OPERATION OF THE SUPERSTORE CHAINS IN BANGLADESH: PROBLEMS

AND PROSPECTS

Muhammad Z Mamun, PhD

Professor, Institute of Business Administration (IBA)
University of Dhaka
&
Rafia Afrin, Lecturer
Institute of Business Administration (IBA)
University of Dhaka

Contact Address
Professor Muhammad Z Mamun, PhD
Institute of Business Administration (IBA)
University of Dhaka
Email: mzmamun@yahoo.com

June 2015

THE SUPERSTORE CHAINS IN BANGLADESH: OPERATING STATUS,

PROBLEMS AND PROSPECTS
ABSTRACT
The superstore chains in Bangladesh are mainly concentrated in densely populated urban
areas. Hassle-free shopping environment, fixed price, one stop service, brand image, quality
commodities and convenient location are the key factors provoking the customers to visit the
superstores. Most preferred superstore products are dry foods, toiletries and cosmetics
followed by dairy, confectionary and groceries items. The shoppers are found positive about
superstore product quality, and service dimensions; but they agree that the superstore
products are a bit expensive. The shoppers feel the need for more quality perishable goods.
The supply chain management is a major obstacle due to dependency on local market,
distant transportation, middlemen, etc. For management, inefficiency, pilferage, theft,
shopliftings are regular phenomena in superstores. New products lines, online shopping
facilities and home deliveries can augment the scope of superstore service.
Key words: brand image, fixed price, one stop service, quality commodities, superstore
chains
1.0

BACKGROUND

A "superstore revolution" has been underway in Bangladesh since the early 1990s. The
superstores have earned a lot of popularity among the urban dwellers in recent years.
Superstores have now gone well beyond the initial upper and middle class clients to reach the
mass market. The effects of this trend touched not only traditional retailers 1, but also the
wholesale, processing, and farm sectors. The superstore revolution is a "two-edged sword."
On the one hand, it can lower food prices for consumers and create opportunities for farmers
and processors to gain access to quality-differentiated food markets and increase income. On
the other hand, it can create challenges for small retailers, farmers, and processors who are
not equipped to meet the new competition and requirements from superstores.
The superstores spread and growth reduces the market share of traditional retailers. This
decline happens at different rates over product categories and locations. The traditional sector
in large cities especially small general stores selling processed foods and dairy products - is
declining fast, as they tend to have trouble competing with superstore chains that buy in bulk
and have economies of scale. Declines are slower among urban traditional retailers who
modernize to compete. Given that many traditional retailers are poor, it is important to help
them modernize and compete, or shift assets and skills to transition to other employment. A
number of policies can help both traditional retailers and small farmers pursue
"competitiveness with inclusiveness" in the era of the superstore revolution.
Research found that the supermarket industry has been well positioned to deal with an
economic slowdown, and industry analysts hope that it will continue to be strong in this
difficult economic environment (FMI 2001). History has proven that the supermarket
industry is traditionally one of the least-affected industries during times of slower economic
growth. Also, there are some possible silver linings for the supermarket industry in this
darkening economic cloud. Consumers are more likely to eat at home rather than restaurants
if the household budget is tight. Workers seeking employment may have more time for
shopping and cooking.

Superstore business can have great potential in a country like Bangladesh. At present in
Bangladesh some 30 companies having about 70 outlets made foray into the business. In the
early days of the business, around 500 customers would visit a superstore outlet a day, but
some 5,000 customers come to a store everyday now. Agora, Meena Bazar, PQS and Nandan
with limited number of outlets are the major superstore players. Hassle-free shopping
environment, hygienic commodities, fresh vegetables, meat and fish at the superstores are
attracting the customers in superstores. Opportunity to use credit cards is another feature of
these stores2. Fresh vegetables directly collected from the farmers are one of the factors for
increasing popularity of the superstores, though some of the customers often complain that
the perishable goods of the superstores are not always fresh in the superstores.
2.0

LITERATURE REVIEW

The supermarket model is characterized by self-service shopping with separate departments

for various consumer items, discount pricing, large-volume procurement and a centralized
distribution system. Different supermarket chains have targeted specific market segments and
concentrated on a preferred format. Some focus more on convenience by providing product
lines of small and medium stores; some concentrate more on discounts with a limited range
of own-brand produce aimed at consumers of certain social classes. Even some of the
supermarkets end with the full range one-stop formats with large, edge of town stores (Fox
and Vorley 2004). Christie (2003) has observed that the superstores are convenient in
location, efficient for weekly family shoppers, on-the-spur shoppers, single life shoppers,
and for students who are always on a budget.
Fox and Vorley (2004) has illustrated that market supremacy by food distributors and
wholesalers gave way to dominance by manufacturers, which in turn succeeded by the rise of
the integrated distributor retailers the supermarkets. The supermarkets are more prone to
have small scale suppliers so that they can buy goods at lower prices. Most of the
supermarkets have huge and centralized distribution chain. The supply chains allow
traceability to ensure safety, quality, brand differentiation, risk management, and
demonstration of due diligence. The supermarkets associative relationships involve a high
level of collaboration between retailers and their supply chains, whether food manufacturers
or fresh produce suppliers (Wrigley and Lowe 2002).
Larson et al. (2005) noted that the importance of supermarkets in the world food economy
has increased radically since early 1990s. Supermarkets are now major sellers and buyers of
food items all over the globe. Urbanization and the liberalization of the services sector have
been important facilitators of this process. Supermarkets link both producers and consumers.
Their relatively cheaper and better quality products contribute positively to the food security
of consumers through global procurement networks, stringent quality requirements and
financial muscle. The same factors, however, impact differently on producers. The suppliers
who can abide by the quality standards, quantity requirements and the business practices of
supermarkets, either alone or in association with others, benefit from these new retail
channels. They also gain easier access to export markets. Smaller and poorer producers, who
cannot meet these requirements, are left out, marginalized and often bought out by larger
concerns, experiencing impoverishment and subsequent deterioration in their food security.
Increased competitive pressures due to big chains expansion in both scale and scope
ultimately underlie the publics preference of the chain stores. The consumers go to

superstores to save on transportation and other transaction costs inherent in shopping in

multiple stores (Basker et al. 2008). Wal-Mart, for example, became customers choice due to
the convenience of one-stop shopping (Wal-Mart 1994, p. 7). In a survey (Pew 2005), it is
found that low prices (50 %), broad selection/variety (22%), and location, hours, and other
convenience factors (13%) are the parameters to choose superstores for shopping. In the
language of Betancourt and Gautschi (1990, 1988), one-stop shopping is a common
distribution service, that is, one that affects all the goods a retailer sells. That is why WalMart never compromises with its quality but at the same time never increases the price of its
products.
According to Fortune Magazine, Wal-Mart is the most popular and largest superstore chain in
the world. Wal-Mart has a very powerful distribution system which ensures regular
availability of all the products to highest number of customers (Knowledge @ Wharton
2003). It follows the strategy of offering products at the lowest and most competitive prices.
It never compromises with its quality and doesnt increase the price of product even if they
could slightly. Wal-Mart believes in long term opportunities thus concentrates on nurturing
the existing customers and reach new customers. The success of a superstore also lies in how
that can utilize its macro environment. For example Wal-Mart has great expertise in utilizing
technical knowledge in its operations. It uses RFID software to manage its inventories. WalMart is one of the companies that successfully captured the benefits of new information
technology by reengineering its entire business. Apart from that, it is very efficient in using
its resources.
The superstores are also popular because they present themselves as brands to their
customers. According to IBIS World (2008), in-house or private label brands in supermarkets
have become a significant trend within the industry. Private brands are closing in the gap of
national brands in supermarkets as merchants are using their retail power to outperform name
brand manufacturers. They are offering a limited shelf space and leasing terms and
conditions, while others simply give their own private brands preferential treatment, with
prominent shelf space and in store displays.
3.0

OBJECTIVES

The broad objective of the study is to identify the problems and prospects of the superstore
chains in Bangladesh. Specifically the study looked into i) the current operating status of the
superstore chains in Bangladesh, ii) the types of customers who visit the superstores, iii) the
strengths of superstores and their future prospects, and iv) the obstacles behind managing and
running superstore business in Bangladesh.
4.0

METHODOLOGY

Both primary and secondary data and pertinent literature is used for the study, though
majority of the data is obtained from primary sources. Primary data is collected through
survey of 196 superstore visitors of different demographic groups of Dhaka city. Interview is
arranged with six top executives of six leading superstores to receive information on the
current operating status and future prospect of superstores. The sampling procedure is a
combination of non probabilistic convenience and judgmental sampling.
A Focus Group Discussion with nine shoppers, of both superstores and other markets, has
been conducted to determine the variables and have an idea about the consumer perceptions.

After the discussion the variables were finalized to develop the coordination schema and the
questionnaire was designed based on the schema variables. The questionnaire includes open
ended, close ended, dichotomous and summated Likert scale model questions. The
questionnaire has been pretested before finalization. The questions were checked to ensure
the internal consistency (The Cronbachs Alpha value = 0.701 0.7). This research is limited
to the operating status, problems and prospects of superstore chains that are located in Dhaka
city. The lack of uniformity among the superstore chains in terms of the product and service
range makes inter-chain comparison difficult.
5.0

REPORT FINDINGS

5.1

Operating Status of Superstores in Bangladesh

The idea of all essential commodities below one roof' is the driving force behind the success
of supermarket business in Bangladesh, which saw around Tk. 200 crore 3 investments in the
last five years. With a strong 20-25 percent annual sales growth, some 30 companies having
about 64 outlets made incursion into the business in the capital. According to Bangladesh
Supermarket Association (BSA) officials there are also 15 supermarket outlets in other cities
of Bangladesh. The following subsections critically analyze operating status of superstores in
Bangladesh.
Location
Most of the supermarkets are situated in different parts of Dhaka city, the capital of
Bangladesh. The areas spread from posh to middle income household localities. Major
concentrations of the chains are in densely populated households irrespective of income
group consisting of all economic and social classes. But the major ones (e.g., Agora, Meena
Bazar, PQS and Nandan) are located in comparatively higher income end localities (e.g.,
Dhanmondi, Banani, Gulshan, Baridhara, etc.).
Customer visit and sales
The pre-launch survey indicated that the superstore chains would attract between 600 and 900
customers on a daily basis, but in reality the stores attracted between 600-2000 people daily.
So from the very first day the superstores have been enjoying warm response of the
customers. Taking all the outlets together, the major superstores fetches daily average sales of
Tk. 1.5 to 2 million. The posh area outlets do the best as it attracts a lot of customers with
deep pockets.
Product line
The superstore provides all kinds of grocery items, shoes (brand and self-manufactured),
apparel and accessories and gift items (e.g., toys, etc.). Hassle-free shopping environment,
hygienic commodities, fresh vegetables, meat and fish, frozen foods at the supermarkets are
wooing the customers. Their product line also includes bakery, toiletries, clothes, household
accessories, organic products, prepared foods, and herbal products. Apart from the essentials
some superstores usually sell, wide range of electronic products. In addition the stores also
try to attract their customers by foreign products. In number the product line varies from
1,000-30,000 items. Besides these, there are food courts and bank branches in few cases.
Some has gym and a beauty salon to make it a one-stop shopping and service center.

Inventory management system

The superstores track its inventory through software and weekly practical counts. Some of
them have sophisticated inventory management software to track suppliers and stock of items
developed by reputed international companies. For demand forecast most of the superstores
use the subjective judgment. But a few use quantitative forecasting techniques using previous
years sales data and order the necessary amount. In such cases forecasting software are used.
Quality control
Quality control drives by mobile-court against food adulteration is very common in
Bangladesh. This experience led the superstores to take necessary quality control measures.
So the management has built up a quality assurance team and reinforced their role through
different measures: a) checking the suppliers certificates and other necessary documents, b)
confirming the quality and expiry dates of the products through regular verification, c)
physical inspection of the goods, d) following strict procurement principles. Some of the
chains check inventory on regular basis, convey survey of customer satisfaction, and conduct
shelf inquiry for quality control. Even with all the measures the chains are many a time has
been penalized by the mobile court drives.
Supply chain
The superstore chains put special emphasis on supply chain management. Most of them have
created an arm that sends its staff members to various sourcing places to scour for popular
grocery products. They have contract with reputed companies (e.g., BADC and Agro
Concern, Abdul Monem Group, etc.) all over Bangladesh. Besides, some of them have set up
beef-rearing farms of their own. They take services from different distributors (100-300) and
suppliers (100-450) both local and foreign. The store applies quality dimensions to procure
the relationship with the suppliers. As the customers are mainly quality seeking in nature,
there is scope for the local growers to communicate with quality conscious chains and
promote their quality products. They sometimes arrange training or discussion sessions with
suppliers in order to show different aspects of the foreign products and encourage improving
the quality of the local products.
Fresh vegetables are directly collected from the selected contract farmers. Some grow
vegetable in its own fields. But the lions share of the supply of all goods is from contract
growers. Since they buy many items directly from the growers and thus cutting many layers
of traders, the grower gets a good price and it gives them an edge in their supply chain
management. For some products they import them directly. For perishable goods they order
every day and for other goods depending on the nature of the product they order analyzing
previous months demand. Almost all products are procured under credit through local
suppliers. But the company pays for some products, like milk - right away. They also sources
from local wholesale markets like Karwan Bazaar. Some superstores produce many of their
items in-house and have a less complicated supply chain compared to other superstores that
have to source most of their products from suppliers form home and abroad.
Staffing

The superstore chains invest a lot on human resource development. They consider it as their
competitive advantage. Their employees are highly trained and qualified. All the staff goes
through a customer service training program conducted by reputed firms and consultants.
Depending on the size the number of staffs per outlet varies from 50-150 which includes
sales persons, inventory managers, counter-stuff and branch managers.
Pricing
The super stores generally follow mark up fixed pricing method. It avoids fluctuating pricing
as it tries not to increase price on the occasion of any special events. Since they have products
in stock they do not need to increase the prices too often. And in some cases, despite buying
some products at exorbitant prices, they do not increase the concerned products price, but
rather adjust the pricing structure in keeping with the total business.
For some high-end chains, price is the secondary concern while quality is the primary one.
Because their customers are from upper-middle and high income groups, they are willing to
pay a premium for the quality goods they offer. They believe their main competitors are other
supermarkets, not kitchen markets. So they price their products higher than other markets as
long as the price is commensurate with what other superstores are charging.
5.2

Customer Distinctiveness of Superstores

Visit frequency
From the analysis, it is noted that the visit frequency followed a positively skewed
distribution with a wide range of visit (0-15). The mean visit found to be 4.06. It is observed
that majority (21.3%) of the superstore visitors usually visit twice a month (Mode). Equal
number of respondents (16.7%) visit thrice or four times a month and about 12.5% visits 5
times a month. Also a significant number (14.6%) of the respondents visit more than 5 times
a month. Interesting a small portion (2.9%) of the respondents has never visit superstores. In
comparison the local market visit also followed a more positively skewed distribution with a
much wider range of visit (0-30). The mean visit found to be 5.0. The number of visits by the
respondents to local markets are mainly once (13.2%), twice (14.9%), thrice (12.6%), and
four times (10.3%). Also a significant portion of the respondents visit 5 (9.2%), 6 (9.8%) and
7 (8.0%) times a month in the local markets.
Visit frequency and socio-economic parameters
The study noted a distinct behavioral pattern among the visitors of superstores. It is observed
that the female household members visit superstores more than the male members (=5%).
The mean visit of male and female is 2.6 and 3.75 respectively. The modal value for females
visit frequency is 4 (22.4%) whereas that of male visitors is 2 (25.4%). There is also a
significant relation between income level and visit frequency (=5%). People with low
income hardly visit superstores. The mean value of visit for people falling in the income
category of 10000-20000, 20000-30000, 30000-40000, 40000 to 50000, and 50000+ are 2.5,
2.54, 4.3, 4.23, and 4.53 respectively. Hence it can be concluded that with increase in income
the frequency of visit also increases. An inverse weak correlation (=5%) was found between
visit frequency and age ( = - 0.147) indicating superstore visit frequency decreases with
increases in age of the visitors. The visitors of age range 18-24 years ( = 4.95) and 39-45 (

= 4.53) has a higher frequency of visit followed by age group of 32-38 ( = 3.52) and 25-31
( = 3.36).
The difference in the visit pattern among different professions is observed in the study
(=5%). It is found that the students visit the most in the superstores ( = 4.89), followed by
service holders ( = 4.32), homemakers ( = 3.50) and teachers ( = 3.44). It is observed that
homemakers have a higher modal value of visit of 4 with a narrower range of visit frequency
(1-8); whereas students have a wider range of visit frequency (0-15) with a modal value of 3
(a positively skewed distribution). In case of teachers and service holders, the modal value is
2 with a narrow range of visit frequency 1-10 and 1-12 respectively. For other professionals
the visits are random, comparatively low and narrow. For example bankers mean visit is 5.17
(mode = 2, range = 2-10), physicians mean visit is 3.60 (mode = 2, range = 1-8), consultant
mean visit is 3.17 (mode 4, range = 2-4), business executives mean is 3.20 (mode = 2, range
= 2-5).
Product preference
The respondents were asked about their choice of market regarding different product line to
find out their preferred products. The responses are divided into three categories based on
customer preference: i) Most preferred, ii) Moderately preferred, and iii) Least preferred
(Table 1). Most of the respondents prefer superstore for dry foods (78.7%), toiletries (72.4%)
and cosmetics (65.5%). The next preferred products are dairy products (56.3%),
confectionary (54.6%) and groceries items (52.3%). On the contrary, most of the respondents
prefer the specialized markets for jewelry and clothing. Superstores have opportunity to
attract more customers if they maintain and make improvements on these product lines on the
basis of customer preference.
Product line
1) Dry food
2) Toiletries
3) Cosmetics
4) Dairy products
5) Confectionary
6) Groceries
7) Perishable goods
8) Gifts
9) Stationary
10) Toys
11) Crockery
12) Leather
13) Jewelry
14) Clothing

Table 1: Product Preference Category

Respondents Product
Preference (%)
78.7%
72.4%
65.5%
56.3%
54.6%
52.3%
43.1%
42%
33.3%
33%
27%
20.7%
14.4%
6.9%

Classification of Product
Line on Preference
Most preferred
Moderately preferred
Least preferred

Environment loyalty and dimension

Most of the respondents visit superstores in the localities which are clean, safe and more
concentrated with super stores (50.6%). But in general the consumers love to visit superstores

of their locality because of accessibility and convenience (74.7%). Still there are scopes of
starting superstore chains in localities at Dhaka city (e.g., Mohammadpur and Bashabo)
which has very few numbers of superstores.
It has also been found in the research that around 36.8% of the respondents stick to a
particular superstore. They are loyal in a sense that they always go to those particular
superstores. The stores are Agora, Almas, PQS, etc. This leads to the fact that particular
superstores have created their own pool of customers to whom they may depend in the future
as well.
5.3

Strengths of Superstores

Product quality, variety and availability

The customer perception about product quality, variety and availability is indexed using a 5
points Likert scale (1: strongly agree & 5:strongly disagree) in Table 2. The result shows
that majority of respondents moderately positive to the product quality, variety and
availability in supermarkets. The shoppers are found affirmative about product availability
(1.99) and product variety (2.00). They also too some extent agree that the superstore
products are a bit expensive (2.07). At the same time, the respondents mentioned positively
about the quality of the product (2.21). The respondents are happy about availability of their
expected brands (2.45) exclusive products (2.80) in the superstores. The shoppers expressed
quite indifferent view toward the quality of the perishable goods found there (2.95). Overall
the respondents expressed their satisfaction regarding the overall quality of the superstore
products (2.15).

1)
2)
3)
4)
5)
6)

7)
8)

Table 2: Product Quality, Variety and Availability

Criterion
The quality of the products in super market is better.
The supermarkets offer sufficient variety of products
The products offered are always available in the superstores.
Exclusive products are more available in the supermarkets.
Expected brands of products are available in the supermarkets.
The quality of perishable goods in the supermarkets is below standard.
The products in the supermarkets are expensive.
Overall product quality in the supermarkets is satisfactory.

Index Value
2.21
2.00
1.99
2.80
2.45
2.95
2.07
2.15

Service quality
The customer assessment of the service satisfaction was analyzed using a 5 points likert scale
(1: strongly agree and 5: strongly disagree) in Table 3. The shoppers very positively
mentioned about the ambience/ environment of the supermarket (1.20), shopping time (1.52),
employee courtesy (1.81), operation schedule (1.86) and service consistency (1.99). They
also found superstore service quite fast (2.01), accurate in measurement (2.02), responsive
towards the customers (2.06) and located quiet conveniently (2.15). Overall the customers are
found satisfied with the superstore services (2.05).
Table 3: Service quality, variety and availability
Criterion
1) The supermarkets are conveniently located.

Index Value
2.15

2) The supermarkets are more responsiveness to their customers.

3) The measurement is accurate in the superstores (like weight, package etc.)
4) The superstores render services quickly.

5)
6)
7)
8)
9)

The service of superstores is more consistent.

The superstores maintain their opening and closing time schedule
The salespersons of the supermarkets are courteous.
Shopping in the superstores is more time saving
The ambience or the environment of the supermarket is better.
10)
The customers are satisfied with overall service of the supermarkets.
5.4

2.06
2.02
2.01
1.99
1.86
1.81
1.52
1.20
2.05

Prospect, Weakness and Future plan of Superstores

Prospect for Expansion

Regarding prospects for future growth and expansion the respondents gave their view
regarding product variety and delivery. The customer assessment of the product variety and
delivery was shown using a 5-points likert scale (1: strongly agree and 5: strongly disagree)
in Table 4. The respondents believe that the product variety should be increased (1.84) and
they should provide more branded products (1.97). Interestingly the respondents think that
superstores should introduce more perishable goods (2.05). From the index value we also see
that the respondents have moderately agreed for the above mentioned statements.
Table 4: Customers view regarding product variety and delivery
Criterion
Mean Index
1) Supermarkets should increase the type of products they offer
1.84
currently.
2) Superstores should provide more branded products.
1.97
3) Superstores should introduce more variety of perishable goods.
2.05
The respondents have also mentioned of some additional facilities to be provided by the
superstores. Majority of the customers thought that the products of the super store are highly
priced and the super stores should lessen the price. The second highest majority mentioned
the need of guarantee of products. Specially, the perishable goods have lot of complaints. So
the customers think that the superstores should provide guarantee for its products quality.
Others include imported food and other items, increasing the number of cash counters and the
space of the isles, online shopping opportunity, home delivery service, and car parking
facility. If the superstores are able to explore the following criteria then they will be able
cover wider customer base.
Problem and Weakness
The study has identified various weaknesses of superstores. Consumers mentioned that the
supermarkets products are expensive. They also agreed that quality of perishable goods
provided by the supermarkets is not quite satisfactory. Apart from that they think that the
brands provided in the superstores are not adequate. There are high demands for imported
products in the superstores which they are unable to provide. In addition most of the
superstores do not cover extensive product lines. They mainly focus on daily consumer
products, groceries, cosmetics and toiletries. Electronic items, entertainment items (e.g.,
music albums, DVDs, etc), food courts, gym, etc., are not available there. The reason behind
this is that since these facilities are more capital intensive, they will need stricter monitoring

and intensive maintenance. The superstore authorities will have to appoint staffs with
technical knowledge so that they can maintain these products properly to ensure that. Because
of these factors they are reluctant to introduce these units.
According to the superstore managers another important obstacle they face for managing the
superstores is maintaining the supply chain. As they have to ensure the quality to their
customers they have to be selective about the places they buy their goods. Apart from that
most of the superstores are unable to provide quality perishable food items. The reason
behind this is that they have to rely on local market, transport facility, middlemen, distance,
etc., which are highly erratic, inconsistent and unreliable. Starting a new outlet is also an
obstacle to them. According to them to expand their business they often do not find adequate
space to open an outlet. As a superstore takes considerable amount of space they often do not
find adequate place to open another outlet in the high demand areas. Internal control and
management is also a major problem for superstore operation. For management inefficiency
pilferage, theft, are regular phenomenons in superstores.
All these obstacles results into loss of profit and thus lesser customer coverage. Some of these
obstacles are not easy to overcome. Superstores should place more emphasis on these factors,
to whatever extent possible, to overcome their weaknesses.
Differentiation tools
The respondents were asked to state their preference characteristics of superstores (Table 4).
As noted the most important factors are fixed price (42.5%), one stop service (41.4%), and
brand image (39.1%). Next in the list come convenient location (28.7%), security (16.7%),
and car parking (9.8%). On the other hand, free offers (5.7%), electronic payment system
(6.3%), transport availability (4.6%), Discount (3.4%), entertainment (2.9%) and membership
facility (1.7%) are found to be not so important factors. This shows that fixed price, one stop
service, brand image and convenience of location are the key factors provoking the customers
to visit the superstores mostly.
Factors
1) Fixed price
2) One stop service
3) Brand Image
4) Convenient
location
5) Security
6) Car parking

Table 5: Superstore Preference Characteristics

Customers
Factors
emphasis (%)
42.5%
7) Free offers
41.4%
8) Electronic
payment
system
39.1%
9) Transport availability
28.7%
10) Discount
16.7%
9.8%

11) Entertainment
12) Membership facility

Customers
Emphasis (%)
5.7%
6.3%
4.6%
3.4%
2.9%
1.7%

Future plan
The prospect of the supermarket industry is based on the key companies future plan of
expansion. Most of the leading superstores strategy is to build a brand of their own-chain as
a Basic Departmental Store of International standard all over the country. They consider all
the 150 million people of Bangladesh as their potential customers and the company would
strive to reach as many people as possible in the next few years by setting up more branches

across Bangladesh. They also want to give their franchise in foreign countries. So initially
they started with huge investment under suppliers credit (Tk. 20-200 million).
So far, other markets have kept the big bite of the market share. At the stage of expansion of
the superstores as market leader, they will be interested to dictate a lot in terms of pricing,
other supply terms and products that the customers cherish. So, they want to add more
products to the shelves in future (e.g., clothes and accessories, furniture, gym, entertainment
lounge, beauty salon, food court, etc.) to make it a one-stop shopping and service center.
Most of the superstores perishable department has a not-so-bad reputation. To strengthen it
further, most of the superstores have a plan to set the whole supply-chain system which will
enable them to source from the growers directly with minimum time and maximum freshness.
They also intend to reduce the middlemen involvement to pass on some of the premiums to
the growers so that the economic impact will come from bottom-up, i.e., famers would be
primary beneficiaries.
Although the chains are fully funded by the local entrepreneurs, some see a possibility of
foreign investment. One has already started negotiation with a foreign company and it could
make huge investments in the equity share of the company. Also some of the companies are
facing difficulty in managing their stores in light of high competition and saturation. So they
are taking a cautious approach in this regard and not going for immediate expansion.
6.0

SUMMARY, CONCLUSION AND RECOMMENDATION

Superstore is a growing industry in Bangladesh which had over Tk. 20 million investments in
the last five years. The superstore business is expanding spatially with the increasing numbers
of superstores and their customer base. The study tried to identify the problems and prospects
of the superstore chains in Bangladesh by surveying superstore managers and shoppers.
Major concentrations of the chains are in Dhaka city and in densely populated urban areas.
The stores attracting between 600-2000 people daily, far from their expected number. The
major superstores fetch daily average sales of Tk. 1.5 to 2 million. In number the product line
varies from 1,000-30,000 items. Hassle-free shopping environment, hygienic commodities,
fresh vegetables, meat and fish, frozen foods at the supermarkets are wooing the customers.
The superstores track its inventory through software and weekly practical counts. Some of
them have sophisticated inventory management software to track suppliers and stock of
items. To ensure quality they check the suppliers credentials, monitor quality and expiry
dates, physically inspect the goods and try to follow strict procurement principles. Some of
the chains check inventory on regular basis, carry out survey of customer satisfaction, and
conduct shelf inquiry for quality control. The super chains emphasize on supply chain with
various reputed sourcing places. They also take services from different selected distributors
and suppliers. For some products they import them directly. For perishable goods they order
every day and for other goods depending on the nature of the product. Almost all products are
procured under credit through local suppliers with few exceptions, like fresh milk.
The superstore chains invest a lot on human resource development. Their employees are
highly trained and qualified which includes sales persons, inventory managers, counter-staff
and branch managers. Depending on the size the number of staffs per outlet varies. The super
stores generally follow mark up fixed pricing method. For some high-end chains, price is the
secondary concern while quality is the primary one. Because their customers are from upper-

middle and high income groups, they are willing to pay a premium for the quality goods they
offer. Most of the respondents prefer superstore for dry foods, toiletries and cosmetics. The
next preferred products are dairy products, confectionary and groceries items. On the
contrary, most of the respondents prefer the specialized markets for jewelry and clothing. It
has also been found that the superstores have created their own pool of significant customer
group who visits them regularly.
It is noted that the visit frequency followed a positively skewed distribution with a wide
range of visit (0-15). The mean visit found to be 4.06. The shoppers visit local markets more
than the superstores. The mean visit found to be 5.0. It is observed that female household
members visit superstores more than the male members. The visitors of age range 18-24 years
and 39-45 has a higher frequency of visit in the superstores. People with low income hardly
visit superstores. Higher income bracket people visits the superstores more. It is found that
the students visit the most in the superstores, followed by service holders, homemakers and
teachers. An inverse relationship between superstore visit frequency and age was observed.
Most of the shoppers visit superstores in the localities which are clean, safe and more
concentrated with superstores. But in general the consumers love to visit superstores of their
locality because of accessibility and convenience.
The majority of respondents are found positive about product quality, availability and variety.
They also too some extent agree that the superstore products are a bit expensive. The
respondents are quite happy about availability of their expected brands and exclusive
products. Still the respondents deem that the product variety should be increased and provide
more branded products. The shoppers expressed quite indifferent view toward the quality of
the perishable goods but they think that superstores should introduce more quality perishable
goods. The shoppers very positively mentioned about the ambience/ environment of the
supermarket, shopping time, employee courtesy, operations schedule and service consistency.
They also found superstore service quite fast, accurate in measurement, responsive towards
the customers and located quiet conveniently. Overall the customers are found satisfied with
the superstore product and service.
According to the superstore managers supply chain management is a major obstacle for
superstores management. In the process they have to rely on local market, transport facility,
middlemen, distance, etc., which are highly erratic, inconsistent and unreliable. Starting a
new outlet is also an obstacle for them due to unavailability of adequate space, especially in
the high demand areas. Internal control and management is also a major problem for
superstore operation. For management inefficiency pilferage, theft, are regular phenomena in
superstores.
The study noted that there is ample scope for more superstore outlets in the country. They
should segment their market for different groups on the basis of price, product, variety and
brand. To respondents fixed price, one stop service, brand image and convenience of location
are the key factors provoking the customers to visit the superstores mostly. They can think of
adding new lines of products and augment their scope of service by providing online
shopping facilities and home deliveries.
Notes
1

The traditional retailers are localized grocery shops with small capital and selected
consumer goods catering the needs of the households in their locality.

2
3

The use of credit/debit cards is still limited in Bangladesh. In very few places the uses of
these cards are seen, one of them is superstores.
Taka (Tk.) is the currency of Bangladesh. $ 1 = Tk. 80.00.

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