Research Article

Procurement Practices Prevalent in Retail Stores with Special Reference to Fast Moving Consumer Goods (FMCGs) in Tamil Nadu  

Paarry J.S.1 , Sekhar C.2 , Balaji P.3 , Sivakumar S.4
1 Heriot Watt University, Dubai, The United Arab Emirates
2 Department of Agricultural Economics, Tamil Nadu Agricultural University, Coimbatore, India
3 Forest College and Research Institute, Mettupalayam, Coimbatore, Tamil Nadu, India
4 Department of Physical Sciences and Information Technology, AC&RI, Coimbatore, Tamil Nadu, India
Author    Correspondence author
International Journal of Horticulture, 2018, Vol. 8, No. 5   doi: 10.5376/ijh.2018.08.0005
Received: 30 Jan., 2018    Accepted: 06 Feb., 2018    Published: 09 Mar., 2018
© 2018 BioPublisher Publishing Platform
This is an open access article published under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Preferred citation for this article:

Paarry J.S., Sekhar C., Balaji P., and Sivakumar S., 2018, Procurement practices prevalent in retail stores with special reference to fast moving consumer goods (FMCGs) in Tamil Nadu, International Journal of Horticulture, 8(5): 39-51 (doi: 10.5376/ijh.2018.08.0005)

 

Abstract

Any consumable items require the process of Procurement. The procurement process in the retail store is customer centric and is driven by the customer choice, though there are situations where the demand planning and order sizing are made depending on the data collected by the customer support agents. For the current research, the Procurement Manager of the Retail Store, Supervisors and the Customer Support Agents are found to be the respondents. The procurement process in the retail store as viewed through the current research is that it is fairly easy and a complicated process. There are opportunities for outsourcing different functions of the procurement process to the service providers and the department yet manages various functions including supplier selection, management and assessment. The unique feature of the retail store in the Coimbatore City as told by the procurement professionals are the "Everyday Low Pricing Scheme" and the collection of customer data for the demand planning and supplier management. Since the supplier selection is based on the capability of the supplier and the order quantity, there are suppliers who are not having configuration which are necessary for supplying to the store, there is more dependency on the distributors who might take it as an opportunity to increase the cost of transport which might be problematic for the cost reduction policy of the store. A customer survey must be conducted in order to learn about the various set backs of the store and if the customers are more frequent in visiting the store, then the capital spent in visual merchandising can be reduced and this might also help reduce the total cost of the process as there was mentioned in the research findings that the visual merchandising tools over shadow the store appearance and the total amount spent is also higher in such case. During the supplier assessment phase after the regular audit of the suppliers, they are provided a score card, this method might prove useful to the suppliers but unless they are competitive business with similar suppliers which might improve the capability of the supplier and the concept of Vendor Managed Inventory (VMI) could be implemented to reduce the ordering cost and transportation cost. 

Keywords
Procurement practices; Retail stores; Vendor selection; Vendor evaluation; Fast moving consumer goods; Hypermarket

1 The History of FMCGs in India

The Fast Moving Consumer Goods (FMCG) industry is one of the fast growing sector in the Indian economy. There are wide variety of literature covered in the area of FMCG. The recent development in the FMCG within the past 5 years have been studied by few authors which contributes to penetration of Business Process Outsourcing (BPO) in FMCG sector for which the results indicate that most of the FMCG companies are outsourcing their business process and are achieving cost savings up to 5 per cent to 10 per cent. The overall outsourcing, process wise varies from 2 per cent to 34 per cent in the FMCG sector and 40 per cent of the companies which have not outsourced are planning to outsource in the near future (Chavadi and Hyderabad, 2011). The present FMCG scenario is that the paradigm has shifted from sellers to buyers as the customers have many choices these days. According to a research by Shah (2011), the Indian shopper’s basic assumption has changed to an idea that the shopping is driven by impulse rather than need and are more demanding, aware and confident in the product or service they acquire.

 

In India, companies like Indian Tobacco Company (ITC), Hindustan Uni-Lever (HUL) Limited, Proctor and Gamble (Colgate), Cadbury and Nestle have been a dominant force in the FMCG sector well supported by relatively less competition and high entry barriers. These Companies in this context, capable of securing higher margins. With the gradual opening up of the economy over the last decade, the FMCG companies have been forced to fight for a market share. In the process,  margins have been compromised.

 

1.1 Indian retail scenario

The urban face of the Indian retail sector has been steadily evolving over the last decade, while the speed and the amount of change have been debatable, the indications have been positive.

 

The indicators are outlined as follows:

1.The growth of organized retail.

 

Here a question arises is, who is the organized retailer? Here the answer will be the modern retailers who have registered for sales tax; income tax; employed staff legally in the sense that they get paid a monthly salary with provident fund and with an exposure to best practices in the retail industry. They make efforts towards building the store as a brand through appropriate product display, store layout, design and ambience, and visual merchandising.

 

1.Their store concept should be replicable and scalable,

2.Evolution of retail consumers and

3.Periodic changes in the policy guidelines.

 

1.2 The growth of Indian retail sector

All the large format retailers today such as Wal-Mart, Tesco, Carrefour and so on, are big because they are in food and grocery. The point to note here is that 70 per cent of the total disposable income in India goes to food and grocery and that is where there is only one per cent penetration of organized retail. In US, the organized retail forms 85 per cent of the market; UK, France, Germany and Spain, the share of organized market is 75 to 80 per cent; In Brazil, the share is 40 to 50 per cent; In Russia, the share is 33 to 38 per cent; In respect of China, it is 19 to 23 per cent. In India, the figure is 7.8 per cent. It means that the organized retail is not going to threaten the unorganized sector. The organized retailers need to invest in food and grocery heavily if the total unorganized retail share has to increase.The strength of Indian retail sector is, it commands higher purchasing power of the consumers, a working population of 117 million with median age 29, and low retail penetration which gives scope for penetration. The opportunities include innovation in retail formats, retail analytics, in-store experience, technology usage in retail and financial models, e-tailing, superior customer focus and change in regulatory scenario.

 

1.3 Problem focus

Increasing population is giving pressure to the urban environment to expand its wings to cater the needs of the common public in terms of fast moving consumer goods. For want of employment opportunities, the migration from rural to semi urban and urban environment is a continuous process and most of the Governments are not paying much attention in checking the migration or not coming forward to establish the employment oriented activities in the villages and rural pockets of democratic India.

 

Considering the urban and semi urban needs, many of the retail stores both manned by Multi-National Companies and the Regional Kirana stores have established their retail outlets to serve the needs of the consumers. In some places, the regional stores are performing better and in some places, the organized retail outlets are performing more than the expectation due to the continuous support from the consumers.

 

Ensuring higher satisfaction to the consumers, how the organized retailing is being carried out by the organized retail formats becomes important. How the procurement practices are planned and are being carried out without any hassle and who are all the stakeholders in the distribution of FMCGs to the organized retail format and its related studies are not available on case study basis. Few studies are available in FMCGs which are carried out in UK and South Africa and the regional studies are not available and hence this study is mainly proposed to conduct in Coimbatore city following a case study approach.

 

1.4 Aim of the study

The main aim of the study is to assess the procurement practices prevalent in the organized retail stores present in the Coimbatore city of Tamil Nadu and the role of different stake holders involved in mobilizing the produce from manufacturers to the ultimate consumers. The Specific objectives chosen for the study is identifying the existing procurement practices with respect of Fast Moving Consumer Goods available in the organized retail store. Though the study has also focused the supply chain issues, it is not focused in this paper and restricted only to the procurement practices prevalent with FMCGs.

 

2 Design of the Study

Methodology refers to the blueprint or set of decisions and procedures which governs a study and makes it understandable to others. It is also subject to inquiry, criticism, replication and adaptation to other settings (Guthrie, 2010). The research methodology is an approach used to justify the methods adopted for research leading to creation of data for analysis of research under consideration (Carterand Little, 2007). The types of research Methodologies available are quantitative and qualitative (Lapan et al., 2012).

 

2.1 Quantitative methodology

The quantitative methodology is used where the number of respondents are more and the data can be effectively measured using quantitative techniques such as Statistical Package for the Social Sciences (SPSS) (May, 2011).

 

2.2 Qualitative methodology

The aim of the methodology is to examine the interpretation of the reality from the respondents' view point (Bryman,2015). The effective means of creating a framework where the respondent is to provide response to the interviews or texts and the response to the interviews can be open.

 

The research model adopted in the current research is Onion model (Figure 1) which can be used for both quantitative and qualitative research. In the current research, the qualitative approach part of the onion model is used of which a few parts of the Onion model are adopted which are used by a qualitative researcher. The different stages include defining research philosophy, research approach, adoption of research strategy, time horizons and data collection methods (Saunders et al., 2009).

 

Figure 1 The onion research model

Note: Saunders et al. (2009)

 

2.3 Research philosophy

The research philosophy is based on the nature of research which depends on whether one makes implicitly or explicitly. It depends on the observational capacity and the ability to capture the knowledge and the results derived (Martela, 2015).The set of beliefs concerned with the nature of reality being investigated can be referred to as research philosophy which is also the underlying meaning for nature of knowledge (Bryman,2015). The research model used in the current research is Onion type which was developed by Saunders et al. (2009), which represents different stages which must be secured during the development of strategy for a research, each layer of onion provides a more detailed stage of research process. The research model adopted provides an intuitive way in designing the research methodology, the importance lies in the way the model can be adapted for any research methodology in different contexts (Bryman, 2015). The choice of research philosophy depends upon the area of knowledge under investigation (May, 2011).

 

The ontological framework is the study of reality or existence (Creswell, 2013) in which the researcher enables to focus on the study, the chosen methods and data collection and analysis (Bergin et al., 2008). There are two ontological frameworks involved in a research process which are positivism and constructionism (Monette et al., 2013). Martela (2015) also suggest research philosophies such as positivism and interpretive which depends on how the models and theories are putforward by the practitioners. The assumption of positivism is that the reality of the problem under consideration exists independently of the problem (Newman and Benz, 1998) but the social constructionism suggests that the meaning inherent in a phenomenon is developed by the observer (Ostlund et al., 2011).

 

2.4 Research strategy

The research strategy is the technique adopted by the researcher to perform the study on the topic of interest (Saunders et al., 2009). There are various steps involved in strategizing a research which might include identifying the scientific problem, the experimental design, data types, methods and experimental techniques (Benestad and Laake, 2015). Saunders et al. (2007) identified different approaches such as case study research, experimental research, interviews, action research, literature reviews and surveys. The current research is concentrated on the procurement practices of SPAR hypermarket which translates to adopt case study as the research strategy. It is the assessment of single unit which establishes the key features and generalizations of the case in consideration (Bryman, 2015). It also provides in-sight about the specific nature of culture or context in comparison to other cases (Silverman, 2013).

 

2.5 Data Collection

The data is collected at the individual level focusing on finding answers to the research questions. There are various possibilities to collect a wide range of experiences, beliefs, norms and practices of the individuals. The observations are source of data and the data is analyzed to provide a basis for the conclusions (Moen and Middelthon, 2015). The data collected during the research can be categorized into primary data (collected by the researcher) and secondary data (created by other researchers) (Kothari, 2004).

 

2.5.1 Secondary data

The secondary data are the information which are processed by an other author who researched in the same or similar topic. Kothari (2004) has classified secondary data as published and unpublished data where, published data includes data available from journals, books, magazines etc., while the unpublished data are those which are obtained from unpublished organizational data or invoices or emails. The published data used are from the books available from the Heriot-Watt offline and online library and the academic journals are obtained from the online data base such as Ebsco, Science Direct, Google Scholar and Emerald full text. The secondary data is a link to the various theoretical aspects of the current research interview data collected (Jansen, 2010). The search terms used for obtaining secondary data from the databases include, procurement functions, procurement cycle in FMCG, value chain, value chain analysis, supplier selection, negotiation with suppliers, vendor selection, visual merchandising, product quality standards in FMCG, retailing in India, price variation in EOQ, price dependent demand and many more.

 

2.5.2 Primary data

The primary data is collected during the research and was not available during the start of the research and the purpose of which is to serve the analysis for the current research (Collis et al., 2003). The primary data collection involves collection of data through Qualitative interview, Participant observation, Group interviews / focus group discussions, Keyperson interviews, Texts, images and objects and Historicizing (Moen and Middelthon, 2015). In the current research qualitative interview is used, which is a conversation involving researcher, participant and the topic. The conversation is directly with the researcher and the participant, such conversations are interactive in nature. The interview may be structured, semi-structured or informal interviews. The interview as told by Moen and Middelthon (2015) should be three-sided relationship involving the interviewer, interviewee and the theme or topic.

 

The data collection means in the current research is through questionnaire and face to face interviews which might be structured or semi-structured with the questions being open ended or closed. Sometimes, a qualitative questionnaire is prepared by breaking down the research questions so that it will be easier for the researcher to conduct interviews and gather more related data possible. In the current research, the structured and semi structured interviews are conducted based on the situation and the person being interviewed, if the person being interviewed is providing less time for answering the questions, fully structured interview is used. The questions are both open ended and closed.

 

2.6 Data analysis

In the current research, the interview method is adopted, as the qualitative methodology is based on the inductive approach, the patterns are derived from the data as a preconditioning for the study (May, 2011). The interview data is grouped accordingly to the common factors exhibited by the respondents, the results of the research are established based on the data examined and its best fit with the current framework of research design (Luoand Flick, 2012; Randall and Mello, 2012). The interview strategy in the researches are conducted in the area of social sciences (Bryman, 2015).

 

2.6.1 Sample size

The sample size is a representation of number of participants selected from the overall data set which are used in research (Newmanand and Benz, 1998). In quantitative research, the sample size is most fundamental as the precision of the outcomes are directly linked with the sample size. For instance, the sample size less than 50, tends to produce results of lower accuracy as the results are dependent on the people providing data. The people who provide data tend to skew the results, hence it is suggestive to have larger sample size thus producing more reliable and accurate results (Flick, 2015). In qualitative research methodology, the sample size is less important and has a sample size from 15 to 30 (Moen and Middelthon, 2015).

 

2.6.2 Sampling techniques

The selection of appropriate sample size for the research under consideration is important. The two types of qualitative sampling techniques suited for the current research are Convenience sampling and purposive sampling. The convenience sampling technique is a non-probabilistic sampling technique which is applicable to both qualitative and quantitative methodologies, but it is frequently used. In qualitative methodology of research, the participants for the research are more readily accessible for the researcher and the participation opportunity provided is not equal to all the participants and is chosen based on the convenience of the researcher (Suen et al., 2014). The purposive sampling technique, researcher uses carefully selected subjects for the study and the expectation from each participant is that they will provide information which are unique and valuable to the research, so the members chosen for the sample are not interchange (Suen et al., 2014). The purposive sampling technique is adopted for the current research topic as it is the most usually used technique in the qualitative research as the research area is targeted on experts in the field having knowledge and experience in the research area (Ghauri and Gronhaugh, 2010). The minimum sample size in the qualitative research is 15 to 20 in order to get sufficient data on the research area (Lapan et al., 2012).Since the sample size for a qualitative interview as suggested by Moen and Middlethon (2015) is 15 to 30 and the sample size suggested by Lapan, Quartaroli and Riemer (2012) is 15 to 20. Hence from the above information the sample size is kept to a minimum of 15 for the current research.

 

To undertake this study, the SPAR Hypermarket, an important retail store positioned in the City of Coimbatore, Western Part of Tamil Nadu was considered. Among the FMCGs, the food and non-food items supplied by the Hindustan Uni-Lever Limited (HUL) found to be the maximum share to the SPAR Hypermarket and at the same time HUL found to be the topper (Table 1) in distributing FMCGs to the hypermarkets and hence the same was selected for the study.

 

 

Table 1 The Top Ten Companiesin FMCG Sector

 

To mobilize the commodity to the store, there were different stakeholders whom are playing vital role in the distribution process of FMCGs. They are the Procurement Officer attached with the Manufacturing Firm, The Distributors in the middle and the Procurement Officer of the SPAR Hypermarket store, Coimbatore and the Consumers whom are visiting the stores for regular or occasional purchase of FMCGs at the SPAR Hypermarket store.

 

In respect of sampling, the Procurement Manager with the Manufacturing firm and the Procurement Manager and the Manager of the Store available with the SPAR Hypermarket are purposively selected following the Purposive Sampling method. Purposive Sampling is one of the most common sampling strategies according to the preselected criteria relevant to a particular research question. In respect of other stakeholders like distributors / vendors and the consumers, 10 Samples in each of the stakeholder delineated above will be considered, whom are numbering to 20 and the same 20 samples were considered for collection of primary data with respect to the following aspects.

 

 

In that, who is practicing the traditional practices, whom are practicing the modern practices of supply using software and other methods, the product flow either in one way or by two ways, the information flow, cash flow, methods of value addition if any, cost minimization activities carried out by the stake holders or not; and what type of logistic practices are being carried out by the stake holders in moving the product from the manufacturers to the retails stores for ultimate distribution to the consumers.

 

3 Results and Discussion

The results related to the procurement practices prevalent with the hypermarket in Coimbatore City was assessed with reference to the objectives chosen and the results are discussed suitably under different heads

 

3.Types of retail stores available globally

The SPAR retail stores are called in different names in different nations based on its functioning and hence the details of such stores have been collected, analysed and presented in Table 2.

 

 

Table 2 Types of SPAR Retail Stores Available Globally

Note: SPAR International Website - 2015 Figures

 

Table 2 revealed the details of types of stores available globally. In Europe, it is designated as Euro Spar, In South Africa, it is described as Super Spar. Spar Express is the name given to Austria and the Spar Drive-Thru is given to the store in Ireland and the country Austria has gained the name of Spar Gourmet store. However, the Stores available in India is designated as SPAR Hypermarket.

 

3.2 SPAR hypermarkets available in India

SPAR Hypermarkets and Supermarkets in India is the result of a license agreement between theDubai based Landmark Group's Max Hypermarkets India Private Ltd. and SPAR International. Max Hypermarkets is responsible for the entire business operation – fromcapital expenditure outlay, day to day operations and management control, while SPAR provides knowledge transfer, technical expertise and brings with its best practices in international retailing to ensure that the brand is being accurately represented, whilstensuring that the local partner retains their financial independence to deliver the bestsolution in each market. SPAR International plays an integral support role in thedevelopment of the hypermarket format in India. The locations of different hypermarkets inIndia are presented in Table 3.

 

 

Table 3 Details of Locations of SPAR Hyper Markets in India

Note: SPAR International Website - 2015

 

In India, the Bangalore City found to be the most preferred destination forestablishing the SPAR Hypermarkets. It might be due to the prevalence of Good Climatethroughout the year, Cosmopolitan nature of the citizens and the people of Bangalorepreferred the quality products at an affordable price and hence the SPAR Hypermarketstores were established in Seven locations in the State of Karnataka especially five inBangalore and the two stores in Mangalore followed by Hyderabad of Andhra Pradesh Statehad commanded the stores in 3 locations. Similar weightage given to Uttar Pradesh with 2stores. All other locations have commanded only one store.

 

In New Delhi, the Capital of India had commanded only one store. It might be due tothe nature of existence of other competitors who operates in a big way and hence the SPARHypermarket has been introduced in New Delhi on test basis to assess the market potentialin the ensuring years. During the year 2017, it is planned to establish 25 stores in India.From that the New Delhi will have an additional space under SPAR Hypermarket. Thenumber of Spar Hypermarkets established in India is accounted to be 0.14 per cent to thetotal number of retail stores available globally.

 

3.3 SPAR hypermarkets in Coimbatore City

SPAR, the world's largest food retail chain store is operated from the Brooke Fields'Plaza -the first shopping mall in Coimbatore. It operates in the 36500 square feet area with28 billing counters for the benefit of the customers, and offers nearly 25000 Plus products.It is the first store in Coimbatore, 9thstore in India under this Landmark group. SPAR currently has 17 stores in India, and offers Shoppers to choose from a wide variety ofqualityproducts across various categories. The details are presented in Table 4.

 


Table 4 Details of Operation of SPAR Hypermarket in Coimbatore City

Note: Primary Data

 

Table 4 revealed that among the 25000 plus products dealt, around 22400 are theproducts from Fast Moving Consumer Goods dealt by the store which is accounted for 90per cent to the total products dealt. The sales area of the store is found to be 36500 squarefeet which is available in single floor which facilitates the Hypermarket to practice VisualMerchandising in certain FMCGs in a big way as one of its Sales Promotional measure.Though it had 28 billing counters at the time of inception of the store, currently only 21billing counters alone are visible and the procurement manager of the store feels that 21 counters are sufficient to eater the needs of the consumers.

 

3.4 Main activities of SPAR hypermarket at Coimbatore City

The SPAR Hypermarket established in Coimbatore City performs different activitiesand the same are listed out and the details are presented in Table 5.

 


Table 5 The Main Activities of SPAR Hyper Market

Note: Primary Data

 

Table 5 revealed the details of main activities of SPAR Hypermarket. There were fourmain activities. In that the SPAR adds value to the local communities by offering "everydaylowpricing" policy and attracts many of the consumers of different strata. It has establishedNutrition Zone which contains nutrition rich products mostly of instant nature and alsoadded organic foods. It performs the supply of Health and Nutrition rich products for thebenefit of the consumers at a low price for which a portion of details are presented in Table 6 on a particular day.

 


Table 6 Details of Fruits and Vegetables Offered to the Consumers on 20th July 2016

Note: Primary Data

 

Table 6 revealed that the price of the produce sold from SPAR Hypermarket, Coimbatore onthe day of 20th July 2016 is found to be low especially in nutrition rich produce and the sameis compared with the local unorganized market for a check once in a while. From the check,it is observed that the SPAR Hypermarket is operating at low price per unit because ofcollective bargaining from the source of supplies. The overall reduction in the price at SPARHypermarket is arrived at 11.23 percent over the market price of the consumer productssold at SPAR. It is clearly understood that the 11 per cent reduction in the price over themarket price of the goods is not much appreciable as the consumer point of view. Because of bulk purchase, the percentage reduction can be increased from 13 per cent to 15 per centon the consumable products to attract the consumers of all strata. The SPAR hypermarket is also running a Food Court inside the store which also finds a relax point for the consumerswhom are tasting the nutrition rich foods offered in the store which facilitates indirectly topurchase the items in the store by the consumers.

 

3.5 Details of vendors supplying FMCGs

The purchase procedure in vogue with the store have been discussed in detail inrespect of food and non-food items. The FMCGs supplied included different brands. The major brands in supply to the store is outlined in the Table 7 and Table 8.

 


Table 7 Number of Vendors Supplying FMCG Products to the SPAR Hyper Market

Note: Source: Primary Data

 


Table 8 Number of Articles Supplied by Vendors of FMCGs

Note: Primary Data

 

Table 7 revealed that the FMCG Food items are supplied by 104 vendors to the store whom are accounted for 44 per cent to the total vendors supplying the FMCGs. Whereas, the Non-Food items under the FMCGs are supplied by 132 vendors whom are accounted for 60 per cent to the total. In a nutshell, one could understand that the store is having 236 vendors in their clutches for effecting the supply of FMCG items.

 

3.6 Details of articles of FMCGs supplied by the vendors

Table 8 depicts the details of number of articles supplied by the vendors of FMCGs tothe Hypermarket.

 

Table 8 revealed that the store is receiving the brands of Proctor and Gamble, HUL, Coca Cola and Pepsi. Among these brands, the number of articles supplied to the store found to be mainly from the HUL Brands which is accounted for around 67 per cent to the total brand supplied to the store followed by the Proctor and Gamble brands which is accounted to be 31.25 per cent to the total. From that one could infer that the FMCGs are received only from two major brands like HUL and Proctor and Gamble. It also reflects the preference of the consumers for these two brands were found to be on the higher side and hence the store is concentrating on these brands. The brands like Coca Cola and Pepsi shared very minimal per cent in the store reflecting that these were occasional drinks.

 

3.7 The automatic replenishment system

The Automatic Replenishment of Stock in respect of FMCGs are taking place in the store. For that they use the `Oracle' software and indicate the stocks Minimum versus Maximum. Based on the instructions, the purchase order is automatically generated by the software and the corrections if any it will be carried out by the Procurement Manager. The details of Automatic Replenishment of stock in respect of "Fair and Lovely "is presented in Table 9.

 


Table 9 Automatic Replenishment System - The Case of Fair and Lovely

Note: Primary Data

 

Table 9 has highlighted the details of Automatic Replenishment System (ARS)available with the store in respect of Fair and Lovely Face Creams. One case contains 96 units of Fair and Lovely Face Creams. The oracle software identifies the produce for automatic replenishment when the stock of "Fair and Lovely" cream touches 6 cases and automatically the purchase order generated for the produce and the regular supplier of thecream also identified and the stock will be maintained in the store. Price negotiations will take place on need basis. Similarly, the Automatic Replenishment System is also practiced for Core Articles like milk and milk products and the details are delineated in Table 10.

 


Table 10 Automatic Replenishment System Followed in Core Articles

Note: Primary Data

 

Table 10 revealed that the Core Articles are ordered by following the Last Six Month Sales of the produce by fixing the minimum stock for ordering as 500 articles and the maximum stock to be maintained in the store to the level of 1200 articles. In respect of the Secondary articles - 'T1' the minimum stock was fixed as 48 units and the maximum stocks to keep in the store was fixed as 96 units following the last six month sales options. The occasionally selling articles are ordered following Last three month sales by fixing the minimum as 6 cases and the maximum to stock with fixed as 12 cases. Similarly, the replenishment of stocks is taking place automatically in the store.

 

3.8 Visual Merchandizing (VM) practices

Visual merchandising refers to anything that can be seen by the customer inside and outside a store, including displays, decorations, signs and layout of space. The overall purpose of visual merchandising is to get customers to come into the store and spend money. Visual merchandising includes how merchandise is presented as well as the store's total atmosphere. Here some of the brands and its merchandising is presented in Table 11.

 


Table 11 The Details of Visual Merchandizing Practice Available in the Store

Note: Primary Data

 

Table 11 revealed that the companies like Nestle, Tresseme, Garnier, Himalaya and Dr. Batra are exhibiting their products separately for the visibility of customers visiting the store by paying rent additionally for the display of their products. For that the rent per month varies from Rs 25000/ to Rs 48000/- The store authorities have not revealed the exact rent paid by each brand owner for their visual merchandizing. Here, the combo offers are offered for each product like “Buy One; Take One” basis. The Visual Merchandizing Practiced in respect of Maggi Noodles by ‘Nestle’ is presented in Figure 2.

 


Figure 2 Store Operating Procedures for the L'Oreal Product

 

3.9 Store operating procedures in vogue with the case firm

To bring the customers attention, the customer support agent of the store will arrange the company brands at a particular space by highlighting the product as part of promotion along with the combo offers given by the company as per the direction of the Procurement Manager. The details of arrangement made by the store are outlined in Table 12.

 


Table 12 Store Operating Procedures (SOP)

Note: Primary Data

 

Table 12 revealed that the FMCGs are arranged in the store following a pattern of arrangement of the produce viz., small to large items and the large to small items at an interval of 10 days. This arrangement is periodically made to bring the attention of the customers visiting the hypermarket store.

 

3.10 Percentage sales across different stores of case firm

Globally the Case Firm Hypermarket stores are positioned in 12314 locations in different countries. These stores have achieved the percentage of sales increased during 2015 over 2014. Based on the available data, the number of stores and their sales percent are presented for discussion. These details are presented in Table 13.

 


Table 13 Percentage Increase of Sales in Case Firm During 2015 Across the World

Note: Case Firm International Website – 2015 Figures) (NA: Not Available)

 

Table 13 revealed that Case Firm - Russia and the Case Firm - China are the leading nations respectively had 420 stores and 347 stores to their credit achieved the sales percentage during the year 2015 to the level of 19 per cent and 6.80 per cent. Though United Arab Emirate had only 13 stores to their credit, the sales percentage is witnessed to the level of 34 per cent during the year 2015 over the year 2014. Double digit growth is witnessed only in very few nations like UAE, Russia, Poland, Croatia. There must be strong reasons for the growth of the hypermarkets across different nations. These details are presented in Table 14.

 


Table 14 Contributing Factors for the Growth of Case Hyper Market

Note: Primary Data

 

3.11 Contributing factors for the growth of case hypermarket

The growth of the stores is visible across the nations. Every year, the numbers are increased, the floor space is also increased, the number of customers visiting to the store is also increased. The contributing factors for the growth are accessed and these details are highlighted in Table 14.

 

Table 14 revealed that the Case Hypermarket being the Worlds' Largest food chain store according to the officials and rank the factor as number one. It is their people who makes difference in all aspects of the store found to take the second rank. Meeting the High food safety and quality of the products on learning the preferences of the consumers found to hold third rank and the hypermarket is capable of meeting the real needs of the consumers in the locale found to hold the fourth rank. These four reasons have taken the store to the growth track.

 

4 Conclusions and Policy Options

In India, Bangalore City frond to be the Most preferred destination for establishing HyperMarkets. The number of products dealt by the store goes with higher than 25000 products.Among this, the FMCGs alone accounted for 90 per cent. The Hyper Market has the name"Everyday low pricing" among the consumers and the store is capable of reducing aroundeleven per cent over the Market price of the FMCGs. Among the FMCG suppliers, the food item suppliers found to be dismal and the Non- Food items suppliers found to be on thehigher side. Though there were different brands of FMCGs, the HUL brands alone shared 67 per cent to the total and the Automatic Replenishment System is in existence with the store.Based on the demand of the consumers on FMCGs, the minimal and maximum stock of supply is decided by the procurement personnel of the store. It is found that the supplier selection, and supplier elimination are annual based and hence the vendor development programs need to be concentrated and if need be the training on procurement practices with respect to procurement functions, packaging and transportation can be thought off and structured training module can be developed and offered periodically.

 

Acknowledgement

J.S. Paarry has developed part of my research work into the paper focusing the procurement practices available with the store. The co-authors have helped me to collect the data from the store, analyzing the same and notably I have to say thanks and memorably place my sincere appreciation to the Program Director and the Research Supervisor Ms. Carrie Annabi for guiding me at every step and supporting throughout the course of the study and the dissertation process with Heriot-Watt University, Dubai. My sincere appreciation to other Professors and my friends in Heriot-Watt University, Dubai for motivating me in all respects and the HR Manager and other staff members at Coimbatore who have guided me in accessing the data from the SPAR Hypermarket store. Last but not the least, the consumers who have visited the SPAR Hypermarket for having expressed the positive aspects associated with the store.

 

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