A

Project Study Report

On

“Impact of Store environment on Generation Y consumers’

impulse buying: A study of Shopper’s stop”

Submitted In the partial fulfilment for the

Award of Degree of

Master of Business Administration

Submitted By:

Krishn Murari Nagar

MBA- IV Semester

Poornima School of Management, Jaipur

ISI-2,RIICO Institutional Area Goner Road, Sitapura, Jaipur.

Poornima School Of magagement

CERTIFICATE

This is to certified that Krishn Murari Nagar of MBA fourth semester of Poornima

School Of Management , Jaipur, has completed his project report on the topic on the

“Impact of Store environment on Generation Y consumers’ impulse buying: A study

of Shopper’s stop” under the supervision of MS. Preeti Tak and MS. Nidhi TAK,

Faculty member, DMS- PCE.

To best of my knowledge the report is original and has not been copied or submitted

anywhere else. It is an independent work done by him.

Dr. Vandana Sharma

(Campus Director)

PSOM

Declaration

Hereby I declare that the project report entitled “Impact of Store environment on

Generation Y consumers’ impulse buying: A study of Shopper’s stop “submitted for

the degree of Master of Business Administration, is my original work and the project

report has not formed the basis for the award of any diploma, degree, associate ship,

fellowship or similar other titles. It has not been submitted to any other university or

institution for the award of any degree or diploma.

KRISHN MURARI NAGAR

MBA- 4th Sem.

Preface

This research report has been prepared to satisfy the requirements of the final semester of

the 2-year MBA program at Poornima School Of Management, Jaipur under Rajasthan

Technical University course of study. The main area of the research topic presented is the

“Impact of Store environment on Generation Y consumers’ impulse buying: A study of

Shopper’s stop”

Retailers are fully aware of the power of impulse buying in enhancing their revenues. The

topic has received substantial attention in the marketing literature, yet little is known about

how the store environment influences unplanned purchases. To that end, this field study

examined the role of environmentally-induced stimulation in influencing impulse buying. In

addition, we investigated the impact of two social factors (perceived crowding and employee

friendliness) on unplanned purchases. The results of this study indicate that perceived

overstimulation (higher than desired) has a positive impact on impulse buying. Moreover, the

two social factors jointly influence consumers’ unplanned purchases. These findings have

several important implications to retail outlets and service operations.

I thank everyone who participated and were involved during the research and report writing

of this project.

ACKNOWLEDGEMENT

Every task that is undertaken should be started by offering prayers to the

Almighty and taking blessings from the elders. In addition, following the completion

of the task, it should end by acknowledging those who extended their time, efforts,

and assistance towards the completion of this research report.

I would like to give heartily thanks to Rajasthan Technical University, Kota who have

given us an opportunity to learn something practical apart from books by including

the in plant this a research work in our MBA Programme.

I express my gratitude to Faculty Guide Miss Preeti Tak and Miss Nidhi Tak who has

supported me to complete this report.

I give my sincere token of thanks to all my faculties, relatives and friends who have

gathered me the wisdom of knowledge. This work is dedicated to my parents who

have supported me throughout my study.

KRISHN MURARI NAGAR

EXECUTIVE SUMMARY

“Retailing is the final step in the distribution of merchandise- the last link in the

supply chain connecting the bulk producers of commodities to the final consumers.”

One undergoing this process is referred to as Retailer. Retailing includes diverse

products such as apparel, footwear, consumer durables, financial services and

leisure. However in India retail trade remains in the backward state but at the same

time is poised to expect a rapid growth in tandem with the economic growth. India’s

$350-400 bn retail market $7.5 bn organized retail is growing about 25-30% annually

against economic growth of around 8% a year. With this onset many players are

entering the market with various products and strategies to cash upon this

development in retail sector, thereby increasing competition.

Similarly there are various retail formats coming up to grab the opportunity in the

retail sector. One of the most prominent retail formats coming up is “Shopping Malls”

which can be defined an arrangement of retail stores and providing the right mix of

shopping, food courts and entertainment and parking facilities. The retail space is

shared by anchor stores and other retailers (tenants), who will pay the developers of

the mall-rent or lease payment for putting up the shop within the mall premises.

Sarang Panchal, Executive Director Customized Research ACNielsen South Asia

says, “With increase in the sheer numbers of malls and modern format stores

shopping has almost become a national pastime in our country especially in the

cities. Strong economic growth along with booming young adult populations with

unprecedented levels of disposable incomes has made people more conscious of

the latest trends and fashions.

TABLE OF CONTENTS

S. No. Content Page No.

1 Introduction 1-8

2 Introduction to the Industry 9-45

3 Introduction to the Organization 46-51

4 Review of Literature 52-80

5 Research Methodology 81-85

6 Facts and Findings 86

7 Analysis and Interpretation 87-97

8 SWOT analysis 98-99

9 Conclusion 100

10 Recommendation and Suggestions 101-102

11 Appendix 103-105

12 Bibliography 106-109

INTRODUCTION

Store environment

Store environment is one of the biggest issues to judge the retailer; retailer certainly

realizes that store environment could affect consumer purchasing decision and the

total shopping experience. The management of the physical environment is

considered as an important element in contributing to a retailer’s financial success

and a valuable shopping experience for consumers (Hines T. and Bruce M. 1993). “

Atmospherics” as the concept was first introduced by Kotler P. (1973), where a

store’s atmosphere is defined as the effort to design buying environments to produce

specific emotional effects in the buyer that enhance purchase probability. In‐ store

environmental stimuli are positively related to the level of pleasure experience in the

store. (Tai and Fung, 1997)

The ambient factors are related to the background character of the environment that

tends to influence consumers at a subconscious level. The elements which are most

considerable are including temperature, lighting, colour, music, smell etc. These

Ambient conditions are normally noticeable to consumers. Undesirable ambient

conditions can cause dissatisfaction if the attention for the consumer is heightened

(www.shvoong.com)

Here the store environment is not including customer services and other intangible

factors. But the interior, exterior, window display, indoor visual merchandise, and the

tools that will help any would‐be store design to be successful are all in the range of

this research and it will be analysed by both aesthetic and functional critical point of

view.

1

Physical environment of fashion retail store is also containing social factors which

are related to sustainability, such as energy using efficiency in the store that is

especially becoming more concerned in Nordic countries. Hence, the sustainable

approach in retailing store design should always be applied in design processing.

Impulse buying

An impulse purchase or impulse buy is an unplanned decision to buy a product or

service, made just before a purchase. One who tends to make such purchases is

referred to as an impulse purchaser or impulse buyer. Research findings suggest

that emotions and feelings play a decisive role in purchasing, triggered by seeing the

product or upon exposure to a well crafted promotional message.

Marketers and retailers tend to exploit these impulses which are tied to the basic

want for instant gratification. For example, a shopper in a supermarket might not

specifically be shopping for confectionary. However, candy, gum, mints and

chocolate are prominently displayed at the checkout aisles to trigger impulse buyers

to buy what they might not have otherwise considered. Alternatively, impulse buying

can occur when a potential consumer spots something related to a product that stirs

a particular passion in them, such as seeing a certain country's flag on the cover of a

certain DVD. Sale items are displayed in much the same fashion.

Impulse buying can also extend to so-called "big ticket" items such as automobiles

and home appliances. Automobiles in particular are as much an emotional purchase

as a rational one. This in turn leads auto dealers all over the world to market their

products in a rapid-fire, almost carnival-like manner designed to appeal to emotion

over reason.

2

Impulse buying disrupts the normal decision making models in consumers' brains.

The logical sequence of the consumers' actions is replaced with an irrational moment

of self gratification. Impulse items appeal to the emotional side of consumers. Some

items bought on impulse are not considered functional or necessary in the

consumers' lives. Preventing impulse buying involves techniques such as setting

budgets before shopping and taking time out before the purchase is made.[4]

A study published in the June 2008 issue of the Journal of Consumer Research

suggests that consumers are more susceptible to making impulsive purchases for

one brand over another if they are distracted while shopping. In the study, Central

Michigan University Psychology professor Bryan Gibson surveyed college students

by measuring their preference for a variety of soft drinks, including Coke and Pepsi.

Results of Gibson's study found that implicit attitudes, or those that people may not

be conscious of and able to verbally express, predicted product choice only when

participants were presented with a cognitive task, suggesting that implicit product

attitudes may play a greater role in product choice when the consumer is distracted

or making an impulse purchase.

Y generation consumers

Generation Y, also known as the Millennial Generation (or Millennials), Generation

Next, Net Generation, Echo Boomers, describes the demographic cohort following

Generation X. As there are no precise dates for when the Millennial generation starts

and ends, commentators have used birth dates ranging somewhere from the mid-

1970s to the early 2000s. Members of this generation are called Echo Boomers, due

to the significant increase in birth rates through the 1980s and into the 1990s, and

because many of them are children of baby boomers. The 20th century trend toward

3

smaller families in developed countries continued, however, so the relative impact of

the "baby boom echo" was generally less pronounced than the original boom.

Characteristics of the generation vary by region, depending on social and economic

conditions. However, it is generally marked by an increased use and familiarity with

communications, media, and digital technologies. In most parts of the world its

upbringing was marked by an increase in a neoliberal approach to politics and

economics. The effects of this environment are disputed.

The term Generation Y first appeared in an August 1993 Ad Age editorial to

describe teenagers of the day, which they defined, at that time, as separate from

Generation X, and then aged 12 or younger (born after 1981), as well as the

teenagers of the upcoming ten years. Since then, the company has sometimes used

1982 as the starting birth year for this generation. "Generation Y" alludes to a

succession from "Generation X."

The name "Echo Boomers" refers to the size of the generation and its relation to the

Baby boomer generation.

Authors William Strauss and Neil Howe have been very influential in defining

American generations in their book Generations: The History of America's Future,

1584 to 2069 (1991). Their generational theory is frequently cited in books and

articles on the subject. Howe and Strauss maintain that they use the term Millennials

in place of Generation Y because the members of the generation themselves coined

the term, not wanting to be associated with Generation X. Almost a decade later,

they followed their large study of the history of American demographics with a book

devoted to the new generation, titled Millennials Rising: The Next Great Generation

4

(2000).[21][22] In both books, William Strauss and Neil Howe use 1982 and 2001 as the

start and end years of the generation, respectively. They believe that the coming of

age of year 2000 high school graduates sharply contrasts with those born before

them and after them due to the attention they received from the media and what

influenced them politically.

According to the authors' 1997 book, The Fourth Turning, modern history repeats

itself every four generations; approximately 80–100 years. The authors of the book

mention that the four-cycles always come in the same order. The first one, the High

cycle, occurs when a new order or human expansion is developed, replacing the

older one. The next cycle is called the Awakening. More spiritual than the previous,

this is a time of rebellion against the already established order. The third cycle is

known as the Unravelling, when elements of individualism and fragmentation take

over society, developing a troubled era which leads directly to the Fourth Turning, an

era of crisis dominating society during which a redefinition of its very structure, goals,

and purposes is established.

Each cycle has its archetypes, the four having the following one defined as: Prophet,

Nomad, Hero, and Artist. According to the aforementioned book, Millennial belong to

the Hero category, featuring a deep trust in authority and institutions; being

somewhat conventional, but still powerful. They grew up during an Unravelling cycle

with more protections than the previous generation (Gen X). They are heavily

dependent on team work, and thus, when they come of age, turn into the heroic

team-working young people of a Crisis. In their middle years, they become the

energetic, decisive, and strong leaders of a High cycle; and in old age, they become

5

the criticized powerful elders of an Awakening cycle. Another previous generation

that belongs to this category is The Greatest Generation (1916–1924).

One author, Elwood Carlson, locates the American generation, which he calls "New

Boomers," between 1983 and 2001, because of the upswing in births after 1983,

finishing with the "political and social challenges" that occurred after the terrorist acts

of September 11, 2001, and the "persistent economic difficulties" of the time.

In Australia, there is much debate over the dates of Generation Y - that is, when

"Gen Y" began, and the "cut-off" period. It is generally accepted, however, that the

first "Gen Y" members were born in 1982. Though some sources use the date range

1982-1995 for the generation, many, including the Australian Bureau of Statistics,

use 1982-2000.

In Canada, 1982 is generally thought to be the starting birth year for Generation Y,

ending in the mid-1990s or 2000, sometimes even as late as 2004.

Like members of Generation X, who are heavily influenced by the advent of MTV,

early members of Generation Y are also sometimes called the MTV Generation. This

term can also be a catch phrase for youth of the late 20th century, depending on the

context.

Fred Bonner believes that much of the commentary on the Millennial Generation

may be partially accurate, but overly general and that many of the traits they

describe apply primarily to "white, affluent teenagers who accomplish great things as

they grow up in the suburbs, who confront anxiety when applying to super-selective

colleges, and who multitask with ease as their helicopter parents hover reassuringly

above them." Other socio-economic groups often do not display the same attributes

6

commonly attributed to Generation Y. During class discussions, he has listened to

black and Hispanic students describe how some or all of the so-called seven core

traits did not apply to them. They often say the "special" trait, in particular, is

unrecognizable. "It's not that many diverse parents don't want to treat their kids as

special," he says, "but they often don't have the social and cultural capital, the time

and resources, to do that."

The Generation most marketers are talking about is Generation Y – also known,

more picturesquely, as the Generation of the Millennium. Most commonly,

Generation Y is defined as including those born between 1980 and 1995. At present,

Generation Y consists of approximately 63 million persons, which makes them the

second largest demographic group in the US. However, by 2020, as the Baby

Boomers (born in the two decades after World War II) start to pass away, Generation

Y will take over as the largest adult generational grouping in the United States.

Key characteristics of Gen Y

• Pragmatic and hard working, with emphasis placed on independence and

individuality

• Ethnically more diverse than any previous generation, displaying a high

degree of tolerance towards different cultures, lifestyles and behaviours

• Economically more optimistic than previous generations, holding a positive

outlook on their lives and their future as a result of growing up in a time of

prosperity

• Remarkably sophisticated consumers with a high level of brand awareness.

Healthy spenders and important agents of purchasing influence

• Comfortable operating in the world of fragmented media, particularly when it

comes to latest technologies. Expected to be responsible for integrating the

7

Net into everyday life In order to define Generation Y as a group of

consumers it is crucial to evaluate and understand the most important

formative values and common experiences shaping Generation Y’s beliefs

and attitudes, and how the interplay between them translates into purchasing

behaviour.

8

INTRODUCTION TO THE INDUSTRY

Background

The Indian retail industry is divided into organised and unorganised sectors.

Organised retailing refers to trading activities undertaken by licensed retailers, that

is, those who are registered for sales tax, income tax, etc. These include the

corporate-backed hypermarkets and retail chains, and also the privately owned large

retail businesses. Unorganised retailing, on the other hand, refers to the traditional

formats of low-cost retailing, for example, the local kirana shops, owner manned

general stores, paan/beedi shops, convenience stores, hand cart and pavement

vendors, etc.

India’s retail sector is wearing new clothes and with a three-year compounded

annual growth rate of 46.64 per cent, retail is the fastest growing sector in the Indian

economy. Traditional markets are making way for new formats such as departmental

stores, hypermarkets, supermarkets and specialty stores. Western-style malls have

begun appearing in metros and second-rung cities alike, introducing the Indian

consumer to an unparalleled shopping experience.

The Indian retail sector is highly fragmented with 97 per cent of its business being

run by the unorganized retailers like the traditional family run stores and corner

stores. The organized retail however is at a very nascent stage though attempts are

being made to increase its proportion. The sector is the largest source of

employment after agriculture, and has deep penetration into rural India generating

more than 10 per cent of India’s GDP.

9

The last few years witnessed immense growth by this sector, the key drivers being

changing consumer profile and demographics, increase in the number of

international brands available in the Indian market, economic implications of the

Government increasing urbanization, credit availability, improvement in the

infrastructure, increasing investments in technology and real estate building a world

class shopping environment for the consumers. In order to keep pace with the

increasing demand, there has been a hectic activity in terms of entry of international

labels, expansion plans, and focus on technology, operations and processes.

This has lead to more complex relationships involving suppliers, third party

distributors and retailers, which can be dealt with the help of an efficient supply

chain. A proper supply chain will help meet the competition head-on, manage stock

availability; supplier relations, new value-added services, cost cutting and most

importantly reduce the wastage levels in fresh produce.

Large Indian players like Reliance, Ambanis, K Rahejas, Bharti AirTel, ITC and many

others are making significant investments in this sector leading to emergence of big

retailers who can bargain with suppliers to reap economies of scale. Hence,

discounting is becoming an accepted practice. Proper infrastructure is a pre-requisite

in retailing, which would help to modernize India and facilitate rapid economic

growth. This would help in efficient delivery of goods and value-added services to the

consumer making a higher contribution to the GDP.

International retailers see India as the last retailing frontier left as the China’s retail

sector is becoming saturated. However, the Indian Government restrictions on the

FDI are creating ripples among the international players like Walmart, Tesco and

many other retail giants struggling to enter Indian markets. As of now the

10

Government has allowed only 51 per cent FDI in the sector to ‘one-brand’ shops like

Nike, Reebok etc. However, other international players are taking alternative routes

to enter the Indian retail market indirectly via strategic licensing agreement,

franchisee agreement and cash and carry wholesale trading (since 100 per cent FDI

is allowed in wholesale trading).

11

Corporate Catalyst India: A report on Indian Retail Industry

Current Status

India’s retail industry accounts for 10 percent of its GDP and 8 percent of the

employment to reach $17 billion by 2010. The Indian retail market is estimated at

US$ 350 billion. But organised retail is estimated at only US$ 8 billion. However, the

opportunity is huge organised retail is expected to grow and touch a retail business

of $ 17 billion as against its current growth level of 3 per cent which at present is

estimated to be $ 6 billion, according to the Study undertaken by The Associated

Chambers of Commerce and Industry of India (ASSOCHAM). Indian retailing is

clearly at a tipping point. India is currently the ninth largest retail market in the world.

And it is names of small towns like Dehradun, Vijayawada, Lucknow and Nasik that

will power India up the rankings soon.

Organised retail in India has the potential to add over Rs. 2,000 billion (US$45

billion) business by the Year 2010 generating employment for some 2.5 million

people in various retail operations and over 10 million additional workforce in retail

support activities including contract production & processing, supply chain &

logistics, retail real estate development & management etc. It is estimated that it will

cross the $650-billion mark by 2011, with an already estimated investment of around

$421 billion slated for the next four years.

Segment analysis

The structure of Indian retail is developing rapidly with shopping malls becoming

increasingly common in the large cities and development plans being projected.

However, the traditional formats like hawkers, grocers and tobacconist shops

12

continue to co-exist with the modern formats of retailing. Modern retailing has helped

the companies to increase the consumption of their products for example: Indian

consumers would normally consume the rice sold at the nearby kiranas viz. Kolam

for daily use. With the introduction of organized retail, it has been noticed that the

sale of Basmati rice has gone up by four times than it was a few years back; as a

superior quality rice (Basmati) is now available at almost the same price as the

normal rice at a local kirana. Thus, the way a product is displayed and promoted

influences its sales. If the consumption continues to grow this way it can be said that

the local market would go through a metamorphoses of a change and the local

stores would soon become the things of the past or restricted to last minute

unplanned buying.

Food and grocery retail

The food business in India is largely unorganized adding up to barely Rs.400 billion,

with other large players adding another 50 per cent to that. The All India food

consumption is close to Rs.9,000 billion, with the total urban consumption being

around Rs.3,300 billion. This means that aggregate revenues of large food players is

currently only 5 per cent of the total Indian market, and around 15-20 per cent of total

urban food consumption. Most food is sold in the local ‘wet’ market, vendors,

roadside push cart sellers or tiny kirana stores. According to McKinsey report, the

share of an Indian household's spending on food is one of the highest in the world,

with 48 per cent of income being spent on food and beverages.

Apparel retail

The ready-mades and western outfits are growing at 40-45 per cent annually, as the

market teems up with international brands and new entrants entering this segment

13

creating an Rs.5 billion market for the premium grooming segment. The past few

years has seen the sector aligning itself with global trends with retailing companies

like Shoppers’ stop and Crossroads entering the fray to entice the middle class.

However, it is estimated that this segment would grow to Rs. 3 billion in the next

three years.

Gems and Jewellery retail

The gems and jewellery market is the key emerging area, accounting for a high

proportion of retail spends. India is the largest consumer of gold in the world with an

estimated annual consumption of 1000 tonnes, considering actual imports and

recycled gold. The market for jewellery is estimated as upwards of Rs. 650 billion.

Pharmaceutical retail

Corporate Catalyst India A report on Indian Retail Industry The pharma retailing is

estimated at about Rs. 300 billion, with 15 per cent of the 51 lakh retail stores in

India being chemists. Pharma retailing will follow the trend of becoming more

organised and corporatized as is seen in other retailing formats (food, apparel etc). A

few corporate who have already forayed into this segment include Dr More pen (with

Life spring and soon to be launched Tango), Medicine Shoppe, Apollo pharmacies,

98.4 from Global Health line Pvt Ltd, and the recently launched CRS Health from

SAK Industries. In the south, RPG group’s Health & Glow is already in this category,

though it is not a pure play pharma retailer but more in the health and beauty care

business.

14

Music Retail

The size of the Indian music industry, as per this Images-KSA Study, is estimated at

Rs.11 billion of which about 36 percent is consumed by the pirated market and

organized music retailing constitutes about 14 percent, equivalent to Rs.1.5 billion.

Book retail

The book industry is estimated at over Rs. 30 billion out of which organized retail

accounts for only 7 per cent (at Rs.2.10 billion). This segment is seen to be emerging

with text and curriculum books accounting to about 50 per cent of the total sales. The

gifting habit in India is catching on fast with books enjoying a significant share, thus

expecting this sector to grow by 15 per cent annually.

Consumer durables retail

The consumer durables market can be stratified into consumer electronics

comprising of TV sets, audio systems, VCD players and others; and appliances like

washing machines, microwave ovens, air conditioners (A/Cs). The existing size of

this sector stands at an estimated US$ 4.5 Billion with organized retailing being at 5

per cent.

15

RETAIL: WORLDWIDE SCENARIO

China- the total sales from retail market in China reached US$755 billion in2005.

However organized retailing in China accounts for only 20% of it. Also the

fragmentation of China's retail market is so high that top 100 retailers makeup for

only 10.5% of the total market. The registered sales of department stores grew by

25.7% and that of convenience stores grew by 36.5% in 2005. The Chinese retail

market is expected to reach new highs as the population of strong middle class is

expected to double by 2020 and mergers and acquisitions among retailers are3

going in great guns. The WTO restrictions are also expected to have a favourable

impact on its retail sector. Key Players Analyzed This section covers the key facts

about players currently operating in the China retail industry including Shanghai

Bailian Group, Beijing Gome Electric, Carrefour, Wal-Mart Stores, Wuhan Zhongbai

Group, and China Paradise Electronics Retail.

Japan- total annual sales for the Japanese retail industry for 2003 amounted to JPY

133,273 billion. Japan had 1.2 million retail establishments in June 2004and there

were 42,738 specialty superstores. The year 2002 to 2004 the annuals sales per

store increased by 3.8%. The growth was mainly driven by the grocery superstores

but the number of superstores specializing in clothes gradually came down. The

organized retail sector in Japan couldn't perform at its full efficiency because of

collapse of the 'bubble economy' in the early 90s

16

Spain- Spain Energy Industry Spain energy consumption is estimated to have

reached 165 Million Tons of Oil Equivalent in 2006. Fossil fuels are the major

sources for energy in Spain especially Oil (49.5%) & Natural Gas (19.9%). With the

Spanish objective of energy security & diversity, and clean energy sources,

renewable sources are expected to grow at rapid pace. Key Findings §Spain is a net

energy importer, with imports accounting for 99% of its total annual oil and natural

gas consumption and 50% of its coal consumption key players in Spain energy such

as Gas Natural Group, CEPS Group, Repsol YPF,Endesa S.A. and Gamesa.

United State- Retail is the second-largest industry in the U.S.by number of

businesses and number of employees. Retail sales in the U.S. (total retail sales

include the categories of gasoline,

17

US Retailing Format

automobiles, and food service) were up about 3.8% in 2007, to $4.49 trillion(Plunkett

Research estimate). The 2007 growth was driven partly by higher gasoline costs as

well as by deep price discounting during the Christmas season by mass

merchandisers and year-long discounting by automobile dealers. Brazil- Emerging

as one of the world's largest retail markets. The sales in the industry have been

growing strongly since 2003 and are expected to continue at this momentum only

over the next few years as constantly declining inflation rate allows for continued

expansion of real incomes (increasing demand for non durable consumer goods)

and credit conditions ease (sustaining demand for durable goods). A process of

consolidation of the retail industry has been underway but overall, the market

remains relatively fragmented, indicating substantial scope for the larger players to

grow their market share in future. The top five supermarket chains account for

approximately 40% of total sales.. All the market values have been converted to US$

at May 2007 exchange rate where, 1 Brazil Real (BRL) = US$ 0.494 (Approx).

18

Penetration of Retail

OBJECTIVES & ROLE OF RETAIL INDUSTRY

Retail is clearly the sector that is poised to show the highest growth in the next five

years. The sector is set for a revolution, as both the present players and new

entrants are gearing up to explore the market. This sector contributes 10% of India's

GDP and the current growth rate is 8.5%. The present size of the organized retailing

sector is approximately 3% and is expected to grow to 25-30% by the year 2010.

There are about 300 new malls, 1500 supermarkets and 325 departmental stores

currently under construction. Many players are coming up with huge investments,

due to which the present 12 million mom-and-pop shops and Kiranas stores fear

losing their business. Most predictions say that the sector might reach to US$ 400-

600 billion by the year 2010

The retail sector has played a phenomenal role throughout the world in increasing

productivity of consumer goods and services. It is the second largest industry in the

United States of America in terms of numbers of employees and establishments.

Wal-Mart, the largest retailer in the United States is also the largest employer in the

United States with annual sales over $ 284 Billion. There is no denying the fact that

most of the developed economies are very much relying on their retail sector as a

locomotive of growth. Analysts, CEOs, and others are using consumer spending and

consumer confidence data originating from the retail sector as an indicator to gauge

the status of the economy

19

Retailing Formats

Format Description The Value Proposition

Branded

Stores

Exclusive showrooms either

owned or franchised out by a

manufacturer

Complete range available

for a given brand,

certified product quality

Specialty

Stores

Focus on a specific

consumer need, carry most

of the brands available

Greater choice to the

consumer, comparison

between brands is Possible

Department

Stores

Large stores having a wide

variety of products,

organized into different

departments such as

clothing, house wares,

furniture, appliances, toys,

etc.

One stop shop catering

to varied/ consumer

needs.

Supermarkets Extremely large self-service

retail outlets

One stop shop catering

to varied consumer

needs

Discount

Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping economies of scale

Low Prices

Hyper- mart Larger than a supermarket, Low prices, vast choice

20

sometimes with a warehouse

appearance, generally

located in quieter parts of the

city

available including services

such as cafeterias

Convenience

stores

Small self-service formats

located in crowded urban

areas.

Convenient location and

extended operating hours.

Shopping Malls An enclosure having different

formats of in-store retailers,

all under one roof.

Variety of shops

available to each other.

Indian Retail- expanding the number of formats

In modern retailing, a key strategic choice is the format. Innovation in formats can

provide an edge to retailers. Organized retailers in India are trying a variety of

formats, ranging from discount stores to supermarkets to hypermarkets to specialty

chains.

Formats Adopted by Key Players in India

Retailer Original formats Later Formats

RPG Retail Supermarket

(Foodworld)

Hypermarket

(Spencer's)Specialty

Store (Health and Glow)

Piramal's Department Store

(Piramyd Megastore)

Discount Store (TruMart)

Pantaloon Small format outlets Supermarket(Food

21

Retail (Shoppe)Department Store

(Pantaloon)

Bazaar)

Hypermarket (Big Bazaar)

Mall(Central)

K Raheja

Group

Department Store (shopper's

stop)SpecialtyStore(Crossword

)

Supermarket (TBA)

Hypermarket (TBA)

Tata/ Trent Department Store

(Westside)

Hypermarket (Star India

Bazaar)

Landmark

Group

Department Store(Lifestyle) Hypermarket (TBA)

Others Discount Store (Subhiksha, Margin Free, Apna Bazaar),

Supermarket (Nilgiri's), Specialty Electronics

COMPETITION OVERVIEW

Profile of the Major Players

Pantaloon Retail

Pantaloon Retail (India) Limited, is India’s leading retail company with presence

across multiple lines of businesses. The company owns and manages multiple retail

formats that cater to a wide cross-section of the Indian society and is able to capture

almost the entire consumption basket of the Indian consumer. Headquartered in

Mumbai (Bombay), the company operates through 4 million square feet of retail

22

space, has over 140 stores across 32 cities in India and employs over 14,000

people. Pantaloon Retail forayed into modern retail in 1997 with the launching of

fashion retail chain, Pantaloons in Kolkata. In 2001, it launched Big Bazaar, a

hypermarket chain that combines the look and feel of Indian bazaars, with aspects of

modern retail, like choice, convenience and hygiene.

The group’s subsidiary companies include, Home Solutions Retail India Ltd,

Pantaloon Industries Ltd, Galaxy Entertainment and Indus League Clothing. The

group also has joint venture companies with a number of partners including French

retailer Etam group, Lee Cooper, Manipal Healthcare, Talwalkar’s, Gini & Jony and

Liberty Shoes. Planet Retail, a group company owns the franchisee of international

brands like Marks & Spencer, Debenhams, Next and Guess in India.

Lifestyle International

Lifestyle International Holdings Ltd’s principal activity is the operation of lifestyle

department store and retail outlets. It focuses on high-end department store format.

As of December 31, 2005, Lifestyle International operated its retailing business

through two brand names, SOGO and Jiuguang. The SOGO Department Stores

consists of the Company's flagship department store, SOGO CWB, in Causeway

Bay, Hong Kong, and the Tsimshatsui store, which features a slightly different format

that targets younger group of customers. The Jiuguang Department Store, which is

located in Shanghai, has a similar business format as that of the SOGO store.

During the year ended December 31, 2005, it launched SOGO CLUB, a lifestyle

service center. Some of the Company’s subsidiaries include Asia Kinetic Limited,

Congenial Company Limited, Eastlord Development Limited, Everwin Worldwide

Limited and Fine Shine Limited.

23

RPG Retail

RPG Enterprises is one of India’s largest business conglomerates, with a turnover of

US$ 1.65 billion (Rs 7,472 crore) and assets worth US$ 1.8 billion. Since its

inception in 1979, RPG Enterprises has been one of the fastest growing groups in

India with more than 20 companies operating successfully in 7 business sectors:

Retail, IT & Communications, Entertainment, Power, Transmission, Tyres and Life

Sciences.

Shopper’s Stop

The foundation of Shoppers’ Stop was laid on October 27, 1991 by the K. Raheja

Corp. group of companies. From its inception, Shoppers’ Stop has progressed from

being a single brand shop to becoming a Fashion & Lifestyle store for the family.

Shoppers’ Stop is the only retailer from India to become a member of the prestigious

Intercontinental Group of Departmental Stores (IGDS). The IGDS consists of 29

experienced retailers from all over the world, which include established stores like

Selfridges (England), Karstadt (Germany), Shanghai No. 1 (China), Matahari

(Indonesia), Takashimaya (Japan), C K Tang (Singapore), Manor (Switzerland) and

Lamcy Plaza (Dubai). This membership is restricted to one member organization per

country/region.

Trent (Tata)

Trent (Tata) was established in 1998, Trent operates some of the nation’s largest

and fastest growing retail store chains. A beginning was made in 1998 with

Westside, a lifestyle retail chain, which was followed up in 2004 with Star India

Bazaar, a hypermarket with a large assortment of products at the lowest prices. In

24

2005, it acquired Landmark, India’s largest book and music retailer. In a recently

signed deal, Trent has agreed to anchor 12 malls set up by DLF Universal Ltd across

the country, at its Westside, Landmark and Star India Bazaar outlets. This amounts

to about 27 locations, totalling to about a million square feet of space.

25

INVESTMENT POLICY AND INITIATIVES

FDI Policy in the Retail Sector

India has kept the retail sector largely closed to outsiders to safeguard the livelihood

of nearly 15 million small storeowners and only allows 51 per cent foreign investment

in single brand retail with prior Government permission. FDI is also allowed in the

wholesale business. Single-brand retailers such as Louis Vuitton, Fendi, LLadro,

Nike and Toyota can operate now on their own. Metro is already operating through

the cash-and-carry wholesale mode.

The policy makers continue to explore areas where FDI can be invited without

hurting the interest of local retail community. Government is considering opening up

of the retail trading for select sectors such as electronic goods, stationery, sports

goods, and building equipment.

Foreign direct investment (FDI) in retail space, specialized goods retailing like sports

goods, electronics and stationery is also being contemplated. The Government has

to walk a tightrope to ensure a `level playing field' for everyone.

The policy of permitting 51 per cent FDI in single-brand product retailing has led to

the entry of only a few global brands such as Nike (footwear), Louis Vuitton (shoes,

travel accessories, watches, ties, textiles ready-to wear), Lladro (porcelain goods),

Fendi (luxury products), Damro (knock-down furniture), Argenterie Greggio

(silverware, cutlery, traditional home accessories and gift items) and Toyota (retail

trading of cars), into retail trading. A 12-billion euro French luxury industry is also

eyeing the domestic luxury segment to make a presence through retailing directly.

26

Business models for entry in Indian markets

Due to the FDI restrictions the international players are looking for alternative

avenues to enter the Indian markets. However FDI restrictions in retailing have not

deterred prominent international players from setting up shops in India. In recent

developments, the Australian retail giant Woolworth Ltd made in innovative entry in

India’s retail space, with India’s Tata group. The Tata group has floated Infiniti Retail

Ltd, in venture with which will sell consumer goods and electronics across the

country. Infiniti Retail will be a 100 per cent subsidiary of Tata Sons and will receive

an initial equity infusion of Rs 4 billion. This Tata retail venture joined hands with

Australian retail giant Woolworths Ltd, which currently operates more than 2,000

stores in 12 different formats. While Infiniti will own and run retail operations in India,

Woolworths, which has attained notable success in selling electronics and consumer

goods through its Dick Smith Electronics chain, will provide technical support and

strategic sourcing facilities from its global network. At present entry into India’s retail

sector can be done through three different routes.

Current entry options for foreign players

Franchise agreements - Most widely used entry route by multinational

retailers

Fast food retailer Domino’s entered India through master franchise root while

Pizza Hut entered through regional franchisee

Cash and Carry

wholesale trading- 100% FDI is allowed in wholesale trading which involves

building of a large distribution infrastructure to assist local manufacturers. The

27

wholesaler deals only with smaller retailers and not consumer. Metro AG of

Germany was the first significant global player to enter India through this route

Strategic licensing agreements - Foreign company enters into a licensing

agreement with a domestic retailer. Mango, the Spanisn apparel brand has

entered India through this route with an agreement with Piramyd, Mumbai,

SPAR entered into a similar agreement with Radhakrishna Foodlands Pvt.

Ltd

OPPORTUNITIES AND CHALLENGES

Investment Opportunities in the Retail Sector

AT Kearney’s study on global retailing trends found that India is the least competitive

as well as least saturated of all major global markets. This implies that there are

significantly low entry barriers for players trying to setup base in India, in terms of the

competitive landscape. The report further stated that global retailers such as

Walmart, Carrefour, Tesco and Casino would take advantage of the more favourable

FDI rules that are likely in India and enter the country through partnerships with local

retailers. Other retailers such as Marks & Spencer and the Benetton Group, who

operate through a franchisee model, would most likely switch to a hybrid ownership

structure.

A good talent pool, unlimited opportunities, huge markets and availability of quality

raw materials at cheaper costs is expected to make India overtake the world's best

retail economies by 2042, according to industry players. The retail industry in India,

according to experts, will be a major employment generator in the future. Currently,

28

the market share of organised modern retail is just over 4 per cent of the total retail

industry, thereby leaving a huge untapped opportunity.

The sector is expected to see an investment of over $30 billion within the next 4-5

years, catapulting modern retail in the country to $175-200 billion by 2016, according

to Technopak estimates.

The Potential of the Indian Retail Sector

The high growth projected in domestic retail demand will be fuelled by:

The migration of population to higher income segments with increasing per

capita incomes

An increase in urbanisation

Changing consumer attitudes especially the increasing use of credit cards

The growth of the population in the 20 to 49 years age band

There is retail opportunity in most product categories and for all types of

formats

Food and Grocery: The largest category; largely unorganised today

Home Improvement and Consumer Durables: Over 20 per cent p.a. CAGR

estimated in the next 10 years

Apparel and Eating Out: 13 per cent p.a. CAGR projected over 10 years

Investment Opportunities

Potential For Investment: The total estimated Investment Opportunity in the

retail sector is around US$ 5-6 Billion in the Next five years.

Location: with modern retail formats having made their foray into the top cities

namely Hyderabad, Coimbatore, Ahmedabad, Mumbai, Pune, Chennai,

29

Bangalore, Delhi, Nagpur there exists tremendous potential in two tier towns

over the next 5 years.

Sectors with High Growth Potential: Certain segments that promise a high growth

are

• Food and Grocery Clothing

• Furniture and Fixtures

• Pharmacy

• Durables, Footwear & Leather, Watch & Jewellery

Fastest Growing Formats: Some of the formats that offer good growth potential

are:

• Speciality and Super Market

• Hyper Market

• Discount stores

• Department Stores

• Convenience Stores and E-Retailing

Supply Chain Infrastructure: Supply chain infrastructure in terms of cold chain and

Logistics.

Rural Retail: Retail sector offers opportunities for exploration and investment in rural

areas, with Corporates and Entrepreneurs having made a foray in the past. India's

largely rural population has caught the eye of retailers looking for new areas of

growth. ITC launched the country's first rural mall ' Chaupal Sagar', offering a diverse

product range from FMCG to electronics appliance to automobiles, attempting to

provide farmers a one-stop destination for all of their needs. There has been yet

another initiative by the DCM Sriram Group called the ' Hariyali Bazaar', that has

initially started off by providing farm related inputs and services but plans to

introduce the complete shopping basket in due course. Other corporate bodies

30

include Escorts and Tata Chemicals (with Tata Kisan Sansar) setting up agri-stores

to provide products/services targeted at the farmer in order to tap the vast rural

market.

Wholesale Trading: wholesale trading also holds huge potential for growth. German

giant Metro AG and South African Shoprite Holdings have already made headway in

this segment by setting up stores selling merchandise on a wholesale basis in

Bangalore and Mumbai respectively. These new-format cash-and-carry stores attract

large volumes from a sizeable number of retailers who do not have to maintain

relationships with multiple suppliers for all their needs.

Cheap Consumer Credit

CHALLENGES OF RETAIL INDUSTRY

The big challenge for the Indian retailing industry is the heterogeneity of the market.

It is up to us retailers to evolve with consumers, predict where and what they will

spend on, be there and take the highest share of their wallet and use this last leg of

the economic chain to build India. At Panta-loon, through our delivery formats, we

touch 52% of the customer¡¦s wallet. My vision is to capture where this new, young

and emergent India is going to spend and capture as close to 100% of their

shopping.

31

So far, modern-format retail has scaled up its presence in the metros anda few cities.

However, the future will see tier-II and, may be; even tier-III cities attract more retail

outlets. Consumer mindset and behaviour is changing in these cities. A growing

base of affluent, upwardly mobile consumers have similar needs and desires as their

urban counterparts and they are looking for instant gratification. With satellite

television, internet and mobile communication available in smaller cities, people are

increasingly exposed to how the ‘West’ lives. Tier-II and tier-III cities present an

enormous growth potential over the next five years and arethe future of modern retail

in India

MAJOR CHALLENGES

1.Amalgamation or Confusion- According to TATA Strategic Management Group,

India has a high density retail structure of 1 retail outlet per 90 people and is the 9th

largest retail market in the world. But the structure of the retail industry in India is in

utter jumble. The parallel operation of convenience stores, supermarkets,

hypermarkets and specialty stores in the economy is bewildering. According to the

'Wheel of Retailing Theory', certain loopholes in tone of the forms of marketing can

get communicated to other forms also.

32

2. What to sell- Another bemusement is the category of items to be offered.

According to researches, 41 percent of total consumption expenditure goes to the

segment of food and groceries and it accounts for 77 percent of total retail sales. So

it is obvious that this is the most preferred section of retailers. But unfortunately the

foible taste bias for 'wet market' (i.e. fresh food available through hawkers) has

marred this prospect also. Therefore supply chain management, storage of fresh

perishable foods and persuading the customers that the food is inexpensive despite

being fresh are genuine challenges to the newcomers. Diversifying the product base

to consumer products such as readymade garments, furniture’s, mobiles and

computers can mitigate the losses, if any from food marketing and also broaden the

reach to consumers.

3. Nostalgia- Indian shopping habits are no different. People tend to attach qualities

like honesty, fair price, good behaviour etc. to shopkeepers with whom they have

been dealing right from childhood. They find no reason to go to a distant megaspore

without any genuine reason. This problem is difficult to deal with as it demands a

change in long-formed mindset. Organized retail outlets can overcome this problem

by employing eligible local peoples who can interact in vernacular language and win

the confidence of people.

4. Information Technology- This is a major problem and India must act fast if it

wishes to create a smooth field for organized retailing. Digitization of services will

make transfer of goods easy and an improvement in supply chain management will

definitely play a significant role in attracting more consumers and less consumer

grievances. Besides, it will generate easier payments option for customer and easier

money movement for the CEOs of these highly diversified malls.

33

MINOR CHALLENGES

1. Human resource crunch- the concern for insufficient manpower in the industry

has been in news for the last few months. This fear is somehow unfounded. The

retail industry according to recent reports is growing at a rate of100 percent. Kishore

Biyani's Future Group i.e. the Big Bazaar chain of retail outlet alone provides

employment to more than 18,000 people and is planning to expand its employment

base to 34,000 by June 2008. If we add to this the foray by mega players like

Reliance and Bharti-Walmart then the fear can surely turn into a misperception.

Retailing mainly deals with hard-selling of space, trade of stocks and building of

relationships. Since most of the openings are for front line shop people, a graduation

will suffice. Nowadays many institutes also provide post-HSC and post-graduate

retail-specific courses.

2. Hindrances from government- Some political parties want the government to

amend laws and improve curbs so that the mega players can't openly decimate the

unorganized retail sector. This is a conclusion based on a myopic outlook and must

be amended for a long term strategy. The fear is baseless because of the reasons

mentioned above. The mega stores will no doubt provide employment to the less

educated masses. Also taking business away especially from small food vendors is

more easily said than done. Instead the limiting move will send wrong signals to the

investors and will ward off investments when the states need it most. Allowing 51

percent retail FDI in single brand retailing is a welcome move in this direction. It is

expected that the government will create further opportunities for the organized retail

to come up as home grown investment is always sweeter than foreign investment.

OTHER CHALLENGES :

LOCATION:

34

"Right Place, Right choice “Location is the most important ingredient for any

business that relies on customers, and is typically the prime consideration in a

customer’s store choice. Locations decisions are harder to change because

retailers have to either make sustainable investments to buy and develop real

estate or commit to long term lease with developers. When formulating decision

about where to locate, the retailer must refer to the strategic plan:

Investigate alternative trading areas.

Determine the type of desirable store location

Evaluate alternative specific store sites

2) MERCHANDISE:

The primary goal of the most retailers is to sell the right kind of merchandise and

nothing is more central to the strategic thrust of the retailing firm. Merchandising

consists of activities involved in acquiring particular goods and services and making

them available at a place, time and quantity that enable the retailer to reach its goals.

Merchandising is perhaps, the most important function for any retail organization, as

it decides what finally goes on shelf of the store.

3) PRICING:

Pricing is a crucial strategic variable due to its direct relationship with a firm’s goal

and its interaction with other retailing elements. The importance of pricing decisions

is growing because today's customers are looking for good value when they buy

merchandise and services. Price is the easiest and quickest variable to change.

4) TARGET AUDIENCE:

35

"Consumer the prime mover"

"Consumer Pull", however, seems to be the most important driving factor behind the

sustenance of the industry. The purchasing power of the customers has increased to

a great extent, with the influencing the retail industry to a great extent, a variety of

other factors also seem to fuel the retailing boom.

5) SCALE OF OPERATIONS:

Scale of operations includes all the supply chain activities, which are carried out in

the business. It is one of the challenges that the Indian retailers are facing. The cost

of business operations is very high in India.

PAST/ PRESENT/ FUTURE OF RETAIL INDUSTRY

Before the decade of eighties, India with hundreds of towns and cities was a nation

striving for development. The evolution was being witnessed at various levels and

the people of India were learning to play different roles as businessmen and

consumers.

Retail-which literally means to put on the market, is a very important aspect of every

city. Without a well organized retail industry we would not have our necessities and

luxuries fulfilled. Be it our daily groceries or fashion accessories and everything in

between, retail industry brings us the blissful experience of shopping. Though

organized retailing industry began much earlier in the developed nations, India had

not actively participated. However with its vast expanse and young population, India

in the 21st century emerges as highly potential retail market. The journey of retailing

in India has been riveting and the future promises further growth. Here is a complete

picture deciphering the past, present and future trends of Indian Retail Market. It is

widely accepted that the retail industry has undergone a drastic change in last five

36

years and there is yet more to come. Let us compare the image of Indian retailing in

2004-05 to that of its status in 2007-08 in the following table’

37

Magnification of the Indian Retail Industry

Yardstick Situation in 06-07 Situation in 08-09

Value of retail sales Rs. 10,20,000 crore Rs 12,00,000 crore

Annual growth rate 5% 5.7%

Value of organized market Rs 35,000 crore Rs 55,000 crore

Share of organized market in

theSector

3.4% 4.6%

Forecasts (after 5 years)

aboutsize of organized retail

market

Over Rs. 1,00,000

crore

Rs. 2,00,000 crore

Forecasts about growth rate

oforganized retail market

Around 30% Around 40%

Comparison of Retail Industry

The above table clearly shows that the retail market as well as the mind set required

for it has experienced a thorough reversal in the last three years. This is just the

beginning and Indians are sanguine that the sector will see rosy days in the future.

This confidence has helped India acquire the No.1 position among30 most attractive

retailing destinations in the world according to the Global Retail Development Index

of 2005 (by AT Kearney, India). Among emerging markets, India holds the second

position after China in the list of most favoured retail destinations

38

Past – Retail Industry in India

Before the decade of eighties, India with hundreds of towns and cities was a nation

striving for development. The evolution was being witnessed at various levels and

the people of the nation were learning to play different roles as businessmen and

consumers. The foundation for a strong economy were being laid, youth were

beckoning new awareness in all spheres. And this brought in an opportunity for retail

industry to flourish. First in the metros and major cities later to impact sub urban and

rural market as well. Retailing in India at this stage was completely unorganized and

it thrived as separate entities operated by small and medium entrepreneurs in their

own territories. There was lack of international exposure and only a few Indian

companies explored the retail platform on a larger scale. From overseas only

companies like Levi's, Pepe, Marks and Spencer etc. had entered targeting upper

middle and rich classes of Indians. However as more than 50 %population was

formed by lower and lower middle class people, the market was not completely

captured. This was later realized by brands like Big Bazaar and Pantaloons who

made their products and services accessible to all classes of people and today the

success of these brands proves the potential of Indian retail market. A great shift that

ushered in the Indian Retail Revolution was the eruption of Malls across all regional

markets. Now at its peak, the mall culture actually brought in the organized format for

Retailing in India which was absent earlier. To your surprise there was not a single

mall in India a decade before and just a few years ago only a handful of them were

striving, today there are more than 50 malls across different cities and 2 years from

now around 500 malls are predicted to come up.

39

Present – Retail Industry in India: At present the Retail industry in India is

accelerating. Though India is still not at an equal pace with other Asian counterparts,

Indian is geared to become a major player in the Retail Market. The fact that most of

the developed nations are saturated and the developing ones still not prepared, India

secures a great position in the international market. Also with a highly diverse

demography, India provides immense scope for companies brining in different

products targeting different consumers. According to the Global Retail Development

Index, India is positioned as the foremost destination for Retail investment and

business development. The factor that is presently playing a significant role here is

the fact that a large section of Indian population is in the age group of 20-34 with a

considerably high purchasing power; this has caused the increase in the demand in

the urban market resulting in consistent growth in the Retail business.

And though the metros and other tier 1 cities continue to sustain Retail growth, the

buzz has now shifted from these great cities to lesser known ones. As the spending

power is no longer limited to metros, every tier 2 city in the country has good market

for almost every product or service. Due to this, tier 2cities like Chandigarh,

Coimbatore, Pune, Kolkatta, Ahmedabad, Baroda,Hyderabad, Cochin, Nagpur,

Indore, Trivandrum etc. provide a good platform for a brand to enter Indian market.

However there are a few precautions for every brand that explores Indian market. As

Indian consumers are very curious and have a broad perspective, they respond well

to a new product or concept and there are very fair chances ofa brand surviving well,

but every Indian consumer be it an urbanite or a small town dweller needs a feeling

of value for money. Although labeled as tight-fisted, Indian consumers are great

spenders once they realize that they are getting value for their money. Also new

product /service concepts from the western world are better adopted first by the

40

urban Indians, the smaller markets respond well to the need based retailing rather

than luxury concepts.

As the Indian retailing is getting more and more organized various retail formats are

emerging to capture the potential of the market.

Mega Malls

Multiplexes

Large and small supermarkets

Hypermarkets

Departmental stores are a few formats which flourishing in the both big and

small regional markets .As the major cities have made the present retail

scenario pleasant, the future of the Indian Retailing industry lies in the rural

regions. Catering to these consumers will bring tremendous business to

brands from every sector. However as the market expands companies

entering India will have to be more cautious with their strategic plans.

Future – Retail Industry in India

According to a study the size of the Indian Retail market is currently estimated at Rs.

704 crores which accounts for a meagre 3 % of the total retail market. As the market

becomes more and more organized the Indian retail industry will gain greater worth.

The Retail sector in the small towns and cities will increase by 50 to 60 % pertaining

to easy and inexpensive availability of land and demand among consumers. Growth

in India Real estate sector is also complementing the Retail sector and thus it

becomes a strong feature for the future trend. Over a period of next 4 years there will

be a retail space demand of 40 million sq. ft. However with growing real estate sector

space constraint will not be there to meet this demand. The growth in the retail

41

sector is also caused by the development of retail specific properties like malls and

multiplexes. According to a report, from the year 2003 to 2008 the retail sales are

growing at a rate of 8.3% per annum. With this the organized retail which currently

has only 3% of the total market share will acquire 15-20 % of the market share by

the year 2010.Factors that are playing a role in fuelling the bright future of the Indian

Retail are as follows:

(1) The income of an average Indian is increasing and thus there is a

proportional increase in the purchasing power.

(2) The infrastructure is improving greatly in all regions is benefiting the market.

(3) Indian economy and its policies are also becoming more and more liberal

(4) Making way for a wide range of companies to enter Indian market.

(5) Indian population has learnt to become a good consumer and all national

and international brands are benefiting with this new awareness.

(6) Another great factor is the internet revolution, which is allowing foreign

brands to understand Indian consumers and influence them before entering

the market. Due to the reach of media in the remotest of the markets,

consumers are now aware of the global products and it helps brands to build

themselves faster in a new region However despite these factors contributing

to the growth of Indian retail Industry, there are a few challenges that the

industry faces which need to be dealt with in order to realize the complete

scope of growth in Indian market. Foreign direct investment is not allowed in

retail sector, which can be a concern for many brands. But Franchise

agreements circumvent this problem. Along with this regulations and local

laws and real estate purchase restrictions bring up challenges. And with

Good Planning, Timely Implementation and a media campaign that touches

Indian consumers any brand can go far ahead in the Indian Retail Revolution.

42

43

IMPACT OF RETAIL INDUSTRY IN GLOBAL WORLD

Organized retailing is spreading and making its presence felt in different parts of the

Country. The trend in grocery retailing however, has been slightly different with a

Growth concentration in the South. Though there was traditional family owned retail

Chains in South India such as Nilgiri’s as early as 1905, the retail revolution

happened With the RPG group starting the Food world chain of food retail outlets in

South India With focus on Chennai, Hyderabad and Bangalore markets,

preliminarily. The Experiment has reaped rich dividends and the group is now

foraying into other Territories as well as. Owing to the success of Food world model

of RPG group, several new models such as Trinethra, Subhiksha, Margin Free and

others have made their foray into this sector albeit at regional levels. Today the food

retail sector in India is about Rupees Ten Lakh Corers (USD 200 billions) of which

the organized food retail segment is about 1 per cent and increasing at a pace of

over 20% year to year.

To be successful in food retailing in India essentially means to draw away shoppers

from, the roadside hawkers and Kiranas stores to supermarkets. This transition can

be achieved to some extent through pricing, so the success of afoot retailer depends

on how best he understands and squeezes his supply chain. The other major factor

is that of Convenience shopping which the supermarket has the edge over the

traditional Kiranas Stores. On an average a supermarket stocks up to 5000 SKU’s

against few hundred stocked at an average Kiranas stores. Though with excellent

potential, India poses a complex situation for a retailer, as this is a Country where

each State is a mini-Country by itself. The demography’s of a region Vary quite

distinctly from others. In order to appeal to all classes of the society, retail Stores

would have to identify with different lifestyles. Hence we may find more of Regional

44

players and it would take enormously long time before nationwide successful Retail

chains emerge. This is the main reason as to why the successful retail chains in the

Countries today operate at regional segments only and are not aiming at nationwide

Presence, at least for the time being. In the organized retail industry, the gestation

periods are long, institutional funding is Difficult, and there is none or little

Government support. But the belief among top Retailer chains in the country is that

the industry will see large investments coming once. The current ban on foreign

direct investment is lifted. But that could be two-three years Away. Food and grocery

retailing is a tough business in India with margins being very Low and consumers not

dissatisfied with existing shops where they buy. For example, the next-door grocery

shopkeeper is smart and delivers good customer service, though not value.

As of now, while Chennai has about five organized food and grocery retail chains,

other big cities such as Delhi, Bangalore, and Mumbai average only two-three such

chains. Almost all food retail players have been region specific as far as

geographical presence is concerned in the country. To illustrate with examples, the

RPG Group's Food World, Nilgiri’s, Margin Free, Giant,Varkey's and Subhiksha, all

of which are more or less spread in the Southern region; Sabka Bazaar has a

presence only in and around Delhi; names such as Haiko and Radhakrishna Food-

land are Mumbai-centric; while Adani is Ahmedabad-centric. Industry topography in

India is such that spreading presence across cities is a tough call. As pointed out by

many experts, organized food and grocery retailing chains going national requires

significant investments. Retailing within this sector is not just about the front-end, but

involves complex supply chain and logistics issues as well. The trend and mindset of

the present retailer chains in India can be best understood by studying Food-World

45

as an example, which came in first in the food and grocery retailing sector. The chain

has no plans to venture beyond the Southern region just yet. Current plans are to

focus on the Southern markets and achieve saturation. The intention is that by 2005,

they could look at the other regions. Subhiksha, a Chennai based discount chain, too

wants to be the principal store of purchase for at least 40 per cent of all consumers

living within500-750 meters of the store, that is, within walking distance. This makes

the point very clear that the strategy among most existing retail chains of various

formats is to completely saturate the markets where they are already established

players and then move on to virtually untouched areas where the challenge of

sourcing resources and extending their supply chain model to best suit the size and

expanse of the market would be a challenging task. Meanwhile, the RPG group

plans to take its new formats such as Giant Hypermarkets national over the next

three years. Grocery is a large component of this format, but not the only one. To

elaborate on the hurdles of going pan-Indian, fundamentally, the way a basic grocery

retailing model works is that the high set-up costs in terms of setting up buying/

distribution infrastructure is gradually amortized over a larger number of stores. The

back-end costs without distribution centre costs, or what in retail jargon is called

retail administration costs, should stabilize at around 2.5 per cent to 3 per cent of

sales.

There are many problems face by Retail industry in Indian Market. They are

following:-

The format does not suit rural India: While the format suits the urban areas, it

does not suit the rural areas in a country like India. Today, in Indian, organized

retailing is confined to class A cities, the 23 largest cities. About 82per cent of

organized retailing comes from the top six cities and another 12percent from the next

46

four. Thus, the top 10 cities account for 94 per cent of all organized retailing in India.

The scattered location of consumers has been the

main deterrent to the rapid spread of the idea in the rural areas.

Purchasing patterns not very conducive: Even in urban centres, the purchasing

patterns of the Indian consumers differ from those of westerners. Whereas in the

west, the purchases are spread better over the month, in India. Purchases are by

and large made in the first week of the month. Theirs perhaps has a correlation to

patterns of payment of wages; Purchasing patterns differ also because of the

difference in the eating habits of people. Inadequate growth of brands: Inadequate

growth of brands is another factor, In India, branding was almost not-existent in

convenience products until recently; this has naturally inhibited retailing through

sophisticated chains. Supply chain problems: As suppliers are not properly

organized in the country, replenishment of stock poses problems for large chains.

Source development also poses special problems.

Being family businesses, retailing enterprises have limitation in expansion; Yet

another reason for the slow pick up of mega retailing idea in India is that all along

retail enterprises have been family concerns. And, family businesses usually have a

limitation in expansion, Example of Vivek’s; The Vivek’s (Formerly Vivek’s& Co. ) of

Chennai, is an example. For the past several years, it remained rather small

because of its family character. During the three decades from 1965 to 1995, it had

just three showrooms. It was a family concern and remained for a long time, a single

store outfit, managed by the father and assisted by his three sons. Once the father

grew old, the sons started managing the business, and because there were three

sons engaged in the business, the enterprise went in for three showrooms. In recent

47

years, however, it has emerged as a major chain, as it has shed its family business

character, now it is actually the largest consumer durable chain in the country. It has

big sales volumes and multiple locations.

Real estate problems; Real estate is an integral requirement of large scale chain

store operation. One needs a large number of stores in each city to achieve optimum

scale. Also, big chains have to operate in several cities. Real-estate thus becomes

crucial. That is why groups that have been in real estate and hotel businesses are

more comfortable in branching off into retailing. For other firms, real estate

development is a problem; they do not command property in prime locations.

Other Limitation of Retail Industry

The organized retail industry in India is faced with stiff competition from the

unorganized sector.

There is a shortage of quality real estate and infrastructure requirements in

our country.

Opposition to Foreign Direct Investment from small traders affects retail

industry.

A very high stamp duty on transfer of property affects the industry.

Shortage of retail space in central and downtown locations also hinders the

growth of retail industry.

Presence of strong Pro-tenancy laws makes it difficult to evict tenants and this

is posing problems.

Land-use conversion is time consuming and becoming complex.

For settling property disputes, it consumes lot of time.

Non residents are not allowed to own property except they are of Indian

origin.

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Inadequacies in infrastructure such as lack of high quality road networks,

power shortages and insufficient storage spaces

SHOPPERS STOP PROFILE

Shoppers Stop Limited was founded by K Raheja Corp in 1991 laying the foundation

of the organized retail industry in India. It started operations with the first store in

suburban Mumbai and is now a multi-channel retailer with 30 large format

department stores and online presence. From its inception, Shopper's Stop has

progressed from being a single brand shop to becoming a Fashion & Lifestyle store

for the family. Today, Shopper's Stop is a household name, known for its superior

quality products, services and above all, for providing a complete shopping

experience.

With an immense amount of expertise and credibility, Shoppers’ Stop has become

the highest benchmark for the Indian retail industry. In fact, the company’s continuing

expansion plans aim to help Shoppers’ Stop meet the challenges of the retail

industry in an even better manner than it does today.

Shoppers Stop invested in and acquired the Crossword Bookstores which now

operates more than 50 stores across the country. It has also invested in Hyper CITY,

a hypermarket which has been rated as amongst the top 100 stores worldwide.

With exclusive brands as well as domestic and international brands, Shoppers Stop

continues its expansion across the country with the department stores, bookstores

and hypermarkets. Shoppers Stop also operates specialty stores for expectant

mothers and children in arrangement with Mother care, and cosmetic boutique stores

with MAC.

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A JV with The Nuance Group of Zurich operates airport retail stores at Bangalore

and Hyderabad airports in India. Shoppers Stop also has an online store @

http://www.shoppersstop.com which within a few months of launch has become one

of the most popular shopping destinations for online shoppers.

Shoppers Stop Voucher

Since its inception in the year 1991, it has progressed from a single branded shop to

an entire fashion and lifestyle store for a family. Today, the Shoppers Stop has

become a household name and is known all around India for its highest quality of

products and services and most of all to provide a unique shopping experience to the

shoppers. With immense amount of credibility and expertise, Shoppers Stop has

moved forward to become the highest bench mark of Indian retail industry. By

providing Shoppers Stop Voucher to its regular customers, the chain provides a

token of concern and loyalty towards the shoppers.

Shoppers Stop Gift Voucher

Shopping at Shoppers Stop is not all about shopping but it is also an experience that

you feel. Similarly a Shoppers Stop Voucher is not all about gifting but they are a

symbol of the joys of living. Usually, these vouchers are valid at all the Shoppers

Stop outlets, HomeStop, MotherCare, Arcelia, Crossword and Stop &Go for one year

from the date of issue. A Shoppers Stop Voucher can prove to be a great gift item

for your loved one as through these vouchers, they will be able to purchase whatever

they like in the store, while the payments are already been made by you at the time

of purchasing the voucher. Some items are usually excluded from being purchased

through a Shoppers Stop Voucher which may include mobile phones and

accessories, gold coins and jewellery.

Send Gift Voucher

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You have to be careful while sending a Shoppers Stop Voucher to your loved one

in India because if it is lost, stolen or misplaced in the way, it is usually not reissued

and your money will go wasted. Earlier, the only option you could use to send the

Shoppers Stop Voucher to your family in India was through courier, but now with

the availability of Internet, you can send it right at your family doorstep directly from

the company itself. You should also make sure that the person you are sending the

Shoppers Stop Voucher utilizes the full voucher as no cash will be refunded or no

credit note will be issued if the gift voucher has been only partially utilized. In addition

to that, these vouchers cannot be substituted for cash or smaller denominations of

gift vouchers. Therefore, you must make sure that the person makes full use of the

voucher so that your money does not go wasted.

Send Shopper’s Stop Gift Voucher

A Shoppers Stop Voucher may range from Rs. 50 to Rs. 2000 and even more than

that, and with this, your loved ones can purchase anything they want from their

nearest Shoppers Stop outlet. There are two types of a Shoppers Stop Voucher,

one for the personal gifting and other one for the corporate gifting. Personal gifting

vouchers are used when you want to wish a birthday, anniversary or festival to your

loved ones, friends or family in India while corporate gifting vouchers are used by

corporate houses to reward and gift their employees, dealers and distributors, to gift

their clients or as festival offers or sales and marketing promotions.

Vision:

To be a Global Retailer in India and Maintain No.1 position in the Indian Market in

the Department Store Category.

Positioning

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Shoppers’ Stop is positioned as a family store delivering a complete shopping

experience defined by its mission, vision and values.

1991: Shoppers' Stop launches at Andheri

Setting up shop in 1991 with its flagship store in Andheri, Mumbai, Shoppers’ Stop is

a member of the K. Raheja Corp. of Companies. Shoppers’ Stop is the first retail

venture by the K. Raheja Corp. Promoted by Mr. Chandru L. Raheja, Mr. Ravi C.

Raheja and Mr. Neel C. Raheja, the K. Raheja Corp. have been leaders in the

construction business for over 48 years. With its wide range of merchandise,

exclusive shop-in-shop counters of international brands and world-class customer

service, Shoppers’ Stop brought international standards of shopping to the Indian

consumer providing them with aworld class shopping experience.

India – 2000 & Beyond…

Expanding its operations to Bangalore, Hyderabad, Jaipur, Delhi, Chennai, Mumbai

(Andheri, Bandra, Chembur, Kandivli, Mulund), Pune, Gurgaon and Kolkata,

Shoppers’ Stop is today recognised as India’s premier shopping destination. With a

customer entry of about 50,000 customers a day, a national presence with over

6, 00,000 square feet of retail space and stocking over 250 brands of garments and

accessories, Shoppers’ Stop has clearly become a one stop shop for all customers.

Customer Profile

Shoppers’ Stop’s core customers represent a strong SEC A skew. They fall between

the age group of 16 years to 35 years, the majority of them being families and young

couples with a monthly household income above Rs. 20000 and an annual spend of

Rs.15000. A large number of Non - Resident Indians visit the shop for ethnic clothes

in the international environment they are accustomed to.

Range of merchandise

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The stores offer a complete range of apparel and lifestyle accessories for the entire

family. From apparel brands like Provogue, Color Plus, Arrow, Levi’s, Scullers,

Zodiac to cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers’ Stop

caters to every lifestyle need. Shoppers' Stop retails its own line of clothing namely

Stop, Life Kashish, Vettorio Fratini and DIY. The merchandise at Shoppers’ Stop is

sold at a quality and price assurance backed by its guarantee stamp on every bill.

Their motto: “We are responsible for the goods we sell”.

Customer Rewards – The First Citizen

Shoppers’ Stop’s customer loyalty program is called The First Citizen. The program

offers its members an opportunity to collect points and avail of innumerable special

benefits. Currently, Shoppers’ Stop has a database of over 2.5 lakh members who

contribute to nearly 50% of the total sales of Shoppers’ Stop.

International Affiliations

Shoppers’ Stop is the only retailer from India to become a member of the prestigious

Intercontinental Group of Departmental Stores (IGDS). The IGDS consists of 29

experienced retailers from all over the world, which include established stores like

Selfridges (England), Karstadt (Germany), Shanghai No. 1 (China), Matahari

(Indonesia), Takashimaya (Japan), C K Tang (Singapore), Manor (Switzerland) and

Lamcy Plaza (Dubai). This membership is restricted to one member organization per

country/region.

Acquisitions

The Organisation, in 2000, along with ICICI ventures also acquired the reputed

bookstore, “Crossword”, which offers the widest range of books along with CD-ROM,

music, stationery and toys. Services like Dial-a-book, Fax-a-book and Email-a-book

enable customers to shop from their homes. Crossword currently has 18 Stores.

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The IT Backbone

Realising the role of IT way back in 1991, Shoppers’ Stop was among the first few

retailers to use scanners and barcodes and completely computerise its operations.

Today it is one of the few stores in India to have retail ERP in place, which is now

being integrated with Oracle Financials and the Arthur Planning System, the best

retail planning system in the world. With the help of the ERP, they are able to

replicate stores, open new stores faster and get information about merchandise and

customers online, which reduces the turnaround time in taking quick decision.

Supply Chain Management

Understanding the importance of distribution and logistics in ensuring that

merchandise is available on the shop floors, has led Shoppers’ Stop to streamline its

supply chain. The company has developed process manuals for each part of the

logistics chain. These modules include vendor management, purchase order

management, stock receiving systems, purchase verification and inventory build up,

generation and fixing of price and store tags, despatch of stocks to the retail floor

and forwarding of bills for payment.

Future Plans

Shoppers’ Stop aims to position itself as a global retailer. The company intends to

bring the world’s best retail technology, retail practices and sales to India. Currently,

they are adding 4 to 5 new stores every year.

54

Environmental Stimuli

Emotional StatesPleasureArousalDominance

BehavioursApproachAvoidance

LITERATURE REVIEW

Store Environment

Retailers are known to design store environments in a manner that will

enhance consumers’ positive feelings, under the assumption that this will lead to

desired consumer behaviours, such as a higher willingness to purchase or stay in

the store for longer. The importance of store environment in enhancing the shopping

experiences of consumers has long been appreciated.

A study by Mehrabian and Russell (1974) was one of the first to be based on the

stimulus-organic body-response (SOR) theory to construct the M-R environmental

psychology model and explore the influence of the “buying environment” on

customer purchases.

Figure 2-1 M-R Environmental Psychology Model (Mehrabian-Russell Model)

Source: Mehrabian and Russell (1974)

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The M-R environmental psychology model suggests that, when individuals face the

external environment, there are two opposing behaviours: approach and avoidance. This

model only applies to normal environments; until Donvan and Rossiter (1982) pioneered the

application of the M-R environmental psychology model to the retail industry, it was not

appropriate for use as a theoretical structure for such. Doncan and Rossiter’s 1982 study

found that store atmosphere can be represented by the primary emotional states of arousal

and pleasure; these are highly important intervening variables in influencing patronage

behavior and intention. Also, the “pleasure emotion” and “arousal emotion” induced by the

environment can cause the customer to remain longer in the store and experience a greater

buying impulse; interaction with store employees also increases. Time and money

expenditures can increase by an average of 12%. Donovan, Rossiter, Marcooley and

Nesdale (1994) further tested the M-R environmental psychology model, measuring the

emotional state of customers, and found that the emotional state of pleasure will lead to

greater time and money spent by customers.

Because scholars have differing views regarding categorization of environments, this

study follows Baker et al. (2002) in using three different environment cues as the store

environment dimension: (1) “Store design cues” refers to all aesthetic-related objects;

tangible and visible environment components exist in the forefront of the consumer’s

perception; such are the more obvious sources of visual stimulation to the customer, and

include internal and external architecture, decorations, color, product arrangement, signs,

space arrangement, …etc. (2) “Store music cues:” music is the intangible background

condition of the environment; the nonvisual feeling can affect the consumer’s subconscious.

This includes music genre, volume, and environment noisiness. Customers generally do not

immediately detect or realize such cues, but the cue of music has a pronounced and deep

influence on the emotions and behaviour of people. (3) “Store employee cues” refers to the

level of feeling related to stimulation from employees, including employee appearance,

friendliness, number, professional ability ...etc. Though most studies of store environment

have not store employee stimulation, consumers often are strongly influenced by store

employees when selecting products; customer loyalty and perception of the store are also

often dependent on employee ability, amiability, and special characteristics.

With regard to the influence of design cues on emotion, Bitner (1986) found that the

cleanliness and orderliness of the store environment exerts significant influence on

customer appraisal and selection. Orderliness in product arrangement and display allows

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the customer to browse and choose products with less difficulty, while clean and bright

stores lead the consumer to develop more positive perceptions. Ward et al. (1992) pointed

out that the space arrangement of stores will influence the movement of customers. Bellizzi

and Hite (1992) found that the colour of walls, lights, and arrangements have subtle

influence on the consciousness and behaviour of customers. Warm colours more easily

attract people to shop in the sore, while cold colors in interior design tend to extend

shopping time of customers. The study also found that colors in the blue range show

greater positive correlation with the satisfaction of customers and sales staff compared to

colours in the red range. Mehrabian and Russell (1974) suggest that the influence of the

physical environment primarily acts through feelings. As a result, a poor store design will

reduce the joys of shopping and lead to degradation of customer buying emotion (Spies,

Hesse and Loesch, 1997). Also, past studies suggest that there exists a connection

between normal store environments and emotion (Wakefield and Baker, 1998).

One recent comprehensive study on the influence of store environment was

conducted by Baker et al (2002). This study shows a significantly positive influence of a

store environment on consumer patronage. Three types of store environment cues were

studied in their research: ambient, design, and social. Ambient cues refer to the background

characteristics of a store, such as temperature, lighting, noise, music, and ambient scent.

Design cues include stimuli that exist at the forefront of consumers’ awareness, such as

architecture, color, and materials. Social cues refer to conditions related to the number,

type, and behavior of customers and employees, and similar characteristics (Bitner, 1992).

Many researchers argue that the influence of store environment on consumer

purchase behaviour is mediated by the consumer’s emotional state. Donovan and Rossiter

(1982) were one of the earliest in studying the mediating role of consumer emotion in this

context. They suggest that store atmosphere, engendered by the usual myriad of in-store

variables, is represented psychologically by consumers in terms of two major emotional

states: pleasure and arousal. These two emotional states are significant mediators of

shopping behaviours within the store, such as enjoyment of shopping in the store, time

spent browsing and exploring the store’s offerings, willingness to talk to sales personnel,

tendency to spend more money than originally planned, and likelihood of returning to the

store.

Bitner (1992) argues that the physical environment of the store may elicit cognitive,

emotional, and physiological responses which will influence consumers’ approach or

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avoidance behaviour in the retailing context. Approach behavior may include staying longer

in the store, spending more money, and/or buying more merchandise. Bitner also suggests

that the strength and direction of the relation between store environment and a consumer’s

response to the environment is moderated by personal and situational factors. Previous

studies have shown that personality traits can influence a person’s reaction to the physical

surroundings (Mehrabian and Russell, 1974; Russell and Snodgrass, 1987).

An individual’s response to an environment often depends on situational factors as

well, such as their plans or purposes for being in the environment (Russell and Snodgrass,

1987).

Donovan et al (1994) found that the emotional states of a consumer induced by store

environments (e.g., pleasure and arousal) appear to be a strong reason why consumers

spend extra time in certain stores, and spend more money than initially intended. Their

research also suggests that the contribution of these emotional variables to consumer

behaviour is independent of cognitive variables such as individual perceptions of quality

and price. However, impulse buying or overspending may result from a desire to alleviate

negative emotions as well as from experiencing positive emotions. In other words, people

may have various negatively-originated or positively-originated motives for overspending.

Donovan et al. (1994) believes that further classification of the relationship between

shopping motives and emotional states is needed.

Sherman et al (1997) also studied the mediating role of consumer emotions in the

influence of store environment on consumer purchase behaviour. Their results suggest that

although cognitive factors may largely account for store selection and for most planned

purchases within the store, the environment in the store and the emotional state of

consumers may be important determinants of certain purchase behaviours, such as

impulse buying. Sherman et. al. (1997) recommends that future studies investigate different

types of shoppers and their motivations when entering the store and how various consumer

groups react to store image and atmosphere.

(Stokols, 1972). In addition to ambient, design, and social cues, crowding is another

factor that researchers believe to have an influence on consumer shopping behavior.

Perceived crowding is a result of physical, social, and personal factors that sensitize the

individual to actual or potential problems arising from scarce space .When the number of

people, objects, or both, in a limited space restricts or interferes with activities and goal

achievement, an individual will perceive the environment to be crowded. Research has

shown that the level of in-store crowding perceived by shoppers can affect their patronage

58

decisions as well as their satisfaction with overall shopping activity (Eroglu and Machleit,

1990).

Berman and Evans (1995) divide atmospheric stimuli or elements into four

categories: the exterior of the store, the general interior, the layout and design variables,

and the point- of-purchase and decoration variables.

Natalie Mitchell and Harmen Oppewal (2009), study on store environment was

administered online (n=861). The results suggested that a premium store atmosphere not

only produce higher expectations, but also higher patronage intentions. Merchandise does

play a role in patronage intentions in conjunction with atmosphere. Results suggest retailers

should consider the salesperson’s role prior to investing in improving their store

atmosphere, to ensure that all components reinforce the desired store experience.

Study suggest that customer perceptions of salespeople should be enhanced during visits

to stores that have a ‘prestige store ambience’ compared with a ‘discount store ambience’

primarily because of superior atmospherics.

Krishnamoorthy Gunasekaran Hemalathaa and Kuthalingam Ravichandranb, (2009).

Outcome of their study that older generation Y consumers are visiting malls for various

motivational reasons.. Various motivational factors have significant association with

demographic variables.

These motivational are as: - Social shopping, which is seen as the most dominating factor.

Second one is Adventure shopping, refers to shopping for stimulation, adventure, and the

feeling of being in another world. third one Idea shopping, They go shopping to keep up

with trends, to keep up with new fashions, to see what new products are available and to

experience new things. forth one is Role shopping ,that reflects the enjoyment that

shoppers derive from shopping for others. Fifth important factor is the Value shopping,

Value shopping refers to shopping for sales, looking for discounts, and hunting for bargains.

The last factor is the Gratification shopping. “Gratification shopping,” involves shopping for,

stress relief, shopping to alleviate a negative mood, and shopping as a special treat to

oneself.

Velitchka D. Kaltcheva & Barton A.Weitz,(2006) Kaltcheva & Weitz study on creating

exciting store environment result find out that due to significant impact of store environment

on consumer behavior, retailers devote considerable resources to store design and

merchandise presentation activities. For example, Toys “R” Us spent $35 million to make its

59

Times Square New York store “the ultimate toy store that is the personification of every

kid’s dream” (Prior 2001, p. 46). Some retailers (e.g., The Sharper Image, Bass Pro Shops,

Barnes & Noble) attempt to create engaging environments in their stores that encourage

shopping. The objective of research is to present and provide empirical support for a

theoretical framework that outlines the impact of arousal-inducing features in a store

environment on consumer affective responses to the environment and subsequent

shopping behaviors in the environment. Kaltcheva & weitz study identify three dimensions

of effective response motivational orientation, arousal, and pleasantness, that effect the

shopping environment or consumer shopping behaviour positively. The first motivational

orientation (e.g., economic, utilitarian) involves consumers engaging in shopping out of

necessity to obtain needed products, services, or information with little or no inherent

satisfaction derived from the shopping activity itself. We refer to this motivational orientation

as the “task-oriented motivational orientation.” The other motivational orientation (e.g.,

recreational, hedonic) describes consumers engaging in shopping to derive inherent

satisfaction from the shopping activity itself. In this case, the shopping activity is freely

chosen, and there is no need to engage in it. Arousal. The arousal construct is used to

designate twosome what distinct phenomena in psychology. “Objective arousal” is defined

as the release of energy collected in the tissues, a variable representing the level of

nonspecific physiological response. “Subjective arousal” is defined as the subjective

experience of energy mobilization. Objective and subjective arousal are moderately

correlated. Pleasantness. “Pleasantness” is defined as the hedonic valence (pleasant or

unpleasant) of the affective response to a stimulus; it is based on the extent to which the

stimulus (the object of the affective response) enables people to achieve their salient goals.

Stimuli that facilitate goal achievement are experienced as pleasant, whereas stimuli that

impede goal achievement are experienced as unpleasant.

The first motivational orientation (e.g., economic, utilitarian) involves consumers engaging

in shopping out of necessity to obtain needed products, services, or information with little or

no inherent satisfaction derived from the shopping activity itself. We refer to this

motivational orientation as the “task-oriented motivational orientation.” The other

motivational orientation (e.g., recreational, hedonic) describes consumers engaging in

shopping to derive inherent satisfaction from the shopping activity itself. In this case, the

shopping activity is freely chosen, and there is no need to engage in it.

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The studies provide consistent support for the proposition that motivational orientation

moderates the effect of arousal on pleasantness. This research indicates that the level of

excitement retailers should create in their stores depends on the shopping motivation of

their customers. Retailers can infer the motivational orientation of their current and

prospective customers from the retail offering. It suggests that the retailer should create a

high-arousal environment for recreational consumers and a low-arousal environment for

task-oriented consumers.

A.M. Kent and A.E. Kirby, “Studies of retail image find their origins with Martineau’s

(1958) definition as the way in which the store is defined in the shopper’s mind, partly by its

functional characteristics and partly by an aura of psychological attributes. The store

environment was defined by the spatial and structural arrangement of the store and divided

by exterior and interior elements. In Kent & Kirby study, two stores were separately

analysed, the research demonstrates the emphasis on merchandise and significance of

products and their presentation in the respondents’ perception of the store.

The research provided opportunities to examine store image through its focus on

uncovering store image through the respondents’ photographs and explanation of their

meaning in their own words. During the elicitation a detailed and in-depth level of visual and

verbal evidence was gathered. It was a rigorous approach since each stage enabled the

researchers to cross-reference their analysis with other stages, with the visual and

transcribed evidence, and check the validity of their interpretation of the respondents’

intentions and meanings. The first stage was particularly successful, as respondents were

very clear about categorising their photographs into distinct elements and needed very little

assistance in finding suitable words to label each one. However, the method does place

considerable pressure on the planning the respondents’ photography, development of

photographs and elicitation, and is relatively time intensive. In terms of interpretation, all the

respondents were familiar with, and regularly shopped at, each of the two stores.

Consequently it could be argued that the physical environment was taken for granted.

Never the less the respondents were very clear about detailed aspects of the environment

which directly influenced the quality of their shopping visit and where they shopped at other

similar stores, they were able to make appropriate comparisons.

Eric R. Spangenberg, Ayn R. Crowley( early 1996) & Pamela W. Henderson,

Research conducted through recruitment of 298 students (46% female) from undergraduate

business classes at a large university, randomly assigned to one of thirteen conditions. One

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unscented and twelve scented conditions consisting of two neutral and two positive scents

diffused at low, moderate or high intensities.

The research showed a significant difference in evaluation of, and behaviours in, a scented

store environment vis-à-vis an unscented store despite no other changes. Scents that are

at least neutral were found to produce enhanced perceptions; the specific scent used did

not matter as much as the presence of the scent.

The subject customers importantly perceived the scented store to be of higher quality in

surroundings and merchandise with a heightened awareness in specific products and

distinct purchase intentions. Of considerable interest was the finding that subjects in the no

scent condition perceived having spent significantly more time in the store than they

actually had. Suggesting that the time consumers spend examining merchandise, waiting in

lines or waiting for help can be made to feel shorter by introducing an ambient scent.

How retail environments affect their users has been reported in the literatures of

architecture and design, geography, environmental psychology and marketing (Greenland

and McGoldrick 2005). Store patronage is influenced, at least to some degree, by the store

environment (Baker, Levy, and Grewal 1992, 1994; Davies and Ward 2002).

Sherry (1998) addresses the influence of designed environment on brand equity in

general, through the concept of the ‘brandscape’, a ‘material and symbolic environment that

consumers build with marketplace products, images and messages, that they invest with

local meaning, and whose totemic significance largely shapes the adaptation consumers

make to the modern world’ (Sherry 1998, 112). Designers too have developed the concept

of ‘brandscape’, in which the architecture and design of the building communicate the retail

brand identity (Riewoldt 2002; Brauer 2002).

Din (2000) consistent communication is the outcome of the design process of both

exterior and interior. From a symbolic perspective, buildings take on additional meaning

beyond instrumental explanations (Rapoport 1982; Berg and Kreiner 1990) and with rise of

consumption, buildings for first time ‘began to be looked on purely as images or marketing

objects’ (Glendinning 2004, 10; see also Carmona et al. 2003).

Drawing from the preceding research perspectives of retail image, store environments and

design, it appears that the physical environment has been a relatively neglected element in

the creation of retail image. Therefore the first research question is to define consumer

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perceptions of the retailer’s physical environment in the context of retail image, and

secondly derived from the design literature, that retail image is communicated through the

architecture and design of the building.

(Levy and Weitz 1997) Store environment could affect shoppers’ behaviors in

several ways. Certain response of human being to environment may be conditioned or

hard-wired in the human brain. For example, for a store layout in a racetrack form,

shoppers may follow the path defined by the layout with little thought or emotion aroused by

the layout.

In the environmental psychology literature, Mehrabian and Russell (1974) showed

that in a variety of settings (schools, hospitals, homes, etc.), the emotions affected by the

environment can be fully described by three states, pleasure, arousal and dominance

(PAD). The majority of studies on emotional response to store environment adopt the PAD

paradigm, and provide evidence that shoppers’ emotional states can be largely represented

by the PAD dimensions (Donovan and Rossiter 1982; Bellizzi and Hite 1992; Babin and

Darden 1995). These studies also show that the emotional response leads to a variety of

behaviours and outcomes, such as how long the shoppers stay and how much money they

spend inside a store. Some other studies use other scales that include some emotion

measures (Bellizzi et al. 1983; Crowley 1993). However, many of these measures are

similar to the measures found in the PAD dimensions.

Store environment also influences various stages of shoppers’ cognitive process inside a

store, including attention, perception, categorization and information processing. For

example, it has been shown that perceived waiting time varies with the valence of music

and consumers’ categorization of a restaurant as a fast food outlet depends largely on the

external appearance of the store (Hui, Chebat and Chebat 1997; Ward, Bitner and Barnes

1992). The influence of store environment on these cognitive stages would subsequently

affect evaluations of the store, its merchandise and service, and hence on the shopping

behaviours or outcomes (Hui et al. 1997; Ward et al. 1992). Furthermore, store environment

may influence these evaluations directly by providing consumers with a peripheral cue or a

tangible evidence for assessing the service and merchandise quality of a store, or by

transfer of meanings from the environment (Parasuraman, Zeithaml and Berry 1988; Bitner

1992).

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Obermiller and Bitner (1984) found that individuals who view retail products in a pleasant

environment evaluate products more positively than subjects who viewed the same

products in an emotionally unpleasant environment. Further, Chebat and Michon (2003)

argued that consumers‟ perceptions of the store environment influence their perceptions of

product quality and consumer behavior. For example, if the consumers‟ perceptions of a

shopping mall environment become more favorable, consumers will perceive product

quality to be higher which can influence consumers to exhibit greater approach behavior in

that environment.

Environments influence consumer behavior in a large part because they alter one‟s feelings

(Babin et al., 1994). Mehrabian and Russell (1974) proposed that two basic emotional

states mediate in consumer behavior in environmental situations. These emotional

responses are pleasure and arousal.

Arousal-nonarousal refers to the degree to which a person feels excited, stimulated, alert or

active in the situation. Evidence suggests that warm colors, fast tempo and high volume

music, and complex environments increase the arousal levels, whereas cool colors, low

tempo low volume music and simply environments tend to have the opposite effect on

arousal (Holbrook and Anand, 1990; Valdez and Mehrabian, 1994; Wirtz et al., 2000;

Berlyne, 1960).

Pleasure-displeasure refers to the degree to which the person feels good, joyful, happy, or

satisfied in the situation. According to Russell‟s circumplex model, all words of affect can be

defined as a combination

of degree of pleasure and degree of arousal. For example, excitement is defined as a

combination of high pleasure and high arousal, and relaxing as a combination of high

pleasure and low arousal.

Wirtz and Mattila (2001) argued that even if the service environment is perceived as

attractive, a mismatch between the desired and actual arousal levels is expected to lead to

low levels of pleasure. For example, when a consumer desires to be in a relaxing or low

arousal environment, then increasing arousal levels reduce the effects of pleasure on

satisfaction. This is because consumers may seek different levels of arousal depending on

their consumption goals.

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Consumers visit shopping malls for a variety of reasons. For example, In Chile, consumers

go to malls only when they need to buy something (Nicholls et al., 2000). In Malaysia,

people may regard shopping malls as community centers for economic and social activities

(Zafar et al., 2007). In the USA, many consumers view shopping malls as an entertainment

source (Iksuk et al., 2005). This is does not only happen for purchasing products or

services to satisfy wants and needs but also to seek shopping values (Babin et al., 1994).

Babin et al., (1994) identified two types of shopping value: utilitarian and hedonic value.

Utilitarian shopping value is defined as the task-related and rational performance. Shoppers

who focused on purchasing the products in order to achieve the goal or complete the work

were called utilitarian shopping value. In contrast, hedonic shopping value is the consumer

enjoyable of shopping experience in term of fun, fantasy, and playfulness.

Rintamaki et al., (2006) conceptualized the hedonic and utilitarian shopping values in a

department store. Briefly, utilitarian value stems from monetary savings and convenience;

hedonic value stems from exploration and entertainment.

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Impulse Buying

“Impulse buying has been considered a pervasive and distinctive phenomenon in the

American lifestyle and has been receiving increasing attention from consumer researchers

and theorists (Youn & Faber, 2000, p.179)”. Despite the negative aspects of the impulse

buying behaviour from past research, defining impulsive behaviour as an irrational

behaviour (Ainslie, 1975; Levy, 1976; Rook & Fisher, 1995; Solnick, Kannenberg,

Eckerman, & Waller, 1980), resulting from a lack of behavioural control (Levy, 1976; Solnick

et al., 1980), impulse purchases account for substantial sales across a broad range of

product categories (Bellenger at al, 1978; Cobb & Hoyer, 1986; Han, Morgan, Kotsiopulos,

& Kang-Park, 1991; Kollat & Willet, 1967; Rook & Fisher, 1995; Weinberg & Gottwald,

1982). A study found that impulse purchases represented between 27% and 62% of all

department store purchases (Bellenger et al., 1978). Rook and Hoch (1985) assert that

most people have experienced an impulse purchase. Other research findings support this

assertion revealing almost 90% of respondents have made grocery purchases on impulse

occasionally (Welles, 1986), and between 30% and 50% of all purchases can be classified

by the buyers themselves as impulse purchases (Bellenger et al., 1978; Cobb & Hoyer,

1986; Han et al., 1991; Kollat & Willett, 1967).

Early studies on impulse buying were more concerned with the definitional issues

distinguishing impulse buying from non-impulse buying and attempted to classify the types

of impulse buying into one of several sub-categories (Bellenger et al., 1978; Kollat & Willet,

1967; Stern, 1962), rather than to understand impulse buying as a trait of consumer buying

behavior. Therefore, this approach generated a theory that ignores the behavioral

motivations of impulse buying for a large variety of products and, instead, focuses on a

small number of relatively inexpensive products. However, this type of approach did not

provide sufficient explanations as to why so many consumers appear to act on their buying

impulse so frequently. Therefore, researchers began to re-focus attention on impulse

buying behavior and to investigate the behavioral motivations of impulse buying (Cobb &

Hoyer, 1986; Hausman, 2000; Piron, 1991; Rook, 1987; Rook & Gardner, 1993; Rook &

Fisher, 1995; Weun, Jones, & Betty, 1998).

The pervasiveness of impulse buying, even for relatively expensive products, led

researchers to look at impulse buying as an inherent individual trait, rather than a response

to inexpensive product offerings (Cobb & Hoyer, 1986; Rook, 1987). Recently, researchers

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appear to agree that impulse buying involves a hedonic or affective component (Piron,

1991; Puri, 1996; Rook & Fisher, 1995; Wenn et al, 1998). Today’s research suggests that

impulse buying behavior is much more complex than previously conceptualized; that this

behavior stems from the desire to satisfy multiple needs that underlie many types of buying

behavior (Hausman, 2000).

Characteristics of impulse buying behaviour

Rook (1987) identified impulse buying behavior with descriptors such as a spontaneous,

intense, exciting, urge to buy with the purchaser often ignoring the consequences. While

more recent research in this area discusses impulse buying as a trait rather than as a

classification of a purchase decision, researchers agree that consumers vary in their

impulse-buying tendency (Puri, 1996; Rook & Fisher, 1995). Without having prior

information of a new product or intention to purchase a certain item, a consumer is exposed

to stimuli, suggesting that a need can be satisfied through the purchase. Youn and Faber

(2000) identify several different types of internal states and environmental/sensory stimuli

that serve as cues for triggering impulse buying. Internal cues include respondents’ positive

and negative feeling states. Environmental/sensory cues encompass atmospheric cues in

retail settings, marketer-controlled cues, and marketing mix stimuli (Youn & Faber, 2000).

Normative evaluations for impulse buying behaviour

Past research shows that planned buying behaviour results in accurate decisions, but

impulsive behaviour results in decision errors, (Halpern, 1989; Johnson-Laird, 1988)

increasing possibilities of negative consequences (Cobb & Hoyer, 1986; Rook, 1987;

Weinberg & Gottwald, 1982). These negative evaluations of impulse buying behaviour

possibly stem from psychological studies of impulsiveness that characterize impulsive

behaviour as a sign of immaturity resulting in a lack of behavioural control (Levy, 1976;

Solnick et al., 1980) or as an irrational, risky, and wasteful behavior (Ainslie, 1975;

Levy,1976; Solnick et al., 1980). However, some research on impulse buying behavior

indicates that impulse buyers do not consider their impulsive purchases as wrong and

report even favourable evaluations of their behaviours. Specifically, in Rook’s and Fisher’s

(1995) study of “Trait and normative aspects of impulsive buying behaviour”, a relatively

small number of respondents (only 20%) reported feeling bad about their impulse buying,

but a large number of respondents (41%) reported that they actually felt good about their

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impulse purchases. One explanation for this phenomenon is that consumers buy products

for a variety of non-economic reasons, such as fun, fantasy, and social or emotional

pleasure. Some consumers even see shopping as retail therapy, as a way of getting over

the stresses of a working day or simply a fun day out (Hausman, 2000) supporting the

hedonic modification for impulse buying.

Factors/Cues influencing impulse buying

Few recent studies investigated the factors that affect impulse buying. Researchers have

suggested that internal states and environmental/external factors can serve as cues to

trigger consumers’ impulse behaviour to purchase. Research shows that situational factors

have practical and theoretical significance in that many decisions are made at the point-of-

purchase (Cobb & Hoyer, 1986) as a reflection of “low involvement” decision-making

strategies (Hoyer, 1984). The research on situational influence can be described as

examining the relationship among shopper characteristics and the features of retailing or

point-of-purchase situations. Shopper characteristics might include involvement (Smith &

Carsky, 1996), attitude (Reid & Brown, 1996), and ethnicity (Crispel, 1997), while the

retailing features could include outlet size (Owen,1995), retail format (Fernie, 1996; Fernie

& Fernie, 1997), and store personality (Abrams, 1996; Burns, 1992).

Internal factors

Affect or mood has been identified as a variable that influences impulse purchasing

(Gardner & Rook, 1988; Rook, 1987; Rook & Gardner, 1993). Rook and Gardner (1993)

found that 85% of their survey respondents indicated a positive mood would be more

constructive to impulse buying than a negative mood. Respondents stated that, in a positive

mood, they had an unconstrained feeling, the desire to reward themselves, and higher

energy levels. Weinberg and Gotwald (1982) found that impulse buyers exhibited greater

feelings of delight, enthusiasm, and joy while Donovan and Rossiter (1982) found that

pleasure was positively associated with a like hood of overspending.

A number of studies in consumer behavior show that impulse buying satisfies hedonic

desires (Piron, 1991; Rook, 1987; Thompson, Locander, & Pollio, 1990). Individual

consumers' impulse buying behaviour is correlated with their desires to fulfil hedonic needs,

such as fun, novelty and surprise (Hirschman, 1980; Holbrook & Hirschman, 1982). In

addition, emotional support needs may also be satisfied by the social interaction inherent in

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the shopping experience. For instance, research findings indicate that consumers report

feeling uplifted or energized after a shopping experience (Cobb & Hoyer, 1986; Rook, 1987)

supporting the recent concept of impulse buying behaviour as a trait motivated by hedonic

desire. The hedonic value of shopping reflects potential entertainment and emotional worth

of shopping (Babin, Darden, & Griffin, 1994). It has been suggested that shopping without

specific intent, may be more significant than acquisition of products and can provide a

highly pleasurable shopping experience (Maclinnis & Price, 1987; Sherry, 1990). Since the

goal of the shopping experience is to provide satisfaction of hedonic needs, the products

purchased during these excursions appear to be chosen without prior planning and

represent an impulse buying event.

External factors

Specific situations and retail settings influence both in-store responses and future store

choice decisions because of the changing and adoptive nature of expectations,

preferences, and behaviour (Hausman, 2000). For instance, the findings of Darden et al.’s

(1983) study showed that consumers’ beliefs about the physical attractiveness of a store

had a higher correlation with a choice of a store than did merchandise quality, general price

level, and selection. This supports the notion that consumers’ choice of a store is influenced

by the store environment, of which visual merchandising plays a vital role. This view is

consistent with Bowers’ (1973) observation that people approaches, avoids, and creates

situations in accordance with their desires. Customers’ avoid or leave retail settings that are

stressful or obstructive (Anglin, Morgan, & Stoltman, 1999). The expectation/experience of

positive feelings generally leads to approach responses, while avoidance is associated with

expectations/experience of negative outcomes (Dovnovan & Rissiter, 1982; Mehrabian &

Russel, 1974; Saegert & Winkel, 1990; Troye, 1985).

Researchers have suggested that various aspects of retailing environments can influence

consumer behavior. Kotler (1973-1974) asserts the significant role of various retailing

atmospherics. For instance, music and color have been related to consumer behaviour

(Bellizzi & Hite, 1992; Milliman, 1986; Yalch & Spangenberg, 1990) suggesting visual

merchandising within the retail settings may influence consumer behavior as well.

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Visual Merchandising

Visual merchandising, or visual presentation, is the means to communicate a

store/company’s fashion value and quality image to prospective customers. “The purpose

of visual merchandising is to educate the customer, to enhance the store/company’s image,

and to encourage multiple sales by showing apparel together with accessories” (Frings,

1999, p. 347). Therefore, each store/company tries to build and enhance its image and

concept through visual presentations, which appeal to shoppers and ultimately transform

them into customers by building brand loyalty and encouraging customers’ buying

behaviours.

Visual merchandising is defined as “the presentation of a store/brand and its merchandise

to the customer through the teamwork of the store’s advertising, display, special events,

fashion coordination, and merchandising departments in order to sell the goods and

services offered by the store/company” (Mills, Paul, & Moorman, 1995, p. 2).

Visual merchandising ranges from window/exterior displays to interior displays including

form displays and floor/wall merchandising as well as promotion signage. It also broadly

includes advertising and brand/store logo (Mills et al, 1995). In this study, however, only

window display and in-store display comprise of form/mannequin display, floor

merchandising and promotional signage were investigated.

Visual Merchandising in Relation to Impulse Buying Behaviour

In-store browsing may be a link between internal and external factors, as an important

component in the impulse buying process as well as a link between consumers’ impulse

buying behaviour and retail settings including exterior and interior display. “In store

browsing is the in-store examination of a retailer’s merchandise for recreational and

informational purposes without an immediate intent to buy” (Bloch, Ridgway, & Sharrell,

1989, p.14). Jarboe and McDaniel (1987) found customers who browsed in a store made

more unplanned purchases than non-browsers in a regional mall setting. As a customer

browses longer, she/he will tend to encounter more stimuli, which would tend to increase

the likehood of experiencing impulse urges. This supports Stern’s (1962) conceptualization

of impulse buying as a response to the consumer’s exposure to in-store stimuli. Shoppers

may actually use a form of in-store planning to finalize their intentions (Rook, 1987). The

store stimuli serves as a type of information aid for those who go to the store without any

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predetermination of what they need or buy, and once they get into the store, they are

reminded or get an idea of what they may need after looking around the store. In other

words, consumer’s impulse buying behavior is a response made by being confronted with

stimuli that provoke a desire that ultimately motivate a consumer to make an unplanned

purchase decision upon entering the store. The more the store stimuli, such as visual

merchandising, serves as a shopping aid, the more likely the possibility of a desire or need

arising and finally creating an impulse purchase (Han, 1987; Han et al., 1991).

The importance of window display in relation to consumers’ buying behavior has received

minimal attention in the literature. However, since a consumer’s choice of a store is

influenced by the physical attractiveness of a store (Darden at al., 1983), and the first

impressions of the store image is normally created at the façade level, it can be suggested

that window display may influence, at least to some degree, consumers’ choice of a store

when they do not set out with a specific purpose of visiting a certain store and purchasing a

certain item. The initial step to getting customers to purchase is getting them in the door.

Personal impulse buying

It began to investigate impulse buying in the beginning of 1950.

Baum（1951）addressed that consumer was stimulated to impulse buying after they came

into the store. Stern（1962）was the first scholar to suggest “impulse mix” to classify four

kinds of impulse buying: pure, remind, suggest, and plan. Although most of research

thought the mean of impulse buying was the same with unplanned buying. Rook （1987）

argued successfully that impulse buying should be depicted it as extraordinary, exciting,

hedonically complex and compelled buyer action. Beatty and Ferrell（1998）constituted a

model as a precursors of impulse buying. They argued that situational variables （ time

available and money available ） and individual difference variables （ shopping enjoyment

and impulse buying tendency ） were found to influence a set of endogenous variables,

including positive and negative affect and so on. Thomas （ 1997 ） also points to two

emotional shifts that affect the buying habits. One is an increase in stress levels because

consumers are out of their daily routine. The other is an increase in levels of anticipation

and excitement.

Crawford and Melewar（2003）explained retailers must create an environment that

minimizes inherent stress and accentuates or at least maintains natural levels of excitement

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,while also virtuously motivating impulse purchasing by reducing or eliminating barriers to

purchase.

In decades, scholars started to transfer the views on the characteristics of different

consumers’ buying trends（Engle, Blackwell and Miniard,2001；Beatty and Ferrell,1998；

Wood,2005 ）； the influence on impulse buying by different situation or culture（Tai and

Tam,1997；Mattila and Wirtz, 2001；Wood,2005）；.and began to try how to predict the

potential of consumers’ impulse buying（Kelly and Smith,2000，Omar and Kent,2001；

Crawford and Melewar,2003；Robert and Jones,2001）.

Social view of impulse buying

Hausman（2000）argues that impulse buying is a hedonic need predominantly motivated

by achievement of higher order needs loosely grouped around

Maslow’s （ 1968 ） hierarchy of needs’. Efforts to satisfy the higher order needs in his

hierarchy lead to different types of impulse buying behaviour. He suggests that normative

evaluations can reduce impulsive purchase behaviour. Consumers act to suppress their

nature impulsive traits to act in accordance with social norms.

Omar and Kent（2001）study impulse buying behaviour in the international airports

shopping. They elaborated that consumers’ normal evaluations have the potential to

influence their impulse buying behaviour.

Crawford and Melewar（2003）proposed that given consumer’s basic value, attitude

and behaviour norm transform slowly, consumer would alter their view about surroundings

and lifestyle. It means that consumer was devoted to be in the cycle of fashion and fad.

Fashion oriented impulse buying occurs as consumers see the product in a new style

and decide to buy it as refer to the awareness of the fissionability on an design or style and

express their self-identity （Phau and Lo,2004 ） With the exposed frequency of fashion,

different groups result to conformity and make fad be accepted by social members. As a

matter of fact, all things what consumers care are the social function and meaning, nor the

value and essential function of products （Phau and Lo,2004） . Consumers usually be

influenced because of chasing fad and get pressure by social members so that they would

make herding behaviors（Freidman, 1984；Dreman, 1979；Barberis and Shleifer,( 2001）

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Wood （ 2005 ） proposed that retailers should not only care about the purchasing

behaviour in retail environment, but also understand consumer’s society more . Impulse

buying would be influenced from discretionary income positively. Due to satisfy individual’s

social needs, consumer would make more impulse buying which make them feel excited

and gratification. Consumer’s society includes consumers purchasing experience and

characteristics of shopping environment.

Peck and Childers（2006）started to address the times of touching with people by

people would make more impulse buying, they found customers touch more with

salesmen, they would increase the possibility of impulse buying. It explains impulse buying

should relate with touch between people by people.

A widely adopted definition is proposed by Rook and co-authors (Rook and Hoch,

1985; Rook, 1987; Rook and Fisher, 1995): impulse buying occurs when an individual feels

a sudden, often powerful and persistent desire to make an unintended, unreflective, and

immediate purchase after being exposed to certain stimuli. The purchase is unintended

because it is made while shopping, when the individual is not actively looking for that item,

has no pre-shopping plans to purchase the item, and is not engaged in a shopping task,

such as looking for a gift, which the item satisfies. Unintended buying arises from a sudden

urge to buy a specific item while shopping. Impulse buying is unreflective in that the

purchase is made without engaging in a great deal of evaluation. An urge toward action

discourages consideration of the potential consequences of the behaviour. Impulse buying

is immediate in that the time interval between seeing the item and buying is short, and the

decision to buy is made on the spur of the moment.

A study by Beatty and Ferrell (1998) suggests that impulse purchasing is closely

linked to hedonic consumption and sensory stimulation.

Rook (1987) also suggests that consumer impulsivity is a lifestyle trait which can be

linked to materialism, sensation seeking, and recreational aspects of shopping.

Recreational shoppers, like shoppers motivated by hedonic values, are less likely to have

an idea of what they are going to buy when they go shopping, which suggests greater

levels of impulse purchasing, and they spend more time shopping per trip on average

(Bellenger and Korgaonkar, 1980).

In their study of buying impulses, Rook and Hoch (1985) found that impulsive

shoppers tend to enjoy shopping more than those who are more cautious in their buying

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styles. Gender differences also exist, as females in the study enjoyed shopping more than

males and tended to be more impulsive. This gender difference in consumer impulsivity

could partly reflect the fact that men and women typically shop for different kinds of

products and have different shopping motivations.

Mehrabian and Russell (1974) study on impulse buying Results that store

environments have a significant influence on these consumers’ emotional states, including

pleasure and arousal, which in turn influence consumers’ impulse buying behaviors in the

store. It indicates that there is a high level of impulse buying (65%) among the surveyed

adult Generation Y consumers. Store environment (in terms of design, ambient, employee,

and crowding factors) positively influences pleasure experienced in the store and give

shape to impulse buying .But personality traits and situational factors (specifically perceived

time pressure) highly influence impulse buying behaviour. Study also indicates that arousal

among adult Generation Y consumers is positively affected by the level of crowding in the

store. That is, their feelings of alertness and excitement tend to increase in a crowded store

environment.

Ben Paul (2002) studies on planned and impulse purchases are investigated using

six personal care product categories. Data analyzed consisted of 982 product purchases of

502 consumers. Responses for product category and the brand purchased were simply

cross tabulated that shows that there are only 76.6 percent of the shoppers who have

completely planned purchase, buying the intended product category and the exact brand

where the epistemic retail search strategies were assumed to be employed. The remaining

23.4 percent are impulsive purchases. The proportion of completely impulse buying (no

intention of buying the category and the brand) is 11.9 percent. Occurrence of impulsive

brand choice, where product category was planned but the brand was unplanned, is

5.3 percent. Impulsive product choice (18.1%) encompasses unplanned purchase in a

product category regardless of the selected brand. Incidence of impulsive product choice,

when the brand chosen was the usual brand, is 6.2 percent. The degree of impulsive

buying could influence the navigational search strategies of consumers. Hedonic search

strategy may be favoured for impulsive choices.

Inside the store as consumers process information during brand comparisons and as they

deal with beauty consultants they appear to use epistemic search strategies. This implies

that marketers and retailers need to design shopping environments that reduce the

expected shopping difficulties of their target consumers. It is important to understand that

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shoppers have varying types and amounts of product and store knowledge, which may

affect their navigational search strategies.

DENNIS W. ROOK, (1950) Extensive research on impulse buying began in the early

1950s and sought to investigate those purchase decisions that are made after the

consumer enters a retail environment.

The term "Impulse buying" refers to a narrower and more specific range of phenomena than

"unplanned purchasing" does. More importantly, it identifies a psychologically distinctive

type of behaviour that differs dramatically from contemplative modes of consumer choice.

Impulse buying is relatively extraordinary and exciting; contemplative buying is more

ordinary and tranquil (Weinberg and Gottwald 1982). According to Dennis Rook Buying

impulses are often forceful and urgent; contemplative purchasing is less so. Also, impulse

buying is a fast experience, not a slow one. It is more likely to involve grabbing a product

than choosing one. Impulsive behaviour is more spontaneous than cautious. A buying

impulse tends to disrupt the consumer's behaviour stream, while a contemplative purchase

is more likely to be a part of one's regular routine. Impulse buying is more emotional than^

rational, and it is more likely to be perceived as "bad" than "good." Finally, the consumer is

more likely to feel out-of-control when buying impulsively than when making contemplative

purchases.

The variety and high levels of excitement that arc attributed to impulse buying distinguish it

from more calm and rational consumer decision making. One respondent said the onset of

a buying impulse feels "like turning up the excitement volume." It comes on as a surprise

and provides novelty and spontaneity. The buying impulse lends to disrupt an individual's

ongoing behaviour stream. This may cause it lo be frightening, loo: the extraordinary

stimulation can induce feelings of being out-of-control. One respondent said the excitement

is "like falling in love with a product.

In a research conducted by Cobb and Hoyer (1986), impulse buying was defined as an

unplanned purchase and this definition can also be found in the research of Kollat and

Willett (1967).

In another research by Rook (1987) reported that impulse buying usually takes place, when

a consumer feels a forceful motivation that turns into a desire to purchase a commodity

instantly.

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Beatty and Ferrell (1998) defined impulse buying as instantaneous purchase having no

previous aim or objective to purchase the commodity.

Stern (1962) found that products bought on impulse are usually cheap. Shopping lifestyle is

defined as the behaviour exhibited by purchaser with regard to the series of personal

responses and opinions about purchase of the products as reported by Cobb and Hoyer

(1986).

They find that shopping life style and impulse buying behaviour are closely related but only

in the case of impulse buyers. The study also states that impulse purchasers fell in the

middle as of the measurement tools used by the researchers, indicated that purchasers will

not pick the first brand they spotted in the shopping mall.

In researches conducted by Cha (2001); Han et al., (1991); Ko (1993) it is reported that

impulse buying behaviour regarding fashion products are associated with patterns like

chaste, repeated emotions as well as fashion-oriented impulse buying behaviours. These

facts were also quoted by Park et al.(2006). The definition of fashion involvement basically

relates to apparel associated with fashionable outfits. The findings of Han et al. (1991)

quoted in response to fashion involvement of consumers, that it might enhance fashion-

oriented impulse buying behaviours among those who habitually wear fashion outfits.

Fairhurst et al. (1989) and Seo et al. (2001) found a direct association among fashion

involvement and apparels purchase. Positive emotions are defined as affects and moods,

which determine intensity of consumer decision-making reported by Watson and Tellegen

(1985).

Park (2006) found a positive relationship of positive emotions, fashion involvement and

fashion-oriented impulse buying with the overall impulse buying behaviour of the

consumers. Ko (1993) reported that positive emotions may result into fashion related

impulse purchase. The researches of Beatty and Ferrell (1998); Husman (2000); Rook and

Gardner (1993); Youn and Faber, (2000) found that emotions strongly influence buying

behaviours, which result into consumer impulse buying. Babin and Babin (2001) found that

in stores consumer’s purchasing intentions and spending can largely be influenced by

emotions. These emotions may be specific to certain things for example, the features of the

items, customer self interest, consumer’s gauge of evaluating items and the importance

they give to their purchasing at a store.

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Piron (1993) found that the total of nine items, a combination of pre-decision and post-

decision stages indicators, resulted into high significant differences and the values of

correlations for unplanned purchases done by consumers resulted into higher value as

compared to purchases done by consumers on impulse. Their study indicated that out of

total questionnaires distributed which were 361, 53 were unplanned purchasers and 145

were impulse buyers (total= 198).

(Rook & Fisher, 1995) Impulse buying has been defined as a spontaneous, immediate

purchase without pre-shopping intentions either to buy a specific product category or to

fulfill a specific buying task (Beatty & Ferrell, 1998). Impulse purchases account for

substantial sales across a broad range of product categories (Bellenger et al, 1978; Cobb &

Hoyer, 1986; Han et al, 1991;

Kollat & Willet, 1967; Rook & Fisher, 1995; Weinberg & Gottwald, 1982). Without having

prior information of a new product or intention to purchase a certain item, a consumer is

exposed to stimuli, suggesting that a need can be satisfied through the purchase. The store

stimuli serves as a type of information aid for those who go to the store without any

predetermination of what they need or buy. The more the store stimuli, such as visual

merchandising, serves as a shopping aid, the more likely the possibility of a desire or need

arising and finally creating an impulse purchase (Han, 1987; Han et al., 1991).

Slama and Tashchian (1985) reported that purchase involvement and search behaviour are

linked to demographic characteristics of the consumer and their household. They asserted

that females are more highly involved and there is greater involvement when there are

children at home. Furthermore, they suggest other factors such as marital status, age,

education and income of the consumer are closely related to purchase involvement and

search. High involvement and the need to plan the shopping activity would support

epistemic search strategies.

Babin et al. (1994) proposed a scale that identifies shoppers in terms of hedonic and

utilitarian (epistemic) shopping values. They defined utilitarian shopping value based on the

premise that shopping is task-related and rational and is therefore viewed more as an

“errand” or work. Consumers high on the hedonic shopping value scale find shopping as a

pleasurable experience. Here, the shopping experience is enjoyable and is viewed as an

“escape” or adventure.

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For over fifty years, consumer researchers have strived to form a better definition of

impulse buying. Early studies on impulse buying stemmed from managerial and retailer

interests. Research in this vein placed its emphasis on the taxonomic approach to

classifying products into impulse and non-impulse items in order to facilitate marketing

strategies such as point-of-purchase advertising, merchandising, or in-store promotions.

This approach is limited by a definitional myopia, which simply equates impulse buying to

unplanned purchasing (Bellenger, Robertson, and Hirschman 1978; Kollat and Willet 1967;

Stern 1962).

In response to this definitional problem, researchers began to focus on identifying the

internal psychological states underlying consumers’ impulse buying episodes (e.g., Rook

1987; Rook and Gardner 1993; Rook and Hoch 1985). Impulse buying was redefined as

occurring "when a consumer experiences a sudden, often powerful and persistent urge to

buying something immediately. The impulse to buy is hedonically complex and may

stimulate emotional conflict. Also, impulse buying is prone to occur with diminished regard

for its consequences" (Rook 1987, p. 191). In the same vein, Hoch and Lowenstein (1991)

explained the impulse buying as a struggle between the psychological forces of desires and

willpower.

The shift in defining impulse buying has drawn particular attention to systematically

investigating factors that may underlie or cause impulse buying. This work includes

examinations of the mood-impulse buying relationship (Gardner and Rook 1988; Rook and

Gardner 1993); the relationship between affective states, in-store browsing, and impulse

buying (Jeon 1990); the holistic processing and self-object meaning-matching in impulsive

buying (Burroughs 1996); and the normative influences on impulse buying (Rook and

Fisher 1995).

Despite considerable efforts devoted to the theoretical framework, little success has been

found in relating personality traits to impulse buying. Although several early investigators

addressed the relations between personality traits and impulse buying, they failed to find

significant results (Cobb and Hoyer 1986; d’Antoni and Shenson 1973; Kollat and Willet

1967). The lack of significant findings may have been due to the fact that these studies: 1)

defined impulse buying as unplanned buying, 2) looked at the relationships of irrelevant

personality traits, and/or 3) used inadequate measures for their constructs.

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Personality Factors Potentially Related to Impulse Buying

Several measurement instruments and models of personality exist. One which may have

particular value for studying impulse buying is the Multidimensional Personality

Questionnaire (MPQ) developed by Tellegen (1982). This instrument was developed in an

exploratory manner over a period of 10 years (Tellegen and Waller, in press). Items

originally based on personality attributes identified in prior models were developed, tested,

refined and revised by empirical testing. The final instrument identified 11 primary

personality dimensions (Tellegen 1982). They are wellbeing, social potency, achievement,

social closeness, stress reaction, alienation, aggression, control, harm avoidance,

traditionalism, and absorption. Among these 11 dimensions are three that seem to have

particular relevance for the study of impulse buying. These dimensions are: Lack of Control

(or Impulsivity), Stress Reaction, and Absorption.

A Lack of Control (or Impulsivity). Control relates to the individual’s characteristic mode of

monitoring impulse. When dimensionalized, the underlying continuum is conceived of as

representing excessive containment of impulse and delay of gratification versus an

insufficient modulation of impulse and an inability to delay gratification. Controllers are

reflective, cautious, careful, rational, and sensible. They like to plan their activities (Tellegen

1982). On the contrary, impulse-ridden individuals are spontaneous, reckless, and careless;

they prefer to "play things by ear." Their decisions are made rapidly and their emotional

fluctuations are readily visible. They tend toward immediate gratification of their desires

even when such gratification is inconsistent with the reality of their situation or their own

ultimate goal.

Impulse buying may be one manifestation of this personality trait Brepresenting a lack of

control. Preferring planned-out activities seem to be counter to prior definitions of impulse

buying. Control would also run counter to Hoch and Loewenstein’s conceptualization of

impulse buying since it should provide people with the ability to maintain high levels of

willpower. A generalized lack of control or impulsivity would therefore seem to be a potential

contributor to impulse buying behaviours.

Stress Reaction. Stress reaction represents systematic individual differences in the

frequency and intensity of responding to situational cues with negative emotional states

(i.e., anxiety, anger, distress, and guilt). This negative emotionality is experienced under

79

daily hassles or everyday life conditions rather than intense pressures such as death or

divorce (Bar-Tal, Cohen-Mansfield, and Golander 1998). Stress reaction is characterized by

salient themes such as tension, jumpiness, and worry-proneness. Highly stress-reactive

people may view their own emotional responses as unwarranted overreactions or even as

inexplicable. They acknowledge responding "catastrophically" to the minor mishaps and

setbacks that have been referred to as "daily hassles." They feel vulnerable and miserable

without reason. They are nervous, sensitive, easily upset, irritable, and troubled by feelings

of guilt (Tellegen 1982).

This chronic negative emotionality may lead people to engage in behaviours that can

provide some relief. At an extreme level, compulsive buying has been hypothesized as

serving a mood management function relieving the painful feeling of people who are

particularly prone to experiencing negative affective states (Faber and Christenson 1996).

Prior research on impulse purchasing has found that a sizable majority of people report

feeling "better" following an impulse purchase (Gardner and Rook 1988). Therefore, highly

stress-reactive people may be more likely o engage in impulse buying in order to escape

from the negative emotional states they more frequently (or more intensely) experience. For

highly stress-reactive people, it is speculated that the short-term gratification accompanying

impulse buying would enhance their positive self-feelings and mood states. They may have

greater difficulties with feeling deprived by not buying or by delay of gratification. For stress-

reactive people, impulse buying can be viewed as a means of coping with stress. Thus, it is

hypothesized that stress reaction would be positively associated with the likelihood of

engaging in impulse buying.

Absorption: Absorption is a tendency to become immersed in self-involving experiences

triggered by engaging external and imaginable stimuli (Tellegen and Waller, in press).

Highly absorptive persons are more likely to have unusual and unconventional thinking and

to be able to suspend disbelief. More specifically, they: 1) are emotionally responsive to

engaging sights and sounds; 2) are readily captured by entrancing stimuli; 3) think in

images and synaesthetic and other cross modal experiences; 4) become absorbed in vivid

and compelling recollections and imaginings; and 5) experience episodes of expanded

awareness and altered states.

Absorption is an interesting construct for consumer research because it can play a role in

how people respond to environmental and sensory cues, including those that influence the

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purchase and consumption of products. Marketer-created environmental and product

factors including colours, smells, sounds, textures, and locations can increase the likelihood

of engaging in impulse buying (Eroglu and Machleit 1993; Mitchell 1994). Work in

absorption indicates that people may differ on the degree to which they are sensitive to

these stimuli. Accordingly, we hypothesize that people with high absorption levels will more

easily be caught up in external sensory stimulation, and thus, more likely to engage in

impulse buying.

Cues That Trigger Impulse Buying

Many different factors have been suggested as triggering the impulse to purchase. By and

large, triggers are divided into two typesBexternal cues and internal cues (Wansink 1994).

External cues are specific triggers associated with buying or shopping. They involve

marketer-controlled environmental and sensory factors. Internal cues refer to consumers’

self-feelings, moods, and emotional states.

Recent studies have stated that atmospheric cues in the retail environment (i.e., sights,

sounds, and smells) are important triggers that can influence a desire to purchase

impulsively (Eroglu and Machleit 1993; Mitchell 1994). Also it has been suggested that

marketing innovations such as credit cards, cash machines, instant credit, 24-hour retailing,

and telemarketing make it easier than ever before for consumers to buy things on impulse

(Rook 1987; Rook and Fisher 1995). Additionally, marketing mix cues such as point-of-

purchase, displays, promotions, and advertisements also can affect the desire to buy

something on impulse.

Consumers’ emotions or affective states have been regarded as potent internal triggers for

impulse buying. It is speculated that impulsive buyers are more likely to be responsive (or

sensitive) to their emotional conditions than non-impulsive buyers (Rook and Gardner

1993). For impulsive buyers, their affective state can stimulate pursuit of the immediate

gratification that buying provides. In fact, recent work has proposed that buying impulses

may be partially motivated by a desire to change or manage emotions or mood states

(Gardner and Rook 1988; Rook 1987; Rook and Gardner 1993). Impulse buyers were

found to be more likely to buy on impulse in both negative moods and positive moods than

non-impulse buyers. The results suggest that impulse buyers are more prone to act when

experiencing hedonically charged moods regardless of their direction. Thus, it is expected

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that both positive and negative affective states are closely ted to the tendency to engage in

impulse buying.

“Impulse buying has been considered a pervasive and distinctive phenomenon in the

American lifestyle and has been receiving increasing attention from consumer researchers

and theorists (Youn & Faber, 2000, p.179)”. Despite the negative aspects of the impulse

buying behaviour from past research, defining impulsive behaviour as an irrational

behaviour (Ainslie, 1975; Levy, 1976; Rook & Fisher, 1995; Solnick, Kannenberg,

Eckerman, & Waller, 1980), resulting from a lack of behavioural control (Levy, 1976; Solnick

et al., 1980), impulse purchases account for substantial sales across a broad range of

product categories (Bellenger at al, 1978; Cobb & Hoyer, 1986; Han, Morgan, Kotsiopulos,

& Kang-Park, 1991; Kollat & Willet, 1967; Rook & Fisher, 1995; Weinberg & Gottwald,

1982). A study found that impulse purchases represented between 27% and 62% of all

department store purchases (Bellenger et al., 1978). Rook and Hoch (1985) assert that

most people have experienced an impulse purchase. Other research findings support this

assertion revealing almost 90% of respondents have made grocery purchases on impulse

occasionally (Welles, 1986), and between 30% and 50% of all purchases can be classified

by the buyers themselves as impulse purchases

(Bellenger et al., 1978; Cobb & Hoyer, 1986; Han et al., 1991; Kollat & Willett, 1967). Early

studies on impulse buying were more concerned with the definitional issues distinguishing

impulse buying from non-impulse buying and attempted to classify the types of impulse

buying into one of several sub-categories (Bellenger et al., 1978; Kollat & Willet, 1967;

Stern, 1962), rather than to understand impulse buying as a trait of consumer buying

behaviour. Therefore, this approach generated a theory that ignores the behavioural

motivations of impulse buying for a large variety of products and, instead, focuses on a

small number of relatively inexpensive products. However, this type of approach did not

provide sufficient explanations as to why so many consumers appear to act on their buying

impulse so frequently. Therefore, researchers began to re-focus attention on impulse

buying behaviour and to investigate the behavioural motivations of impulse buying

(Cobb & Hoyer, 1986; Hausman, 2000; Piron, 1991; Rook, 1987; Rook & Gardner, 1993;

Rook & Fisher, 1995; Weun, Jones, & Betty, 1998).The pervasiveness of impulse buying,

even for relatively expensive products, led researchers to look at impulse buying as an

inherent individual trait, rather than a response to inexpensive product offerings (Cobb &

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Hoyer, 1986; Rook, 1987). Recently, researchers appear to agree that impulse buying

involves a hedonic or affective component (Piron, 1991; Puri, 1996; Rook & Fisher, 1995;

Wenn et al, 1998). Today’s research suggests that impulse buying behavior is much more

complex than previously conceptualized; that this behaviour stems from the desire to satisfy

multiple needs that underlie many types of buying behaviour (Hausman, 2000).

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Research methodology

Since the study is on retail sector first the detail study of the store is been conducted about

its environmental factors and various factors that provoke impulse buying during the mall

visit.

Based on the topic objectives were set and to arrive at the opinion on objectives a set of

100 questionnaires were designed of 9 questions and response is collected from the

customers who are visiting the store. For data collection Random Convenient sampling

method was adopted.

For this project the area of research is Jaipur city.

Title of project

“Impact of Store environment on Generation Y consumers’ impulse buying: A study of

Shopper’s stop”

Duration of project

It is semester long project study

Objective of the study

The primary objective of the study remains to identify the Impact of Store environment on

Generation Y consumers’. The study will, in an overall perspective, aim to cover following

objectives.

1. How consumer’s behaviour is influenced by the physical environment of a multi‐brand fashion retail store.

2. How consumers perceive different feelings in a multi‐brand fashion retail store?

3. According to the retailer’s marketing strategy, should a multi‐brand fashion retail

store display products separately according to different brands, or to mix all brands

with display?

4. To find out the environment of retail sector in India.

5. To find out the new trend of store environment.

6. To know the contribution of technology that how it change the scenario of the store

environment in India.

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7. To analyze the awareness of the public towards the store environment of shoppers

stop

8. To find out the perception and first choice of the public while taking services in

different situations.

SAMPLING METHOD

Since the study is restricted to Retail sector, all the functional Departments of shoppers

stop and the respondents are found at the store only so according to the convenience

randomly they are being picked so sampling method is used in this study is Random

Convenient Sampling.

Sample size 100 respondents

Sampling Method Convenience

Sample Unit Customer of shoppers stop

Measuring Tool Questionnaire

Data collection method

Market research requires two types of data i.e. secondary data and primary data.Primary

data has been used abundantly for the study. Well questionnaires were prepared & the

survey was undertaken. Feedback for the display has been taken by asking questions &

observation has also done to gather primary information. There is also a use of secondary

data, collected from the various journals, books, and websites & from company managers.

Research type Exploratory Research

Data type Primary and secondary data

Research tools Questionnaire, observation and interviews

Sampling units consumers and sales-personnel at retail stores

Sample size 100

Sample drawn from Jaipur City

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The study will be primarily focused on Impact of Store environment on Generation Y

consumers’ impulse buying: A study of Shopper’s stop Jaipur city.

Since Generation Y is diverse, the target sample in this study focused on a segment

of this population group: consumers aged 18-30, or adult Generation Y. Surveys will

administer using a mall intercept interview method in shoppers stop. The interviewers will

students comes under this age group. Considering part of this target population is college

students while others may have full-time jobs, the interviews took place both weekends and

weekdays to reduce bias.

The typical shoppers targeted for the intercept interview were those who appeared to

be in the 18-30 age range and had a shopping bag in their hands. The interviewers

intercepted the target shoppers and asked about their interest in participating in the survey.

These consumers will give a questionnaire that takes about 10 minutes to complete.

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Scope of the study

With increasing competition, retailers strive to ensure that their stores are appealing to their

target markets. As retailers are finding it increasingly difficult to create a differential

advantage on the basis of store environment alone, the store itself plays an important role

for market differentiation. The correlation between consumers’ beliefs about the physical

attractiveness of a store and patronage intentions (Darden, Erdem, & Darden, 1983)

suggests that the visual aspect of the store may be significant in relation to the consumers’

choice of a store and buying behaviour. Since many retailers use visual presentation of the

store/company’s offering in order to encourage customers’ buying behaviours, this fact was

expected to be found in the consumer and marketing literature.

If first impressions and appearance are important indicators of store image, then store

window displays must play an important role in a consumer’s decision whether or not to

enter the store. However, classifications of store image components in the literature are

almost entirely related to the in-store merchandise placement.

This neglect does not signify that this area is unworthy of academic research, but may

indicate that since store environment concerns perceptions of creativity, an area which is

difficult to test; researchers may have difficulty in analyzing it meaningfully.

Therefore, this study will provide information as to why should be store environment

considered an important component of a strategic marketing plan in support of sales

increase and positive store/company image. This study will also provide insights to retailers

about types of visual merchandising that can influence consumers’ impulse buying

behaviours. The way in which merchandise will eventually be displayed and promoted at

the store level is an important consideration in the buying function as well as in the strategic

marketing/merchandising plan.

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LIMITATIONS OF STUDY

The study might be limited by following factors:

1. The primary data, collected in form of questionnaires and interviews, might have

inherent limitations of biasness and casual response.

2. The collection and availability of data is acting as a limit to the study.

3. Authenticity of secondary data.

4. Lack of time availability.

5. The study is focused only on shoppers stop and covers limited information about the

topic.

6. The result and analysis based on the customer survey and questionnaire method,

thus biasness and manipulations could not be avoided.

7. Small sample size has been taken (only 100).

8. Findings are related to particular areas.

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Facts and finding

1. By the study it is found that 56% of the respondent visits the store twice in a month. So most of the consumer may visit the store twice in a month.

2. 76% respondents are satisfied with the ambience of the shopper’s stop. It is good

that the store environment is up to the expectation of the customers.

3. 59% respondent wants to stay in the store if they like the atmospheric of the store

while 38% respondents are not in the state that either they want to stay or not. Here

the work for shopper’s stop is to encourage them to stay in the store.

4. POP display is very important in the retail store because it encourage consumer to

purchase the product for which they didn’t planned.

5. Human element like customer service, employee uniform, other customer in store

etc. affect the shopping experience of the customer during shopping.

6. Lighting system of the retail outlet is also play important role in the impulsive buying

of the product.

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90

ANALYSIS AND INTERPRETATION

Frequency of shopping in shopper’s stop.

(a) Once a month (b) Twice a month (c) More than two times in a month

Response No. of respondent

Once a month 26

Twice a month 56More than two times in a month 18

Once a month Twice a month More than two times in a month

No. of respon-dent

26 56 18

5

15

25

35

45

55

Frequency of shopping

Analysis

Among 100 respondent 26 visit the retail outlet once in a month while 56 visit the mall twice ain a month and only 18 respondent visit the outlet more than twice in a month.

Interpretation

Most of the visitor visits the mall twice in a month.

91

Are you satisfied with the ambience of the shoppers stop?

Yes No

Response No. of respondent

YES 76

NO 24

YES

NO

5 15 25 35 45 55 65 75YES NO

No. of respondent 76 24

satisfied with ambience of shoppers stop

Analysis

Among 100 respondent 76 of them they are satisfied with the ambience of the shopper’s store and only 24 are not satisfied with the ambience of the store.

Interpretation

Most of the consumers of the shopper’s stop are satisfied with the store ambience.

92

Factors which influence your first impression regarding the store. Give rating.

Element Mean

Colour Schemes/ Themes 3.546296

Flooring /carpeting 3.095238

Ceiling 3.339623

Wallpaper/ advertisement 3.412214

Lighting 3.623188

Music 3.611111

Scents 3.607143

Temperature 3.052632

Cleanliness 3.06383

Others 3.432099

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Factors Agree

Disagree

Neutral

Strongly

disagree

Strongly agree

Colour Schemes/ Themes

59 0 17 0 16

Flooring /carpeting

28 22 13 5 0

Ceiling 36 0 42 14Wallpaper/

advertisement

54 0 5 0 36

Lighting 56 13 0 0 0Music 55 0 29 10 3Scents 57 6 3 9

Temperature

10 0 0 0 90

Cleanliness 12 0 0 0 88Others 35 0 46 0 0

Analysis

Lighting is the most effective factor that influence first impression in the retail store for a

customer as the mean of the lighting is highest among all the factors followed by music and

scents.

Interpretation

Proper and colourful lighting system play crucial role as a motivating factor for impulse buying.

Generally, what external elements drive you to a store? （Multiple Choices）

Elements Strongly disagree

(1)

Disagree (2)

Neutral (3)

Agree (4)

Strongly agree (5)

Address and Location

0 9 7 45 28

Architectural Style of the

building

30 0 26 16 6

Size of the store

10 0 42 19 8

Colour of the store

6 0 46 0 0

Display Windows

0 0 16 6 59

Exterior Signs (SALE

Promotion)

2 1 5 7 83

Design of Doorway

0 14 24 53 0

Others 0 0 0 18 0

 Elements Mean

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Address and Location4.033708

Architectural Style of the building2.589744

Size of the store3.189873

Colour of the store3.954955

Display Windows 4.638095

Exterior Signs (SALE Promotion)3.117647

Design of Doorway 3.325

Others 3

Analysis

The highest mean value is of the display windows i.e.4.638095 followed by address and location and colour of the store and there values are 4.033708, 3.954955 respectively.

Interpretation

Display of the product in the retail store is most important factor that influence impulse buying.

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Are these elements of store layout and design important when you are shopping in a store?

(Please rate the options, 1 is the most important, and 5 is the least important)

Layout element Most important(1)

Moderately Important(2)

Neutral(3) Important(4) Least important(5)

Space design/allocation

78 5 9 7 1

Placement/Grouping of products

46 24 5 21 1

Display models in store

65 22 2 9 1

Design of fitting rooms

36 32 12 9 4

Design of furniture 23 27 22 19 4

Traffic flow 16 24 0 0 8

Waiting queue 49 6 3 16 2

Analysis

The highest mean value is 2.515789 which is of design of furniture followed by traffic flow design of fitting rooms and, the values are 2.166667and 2.064516 respectively.

Interpretation

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Layout element Mean

Space design/allocation1.48

Placement/Grouping of products2.041237

Display models in store1.575758

Design of fitting rooms2.064516

Design of furniture2.515789

Traffic flow2.166667

Waiting queue1.894737

Design of the furniture in the retail store is one factor which is also responsible for impulsive buying.

If you like the store atmospheric, do you want to look around/stay longer?

Response No. of respondentYes 59

May be 38No 3

total 100

59%

38%

3%

peoples wants to stay longer in store

Yes May be No

Analysis

Among 100 respondent 59% of them are stay in retail outlet if they found the environment favourable. 38% are in the situation whether they stay of not, it depends on the other factors also may be personal or any other reason and only 3% are not stay in the retail outlet.

Interpretation

It is necessary to create good and favourable environment in the retail store to attract the customers.

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Does the atmospheric encourage you to buy?

Response No. of respondent

Yes 49

May be 35

No 16

Yes49%

May be35%

No16%

Atmospheric encourage to buy

Analysis

49% consumers are provoked by the ambience and atmospheric factors and 35% are in the middle situation that they may or may not encouraged to purchase by the ambience factors and 16% of the respondent are not supposed to influence by ambience factors.

Interpretation

Most of the mall visitors are go for impulse buying due to the atmospheric and environmental factor of the store.

98

What Point-of-purchase (the till/cash desk) variables encourage you to make additional

purchase? (Multiple Choices）

ResponseNo. of respondent percentage

Store cards leaflet 37 37Posters/Signs behind the cash desk 64 64Product display (e.g. some small accessories) 89 89Price display (e.g. Bargain Boxes) 98 98In-store Magazines/Catalogue 65 65Candy and Sweet 56 56Others 34 34

8%14%

20%22%

15%

13%8%

POP Display encourage to purchase

Store cards leaflet Posters/Signs behind the cash desk Product display (e.g. some small accessories)Price display (e.g. Bargain Boxes) In-store Magazines/Cata-logue Candy and SweetOthers

Analysis

98% visitors are go for unplanned purchasing because of the price display, 89% are due to product display, 64% encouraged to purchase by the posters/signs behind the cash desk, 56% purchase candy and sweets as they encouraged to purchase, 37% influenced by the store cards leaflets and 34% are encourage to purchase by the some other factors.

Interpretation

Product and price display play important role in the impulse buying of the consumers.

99

What human elements in a store definitely effect your shopping experience? （Multiple Choices）

Customer

Servi

ce

Employe

e chara

cteris

tics (in

cluding U

niform

s)

Busy sto

res (C

rowding)

Store

fitting room fa

cilities

or Retu

rn policy

Other cu

stomers

in st

ore 0

20406080

100120 100

86 86

3610

10086 86

3610

No. of respondent percentage

Analysis

Shopping experience of 100% respondents are affected by customer service, 86%, 86%,36%,10% respondents shopping experience affected by the human factors like employee characteristic, busy store(crowding),store fitting room facilities or return policy and other customers in store respectively.

Interpretation

Customer service is most important human factor which affects the customers shopping experience.

100

Response No. of respondentCustomer Service 100Employee characteristics (including Uniforms) 86Busy stores (Crowding) 86Store fitting room facilities or Return policy 36Other customers in store 10

SWOT analysis of Shopper‘s Stop

Strength

Variety

Range

Different Brands

Pioneer

Loyal customer

Low risk

Good financial position

Presence across various segments

Weakness

Very high prices: They provide international Brands due to which their prices are very high.

Less Schemes: They do not offer so much schemes, they offer schemes only on special occasions like Diwali, Independence Day, etc.

Less Discounts: They offer less discount in their schemes, they basically offer 10% to 20% discount

Competition from standalone stores

Late entry into value retailing

Store makeover expenditure

Threats Government Policies

Entrance of New Players

High attrition

Lesser consumer spending

Entry of foreign players

Unorganized sector

Independent stores

Opportunities Awareness about the brands

Quality

Youngsters

Higher disposable income

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Collaborate

Private levels

Tier 2 & tier 3 cities

Enter new consumer goods segments.

102

CONCLUSION

This study indicates that store environments do have a significant influence on adult

Generation Y consumers’ emotional states, which in turn influence their impulse buying

behaviour. The results of this study suggest that employee and ambient cues have a

significant positive influence on pleasure. This result provides support for promotional

activities that attempt to stimulate consumers’ levels of arousal as a way to enhance their

tendency to buy items on impulse. Factors may need to be investigated such as time

available for shopping and environmental stimuli. The presence of environmental

stimulation variables such as scent and sound may moderate the choice of search strategy.

The knowledge of product categories associated or purchased together is valuable in store

layout designs and shelving strategies

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Recommendation and Suggestions

Based on the above findings, the following recommendation can be adopted by marketers

while introducing new product into the market:

Using price and non-price sales promotion for newly introduced consumer product to the

market as a tool to encourage consumers ‘purchase without plan can be recommended.

Marketers with low priced product can use this strategy prior to the others.

While segmenting the total market for price related information/offers, it is recommended

to consider demographical factors of the respondents.

As consumers strongly believe there is positive association between price and quality of

the product, marketers who is interested in using price promotion have to be careful on

the consequences of price reduction.

They should introduce more schemes, discounts, sales to increase the sales.

They should introduce Low rate Brands which will attract the middle class customers

also or brands for masses.

The stores becomes a bit messy because of a large footfall & small size of stores so

they should have larger outlets

They offer parking space only for the ―first citizen‖ card holders which acts as a

constraint for many first visitors to visit the malls.

Shoppers stop‘s competitors used aggressive medium of advertisement like television

commercial ads, thus to gain a competitive advantage over the competitors Shoppers

Stop should also use such medium of marketing.

Recommendations for Future Research

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Because impulse buying behaviour was strongly related to emotional/affective reactions

and behaviour despite of the possible fact that it might have been more likely influenced by

external factors, the type of influence/response was somewhat difficult to determine by the

survey questionnaires. If consumers were aware of their responses to various situations,

the influence of different factors/events could have been directly examined. Therefore,

combination of quantitative and qualitative research methods (e.g., observational or

experimental research methods) is recommended for future research. In addition, since

impulse buying is phenomenon in a modern society, expended research with various

demographical and geographical groups as well as influences of visual merchandising in

various non-store formats are recommended.

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AppendixQUESTIONNAIRE

Impact of Store environment on Generation Y consumers’ impulse buying: A study of

Shopper’s stop

We are seeking your true reaction on the following scenario that you actually or might

encounter in market place. Please response as normally as possible. Your response will be

kept confidential and will be used only for academic purposes. Please circle/Mark your

response.

Thank you

Gender: Male Female

Your age is 18 18-25 25-30 31+

1. Frequency of shopping in shopper’s stop.

(a) Once a month (b) Twice a month (c) More than two times in a month

2. Are you satisfied with the ambience of the shoppers stop?

Yes No

3. Factors which influence your first impression regarding the store. Give rating

Factors Strongly disagree(1)

Disagree(2)

Neutral(3)

Agree (4)

Strongly agree(5)

Colour Schemes/Themes

Flooring /carpeting

Ceiling

Wallpaper/advertisement

Lighting

Music

Scents

Temperature

Others

Cleanliness

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4. Generally, what external elements drive you to a store? （Multiple Choices）

Elements Strongly disagree (1)

Disagree(2)

Neutral(3)

Agree (4)

Strongly agree(5)

Address and Location

Architectural Style of the building

Size of the store

Colour of the store

Display Windows

Exterior Signs (SALE Promotion)

Design of Doorway

Others

5. Are these elements of store layout and design important when you are shopping in a store? (Please rate the options, 1 is the most important, and 5 is the least important)

Layout element Most important

Moderately Important

Neutral Important Least important

Space design/allocation

Placement/Grouping of products

Display models in store

Design of fitting rooms

Design of furniture

Traffic flow

Waiting queue

107

6. If you like the store atmospheric, do you want to look around/stay longer? Yes Maybe No

7. Does the atmospheric encourage you to buy?

Yes Maybe No

8. What Point-of-purchase (the till/cash desk) variables encourage you to make additional purchase? (Multiple Choices）

Store cards leaflet In-store Magazines/Catalogue

Posters/Signs behind the cash desk Candy and Sweet

Product display (e.g. some small accessories)

Price display (e.g. Bargain Boxes) Others

9. What human elements in a store definitely effect your shopping experience? （Multiple Choices）

Customer Service Employee characteristics (including Uniforms)

Busy stores (Crowding) Other customers in store

Store fitting room facilities or Return policy

108

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