The main focus of this research is in the area of organised retail specifically in the convenience stores format in India.
The Indian organised retail is growing rapidly but is still in the nascent stage. There are many challenges in terms of infrastructure, supply chain efficiencies, cost structure and customer adaptability to the emerging retail formats.
India is perceived to be a lucrative destination for retail and with opening up of foreign direct investment imminent many multinational giants are eyeing India.
Indian companies are grappling with many challenges and experimenting with many formats in retail. This study attempts to understand the present scenario and the preparedness of domestic companies in consolidating their existing position to evolve a business frame work model for domestic companies to not only consolidate their existing position but also counter threats from multinationals entering into India.
The research revealed that there are not many integrated business models, though there are models on different components of supply chain and retail, Indian companies will certainly benefit from creation of integrated business model which can assist them in taking strategic decisions in terms of managing cost and revenue structure and expansion plans.
This study is intended to understand the drivers and factors influencing the back end operations in the area of supply chain efficiencies and the front end operations particularly in respect of costs, revenues and key drivers to create an integrated business model frame work to drive optimisations at all levels. Sample of this study was two major organised retail companies in Bangalore catering to about seventy outlets in Bangalore and having distribution centres.
Tools used in this study was data observation sheets for all the key parameters for both back end and front end operations, in addition to unstructured in depth interview with expert group.
Some Major findings were:
Stock keeping units, cost of procurement and secondary freight emerged as significant drivers to be controlled for efficiency and optimisation link in the back end grocery and staples.
Rentals, Sales, Cost of goods sold, Total personnel cost and Total facilities cost had significant influence on EBIDTA of front endsuper market.
Break even point for same size stores differed depending upon the location.
Sensitivity analysis revealed that manpower, rent and total facilities cost had significant impact on EBIDTA .
Table of Contents
1 INTRODUCTION
1.1 INDUSTRY OVERVIEW
1.2 FDI SCENARIO IN INDIA
1.3 MULTI BRAND RETAIL
1.4 OVERVIEW OF FORMATS AND CHANNELS
1.4.1 Supermarkets
1.4.2 Convenience Stores
1.4.3 Discount Stores
1.5 REGULATORY FRAMEWORK
1.6 FOREIGN DIRECT INVESTMENT
1.6.1 Foreign Exchange Management Act (1999)
1.7 BUSINESS MODEL IN THE CONVENIENCE STORE FORMAT
1.8 INTRODUCTION TO DRIVERS, FACTORS AND VARIABLES
1.9 NEED FOR THIS STUDY
2 REVIEW OF LITERATURE
2.1 STUDIES RELATED TO FOREIGN DIRECT INVESTMENT
2.2 STUDIES RELATED TO SUPPLY CHAIN AND VALUE CHAIN
2.2.1 Key Drivers and Facilitators of Back End Operations
2.2.2 Key Drivers for Fruits and Vegetables
2.2.3 Key Cost Drivers for Front End Operations
2.3 BUSINESS MODEL PARAMETERS OPERATING
2.3.1 Innovations in Retail Business Models
2.3.2 Innovations in Retail Pricing and Promotions
2.4 RESEARCH GAP
3 RESEARCH DESIGN
3.1 STATEMENT OF THE PROBLEM
3.2 VARIABLES UNDER INVESTIGATION
3.2.1 Operational Definitions
3.3 OBJECTIVE OF THE STUDY
3.4 THEORETICAL FRAMEWORK
3.4.1 Back end Grocery Process Analysis
3.5 HYPOTHESES
3.5.1 Hypotheses Related to Back end Grocery
3.5.2 Hypotheses related to Back end fruits and vegetables
3.5.3 Hypotheses related to Front end supermarket
3.5.4 Hypotheses related to Front end Fruits and Vegetables
3.5.5 Hypotheses related to Back end Grocery Significant Influence of Factors
3.5.6 Hypotheses related to Back end Fruits and Vegetables Significant Influence of Factors
3.5.7 Hypotheses related to Front end Supermarket Significant Influence of Factors
3.5.8 Hypotheses related to Front end Fruits and Vegetables Significant Influence of Factors
3.6 SAMPLE OF THE STUDY
3.6.1 Sample Characteristics (Back End)
3.6.2 Sample Characteristics (Front end)
3.7 SAMPLING TECHNIQUES USED
3.8 TOOLS ADOPTED FOR THE STUDY
3.9 DATA COLLECTION
3.9.1 Primary Data
3.9.2 Secondary Data
3.9.3 Statistical Techniques and Tools
3.10 LIMITATIONS OF THE STUDY
4 ANALYSIS AND INTERPRETATION
4.1 OVERVIEW OF ANALYSIS
4.2 CORRELATION MATRIX
4.2.1 Back end Grocery Significance of Variables and Regression Model Fit
4.2.2 Back end Grocery Significance of Relation between Variables
4.2.3 Back end Grocery Significant Predictors
4.2.4 Back end Fruits and Vegetables Significance of Variables and Regression Model Fit
4.2.5 Back end Fruit and Vegetables Significance of Relation Between Variables
4.2.6 Back end Fruits and Vegetables Significant Predictors
4.2.7 Front end Supermarket Significance of Variables and Regression Model Fit
4.2.8 Front end Supermarket Significance of Relation between Variables
4.2.9 Supermarket Significant Predictors
4.2.10 Front end Fruits and Vegetables Significance of Variables and Regression Model Fit
4.2.11 Front end Fruits and Vegetables Significance of Relation between Variables
4.2.12 Front end Fruits and Vegetables Significant Predictors
4.3 BACK END GROCERY SIMULATION ORIGINAL MIX
4.3.1 Back End Grocery Simulation One on Original Base
4.3.2 Back end Grocery Simulation Two Back end Grocery Simulation Two on Original Base
4.3.3 Back end Grocery Simulation Three on Original Base
4.3.4 Back end Grocery Simulation Four on Original Base
4.4 BACK END FRUITS AND VEGETABLES SIMULATION ORIGINAL BASE
4.4.1 Back end Fruits and Vegetables Simulation One on Original Base
4.4.2 Back end Fruits and Vegetables Simulation Two on Original Base
4.4.3 Back end Fruits and Vegetables Simulation Three on Original Base
4.4.4 Front end Supermarket Simulation Original Base
4.4.5 Front End Supermarket Simulation One on Original Base
4.4.6 Front end Supermarket Simulation Two on Original Base
4.4.7 Front end Supermarket Simulation Three on Original Base
4.4.8 Front end Fruits and Vegetables Simulation Original Base
4.4.9 Front end Fruits and Vegetables Simulation One on Original Base
4.4.10 Front end Fruits and Vegetables Simulation Two on Original Base
4.4.11 Front end Fruits and Vegetables Simulation Three on Original Base
4.4.12 Front end Fruits and Vegetables Simulation Four on Original Base
4.5 FRONT END SUPERMARKET BREAK EVEN INDICATORS
4.6 FRONT END SUPERMARKET SENSITIVITY ANALYSIS ON MANPOWER
4.6.1 Front end Supermarket Sensitivity Analysis on Rent
4.6.2 Front end Supermarket Sensitivity Analysis on Manpower, Rent and Facility
4.7 BUSINESS MODEL MATRIX
4.8 HUB AND SPOKE CONCEPT FOR FRONT END SUPERMARKET
4.9 CONCLUSIONS
5 SUMMARY AND CONCLUSION
5.1 NEED AND RATIONALE FOR THE STUDY
5.2 STATEMENT OF THE PROBLEM
5.3 RESEARCH OBJECTIVES
5.4 VARIABLES OF THE STUDY
5.5 HYPOTHESES
5.5.1 Hypotheses related to Front end fruits and vegetables
5.5.2 Hypotheses related to Back end grocery significant influence of factors
5.5.3 Hypotheses related to Back end fruits and vegetables significant influence of factors
5.5.4 Hypotheses related to Front end Supermarket Significant Influence of Factors
5.5.5 Hypotheses related to Front end Fruits and Vegetables Significant Influence of Factors
5.6 RESEARCH DESIGN
5.7 DATA ANALYSIS
5.8 FINDINGS FROM THE STUDY
5.9 MANAGERIAL IMPLICATIONS OF THE STUDY
5.10 SUGGESTIONS FOR BACK END OPERATIONS
5.11 SUGGESTIONS FOR FRONT END OPERATIONS
5.12 CONTRIBUTIONS TO THE KNOWLEDGE AND UNDERSTANDING
5.13 LIMITATIONS OF THE STUDY
5.14 RECOMMENDATIONS
5.15 SCOPE FOR FURTHER RESEARCH
5.16 CONCLUSION
Objectives and Research Themes
The primary objective of this research is to analyze the operational cost drivers and performance parameters of organized retail in the convenience store format in Bangalore, India. By examining the interplay between back-end supply chain efficiency and front-end store operations, the study aims to develop an integrated business model framework that helps domestic companies consolidate their market position and counter competitive threats from multinational retail giants entering the Indian market.
- Analysis of key cost drivers in back-end (grocery and fresh produce) and front-end retail operations.
- Development of integrated business models through linear programming and simulation for margin optimization.
- Evaluation of break-even points and sensitivity analysis of variables like manpower, rent, and facility costs.
- Formulation of strategic recommendations for operational efficiency in the convenience retail sector.
- Mapping the impact of Foreign Direct Investment (FDI) on the competitive landscape of Indian retail.
Excerpt from the Book
1.1 Industry Overview
The retail sector has been at the helm of India’s growth story. The sector has evolved dramatically from traditional village fairs, street hawkers to resplendent malls and plush outlets, growing from strength to strength. According to the Indian Council for Research on International Economic Relations (ICRIER), India is the seventh-largest retail market in the world, and is expected to grow at a CAGR of over 13% till FY12. In FY07 retail sales reached Rs 13,300 bn and amounting to around 33% of India’s GDP at current market prices. According to the Central Statistical Organisation (CSO) estimates, the total domestic trade (both retail and wholesale) constituted 13.0% of country’s GDP in 1999-2000, which has gone up to 15.1% in FY07.
Retail and wholesale trade is the single largest component of the services sector in terms of contributions to the Gross Domestic Product and at 15% it is the largest contributor after Agriculture. As per press release of Reuters of May, 2011, it is expected to rise to 22%.
Summary of Chapters
1 INTRODUCTION: This chapter provides an overview of the Indian retail sector, highlighting its growth, the impact of FDI, and the urgent need for a structured business model to face future challenges.
2 REVIEW OF LITERATURE: This section covers various academic sources regarding supply chain management, retail value chains, and foreign direct investment to establish the research gap.
3 RESEARCH DESIGN: This chapter outlines the methodology used for the study, including the variables under investigation, data collection techniques, and the theoretical framework.
4 ANALYSIS AND INTERPRETATION: This core section presents the quantitative findings, utilizing correlation matrices, regression models, and simulation scenarios to optimize operations.
5 SUMMARY AND CONCLUSION: The final chapter summarizes the research findings, offers managerial implications, and provides concrete suggestions for operational improvements and future research.
Keywords
Organised Retail, Convenience Stores, Supply Chain, Value Chain, Back-end Operations, Front-end Operations, Business Model, Cost Drivers, Margin Optimization, FDI, Retail Strategy, Simulation, Linear Programming, Sensitivity Analysis, EBIDTA
Frequently Asked Questions
What is the core focus of this research study?
The research focuses on the organized retail sector in India, specifically the convenience store format. It investigates how to create an integrated business model by linking back-end supply chain efficiency with front-end store profitability.
What are the central themes discussed in the work?
The study centers on supply chain management, retail cost drivers, operational performance, and the strategic implications of Foreign Direct Investment (FDI) on domestic retailers.
What is the primary research objective?
The primary objective is to identify key operational cost drivers in both back-end and front-end retail to develop an optimized business model framework that allows Indian companies to better compete with multinational corporations.
Which scientific methods are utilized for this analysis?
The study employs a mix of qualitative expert interviews and quantitative methods, including descriptive statistics, correlation matrices, multiple linear regression, and linear programming for simulation and optimization.
What topics are covered in the main body of the work?
The main body treats industry trends, literature reviews on retail supply chains, detailed research design and methodology, and a comprehensive analysis of sales, margin, and cost data, alongside optimization models for grocery and fresh produce operations.
How would you characterize this work using keywords?
The work is characterized by terms like organized retail, supply chain optimization, business model, cost driver analysis, margin management, and strategic retail competitiveness.
How does the study approach the Hub and Spoke concept?
The study uses the Hub and Spoke concept as an expansion and optimization strategy for front-end supermarket stores, demonstrating how to improve viability and reduce break-even sales requirements for smaller store formats.
What specific role does the sensitivity analysis play in the findings?
The sensitivity analysis is used to test how changes in key cost drivers—specifically manpower, rent, and facility costs—impact the EBIDTA of representative stores, providing actionable data for management to improve store profitability.
- Quote paper
- A. S. Suresh (Author), 2012, A study on the value chain of domestic multi brand retail in the convenience stores format and their interrelationship at Bangalore, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/465490
