Causes for Failure of Food and Grocery Stores in India

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Research Methodology

Literature review

Causes for failure of food and grocery stores in India.

Under the guidance of
Mr. Shiv Kumar M Belli

Submitted to: Mr. A Srinivasa Rao

Submitted by: Anshima Gupta
MFM 2010-2012

Literature review

1. Indian retail report 2009 – a detailed summary – This report talks about the opportunities and scope that the Indian retail industry presents to the world. There are a number of reasons for this like favourable demographic and psychographic changes relating to India’s consumer class, international exposure, availability of quality retail space, wider availability of products and brand communication. India’s biggest USP and asset base is its youthful population, whose appetite for leisure and entertainment is galloping at 14 % per annum.

The food and grocery segment of the organised retail industry grew at a robust rate of 55.2% in 2006-2007. And, in the overall organised retail pie Food and Grocery was the dominant category with 11.5% share. In order to reap the benefits of this opportunity a number of MNC’s are planning to invest in the Indian retail industry.

2. Summary of the data on the failure of Subhiksha retail: A number of reasons for the failure of these stores were suggested. The main reasons being the following

* Discount pricing with thin margins
* Expansion without sufficient financial backing
* Heavy investments in the stock markets followed by the global economic meltdown * Default on payments of suppliers

3. Summary of the data on the close down of Reliance Fresh: Following are the reasons suggested for their failure

* Inability to create a robust supply chain.
* Protests and demonstrations by the local vegetable and fruit vendors since they would lose their livelihood.

4. Summary of the data on the close down of Spencer’s Retail: Following are the reasons suggested...
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