Right from the time world realised the necessity for an organised market, the supermarkets became a major resource of regulatory trade. Channelisation of consumer commodities were made available through this. Due to strong regulatory necessities in western countries and the reason that all consumer necessities can be brought into one zone, which resulted in economies of scale & scope, supermarkets were able to achieve the price advantage and thus the compatitive advantage on the longer run, which resulted in their spontaneous demand.

I know what everyone would be thinking just after reading the first paragragh. There is lot more, than what you think it is. Supermarkets have become such a day-today activity that we just ignore the importance of them in our lives in general. Think about Indian retailing industry for a minute. Why is the reason that India has strong rules when it comes to retailing in India for Foreign Direct Investments (FDI). It's regulated to such an extent that any multi-national has to partner with an Indian company to enter India and at the same time give up a lot of benefits in comparision to an Indian established company, say like the Tata's. In spite of these the likes of Walmarts are awaiting an opportunity.

The reason for this is that Supermarkets have become hybrid in nature and reached such an extent that they can sell anything to everything at a premium price. I worked in Woolworths for over four months as part time employee during my first semester of my MBA and was amazed by the operations side of things. Woolworths employees the largest workforce when it comes to retail industry in Australia and also the numero uno in retailing. I must agree that most of them working with me were either students(part time as me) or people with inferior educational backgrounds. But I may have been the only guy to have worked in all departments, proving my Law of MJOA time and again.

I loved their professionalism involved for a small store, which had a turn-over of about less than 20% compared to the biggest store in Sydney. The mechanisms and models which were used were quite normal & natural but the operations were quite freeky. The whole store was divided into many divisions like Front end(Billing), Back dock(Stocks), Administration, HR, Groceries, Perishables, etc. Within all these departments there would be a specific number of people working completing the tasks involved. There were Supervisors, Two Managers, one Assistant Store Manager and a Store Manager. All these for a small store in a quite decent suburb of Sydney.

In terms of classification of competition, I thought 'Coles' was the Direct one and the 'Eleven' or the Convience Stores in which commodities costed one & half times more were the Indirect ones. These were at the surface level. The social architecture is in such a way that for fullfilling your basic needs like Cereals, Juices, Milk, Pasta, etc a visit to the supermarket is the only option so the market is huge.

Woolworths use the minimum shelf balance balance; if you are too keen in knowing the operations part and an accountant. As always when there is demand and no supply, you are going on a loss; so the vitality lies on the profit maximisation. So the social need for these resulting in having a major impact as a business. I would say, wanna make some money, open a supermarket. But again for me these may not be the best option when it comes to a longer term in India, for which I have my own views.

In the following post I will write "Why supermarkets may not become too popular in India", my view about this issue....

Filtered by sambhar....