Grocery Shop Research Proposal 26.06.14

8/10/2019 Grocery Shop Research Proposal 26.06.14

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Research Proposalon

Grocery ShopAnish Store, Chhota Govindpur(Serving the Bottom of the Pyramid Customers)

Under Guidance of: Dr. Angshuman Ghosh

(XLRI, Jamshedpur)

27thJune 2014

Submitted by (Group No.):-

1) Anshuman Dey (MP12009)

2) Anupam Ghosh (MP12011)

3) Banani Bhattacharjee Ms (MP12014)

4) Debashish Kr Dutta (MP12017)5) Jahir Alam Chowdhury (MP12026)


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Execut ive Summary:This project has been undertaken as a part of UC group research project under guidance of Dr.

Angshuman Ghosh, Professor Marketing XLRI Jamshedpur. We would like to thank Prof.

Angshuman and XLRI management for providing such opportunity and enriching our learning.

While selecting the project topic few excellent ideas came into our mind. But all these were not

relevant for basic understanding of the course and quite complex. Finally we consulted with professor

Angshuman and he suggested us to choose some small but very relevant topic for this study. With

this clue and after lot of brainstorming we selected a small Grocery Shopin Chhota Govindpur

for this research. This shop (Name: Anish Store) is located in interior part of Chhota Govindpur,

managed by single shop owner and serving bottom of the pyramid customer within 2km of the store.

The salient features behind choosing this topic are:-

To understand the business model of this small shop owner. Like capital investment, sales,

profitability, turnover etc.

The variety of goods offering, inventory management/ stock replenishment system.

Its customer profile, their taste, preferences and buying behaviour.

Type of wholesalers or distributors supplying to this shop.

Above all The current business problem or challenges faced by the shop owner.

Using the Business research techniques, finding out most appropriate solution to the

significant business problem of shop owner.

Sharing the findings with shop owner and take his agreement in implementing the same.

If Suggestions are implemented, track the performance of shop owner and record his

feedback.

Provide support if any further research or suggestion is needed by the shop owner.

Investigate whether the findings of this research could be generalized to similar shop owners

or further research is needed

Throughout this research we shall be referring the methodology taught in our UC class and the

reference book of Market Research by Naresh K. Malhotra. Our scope of research will limit only to

this grocery shop (i.e. Anish Store, Chhota Govindpur) and its business processes. The main focus

will be to understand the business problem of shop owner and then find the most appropriate solution

using the market research techniques.

The content and sequence of the research is mentioned in the next page.


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Contents

1. Environment

Grocery Store

Anish Store, Chhota Govindpur

2. Research Objective

Problem Identification

Decision Area/Problem

Research Problem

3. Research Approach

Deriving dependent/independent variables

Research Questions

Hypothesis

4. Research Design:

Research Method

Sampling Method

5. Data Collection

6. Data Analysis

7. Results and Findings

8. Recommandations or Conclusions

9. Limitation and Further Research Scope


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1) Environment:

Grocery Store:-A grocery store is a retail store which primarily sells food or food products. The food products arenormally not perishable in nature which includes rice, dal, spices, cooking oils, detergents, biscuits,milk etc. Based on its size and goods offering it can be categories in following types:-

1) Convenience store: Small store nearer to residance offer daily usable food products.

2) Delicatessen: A type of store where fine foods are sold.

3) Greengrocer: Sells fresh vegitables, fruits, milks and ready to cook or eat items.

4) Health food store: Stores which sells fresh goods, organic products and food supplements.

5) Milk Bar: Stores offer Milk, Confectionary items and ready to eat food.

6) Super Market: A large form of traditional store which offers food products and house hold

goods

7) Hyper Market: A hypermarket is a superstore combining super market and departmental store

In India 80% of Grocery are sold through Convenience Store. These stores have unique advantages

like proximity to customers, easy to access, extends credit facility, maintains good relationship,

understand specific needs of customers etc. In Big cities and towns lot of super market and hyper

market are also available to the consumers. Whereas, in semi urban area and villages consumers

are heavily dependent on these convenience stores for buying their daily useable and grocery items.

These store possess unique business model as they are run by the owner himself, have very limited

capital/resources, handle local customers base and faces lot of issues in functioning the business.

To understand these we have selected similar store in nearby locality, i.e. Anish Store , Chhota

Govindpur, for this research.

Hyper Market Super Market Greengrocer

Delicatessen Convenience Store Milk Bar


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1) Environment:

Anish Store, Chhota Govindpur:-Small Grocery Store, Located in outskirt of East Jamshedpur; Subash Nagar, ChhotaGovindpur. Mr. S.K. Gupta, shop owner himself manages the business and earns hislivelihood from this shop. Other details of this business are:- Total investment made by the shop owner is Rs.80,000.00 and the entire asset value

including the shop is around Rs. 2,50,000.00 Mainly grocery store, sells items like Rice, Dal, Spices, Cooking Oils, Soap, Detergents,

Cold drinks etc. Total SKUs is around 250Nos and item category, 80Nos Customer Profile; mostly villagers within 2Km of the Shop having income < Rs.8000.00

per month. Grocery purchase is almost 40% of their income. Customers prefers to buy on weekly basis, very price sensitive, purchases small packets

or quantities of goods at a time, high involvement in purchases, full aware of marketinformation and competitor offerings.

Sale is around 1Lakhs/Months (12Lakhs/Annum), Maximum sale is done on credit and

payment cycle is weekly. Credit to Cash Sales ratio is 65% : 35% Average Profit is 8 to 10%. Highest margin of 20% comes from Cold drink and

confectionary items whereas FMCG goods have lowest margin of 3 to 4%. The shop owner has fixed expenditure of Rs. 2500.00/month for running the business. The shop owner purchases goods from small wholesaler or distributors who also extends

credit facility. Goods are delivered to the shop on FOC basis. Few companies like Godrej, Britannia, Sunfeast, Hindustan Lever, Tata tea, Coke,Pepsi

have purchased small spaces in racks for displaying their products.


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2) Research Objective:The shop owner Mr. Gupta faces various business problems while running his shop. All problemsmay not be so relevant and critical for functioning the business. Our research objective is toIdentify most significant problem of shop owner and find out the appropriate solutionusing the market research technique.

Problem Identification:-

We visited this shop on Dt: 22.06.14 and had a detailed interview with the shop owner Mr. Gupta.

Our agenda was to understand his business model and find out the problems which the shop

Owner is currently facing. Followings are the list of problems came out from the discussion:-

1) Credit collection: Most of the Customer dont pay 100% of their previous bills before taking

further goods on credit for next period. Due to this working capital gets blocked.

2) Low inventory turnover ratio presently it is 5.5, compared to Market trend of 10

3) Very low profit % in FMCG and branded goods i.e. 3 to 4%. Volume discount are available butblocks capital.

4) Owner is single person who is managing the shop, availability throughout the day is an issue.

Shop remains close 5 to 6 day in a month due to personal issues of shop owner

5) Sales is almost stagnant since last 3Yrs. (i.e. 12 Lakhs/Yr), Avg. Profit: 8 to 10%

6) Current Fixed cost Rs.2500/Months which is increasing @ 7 to 8% per annum.

7) Low purchasing capacity of individual customers as income


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3) Research Approach: Deriving Dependent & Independent Variables: The first step in research approach is to find

out the dependent and independent variables from the Research Problem. With the help of

these variables we can construct research questions, develop hypothesis and design the

research. Following table summarizes the process of deriving variables for this research:-

Input Variables

Inde endent

Intermediate Variables

(Dependent)

Output Variables

(Dependent)

R1: Credit worthiness of

Customers

R2: Supplier Credit Facility

R3: Inventory pattern of High

Value SKUs

R4: Review of Sales/demand

pattern

R5: Working capital management

system

R6: Non Moving & Obsolete

Stock Position

R8: Any other Factors

CashConversionCycle&In

ventoryTurnover

C1: Income

C2: Demographic Profile

C3: Purchase Volume

C4: Social Reputation

C5: Substitute Shop

C6: Buying Volume

C7: Payment Cycle

C8: Demand of Goods

C9: Shop Owner Reputation

C10: Market Trend

R7: Market Trend or Study of

Similar business

C11: Total Variety of SKUs

C12: Min. Stock Qty.

C13: Reorder Lever

C14: Time for stock replenishment

C15: Space availability

C16: Avg. Monthly/daily sale

C17: Distribution of Sale

C18: Demand of Regular customer

C19: Demand of New Customers

C20: Capital Investment details

C21: Total Capital Req.

C22: Payment Collection PatternC23: Payment issuing pattern

C24: Fixed Vs Recurring Expenses

C25: Avg. Inv. of Non-moving items

C26: % of Non-moving items

C27: Obsolance value/month

C28: Similar Business CCC & IT

C29: Nearby competitor data

C30: Internal Factor (Knowledge

level, skill, competencies etc.)

C31: External Factor (PESTEL)


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3) Research Approach:

Research Questions: From the above table (Input/ Output variables) we can summarize the

research questions as follows:-

R1: What is the level of customers Credit worthiness?

R2: To what extent the Supplier provides Credit facility?

R3: How the Inventories of High Value SKUs are maintained?

R4: How the demand/sales of goods are changing throughout the week?

R5: What is the level of investment made and how it is managed?

R6: How inventory of Non-moving & Obsolete items are managed?

R7: What is the CCC & ITR of similar business, trend?

R8: Any other Factors leading to high CCC & ITR?

Hypothesis: There are two approaches of developing hypothesis. Either we can develophypothesis against each of the research question or else one single hypothesis for the researchproblem. For the sake of simplicity we have decided to follow the later approach andsummarizes the hypothesis as:-

H0:Present Cash Conversion Cycle and Inventory Turnover Ratio of Anish Store are as perthe market Trend.

Ha:Present Cash Conversion Cycle and Inventory Turnover Ratio of Anish Store are differentfrom the market Trend.

4) Research Design:

Research Method:The set of information we are looking from the research questionnaire i.e. from R1 to R8 are

sensitiveand may lead to socially desirable response if asked directly from the shop owner. Further

the purpose of this study is first to understandWhy the shop owner have problem with Cash

Conversion Cycle and Inventory Turnover Ratio?. Considering these two factors we find that In-

depth Interview/Case Studyresearch method is most appropriate for this research. FollowingDiagram summarizes the selection process of research technique:-

Research Questionnaire(From R1 to R8)

Input Variables(From C1 to C31)

Sensitive Information+

Understand CCC & ITR

Research Technique

In-depth Interview/Case Study


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5) Research Design:

Sampling Method:Since this is an In-depth Study our sampling type will be Non Probablistic - Quota Sampling.

Selection criteria of quota are based upon convenience, type of information & the input variable

we are looking for. Following table summarizes the sampling selection process:-

S.N. Input Variables Type of InformationSample

DescriptionSelection Criteria for Quota

No. of

Samples

C1 Income

C2 Demographic Profi le

C3 Purchase Volume

C4 Social Reputation

C5 Substi tute Shop

C6 Buying VolumeC7 Payment Cycle

C8 Demand of Goods

C9 Shop Owner Reputation

C10 Market Trend

C11 Total Variety of SKUs

C12 Min. Stock Qty.

C13 Reorder Lever

C14 Time for stock replenishment

C15 Space availability

C16 Avg. Monthly/daily saleC17 Distribution of Sale

C18 Demand of Regular customer

C19 Demand of New Customers

C20 Capital Investment details

C21 Total Capital Req.

C22 Payment Collection Pattern

C23 Payment issuing pattern

C24 Fixed Vs Recurring Expenses

C25 Avg. Inv. of Non-moving itemsC26 % of Non-moving items

C27 Obsolance value/month

C28 Similar Business CCC & IT

C29 Nearby competitor data

C30

Internal Factor (Knowledge level,

skill, competencies etc.)

C31 External Factor (PESTEL)

Total Sample (Including Shop Owner) 21

Shop owner is the only sample.

Physical Verification of stock1

R1: What is the level

of customers Credit

worthiness?

Current

Customers of

Anish Store

1) Customer Buying>

Rs2000/Month

2) Associated with > 6Months

10

R2: To what extent the

Supplier provides

Credit facility?

1) Supplier Good Value >

Rs10000/Month

2) Have relation> 6Months

5

R7: What is the CCC

& ITR of similar

business, trend?

R8: Any other Factors

leading to high CCC

& ITR?

Major

Suppliers

Shop Owner

Shop Owner

Closest

Competitor

R3: How the

Inventories of High

Value SKUs are

maintained?

Shop OwnerShop owner is the only sample.

Physical Verification1

R4: How thedemand/sales of

goods are changing

throughout the week?

R5: What is the level

of investment made

and how it is

managed?

R6: How inventory of

Non-moving &

Obsolete i tems are

managed?


Physical Verification of sells

data

1

Shop Owner


Physical Verification +

Estimation

1

Grocery Shops within 2KM of

Anish Store & Serving Similar

Customer

1

Shop Owner +

Society

Shop Owner

People staying nearby but not a

customer

5

Grocery Shop Research Proposal 26.06.14

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