ABSTRACTMany local supermarkets in small cities do not consider the modern inventory policies and retailmanagement techniques when it comes to administrating their business; rather they depend onprimitive and inefficient material handling techniques. In this paper we study such a localsupermarket and based on interacting with the supermarket employees and customers we makequantitative models based on the areas of improvement, like Inventory Policy, Demand Forecasting,Utilization of Space, Safety Stock, Overstocking etc. and come up with a simple collaborative modelwhich demands multilevel optimization of some of the above mentioned areas and is easy to useand implement for these local retail stores. This new proposed model will clearly define theadvantages of using it over the current model in terms of improved sales and profit. This model is ageneral model and can be implemented for all such local supermarkets.INTRODUCTIONToday the world is undergoing a paradigm shift with respect to the way in which we handlebusinesses. The transition phase is more for developing countries for various reasons, this researchis aimed at such developing countries who might find it difficult to sustain the change in which wecarryout business today. The Indian retail industry has surfaced as one of the most enterprising andfast-growing industries because of emergence several new players in the recent times along withrising income levels, growing aspirations, favourable demographics and easy credit availability. Itconstitutes over 10% of the country’s Gross Domestic Product (GDP) and around 8% of theemployment and is valued at USD 672 billion. Globally, India is fifth-largest global destination in theretail space and is growing at a rate of 12% per annum. These demographics show the importance ofstudying retail stores and their impact on a developing country like India. Here we specifically targetthe local retail stores because they are unexposed to the wonders which a new business model cando to their profits. This model will be easy to implement and optimized for the best results. Weconsider the case of supermarkets in vellore TN, The are about 30 local supermarkets in 10 kmradius to VIT vellore and most of them do not follow a model when it comes to inventory policies,demand forecasting , space utilization etc. they depend on instincts and speculation rather thanscientific methods to drive their business policies. If these local supermarkets are provided with asimple yet efficacious model, they will immensely benefit from it and will be able to cope up with thenew business trends.