Final Thesis

Dear Suheal I have received your synopsis as well as confirmation that I would be your guide for the thesis . The topic is fine and you can go ahead with your thesis on "Food retailing in Karnataka: The Case for food supermarkets" . Treat this mail as a formal approval of the same. Remember to get yourself registered at the IIPM Academics by showing a copy of this approval mail or forwarding this mail to [email protected] and get the ID No. You have to send me at least 6 Thesis Response Sheet before submitting the Final Thesis . The Response Sheet should contain the following Details. You can take a separate document in the same format. Make sure you mail the response sheet at regular intervals. Your thesis will be evaluated on the basis of a viva voce, details of which will be intimated to you after you have been issued the Alumni ID. The last date of submission for your thesis is July 31, 2009. Remember that missing the deadline for submission could mean a penalty of Rs. 1000/- as well as the possibility of the thesis not being in time for processing your documents during the convocation. 1) Your Name 2) Your ID Number 3) The Topic of the Study 4) Questionnaire which you have made to collect Primary Data (in the first or the second Response sheet) 5) Date when the Guide was consulted. 6) The outcome of the discussion 7) The Progress of the Thesis Regards Tareque

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FOOD RETAILING IN KARNATAKA: A CASE OF SUPERMARKETS

Submitted to Major Advisor/Guide

PROFESSOR TAREQUE LASHKAR IIPM Bangalore K.B.RAMAPPA Doctorate in food retailing Operations Head Mother Diary’s Safal Retail Bangalore

Submitted by SUHEL PASHA .R ID.NO. - B0709SS 10056 ALUMNI ID - BS07M002 INDIAN INSTITUTE OF PLANNING AND MANAGEMENT BANGALORE-560 034

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The Indian Institute of Planning & Management

ID NO: B0709SS 10056 THESIS TOPIC APPROVAL (Marketing)

Dear Suhel I have received your synopsis as well as confirmation that I would be your guide for the thesis . The topic is fine and you can go ahead with your thesis on "Food retailing in Karnataka: The Case for food supermarkets" . Treat this mail as a formal approval of the same. Remember to get yourself registered at the IIPM Academics by showing a copy of this approval mail or forwarding this mail to [email protected] and get the ID

Regards, Tareque

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Acknowledgements

I am grateful to Mr. Tareque , HOD of Indian Institute Of Planning and Management (Bangalore),for Providing the time and informational support to revise this book.

I am also grateful to Mr. K.B. Ramappa, Operations Head of Safal for information and infrastructural support.

Su hel Pasha Rasheed

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1) Introduction

2) Review of Literature

3) Methodology

4) Results

5) Discussion

6) Summary and Policy Implications

7) Reference

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1. INTRODUCTION Food is defined as any substance taken into the body for the purpose of providing nourishment. The food industry is the complex, global collective of diverse businesses that together supply much of the food energy consumed by the world population. With population around the world concentrating in urban areas, food buying is increasingly removed from all aspects of food production. Food accounts for the largest share of consumer spending. Food and food products account for about 53 per cent of the value of final private consumption. This share is significantly higher than in developed economies, where food and food products accounts for Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

about 20 percent of consumer spending significant spending on food and increasing out of home food consumption represent opportunities for food retailers and food service companies(www.tata.com) to cater their needs. Retail, according to concise Oxford English Dictionary, is the ‘sale of goods to the public for use or consumption rather than for resale’. Retailing is derived from the French word ‘retailer’ meaning ‘breaking bulk’ and breaking bulk quantities into smaller saleable units. Usually, a retailer buys goods or products in larger quantities from manufacturers or importers, either directly or through a wholesaler and then sells individual items in small quantities to general public or the end users. This is relatively a recent development, taking place mainly over the last 50 years. The supermarket is a defining retail element of the food industry, where tens of thousands of products are gathered in one location, in continuous, year round supply, Supermarkets were first established in U.S during the 1930’s as no – frills retail stores offering low prices. In the 1940s and 50s they became the major food marketing channel in the U.S.: the 1950s also saw them spread through much of Europe. Their growth is part of a trend in developed countries toward reducing cost and simplifying marketing. In the 1960s supermarkets began appearing in developing countries in the Middle East, Asia, and Latin America, where they appealed to individuals who had the necessary buying power and food storage facilities. The world over retail has been growing rapidly with increasing sophistication and modernization of the life style of households and individual and with increasing globalization of trade. The retail sector has strong backward and forward linkages with other sectors like agriculture and industry through stimulating demand for goods and through mass marketing, packaging ,storage and transport, Moreover, it creates considerable direct and indirect employment in the economy. Also the consumers have benefited in terms of wide range of products available in a market. The retail sector is broadly classified in to two groups, Organized and Unorganized retail sector, the organized sector is mainly characterized by the typically large number of retailers, greater enforcement of taxation mechanisms and better labour law monitoring systems. It is Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

not just a stocking and selling, but is more about efficient supply chain management, developing vendor relationships, quality customer service, efficient merchandising and timely promotional campaigns. On the other hand the unorganized retail market is characterized by typically small retailers, more prone to tax evasion and lack of labour law supervision. This market is more common in developing countries. Global Scenario: Retail has played a major role world over in increasing their activity across a wide range of consumer goods and services. The impact can be seen in countries like U.S.A., U.K, Mexico, Thailand and more recently china. Economies of countries like Singapore, Malaysia, Hong Kong, Sri lanka and Dubai are also heavily assisted by the retail sector. Globally, retailing is a big business; its turnover is fast marching to 6.6 trillion. The retail industry in America employs more than 22 million people and generates more than three trillion in retail sale annually (www.epwrf.res.in). According to the India Retail Report 2005-imagesKSA techno park ,the retail sales was found to be the highest in developed countries like USA and UK,. Where in 85 percent of the retail sector was constituted by organized retailing due to 100 percent Foreign Direct Investment(FDI) and its contribution of nine percent of GDP and more than 10 percent employment in these countries(www.imagesretail.com/india_retail_report.htm). The share of organized retail is more so in case of developed countries due to the busy life schedule and lack of time for shopping, high literacy rate, exposure to media, greater availability and penetration of variety of consumer goods into the interiors of the country and better shopping experience. Whereas, the share of organized retail outlets in developing countries was very less, it was 17 percent in china and very meager of about three persent in india because of the poor literacy rate, lack of exposure to media, non- availability and low penetration of consumer goods to rural areas of the country and lack of shopping experiences. There are many Multi National companies operating in the retail business throughout the world. The big four champions in 2004 were Wal-Mart, Carrefour, Home Depot and Target. Expect Carrefour, which was hailed from France, all these top champions were from USA .The Combined sales was $438 billion and were growing at the rate of 10 Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

percent per annum, there growth comes from putting small stores out of business. This is happening in Europe and Asia . The Big Box and Hypermarket are operating everywhere. However, Germany based Metro is operating in 27 countries all over the world including India (KSA Techno park). The traditional forms of independently owned small business and cooperative have lost significant market share in developed countries and the retail sector in these countries is now characterized by large multiple chains run by the powerful and sophisticated organizations. In global, the recently existing retail formats are Hypermarkets, Supermarkets, Mass merchandisers, Discounters, Convenience stores, Specialty stores , Mass merchandisers, Discounters, Convenience stores, Specialty stores and mom and pops. The evolving formats with their dealing category of goods and the examples of the type are shown below: Hypermarkets-These are mainly located out of town covering an area over 40,000 Sq.ft aim at the monthly bulk shoppers. These markets have spacious parking lots and sell variety of products such as electronic, clothing, durables and so on part from groceries. Supermarkets- It mainly based on the classical self- service system. Its area varies from 4000 to 20000 sq. ft. They mainly focus on one of the primary conditions of grocery, household goods, personal care etc. Mass Merchandisers- The mass merchandisers have cross country chain operations. They offer less choice in each category: give discounts, cheap costs and inventories at lower level. Discounters- Aimed mainly at bargain buyers, they are different from supermarket. They offer less choice in each category; give discounts, cheap costs and inventories at lower level. Convenience stores-They are located at convenient points like petrol stations that keep open day and night and sometimes do odd jobs for time starved customers (clothes, laundry, medicine prescription, and pick up).They occupy a small area, usually less than 2,000 Sq.ft. Specialty stores- These are moving towards ‘consultative shopping’ where a salesman is well trained in offering specialized advice to customers before they purchase any commodity. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

Mom-and-Pops-Traditional formats, these are very small (less than 1000 sq.ft) and family owned corner shops.

The Indian Scenario: Trade or retailing is the single largest component of the services sector in terms of contribution to GDP. Its massive share of 14% is double the figure of the next largest broad economic activity in the sector. India is the ‘second most attractive retail destination’ globally from among thirty emergent markets. It has made India the cause of a good deal of excitement and the cynosure of many foreign eyes. With a contribution of 14% to the national GDP and employing 7% of the total workforce (only agriculture employs more) in the country, the retail industry is definitely one of the pillars of the Indian economy1.

Growing in tandem with the economy is the Indian retail sector. The sector is on a high growth trajectory and is expected to grow by more than 27 per cent over the next 5 to 6 years. Retail is one of India’s largest industries, contributing to about 10 per cent of the GDP and providing employment to 8 per cent of the nation’s workforce. Indian retail business promises to be one of the core sectors of the Indian economy, with organised retail sector estimated to grow by 400 per cent of its current size by 2007-08. Income, technology and life styles of consumers are changing, even from whom they buy are changing. The location or the place where they buy is changing; the shops are opened closed according to the convenience of the buyers. The buying process has changed due to Internet buying, which brings new and better deals and also saves time. Population growth rate, increasing literacy rate and increasing family income has an effect on consumer spending. Changing social attitudes towards work, home and leisure affect the retail strategies. Political decisions relating to the environment, shopping locations Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

and fair trade affect, where and how retailers can trade. Changes in technology bring new attitudes to buying products and services and to better organization of the supply chain. India has the highest shop density in the world and the present retail market in India. We are ranked second in the global retail development index out of 30 by AT Kearney. This figure shows the comparative penetration of organized retail in India.

Com pa ri t iv e pe nit ra t io n of org a ni z e d re t a il 120%

Traditional Organized

100% 80% 60% 40% 20% 0% US

Taiwan

Malaysia

Thailand

Indonesia

China

India

Evolution of Retail Market in India. In the beginning there were only kirana stores called Mom and Pop Stores, the friendly Neighborhood stores selling every day needs. In the 1980s manufacturer’s retail chains like DCM, Gwalior Suiting’s, Bombay Dying, Calico, Titan etc started making its appearance in Metros and small towns. Multi brand retailers came into the picture in the 1990s. In the food and FMCG sectors retailers like Food world, Subhiksha, Nilgiris are some of the examples. In music Segment Planet M, Music world and in books Crossword and Fountainhead are some others. Shopping Centers began to be established from 1995 onwards. A unique example was the -Establishment of margin free markets in Kerala. The millennium year saw the emeregence of super markets and hypermarkets. Now big players like Reliance, Bharti, Tatas, HLL, Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

ITC are entering into the organized retail segment. The big international retail bigwigs are waiting in the wings, as the present FDI guidelines do not allow them to own retail outlets in the country. Walmart is testing the waters by agreeing to provide back end and logistic support to Bharti for establishment of retail chains with a view to study the market for future entry when the FDI guidelines change and to establish a backbone supply chain. Table 1 shows the different phases in the growth of organized retailing in India. Table: 1. Journey of Organized Retail in India Year

Growth

Function

2000 First Phase Entry, Growth, Expansion, Top line focus 2005

Second Phase

2008

End to end supply chain management, Backend operation, Third Phase Technology, Process

2011

Fourth Phase

Range, Portfolio, Former options

M&A, Shakeout, Consolidation, High investment

Sour ce: Ernst & Young Few of India's top retailers are: 1. Big Bazaar-Pantaloons: Big Bazaar, a division of Pantaloon Retail (India) Ltd is already India's biggest retailer. In the year 2003-04, it had revenue of Rs 658.31 crores & by 2010; it is targeting revenue of Rs 8,800 Crore. 2. Food World: Food World in India is an alliance between the RPG group in India with Dairy Farm International of the Jardine Matheson Group. 3. Trinethra: It is a supermarket chain that has predominant presence in the southern state of Andhra Pradesh. Their turnover was Rs 78.8 Crore for the year 200203. 4. Apna Bazaar: Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

It is a Rs 140-crore consumer co-operative society with a customer base of over 12 lakh, plans to cater to an upwardly mobile urban population. 5. Margin Free: It is a Kerala based discount store, which is uniformly spread across 240 Margin Free franchisees in Kerala, Tamil Nadu and Karnataka. Wholesale trading is another area, which has potential for rapid growth. German giant Metro AG and South African Shoprite Holdings have already made headway in this segment by setting up stores selling merchandise on a wholesale basis in Bangalore and Mumbai respectively. These new-format cash-andcarry stores attract large volumes from a sizeable number of retailers who do not have to maintain relationships with multiple suppliers for all their needs. KARNATAKA SCENARIO The study conducted by the Rabo India finances Pvt. Ltd. says that south Indian states of Tamilnadu. Andhra Pradesh and Karnataka have taken a read role in establishing modern food outlets. The growth of organized retailing has shown particular vigor in Chennai and Bangalore where an estimated 40 per cent of their grocery requirement were met through modern retail formats. The study pointed out that media exposure; nuclear families and emancipation of woman are some of the important demographic reasons for the shift in the decision-making variables from price. the study also estimated that organized food retail sector is set to expand over ten folds in the next five years to approximately Rs. 75 billion ($1.6 billion).the estimate was based on the assumption that 6 million household would spend Rs. 1000/ per month through organized retail. Karnataka is one of the leading states in organized retailing in India as there are more than ten organized retailers (firms) with more than 100 outlets including metro AG operating in Bangalore city alone due to increasing urbanization and expanding service sectors like software, banking, insurance and business process outsourcing (BPO),which has taken a metropolitan city status more recently has led to increase in income of the consumers. apart from Bangalore ,cities such as mysore, manglore, hubli-dharwad and belgaum in Karnataka are also growing Rapidly in terms of urbanization, income and organized retailing with local food markets as they converting unorganized retail outlets into organized form because of strong demand for convenience products; and better educated concerned about health, nutrition, food safety, and the environment. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

As income rose and shoppers although both convenience and new tastes and stimulation, supermarkets were able to expand the products offered. The global economy has changed, consumer demand has shifted, and retailers operating system today are infused with far more technology than was the case in the past. it was observed that lot of progress have been achieved in the food retailing in the past decade through organized food stores such as supermarkets, discount stores, fresh product outlets, specially stores, convenience stores and off price retailers. But still there is a lot of scope for the food retailing. the state is experiencing rapid structural change with the emergence of huge retail firms with massive buying power and concomitantly concentration in the manufacturing sector. hence, an effort was made in the state to study the entire business aspects of organized food retailing in general and supermarkets in particular. In addition, consumers study was also undertaken to know the factors to be considered while purchasing their food products in food retail outlets. The specific objective of the study was as fallows: 1. To document the supermarket existing in the study area 2.To study the organizational structure in supermarket. 3.To evaluate the investment pattern of supermarket 4.To evaluate the financial management of supermarket 5. To study the procurement management in supermarket 6.To study the inventory management and its costs 7.To study the management of processing/value addition in supermarket 8.To ascertain the methods of pricing in supermarket 9.To ascertain the constraints/problems faced by the retailer. 10.To identify the factors influencing the consumers to purchase the food products in food supermarkets/food retail outlets. The above said objectives are very much relevant from the viewpoint if investors in the food retailing industry and they helps in providing best services to the consumers at competitive prices. Although few studies were conducted on the food retailing, there were no studies, which cover the above aspects of food retailing business and constraints faced by the supermarket in Karnataka. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

Limitation of the study; The study was purely based on the data given by the owners/executives of the food retailing companies/outlets who are generally suspicious of the motives of any investigation because of fear of taxation and competition. In addition, due to non-availability of time series data with respect to the business performance indicators over a period of time, only recent year’s data (2006-07) was used to analyse the performance. Therefore, the investigation was confronted with various drawbacks in ascertaining the data. in case of companies having chain of outlets/units, only one unit/outlet data was used to assess the overall Objectives of the study; Hence greater care was taken to collect the data as accurately as possible. Presentation of the study; The entire study has been presented in seven chapters. In the first chapter, the importance and the current status of the present study was highlighted. The specific objectives of the study as well as limitation of the study have also been indicated.

Chapter II deals with the review of the relevant research studies connected with the objectives Chapter III outlines briefly the main features of the study area and the study outlets. The nature and sources from which relevant data have been collected and the various statistical tools and techniques employed in the study for evaluating the objective were included. Chapter IV is devoted to the analysis of the data through a variety of tables into which relevant details have been compressed and summarized under appropriate heads presented in the tables. Chapter V provides the casual relationship between certain variables and the outcome which they produced. Chapter VI briefs the summary of the main along with the policy implication that emerged from the finding of the study Chapter VII, the final chapter list the references cited while undertaking the research. II REVIEW OF LITERATURE

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In this chapter, an effort has been made to critically review the literature of the past research work relevant to the present study.since,the studies related to food processing and food retailing in the country are relatively few, the available literature on the related subject has been reviewed and presented under the sections namely 2.1 documentation in food industries 2.2 organizational structure and investment pattern in agro-industries 2.3 financial management in food industries 2.4 procurement managements in food industries 2.5 inventory management and costs in food industries 2.6 processing/value addition in food retailing 2.7 factors considered and methods of price-formation in food retailing 2.8 constraints and measure to solve the problems faced by the food retailers 2.9 factors influencing the consumers to purchase the food products in food retail outlets. 2.1 DOCUMENTATION IN FOOD INDUSTRIES Dudinov (1999) documented the practices of small enterprises operating in the food sector in the USA, Germany and France with the aim if identifying factors contributing to their success to their success that could be used in Developing this sector in Russia. The main types of small enterprise operating in each of these countries were described.in the USA; these were trading companies, wholesale-retail firms, small trading enterprises and cooperative societies. In Germany enterprises owned by a single owner dominate; small retail enterprise account for approximately 60% of turnover in the German food market. In France, food retailing was dominated by “self-service”, which accounts for two thirds of enterprises in this sector, hypermarkets and supermarkets accounted 42% of food sales, super stores 9% and convenience stores 12%. Nikolaou and Hughes (1999) in their study to explore the role of publicityfinanced agricultural market information services (AMIS) organization, both in development western economies (UK, germany and USA) and in economies Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

in transition (Poland, Czech republic, Romania and Russia); and, taking the case of Bulgaria, to question whether agricultural market information services have fully performed the functions that they were designed for. The study reported that the price and trade liberalization have always been regarded as essential components of reform packages implemented in economies in transition. In agriculture, typically, has been a programme to improve market information through establishing AMIS.form an economic perspective, the importance of AMIS relates to their function in augmenting market integration through improving transparency in agricultural markets. Frick and groenewald (1999) opined that the necessary data on agriculture must be available for public and private decision –makers in the agricultural sector to use agricultural information for decision-making, solve problems or increase their knowledge. As a result of the supply of these data decreased. also, the needs for data on agriculture of the various decision-making i.e. the farmers and extension officers, changed .since information system are based on the needs of the decision-makers, the need for data agriculture should be determined before either existing methodology are improved or new methodologies are introduced to increase the supply of data on agriculture in south Africa. Atkinson et al (2000) reported that the formulation of information and communication management strategies would facilitates the development of small-scale food processing enterprises in African, Caribbean and pacific countries. The specific aim was to conduct critical reviews of the small-scale food processing sector in Mozambique, South Africa and Zambia which would highlight constraints relating to information and communication management issues. The report notes that improving the flow of information to small-scale food processors is crucial to their future success. The main generic recommendations were:(1) development of a regional network for information exchange;(2) establishment and development of business support centres ; and (3) development of an information support system foe small-scale food processing enterprises at the national level. Virichev (2000) reported that in an attempt to stabilize the food market and price, the Moscow administration set up a city reserve of basic commodities and an ordering system for fruit and vegetables. In 1999, purchase included 680 000 tons of meat and meat products, 500 000 tons of sugar, 1 200 000 tons of grain, and large quantities of other essentials, enough to ensure supplies foe Moscow. The supplies were funned from the budget, there were additional non-budget sources, and interregional cooperation was actively Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

pursued. Nevertheless, the national financial crisis and the drop in some areas subsequently put considerable pressure on the system, compounded by the sharp increase in imported foods, which in turn further depressed domestic agricultural production. A major problem in prices and prevented the establishment of a price-monitoring system. Appreciating that the key to a stable food supply is support for domestic growers, it was proposed that by 2010 a total of 25 wholesale food markets (WFM), with the necessary infrastructure, should be set in 2 stages, some based on existing sites, some new. An information programme formed an important component of the programme. Consideration designed to safeguard the operations of the WFM. Perkins (2001) reviewed the state of the retail grocery market in Europe in (2001). It comments that although the food retailing sectors was falling as a percentage of overall retail sales across Europe, this was Because of greater amounts of income being spent on non-essential services and goods. It also reflects on previous assertions that the arrival of wal-mart in Europe would begin a wave of consolidation. It goes on to discuss the mergers that have taken place recently and also the other types of joint ventures and alliances that have emerged. It views wal-mart as a potential predator in the major European markets. Lindgreen et al (2004) examined the extent to which companies in the Dutch food retailing sector were using the World Wide Web and its associated technology to conduct their business. It analysed the commercial web sites of Dutch food retail companies (numbering 34 in all) to determine which commerce processes were being supported online in this sector. The results of the research provided insights to academics on the adoption of electronic commerce in a particular industry sector and to food retail managers on their competitor’s usage of the World Wide Web. The findings show that, generally support for electronic commerce processes a sub –processes was merely 16% of the considered sample. Most retailers used internet only as a medium of communication. Although others have set up commercial web sites that provide higher customer support. Several sub –processes appear to be supported such as core logistics, online customization possible in the process. A high correlation was observed between search, valuation, and authentication on the one hand and support for online payment on the other hand. Lastly, there was no signification difference between regional/national retailers or firm size, especially for the search and d valuation processes.

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Anders (2005) reported that due to increasing concentration and a rapidly changing competitive environment in many food markets, it was expected that farmers and processors suffer from the exertion of retail markets power. This might be the case particularly on those regional markets where smallscale marketing structures dominate. Given this background, this study analysed the simulation exertion of retailers the German meat market. Based on the production –theory approach proposed by gohin and guyomard (journal of agricultural economics (2000) 51(2), 181-195) the modal parameterized the retail industry’s oligopoly and oligopsonu equilibrium. Standard market power measures like Lerner indexes were computed, and selected elasticity’s of factor supply and industry demand were provided. Results suggested that the hypothesis of perfect competition and pricetaking behaviour clearly has to be rejected upstream and downstream market power in regional meat marketing is limited. Eastwood et al (2005) study revealed that successful food retailing depends to a significant degree on providing a positive shopping environment for consumers. The SERVQUAL format was one way of gathering information about shopper’s ideal and actual rating of an outlet’s characteristics. Implementation of the identity strengths and weaknesses with respect to patron’s evaluations of outlet characteristics. Six green groceries were selected to reflect the diversity of outlets in Tennessee, and a survey of 1118 consumers in the selected outlets was conducted in the spring of 2000. Results indicated that the consumer ratings vary by feature group for ideal, actual, and actual minus ideal subgroup scores. The information could be used to generate better store-specific strategies to meet consumer expectations. 2.2 ORGANIZATIONAL STRUCTURE AND INVESTMENT PATTERN IN AGROINDUSTIES Muralidharan (1981) compared the establishment costs of three processing units namely sugar, gur and khandsari units in mandya distinct of Karnataka. He found that establishment cost of the three units to be in the order of rs 4, 40, 28,322.03 lakhs for sugar Srinivasan (1997) studied the organisation and managements effectiveness’ of regulated market committee; he observed more or less uniform organisation structure of regulated markets in Tamil nade, in thirukoilur regulated market alone the post of junior superintend existed. However the

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number of posts in each cadre and the number of posts filled up varies with the quantum of arrivals. Ramdev (1998) observed the management appraisal of cashew processing industry in uttara Kannada district of Karnataka.He found the line organization type of structure in cashew processing industry, which is sample and clear cut responsibility and authority with fast and easy feed back from the employees. the discipline among employee maintained easily and effectively, similarly their salary expenditure increased with increase in size of the unit.

Efermenko (2000) presented an overview of the main aspects of organizational structure that currently exist in the belarussian agricultural sector. Prospects for the development of new organizational and legal forms of commercial enterprises in the agricultural sector were considered, taking into account the impacts of the new civil code of the republic of Belarus. It was suggested that a new structure for “agribusiness” could gradually be established, and this would embrace a whole range of ownership and management types, including corporations (open and closed joint stock companies, and limited liability companies),partnership, cooperatives (production and consumer) and individual ownership (unitary enterprise, and daughter or subordinate companies). Mane rahul rajaram (2000 a) observed that both small and large starch units followed the line organization type of structure because of less number of actives and high investments in these industries, this is also easy to develop a sense of belonging to the organization, communication is fast easy and feedback from the employees can be easily obtained and immediate corrective measures can be applied. Ushachev (2000) reported that the crisis in the agro-industrial complex (AIC) was attributed to a large extent to the absence of control of the socioeconomic process occurring in it due to several reasons: the organizational structure of the AIC had allowed to disintegrate; many of the states control functions have split among numerous ministries and departments; and relevant officials were unprepared for the conditions of market economy. The strategy of the measures required to rectify the situation involved: formulation of clear-cut objectives; step-by-step planning of the control system; and a time scale to ensure the measures are carried out. Practical implementation of this programme was discussed with specific Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

proposal, including: establishment of a government council to coordinate and develop the AIC; elimination of all forms of duplication among departments responsible for inter- and intradepartmental agricultural questions; estalbishment of an official agency for state property within the AIC system, at both regional and federal levels; strengthening of regional administrative organizations; gradual conversion of integrated, joint-stock type structure to cooperative forms; and development of a special federal programme for a single AIC management system. Lzvekov (2000) observed the switch from a centralized to a market economy in Russia has led to a change in the structure of the food distribution network and the rise of the wholesaler as the link between producer and retailer. An analysis was made of the wholesaler as the link between producer and retailer. An analysis was made of the wholesaler sector, with particular reference to its role in shaping the operating system employed with regard to Russian conditions, the organizational structure and management system of the MERKA fruit and vegetable company, it had a 2-tier structure: one embraces the commercial director, the chief engineer and accounts department, while the other operators the commercial trading operation. Its modus operandi was said to permit it to unsercut its rival’s prices by 10-15%, not least by operating through regular foreign importers, an important factor in view of the current import levels of 80% of all fruits and vegetables. Kozachuk (2001) reported that any management practices existing in Russian enterprises were inappropriate for operating in market conditions. There was a clear nee for management functions to be extended, and for new methods and approaches to management that are suitable for different ownership types to be developed. The process of managing a trading enterprise should be based on market principles and modern management methodologies. Key ideas in western management theory were considered, and used as the basis for different models of organizational structure in trading enterprises. These models include: the functional area; the divisional structure, where positions are grouped by similarity of products or services; and hybrid structures, which incorporate elements of both functional and divisional structures. Different management styles were also considered. Specifically the directive and democratic styles. It was stressed that the choice of management style influenced by the economic situation and functional characteristics of any given trading enterprise. Hasert (2001) conducted an analysis of the competitiveness of milk production, considering the unique condition of the eastern provinces of Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

Germany. Based on experiences and comparing statistical data of the territory, key factors for profit were concentration, specialization and strict management of expenditures. Author suggested the optimal farm size to be 300-600 cows per farm. According to the income and of the specific inputs, the profitability threshold was 7000 kg/cows. The precondition for successful economical functioning was a management which was professional, had strict management of expenditures and was highly motivated. In this organizational structure, there was a chance and the potential of profitable milk production based on employed workers , and was competitive to farming systems based on family ownership. Wilson and Thompson (2003) analysed the organizational structure of the fresh produce industry in the western USA, Florida, and Mexico, operates in a competitive environment. It used the data obtained fro interviews with 83 grower-shippers in 1995-96 traditional views and models of perishable food suppliers fail to capture the fundamental role of time integration in firm-level organization. A two-phase research design of major grower (shipper firms of lettuce, tomatoes, and melons) reveals a diverse distribution of firms across the time integration continuum. Most firms used more than one macroclimate to extend product availability. Decision makers were encouraged to understand the implicational of these temporally integrated organizations on agricultural and trade policy.

Feher (2004) focused on efforts to reform the government structures, in particular the ministries of agriculture, in the transition countries of central and Eastern Europe In light of their EU accession. To guide the necessary reforms in the public sector, several governments adopted a medium-term strategy for public sector reforms. An integral part of the strategy was functional analysis that would help to re-orient ministries of agriculture to carry out their policy, regulatory and service delivery responsibililities costeffectively, with full transparency to the government, and with sensitivity and courtesy to the public. The study makes comprehensive recommendations for the abolition, rationalization, privatization and transfer of functions on how remaining and new functions could be structured in effective organizational units for both the medium and long term. The benefits and implementation, and strengthen the accountability of subsidiary institutions. 2.3 FINANCIAL MANAGEMENT IN FOOD INDUSTRIES Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

Mohammed Ali (1992) used financial ratios to analyze, the performance of fruits and vegetables processing units under private and public sector. The study revealed that the solvency position of the private sector was found to be lower, but for public sector it was high. The liquidity ratios in general have revealed that the private sector unit is better position than public sector. The profitability ratios have indicated the more eficient utilization of fixed assets as well as owned funds by private sector unit. The turns over ratios were low in case of public sector unit when compared to private sector unit. Arora and zebul nisha (1996) in their study on rural food processing in Rampur district of UP concluded that even with a low Laval of operation rural food processing complexes are making profits. Their annual net returns, operating profit to revenue ratio, net profit to revenue ratio, operating ratio and operating efficiency are 23.70, 25.03, 41.81, 34.49 and 58.18, respectively. The working capital employed and interest coverage ratios of 51.16, 68.38, 57.01 and 5.90, respectively, proves their financial soundness. Devaraja (2000) study examined the performance of the horticultural producer’s cooperative marketing and processing society limited in Karnataka, India, during the period 1958/59-1995/96. Physical and financial indicators of performance such as membership, retail outlets, share capital, owned funds, total assets, long-term investments, fixed assets, working capital, total liabilities, and sales, were Analysed. Results show that there were substantial increases both in physical and financial indicators over the period of study.

Mane rahul rajaram (2000 b) reported that the larger unit were more efficient than the small unit. It may be because of economies of scale in operation and management. Solvency position of large unit was somewhat less sound but well within the acceptable norms. Both units were having good financial strength. Marton (2000) analysed the extent of foreign involvement in the Hungarian food industry financial and economic characteristics of large companies with majority foreign ownership operating in this sector. It was found that the foreign-owned companies accounted for 51.7% of total sales in the Hungarian food industry in 1997, compared with 23.7% in the United Kingdom and just 7.7% in Finland. Of the ten companies operating in the Hungarian food and tobacco sector (ranked by turnover). Only one, babolna Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

RT, was 100% foreign-owned (namely cereol art unilever kits (food division), coca-cola amatol kite, nestle hungaria kits, and egri dohanygyr kft). Khan et al(2001) study assessed the costs,returns, and profitability of meat retailing in peshawar,pakistan,using primary data collected in the beginning of year 2000 from 80 meat retailers through a pre-tested interview schedule. Analysis of the data shows that the total costs per month amounts to rs 130 763.74 meat retailing is a profitable enterprise, with net revenue per month amounting to rs 8613.66. Konieczka (2002) reported the profitability,liquidity,the level of debt and efficiency data for a number of small (assets up to 20 million zloty), medium (20-40 mil zloty) and large (over 40.0 mil zloty) polish sugar companies were analysed for the period 1996-2000 in order to establish potential advantages or industry restructuring. The results revealed generally weakening financial indicators for the smallest companies, suggesting that restructuring in favour of large sugar concerns with stronger market representation and lower unit costs would bring economic advantages. Gustafson (2003) study revealed that in Fargo, USA on an average, both food manufacturing and food retailing small businesses had positive financial characteristics.although, they were only marginally profitable and liquid, they were highly solvent,accounts receivable and inventory comprise nearly half of food manufactures total assets and a third of food retailers assets. By most financial measures, food retailers were statistically smaller than food manufactures. Both food manufacturers and food retailers utilized computers, primarily for accounting/book keeping inventory management and administration. Primary financial services used were for transactions and trade credit. Nearly three-fourths of food manufacturing and one half of food retiling supply purchases involve trade credit from a large number of trade credit suppliers, on average. Both firm types have higher credit risks and were tardy with repayment of trade credit

2.4 procurement management in food industries Natarajan (1990) observed that the major cost in milk production was cattel feed (20%) he suggested that agricultural price commission in consultation with economic ministries and planning commission to recommend, from time to time to the procurement and support prices of milk and milk products as done for other performance of dairy co-operative societies (DCS), four factors were important viz,,high milk utilization, better milk marketing, distribution of Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

cattle feed and credit for buying and technical assistance to milk producers through co-operatives.

Balasubramanian and prema (1996) in their study on processing and trading of cashew nuts in India observed that the total processing and raw material costs accounted for about 70%,labour charges 10.5% purchase taxes 5% freight and handling charges 5%,packing cost 4.5% and remaining 5% was contributed by costs of power,fuel,depreciation and overheads all put together. Bouvier-parton-p (1998) in his study on contractual forms between retailers and their suppiers in the food sector reported that vertical inregration and contractual relations are the two main features of the French food-retailing sector. The economic weight of these is more or less similar. However, in the long run it seems that (a) the contractual side is more important than the integrated one and that (b) contractual forms related to high quality tend now to be dominant. Woods ET at (2000) examined the supply chain concept for horticultural products which were characterized by pershability. Heterogeneity and lags in production response to market signals, producer’s profit are vulnerable to quantity, timing of supply and product specification. Many supply chains in smaller industries were loose. Fragmented, interwoven, unstable and unique. Hence, he suggested the firms operating in within these environments needs an astute understanding of the chains, the hierarchy of channel members and their relative position. Effective business strategies for individual firms and supply chains need to be developed and redeveloped to accommodate the dynamic nature of horticulture. Lehtinen et al (2002) in their study on contract manufacturing in Finnish food industy,found that in the future,direct deliveries from the contract manufacturer to retail stores will increase, the delivery times will shorten and thus, more flexibility is needed from the contact manufacturer. Weindlmaier et al (2002) conducted a survey in the Bavarian (germany) food industry (with 153 respondents) the study shows that from the point of view of the processors, in the near quality management system in agricultural firm might be a pre-requisite to deliver raw materials to the food industry. Linggreen and hinley (2003) discussed the measures taken by tesco Food Company in setting up effective guidelines for managing its relationship with Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

neat suppliers. These guidelines for managing its relationship with neat suppliers. These quidelines make it possible for Serious food scares and to address consumers concern over animal welfare and environment issues specific initiatives include different animals, feeds and medicinal policies and schemes have been implemented by both tesco and the meat suppliers. The benefits of tesco’s approach to its suppliers and consumers are considered and included the ability to deliver higher value products. Narayan reddy (2004) in his study reported that most (61%) of the retailers get their requirements from wholesalers 15% from the large and other retailers. Over 17% of the selected retailers get their goods from more than one source, but a small percentage of retailers get some of their requirements from producers. From the side of the terms of supply 67% of retailers get their requirements by paying cash. Only 13% of the retailers get their requirements on credit and 19% credit partly from the suppliers. Apart from this, the study also shows that the organized retailers/hyper malls and super markets get wholesales margin plus concession as they buy in bulk and are also the producers. Anonymous (2006) reported that in USA food retailing,labor was the largest single marketting cost,accounting for half the industry,labour was the largest single marketting cost,accounting foe half the industry’s expenses beyond the farm.food retailers employ more than 3.5 million workers.the industry’s next highest costs were for packaging (8.0 percent) and transportation and energy ( a combined 7.5 percent).recent trends such as high energy costs and the rising demand for more convenient packaging have increased all these expenses. 2.5 INVENTORY MANAGEMENT AND ITS COSTS IN FOOD INDUSTRIES Blayney and weimer (1991) analysed four general alternatives to the current US dairy programme each with the objective of avoiding large milk surpluses were studied by USDA these were (1) a target price/deficiency payment programme; (2) a reclassification plan commonly called the class IV plan (3) two-tier pricing; and (4) milk marketing diversion using a rating farm receipts retail value and government cost it was concluded that the current programme measured up well against the option stusied.although the current programme did not guarantee producers a profit it provided the market signals individuals need to make decisions and acted as a price floor to stabilize downswings in prices .

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Farsad and lebruto (1993) reported that the consequences of overstocking items or unserstocking were undesirable.overstocks absorb money and invite waste. Under stocks risk disappointing customers with unavailable menu items or add to food coats by requiring emergency runs to the cash and carry through analysis of daily item use and an application of risk, managers could calculate when to reorder that is when there is sufficient stock to cover typical demand until the next delivery to account for unexpected demand some safety stock must be included (by calculating the standard deviation of each day’s use for the past time period say a week and factoring that with the Z score of the sevice-level probability that management Is willing to absorb) by factoring the lead time ( delivery and food prep) the standard deviation of the usage and the acceptable probability of a stock out managers can use a formula to determine precisely when to reorder. That foe every one unit increases in inventory turnover. Market capitalization increased by $479 million in the FAFH over the analyst period. Thus the equality capital market places a premium on the efficient management of inventors in the food system and rewards those firms that develop adopt and implement supply chain technologies Nein pichu and shiwen (2004) reported that as computes are more and more widely used in livestock production and farmers manufacturing their own feeds were growing more popular in Taiwan. This study was conducted to design a package which included simple feed formulation and ingredient inventory management to meet the farmer’s needs and to provide then with a more effective management regime of the feeds ingredients. This system was written in Microsoft visual basic 6.0 programming language and Microsoft access database. The system was divided into four modules in terms of printing report. The inventory management system could facilitate the manages in monitoring the inventory to make the most effective adjustment and usage of the ingredient. The managers could, therefore load their ingredient costs. This system could be executed on windows operating system and enable the farmers to consider shares livestock growth condition to make it as a calculation tool to formulate animal feeds rapidly.

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2.6 PROCESSING / VALUE ADDITION IN FOOD RETAILING Singh ET all (1994) Ina study on economics of marketing and processing of pulses in Banda district (uttar Pradesh) observed that per quintal cost of processing of arhar. Gramm and lentil was rs. 831.67 rs .823 and rs 752.05 respectively. Kutz and boland (2000) study ravelled that us premium beef it’s a cooperative partnership between all segments of the beef industry value chain was affording each segment on interest in the key stages of beef production and processing as well as equal share of the financial risks and rewards. This value added strategy was accomplished through vertical integration and adding equality based pricing structured to more closely link beef producers and consumers. Berverland (2001) analyzed the level of brand awareness within the new Zealand market for ZESPRI kiwi fruit, the effectiveness of this branding strategy employed by kiwi fruit new Zealand since it created value of this fruit. And the implications of this findings for agribusiness in general using the data collected from surveys if kiwi fruit consumers (n=1060 outside three major super market chains in Auckland. New Zealand the results suggested that the level of brand awareness for ZESPRI is low among consumers. it is indicated that brand awareness could be increased through a relationship marketing programming involving targeted marketing and supply chain management. Mahesh and nagaraja (2002) reported that the value addition of cashew (anacardium occidentale) kernel baby bits (CKBB) was attempted by coating with cane sugar, honey and salt. Optimum casting at 100 degrees c for 5 min at 70% concentration for cane sigar and honey. And 5% for salt. Sweetened (70%) and vanillin (0.1%) flavoured CKBB are the most preferred. de fatting of CKBB enhances the per cent caiting. cating or cashew kernels of grades with cane sugar at 70% is dependant on the surface area. Cashew apple Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

juice could be coated on the CKBB. Acceptabity of cashew apple juice coated baby bits (bb) improves with the addition of cane sugar at 70% concentration. Permitted colours and acne sugar compete with each other during caiting. Madhrai and kamini Devi (2003) found that in watermelon, the rind constituted 33% of the whole fruit weight. Value added preserved products like pickles. Tuttti fruity. Vadiyams and cheese were prepared using the white portin of watermelon rind. The quality of production in terms of physical parameters was evaluated. All production was subjected to sensory evaluation test using a panel of 20 judges. Results showed that mean sensory scores for attributes were high. There was no change in mean scores after one month storage. Santhosh kumat et al (2003) in examines the Indian research efforts in vegetables crops, new niches for vegetables production, and the impact of pest management research it was indicated that the ongoing research programmes on vegetables addressing may emerging challenges. There is a wide scope for innovative improve net and a sharper focus on vegetables processing, value addition and quality control. Subasinghe (2003) studied the different innovations used by food processors to add value to aquaculture products such as shrimps. In order to survive in highly competitive market environment. Some of these innovations were focused on the packaging and presentation of the shrimps, whereas others focused on pre-processing/ processing. Such as peeling, preparation of breaded products, application of batters and production of other shrimp based products. Arora et al (2004) found that vegetables washing are an important primary process unit operation for value addition of the produce at farm level. Washing is used not only to remove field soil, dust, pesticides, but also the surface microbial load. Carrots, potatoes and spinach were washed mechanically in a rotary vegetable washing machine at varying speed and time and then evaluated for their quality. The microbiological washing efficiency. Which is calculated by observing the total viable count of the surface of the vegetable before and after washing ranged between 96.599.8% as compared to recommended 80% indicating the adequacy of the vegetable washing machine? Kaveri and bindhu (2004) showed the effect of substituting 50% of the pulse fraction of 10 Indian recipes (adai, pessarattu, plain dosai, masal vadi, seeyam, and my sore bonda, kandharappam, dhokla, maladu and moong Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

dhal halwa) with whole or defatted soyabean flour on quality and nutritive. The results showed that all recipes substituted contents than traditional and defatted soyabean flour-substituted recipes. Calcium, Phosphorus, iron and protein contents were higher in substituted than traditional recipes. The flavour taste and degree of liking of whole soyabean floured- substituted and traditional recipes were almost similar,. It was conclude that whole soyagean floured could be included in the daily diet by incorporating in recipes at 50% level Ramakrishnaih et al (2004) attempted to study the technology package devolvement to retrieve the cotyledon from the dhal mill b products contains about 50% cotyledon material amounting to one million tone and also refining the same to an acceptable/ desired level. The technology consists of de sronnnig size separation. And air classification followed by refining and thermal stabilization of edible material. About 30-35% of the cotyledon material was recovered form the by products from the commercial dhal mills and used in the preparation of traditional piles based products. It could be substituted in the based products such as vada, rasm/ sambar and papds up to about 50%. Adoption of this technology by dhal millers in the county would results in the recovery of about 5 lakh tones of cotyledon material valued at rs 500, which could contributes to the econoes enlistment of the industry. 2.8 FACTORS CONSIDERD AND METHODS OF PRICE FORMATION IN FOOD RETAILING Gautham battacharya and Simons (199) study revealed that the persistence of low quality was explained with rational strategic behavoiur of producers and consumers of experience goods in informs; markets, where quality was revelled after purchase, price was determined by bargaining and renegotiating of price does not necessarily follow after quality is improved by the seller. Starting from a given contract between a buyer and a seller at a given price that has been reached through costly bargaining , assume that after the existing quality was revealed the seller corns across a project (possibly adaptation of better technology), which will enhanced existing quality . If the project is efficient. It will always be adopted by any formal market structure. Rosecky and king (2000) said that the accepted economic theory suggests the prices of commonly available products in competitive markets are likely to be approximately the are. If monopoly prices can be extracted the resulting profits attract competitors into the market. In his study. He his Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

study, he examined the prevailing prices in detail for a large number of commonly available supermarket products in France, the United Kingdom, and the USA. The results of this study show that some products have very similar or the same prices and other products have different pricing pattern. Santiago et al (2000) conducted a pilot sample survey in 1997 to study the structural features of the foodstuff wholesale market in ao Paulo city, Brazil. The usual pricing process in this market was simply achieved by adding a mark-up to the costs. However me wholesalers obtain price information from other wholesaler. Specialty those established far from the main wholesaler areas. Wholesale are used to buying products from farmers (particularly no 0manufactured foodstuffs like potato onion and eggs) from jobbers or other wholesalers [malze and garlic] from the jobbers and industries (rice) from industries and other wholesalers (beans, meat, sugar, coffee and wheat flour) most wholesalers sell to retailers, but some also sell to other wholesalers sell to retailers but some also sell to other, wholesalers, to restaurants to industries and even to consumers, Todorova (2000) presented a method of price determined, which was based on comparisons of prices, technical and trade parameters of competarive products in the case of greenhouse tomatoes from Bulgaria and turkey. The price of Bulgarian greenhouse tomatoes was determined to be 2.65 leva i.e. 32% higher than that of the Turkish ones. Hermann et al (2001) explained theoretical aspects of pricing and consumer behaviour and to analyse them with reference to group of breakfast products, using germen data from September 1996 to June 1999. The results indicated major significance of special offers. On average, out of 20 groups of foods, one product in each group was offered data discount every two weeks. Special offers had very marked effects on sales which in some cases rose by 274% demand was greatest for products with a long storage life, such as coffee. It apparels likely that consumers bought some items only during special offer periods. There was very strong consumer reaction to price changes for jams and breakfast cereals. An active pricing policy thus represents central marketing instruments in food retailing; this was consistent with strong consumer reaction to price changes. It does not confirm the textbook statement that price elasticity of demand for food products is low. It does however, Diverge between types of retail outlet and product types, nevertheless consumer reaction was very strong. Ramadhani (2002) study suggests that there was a substantial amount of trading and consumption of the fruits in both rural and urban areas of Zimbabwe. The, marketing system was characterized by lack of production’s Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

s all fruits were collected and retailer but few wholesalers. There were numerous collectors and retailers but few wholesalers. There was also no sophisticated product differentiation. There was a lack of an adequate price formation mechanism as prices were based on information from neighbours, knowledge of previous seasons and total cost incurred by traders. Tu chihching and connor’s (2002) Newark was one of the two price concentration studies of US grocery retailing that has failed to find a positive relationship. They examined four possible sources of experimental error in this study, based on a sample of US metropolitan areas in 1987-88. The most important sources of error were the failure to exclude non competing grocery retailers in the construction of the concentration measure. The relationship was also sensitive data sources, and functional form. When these changes were made, concentration was found to be positively was significant despite a small non-random sample of cities and unscientifically sampled prices. Buzas (2003) paper presents the results of price analyses done in the course of food retail activity investigation.he viewed from a theoretical-economic approach, the consumer price contains the costs of production, processing and trading as well as the profit share related to these activities. In practice, particularly in the food sector, this kind of linear accumulation has rarely succeeded. In the case of foods due to a decrease in consumption and vertical competition, not only the profit share, but often some of the costs could not be made good in the selling price. This failure has an impact on agriculture producers and the food industry whereas in commerce price there are diverse practices in use from the simple mark-up pricing method to the complex marketing strategies based price-forming Bacchi and alves (2004) analysed the price formation process of retail crystal sugar in the centre-southern region of Brazil, considering the different segments of its commercialization chain. The analysis as carried out over the may 1998-december 2002 period. Result indicated that producer and retail prices of crystal sugar have expensive relations in the short and long run. Income was not proven very important in the explanation of the crystal sugar price in the retail market. This was expected due to the small share of the product in the expenses of families. Herrmann and moser (2004) examined how far psychological pricing plays a role in grocery retailing and whether it contributes to price rigidity of branded foods in Germany. The empirical analysis was based on scanner data of weekly prices for 20 branded foods across 38 stores in Germany for 144 weeks in the period 1996-99. The analysis shows that psychological pricing points were extremely important in German food retailing; prices Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

ending at digit 9 were by far the most important. Moreover, there was often a strong concentration in pricing on only a few psychological prices. The analysis also shows that psychological pricing seems to be one major determinant of price rigidity in German grocery retailing. Prices of branded foods were surprisingly sticky given the high variability of agricultural commodity prices in food retailing. Apparently, prices do not change much (apart from sales) and if they do, they tend to move from one psychological price to the next. Mclaughlin (2004) in his study explained the major factors that contributes to the complicated price formation process,as several levels of fresh fruit and vegetables in the US were marketing channels,market structure changes,pricing techniques and promotional impacts, retail responses to supply changes, and price versus value Carman and sexton (2005) study analysed the retail milk pricing by supermarkets and marketing margin behaviour for four fluid milk products in nice large metropolitan market in the western United States. Multiple empirical approaches are utilized to investigate retailer pricing behaviour, and on balance, these methods provide significant evidence of noncompetitive price behaviour in each of the markets. Correlations of retail price changes indicate considerable pricing independence among retailers across cities, while rankings of retail prices by milk product provide across cities, while ranking of retail prices by milk product provide significant evidence that price were not based primarily on costs, As would be true if pricing were competitive =. Estimated retail price responses to farm price changes are consistent with monopoly pricing behaviour for several of the milk products in several of the markets. 2.8 CONSTRAINTS AND MEASURES TO SOLVE THE PROBLEMS FACED BY THE FOOD RETAILERS Cannor et al (1999) reviewed the economic literature on empirical studies of competition in the US food-retailing industry, with special attention to a few studies that attempt to cope with new forms of horizontal and vertical competition. With the end of the supermarket revolution in the 1970’s new forms of horizontal, vertical and geographic competition have appeared to challenge the supremacy of the supermarket format. New retail formats like warehouse stores, super centres, and fast-food outlets appear to affect local retail supermarket prices slotting allowances, coupons, and electronic data gathering have intensified retailer-manufacturer rivalry. Foreign direct

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investment offers the promise of new European style management style in US grocery retailing. Anonymous (2000) found that the US food retailing industry has undergo unprecedented consolidation and structural change in recent years. Large retailers have purchased almost 3500 supermarkets since 1996 representing annual grocery store sales of more than $67/thin/000 million. The nationwide share of sales for the four largest retailers increased from nearly 16% in 1992 to almost 29% in 1998. Widespread consolidation in the grocery industry could have implication for consumers and food market suppliers such as grower-shippers and wholesalers. Some consumer’s fear that fewer food retailers will eventually mean higher grocery prices and less variety. Suppliers worry those fewer but larger buyers could force lower for products and services that food retailers purchase. Retailers were likely to continue consolidating in order to maintain profitability as competition for the consumer food dollar increase. Rudolph et al (2000) in their study suggested that the food retailers risk a loss of image or even a loss of the customer if they do not learn to react effectively to failures and improve their service strategy. Aalto setala (2002) examined the empirical relationship between economies of scale, concentration and industry-wide concentration (which can be interpreted as multimarket contact) was taken into account in the evaluation of grocery retail competitiveness. Data were obtained from observation from 1994, 1995 and 1997. The results show that the main factor affecting market power was the size of the retail firm. Larger share grocery retailers, fro both the local and the national markets, carried higher mark-ups. At the same time, no firm-level scale economics were found from these larger firms. He concluded from these findings that the main purpose of large grocery retail mergers was to gain market power not efficiently. Nageshwar rao and bramhanandan (2003) in their study on problems of retail trades in Guntur district of andra Pradesh found that increasing salary, other incentives and working hours were major problems from the employees side rent on building was a problem of retail trades (62%) since they were facing many problems from the building owner side like high rent, frequent repair and demand for more good-will. Apart from these retailers (44%) also had faced many problems on media like high rates, inadequate information and coverage of area and timing problems. Fischer (2004) examined the problems involved in the management of international marketing activities of food products from the company perspective. It indicated that the major obstacles encountered in the Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

management of international marketing were higher transaction coasts and risks relative to home market business activities more specifically, for food products there were 6 main problem areas, which arise from the literature skills and knowledge of foreign business partners mentally); trade fair activities; special food product logistics and marketing problems; trade terms, export documentation and billing, and foreign exchange risk management; provision of foreign market information and government assistance. Results from a questionnaire-based survey of companies from germany ( in November 1998) and Australia (in July 1999) engaging in exporting and/or importing of food products suggested that staff education or trailing and logistics were the most important factors affecting success in international markets. Implication of this study were Those agribusinesses must give special attention to staff recruitment and training and to the mastering of food product logistics if they want to compete successfully internationality. Muller et al (2004) study revealed that the different meanings of quality for the products insufficient technical resources, badly coordinated working processes and low consumer demand for organic products were identified as weaknesses of the supply chain systems in germany, Switzerland and in Netherlands. Many of the success factors for improving quality, such as a common gaol and control of the participants, intensive communication, exchange of knowledge and information and an informal leader of the chain were also characteristics for network structures in general. In Switzerland, success of the system in place was based both on a clear position of the food retailing sector as an informal leader and on structures that encourage trust and ensure a stable balance of power between actors. In the nether land, in turn, the traditionally professional production and the general preferences for personal contacts and dialogue as the specific advantages of the existing structures. 2.9 FACTORS INFLUENCING THE CONSUMERS TO PURCHASE THE FOOD PRODUCTS IN FOOD RETAIL OUTLETS Recess (1992) in his study revealed that factors influencing the consumer’s choice of food are complex, and must be added to variables such as flavor,texture,appearance,advertising etc. demographic and Household role changes and the introduction of microwave Owens have produced changes in eating habits a reduction in traditional cooking. Fragmentation of family means and an increase in ‘snacking’. The vigorous sale of chilled and other prepared foods is related to the large numbers of working wives and single Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

people, who require and value conveniences developments in retailing with concentration of 80% of food sales in supermarkets, is also important.. consumers are responding to messages about safety and healthy eating they are concerned about the way in which food is produced and want safe, ‘natural’, high quality food at an appropriate price. Kainth (1994) in his study on “consumption of apples: consumer’s towards view pattern and determinants” used ranking techniques to understand consumer preference for apples in different income groups. He also used linear multi-variety regression to analyse the factors affecting apple consumption. Ragavan (1994) reported that quality, regular availability, price, accuracy in weighing and billing, range of vegetables and accessibility as the factors in the order of importance which had influenced purchase of vegetables by respondents from modern retail outlet. Sundar (1997) study revealed that the grocery department of sarevana bava cooperative supermarket, cuddalore was enjoying favourable images of consumers in the attributes such as equality of price, behaviour of sales persons, moving space, location, correctness of weight, Packing of goods, number of sales persons and convenient shopping hours. At the same time, the image is weak in the attributes such as quality of goods, availability of range of products, variety of goods acceptance of returns, credit facility, and door delivery and in sales promotional measures. Devil et al (2003) conducted a study on means-end-chain analysis of the food sector and explored the extent to which the findings made can be used to inform the retail positioning strategy of food retailers in the UK, using data obtained from 15 respondents. Using means – end theory as the theoretical underpinning of the study, the study employed laddering methodology to identify the linkages between food retail store attributes and personal values. The findings of the study present a more personally relevant representation of consumer’s perceptual orientations towards food retail store image. At the attribute level “good quality products”,” good reputation”,” store has additional services”, and “value for money”, are most sought after. These were linked to the consequences “feel good” and to “save time”. Overall, the findings support previous value driven research, concluding that “happiness” and “quality of life” were the most strived for personal values. Cavard and mortal (2003) undertook a survey among 2000 french consumers in 2002 to study their behaviours regarding the purchase of fruit and vegetables. It first appraised purchasing frequency; the weekly purchase being prevalent. Regarding places of purchase, supermarkets come first, Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

followed closely by market. In terms of modes of purchase, the self service with assisted weighing was the preferred option. Consumer expectations concerns better control of labelling and quality on the selling place with an indication of consumer- by date. The main consumers, the old-aged people, appear, however to be less concerned with this additional information. Michels et al (2003) study revealed that almost all foods retailers in Germany sold organic products, fresh ones being estimated at 45% of the turnover. Surveys indicated that 49.7% of households bought fresh products, principally vegetables at least once between April and December 2002 vegetables, fruit, potatoes, and eggs were the main categories on offer in supermarket-type outlets; specialist whole food shops and producers direct marketing enterprises carried a wider range of produce including meat. Some 77% of turnover by the larger retailers was from sales to regular purchases. Average frequency of purchasing. However, was not over 5 times in 9 months. Younger customers tended to bu from specialist outlets rather than supermarket. Manivannan and raghunanthan (2004) observed that there was no close relationship between the age, sex, education, occupation and extend of utilizing departmental stores where as income alone had shown a close relationship with the extent of utilizing departmental store at 1 % significant level, which shows that there was a close relationship between income and extent of utilizing department stores. Kinsey et al 92004) in his study identified seven forces that have converged to create a demand –riven food systems in the USA are (1) more diverse consumer characteristics and tastes; (2) the universal product code (bar code) and all the information technology that followed; (3) walmart (biggest food retailers in the world) the early adopted of information technology consumer response, a defensive response to walmarts expansion (4) concentration of retail ownership (5) global concentration of food processing and manufacturing: (6) new business models. Haese et al (2005) study revealed that since late 1990, the number of supermarket in South Africa has been steadily growing. Due to a more effective and efficient management and procurement system, the supermarkets can benefit from economics of scale and sell food at a relative low price.intheir study they presented a case and sell food at a relative low price. In their study presented a case study of two villages in the Transkei Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

area of South Africa. In these poor rural communities. The majority of households now buy their main food items from supermarkets rather than from local shops and farmers. White presenting an important step towards livelihood development and food security, these supermarkets provides many food items at lower prices. With an increase in income, the households look for variety and exoticism in their food products, and will most likely fin this in the supermarkets, rather than the stores. III METHODOLOGY This chapter presents the climatic and economic feature of the study area, nature source of data collected analytical tools and techniques employed under the following headings. 3.1 description of the study area 3.2 sampling design 3.3 selections of the products 3.4 nature and sources of data 3.5 analytical tools and techniques and concepts used in the study 3.1 DESCRIPTUION OF THE STUDY The state of Karnataka is situated ona tableland where the western and eastern ghat converges into the nilgiri hill complex. And is confirmed roughly within 11.5 degree north and 18.5 degree north latitudes and 74 degree east and 78.5 degree east longitudes. The state is bounded by maharastra and goa state in the north and north-west; by the Arabian Sea in the west; by kerala and tamilnadu states in the south from north to south and about 4000 kms from east to west. and covers an area of about 1.91.791 sq km. it accounts for 5.83 percent of the total states of the country in terms of both geographical area (1.92 lack kms) and population of 5.27 crores (2001 census). Karnataka is one of the leading states in the country terms of economic development and its per capita income during 2002-03 was rs.21696. the state GDP at constant prices (2002-03) was rs 72.399 crores accounts for 5.5 percent of the national GDP> the state has witnessed a healthy 6.5 per cent CARG in the GSDP for ten years period 1994-2003, being the highest among the leading states in the country. The state is largely services oriented and income from the sector contributes to half the state’s GDP with the agricultural and the industrial sector contributing to nearly 25percent each. The major manufacturing oriented industries. Among the services oriented in the state include sugar, paoper and cement industries. Among the services Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

oriented sectors. Karnataka leads the Indian biological industry. IT is another thriving industry in the state. Concentrated in and around Bangalore. The silicon valley of India. The states pride having a string infrastructure and the number of national and stet highway make inter-city and town communication easily accessible. Karnataka also has a strong railway and airport network. It is a preferred destination for investments and the Karnataka udyog mithra is a single contract point for all investors who wish to invest in the state. Karnataka is also one of threading states in organized retailing in India as three are more than the organized retailers with more than 100 outlets including metro AG operating uin Bangalore city alone due to increasing urbanization and expanding services sectors like software, banking, I insurance and business process outsourcing (BPO). Which has taken a metropolitan city status more recently has led to increased income? Of thee consumers apart from Bangalore cities such as Mysore Mangalore, hubli dharwad and Belgaum in karnataka re also growing rapidly interims of urbanization. Income and organised retailing with local food marketers as they are converting unorganized retail outlets into organized from because of strong demand for convince products. And better educated consumers concerned about health, nutrition, food safety. And the environments. Since majority of modern retiling formats like Karnataka were purposively for the study. Bangalore city situated at an altitude of 920 meters above the sea level. It sis the principal administrative, cultural, commercial and industrial centre of the state. The city which is spread over an area of 2190 square km. enjoys a pleasant and equable climate throughout the year’s use to its elevation (100m)... it is also blessed with a large number of lakes and parks within the city. Today Bangalore is the fastest growing city in the Asia with a burgeoning population of more than four million. The literacy rate of the city was 86.58 percent. Its tree lined street and abundant greenery have led to it being called the garden city’ of India. However since local entrepreneurs and the technology gland Texas instrument discovered item potential as high tech city in the early 1980s.banglaore has seen major technogy boom. It is called the silicon valley of India. There are more than ten organized retailers with more than 100 outlets including metro AG operating bang aloe city alone. The super marketers like foodworld, nilgiries, trinethra, subhikdsha and spencers are the major players operating with their chain of outlets in Bangalore. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

The twin cities hubli-dhrawad is located at a distance of around 430 kms from bangaloe the capital of Karnataka state. The climate is hot and wet during the summer and rainy seasions and pleasant during winter. Dharwad is the administrative capital of the dhrawad district and hubli serves as the commerce centre. Dharwad is a quiet, pleasing and fast growing city twentytwo km away, dhrawad forms a twin city. These cities cover an area of 202.4 sq kms with the urban population of 7.86.018. Hubli- dharwad is known for its prestigious educational institutes. Dhrawad is perhaps best known for its pedhas. A sweet made out of milk. And is a must buy for any tourist visiting the city. Today dharwad has grown beyond its borders, with industries dotting both its northern and southern boundaries. In years ahead. it promises to be a beehive of commercial activity. The location of the city on the NH4 makes it equidistant from two of the most industrialised centres in the country. Bangalore the capital of Karnataka state and pune the 2nd most industries city in maharastra . Most of the retail sector in these cities small business which occupied a significant market share. Recently hubli based BDK based group of companies entered to modern retailing by operating two supermarkets outlets (in 2001) at hubli and few local retailers also modernizing their stores in the form of supermarkets. Mangalore is an important city in Karnataka and is situated on the west coast. After integration the city id developed fat in all direction viz. in the field of education, industry and commerce. Mangalore is loated at 12’-52’N latitude and 74”-49’E longitude. The city is located in the Western Ghats and in the west by the the Arabic sea. Three national highways viz. NH -17 linking panvel and kanyakumari. NH-48 linking mangalore and babangalore.NH-13 linking Mangalore and Sholapur pass through the city. A domestic airport is located at bajpe. This is 15 km from city connecting it to Mumbai and Bangalore. Mangalore is also linked by rail to all major cities of India and is also having all weather harbours. Mangalore is headquarters of ghakshina Kannada district, the largest urban converting an area of Karnataka and the fourth largest city of the covering an area of 132.45sq with the urban population of 4.19,306. The city is an administrative, commercial, and educational. And industrial centre . An all weather port is located in mangalore and is the only major port of Karnataka, major banks of the indfai are organizes from this town. It is also famous for educational institutes. Only in this millennium, some of the organized retailer’s entered this city with modern retail formats. Foodworld is in operating since 2002. Belgaum Is one of the fastest growing cities in the northwest part of Karnataka. The district of Belgaum borgers maharstra and goa. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

Belgaum is accessible via air from Bombay and Bangalore. Belgaum is famous for the sweets and locally made ice cream. Belgaum is also home to several decisions of the Indian armed forces. The commando school of the India army is also situated in Belgaum. The Indian air force has a a big airbase near belagaum.a s of 2001 census the city had an area of 94.08 sq kms with population of 3.99.653. The city had an average literacy rate of 78% higher than national average of ^55. There were no organized retailers in this city but few local retailers converting their old stores into modern formats. Mysore city was the capital of royal Mysore province. To the people of India the word Mysore synonymous with sandalwood. Silk and fine inlay- work using ivory.. Mysore is also the home of May well regarded musicians and artists. It is the fastest growing city in Karnataka next to Bangalore. The city spread over area of 128.42sq kms with urban population 7.8lakh. being a traditional city there were no organized retailers till 2001,but recently because of its booming economic growth, few organizes retailers like food world and nilgiri’s have entered this city with their supermarket and many local retailers are also converting their old a stores into the modern formats (like supermarkets). 3.2 SAMPLING DESIGN To fulfill the objectives related to the supermarkets operations of the study a multistage random sampling technique was used. In the initial stage, Karnataka state was selected as it is one of the leading states in organized retailing in India t the second stage, five cities across Karnataka such as Bangalore. Hubli dhrawad, mangalore, belagaum and Mysore were selected as the majority of organized retailers were existed in these areas. Recently most of the local retailers in those areas also modernizing their stores in the form of modern formats like supermarkets. In the last stage, three supermarkets (one outlet/branch) from each city were selected randomly, so that total sample size selected for the study was 15. Among the number of supermarkets existing in these areas, only three supermarkets who were agreed to provide the data are selected. However, supermarkets which were in operation for at least two successive years were selected and their performance was studies for the last financial year 2007=07. In addition to study the factors influencing the consumers to purchase food products in these supermarkets/retail outlets, ten consumers from each selected supermarkets/retail outlets (30 from each city) were interviewed randomly, so that total number of consumers accounts to 150. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

3.3 SELECTON OF PRODUCTS Since it is difficult to study the overall operation in all the products only two products from each agricultural commonly groups like rice and wheat in cereals, turn and green gram in pulses, dry chilly and mustard in spices, banana and apple in fruits and finally tomato and onion in vegetables were selected based on their volume of sales in supermarkets. 3.4 NATURE AND SOURCES OF DATA The detailed information required for the study was collected from both primary and secondary sources in order to accomplish the various objectives of the study and are illustrated with their heads as follows. A) PRIMARY DATA The primary data on roles and responsibility of each individuals in the hierarchy and the pattern of investment like fixed and working capital were collected in detail to know the investment pattern and organized structures of the supermarkets. The data on financial management aspects like different assets and liabilities, owned fund, inventory, working capital, sales and returns were collected from their records like balance sheet, profit and loss account and trade account were collected to know the financial status of this supermarket. The information on procurement aspects like channels of procurement of raw materials, quantity procured costs of procurement and inventory aspects like quantity and value of different inventories maintained at different stages and their cost of carrying were collected to understand the procurement and inventory management in those markets. The information on stages involved in processing, cost incurred in processing and value addition per unit of each selected products in different categories such as foodgrains, pulses, fruits, vegetables and spice products and the various price determination methods adopted by these supermarkets were collected from the concerned authorities of sugar markets to evaluate management of processing and price determination. Similarly, the data on problems faced by the supermarkets such as causes for loss in retail business, sources of finance, infrastructure problems, problems from the movement authorities etc.. were also collected from the concerned authorities of these selected supermarkets. Apart from these to study the factors influencing the consumers to purchase food products from the supermarkets/food retail outlets. The information regarding the socio economic factors like age, education, occupation, income , family size, family type, religion etc.. products factors like price, quality, packaging, labelling Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

and other factors like range of product s, convenience, location , credit, home delivery, parking facilty,service quality and schemes and offers etc., were collected fro, the randomly selected consumers from each supermarkets using the protested schedule through the personal interview method.

B) SECONDARY DATA The secondary data on area, production and education status of the selected cities were collected from the respective municipal corporation. 3.5 ANALYTICAL TECHNIQUES EMPLOYED IN ORDER TO ANALYSE THE OBJECTIVES OF THE STUDY, THE DATA COLLECTED WERE SUBJECTED TO ANALYSIS THROUGH APPROPRIATE TECHNIQUES AS FOOLWS; 3.5.1 Tabular analysis 3.5.2 Financial ration analysis 3.5.3 Factor/ cluster analysis 3.5.4 Principal components technique 3.5.5 Garrett’s ranking technique 3.5.1 TABULAR ANALYSIS The data collected were presented in tabular form to facilitate easy comparisons. The investment Patten, hierarchical levels of organization in supermarket outlets, cost of procurement, inventory costs, value addition and problems faced by the retailers were presented in the form of tabular analysis. The data was summarized with the help of statistical tools like averages and percentages to obtain meaningful inferences. 3.5.2 The financial ratio analysis techniques was consider to be a most useful tool in evaluating the performance of the supermarkets and they mainly points out the relative importance of the selected items. The financial statement used in this study correspond to the financial; year of the super markets April to march of 2006-07. In this study the ratio analysis techniques has been heavily relied upon to test the solvency,liquidity, profitability, turnover and sales of the supermarkets. The ratios used for the analysis are described below. 3.5.2.1 Test of solvency The solvency ratios would indicate the abity of the supermarkets to meet its medium and long term obligations and they would loss provide a basic for measuring the leverage effects on the supermarkets. To meet the solvency Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

positions of the supermarket, ration such s liabilities to own funds and fixed assets to owned funds were employed. a. Total liabilities to owned funds ratio The ratio reflects the total commitment which the supermarkets. Owed to the creditors in relations to the owned funds of the supermarkets. This ration is computed using the tuition given below. Total liabilities Total liabilities to owned funds ratio=…………………………………………………… Owned funds The total liabilities referred to all the items under liabilities column of balance sheet except the net profits, subsidies and owned funds. The paid up share capital, depreciation fund. Reserve funds and net profits were included under the owned funds of the supermarkets. b. Fixed assets to owned funds ratio This ratio would indicate the extent of owned funds incepted in fixed assets. Ratio was obtained using following equation. Fixed assets Fixed assets to owned funds ratio; …………………………………….. Owned funds 3.5.2.2 Test of liabilities This measures the ability of the supermarkets to meet immediate maturing obligations. These ratios called balances sheet ratios, ratio of liquid assets to total assets, current ration and acid ration were employed to measure the liquidity position of the supermarkets. a. Liquid assets to totals assets ratio This ratio shows the liquidity performance of the supermarkets. It indicates the position of the total asserts maintained in liquid from which would help the supermarket to meet its immediate maturing obligations. Liquid assets Ration of liquid assets to totals assets ration: ………………………………. Total assets Liquid assets included cash in hand, cash at bank, short term deposits , value of closing stock adjusting heads due to, sundry debtors, deposits with banks etc. the total assets include all the items under the assets column of the balance sheet, viz., sum of current assets and fixed assets. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

b. Current ratio The ratio would measure the number of units of current assets owned by the supermarkets to meet each of the short term obligations. It is given by the following equation. Current assets Current ratio=…………………………….. Current liabilities If the ratio was more than one. It suggested that current assets of the supermarkets were adequate to pay off all current liabilities. If it was one they were just sufficient and if less than one. The supermarkets could be unable to pay current dues when asked fro. A current ration of roughly two was considered to be satisfactory level. Current liability was obtained by deducting long term loans and long term deposits from the total liabilities. 3.5.2.3 Test of profitability The profitability ratios would provide a fairly sound method of diagnosis pf the financial status of the supermarkets and overall efficiency of the supermarkets. These ratios compared the returns over the amount sunk into the business by the supermarkets. Thus these ratios indicated the prodigality of sales and investment made in the business. The ratios employed for the study are discussed below. A. Ratio of net total assets This ratio would indicate the earning capacity of the total assets of the supermarkets. It was computed as follows. Net profits Net profits to total assets= ………………………. Total assets An increase in the ration over the years showed improvement in the overall efficiency of the supermarket. Net profits included the amount of income received by the supermarket after meeting all its expenses at the end of the years. B , net profits to owned funds ratio This ration showed the extent of profitability in relation to investment of owned funds of the supermarkets. It was calculated by he equations given below. Net profits Net profits to owned funds ratio=……………………… Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

Owned funds c. Net profits to total sales ratio This ratio is alos known as net profit margin. It was determined by relating the net income after taxes to the net sales for the period. The ratio was calculated as under. Net profits Net profits to sales ratio=……………………………………… Total sales d. Net profit margin (%) The net profit margin was determined by relating the net income after taxes to the gross retunes for the period and is expressed in terms of per cent. Net profits Net profits to sales ration=…………………..*100 Gross returns 3.5.2.3 Tests of turnover The ratios which were quite important to this study, but did bot come under any of the above categories of test presented below. a. Working capital turnover ratio This ratio was employed to assess the efficiency of the total working capital employed by the supermarkets in their business and was calculated as under Total assts Working capital turnover ratio=…………………………….. Total working capital The higher the turnover greater would be the efficiency and longer the rate of profitability. b. Fixed assets turnover ratio Fixed assets turnover ratio was used to test the sales turnover of fixed assets. it indicates the efficiency in utilizing the fixed assets. This ratio was compute as foods. Total assets Working capital turnover ration= ……………………………… Total working capital Higher the fixed assets turnover ratio, higher would be the efficiency of the supermarkets in utilization of fixed assets to generate sales. 3.5.3. factors/principal component analysis The techniques of faster analysis, which is a multivariate statistical technique’s as employed to ascertain the major problems faced by the supermarkets in the business of foods retailing factors analysis was used in Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

data reduction by identifying a small number of factors, which explain most of the variance observes in a much larger because it has some advantage than other techniques (mittalZ & paul 2004) in principal component analysis .a set of original variables is transformed into a new variables are linear functions of the original variables is transformed into a new variable are liner functions of the original variblaes.the objectives is to find out only a few compounds , which accounts for most of the variation in the original st of data. The principal compotes (p1) is determined as follows, P1-a1j+a2j+a3j Z3+…. +anj Z Where, Pi=1 1 to n, are new uncorrelated components A0=i=1 to n and j=1 to n, the Z coefficients are factor loadings. Zi=1 to n are observed variables as standardized by dividing (X-X) by its standard deviation (x). Each component makes a maximum contribution in descending order to the sum of the variance of the variable. Normally, the first principle components contribute a maximum to their total variance: the second principle component contributes to the residual variance and so on. The sum of the variance of all the principle components is equal to the sum of the variance of the original variables. Sum of square of factors loadings (a2 1+a2+a2+) is called variance explained by factor (1) this is also known as exigent value (). The percentage contribution of p1 in the total variance of original variables (X) is given by, P1=/n x 100 (n=number of variables) The principal component analysis was carried out by using SPSS 10 statistical package. After the data were fed into it, the package provided output such as correlation matrix, initial factor matrix and rotated factor matrix. Initial factor matrix generally fails to be meaningfully interpretable. Therefore, rotated factor matrix was used for identification of factors. Varian rotation (an orthogonal method), the most common rotation method was used for rotation. This method tries to produce factors are as simple as possible by maximizing the variance of the loadings across the items within factors. These leads to high loadings becoming higher and lower loadings declining. For the selection of factors Eigen values more than one is taken into account. Identification of and naming of any factor would be a subjective conclusion. Generally, the heavy loaded key variables would be subjective conclusion. Generally, the heavy loaded key variable would be a considered as basis for identification and naming of dimension. In order to assign some meaning to factor solution a minimum level of signification for factor loading

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was 0.5 was taken. Higher the value of factor loading of the variable on a particular factor, greater would be the association with that factor. In principal component analysis 38 variables were considered to be the major problems affecting the food retailing business in Karnataka. Indicators were identified after careful investigation of the earlier studies and consultation with the higher authorities of the supermarket. The selected problems are presented in table 3.1 3.5.4 CLUSTER ANALYSIS OF VARIABLES Classification of characteristics into meaningful sets of clustering is an important procedure in all the social and biological science. The cluster analysis is a formal multivariate statistical procedure it is a simple form of correlation analysis and it provides a measure of similarity among different independent variables. This analysis and it provides a measure of similarity among different independent variable. This analysis starts with a data set containing information about population based on the sample of entitiesa and attempts to recognize these entities into homogeneous groups. The cluster analysis of variable was adopted to analyse the scores obtained from the opinion survey of consumers in order to know the factors influencing the consumers to purchase food products in supermarket. Clusters were formed using the minimum distance (maximum similarity) method, also known as s ingle linkage method. Initially each variable were grouped to form a cluster. The amalgamation process was continued in a step wise fashion/method until a single cluster was formed contain all the variables. The so classified cluster were subjected to test the correctness of the group classification using discriminate analysis, this analysis helps us to know the relative importance of different variables in regard to their power to discriminate between the groups. The case-wise statistics derived from the discriminate analysis and the proximity matrixes of squared Euclidean distance for the cluster classification were presented in appendix-V appendix –VI respectively. The selected variables/factors influencing the consumers to purchase food products in supermarket are presented in table 3.2 3.5.5 GARRETT’S RANKING TECHNIQUE Garrett’s ranking techniques was used to rank the factor considered by the retailers in pricing the products at the supermarkets.

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For this purpose twelve factors were first identified as important ones considered by a majority of retailers in their business. These factors were identified in consultation with the higher authorities of the considered by the retailers in pricing the products were nature of products, market forces (supply & demand) product life competition, long-term pricing, market segmentation, quality of the products, relative prices of the producers, price should not be high, price should convenience prospective consumers, price shall ensure profitability and availability of the products. The selected retailers were asked to rank the above factors. In this next stages,, rank assigned to each factors by each individual was converted into per cent position using the following formula. Per cent position=100 (Rij-0.5/Nj) Where, Rij stands the it factor (i=1,2,……12) by the jth individual (j=1,2,…… 15) and Nj stands for the number of factors ranked by jth individual. Once the per cent positions were found, scores were determind for each per cent position were found, scores were determined for each per cent position by referring garret’s table. Then, the scores for each factor were summed over the number of retailers who ranked that factor, in this way, total scores were arrived at for each of the twelve factors. And mean scores were calculated by dividing the total score by the number of retailers/supermarkets, who gave ranks. Final overall ranking of the twelve factors was done by assigning rank 1, 2, 3…etc in the descending order of the mean scores. 3.6 DEFINITION OF TERMS AND CONCEPTS USED IN THE STUDY 3.6.1 CAPITAL INVESTEMNT Fixed capital The items included under the fixed capital are the cost of land, building machinery and equipments and other fixtures.

B .Working capital The working capital included cost of raw materials, utilities (like power, oil water charges), processing material (cloth bags, tags, labels) cost, wages, salaries, company overheads (repair and maintenance cost) and administrative overheads (stationeries expenses, office communication), interest on working capital, chemical cost, increase fee, cost of processing, and advertisement expenses. C.

Investment on building

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This includes investment on building for processing/value addition, storage, and office and drying yard. D. Investment on machinery and equipments Under this, investment made on display cases, floral cases, display walk-in freezers, hot-food display cases, ice machines, packing machines, weighing machines etc. E. Investment on other fixtures It includes investment on fan, tube lights, furniture, and computers in the supermarket (outlets). F. Investment on infrastructure It includes investment on power generator, trolleys and treansport vehicles. 3.6.2 Procurement A.Procurement cost of products It was computed by adding the items of commission charges to organizers, transport and loading/ unloading charges B.Inventory -It is defined as usable but idle resource at different stages. C.Raw material It means that the products brought by the retailers Is processed but not packed. D.Finished product After processing/value addition products are kept in cloth bags/polythene bags wrapping boxes and sealed. E.Cost of arraying inventory This is expressed in rupees per item held in stock per unit time. It is worked out by adding the items of storage cost and interest on carrying inventory. F.Storage cost It includes the retail charges of the warehouse and maintenance charges where in the products are stored G. Maintenance charges In this variable cost of insecticides, white washing and cleaning were included. H. Interest on carrying inventory It is worked at the rate 18% at the value of products stored for number of months. 3.6.3 processing/value addition

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I. Stages of processing/value addition A pre cleaning: it refers to the removal of particles such as pieces of trash, stones, clods, removal of foreign materials. Other products etc larger in size than desirable products from threshed products lot. Incase of fruits and vegetables, it is washing of fruits and vegetables to remove dusts, removal of decayed etc. B.Conditioning: it refers operation such as shelling, debarking etc., for basic cleaning of fruits and vegetables. C.Grading. It refers to the actual cleaning and grading of products based on the quality preferences D.Treating. It refers to the application of fungicide, insecticide or combination of both, to products so as to disinfect them from seed borne or soil borne pathogenic organisms and storage insects. E.Bagging and stitching: it refers to filling of products in bags/polythene bags to an exact weight. F.Labelling and stitching: it refers to attaching labels, certificates, tags on the products bags and sewing the seed bags II value addition-It is calculated by subtracting the purchase value of one quintal of any product from the sale value of finished product. III cost of processing/value addition This was computed by adding costs incurred on power, supervision charges during processing, chemicals, packing meterials (cloth/polythene bag, tags, labels, gunny bags) and labour charges. 3.6.4 Marketing a. Retailers: he is the one who sells company’s individual products/item in small quantities to the ultimate consumers. b. Cost of marketing: it is calculated by adding commission charges, outward transport charges and advertisement expenses. c. Outward transport charge: this is the charge incurred by the company in transporting the products from warehouse to retailing outlets. d. Commission charges: it Is the charge paid to the intermediaries/commission agent while buying groceries from market. This varies from commodities to commodities. e. Advertisement expenses; these are the expenses incurred in selling the company’s products. This is calculated by adding the cost of the items (banners, wall psters, pamphlets, advertise through Medias like TV, radio etc0 SPENT FOR PROMOTING THS SALES.

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f. SALES REALISATION; it is calculated by adding the sale value of main products. 3.6.5 Pricing methods I. cost based pricing methods: in this case no accounts is taken for market requirement but set of amount is added to the costs the draw back of this method is that if cost increases the price of the products must also increases. a. absorption cost pricing- large department stores follow this kind of pricing methods . The price of each product is dependent on how many costs it creates. B. target pricing- a target price is made then costs are adjusted. II. Market based pricing methods: dependents on accurate analysis of the market and consumer requirement. a.Penetration pricing – this method is used for new products wanting to gain market share. The products are priced low to get a hold in the market. b.Market skimming- for new innovative products, first few months higher prices were charged as there is a little competition and the products is popular because of it is new. c.Loss leader pricing- charging below cost price to try and attract customers (in supermarket) d.Psychological pricing- hitting price points that are significant, ex rs 999.99 sounds better than rs 1000. e.Discounting pricing- offering lower prices for a set time period to try and boost sales and sell off unwanted stock. III… Completion based pricing methods a. Closing rate or market pricing- charging the same as the competitors of the market leader b. Destroyer or destructor pricing- charging below average to drive out compotation. IV RESULTS In consistence with objectiveness of the study, the necessary data collected from various sources were analyzed and interpreted and the results of such analysis are presented in this chapter under the following heading. 4.1 documentation of supermarkets 4.2 investment pattern of supermarkets 4.3 organizational structures of supermarkets 4.4 procurement management in supermarkets Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

4.5 inventory management and its costs in supermarkets 4.6 processing/ value addition in supermarkets 4.7 financial management in supermarkets 4.8 factors considered and methods of prices formation in supermarkets 4.9 problems face by the food retailers 4.10 factors influencing the consumers to purchase the food products in supermarkets 4.1 DOCUMENTATION OF SUPERMARKETS Since food retailing is relatively a recent development and supermarkets have been defining retail element of the food industry. An effort was made in this section to collect and document existing supermarket in selected cities across Karnataka. As on today (2006), the names of existing supermarket, number of outlets and address of their head offices presented in table 4.1-It was evident from the table 4.1 that majority of multi outlets forms of organized food retailing firms’ found only in cities like Bangalore and Mysore and recently formed un-organized form of outlets were observed in Mangalore, Belgaum and hubli dharwad . However the highest number of outlets accounted by shubhiksha (40) followed by foodworld (33) fabmall (23) s*mart (18) namdhari’s fresh (14) and nilgiries dairy farm ltd (12) were found in Bangalore city. The other supermarkets existing in the city were spencer’s food bazaar. Ahar supermarkrts, Monday 2 Sunday, farm line supermarkets. M.K retail co, super mart, Raba traders etc., etc .a ll these firm shad their head offices at Bangalore only. In Mysore city except few firms like loyal world (which had 4 outlets) fabmall, M.K Hussein & sons and nilgiri’s (2 outlets each); all other supermarkets had one outlets each. The famous supermarket in the city was loyal wotls, arihanth super bazaar, Mohan Bandar, shivananda supermarket, a-z supermarket, a-z supermarket and food world. Among the existing supermarkets in the city, few organized supermarkets like food world, nilgiri’s shubhiksha and fabmall have their head offices at Bangalore. Most of the supermarkets in mangalore city were of UN organized and family owned. Except two pullets owned by alga stores supermarkets, all other supermarkets had one outlets each in the city. The supermarkets like Andy’s supermarkets, Apna bazaar, food world, Nilgiri’s and food bazaar were well known in the city. On the other hand the supermarkets Like Jimmy’s supermarkets , Misbah supermarkets ,Move and pick, Non super bazaar Ruby’s supermarkets , Sudhat bazaar etc. were also playing then role in the business.

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In Hubli- Dharwad and Belgaum cities, most of the local and traditional retailers were recently their stores into modern style supermarkets. it was witnessed from the table 4.1 that pick n pay sangam food basket. Day 3 Day, needz supermarkets and Eshan supermarkets were the only five supermarkets in Hubli-Dharwad city, however, the supermarkets operating in the Belgaum city were Hans Ral supermarkets and shoppers paradise, which are all family owned. 4.2 INVESTMENT PATTERN OF SUPERMARKETS The average area of the supermarkets outlets and their capital investment patterns in table 4.2 it is observed from the table that the average area of the supermarkets was found to be more in Bangalore (4333.33 square feet) followed by Mysore(3133.33 square feet) Hubli Dharwad (2833.33 square feet) Mangalore (1833.33square feet) and Belgaum(1200 square feet) the expenditure incurred on the establishment of supermarket outlets is treated as fixed capital investment which includes land & building, machineries & equipment, infrastructural facilities, other fixtures, salary to permanent employees and others fixed capital,. It could be seen from the table that the overall total fixed costs per outlet was 78.42 lakh. Though the fixed capital drastically varied from city to city, the highest of rs, 256.30 lakh was found in Bangalore followed by rs, 71.60 lakh Hubli-dharwad Rs. 39.23 lakh in Mysore, Rs 18.81 lakh in Belagaum and rs 13,00 lakh inmanaglroe, controversially it accounts for 30.01 percent of the total capital. Among different fixed capital. The proportion of land & building alone accounts for 23.50 percent employees accounts to 2.10 percent, 1.20 percent, 1.08 percent respectively, of the total capital. Increases of working capital, raw materials were the prime costs, contributing about 67 percent of the total capital. The other working capital incurred in the establishment of supermarkets ere wages to casual labours, power charges, packing material etc their share in the total capital was very meagre(less than one percent) however at an overall average level the costs required to established a supermarket in karnarka was rs.261.33 lakh and the same in different cities such as bangaloe,mysore, hubli-dharwad, Mangalore and belagaum were rs 762.061 lakh , rs 205.867 lakh, rs 173.191 lakh, rs 96.78 lakh and rs 78.53 lakh respectively. 4.3 ORGANIZATINNAL STRUCARUTR OF SUPERMAREKTS Organizational structure involves arrangement of activates and assignments of personnel to these activate sin order to achieve the organizational goal. Form managerial points of view the main concerns are ensuring Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

communication and coordination. It is way by which various parts of an organization are tied together and coordinated manner and it illustrated the various relationship among levels of the hierarchy within the organization as well horizontal relationships among various aspects of the organizational operations a well planned organizational structure results in better use of resources. Such organization structure agows, I) The pattern of authority and responsibility among organizational members. II) The communication flow within the organization III) The system of task differernation and integration. The type of organization structure would depend upon the type of organizational itself and its photocopy of operations. Basically there are six types of organizational structures. a) Line organization b) Line and staff organization c) Functional organization d) The divisional organization e) Project organization f) Matrix organization Though the study found that line and line staff, a nd the functional categories of organization structural in multi outlet 9chain of supermarkets) firms/companies, the line organization easy commonly followed in both multi firms (chain of supermarkets) and supermarkets not in chain. Line organization: this is the clear and simplest form of organization and is the most common among low invest companies. The authority is embedded in the hierarchical structure amend it flows in a direct line from the top of the managerial hierarchical down to the operative levels of workers it clearly identifies authority, responsibility and accountability at each level. These relationship I the hierarchic connect the position and tasks of each level with those above and below it. There is a clear unity of command so that the person at each level and is responsible only to the person above him. Thereby the communication is fast and easy feedback from the employees is acted upon faster. The line personnel are directly involves in achieving the objectives of the company. Line and staff organization: in this type of organization structures delineation of organizational authority between management personnel having overall planning and direction responsibility and operational personnel having direct job performance responsibility. Here staff is adversary to the line function. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

Functional organization; this type of organization structure is based on functional performance, organizational department crested to fulfill organizational functions such as marketing, finance and personnel. This type of organization has characteristics of both line and staff functions. The organization structure of supermarkets in chain and supermarkets not on chain are illustrated in figurer 1 and figure 2. 4.3.1 Organizational structure of supermarkets in chain In the hierarchy of theses outlets, they have executive (managing director/chief executive). The role of a managing director is to design, develop and implement the strategic plan for their company in the most cost effective and time efficient manner. He is responsible for both the day to day running of the company and developing business plans for the long term future of the organizational. In the supermarket firms, MD is assisted by general mangers of all the department such as purchase, marketing, fiancé and the system. The general mangers are also an executive who has overall responsibility for managing both the revenue and cost element of a particular department. This is often referred too profit & loss resposibityl. This means that general managers usually oversee most or all of the functions as wella s the day to day operations of the particular department. Frequently he is also responsible for leading or coordinating the strategic planning functions of the company. The GM is assisted by an assistant general manger; he is in turn assisted by purchase mangers, store mangers, supervisors and labours in hierarchy, the whole team is responsible for the complete purchase and procurement of related material for He Company. The purchasing mangers, buyers, and purchasing agents make up a key component of a firm’s supply chain. The responsibility of the GM and his team involve supervision, marketing profitability and sales, reputing, resale pricing, inventory, s service maintains and other duties as requested by managements. He is assisted by an AGM, shop Manager’s supervisors, cashiers attainders sales representatives and watchmen in a top-down hierarchy. The GM (finance) assisted with AGM (accounts) and accountants are responsible for maintenance of overall accounting and auditing aspects of the business. Finally, GM (system) looks after day to day operations of the supermarkets and is responsible for developing process, system, quality and service standards. The flow chart of the organizational structure of supermarket is shown in fig 1. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

4.3.2 Organizational structure of supermarket not in chain In these supermarkets, the proprietor or the manager is the head of the supermarket and he will be the decision maker in the organization. He is usually assisted with supervisors, cashiers, sales representatives and watchmen in a hierarchical way. The manager himself looks after purchasing, inventory and marketing activities like purchasing, processing, marketing and sales activities as assigned by the manager. The organizational flow chart is shown in fig 2. 4.4 PROCUREMENT MANAGEMENT IN SUPERMARKET Procurement management automates all procurement process and enables any organization to establish a collaborative working relationship with key suppliers. More efficient and streamlined procurement activities reduce purchasing costs, eliminate unnecessary transactions, and enable us to take advantage of strategic supplier relationship. 4.4.1 Existing procurement patterns The existing purchasing pattern and the agency preferred by the supermarkets across karnataka are presented in table 4.3. it was observed from the table the supermarket followed centralized or store level purchasing pattern for procuring the selected products. In Bangalore, cent percent of the supermarket followed centralized purchasing pattern whereas in case of Mangalore and Belgaum, cent per cent preferred store level purchasing. In Mysore, 66.67 per cent prefer store level purchasing and 33.33 per cent have gone for centralized purchasing and the reverse was found in hubli-dharwad. Further, it was noticed from the table that all the supermarket purchased groceries through commission agent/market in all the cities but fruits and vegetables were purchased from various sources.. in addition to the own production and direct purchase from the farmers, some of the supermarkets in Bangalore purchased fruits and vegetables from commission agents also for resale at supermarket but in mysore and Mangalore these products were purchased from commission agents only. No sale of fruits and vegetables was found in belgaum and hubli- dharwad supermarket. 4.4.2 Monthly average quantity and value of procurement in various supermarkets across cities 4.4.2.1 Bangalore-The monthly average quantity and value of procurement of selected commodities by supermarket in Bangalore city are presented in Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

table 4.4. It was revealed from the table that among grocery items, the average frequency of purchase was 4.67 in rice, wheat, green gram and tur dal but it was 4.33 in chilli and 2.67 in mustard. Tur dal was procured in highest (6.46 quintals) quantity followed by green gram (5.54 quintals) , rice(4.88 quintals), wheat (4.29 quintals ), mustard (0.64 quintals) and chilli(0.48 quintals). All the groceries were procured from the commission agents/market. The SMR 9standard), SMR(premium) and SMR(regular) varieties in rice, and byadgi stem less variety of chilli were the major varieties in their respective items procured in highest quantities. However, the total amount spent on these items was found to be high in green gram (Rs. 25,750.42) followed by tur dal (Rs. 21,248.96) wheat (Rs. 8882.29), rice(Rs, 8366.61), chilli(Rs. 3,459.44), and mustered(Rs. 1599.43). The average price per quintal was the highest in chilli (rs. 7258.33) and lowest in rice (Rs. 1719.290 in grocery items. Whereas in case of fruits and vegetables, tomato was procured was highest (14.63 quintals) quantity followed by onion and banana (12.50 quintals each), and apple (5 quintals). On an average, the frequency of purchase was 10 in case of tomato and banana while it was 4.67 in onion and 8.33 in apple. In addition to commission agents and direct Procurement of tomato from farmers. Own production was also detected in Bangalore supermarkets. The maximum amount spent in procurement of apple. 4.4.2.2. Mysore Table 4.5 represents the average quantity and value of products procurement of commodities by supermarket in Mysore city. The average monthly frequency of purchase was four in rice, wheat, green gram, tur dal and chilli whereas it was two in mustard. Here the highest quantity of commodity procured by the supermarkets was in rice (3.12 quintals) followed by green gram (3.17 quintals), tur dal(2.77 quintals), wheat (2.07 quintals), mustard(0.23 quintals) and chilli (0.21 quintals) in grocery items. In respect of total amount, the maximum of Rs. 14,698.06 was observed in green gram due to its high unit cost (Rs 4,642.50/quintal) and the minimum was found in mustard (Rs.583.33) as it was purchased in small quantity. The maximum procurement in case of fruits and vegetables was found in banana (20 quintals) followed by tomato(12 quintals), onion (10 quintals) Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

and apple (6 quintals) and the total amounts to Rs.33,120 for apple, Rs.33,000 for banana, Rs. 6700 for onion and rs 6600 for tomato. The average frequency of purchase was 15 in tomato, 10 in banana and apple, but for in onion. 4.4.2.3 Mangalore The average monthly procurement of selected commodities by the supermarket in Mangalore city is shown in table 4.6 it could be seen from the table the maximum quantity of grocery was purchased in rice (4.96 quintals amounts to Rs. 8017.92) followed by tur dal (3.41 quintals amounts to Rs. 12558.33), wheat (1.24 quintals amounts to Rs. 24898.17) chilli (0.23 quintals) and mustard (0.15 quintals). The purchase frequency was 5.67 in rice, wheat, green gram, tur dal and chilli. Mustard procured 2.33 items in a month. In fruits and vegetables, there was no sale of apple noticed in Mangalore supermarkets, however, more procurement quantity and total costs were observed in banana (9 quintals & Rs. 14600) followed by onion (5.5 quintals & Rs. 3937.50) and tomato (4.5 quintals & Rs. 2790.83). the unit costs were also in the same order, while the purchase frequency was 10 in tomato and five in onion. 4.4.2.4 Belgaum The purchase frequency of groceries in begum was differed from commodity to commodity (tab 4.7). However, the frequency observed was 4.39 in rice, 4.67 in wheat, 4.33 in green gram, 4.42 in tur dal, 4.33 in chilli and two in mustard. All these products were procured from commission agents only. The table reveals that rice (2.33 quintals) was the major commodity procured by the supermarkets followed by tur dal (2.13 quintals), wheat (1.92 quintals), chilli (0.19 quintals) and mustard (0.09 Quintals). While the estimated total amount were Rs. 6,299.17, Rs 6,289.58, Rs. 3,662.78, Rs. 3,496.88 Rs. 1,292.50 and Rs. 196.67 in case of green gram, tur dal, rice, wheat, chilli and mustard, respectively. No sale of fruits and vegetables was noticed in Belgaum city supermarkets. 4.4.2.5 hubli-dharwad Table 4.8 presents the average monthly costs incurred in procurement of commodities by supermarkets in hubli-dharwad city. It could be seen from the table that were procured in the order of 4.46 quintals, 2.88 quintals, 2.75 quintals, 2.61 quintals, 0.26 quintals and 0.18 quintals, respectively. The amount spent high in respective commodities. The frequency purchase was Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

3.67 in rice, wheat, green gram, tur dal and two in mustard. No sale of fruits and vegetables were seen in hubli-dharwad. 4.4.2.5 Overall The overall monthly average quantity and value of products procured across different cities in karnataka are shown in table 4.9. it was noticed from the table that the average frequency of purchase in groceries was 4.53 times a month in rice and wheat, 4.47 times in green gram, 4.48 times in tur dal, 4.67 times in chilli but only 2.2 times in mustard. The quantity purchased was also more in rice (0.85 quintals) followed by tur dal(0.77quintals), green gram(0.71 quintals), wheat (0.54 quintals), chilli (0.07 quintals) and mustard (0.12 quintals). The cost per quintal was highest in chilli (Rs. 6739.79) while least in rice (Rs. 1,688.050. hence the total amount is found to be much in Rs. 14,258.75 Due to its high unit price and maximum purchase quantity. Further, it is revealed that the APMC was the only agency preferred in buying these products.In case of fruits and vegetables, the purchase frequency was more in tomato (10.83) and banana (10.00). Similarly, the quantity purchased was high in banana (1.38 quintals/trip) as the quantity purchased in maximum quantity. Apart from own production, these fruits and vegetables were procured from various sources such as commission agents and direct purchase from the farmers particularly in case of tomato 4.4.3 Monthly costs incurred in procurement of commodities by supermarket in different cities 4.4.3.1 Bangalore -The average monthly costs incurred in procurement of selected commodities by supermarket in Bangalore city are presented in table 4.10. it was revealed from the table that among grocery items, green gram accounts for high total cost (Rs. 26,005.14) in procurement followed by tur dal (Rs. 21,545.56), rice(Rs. 9,838.42), wheat(Rs. 9067.56), chilli (Rs. 3,676.58), and mustard(Rs. 1.773.52) while the quantity was maximum in tur dal (6.46 quintals), green gram (5.54 quintals), rice(5.52 quintals), wheat(4.29 quintals), mustard (0.64 quintals) and chilli (0.48 quintals). Other than the price of the products, transport costs are the prime costs in procurement however; the costs were Rs. 279.58, Rs.273.96, Rs.235.42, Rs.233.24, Rs.106.20 and Rs.79.78 in green gram, tur dal, wheat, rice, mustard and chilli, respectively. The sales tax at the rate of four per cent seen only In case of spices and it was found to be highest of Rs.138.38 in chilli as the unit cost of the product itself was high. Further, the total cost per Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

quintal was high in the order of chilli (Rs. 7715.78), green gram (Rs. 4,691.72), tur dal (Rs. 3,257.47), mustard (Rs. 2,785.63), wheat (Rs. 2,359.45) and rice (Rs. 1,777.66).

In case of fruits and vegetables, tomato was procured in highest (14.63 quintals) quantity followed by onion and banana (12.50 quintals each) and apple (5 quintals) although the total cost were high(Rs. 27,025) in apple followed by banana (Rs. 23,175), onion (Rs. 7,224.38) and tomato (Rs. 7,224.38). The transport costs incurred in procurement of fruits and vegetables were Rs. 1,312.50 in tomato, Rs.675 each in banana and apple, and Rs. 275 in onion. Yet, the costs per quintal were in the order of Rs. 5,405 in apple, Rs. 1,854 in banana, Rs. 782.33 in onion and Rs. 495 in tomato. 4.4.3.2 Mysore-Table 4.11 corresponds to the average monthly cost incurred in procurement of commodities by supermarket in Mysore city. Here the highest total cost was accounted by green gram (Rs. 14,834.72) due to its high unit cost (Rs. 4,685.61/quintal) and quantity purchased and the minimum was accounted by mustard (Rs. 646) as it was purchased in small quantity (0.23 quintals0. The subsequent total costs of other groceries were, Rs. 9,087.22 in tur dal, Rs. 5,675.62 in rice Rs. 4,154.83 in wheat and Rs. 1,649.84 in chilli. The proportion of transport cost was highest in rice that is Rs. 142.52 followed by green gram (Rs. 136.67), tur dal 9Rs. 119), wheat (Rs. 102.17), mustard (Rs. 39.33) and chilli (Rs. 33.32). The sales tax of Rs. 62.11 was observed in chilli. In case of fruits and vegetables, the maximum procurement was in banana (20 quintals ) and less in apple (6 quintals) thus the total cost were alos high (Rs. 34,000 and Rs. 33,420 ) in respective commodities. The cost was Rs. 7,200 each in tomato and onion. The unit cost was as high as Rs 5,570 per quintal in apple. However, the transport cost was more in banana (Rs. 1000) and least in apple. 4.4.3.3 Mangalore The average monthly costs incurred in procurement of selected commodities by supermarkets in Mangalore city are depicted in table 4.12 it was shown from the table that the maximum quantities of groceries were procured in rice (4.96 quintals ) followed by tur dal (3.41 quintals), green gram (2.82 quintals), wheat (1.24 quintals ) and chilli (0.23 quintals ) and the maximum cost was incurred in chilli green gram (Rs. 12,648.22) followed by tur dal (Rs. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

10,688.88), rice (Rs. 8,192.38) and wheat (Rs. 2,542.06) and chilli (Rs. 1730.61). Mustard was procured in minimum quantity. In addition, relatively high transport cost (Rs. 169.08) was found in rice and low (Rs. 40.69) in chilli. The highest local sales tax of Rs. 66, 02 was accounted for chilli. In respect of fruits and vegetables, there was no sale of apple was noticed in Mangalore supermarkets, however, more procurement and total costs were observed in banana (9 quintals & Rs, 15,150 ) followed by Onion (5.5 quintals & Rs. 4,207.50) and tomato (4.5 quintals & Rs. 3,022.50). The unit costs also found in the same order.

4.4.3.4 Belgaum-The average monthly charges incurred in procurement of commodities by supermarket in Belgaum city are shown in table 4.13. The table reveals that rice (2.33 quintals) was the major commodity procured by the supermarkets followed by tur dal (2.13 quintals), wheat (1.92 quintals), chilli (0.19 quintals) and mustard (0.09 quintals). While the total costs were rs. 6,356.11, rs. 6,353.33, 3735.88, Rs. 3,547.99, Rs. 1370 and Rs.216.48 in case of green gram, tur dal, rice, wheat, mustard and chilli, respectively. The total transport costs were found to be highest in rice (Rs. 75.42) followed by tur dal (Rs. 72.08)and wheat(Rs.60.83). The unit cost was highest in chilli that is Rs. 7212.81/quintal and lowest in rice (Rs. 1,611.31/quintal). The local sales tax in spices was more (Rs. 51.70) in chilli as compared to mustard. No sale of fruits and vegetables were noticed begum city supermarket. 4.4.3.5 hubli-dharwad-Table 4.14 presents the average monthly costs incurred in procurement of commodities by supermarket in hubli-dhrwad city. It could be seen from the table that rice followed by green gram, wheat tur dal, chilli and mustard were procures in highest order of 4.46 quintals, 2.88 quintals, 2.75 quintals, 0.26 quintals and 0.18 quintals, respectively. Over quintal cost was Rs. 7216.64 for chilli, Rs. 4,180.73 for green gram, Rs. 3,090.01 for tur dal Rs. 2,604.41 for mustard Rs. 2,154.58 for wheat and Rs. 1690.63 for rice. As it was observed in the earlier cities that the sales tax was applied only for spices and chilli was the maximum was found in supermarkets. 4.4.4 Average monthly costs incurred in procurement of commodities by supermarkets in Karnataka Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

The overall average monthly costs incurred in procurement of commodities by supermarket in different cities (karnataka) is gives in table 4.15 it was observed from the table that rice (3.85 quintals) followed by tur dal (3.47 quintals ), green gram (3.18 quintals), wheat (2.45 quintals), chilli (0.32 quintals) and mustard (0.26 quintals) were the major groceries procured by the supermarkets. In proportion to the quantity, the total costs were found to be in the descending order of Rs. 14,169.36, Rs. 10,997.59, Rs. 6,561.78, Rs. 2289.54 and Rs. 687.56 for green gram, tur dal, rice, wheat, chilli and mustard. The costs per quintal was Rs. 7144.09 for chilli, Rs. 4,463.64 for green gram, Rs. 3,149.58 for tur dal, Rs. 2,671.88 for mustard, Rs. 2,236.46 for wheat and Rs. 1,726.99 for rice. However, the sales tax was found in spices and it was Rs. 46.93 in chilli followed by mustard that is Rs. 25.28. Similarly, in case of fruits and vegetables, the purchase was highest in case on banana (13.83 quintals) followed by tomato (12.50 quintals), onion (9.33 quintals) and apple (5.50 quintals). The total costs incurred were Rs. 30,180, Rs. 24,148.15, Rs. 7,058.15 and Rs. 6,564.79 for apple, banana, onion and tomato. The transport costs seems to be more in tomato (Rs. 1,012.50 ) and less in apple (rs. 287.50) based on their quantity purchased. The commodity wise costs incurred in procurement of commandeers by supermarket in selected cities across karnarka are illusterded in table 4.16. On an average groceries, rice was the major commodity procured in highest quantity (4.12 quintals) followed by tur dal (3. $& quintals) green (4!2 quintals) chilli (0>27) and mustard (0.26) bu the total costs were high in green grams (14,371.40) followed by tur dal (sr 11.140.43) rice (rs 7.005.440 wheat (4,887.40) chilli(rs 2,060.76) and mustard (rs 701.24) it was note worthy to mention that in all the commodes quantise procured and their unit cost were found to be high in Bangalore alone where in the procurement of tur dal was 6.46 quintals (rs 4.691.39/quintals) rice was 5.52 quintals (rs1777.96/quintals) wheat was 4.29 quintals and chilli was 0.48 quintals (rs 7715.78/quintals) city to city. As it was revealed from the table the quantity procured in rice was more (4.96 quintals) in Mangalore but least in wheat (.24 quintals ) in most of the commodities such as rice, green gram ,tur dal, chilli and mustard the procurement was less that is 2.33 quintals, 1.49 quintals, 2.13 quintals, 0.19 quintals and 0.09 quintals, respectively in belgaum. The local sales tax of 4percent on spices found in all the cities and the average was highest in chilli (rs 77.91) followed by mustard (rs.25.28).the transport costs varied in accordance with the quantity purchased in all the cities and in all the commodities. However the highest transport cost was noticed in rice (rs 157.20) and the least was in mustard (rs 42.540

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In respect of fruit and vegetable’s the maximum quantity of commodity procured commodities were banana (3.83 quintals) followed by tomato (10.38 quintals)onion (9.33 quintals) followed by tomato(10.38 quintals), onion (9.33 quintal) and apple (5.50 quintals) whereas the cost power quintals and total costs incurred were more in apple (rs 1.745.78/quintala and rs 3.0222.50 total cost) followed by banana (rs 1745/quintals and rs 24.108.23 total cost0 onion 9rs 588.89/quintals and rs 5.815.63 total cost) the table alos indicated that the fruit and vegetables procured from farmers directly in the study area.. The transport costs were high in tomato (rs712.50) and banana (rs 708.33) s the quantity procured was high in these commodities. Table 4.17 presents the city wise average monthly charges incurred in procurement of commodities by supermarket. The monthly total quantity pressured was highest in Bangalore (67.65) followed by mysore (59.77) and mangalore 31.80, hubli- dharwad(13.13quintals ) and belagaum (8.14 quintals ) and in same descending order. The total costs were rs 13, 9110.31, rs 1.17.868.23 Rs.58.583.55, Rs.35.097.47 and Rs 21.580.23 in respectively cities. Similarly, the transport costs were rs 414568 s, 2972.9rs, 1478.44 rs, 297.66 and rs 541.69 in Bangalore, mysore mangalore, belagaum, hubli ,Dharwad, however depending on the quantity procured total coasts in different commodities varied across cities. 4.5 INVENTOERY MANAGEMNT AND ITS COSTS IN SUPERMARKETS Inventory refers to stocks of anything necessary to do business. These stocks represent a large portion of the business investment and must be well managed in order to maximize profited. Raw materials inventory. Work in process inventory, finished products inventory and work in sales inventory represents the various forms of investors. Each type represents money tied up until the inventory leaves the company as purchased products. Likewise, merchandise stocks in a retail store contribute to profits only when there sale puts money into the cash register. In fact many small businesses like supermarket. Unless investors are controlled, they are unreliable, inefficient and costly. Inventory management and inventory control must be designed to meet the dictates of the marketplaces and support the company’s strategic plan. In addition to inter on working capital, shrinking labour charges and packing material, cold storage were also added to the inventory cost compounds of fruits and vegetables. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

4.5.1 Most of inventories and supermarkets of different cities.

preparation

of

products

for

sale

in

4.5.1.1 Bangalore -The cost of inventory and preparing the products for sale in Bangalore short time period inventories were maintained in different commodities,. In groceries the period was 4.67 days in mustard whereas in case of fruits and vegetables, 4.67 days in onion. 3.60 days in apple and 3 days in very perishable like tomato and banana the quantum of investors was found to be the highest in tur dal (6.46quintals) followed by wheat (5.75 quintals) green gram (5.54 quintal 0 rice (5.52 quintals ) mustard (0.64 quintal ) and chilli (0.48 quintals) in groceries the respective inventories valued at rs .21.859.03 ,Rs. 9,417.06 rs, 26.903,63, rs. 10.107.12, rs. 1.750.08 and rs. 3.703.32. among different type of inventories. The finished product inventory was observed to be the highest both in terms of quality and storage period it was 4.66 quintals in whet valued at rs.6.765.47 held for 1.40 days. Next to the finished product inventory ,most of the product was detained at work in tur dal was 0.42 quintals for 1.10 days, in wheat was 0.55 quintals for 1.30 days and rice was 0.80 quintals for 1.20 days. The storage period of work in process inventory was low in most of the products that is one day in rice, 0.84 days in wheat, 0.22 days in green gram, 0.39 days inters dal and 0.13 days Inc hills. The packaging material cost and labour charges for cleaning and packing were found to be the major costs components of inventory management in all the commodities. However these costs were rs. 582.50 And rs 233 in tur dal, rs 631.50 and rs 210.50 in wheat and rs.400 and rs 160 ingrain gram. The minor costs include interest on working capital at the rate of 12.5 percent and shrinking/ wastage of the product. The shrinking costs were rs. 533.85 in green gram. Rs 436.63 in tur dal. Rs 101.18 in rice etc. at anal verge, the total inventory cost per quintal was more in chilli ( rs .394.33) followed by mustard 9rs 253,90) green (rs .201.63) tur dal (rs 1993.61) wheat (rs 166.46) and rice (rs 136 .90) In fruit and vegetables’ the quantity of inventory maintained and their values were high values were in high in onion (12.50 quintals valued at rs.11.606.25) and low in apple (1.39 quintals valued at rs. 7845.86) in addition the quantity maintained in tomato was 4.88 quintals with the worth of rs.3.126.86 and in banana was 4.17 quintal with the worth of rs. 7.987.64. The work in process and finished product inventories were not kept in case of bana and apple as they are directly sold in the shop. As in the case of groceries , the finished product inventories found to be maintained in highest quantity and for long period in tomato (3. 50 quintals for 1.60 days) and onion (8.50 quintals for 1.90 days) on the other hand, raw material inventory Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

was found maximum in banana ( 2.46 quintals for 1.80 days) and apple (0.91 quintals for 2.20 days) in inventory cost components , shrinking was perceived to be the highest cost in onion ( rs .1160.61) followed by banana ( rs 790.10 ) apple (rs 771.92) and tomato (rs 322.31 ) further the cold storage cost was rs 22.59 in tomato, rs 123 in banana and rs, 54.50 in apple./in apple . in contrast the labourn charges were nil in banana and apple, and no cold storage was used in onion. However the total inventory cost per quintal was n descending order incase of apple (rs.608.96) banana (rs 240.47) tomato (rs. 227 .52) and onion (rs 202.78)

4.5.1.2 Mysore -Table 4.19 presenters the costs of inventory and preparing the products for sale in yore supermarkets. It was shown in table that the storage period of inventories was 4 days in all the groceries except mustard wherein storage period was 15 days. In case of fruits and vegetable the period was 2 days in tomato. Banana and apple but 4 dates in onion. The quantity and value of groceries was looked to be high in rice ( 3.33 quintals accounted for worth of rs.5963.20) followed by green gram (3.17 quintal accounted for worth of rs .15391.14) wheat ( 3.oo quintals accounted fro worth of rs.4847) tur dal (2.77 quintal accounted for worth of rs 9366.06) chilli (0.21 quintals accounted for worth of 1.52 days in green gram, 2.11 quintal for 1.30 days in rice. 1.90 quintals for 1.52 days in green gram , 2.11 quintals; for 1.30 days in rice , 1.90 quintals for 1.40 days in tur dal. More than half of the quantity of chilli (0.10 quintals) and mustard (0.12 quintal) was alos held in this stage only. The rework in process inventory accounts for less quantity and minimum storage period in almost all groceries. World in sales inventory was 0.72 quintals of rice, 0.65 quintals of wheat, 0.45 quintals green gram, 0.32 quintal of tur dal, 0.05 quintal of chilli and 0.04 quintals mustard. In respect op costs. Packaging material and labour charge was the major and shrinking and inters on working capital were the minor compotes in inventory magnet, the packaging cost was higher in the order of green gram ( rs 258.75) rice ( rs.244.76) wheat (rs.243.20) tur dal (rs 184) chilli (rs.20.40) and mustards (rs .20.27) the labour charge accounted for rs 129.59, rs .110.50, rs 106.99 rs, 102./93. Rs. 20.60 and rs. 24.03 in green gram , rice, wheat, tur dal, chilli and mustard, shrinking was observed too be more in green gram ( rs 310.35) In fruits and vegetables the quantity and value of inventory period was more in onion (10 quintal valued at rs .7920) followed by banana (1.33 quintal valued at rs 2282.95) tomato (0.80 quintals valued at rs.631.40) and apple Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

(0.40 quintals valued at rs 2328.80) as in the case of Bangalore, the work in process inventory and finished product inventories were not maintained in banyan in onion (6.80 quintal for 1.40 days) (and it was very 0.33 quintals in tomato. The work inhales inventory management of fruits and vegetables followed by shrinking and packaging material. The costs were Rs. 562.50, Rs. 396.78, Rs. 340 for onion and Rs 32.25, Rs 68.72 and rs. 16.50 For tomato. However the total the cost involved was rs.315 .70 in rice, Rs 262.90 in tur dal, rs. 202.40 in green gram, rs 126.25 in wheat, Rs 22.92 in chilli and rs. 6.60 In mustard. The labour chargers were Rs.124.31 in rice, rs 123.21 in tur dal. Rs 94.27 in green gram, Rs 68.45 in wheat, Rs 24.88 in chilli and Rs 14.19 in mustard. however, the total inventory cost per quintal was highest in chilli (Rs 361.56) followed by green gram (Rs 201.64) tur dal (Rs 180.78) mustard (Rs 168.29) and wheat (Rs 137.66) In fruits and vegetables, the maximum inventory was maintained in onion (5.50 quintals valued at Rs 4628.25) subsequently in tomato (1.50 quintals valued at Rs 1190.25) and banana (0.60 quintal valued at Rs 1029.00) it was also observed from the table that the finished product inventory had the highest quantity and maximum storage period Ire 2.80 quintal for 1.90 days in onion. There were no work in process inventory costs concern labour charge and packaging materials were the main components of. It was Rs 268.35 and Rs 230.89 in onion. Rs 76.67 and Rs 123.50 in tomato respectively. However, there was no cold storage was observed in mangalore supermarkets. The unit cost of inventory for banana was Rs 214.03, Rs 162.00 fro tomato and Rs 116. 66 for onion. 4.5.1.4 Belagaum-It could be noticed from the table 4.21 that the storage period of inventory by the supermarkets were 4.39 days in rice, 4.42 days in tur dal, 4.33 days each in wheat, green gram and mustard but the highest storage period of 15 days was observed in mustard. The quantity of inventories was found to be high in wheat (2.56 quintals) followed by rice (2.333 quintals) , tur dal (2.13 quintals), green gram (1,49 quintals ), red chilli (0.19 quintals) and mustard (0.09 quintals ) in groceries. The respective inventories valued art Rs. 3935.15, Rs 3861.39, Rs 6575.00, Rs, 1359.69 and Rs, 223.72. Among different type of inventories, the finished product inventory was observed to be the highest in terms of quantity. It was 1.75 quintals in wheat followed by 1.451 quintals I =n rice 1.33 quintals intern dal. 0.76 quintals in green gram 0.10 quintals in chilli and 0.30 quintals in mustard. The kept in Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

work in process inventory was found to bee minimum in all the cases. The packaging cost was found to be the prime cost in inventory as it was Rs 213.50 in wheat Rs.155.53 in rice, Rs 13.93 intern dal, rs 78.28 in green gram, Rs 16.30 red chilli, Rs 4.48 in mustard. Similarly the labour cost incurred were Rs .132.55 in green gram Rs.132.19 in tur dal Rs. 39.32 in wheat, Rs.38.42 in rice, Rs.27, 28 in red chilli rs.4.48 in mustard. It was observed that the total inventory costs were found maximum in case of tur dal (Rs.333.46 ) and low in mustard Rs.15.31) however, the unit cost per quintal was high in chill (Rs 319.89) followed by mustered 170.22), green gram (1652,.21) tur dal (rs.156.55) wheat, (RS166.86()< rice (Rs143.70).No sale of first and vegetable were observed in belagaum supermarkets 4.5.1.5. HUBLI-DHARWAD -It was observed fro the table 4,22 storage periods commodities in the inventories by the supermarkets were 3.76 days each in rice, wheat ,green ,.rice ,tur dal,.chilli whereas the period was 15 days mustard. Asia revealed from the table that the quantity maintained in inventories and their valuates where more in rice, (4.46 quintals with at Rs 7705.77)followed by wheat *(4.00 quintals worth at Rs.6277), green gram (2.88 quintals worth at Rs.12488.40 ) tur dal (2,61 quintals worth at Rs 8378.10 ), red chilli(0.26 quintals worth at Rs 18.57),mustard 0.18 quintals worth at Rs 456.21) among the different inventors finished product inventory occupied maximum quantity and storage period in all t he commonideuis that is 2.80 quintals for 1.26 days in rice flowered by 2.15 quintals foe 1.35 days in wheat two quintals 1,.16 days in green gram,1.75 quiytnatla for 1.10 days in tur dal ,0.15 quintals for 1.35 in chilli’s, and 0.5 quintals for 5.97 in mustard, again the wok in processes inventory I was low in the common dies. Here packaging materials, labour charges and shrinking were the major cost components. The packaging material cost was Rs .280, Rs.275.20, Rs.214, Rs 174
fore sale in selected cities. Across Karnataka are presented in table4.23. it could be seen the table that the shirt time period inventories were maintained in different commodities. In case of groceries the period was 4.48 days in rice, 4.44 days each, wheat and green gram, 4.49 days in tur dal , 4.45 days in chilli 13.82 days in mustard whilt in case of fruit vegetables. 2.73 days in onion 1.12 days in apple and 1.60 each in tomato and banana. The quantity of inventories in groceries were found to be high in rice (4.12 quintal) followed by tur dal ( 3.48 quintals ), wheat ( 3.39 quintals) green grams (3.18 quintals ), chilli (0.27 quintals) and mustard (0.26 quintals)the respective inventories valued art Rs 7188.38, Rs 11474.77, Rs 5444.01 Rs. 14894.80, Rs 2046.38 and Rs 689.07. Among different type of inventors the finished product inventory was observed to be the highest both in terms of quantity and storage period. It was 2.58 quintals for valued at 4477.02 held for 1.42 days, 2.34 quintals in tur dal valued at Rs, 7771.87 held for 1.42days, 2.20 quintals in wheat valued at Rs .3502.29 held for 1.53 days, 2.01 quintals in green grams valued at Rs 94466.78 held for 1.61 days, 0.14 quintals in chilli valued at Rs. 1021.93 held for 1.65 days and 0.14 quintals in mustard valued at Rs 369.77 held For 5.74 days. Next to the finished product inventory , most of the product was detained at work in sales inventory and raw material inventory, the work in sales inventory in tur dal was 0.33 quintals for 0.95 days, in wheat 0.51 quintals for 0.98 days in rice 0.57 quintals for 0.70 days, in green gram 0,39 quintals for 1.13 days, in chilli 0,04 quintals for 0.89 days and in mustard was 0.04 quintals for 2.22 days the storage period of work in process inventory was low in most of the products that is 1.08 days in tur dal, 0.15 days in green gram, 0.08 days in wheat , 0.06 days in mustard and 0.05 days in chilli . The parking material cases and labour charges for cleaning and packing were found to be major cost components of inventory management in all the commodities. However these costs were Rs 297.93 and Rs 121.56in wheat, Rs 289.20 and Rs 267.87 and Rs 129.34 in tur dal Rs, 230.69 and Rs 107.59 in green gram Rs .25.20 and Rs 23.12 in chillies Rs 70.96 and Rs 29.53 in mustard. The minor costs include interest on working capital at the rate of 12.5 percent and shrinking of the product. The shrinking costs were Rs 298.35 in green gram, Rs 229.56 in tur dal , Rs 79.81 in rice, Rs 54.40 in wheat, Rs 43 .39 in chilli and Rs 7,37 in mustard, t the average , the total inventory cost per quintal was more in chills (Rs 361.37 ) followed by mustard (Rs 216.39 ) green gram (Rs 202 .53) tur dal ( Rs181.88), wheat (Rs 140.51) and rice ( Rs 117 .87 )With respect to fruit and vegetable the Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

quantity of inventories maintained and their values were high in onion (5.60 quintals values at Rs , 4830.90 ) and low in apple (o.39 quintals valued at Rs .2034.93 ). The other commodies such as tomato were 1.44 quintals valued at Rs 989.70 and banana was 1.22 quintals valued at Rs 2259.92. the work in process and finished product incensories were not kept in case of banana and apple as they sold in theshop.a sin the case of groceries, the finished product inventories found to be maintained d in highest quantity for long period in onion (3.62 quintals for 1.04 days) and tomato (0.94 quintals for 0.64 days) but the raw material inventory was found maximum in banana (0.63 quintals for 0.80 days) and apple (0.23 quintals for 0.66 days). In different inventory cost components, shrinkage perceived to be the highest cost in onion (Rs 102.91). The cold storage cost was Rs. 50.80 in tomato (Rs. 30.10 in banana and Rs. 11.30 in apple. Labour charges were nil in banana, and apple. Cold storage was not used for onion. However, the total inventory cost per quintal was in descending order in case of apple (Rs. 613.93), banana (Rs. 215.31), tomato (Rs. 208.69) and onion (Rs. 159.97). The commodity-wise costs of inventory and preparing the products for sale across cities in karnataka are shown in table 4.24. it may be seen from the table that the average strong period of groceries was 4.49 days in tur dal, 4.48 days in rice, 4.47 days in wheat and green gram, 4.45 days in chilli but it was 13.82 days in mustard. Whereas in case of fruits and vegetables, the period was 13.82 days in mustard. Whereas in case of fruits and vegetables ,the period was 4.56 days in onion, 2.67 days each in tomato and banana, and 2.80 days in apple. It was noticed that in most of grocery items, the inventory period was more (5.67 days) in Mangalore and the less (3.67 days) in hubli-dharwad. On the other hand, the period was varied across cities and commodities. Further period of inventory was found to be high in mustard but the period was differed across cities and lowest was detected in tomato and apple. The maintained of maximum quantity of grocery inventories were found in bam galore (6.46 quintals of tur dal ,5.75 quintals of wheat , 5.54 quintals of green gram , 5.52 quintals of rice, 0.64 quintals of wheat,5.54 quintals of green gram 5.52 quintals of rice , 0.64 quintals of mustard and 0.48 quintals of chilli) while the least quantity maintained was found in belgaum (2.58 quintals of wheat 2.33 quintals of rice, 2.13 quintals of tur dal, 1.49 quintals of green gram 0.19 quintals of green gram 0.19 quintals of red chill and 0.09 quintals of mustard). On the contrary the quantity maintained in Mysore and Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

mangalore were differed in some of the products. It was the quantity maintained in rice at Mangalore was 4,96 quintals whereas it was 3.33 quintals in mysore. Similarly the quantity of inventory in wheat was three quintals in mysorebut it was 1.62 quintals in mangalore. In case of costs, packaging material followed by labour charges, shrinking and interest on working capita; were identified as the major components. The greater total costs were also noticed in Bangalore in all the products but these costs were also noticed in Bangalore in all the products but these costs were varied across cities and commodities to commodities. Further the total inventory Costa were also high in Bangalore alone except green gram, wherein the total inventory cost over quintal was Rs .222.63 in mysore in contrast it wars 201.63 in Bangalore. In fruits and vegetables category, the highest quantity of inventory was found in Bangalore (12.50 quintals of onion, 4.88 quintals of tomato, 4.17 quintals of bana and 1.39 quintals of apple) followed by mysore ( 10 quintals of onion, 1.33 quintals of bana , 0.80 quintals of tomato and 0.40 quintals of apple) and mangalore (5.50 quintals of onion, 1.50 quintals of tomato, 0.60 quintals of bana) no sale of fruit and vegetables were witnessed in Belgaum and hubli dharwad. Intern of inventory costs, the average total costs were high in onion (Rs 1493.03) followed by apple (Rs.549.46), tomato (Rs 499.47) and bana (437.80). Nevertheless average total inventory costs per quintal were more in apple (Rs.620.07), banana (Rs.197.17), tomato (Rs.190.30) and onion (Rs.149.90) in that order. However these costs were found to be greatest in Bangalore (Table 4.24). The city wise costs of inventory and preparing the product for sale are elucidated in table 4.25. Even though, the quantity of inventory maintained was high in Bangalore (47.33 quintals) followed by mysore (25;24 quintals), mangalore (20.79), hubli dharwad (14.39 quintals) and belagaum (8.81 quintals), Bangalore (4,85 days ) and mysore (4,50 days). Among different commodities, the quantity stored in onion was maximum(12.50 quintals in Bangalore, 10 quintals in mysore and 5.50 quintals in Bangalore, 0.21 quintals anymore, 0.23 quintals in mangalore. 0.19 quintals in belagaum and 0.26 quintals in hubli-dharwad, the respective values were maximum and minimum as the case may be. With respect to cost component, packaging, costs were found to be prime constituent. On an average it accounts Rs.2868.84 in bangaloe followed by Rs.1375.77 in Mysore. Rs .1141.77 in mangalore. Rs 973.40 in Hubli-Dharwad and Rs.603.43 in Belgaum. The cold storages were nil in mangalore, belagaum and hubli dharwad but seen only in case of tomato, banana and apple in Bangalore and Mysore. However the Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

total inventory cost per init was more in case of chilli (RS 394.33 in Bangalore. Rs 353.36 in Mysore .Rs 361 in mangalore, Rs.319.89 in Belgaum and Rs.337.14 hubli-dharawad). 4.6PROCESSING/VALUE ADDITION IN SUPERMARKETS Processing in the supermarkets is the removal of inert materials. Other crop seeds undersized seeds from the raw, materials in case of groceries whereas. It is cleaning and grading of products in fruits and vegetables. Generally, these activities are done through mechanical means. 4.6.1 EXTENT OF ACTIVTIES UNDERTAKEN IN PREPARION OF PRODCUTS FOR SALE IN SUOPERMARKETS. The steps or stages identified in the processing of commodities by the supermarkets are as follows. Stage I: cleaning Stage II: grading Stage III: bagging Stage IV: labelling and sticking conditioning was not observed in any supermarkets in the study area. The extent of activities undertaken in preparations of the products for sale in supermarkets is shown in table 4.26. It is revealed from the table that in the entire groceries cent percent of cleaning, bagging and labelling and sticking were undertaken by all the supermarkets. However, grading was observed in 66.67 per cent of Bangalore supermarket but it was no seen in Belgaum supermarket. In overall it represents that cent per cent of the supermarket followed cleaning,bagging and labelling and activities and 26.67 per cent of them undertaken grading activities across cities in the state. In fruits and vegetables cleaning activity was observed in all the supermarkets,which are dealing with these products but cent per cent guarding, bagging and labelling and sticking were identified only in Bangalore supermarkets. At an overall it accounts 100 per cent of the supermarkets carried out cleaning activity and 33.333 per cent each followed gearing, bagging and labelling and sticking activities in the state. 4.6.2 VALUE ADDITION IN SUPERMARKETS FOR THE SELECTED PRODUCTSValue addition as a result of processing during the resale of average value added in case of groceries was maximum in wheat (31.33 per cent) this is followed by rice (30.59 per cent) mustard (28.05 per)On the other hand in Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

fruits and vegetables category the per cent value addition in Bangalore super markets was found to be highest in tomato (64.78 per cnt) as against 20.65 per cent in apple. Similarly, it was 41.73 per cent in onion and 28.00 per cent in banana. The indicated percentage of value addition in my sore supermarkets was 45 per cent in tomato, 39.09 per cent in onion, 25.00 per cent in banana and 21.14 per cent in apple. In respect of Mangalore too, the value addition was maximum in tomato wherein the percentage value added was 37.83 perCent. The banana and apple occupied 35.00 per cent and 28.99 per cent accordingly. On the overall supermarkets, the greater per cent of value addition was found in mustard (27.68 per cent) among groceries and tomato (49.21 per cent) in fruits and vegetable. The value addition in other commodities were in the descending order of 26.99 per cent, 26.17 per cent, 19.99 per cent, 17.48 per cent, and 16.21 per cent in wheat, rice, tur dal, green gram and chilli, and 38.61 per cent, 27.33 per cent and 22.90 per cent in onion, banana and apple. However, out of the selected cities the maximum value addition in both groceries and fruits and vegetable were found in Bangalore. 4.7 FINANCIAL MANAGEMENT IN SUPERMARKETS Financial performance refers to any companies ability to generate new resources, from day to day operations, over a given period of time. The financial ratio represents the relationship between two accounting figures expressed mathematically. In financial analysis, a ratio is used as an index or yardstick for evaluating the financial performance or status of any institution against certain standards. Ratio analysis technique is popular in the accounting system of enterprises in general and helps in spotting trends towards better or poor performance. It is helpful in finding significant deviations from an average or pre-determined standard. The financial ratios relevant to supermarkets in retailing are grouped under four different categories namely, solvency ratios, liquidity ratios, profitability ratios and turnover ratios and pre presented in table 4.28 Solvency ratios-The long-term solvency positions of the supermarket are assessed by these ratios. Solvency refers to the ability of the supermarket to replay its outside long-term liabilities/total liabilities. Solvency ratio indicates long-term stability of a concern. The long-term creditors would judge the soundness of the supermarket on the basis of the long-term financial strength measures in terms of its ability to pay the interest regularly as well as replay the installment of the principal on due dates or in one lump sum at the time of maturity. Here the ratios like total liabilities to owned funds and fixed assets to owned funds were considered. The ratio of total liabilities to owned funds was found to be 0.798, 0.600, 1.905, Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

3.535, and 0.345 in Bangalore, My sore, Mangalore, hubli and belgum, respectively. On the overall across cities it was 1.400 which indicates the soundness of the supermarkets business in the state. The ratio of fixeed assets to owned funds was found to be 0.697 in Bangalore, while 1.731 and 1.367 were found in Mangalore and hubli-dharwad. At an average the ratio was 0.853 for the overall supermarkets across the state. Liquidity ratio-Liquidity ratio indicates the continuous operation of the supermarkets. These ratios are used to measure the ability of an institution to possess adequate cash to meet immediate obligations. The liquidity position of the supermarket was examined using two ratio namely liquid assets to total assets ratio and current assets to current liabilities ratio.

A review of the table indicates that in all the supermarkets. The liquid assets to total assets ratio was less than 0.5 which is 0.459 in Bangalore, 0.404 in My sore, 0.157 in belgaum and 0.268 in hubli-dharwad and hence the overall was 0.337. it indicates that more than 50 per cent assets were not in liquid assets form. The current ratio (ratio of current assets to current liabilities) presented in the table indicates that the ratio was more than one in all the cities supermarkets except mysore, wherein the ratio was 0.994. it means to say The supermarket had more than one rupee of current assets per rupee of current rupee of current liabilities Profitability ratios-These ratios can be used to assess the financial status and overll efficiency of the supermarkets these ratios were used to compare the return on investments an important indicator of the operational efficiency of a firm is its profits however total profits do not indicate the efficiency where as the profit per unit of different aspects of business certainly does. Hence the ratio of net profits to different determinations were worked out and presented in table 4.28 Net profits to fixed assets ratio were found to be 1.297, 0.717, o.705, 0.677 and 0.572 in various cities on the descending order in mysore, hubli-dharwad, belgaum, mangalore and banglore.similarly,the ratio in case of net profits to total assets was high in belgaum wherein the ratio was 4.509 followed by myosre (3.146), mangalore (2.187), banglore (1.373) and hubli-dharwad (0.868). however , the overall ratio was 2.499. the obtained ratios were 4.621 in mangalore subsequently 1.773 in hubli-dharwad,1.229 in mysore ,0.859 in bangalore and 0.537 in belgaum.the overall net profit to own funds was 1.989.the ratio of net profits to total sales ratio point outs the net profits for each rupee of own funds used in the business, which were 0.205 incase of bangalore, while 0.170 in case of mangalore. It is quite good in mysore (0.191),hubli-dharwad (0.180) and belgaum (0.178). Net profits to total sales were also found to be 0.189 in cities across the state indicating 0.187 rupee contribution to rupee of total sales.

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Turnover ratio;The turnover indicates the operational efficiency of the supermarket in the study area. The efficiency of supermarket in the selected cities was compared using the indicators such as working capital turnover ratio and fixed assets turnover ratios. The working capital turnover ratio indicated the relationship between sales and working capital. This ratio was highest 0f 5.156 in belgaum followed by 1.890 in Bangalore, 1.576 in Mangalore, 1.539 in hubli-dharwad and 1.331 in mysore supermarkets. In contrast, the fixed assets to turnover ratio was 6.784 in mysore, 4.319 in hubli-dharwad, 3.971 in Mangalore, 3.931 in belgaum and 3.581 in Bangalore. At an average, the average working capital turnover ratio was 2.298 and fixed assets to turnover ratio was 4.517 for the state. 4.8 factors considered and methods of price-formation in supermarkets In order to assets the relative importance attached by the supermarket to the factors considered in pricing of products at supermarkets in different cities across Karnataka garret technique was employed. The factors considered in the analysis were nature of products, market forces (supply & demand), product life competition, long-term pricing, market segmentation, quality of the products, relative prices of the producers. Price should not be high, price should convenience prospective consumers, and price shall ensure profitability and availability of the products. In addition to city- wise results, overall results of the analysis are presented in table 4.29 Table 4.29 represents the results of the garret ranking analysis conducted in respect to factors considered in pricing the products in supermarkets by the retailers (supermarket) As the table reveals, the Bangalore supermarkets attached significance importance to quality of the product followed by price should ensure profitability, nature of the product, competition, product life, price should not be high, availability of product, price shall convenience prospective consumers etc. in mysore supermarkets attached first preference to nature of the product and the least consideration was given to market segmentation. The order factors such as quality of the products =, availability of the product, price should not be high, competition etc were also considered next to nature of the product. Nature of the product, quality of the product, price should ensure profitability and competition were reflected as the prime factors considered in pricing at Mangalore. Similarly, competition, price should not be high, quality of the product and price ensure profitability were the factors considered in belgaum firms. In case of hublidharwad, quality of the products was considers the most important factor in fixing the price for the products. Long term pricing was given least importance. The other factors namely, competition, price should not be high, nature of the products, availability of the product, market forces, product life Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

assumed second, third, fourth, fifth, sixth and seventh important place in hubli-dharwad supermarkets. In the overall, the factors –quality of the product, nature of the product, competition, and price should not be high, price should ensure profitability, availability of the product, product life, relative price of the rival products, market forces price shall convenience prospective consumer, market segmentation and long-term pricing were considered as important in that order. The sum of the opinion of the retailers, which are converted into scores (garret table) and the mean scores obtained are presented in appendix-I One of the most crucial areas of decision making for retailers is pricing. The main objectives of the pricing are to get handsome return on investment, to achieve the growth in terms of sales, to increase he market share and to stabilize the variations in the prices to protect prospective consumers and in turn total sales. In case o retailing, the supermarkets decide the price for their products base on the market situation. However, the methods of pricing followed in supermarkets were illustrated in table 4.30 . In addition to absorption cost pricing and going rate pricing methods by the cent per cent of the Bangalore supermarkets, target pricing, perception pricing and discounting pricing were adopted by 66.67 per cent of the supermarkets about 33.33 per cent was followed loss leader pricing in items. It was cent per cent 66.67 per cent and 33.33 per cent of the supermarkets in Mysore followed absorption cost pricing and going tare or market pricing, discounting pricing and penetration method o pricing. All the supermarket in Mangalore adopted absorption cost pricing and going rate or market pricing methods, whereas 66.67 per cent of them in the city were also made use of loss leader pricing. A part from this. 33.333 per cent of the supermarket also went behind penetration pricing , discounting and destroyer or destructor pricing methods occasionally. The pricing in belgaum supermarkets was done through absorption cost pricing and going rate or methods pricing methods by all the firms tougher with discounting pricing by 33.333 percent of the supermarket, similarly the methods employed by the hubli dharwad supermarket were absorption cost pricing, discounting pricing ( in festivals) and going rate or market pricing methods (100 per cant each) and penetration pricing and loss leader pricing (33.333 percent each)at an overall, cent per cent of the supermarket in the state followed absorption cost pricing the products at supermarket .a bout 60 percent followed discounting pricing special days while 33.33 per cent and 26.67 percent adopted penetration pricing and loss leader pricing methods. A small proportion (13.33 per cent and 6.67 percent) of the supermarkets also adopted target pricing (fro selected products) and destroyer or destruct pricing methods in their retailing business. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

4.9PROBLEMS FACED BY THE FOOD REATILER In the present study 38 variable were identified and grouped into 10 factors after rotation of principle components technique. Out of the 10 factors 9 factors, which explain 92.38 of the total variable were selected for interpretation. Table 4.31 shows the factor loading of the each variable under different factors and the percentage variation explained by each factor. The first dimension explains 19.18 per cent of the variation. Among 38 indicators 8 showed higher factor loading (above 0.5) on the first dimension. Availability of trained employees, banks for sources of finance demand for credit from the customers , bargain from the customers, government scheme fro finance, repayment from the customers and credit facility from the wholesales had highest factor loading of 0.797, 0.788, 0.743, 0.697, 0.665, 0.594, 0.555 and 0.523 respectively. This implied that these indicators were the key problems in the supermarket business in different cities of Karnataka. In contrast to these advertisement rate and coverage of area, WTO impact on profit margin and on price of the products and market information from the wholesalers had shown negative factors loadings. The Second dimensions explained 15.85 per cent of the variation and it consists of 6 indicators with high factors loading (above 0.4). Except transportation facilities (0.677), timing of advertisement (0.669) , damages of products from wholesalers (0.658), bribes to government authorities (0.650)< tax Charged by the government (0.583) and margin from the wholesalers (0.486) have shown positive factor loading on supermarket business. The Third dimension, which explained 11.04 per cent of the variation in the problems of the supermarket consists of 5 indicators . Among the five, four indicators – demand for discounts and offers from the customers, locations – demand for discounts and offers from the customers, location of the supermarket. Who impact on the problems but information in advertisement shown negative effect. VAT charges, demand for new products from the customers , land and building and financial resources were comes under fourth dimension explained about 9.78 per cent variation, the respective factor loading are 0.72, o.55, 0.52 and 0.48. the fifth dimension explained 9.42 percent of the variation . The number of indicators included in this dimension was 3, with insurance facilities and procedures of the government have negative factors loading but variations by the wholesalers had positive factors loading.

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About 6.67 percent of total variation was explained by sixth dimensions consisting of storage facilities and agencies for supply of products to the supermarket have positive loading. The two variables such as delivery from the wholesalers and option of the retailers regarding VAT included in seventh dimensions explained 6.19 per cent of the total variations with positive consequence on the problems of the retailing. The eight and ninth dimension which expand 4.70 and 4.10 per cant of total variations includes existing locations of the site and avalitiblity of untrained employees respectively had factors loading of -0.46 and 0.52 The components matrix and the extent of variation explained by different dimensions on the problems of supermarket in Karnataka are shown in appendix – II appendix-III FACTORS INFLUENCING THE COMNSUMERS TO PURCHASE THE FOOD PRODUCTS IN SUPERMARKET in this section, results of the opinion of the consumers to go for purchase at the supermarket in the study area were collected using three point scale technique based on their importance as most , medium and less performance. The opinions obtained in terms of acores (I,e there points scale) from the counsyue,rs were analyzes using cluster analysis and the results of the analysis are presented in table 4.32 it was revealed from the table that out of 30 variables, 13 variables were found in the first aggregate cluster named as accessibility and product quality factors, 10 were grouped in second aggregate cluster named as influencing factors to go for purchase at supermarket and remaining seven variable were includes in third cluster amend the cluster as product promotion q1quality factors were convenient location of the supermarket, range of product availability, convenient for purchase,availability of quality products, saves time of shopping, working women and convenience, frequency of visits etc based on their similarly within the variable, similarly the influencing factors in the second clusters were reasonable price , parking facility, shopping is seen enjoyable at supermarket, attractive packing, schemes and offers, concern about health, welfare and the environment, influence of peer group, availability of range of brands etc as the stimulate the consumers to opt for supermarket for their purchase. The products promotion n factors in the third cluster group were payment methods, interest in eating foreign foods, home delivery facility, new products market development, attractive advertisement, fresh fruits and vegetables and fresh bakwy products availability. The similarly of the variables can be seen in the dendrogram (appendix-IV). However the cluster classification obtained from Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

the analysis were tested in the discriminate analysis and the results gained are presented in table 4.33, it is found from the table that he group classification was cent per vent correct. The cluster analysis were given in appendix V and the proximity was presented in appendix VI V DISCUSSSION The findings of the study, which were presented previously, are discussed in this chapter under the following headings to arrival at a meaningful interpretation. 1. 2. 3. 4. 5. 6. 7. 8.

documentation of supermarket investment pattern in supermarket organizational structure of supermarket procurement management of supermarket inventory management and its costs in supermarket financial management in supermarket' financial management in supermarket factors considered and methods of price- formation the food products in supermarket

1. DOCUMENATION OF SUPMARKET Table 4.2 presents the list of existing supermarket in selected cities across Karnataka (up to 2006). The name some existing supermarket, number of outlets and addresses to heir head offices re presented in the table. It was observed from the study that majority of the organized supermarket (multi outlets) existing and operating only in big cities like Bangalore and Mysore . These organized supermarkets have multi outlets operating under the single management and accounts fro huge turnover. The un-organized recently formed supermarkets were found in Mangalore. Belguam and hubli-dharwad. In these cities, the big local and conventional store owners have converted their indigenous general stores into the modern type of stores called supermarkets to cater the changing needs and expectations of modern consumers consumer familiarity that runs from generation to generation Is one big advantage for the traditional retailing sector.

The more organized form of supermarkets found in banglore city based on their number of outlets were shubhiksha (40) followed by foodworld (33),fabmall(23), smart (18), namdhari's fresh (14) and niligiri dairy farm Ltd Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

(12). the other important supermarkets in the city were spencer's, food bazaar, monday to sunday, farm line supermarkets, M.K retail Co. super mart, ruba traders etc. all these supermarkets have head offices at banglore. The famous indigenous supermarkets in the mysore city were loyal world, arinath super bazaar, mohan bhandar, shivananda supermarket, A-Z supermarket and foodworld. However, the organized supermarkets like foodworld, niligiri's, s shubhiksha and fabmall have presented the city more recently and most of these had their head office at banglore. The family owned un-organized supermarkets such as baliga stores supermarket, Andy’s supermarket; apna bazaar, jimmy's supermarket, misbah supermarket, move N pick, noor super bazaar ruby's supermarket, sadhar bazaar were well known in the city. Just recently, The organized supermarkets like foodworld, niligiri's and food bazaar have also entered into the food retailing business in the city. Pick 'n' pay, sang ram food basket, day 2 day, needs supermarket and eshan super Shoppe were the only five supermarkets in hubli-dharwd city, however, pick 'n' pay and sangram food basket had two outlets each in the city. Similarly, the supermarkets in the belgaum city were hans raj supermarket, neena supermarket, quality supermarket, rex supermarket and shoppers paradise, most of which are family owned. 2.INVESTMENT PATTERN IN Supermarkets it was found from table 4.2 that the average area of the supermarket outlets in different cities were found to be 4333.33 square feet, 3133.33 square feet, 2833.33 square feet and 1200 square feet in Bangalore, mysore, hublidharwad, manglore and belgaum, respectively. The area was high due to more transactions, range of products and more spacious to attract consumers in big cities like banglore and mysore and less in manglore, hublidharwad and belguam as the supermarkets in these cities were recently converted from the conventional stores. Sometimes organizations are created large at the outset, usually because size is an advantage or a necessity. For example, the owner of an independent supermarket does not open a small store in a newly built subdivision and then grow larger as demand warrants. Instead, a large store is designed and built that has the capacity to deal with the expected number of customers in the neighborhood. A small grocery store could not complete effectively in price and selection with other nearby supermarkets. In addition, table indicated that though, the fixed capital drastically varied from city to city, highest was found in Bangalore (Rs. 258.30 lakh) followed by hubli-dharwad (Rs. 71.60 lakh), mysore (Rs. 39.23 lakh),belgaum(Rs. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

18.81 lakh) and manglore (Rs. 13.00 lakh), however, the overall average total fixed cost per outlet was Rs. 78.42 lakh for the state as a whole. At the same time, it accounts for 30.01 per cent of the total capital. This is due to higher amount of capital investment on sophisticated modern equipments and infrastructural facilities. Among different fixed capital, the proportion of land 7 building accounted for 23.50 per cent of the total capital elements were machineries & equipments, other fixtures and salary elements were machineries & equipments, other fixtures and salary to permanent employees which accounts to 2.10 per cent, 1.20 per cent, 1.08 per cent respectively of the total fixed capital. In case of working capital, raw materials were the prime costs contributed about 67 per cent of the total capital as the retailing business (supermarkets) itself is to reselling of commodities and quicker conversion if inventory into cash. The other important working capitals incurred in the establishment of supermarkets were wages to casual laborers, power charges and packaging material. These results are on par with the study conducted by nagesh (1990) wherein the highest fixed capital investment was in building (72.81 per cent) followed by machinery and equipments(15.42 per cent) and land (11.77 per cent) in production and marketing of cashew in Karnataka at an overall, the average total costs required to establish a supermarket in Karnataka was 261.33 lakh and the same in different cities such as banglore, mysore, hubli-dharwad, manglore and nelgaum were Rs. 762.061 lakh, Rs. 205.876 lakh, Rs. 173.191 lakh, Rs. 96.78 lakh and Rs. 78.53 lakh, respectively. The higher costs in big cities was due to higher labour costs, social security to employees, high quality real estate, much bigger premises, comfort facilities such as airconditioning, back-up power supply, taxes etc.,, it is more so incase are of low cost structure, mostly owner-operated, has negligible real estate and labor costs and little or no taxes to pay. ORGANIZATIONAL STRUCTURE OF SUPERMARKETSit was observed that the organized supermarkets or supermarkets in multi outlet (chain of supermarkets) firms/companies followed line, line and staff, and the functional categories of organizational structures whereas line organization was commonly followed in un-organized supermarkets or supermarkets not in china. This may be because of huge investment and more number of activities in organized supermarkets and the reverse is true in un-organized supermarkets. The line organizational structure in both the supermarkets was found to be similar with the studies conducted by ramdev (1998) and mane rahuk rajaram (2000) they found that the both small and large scale agro-based units having both less and high investments followed line organization type of structure because of fast communication, easy feed back and possibility to take easy and immediate corrective measures. The functional organizational structure Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

followed in the organized supermarkets was found to be reliable when it is compared with the repory presented by kozachuk (2001) regarding management practices existing in Russian enterprises, which were inappropriate for operating in market conditions due to lack of functional organizational structure I trading enterprises The line organization is simple; authority and responsibility are clear cut, easily assignable and traceable. It is easy to develop a sense of belonging to the organization. Communication is fast,easy and feed back from employees can be easily obtained and immediate corrective measures can be applied. The discipline among employees can be maintained easily and effectively. In line and staff organizational structures delineation of organizational authority between management personnel (staff) having overall planning and direction responsibilities and operational personnel (line) having direct job performance responsibilities. Here staff is advisory to the line function. Similarly, functional organization structure is based on functional performance; organizational departments are created to fulfill organizational functions such as marketing, finance, and personnel. This type of organization has characteristics of both line and staff functions.organizational structures of supermarkets in chain (organized supermarkets In the hierarchy of these outlets/supers they have executive (managing director (MD)/chief executive (CEO) to design, develop and implement the strategic plan for the company in most cost effective and time efficient manner and in turn he is responsible for both day-to-day running of the company and developing business plans for the long term future of the supermarkets. He is assisted by general mangers (GM) of different departments such as purchase, marketing, finance and the systems. The general manager takes care of overall responsibilities for managing both revenue and cost elements of their respective department. Usually he over see almost all the functions as well as day-to day operation of their department. Frequently, he is also responsible for leading or coordinating the strategic planning functions of the supermarkets. The GM (purchase) is assisted by an assistant general manager (AGM) in turn purchase managers, store managers, supervisors and labourers in a hierarchy. The whole team is responsible for the complete purchase and procurement of related materials for the company such as price, quality, availability, reliability of the products and technical support when choosing suppliers and merchandise. They try to get the best deal for their company, meaning the highest quality goods and services at the lowest possible cost to their companies. The purchasing managers, buyers, and purchasing agents make up a key components of a firm's suply chain. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

The responsibilities of the GM (marketing) and his term involved in supervision, marketing, sales of the supermarkets. He is assisted by an AGM (marketing), shop managers, supervisors, cashiers, attendees , sales representatives and watchmen in a top-down hierarchy. The team looks after reporting, resale pricing, inventory, service maintenance and other duties as requested by management. In addition, the marketing people involves in developing and implementing an annual marketing plan, directing division marketing activities, and developing an annual sales and promotion program. The GM (financial) assisted by AGM (accounts) and accountants are responsible for maintenance of overall accounting and auditing aspects of the business. They helped in planning, budgeting, maintaining recors and accounts of employees, customers and suppliers. Finally, GM (system) looks after day to day operations of the supermarkets and is responsible for developing process, systems, quality and service standards. 2.Organizational structures of supermarkets not in chain (un-organized supermarkets)The proprietor or the manager is the head and sole responsible for anything in these supermarkets. He will be the decision maker in the organization usually assisted with supervisors, cashiers, sales representatives and watchmen in a hierarchical way. The manager himself looks after purchasing, inventory and marketing activities. Some time, any person in the supermarket can be assigned for various activities like purchasing, processing, marketing and sales activities as assigned by the manager PROCUREMENT MANAGEMENT IN SUPERMARKETS 1.existing procurement patterns it was observed from the table 4.3 that only two types of purchasing patterns such as centralized or store level purchasing pattern were followed in supermarkets for procuring the selected products. In order to establish and effectuate a uniform procedure for the handling of purchasing matters; to obtain the most suitable service and commodities at the lowest price; and to promote the best possible means of exercising financial control over expenditures, the centralized purchasing system was adopted by most of the optimizes multi-store inventory control from one central location to manage just-in time replenishment. In contrast, store level purchasing refers to the purchase of commodities for the individual outlets as and when necessary, mostly followed by the unorganized supermarkets. It was also noticed from the table that in Bangalore, cent per cent of the supermarkets followed centralized purchasing pattern due to their multi outlet operations and organized form of retailing. On the other hand, in Mangalore and belquam, cent pet cent preferred store level purchasing because of their single outlet operation and un-organized structure of Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

retailing. However, 66.67 per cent of supermarkets in my sore, preferred store level purchasing and 33.33 per cent have gone for centralized purchasing and the reverse was found in hubli-dharwad depending upon their mode and size of operation. These results are in accordance with the study conducted by woods t al (2000) while studying the supply chain concept for horticultural products. They found that many supply chains in smaller industries were loose. Fragmented, inter woven, unstable and unique. Hence, they suggested those firms operating in within these environment needs an astute understanding of the chains, the hierarchy of channels members and their relative position. In the study, he also suggested effective business strategic for individual firms and supply chains needs to be developed and redeveloped to accommodate the dynamic nature of horticulture. Further it was noticed from the table that all the supermarket purchased groceries through APMC (agricultural produce marketing committee) in all the cities because of prevention of the existing rules and regulations of the government to procure agricultural products from any other sources but fruits and vegetables were purchased directly from farmers and groom wholesale markets. In addition to these sources some supermarkets in Bangalore have their own production. In mysore and mangalore fruits and vegetables purchased through wholesale market only. On the other hand , no sale of fruits and vegetables were found in belagaum and hubli-dhrawad supermarket. These are equivalence with the results of the study reported by narayana redddy (2004), he stated that most (61 percent) of the retailers get their requirement from wholesalers, 15 percent from the large and other retailers over 17 percent of the selected retailers get their goods from more than one sources, but a small percentage pf retailers get some of their requirements from producers. Apart from this , the study also shows that the organized retailers/ hyper malls and supermarkets get wholesalers margin plus concession as they in bulk and are also the producers. 2.MONTHLY AVERGE QUANTITY AND VALUE OF PROCUREMENT IN VARIOUS SUP S ACROSS CITIES 1 .BANGALORE;It was reveled from table 4.4 that among grocery items. The average frequency of purchaser was ranged from four to five times in a month for groceries. Among the groceries, rice, wheat,greeen gram and tur dal and chilli were produce more frequently than mustard wherein the procurement was 2.67 times a month. On the average, tur dal was procured in highest (6.64 quintals) quintals followed by greeen gram (5.54 quintals). rice (4.48 quintals) wheat (4.29 quintals), mustard (0.64 quintals) and chili (4.29 quintals). The average quintals of purchase in cereals and pulsed was high because of the high turnover and demand from the consumer the grades like standard, premium and regular in sona masoori rice and byadagi stem less variety chilli were the major varietes procured in highest quantities based on the consumer preferce. The average total amount spent on these Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

items were found to be in green gram(Rs./25.274.56) followed by tur dal (Rs.21.271.60), wheat (Rs.8,832.14) rice(Rs.9603.18), chilli (Rs.3,48.43) and mustard (Rs.1603.34). However the average price per quintals was highest in chilli(RS.7258.33) and lowest in rice (Rs.1719.29), the main sources of purchase for groceries was APMC only in case of fruits and vegetables tomato was procured in highest (14.63 quintals) quantity followed by onion and bana(12.50 quintals each ) and apple (5 quintals ) high demand for tomato and onion was natural due to the daily use of these things in good preparation by the consumers. On an average , the frequency of purchase was 10 times a month in tomato and banana, 4.67 times in onion and 8.33 times in apple depending on their perish ability nature. In addition to market and direct procurement of tomato from farmers, own production was also observed in Bangalore supermarket whereas the procurement in other fruits and vegetables was found to be from wholesale market only. The maximum amount spent in procurement as apple (266.750.00) because of its high unit cost price. 5.4.2.2mysore-as presented in table 4.5 the average monthly purchase frequency in groceries was found to be four times a moth in case of rice, wheat, green gram, tur dal and chilli but it was two times in mustard because of its less demand. The highest quantity procurement by the mysore supermarkets was found in rice (3,12 quintals), wheat (2.77 quintals) followed by green gram (3.17 quintals) and chili (0.21 quintals ). based on the unit cost and quintals purchase the total amount spent by these supermarkets was maximum of rs.14.689.06 was observed in green gram due to its high until cost (Rs.4.642.50 quintals) and the minimum was found in mustard (Rs.583.33) as it was purchased in small quantity. The higher procurement incase of frits and vegetables was observed in banana (20 quintals) followed by tomato (12 quintals) onion (10quintasl ) and apple (6quintasl ) depending upon the demand for these products and the total amounts to Rs.33.120 for apple. Rs.33.000 fro banana. Rs.67... For onion and Rs.6600 fro tomato. Here the average frequency of purchase was 15 times a month in tomato, 10 times in banana and apple, but only four times in onion because of its hairiness. 3.Mangalore - the average monthly purchase of selected commodities in mangalore supermarkets shown in table 4.6 reveals that the maximum quantity of grocery purchase was in rice(4.89 quintals ) followed by tur dal(3.41 quintals), green gram (2.82 quintals ), wheat (1.24 quintals ), chilli (0.23 quintals ) and mustard (0.15 quintals ) depending on their turnover in the supermarkets the amount spent respective of the order was Rs.8.023.29, Rs.10.552.54, Rs 12.535.56, Rs.2,498.47, Rs.1.623.90 and Rs.361.00 based on their quantity purchased due to the demand for those products. The purchase frequency was 5.67 times a month in rice, wheat, green gram, tur dal and chilli but 2.33 times a month in mustard because of its less demand. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

All these products were acquired from APMC only. In fruits and vegetables, no sale of apple was noticed in mangalore supermarkets because of non availability of fruits in wholesale market and the dominance of traditional fruits sellers in the study area. However, more procurement in terms of quantity and total costs were observed in banana (9 quintals & Rs.14.700) followed by onion (5.5 quintals & Rs.3.932.50) and tomato (4.5 quintals & Rs.2.797.50). The units costs were also observed in the same order. While the purchase frequency was 10 times a month in tomato and five times in onion. All these products were also purchased from the wholesalers market. 4. Belgaum the frequency of groceries in belgaum was different from commodity to commodity (Tabel4.7) that is 4.39 times a month in rice, 4.67 timeline month in wheat.4.33 times in green gram.4.42 times in month in tur dal. 4.33 times in chlli and two times a month in mustard fro thr reason that the supermarkets purchase the products whenever need arises. All these products were procured from APMC only. In addition, the table also revealed that rice (2.33 quintals) was the major commodity procured in supermarkets followed by tur dal (2.13 quintals),wheat (1.92 quintals), chilli(0.19 quintals ) and mustard (0.09 quintals ).a t the same time, the estimated total amount were Rs.6.305.69, rs.6281.25, rs.3660346, rs.3.481.15, rs 1.292.3 and Rs 196.44 in case of green gram, tur dal, rice, wheat, chilli and mustard, respectively based on their unit cost and q1uanity purchased. However these products were brought from APMC only as it is the only regulating body for marketing of agricultural commodities. No sale of fruits and vegetables were noticed in supermarkets of these products in the supermarkets. a part from this fact, the other reasons opined by the retailers were lack of aviability of fruits and vegetables regularly. Existence of traditional fruit and vegetables vendors in the city, lack of manpower to look out of these products as these marketed in everyday early morning. 5.Hubli-Dharwad The results of table 4.8 reported that the average monthly costs incurred in procurement of commodities by the supermarkets in hubli-dharwad city. It was rice followed by green gram,wheat,tur dal, chilli and mustard procured in order of 4.46 quintals,2.28 quintwls,2.75 quintals,2.61 quintsl,0.26 quintals and 0.18 quintals , respectively in the city, the amount spent was also high in those respective commodities. The frequency of purchase was 3.67 times in rice,wheat,green gram, tur dak and two in mustard. No sale of fruits and vegetables were seen in hubli -dharwad which are attributes to the reasons that lack of infrastructural facilities to handle these products like lack of manpower, cold storage , non availibity of product etc., like in other cities , the grocey items wee procured from the market Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

5. Overall The overall monthly average and value of products procurement acrosss cities in Karnataka presented in table 4.9 revealed the the average frequency of purchase in groceries was ranged from four to five times month but it was only 2.2 times in mustard. The quality purchase was also found to be more in rice (0.85 quintals ) followed by tur dal (0.77 quintals ), green gram (0.71 quintals ), wheat (0.54 quintals)chilli(0.07 quintals ) and mustard (0.12 quintals). This is attributes to the fact that the turnover in cereals and pulses was much more when compared with spices, as these products are daily use items by the consumers and hence, the demand was more in these commodities. the cost per quintals was highest in chili (Rs 6739.79) while least in rice(Rs.1.688.90). Further the total amount spent found to be much in green gram (Rs.14.258.75) due to its high unit price and high quantity purchase. It was also repotted that the APMC was the only source of purchase for grocery products as it id the only governing body fror marketing of agricultural commodities. the existing policies of the government also prevents from sources with respect to fruit and vegetables, the purchase frequency was more in tomato(10.83) and banana(10.00) due to their perishables nature of the products in general and tomato in particular and also to avoid wastages during storage. Correspondingly, the quantity purchased was high in banana (*1.38 quintals) as the demand for this products was more. Apart from own production and direct purchase of fruits and vegetables from farmers by the supermarket in Bangalore. All supermarkets in various cities purchased fruits and vegetables from wholesale markets only. 5.4.3monthly costs incurred in procurement of commodities by supermarkets in daggering cities 5.4.3.1BANGALORE It could be seen from the table 4.10 that the average monthly costs incurred in procurement of selected commodities by supermarkets in Bangalore city. Among grocery items, green gram accounted fro high total cost (Rs 26.005 .1111114 ) in procurement because of its high unit cost and quantity purchased followed by tur dal (Rs. 21.545.56) rice (Rs.1.773.52) wheat (rs. 9067.56) chili (Rs. 3.676.58) and mustard (Rs.9.838.42) where the equinity purchased was 6.46 quintals in tur dal, 5.54 quintals in green gram. 5.52 quintal in rice, wheat in 4.29 qunrals.0.54 in chili. It was found from the study that next to price of the product, transport costs were the prime costs in procurement and the sales tax at the rate of four per cent seen only in case of spices. However the costs observed in transport were Rs.278.58, Rs. 273.96, Rs 235.54, RS 233.24, Rs.106.20 and Rs,79.78 in green gram , tur dal ,wheat. Rice, mustard and chili, respectively. The sales tax was found to be high ( rs.138.38) in chili. Respectively. The sales tax was found also high Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

in chili (Rs.7715.78) a the cost of the raw material itself was high in this commodities. As in the excise of groceries, transport costs were also found to be high in fruits andvegitavles. The total costs were rs. 1313.50 in tomato, Rs.675 each in banana and apple, Rs.275 in onion. The high total transport costs in tomato and banana attribute to high quantity purchase primary. In addition these vegetables are more perishable than the other two (onion and apple) and needs special care while transport including the transport material. Further tomato was procured in highest (14.63 quintals) quintals because of more demand from the consumers onion and banana stands next to tomato in terms of quality purchased (12.50 quintals each). Apple procurement was very meager (5 quintals) because of its high unit coat and less demand from the consumers total costs were noticed to be high (Rs. 27,025) in apple followed by banana (Rs. 23,175), onion (Rs. 7,224.38) and tomato (Rs. 7,224.38). 5.4.3.2mysore In mysore, high total cost was accounted by green gram (Rs. 14,834.72) due to its high unit cost (Rs. 4,685.61/quintal) and quantity purchased and the minimum was accounted by mustard (Rs. 646) as it was purchased in small quantity (0.23 quintals). Based on the quantity purchased the proportion of total transport costs were high in rice (Rs. 142.52) followed by green gram (Rs.136.67), tur dal (rs.119), wheat(Rs. 102.17 quintals), mustard (Rs. 39.33) and chilli (Rs. 33.32). in addition the sales tax was found in spices. In fruits and vegetables, the utmost procurement seen in banana (20 quintals) and less in apple (6 quintals) thus the total cost were also high (rs. 34.000 and 33,420) in respective commodities. The transport costs were more in banana (Rs. 1000) and least in apple (table 4.11). 5.4.3.3Mangalore - The average monthly costs incurred in procurement of selected commodities by supermarket in Mangalore city depicted in table 4.12 shows that the maximum quantity of groceries were procured in rice (4,96 quintals ) followed by tur dal (3.41 quintals ) ,green gram (2.82 quintals), wheat (1.24 quintals) and chilli (0.23 quintals) but maximum cost was incurred in green gram (Rs. 12,648.22) because of its unit cost and quantity purchased. Mustard was procured in minimum quantity due to its less demand and consumption by the consumers relatively high transport cost (Rs. 169.08) were found in rice and low (Rs. 40.69) in chilli. The local sale tax at the rate of four per cent was prevailed in this market too which is highest of Rs. 66.02 accounted in chilli. No sale of apple was noticed in Mangalore supermarkets because of non=availability of the product in wholesale market and the dominance of tradition fruit sellers in the town. More procurement and total costs were observed in banana (9 quintals & Rs. 15,150) followed by onion (5.5 quintals &Rs. 4,207.50) and tomato (4.5 quintals & Rs. 3,022.50) depending on their quantity handled. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

5.4.3.4Belgaum - It could be seen from the table 4.13 that the average monthly costs incurred in procurement of commodities in belgaum supermarkets. Rice was the major (2.33 quintals) commodity procured followed by tur dal (2.13 quintals), wheat (1.92 quintals), chilli (0.19 quintals) and mustard (0.09 quintals) in mysore supermarket. Corresponding total costs were Rs. 6,356.11, Rs. 6,353.33, 3735.88, Rs. 3,547.99, Rs. 1370.00 and Rs. 216.48 in case of green gram, tur dal, rice, wheat, mustard and chilli, respectively because of their quantity purchased and high unit cost. The total transport costs were found to be high in rice (Rs. 75.42) followed by tur dal (Rs.72.08) and wheat (Rs. 60.83) for the same reason. The local sales tax in spices was more (Rs. 51.70) in chili as compared to mustard for the simple reason that the unit cost of chilli was more than the mustard. No sale of fruits and vegetables were noticed in belgaum city supermarkets because of lack of infrastructural facilities of handle these products. 5.4.3.5 hubli-dharwad It could be seen from the table 4.14 that rice followed by green gram, wheat, tur dal, chill and mustard were procured in order of 4.46 quintals, 2.88 quintals, 2.75 quintals, 2.61 quintals, 0.26 quintals and 0.18 quintals, respectively in hubli-dharwad. As it was observed in the earlier cities that the sales tax was applied only for spices and chili was the maximum contributor (Rs. 71.36) for it. However, the transport costs were high in green gram observes because of lack of infrastructure facilities to handle thee fruits and vegetables and also due to non-availability of these products and product suppliers regularly. 5.4.4

Average monthly costs incurred in procurement of commodities by supermarkets in Karnataka as it was observed from table 4.15 that at an overall, rice (3.85 quintals) next were tur dal (3.47 quintals), green gram 3.18 quintals), and wheat (2.45 quintals) were the major groceries procured by the supermarkets as these are the daily use items by the consumers and hence the demand was more in these cases. Whereas, in case of spices such as chilli and mustard the quantity purchased was very meager (less than 0.5 quintals/month) because of less turnover in these commodities. In proportion to the quantity, the total costs were also found high in almost all the commodities. However, the average cost per quintal accounted was Rs.7144.09 for chilli, Rs. 4,463.64 fro green gram, Rs. 3,149.58 for tur dal, Rs. 2,671.88 for mustard, Rs. 2,236.46 for wheat and Rs. 1,726.99 for rice. The sales tax was found only in spices and it was Rs. 46.93 in chilli which is followed by mustad.

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Similarly in case of fruits and vegetables, the purchase was highest in banana (13.83 quintals) subsequently tomato (12.50 quintals),onion (9.33 quintals) and apple (5.50 quintals) depending on their demand prevalence. The transport costs seems to be more in tomato (Rs. 1,012.50 ) as it is very perishable and purchased in high quantity compared to other products and less in apple (Rs. 287.50). it was noted from the table 4.16 that in all the commodities. Quantity procured and their unit costs were found to be high in banglore alone. It may be due to the higher average size of the supermarkets and high turnover of the commodities. Wherein, the average procurement of tur dal was 6.46 quintals, green gram was 5.54 quintals, rice was 5.52 quintals, wheat was 4.29 quintals, mustard was 0.64 quintals and chilli was 0.48 quintals. In contrast, the commodities procurement was found to be less in belgaum due to the existence small sized un-organized supermarkets and their small turnover. The local sales tax of four per cent on spices found in all the cities and slightly high sales tax was observed in chilli (rs. 77.91 ) compared to mustard (Rs. 25.28) .the transport costs varied accordance with the quantity purchased in all the cities and in all the commodities. How ever, the highest was noticed in rice (rs. 157.20) and the least in mustard (rs. 42.54) in fruits and vegetables, the quantity procured was maximum in banana (13.83 quintals) followed by tomato (10.38 quintals), onion (9.33 quintals) and apple (5.50 quintals) depending upon their existing demand, whereas, the cost pr quintal and total incurred were more in apple (rs. 5487.50/quintals and Rs. 30,222.50 total cost) followed by banana (Rs. 1745.78/quintals and Rs. 7,062.22 total cost). The table also indicated that the fruits and vegetables procured from various such as wholesale market, own production and direct purchase from farmers except banglore, almost only. The transport costs detected high in tomato (Rs. 712.50 ) and banana (Rs. 708.33) as the quantity procured was high in these commodities. Citywise average monthly cost incurred in procurement of comm by the supermarket (table 4.17) found that the monthly total quantity procurement was high in banglore (67.65 quintals) followed by mysore(59.77 quintals), banglore(31.80 quintals), hubli-dharwad (13.13 quintals) and belgaum (8.14 quintals), as the supermarkets size and the turnover were maximum in the city. Sometimes organizations are created large at the outlets, usually because size is an advantage or a necessity . For example, the owner of an Independent supermarket does not open a small store in a newly built subdivision and then grow larger as demand warrants. Instead, a large store is designed and built that has the capacity to deal with the expected number of customers in the neighborhood. A small grocery store could not compete effectively in price and selection with other nearby supermarkets. In the same way, the total costs were in descending order in these cities. Similarly, the transport costs were Rs. 4145.68, Rs. 2,972.91, Rs. 1,478.44 Rs. 541.59 in Bangalore, mysore, Mangalore, belgaum and hubli-dharwad. However, depending on the quantity procured total costs in different commodities varied across cities. Except tomato, total costs per quintal in all the commodities were also found to be high in Bangalore only. This is mainly Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

because of the reason that the supermarkets in Bangalore procuring tomato from different sources like direct procurement from the farmers and wholesale auction market like safely company which is mainly dealing with auctioning of fruits and vegetables. Apart from this, own production of fruits and veg were also observed in few supermarkets.

5.5.

inventory management and its costs in supermarkets inventory refers to stocks of products,which represents a large portion of the business investment and must be well managed in order to maximize profits. Raw materials inventory , work in process inventory, finished products inventory and work in sales inventory represents the various forms of inventories maintained by the supermarkets. Each type represents money tied up until the inventory leaves the company as purchased products. In fact, many small businesses like supermarket cannot absorb the types of losses arising from poor inventory management unless inventories are controlled, they are unrealizable, inefficient and costly. Inventory management and inventory control must be designed to meet the dictates of the marketplace and support the company's in the supermarkets are interest on working capital, shrinkage, labor charges, packing material and cold storage charges.

Cost of inventories and preparation of products for sale in supermarket of different cities 5.5.1.1 Bangalore the costs of inventory and preparing the products for sale in banglore city presented in table 4.18 revealed that supermarkets maintained short time period inventories in almost all the commodities. It may be due to the reason that they do not want to get caught with obsolete items and just try to have an adequate inventory on hand. These just-in -time inventory and material requirements planning (MRP) management approaches works to eliminate inventories rather than optimize them. These reports are on par with the results obtained by farsad and lebruto (1993). he reported that the consequences of overstocking items or under stocking were undesirable. Overstocks absorb money and invite waste in food inventory management. Further, form better inventory management controls to new loss prevention methods,retailers are integrating more technology initiatives into their operations to run more efficient stores.In groceries, particularly in cereals and pulses the inventory period was ranged four to five days in spices it ranged from four to 11 days. While in case of fruits and vegetables the periods ranged between three to five days because of perish ability of these products. The volume of inventories found to be high to be in tur dal (6.46 quintals ) followed by wheat (5.75 quintals) green gram (5,54 quintals ), rice (5.52 quintals ),mustard (0.64 quintals ) 5.5.1

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and chilli (0.48 quintals ) with their respective values ar Rs.21.859.03 , Rs.9417.06, Rs 26,903.63, Rs. 10.107.12, Rs ,01750.08 and Rs. 3.703.32 based on their turnover in turn due to consumer demand for essential and daily use items. The fifnished product inventory was observed to be highest both in terms of quanity and storage period as the business involves quick conversion of inventory and hence the mangers must formulate a plan to ensure enough inventories is on hand for production of finished product, the finished product stock was 4.66 quintals in tur dal valued at Rs15.830.02 held for 1.60 days 4.21 quintals in wheat valued at RS.6.765.47 held for 1.50 days and 3.60 quintals in rice valued at Rs.6.555.60 held for 1.40 days next to the finished product inventory, most of the product was detained at work in sales inventory and raw material inventory. The work in sales inventory should be maintained to retain the prospective customers from the psychological point of view. However the work in ales inventory in tur dal was 0.42 quintals for 1.10 days, unit what was 0.55 quintals. The storage period of work in process inventory was low (less than a day) in almost all the products because as soon as the raw material comes they will subject product stage. In case of inventory costs, the packaging material and labor charges for cleaning and packing were to be the major cost components in all the commodities. Packing is an important cost component in supermarkets inventory as it involves costs in getting good quality packing material which should have good appearance, durable and printable form to deliver the products in an exciting presentations with difference in size and weight of packets. Most of the supermarkets have their own brand names which create an image in the minds of customers in turn help in attracting them. However these costs were Rs.400 in tur dal, rs 631.50 in wheat, and Rs.210.50 in wheat and Rs.400 and Rs 160 in freen gram. The minor costs include interest on working capital at the rate of 12.5 percent and shrinking/wastage of the product. The shrinking costs were Rs.533.85 in green gram ,Rs.436.63 in tur dal, Rs 101.18 in rice etc. at an average, the total inventory cost per quintal was more in chilli (Rs.394.63) followed by mustard (Rs.2533.90), green gram (Rs.136.90) as the unit shrinking was more in chilli and mustard. 5.5.1.2 In fruits and vegetables, the quantity maintained and their values were high in onion (12.50 quintals at RS.11.606.25) and low in apple (1.39 quintals at Rs.7.845.86). In addition , the quantity maintained In tomato was 4.88 quintals with worth of Rs.3.126.86 and in banana was 4.17 quintals with the worth of Rs 7.987.64./the work in process and finished product inventories were minimum in case of banana and apple as most of these directly sold in the shop by just manual cleaning and grading. Alike groceries the finished product inventories in fruits and vegetables were maintained in higher Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

quantity and for lengthy period in tomato (3.50 quintals for1.60 days) and onion (8.50 quintals for 1.90 days) on the other hand raw material inventory in banana was 1.05 quintals for 0.52 days and apple was 0.25 quintals for 1.12 days. In inventory, shrinking cost was perceived to be the highest cost iin onion (Rs.1160.61) followed by babab (Rs.978.05). Apple (Rs.905.26) and tomato (Rs.322.31). The cold storage cost was Rs.226.50 in tomato ,Rs.123.00 in banana and Rs.45.50 in apple and the per unit cost seems to be same for all commodities. In contrast, no cold storage was used for onion because of its sturdiness. Nevertheless the totla inventory cost per quintals was in descending order in apple (Rs.759.51) followed by banana (Rs.327.91). Tomato (Rs.226.50) and onion (rs.202.78)

5.5.1.2MYSORE The cost of inventory and preparing the products for sale in mysore supermarkets presented in table 4.19 revealed that storage period of inventories was four days in all groceries that storage period of inventories was four days in all groceries except mustard, wherein the storage perod was 15 days because of its non pershability. In case of fruits and vegetables, the period was two days in tomato, banana and apple but four days in onion depending on their pershabilty.The quality and value of groceries was seems to be high in rice (3.33 quintals) followed by green gram(3.17 quintals), wheat (3.00 quintals), tur dal(2.77 quintals), chilli(0.21 quintals) and mustard (0.23 quintals), the respective values were Rs. 5,963.20, Rs. 15,391.14, Rs. 4,947, Rs, 9366.06, Rs. 1612.33, and Rs. 624.16 depended on the respective unit costs. The maximum quantity of inventory was held in finished product stage in all grocery items as in the case of banglore supermarkets. How ever , the finished quantity maintained were 2.25 quintal in green gram, 2.11 quintals in rice, 1.90 quintals in wheat, 1.60 quintals in tur dal. Even more than half of the quantity of chilli and mustard found to be held at this stage only. The work in process inventory accounted for less quantity and minimum storage period in almost all groceries. The packaging cost was higher in green gram (Rs. 258.75) followed by rice (Rs. 244.76), wheat (Rs. 243.20), tur dal (Rs. 184.00), chilli (Rs 20.40) and mustard (Rs 20.16) In fruits and vegetables, the quantity and value of inventory period was more in onion (10 quintals) followed by banana (1.33 quintals), tomato (0.80 quintals) and apple (0.65 quintals) depending on their perish ability and demand. The finished product inventory had highest quantity in onion (6.80 Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

quintals) subsequently in tomato (0.33 quintals). The work in sales inventory was 0.43 quintals in banana, 0.75 quintals in onion, 0.25 quintals in tomato and apple as it is an important stage to attract customers and to retain them. However, the labors costs were Rs. 562.50, Rs. 340 for onion and 32.25 Rs. 68.72 and Rs. 16.50 for tomato. The total inventory cost per quintal was Rs. 758.69 in apple. Rs. 181.39 in tomato, Rs. 178.21 in banana and Rs. 130.27 in onion. Negligible labors charges were seen in banana and apple as they involve simple cleaning and grading. 5.5.1.3

5.5.1.4

Mangalore - It was observed from table 4.20 that the storage period was 5.67 days in cereals and pulses whereas the period was 5.94 days in chilli and 12.87 days in mustard. Similarly, in fruits and vegetables the storage period was three to five days in fruits and vegetables depending on their keeping quantity and demand for the products. No sale of apple was noticed in Mangalore supermarkets because of the reasons such as non-availability of the product regularly, existence of conventional fruits and vegetables vendors in the city, less demand for the product, high price of the product and fear of losses due to perish ability and lack of infrastructures to handle these fruits. The inventories in grocery items were found more in rice (4.96 quintals) followed by tur dal (3.41 quintals), green gram(2.82 quintals) and the respective values were Rs. 8,284.44, Rs. 11,170.31,Rs. 13,115.82, Rs. 2,643.84, Rs. 1,698.72 and Rs. 391.20. as in the case of other cities, finished product inventories were also occupied top position in terms of quantity and period of storage. The least quantity the commodity seized was again the work in process inventory. The quantity at work in sales was moderate of 0.72 quintals in rice, 0.35 quintals in wheat, 0.45 quintals in green gram, 0.32 quintals in tur dal, 0.05 quintals in chilli and 0.04qintals in mustard , again, the packaging materials and labour charges were the major costs in inventory which were found to be highest (Rs. 315.70 and Rs. 124.31 ) in rice and least in mustard (Rs. 6.60 and Rs 14.19).however, the highest cost in packaging material different from commodity to commodity. The total inventory cost per quintals was highest in chilli (Rs. 361.56)followed by green gram, tur dal, mustard , wheat and the least was found in rice (Rs. 106.30).

In fruits and vegetables, the maximum inventory was maintained in onion (5.50 quintals) subsequently in tomato (1.50 quintals) and banana (1.10 quintals) depending on its prevailing demand/turnover and perish ability of the products. The finished products were stored in maximum quantity for 1.90 days onion. There work in process and finished product inventories were seems to be very little in banana as it is directly sold in the shop. The labors charge and packaging materials were Rs. 268.35 and 230.89 in onion. Rs. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

76.67 and Rs 123.50 in tomato, respectively. However, no cold storage was observed for both fruits and vegetables in Mangalore supermarkets. The unit cost of inventory for banana was found to be Rs. 303.18, Rs. 162.00 for tomato and Rs. 116.66 for onion . 5.5.1. 4 Belgaum it was noticed from table 4.21 that the storage period of inventory by the supermarkets in belgaum was ranged from four to 4.5 days in almost all groceries except mustard wherein the storage period was 15 days the quantity of inventory was found to be high in wheat (2.58 quintals) followed by rice (2.33 quintals) tur da,(2.13 quintals), green gram (1.49 quintals), chilli (0.19 quintals) and mustard (0.09 quintals) in groceries. The respective inventories valued at Rs. 3,935.15, Rs. 3,861.39 , Rs. 6,600.34, Rs. 6575.00 Rs. 1,359.69 and Rs. 223.72. among different types of inventories, the finished product inventory was observed to be the highest in terms of quantity as the supermarkets keep it ready for the sales counter. The work in process inventory was found to be minimum in all the cases. The packaging cost was found to be minimum in all the cases. The packaging cost was found to be the prime cost in inventory as it was rs. 213.50 in wheat, rs.155.53 in rice, rs. 134.93 in tur dal, rs. 78.28 in green gram , rs. 16.30 in chilli and rs. 4.89 in mustard. Packaging costs were observed to be maximum because of the use of costly, durable and attractive materials and printed attractive information on it to attract the customers. The maximum shrinkage cost in green gram followed by tur dal , wheat ,rice, chilli and mustard may be depends on the quantity of stock they handled. However it was detected that the highest total inventory costs in tur dal (rs. 333.46) and low in mustard (rs 15.32) there was no sale of fruits and vegetables in belgaum supermarkets , the reason attributed like-lack of infrastructural facilities to handle fruits and vegetables, lack of availability of fruits and vegetables regularly, lack of manpower to look after fruits and vegetables as these products were marketed in the everyday early morning at wholesale market etc.

5.5.1.5

Hubli-dharwad

Table 4.22 represented that the storage period of commodities in inventories by the hubli-dharwad supermarkets were 3.67 days in cereals including chilli but the period was 15 days in mustard. The total quantity maintained in inventories with their respective values were more in rice (4.46 quintals worth of Rs. 7,705.77)followed by wheat (4.00 quintals worth of Rs. 6,277 ), green gram (2.88 quintals worth of Rs. 12488.40), tur dal (2.61 quintals worth of Rs.8378.10), chilli (0.26 quintals worth worth of Rs 1857.83) and mustard (0.18 quintals worth of Rs. 456.21 ) depending on the turnover Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

quantity as it is an important stage of inventory occupied maximum quantity as it is an important stage of inventory to maintain regular stock at sales counter. Similar to other cities, the work in process inventory was low in all the commodities. Again the costs incurred on packaging materials followed by labor charges were the major inventory cost components. The shrinkage cost was found maximum in green gram followed by tur dal, rice, wheat, chilli, and mustard depends on the quintal was in the order of chilli (rs. 337.14), green gram (rs. 200.78),tur dal (rs 170.04), mustard (rs 136.62), wheat (rs 117.42) and rice (rs. 103. 66). No sale of fruits and vegetables in hubli-dharwad supermarkets attributed to the facts as lack infrastructural facilities to handle Fruits and vegetables, existence of professional local fruits and vegetable vendors, fear of loss due to perish ability nature of the products, less demand for the produce etc. 5.5.2 average costs of inventory and preparing the products for sale at supermarkets in Karnataka at the costs of inventory and preparing the products for sale in selected cities across karnataka presented in table 4.23 revealed the short time period inventories maintained in different commodities by the supermarkets in the state. The inventory period was ranged from between four to 4.5 days in all the groceries except mustard where the storage period was 13.82 days. In case of fruits and vegetables, the inventory period was one day to three days only because of their perishability and demand for only fresh by the consumers. The average quantity of inventories maintained in groceries were high in rice(4.12 quintals) followed by tur dal(3.48 quintals), wheat (3.39 quintals),green gram(3.18 quintals),chilli(0.27 quintals) and mustard (0.26 quintals). The respective inventories were valued in accordance with the quantity handled and the unit cost price of the products; however, the respective values were Rs7,184.38, Rs. 11,474.77,rs 5,444.01,rs 14,894.80 .,rs 2,046.38 and rs.689.07 among inventories, the finished product inventory was found to be highest both in terms of quality and storage period as the product should be ready for sales shelves to maintain regular and accurate stocks for the consumers. However the finished stocks were 2.58 quintals for rice, 2.34 quintals in tur dal 2.2o quintals in wheat 2.01 quintals in green gram 0.14 in chilli and 0.14 quintals in mustard . Next to finished product inventory, most of the product was detained at work in sales inventory . The storage period of work in process inventory was low in most of the products that is 2.55 days in mustard, 1.08 days in rice, 0.75 days in wheat, 0.69 days in chilli because as soon as the raw material comes it was subjected to work in process inventory to make it ready for the sale at the supermarkets and hence the inventory period is low. The packaging material cost and labor charges for cleaning and packing were found to be the major cost components of inventory management in all the commodities as the packaging involve costly, durable, attractive material and printed information on it to attract customers, the major costs include interest on working capital Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

at the rate of 12.5 per cent and shrinkage/wastage of the product. However at an average the total inventory cost per quintals was more in chilli (Rs. 361.37 ) followed by mustard (rs. 216.39), green gram (Rs. 202.53), tur dal (Rs. 181.88), wheat(Rs. 140.51) and rice (Rs. 117.87)with respect to fruits and vegetables , the quantity of inventories maintained and their values were high in onion (5.60 quintals valued at rs. 2,034.93) due to their turnover and demand. The quantity uphold in tomato and banana was 1.44 quintals and 1.22 quintals . The work in process and finished product inventories kept in case of banana and apple was low due to their direct selling at shop by just manual cleaning and grading of fruits. The finished product inventories were maintained in highest quantity for long period in onion compared to other fruits and vegetables because of its nonperishability for some time. The raw material inventory was found maximum in banana(0.63 quintals for 0.80 days) due to no grading and cleaning of banana inmost of the supermarkets, shrinkage cost perceived to be the highest cost in onion(rs. 357.65) followed by banana (rs. 202.07), apple (rs. 200.72) and tomato (rs. 102.91) at the inventories the cold storage cost was highest in case of apple (rs. 613.93) follwed by banana (rs.215.31),tomato (rs.208.69) and onion (rs.159.97) the table 4.24 indicated that the average storage period of groceries was between 4.5 days groceries except wherein it was 13.82 days. In case of fruits and vegetables, the storage period was ranged between two to five days. It was noticed from the table that the inventory period was varied across cities and commodities and found to be high in mustard and low in tomato and apple due to their perish ability nature and turn over of the commodities. The maximum quantiy of inventory maintained in grocery items were found in banglore (6.46 quintals of tur dal, 5.75 quintals of wheat, 5.54 quintals of green gram, 5.52 quintals of rice , o.64 quintals of mustard and 0.48 quintals of chilli) while, the least were found in belgaum (2.58 quintals of wheat, 2.33 quintals of rice, 2.13 quintals of tur dal 1.49 quintals of green gram , 0.19 quintals of red chilli and 0.09 quintals of mustard) depending on their size of the supermarkets and turnover. On the contrary, the quality maintained in Mysore and mangalore were different in some products. In case of inventory cost packing material followed by labor charges, shrinking and interest on working capital were identified as the cost components . The greater total inventory costs and total costs were across cities were also noticed in Bangalore in almost all the products. But these costs were varied across cities and commodities. In addition , the quantity of inventories maintained in spices. Especially in case of mustard was more among all the commodities but inventory cost per quintals was noticed to be high of rs. 353.25 because of its long storage period. In fruits and vegetables, the highest quintity of inventory was found in bangalore (12.50 quintals of banana and 1.39 quintals of apple) follwed by mysore (10 quintals of onion , 1.33 quintals of banana, 0.80 quintals of Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

tomato and 0.40 quintals of apple) and mangalore (5.50 quintals of onion, 1.50 quintals of tomato, 0.60 quintals of banana) depending on the average size of the supermarkets and their turnover in the state. No sale of fruits and vegetables were witnessed in belagaum and hubli dharwad due to lack of infrastructural facilities to handle fruits and vegetables , existence of total traditional friuts and vegetables vendors , non availibility of fruits and vegetables. However the average total costs high in onion (Rs. 1.493) followed by apple (Rs.549.47) and banana(437.80) nevertheless average total inventory cost per quintals was as high as Rs. 620.07 in apple follwed by banana (Rs.197.17 ) tomato (Rs. 190.30 ) and onion (rs.149.90) in that order. It could be observed from table 4.25 that even though, the quantity of inventory maintained was high in bangalore (47.33 quintals ) follwed by mysore (25.24 quintals), mangalore (20.79 quintals), hubli dharwad (14.39 quintals) and belgaum ( 8.81 quintals ). the average inventory period was highest (6.13 days ) in belgaum follwed mangalore (5.83 days) hublidharwad (5.56 days ), bangalore (4.85 days ) and mysore (4.50 days). Among different commodities. The quanity stored was maximum in onion (12.50 quintals at banaglore, 10 quintals at mysore and 5.50 quintals at managlore) in all the cities and minimum in chilli (0.48 quintals in bangalore. 0.21 quintals in mysore, 0.23 quintals in managlore, 0.19 quintals in belgaum and 0.26 quintals in hubli-dharwad) depending on the respective demand for the produce and turnover of the supermarkets. Next to the onion was tur dal both in quantity and storage perod, with respect to cost components, packaging costs were found to be the prime consitituet, on an averge it accounts Rs.1141.77 in mangalore, rs 973.40 in hubli-dharwad and Rs.603.43 in belgaum. The highest pacaking cost attribute and printed information on it to the customers. The cold storage were nill in managlore, belgaum and hubli-dharwad because of their recent evolution towards conventional shops to supermarkets but seen only in case of tomato, banana and apple in bangalore and mysore as they are very pershability and demand for fresh produce by the consumers in this city. 6. Processing/value addition in supermarkets 1. Extent of activities only four steps or stages such as cleaning, grading, bagging and labellings and sticking. The conditioning was not observed in supermarkets since they have not undertaking long-term inventories. The results of the table4.26 revealed that in the entire groceries cent per cent of cleaning, bagging and labellings and sticking were undertake by all the supermarkets to maintain good relationship with the consumers by providing good quality products. In addition, it is very much necessary and the only way to compete with the conventional stores. On the other hand, these activities help in segmentation with price differentiation. However, grading was observed in 66.67 per cent of the banglore supermarkets but it was not seen in belgaum supermarkets since most of the supermarkets are Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

un-organized in the city. In overall, cent per cent of supermarkets across the karnataka followed cleaning, bagging and labeling and sticking activities whereas 26.67 per cent of the supermarkets undertook grading activities. In fruits and vegetables cleaning activities was observed in all the supermarkets as it is a basic thing to differentiate from other stores which are dealing with these products because of the existence of local fruits and vegetables vendors in all the cities. In contrast to this, all the banglore supermarkets followed grading,bagging, and labellings and sticking activities since the consumers of these markets in the city are highly sophisticated with high standard of living. At an overall, it accounts cent per cent of supermarkets carried out cleaning activity and 33.33 per cent each followed grading,bagging, and labellings and sticking activities across the state these results are similar to the study conducted by arora et al (2004) while studying the microbial reduction by washing vegetables in a rotary washer. He reported that vegetable washing is an important primary process unit operation for value addition of the produce at farm level washing is used not only to remove field soil,dust,pesticides but also the surface microbial load. 2.Value addition in supermarkets for the selected products it is observed from table 2.27 that in banglore supermarkets the average value added in case of groceries was more in wheat(31.33 per cent)followed by rice(30.59 per cent) mustard (28.05 per cent),tur dal(23.45 per cent),green gram(19.94 per cent) and chilli (17.52 per cent) due to higher prices obtained and relatively lower percent of wastage. In similarly,in mysore supermarkets the per cent value addition was highest in mustard(26.47 per cent) followed by wheat(24.23 per cent), rice (22.86 per cent),tur dal (19.67 per cent),green gram(15.97 per cent) and chilli(15.45 per cent). In manglore the value added was more in mustard (28.16 per cent)followed by rice(27.72 per cent0,wheat(27.14 per cent),tur dal(18.00 per cent,chilli(16.82 per cent) and green gram(16.04 per cent) because of highest prices for the products. The per cent of value addition in mustard was found to be high (29.17 per cent)in the case of belgaum supermarkets also due to high price for the produce which is followed by wheat (26.07 per cent),rice(24.83 per cent),green gram (20.27 per cent),tur dal(16.05 per cent) and chilli(15.50 per cent). Further, in the supermarkets of hubli-dharwad, the value addition was found to be 20.32 per cent in green gram,18.58 per cent in tur dal and 15.21 per cent in chilli depending upon their higher price realization on the other hand in fruits and vegetables category the per cent value addition in bangalore supermarkets was found to be the highest in tomato(64.78 per cent)as against 20.65 per cent in apple. This indicated the benefits of use of different sources of purchase for the produce such as direct procurement from the farmers and own production will obviously enhances realization especially in case of vegetables like tomato. Similarly it was 41.73 per cent in onion and 28.00 per cent in banana due to higher prices obtained. It may the attributed to the lack of cleaning and grading activities of these produces in other markets. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

The indicated percentage of value addition in mysore supermarkets were 45 per cent in tomato,39.09 per cent in onion,25.00 per cent in banana and 21.14 per cent in apple. In respect of manglore too,the value addition was maximum in tomato wherein the percentage value added was maximum in tomato wherein the percentage value added was 37.83 per cent the banana and apple occupied 35.00 per cent and 28.99 per cent accordingly overall at the supermarkets across the state, the highest per cent of value addition was noticed in mustard(27.68 per cent) among groceries and tomato(49.21 per cent) in fruits and vegetables. The higher price realization from mustard was due to absence of cleaning,grading of these produce in other markets as it was due to absence of cleaning, grading of these produce in other markets as it is less demanded from the consumers. The value addition in other commodities were in the descending order of 26.99 per cent wheat,rice,tur dal,green gram and chilli, and 38.61 per cent, 27.33 per cent and 22.90 per cent in onion,banana and apple . However out of the selected cities. The maximum value addition in both groceries and fruits and vegetables were found in banglore because of higher prices of the producers in this market

7.FINANCIAL MANAGEMENT IN SUPERMARKETS Various financial ratios were worked out for the year 2006-07 and presented in table 4.28 to assess the financial performance of the supermarkets in different cities across karnataka. Solvency ratios the solvency ratios indicate the extent of amount borrowed per rupee of owned in the business. Solvency refers to the ability of the supermarkets to repay its outside long-term liabilities/total liabilities in turn it indicates long-term stability of a concern. The solvency ratios analyzed during the study were identified as total liabilities to owned funds ratio and fixed assets to owned funds ratio. The ratio of total liabilities to owned funds was found to be 0.798,0.600,1.905,3.535,0.345 in banglore,mysore,manglore,hubli-dharwad and belgaum,respectively. Even the ratio of fixed assets to owned funds was found to be highest in manglore(1.731)followed by hubli-dharwad(1.367) and banglore(0.697). This indicated that the amount of borrowed fund per rupee was highest in hublidharwad followed by manglore,banglore,mysore and belgaum.this was because the amount pooled by the hubli-dharwad and manglore market was w when compared to other cities, on the overall across cities,it was 1,400 which indicates the soundress of the supermarkets business in the state the recent conveversion of tradition stores to modern type of supermarkets in these cities also made these supermarkets to be more dependency on external funds. Therefore, the supermarkets should taken care for improving Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

the own funds and volume of business to the need of improving financial strengths of the supermarkets. Liquidity ratios - Liquidity ratio indicates the continuous operation of the supermarkets. These ratio are used to measure the ability of an institution to possess adequate cash to meet immediate obligation. The liquidity position of the supermarkets was examined using two ratios namely liquid assets to total assets ratio and current assets to current liabilities ratio it was noticed from the table (table 4.28) that in all the supermarkets the liquid assets to total assets ratio was less than 0.5, which is 0.459 in banglore,0.404 Mysore 0,399 in manglore,0.157 in belgaum and 0.268 in hubli-dharwad and hence the overall was 0.337 it indicated that more than 50 per cent of the assets were not in liquid assets form. Therefore, all the units should increase the proportion of liquid assets in the total assets so as to improve the liquidity status of all the supermarkets the current ratio (ratio of current assets to current liabilities)presented in the table indicated that the ratio was more than one in all the cities supermarkets except Mysore,wherein the ratio was 0.994 it means to say the supermarkets had more than one rupee of current assets per rupee of current liabilities the minimal acceptable level for value of this ratio is two, hence, there existed a need for improving the liquidity position of the supermarkets by reducing its dependency on the short-term borrowings.

Profitability ratio - In the present study,the profitability ratios were analyzed for measuring the efficiency of the firms in utilizing their resources for generating profits. The profitability of the study supermarkets in this case was analyzed through net profits to fixed assets ratio,net profits to total assets ratio,net profits to owned funds ratio and net profit to total sales ratio were calculated and presented in table 4.28 net profits to fixed assets ratio were found to be high in Mysore wherein the ratio was 1.297 and least in Bangalore(0.572)and in other cities also the ratio was more than 0.677. this indicated that the profit generated per rupee of fixed assets was quite in all cities in turn it indicates the efficient use of fixed assets by the supermarkets. Similarly the overall net profits generated per rupee of total assets was nearly 2.50 rupee which indicates the improved efficiency of supermarkets in utilizing the total assets. The ratio of net profits to owned funds ratio point outs the net profits for each rupee of own funds used in the business, which were 4.621 in case of mangalore, while 1.773 in case of hubli-dharwad and the least was observed in belgaum 0.537. this ratio shows that the supermarkets were quite able tp products its equity. Net profits to Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

total sales were also found to be very significant in all the cities across the state indicating more than a 0.170 rupee contribution to per rupee total sales and still there is a nedd for improving capacity utilization and sales performance. Turnover ratio - The turnover ration indicates the operational the efficiency of the supermarkets in the study area. The efficiency of supermarkets in the selected cities was compared using the such as working capital turnover ration and fixed assets turnover ratios. The working capital turnover ratio indicated the efficiency of a supermarkets in utilizing its working capital for generating sales revenues. The ratio was highest of 5.156 in belgaum sales revenues. The ratio was highest of 5.156 in belgaum followed by 1.890 in bangalore, 1.576 in managlore, 1.539 in hubli-dharwad and 1.331 in mysore supermarkets. This indicates the turnover per unit of working capital was higher in belgaum over all other supermarkets and good in all other cities. This shows the lack of efficiency in sales even with higher working capital in contrast, the fixed to turnover ration were higher in the order of mysore, hubli-dharwad, managlore, belgaum and in Bangalore.(6.784, 4319, 3971 AND 3.581 respectively).this was because these supermarkets were able to achieve higher sales target with less investment in fixed assets accordingly. The above alll financial statues of the retailers were similar to the study bt gustafson(2003). The study revealed that in Fargo. USA in an average, both food manufacturing and food retailing small businesses ahead positive financial characteristics. Although they were only marginally profitable and liquid. They were highly solvent accounts receivable and inventory comprise nearly half of food manufactures total assets and a third of food retailers assets.

5.8 FACTORS CONSIDERD AND METHODS OF PRICE-FORMATION IN SUPERMARKETS The results of the garret ranking analysis conducted in respect of factors considers in pricing the products in supermarkets by the retailers were presented in table 4.29 revealed that the Bangalore belgaum supermarkets attracted significance importance to quality of the products followed by price should ensure profitability because of the sophisticated and high standard of living consumers in the city prefer quantity products rather then price as it is undesirable from the point of rational consumer hence they will decide the price in such a way that it Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

should ensure profitability also. Next to these the factors considers were nature of the products, completion, products life, price shoould not be high availability of products, price shall convenience prospective consumer etc. in mysore supermarkets attached first prefers to nature of the products and least consideration to market segmentation. As the supermarkets fixes the price based on the nature of the products like products etc. least importance was given to market segmentation as the products availability of the product. Price should not be high, competition etc were also considered in pricing at manglaore supermarkets. The factors like price should ensure profitability. Competition and price should not be high were considerd in their order. In case of hubli-dharwad, quality of the products was considered as the most important factors and long term pricing was given least imporatnce in fixing the price fro the products at supermarkets. In the state as whole, the quality factors like quantity of products, nature of the products were considered as most important ones which are mostly consumer oriented as he decides the fate of the business, whereas competitions, price should not be high, price should ensure profitability wee firm oriented as these factors decides his profit. The other factors such as availability of the products, products life, relative price of the rival products, market force, price shall convenience prospective consumers, market segmentation and long term pricing were considered as important respectively in the above stated order. While firms compete along many dimensions, pricing strategy is clearly one of the most important. In many retail industries. Pring strategy can be characterized as a wide range of products. It was found from table 4.30 that absorption cost pricing and going rate pricing methods were followed to gain some profits from the business after meeting their operating expenses. The prices decide from business mwtjods are similar to the rivals products and more competitive. These results are coincides the prevailing prices for commonly available supermarkets products in France ,UK and USA the results that some products have very similar or the same prices and discounting pricing were adopted occasional to this target pricing and discounting pricing were adopted occasionally to attract customers by charging below the cost price of the supermarkets in mysore followed absorption cost pricing and going rate ot market pricing and discounting method of pricing for the above mentioned reasons. All the supermarkets in managore adopted absorption cost pricing and going rate or market pricing methods, whereas 66.67 per cent of them in the city also made use of loss leader pricing to try and attract the customers. Apart from this 33.33 percent of the supermarkets also went for penetration pricing, discounting and destroyer or destruct or pricing methods occasionally to acquire market share by pricng low to get hold of the product in the market if, it is new, offering lower prices for a set of times especially during festivals and charging below averge to drive out competition as the case may be. The pricng and ging rate or market pricing methods by all the firms supermarkets occasionally at the time of festivals. Similarly the methods employed by the hubli-dharwad supermarkets were absorption cost pricing, discounting Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

pricing and going rate or market pricing methods by almost all the supermarkets. At an overall cent per cent of the supermarkets in the state followed absorption cost pricing and going rate or market pricing method in pricing the produces at supermarket bout 60 percent followed discounting pricing at supermarkets. While 33.333 per cent and 26.6.7 per cent adopted penetration pricing and sol leader pricing methods. A small proportion of the supermarkets also adopted target pricing for selected products and destroyer or destruct pricing methods were used to try and attract customers to the shopping at supermarkets. 9.PROBLES FACED BY THE FOOD RETAILERS; The problems in the supermarkets business were many but the variation were governed by a few dimensions. In order to formulate appropriate, it was necessary to identified and assess the magnitude of association of these dimension which provide deeper insights in knowing the phenomenon. In the present study, there were 38 variable identified and grouped to explain the problem of supermarkets across cities in the state. These indicates were subjected to factor analysis. Out of them 25 indicating were selected with factors loading by techniques of various rotation and considers nine dimension which explained 92.38 per cent of tha total variation in the problem for interpretation. Table 4.31 shows the factor loading of the each variables under different factors and the percentage variation explained by each factor loading ,non availability of trained employees, banks for sources of fiance, demand for credit from the customers and bargain from the customers were key to problem among them, as the supermarkets businesses is new approach toward organizes marketing hence require huge investment towards retailing business. The credit and bargains from the customers are as usal in any business activist. This indicated that there is a need to train the employees as per supermarkets requirement and bring confidence of the businesses in financiers to get the support . The other problems such as lack of government schemes for finance towards this businesses, defaults from the customers and non-availability of the credit facility from the wholesale were found to be the other major problems. It indicates some schemes by the government for this businesses as it is flourishing in recent years, providing better service to the consumers in turn superior prices to the farmers, it may alert the farmers towards production of quality produces. In contrast advertisement rate and production of quality produces. In contest advertisement rate and coverage of area. WTO impact on profit margin and price of the products and market information from the wholesalers have shown no impact. The variable affecting the businesses such as lack of experience in the businesses, bad timing of advertisement, damage of products from wholesalers, bribes to government authorities, tax charges by the government and margin from the wholesaler were listed in the second Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

dimension. The demand for discounts and offers from the customers, lactose of the supermarkets, WTO impact on competition and existing laws of the businesses were listed as the third dissenting problems. It may be due to general tendency of the customers for discontinues and offers. As the world is opened for Gerald competition it has an impact on the businesses; very businesses has to undergo the prevailing rules and regulation and there is no quid pro qua hence retailers felt these things as the problems, similar to this result, study conducted by connor et al (1999) shown that new forms of horizontals, vertical and geographical components have appear to challenge the supermarkets of the format in US grocery redialing. The other problems quoted by the retailers listed in subsequent climates were VAT charges , demand for new products from the customers, land and building financial resources, price variation the wholesaler, storage facilities and agencies for supply of produced to supermarkets,delayed delivery from wholesaler,existing location of the sut and availability of untrained employees have conquest on the problems of the retailing. Nageshwar rao and bramhanandan (2003) in their study on problems of retail trader in guntur district of andhra pradesh found that rent on building was a problem from the building owner side like high rent, frequently also faced many problems on media like high rates, inadequate information and coverage of area and timings problems. Looking into th elicited problems the retailers must learn to cope up and solve the problems to be the leader in the businesses. Rudolph et al (200) in their study suggested that the food retailers risk a loss of image or even a loss of the customer if they do not learn to react effectively to failure and improve their service strategy. 10.Factors influencing the consumers to purchase the food products in supermarkets due to urbanization, changing lifestyles,adoption of western styles,strong income growth and favorable demographic patterns the food consumption habit of Indian consumers habit of Indian consumers has been changing over the years. the shift in cons habit to away form home food products like fast foods. the whole concept of shopping has altered in terms of format and consumer buying behavior,ushering in a revolution in shopping in India. the consumers are also shifting from traditional local markets to modern supermarkets because of the shopping experience this regard an attempt was made in this study to ascertain the factors influencing the consumers to purchase the food products in supermarkets by opinion survey of the consumers across cities in the state. The results of the opinion of the consumers to purchase at the supermarkets in the study area were collected using three point scale technique based on their importance as most,medium and less preference,the opinion obtained in terms of scores were analyzed using cluster analysis and the results are presented in table 4.32 it was observed that out of 30 variables,13 variables Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

were found in the first aggregate cluster based on their similarity were found in the first aggregate cluster based on their similarly within the variables,among these 13 variables,convenient location of the supermarkets,range of products availability,convenient for purchase,availability of quality products were considered as the prime factors influencing the consumers to go for purchase at supermarkets most of these are concerned to the accessibility and products oriented factors hence the group was named as accessibility and product quality factors,second aggregate cluster comprised of major factors such as reasonable prices,parking facility shopping is seen enjoyable at supermarkets. Attractive packing,schemes and offers,concern about health,welfare and the environment ,influence of peer group,availability of range of brands most of which influences the consumers to opt purchases at supermarkets and hence the group was named as influencing factors,the third clusters group was named as product promotion factors since it consists of promotional factors like payment methods,interest and taste in eating foreign foods,home delivery facility,new products market development,attractive advertisement,fresh fruits and vegetables and fresh bakery products availability etc .this indicated the retailers to considers the consumers views and make changes accordingly to attract prospective buyers for efficient and effective retailing to make profit since consumer is the ling who decides the fate of the supermarkets VI summary and policy implication 6.1 Introduction Food accounts for the larger share of consumer spending food and food products account for about 53 per cent of the value of final private consumptions share is significantly higher than in developed economies,where food and food products account for about 20 per cent of consumer spending,significant spending on food and increasing out-of-home food consumption represents opportunities for food retailers and food-service companies (www.tata.com) to cater to their needs retailing is one of the larger industries in India and second largest employer after agriculture. The retailing industry provides employment to over 18 million people .one out of every 25 families in India is engaged in the business of retailing with the ownership and management predominantly family controlled,however,in sharp contrast to developed countries,unit average size of retail outlet in india is very small here,the majority of food consumption is still at home . Nevertheless,out-of-home food consumption is increasing local market and small-scale retailing continue to dominate India's food retail sector unlike most other countries,India retail sector is highly fragmented and bulk of the business is in the unorganized sector(97 per cent) local 'wet' market vendors,roadside pushcart sellers or tiny kirana (grocery) stores however,the share of modern organized retail sector is likely to grow from its current three percent to 15-20 per cent over the next decade. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

Retail growth in the coming five years is expected to be stronger than GDP growth,driven by changing lifestyles and by strong income growth,which in turn will be supported by favorable demographic patters and the extent to which organized retailers succeed in retailing lower down the income scale to reach potential consumers towards the bottom of the consumer pyramid growing consumers credit will also help in boosting consumer demand. A large young working population with median age of 24 years nuclear families in urban areas,along with increasing working-women population and emerging opportunities in the service sector are going to be the key growth driven of the organized retail sector in india. The structure of retailing will also develop rapidly. shopping malls are becoming increasingly common in large cities,and the number of department stores is growing much faster than overall retail supermarkets have been taking an increasing share of general food and grocery trade over the last two decades. Organized food retailing is a relatively new phenomenon in india,with small western-style supermarkets only starting to appear since 1990s. Thee country gas witnessed a retail revolution in recent years. Significant development has been taking place in urban areas in the form of organized retailing mega stores or malls more so in the south of the country in the major cities of banglore,chennai and hydrebad,as well as new delhi and mumbai in the north. it is expected that the tier II cities would take another five years to absorb modern retailing opportunities moreover the case for Indian retailers to explore rural markets in also strong due to the size of rural population and agriculture income growth in last couple of years . The major formats being followed for organized food retailing in india are supermarkets , discount stores,fresh product outlets,specially stores,convenience stores and off price retailers. The organized food retailing sector in India is on the a=verge of a boom and expected to undergo further change with perspective new domestic and global foreign entrants and the takeover or exit of some existing participant analysts believe that hypermarket will determine the future of organized food retailing over the short to medium term traditional grocery are also gradually redefining themselves by increasing floor space and introducing self-service format and value added services such as credit and home delivery (anonymous 2004)the study conducted by the rabo India finance Pvt. Ltd. Says that south Indian states of tamil nadu,andhra pradesh amd karnataka have taken a lead role in establishing modern food outlets. The growth of organized retailing has shown particular vigor in chennai and banglore where an estimated 40 per cent their grocery requirements were met through modern retail formats karnataka is one of the leading states in organized retailing in india as there are more than ten organized retailers (firms) with more than 100 outlets including metro AG operating in banglore city alone due to increasing urbanization and expanding service sectors like software banking insurance and business process outsourcing (BPO) which has taken a Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

metropolitan city status more recently has led to increase in income of the consumers. Apart from banglore cities such as mysore manglore,hublidharwad and belgaum in karnataka are also growing rapidly in terms of urbanization,income and organized retailing with local food markets as they are converting unorganized retail outlets into organized form because of strong demand for convenience products and better educated consumers concerned about health,nutrition,food safety, and the environment as income rose and shoppers sought both convenience and new tastes and stimulation,supermarkets were able to expand the products offered. the global economy has changed,consumer demand has shifted,and retailers operating system today are infused with far more technology than was the case in the past. it was observed that lot of progress have been achieved in the food retailing in the past decade through organized food stores such as supermarkets,discount stores,fresh product outlets,specially stores,convenience stores and off price retailers,but still there is a lot of scope for the food retailing state is experiencing rapid structural change with the emergence of huge retail firms with massive buying power and concomitantly concentration in the manufacturing sector an effort was made in the state to study the entire business aspects of organized food retailing in general and supermarkets in particular. In addition,consumers study was also undertaken to know the factors to be considered while purchasing their food products in food retail outlets. The specific objectives of the study were as follows • • • • • • • • •

To document the supermarkets existing in the study area to study the organizational structure in supermarkets To evaluate the investment pattern of supermarkets To evaluate the financial management of supermarkets To study the procurement management in supermarkets To study the inventory management in supermarkets To study the management of processing/value addition in supermarkets To ascertain the methods of pricing in supermarkets To study the constraints or problem faced by the retailers. To identify the factors influencing the consumers to purchase the food products in food supermarkets/food retail outlets.

Limitation of the study ; The study was purely based on the data given by the owners/executives of the food retailing companies/outlets who are generally suspicious of the motives of any investigation because of fear of taxation and competition. In addition,due to non-availability of time series data with respect to the business performance indicators over a period of time,only recent year's data (2006-07) was used to analyst the performance,the investigation was confronted with various drawback in ascertaining the data. in case of companies having chain of outlets/units,only one unit/outlet data was used to assess the overall objectives of the study. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

Hence greater care was taken to collect the data and it was also cross checked to get unbiased data as accurately as possible. 2.Methodology ; The present study is mainly concerned with the food retailing activities of the supermarkets across selected five cities in particular and karnataka state in general. To fulfill the objectives related to the supermarkets operations of the study a multistage random sampling technique was used. In the initial stage,karnataka state was selected as it is one of the leading states in organized retailing in india.at the second stage,five cities across karnataka such as banglore,hubli-dharwad,manglore,belgaum and mysore were selected as the majority of organized retailers were existed in these areas. Recently,most of the local retailers in these areas also modernizing their stores in the form of modern formats like supermarket the last stage,three supermarkets (one outlet/branch) from each city were selected randomly,so that the total sample size selected for the study were 15 among the number of supermarkets existing in these areas,only three supermarkets who were agreed to provide the date are selected. however, supermarkets which selected and their performance were studied for the last financial year 200607 .In addition to study the factors influencing the consumers to purchase food products in these supermarkets/retail outlets, ten consumers from each selected supermarkets/retail outlets (30 from each city) were interviewed randomly,so that total number of consumers accounts to 150. Since, it is difficult to study the overall operation in all the products only two products from each agriculture commodity like rice and wheat in cereals,tur dal green gram in pulses,dry chilly and mustard in spices,banana and apple in fruits and finally tomato and onion in vegetables were selected based on their volume od sales in supermarkets.

Data collection;The detailed information required for the study was collected from both primary and secondary sources in order tp accomplish the various objectives of the study the primary data on roles and responsibility of each individuals in the hierarchy and the pattern of investment like fixed and working capital were collected in detail to know the investment pattern and organizational aspects like different assets and liabilities,owned fund,inventory,working capital,sales and returns were collected from their records like balance sheet,profit and loss account and trade account were collected to know the financial status of these supermarkets . The information on procurement aspects like channels of procurement of raw materials,quantity procured,costs of procurement and inventory aspects like quantity and value of different inventories maintained at different stages and Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

their cost of carrying were collected to understand the procurement and inventory in processing cost incurred in processing considered in evaluating the performance of the supermarkets and they mainly point out of relative importance of the selected items. The financial statements used in this study correspond to the financial year of the supermarkets April to march of 200607. the ratio analysis technique has been heavily repaid upon, to test the solvency, liquidity, profitability, turnover and sals of the supermarkets . The multivariate statistical technique, principle component analysis was employed to ascertain the major problems faced by the supermarkets in the business of food retailing. The cluster analysis is a formal multivariate statistical procedure was used in identifying the factors influencing the consumers to purchase food products at supermarkets Finding of the study 1.It was observed from the study that majority of the organized supermarkets (multi outlets ) existing and operating only in big cities like Bangalore and mysore . These organized supermarkets have multi outlets operating under the single management and accounts for huge turnover. The un-organized recently established supermarkets were found in Mangalore, belgaum and hubli-dharwad . In these cities, the big local and conventional store owners have converted their indigenous general stores into the modern type of stores called supermarkets to cater the changing needs and expectations of modern consumers which have consumers familiarity that from generation is one big advantage for the traditional retailing sector. 2.The more organized form of supermarkets found in Bangalore city based on their number of outlets were shubhiksha (40) followed by foodworld (33), fabmall (23) smart (18), namdhari's fresh (14) and nilgiri dairy farm Ltd (12) . all these supermarkets have their head offices at bangalore. The famous indigenous supermarkets in the mysore city were loyal world, arithanth super bazaars, mohan bhandar, shivananada supermarket, A-Z supermarket and foodworld, however , the organized supermarkets like foodworld, nilgiris shubhiksha and fabmall have penetrated the city more recently and most of these had theirr head office at banglore. The family owned un-organized supermarkets such as baliga stores supermarkets . Andy's supermarket apna bazar. Jimm's supermarket, misbah supermarket, move N pick, noor super bazaar Ruby's supermarket, sadhar bazaar were well known in the city. Pick n pay, sangram food basket, day 2 day, needz supermarkets and eshan super shoprr were the only five supermarket in hubli dharwad city. Similarly the supermarkets in the belgaum city were hans raj supermarket, neena supermarket, quality supermarket, rex supermarket and shoppers paradise.

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The average area of the supermarket outlets inn different cities were found to be 4333.33 square feet, 2833.33 square feet, 1833.33 square feet in and 1200 square feet in Bangalore, mysore, hubli-dharwad, mangalore and belgaum, respectively usually size is an advantage because a large store designed and build has the capacity to deal with the expected number of customers in the neighborhood. 4.The fixed capital drastically varied from city to city higheest was found in banglore (Rs. 255.30) and leasst in managlore (Rs.13.00 lakh). However the overall average total fixed cost per outlet was Rs.78.42 lakh for the state as a whole. In case of working capital, raw materails were the prime costa contributed about 67 per cent of the capital as the retailing business (supermarket) itself is to reseeeling of commodities and quicker conversion of inventory into cash. At all overall the averge totoal costs required to establish a supermarket in the karnataka was Rs.261.33 lakh. The higher costs in big cities was due to higher labour costs, social security to employees, high quality real estste, much bigger premises, comfort facilities such as air conditioning back up power supply, taxes etc., it is more so incase of organizes retailing. 5.It was observed that the organized supermarkets or supermarkets in multi outlets (chain of supermarket) firms/companies followed line, line and staff, and the functional categories of oganizational structure wheras line organization was commonly follwed in unorganized supermarkets or supermarket not in chain. Most of these unorganized supermarkets are family owned 5.Two types purcahsing pattern such as centralized or store level purchasing pattern were follwed in supermarkets for procuring both groceries and fruit vegetables products. All the Bangalore supermarkets folllwed centralized purchasing pattern due to their multi operations and form retailing. On the other hand. Most of the supermarkets in other cities, followed store level purchasing because of their single outlwets operation and unorganized structure of retailing in maglaore and belagaum cent per cent prefferd store level purchasing. However 66.67 per cent of supermarkets in mysore. Prefferd store level purchasing and 33.33 per cent have gonr for centralized purchasing and the reverse was found in hubli dharwad depending upon their mode and size of operation. In mysore and manglaore fruits and vegitables purchased through wholesale market only. 7.No sale of fruits and vegetables were witnessed in belgaum and hubli -dharwad supermarkets due to lack of infrastructural facilities to handle fruits and vegetables, competitation from the existing local, traditinal fruits and vegetables vendors,non availability of fruits and vegetables regularly, fear of losses due to the pershabilty nature of fruits and vegetables. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

8.The ovrerall monthly averge quabtity and value of products procuremnt across cities in karnatka revealed that the average frequency of purchse in groceries was ranged from four to five times a month but it was only 2.2 times in mustard. The cost per quintals was highest in chilli(Rs.6739.79) while least in rice (rs.1.688.05) it was also reported that the APMC was the only source of purchse for groceries productrs as it is the onlt govenrig body for marketing of agricultural commodities. The existing polices of the government may also prevent sources. 9.With respecct to fruits and vegetables in the state, the purchase frequency was more in tomato (10.83) and banana(10.00) due to their perishability nature of the products in general and tomato in particular and also to avoid wastages during storage. In case of friuts and vegetables. Toamto was procures In highest (14.63 quintals) quantiy follwed by onoin and banan (12.60 quintasl each) and apple (5 quintasl) 10.The quantity purchased was also found to be more in rice (0.85 quintals ) followed by tur dal (0.77 quintals ) green gram (0.71 quintals ) wheat (0.54 quintals ) and mustard (0.12 quintals ). this is attributes to the fact tha the turnover in cereals and pulses waas much more when compared with spices as these products are daily use items by the consumers and hence the demand was more in these commodities. 11.On the average tur dal was produced in highest (6.46 quintals ) quanity followed by green gram (5.54 quintals ), rice (4.48 quintals ) wheat (4.29 quintals ) , mistard (0.64 quintals ) and chilli 0.46 quintals ). the average total amount spent on these items were found high in green gram (Rs.25.275.56) follwed byt tur dal(Rs.21.271.60), wheat (Rs.8.832.14), rice (Rs.9605.18), chilli(Rs.3.458.43) and mustard (Rs.1603.34) . However the average price per quintals was highest in chilli (Rs.7258.33) and lowest in rice(Rs.1719.29). the main sources of purchase for groceries was APMC only. 12.State as a whole , rice (3.85 quintals ) next were tur dal (3.47 quintals ), green gram (3.18 quintals )))) and wheat 2.45 quintals ) were the major groceries procured by the supermarkets as these are the daily use items by the consumers and hence the demand was more in these cases. The sales tax was found only in species and it was Rs.46.93 in chilli which is follwed by mustard. 13.Similarly in case fruits and vegetables, the purchase was highest in banana (13.83 quintals ) subsequently tomato (12.50 quintals ) onion (9.33 quintals ))) and apple (5.50 quintals ) depending on their demand prevelence. 14.In all the commodities, quanity procured and their unti cists were found high in bangalore alone.it may be due to higher averge size of the Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

supermarkets and high turnover of thr commodities in contrast, the commodities procurent ws found to be less in belagaum due to the existence small sized unorganized supermarkets and their small turnover.

15. In friuts and vegetables the quanity prcoured was maximum in banana(13.83 quintals ) follwed bt toamto (10.38 quintals ) onion (9.33 quintals ) and apple (5.50 quintals ) depending upon their incurred were more in apple (Rs. 5487.50 quintals ) and Rs. 30.222.50 total cost). It was also observed that friuts and vegetables procured from various sources such as wholesale market, own production and direct ourchae fron farmers, except bangalore alnost all the cities purchased fruits and vegetables from wholesale market only. The transport cists detected high in tomato (rs.712.50) and banan (Rs 708.33) as the quantity procured was high in these commodities. 16.City wise averge monthly cost incurred in procurement of commodities by the supermarkets found that the monthly total quanity procuremnt was high in bangalore (67.65 quintasl ) follwed by mysore (59.77 quintals ) managalore (31.80 quintals ) hubli dharwad (13.13 quintals ) and belagaum (8.14 quintals ) as the supermarkets size and the turnover were maximum in the city. Except tomato. Total costs per quintals in all the commodities were also found to be high in banglore only. This is manily because of the reason that he supermarket sin banglaote procuring toamto from diffent sourcess like direct procurel=met from the farers and whiolaslaes auction of riuts and vegetables were also observed in few supermarkets. 17.The costs of inventory and prompting the products fro sale in selected cities across Karnataka revealed the short time period inventories maintained in different commodities by the supermarket in the state. the two inventory approaches followed by these supermarket are material requirement panning (MRP)due to their turnover and demand . The finished product inventories wre maintained in highest quanity for long period in onion comapaeed to fri=ts and vegetables beauawse of its non perishability for some time. 18.Shrinking cost perceived to be the highest cost in onion (Rs.357.65) followed by banan (Rs.202.07) apple (Rs.200.75) and tomato (Rs.102.69) at the inventories. 19.The maximum quanitiy of inventories maintained in groceires items were found in bangalore (6.46 quintals of tur dal , 5,75 quintals of wheat 5,54 quintals of geen t=gram 5.53 quintals of rice, 0.64 quintals of mustard and 0.48 quintals of chilli while the least were found in belagaum (2.58 quintals of whrat . 2.33 quintals of rice ,2.13 quintals of tur dal , 1.49 quintals of Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

green gram, 0.19 quintals of red chilli and 0.09 quintals of mustarddeoending on their size of the supermarkets and turnover. 20.In case of inventory paching materials follwed by labour charges, shrinking and intrest on wotking caoital wer identified as the cost componets. The higher packaging cost was due to use of good packaigng material embrossed with trademark as most of the supermarkets have own brand names. The greater total inventory Cost and total cists were also noticed In bangalore in almost all the products. But these coasts were vaied across cities and commodities. 21.In fruits and vegetables the highest wuantiy of inventorey was found in Bangalore (12.50 quintals of onion, 4.88 quintals of toamto , 4.17 quintals and 1.30 quintals banana, 0.80 quintals of toamto aand 0.40 of apple) and managlore 5.50 quintals of onion 1.50 of tomato 0.60 quintals of banana ) depending on the avergae six=ze of the supermarkets and their in the state. 22.The quantity of inventiry maintained was high in bangalore (47.33 quintals folllwed in mysore (25.24 quintals ), mangallore (20.79 quintals ) hubli dharwad 14.39 quintals and belagaim 8.81 quintals quintals quintals quintals the avergae onventory period was highest (6.19 dys ) in belagaum folwed by mangalleo(5.83 days ) hubli -dharwad(5.56 days) bangalore (4.58 days) and mysore (4.50 days ) 23.With respect to invetory cost componets. Packagibg costs were found to be th eprime constiotutes on an averge it accounts Rs 2868.84 in bangalore follwed by Rs.1375.77 in mysore , Rs.1141.77 in maglore , Rs.973.49, hubll dfharwad and Rs.1141.77 in belgaum. The highest pachaguing cost attributrs and printed inforamtio on it attract the customers. 24. The results revealed that in the entire groceries dealing cent per cent og cleaning , bagging and labellling and sticking wee undertaken by all the supermarkets to maintain good relationship with the consumers by providing good quality products.in additon it is very much neccessry and th eonlt way to compete with the conventional stores. On the other hand these activities help in matrket segmentation with price diffencaitio. However grading was observed in 66.67 per cent of the Bangalore supermarkets but it was not seen in belgaum supermarkets since most of the supermarkets are unorganized in the city. In overall cent per cent of supermarket acros the karmnataka. 25.In fruits and vegetables cleaning activity was observed in all the supermarkets as it is abasic thing to diffreciates from other stores which are dealign with these prducy=ts becquse of the existance of loacl fruits and vegetables vendors in all the cities.in conrats to this,a ll the bangaloe supermarkets follwed grading, bagging and markets in the city are highly Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

sophisticated with high stanadard of living. At an overall it accounts cent of supermarkets carried out clening axctivity. 26.. It is observed that in bangalore supermarkets the averge value added in case of groceries was more in wheat (31.33 per cent ) follwed bt rice (30.50 per cent) mustard (28.05 per cen) tur dal (23.45 pecent) bgreen gram (19.94 per cent) and chilli(17.52 percent) due to higher prices obtained and relatively lower percent of wastage. 27.The other hand. In fruits and vegetables categories trhe per cent value addition in bangalore supermarkets was found to be highest in tomato (64.78 per cent ) as against 20.65 per cent in apple. This indicates the benefits of use of difernet from the far,mers and own productio will obviuosly enhances realizaation especially in case of vegetables like tomato. 28. At the overall supermarkets across the state , the higher per cent of value additon was noticed in mustard (27.68 per cent) among groceries and toamto (49.21 per cent ) in fruits and vegetables. The higher price realozation from mustard was due to absecnce of cleanign , grading of these produce in other markets as it is less demaned from the consumers. However out of the selected cities, the maximum value adddtion in bothgroceries and fruits and vegetables were found in bangalore because of higher prices of the products in this market. 29. The ratio of total liabilities to owned funds was found to be 0.798, 0.600, 1.905, 3.535, 0.3.45 in bangalore, mysore, mangalore, hubli -dharwad and belgaum respectively.the ratio of fixed assets to owned funds was to be the highest in mangalore (1.731 follwed by hubli-dharwad(1.367 and bangalore0.69733). It was noticed that in all the supermarkets, the liquid assets to total assets ratio was less than 0.5 which is 0.459 in banglore , 0.404 in mysore, 0.399 in mangalore, 0.1657 in belgaum and 0.268 in hublidharwad and hence the overall was 0.337.it indiactes that more than 50 percent of the assets were not in liquid assets form. 30. The current ratio presented in the table indicates that the ratio was more than one in all the cities supermarkets except mysore , wherin the ratio was 0.994 it means to say supermarket had more than one rupee of current assets per rupee liablities. 31. Net profits to fixed assets ratio were found to be high in myosre. Wherin the ratio was 1.297 and least in bangalore (0.572) and in other cities also the rato was more than 0.677. this indicates that the cities inturn it indicates the effiecnt use of ifxed assets by the supermarkets. Similarly the ovelalll net profits to total assets was 2.4999 which oindicates thath profit generated per rupee of total assets was nearly 2.50 rupeee which shown trhe improvwed effeciency od supermarkets. The ratio of net profirt to owned finds ratio Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

which were 4.621 incase wasobserved in belagaum 0.574. this ratio shown that the supermarkets were quite able to total sales were alsi found to be vey signifiecnt in all the cities across the state indicating more than a 0.170 rupee contibution to per rupee total sales. 32. The working capital turnover ratio was highest of 5.156 in belagum folle by 1.890 in bangalore, 1.576 in mangalore , 1.539 in hubli –dharward,and 1.331 in mysore supermarkets. This indicated the turnover per unit of working caoital was higher in belagaum over all othrer supermarkets and good in all other cities. In belagaim over all ht efixed assets to turnover ratios were higher in the order on mysore, hubli-dharwad, mangalore, belgaum and in Bangalore (6.784. 4.319 3.971 . 3.931 and 3.581 respectively). This was because these supermarket were able to achieve higher sales targets with less investment in fixed assets accordingly. 33. State as whole the factors considerd while pricing the products at supermarkets attached significance importance to the quality the products and the nature of the produts. 34. It was found that absorption cost pricing and going rate pricing method were adopted by cent per cent of the bangalore supermarkets. All the supermarkets in mangalore adopted absorption cost pricng and going rate or market pricng methods, wheras 66.67 percent of htem in he city aslo made use of loss leader pricng to try and attract the customers. The pricing in Belgaum supermarkets was done through absorption cost pricng and going rate or markrt pricng methods by all the firms’ together with discounting pricing by 33.33 per cent of the supermarkets occaisnally at the time of festivals. Similarly the methods employed by the hubli -dharwad supermarkets were absorption cost pricing, discounting pricing 35. At an overall cent per cent of the supermarkets in the state follwed absorption cost pricng and going rate or market pricng methods in pricng the produvcts at supermarkets about 60 per cent follwed discounting princing during special days like festivals while 33.33 per cent and 26.67 per cent adopted penetration pricng and loss lweader pricng method. A small proportion (13.33 per cent and 6.67 per cent ) of the supermarkets also adopted target pricng for uused to try and attract customer for the shoppiing at supermarkets. 36.The problems in the supermarkets business were many but the variation were govened by a few dimentions. Non availibilty of trained employess, banks for sources of fiance, demand for credit from the customers and bargain firm hence there may be a lack of availibikty of trained marketing and business requres huge investment and unsertainity of the seccess may restrain finacual toward retailing businesss. The credit and bargian from the customers are as usal in any business activities. In contrast, advertisemnt Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

rate coverage of area. WTO impact on profits margin and price of the products and market infornation fron the wholesale have shown impact. 37.The other problems quoted by the retailers listed in subsequent dimensions were VAT charges, demand for new products from the customes, land and building and finacial resouces, price variation by the wholesalers, storage delayed and avilibilty of untrained employees have consequences on the probles of the retailing. 38. It was observed that convenient loaction of the supermarkets, range of produts availibilty, conbenient pf purhse. Avialibilty of qulaity products were considerd as the prime factors influencing the consulers to go for purchse at supermarketrs most of these are concerned to accessibilty and oriented factors. Influencing factors cluster comprised of major factors such as reasonable prices, parking facility, shopping is seen enjoyable at supermarkets. Attractive packing , schemes and offeras, concern about health welfare and the enviromentinluence iit consist of protion factorslike payemnt methods interst in eating foreign foods, home delivery facilty, new products market development, attractive advertisement, fresh fruits vegetables and fresh bakery products avilibity and frsh bakey products availibity etc..

Policy implications: 1. Since most of the supermarkets in the state are unorganized (except bnagalore) there is a lot of scope for the supermarkets business to shift from unorganized to organization from of retaing by reasons of increaded urbanization and income. Change in culture in culture, Food habits, taste and preference, lack of time for shopping due to incresed working women and shopping pattern of the consumers. 2.New entrance into this business have to adopt the models used by leading to Increase thier own effeviency, while companies enreing the market have to undego an apprenticeship with regard to the different cultural background and cosumer preference and necessarily make certain adjustment. Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

3. It would be better if larger sized supermarkets created at the outset because size is an advantage or a nesessity. A large store is designed and built have the capacity to deal with the excepted number of custoemr in the neighborhood but a small selction with other nearby supermarkets. 4. Since investment in establishment ,modernization and expansion are capital intensive in supermarkets local companies and local foreign joint ventures seems to be the suitable strategic than the purly foregin organized india's retailing industry. 5. Due to an ongoing of increaing organization and implemention of information technology, the retail sector has to adopt a new form of relationship with suppies and needs to develop a wide range og knowledge with their vhangoong the habbits towards the consumers of power in the productive from industry to retail. 6.The growing cometion between outlets with the same format.as well as between diifernt types of store should introduce codt reduction programs and measures to rationalize opetions as well as to differentiate services in order to increase customer base. 7.In order to establish and effective a unifrom procedure for the handling of purchasing matters to obtain the most suitable serives and puchasingpromote the best possibel means of excercing finacial control over expenditures, the centralized purchsing system should be adopted by the supermarkets having replenishment. Those firms operting in within these enviroment need an atute inderstanding of the chains the herarchy of channels members and hteir relative poston. 8 .As it was observed from the study that the total costs incured in procurement of tomato was less at banglaore when compared to other cities because of the use of various sources like direct procuremnt from the farmers and own production .it is highly recommended that the supermarketers to go for these sources to get wholesale margin in bulk and are also the producers . If it is from the farmers it alets them about the importance of production of quantiy produce in turn for their benefits. 9. Specila emphasi smust be placed on the computerzed of the sector whhich help to improve the effecincy in opertions of procuremnt and mangent which is in turn providing greater knowledge on products flows and efficiency gains in the producers retailers chain. 10.Even after accounting for competion and supply side characteristics, demographical characteristicssuch as density of the population averge food expenditure, invome og households averge households size, number of store Admission Office: IIPM Tower,419,100ft Road,Koramangala,Bangalore-560034, Ph:51102427/28. E-mail: [email protected], Web: www.iipm.edu

in the area ,size of the store etc., should be taken care before plays a significant role in the choice of the products by the consumers. 11.The solvency and liquidity ratiosof the supermarkets were found to be very negligible andhence should be taken care for improving the own funds, volume of business and liquidity position to the need of improving financial of the supermarkets. 12. food retailers risk a loss of image or even a loss of the customer if they do not learn to react effectively to the problems uncounted in the process of the business as ascertained during the investigation which may lead to failure, hence, they should concentrate to the latest retailing strategic to improve their services to the customers and to make profits.

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