An Empirical Critique on Traditional and Modern...

An Empirical Critique on Traditional and Modern

Hypothesis in Retailing in the Context of

Internationalisation of Indian Retail Marketing

Research Paper in Manu Bhai M Shah Memorial Gold Medal Session

67th All India Commerce Conference

*Dr. P. Antony George, M.Com., Ph.D. & * Dr. Bino Thomas. M.Com.,MBA, Ph.D.

Abstract

Retail marketing which is traditionally the connecting link between manufacturers and

consumers in the distribution channel, has been in a dramatic transition phase in India after the mega entry of organized retailers and Government decision to permit 51 percent FDI in multi brand retailing. The middle class population in India, who are perceived to be the most sophisticated consumers, is estimated to be about 500 million which is really a great stimuli for multinational retailers to open the door of Indian retailing sector for opening their mega retail outlets in India. The study endeavours to empirically examine the widely debated issues emerged in the Indian retail marketing on account of mega entry of organised retailers and FDI in multi brand retailing and its impact on customer satisfaction and perception. The pertinent questions emerged in this context are whether organised retailers or Mall culture do introduce in to the traditional bound Indian retail marketing and how do and in what way the socio-economic impacts of organised retailing and FDI in retailing have been influencing the traditional Indian retailing and customer behavior. The empirical study clearly indicate that even though some investigative media report the 'phenomenon of mall fatigue', organised retailers are able to intrude into Indian retail sector and pose some challenge to traditional Indian retailers and satisfy Indian consumers to a certain extent. The study also shows that in terms of socio-economic impact overall index the negative impacts of organised retailing and 51 percent FDI in retailing significantly higher than its positive impacts. Though the consumers cautiously welcome some positive benefits of retailing by MNCs, they have genuine concerns and apprehension about the possible damage that organised retailing and its internationalisation, without strong social control, may inflict on tradional retailing and Indian society. However, the picture is not so rosy because the study also reveals that a large number of Indian consumers visit mega malls for leisure, window shopping, hanging around etc. which count whooping footfall in Malls but poor impact on sales volume and patronage. More importantly, traditional retailers excel organized retailers in some functional performance factors indicating the strong and enduring relationship between traditional retailers and Indian consumers. However, Malls culture is gradually influencing the Indian consumers, who have better marketing exposure and awareness and fast changing life style. Anyway, in the liberalised scenario, the malls become a reality and traditional retailers have to be very sensible to perceive the challenges posed by mega retailers by reshaping and rejuvenating their tradition-centric retail marketing strategies with a focus on their unique core competencies to provide maximum customer satisfaction. Similarly mega retailers, should realise that spacious air-conditioned environment, entertainment for family, eating joints, disco and other marketing gimmick are not sufficient to lure the clever Indian consumers. The entry of mega retailers in Indian retail marketing may be instrumental in making the traditional retail sector more competative and consumer-centric. The government and society at large should also recognise the meritorious services of traditional Indian retailers for the economic and social progress of our country and follow sensible approach for the survival of traditional retailers which is an internalized economic and social phenomenon in the Indian tradition and culture.

* Associate Professor, Post Graduate Department of commerce & Research Centre, StThomas

College, Kozhencherry, Pathanamthitta, Kerala.(NAAC accredited with B++) Ph: ® 0479 - 2303242, Mob:9495953243, 9446917752 E-mail [email protected]

mailto:[email protected]

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* Associate Professor & Head,P.G.Department of Commerce, BAM College, Thurithikad

Pathanamthitta, Kerala, Mob: 9447116565




Research Paper in Technical Session II

66th All India Commerce Conference

Indian Commerce Association

Dr. P. Antony George, M.com.P.hD.

Associate Professor

Post-Graduate Department of Commerce and Research Centre St. Thomas College, KozhencheryP.O, Pathanamthitta, Kerala - 689 641

(NAAC Accredited with B++ Grading) Ph: 0479 2303242 Mob: 9495953243, 9446917752 e-mail :[email protected]

Mahatma Gandhi University, Kottayam

Dr.Bino Thomas M.com.MBA,P.hD Associate Professor and Head

P.G.Department of Commerce, BAM College, Thurithikad

Pathanamthitta, Kerala, 9447116565

September

3

2014

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Introduction

Retail marketing, which is traditionally the connecting link between manufactures and

consumers in the distribution channel, has been in a dramatic transition phase in India, which is incomprehensible to Indian marketers and consumers in the closed economic scenario in the pre liberalization period. Indian retail sector has been accepted as the one of the best three emerging retail market by the leading international rating agencies- Knight and Fraid & AT Kearney and they predicted an amazing 30 per cent compounded annual growth rate (CAGR) in the organised Indian retail marketing. The progress of Indian retailing is so marvelous that recently it has been ranked in the Global Retail Development Index (GRDI) as the most attractive retail market for global players to enter. In the light of these developments, undoubtedly, organized retailers in India will continue to be crowd pullers and about 50 percent of the top-end Indian consumers are actually shop or ready to shop in these giant retail marketing outlets. The middle-class population in India who are perceived to be the most sophisticated and monied consumer segments, is estimated to be about 500 million, are expected to push consumption by leaps and bounds in the years to come. Moreover the average Indian household income in urban and semi urban areas has been growing at 5 percent CAGR since 2000 that invariably accelerate the rate of growth in consumption. Another interesting development is the change in the age profile of Indian population wrth younger ones outnumbering the old that may trigger unprecedented level of consumption and spending in the coming years. The supporters of organized retailers and FDI in multi brand retailing put forward the argument that the modernization in Indian retailing is a critical requirement to put the Indian economy to the trajectory of high economic growth. According to them, large format retailers and FDI in multi brand retailing bring modern practices in inventory management, logistics and supply chain management and innovative technologies to Indian retailing sector. They are of the view that the traditional retailers can’t be a growth drive of the economy with its centuries old and out dated marketing practices. The advocates of organised retail can not recognise the economic and social significance of traditional retailers in strengthening the economic and social system. However, the supporters of mom and pop stores argue that traditional retailing as an essential constituent of culturally rich Indian social system. According to them they should be survived and strengthened to sustain the diversity and distinctive characteristics of Indian society. The political and academic deliberations on this burning issue trigged the empirical curiosity of the researcher to investigate this politically sensitive socio-economic problem.

Need a for and significance of the study In spite of the encouraging developments that present a rosy picture indicating tremendous potential for the growth of retail marketing, traditional retailers continue to remains fragmented and the neighborhood kirana stores have still the potential to pose challenges to organised retailers. With the earnings of middle class to splurge and mega retailing outlets to come aplenty, India may be passing through an unbridled consumerism in the coming years. The enterprising retail marketers are hopeful to cash on this emerging opportunity by developing mall culture. Some experts predict speciality retail marketing outlets like wedding mails, festival city, boutique malls, gold soaks as the future face of Indian retail culture. They think modern retail approach of providing Indian consumers, a unique purchase experience offering the finest mix of brand with maximum customer care add new feather in

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the history for Indian retail marketing Some experts argue that the burgeoning of mall culture is bringing a lot of unethical trends in organised retail marketing which in turn make it the victims of the greed of property developers. Interestingly, some mega retail marketing outlets / mails are on the verge of the collapse and some investigative medias begin to depict the phenomenon of 'mall fatigue' that has been emerging in some areas with the vulgarization of organized retail marketing enthusiasm. Presently, our retail marketing has been passing through a critical transition phase that triggers serious debates and discussions among academics, researchers and practical marketers. Moreover, after the Government decision to permit FDI in multi brand retailing there is some of ambiguity and chaos in Indian retail marketing. In this background, the researchers and academicians have social obligation to look into this issue in an academic and empirical perspective to bring into light the reality behind it. The government, political leadership, consumers and society at large are eagerly waiting to hear some unbiased and believable news on this issues in retail marketing from researchers. Therefore an empirical study on retail marketing incorporating the views of different stakeholders is socially relevant and practically significant.

Social background of the study Indian consumers had no exposure to world market till liberalization and their market was

limited within the boundary of the closed economy where only a few brands of products were available for consumption. Sensing the growing economic strength and purchasing power of Indian consumers, the retail markers gradually changed their marketing strategies and policies to accommodate consumers feelings and sensitiveness in the new environment. The structural transformation in the society has fuelled the unbridled consumption with new shopping styles and approaches. In the modern social environment, consumers, especially the middle class have-less time for conventional shopping. Naturally, they desire to get different products under one roof at low prices.The marketing environment has been dramatically changed with the entry of organized retailers and decision to permit FDI in single brand retailing. Indian consumers especially upper middle class started enjoying the buying experience from sophisticated market with mega malls. Indian retailers also have been changing their marketing philosophies and approaches to accommodate the feelings of Indian consumers with more focus on societal marketing concept.

Economic and political background Retailing is not only an integral component of economic system but also instrumental in

moulding the economic and social life. Earlier trading, particularly retail marketing, has been considered as a traditional function of business with less formality. However, in the post liberalization era, retailing is increasingly being viewed as a domestic sector in the economy in terms of its huge turnover, contribution to GDP, generation of employment and growing dominance in supply chain. Presently, retail marketing becomes more sophisticated, brand -dominated and highly formalized with the result that its contribution to economic activity is becoming very obvious. As retail marketing becomes increasingly developed, characterized by lager multiple chain malls and internationalization, it is a driving force in the economy. The political leadership which usually very enthusiastic in generating maximum wealth through the liberalization process, also adopt a cautious political strategy to prompt organized retailing by initiating some policy measures. The uncompromising attitude of political leadership in Government on permitting FDI in multi brand retailing trigged wide spread protest/opposition and political crisis. This is the economic and political background at the time of the study.

Statement of the Problem The organised retailing, especially political decision to permit FDI in multi brand retailing which

is a mega development in the business world, raises concerns and confusion both in business and academic circles. In Indian context, both consumers and mega retailers don't have a clear idea about direction in which our retail sector have been moving. Indian society has been following a very distinctive culture in retailing which is basically tradition bound and deep-rooted family business. In a way, the consumers and traditional retailers maintain family tike close relationship which is a mystery to modem retail markers. The entry of mega retailers in the retail sector naturally trigger some confusion, public resistance and protest with the result that there is no clarity on the direction in which the retail marketing sector has been progressing. In this perplexing environment in the retail sector, the pertinent questions that aught to be answered in the empirical study are:

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a) What are the socio-economic impact of the entry of multi national retailers to Indian retailing sector b) Whether the organised retailers can intrude into Indian retail sector and challenge traditional

retailers satisfy customers? c) How do Indian consumers perceive the emerging retail marketing and to what extent they are

satisfied with mega retailers sector in the light of new development? d) What will be the attitude and behaviour of Indian consumers, towards the organized and

traditional retailers the new marketing environment? To find realistic answers to the questions on the research problem the following objectives have be framed for the study

Objectives of the study

1 To examine the socio-economic impact of organised retailing and FDI in multi brand retailing on traditional Indian retailing sector

2 To measure customer satisfaction in terms of performance of traditional and organised

retailers employing of affinity quadrant and functional performance quadrant analysis.

3 To measure and analyse consumer behaviour in the context of changes in approaches in retail marketing and to diagnose different dusters of consumers in terms of retail purchase behaviour.

4 To measure and analyse the consumer's affinity, attitude and perception on traditional and organized retailing in the new marketing environment.

Hypotheses of the study The following null hypotheses had been formulated for the study

1) There is no significant difference in the overall socio-economic positive and negative impact on account of organized retailing and FDI in multi brand retailing

2) The mean scores of customer satisfaction in terms of consumer's affinity to retail markers of different demographic segments are same.

3) The mean scores of affinity factors influencing consumers in purchase from organized retailers are equal

4) The mean score of customer satisfaction in terms of perceived value of functional performance factors of traditional and organised retailers are same.

Limitations 1) The variables identified for the study are basically qualitative in nature and interval level data

are employed for statistical analys and the result derived many not be very accurate. 2) Basically behavioral approach had been adopted in the survey for studying the attitude,

perception and approach of consumers in retail purchase decision. The tools and instrument employed for this purpose may not very foolproof and realistic.

Literature Review Empirical investigations in retail marketing by researchers in practical marketing and

academic circles contributes some commendable research output that divulges valuable insights on various issues on retailing. Research studies on management of service and quality in retail marketing, retail communication and promotion and management of retail brand etc. by some erudite research scholars are really great considering the practical and academic utility of the findings of these studies. However, some research gaps are found in the area of consumer behaviour in retail marketing in which continuous studies are very essential to sense the feelings of consumers on retailing for designing suitable retail marketing approach at appropriate time periods. This literature review focuses on some research studies that are relevant in this study and relationship to the research problem.

A question need to be answered in retail marketing is how do the consumers make purchase decisions for purchase from retailers. Kelly et al (2009) investigated different dimensions of customers purchase experience from retailers and reveals that consumers are strongly influenced by diversified factors in purchasing products from retail outlets. They argued that even though consumer behavior to a certain extent is conditioned, it is possible to influence consumers through effective marketing

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programmes to respond to a particular retail marketing offer. The findings of the study are academically and practically very relevant.

Daliaert et. al (2008) in their outstanding empirical study on retail marketing diagnosed consumer as human beings generally showing rationality in purchase decisions and collect maximum information about product and organization for taking purchase decisions. Purchase decisions with regard to retailers are also analysed in the study that reveals the approach of consumers towards retailers. The valuable findings are very insightful to serious researchers in retail marketing.

In a research study in retail marketing, an eminent market researcher Hurley (2008) beautifully

presented consumer behaviour in retail setting. The study reveals that when the image of the retailer, personality traits of the retailer, service delivery policy etc. corresponds to consumers need and priority, it results in development of consumers positive attitude towards retail outlets and continued patronage.

Severin et. al (2007) in their scholarly longitudinal research study on retailing presented the complexities of consumer behavior in retail marketing context and beautifully depicted different dimensions of consumers decisions process and reactions in retail shopping over different time periods. However the study fails to examine affinity factors that influence consumers in the selection of retail outlets.

In an illustrious study on retailing Alexander et. al (2009) examined the marketing strategies and programmes in internationalisation of retailing. The difficulties in designing different components of marketing mix to satisfy the customers having heterogeneous characteristics all over the world is thoroughly examined in the study which is really beneficial for marketing researchers at international level.

Internationalisation of retail marketing is a challenging marketing exercise by mega retailers and the insightful study by Oupuis (2010) diagnose different success factors for successful retailing when the international retail players crossing the bounderies of other nations. The study clearly reveals that unless the retailer do necessary homework and conduct a well planned marketing survey to understand the regional realities they cannot win a decent share in the market.

Evens et. al (2011) in their empirical study on retailing and examined the impact of some prominent factors influencing the consumers in purchasing products from retail outlet. They found that proximity of retail outlets and their convenient location as a prominent factor that influence the decision of consumers in selection of retailer and purchase of product. The theoritical frame work on retailing designed for the study has the real empirical orientation that give better insights to researchers in retail marketing .

Thus, all these research studies on retailing clearly indicate the importance and significance

of analysis of consumer behaviour in the retail marketing. These studies also reveals some research gaps especially scientific measurement of customer satisfaction and perception in the area of retail marketing and the present study endeavors to focus on different dimensions on retailing that are not covered in different studies.

Methodology An appropriate methodology had bean framed for the study to achieve maximum empirical

orientation and objectivity in the study. Abstract concepts, associated with the issue were appropriately operationalised and quantified.

Population/ Universe The households individuals both male and female within the age group of 15 to 75 years and

have the exposure to purchase of products from both traditional and organised retailers constituted the population of the study. Individuals belonging to different income level, educational background, marital status, occupation etc were covered to get balanced answers/ opinion on the issue.

Research Approach A behavioural approach had been followed to avoid self perception of respondents in data

collection. Since an important focus of the study was the measurement of customer satisfaction and analysis of the consumer behavior in purchase from retailers and some information have qualitative dimension, the approach of the research was both quantitative and qualitative.

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Research Method The study mainly followed survey method for collection of data since material Information

required had to be collected from consumers directly. However to collect more accurate data, observation method was also adopted at appropriate practical situation that was very helpful to enhance the quality of data. On account of financial constraints and other limitations a sample survey was adopted for the collection of primary data.

Sample Design Source List/ Sample frame The source list / sample frame had been prepared from the list of consumers, furnished by

both traditional and organized retail marketers. Respondents were selected from the sample frame to collect primary data by conducting survey. Similarly a panel of experts consisting of researchers, academicians and marketing experts in retailing were also respondents of survey from whom information were collected through unstructured interview method.

Size of the sample

The size of the sample had been determined as 80 after considering the nature of the universe, standard of accuracy, time and financial constraints. For the determination of sample size the approach based on precision rate and confidence level had been adopted.

In the study the responses of consumer were measured in terms of scores which formed the values for statistical analysis. In majority of questions the scores are between 1 to 10. The acceptable error was determined ±1 at 95 per cent confidence level. Thus the size of the sample as ascertained as under. n = Z2 O2

e2 n = (1.96)2 (4.5) 2 = 77.72

e2 n = 78 say 80 Here α ≤ Range = 10-1 = 4.5

2 2

Method of sampling Simple random sampling had been adopted for selection of sample unit from sample frame in

which respondents having diversified demographic profile had been included.

Method of Data Collection

Both primary and secondary data had been collected for the study. The primary data had been collected by conducting sample survey. Questionnaire was the research instrument employed for the collection of primary data. Secondary data were collected from research journals, published and unpublished dissertation, Websites etc.

Conceptual Frame work of the Study An appropriate conceptual frame work had been designed to achieve optimum conceptual

clearly and empirical focus in the study. The concepts / variables associated with the research problem were a circumscribed in an integrated frame to design the framework.

Since empirical examination of the performance of traditional and organised retail marketers

in the emerging Indian retail sector is the main thrust of the study these concepts and variables become the components of conceptual framework. Affinity quadrants influencing consumers, functional quadrant reflecting the performance of retailers, retailers marketing mix etc are the main dimension in the management of marketing programmers in retail marketing. Consumer behaviour in retail marketing and their decision in respect of selection of retailer, affinity and attitude to retailer are also important component of the conceptual framework. Consumer retailer affinity test,analysis of retailers functional quadrants, principal component analysis longitudinal analysis, performance gap analysis and cluster analysis by using SPSS to diagnose prominent clusters of consumers etc. are the important part of conceptual framework.

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Fig No -1

Conceptual Framework of the study

Analytical Framework of the study

An analytical framework for the study was also designed to ensure focused statistical analysis of the variable by selecting the most appropriate discriptive and inferential statistical measures. The analytical framework designed for the study is presented below

Figure-2

Analytical Framework of the study

As depicted in the figure, analysis of consumer affinity to retail marketers, retailers functional

performance analysis, consumer perception and attitude analysis cluster analysis, longitudinal analysis, socio-economic impact analysis were different dimensions analytical framework. Consumer retailer affinity test, analysis of affinity quadrant, importance rating and retailers functional quadrants analysis are the main components of statistical analysis. Cluster analysis, which was is an important part of analytical framework, performed by using SPSS to diagnose prominent clusters of consumer

Retailers Functional quadrants

Measurement of CustomerSatisfaction

Measurement

ConsumersAffinity to

Retailers

Measurement

of performanceof Retailers

MeasurementConsumers

AttitudePerception

Analysis of Consumer Behaviourin Retailing

Socio

EconomicImpact

Analysis

Cluster

Analysis

FunctionalPerformance

Analysis

Principal

ComponentAnalysis

PerformanceGap

Analysis

LongitudinalAnalysis

Consumers

Affinity toRetailers

Social

EconomicImpact

ConsumersClusters

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emerged on the basis of demographic, psychographic behaviorist and socio-economic characteristics of consumer in retailing also employed in the study.

Measurement of Variables The main focus of the study was the examination of customer perception, behaviour in the

purchase of products from retailers and performance analysis of traditional and organised retailers in the context of emerging development in retailing . The operationalisation of qualitative variables and deriving quantitative values using appropriate statistical measures are described below.

a) Consumers perception and attitude on retail marketing The Consumers perception/attitude to retail marketing had been measured in terms of 5 point

comparative rating scale. Appropriate battery of statements were framed on the basis of inputs from past empirical studies and discussion with experts in retail marketing. The variables and statements used to elicit consumers responses to these variables are presented here.

Table No. 1 Measurement of Consumer's Perception and Attitude on Retail marketing

Variables

Statements

(1 ) Usefulness of Organized retailers. and FDI in multi brand

Mega Retailers FDI in multi brand retail are very useful and inevitable in modern marketing

(2) Purchase Experience:

Purchase from Malls/organized retailers provides unique purchase experience

(3) Public Agitation

Public agitation/opposition against Mega retailers FDI in multi brand is unjustifiable

(4) Relevance of Traditional Retailers

Traditional retailers should be active and dominating to Protect societal interest

(5) Customers Relationship

The personal touch and relationship is maximum in Traditional Retailing.

Source: Betts, E and McGoldrick, P. J (2005) “The strategy of the retail sale, typology, review and synthesis”, International Review of Retail Distribution and Consumer Research,5(3) 308-37; Kumar V and Karande K (2010) “The effect of retail store environment on retailer performance”, Journal of Business Research.8(4) 25 -38.

Measurement of Customer Satisfaction and Affinity to Retailers- Affinity Quadrants

In order to measure the degree of consumer's affinity to retailers, a consumer affinity and attachment test had been employed. This empirical test was administered to ensure that consumers responses are realistic and unbiased. The conceptual and empirical inputs for this test were obtained from Dick et.al. (2004) and Sweeney et. al (2009) and a behavioral approach was adopted in the test ensure the spontaneous responses from consumers avoiding their self perception.

The test consisted of three practical situations that consumer might face in purchasing product from retailers. Four options were provided for each questions and respondents were asked to select the most suitable option.

Consumer's Affinity Test Score and its significance The degree of consumers affinity towards organised retailer / traditional retailer had been

measured and assessed on the basis of total score they obtained from the test. The strategy of the test was to give higher score for option that favour organised retailer. Naturally a respondent who had higher score shows more affinity to mega retailer and low total score indicates low affinity to traditional retailers.

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Table No -2

Consumer Affinity to Retailers- Allocation of Score

Question No.

First Option

Second Option

Third Option

Fourth Option

Question I

7

5

3

1

Question II

8

6

4

1

Question III

2

3

5

1

The maximum total score a respondent could get from the test was 20 and (If first options of question No I and II and Third option of question No.III were selected) and minimum was 3 (If fourth options of questions I, II and III were selected) Significance of Score

(1) 1-5 Score (5 inclusive) Respondents who score between 1-5 do not have any affinity and attachment to mega retail

marketers/ mall. They prefer to buy product from traditional retailers. (2) 6-10 point (10 inclusive)

Respondent who have score in this range do not have strong affinity towards mega retailers. They have strong liking towards traditional retailers.

(3) 11-15 points (15 inclusive) Respondents in this range of score have high affinity towards organized retailers. As far possible

they prefer to buy product from mega retailers. (4) 16-20 points (20 inclusive)

Respondents who get points in this score range have very high affinity to organized retailers and very low affinity to traditional retailers.

Affinity Quadrant (Factors influencing consumers in purchasing from Malls) The affinity quadrant that influence the consumer in purchasing the product from mega retail marketing outlets had been diagnosed to ascertain the degree of influence of these factors in the purchase indecisions from retail outlets. The overall index for the affinity quadrant was measured to rank these factors on the basis of performance. The affinity quadrants identified and measured in the study are

Table - 3 Affinity Quadrant Factors Influencing Consumer in organized Retail Marketing

S/No

Description of Quadrant

1

Reputation,structural beauty

6

Courteousness and Friendliness 2

Cleanliness and checkout Services

7

Informative Advertisement

3

Convenient location

8

Recommendation from friends

4

Product Variety and Quality

9

Freedom to search and select product

5

Fairness in Pricing

10

Facilities for car parking

Source: Kelly.R.F and Stephenson, R (2007) ‘The semantic differential :An information source for designing retails patronage appeals'. Journal of marketing, 31 October 41-49

The affinity quadrant importance rating was first ascertained and the performance values of these factors were measured. The overall index of the affinity quadrant was calculated by employing the following equation Overall Index of Affinity Quadrant (Olaq) = ∑IRpq PVaq

∑IR pq

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Where IRaq stands for importance rating for affinity quadrants PVaq stands for performance value for Affinity Quadrants Functional Performance Quadrants Comparative evaluation of traditional and organized retail marketer had been made in terms of performance quadrants measuring the overall index functional performance. The following formula had been employed to calculate overall index. Functional Performance Quadrant Overall Index (OIpq) = ∑IRPQ PVpo ∑IRpq Where IRpq stands for Importance rating for functional performance quadrant

PVpq stand for perceived value of functional performance quadrant

The Overall index of functional performance quadrant for both traditional and organized retailers are used to evaluate and compare their performance. Validity and Reliability of Measures The validity of statistical measures had been ensured by pre-testing the questionnaire before administering it to respondent. To test the validity of the measures face validity and content validity tests were employed. Test retest reliability method had been employed to ensure reliability of different statistical measures.

Table-4

Summary of Research Methodology

1.

Research area / Topic

An Empirical Critique on Traditional and Modern Hypotheses in Indian Retailing in the context of FDI in Multi Brand Retailing

2.

Research approach

Both quantitative and qualitative 3.

Research Method

Survey Method

4.

Type of Survey

Sample Survey

5.

Sample Design

Simple Random Sampling

6.

Population

Individual consumers

7.

Sample Frame

List of consumers furnished by retailers

8.

Sources of data

Primary and secondary

9.

Method of data collection

Questionnaire / interview

10.

Statistical Measures Descriptive and inferential

Mean, std deviation correlation, regression, T test cluster analysis, principal component analysis, longitudinal analysis

Results and Discussion SECTION I

SOCIO-ECONOMIC IMPACT OF ORGANISED RETAILING

AND FDI IN MULTI BRAND RETAILING

Indian retailing occupies a pre-eminent position in the economic and social system considering their significant role in income and employment generation and long cherished tradition of inculcating human relationship in trading activities. The mega entry of organized retailers and FDI in multi brand retailing trigger unprecedented transformation in the Indian retail sector. The issues and questions on this multi-dimentional social and economic issue are many and no responsible person can put forward a conclusive answers to end the chaos and predicament emerged. The society get realistic answer on the issue only when questions are raised in an empirical frameworkin terms of opinions of unbiased respondents. The researcher formulated a panel of experts consisting of academicians, researchers, social workers politicians, consumers and common people who understood the issue to collect their responses on the issue. Here, the socio-economic impact of organized retailing and FDI in multi brand retailing is empirically examined

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Table-5 Socio –Economic Positive Impact of Organised Retailing and

FDI in multi brand Retailing

Positive Impact Variables MeanScore Std Error Confidence Level 95% 1. Critical for High Growth 7.5 0.253 763-7.171 2. Modernise Inventery Magt 7.8 0.234 8.228-7.372 3.Efficiant Supply chain Magt 8.0 0.283 8.518-7.482 4. Efficiant Storage 8.2 0.275 8.703-7.697 5.Advanced Managerial skill in retailing 7.7 0.244 8.146-7.253 6. Improvement in the product quality 5.5 0.285 6.022-6.021 7. Reduction in Prices 5.7 0.234 6.128-5.272 8.improvement in safety standards 6.5 0.215 6.893-6.106 9.Wide range of Choice of Products 7.8 0.275 8.303-7.296 10 Employement Generation 5.3 0.237 5.734-4.866 11.Beter prices for agricultural products 5.2 0.234 5.504-4.772 12.Modernisation of retail Infrastructure 8.2 0.285 8.721-7.678 Source: Primary Data

Table-6 Socio-Economic Negative Impact of Organised Retailing and

FDI in multi brand Retailing

Negative Impact variables Mean score Std Error Confidential Level 95%

1. Market Domination serves the interest MNCs 8.5 0.278 8.917-7.991

2. Destroy livelihood of traditional retailers 8.8 0.283 9.308-8.379

3. Eventual exploitation of farmers 8.3 0.312 8.871-7.729

4. New middle men like quality controller

certifications agencies create problems

7.8 0.324 8.425-7.207

5. Monopoly power resort to predatory pricing 8.2 0.293 8.736-7.663

6. Generate irrational and excessive spending habits 7.7 0.253 8.162-7.237

7. Contraction in Employment opportunities 8.2 0.353 8.845-7.554

8. Displacement of Traditional middlemen

reduce farmer’s Market access

7.5 0.245 7.948-7.052

9. Mandatory National treatment to MNCs limit

the role states

8.5 0.286 9.023-7.976

10. Promote unethical and unfair practices in retailing

8.3 0.257 8.770-7.829

11. Ruin social and humanistic dimension of Indian retailing

8.8 0.268 9.290-8.302

12. Create unrest and chaos in society 7.5 0.265 7.992-7.015

Source : Primary Data

Socio-economic impact analysis of the organized retailing and FDI in multi brand retailing in

terms of socio-economic positive and negative impacts reveals a realistic picture on the issue. Since the issue being multi faceted involving economic social and cultural dimension focus on economic impacts alone will not give the overall impacts. Rather a socio-economic impact analysis on the issue may provide more realistic results. The study identified 12 variables each from socio-economic positive and negative impact for the for empirical assessment of overall impact of the issue quantitatively. All these variables are measured in 10 point rating scale and the highest aggregate score for a set of 20 variables in 120

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Table-7

Socio Economic Impact Analysis Overall Index- Positive and Negative Impact

Overall Positive socio-economic impact Index (OSEINF)

Overall Negative Socio-Economic Impact (OSEIPF)

P Value at 95% Confidence

level Maximum Value Derived Value Maximum Value Derived Value

0.035 120 98.1 120 82.4

Source: Primary Data

The result of socio-economic impact analysis in terms of simple statistical measurement is a

clear Indication of the general thinking of the society on this issue. Socio-economic positive impact index on entry of multinational retailers suggest that society will accept the entry of organised retailers if they bring in some real economic and social benefits. However the significantly higher index value on the socio-economic negative impact reflects the genuine concern of the people that entry of multi national retailers without effective regulation and control ultimately inflict damage to our economic and social system. The P value at 95 percent confidence level clearly shows the significant difference between socio-economic positive and negative impact of organized retailing and FDI in multi brand retailing. Therefore the first hypothesis that there is no significant difference between overall index on socio-economic positive and negative impact due to organized retail is rejected

SECTION-II CUSTOMER SATISFACTION, AFFINITY AND ATTITUDE TO TRADITIONAL AND ORGANISED RETAILERS

Consumers perceptions and Attitude on Retail Marketing

The perceptions and attitude of consumers to traditional and organized retailers is very important to understand the thinking of consumers on retailing. Appropriate battery of statements were used in the questionnaire to elicit quick and spontaneous response of consumers on this issue. The perception and attitude of consumers on retailing, social and economic dimensions of retailing are measured and analysed by presenting the statements that provoke the thought, belief and ideology of consumers on retailing.The results of responses on this aspect of the study is presented below

Table No - 8 Consumers Perception and Attitude on Retail Marketing

SI.No

Variables

Mean score

Std error

95% Confidential Interval

1

Economic significance of organized retailers and FDI in multi brand

3.2

0.142

3.376 - 3.024

2

Uniqueness in purchase experience in malls

3.0

0.241

3.572- 2.428

3

Need for opening more mega retailers

2.5

0.114

2.923 - 2.477

4

Public resistance and Protest to Malls

3.3

0.162

3.618-2.982

5

Internationalisation of Retailing

2.5

0.132

2.758-2.292

6

Economic and social Significance of Traditional Retailers

3.7

0.153

3.998-3.402

7

Protection to Traditional Retailers

3.8

0.162

4.117-3.483

Source: primary data The general perception and attitude of consumers in retail marketing is clearly revealed in the

results presented in the table. The mean value in respect of variables measuring consumers attitude clearly indicate the approach of consumers towards retail marketing.

Majority of respondents recognizes the utility of malls in modern life which is clear from the mean value of 3.2. Similarly, even though consumers have some different purchase experience from mall they are not considering it as unique which is indicated in the low score of 2.5. Respondents

15

generally recognise the social and economic relevance of traditional retailers by assigning higher values to different variables showing favorable attitude towards traditional retailers.

The Consumers affinity to retailers is ascertained on the basis an empirical test as mentioned

in the methodology. Here the results of the test is analyzed on the basis of the total score of respondents. In term of the total score, consumers are categorized in to five groups in terms of degree of affinity to mega and traditional retailers. High mean score signifies high affinity to mega retailers and low affinity to traditional retailers and vice versa.

Table -9

Consumers Segments in Terms of Affinity to Mega Retailers & Traditional Retailer

Segments

sample Size

Mean score

std error

95% confidential interval

1 Very High Affinity to Mega retailer (Very low Affinity to traditional Retailers)

12

17.2

0.583

18.343-16.057

2 High Affinity to Mega retailers(Low Affinity to traditional retailers)

14

14.8

0.492

15-764-13.834 3 Moderate Affinity to mega

retailers and traditional retailers

21

11.2

0.323

11.833-10.56

4 Low affinity to Mega retailers ( High Affinity to Traditional retailers)

17

7.7

0.243

8.176-7.224

5 Very Low affinity to Mega retailers ( Very High Affinity to Traditional retailers)

16

4.5

0.214

4.919-4.081

Source: Primary Data

The consumers affinity test clearly indicate their degree of affinity to Mall and traditional retailers in terms of mean score of different segments. First segment with sample size of 12 has a mean score 17.2 shows very high affinity to malls. With sample size of 14 and mean score of 14.8 the second segment of consumers also have strong affinity to mega retailers. However with sample size of 21 and mean score of 11.2 the third segment exhibit moderate affinity to both mega and traditional retailers. The fourth segment has low affinity towards Malls and high affinity to traditional retailers. The fifth segment with a sample size of 16 and mean score of 4.5 shows very low affinity to mega retailers and naturally this segment exhibits strong affinity to traditional retailers.

Demographic Segment wise Affinity to Mega and Traditional Retailers

The affinity of different demographic segment of consumers is also ascertained to examine the difference in the degree affinity of these consumer segments to mega and traditional retailers.

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Table - 10 Consumer Affinity to Organised Retailers - Demographic Segment wise

Age Group Sample Means Score

Std Error

Confidential level(95%)

15-30 34 16.2 0.523 17.2225-15.178

30-45 25 14.3 0.458 15.197-13.403

45-60 12 10.5 0.294 11.076-9.924

60.75 9 4.3 0.264 4.699-3.901

Gender

Male 45 11.3 0.312 11.911-10.689

Female 35 16.8 0.548 17.874-15.726

Occupation

Employees 21 10.2 0.289 10.766-9.634

Professional 12 14.9 0.425 15.733-14.067

Businessmen 14 14.2 0.414 15.611-13.389

Retired 10 9.3 0.274 9.837-8.763

Students 23 17.7 0.584 18.845-16.555

Lifecycle segment

Bachelor Empty 22 18.1 0.612 19.299-16.901

Young Married 21 15.4 0.524 16.427-14.373

Young Full Nest 15 12.1 0.337 12.760-11.440

Older Full Nest 12 7.4 0.246 7.882-6.918

Older Empty Nest 10 3.8 0.211 4.214-3.386

Social Class

Upper Middle class 12 17.8 0.584 18.944-16.656

Middle class 21 12.8 0.328 13.442-12.158

Lower Middle class 27 7.2 0.234 7.658-6.742

Lower Class` 20 4.5 0.198 4.888-4.118

Income

Lower income 27 7.3 0.258 7.805-6.795

Middle income 34 14.2 0.532 15.242-13.158

Higher Income 19 17.5 0.646 18.766-16.234

Source : Primary Data Demographic segment wise consumer affinity indicate the degree of affinity of different segments of consumers within the group. The affinity of consumers within the age group of 15 -30 have high degree of affinity towards mega retailers and as consumers become old they show high affinity to traditional retailers. When male shows high affinity to traditional retailers female shows high affinity to organized retailers. Similarly students, bachelor empty nest, upper class, upper middle class segment have high affinity, towards traditional retailers. P values at 95% confidence level had been

17

calculated to ascertain whether there is significant difference in the degree of affinity of different groups of consumers. The results of the analysis in presented in the following table

Table. 11

Consumers Affinity to Organised Retailers (P values at 5% significance Level)

Age

15-30

30-45

45-60

60-75

15-30

-

0.0072

0.0012

0.0052

30-45

-

-

0.0018

0.0087

45-60

-

-

-

0.0023

60-75

-

-

-

-

Life - Cycle

Bachelor Empty

Young Married

Young Full nest

Old full

Old Empty

Bachelor Empty

-

0.0063

0.0075

0.0084

0.0054

Young Married

-

-

0.0042

0.0034

0.0089

Young full nest

-

-

-

0.0071

0.0054

Older full nest

-

-

-

-

0.0082

Older empty

-

-

-

-

-

Social Class

Upper class

Upper Middle

Middle Class

Lower

Upper Class

-

0.0021

0.0018

0.0015

Upper Middle

-

-

0.0075

0.0067

Middle Class

-

-

0.0037

Lower

-

-

-

-

Income

Lower Income

Middle Income

Higher Income

Lower

-

0.0058

0.0069

Middle

-

-

0.0048

Higher

-

-

-

Source : Survey Data In terms of P values, there is significant difference in the degree of consumers affinity to

retailers of different groups of consumers included in various demographic segments. Therefore the first null hypothesis that the mean score of consumers affinity to retailers of consumer groups belonging to different demographic segment are same has been rejected.

Affinity Quadrant - Factors influencing consumers for affinity to malls

The consumers are influenced by a variety of factors in developing affinity to mega retailers and these factors influence their decision process in the selection of mega retailer. As mentioned in the methodology, the study identified 10 factors that possibly create an affinity to malls in consumers mind. Table 8 presents the result of affinity quadrant analysis.

Table No. 12 Affinity Quadrant - Importance Rating

SI.No. Factors

Mean

SE

95% Confidential Travel 1 Reputation & Structural Beauty

8.4

0.234

8.858 - 7.942

2 Cleanliness Arrangement

7.5

0.214

7.923 - 7.077 3 Convenient Location

8.1

0.225

8.541 - 7.659

4 Product variety, Quality

9.3

0.241

9.272-8.328 5 Fairness in Pricing

9.2

0.258

9.706 - 8.694

6 Courteousness & Friendliness

7.5

0.212

7.915-7.085 7 Informative Advertisement

5.3

0.189

5.570 - 4.830

8 Words of mouth decision

8.3

0.265

8.819-7.781 9 Freedom to search and select

8.7

0.275

9.239-8.161

10 Facilities for car parking

8.5

0.253

8.995 - 8.005

Source : Sample survey

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The importance ratings of affinity quadrants indicate the weightage given by consumers to different factors influencing them in the decision for purchase of product from mega retailers. The mean scores of different affinity quadrant indicate that product variety, fairness in pricing, freedom to select product, reputation and structural beauty, convenient location etc are most influencing affinity factors. More importantly, except advertisement, out 10 quadrants all other factors exert strong influence on consumer in favoring mega retailers.

Affinity Quadrant Perceived Performance The perceived performance of organised retailers in respect of affinity quadrant indicate that,

their performance scores in respect of reputation and infrastructure, cleanliness and arrangement, advertisement, freedom to search and select product, the scores are more than 8 and the performance with regard to other factors is not up to mark, overall index that signifies the overall performance of the Mall in respect of affinity factors is 7.32 which indicates some deficiency in performance. The result of the analysis is presented in the following table.

Table-13

Affinity Quadrant Perceived Performance Mega Retailers Affinity Quadrants Perceived Importance IRPVaq Performance (PVaq) Rating(lRaq

(1) Reputation Structural Beauty

8.5

8.4

69.72 (2) Cleanliness & Arrangements

8.5

7.5

60.75 (3) Convient location

7.2

8.1

58.32 (4) Product Variety & Quality

7.2

9.3

66.96 (5) Fairness in Pricing

6.3

9.2

57.96 (6) Courteousness & Friendliness

7.1

7.5

53.25 (7) Advertisement

8.2

5.2

42.64 (8) Words of mouth decision

5.3

8.3

46.48 (9) Freedom to Search & Select

8.3

8.7

72.21 (10) Facilities for car Parking

7.5

8.5

63.75

∑IR aq 80.7 ∑IRPVaq 592.04

Overall Index ∑Ol aq) = ∑IRPV aq = 592.04 = 7.34 ∑IR aq 80.7 Futuristic perception of Customer Satisfaction and Purchase behaviour in Retail Marketing

Since organised retailing has been at the introduction/growth stage and traditional retailers are at the maturity /saturation stage, a futuristic analysis of possible consumers behaviour in terms of consumers responses and post purchase actions in retailing is practically very relevant. Especially the analysis is the very appropriate in the context of possible entry of global retailers with 51percent FDI in multi brand retailing. This futuristic analysis is made in terms consumer behaviour in respect of consumer responses viz; selection of retailer, amount of purchase and timing of purchase and post purchase consumer behaviour viz; purchase / repurchase intention , (Possibility of purchase in future), words of mouth decision (Possibility of recommending retailer) Patronage and support (Continuation of dealings). The result of the analysis revealed in the following table.

Table 14 Consumers Responses and Post Purchase Actions in Retailing

Responses / Behaviour

Organised Retailer

Traditional Retail Marketing

Mean Score

Std Error

Mean Score

Std Error

Selection of Retailer

5.9

0.192

7.3

0.213 Amount of Purchase

6.2

0.208

6.8

0.224

Repurchase Intention

5.3

0.182

6.7

0.197 Words of Mouth Decision

4.5

0.175

7.2

0.234

Patronage & Support

5.2

0.169

6.4

0.207

Source : Primary data

The above table clearly suggests that the traditional retailers have some superiority in respect of purchases responses and post purchase behaviour especially in respect of word of mouth decision. However it is to be noted that traditional retailers are in the field for a very long period and naturally they have more connection and link with consumers which in turn result in positive responses and

19

post purchase behaviour. Neverthless the position of the mega retailer is not discouraging because even at this induction stage they are able to influence a group of consumers having adequate disposable income and purchasing power.

Multiple Correlation -Consumers Affinity and Consumer Behaviour The multiple correlation had been ascertained by taking consumer's affinity to retailers and

perceived performance of retailers as predictors and purchase responses and post purchase behaviour as dependent variables. The result of correlation between these predictors and dependents are presented in the following table.

Table-15

Multiple Correlation- Consumers Affinity 5 percent significance level

Predictors (Constant)

Dependant Variables

Correlation R

Standard Error

P Values

Consumers Affinity Perceived Performance

Consumers Purchase Responses

0.783

0.583

0.0072

Consumers Affinity Perceived Performance

Post purchase Behaviour

0.852

0.782

0.0068

Source : Primary Data As per the result in the table the multiple correlations between predictors and dependant

variable is very significant. If there is increase in the affinity of consumers on account of improvement in the perceived performance in affinity quadrant or improvement in the perceived performance of functional performance quadrant, there will be positive consumer purchase responses and post purchase behaviour. Thus the null hypothesis that 'there is no correlation between consumers affinity and consumer purchase behaviour is rejected.

SECTION - III

Measurement of Customer Satisfaction and perception-Functional Performance of Traditional and Organised Retailers

The functional performance quadrants which are very prominent indicators of the level of performance of in functional areas are employed to make a comparative evaluation of the performance of traditional and organised retailers. The results of the evaluation are depicted in the following table.

Table. 16

Functional Performance -Traditional VS Organised Retailers Functional Performance Quadrants

IR

PV Organized Retailers

PV Traditional Retailers

1 Product Durability

8.2

8.5

7.9 2 Overall environment

8.5

8.7

6.8

3 Accuracy in Bill Preparation

8.5

8.8

7.8

4 Honouring Promises

9.2

6.5

9.1

5 Readiness to provide timely help

8.8

7.2

8.7

6 Fairness in price

7.5

8.2

8.7

7 Sincerity and commitment

8.2

7.9

8.5

8 Humanistic Approach

9.2

6.5

9.2

Source: Survey Data

Functional performance importance rating clearly indicates the importance attached to different functional performance quadrants. Consumers attached high weightage to the retailers dignity to honor promise and humanistic approach. Similarly consumer consider other factors as also very important since the other factors have also scored within the range of 7.5 to 8.5. The functional perceived performance of traditional and organized retailers shows that the perceived performance of

20

the traditional retailers in respect of factors like humanistic approach, honoring promises, readiness to provide timely help etc is very high in comparison to malls. On the other hand in respect of factors like product durability, overall environment, accuracy of bill preparation etc., the organized retailers excel the traditional retailers.

Table -17 Functional Performance - Traditional Retailers Vs Organized Retailers

(Overall Index & P Values)

Functional Quadrant

Organised IRPVfq

Traditional IRPVfq

P.Value 5%confidence

1 Product Durability

69.70

64.78

0.0064

2 Overall Environment

73.95

57.80

0.0053

1 Accuracy in Bill

74.80

66.30

0.0072

4 Honoring Promises

59.80

83.72

0.0012

5 Readiness to provide help

63.36 76.56 0.0028

6 Fairness in price

61.50 65.25 0.0036

7 Sincerity and commitment

64.78

69.70

0.0292

8 Humanistic Approach

59.80

85.56

0.0016

Source :Primary Data ∑lRPVfq 527.69 ∑lRPVfq 569.67 Overall Perceived Functional Quadrant (Olfq) = ∑IRPVfq ∑IRfq Olfq (Organized retailers) = 527.69 = 7.74 68.1 Olfq (Traditionalretailers) = 569.67 = 8.36

68.1 The quantitative values presented in the above table on the weighted average score and

overall index of the functional performance quadrant of traditional and organized retailers reveals their comparative performance in retailing sector .Both organised and traditional retailers have their own superiority in respect of some specific functional quadrant. However overall evaluation show that traditional retailers have an edge on organised retailers on account of their core competency in respect of prominent functional quadrants.

Functional Performance Quadrants Principle Component Analysis In retail marketing the low performance of retailers in different functional areas influence the

consumers purchase decisions. Therefore the retailers should diagnose the most influencing functional quadrants in the of order degree of influence Principal component analysis is asuitable statistical measure to rank these factors in the order of the degree influence

Table-18 Functional Performance Quadrants Principal Component Analysis

Source : Primary Data Note: Extraction Method : Principal Component Analysis

FPQ 1 2 3 4 5 6 7 8

1.Product Durability 0.68

2. Overall Environment 0.75

3.Accuracy in Billing 0.72

4.Honouring Promises 0.89

5. Willing to provide hdp 0.87

6. Fairness in pricing 0.82

7. Sincerity and commitment 0.77

8. Humanistic Approach 0.93

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Rotation Method : Varimax with Kaiser Normalization The values derived in respect of different functional quadrant is a clear indication to the significance of human relationship and social significance of retail marketing with a score of 0.93. Humanistic approach emerged as the most influencing functional quadrant in retailing followed by honouring promises(0.89) willingness to help(0.87) Fairness in pricing (0.82) etc. Overall, the human dimension in retail marketing the key to open the consumers mind who exhibit distinctive behaviour in retailing.

Functional performance Quadrants- Longitudinal Analysis The FDI in multi brand retailing is both a disturbing and delighting development in the Indian retail sector as far as different stake holders are concerned. This development results in sleepless days for millions of traditional retailers and people who depend on this social system for their livelihood. On the contrary this is a big boon to mega retailers and customers who have more sophisticated buying habits and the practice of buying goods from mega malls. Now the time is ripe to examine whether entry of organized retailers remarkably changed the Indian retail environment. A longitudinal analysis for studying the variation in the performance of traditional and organized retailers in two time period is a warning signal to organized retailers and traditional retailers in framing their futuristic plans.

Table-19 Functional performance Quadrants –Longitudinal Analysis

Functional Quadrants

Traditional Retailers Organised Retailers

2007-08 2010-11 2007-08 2010-11

Product Variety 7.5 7.5 0.77 0.382 0.78 0.321 8.7 0.285

Overall Environmet 7.2 0.353 7.9 0.254 8.2 0.312 8.9 0.258

Accuracy in Billing 6.2 0.537 7.5 0.265 8.3 0.381 8.5 0.324

Honouring Promises 8.5 0.392 8.9 0.321 6.2 0.312 6.3 0.287

Readness to provide Help

8.7 0.258 8.8 0.423 6.3 0.258 6.5 0.292

Fairness in pricing 8.3 0.369 8.5 0.275 7.3 0.314 6.8 0.253

Sincerity and Commitment

8.8 0.287 8.9 0.348 7.2 0.241 7.1 0.352

Humanstic approach 9.2 0.361 9.3 0.384 6.2 0.321 6.3 0.275

P Value <0.05 <0.05

Source Primary Data: The longitudinal analysis clearly present the comparative performance of traditional and organized retailers in two time periods. The table values is an indication to the ability of both organized and traditional retailers in sustaining the performance level. It is to be noted that when traditional retailers improved their performance in respect of some factors in the second period, the organized retailers are not very successful in improving their performance on factors that focus on human relationship and individualized attention in retailing.

Performance Gap analysis in Retailing Organised Retailers Vs Traditional Retailers Customers relationship and loyally are the essential requirements for successful retailing. The retailers who fail to accommodate customers feelings and sensitivities may loose customers that will pose challenges for their sustainability and prosperity. When retailers are able to perform according to customers expectation it is guarantee for the continued patronage and support of customers. Perform and Gap. Analysis in terms of functional performance quadrants is very useful to understand whether retailers are able to do marketing as per customers wishes. Here, the expected performance and perceived performance of organized and traditional retailers are compared to measure the gaps/deficiencies in their performance

22

Table -20 Performance Gap Analysisi in Retailing

Organised Retailers Vs Traditional Retailers

Functional Quadrants

Organised Retailers Traditional Retailers

1 Product variety

Expected Performance

Perceived Performance

P Value at5% Significance

Level

Expected Performance

Percived Performance

P Value 5%

significance level

0.82 0.85 0.031 0.72 0.65 0.021

2. Overall Environment

0.82 0.92 0.023 0.65 0.62 0.062

3. Accuracy inBilling

0.78 0.85 0.014 0.73 0.65 0.027

4. Honouring Promises

0.73 0.57 0.054 0.87 0.92 0.032

5. Readness to provide help

0.65 0.52 0.058 0.85 0.92 0.028

6. Fairness in Pricing

0.78 0.65 0.043 0.75 0.74 0.058

7. Sincerity and commitment

0.83 0.67 0.059 0.85 0.88 0.018

8. Humastic Approach

0.58 0.42 0.058 0.90 0.95 0.022

Source : Primary Data

Performance gap analysis reveals some interesting results on the level of performance of organised and traditional retailers. When organised retailers presents outstanding performance on product variety durability overall environment and accuracy in billing without any significant difference in expected and perceived performance their lacunae performance in respect of other functional quadrants is a clear indication of their underperformance on this vital aspects of retailing. However traditional retailers are really successful on these functional quadrants which suggest their superior performance on customer relationship

SECTION – IV

Consumer Clusters in Retail Marketing

The grouping of consumers in to different clusters in terms of similarities in characteristics and analysis of there clusters explain why a particular category of consumers behaves in a distinctive way in comparison to other consumers in other category. Technically, a cluster consists of similar variables which are used to create customer segments that correlate highly with one another and have comparatively low correlation with variables used to create other customer segments. In emerging retailing sector cluster analysis and study of consumer behaviour on the basis characteristics of consumers belonging to different clusters, is practically inevitable for successful retail marketing.

23

Table-21 Consumer Clusters in Retailing - Cluster Analysis

Clusters

Demographic Characteristic

Principal Benefit

Purchase

Distinctive

Sought

Attitude/Behaviour

Personality

Status Oriented Mall- Centric

• Upper Class • High Income • Young Full Nest • Under 45 years • Higher Professionals • Businessmen

• Premium Products • High Quality • Personal Care • Repulation of Retailer •Technological • Prime Locations

• Positive attitude to • purchase • Quick Purchase • High Preference for

Branded Products • Prefer to buy from Malls

• Demanding • Loyaltyto Mega • NoPrice

Sensitivity • Seek new Products. .

•Principle •Oriented •Retail Experiencers

•Upper Middle Class •Moderate Income. •Middle Aged •College Education. •Small Family Size. •Top Executive

•Product Variety •Punctuality •Courteous Behaviour •Cleanliness •Superior Quality •Prestige pricing •After Sale Service

•Professionalism in Purchasing •Calculative Purchase Decisions • Not Conservative • Simultaneous selection of Brands and Retailer

• Honest • Soft-Core Loyalty

to Retailers •Moderate Price Sensitivity. •Group Oriented Selection of Product

Value - Oriented Achievers

•Middle -Class •Middle Income •45-60 years •College Education •White-Collar Employees •Middle - Executives

•Fair Price •After Sale Service •Bargain Dealings •Moderate Quality •Product Durability •Checkout Services

•Shop for Comfort Durability value •Unimpressed by Luxuries •Trust Advertising •Moderate in Purchasing

•Rational Spending •Shifting Loyalty •Prefer Traditional Retailers. •Serious Thinking in Purchase.. Image-

Centric Strivers

•Lower Middle Class •20-40 years •Average Education •Lower Executives •Self Employed

•Prestige Pricing •Individual Attention •Reputation of Retailer •Recognition of Staff •Extra facilities •After sale service

•Buy on Impulse •Receptive to new Products. •Listen to Recommendation. •Decor and Infrastructure

•Follow Fashion and Fad. •Shop for Image Building. •Image Conscious •Spend on Clothing and Personal Care Product.

Traditional- Centric Believers

•Middle Class •Lower Middle Class •45-75 years. •Moderate Income •Landed Agriculturist •Employees

•Honest Service •Fair and Transparent Dealing •Product Durability •Concern for Retailers •Humanistic Approach •Fair/ reasonable price

•Conservative Approach in Purchase •Prefer Familiar Retailers ' •Prefer Standard Product •Need Based Purchase •Hard core loyal

•Slow to Charge Purchase Habit •Respect Tradition and Heritage. •Dislike Extreme Modernism. •Unimpressed by Luxuries.

Source: Survey data

Discussion The meaning of the results presented in the above analysis, is discussed in the following

section which integrates insights on findings, empirical and practical significance of the results and comparison with existing theories.

As mentioned in the introduction, the study endeavors to make an empirical analysis of emerging trends in retailing with focus on the performance of organised and traditional retailers and analysis of consumer behaviour in retailng.

Spontaneous and instant response to battery of statements on a particular problem or issue is perceived to reveal the realistic view of respondents on the issue raised. Table No.: 8 measures and analyse the general perception and attitude of consumers on retailing in the context of 51 percent FDI

24

in multi brand retailing and infusion of mall culture in the marketing. The insight and empirical meaning of the responses of consumers revealed in the analysis is very interesting and practically relevant. The responses are measured in five point rating scale and score in respect of different variable is a clear indication of how consumers view this serious issue. The usefulness and importance of malls and organised retailers in the modern society is recognised by the consumers and albeit, only some consumers feel unique purchase experience in malls. Consumers now look for internationalization of retailing which is an encouraging information for organised retailers. Public resistance and destruction of mega retail outlets is perceived by consumers as unjustifiable. Most probably the society may have a feeling that if the malls do not fulfill the social aspiration and responsibility, they naturally vanish without any social resistance. For example even at this initial stage speciality retailers like GAP H & M, Office Depot Target etc. decided to say no to India anticipating a discouraging response. The most interesting result of the analysis is that consumers strongly admit the significance of traditional retailers and the need for their survival to protect the societal interest in the long run. Similarly, consumers strongly believe that the personal relationship and touch in traditional retailing is great. The overall responses of the respondents is very clear and unambiguous. Mega retailing is not a mania or craze for Indian consumers though they encourage the meritorious aspects of mall culture. It is to be noted that, Indian consumers still maintain a strong attachment to traditional retailers which is basically a family like relationship which goes beyond buyer and seller relationship.

Table-9 explains the results of consumers affinity and attachment to retailers. The grouping of consumers in terms of the degree of affinity to mega retailers or traditional retailers shows the balanced and judicious approach of consumers to the emerging trends in retail marketing. Hardly 10 per cent of the respondents has very strong affinity to Mall / Organised retailers which shows that Indian consumers are closely watching the performance of malls at this induction/growth stage. On the contrary 20 per cent of the consumers / maintain very strong affinity to traditional retailers which is clear indication of historical link between traditional retailers and Indian consumers. However the most important dimension of this empirical test is that about 30 per cent of consumers maintain moderate affinity to both mega and traditional retailers. It is a clear indication that whatever may be the vibrating sensation on the mega entry of retail giants and 51 percent FDI in multi brand retail the Indian consumers still respect the century old historical tradition of family like Indian retailers.

Table No.:10 analyse the demographic-wise consumer affinity to mega and traditional retailers. In a marketing perspective this analysis is very important to diagnose valuable clues on the attitude and behaviour of consumers to retailers. Insightful clues and practical hints on the consumer behaviour in retailing can be drawn from this demographic segment-wise analysis of consumer affinity. The high affinity to mega retailers within the age group of 15 to 40 years, female, students, upper classes, high income group etc. shows that mall culture is not a dirty concept to Indian consumers. However, consumers within the age group of 40-75 years, professionals, employees, retired etc. who are the real decision-makers in purchasing have either moderate or low affinity to mega retailer and still believe in the social relevance and meritorious service of traditional retailers. Therefore, unless organised retailers have a real consumer-centre approach, the mall mania may be gradually transformed to the phenomenon of mall fatigue. The recent closure of some city's and suburb mall suggests that the churning period of malls is not rosy. A survey conducted by 'Retailer', the leading retailing magazine in India revealed that other than food-court retailers, not too many of retailers are not happy with their sales. Some other studies Mayers et. al (2007), Wawson. J (2008) also reported similar trends in retailing. Therefore the clues and suggestions emerged from the analysis of the affinity test is very relevant for both mega and traditional retailers. What continues to be a cause of concern and raises some speculation is the fact that, in the malls, the consumers spend a lot of time and not much money.

Table 11 shows the P values in respect of the different group of consumers in each demographic segments. Since all P values are less than 0.05 at 95 per cent significance level there is significant difference in the affinity of different demographic segments. The difference in the affinity and consumer behaviour of age group, life cycle segments, social classes, different income levels should be seriously examined by the retailers to develop appropriate tools that trigger affinity to a particular retailer. Studies show that age is a very influential demographic variable as many purchases, such as an those for babies and children are age dependent. Retailers are keen to influence children under 12 years of age rather than treat them as passive in the consumer behaviour process.

Importance retailing in respect of 10 affinity quadrant presented in table-12 have wider implications in retailing especially at the induction stage of organized retailers. But of 10 affinity

25

quadrant of mega retailers, almost 9 factor are perceived to be very important for consumer. Therefore the strain and responsibility of mega retailers are tremendous to make these affinity quadrant distinctinctively consumer centric. The consumer attach very high importance to fairness and transparency in pricing and product variety and quality and consumer behaviour naturally influenced by these affinity factors. It is still debated whether consumers act in a rational way in purchase decision or whether they are more compulsive in action. The difficulty the retailers have in understanding this is that consumers have expressed conscious rationalisations as well as unexpressed attitude to purchasing. Thus purchase decision have both rational and irrational elements and internalisation of there affinity quadrants in retailers marketing programme make consumer behaviour more predicable.

The affinity quadrant performance analysis presented in table 13 clearly reveals the present performance of mega retailers in respect of affinity factors. The perceived performance of mega retailers in respect of fairness in pricing and product variety need special attention. One of the important affinity factor that attract consumers to mega retailers is pricing of product(less than MRP) and the mega retailers should be very careful in framing and practicing fair pricing policy to impress consumer. However, consumers have a feeling that mega retailers follow some unethical practice for price fixations. That is why consumers may have some reservations about the sincerity of organized retilers in pricing. Another important factor that need serious attention is the discouraging perceived performance of Malls on words of mouth decisions.

Table No. 16 present the data on the importance rating and perceived performance of organised and traditional retailers in respect of these functional factors. Consumer perceive all factors as very important in retailing particularly the honouring promises and humanistic approach with score of more than 9 points. Thus the implication is very clear and suggest what should be the approach and strategy of mega retailers in modern marketing. As revealed in the analysis, even though a large group consumers in the economically affluent section of the society has affinity to malls, to have mass appeal and social orientation in retailing the organized retailers have to reorient some existing approaches that are basically marketing gimmicks. However considering the huge investment in developing and maintaining malls, such marketing practices may be inevitable which in a real hindrance that damage the human face and transparency of Malls.

The comparative analysis of perceived performance of traditional retailers and organized retailers in respect of functional quadrants are presented in table No.17. The results of the table should be viewed by retailers responsively so that they can conduct retailing with clarity and winning initiative . Surprisingly, the individual index of different functional quadrant for traditional retailers is much higher than mega retailers, especially in respect of factors like honouring promises, readiness to provide timely help, humanistic approach etc. The superior performance of mega retailers with regard to overall environment, accuracy in billing, product durability etc. are some functional quadrants that wins certain segments of consumers for Mall. Noticeably, in respect of these functional quadrant the performance of traditional retailers is not up to the mark. Anyway, the overall performance of traditional retailers in terms of overall index is superior to mega retailers which is a clear indication to mega retailers to do necessary homework to improve their performance to have better market positioning..

The cluster analysis presented in the table-21 reveals the consumer clusters in retailing and their distinctiveness in terms demographic characteristics, principal benefit sought, purchase attitude, consumers behaviour, distinctive personality characteristics. Consumers in the status-oriented cluster are belong to upper class consisting of professionals, businessmen are very particular to buy product from Malls. They like to buy premium product of high quality irrespective of the price. They want personal care and individualised attention and have very positive attitude to purchase reputed branded product

Principle-oriented retail experiences are matured, well educated, responsible and rational consumers. They are flexible and reflective thinkers, accepting change and really enjoy the purchasing from malls. They belong to upper middle class consisting of executives, professionals and proprietors of medium sized business. Product variety, punctuality, fair pricing etc. are the principal benefits they are searching for in the purchase.

Value-oriented achievers_ are high income, practical and value-seeking consumers. They are less wealthy conservative, middle class, white collar employees, middle executives, self-employed etc. Fair pricing, consumer-centric after sales service, product durability etc. are the principal benefits they sought from retailers. They have special preference for traditional retailers and exhibit softcore loyalty and rational spending behaviour. They shop for comfort durability and value and unimpressed

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by luxuries. Image-centric strivers, who are image conscious follow fashion and fad in life, perceive purchase from retailer as a image-building exercise. They belong to lower-middle class with average education and average level of income. They expect individual attention, like to be recognized by retailer, and prefer moderate pricing. Generally they make purchase on impulse and receptive to new product and product innovations. Traditional-centric believers are very rigid and conservative consumers who always prefer traditional retailers expecting sincerity and honest service. They always expect fair and transparent dealings and humanistic approach from the retailer. Their purchase are mainly need-based and very slow to change purchase habit.

The overall impact index derived from the socio-economic impact analysis in tables 5 and 6

clearly reveals that the implementation of the policy decision to allow 51 percent FDI in multi brand retailing overlooking the social and economic realities and genuine aspiration of common people can not be justifiable and sensible. The policymakers should follow a realistic approach on this vital economic policy that have wider social and economic implications. When a large majority of common people raise their legitimate opposition for their survival and protecting the national interest what the Government can do is to implement the policy with minimum disturbance and affliction to the existing retail system. In the democratic system the Government should have an open, transparent and generous approach when a policy having wider social implications is adopted. As the ultimate goal of all economic programmes and policies is social well-being and welfare of the people, the policy makers view this issue more justifiably and sensibly to do justice to all stakeholders in retailing.

Managerial Implications of the Study Programmatic approach in retail marketing that offers the real delight to consumers in terms

of customer value should be a realistic objective to be achieved by retailers. Therefore the empirical findings of this study may have comprehensive managerial implications for successful retailing. Theatrical reflections on the findings should be carefully analysed by retailers in a managerial perspective to apply them in practical retail context.

Managerially speaking, retailers especially organised retailers should have the foresight and vision to sense and perceive the attitude, belief, perception and level satisfaction of consumers in retailing. Therefore the result and empirical reflections on the consumers perception and attitude on retailing should be examined and internalised by the retailers, especially mega retailers to do retail business with courage and confidence. The managerial implication of this part of study is that the majority of consumers do not have prejudice or blind opposition to mega retailers. However, organised retailers should enter the market by respecting the existing culture, value system and other factors that conditioned the purchase behaviour of Indian consumers for a long period. Similarly, traditional retailers/ should view the entry of mega retailers in retail sector very seriously especially 51 percent FDI in multi brand retailing because their core competency don't always help them to survive in an turbulent marketing environment.

The findings of the consumers affinity and attachment test is really very useful to retailers to understand why consumers behave in a particular way in different situations. The segmentation of consumers into five distinctive groups on the basis of the degree of affinity to organised retailers and traditional retailers should be viewed by both mega and traditional retailers with an open mind to accept the reality. The demographic segments wise consumers affinity will definitely help the retailers to understand consumers and in knowing how far they succeed in intruding in to the mind of target consumers. The retailers can formulate and employ such empirical affinity test at periodical intervals to observe the difference in the degree of affinity and then investigating the causes of such difference. This will help the retailers to formulate effective market and positioning strategies by incorporating appropriate marketing inputs

The thorough verification of affinity quadrant importance ratings and perceived performance is very helpful to retailers to understand why a consumer develops affinity to a particular retailer. The ten affinity factors diagnosed in the study should be analysed by both organised and traditional retailers in a managerial perspective to have a self evaluation of their strengths and weaknesses in respect of these factors. One important point to be noted here is that, as far as possible, retailers should not spend extra energy time and money to strengthen a particular affinity factor in which they have no core competency.

Similarly the retailers should also examine the functional performance quadrants in a

professional way to see how do consumers attach importance to these factors and perceive their level of performance. Both organised and traditional retailers have their own core competencies in some function performance quadrant. Therefore, logically both mega and traditional retailers endeavor to

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identify deficiencies in functional performance areas in which they are very competent and then pay attention to other areas of functional performance. That is why, a large chunk of consumers go to malls for leisure, window shopping hanging around which ;count whooping footfalls but has very less impact on sales and patronage. These negative trends suggests a serious an urgent need for investigation with a research-orientation on various dimensions of functional performance factors and marketing offers of retailers to redesign and reshape them in tune with consumers expectations.

The results of the cluster analysis reveals valuable clues on the characteristics of customers.

The cluster analysis has some special managerial implications since the insight from this analysis is the ideal key to open the closed self of consumer mind. The traditional and organised retailers can develop appropriate market targeting and positioning strategy on the basis of distinctive characteristics of different clusters of consumers. By analysing clusters the retailer can develop and offer a clear and impressive preposition which may help the retailer to strongly position them in consumers mind.

Conclusions The conclusions drawn on the basis of analysis and reflective thinking on the results of the

study is very clear and unambiguous. Organised retailers in spite the phenomenon of mall fatigue are able to intrude into Indian retail sector and pose some challenge to traditional Indian retailers to a certain extent. Organised retailers are able to influence the purchase behaviour and satisfy selected segments of consumers through their mega strategies. Even though some segment of consumers, especially the upper class and student community exhibit affinity and interest to mega retailers, majority of Indian consumers still continue to have special satisfaction and liking towards traditional retailers and show hard core loyalty to them. However, it is to be noted that within short period of their entry into the market, organused retailers are able to capture a fair market share in the retail sector which shows that the mall culture is gradually infiltrating to be traditional bound Indian retail sector. The unfortunate development in the retail sector is the increasing vulgarisation of organised retailing enthusiasm and insensible attempt of mega retailers to lure consumers through some unethical marketing gimmicks. As per empirical studies, majority of Indian consumers feel uncomfortable shopping in a sanitized, air conditioned steel and glass environment and they still prefer traditional way of shopping in high streets. However the study suggests that Indian consumers don't have bias and blind opposition to mega retailers which is a clear and insightful warning to traditional retailers to refine their traditional old conservative marketing style to compete with organized retailers who may show their real strength in the years to come Therefore the Government should recognise that modernisation of socially and culturally internilised Indian retailing through the mega entry of organised retailers and FDI in multi brand retailing naturally trigger, chaos and confusion. Traditional Indian retailing is a deeply internilised social phenomenon which is a distinctive model in world retailing. When a major section of the society stands for of the survival and sustainability of traditional retailers, all policy initiatives for the modernisation of Indian retailing should accommodate this sensible societal feelings that will eventually contribute for the overall prosperity and well being of Indian society.

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An Empirical Critique on Traditional and Modern...

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