in advance over phone or internet and pick up the goods
    on their way. This would save a lot of time and efforts of consumers.

   The sheer size, appealing (glamorous) image, security and innovative
    technology to some extent works negatively for the retail outlets. They
    should rather try to gel with the perception of the general masses. Much
    of the general public still considers them out of reach.

   Organized retail sector has done little to demarcate between their different
    variants. They need to clearly define themselves in terms of what kind of
    products do they offer, as to who can be their customers in terms of



Dear Madam, we are management students from NLDIMSR, conducting
research on the perception of housewives towards kirana stores vis-à-vis
supermarkets. The information provided to us by you will be kept confidential
and would only be used for academic purposes. We would be highly obliged if
you help us by filling this questionnaire and provide us with your valuable
suggestion and feedback

 1. Have you visited any of the Retail Outlets/Supermarkets in town?

          Yes - Location : _________________
          No

 2. What do you think is the major difference between a supermarket and your
     local kirana store?


 3. Where do you make most of your grocery purchases from?

            Near by kirana store
            Specific kirana store
            Retail Outlet/ Supermarket
            Any other : ____________________

 4. How frequently do you visit a Supermarket to make your purchases?

            Daily
            Once a week
            Twice a week
            Once a month
            Twice a Month

 6. Which of the following would you prefer in terms of the following

                                  SUPERMARKET             KIRANA STORE

PRICE                                 □                          □

PROXIMITY                             □                          □

QUALITY                               □                          □

VARIETY                               □                          □

DELIVERY                              □                          □

 5. On the scale of 1-5, give marks to the following:
    Very Important- 5, Important- 4, OK-3, Not Important-2, Not needed- 1.

        A.   Location
        B.   Ambience
        C.   Service
        D.   Discounts
        E.   Promotional Offers

 7. What do you think of the recent increase in the number of Supermarkets all
    over the city?

             Will certainly benefit the Consumers
             May benefit the Consumers
             Cant Say
             Will not benefit the Consumers
             Any other Comment : _

Respondent Details

Age Group –
   18 - 25
   26 - 30
   31 - 40
   41 - 50
   51 - 60

Monthly Income Group –
   Below 15,000
   15,000 – 30,000
   31,000 – 45,000
   46,000 – 60,000
   Above 60,000

Educational Background –
   SSC
   HSC
   Graduate
   Post Graduate


   Network Magazine (Issue of March 2007)
   Retail in India- Swapana Pradhan
   Marketing Research – Naresh Malhotra
   The Marketing Whitebook 2005
   Marketing Management – Philip Kotler
   Marketing Research- Burns & Bush
   Statistics for Management- Levin & Rubin


                             EXECUTIVE SUMMARY

The main purpose of conducting this research is to study the perception of
housewives towards supermarkets. Also we have made an attempt to study
which are the most important factors that influence the process of selecting either
a supermarket or a nearby kirana store for day-to-day purchases.

In order to achieve our desired objectives we have conducted a 2 month long
research, covering all the aspects of Marketing Research. To aid us in our
research we have also referred many books, magazines, journals, websites that
has given us a lot of valuable information.

We have also designed a questionnaire for this study and targeted 100
respondents, from different locations in western Mumbai targeting the
housewife of the household, preferably who makes most buying decisions in
terms of Food & Grocery. We would use statistical tools like excel and SPSS to
aid us in data interpretation.


To do a comparative study of the perception of housewives towards kirana stores
vis-à-vis supermarkets.


1) To study the factors affecting the perception of   housewives towards kirana
stores and supermarkets
2) To study the impact of the location of the supermarkets or proximity to the
3) To study the impact of the mind set of housewives regarding the price pattern
of consumer products on their buying behavior


The Indian retail industry is the next sunrise industry of the Indian economy.
This study would enlighten us with the current state of the retail industry. This
would also give us valuable insights into consumer behavior which could be
leveraged in various areas of marketing study.
The study would also help relate the impact of a booming retail industry on
other areas of the economy viz employment generation, enhanced tourism
prospects etc.


Journals/ Newspapers       Websites                  Reports

Retail Biz                Economic    Times-    Retail
                                                     Sector Overview
India Mart              Retailing Scenario in India-
                       A CII Report

Cygnus, Global Industry
                                                     McKinsey Quarterly, Apr
                                                     FICCI Retail Report 2007

Creating     Competitive         Retail News, Ernst and
                                                     Young LLP, Spring 2006
Advantage In        Retail,
David Sharpe, Accenture

                                                     Technopak Retail Research,
The Economic Times       2007

Business Standard
Hindu Business Line
The Telegraph
The Wall Street Journal
The Financial Express


The research group will use the DESCRIPTIVE research design where the main
technique will be a survey method. This method will be used because it will help
us to get an analysis of many factors like age group and income groups of
housewives visiting different retail formats. The survey will provide us an
insight as to the Awareness, Expectation and Perception of housewives.
EXPLORATORY Research would facilitate us ascertain the perception of
housewives towards kirana stores vis-à-vis supermarkets. As many of the factors
are ambiguous, we conduct Exploratory Research.

      Sample Unit: Housewives
      Sample Area: Western suburbs of Mumbai (Dahisar- Malad)
      Sample Size: 100
      Sampling Technique: Simple Random Sampling

Research Instrument: Questionnaire
Contact Methods
      Telephone Interviewing
      Personal In-Home Interviews
      Email Surveys
Software                                      Statistical Tools
      Excel                                     Correlation
      Minitab                                    Z- Test
      SPSS                                       T- Test
      NUDIST                                     Chi- square


1) H0: Housewives prefer kirana stores over supermarkets
  H1: Housewives do not prefer kirana stores over supermarkets

2) H0:    Housewives perceive that kirana stores sell cheaper as compared to
   H1: Pricing of consumer products does not impact buying behavior of

   1. Nandini Pai                          B.Com
   2. Vishnupriya Maheshwari               B.Sc. (IT)
   3. Saurabh Agarwal                      B.Sc. (IT)


        Laptops
        Computers with Internet connection
        Printers
        Xerox Machine
        Library for Reference Material.

Sr n    Activity                       Days                   Specific Remarks       Cost
1       Defining    the   Problem 15th– 20th July2007                                --
        and Objectives
2       Defining the Hypothesis        21st–25th July 2007                           --

3       Deciding         on        the 26thJul-1stAug 07                             --
        Research Design
4       Literature Review              2nd-18thAug 2007       Internet,              300
                                                              Newspapers, Past
5       Questionnaire Design           2nd_31stAug 2007       Deciding no of         100
                                                              questions, format
                                                              of questions,
                                                              expert opinion
6       Research Proposal              1st September – 17th                          --
                                       September 2007
7       Data Collection                17th September 2007 Administering             500
                                       – 26th Sept            questionnaire
                                                              recording data
8       Data       Analysis         & 27th September – 3rd Coding,            using --
        Interpretation        of   the October 2007           software         and
        findings                                              statistical tools.
9       Report Preparation and 4th October – 10th                                    300
        Submission                     October 2007
10      Total Cost and Days            88 Days                                       1200




Perception of housewives towards kirana stores vis-à-vis supermarkets


How to incline housewives towards supermarkets


To do a comparative study of the perception of housewives towards
supermarkets vis-à-vis kirana stores


Factors affecting the perception of housewives towards kirana stores and


Relationship of all these factors and their impact on the perception of housewives