Documentos de Académico
Documentos de Profesional
Documentos de Cultura
ORGANIZED
RETAILING IN INDIA
Medha Kanetkar,
C.P. & Berar College, Tulsibag, Nagpur.
Tel: 9970934336
medhakanetkar@gmail.com
ABSTRACT
Organized retailers actually work as a retail outlet catering to varied needs of the
customers. The purchasing pattern of the customer has changed recent days.
Customer's buying behaviour is influenced by social factors, such as the group to
which the customers belong and social status. In a group, several individuals may
interact to influence the purchase decision. Change in consumption pattern is due to
outsourcing business per capita, income of middle age, population in big cities is
rising rapidly and easier access to credit. Retail shopping space is also growing
exponentially and has increased to 54 million square meters. The development of
organized shopping malls has literally been a revolution in India. Retailing is one of
the largest business activities in India and one of the largest sources of employment
in the country. Due to drastic change in the behavior of the consumer, in the view of
growing economy, earning capacity, less time and fast track life the emerging
challenge for the retail in India and in Nagpur city is to maintain the quality in
competitive rate structure. Data was collected from questionnaire filled up by the
consumers visited to organized retail shops. 400 consumers were selected by
Random Sampling Method. Introduction of organized retailing has not been able to
replace traditional markets, which are still popular among the pocket conscious
people, but has definitely added a new adventure to the shopping experience.
Keywords: Organized retailing, Consumer Behaviour, Socio-Economic Impact,
emerging challenges, consumption pattern
1. Introduction
India is one of the fastest growing economies in the world and one of the largest in
term of purchasing power parity. It has been called a nation of shopkeepers since
centuries. Trading is one of the most significant sectors of the Indian economy. The
contribution of this sector in the total Gross Domestic Product is 14 percent and near
about 3 crore peoples derive their income from this treading activities. Majority of
them are laborers involved in small retail treading activity. These small traders now
will have to face competition with organized large departmental stores like, Walmart,
Tesco, Metro, Kasino, Big Bazar, Pyramid, Pantloon, Westside etc.
With the changing demographics across the world the organized retailing is taking
shape where people buy their daily and monthly purchases. In a way, large area,
usually lined with many products, brands with width and depth. Organized retailers
actually work as a retail outlet catering to varied needs of the customers. The
purchasing pattern of the customer was changed recent days. Customer's buying
behavior is influence by social factors, such as the group to which the customer
belong and social status. In a group, several individual may interact to influence the
purchase decision. Up to 2002, consumers
even in India, top cities such as Mumbai, Delhi has no choice to purchase their daily
foods and
consumers good from small scale Mom & Dad Stores. However, the
shopping experience fo r India's urban consumers is now changing completely.
Because of the outsourcing business per capita income of middle age population in
big cities is rising fast and easier access to credit are bringing a change in
consumption pattern. Retail shopping space is also growing exponentially and has
increased to 54 million square meters.
The development of organized shopping malls has literally been a revolution in India.
The opening of the Indian Economy in the early 1990s brought a wide range of new
household's appliances, stylish apparel, and other consumer goods, along with the
plenty of media exposure. But what the Indian consumer still lacked was a worldclass shopping experience: a pleasant, open, relaxing, air-conditioned place to
compare prices, quality and styles without other customers trying to squeeze
through the shop doorway or shout over one's head to proprietor.
India is the country having the most unorganised retail market. Traditionally it was a
family's livelihood, with their shop in the front and house at the back, while they run
the retail business. More than 99 per cent retailer's have a space less than 500
square feet of shops. The Indian retail sector is estimated at around 900,000 crore,
of which the organised sector accounts for a mere 2 per cent indicating a huge
potential market opportunity that is laying in the waiting for the consumer.
Purchasing power of Indian urban consumer is growing and branded merchandise in
categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even
jewellery, are slowly becoming lifestyle products that are widely accepted by the
urban Indian consumer. Indian retailers need to advantage of this growth and aiming
to grow, diversify and introduce new formats have to pay more attention to the
brand building process. The emphasis here is on retail as a brand rather than
retailers selling brands. The focus should be on branding the retail business itself. A
number of large corporate houses - Tata's, Raheja's, Piramal's, Goenka's - have
already made their foray into this arena, with beauty and health stores,
supermarkets, self-service music stores, new age book stores, every- day- low price
stores, computers and peripherals stores, office equipment stores and home-building
constructions stores. Today the organised players have attacked every retail
category.
Wal-Mart, the world's biggest retailer, was established in 1962. Its founder Sam
Walton had expanded Wal-Mart into a chain of discount stores and all its stores were
built on the principle of attracting customers of the lower income group by providing
a variety of products under one roof at a low price. Also the malls are providing the
facilities for customers to pay the higher amount on installment basis, and/or giving
interest free finance, credit card facility, gift hamper, free products and many other
discount facilities.
2. Indian Retailing can be classified in two sectors:
1) Organised Retailing, which has developed in India in following format.
i) Shopper stop Departmental store format
ii) Big Bazaar Hyper market
iii) Food world Super market
iv) Pantaloons and the home store Specially retailing
2) Un-organised Retailing.
Retailing is subjected to the constant changes, which increase both the risk and the
influenced by many forces such as:
1) Population
2) Mobility of consumer
3) Increased in personal income
4) Changes in the distribution of income
5) Consumer credit
6) Competitive changes
7) Technological innovation
8) Government policies, etc.
The essential elements for a successful retail trade can be classified as,
1) Selection of proper goods
2) Perfect knowledge about the goods
3) Sales policy
4) Adequate capital
5) Business location
6) Education and business
7) Attractive display and advertisement
8) Providing credit facility
3. Methodology
3.1.Significance of the Study
Retailing is one of the largest business activity in India and one of the largest
sources of employment in the country. According to a study by Industry Body FICCI,
the total retail trade in India was worth Rs. 11,00,000 crores in the year 2003. Of the
approximately 12 millions retail shops, 96% occupy floor space less than 500 square
feet. The large number of retail shops is in the un-organized sector, such as
Grocery, Vegetable shop etc. Only about 2% of outlet in the organized sector, such
as retail chains, departmental stores, and special stores. The boom in India's retail
industry is mainly due to the rise in shopping Malls across the country in the past 5-6
years even as their management has emerged as a big challenge.
The Indian market comprises of three different types of consumer such as rich
consumers having tremendous purchasing capacity, middle class consumers having
adequate purchasing power, and the bottom line consumers who posses low
purchasing power. Big retailers would not reach up to the bottom; they would be
concentrating their attention towards the reach and middle classes. The Mall culture
is affecting the small retailers. There are the major reasons of which the challenge
has arisen for the small stores. Usually the mentality of average people in India,
have the product in a cheap rate and in addition it should also have the quality.
Such behavior of consumer has made market much more competitive, but it has
many prospects, so the big companies like ITC, Big Bazar, Tru Mart, Chaupal,
Reliance etc. have jumped into the retail market. These companies trying to attract
the customer by providing the goods in discount rate, less than MRP, certain gift
hampers, free product on purchase etc. Due to such methods or schemes of
attracting the customer by the giant and organized players in retail trade, the small
and un- organized shopkeeper's i.e. the sole traders are finding themselves difficult
to maintain the customer's fluency. The mode of buying the product on credit by the
customer from the sole trader has also decreased. This happens especially with
Grocery shops, small readymade cloth stores and small other stores. As the
economy in the boom condition people do have enough money in their hand to
purchase the product in cash, or on credit cards, so they are getting attached
towards such Big Bazaar, Tru Mart.It also because such retailers are able to maintain
the quality and packed products. Due to drastic change in the behavior of the
consumer, in the view of growing economy, earning capacity, less time and fast
track life the emerging challenge for the retail in India and in Nagpur city is to
maintain the quality in competitive rate structure.
3.2.
Attempts have taken to study the view of consumers regarding organized and unorganized retailing and their preferences towards the consumer goods in Nagpur
City. For this research Nagpur City is considered as the area of research. It is one of
the important cities in Maharashtra, as well as in the country. It is second capital of
Maharashtra. It is located at geographical centre of India and well connected by rail,
road and air with rest of the country and three national highways are also passing
through the city. To cater the need of increasing importance of city, Cargo Hub,
Mihan project has already started and some IT companies have already started
functioning and like Infosys, Mahindra- Satyam have decided to launch their projects
in near future.
The Mall culture was started in Nagpur city 4-5 years back by setting up Westside
and then Big Bazaar. Cooperative consumer stores were started long back, but the
culture remains same as small retailers. More consumers are attracting towards Big
Bazaar because of its publicity, big space, marketing strategy, display of various
products and discount facilities. Displaying various products under one roof makes
the consumers convenient to choose the product freely and can handle the products
by themselves hence the consumers are purchasing some products which are not of
their prime importance.
Markets in Sitabuldi, Sadar, Central Avenue, and GandhiBaug meet the city's
shopping needs. Dharampeth and Itwari have emerged as a popular alternative. The
total area covered by shopping mall in Sitabuldi on 10lack sq. ft. with a hotel,
recreation centre and multiplex theatres built in. Six new shopping malls in Nagpur
will come up by 2008-09 at an investment of Rs. 1,000 crores. The Nagpur Municipal
Corporation has allocated unused land to infrastructure development companies for
a
twenty-year lease of Rs. 545 crores. BSEL infrastructure Realty and Unity
Infraprojects have bagged the projects. These malls would be located in Netaji
Market and Water Works Department in Sitabuldi, in Gokulpeth Market, Grain Market
in Wardhaman Nagar, in Jaripatka and in Pachpoli Flyover near Kamal Square. Some
of the recently built notable landmarks are MHKS Mall at Chaoni, Mangalam Marvel
at W.H.C. Road, The Tringle at Kingsway and Inland at Central Avenue.
Big Bazaar is first Mall and organized retail shop in the city and hence we have taken
into consideration for our research project as a case study.
3.3.
3.5.Sampling
The consumers and small retailers are the universe of the research. It is very difficult
to collect information from every consumer, so we used the sampling method for
research. Big Bazaar has two outlets in Nagpur city (Ramdaspeth and Vardhaman
nagar), so data was collected from the consumers visited to these outlets. 400
consumers were selected by Random Sampling Method. A Questionnaire was
prepared for consumers and this was filled up by the way of contacting the
consumers and making some queries regarding their opinion.
Samples from Nagpur city was selected by Random Sampling method. Two outlets of
Big Bazaar are the places of observations. Specific sampling method have adopted
for Big Bazaar. 400 consumers from different locality and different economic status
have selected for the study. The total data collected, after filling up the
questionnaires from 400 consumers, is analysed in this chapter. The presentation is
with tabular form and its explanation and using graphic presentation. The graphic
presentations are self explanatory hence tables are not presented.
Total 400 consumers from metropolitan township of Nagpur were administered the
preset purposive but small questionnaire and the responses recorded are presented
here
4.
Bellow S.S.C.
S.S.C.
Graduate
Post Graduate
Other
Total
No.of
Per cent
Respond
ent
42
138
172
44
04
400
10.5o
34.50
43.00
11.00
1.00
100
Data was collected from various consumers. Table -1 contain the data related with
the qualification of the consumer. It is observed that most of consumers are
graduates, while bellow S.S.C. and Post Graduate consumers are less. This is
because most of the consumers are from middle-income group.
Figure 1: Monthly Income of Consumer
Above chart explains the respondent from the different income groups. It shows that
most of the consumers are from lower income group (35.5%) and middle-income
group (47.5%), while consumers from upper middle and upper income group are
less. The consumers from high-income group may not be interested to do the
purchases from Big Bazaar, but may be from other big malls. Some consumers are
visiting Big Bazaar only for window-shopping.
Mode of
No. of
purchas Responden
e
Cash
206
Per cent
Credit
Both
32
162
52
8
40
Total
400
100
The consumers are purchasing their essential goods by cash, as now a day
purchases on credit basis are less. 52% consumers are purchasing by cash as
compare to the 8% on the credit. Some times the consumers may be using both
means for purchasing which may be depending on the time of the month.
Correlating with Table - 3 the consumers are prefer to purchase by cash as there is a
price difference in cash and credit purchases.63% consumers experiences that there
is difference in price between cash purchase and credit purchase but 37%
customers refuses that there is any difference .
Total 400 respondents opinion is recorded and figure III.6 gives the percentile. 39%
Consumer's attitudes are to have purchases of groceries from near by shops due to
time constraint, but it is no every
time. Some bulk purchases are being done
from wholesale market. The consumable and durables may be purchasing along
with groceries from Big Bazaar (22%) and super markets (15%).
No. of
Respondent
134
Per Cent
33
26
Retail Seller
122
31
118
29
Total
400
100
This is the general observation that the consumers are purchasing luxurious goods
from Authorised Shops (33%), Retail seller (31%) or Big Bazaar (29%). Very few are
approaching to Distributors (7%).
No. of
Respondent
Per cent
284
71
No
116
29
Total
400
100
71% consumers purchase the same goods from Big Bazaar as well as from the small
retailers, but 29% customers did not purchases the same goods from the only from
small retailers.
No. of
Respondent
Per cent
Retail shop
240
60
Big Bazar
160
40
Total
400
100
Above responses from the consumers are depending on the types of luxurious goods
hence the responses are varying.
Table 7 : Responses Of Consumer's About Big Bazaar Give Better Services
Than Small Retailer
Shops
No. of
Respondent
Per cent
Yes
356
89
No
44
11
Total
400
100
Considering the services rendered to the customers, it is found that the Big Bazaar
than retail shops
gives the better services. Above table shows that 89%
respondents are satisfied with the better services from the Big Bazaar
Table 8 : Comparison Of Services Provided By Big Bazaar And Small Retailers
Consumer's responses from the above table show that the cash discount on some
items may be the reason to have purchases from Big Bazaar; the other advantages
are free home delivery (24%) and free gifts (20%). Credit card holders prefer Big
Bazaar for shopping.
Consumer's attitude towards the free gift is more than other services, but this is not
only reason to do the shopping in Big Bazaar. In Big Bazaar consumers can handle
the items freely to check the quality and quantity, which can be done within short
time. Small retailers are not providing any such facilities, which can be seen in
above table
Table 9: Effect of advertisement of Big Bazaar on consumers
Effect
No. of
Respondent
Per cent
Yes
256
64
No
144
36
Total
400
100
In the fast going world advertisement is a mean to attract the consumers. This is
very true from the responses mention in the above table. 64% consumer's
purchases are influences by the advertisement but 36% consumers are not
influenced by the advertisement.
It has observed that the advertisements are influencing the students and children to
have purchases of particular brands of goods. The cost in such cases is not a criteria
but the availability.
No. of Respondent
Per Cent
130
33
62
15.5
50
12.5
92
23
66
16
Total
400
100
No. of Respondent
172
36
82
70
40
Per Cent
43
9
21
17
10
400
100
It is observed that 43% consumers purchasing their goods with the ISI mark, this
shows the consumer's awareness about the quality. MRP and Expiry date of the
goods is also an important factor while purchasing. 10% consumers are aware about
the Brand of the goods.
Table 12: Opinion of consumer about Big Bazaar
Reasons
Enjoyment in
Reasonable cost
Proper quality
Proper quality not
Total
No. of Respondent
128
110
120
42
400
Per Cent
32
27.5
30
10.5
100
The consumer's attitude to purchase from Big Bazaar is depending on the factors
given in Table 12,
while only few consumers (10.5%) are not satisfied about the
quality. Malls are air conditioned so people enjoying while purchasing and all things
related with the living available under one roof.
Table 13: Steps taken by consumer for goods/items are improper or inferior
Items
Consumer Protection Act
Lodging complaint in
Consumer Forum Cell
Return the goods to Mall
Don't know what to do
Total
No. of Respondent
110
140
Per Cent
28
35
76
74
400
19
18
100
Steps taken by consumers are given above. It has observed that 63 per cent
consumers are aware about the consumer protection, may in terms of Act or Forum
Cell. Very few consumers do not know about it. Some (19%) consumers are returning
the goods to the malls.
6.
Table 14: The Mode of Purchasing and its
Reasons Table 14: Mode I - Purchasing from
Super or Big Bazaar
Reasons
Goods available in proper quantity
Goods and Brand as per demand
Self purchasing is convenient
No chance for Deception
Knowledge about availability of goods
while selection
Knowledge of difference in prices of
goods of different brand
Others
Total
No. of
Respondent
102
118
128
140
120
94
76
778
Variable responses are obtained from the customers. It is found from the questioner
that the customers have given the multiple reasons for their choice as Big Bazaar. As
the responses are mixed it is impossible to draw the concrete result.
Table 14: Mode II --- Purchasing from retail shop near the house
Reasons
Purchase of goods at any time
No unconvinced for purchasing
No deception
Easy exchange of goods
Others
Total
No. of
Respondent
84
74
64
68
28
318
Table 14: Mode III --- Home-Delivery from Super / Big Bazaar
Reasons
No. of
Respondent
due to lack of time
50
Convenience
70
Payment by cheque or credit
112
card also available
Others
16
Total
248
The data analysis carried out shows that all-in-one stores, with everything from
groceries and vegetables to footwear, clothes, cosmetics, furnishings and electrical
items available under one roof, a growing middle class with higher disposable
incomes is heading for the Big Bazaar in droves. For some, it is a way
to chill out on movies and food in the added comfort of a fully air-conditioned space.
"In short, it is a living room for most of them." Introduction of organized retailing has
not been able to replace traditional markets, which are still popular among the
pocket conscious people, but has definitely added a new adventure to the shopping
experience.
5. CONCLUSION
There is no doubt the world is changing and consumer behaviour is evolving faster
than what would have normally expected. Consumers and producers are brought
together electronically in ways we have never before experienced. One of the most
exciting aspects of the new digital world is that consumers can interact directly with
other people who live around the block or around the people.
5(a). Impact of Organized Retailing
5(a).1 Socio Economic Impact
Livelihood of millions of small and big shopkeepers will be uprooted to setup the
chain of corporation owned retail. After farming, retailing is India's major occupation.
According to Census 2001, there were 269 lack main and 24 lack marginal workers
in wholesale and retail trade. Nearly 3 crore people depends on trade. 1.1 crore in
urban and 1.9 crore in rural areas. The growth of corporate retail will take place by
destroying the self-organised small retail in India. Reliance and Wal-Mart are
presenting themselves as friends and liberators of farmers and they refer to small
traders as middleman, as if they are not giant middleman. At least in the case of
small traders, farmers have a choice in the terms of whom to sell. Reliance and WalMart are monopolistic buyers who in due course of time will drive down procurement
prices of agriculture and manufactured products. They claim that they are paying
more to the farmers, but the truth is that they are at present procuring from the
existing Mandis (markets) all across the nation, and not straight from the farmers, so
there is no question of paying better returns to the farmers.
Benefits of organised retailing to consumer and society can be summarised as,
1.
Beautiful interiors with entertainment facility
2.
Extremely pleasing ambience
3.
Mall offers you much more than just shopping
4.
Huge gaming zone where kids can utilize the time at the optimum
5.
Malls are always being constructed at prime location and in high profile
areas. The changing trend, convenience of shopping, getting variety of items
under one roof attracts and induces people of all age group to frequently
visit malls.
6.
Generates employment opportunities, direct and indirect, for thousands
of people.
Considering the impact of Big Bazaar on the consumers retailers are rendering the
following services;
1.
2.
3.
4.
5.
6.
Providing essential data and information to the manufacturers about
the trend in marketing changes in fashion, tests, etc.
7. Making available the good according to the season.
8. Gives proper advice to the customer.
5(a) 2. Effects of Organized retailing in India
1. All-in-one stores. With everything from groceries and vegetables to footwear,
clothes, cosmetics, furnishings and electrical items available under one roof, a
growing middle class with higher disposable incomes is heading for the malls in
droves.
2. For some, it is a way to chill out on movies and food in the added comfort of a
fully air-conditioned space. "In short, it is a living room for most of them."
3. On festivals, the malls can undoubtedly compete with a meal what with the
carnival-like atmosphere and no elbow room for the visitors.
4. The anchors that first pull the crowds here - and at other malls all over the
country - are as varied as they come. There are the US and European chains such as
McDonald's, Lacoste, Pizza Hut, Benetton, Subway, Marks & Spencer and Mango.
Their success has spawned the emergence of successful Indian chains such as
Pantaloon, Globus, Shoppers Stop, Giant, Lifestyle and Big Bazaar. Stores named
after popular branded merchandise also act as effective anchors
5. Introduction of organized retailing has not been able to replace traditional
markets, which are still popular among the pocket conscious people, but has
definitely added a new adventure to the shopping experience.
6. LIMITATIONS OF THE STUDY
The consumers are the universe of the research. It is very difficult to collect
information from every consumer, so we used the sampling method for research. Big
Bazaar has two outlet in Nagpur city (Ramdaspeth and Vardhamannagar ) so data
was collected from the consumers visited to these outlet. 400 consumers were
selected by Random Sampling Method. A Questionnaire was prepared for consumers
and this was filled up by the way of contacting the consumers and making some
queries regarding their opinion.
BIBLIOGRAPHY
ET Intelligence Group, (2007) Retail the big- bang story, The Economic
Times, January.
India has most shops in the world, The Times of India, December 15,
2006.
www.rai.net.in
www.wikipedia.org
www.peeplo.com