Supply Chain Activities

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Superstore or super market is now a common place for the city people of Bangladesh. Several factors are working to grab the attraction of the consumers to the superstores. Discounting, offering better service, reliable price, good environment make the consumers mind to go there. On the other hand the monetary value of this industry is growing up in our economy. Lots of people are getting involved with this industry making their live out of unemployment. In this assignment we are assigned to elicit the “Factors affecting on the emergence of supermarket in Bangladesh: A study on Agora”. We have tried our best to carry out our mission. We have got some factors then explained themselves according to the theories. We made a survey on 200 respondents to know the real scenario of this industry. The officials of Agora were asked to give their views in this assignment.

Overall idea of the supermarket industry of our economy:
The term super market is not common to the consumers of Bangladesh. In 1990s Agora make their inception in this industry a sister concern of Rahimafrooz. Since then with a strong 15-20 per cent annual sales growth, about 30 companies with more than 400 outlets have already made foray into the industry. Before the beginning this trend people were used to go to the traditional bazaar called Kacha Bazaar . They were used to bargain with the sellers they needed to check the products quality and it was somewhat hassle full activity. When the supermarket set out their business in this country things are going to change. Now-a-days people can buy their product at any time from supermarket without hassle even they can order over online and get their product home. They could get varieties of things, all under the same roof, at a price that is not too much more than the usual Kacha Bazaar price.

People are coming to the supermarkets with enthusiasm for that reason the current players are taking initiatives to expand their realm over the country. Supermarket industry in our country is in primary level, because only the city dwellers can get the services of these markets. But things are changing drastically. More outlets are being opened to the new places to meet the growing demand of the customers. According to the super store employees, hassle-free shopping environment, hygienic commodities, fresh vegetables, meat and fish at the supermarkets are the matter of getting the attention of the customers.

The supermarket biggies have attempted the massive expansion drive to attract the shoppers, who still depend on unplanned wet markets to buy their daily essentials. In this city the first superstore was established by Rahimafooz named Agora. Agora is a super shop that offers a wide variety of food and household merchandise. It has enough space to get all the necessary products and has greater amount of products than any other traditional Grocery shop. Agora comprises meat, produce, dairy and baked goods departments along with shelf space reserved for canned and packaged goods as well as for various nonfood items such as household cleaners, pharmacy products, and pet supplies. Agora is providing the services to the customers but there are complains that they charge high price for their product. But the officials of Agora claim the when the matter of quality comes in front then the customers will realize that the price is equal. The outlets of Agora are found in different areas of the city which suggests its differentiation strategy.

Nandan Megashop , Meena Bazar and Shawpno are other three super shops of the city that focus on differentiation strategy. They try to provide quality products to the consumers and as a result the price charged is a bit high. Shwapno, a relatively new player in the market, focuses on a different strategy. It claims that it offers “Everyday Low Price” policy to consumers and believes that in this way they will be able to attract significant market share within a short span of time.

As we have made our assignment on Agora so lets tell about Agora:

In 2001, Niaz Rahim the son of late A.C. Abdur Rahim the founder of Rahimafrooz initiated Rahimafrooz Superstores Limited (RSL) and launched Agora – the first ever retail chain in Bangladesh. Agora changed the lifestyles of its consumers by providing cleaner and greater services to the customers. Agora’s focus on product freshness and quality that helped Agora to gain the believe of customers.

It has worked in tandem with the Bangladesh Standards and Testing Institute (BSTI) and the Food and Sanitary Division to highlight the importance of food safety and freshness in perishables and non-perishables alike. Agora established the practice of stabilizing prices of food essentials during critical months. In a country that is fraught by high fluctuations in the prices of food – particularly during the month of Ramadan – Agora has set the example of working with its suppliers to keep prices of rice, sugar, lentils, oil and other commodities stable. At any point in time, there are nearly 20,000 different products available at Agora. Other supermarkets in the country have followed suit and given the industry increased credibility in the eyes of consumers and government alike. (‘Brand Success story of AGORA Rahimafrooz Superstores Ltd”…http://www.asiaretailcongress.com/ARC%2710-11/Niaz%20Rahim.html)

Contribution of Supermarket in our economy:

The super market industry is emerging sector in our economy, every year it keeps its contribution in our economy. Every year government receives around tk30 crore through taxes and VAT. If government can take proper initiatives and give proper support tot this industry then it may be the second largest contributing sector in our economy. The supermarket industry deals with around Tk 15,000 crore businesses (sales and buying) per year creating over 10,000 jobs.

Currently, two percent Bangladeshis consumers do prefer shopping from supermarkets while in neighboring India, five percent shoppers go to supermarkets, the entrepreneurs said. The highest 18 percent consumers in the Maldives and 14 percent in Sri Lanka go to supermarkets for shopping (http://news.priyo.com/business/2012/01/24/supermarket-sector-contributes-45894.html) According to the analysts, the chain supermarket sector will grow to Tk 20,000 crore by 2021, with the income growth of the population. And yearly growth of about 30 percent that is promising growth for this sector. The growth of supermarkets is linked with the growth of Bangladesh that aspires to be a middle-income country by 2021.Now net sales value of 400 outlets of supermarkets across the country is tk15 billion and the sector employs 40 percent of the total employment which is 10 million people.

According to the BSOA (Bangladesh Superstores Owners Association) data at present the retail market which is worth about tk 747.50 billion is growing at an annual rate of 14 percent will reach 1307.38 billion by 2015 and tk 3027.25 billion by 2021. On the other hand the super market worth about Tk 172.5 billion will reach Tk 756.8 billion by 2015 and Tk206.50 billion by 2021. And the supermarket industry has a vast possibility to grow up because the supermarkets are catering only 2.00 percent of the retail markets of the country and with the growth of economy the members of supermarkets would be 1000 and many entrepreneur would come forward to setup backward linkages like packaging and direct linkages.

Exploring existing channels of supermarket with members:
Product Categories of Agora

* Beverage

* Fish

* Fruit

* Meat

* Vegetable

* Confectionary

* Baby products

* Basic Households

* Paper accessories
Generally in case of beverage items Agora directly link with the local company such as Tamani beverage delivers the coca cola &Transcom beverage directly supply the Pepsi cola at Agora. On the other hand in Agora they have some fixed suppliers who do supply the perishable products such as fruits, vegetables, fish, and meat etc & Rarely Agora collects the product directly from the field or the fermar.In case of fruits Agora links with the local broker who do buy from the importers & supply the Agora through lot size at Badamtaly area in Dhaka. Moreover in case of baby care products & cosmetics they do often directly communicate with the mother company like that products of Unilever are delivered from the Unilever Company & sometimes they deal with the importers. As well as Agora collects their daily necessary household products from the local market & sometimes from the importers. All process in a supply chain fall into two categories depending on the timing of their execution relative to end customer demand. With push process, execution is initiated in response to a customer orders. Pull process may also referred to as reactive process. Let’s see the push and pull boundary of Agora.

Customer

Push /Pull boundary

Push strategy
Agora

Pull strategy

Third party / Mother Company

Root level Supplier

The supply chain activities of Agora is a sequence of processes and flows that take place within and between different stages and combined to fill a customer need for a product. Let’s have a look of cycle view of supply chain processes of Agora:

Customer

Customer Order Cycle

Agora

Replenishment and Manufacturing Cycle

Third party/ Mother company

Procurement Cycle

Root level Supplier

Agora’s cycle view of supply chain accomplishes with the experienced employees. For example: If the shelves of soap be vacant the outlet manager sends a product (PO) orders to the supply chain department of the Agora. The supply chain department then issue product requisition (PR) to the supplier and supplier send the products to the depot of Agora and then according to the outlet’s demand. What is the reason of being profitable of the super markets in spite of such costly management and maintenance? The answer is that the process of procurement is the crucial point of being profitable. Let’s have look of traditional kacha bazaar and super markets. The distribution channel of traditional market is following – Raw material Supplier

Manufacturer

Wholesaler

Retailer

Customers

The distribution channel of supermarket is –

Customer

Super market

Third party

Root level supplier

So, after discussing the channels of super market and traditional market we see that the existence of middleman is the reason of price hike and syndication. The emergence of super market sometimes charges the higher prices than local market due to maintenance cost and to control the product quality.

Changes in the marketing channels due to the establishment of supermarket in Dhaka city: Both the local retailers and the supermarkets need intermediaries for supplying the products they need. The changes occurred mainly in the type of intermediaries they use. Usually the local retailers don’t have their own organized wholesalers or distributors in their marketing channels. The local retailers get products from different suppliers and they often buy the products directly from the farmers or manufacturers. But the supermarkets need and they have their own organized intermediaries for their necessary products to be delivered in order to assure a reliable supply of consistent quality. It is troublesome for the supermarkets to buy products directly from the farmers or manufacturers. And it is also impossible for the small farmers or manufacturers to bring their products in tiny lots for sale to the supermarkets. Then there is the question of grading, quality and packaging.

So, it is more convenient for the supermarkets to buy from their own wholesalers or distributors the products that they need. Only 1.4% owners of the grocery shops in Dhaka city have their own distribution channel. Around 98.6% owners do not have their own distribution channel.(S. S. M Sadrul Huda, Mahmud Zubayer, Omar Faruq. Case Study – Marketing Strategies of Retail Stores: An Evaluation of Grocery Shops of Dhaka City) The traditional marketing channels are unsuitable for supermarkets in terms of the service supermarkets wish to provide to consumers. That’s why the most organized and disciplined retailers are trying to maintain their own supply chain management to bring fresh and quality products to the store. They are focusing more on strengthening their backward linkage for product availability. They are also strengthening their existing trading relationships, rather than simply increasing the number of suppliers.

Some perishable products, such as fruits, vegetables, meats and fishes are considered important by supermarkets in order to attract people to their stores rather than to competitors. It is easier to create an individual identity by such products rather than grocery products. Because the grocery products provided by every supermarkets are of the same quality. However, in order to do this the supermarkets need to be assured of a reliable supply of consistent quality. So, it is necessary for a store to receive dependable deliveries from a few wholesalers or from a centralized distribution centre than to have to worry about buying from farmers or wholesale markets on a daily basis.

Shawpno, one of the superstores of Bangladesh, is started by ACI logistic in a large scale across the country, has bought down the number of its outlets to 40 from 65 mainly due to the failure in supply chain.

“At this moment we have stopped expansion in other areas as infrastructure is not much developed in Bangladesh,” Kamal Ahmad, executive consultant of ACI said. “Supply chain is the most important and first challenge to sustain the business and retain customers,” Niaz Rahim, group director of Rahimafrooz that operates the most organized and disciplined retail shop Agora, said.

“When we started we did not grow accordingly for the supply chain; products did not come as there was inconsistency and damage of products, he said.

But 10 years is a long time to understand the customers behavior and “Now we are scaling up with our strong supply chain where we identified the farmers who really grow products.”

(Monira Munni. Case Study- Superstores focusing more on supply chain management challenge)

5. Exploring the factors affecting the emergence of super market:

There are many factors that are affecting the emergence of super market in Bangladesh.

Time Factor:
Supermarket products are adorned in nice way. Customers can get their all sorts necessary items under one roof and they can easily select or purchase their desired items. If customer goes to traditional market there need so much time for choice the product and purchase their desired product. Another cause is in traditional market products are not actually adorned, so customer need to spend many times for finding their desired product.

Price Factor:
Supermarket charge is fair and price is same for all customers. Customer does not need any kind of bargain for purchasing their suitable product. For this reason customer prefer supermarket rather than the traditional market. In supermarket they serve the product in cheap price because they purchase the product from the farmer or the root level of the product is produce.

Product sorting;
In supermarket products are assorted in elegant. Similar types of product are assorted in the near such as all kinds of grocery item are assort in the same portion of the unit, vegetable and fish & meat are near the grocery item, cosmetics are assorted another unit of the supermarket , so customer can find easily their required product.

Promotional activities: Supermarket frequently gives discount, coupon, and lottery etc promotional activities to attract the customer. In our country the superstore such as ‘shawpno’ frequently gives their advertisement in newspaper as like the compare of price of product in local market and their price. Sometimes they give discount some of the selected product for attracting the customer. Sometimes they setup banner different place like as beside the road of the residential area and near their branch for attracting
the customer.

Environment: Environment is another key factor of emerging of superstore in our country. The inner environment of superstore is clam and quite. There is no hassle in the superstore, customer can buy their desired product in a clam environment and customers are satisfied for buying the product in such environment. In our traditional market customer need to bargain to purchase the product so there create a excited environment for buying or selling the product, but in the supermarket customer can easily purchase their required product without any bargain because the price are same to all, so customer prefer supermarket rather than the traditional market.

Availability:
In superstore product are stored in many quantity, they buy the product from the farmer and the dealer so the buy huge amount of product. All kind of product is available for the customer. The supply strategy of supermarket is strong because there need to be replenishment of empty self the sales person are always alert for adorned the self. There are assorted many kinds of product in superstore. Customer can buy any amount of product from the supermarket

Guarantee or warrantee:
Supermarket gives after sales service for their customer. They give guarantee or warrantee on their selected product. So people feel safe and buy the product without any hesitation. If there any problem of their product customer can claim to their outlet and the always ready to change or refund their selling item. Having these kinds of service customer are pleased and they become loyal toward the supermarket.

Online selling:
In our country now some of the superstore gives the online selling service. Now customer can buy product by ordering through online. Customer have to access the internet go to the web site of the company and ordered their desired product. Online service is very helpful for the customer because customer can order the product from the home as well as from their office.
For the online service customer can save their time without going the superstore. Home delivery service:

Supermarket now provides the home delivery service for their registered customer. For gaining the home delivery service customer have to be registered in a club or group. Creating club or group the supermarket supervisor provides the home delivery service and sometimes they gain various discount for joining the club or group. Customers have to charge monthly or yearly for staying such kind of group.

Product quality:
Quality of product in the supermarket is very standard. Product quality is related with their fame. If they serve the normal or poor quality of product the customer are not interested for buying product. For attracting the customer they provide the unique product to satisfy the customer. After buying the huge amount of product they create category on the standard of the product.

Payment: Supermarket provides a flexible payment solution for the purchase goods. Customer can pay their bill or charge through credit card. So customer need not bear the cash money for buying the product. It is safe for the customer to buy with the credit card because they feel secure and satisfied buying the product.

Ranking among the factors that are affecting:
For initial study we conduct a survey on a group of 120 people. We selected mostly the adult customers who were just leaving the market and we collect some response the people are known to us make their market from the super market. Basically we wanted to find the factors those are affecting the emergence of supermarket in Bangladesh. Our survey was conducted by some questions that helped us to get the necessary information from the consumers and they are: 1. The income level in which the respondent belongs.

2. The types of products they buy from Agora.
3. The price level of Agora.
4. The stock of necessary products available in Agora.
5. The services provided from Agora.
6. The factors for what the shopping trends are being changed. 7. The number of time respondents goes to Agora.
8. The factors those drive them to shop at Agora.

Our research objectives were:

1. To find out the relation between income level and shopping frequency at Agora. 2. To elicit factors those are affecting the emergence of super market in our country. 3. To know the satisfactory level of customers.

Exploring the relation of shopping to the super market with residential area, occupation, family size etc: Due to the emergence of growing supermarket in our country we can see that the shopping trend that was previously into the traditional market is now changing. The traditional market is now giving its place to the supermarket. Today’s people are trying to live in the urban areas because of the amenities that are available at city’s life. Urban people are now concern about the existence of the supermarkets. They are now entering into the supermarkets more freely instead of going traditional markets. It’s not been many years when the supermarkets start their business in our country. The history of supermarkets in our country is not much ancient rather it is newly establish due to the rapid urbanization. People of different rural areas are now coming to the city for earning their livelihood. And as they are living in the city they are now getting acquaintance with the supermarkets.

The supermarkets in our country are mostly located in the urban areas; Dhaka is to be more specific. In Dhaka people are very busy in their life and they do not have enough time for shopping. The very short time which they have to shop they go to the supermarkets and saves time. The families in which both the husband and the wife are in service they are bare get time for shopping. And for them the supermarkets is the best solution. The supermarkets are not getting popular only for one single reason rather there are several factors which are responsible for that. In this stage we will explore the relationship to the supermarkets with Residential areas, Occupation and Family size: Residential areas: If we take a short look over the supermarkets of the Dhaka city we will find that all the supermarkets are located in different residential areas.

As we are dealing with the Agora we will see that it has 10 outlets in Dhaka and all these outlets are located in very expensive residential areas. Residential areas like, Gulshan, Dhanmondi, Uttara, Baily road and so on. In these residential areas, people usually have a very significant amount of income. And they are not intend to go to the supermarkets buy their daily necessaries. They depend on the supermarkets for it. From the questionnaire we can find that maximum of our respondent tick the location for the prime cause for their shopping at Agora. When a busy man sees that there is a supermarket in his locality then he rush to the supermarket for shop and thinks that his shopping problem is going to an end. Now he can shop from the supermarket and he need not to go the traditional markets. While talking with Mr. Rafiqul Alam, Branch manager of Shantinagar, he said that a huge sale is going on everyday at Agora in the Gulshan and Dhanmondi branch. These two branches are making huge profit for the Agora. Not only these two branch but also other branches which are located in the residential areas are making profit for Agora. The people of residential areas are very busy. They do not have much time for shopping. They try to shop very quickly and avoid the hassle of the traditional markets.

Location is the very important thing in shopping. We can not expect that people will go hundred miles for shopping at Agora. As residential areas people are very busy, they want to buy their every necessary things from a single shop, they try to avoid the hassle of the traditional markets, and they want to enjoy the shopping environment, they definitely need a supermarkets. And for them Agora is the best solution. Residential areas people do shop from the supermarkets rather than the traditional market. And supermarkets are also situating in a place where the people of residential areas can buy easily. Obviously we can not think of a supermarket that is located in the slum areas.

Occupation: people from different occupational areas are coming to the supermarkets for shopping. Occupation like business, service, housewife, teaching and even students are also buying from the supermarkets. Buying at a supermarket is not costlier than the traditional local markets. From the questionnaire we have found that most of the respondent is residential areas housewives. They feel comfort at the supermarkets. While shopping they enjoy the environment of the supermarkets. Another major occupational group is the service holder. They do not get enough time earlier in the morning for shopping. That’s why they prefer shopping at the evening while they return from their office. In the family where both the husband and the wife are in job they do not have much time for shopping and that’s why they prefer supermarkets than the traditional markets.

They shop in holidays and sometimes after returning from their job. And in this purpose supermarkets are the best solution. As the shopping trends are now changing due to the upgrading life style supermarkets can play a vital role in this regard. From the respondent we have found that there is a number of profession in which our respondent belongs to. Among these businessman, service holder, housewife, university teacher are mostly buy at the supermarkets. We can not think that a rickshaw puller will buy from the supermarkets. And the reason is obvious why a rickshaw puller can not buy from the supermarkets. So we can that the occupation is related with the shopping habits at the supermarkets. Family size: Family size is also a very important issue in the shopping trends from the supermarkets. From our respondent we have found that maximum respondent have small family. Basically the urban people do not have much member in their families. Most of the family here is small in size. Modern families are small and very much concern about the cost of living.

That’s why they keep their parents in village and lives in city with only wife and their children. And family size has a profound impact in the shopping trends. Large families are doing their shopping from the local markets because they have more members for that. But in a family where the husband and the wife are in service shopping from the traditional markets is not very easy for them. In this regard the supermarkets are the best solution.

Findings:
After conducting the survey we found that Agora has some Promotional activities which attract the existing and potential consumers. It has regular promotion of services, existing & new products in daily newspaper to keep consumers aware of the available products. Also Agora has some exclusive seasonal offer, price reduction, sales promotion to attract the consumers. Many exclusive products like perfume, households and fresh, basic foods are available in Agora which is priced higher than traditional market. In the time of pricing Agora is very competitive with its competitor. Agora has a vast collection of products for that reason customers can get their necessary products easily from the shelves of it. Agora buys their almost all products from the mother companies and third parties. Agora is very conscious about the product quality they don’t compromise with product quality. One of the most important thing is that when Agora get any complain from their customers they take it as a “golden gift” . They think that getting complain from customers give them the opportunities to increase the standard of their services.

Conclusion:
At the last of this assignment we can say that super market is the phenomenal member in our economy. The market players are trying to expand their business with unique services and products that is good for customers. Customers are getting the products of Agora in great quality and they can also get their product in home. But with the growing of this industry the government should come forward to help this industry to be flourished. Government should reduce the tax on import and the procedure of establishing new outlet should be easier. On the other hand there should be the

Supply Chain Activities

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