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A Review of Customer Preference towards Organized Retail Stores Mr. Sunil Atulkar

Research Scholar

Department of Management Studies

Maulana Azad National Institute of Technology

Bhopal (M.P.)

Dr. Bikrant Kesari

Assistant Professor

Department of Management Studies

Maulana Azad National Institute of Technology

Bhopal (M.P.)

Abstract: Retailing in India came with evolutionary patterns from kirana store to super market. Initially it was un-organized, and after that it is

carried forward and now it is growing organized sector such as supermarket, hypermarket, malls etc. The paper tries to find out the

preference of the customer towards organized retail sector and how customer behaves at the time of product purchase. On the basis of

research review of existing literature researcher shows that the availability of quality, retail space, wider availability of products and

brand communication are some of the factors that are driving the organized retail in Indian will directly or indirectly affect the

preference of the customer. This study shows that some of the specific elements like product information, customer involvement,

atmosphere, customer attributions and choices play important roles during various stages of the customer decision process. So customer

are now showing preference for shopping malls, enable them to shop variety of products under one roof with shopping experience in

term of ambience and entertainment.

Key Words: Retailing, unorganized retail, organized retail, customer preference

INTRODUCTION Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers are part of an integrated system called

the supply chain. In simple term retailer purchases goods or products in large quantities from manufacturers directly or through a

wholesaler, and then sells smaller quantities to the consumer for profit. Retail is an emerging sector in India so the marketers are

influencing the customer by offering them in a variety of product in different ways, at various locations, in various forms resulting in

emergence of different retail formats. Customers are highly influenced by image of the retail outlet, its attributes, product range,

variety, services, employee’s behavior, décor, music and marketing strategies. Retailing can be done in either fixed locations like stores

or markets, door-to-door or by delivery. There are two differ types of retail outlets operate in the market first one is organized retail which refers to the sectors undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include

the corporate retail formats of the exclusive brand outlets, hypermarkets, supermarkets, departmental stores and shopping malls.

Another is unorganized retail which is traditional formats of low-cost retailing, for example, hand cart and pavement vendors, mobile

vendors, local kirana shops, general stores, convenience stores, hardware shop, small retail businesses in apparel, electronics, food etc.

New retail formats are growing at a rapid pace in India. The retail sector is controlled by traditional and modern retail formats. These

formats have emerged and developed with the growth of population in India. Organized retailing is witnessing a wave of national and

international players experimenting with various retail Formats. There remains a need among Indian businesses to understand the

changing behavior of customers towards shopping in organized retail outlets. The changing customer preference variables like values,

activities, interests, opinions, motives and lifestyles have contributed immensely to the growth of organized retail store formats such as

convenience stores, discount stores, super markets and hypermarkets etc. Organized retailers actually work as a retail outlet catering to

varied needs of the customers. The purchasing pattern of the customer has changed recent days. Customer’s buying behavior is

influenced by social factors, such as the group to which the customers belong and social status. In a group, several persons may interact

to influence the purchase decision. Change in consumption pattern is due to Lifestyle, income of middle age, population in big cities is

rising rapidly and easier access to credit. Drastic change in the behavior of the consumer, in the view of growing economy, earning

capacity, less time and fast track life, have to face emerging challenge for the organized retail in India.

Customer Preference:-

Customer preferences are defined as the individual tastes, as measured by utility, of various bundles of goods. They permit the

customer to rank these bundles of goods according to the levels of utility they give the consumer. Customer preference in India is

almost changing and creating a tremendous potential for the retail industry to look for innovative ideas and bring in new products with

creative marketing approach to tap the huge working population. New modern retailing concepts of western trends has entered into the

retail market in India; in the form of active shopping centers, multi-storied malls and the huge complexes that offer shopping,

entertainment and food all under one roof are also called organized retail.

A Review of Customer Preference towards Organized Retail Stores

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Understanding about customer preference is essential for retail managers because it enables them to identify and target those customers

who are most likely to purchase and retailer can focus on explaining retail support with respect to various elements like location of the

store, frequency of customer to visit store and store choice preference. The success of the organized retail store depends on the way the

retailers would create and deliver the value to the customer through their distinct retail formats. The organized retail sector is all set to

witness maximum number of large format malls and branded retail stores in different cities of India, with everything from groceries and

vegetables to footwear, apparels, cosmetics, furnishings & home decors available under one roof. Organized retail stores like super

market, hyper market, malls are not merely points of sales for different retailers but it is a place where several brands build their equity

in coming together. Their main purpose is to focus on the target audience and increasing the footfalls in these retail formats. The

organize retail formats are still in nascent stages in India when compared to developed and other developing countries. The retailing

sector in India has undergone significant transformation in the past 10 years. For the current generation of customers, the meaning of

shopping has changed because the decision making is more complex and even more important for consumers today than in the past. The

changing consumer taste and preference, increasing disposable income and the propensity to spend are some of the factors affecting the

changes in the retail scenario in India. Some of the factors that affect store choice and attract customers towards shopping centre include

space, ambience, entertainment and convenience and moreover a range of product in a particular place. The growth of shopping malls,

retail chains and multi-brand outlets is evidence of consumer behavior being favorable to the growing organized segment of the

business.

Literature Review: Vidushi Handa, Navneet Grover- This paper provides detailed information about the growth of retailing industry in India. It examines

the growing awareness and brand consciousness among people across different socio-economic classes in India and how the urban and

semi-urban retail markets are witnessing significant growth. It explores the role of the Government of India in the industries growth and

the need for further reforms. The paper includes growth of retail sector in India, strategies, strength and opportunities of retail stores,

retail format in India, recent trends, and opportunities and challenges. This paper concludes with the likely impact of the entry of global

players into the Indian retailing industry. It also highlights the challenges faced by the industry in near future.

Medha Kanetkar- The study shows that there is no doubt the world is changing and consumer behavior is evolving faster than what

would have normally expected. Consumers and producers are brought together electronically in ways we have never before experienced.

One of the most exciting aspects of the new digital world is that consumers can interact directly with other people who live around the

block or around the people.

Lakshmi Narayana K, Ajata Shathru Samal and P Nagaraja Rao- The concept of retail is primitive in Indian context. We had Grocery

stores, medical stores and lot many other stores working surprisingly well all over the country. Recently people are getting idea of the

traditional stores going to be vanished. But just to remind us, we should never forget how deep rooted is this old concept. The very

modern organized stores have taken the idea of retailing nowhere else then from these old shops.

Dhruv Grewal, Kusum L. Ailawadi, Dinesh Gauri, Kevin Hall, Praveen Kopalle, Jane R. Robertson: - This article synthesizes recent

advances in pricing and promotions findings as they pertain to enhanced targeting, new price and promotion models, and improved

effectiveness. A retail business model articulates how a retailer creates value for its customers and appropriates value from the markets.

Innovations in retail business models are increasingly critical for building sustainable advantage in a marketplace defined by unrelenting

change, escalating customer expectations, and intense competition.

Nancy M. Puccinelli, Ronald C. Goodstein, Dhruv Grewal, Robert Price Priya Raghubir, David Stewart- This study seeks to enrich this

understanding by providing an overview of existing consumer behavior literature and suggesting that specific elements of consumer

behavior—goals, information processing, memory, involvement, attitudes, affective processing and customer attributions and choices

play an important role.

Urvashi Gupta- This study was conducted for the purpose of understanding the changes taking place in the minds of consumers towards

modern retail formats and traditional retailers. It was observed that due to the changing demographics, urbanization, and awareness due

to electronic media especially internet the customers have multiple options to choose from modern retail outlets to neighborhood shops.

Majority of the consumers are visiting organized formats for variety, easy availability, cleanliness with additional facility of

entertainment for children and convenient parking facility and restaurant etc. In case of unorganized outlets immediacy of the store,

credit and bargaining facility balance the tilt. Unlike higher age groups who prefer to visit Kirana stores, the younger generation has

more inclination towards organized retail. Both organized as well as unorganized retailers need to add value added services to make the

shopping experience more comfortable and value oriented.

Suman Yadav, Sadaf Siraj, Richa Arora- This paper highlights the research done in last two decades on customer patronage behavior in

shopping mall and identifies areas for future research with India as focus. Organized retailing is changing the whole concept of shopping

in terms of consumer buying behavior. Shopping today is much more than just buying – it is an experience itself. The retailing business

in India has witnessed huge growth due to emergence of supermarkets as well as centrally air-conditioned malls. The Indian consumer is

A Review of Customer Preference towards Organized Retail Stores

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changing rapidly. They now have a choice of wide range of products, quality, variety and prices. Consumer are now showing preference

for shopping malls, which enable them to shop variety of products‘ under one roof.

Kameshwar Mishra, Abhinav Kumar Shandilya-The Study shows that people use to purchase their daily needs in small quantities from

the retailers whenever required and the retailer keeps a stock on behalf of consumers to meet the demand. With the change in

demography and preference, the expectations of customers are changing and it is a continuous process. The purchase experience of the

customers not only evaluate any outlet on the basis of goods available but the evaluation is based on a mix of goods available, comfort

of purchasing, the quality of time spend in the outlet and many more. The increasing demand of organized retailing in urban areas with

continuous changing customer expectation.

Customer’s Preference towards Organized Retail Stores: Studying various literatures this review shows that the presence of organized retail stores in the market shift the preferences of

customers to various organized retail formats. The demographic profile of the customers, family attributes and income profile of the

customer play a major role in the selection of various retail formats for product purchase. It has been observed that due to the changing

demographics, urbanization and awareness through electronic media especially internet the customers have multiple options to choose

retail outlets. Majority of the customers are visiting organized retail for product variety, easy availability, cleanliness with various

additional facility like entertainment for children and convenient parking facility and restaurant etc. Researcher also analyzed that the

quality of the service is very much important for building relationship with the customers. Some of the major factors identified for

ascertaining service quality are price, brand name, store name, promotional tools etc. Some researchers categorized these factors as

physical aspects, reliability, problem solving, retail policies and personal contacts. Some others named them as tangibles, reliability,

responsiveness, assurance and empathy. It is also found that customer expectations, perceptions should be closely related with quality of

services offered by the retailers. Now a day customers purchasing decisions is based on the perception about the brand, rather than

reality of the product. Indian customers have various choices of international brands to purchase, but the Indian customers are very

choosy in selecting the brands and especially in the consumer durables. Customers make their purchasing decisions on the basis of the

value perceived by the service package being offered by the product, rather than simply their current levels of satisfaction. Customer

preference is very much associated with service quality offered by the retailer because the Indian market comprises of three different

types of customer such as high class customer having tremendous purchasing capacity, middle class having adequate purchasing power,

and the lower line customer have low purchasing power. Big retailers would not reach up to the lower customers, so they focused on

high and middle classes customers because the average people in India have to purchase the product in cheaper rate and it have the

quality as well as quantity also. Such behavior of customer has made market much more competitive, but it has many prospects, so the

big companies like ITC, Big Bazar, TruMart, Reliance etc. have jumped into the retail market. These companies trying to attract

customer by providing the products in discount rate, less than MRP, certain gift hampers, free product on purchase etc. This methods or

schemes of attracting the customer by the organized players create huge competition for unorganized retail to maintain customer‘s

confidence.

Factors behind Consumer Attractiveness After studying various literatures some of the factor has been found that customers are more attracted towards organized formats. First

factor is Brand name because the customers have the more attraction toward Brand name. Brand Name of product or company is a status

symbol which creates positive image of the product and loyalty in customer mind as well as in the society. Second factor is the

reputation of retailer‘s as it is specific when it applies to a variety of products carried within the store. The reputation of product is

measured by product quality, quantity, inbuilt features and further purchase from the customer point of view. Another factor is the Price

because various retail store formats arrange, discount offers, lottery, free samples, gift voucher, buy one get one free, etc. Maximum

middle class customers are price conscious and have limited budget for the purchase. Promotional tools also act as driving factor in

favor of these new formats. The author personally experienced in Bhopal city where DB mall, C21 mall, Reliance fresh,V-Mart, Vishal

Mega mart etc. arrange attractive promotional activities using print and

electronic media to attract toward purchase from organized retail stores. They also sometimes do celebrity endorsement and organize

events, live shows in these shopping complexes. Friends‘ influence and words of mouth work a lot in promoting these retail stores.

Service quality is also excellent in these stores and these formats also facilitate with parking, entertainment, fooding, shopping, safety

measures and billing system etc. It is investigated that modern retail developments and growth of modern formats are taking place in

India and challenges & opportunities are available to the retailers to succeed in Indian retail market and retailers need to innovate in

designing the value proposition, deciding the format to deliver to the customer and also strive to serve the consumer better, faster and at

less cost.

Traditional retailers are upgrading their shops similar to branded showrooms in specialty stores, discount stores, convenience stores,

departmental stores etc. It is a matter of debate to whether Indian unorganized retail stores would be able to survive in the face of

competition from organized retail format. Although traditional retail currently constitutes over 90% of the total sales in the country,

A Review of Customer Preference towards Organized Retail Stores

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ISSN: 2320-8236 VOLUME: 2, ISSUE:3 JULY- SEPTEMBER 2014 www.ircjournals.org www.ircjournals.org

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unorganized retail format that are unable to compete with new age retailers in terms of Brand, product variety and services that effects

the volume covered by unorganized retail in several parts of the country. It is found that traditional players are enjoying the retailing

business in the rural part of the country because the major part of Indian population lives in rural area. But now the organized retailer the

big global players aim at catering the rural market also. Changes in the consumer behavior, is bringing about change in retail industry, as

India migrates from the unorganized to organized retail. Manufacturers believe that organized retail would benefit society at large, more

so the end customers in terms of better product variety, features and price. More employment opportunities will be generated by the

orgsnised retail in India. Manufacturers believe that both modern and traditional retailers will co-exist in India for some time to come, as

both of them have their own competitive advantages. The unorganized retail has a low- cost structure, convenient location, and customer

closeness. Modern retail offers product width and depth and a better shopping experience. As the Indian economy currently growing,

rising consumption and the lesser availability of retail space in India, organized retailing is here to stay, but it will never replace the

existing unorganized stores. Organized retail store provide Beautiful interiors with entertainment facility, extremely pleasing ambience,

huge gaming zone where kids can utilize the time at the optimum, malls are always being constructed at prime location and in high

profile areas. The changing trend, convenience of shopping, getting variety, modern decoration, location of retail outlet, word of mouth

publicity and attentive services of salesperson under one roof attracts and induces people of all age group to frequently visit these

modern retail formats.. For customer attractiveness in term of service quality, perception and expectations organized retail always

keeping the stock of the different verities of goods, applying various methods of demand creation, helping in the effective distribution of

consumer goods, extending credit facilities to the consumers, providing essential data and information about the latest fashion, tests,

making available the good according to the season, gives proper advice to the customer.

Conclusion: After studying various papers, it has been observed that due to the changing demographics, urbanization, and awareness due to

electronic media especially internet the customers have multiple options to choose from modern retail outlets. Majority of the customers

are visiting organized formats for variety, easy availability, cleanliness with additional facility of entertainment for children and

convenient parking facility and restaurant etc. Today it has been found that all age group customers prefer to visit organized retail stores

because of various customer facilities provided to them. Families with less annual income prefer shopping with nearby unorganized

retail stores where customers with higher qualification were found to be more attracted towards organized retail outlets. It is investigated

that modern retail developments and growth of modern formats are taking place in India and challenges & opportunities are available to

the retailers to succeed in Indian retail market and retailers need to innovate in designing the value proposition, deciding the format to

deliver to the customer and also strive to serve the consumer better, faster and at less cost.

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