49189457 dissertation consumer behavior in retail

8/7/2019 49189457 Dissertation Consumer Behavior in Retail

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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


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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



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HUMAN BEING MAKES THINGS POSSIBLE.

Mukesh Kumar

PGDM (2006-2008)

([email protected])

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.

mailto:[email protected]:[email protected]


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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



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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



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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.



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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.



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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



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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



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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



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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



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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



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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



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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:



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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.



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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



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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.



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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.



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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



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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



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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



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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



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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



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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



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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



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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



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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



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



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.



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



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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



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



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



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



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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



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



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.



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.



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.



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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



42/65


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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.



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



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



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


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


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?



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



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.



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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



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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



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



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%



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



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?



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



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



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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.



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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

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.htm


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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



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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



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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



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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



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Occupation

Income/ annum0-.5 Lac .5-1.5 Lac 1.5-3 Lac 3-6 Lac More than 6 Lac

49189457 dissertation consumer behavior in retail

Documents