The Case of Supermarket Promotions in India

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Acknowledgement

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Table of Contents

CHAPTER 1: INTRODUCTION5

Research Background and Initiatives5

CHAPTER 2: LITERATURE REVIEW7

Incentives for Outgrowing9

Structure of Outgrowing Operations10

a)Organization11

b)Technical assistance14

c)Incentives for farmers17

Fundamentals of Success17

Major Challenges18

CHAPTER 3: METHODOLOGY22

CHAPTER 4: RESEARCH ETHICS27

REFERENCES29

APPENDIX32

Chapter 1: Introduction

Research Background and Initiatives

The rapid development of the organized food retail sector (modern supermarkets, hypermarkets and specialty stores) is a important indicator of the economic and cultural revolution that India is undergoing. According to the findings of a recent joint study conducted by the Federation of Indian Chambers of Commerce and Industry and Ernst and Young, organized retail sales will increase from the current five percent of total retail sales to 30 percent over the next 10 years. Another study by Deloitte, Haskins and Sells demonstrated that organized food retail increased at an unprecedented rate in 2007, accounting for eight percent of total retail sales in evaluation with five percent in 2006. The burgeoning buyer fondness for supermarkets has its origins in the increase of the built-up middle class. Most foremost corporate houses, multinational companies and Indian retail companies are dynamically engaged in the sector and competing for a bigger slice of the pie and this growth in organized food retail provides important opportunities, and challenges, for small-scale Indian farmers who may become preferred suppliers - or be marginalized - by this appearing food value chain (Singh Deo Datt, 2008, pp: 21).

This case study describes the experiences of one food retailer, ITC, in expanding its outgrowing activities to the fresh vegetable sector. The study recounts ITC and its incentives for outgrowing and presents the structure of its outgrowing operation and its successes and challenges. Finally, it recounts the role that GMED, a development organization, played in helping the expansion of ITC's outgrowing operations (Singh Deo Datt, 2008, pp: 32).

Chapter 2: Literature Review

ITC, one of India's largest corporations, has diversified business interests in the cigarette, tobacco, pulp and paper, hotels, IT, retail and agribusiness sectors. According to ITC's 2008 annual report, its gross turnover was 213.55 billion rupees (US$4.8 billion) and its snare earnings after levy was 31.20 billion rupees (US$.71 billion). ITC-International Business Division (IBD), one of the largest commodity traders, has set up an e-Choupal system for exactly procuring soybean, coffee, wheat, rice, grains, pulses, shrimp and other seafood exactly from farmers (FCCI, 2007, pp:210).

Choupal Fresh is a new ITC-IBD horticulture retail venture, initially conceptualized as cash and carry stores that would wholesale fresh produce mainly to pushcart vendors, but furthermore to diverse retailers and institutional buyers. The venture started with three navigate outlets in Chandigarh, ...