FoodWorld: Pioneering Organized Food Retailing in India|Business Strategy|Case Study|Case Studies

FoodWorld: Pioneering Organized Food Retailing in India

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Case Details:

Case Code : BSTR051
Case Length : 14 Pages
Period : 1990 - 2003
Organization : RPG Group
Pub Date : 2003
Teaching Note :Not Available
Countries : India
Industry : Food Retailing

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Foodworld Story

After carrying out an extensive study on the retailing sector, RPG short-listed clothing and supermarkets as the high return areas. However, RPG recognized that the clothing business required expertise and considerable investment for designing, branding and managing independent manufacturers, while it was comparatively easier to manage supermarkets.

Therefore, RPG decided to venture into the supermarkets business. RPG decided to call the supermarket chain FoodWorld for two reasons - firstly, the name clearly signified the range of products the stores would stock, and secondly, it could be easily translated into most of the Indian languages. Following this decision, the group carried out an extensive survey on consumer attitude towards retailing (Refer Table II). The survey revealed that operating and logistics efficiencies were crucial for the success of any retailing venture and that they could be achieved only through the use of superior technology. Since RPG did not have prior experience in this field of business, it decided to take help from an experienced player...

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Establishing The Outlets

On the basis of the above information, FW defined its objective as: 'To offer the Indian housewife the freedom to choose from a wide range of products at a convenient location in a clean, bright, and functional ambience without a price penalty.'

Initially, the target customers were identified as neighborhoods that had at least 4000 households with a monthly income of more than Rs 4000. For this kind of a customer base, FW needed to start operations in a metropolitan city. Considering the fact that the cost of real estate was low in Southern India, RPG chose Chennai (formerly known as Madras) and Bangalore as the initial locations for setting up FW stores. The cities were then divided into smaller areas so that the target neighborhoods could be easily identified. Seven localities were chosen in Chennai and the first store was opened at an upper-middle-income residential area of the city, Ramaswamy Road in May 1996. RPG decided to operate on the hub and spoke model wherein it planned to have a cluster of stores across a geographical area...

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