Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
A. Suryanarayana*
With the growing number of retail businesses and the “overstoring” of countries, the competitive advantage of one retail institution type over another is an important consideration in the evaluation of any retail format. The Indian retail sector is in the transient stage and there is an ever-increasing demand from new and expanding retail chains. Retailing has changed and expanded in all lines of business, be it Apparel, Jewelry, Footwear, FMCGs, Durables,
Groceries, Food, etc. The number of groceries stores grown over a period of time is an evidence of change in customers‟ purchasing trends. It has also brought in the much-needed volume-driven growth for companies, particularly in the FMCG sector. With the changing trends, the customers‟ segments have also changed drastically. In the modern era, the housewife shoulders the responsibility and does shopping for her daily food supply. Today the general store has huge stocks of wide variety of products. And we find the more refined selfservice „cash-and-carry‟ organized retail stores in the form of supermarkets, department stores, shopping malls and the like.These stores signified the beginning of „organized retailing‟ and its evolution across the world.The modern consumer is posing a challenging task for Indian retail. More aware, more confident, and much more demanding. The manner in which the product is presented has to be perfect too. Customer loyalty is the prime objective that every retailer aims for with his retail mix elements. In the present scenario, the power has shifted from those „who sell‟ to those „who buy‟; customers have so many choices these days. This Paper explores the emerging trends in the
FMCGs‟ retailing industry. The author has conducted a survey involving 30 retail units in the twin-cities of Hyderabad and Secunderabad that has supported the premise that the store atmospherics of the store does play a decisive role to attract the customers and is crucial for the success of the store.
Key Words: Customer Service, Hedonic Shopping, Atmospherics, Store loyalty and
Store Patronage, and Organized Retailing.
The competitive advantage of one format of retail institution over another is an important consideration while evaluating the relative efficacy of myriad changes that are being witnessed recently along with the growing number of retail businesses. Advantages can be gained by having the lowest delivered costs and differentiation in terms of providing superior or unique performance on attributes that are important to customers.
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Major attributes for achieving competitive advantage are price, location, merchandise assortments, promotion, services, layout, and organization. Retail institutions need to
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*Prof. A. Suryanarayana, Department of Business Management, Hyderabad, India, e-mail: professorsuryanarayana@gmail.com
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Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1 have a competitive advantage, one that their competitors cannot easily imitate.
To achieve competitive advantage, retailers modify their operations and retailing mix based on their target segment‘s value schema. This modification process, used to acquire competitive advantage, very often results in the evolution process of retail institutions.
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With the changing trends the customers‘ segments have also changed drastically. In the modern era the housewife shoulders the responsibility, and does shopping for her daily food supply. Today the general store has huge stocks of wide variety of products.
And we find the more refined selfservice ‗cash-and-carry‘ organized retail stores in the form of supermarkets, department stores, shopping malls and the like. These stores signified t he beginning of ‗organized retailing‘ and its evolution across the world. This new breed of organized retailers have their shelves neatly stacked with a variety of products which include shoes, furniture or any conceivable item one can think of. This phenomenon of newfound modern supermarkets, department stores is in sharp contrast to the old and conventional grocery stores that had hitherto existed.
The revolution in the shopping habits of the people across the entire world has virtually brought the supermarket to the main street. This revolution is unparalleled in human history, as it has challenged the distribution system that delivers food and other products to the consumer in unprecedented abundance, variety and quality. Retailing was never as it is seen today. It has gone through its natural process of evolution in all areas from the initial concept of the supermarket and department store to the shopping mall, as it exists today. Many of the old and informal store formats have been completely transformed into the scientifically designed new formats. In fact, it has been observed over the decades that only those retailers who kept changing with the times have been successful, while the others who could not keep pace with change have had to face the consequences of their rigidity.
The successes of international retailing stores have far outnumbered the failures, which have aroused an overwhelming interest in retailing. As a consequence of this rush to join the retail bandwagon, most developed countries today have more retailers than can actually survive in the marketplace. The consequence has been the fierce war for survival between various retailers and the fallout of this war for the latter. This competition is only becoming fiercer by the day forcing retailers to come up with more creative ideas to attract customers to their stores, which has led to a ‗stores war‘ in almost every country across the globe. It is widely felt that many of the developed countries have already become saturated as far as their stores are concerned and only the introduction of newer techniques to reduce costs and attract customers would determine who ultimately survives in the cut-throat retailing world.
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Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1

The Present Scenario
When India liberalized its economy in 1980s, retailing also started changing. Textiles sector (companies like Bombay Dyeing, Raymond‘s, S. Kumar‘s and Grasim), were the first to see the emergence of chains. Later on, Titan, maker of premium watches, successfully created the organized retailing concept in India by establishing a series of elegant showrooms. For long, these remained the only organized retailers, but the latter half of 1990s saw a fresh wave of entrants in the retailing business. This time around it was not the manufacturer looking for an alternative sales channel. These were the retailers with no serious plans of getting into manufacturing. These entrants are in various fields, like – Food World, Adarsh Mart and Nilgiris in food and FMCG;
Planet M and Music World in Music; Crossword and Fountainhead in Books. Indian
Retail Industry is ranked among the ten largest retail markets in the world. The attitudinal shifts of the Indian consumer in terms of ―Choice Preference‖, ―Value for
Money‖ and the emergence of organized retail formats have transformed the face of
Retailing in India.
The Indian retail industry is currently estimated to be a US$ 200 billion industry and
Organized Retailing comprises of 3 per cent (or) US$6.4 Billion of the retail industry.
With a growth over 20 percent per annum over the last 5 years, Organized Retailing is projected to cross US$ 23 Billion by 2010 itself. The Indian retail sector is in the transient stage and there is an ever-increasing demand from new and expanding retail chains. Currently there is a shortage of quality retail space in the country, with the total organized retail space stock estimated to be over 35 million square feet.
However, as new supply enters the market, this scenario is likely to change. If the incremental stock is not met by continued demand from retailers, or in case of a downturn in the economic environment, the fears of excess supply will no longer remain unfounded. However, in their bid to exploit the unleashed retail potential of the Indian market, mall developers are paying little attention to the factors that are really critical for success. Easy availability of mall space and increased space specifications by the new retail occupiers will heighten the intensity of competition in this sector. In such a scenario, success in the retail business will be driven by the ability to create all encompassing retail destinations and backing the product offering by right tenant-mix and location. Further, as the Indian consumer matures and shopping becomes more of a planned exercise, the concept of Specialty Malls will be well accepted.
In this environment, from among the several factors that influence the store‘s success, the authors have chosen one of the most imperative factors for this study —‗Ambience‘.
It is important for the retailer to understand the relationship between the ambience of the store and the consumers‘ buying decisions. This article is different from the available extant literature on the FMCG sector in general and in the Indian context in particular on several dimensions. The study explores the influence and impact of ambience in the store and on the concomitant sales. The Paper is organized into four sections to summarize relevant findings from the extant literature, to introduce the
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Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1 procedures and methodology of the survey that is carried out, and to describe and discuss the results of the data collected, and finally to come up with the practical implications of the study.
There are many research studies that have documented consumers‘ viewpoint of shopping experiences as either ‗general‘ or ‗special‘. In the latter case, they become specific shopping experiences providing entertainment or recreation (e.g., Bellenger and
Korgaonkar, 1980; and Babin, Darden and Friffin, 1994). Generally, studies involving shopping and entertainment can be categorized into two research streams: (1) as an enduring tendency or trait; or (2) as a motive for a particular shopping trip.
Atmospherics: The physical elements designed in a st ore appeal to consumers‘ emotions, encourage buying, and help create an image and position for a retailer.
Exterior atmospherics elements include the appearance of storefront, display, windows, store entrances, and degree of traffic congestion. Interior atmospherics elements include aesthetic considerations such as lighting, wall and floor coverings, and store fixtures.
Warren S. Kelgon; Retailing listed he activities involved in the direct sale of goods or services to customers. The variety of shopping motives that have been suggested (e.g.,
Tauber, 1972) are summarized and framed by the motivational typology described by
Westbrook and Black (1985). This typology postulates that shopping motives can be grouped into three categories: product-oriented, experiential, and a combination of product and experiential. The experiential motive has a hedonic or recreational orientation, the store or mall visit is made for the pleasure inherent in the visit itself. The last category of motive occurs when the shopper seeks to satisfy a purchase need while enjoying a pleasurable recreational experience. Researchers have found that people typically shop for both hedonic/recreational purposes and utilitarian reasons, and that a positive mood can result from consumers pursuing either type of shopping (Martineau,
1958; and Babin, Darden and Griffin, 1994).
The store atmosphere varies along three main dimensions: Pleasantness, Arousal, and
Dominance. Different elements of a retailer‘s in-store environment, e.g., color, music, and crowding, can influence consumers‘ perceptions of a store‘s atmosphere, whether or not they visit a store, how much time they spend in it, and how much money they spend there (Bellizzi, Crowley, and Henderson 1983); (Milliman 1982); (Eroglu and
Machleit 1990); Baker et al. 2002, found that store environment factors, particularly physical design perceptions, to be significantly affecting consumers‘ perceptions of merchandise price, merchandise quality, and employee service quality. Schlosser
(1998) argued that, store atmosphere has a social identity appeal and, as such, a pleasing atmosphere in the store should influence perceptions of socially
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Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1 communicative products in the store and not so much the intrinsically rewarding products (Richardson, Jain, and Dick 1996).
Subhashini Kaul, (2006) has examined the various measures of store patronage and its antecedents; store loyalty. On patronage the author concludes that consumers would display greater patronage behavior for furniture as compared to garments, more for garments as compared to grocery etc. In any case, exclusive shopping at a single store is rare. Loyalty is the prime attitudinal objective that every marketer / retailer aims for with his marketing/retail mix elements.
Loyalty assures a retailer of patronage, of not just constancy and longevity of his business but creates an effective competitive advantage and an entry barrier which is difficult to erode. Research conducted by Woodside and Trappey (1992) indicates that there is an automatic cognitive processing of store attributes by consumers that determine which store will be their primary buying centre. They found that customers could quickly name a store when asked what store comes to mind for specific attributes such as ―lowest overall prices‖, ―most convenience,‖ and so forth. They concluded that the process of being satisfied with a specific store is a function of the store‘s characteristics and the consumer‘s shopping patterns.
Marketing literature has identified several causal factors that influence store satisfaction while shopping, among them being: Store attributes, for instance, location of store
(Woodside and Trappey, 1992); nature and quality of assortment stocked (Claxton and
Brent-
Ritchie, 1979; Sirohi et al, 1998); store‘s pricing strategy (Williams et al., 1978); character of in-store promotions (Urbany et al., 2000; Kumar and Leone, 1988); assistance of sales personnel (Macintosh and Lockshin, 1997; Magi, 2003); store‘s physical attributes (Chain Store Age Executive, 1987); atmospherics of store (Kotler,
1974; Crawley, 1993; Yalch and Spangenberg, 1999; Babin and Darden, 1996); issue of loyalty cards (Magi, 2003).
Martinean (1958) has studied the Store Image way back in the 1950s. He was the first to link store image to t he image that a shopper has of oneself. He called ‗Store image‘ as personality of the store or its image. According to him, the store is defined in the shoppers‘ mind, partly by its functional qualities and partly by the quality of its psychological attributes. He lists functional attributes such as location, price ranges, and merchandise selection. He illustrates the psychological attributes leading to the creation of store image as: layout and architecture of the store, symbols (emblems) and colors, advertising, and sales personnel of the stores.
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Objectives of the Study: Based on the literature review made, the research objective that is set forth is: ―To Study the importance of store ambience that affects the
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Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1 consumers‘ buying decisions‖ and from this objective, the Hypothesis formulated is ― H1:
Atmospherics affects the Brand image of the store”.
Research Methodology : The scope of the study is restricted to few selected organized
FMCG Retailers in twin cities of Hyderabad and Secunderabad. The prominent retailers with larger number of footfalls are considered for this study. They are: Food World,
Reliance Fresh, Big Bazaar, Adarsh Mart, Spencer‘s, and More. The attributes of retail stores such as in-store promotions, customer service, billing process, and parking are explored in detail.
Research Design: Exploratory research is used to obtain information concerning the current retailing trends and the changing customer preferences. The research methods deployed range from the survey, which describes the present situation to the correlation study that investigates the relationship between the variables.
Correlation is calculated to find out the dependability of variables and to substantiate the results of correlation, regression analysis is carried on. Further, coefficient of determinant is calculated to measure the unexplained variance as borne out by regression analysis. Finally, t-test is applied to test the hypothesis statistically.
Sample Size: A simple non-probabilistic convenience (Mall Intercept) sampling method is used to understand the behavior of consumers. The overall size for the study included
500 respondents and 30 Retailers‘ units from Hyderabad and Secunderabad. The 30
Retail units are selected from six popular and prominent retailers i.e. Food World,
Reliance Fresh, More, Vishal Mart, Big Bazaar, and Spencer‘s.
Atmospherics of the Store:
In this study, store ambience/layout has been found to have a significant influence on store satisfaction. As suggested in a number of earlier studies, including those of Kotler
(1973-1974), Yalch and Spangenberg (1990), Crawley (1993) and Babin and Darden
(1996), store atmospherics is known to lift the mood of the shoppers pushing them to buy more, to become more adventurous, and to try other brand/products. These studies have severally identified various factors that can contribute to store ambience, namely the configuration of the store, lighting, and store color scheme. Competition between retail outlets has led managers to pay attention to aesthetics and atmospherics. Recent research has shown that pleasure and arousal mediate consumers‘ desire to stay in or escape from a setting, their desire to affiliate with others in the setting, and their willingness to spend money or time. The modern retail stores have to concentrate on providing the atmospherics at the international standards. Globalization has made possible, the smooth flow of travelers across the borders.
The big leap taken in the I.C.E. sector (Information, Communication, and
Entertainment), made the customers to become more aware of the shopping
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Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1 experiences across the globe. The customers having experienced the shopping pleasures in the developed countries expect the same shopping entertainment back home in our own country. Buying and Shopping have become two distinct aspects.
Academics, retailers, and the customers agree that the atmospherics in the store plays a very important role in making purchase decisions. A store would need to create a good environment for such shoppers. Lighting, music, and fragrance would help in building image of the store. The display of the merchandise and clear Point of Purchase
(POP) communication also are very essential for such shoppers.
Today, the media and technology overwhelmingly influence people‘s leisure behavior. A good film on a DVD, a classic concert on a CD, or current bestsellers may be cited as a few among our favorite forms of entertainment. Interestingly, the utility of a medium is judged not by its appearance but by its content stored within. In total contrast to the normal purchasing decisions, customers now use appearance and presentation in the store as very important factors to discriminate and assess content. Lighting design must take these requirements into account and make them more visible.
The success of a shopping centre depends on levels of enjoyment experienced while being in the main central areas and the amount of ‗feel good‘ factor by the customers.
Modern lighting management is the brain of complex lighting concepts. A high proportion of daylight is a standard feature while designing central areas. Artificial lighting scenarios made up of general and accent lighting as well as special lighting effects, come into play primarily in the mornings and evenings. Intelligent lighting management systems do several jobs at a time. For example, light combined with movement entices visitors from public areas inside. Similarly, spectacularly choreographed lighting provides a backdrop to special events. Changes in natural daylight throughout the day have a positive effect on employee motivation in offices and areas where customers are given pieces of advice. Such scenarios are based on the very latest knowledge provided by Lighting Science discipline.
With the right kind of illumination, presentation, signage, the retailer can entice the customers to step inside the stores for purchasing. This study also focuses on the atmospherics and overall ambience in the store.
As many as 90
–96% of the customers surveyed
(Refer Tables: 1, 2, 3, and 4) have appreciated the decorative lighting and overall ambience across the six retailers.
Table: 1 Decoratives in the Stores
Response No of Respondents %
Very good
Good
Poor
Total
136
330
34
500
27.2
66.0
6.8
100
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Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
Table: 2 Lighting in the Store
Response
Very good
Good
No of Respondents
185
290
%
37
58
Poor
Total
25
500
5
100
Some of the earlier studies have concluded that light and color combination does create excitement among the customers. Though organized retailing in India is quite young, in the atmospherics area it has grown tremendously. Some of the respondents have admitted that they are totally surprised by the plush interiors and the florescent lighting that create a glamorous and unique ambience (Table: 2).
From the study, it is clear that only 4%of the customers did not appreciate the ambience. Using the right kind of atmospherics, the retailers can entice the consumer and trigger him/her to purchase.
Table: 3 Ambience in the Stores
Response No of Respondents %
Very good 141 28.2
Good
Poor
339
20
67.8
4.0
Total 500 100
Many of the store managers strongly feel that appropriate planning and design helps in creating the right ambience. The products display as per category, convenience, or according to the premium paid by the company is also a big task. A well-designed store makes way for the next customer and leads ultimately to generating increased sales.
Retailers want to create less distracting environment that allows customers to enjoy their spending time, while shopping and buying whatever they want.
Retail display is a very sensitive mix between human psychologies; visual cues, and the science of effective plan display. Designing takes into account the brand personality, brand theme, along with light and space configuration. The layouts increase efficiency of putting across message of the brand that gets conveyed through product and customer service.
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Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
Table: 4 Ambience Comparison Across Six Retailers
Stores/Response
Very Good
No of
Respondents %
Good
No of
Respondents %
Poor
No of
Respondents %
Total
No of
Respondents %
More
Reliance Fresh
19
30
23
34.48
61
57
73
65.52
3
0
4 83 100
0.00 87 100
Vishal Mart
Bigbazar
Spencer
Foodworld
15
40
4
30
19.74
47.62
14.81
29.13
56
44
22
72
73.68
52.38
81.48
69.90
5
0
1
1
6.58
0.00
3.70
0.97
76
84
27
103
100
100
100
100
Brand Image: Retail equity also serves as a differentiator when consumers are confronted with hundreds of retail outlets and its power is more than evident. It also helps the outlet to have better buying power with large companies due to its capacity to buy in bulk. 73% of customers that shop at Vishal Mart do so for its good brand image
(Refer Table: 5). Comparable numbers for other outlets are shown against them in parentheses as follows: Reliance (78.16%), Big Bazaar (75%), Vishal Mart (72%),
Spencer‘s (85%), and Foodworld (75.7%) implying thereby that huge majority of the customers shop from a particular store due to their respective brand name.
Table: 5 Impact of Brand Image on Choice of Retail Chain Stores
Stores
/Response
More
Reliance
Fresh
Vishal Mart
Big Bazar
Spencer
Yes
No of Respondents %
73..0
61 0
68
55
63
23
78.16
72.37
75.00
85.19
No of
Respondents
22
19
21
21
4
No
%
27.00
21.84
27.63
25.00
14.81
Total
No of
Respondents %
83
87
76
84
27
100
100
100
100
100
Food World 78
 Hypothesis Testing:
75.73 25 24.27 103 100
H2: Atmospherics affects the Brand image of the store.
The objectives of this study include the study of atmospherics and preference for a branded store.It is observed that the organized retailers are challenging the traditional stores and branding has entered retailing as well. In recent times, the retailers are not only building ‗store brands‘ but also trying for appropriate positioning.
Based on the above factors the following hypotheses are constructed.
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Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
Ho: Atmospherics does not affect the Brand image of the store.
Ha: Atmospherics affects the Brand image of the store.
Findings indicate, that the customers purchasing in an organized retail store admit that it‘s a satisfying experience with respect to weight/quantity, quality, price, time, and customer service. With the increasing competition, customers do get special attention in these stores. It is also noticed that while the kirana merchants took the customer for granted, some of the respondents experienced very poor attention and service in the local/traditional stores. From the above hypotheses, two variables are derived:
Atmospherics and Brand Image. The responses for this parameter are taken in terms of
―Good‖ for Atmospherics (The sum of response very good and good is taken) and yes for brand preference ( Table: 5 ). The Mean of Atmospherics is 75 and that for Brand
Image is 77 thereby meaning that on an average 75 customers have appreciated the atmospherics of the store. Around 77customers opined that brand image of the retailer influences selection of store for buying FMCGs. The Karl Pearson‘s coefficient of correlation at + 0.997 establishes an almost perfectly positive correlation between atmospherics and Brand image of the store. It can be inferred that the more attractive the atmospherics in a store the better the brand image of the store. The t-test is applied to test the hypothesis. The calculated t-value at 25.77 is greater than the table value at
95% confidence level i.e., 12.706. Therefore, the hypothesis: Atmospherics affects the
Brand image of the store , is accepted.
Research result of the Study supports the contention that branding has entered retailing business as well. The organized retailing is expanding each day in India with the rise in purchasing power, increasing literacy, and the huge middle class. As a result, the onus is on the retailers to differentiate their stores to remain in competition. In order to differentiate their stores, retailers, by and large, use atmospherics such as the exteriors, interiors, lights, point of purchase displays, store layout, and overall ambience. It is observed that the Reliance Fresh, Vishal Mart, and Foodworld have very distinct atmospherics. While Foodworld has concentrated more on red color combination, More , with green and yellow combination, has a unique ambience. Bigbazar has a rich mix of orange and other colors as against Spencers‘ distinctly different ambience in the store.
Therefore it can be said that atmospherics plays a crucial role in building brand image of a retail store. In a way, this result also supports the argument that both the traditional stores and organized stores will co-exist in future as well.
Dictionary of Marketing Terms (2 nd ed.). Chicago, IL: American Marketing Association, p.
52. [P.D. Bennett (Ed.), 1995]
Retailing: Concepts and Decisions. New York: John Wiley and Sons [R.R. Gist, 1968]
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Proceedings of Global Business Research Conference
7-8 November 2013, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-35-1
Atmospherics as a Marketing Tool, Journal of Retailing , Vol. 49 [P. Kotler, 1973-
1974]
Effects of Store Music on Shopping Behaviors, Journal of Consumer Marketing, Vol.7 pp.55-63. [R. Yalch, E. Spangenberg, 1990]
Good and Bad Shopping Vibes: Spending and Patronage Satisfaction, Journal of
Business Research , Vol.35 pp.201-6. [B.J. Babin and W.R. Darden, 1996]
Retailer
—April-May, 2007
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