dissertation, consumer behavior in retail

89
Table of Content Acknowledgement …………………………………………………..……2 Preface……………………………………………………………………….3 Abstract…………….…………………………………………………………4 An introduction………………………………………………………………5 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 people…………………………………………………25 Opportunity challenges and emerging trends…………………………….27 Retail as an employment generator……………………………………….38 Objective of the survey……………………………………………………..39 Research methodology…………………………………………………….40 Analysais………………………………………………………………………42 Conclusion……………………………………………………………………53 MUKESH KUMAR, I.T.S, PGDM (2006-2008) 1

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Page 1: dissertation, consumer behavior in retail

Table of Content

Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2

Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3

Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4

An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6

Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8

Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15

Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23

Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25

Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27

Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38

Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39

Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40

Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42

Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54

Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55

Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56

Total no of Tables------7Total no of Figure------10

MUKESH KUMAR ITS PGDM (2006-2008) 1

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 amp 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 Shekhar Ghose He had

contributed to this being a much better project that it couldnrsquot 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

HUMAN BEING MAKES THINGS POSSIBLE

Mukesh Kumar

PGDM (2006-2008)

(Mukesh_38yahoocom)

MUKESH KUMAR ITS PGDM (2006-2008) 2

Preface

rogress 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

PThe 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 3

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

90rsquos 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 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 donrsquot have time

for things

Though some of the customers perceive departmental stores to be expensive

and only high income categoryrsquos cup of 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

MUKESH KUMAR ITS PGDM (2006-2008) 4

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 Handel and Einze handle respectively) also refer to sale of

small quantities or items

R

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 the end-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 Recreational shopping often involves window shopping (just

looking not buying) and browsing and does not always result in a purchase

MUKESH KUMAR ITS PGDM (2006-2008) 5

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 amp 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 Indian

consumers This led several visitors to the mall but never converted to actual

purchases since most were visiting the place out of curiosity

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

MUKESH KUMAR ITS PGDM (2006-2008) 6

The Global Retail Industry

An Overview

etail 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 USA UK 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 US $7 trillion sector

Wal-Mart is the worldrsquos largest retailer Already the worldrsquos largest employer with

over 1million associates Wal-Mart displaced oil giant Exxon Mobil as the worldrsquos

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 (45497) from the retail business

MUKESH KUMAR ITS PGDM (2006-2008) 7

Global Retail

1999 2002 2005

Total Retail (US$

Billion)

150 180 225

Organized Retail

(US$ Billion)

11 33 7

Share of

Organized retail

07 18 32

Table no -1 Source CSO MGI Study

Top Retailers Worldwide

Rank Retailer Home Country

1 Wal-Mart Stores Inc USA

2 Carrefour Group France

3 The Kroger Co USA

4 The Home Depot Inc USA

5 Metro Germany

MUKESH KUMAR ITS PGDM (2006-2008) 8

Table no -2 (Source STORES Deloitte Touche

Tomahatsu)

Retail Scenario in India

s the corporate ndash the Piramals the Tatas the Rahejas ITC SKumarrsquos

RPG Enterprises and mega retailers- Crosswords Shopperrsquos Stop and

Pantaloons race to revolutionize the retailing sector retail as an industry in India

is coming alive

A

Retail sales in India amounted to about Rs7400 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 83 per year compared with 71 for

consumer expenditure Modernization of the 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

AT Kearney Inc places India 6th on a Global Retail Development Index The

country has the highest per capita outlets in the world - 55 outlets per 1000

population Around 7 of the population in India is engaged in retailing as

compared 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

MUKESH KUMAR ITS PGDM (2006-2008) 9

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 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

bull Rising incomes and improvements in infrastructure are enlarging consumer

markets and 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 178 by 2006-07

bull Liberalization of the Indian economy which has led to the opening up of the

market for 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

bull Shift in consumer demand to foreign brands like McDonalds Sony Panasonic

etc

bull The internet revolution is making the Indian consumer more accessible to the

growing influences of domestic and foreign retail chains Reach of satellite TV

MUKESH KUMAR ITS PGDM (2006-2008) 10

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 2: dissertation, consumer behavior in retail

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 amp 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 Shekhar Ghose He had

contributed to this being a much better project that it couldnrsquot 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

HUMAN BEING MAKES THINGS POSSIBLE

Mukesh Kumar

PGDM (2006-2008)

(Mukesh_38yahoocom)

MUKESH KUMAR ITS PGDM (2006-2008) 2

Preface

rogress 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

PThe 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 3

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

90rsquos 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 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 donrsquot have time

for things

Though some of the customers perceive departmental stores to be expensive

and only high income categoryrsquos cup of 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

MUKESH KUMAR ITS PGDM (2006-2008) 4

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 Handel and Einze handle respectively) also refer to sale of

small quantities or items

R

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 the end-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 Recreational shopping often involves window shopping (just

looking not buying) and browsing and does not always result in a purchase

MUKESH KUMAR ITS PGDM (2006-2008) 5

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 amp 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 Indian

consumers This led several visitors to the mall but never converted to actual

purchases since most were visiting the place out of curiosity

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

MUKESH KUMAR ITS PGDM (2006-2008) 6

The Global Retail Industry

An Overview

etail 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 USA UK 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 US $7 trillion sector

Wal-Mart is the worldrsquos largest retailer Already the worldrsquos largest employer with

over 1million associates Wal-Mart displaced oil giant Exxon Mobil as the worldrsquos

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 (45497) from the retail business

MUKESH KUMAR ITS PGDM (2006-2008) 7

Global Retail

1999 2002 2005

Total Retail (US$

Billion)

150 180 225

Organized Retail

(US$ Billion)

11 33 7

Share of

Organized retail

07 18 32

Table no -1 Source CSO MGI Study

Top Retailers Worldwide

Rank Retailer Home Country

1 Wal-Mart Stores Inc USA

2 Carrefour Group France

3 The Kroger Co USA

4 The Home Depot Inc USA

5 Metro Germany

MUKESH KUMAR ITS PGDM (2006-2008) 8

Table no -2 (Source STORES Deloitte Touche

Tomahatsu)

Retail Scenario in India

s the corporate ndash the Piramals the Tatas the Rahejas ITC SKumarrsquos

RPG Enterprises and mega retailers- Crosswords Shopperrsquos Stop and

Pantaloons race to revolutionize the retailing sector retail as an industry in India

is coming alive

A

Retail sales in India amounted to about Rs7400 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 83 per year compared with 71 for

consumer expenditure Modernization of the 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

AT Kearney Inc places India 6th on a Global Retail Development Index The

country has the highest per capita outlets in the world - 55 outlets per 1000

population Around 7 of the population in India is engaged in retailing as

compared 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

MUKESH KUMAR ITS PGDM (2006-2008) 9

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 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

bull Rising incomes and improvements in infrastructure are enlarging consumer

markets and 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 178 by 2006-07

bull Liberalization of the Indian economy which has led to the opening up of the

market for 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

bull Shift in consumer demand to foreign brands like McDonalds Sony Panasonic

etc

bull The internet revolution is making the Indian consumer more accessible to the

growing influences of domestic and foreign retail chains Reach of satellite TV

MUKESH KUMAR ITS PGDM (2006-2008) 10

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 3: dissertation, consumer behavior in retail

Preface

rogress 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

PThe 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 3

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

90rsquos 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 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 donrsquot have time

for things

Though some of the customers perceive departmental stores to be expensive

and only high income categoryrsquos cup of 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

MUKESH KUMAR ITS PGDM (2006-2008) 4

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 Handel and Einze handle respectively) also refer to sale of

small quantities or items

R

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 the end-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 Recreational shopping often involves window shopping (just

looking not buying) and browsing and does not always result in a purchase

MUKESH KUMAR ITS PGDM (2006-2008) 5

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 amp 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 Indian

consumers This led several visitors to the mall but never converted to actual

purchases since most were visiting the place out of curiosity

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

MUKESH KUMAR ITS PGDM (2006-2008) 6

The Global Retail Industry

An Overview

etail 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 USA UK 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 US $7 trillion sector

Wal-Mart is the worldrsquos largest retailer Already the worldrsquos largest employer with

over 1million associates Wal-Mart displaced oil giant Exxon Mobil as the worldrsquos

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 (45497) from the retail business

MUKESH KUMAR ITS PGDM (2006-2008) 7

Global Retail

1999 2002 2005

Total Retail (US$

Billion)

150 180 225

Organized Retail

(US$ Billion)

11 33 7

Share of

Organized retail

07 18 32

Table no -1 Source CSO MGI Study

Top Retailers Worldwide

Rank Retailer Home Country

1 Wal-Mart Stores Inc USA

2 Carrefour Group France

3 The Kroger Co USA

4 The Home Depot Inc USA

5 Metro Germany

MUKESH KUMAR ITS PGDM (2006-2008) 8

Table no -2 (Source STORES Deloitte Touche

Tomahatsu)

Retail Scenario in India

s the corporate ndash the Piramals the Tatas the Rahejas ITC SKumarrsquos

RPG Enterprises and mega retailers- Crosswords Shopperrsquos Stop and

Pantaloons race to revolutionize the retailing sector retail as an industry in India

is coming alive

A

Retail sales in India amounted to about Rs7400 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 83 per year compared with 71 for

consumer expenditure Modernization of the 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

AT Kearney Inc places India 6th on a Global Retail Development Index The

country has the highest per capita outlets in the world - 55 outlets per 1000

population Around 7 of the population in India is engaged in retailing as

compared 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

MUKESH KUMAR ITS PGDM (2006-2008) 9

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 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

bull Rising incomes and improvements in infrastructure are enlarging consumer

markets and 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 178 by 2006-07

bull Liberalization of the Indian economy which has led to the opening up of the

market for 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

bull Shift in consumer demand to foreign brands like McDonalds Sony Panasonic

etc

bull The internet revolution is making the Indian consumer more accessible to the

growing influences of domestic and foreign retail chains Reach of satellite TV

MUKESH KUMAR ITS PGDM (2006-2008) 10

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 4: dissertation, consumer behavior in retail

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

90rsquos 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 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 donrsquot have time

for things

Though some of the customers perceive departmental stores to be expensive

and only high income categoryrsquos cup of 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

MUKESH KUMAR ITS PGDM (2006-2008) 4

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 Handel and Einze handle respectively) also refer to sale of

small quantities or items

R

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 the end-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 Recreational shopping often involves window shopping (just

looking not buying) and browsing and does not always result in a purchase

MUKESH KUMAR ITS PGDM (2006-2008) 5

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 amp 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 Indian

consumers This led several visitors to the mall but never converted to actual

purchases since most were visiting the place out of curiosity

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

MUKESH KUMAR ITS PGDM (2006-2008) 6

The Global Retail Industry

An Overview

etail 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 USA UK 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 US $7 trillion sector

Wal-Mart is the worldrsquos largest retailer Already the worldrsquos largest employer with

over 1million associates Wal-Mart displaced oil giant Exxon Mobil as the worldrsquos

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 (45497) from the retail business

MUKESH KUMAR ITS PGDM (2006-2008) 7

Global Retail

1999 2002 2005

Total Retail (US$

Billion)

150 180 225

Organized Retail

(US$ Billion)

11 33 7

Share of

Organized retail

07 18 32

Table no -1 Source CSO MGI Study

Top Retailers Worldwide

Rank Retailer Home Country

1 Wal-Mart Stores Inc USA

2 Carrefour Group France

3 The Kroger Co USA

4 The Home Depot Inc USA

5 Metro Germany

MUKESH KUMAR ITS PGDM (2006-2008) 8

Table no -2 (Source STORES Deloitte Touche

Tomahatsu)

Retail Scenario in India

s the corporate ndash the Piramals the Tatas the Rahejas ITC SKumarrsquos

RPG Enterprises and mega retailers- Crosswords Shopperrsquos Stop and

Pantaloons race to revolutionize the retailing sector retail as an industry in India

is coming alive

A

Retail sales in India amounted to about Rs7400 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 83 per year compared with 71 for

consumer expenditure Modernization of the 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

AT Kearney Inc places India 6th on a Global Retail Development Index The

country has the highest per capita outlets in the world - 55 outlets per 1000

population Around 7 of the population in India is engaged in retailing as

compared 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

MUKESH KUMAR ITS PGDM (2006-2008) 9

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 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

bull Rising incomes and improvements in infrastructure are enlarging consumer

markets and 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 178 by 2006-07

bull Liberalization of the Indian economy which has led to the opening up of the

market for 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

bull Shift in consumer demand to foreign brands like McDonalds Sony Panasonic

etc

bull The internet revolution is making the Indian consumer more accessible to the

growing influences of domestic and foreign retail chains Reach of satellite TV

MUKESH KUMAR ITS PGDM (2006-2008) 10

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 5: dissertation, consumer behavior in retail

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 Handel and Einze handle respectively) also refer to sale of

small quantities or items

R

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 the end-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 Recreational shopping often involves window shopping (just

looking not buying) and browsing and does not always result in a purchase

MUKESH KUMAR ITS PGDM (2006-2008) 5

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 amp 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 Indian

consumers This led several visitors to the mall but never converted to actual

purchases since most were visiting the place out of curiosity

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

MUKESH KUMAR ITS PGDM (2006-2008) 6

The Global Retail Industry

An Overview

etail 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 USA UK 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 US $7 trillion sector

Wal-Mart is the worldrsquos largest retailer Already the worldrsquos largest employer with

over 1million associates Wal-Mart displaced oil giant Exxon Mobil as the worldrsquos

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 (45497) from the retail business

MUKESH KUMAR ITS PGDM (2006-2008) 7

Global Retail

1999 2002 2005

Total Retail (US$

Billion)

150 180 225

Organized Retail

(US$ Billion)

11 33 7

Share of

Organized retail

07 18 32

Table no -1 Source CSO MGI Study

Top Retailers Worldwide

Rank Retailer Home Country

1 Wal-Mart Stores Inc USA

2 Carrefour Group France

3 The Kroger Co USA

4 The Home Depot Inc USA

5 Metro Germany

MUKESH KUMAR ITS PGDM (2006-2008) 8

Table no -2 (Source STORES Deloitte Touche

Tomahatsu)

Retail Scenario in India

s the corporate ndash the Piramals the Tatas the Rahejas ITC SKumarrsquos

RPG Enterprises and mega retailers- Crosswords Shopperrsquos Stop and

Pantaloons race to revolutionize the retailing sector retail as an industry in India

is coming alive

A

Retail sales in India amounted to about Rs7400 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 83 per year compared with 71 for

consumer expenditure Modernization of the 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

AT Kearney Inc places India 6th on a Global Retail Development Index The

country has the highest per capita outlets in the world - 55 outlets per 1000

population Around 7 of the population in India is engaged in retailing as

compared 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

MUKESH KUMAR ITS PGDM (2006-2008) 9

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 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

bull Rising incomes and improvements in infrastructure are enlarging consumer

markets and 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 178 by 2006-07

bull Liberalization of the Indian economy which has led to the opening up of the

market for 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

bull Shift in consumer demand to foreign brands like McDonalds Sony Panasonic

etc

bull The internet revolution is making the Indian consumer more accessible to the

growing influences of domestic and foreign retail chains Reach of satellite TV

MUKESH KUMAR ITS PGDM (2006-2008) 10

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 6: dissertation, consumer behavior in retail

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 amp 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 Indian

consumers This led several visitors to the mall but never converted to actual

purchases since most were visiting the place out of curiosity

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

MUKESH KUMAR ITS PGDM (2006-2008) 6

The Global Retail Industry

An Overview

etail 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 USA UK 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 US $7 trillion sector

Wal-Mart is the worldrsquos largest retailer Already the worldrsquos largest employer with

over 1million associates Wal-Mart displaced oil giant Exxon Mobil as the worldrsquos

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 (45497) from the retail business

MUKESH KUMAR ITS PGDM (2006-2008) 7

Global Retail

1999 2002 2005

Total Retail (US$

Billion)

150 180 225

Organized Retail

(US$ Billion)

11 33 7

Share of

Organized retail

07 18 32

Table no -1 Source CSO MGI Study

Top Retailers Worldwide

Rank Retailer Home Country

1 Wal-Mart Stores Inc USA

2 Carrefour Group France

3 The Kroger Co USA

4 The Home Depot Inc USA

5 Metro Germany

MUKESH KUMAR ITS PGDM (2006-2008) 8

Table no -2 (Source STORES Deloitte Touche

Tomahatsu)

Retail Scenario in India

s the corporate ndash the Piramals the Tatas the Rahejas ITC SKumarrsquos

RPG Enterprises and mega retailers- Crosswords Shopperrsquos Stop and

Pantaloons race to revolutionize the retailing sector retail as an industry in India

is coming alive

A

Retail sales in India amounted to about Rs7400 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 83 per year compared with 71 for

consumer expenditure Modernization of the 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

AT Kearney Inc places India 6th on a Global Retail Development Index The

country has the highest per capita outlets in the world - 55 outlets per 1000

population Around 7 of the population in India is engaged in retailing as

compared 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

MUKESH KUMAR ITS PGDM (2006-2008) 9

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 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

bull Rising incomes and improvements in infrastructure are enlarging consumer

markets and 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 178 by 2006-07

bull Liberalization of the Indian economy which has led to the opening up of the

market for 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

bull Shift in consumer demand to foreign brands like McDonalds Sony Panasonic

etc

bull The internet revolution is making the Indian consumer more accessible to the

growing influences of domestic and foreign retail chains Reach of satellite TV

MUKESH KUMAR ITS PGDM (2006-2008) 10

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 7: dissertation, consumer behavior in retail

The Global Retail Industry

An Overview

etail 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 USA UK 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 US $7 trillion sector

Wal-Mart is the worldrsquos largest retailer Already the worldrsquos largest employer with

over 1million associates Wal-Mart displaced oil giant Exxon Mobil as the worldrsquos

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 (45497) from the retail business

MUKESH KUMAR ITS PGDM (2006-2008) 7

Global Retail

1999 2002 2005

Total Retail (US$

Billion)

150 180 225

Organized Retail

(US$ Billion)

11 33 7

Share of

Organized retail

07 18 32

Table no -1 Source CSO MGI Study

Top Retailers Worldwide

Rank Retailer Home Country

1 Wal-Mart Stores Inc USA

2 Carrefour Group France

3 The Kroger Co USA

4 The Home Depot Inc USA

5 Metro Germany

MUKESH KUMAR ITS PGDM (2006-2008) 8

Table no -2 (Source STORES Deloitte Touche

Tomahatsu)

Retail Scenario in India

s the corporate ndash the Piramals the Tatas the Rahejas ITC SKumarrsquos

RPG Enterprises and mega retailers- Crosswords Shopperrsquos Stop and

Pantaloons race to revolutionize the retailing sector retail as an industry in India

is coming alive

A

Retail sales in India amounted to about Rs7400 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 83 per year compared with 71 for

consumer expenditure Modernization of the 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

AT Kearney Inc places India 6th on a Global Retail Development Index The

country has the highest per capita outlets in the world - 55 outlets per 1000

population Around 7 of the population in India is engaged in retailing as

compared 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

MUKESH KUMAR ITS PGDM (2006-2008) 9

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 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

bull Rising incomes and improvements in infrastructure are enlarging consumer

markets and 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 178 by 2006-07

bull Liberalization of the Indian economy which has led to the opening up of the

market for 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

bull Shift in consumer demand to foreign brands like McDonalds Sony Panasonic

etc

bull The internet revolution is making the Indian consumer more accessible to the

growing influences of domestic and foreign retail chains Reach of satellite TV

MUKESH KUMAR ITS PGDM (2006-2008) 10

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 8: dissertation, consumer behavior in retail

Global Retail

1999 2002 2005

Total Retail (US$

Billion)

150 180 225

Organized Retail

(US$ Billion)

11 33 7

Share of

Organized retail

07 18 32

Table no -1 Source CSO MGI Study

Top Retailers Worldwide

Rank Retailer Home Country

1 Wal-Mart Stores Inc USA

2 Carrefour Group France

3 The Kroger Co USA

4 The Home Depot Inc USA

5 Metro Germany

MUKESH KUMAR ITS PGDM (2006-2008) 8

Table no -2 (Source STORES Deloitte Touche

Tomahatsu)

Retail Scenario in India

s the corporate ndash the Piramals the Tatas the Rahejas ITC SKumarrsquos

RPG Enterprises and mega retailers- Crosswords Shopperrsquos Stop and

Pantaloons race to revolutionize the retailing sector retail as an industry in India

is coming alive

A

Retail sales in India amounted to about Rs7400 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 83 per year compared with 71 for

consumer expenditure Modernization of the 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

AT Kearney Inc places India 6th on a Global Retail Development Index The

country has the highest per capita outlets in the world - 55 outlets per 1000

population Around 7 of the population in India is engaged in retailing as

compared 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

MUKESH KUMAR ITS PGDM (2006-2008) 9

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 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

bull Rising incomes and improvements in infrastructure are enlarging consumer

markets and 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 178 by 2006-07

bull Liberalization of the Indian economy which has led to the opening up of the

market for 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

bull Shift in consumer demand to foreign brands like McDonalds Sony Panasonic

etc

bull The internet revolution is making the Indian consumer more accessible to the

growing influences of domestic and foreign retail chains Reach of satellite TV

MUKESH KUMAR ITS PGDM (2006-2008) 10

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 9: dissertation, consumer behavior in retail

Table no -2 (Source STORES Deloitte Touche

Tomahatsu)

Retail Scenario in India

s the corporate ndash the Piramals the Tatas the Rahejas ITC SKumarrsquos

RPG Enterprises and mega retailers- Crosswords Shopperrsquos Stop and

Pantaloons race to revolutionize the retailing sector retail as an industry in India

is coming alive

A

Retail sales in India amounted to about Rs7400 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 83 per year compared with 71 for

consumer expenditure Modernization of the 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

AT Kearney Inc places India 6th on a Global Retail Development Index The

country has the highest per capita outlets in the world - 55 outlets per 1000

population Around 7 of the population in India is engaged in retailing as

compared 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

MUKESH KUMAR ITS PGDM (2006-2008) 9

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 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

bull Rising incomes and improvements in infrastructure are enlarging consumer

markets and 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 178 by 2006-07

bull Liberalization of the Indian economy which has led to the opening up of the

market for 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

bull Shift in consumer demand to foreign brands like McDonalds Sony Panasonic

etc

bull The internet revolution is making the Indian consumer more accessible to the

growing influences of domestic and foreign retail chains Reach of satellite TV

MUKESH KUMAR ITS PGDM (2006-2008) 10

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 10: dissertation, consumer behavior in retail

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 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

bull Rising incomes and improvements in infrastructure are enlarging consumer

markets and 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 178 by 2006-07

bull Liberalization of the Indian economy which has led to the opening up of the

market for 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

bull Shift in consumer demand to foreign brands like McDonalds Sony Panasonic

etc

bull The internet revolution is making the Indian consumer more accessible to the

growing influences of domestic and foreign retail chains Reach of satellite TV

MUKESH KUMAR ITS PGDM (2006-2008) 10

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 11: dissertation, consumer behavior in retail

channels is helping in creating awareness about global products for local

markets About 47 of Indiarsquos 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 satellite channels 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

bull Retailers direct procure the products amp services in bulk through manufacturers

so they eliminate the middleman and save the cost They offer the product amp

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

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

MUKESH KUMAR ITS PGDM (2006-2008) 11

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 12: dissertation, consumer behavior in retail

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 through increased 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 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)

MUKESH KUMAR ITS PGDM (2006-2008) 12

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 13: dissertation, consumer behavior in retail

The Organized Retail Pie of Daily need items

The Organised Retail Pie

2

3

7

7

9

13

19

40

Beauty Products

Books Music ampGifts

Home Decore

Jewellery ampwatches

Footwear

Durables

Food amp Grocery

Cloathing Textilesamp FashionAccessories

(Business Today December 312006)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

MUKESH KUMAR ITS PGDM (2006-2008) 13

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 14: dissertation, consumer behavior in retail

resemble a retailing industry in the modern sense of the term This

presents international retailing specialists with a great opportunity

It was only in the year 2000 that the global management consultancy put

a figure that Rs 400000 crore (1 crore = 10 million) which will increase

more than Rs 800000 crore by the year 2007 ndash 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 Rs20 000 crore the organized retail industry will

grow more than Rs 160000 crore by 2007 The TOTAL retail market

however as indicated above will grow 20 per cent annually from Rs

400000 crore in 2000 to Rs 800000 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

MUKESH KUMAR ITS PGDM (2006-2008) 14

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 15: dissertation, consumer behavior in retail

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 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 ndash complete with food courts recreation

facilities and large car parking space ndash 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 amp experience about Retail at the same local players has

knowledge about Indian culture ampsociety setup

These drawbacks present opportunity to international andor

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

MUKESH KUMAR ITS PGDM (2006-2008) 15

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 16: dissertation, consumer behavior in retail

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

bullIndian 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 (3500 - 5000 sq ft)

Mini supermarkets typically (1000 - 2000 sq ft)

Convenience store typically (750 - 1000 sq ft)

Discountshopping 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

MUKESH KUMAR ITS PGDM (2006-2008) 16

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 17: dissertation, consumer behavior in retail

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

clothing house wares

furniture appliances toys

etc

One stop shop catering to

varied consumer needs

Supermarkets

Extremely large self-

services retail outlets

One stop shop

catering to varied consumer

needs

Discount Stores

Stores offering discounts on

the retail price through

selling high volumes and

reaping 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

An enclosure having

different formats of in-store

Variety of shops available

MUKESH KUMAR ITS PGDM (2006-2008) 17

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 18: dissertation, consumer behavior in retail

Shopping Malls retailers all under one roof 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

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)

MUKESH KUMAR ITS PGDM (2006-2008) 18

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 19: dissertation, consumer behavior in retail

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 50000+ square foot in size stores in Class II towns

have stabilized in the 25000-35000 square foot range

Development of discount formats Large discounts formats 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 19

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 20: dissertation, consumer behavior in retail

Retail Revolution

Name N0Of 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

Format

Reliance retail has an

ambitious roll out of 1575

stores by 2007 It plans to

have ware house-style store

spread over 150000 sq ft

storesbin a super market

format

Shoppersrsquo

stop

20 Deptt

Hypermarket

Books

One of the earliest in the

retail market Shopperrsquos Stop

plans to expand retail space

to 25 mn sq ft by FY08

From the Current 950700 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

MUKESH KUMAR ITS PGDM (2006-2008) 20

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 21: dissertation, consumer behavior in retail

expansion of its Spencer

supermarket and

hypermarket stores and

Music World stores Retail

space of 4 mn sq ft amp550

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

retail will expend to 125mn

sq feet in FY 07 from the

current 900000 sq ft income

from operations in 06 was

RS365 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

MUKESH KUMAR ITS PGDM (2006-2008) 21

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 22: dissertation, consumer behavior in retail

known but their hiring plans

indicate a presence in all

categories from apparel food

to furniture The group wild

pump in Rs 5000 cr to 6000

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 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 amp 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

MUKESH KUMAR ITS PGDM (2006-2008) 22

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 23: dissertation, consumer behavior in retail

Clothing amp 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 tastes and preferences it is unlikely that the

traditional outlets will survive the test of time

Home Furniture amp 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 amp Personal Goods

MUKESH KUMAR ITS PGDM (2006-2008) 23

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 24: dissertation, consumer behavior in retail

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 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

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

MUKESH KUMAR ITS PGDM (2006-2008) 24

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 25: dissertation, consumer behavior in retail

But the trade in India is fragmented unorganized networked and individually

small The 12 million kirana shops are mostly family or ma-pa owned with little

capital 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 45 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 who

are 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

about $12 billion worth of goods These retailers source their goods from inside

China

MUKESH KUMAR ITS PGDM (2006-2008) 25

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 26: dissertation, consumer behavior in retail

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 increased

goods 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 50000 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 income levels - 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

35000 and Rs 75000 a year In the next income category Rs 70000 and Rs

105000 the proportion dropped from 36 in 1985 to one-fifth in 1999

Revealingly in the next category Rs 105000 to Rs 140000 the percentage

increased during this period from 15 to a quarter of the middle class And

above Rs 140000 it similarly went up from 22 to 27 So it seems clear that

this consuming class is better off than ever before

I

MUKESH KUMAR ITS PGDM (2006-2008) 26

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 27: dissertation, consumer behavior in retail

India has registered a very impressive growth of its middle class -- a

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$600000 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$20000 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 (ie upper middle + middle middle

lower middle classes) are expected to grow by 5 to 10 percent annually

MUKESH KUMAR ITS PGDM (2006-2008) 27

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 28: dissertation, consumer behavior in retail

Opportunity Challenges and emerging trends for

Organized retail in Indian

Opportunity

Population Indiarsquos population estimated at 1055 million is expected to grow by

17 year by year Growing urbanization is key trend in the country with rural

population growth average 179 and urban growth at 307 for the period

1991 to 2001 Today (12 Mar 2007 at 1003) the population of India is

1110480374

Right now the population of Key static with regard to population growth ant the

urban and rural split is set out bellow

Source Technical Group on Population Projections Registrar General of India (RGI) 1996

Figure no-2

MUKESH KUMAR ITS PGDM (2006-2008) 28

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 29: dissertation, consumer behavior in retail

In the period between 1996-2016 population in the

1 Age group 15-59 will increase from 519 to 800 million

2 Age group lt 15 yrs will decline from 353-350 million

3 Age group gt 60 yrs will increase from 623 to 1129 million

Challenges of Retailing in India

Retailing 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

bull Automatic approval is not allowed for foreign investment in retail

bull Regulations restricting real estate purchases and cumbersome local laws

bull Taxation which favors small retail businesses

bull Absence of developed supply chain and integrated IT management

bull Lack of trained work force

bull Low skill level for retailing management

bull Intrinsic complexity of retailing ndash rapid price changes constant threat of product

Obsolescence and low margins

bull The credit facility given by the unorganized retail which is not available to

Organized store

bull Traditional pattern of buying of consumer

bull Credit facility given by kirana store

bull Family relationship with kirana storeLalagi

bull Psychological behavior to enter big size

bull Check impulsive buyer

bull Absence of model

bull Limited floor space Park space Display space

bull Time factor

bull Home delivery

MUKESH KUMAR ITS PGDM (2006-2008) 29

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 30: dissertation, consumer behavior in retail

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 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 focus upon 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 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 with customers and their

needs In spite of the positive prospects of this industry Indian retailing faces

MUKESH KUMAR ITS PGDM (2006-2008) 30

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 31: dissertation, consumer behavior in retail

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 lsquoMecca of Indian Retailrsquo

Factors Description Implications

Barriers to FDI

1048707 FDI not permitted in

pure retailing

1048707 Franchisee

arrangement allowed

1048707 Absence of global

players

1048707 Limited exposure to

best practices Status

Lack of Industry

1048707 Government does not

recognize the

industry

1048707 Restricted availability

of finance

1048707 Restricts growth and

scaling up

Structural Impediments

1048707 Lack of urbanization

1048707 Poor transportation

infrastructure

1048707 Consumer habit of

buying fresh foods

Administered pricing

1048707 Lack of awareness of

Indian consumers

1048707 Restricted retail growth

1048707 Growth of small one-

store formats with

unmatchable cost

structure

1048707 Wastage of almost

20-25 of farm

MUKESH KUMAR ITS PGDM (2006-2008) 31

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 32: dissertation, consumer behavior in retail

produce High Cost of

Real Estate

High Cost of Real

Estate

1048707 Pro-tenant rent laws

1048707 Non-availability of

government land zoning

restrictions

1048707 Lack of clear

ownership titles high

stamp

1048707 Difficult to find good

real estate in terms of

location and size

1048707 High land cost owing to

constrained supply

1048707 Disorganized nature of

transactions

Duty (10)

Supply Chain

Bottlenecks

1048707 Several segments like

food and apparel

reserved for SSIs

1048707 Distribution logistics

constraintsndashrestrictions of

purchase and movement

of food grains absence

of cold chain

infrastructure

1048707 Long intermediation

chain

1048707 Limited product range

1048707 Makes scaling up

difficult

1048707 High cost and

complexity of sourcing amp

planning

1048707 Lack of value addition

and increase in costs by

almost 15

1048707 Differential sales tax

rates across states

1048707 Added cost and

complexity of distribution

MUKESH KUMAR ITS PGDM (2006-2008) 32

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 33: dissertation, consumer behavior in retail

Complex Taxation

System

1048707 Multi-point octroi

1048707 Sales tax avoidance by

smaller stores

1048707 Cost advantage for

smaller stores through

tax evasion

Multiple Legislations

1048707 Stringent labor laws

governing hours of work

minimum wage payments

1048707 Multiple

licensesclearances

required

1048707 Limits flexibility in

operations

1048707 Irritant value in

establishing chain

operations adds to

overall costs

Customer Preferences

1048707 Local consumption

habits

1048707 Need for variety

1048707 Cultural issues

1048707 Leads to product

proliferation

1048707 Need to stock larger

number of SKUs at store

level

1048707 Increases complexity

in sourcing amp planning

1048707 Increases the cost of

store management

Availability of Talent

1048707 Highly educated class

does not consider

retailing a profession of

choice

1048707 Lack of proper training

1048707 Lack of trained

personnel

1048707 Higher trial and error in

managing retail

operations

1048707 Increase in personnel

MUKESH KUMAR ITS PGDM (2006-2008) 33

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 34: dissertation, consumer behavior in retail

costs

Manufacturers

Backlash

1048707 No increase in margins 1048707 Manufacturers refuse

to dis-intermediate and

pass on intermediary

margins to retailers

Table no-6 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 these players 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 applied across India Some of the notable exceptions

have been garment retailers like Madura Garments amp Raymond who was scaled

their exclusive showroom format across the country The Indian economy is

highly regulated and the most significant regulation is the restriction of foreign

ownership

MUKESH KUMAR ITS PGDM (2006-2008) 34

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 35: dissertation, consumer behavior in retail

Trends in Retailing

New 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 peddlerrsquos carts in the Mall of America Today three-fourths of the

nationrsquos major malls have carts selling everything from casual wear to condoms

Successful carts average $30000 to $40000 a month in sales and can easily top

$70000 in December With an average start-up cost of only $3000 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

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

retailing consumers 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

superstores and smaller independently owned stores has become

particularly heated Because of their bulk buying power chains get more

favorable terms than independents and the chainsrsquo 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 amp Noble superstore or

MUKESH KUMAR ITS PGDM (2006-2008) 35

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 36: dissertation, consumer behavior in retail

5 Borders Books and Music usually puts smaller bookstores out of business

Yet the news is not all bad for smaller companies Many small

independent retailers thrive by knowing their customers better and

providing them with more personal service

6 Todayrsquos 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 masses of consumers

7 In the process they are crowding out smaller manufacturers who become

dependent on one large retailer and are therefore extremely vulnerable

and smaller 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 to

make 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

and programmed 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 retail formats

10Technology is becoming critical as a competitive tool Retailers are using

computers to produce better forecasts control inventory costs order

electronically 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 ITS PGDM (2006-2008) 36

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 37: dissertation, consumer behavior in retail

11Retailers with unique formats and strong brand positioning are

increasingly moving into other countries McDonaldrsquos The Limited Gap

and Toys ldquoRrdquo US have become globally prominent as a result of their

great marketing prowess Many more Indian retailers are actively pursuing

overseas markets to boost profits

12There has been a marked rise in establishments that provide a place for

people to congregate such as coffeehouses tea shops juice bars

bookshops and brew pubs

EMERGING TRENDS

1 Forward integration alternate channels In bid to close the distance

between 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 to enhance 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

quality and 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 care products 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

MUKESH KUMAR ITS PGDM (2006-2008) 37

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 38: dissertation, consumer behavior in retail

With quotas in textiles sector also being relaxed global retailers are

increasingly focusing 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

investment in customer acquisition setting up of systems process and

consequent operational loose many leading retailers have passed their

ldquolearningrdquo phase and are getting in to the consolidationaggressive rollout

phase Today few of them 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 store chain Shoppers Stop will soon have

its Initial Public Offer (IPO) and use all the 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 and hypermarkets

MUKESH KUMAR ITS PGDM (2006-2008) 38

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 39: dissertation, consumer behavior in retail

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 lsquoservicesrsquo 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 67 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 the

huge market potential largely

T

Untapped A modern retailretail 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 of organized retailing) according to Arvind Singhal CMD KSA

Technopak Retail can create as many new jobs as the BPOITeS sector in India

A strong retail front-end can also provide the necessary fillip to agriculture amp food

processing handicrafts and small amp medium manufacturing enterprises creating

millions of new jobs indirectly Through its strong linkages with sectors like

tourism and hospitality retail has the potential of creating jobs in these sectors

also Though the Planning Commission has identified retail as a prospective

employment generator in order to strengthen the multiplier effect of the growth in

organized retailing upon the overall employment situation a pro-active

governmental support mechanism needs to evolve for nurturing the sector

Issues like FDI in retail allocation of government-controlled land on more

favorable terms strong political and bureaucratic leadership etc need to be

addressed adequately Big corporate houses are coming in retail with huge

investment plan in coming future due to the reason of competition Retail has

required more talented amp skilled business people

MUKESH KUMAR ITS PGDM (2006-2008) 39

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 40: dissertation, consumer behavior in retail

OBJECTIVE OF THE SURVEY

he following survey was mainly done with an objective to know the state of

mind of an individual and their preference of organized retail And their

satisfaction level towards these outlets

TAnd other reasons are

1 To get an insight in to the retail industry

2 To understand the factors that influence shoppers to visit organized retail

Outlets

3 To understand consumer behavior about organized retail shop

4 To identify change in consumer behavior ie preference of the small

retail store over the supermarket or vice versa

5 Buying Experience of middle class people for daily need items with from

Organize retail shop amp Kirana store

MUKESH KUMAR ITS PGDM (2006-2008) 40

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 41: dissertation, consumer behavior in retail

RESEARCH METHODOLOGY

o discover the answer to the research or to achieve the objective of the

project certain scientific procedure was followed These procedures are

explained as follows

T

Research technique

In my research I followed the descriptive method of research which includes

surveys and fact-findings enquires of different kinds The major purpose of

descriptive research is description of the state of affairs as it exists at present In

business research we quite often use the term Ex Post Facto research for

descriptive research studies The main characteristic of this method is that the

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

MUKESH KUMAR ITS PGDM (2006-2008) 41

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 42: dissertation, consumer behavior in retail

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 amp 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 ITS PGDM (2006-2008) 42

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 43: dissertation, consumer behavior in retail

Analysis

1) What the factor that influences your decision while going for

purchase of daily need items

12

45

8

18

14

3

0

5

10

15

20

25

30

35

40

45

50

Service Price Dealing ofthe salesperson

Variety of theproducts

Brand name Properproductdisplay

Factors that influence decision making

No

of r

espo

ndan

ts

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 decision while 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 of daily 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 Big Baazar and also Bharti

Wal-Mart is also going to penetrate Indian

MUKESH KUMAR ITS PGDM (2006-2008) 43

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 44: dissertation, consumer behavior in retail

2) What type of stores do you prefer for shopping for daily need items

No particular

preference 20

MallsDepartmental Store20

Kirana Stores

Convenience store45

Co-operative Stores 15

MallsDepartmentalStore

Co-operative Stores

Kirana StoresConvenience store

No particularpreference

Figure no-4

For daily need items generally people prefers Kirana storesConvenience 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

storesConvenience 20 People prefer to go Malls Departmental stores for

daily need items generally these people are those who purchase product in bulk

for a full month Behind this they give reason that they donrsquot have much time to

visit shop daily Shopping from these stores 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 items15 people out of 100 believe that

Co-operative stores are giving good discount and quality oriented product

MUKESH KUMAR ITS PGDM (2006-2008) 44

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 45: dissertation, consumer behavior in retail

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 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 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 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

MUKESH KUMAR ITS PGDM (2006-2008) 45

7550 55

4060 70 80 88

60

2550 45

6040 30 20 12

40

0

20

40

60

80

100

120

YES NO

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 46: dissertation, consumer behavior in retail

4) How often you go for shopping for daily need items

Once a month10

Once in a week25

Once a day40

Thrice a month25

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 donrsquot 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 retailers So for these kinds of people organized retailers are much

profitable that is again a type of strength for organized retailer

MUKESH KUMAR ITS PGDM (2006-2008) 46

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 47: dissertation, consumer behavior in retail

5) How much portion of your fix income you dispose in shopping

month for daily 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 thousand

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 ITS PGDM (2006-2008) 47

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 48: dissertation, consumer behavior in retail

6) On the scale of 0 to5 Rate your Buying Experience of daily need items

with

Buying Experience of daily need items with organised retail on the scale of 5

35

25

55

30

Poor

Average

Good

Very Good

Excellent

Buying Experience of daily need items with unorganised retail on the scale of

5

44

17

11 11

17 Poor

Average

Good

Very Good

Excellent

Figure no-8

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

MUKESH KUMAR ITS PGDM (2006-2008) 48

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 49: dissertation, consumer behavior in retail

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes55

No45

Yes No

Figure no-8

From 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

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 need items are costly in comparison to Local

kirana wala shop So here is a lead for organized retailers where they have to

work

MUKESH KUMAR ITS PGDM (2006-2008) 49

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 50: dissertation, consumer behavior in retail

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

No40

Yes40

Cant say20

Yes No Cant say

Figure no-9

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

MUKESH KUMAR ITS PGDM (2006-2008) 50

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 51: dissertation, consumer behavior in retail

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

agree

Shopping in organize

retail stores is more

expensive compare

to local kirana shop

20 18 38 12 12

It is more time

consuming to

purchase in

organized retail

stores

20 18 15 22 25

Prefer shopping from

local kirana shop

because they give

credit

9 22 10 20 39

Prefer 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

MUKESH KUMAR ITS PGDM (2006-2008) 51

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 52: dissertation, consumer behavior in retail

other hand people had given negative response in question ldquoIt is more time

consuming to purchase in organized retail storesrdquo they say that in organized

retail shop 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

lotrsquos 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 amp Subhiksha In

the point of home delivery people say that 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

MUKESH KUMAR ITS PGDM (2006-2008) 52

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 53: dissertation, consumer behavior in retail

10) Where you feel better to go for purchase of daily need items

Kirana Stores

Convenience store57

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

ldquoThe Preference of middle class for Organized Retail For daily need itemsrdquo 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 amp quality conscious That is again

a type of victory for organized retailers

MUKESH KUMAR ITS PGDM (2006-2008) 53

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 54: dissertation, consumer behavior in retail

Conclusion

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 hisher 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

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 enough to be able to compete with the traditional sector

MUKESH KUMAR ITS PGDM (2006-2008) 54

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 55: dissertation, consumer behavior in retail

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 is based 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 ITS PGDM (2006-2008) 55

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 56: dissertation, consumer behavior in retail

Bibliography

Books

Retail Marketing by JA Lamba

Statistic Methods by SP Gupta

Research Methodology by C R Kothari

Web sites

httpenwikipediaorgwikiRetail

httpwwwindiaonestopcomretailinghtm

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=13997

httpwwwibeforgartdisplayaspxcat_id=375ampart_id=3974

httpwwwreportbuyercomconsumer_goods_retail

country_overview_consumer_goods_retail_

indian_organized_retail_industry_2005_2007_htmltop

httppopulationcommissionnicinfacts1htm

httpwwwindiatogetherorg2005juleco-palaceshtm

MUKESH KUMAR ITS PGDM (2006-2008) 56

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 57: dissertation, consumer behavior in retail

Magazines amp News papers

Sudhir Vinita (Apral31 2006)rdquoIn The Growth Trajectoryrdquo Pitch pp 26-29

Guest Column (November15 2006)rdquo The Changing Marketplacesrdquo Pitch pp 100-

110

Sridharan R and Gopalan Krishna (December31 2006)rdquoRetailrsquos Coming Face-

Offrdquo Business Today pp82-94

lsquoThe Behemoth from Bentonvillersquo The Times Of India (Times Ascent) New Delhi

27December2006 pp 10

ldquoRetail Revolutionrdquo (29November2006) The Economic Times New Delhi pp 20

Barbaro Michael amp Greenhouse Steven (August19 2006)rdquoWal-Mart image-

maker quitsrdquo Times Business

Kaushik Neha (21December2006) ldquoYouth and beyondrdquo Business Line (Brand

Line) pp 01

MUKESH KUMAR ITS PGDM (2006-2008) 57

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 58: dissertation, consumer behavior in retail

Annexure

QUESTIONNAIRE

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

MallsDepartmental 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 shopping

Promptness

Service

Low price

High price

Discount

Variety

Brand

MUKESH KUMAR ITS PGDM (2006-2008) 58

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 59: dissertation, consumer behavior in retail

Door delivery

4) How often you go for shopping for daily need items

Once a day Once a week

Thrice a month Once a month

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

with

Organized retail shop 012345

Kirana Stores 012345

0 for Very poor 1 -poor 2 - average 3 - good 4 - very good 5- excellent

MUKESH KUMAR ITS PGDM (2006-2008) 59

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 60: dissertation, consumer behavior in retail

7) Are you satisfied with the shopping of daily need items from organized

retail store

Yes No

8) It is expensive to purchase in organized retail stores in comparison to

local kirana shop

Yes No canrsquot 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 shop

It is more time consuming to purchase in organized retail stores

Prefer shopping from local kirana shop because they give credit

Prefer shopping from local kirana shop because they give fresh products

Kirana shops provide home delivery of even less products

1 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

MUKESH KUMAR ITS PGDM (2006-2008) 60

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details
Page 61: dissertation, consumer behavior in retail

Respondent Details

Sex Male Female

Age Qualification

Occupation

Income annum

0-5 Lac 5-15 Lac 15-3 Lac 3-6 Lac More than 6 Lac

MUKESH KUMAR ITS PGDM (2006-2008) 61

  • Table of Content
  • Acknowledgement helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2
  • Prefacehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3
  • Abstracthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4
  • An introductionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5
  • The global retail industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip6
  • Retail scenario in Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8
  • Different forms of retailing helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15
  • Classification of Indian retail sectorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21
  • FDI in retailhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip23
  • Indian middle class peoplehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25
  • Opportunity challenges and emerging trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27
  • Retail as an employment generatorhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38
  • Objective of the surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39
  • Research methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40
  • Analysaishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip42
  • Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53
  • Limitationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip54
  • Bibliographiehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip55
  • Annexurehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip56
  • Acknowledgement
    • OBJECTIVE OF THE SURVEY
      • RESEARCH METHODOLOGY
        • Annexure
          • Respondent Details