Imp 2

Volume2,Issue6(June,2012)ISSN:22497307
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A P e e r R e v i e w e d I n t e r n a t i o n a l J o u r n a l
o f A s i a n R e s e a r c h C o n s o r t i u m
AJRBEM:
A S I A N J O U R N A L O F
R E S E A R C H I N B U S I N E S S
E C O N O M I C S A N D
M A N A G E M E N T

MANAGEMENT OF SUPPLY CHAIN DRIVERS IN KIRANA STORES
(A CASE STUDY OF BANGALORE CITY)

PANNEERSELVAM S*

*Associate Professor,
Post Graduate Department of Management Studies,
Siddaganga Institute of Technology,
Tumkur 572103, Karnataka.

ABSTRACT

Retail is an old phenomenon in India. Despite the emergence of organised food
retail, the traditional kirana stores accounts for about 90% of the trade. At the same
time, it is the fact that organised retail is gaining momentum in India and is being
increasingly accepted and adopted by the people, especially younger generation.
Meanwhile, the Government of India (GoI) is taking steps to open up the food retail
for Foreign Direct Investment (FDI) which would turn the gate to organised retail
and many have expressed their apprehension about its probable impact on the
traditional trade.

Organised Retail owes its success to the effective management of the supply chain.
The goal of supply chain is to enhance end customer value. Hence a study to look
into the aspects of supply chain at the traditional kirana stores however frugal it
may, become important and was undertaken in Bangalore. The study brings about
the information on how the kirana stores manage the modern supply chain drivers
such as inventory, location, transportation, sourcing, pricing and information. The
study also suggests the ways by which the kirana stores can improve their trade.

KEYWORDS: Indian Retail, Food Retail, kirana stores, retail supply chain, retail
logistics.
______________________________________________________________________________

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INTRODUCTION
1.0 RETAILING IN INDIA
Retailing consists of all activities involved in selling goods and services to consumers for
their personal, family, or household use. It covers sales of goods ranging from automobiles to
apparel and food products, and services ranging from hair cutting to air travel and computer
education (Chetan Bajaj, 2005).
Retailing is one of the largest sectors in the global economy. In India, for a long time the
corner grocery store was the only choice available to the consumers. With the increasing
demand of the customers spurred by changing trends, aspiring needs for variety, the traditional
retail gave rise to modern retail format. The traditional food and grocery segment has seen the
emergence of supermarkets/grocery chains, convenience stores and hypermarkets.
Traditionally, retailing has not been a structurally organized industry in India. Organized
retail network was seen only in fabrics, with large mills building their own exclusive stores like
Raymonds, Bombay Dyeing etc.
The Indian Retail Industry on the whole is divided into organised and unorganised
sectors. Unorganised/Traditional retailing refers to the traditional formats of low-cost retailing,
for example, the local kirana shops, owner manned general stores, paan/beedi shops,
convenience stores, hand cart and pavement vendors, etc (Corporate Catalyst India, 2006).
Modern Retail has seen a significant growth in the past few years with large scale
investments made by Indian corporate houses primarily in Food and Grocery retailing. The total
retail (organised and unorganised) industry in India is estimated to be Rs 20 lakh crore in 2010.
This is expected to reach Rs 27 lakh crore by 2015. Organised retail, which is estimated to be Rs
1.0 lakh crore (5 per cent share) in 2010, is projected to reach Rs 3.0 lakh crore (11 per cent
share) by 2015. This means a tripling of the current size and scale of organised retail in the next
five years, i.e. 2010 - 2015. While organised retail will grow at a fast pace, it is important to note
that a larger part of the Rs 7.0 lakh crore growth in total retail will come from unorganised retail.
This segment (unorganised retail) is projected to grow by over Rs 4.5 lakh crore in the next five
years (Raghav Gupta et al, 2010).
The retail market in India is about $410 billion in 2010 and may rise to $637 billion in
2015 (Figure 1), according to consultancy Technopak Advisors (Retail Biz, 2010). The Indian
retail business employs nearly 21 million people, about 7% of total employment. There are about
15 million retail outlets, the largest number in the world.

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society including the state and central governments are striving to collate information about the
kirana stores. In this context, an attempt is made to bring forth the literature available about the
stores.
Neeraj Thakur (2009) interviews with the customers show the reasons for customers
purchasing the groceries from the traditional kirana stores in spite of supermarkets in the same
locality. The article differentiates the stores from organised retail outlets on different factors.
The article highlights the unique features of kirana stores in terms of location, ownership,
merchandise, pricing, customer-trust and other services.
The findings of a survey done under the aegis of ASSOCHAM Social Development
Foundation during March-April 2010 conducted in 15 major cities is enumerated by Varun J ain
(2010) in his paper. The findings show that the shoppers in India prefer the local kirana stores
over malls. The shoppers love to hangout and shop from their local traditional stores because of
the familiarity with ambiance, ease of access, emotional attachment, early opening and late
closing times etc., which suits the local residents.
Shubhra Saini (2009) finds that the mushrooming of malls, departmental stores,
hypermarkets and supermarkets have not affected the market of the kirana stores much.
According to Thomas Verghese, kirana stores with their own strength and proposition for
the Indian consumers would keep them relevant in Indian markets even long after international
players come in (Darlington J ose Hector, 2012).
According to Nielsens Shopper Trends 2011 (Bhusan Ratna, 2010), the shoppers are
not neglecting the local kirana stores. The rise of traditional grocery stores continues to be strong
driven by convenience, availability of home delivery and trusted relationships between the
shopper and local grocer.
Raghav Gupta (2009) identifies interesting things that kiranas do better namely: i. Customer
Relationship Management ii. Dynamic Merchandising and iii. Efficient store operations.
According to Sunil Chopra (2010), the strategic fit requires a companys supply chain
achieve the balance between responsiveness and efficiency that best meets the needs of the
companys competitive strategy. To understand how a company can improve supply chain
performance in terms of responsiveness and efficiency, one must examine the logistical and cross
functional drivers of supply chain performance: facilities, inventory, transportation, information,
sourcing and pricing. These drivers interact with each other to determine the supply chains
performance in terms of responsiveness and efficiency (Figure 2). Basically, this framework is
used in the study.

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FIGURE 2: SUPPLY CHAIN DECISION-MAKING FRAMEWORK

Source: Sunil Chopra, 2010.
3.0 THE RESEARCH PROBLEM
The supply chain encompasses all of those activities associated with moving goods from
the raw-materials stage through to the end user. Supply Chain Management (SCM) refers to the
delivery of enhanced customer and economic value through synchronised management of the
flow of physical goods and associated information from sourcing to consumption, (Sotiris
Zigiaris, 2010). The supply chain management plays a critical role in the business. The global
food retailers such as Wal-Mart, Carrefour and Tesco are successful because of the effective
management of their supply chain.
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In India, in recent times, organised food retail is gaining momentum and many corporate
houses have started investing in this business and opened up hundreds of outlets all over the
cities in India. The organised food retailers have started adopting supply chain management in
India. People in India with their changing life style, higher disposable income, education and
better information have started adopting the organised retail. While adapting to the new modern
retail for their planned purchases, the customers still visit their neighbourhood kirana stores for
their immediate purchases. Organised food retail amounts to 7% only in India. Having said this,
not much information is available to know about the management of modern concepts such as
supply chain as practised by the traditional kirana stores.
As competition is picking up, there is a need to study how the kirana stores manage the
supply chain drivers such as facilities, inventory, warehousing, information, sourcing and pricing
(Sunil Chopra, 2010). Hence the present study, Management of Supply Chain Drivers in kirana
stores (A case study of Bangalore City).
3.1 OBJECTIVES OF THE STUDY
To examine the management of logistics and cross-functional drivers in the kirana
stores;
To ascertain the practices adopted by the kirana stores;
To suggest ways to improve the performance of the drivers.
3.2 RESEARCH METHODOLOGY
The Food and Grocery (F&G) retail segment in India is unique. F&G can be broadly
categorised into organised and unorganised retail. The study is restricted to unorganised retail,
i.e., kirana stores. Table 1 enlists the sources of information and sampling.
TABLE 1: SOURCES OF INFORMATION
Universe kirana stores in Bangalore.
Sampling unit kirana stores
Sampling Technique Purposive/J udgemental Sampling
Primary Sources a) Structured Questionnaire
b) Personal Interviews with kirana store owners
Secondary Sources J ournals, Periodicals, Business Magazines, and Newspapers.

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3.3 DETERMINATION OF SAMPLE SIZE

An appropriate sample size has been arrived at after taking into account the confidence
level of 95%, confidence interval of 7% and the population (number of kirana stores). The
sample size determined is given in Table 2. Thus, the sample size of kirana stores considered for
the study was 200.
TABLE 2: DETERMINATION OF SAMPLE SIZE (KIRANA STORES)
Confidence Level 95%
Confidence Interval 7%
Population (No. of stores Estimated) 2,00,000
Sample size Required 196
Source: http://www.surveysystem.com/sscalc.htm.
3.4 PILOT SURVEY
A pilot survey was conducted at Banshankari II and III stage, Bangalore to ascertain the
validity of the questionnaire. About 15 kirana stores were covered as part of the pilot survey. The
objective of the survey was to understand from the respondents the relevance, usability,
reliability, etc of the instrument. Based on the insights gained in the pilot survey, some of the
questions were rephrased, some were redesigned, re-categorised and refined.
3.5 RESEARCH SURVEY
The survey is exploratory in nature. As part of the survey, the researcher has covered
almost all major locations, about 75 places in the city of Bangalore. Though the sampling
method adopted was convenience/judgemental sampling, only one store from a location is
selected. This is to make sure that as many stores as possible may be covered from different
locations and information collected is not biased or skewed.
3.6 RELIABILITY ANALYSIS
Reliability of the questionnaire was tested using Chronbachs Alpha (also referred to as
coefficient alpha) technique. The test showed a satisfactory index of 0.6 to 0.9 which is adequate
for the analysis of the data.
3.7 DATA TABULATION AND ANALYSIS
1. Microsoft Access 2007 was used for database creation and data entry purposes.
2. Microsoft Access 2007 and Microsoft Excel 2007 were used for data filtering, sorting and
drawing charts.
3. SPSS Ver 16.0 was used for descriptive analysis.
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4.0 DAT
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KIRANA ST
N:22497
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7307
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The analysis on logistics drivers and cross-functional drivers for kirana stores is as
follows.
4.2 LOGISTICS DRIVERS
4.21 LOCATION OF STORES
The location of a store determines the accessibility to consumers convenience to them
and the cost of operation. According to Sunil Chopra (2010) decisions regarding the role,
location, capacity, and flexibility of facilities have a significant impact on supply chains
performance.
The location details of the kirana stores (Table 4) shows that the stores were more or less
equally distributed throughout the prominent geographical areas of Bangalore city. All the stores
invariably are located at vantage points of the main road or bylanes. Almost all the stores were
located on the main road, or street corners or important junction points.
TABLE 4: LOCATION OF KIRANA STORES
Location No. of Stores Percentage
Main Road 78 39%
J unction Points 74 37%
Street Corner 48 24%
Total 200 100%
Source: Field Survey.
4.22 SIZE OF THE STORES
The store size is an important factor in drawing the customers attention. Table 5 shows
the size of the stores surveyed. Kirana stores are typically small in size as they are located in the
residential area zones. The size of the stores revealed that about half of the stores were less than
200 sq. ft. and about one-fourth of the stores (28%) were of size greater than 400 sq. ft.
TABLE 5: SIZE OF THE STORES (SQ. FEET)
Size No. of Stores Percentage
1-100 21 10.5
101-200 89 44.5
201-300 18 9
301-400 16 8
401-500 15 7.5
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501-600 19 9.5
601-700 3 1.5
701-800 19 9.5
Total 200 100
4.23 INVENTORY
4.23.1 SKU CATEGORY MANAGEMENT
Merchandising is a key factor in attracting the customer and encouraging repeat business
(Newman, 2007). Table 6 to Table 8 and Figure 4 show the number of SKUs in different
categories at the kirana stores.
TABLE 6: STORES SELLING DIFFERENT SKUS
Food Vegetables Non-Food Staples Beverages
Other
Items
No. of
Stores
% of
Stores
67 33.5
151 75.5
158 79
162 81
164 82
188 94
191 95.5
With respect to the SKU categories maintained by the stores, about 20% of the stores
stored food items in the range of 11-20 items; about 25% of the stores stored 21-30 food items;
about 12% of the stores each were having 31-40 and 51-60 food items and some stores (10%)
stored about 91-100 food items. Number of vegetables stored by the stores was less than 20 in
most of the stores, non-food less than 50, staples less than 50 and beverages less than 20. Food,
non-food and staples were the major category of items stored by all the kirana stores. The total
SKUs were in the range of 125 150.

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TABLE 7: NUMBER OF SKUS IN KIRANA STORES

No. of SKUs
No. of kirana Stores
Food Vegetables Non-Food Staples Beverages Others
1-10 13 71 12 19 4 9
11-20 42 87 85 86 52 31
21-30 52 5 29 41 - 22
31-40 24 1 23 15 - 9
41-50 16 - 26 27 - 8
51-60 23 - 8 2 - -
61-70 3 - 2 0 - -
71-80 7 - 6 1 - -
81-90 0 - 0 0 - -
91-100 20 - 6 0 - -
Total 200 164 197 191 56 79

TABLE 8: PERCENTAGE OF SKUS IN KIRANA STORES
No. of Items
Percentage of Kirana Stores
1-10 7 43 6 10 7 11
11-20 21 53 43 45 93 39
21-30 26 3 15 21 - 28
31-40 12 1 12 8 - 11
41-50 8 - 13 14 - 10
51-60 12 - 4 1 - -
61-70 2 - 1 - - -
71-80 4 - 3 1 - -
81-90 - - - - - -
91-100 10 - 3 - - -
Total 100 100 100 100 100 100
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Source: F
4.23.2 N
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BEM
No.
of
Days

S
1-2
3-4
4-5
6-7
8-9
10-
11
12-
13
14-
15
Total
Source: F
Sourc
Food
No.
of
Stores
%
52 26
67 33.5
44 22
22 11
2 1
5 2.5
- -
8 4
200 100
Field Survey
ce: Field Sur
Volu
TAB
Vegetabl
No.
of
Stores
125 7
37 2
2
-
-
-
-
1 0
165 1
y.
FIGU
rvey.
ume2,Issu
BLE 9: STO
les Non-
%
No.
of
Stores
75.8 2
22.4 15
1.2 59
- 82
- 19
- 11
- 2
0.6 5
100 195
URE 5: STO
ue6(June
OCK HELD
-Food
s
%
N
o
Sto
1.0 2
7.7
30.3 4
42.1 5
9.7 2
5.6 4
1.0
2.6
100 19
OCK HELD
,2012)
D (IN DAYS)
Staples
No.
of
ores
%
2 1.1
5 2.6
44 23.2
58 30.5
20 10.5
45 23.7
8 4.2
8 4.2
90 100
D (IN DAYS
ISS
)
Beverages
No.
of
Stores
%
- -
4 2.3
23 13.
60 34.
25 14.
26 14.
23 13.
14 8.0
175 10
S)
N:22497
s Other S
%
No. of
Stores
-
3 2
.1 21
.3 38
.3 9
.9 1
.1 2
0 1
0 74
7307
SKUs
%
-
2.7
28.4
51.4
12.2
1.4
2.7
1.4
100

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TABLE 10: CENTRAL TENDENCIES OF STOCK HELD (IN DAYS)

Mean 4 2 6 7 7 2
Median 3.5 1.5 6.5 6.5 6.5 0
Mode 3.5 1.5 6.5 6.5 6.5 0
Std. Deviation 3 1 3 3 4 3
Range 13 14.5 14.5 14.5 14.5 14.5

Table 11, Table 12 and Figure 6 show the analysis of stock-out and percentage of stock-
out of the kirana stores. About a quarter of the kirana stores were not having a stock-out and
about 70% of the kirana stores had a stock-out in the range of 1-10. The analysis showed that the
fill rate or the service rate of the kirana stores was good. At the same time, it may also be noted
that the customers visit kirana stores for immediate purchases, fill-in and hence kirana stores
cannot afford to have stock-out.
TABLE 11: STOCK-OUT
No. of Stores Percentage
Yes 147 73.5%
No 53 26.5%
Total 200 100%
TABLE 12: PERCENTAGE OF STOCK-OUT
Percentage of
stock-out
No Stock-out 53 26.50%
1-5 100 50.00%
6-10 36 18.00%
11-15 6 3.00%
16-20 2 1.00%
Stock-out
(Percentage)
Mean
3.88
Median
3.00
Mode
3.00
S.D.
4.31
Range
28.00
Minimum
0.00
Maximum
28.00
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21
>2
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Source: F
Source: F
4.24 CRO
4.24.1 S
S
many so
quality o
T
wholesal
merchand
followed

1-25
25%
otal
Field Survey
Field Survey
OSS-FUNC
OURCING
ourcing is an
urces based
f the mercha
Table 13 and
lers, dealers
dise by call
d by placing o
Volu
2
1
200
y.
y.
CTIONAL D
G
n important
d on conven
andise, the p
d Table 14 s
and salesper
ling through
orders with t
ume2,Issu
1.00
0.50
100
FIGURE
DRIVERS
activity in r
nience, speci
price, order a
show that th
rsons to sou
h phone to
the salespers
ue6(June
0%
0%
0%
6: STOCK
retailing. The
ial offers an
and on-site d
he kirana sto
rce their me
the wholesa
sons who vis
,2012)
K-OUT
e retailers so
nd discounts
delivery serv
ores used m
erchandise. A
alers was th
sit the stores
ISS
ource their m
s, credit faci
ices etc.
more than on
Among them
he most pop
s (36%) at re
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ne source na
m, procureme
pular (62%)
egular interv
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from
y and
amely
ent of
) one
als.
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TABLE 13: SOURCING SKUS I

Through phone to the dealers 55 27.5
Through phone to the
wholesalers
123 61.5
Visit by salesperson 72 36
Personal visit 47 23.5
Total 297
TABLE 14: SOURCING SKUS II
Through phone to the wholesalers 71 35.50%
Visit by salesperson 22 11.00%
Personal visit 18 9.00%
Phone to W/S and Salesperson 16 8.00%
Phone to Dealers and Phone to W/S 15 7.50%
Phone to Dealers and Salesperson 13 6.50%
Through phone to the dealers 11 5.50%
Personal Visit and Phone to W/S 7 3.50%
Personal Visit and Phone to Dealers 6 3.00%
Personal Visit, Phone to W/S and Salesperson 6 3.00%
Personal Visit and Salesperson Visit 5 2.50%
Phone to Dealers, Phone to W/S and Salesperson 5 2.50%
Personal Visit, Phone to Dealers, Phone to W/S and
Salesperson
3 1.50%
Personal Visit, Phone to Dealers and Salesperson 2 1.00%
Total 200 100.00%

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4.24.2 BENEFITS/INCENTIVES ON PURCHASES

As regards procurement of merchandise, kirana stores usually are showered with
numerous incentives/benefits by the suppliers based on the order size, store relationship and
image. Most of the kirana stores got the quantity discount and sometimes gift vouchers as well.
Table 15 and Table 16 show the benefits/incentives received by the kirana stores in the
procurement of merchandise. The data show that most of the stores received quantity discount on
purchases and about 11% of the stores got gift vouchers also.
TABLE 15: BENEFITS ON PURCHASES I
Quantity Discount 190 95.00%
Gift Vouchers 22 11.00%
Freebie 15 7.50%
Gift 12 6.00%
No Benefits 03 1.50%
Any other 01 0.50%
TABLE 16: BENEFITS ON PURCHASES II
Quantity Discount 148 74.00%
Gift and Quantity Discount 20 10.00%
Freebie and Quantity Discount 11 5.50%
Gift Vouchers and Quantity Discount 9 4.50%
No benefits 4 2.00%
Gift Vouchers 2 1.00%
Gift 1 0.50%
Freebie 1 0.50%
Year-end tours 1 0.50%
Freebie, Gift and Quantity Discount 1 0.50%
Freebie, Gift and Quantity Discount 1 0.50%
Any other 1 0.50%
Total 200 100.00%
4.24.3 MODE OF PAYMENT AND CREDIT PERIOD
Table 17 and Figure 7 present the details about the mode of payment and Table 18
contains the period of credit to the kirana stores. The data show that the kirana stores most often
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used the
stores pa
some be
maximum
Cash
Credit
Both
Total
Source: F

option of b
aid the cash
enefits/incent
m of 2 week

Field Survey

Volu
Cash
buying on ca
whenever t
tives as com
s credit from
TA
y.
FIG
Source: Fiel

ume2,Issu
ash as well
they bought
mpared to
m the supplie
ABLE 17: M
No
GURE 7: M
ld Survey.
38%
ue6(June
as through
t the mercha
credit purch
ers.
MODE OF P
o. of Stores
76
16
108
200
MODE OF P

54%
,2012)
credit (54%
andise. Usua
hases. Kiran
PAYMENT
PAYMENT
8%
Credi
ISS
%). About 38
ally, cash pu
na stores m
Perc
3
5
1

it
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8% of the k
urchases go
most often g
centage
38%
8%
54%
00%
7307
kirana
with
got a
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TABLE 18: PERIOD OF CREDIT

Week(s) No. of Stores Percentage
One 36 29
Two 83 67
More than two 5 4
Total 124 100

4.24.4 PRICING
Price Discount is an important benefit offered to the customers by the retailers. The data
show that majority of the kirana stores offer discount to their customers (Table 19 to Table 21).
Of the stores who had given discounts, three-fourths of the stores (79%) offered discount on total
purchases and about 10% of the stores had given discount on the individual items purchased. It is
common in the retail trade to offer discount on the maximum retail price (MRP) or list price.

TABLE 19: PRICE DISCOUNT ON MRP
No 28 14%
Yes 172 86%
Total 200 100%

Mean 10.99
Median 10.00
Mode 10.00
Std. Deviation 4.47
Range 24.00
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TABLE 20: PRICE DISCOUNT ON PURCHASES

Individual Items 19 11.05%
Total Purchase 136 79.07%
Individual Items and Total Purchase 15 8.72%
Others and Total Purchase 2 1.16%
Total 172 100.00%
TABLE 21: DISCOUNT ON PURCHASES
Percentage of
Discount
0 28 14.0%
1 1 0.5%
2 62 31.0%
5 74 37.0%
10 34 17.0%
Otherwise 1 0.5%
Total 200 100%
4.24.5 APPLICATION OF COMPUTERS
Computer has become the integral part of modern life. Application of computers,
therefore, has become essential for any business because of several advantages.
Tables 22 to Table 24 show the application areas of computers in kirana stores. It may be
understood that computers have not been used in kirana stores extensively. Less than quarter of
the kirana stores (23%) have only used the computers in management of the stores. Of which,
41% of the kirana stores used computers for managing inventory and 50% of the stores used for
accounting applications. It is obvious that many of the kirana stores are not taking full advantage
of the computer applications, more so with regard to customer database.
Mean 5
Median 5
Mode 5
Std. Deviation 3
Range 9
Minimum 1
Maximum 10
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TABLE 22: COMPUTER USAGE

Yes 46 23%
No 154 77%
Total 200 100%
TABLE 23: AREA OF COMPUTER APPLICATION I
Application Area No. of Stores Percentage
Accounting 37 50%
Inventory 30 41%
Purchasing 5 7%
Finance 1 1%
Customer Management 1 1%
Total 74 100%
TABLE 24: AREA OF COMPUTER APPLICATION II
Application Area No. of Stores Percentage
Inventory 6 13.04%
Purchasing 1 2.17%
Accounting 12 26.09%
Finance 0 0.00%
Customer Management 1 2.17%
Accounting and Inventory Mgt. 21 45.65%
Accounting and Finance 1 2.17%
Accounting, Inventory and Purchasing 2 4.35%
Accounting and Purchasing 1 2.17%
Inventory and Purchasing 1 2.17%
Total 46 100.00%

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5.0 FINDINGS
5.1 LOGISTICS DRIVERS
5.11 Location
The stores were more or less equally distributed throughout the prominent geographical
areas of Bangalore city. All the stores invariably are located at vantage points of the main road or
bylanes. Almost all the stores were located on the main road, or street corners or important
junction points.
Kirana stores are typically small in size as they are located in the residential area zones.
The size of the stores revealed that about half of the stores were less than 200 sq. feet. Some of
them were relatively bigger.
5.12 MERCHANDISE MANAGEMENT (INVENTORY)
With respect to the SKU categories maintained by the stores, majority of the stores had
food items in the range of 11- 60 items and some stores stored about 91-100 food items. The
stores stored vegetables in the range of 1-20, non-food in the range of 11-50, staples in the range
of 1-50 and beverages in the range of 11-20. Food, non-food and staples were the major category
of items stored by all the kirana stores. The total SKUs were in the range of 125 150.
In kirana Stores, the food items were carried for about 1-7 days. Vegetables were carried
for 1-4 days. The non-food items were carried for 4-7 days. The staple items were carried for 4-9
days. The beverages were carried for 4-13 days.
On an average, the stores held the stock of food items for about 4 days, vegetables for 2
days, non-food, staples and beverages for about a week. From the data, it is evident that the
inventory turnover is high enabling stores to manage the working capital effectively.
5.12 TRANSPORTATION
Kirana store did not spend much on the inbound transportation as the SKUs were
delivered to their stores by the suppliers. The suppliers were wholesalers, dealers and
salespersons. In case, when they went personally to bring the merchandise, they used their own
vehicles such as motorbikes and sometimes the auto rickshaws.
5.2 CROSS-FUNCTIONAL DRIVERS
5.21 SOURCING
Kirana stores used more than one source namely wholesalers, dealers and salesmen to
source their merchandise. Among them, procurement of merchandise by calling through phone to
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the wholesalers was the most popular (62%) one followed by placing orders with the salesmen
who visited the stores (36%) at regular intervals.
As regards procurement of merchandise, kirana stores are showered with numerous benefits by
the suppliers based on the order size, store relationship and image. Most of the kirana stores got
the quantity discount and sometimes gift vouchers as well.
The kirana stores most often used the option of buying on cash as well as through credit
(54%). About 38% of the kirana stores paid the cash whenever they bought the merchandise.
Usually, cash purchases go with some benefits/incentives as compared to credit purchases. kirana
stores most often got a maximum of 2 weeks credit from the suppliers.
5.22 PRICING
Among the stores who had given discount on purchases, about three-fourth of the stores
had given discount on total items purchased and about 10% of the stores had given discount on
the individual items purchased.
The discount did not exceed 10% and majority of the stores gave a discount of 2% or 5%
on the M.R.P.
5.23 INFORMATION
It may be understood that computers have not been used in kirana stores extensively.
Less than quarter of the kirana stores (23%) have only used the computers in management of
their stores. Of which, 41% of the kirana stores used computers for managing inventory and
50% of the stores used for accounting applications. It is obvious that many of the kirana stores
are not taking full advantage of the computer applications, more so with regard to customer
database.
6.0 SUGGESTIONS
Kirana stores were having less than 150 SKUs in their stores. Of course, by the nature of
business they may not be able to manage more SKUs. At the same time, the modern customers
want more choice. So efforts need to be taken to have more variety in their stores. This will
attract more customers and also discourage the existing customers to shift away from their stores.
Most often, the kirana stores do not spend time on display of the merchandise. But this
is essential to induce the customers to visit their stores. Banners, displays are important
component of food retail and these activities need to adopted by the stores to get more sales.
It has been inferred from the study that about three-fourth of the kirana stores are facing
stock-out. Customers visit kirana stores for fill-in immediate purchases. If the kirana stores
are not in position to meet the demand of customers, they lose their goodwill and also the
customers themselves. Therefore, adequate steps have to be taken to have sufficient stock to
meet the demand.
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Traditionally, the kirana store owners buy their SKUs on cash. In this study also, it has
been found that about two-fifth of the stores bought the SKUs only on cash. It has been
suggested that they need to be encouraged to buy on credit. This would help them to manage the
cash for buying more number of merchandise and in turn this would result in more number of
customers and sales.
Over three-fourth of the kirana store are not using computers for the management of
kirana stores. The stores are not taking full advantage of computer applications in the field of
SKU management, accounting, etc. It is suggested that kirana stores start adopting computers for
better management of the stores.
7.0 CONCLUSION
Food Retail is a big business in India. Till recently, the business model that successfully
satisfied the needs of the customers was the Kirana stores. Kirana stores exists in India for many
years. Kirana store owners, the small traders with their native intelligence, dynamic
merchandising and personal relationship with the customers, were successful in their business
satisfying the customers to a larger extent and at the same time earning a decent income. With
the aspiring needs of the customers, young population, high disposable income and informed
customers, slowly the organised retailing is gaining momentum.
With high market potential, the foreign food retail leaders such as Wal-Mart, Carrefour,
Tesco and others are waiting on the wings to enter the market on their own. In this context, there
will be shift in buying pattern of the customers i.e. from kirana stores to the organised retail. But
at the same time, customers are not going to abandon the kirana stores. For immediate purchases,
fill-ins, customers rely on the traditional stores and the business is going to stay forever. At the
same time, the kirana stores would need to improve on their weaknesses such as unhygienic
conditions of the stores, better shelving and displaying of merchandise and outlook of the stores.
This would help them in sustenance and growth of the business. India is a country of
contradictions and there is enough space for any business to survive and grow and kirana stores
is not an exception!
REFERENCE
1. Andrew J Newman and Peter Cullen, "Retailing: Environment & Operations", Thomson
Learning 2007.
2. Bhusan Ratna (2010), Attractive deals and promotions help big retailers grow, Economic
Times, 5
th
J uly 2011.
3. Chetan Bajaj et al, Retail Management, Oxford Publishers, 2005.
4. Corporate Catalyst India, A report on Indian Retail Industry, 2006.
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5. Darlington J ose Hector (2012), Uniquenss of kirana stores will keep them relevant:
Interview with Thomas Varghese, MD&CEO, Aditya Birla Retail, The Financial Express,
J anuary 27, 2012.
6. Dr. M Bhasi, Retailing in Kerala, http://www.indianmba.com/Faculty_Column/
FC612/fc612.html.
7. http://www.chillibreeze.com/articles_various/Kirana-stores.asp
8. http://www.surveysystem.com/sscalc.htm.
9. Neeraj Thakur (2009), Kirana stores back in fashion, Business Standard, New Delhi Ed.,
J anuary 26, 2009.
10. Raghav Gupta (2009),Can modern retail learn from the humble kirana?, FICCI Footfalls,
March April 2009.
11. Raghav Gupta, Rohit Bhatiani, and Pranay Gupta, An Overview of Indias Consumer and
Retail Sectors, pp 27-32, Technopak Perspective, Volume 4, 2010.
12. Retail biz, J anuary 2010.
13. Shubhra Saini (2009), Kirana rules the retail pie,
http://retail.franchiseindia.com/articles/Retail-Business-Practice/New-Trends/Kirana-rules-
the-retail-pie-51/, October 27, 2009.
14. Sotiris Zigiaris (2000), Supply Chain Management,
http://www.urenio.org/tools/en/supply_chain_management.pdf
15. Sunil Chopra and Peter Meindl, Supply Chain Management Strategy, Planning &
Operations, 4
th
Edition, 2010.
16. Varun J ain (2010), Kiarna Stores: Difficult to Defy,
http://retail.franchiseindia.com/articles/Retail-Trends/Retail-Industry/Kirana-Stores-
Difficult-to-Defy-264/, J une 19, 2010.

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Volume2,Issue6(June,2012)ISSN:22497307

FIGURE 2: SUPPLY CHAIN DECISION-MAKING FRAMEWORK

3.3 DETERMINATION OF SAMPLE SIZE

TABLE 7: NUMBER OF SKUS IN KIRANA STORES

TABLE 10: CENTRAL TENDENCIES OF STOCK HELD (IN DAYS)

TABLE 13: SOURCING SKUS I

4.24.2 BENEFITS/INCENTIVES ON PURCHASES

TABLE 18: PERIOD OF CREDIT

TABLE 20: PRICE DISCOUNT ON PURCHASES

TABLE 22: COMPUTER USAGE

Source: Field Survey.

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