8/7/2019 49189457 Dissertation Consumer Behavior in Retail
1/65
Table of Content
Acknowledgement ..2
Preface.3
Abstract.4
An introduction5
The global retail industry...6
Retail scenario in India..8
Different forms of retailing ..15
Classification of Indian retail sector.21
FDI in retail..23
Indian middle class people25
Opportunity challenges and emerging trends.27
Retail as an employment generator.38
Objective of the survey..39
Research methodology.40
Analysais42
Conclusion53
Limitations54
Bibliographie.55
Annexure..56
Total no of Tables------7
Total no of Figure------10
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 1
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
2/65
Acknowledgement
n the completion of the dissertation report, I owe a
great deal too many people at the very outset; I
would like to express my profound sense of gratitude to Mr.
Manoj Dash,Professor Of Institute of Technology & Science,
Ghaziabad. For providing me opportunity and valuable time
he gave me during my Dissertation from his busy schedule. I
do acknowledge courtesy during my stay there.
O
I would like to pay my special thanks to Prof. ShekharGhose. He had contributed to this being a much better
project that it couldnt possibly have been without his
guidance.
I express my sincere thanks to all the respondents who
filled up the questionnaire because of only them this report
has been made possible.
With a deep sense of reverence I would like to express my
wholehearted thanks and deep gratitude to my parents who
have always been a source of inspiration of mine. Their
everlasting cooperation and smiling affection inspired me to
rise up to what I am today.
So many others who have been associated with this work
directly or indirectly, all have many sincere thanks.
The greatest achievement of the project was the
realization of the fact that
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 2
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
3/65
HUMAN BEING MAKES THINGS POSSIBLE.
Mukesh Kumar
PGDM (2006-2008)
Prefacerogress is a continuous process. It is relative and
absolute. We cannot stop at a certain destination
and declare that target has been achieved and we need not
go further.
P
The Dissertation programs are designed to give managers
the future of the corporate happenings and work culture.
These real life situations are entirely different from the
stimulated exercises enacted in an artificial environment
inside the Dissertation are designed, so that the managers of
tomorrow do not feel ill case when the times comes to
shoulders responsibilities.
The experience that I have gathered during this period has certainly provide me
with an orientation which I believe will help me to shoulder my assignment
successfully in near future. During this period I have collected all the information
regarding organized retail industry, their effect on the Preference of middle class
for purchase of daily need items.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 3
mailto:[email protected]:[email protected]8/7/2019 49189457 Dissertation Consumer Behavior in Retail
4/65
On the basis of my Dissertation program, I tried my best
to arrange the work in the systematic and chronological way.
However the cover every detailed information of organized
retail industry in such a short period was not possible.
Despite the inherent shortcomings of the study, a genuine
was made on my part to see that study was carried in the
right respective.
Abstract
he Indian retail industry is now beginning to evolve in
the line with the transformation that has swept other
large economies. The liberalization of the consumer goods
industry initiated in the mid-80 and accelerated through the
90s has begun to impact the structure and conduct of the
retail industry.
T
The concept retail which includes the shopkeeper to
customer interaction, has taken many forms and dimensions,
from the traditional retail outlet and street local market
shops to upscale multi brand outlets, especially stores or
departmental stores.
The objective being to assess the various parameters that
influences a buyer to visit or shop at departmental store
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 4
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
5/65
thereby contributing to its turnover (in terms of sales and
profits) hence leading to its overall success.
The extensive research brought me to conclude that
departmental stores are soon emerging on the top priority
lists, amongst the shopping spree in Delhi and NCR, as they
seem to derive immense pleasure of convenience and
exposure to variety under one roof, in their extremely busy
lives, when they dont have time for things.
Though some of the customers perceive departmental
stores to be expensive and only high income categorys cupof tea, the stores make constant efforts to induce them to at
least visit the store at once during the sale period, or
discount offers.
Hence this document entails me through these aspects in
great detail, helping me to understand the concept of retail
marketing through departmental stores in Delhi.
Introduction
etail comes from the French word retailer which
refers to cutting off, clip and divide in terms of
tailoring (1365). It first was recorded as a noun with the
meaning of a sale in small quantities in 1433 (French). Its
literal meaning for retail was to cut off, shred, paring. Like
the French, the word retail in both Dutch and German (detail
R
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 5
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
6/65
Handel and Einze handle respectively) also refer to sale of
small quantities or items.
Retailing consists of the sale of goods or merchandise,
from a fixed location such as a department store or kiosk, in
small or individual lots for direct consumption by the
purchaser. Retailing may include subordinated services, such
as delivery. Purchasers may be individuals or businesses. In
commerce, a retailer buys goods or products in large
quantities from manufacturers or importers, either directly or
through a wholesaler, and then sells smaller quantities to theend-user. Retail establishments are often called shops or
stores. Retailers are at the end of the supply chain.
Manufacturing marketers see the process of retailing as a
necessary part of their overall distribution strategies.
Shops may be on residential streets, or in shopping
streets with few or no houses, or in a shopping center or
mall. Shopping streets may or may not be for pedestrians
only. Sometimes a shopping street has a partial or full roof to
protect customers from precipitation. Retailers often
provided boardwalks in front of their stores to protect
customers from the mud. Online retailing, also known as e-
commerce is the latest form of non-shop retailing (cf. mail
order).
Shopping generally refers to the act of buying products.
Sometimes this is done to obtain necessities such as food
and clothing; sometimes it is done as a recreational activity.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 6
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
7/65
Recreational shopping often involves window shopping (just
looking, not buying) and browsing and does not always result
in a purchase.
Organized retailing in India is alluring all the big players
(corporate houses). India has approximately 300 million
middle class people and this group is growing rapidly. One of
the important reasons for rapid growing of organized retail in
India is malls. There are malls manias in Indian market. Each
& every real estate developers are constructing world class
malls in India. Malls in India are a relatively new format for
retailing. While this format may have existed in the Western
economies for several decades, in India this phenomenon
could be estimated to be only about fifteen odd years old.
One of the earliest large floor-area retailers in India was
Shoppers Stop. However, the first of the current format of
the malls was the Crossroads mall in Mumbai, which was
established by the Primal in period around 2000-01.
Crossroads then had the highest rent per sq. meter of
establishment that the vendors had to bear. Due to the
exorbitant rent, Crossroads initially had a rough ride. Also,
the mall format was new, and was a novelty for most Indianconsumers. This led several visitors to the mall, but never
converted to actual purchases, since most were visiting the
place out of curiosity.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 7
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
8/65
However, the situation had changed drastically now. Malls
seem to be springing up across several cities in India.
Notable among these is Gurgaon, an upcoming city near
Delhi.
The Global Retail Industry
An Overviewetail has played a major role world over in
increasing productivity across a wide range of
consumer goods and services .The impact can be best seen
in countries like U.S.A., U.K., Mexico, Thailand and more
recently China. Economies of countries like Singapore,
Malaysia, Hong Kong, Sri Lanka and Dubai are also heavily
assisted by the retail sector.
R
Retail is the second-largest industry in the United States
both in number of establishments and number of employees.
It is also one of the largest worlds wide. The retail industry
employs more than 22 million Americans and generates
more than $3 trillion in retail sale annually. Retailing is a U.S.
$7 trillion sector.
Wal-Mart is the worlds largest retailer. Already the worlds
largest employer with over 1million associates, Wal-Mart
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 8
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
9/65
displaced oil giant Exxon Mobil as the worlds largest
company when it posted $219 billion in sales for fiscal 2001.
Wal-Mart has become the most successful retail brand in the
world due its ability to leverage size, market clout, and
efficiency to create market dominance. Wal-Mart heads
Fortune magazine list of top 500 companies in the world.
Forbes Annual List of Billionaires has the largest number
(45/497) from the retail business.
Global Retail
1999 2002 2005Total Retail (US$
Billion)
150 180 225
Organized Retail
(US$ Billion)
1.1 3.3 7
% Share of
Organized retail
0.7 1.8 3.2
Table no. -1 Source: CSO, MGI Study
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 9
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
10/65
Top Retailers Worldwide
Rank Retailer Home Country
1 Wal-Mart Stores, Inc. U.S.A.
2 Carrefour Group France
3 The Kroger Co. U.S.A.
4 The Home Depot, Inc. U.S.A.
5 Metro Germany
Table no. -2 (So
STORES / Deloitte Touche Tomahatsu)
Retail Scenario in India:
s the corporate the Piramals, the Tatas, the
Rahejas, ITC, S.Kumars, RPG Enterprises, and mega
retailers- Crosswords, Shoppers Stop, and Pantaloons race
to revolutionize the retailing sector, retail as an industry inIndia is coming alive.
A
Retail sales in India amounted to about Rs.7400 billion in
2002, expanded at an average annual rate of 7% during
1999-2002. With the upturn in economic growth during
2003, retail sales are also expected to expand at a higher
pace of nearly 10%. Across the country, retail sales in real
terms are predicted to rise more rapidly than consumer
expenditure during 2003-08. The forecast growth in real
retail sales during 2003- 2008 is 8.3% per year, compared
with 7.1% for consumer expenditure. Modernization of the
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 10
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
11/65
Indian retail sector will be reflected in rapid growth in sales
of supermarkets, departmental stores and hypermarts. Sales
from these large-format stores are to expand at growth rates
ranging from 24% to 49% per year during 2003-2008,
according to a latest report by Euromonitor International, a
leading provider of global consumer-market intelligence.
A.T. Kearney Inc. places India 6th on a Global Retail
Development Index. The country has the highest per capita
outlets in the world - 5.5 outlets per 1000 population. Around
7% of the population in India is engaged in retailing, ascompared to 20% in the USA.
In a developing country like India, a large chunk of
consumer expenditure is on basic necessities, especially
food-related items. Hence, it is not surprising that food,
beverages and tobacco accounted for as much as 71% of
retail sales in 2002. The share of food related items had,
however, declined over the review period, down from 73% in
1999. This is not unexpected, because with income growth,
Indians, like consumers elsewhere, have started spending
more on non-food items compared with food products. Sales
through supermarkets and department stores are small
compared with overall retail sales. Nevertheless, their sales
have grown much more rapidly, at almost a triple rate (about
30% per year during the review period). This high
acceleration in sales through modern retail formats is
expected to continue during the next few years, with the
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 11
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
12/65
rapid growth in numbers of such outlets due to consumer
demand and business potential.
The factors responsible for the development of the retail
sector in India can be broadly
Summarized as follows:
Rising incomes and improvements in infrastructure are enlarging consumer marketsand accelerating the convergence of consumer tastes.
Looking at income classification, the National Council of
Applied Economic Research (NCAER) classified
approximately 50% of the Indian population as low income in
1994- 95; this is expected to decline to 17.8% by 2006-07.
Liberalization of the Indian economy which has led to the opening up of the marketfor consumer goods has helped the MNC brands like Kellogg, Unilever, Nestle, etc.
to make significant inroads into the vast consumer market by offering a wide range of
choices to the Indian consumers.
Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.
The internet revolution is making the Indian consumer more accessible to the growing
influences of domestic and foreign retail chains. Reach of satellite T.V. channels ishelping in creating awareness about global products for local markets. About 47% of
Indias population is under the age of 20; and this will increase to 55% by 2015. This
young population, which is technology-savvy, watch more than 50 TV satellitechannels, and display the highest propensity to spend, will immensely contribute to
the growth of the retail sector in the country. As India continues to get strongly
integrated with the world economy riding the waves of globalization, the retail sector
is bound to take big leaps in the years to come.
Retailers direct procure the products & services in bulk through manufacturers, so
they eliminate the middleman and save the cost. They offer the product & services on
the discount prices or on a wholesaler rate to the consumer.
Country Malaysia Thailan
d
Philippine
s
Indonesia South
Korea
China Indi
a
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 12
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
13/65
Organize
d
Retailing
55% 50% 35% 30% 15% 20% 3%
Tradition
Retailing
45% 50% 65% 70% 85% 80% 97%
Table no. -3
The Indian retail sector is estimated to have a market size
of about $ 180 billion; but the organized sector represents
only 3% share of this market. Most of the organized retailing
in the country has just started recently, and has been
concentrated mainly in the metro cities. India is the last
large Asian economy to liberalize its retail sector. In
Thailand, more than 40% of all consumer goods are sold
through the super markets and departmental stores. A
similar phenomenon has swept through all other Asian
countries. Organized retailing in India has a huge scope
because of the whole urban and rural and the growing
consciousness of the consumer about product quality and
services.
A study conducted by Fitch, expects the organized retail
industry to continue to grow rapidly, especially throughincreased levels of penetration in larger towns and metros
and also as it begins to spread to smaller cities and B class
towns. Fuelling this growth is the growth in development of
the retail-specific properties and malls. According to the
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 13
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
14/65
estimates available with Fitch, close to 25mn sq. ft. of retail
space is being developed and will be available for occupation
over the next 36-48 months. Fitch expects organized retail to
capture 15%-20% market share by 2010. A McKinsey report
on India says organized retailing would increase the
efficiency and productivity of entire gamut of economic
activities, and would help in achieving higher GDP growth. At
6%, the share of employment of retail in India is low, even
when compared to Brazil (14%), and Poland (12%).
The Organized Retail Pie of Daily need items:
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 14
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
15/65
The Organised Retail Pie
2%
3%
7%
7%
9%
13%
19%
40%
Beauty Products
Books, Music &
Gifts
Home Decore
Jewellery &
watches
Footwear
Durables
Food & Grocery
Cloathing, Textiles& Fashion
Accessories
(Business Today December 31.2006)Category wise share in organized retail Source CII
Kearney Report
Figure no.-1
Fact and Figures:
Even though India has well over 5 million retail outlets of all sizes and
styles (or non-styles), the country sorely lacks anything that can resemble a
retailing industry in the modern sense of the term. This presents international
retailing specialists with a great opportunity.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 15
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
16/65
It was only in the year 2000 that the global management consultancy put
a figure that: Rs. 400,000 crore (1 crore = 10 million) which will increase more
than Rs. 800,000 crore by the year 2007 an annual increase of 20 per cent. .
As much as 96 per cent of the 5 million-plus outlets are smaller than 500
square feet in area. This means that India per capita retailing space is about 2
square feet (compared to 16 square feet in the United States). Indias per capita
retailing space is thus the lowest in the world (source: KSA Technopak (I) Pvt
Ltd, the India operation of the US-based Kurt Salmon Associates).
Just over 8 per cent of Indias population is engaged in retailing
(compared to 20 per cent in the United States). There is no data on this sectors
contribution to the GDP.
From a size of only Rs.20, 000 crore, the organized retail industry will
grow more than Rs. 160,000 crore by 2007. The TOTAL retail market, however,
as indicated above will grow 20 per cent annually from Rs. 400,000 crore in
2000 to Rs. 800,000 crore by 2005.
Given the size, and the geographical, cultural and socio-economic
diversity of India, there is no role model for Indian suppliers and retailers to
adapt or expand in the Indian context.
The first challenge facing the organized retail industry in India is:
competition from the unorganized sector. Traditional retailing has established in
India for some centuries. It is a low cost structure, mostly owner-operated, has
negligible real estate and labor costs and little or no taxes to pay. Consumer
familiarity that runs from generation to generation is one big advantage for the
traditional retailing sector.
In contrast, players in the organized sector have big expenses to meet,
and yet have to keep prices low enough to be able to compete with the
traditional sector. High costs for the organized sector arises from: higher labor
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 16
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
17/65
costs, social security to employees, high quality real estate, much bigger
premises, comfort facilities such as air-conditioning, back-up power supply,
taxes etc. Organized retailing also has to cope with the middle class psychology
that the bigger and brighter sales outlet is, the more expensive it will be.
The above should not be seen as a gloomy foreboding from global retail
operators. International retail majors such as Benetton, Dairy Farm and Levis
have already entered the market. Lifestyles in India are changing and the
concept of value for money is picking up.
Indias first true shopping mall complete with food courts, recreation
facilities and large car parking space was inaugurated as early as in 1999 in
Mumbai. (This mall is called Crossroads).
Local companies and local-foreign joint ventures are expected to more
advantageously position than the purely foreign ones in the fledgling organized
Indias retailing industry. The foreign Retail players has knowledge &
experience about Retail ,at the same, local players has knowledge about Indian
culture &society setup.
These drawbacks present opportunity to international and/or
professionally managed Indian corporations to pioneer a modern retailing
industry in India and benefit from it.
The prospects are very encouraging. The first steps towards
sophisticated retailing are being taken, and Crossroads is the best example of
this awakening. More such malls have been planned in the according to that
retail industry is one of other big cities of India.
An FDI Confidence Index survey done the most attractive sectors for FDI
(foreign direct investment) in India and foreign retail chains would make an
impact circa 2003.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 17
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
18/65
Indian organized retail is new and in the experimental stage so the
players should be deeper pocket to absorb the sock of loss in retail
Different Forms of Retailing:
1. Store Retailing
2. Non store Retailing
3. Other popular format
Store Retailing
1. Popular Formats in store retailing
Hypermarts
Large supermarkets, typically (3,500 - 5,000 sq. ft)
Mini supermarkets, typically (1,000 - 2,000 sq. ft)
Convenience store, typically (7,50 - 1,000 sq. ft)
Discount/shopping list grocer
Traditional retailers trying to reinvent by introducing self-service formats as well
as value-added services such as credit, free home delivery etc.
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 possible
Department Stores
Large stores having a wide
variety of products,
organized into different
departments, such as
One stop shop catering to
varied consumer needs.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 18
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
19/65
clothing, house wares,
furniture, appliances, toys,
etc.
Supermarkets
Extremely large self-
services retail outlets.
One stop shop
catering to varied consumerneeds
Discount Stores
Stores offering discounts on
the retail price through
selling high volumes and
reaping the economies of
scale.
Low prices.
Hyper-mart
Larger than a Supermarket,
sometimes with a
warehouse appearance,
generally located in quieter
parts of the city
Low prices, vast choice
available including services
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
close to each other.
Source: India info line Table no.-4
2. Non-store Retailing:
It is another type of retail Business. Different types of non-store retailing are
given below:
Direct Selling
Direct selling which started centuries ago with itinerant peddlers has burgeoned
into a $9 billion industry, with over 600 companies selling door to door, office to
office, or at home sales parties. A variant of direct selling is called multilevel
Business, whereby companies such as Amway recruit independent
businesspeople who act as distributors for their products, who in turn recruit and
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 19
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
20/65
sell to sub distributors, who eventually recruit others to sell their products, usually
in customer homes.
Direct Business
Direct Business has its roots in mail-order Business but today includes reaching
people in other ways than visiting their homes or offices, including tale Business,
television direct response Business, and electronic shopping.
Automatic Vending
Automatic vending has been applied to a considerable variety of merchandise,
including impulse goods with high convenience value (cigarettes, soft drinks,
candy, newspaper, hot beverages) and other products (hosiery, cosmetics, food
snacks, hot soups and food, paperbacks, record albums, film, T-shirts, insurance
policies, and even fishing worms).
3. Some other popular formats:
Region specific formats: With organized retail
penetrating in to class II towns, retailers have started
differentiating and experimenting with store sizes and
formats. For example, in departmental store format, while
most class cities and metros have large stores of 50,000+
square foot in size, stores in Class II towns have stabilized in
the 25,000-35,000 square foot range.
Development of discount formats: Large discountsformats, or hypermarkets, aiming at retail consolidation by
providing a single point of contact between brand-owners
and customers, are now emerging as major competitors to
both unorganized and organized retailers. Penetration of
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 20
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
21/65
organized retailing in to the lower income brackets and
consumers demand for increased value-for-money has
improved the prospects of these formats. Big Bazaar,
Promoted by Pantaloon, and Giant, promoted by RPG group,
provide two examples of this trend.
Convenience stores at gas Station: India is now
showing signs of aligning with global trend in petro-retailing
with increasing sales coming from non-fuel related products.
With deregulation, private players entering this sector force
existing petro-retailers to review their business models.
Dealer and company owned convenience stores at service
station are on the rise. State run oil giants have entered into
joint venture with FMCG companies and food retailers to sell
food and groceries select markets.
Retail Revolution
Name N0.Of stores Formats Details
Pantaloon 100 Multiple
Format
Has aggressive growth plans
in the retail sector, plans to
reach a monthly run rate of
Rs 2500 crore by June 2010
Reliance 70 Multiple Reliance retail has an
ambitious roll out of 1575
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 21
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
22/65
Format stores by 2007. It plans to
have ware house-style store
spread over 150,000 sq ft
storesbin a super marketformat.
Shoppers
stop
20 Deptt./
Hypermarket /
Books
One of the earliest in the
retail market, Shoppers Stop
plans to expand retail space
to 2.5 mn sq ft by FY08,
From the Current 950,700 sq
ft.
Raymond 321 Specialty
Stores
A manufacturer-retailer.
Raymond also has an
overseas network of around
25 shops
RPG Retail 250 Hypermarkets The group is planning an
expansion of its Spencer
supermarket and
hypermarket stores and
Music World stores. Retail
space of 4 mn sq ft &550
stores by 2008
Bharti Group NA Multiple
Format
With joint venture with global
major Wal-Mart, the group is
expected to have an
estimated 6 million retail
surface by 2008
Gloubes 28 Deptt /
Hypermarket /
Books
Will add 6 west side Stores,
5 Landmark book stores and
1 hypermarket. Space under
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 22
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
23/65
retail will expend to 1.25mn
sq feet in FY 07 from the
current 900,000 sq ft. income
from operations in 06 wasRS365 crore and growth rate
during HY 07 was 40%
Trent 100 Multiple
Format
Has aggressive growth plans
in the retail sector, plans to
reacha monthly run rate of
RS 2500 crore by June 2010.
Aditya Birla
Group
NA NA The largest corporate group
to jump into the fray. Has
some experience in retail
business of Madura
Garments. The format is not
known but their hiring plans
indicate a presence in all
categories from apparel, food
to furniture. The group wild
pump in Rs 5,000 cr to 6,000
cr in the initial phase.
Table no.-5 The Economic Times, 29 Nov. 2006
Classification of Indian retail sector:
Food Retailers
There are large number and variety of retailers in the
food-retailing sector. Traditional types of retailers, who
operate small single-outlet businesses mainly using family
labor, dominate this sector .In comparison, super markets
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 23
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
24/65
account for a small proportion of food sales in India.
However the growth rate of super market sales has being
significant in recent years because greater numbers of
higher income Indians prefer to shop at super markets due
to higher standards of hygiene and attractive ambience.
Health & Beauty Products
With growth in income levels, Indians have started
spending more on health and beauty products .Here also
small, single-outlet retailers dominate the market .However
in recent years, a few retail chains specializing in these
products have come into the market. Although these retail
chains account for only a small share of the total market ,
their business is expected to grow significantly in the future
due to the growing quality consciousness of buyers for these
products.
Clothing & Footwear
Numerous clothing and footwear shops in shopping
centers and markets operate all over India. Traditional
outlets stock a limited range of cheap and popular items; in
contrast, modern clothing and footwear stores have modern
products and attractive displays to lure customers. However,
with rapid urbanization, and changing patterns of consumer
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 24
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
25/65
tastes and preferences, it is unlikely that the traditional
outlets will survive the test of time.
Home Furniture & Household Goods
Small retailers again dominate this sector. Despite the
large size of this market, very few large and modern retailers
have established specialized stores for these products.
However there is considerable potential for the entry or
expansion of specialized retail chains in the country.
Durable Goods
The Indian durable goods sector has seen the entry of a
large number of foreign companies during the post
liberalization period. A greater variety of consumer
electronic items and household appliances became available
to the Indian customer. Intense competition among
companies to sell their brands provided a strong impetus to
the growth for retailers doing business in this sector.
Leisure & Personal Goods
Increasing household incomes due to better economic
opportunities have encouraged consumer expenditure on
leisure and personal goods in the country. There are
specialized retailers for each category of products (books,
music products, etc.) in this sector. Another prominent
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 25
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
26/65
feature of this sector is popularity of franchising agreements
between established manufacturers and retailers.
FDI in retail
overnment has relaxed regulatory controls on
foreign direct investment (FDI) considerably in
recent years, while retailing currently remains closed to FDI.
However, the Indian government has indicated in 2005 that
liberalization of direct investment in retailing is under active
consideration. It has allowed 51% FDI in single brand
retail.
G
The next cycle of change in Indian consumer markets will
be the arrival of foreign players in consumer retailing. Indian
companies know Indian markets better, but foreign players
will come in and challenge the locals by sheer cash power,
the power to drive down prices. That will be the coming
struggle.
India can become a giant in a short time span in food processing and textiles, for
which we have the potential because Indian agricultural production is the lowest
cost in the world, and textile labor is the cheapest internationally.
Allowing FDI in retail trade, especially in groceries and garments marketing, is
one sure way of doing it. Food processing and textiles will grow very substantially
from the linkage effects of a modernized; globalize retail trade that only FDI can
ensure. The employment generation for Indian youth would also be enormous.
Indian retail trade is of enormous size ($180 billion), nearly 10 per cent of GDP,
employing 21 million persons, which is about 7 per cent of the labor force. It is six
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 26
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
27/65
times bigger than Thailand and five times larger than South Korea and Taiwan.
Chinas retail trade is 8 per cent of GDP and 6 per cent of employment.
But the trade in India is fragmented, unorganized, networked, and individually
small. The 12 millionkirana
shops are mostly family or ma-pa owned, with littlecapital for expansion or credit to receive or to extend to consumers.
About 96 per cent of these shops have 500 sq. ft or less of space with limited
stock or choice to offer. During all these years, instead of shedding tears for
indigenous trade and resisting FDI, had the government declared it an industry, it
would done the trade a world of good. Now it is being said that allowing FDI in
retail trade would destroy this commerce! Will it?
A study by the Associated Chambers of Commerce of Industry of India,New Delhi, concluded that at least for the next ten years that will not
happen. Thereafter, the present fragmented system may get phased out or
evolved into more integrated networked units.
Modern retailing is designed not only to provide consumers with a wide variety of
products under one roof, but also of assured home delivery and information
feedback between consumers and producers. A modern retail outlet will also
make it easy to buy on credit and provide for servicing and repair of products
sold.
With IT application, the modern retail store can cut transaction costs such as due
to inventory, delivery and handling. That is precisely how the US based Wal-Mart
grew to be a giant because it reduced its distribution costs to 3 per cent of sales
compared to 4.5 per cent of others.
With MIT Professor Sanjay Sharmas epochal innovation of RFID (radio
frequency identification), which will do away with cash registers and clerks whoare required to operate it, Wal-Mart will further reduce its costs.
India is today the only major economy that still does not permit FDI in retail trade.
In China, 35 of the worlds top 70 retailers have already entered and set up
business. They have helped boost exports. Wal-Mart alone exported in 2002
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 27
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
28/65
about $12 billion worth of goods. These retailers source their goods from inside
China.
India is targeting for its GDP to grow by 8 to 10 per cent per year. This requires
raising the rate of investment as well as generating demand for the increasedgoods and services produced. Exports are one way of generating that demand.
Encouraging private consumption expenditure is another way.
These retail giant houses can bring their better managerial practices and IT-
friendly techniques to cut wastage and set up integrated supply chains to
gradually replace the presented disorganized and fragmented retail market.
According to McKinsey, India wastes nearly Rs. 50,000 crore in the food
chain itself. These international retail outlets can help develop the food
processing industry, which requires $28 billion of modern technology and
infrastructure.
FDI in retail trade has forced the wholesalers and food processors to improve,
raised exports, and triggered growth by outsourcing supplies domestically. The
availability of standardized products has also boosted tourism in these countries.
Indian Middle Class People:
n India, the middle class is difficult to define by incomelevels - not least because of the massive concealment
of earnings. It is vaguely described as the 200-250 million
who are engaged in the market, almost as large as the entire
US population. According to the National Council of Applied
Economic Research (NCAER), between 1985 and 1999, a
quarter of this class earned between Rs 35,000 and Rs
75,000 a year. In the next income category, Rs 70,000 and
Rs 105,000, the proportion dropped from 36% in 1985 to
one-fifth in 1999. Revealingly, in the next category, Rs
105,000 to Rs 140,000, the percentage increased during this
I
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 28
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
29/65
period, from 15% to a quarter of the middle class. And above
Rs 140,000, it similarly went up from 22% to 27%. So it
seems clear that this consuming class is better off than ever
before.
India has registered a very impressive growth of its middle classa
class which was virtually non-existent in 1947 when India became a politically
sovereign nation.
At the start of 1999, the size of the middle class was unofficially
estimated at 300 million people.
The middle class comprises three sub-classes: the upper middle,
middle and lower middle.
The upper middle class comprises an estimated 40 million people. They
have annual incomes of US$600,000 each in terms of Purchasing Power Parity
(PPP).Here calculation of PPP is complicated, but suffice it to say that it is
based on what a unit of currency can purchase in one country compared to
what the same currency can purchase in another country. It is also known as
the law of one price that governs the price level of general goods and
services between the two countries).
The middle class comprises an estimated 150 million people, each with
PPP incomes of US$20,000 per year each.
The lower middle class comprises an estimated 110 million people. An
estimate of their annual income is not available, but they are mostly the
relatively affluent people in the rural areas of India.
The middle classes on the whole (i.e. upper middle + middle middlelower middle classes) are expected to grow by 5 to 10 percent annually.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 29
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
30/65
Opportunity Challenges and emerging trends for
Organized retail in Indian
OpportunityPopulation: Indias population estimated at 1,055 million is expected to grow by
1.7 % year by year. Growing urbanization is key trend in the country, with rural
population growth average 17.9 % and urban growth at 30.7% for the period
1991 to 2001. Today (12 Mar 2007 at 10.03) the population of India is
1,110,480,374.
Right now the population of Key static with regard to population growth ant the
urban and rural split is set out bellow
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 30
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
31/65
Source: Technical Group on Population Projections, Registrar
General of India (RGI) 1996
Figure no.-2 In the period between 1996-2016, population in the:
1. Age group 15-59 will increase from 519 to 800 million
2. Age group < 15 yrs will decline from 353-350 million
3. Age group > 60 yrs will increase from 62.3 to 112.9 million
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 31
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
32/65
Challenges of Retailing
in IndiaRetailing as an industry in India has still a long way to go.
To become a truly flourishing industry, retailing needs to
cross the following hurdles:
Automatic approval is not allowed for foreign investment in retail.
Regulations restricting real estate purchases, and cumbersome local laws.
Taxation, which favors small retail businesses. Absence of developed supply chain and integrated IT management.
Lack of trained work force.
Low skill level for retailing management.
Intrinsic complexity of retailing rapid price changes, constant threat of productObsolescence and low margins.
The credit facility given by the unorganized retail which is not available toOrganized store
Traditional pattern of buying of consumer
Credit facility given by kirana store
Family relationship with kirana store/Lalagi
Psychological behavior to enter big size
Check impulsive buyer
Absence of model
Limited floor space, Park space, Display space
Time factor
Home delivery
The retailers in India have to learn both the art and
science of retailing by closely following how retailers in other
parts of the world are organizing, managing, and coping up
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 32
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
33/65
with new challenges in an ever-changing marketplace. Indian
retailers must use innovative retail formats to enhance
shopping experience, and try to understand the regional
variations in consumer attitudes to retailing. Retail
marketing efforts have to improve in the country -
advertising, promotions, and campaigns to attract
customers; building loyalty by identifying regular shoppers
and offering benefits to them; efficiently managing high-
value customers; and monitoring customer needs constantly,
are some of the aspects which Indian retailers need to focusupon on a more pro-active basis.
Despite the presence of the basic ingredients required for
growth of the retail industry in India, it still faces substantial
hurdles that will retard and inhibit its growth in the future.
One of the key impediments is the lack of FDI status. This
has largely limited capital investments in supply chain
infrastructure, which is a key for development and growth of
food retailing and has also constrained access to world-class
retail practices. Multiplicity and complexity of taxes, lack of
proper infrastructure and relatively high cost of real estate
are the other impediments to the growth of retailing. While
the industry and the government are trying to remove many
of these hurdles, some of the roadblocks will remain and will
continue to affect the smooth growth of this industry. Fitch
believes that while the market share of organized retail will
grow and become significant in the next decade, this growth
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 33
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
34/65
would, however, not be at the same rapid pace as in other
emerging markets. Organized retailing in India is gaining
wider acceptance. The development of the organized retail
sector, during the last decade, has begun to change the face
of retailing, especially, in the major metros of the country.
Experiences in the developed and developing countries
prove that performance of organized retail is strongly linked
to the performance of the economy as a whole. This is
mainly on account of the reach and penetration of this
business and its scientific approach in dealing withcustomers and their needs. In spite of the positive prospects
of this industry, Indian retailing faces some major hurdles
(see Table 1), which have stymied its growth. Early signs of
organized retail were visible even in the 1970s when Nilgiris
(food), Viveks (consumer durables) and Nallis (sarees)
started their operations. However, as a result of the
roadblocks, the industry remained in a rudimentary stage.
While these retailers gave the necessary ambience to
customers, little effort was made to introduce world-class
customer care practices and improve operating efficiencies.
Moreover, most of these modern developments were
restricted to south India, which is still regarded as a Mecca
of Indian Retail.
Factors Description Implications
Barriers to FDI
FDI not permitted in
pure retailing
Absence of global
players
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 34
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
35/65
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
36/65
Supply Chain
Bottlenecks
Several segments like
food and apparel
reserved for SSIs
Distribution, logistics
constraintsrestrictions of
purchase and movement
of food grains, absence
of cold chain
infrastructure
Long intermediation
chain
Limited product range
Makes scaling up
difficult
High cost and
complexity of sourcing &
planning
Lack of value addition
and increase in costs by
almost 15%
Complex Taxation
System
Differential sales tax
rates across states
Multi-point octroi
Sales tax avoidance
by smaller stores
Added cost and
complexity of distribution
Cost advantage for
smaller stores through
tax evasion
Multiple Legislations
Stringent labor laws
governing hours of work,
minimum wage payments
Multiple
licenses/clearances
required
Limits flexibility in
operations
Irritant value in
establishing chain
operations; adds to
overall costsLocal consumption Leads to product
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 36
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
37/65
Customer Preferences
habits
Need for variety
Cultural issues
proliferation
Need to stock larger
number of SKUs at store
level
Increases complexity
in sourcing & planning
Increases the cost of
store management
Availability of Talent
Highly educated class
does not consider
retailing a profession ofchoice
Lack of proper training
Lack of trained
personnel
Higher trial and error
in managing retail
operations
Increase in personnel
costs
Manufacturers
Backlash
No increase in
margins
Manufacturers refuse
to dis-intermediate and
pass on intermediary
margins to retailers
Table
Source: Market Participants, Fitch
Emerging Trends in Retailing
Retailing in India is at a nascent stage of is evolution, but within a small period of
time certain trends are clearly emerging which are in line with the global experiences.
Organized retailing is witnessing a wave of players entering the industry. And, theseplayers are experimenting with various retail formats. Yet, Indian retailing has still
not been able to come up with many successful formats that can be scaled up and
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 37
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
38/65
applied across India. Some of the notable exceptions have been garment retailers like
Madura Garments & Raymond who was scaled their exclusive showroom format
across the country. The Indian economy is highly regulated and the mostsignificant regulation is the restriction of foreign ownership.
Trends in RetailingNew retail forms and combinations continually emerge.
Bank branches and ATM counters have opened in
supermarkets. Gas stations include food stores that make
more profit than the gas operation. Bookstores feature
coffee shops.
Even old retail forms are reappearing: In 1992 Shawna
and Randy Heniger introduced peddlers carts in the Mall of
America. Today three-fourths of the nations major malls
have carts selling everything from casual wear to condoms.
Successful carts average $30,000 to $40,000 a month in
sales and can easily top $70,000 in December. With an
average start-up cost of only $3,000, pushcarts help budding
entrepreneurs test their retailing dreams without a major
cash investment. They provide a way for malls to bring in
more mom-and-pop retailers, showcase seasonal
merchandise, and prospect for permanent tenants.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 38
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
39/65
1. New retail forms are facing a shorter life span. They are rapidly copied and
quickly lose their novelty.
2. The electronic age has significantly increased the growth of non store retailingconsumers receive sales offers in the mail and over television, computers, and
telephones, to which they can immediately respond by calling a toll-free
number or via computer.3. Competition today is increasingly intertype, or between different types of
store outlets. Discount stores, catalog showrooms, and department stores all
compete for the same consumers. The competition between chain superstoresand smaller independently owned stores has become particularly heated.
Because of their bulk buying power, chains get more favorable terms than
independents, and the chains large square footage allows them to put in cafes
and bathrooms.
4. In many locations, the arrival of a superstore has forced nearby independents
out of business. In the book selling business, the arrival of a Barnes & Noble
superstore or
5. Borders Books and Music usually puts smaller bookstores out of business. Yetthe news is not all bad for smaller companies. Many small independent
retailers thrive by knowing their customers better and providing them withmore personal service.
6. Todays retailers are moving toward one of two poles, operating either as
mass merchandisers or as specialty retailers. Superpower retailers are
emerging. Through their superior information systems and buying power,these giant retailers are able to offer strong price savings. These retailers are
using sophisticated marketing information and logistical systems to deliver
good service and immense volumes of product at appealing prices to massesof consumers.
7. In the process, they are crowding out smaller manufacturers, who become
dependent on one large retailer and are therefore extremely vulnerable, andsmaller retailers, who simply do not have the budget of the buying power to
compete.
8. Many retailers are even telling the most powerful manufacturers what tomake; how to price and promote; when and how to ship; and even how to
reorganize and improve production and management. Manufacturers have
little choice: They stand to lose 10 to 30 percent of the market if they refuse.
9. Marketing channels are increasingly becoming professionally managed andprogrammed. Retail organizations are increasingly designing and launching
new store formats targeted to different lifestyle groups. They are not sticking
to one format, such as department stores, but are moving into a mix of retailformats.
10. Technology is becoming critical as a competitive tool. Retailers are using
computers to produce better forecasts, control inventory costs, orderelectronically from suppliers, send e-mail between stores, and even sell to
customers within stores. They are adopting checkout scanning systems,
electronic funds transfer, and improved merchandise-handling systems.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 39
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
40/65
11. Retailers with unique formats and strong brand positioning are increasingly
moving into other countries. McDonalds, The Limited, Gap, and Toys R
U.S. have become globally prominent as a result of their great marketingprowess. Many more Indian retailers are actively pursuing overseas markets to
boost profits.
12. There has been a marked rise in establishments that provide a place for peopleto congregate, such as coffeehouses, tea shops, juice bars, bookshops, and
brew pubs.
EMERGING TRENDS:
1. Forward integration / alternate channels: In bid to close the distancebetween the company and the end consumer by cutting down the distribution
channel, some manufacturers of consumer goods are establishing company
owned stores and service formats and exploring the store in store concept toenhance margins and increase customer value.
2. Sourcing: The CPG industry is following the It outsourcing trend. Indian
subsidiaries of global CPG players have proved them self in term of qualityand production capabilities. This had led several international companies to
source from India. For example Hindustan lever the subsidiary of Unilever
exports a wide range of products like soap, detergents, oral care and skin careproducts to other Unilever subsidiaries. A new export Oriented unit is being
set up by Hindustan lever in Pune, to cater to the need of this business.
Unilever is also setting up a global sourcing office in India to buy products
and raw material from low cost location for its subsidiaries across the world.India is moving towards embracing global patent and trademark standard that
will facilitate outsourcing by CPG companies.
With quotas in textiles sector also being relaxed, global retailers are increasinglyfocusing their sourcing efforts (both apparel and non apparel) from India. Wal-Mart
has announced it will increase it an annual sourcing from India from USD5 billion.
This trend is likely to be followed by most big retailers.
3. Rapid expansion and format migration: After making years of investmentin customer acquisition, setting up of systems / process and consequent
operational loose, many leading retailers have passed their learning phase
and are getting in to the consolidation/aggressive rollout phase. Today few ofthem are making modest money out of the business. This provides confidence
to the investors to infuse much needed capital in the businesses and will lead
the further expansion and format migration. For example the department storechain, Shoppers Stop, will soon have its Initial Public Offer (IPO) and use allthe fund raised, for rapid expansion in existing format and roll out of grocery
stores. Other leading retailers such as Tent (West side) and Landmark Group
(life style) are also considering new formats in home improvement andhypermarkets.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 40
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
41/65
Retail as an Employment Generator
he retail sector can generate huge employment
opportunities, and can lead to job-led economic
growth. In most major economies, services form the largest
sector for creating employment. US alone have over 12% of
its employable workforce engaged in the retail sector. The
retail sector in India employs nearly 21 million people,
accounting for roughly 6.7% of the total employment.
However, employment in organized retailing is still very low,
because of the small share of organized retail business in the
total Indian retail trade. The share of organized retailing in
India, at around 3%, is abysmally low, compared to 80% in
the USA, 40% in Thailand, or 20% in China, thus leaving thehuge market potential largely
T
Untapped. A modern retail/retail services sector has the
potential of creating over 2 million new (direct) jobs within
the next 6 years in the country (assuming only 8-10% share
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 41
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
42/65
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
43/65
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
44/65
research has no control over the variables; he can only report what happened or
what is happening.
Structured questionnaires were prepared having both open and close-ended
questions. The questionnaire was prepared for middle class Indians for
understanding their purchase behavior with organized retail for daily need items.
Universe of the study
Universe of the study was the people of middle clsss(Upper middle class, Middle
middle class, Lower middle class) of NCR (North Central Regon).
Sample size for study
100 people were surveyed by the questionnaire method. Both convenience and
judgmental sampling was used.
Data collection techniques
To achieve the objectives of the study both primary and secondary data was
collected.
Primary data
100 people were surveyed to know their purchase behavior with organized retail
for daily need items. And factors, which motivated them to go for organize retail.
Secondary data
Secondary data was collected by visiting libraries and associations the major
being.
Internet
Different News Paper & Magazines
Journals
Data tabulation, analysis and interpretations
The data was tabulated using tally marks and analyzed by using percentages.
The interpretations are based on the overall survey done on the respondents.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 44
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
45/65
Analysis
1) What the factor that influences your decision while going for purchase ofdaily need items?
12
45
8
18
14
3
0
5
10
15
20
25
30
35
40
45
50
Service Price Dealing of
the salesperson
Variety of the
products
B ra nd n am e P ro pe r
productdisplay
Factors that influen ce decision ma
No.
ofrespondants
Series2
Figure no.-3
The data which is collected by questionnaire is very well showing that the people of
middle class are very price conscious. And the price factor influence their decisionwhile going for purchase of daily need items. After that Variety of the product and
brand name effect a lot in decision making .Other factor like service proper product
display has not much importance while purchase of daily need items. But apart ofdaily need items in the sample size of 100 people 45% people is influenced for daily
purchase by price. That is a reason that lots of organize retailer are focusing their
store on the basis of price. The best examples are Subhiksha, Reliance Fresh, BigBaazar and also Bharti Wal-Mart is also going to penetrate Indian
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 45
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
46/65
2) What type of stores do you prefer for shopping
for daily need items?
No
particular
preference
20%
Malls/Depar
tmental
Store
20%
Kirana
Stores/
Convenienc
e store
45%
Co-operative
Stores
15%
Malls/Departmental
Store
Co-operative Stores
Kirana Stores/
Convenience store
No particular
preference
Figure no.-4
For daily need items generally people prefers Kirana
stores/Convenience store because they gives the reason that
the positioning of kirana stores for daily need items is much
more convenient. According to chart 45% of people prefer
kirana stores/Convenience. 20% People prefer to go Malls/
Departmental stores for daily need items, generally thesepeople are those who purchase product in bulk for a full
month Behind this they give reason that they dont have
much time to visit shop daily. Shopping from these stores
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 46
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
47/65
saves their time and their service, variety and offers
satisfied their need.
These people are generally Upper middle class service
people or middle executives from reputeted organization.
Rest of 20% people have not any preference towards stores
for daily need items.15 people out of 100 believe that Co-
operative stores are giving good discount and quality
oriented product.
3) What comes when you think about organized
retail shop?
Figure no.-5
In the process of filling questionnaire done by respondents
when I interacted with people then I found that when I asked
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 47
75 50 55 4060 70
80 88
60
2550 45 60
40 3020 12
40
0
20
40
60
80
100
120
Funin
shoppin
g
Prom
ptness
Service
Lowprice
High
price
Discou
nt
Variety
Bran
d
Door
delive
ry
YES NO
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
48/65
about organized retail shop then more than 60%
respondents given their view in favor of organized retail
stores. About organized retail shop they feel that shopping
with these stores give them fun because all the items with
wide variety is available under one roof with discounts. Mean
to say products are available can be found in less efforts.
And they are generally discounted, Branded with wide
variety. Here is a pitch for organized retail store where they
can pitch the product because already people has positive
attitude towards organized retail stores. That is a positivepoint for organized retailers. But in some point of view for
daily need items people say after discount goods are cheep
in purchase but after discount session product of daily need
items are costly in comparison to Local kirana wala shop.
Generally lower middle class believe on that. So here is a
lead for organized retailers where they have to work.
4) How often you go for shopping for daily need items?
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 48
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
49/65
Once a
month
10%
Once in a
week
25%
Once a day40%
Thrice amonth
25%
Once a day Once in a week
Thrice a month Once a month
Figure no.-6
Basically the reason of asking this question from
respondents is to understanding their frequency of visiting of
the shop which helps us to understand how often they visit
the shop for daily need items. Generally people purchase
items like milk, bred, cigarette and vegetables daily, 40% of
total respondents say that they daily go for shopping. 25 out
of 100 say that they go purchase of daily need items for
once week. 25% people visit for these items for thrice a
month and rest of 10% people go for these items for once a
month because they dont have time to go daily for these.
Again these people are people from upper middle class. So
those people generally purchase in a bulk for a month. More
than 55% people from those prefer organized retail because
from purchase in bulk they get big discount. Reliance fresh,
Big Bazaar, Spancers and Subhiksha are generally preferred
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 49
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
50/65
retailers. So for these kinds of people organized retailers are
much profitable that is again a type of strength for organized
retailer.
5) How much portion of your fix income you dispose in shopping / month fordaily need items (In Thousands)?
2-5
thousand
55%
5-7
thousand
15%
0-2
thousands
20%
more than 7
thousand
10%
0-2 thousands 2-5 thousand
5-7 thousand more than 7 thousan
Figure no.-7
The reason of asking this question from the respondents is
to understand their purchasing behavior towards daily need
items. In the sample size of 100, 55% of people invest
between 2 to 5 thousands, so this is again an opportunity for
shop keepers to earn. After analysis of data it has found that
on those 60% of people who invest more than average they
mostly prefers organized retail stores because of variety,
quality and discount . That is also positive point for organize
retailer.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 50
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
51/65
6) On the scale of 0 to5 Rate your Buying
Experience of daily need items with
Buying Experience of daily need items wi
organised retail on the scale of 5
35%
25%
5%
5%
30%
Poor
AverageGood
Very Good
Excellent
Buying Experience of daily need items
with unorganised retail on the scale of5
44%
17%
11% 11%
17%
Poor
Average
Good
Very Good
Excellent
Figure no.-8
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 51
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
52/65
Above graph shows that more than 60% people have
excellent experience with organize retail but in traditional
retail 60% also have excellent experience but satisfaction
level is much higher in organized retail 25% people found
excellent experience in organized retail but only 11% people
enjoyed excellent experience in unorganized retail. The
respondent had to rate the both organized as well as
unorganized retail store buying experience.
7) Are you satisfied with the shopping of daily need
items from organized retail store?
Yes
55%
No
45%
Yes No
Figure no.-8From the sample size of 100, 55% people are satisfied
with organized retail. More than 50% respondents had given
their view in favor of organized retail stores. About organized
retail shop they feel that shopping with these stores
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 52
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
53/65
shopping becomes fun because all the items with wide
variety are available under one roof with discounts. Mean to
say products are available can be found in less efforts. And
they are generally Discounted, Branded with wide variety.
Here is a pitch for organized retail store where they can
pitch the product because already people has positive
attitude towards organized retail stores. That is a positive
point for organized retailers. But in some point of view for
daily need items people say after discount goods are cheep
in purchase but after discount session product of daily needitems are costly in comparison to Local kirana wala shop. So
here is a lead for organized retailers where they have to
work.
8) It is expensive to purchase in organized retail
stores in comparison to local kirana shop?
No
40%
Yes
40%
Can't say
20%
Yes No Can't say
Figure no.-9
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 53
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
54/65
Generally in organized retail wide variety of products is
available can be found in less effort. And they are generally
Discounted, Branded with wide variety. But in some point of
view for daily need items 40% people say after discount
goods are cheep in purchase but after discount session
product of daily need items are costly in comparison to Local
kirana wala shop. But 40 out of 100 feel that goods are not
expensive in organized retail shop. And 20% are not having
any idea about the price.
9) To what extent do you agree with following
statements; rate them on the scale of 0 to 5.
Question Strongly
disagree
Disagree Moderat
e
Agree Strongly
agreeShopping in organize
retail stores is more
expensive compare
to local kirana shop
20% 18% 38% 12% 12%
It is more time
consuming topurchase in
organized retail
stores
20% 18% 15% 22% 25%
Prefer shopping from
local kirana shop
9% 22% 10% 20% 39%
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 54
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
55/65
because they give
creditPrefer shopping from
local kirana shop
because they give
fresh products
32% 28% 17% 8% 15%
Kirana shops provide
home delivery of
even less products
10% 10% 30% 21% 29%
Table no.-6
From the above table it can be understand that the people
of middle class very well know that Shopping in organize
retail stores is not expensive compare to local kirana shop
because people say that in organized retail shop products
are available under one roof so it save their time as well as
traveling cost . But in other hand people had given negative
response in question It is more time consuming to purchase
in organized retail stores, they say that in organized retailshop in the flood of product many times it take more time to
select right product but in this question 38% people gives
the reason that these stores gives lots of choice in selection
so it save theirs traveling time. Lover middle class prefer
kirana shop because they give credit without having credit
card which is again much more convenient for lower middle
class people. But in point of freshness 60% people prefer
organized retail store because thy know that fresh product
generally only can be found in stores like Reliance Fresh &
Subhiksha. In the point of home delivery people say that
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 55
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
56/65
their kirana shop owner give home delivery of less product
even low price like 20-50. But in organized retail shop there
is a fix slap for that they give home delivery.
10) Where you feel better to go for purchase of
daily need items?
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 56
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
57/65
Kirana
Stores/
Convenienc
e store
57%
Organized
Retail shop
43%
Organized Retail shop Kirana Stores/ Convenience store
Figure no.-10
The aim of asking this question from respondents is to conclude the research of
The Preference of middle class for Organized Retail For daily need items This
question sumup all the research which is showing that for daily need items
generally use local Kirana stores in comparison to organized retail But for other
items generally people prefer variety and quality oriented store that is organize
retail store. But if we understand the consumer behavior of middle class then we
will find that rapidly they are shifting kirana stores to organized retail shop. If we
would have asked this question to respondent then we would have find decision
in favor of kirana stores. Currently Indian middle class is showing a big change
in their buying behavior and becoming Variety & quality conscious. That is again
a type of victory for organized retailers.
Conclusion
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 57
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
58/65
iberalization of the economy in the nineties and the entry of large players in
the retail business have brought the retail industry into spotlight. Big
players and national retail chains are changing the rules of the game, in spite of
their meager share in the overall retail trade. Organized retailing though still in an
embryonic stage has huge growth potential.
L
To meet the challenges of organized retailing that is luring
customers away from the unorganized sector, the
unorganized sector is getting organized. Because of
preference of middle class for these stores is going to
increase day by day. The organized retail chains, display all
the products and the most attractive product catches the
customer attention. Gone are the days of - customer loyalty
with increasing number of products of similar quality hitting
the market? The customers of the 21st century would expect
to pick his/her own products form an array of choices rather
than asking the local kirana wallas to deliver a list of monthly
groceries. Thus, the way of distribution of products has
gained importance in the past decade.
The first challenge facing the organized retail industry in India is: competition
from the unorganized sector. Traditional retailing has established in India for
some centuries. It is a low cost structure, mostly owner-operated, has negligible
real estate and labor costs and little or no taxes to pay. Consumer familiarity
that runs from generation to generation is one big advantage for the traditional
retailing sector. That is the basic reason now organized sector facing more
challenges from unorganized sector but this research report is also concluding
that preference of middle class for organized retail is going to increase rapidly
but it is little bit slow in daily use items but the day is not so for when middle
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 58
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
59/65
class people frequently purchase daily need items maximum from organized
retail shop.
In contrast, players in the organized sector have big
expenses to meet, and yet have to keep prices low enoughto be able to compete with the traditional sector. High costs
for the organized sector arises from: higher labor costs,
social security to employees, high quality real estate, much
bigger premises, comfort facilities such as air-conditioning,
back-up power supply, taxes etc. Organized retailing also
has to cope with the middle class psychology that the bigger
and brighter sales outlet is, the more expensive.
Limitations
The time factor was a great limitation while the time of 2 month research project.
Due to less knowledge of site of NCR, I visited few areas of NCR so research isbased on according to the customer of that area.
Sample size of 100 is not sufficient to finish this project in moredescriptive
manner. During our meeting part with customer we consider only our potential customer
who was middle class people.
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 59
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
60/65
Bibliography
Books
Retail Marketing by J.A. LambaStatistic Methods by S.P. Gupta
Research Methodology by C. R. Kothari
Web sites
http://en.wikipedia.org/wiki/Retail
http://www.indiaonestop.com/retailing.htm
http://www.ibef.org/artdisplay.aspx?cat_id=375&art_id=13997
http://www.ibef.org/artdisplay.aspx?cat_id=375&art_id=3974
http://www.reportbuyer.com/consumer_goods_retail/country_overv
iew_consumer_goods_retail_/indian_organized_retail_industry_2005
_2007_.html#top.
http://populationcommission.nic.in/facts1.htm
http://www.indiatogether.org/2005/jul/eco-palaces.htm
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 60
http://en.wikipedia.org/wiki/Retailhttp://www.indiaonestop.com/retailing.htmhttp://www.ibef.org/artdisplay.aspx?cat_id=375&art_id=13997http://www.ibef.org/artdisplay.aspx?cat_id=375&art_id=3974http://www.reportbuyer.com/consumer_goods_retail/country_overview_consumer_goods_retail_/indian_organized_retail_industry_2005_2007_.html#tophttp://www.reportbuyer.com/consumer_goods_retail/country_overview_consumer_goods_retail_/indian_organized_retail_industry_2005_2007_.html#tophttp://www.reportbuyer.com/consumer_goods_retail/country_overview_consumer_goods_retail_/indian_organized_retail_industry_2005_2007_.html#tophttp://populationcommission.nic.in/facts1.htmhttp://www.indiatogether.org/2005/jul/eco-palaces.htmhttp://en.wikipedia.org/wiki/Retailhttp://www.indiaonestop.com/retailing.htmhttp://www.ibef.org/artdisplay.aspx?cat_id=375&art_id=13997http://www.ibef.org/artdisplay.aspx?cat_id=375&art_id=3974http://www.reportbuyer.com/consumer_goods_retail/country_overview_consumer_goods_retail_/indian_organized_retail_industry_2005_2007_.html#tophttp://www.reportbuyer.com/consumer_goods_retail/country_overview_consumer_goods_retail_/indian_organized_retail_industry_2005_2007_.html#tophttp://www.reportbuyer.com/consumer_goods_retail/country_overview_consumer_goods_retail_/indian_organized_retail_industry_2005_2007_.html#tophttp://populationcommission.nic.in/facts1.htmhttp://www.indiatogether.org/2005/jul/eco-palaces.htm8/7/2019 49189457 Dissertation Consumer Behavior in Retail
61/65
Magazines & News papers
Sudhir Vinita (Apral31, 2006)In The Growth Trajectory, Pitch pp 26-
29
Guest Column (November15, 2006) The Changing
Marketplaces, Pitch pp 100-110
Sridharan R. and Gopalan Krishna (December31,
2006),Retails Coming Face-Off, Business Today pp82-94
The Behemoth from Bentonville The Times Of India
(Times Ascent), New Delhi, 27December2006, pp 10.
Retail Revolution (29November2006) The EconomicTimes, New Delhi, pp 20.
Barbaro Michael & Greenhouse Steven (August19,
2006),Wal-Mart image-maker quits, Times Business
Kaushik, Neha (21December2006), Youth and beyond
Business Line (Brand Line), pp 01.
Annexure
QUESTIONNAIRE
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 61
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
62/65
1) What the factor that influences your decision
while going for purchase of daily need items?
Service Variety of the products
Price Brand Name
Dealing of the sales person Proper product display
2) What type of stores do you prefer for shopping
for daily need items?Malls/Departmental Store Co-operative Stores
Kirana Stores/ Convenience store No particular preference
3) What comes when you think about organized retail shop?
Yes No
Fun in shoppingPromptnessServiceLow priceHigh priceDiscountVarietyBrandDoor delivery
4) How often you go for shopping for daily need
items?
Once a day Once a week
Thrice a month Once a month
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 62
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
63/65
5) How much portion of your fix income you dispose
in shopping / month for daily need items (In
Thousands)?0 - 2 2 - 5
5 - 7 more than 7
6) On the scale of 0 to5 Rate your Buying
Experience of daily need items withOrganized retail shop 0...........1.............2...............3.................4...........5
Kirana Stores 0...........1.............2...............3.................4...........5
0 for Very poor, 1 -poor, 2 - average, 3 - good, 4 - verygood, 5- excellent
7) Are you satisfied with the shopping of daily need
items from organized retail store?
Yes
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 63
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
64/65
8) It is expensive to purchase in organized retail
stores in comparison to local kirana shop?
Yes No
say
9) To what extent do you agree with following
statements; rate them on the scale of 0 to 5.
Shopping in organize retail stores is more expensive compare to local
kirana shopIt is more time consuming to purchase in organized retail storesPrefer shopping from local kirana shop because they give creditPrefer shopping from local kirana shop because they give fresh productsKirana shops provide home delivery of even less products1 for strongly disagree, 2 - disagree, 3 - moderate, 4 - agree, 5- strongly agree
10) Where you feel better to go for purchase of
daily need items?
Organized retail shop Kirana
Stores
Why......................................................................................
...................................
Respondent Details
Sex Male Female
Age Qualification
MUKESH KUMAR, I.T.S, PGDM (2006-2008) 64
8/7/2019 49189457 Dissertation Consumer Behavior in Retail
65/65
Occupation
Income/ annum0-.5 Lac .5-1.5 Lac 1.5-3 Lac 3-6 Lac More than 6 Lac
Top Related