Although distribution and retailing are consolidated in major metros through tieups of big supermarket chains with small stores, the consumer still prefers to go to grocery shops to buy the products, he said. Being in touch with every customer in his locality, the shopowner knows their choice and requirements and also offers credit facilities to important clients.

Generally, the grocer maintains a book record (khata) for all purchases and charges the customer at the end of the month. Naturally customers prefer to go to the local grocer rather than the super bazaar or departmental store which do not offer any such facility, Mukherjee said. The grocer also delivers the goods to the customer and offers discounts on retail prices ashis infrastructure costs are much lower than departmental stores, he added. FMCG marketing has undergone tremendous change beginning from the pan shop to the super bazaar and finally finding its way to the Internet which is yet to gain popularity in India, Mukherjee said.

In the south, big retail chains like Ramkrishna, Nilgiri and Spencers are slowly gaining a foothold in the market, but it will take them more than half a decade to gain the confidence of the average shopper, Mukherjee reckons. According to him, the success of supermarkets will depend on the consumers' mobility such as availability of personal transport; freebies offered on bulk purchase; and the customers' desire to finish shopping at one go. Some super bazaars are already conducting lotteries, offering prizes and discounts to attract consumers but without much success, he said.

``The price promotion of products and excess brand promotion of FMCG products will make the brand unhealthy which also cannot be avoided in a highly competitivemarket like India,'' Mukherjee said.

Following the amendment to the Urban Land Ceiling (Regulation) Act, supermarket chains should increase the number of outlets in a city to 15 in order to leverage on economies of scale like the samavayikas. However, Mukherjee feels that with the Indian consumers' preference for grocery shops, the trend is unlikely to be established before a couple of years.

Factors like diversity of market size, multi-tier complex distribution network, large number of independent retailers, a penchant for assortment, low trade margin, retail space shortage and growing power of retailers should be taken into account before deciding on the pattern of product distribution in India, Mukherjee said. The future distribution scenario will depend on real estate costs, a highly stratified market, socio-economic and cultural variations, mobility and personal transportation and economies of scale.

Some critical success factors of distribution are lean distribution, infotech usage, building along-term trade relationship, retail viability, trade-based brand equity, transportation system efficiency, geographical spread and rural markets.

A 1997 AIMS study conducted on shop-type distribution of outlets in the country reveals that grocers account for 32.4 of total sales, pan/bidi stores 14.6 per cent, food shops 11.6 per cent, general stores 10.1 per cent, electricity/hardware 6.7 per cent, chemists 5.7 per cent, cosmetic stores 3.7 per cent and others 15.2 per cent.

Commenting on the study, Mukherjee said that the options before a foreign company planning to set up a distribution network in India include building its own setup from scratch, hiring another existing network, setting up a joint venture with an existing distribution company and buying a company with a wide reach in the retail segment.