1. Today the field of marketing performs in a very competitive world, which is like a battle field fighting with each other to attract customers in the forms of new company or due to a lapse of customers. Many different of customers are needed in order to sustain the brand as well as the company in the market.

2. Opposite to traditional business practices there is a huge extent of synergy that is needed while the raw materials are supplied for the process from the plants. Thereafter, it will go to the hands of the end consumer and this chain of distribution constitute with the numbers of the independent organizations.

3. These parties operate in channels of many kinds of degrees which contribute to a wholesaler at one time and a retailer in another time. In addition, the importance of a strong retail sector is a must for any country to distribute the benefit of the economic process that has taken place in the country itself. Therefore, the retail sector has become a necessity of any society.

4. The supermarket concept was initiated in Sri Lanka with the departmental store namely of Cargill’s and Millers, which was during the colonial period of Sri Lanka. The supermarkets initially started in 1980’s but the expansion appeared from 2000 onward. Today, the supermarket industry is at the growing stage of its industry life cycle. (Wanninayake and Randiwela, 2007)

There are around 600 supermarket outlets. The major outlets offer i.e. FMCG products [1] . The major supermarket chains that are dominating the industry are; Cargill’s Food City and Keels super. In addition to the above major supermarket chains there are other supermarket chains such as Sentra, Kings Super, Arpico, Sun Up, Park & Shop, Crystal and Prince Super to name a few. In addition to the major supermarket chains, there are a lot of single owner, self service and retail outlets operating all over the country.

5. Retailing is an industry that has been growing rapidly over the past decade and is also contributing a significant amount for the Sri Lanka’s GDP. There are several major supermarket chains that have emerged, especially for food and grocery items. The supermarkets are and have been popular over the past. The private supermarkets chains are rapidly growing in the country and are driven to urban areas and as well as in the past five years the supermarket concepts have expanded to the city limits. This has taken place due to the changes of lifestyles of the retail customers and due to the new social circle of the wealthy people in the outstation areas. The newly acquainted lifestyles of the people require them to seek such services. (Wanninayake and Randiwela, 2007)

6. In the Western Province there are number of supermarkets that has been already established and the grocery owners are a little bit scared about whether their will be a collapsed with the starting of the supermarkets. However, the customers are still patronising the traditional groceries.

CHAPTER 02

METHODOLOGY

STATEMENT OF THE PROBLEM

1. There are number of supermarkets that have been already established and the grocery owners are a little bit scared about, whether there will be a collapse in the groceries with the starting of the supermarkets. However, the customers have not totally ignored the traditional groceries. The Sri Lankan retail market customers use presently both the grocery stores as well as the supermarkets. Both the supermarkets and the groceries are facing a greater danger of switching the customers among the supermarkets and the groceries. The strategies adopted by the groceries are to introduce the supermarkets and the strategies adopted by the supermarkets are to copy the groceries. The retaining of customers is either a matter of surviving or destroying both supermarkets and groceries.

Our issue can be defined as;

“To what extent has the supermarkets replaced the marketing assortment elements offered by grocery shops for the retail consumers in Sri Lanka.”

RESEARCH HYPOTHESIS

Marketing element mix offered by the traditional grocery shops for the retail customers has not fully replaced by the Supermarkets in Sri Lanka.

SCOPE OF THE STUDY

3. The focus of the research is to find out whether the supermarket culture has an impact on their customers behaviour towards the traditional grocery shops in Sri Lanka. The scope of the study is limited to geography and 100 retail customers have been selected from the Colombo District, Western Province of Sri Lanka. The method of the study chosen is convenience sampling design.

JUSTIFICATION

4. Sri Lanka is still on the convenience store phase with marketers like Keells and Cargills and expanding supermarket chains to more towns in the country. The supermarkets two or three years ago were limited to the capital. (Stanton, J 2010) Most local supermarkets focus on groceries and food items. The groceries were the main retail distributor for decades in Sri Lanka and the major source of FMCG for the retail customers. The grocery owners were a little bit in fear about whether there will be an end with starting of the supermarkets. The customers used both the sources and the customers who went to supermarkets came back to the grocery store again. While a number of supermarkets chains have increased there is no evidence to find out if a significant number of groceries have closed down. Also some of the grocery stores do practice operations in similar fashion to the supermarkets. These incidences promote the researcher with interesting study material “to what extent the supermarkets have replaced the marketing assortment elements offered by the grocery shops for the retail consumers in Sri Lanka.”

GENERAL OBJECTIVES

5. To identify how the customers recognize the mix of the marketing elements arrangements by the supermarkets and the grocery shops.

SPECIFIC OBJECTIVES

6. The specific objectives are;

a. To study the present situation of the grocery shops.

b. To study the present situation of the supermarkets in Sri Lanka.

c. To evaluate the customer satisfaction of the mix of marketing elements within the supermarket and the grocery shop.

ORGANIZATION OF THE PAPER

7. The first chapter introduces the Subject and the Objectives. The chapter two consist of the Hypothesis, Statement of the Problem, Scope of the Study, Data Collection, Methods, Sampling, and Limitations. The chapter three contains the Constraints and Literature Review. The chapter four contains the Findings, Statistics. The chapter five is about Discussion and Arguments. The chapter six contains the Findings and chapter seven is the Conclusion and the Recommendations will be included in chapter eight.

METHODS OF DATA COLLECTION

8. The primary data gathering is done by using a survey method. The convenience sampling method is used with a help of a questionnaire. The sample for primary data gathering is from the retail customers of the Colombo District in Sri Lanka.

Primary sources will include interviews, focus group discussions with a several consumers and economists.

b. Secondary Sources of information is gathered from the Annual Reports of the Central Bank of Sri Lanka and from relevant web sites.

SAMPLING

9. From the total population that consists of all the retail customers in Sri Lanka, a sample of 100 respondents were selected using the convenience sampling method from the Colombo District, which represents the highest number of groceries and supermarkets in Sri Lanka.

LIMITATIONS

10. The availability of time to conduct this research was only 3 months. In depth results could be obtained if research time period was extended. The sample size was limited only to 100 respondents and the scope of the research was limited only to the Colombo District.

CHAPTER 3

LITERATURE REVIEW AND THEORETICAL FRAME WORK

HISTORY OF SUPERMARKETS

1. Supermarkets existed in Latin America from at least the 1960s, but began to grow more rapidly in that region during the economic boom and opening of the Foreign Direct Investment (FDI) in the 1990s. The growth of it began later in East/South East Asia and the Central Europe. (Reardon at al., 2004)

2. A more cautious view regarding the likely rate of supermarket expansions were expressed early in Asia and over the past two years in Asia, Africa and even Latin America. Goldman et al., 1999.Despite that city’s developed economy; they attribute this strength to these traditional markets’ and the adoption of consumer shopping habits. Goldman (2000) was one of the first to identify consumers’ “selective adoption” of supermarkets, whereby the “consumers who regularly shop in supermarkets continue to purchase fresh food at the traditional outlets”; these findings echo those of others showing continued retail diversity even where most supermarkets have expanded. Maruyama et al.,2007, also see strong growth, but cite serious challenges for supermarkets into lowering their prices and enhancing the convenience of their location, both of which are key factors for the great mass of consumers in Africa and Asia.

RETAIL PERFORMANCE IN SRI LANKA

3. In 2009, all major sectors of the economy contributed positively to the economic growth. The largest contributor to this is the wholesale and retail trade sub-sector, meanwhile, the services sector recorded only a growth rate of 1.1 per cent during the first half of 2009, this was largely due to the contraction in the wholesale and retail trade and the hotels and restaurants sub-sectors, amidst the overall slowdown of economic activity.

SUPERMARKET SECTOR OF SRI LANKA

4. The supermarket concept was initiated in Sri Lanka with the departmental store namely Cargill’s and Millers, which was during the colonial period of Sri Lanka. The supermarkets initially started in the 1980’s but after year 2000 onwards, the expansion appeared. Today, the supermarket industry is at the industry’s growing life cycle stage. (Wanninayake and Randiwela, 2007)

5. In the last ten years, a major improvement in the retail sector has been observed in Sri Lanka. The super-marketing has come to stay together with the excellent footwear, clothing and electronic retailing norms amongst others. The traditional trade (kade’s) has also been upgraded, in order to compete with the modern retailing norms. The Sri Lankan consumers have been influenced by the Western lifestyles and hence, now demand a greater convenience. The supermarkets and other modern trade outlets offer a wide range of products under one roof. Hence, the consumers need of greater conveniences are met. The consumers also demand good quality products at affordable (value-for-money) prices. The modern trade is in a great position to fulfil this requirement as well. The majority of consumers patronizing the modern trade outlets are upper and upper middle class income earning consumers. These consumers are more “brand” conscious and hence, are able to fulfil this need by shopping at supermarkets, hypermarkets and other modern retailers. The consumer lifestyles are also changing with a greater degree of westernization, a comfortable shopping experience is desired. Hence, the modern retail formats can provide this consumer requirement.( Perera,P,2010)

CUSTOMER SATISFACTION AND DEFECTION ATTRIBUTES IN RETAILLING FORMATS

6. A study by Theodoridis et al., 2009 to extend the test of the functional relationship between store image attributes and customer satisfaction in the market environment of Greece. Store attributes appear to be significant determinants of customer satisfaction; pricing and products-related attributes were equally significant in all four groups.

7. Smaller grocery