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0RGANIZED RETAIL IN INDIA: PRESENT SCENARIO AND FUTURE CHALLENGES
INTRODUCTION
The Indian retailing industry is continuously been evolving in the last decade. Major
international as well as Indian players are introducing innovative store formats and trying to
woo the customers. The supply as well as demand side are both responsible for these
significant changes in retail sector which is leading to expanding organised retail outlets share
in a country which had been so far dominated by unorganised retail outlets. The globalization
of retailing has been occurring for many years; but research related to retailing especially in
countries like India where retailing is still dominated by the unorganized sector has a relatively
short history. The new organised retail players are competing with each other as well as the
unorganised sector aggressively for consumer’s attention. Retail shopping behaviour has been
one of the major research areas in developed countries where it is a major contributor to the
GDP of the nations but comparatively in countries like India where organised retailing is yet
making in roads shopping behaviour is not the area much researched upon. The purpose of the
study is to investigate the retail store choice criteria. More specifically we will be trying to
explore the drivers of store choice for the organised retail outlets.
It is very important for the new organised retailers to understand store choice behaviour to be
able to attract and retain consumers. The study focuses on studying the importance that
customers attach to a set of attributes drawn mainly from the existing literature (Swinyard and
Rinne, 1994; Lindquist, 1974: Arnold et al; Solgaard and Hansen, 2003). These consumer
oriented attributes reflect the personality of the store and create an image in the mind of the
consumers (Martineau, 1958). The more distinct the image in the mind of the customers the
grater will be the differentiation from the other stores and thus they will be able to successfully
influence the store choice behaviour.
The research domain retail store choice deals with research studies pertaining to literature on
“Why do consumers shop at the stores they do?” Marketing academics and practitioners have
long recognized the importance of this question because it affects not only where consumers
buy, but what and how much they buy. Store choice and patronage behaviour involve a
decision process related to where consumers shop, how they shop and what they
purchase.Moreover, the consumer's perceptions and attitudes derived from experiences,
information and need towards certain store attributes have been recognized as the most
influential in the patronage decision making process .
Store choice literature
Byoungho Jin, Jin Yong Park, Jay Sang Ryu (2010) To help US apparel firms successfully enter
these promising markets, the study compares the evaluative attributes that Chinese and Indian
consumers utilize when purchasing denim jeans. Data was collected in Shanghai, China and
Bangalore, India. To measure consumers’ evaluative criteria in more realistic settings, this study
employs a conjoint analysis method. The purpose of this study is to compare apparel evaluative
criteria between Chinese and Indian consumers when they purchase apparel employing
conjoint analysis. The findings of this study confirmed that Chinese and Indian consumers
ranked the importance of attributes differently when they purchased denim jeans. For Chinese
consumers, price was the most important attribute, followed by fitting, brand country of origin,
quality and design whereas Indian consumers placed importance on fitting, brand country of
origin, design, price, and quality in a descending order. For three evaluative attributes (brand
country of origin, price and design), Chinese and Indian consumers showed significant
differences. Price was more important to Chinese consumers whereas brand country of origin
and design were more important to Indian consumers.
Paul W. Ballantine , Richard Jack and Andrew G. Parsons (2010)in their study , “Atmospheric
cues and their effect on the hedonic retail experience”, suggest that the experiential retail
concept had evolved into a fuller hedonic experience desire for customers, and in this respect
an holistic approach which looks to understand the hedonic immersion a customer seeks and
experiences because of the atmospherics present is more relevant for today’s shopper
environment. Research was conducted using a within-subjects comparative case study design,
with the data being qualitative in nature. To satisfy these conditions, two consumer electronics
stores in Christchurch, New Zealand, were selected for the study. The store type was chosen
due to the availability of experiential retailers in this industry, and the precedent of using such
high involvement goods to ensure that both central and peripheral cues were noted by
participants the study found that the conceptual integration of experiential consumption,
hedonic consumption and atmospherics had been long overdue, and the study had provided a
theoretical link and applied it in real store settings. This study also suggested that while the
effective use of attractive stimuli like interactive product displays or attractive display features
are important, consumers must be enabled through the use of facilitating stimuli such as
comfort and lighting.
Jonathan Elms, Catherine Canning, Ronan de Kervenoael, Paul Whysall, Alan Hallsworth (2010)
The purposed in their this paper to investigate the extent of retail change in the UK grocery
sector over the last 30 years Through reconsidering 30 years of retail change, the paper
highlights that with time how do you shop has come to pose at least as interesting a question as
where do you shop. In 1980, a press article by Richard Milner and Patience Wheatcroft
attempted to anticipate retail change by 1984. Taking that as a template, the paper examined
how retail did, in fact, change over a much longer timescale: with some unanticipated
innovations in place even by 1984. Reference was made to academic research on grocery
retailing in progress at the time and which had recently been revisited.
The determinants of customer loyalty are identified for a large U.S. retailer based on a survey of
972 customers by Toyin A. Clottey, David A. Collier, , USA Michael Stodnick, , (2008). An ordered
logistic regression was used to estimate the proportion of a retailer’s customers who were
willing to recommend the retailers products to others based on survey results. The research
identifies three statistically significant determinants of customer loyalty and uses ordered
logistic regressions to estimate the proportion of a retailer‘s customers who are willing to
recommend the retailer‘s products to others. An ordered logistic regression model supported
the three hypotheses that product quality, service quality, and brand image are drivers of
customer loyalty in a retail setting Brand image was the strongest driver of customer loyalty
followed by product quality then service quality.
Parimal H. Vyas, Keyur Patel and Mayank Bhatt (2009) The researchers have attempted to replicate a
conceptual framework (Kathleen, Seiders, Glenn B. Voss, Dhruv Grewal, and Andrea L. Godfrey, 2005)
that explains why two customers with the same (different) levels of satisfaction engage in different (the
same) patterns of repurchase behavior. The researchers to make an attempt to understand the
association of key moderators influencing the relationship . the study aimed to identify
factors
influencing the repurchase intentions of retail customer; to investigate the factors affecting the
repurchase intension of the retail customers., and to study the relationships between the factors with
repurchase intentions of retail customers. The necessary Primary data was collected using a survey
method with the help of a structured nondisguised questionnaire structured questionnaire administered
in person on customers when s/he came out of the retail stores viz., Big Bazaar, Reliance Super, and
Subhiksha located in the twin-cities of Anand and Vallabh Vidyanagar of the Central part of the State of
the Gujarat. The study found that here existed significant correlation between satisfaction and
Involvement and satisfaction and decision convenience. The research study yielded significant
correlation between repurchase intention and post benefits convenience, repurchase intension and
involvement and repurchase intension and satisfaction. From the study it was found that satisfaction,
involvement, post benefit convenience, accessibility convenience, transaction convenience, and time
convenience are the most influencing factors for repurchase intentions of retail customer. The study
provided significant correlation between satisfaction and involvement, satisfaction and repurchases
intention and satisfaction and decision convenience. A significant correlation between repurchase
intention and post benefit convenience was found. The retailers cannot neglect the mentioned 7 factors
at any cost, as they are very important for customer satisfaction and repurchase intension.
Retailing in India
The Indian retail sector started transforming in the 1990’s.According to ASSOCHAM report (2009) the
overall size of Indian retail sector has been estimated to grow by USD 55 billion in 2010, at a compound
annual growth rate (CAGR) of 5.5 per cent, to become USD 410 billion market by 2010. Also, organized
retail, which currently accounts for nearly 5 per cent of the retail market, is pegged at around USD 9.23
billion and expected to grow at a CAGR of 2.3 per cent to touch USD 13 billion by 2010.
Indian retail market, ranked as the most attractive emerging market for investment in the retail sector
and the fifth largest retail destination globally, is likely to regain strength with income of major retail
players expected to grow consistently to average more than 30 percent by the end of current fiscal,
according to an Assocham Financial Pulse Study. (Financial Pulse “Prospects in Indian Retail Sector” Dec
2009 by Ravish Jaggi, Asscocham Research Bureau). The international consulting firm, A.T. Kearney,
annually ranks emerging market economies based on more than 25 macroeconomic and retail-specific
variables through their Global Retail Development Index (GRDI). For three years (2005, 2006, 2007) and
was again at the top position in 2009. India lost its top position to Vietnam in 2008 because of the
increased real estate prices and highly competitive market. India has been ranked as number one
indicating that the country is the most attractive market for global retailers to enter. The high economic
growth during the last few years raising disposable incomes rapidly, favourable demographics placing
incomes on younger population with less dependency, and urbanization are some of the major factors
fuelling the Indian retail market.
The Indian retail market is the fastest growing, highly competitive, complex and most dramatically
changing retail market of the world for the last decade. The strength of the sector is apparent from the
fact that even during the world slow down the sector
The Indian retail industry can be bifurcated into organised and unorganized sectors. The popular
traditional form of retail has been the so-called ‘unorganized’ form of retailing mostly represented by
small family-owned stores, selling one particular category of product, e.g Kirana shops, drug stores,
located in the market place or residential areas, road-side stalls, hand-cart and pavement vendors etc(
Shaoni Shabnam and Bino Paul J.D, 2008). Organised retail, one of the most notable emerging sectors of
the Indian economy, continues to attract significant investment and interest from leading national and
international players (Govil Gaurav, Balaraman Rajesh and Nair Vinod, 2008). The last 3-4 years have
witnessed the entry of a number of organized retailers opening stores in various modern formats in
metros and other important cities. Still, the overall share of organized retailing in total retail business
has remained low (Joseph, Soundrajan, Gupta, and Sahu 2008).
A variety of formats are being rolled out, at a fast rate with mixed success. Both retailers and shoppers
are currently in an evaluation phase with no clear verdict as to what may drive the choice of stores in
the longer term. The newly established stores are able to attract shoppers into stores due to its
ambience, but they are finding conversions into purchases to be lower than expected and hence lower
profitability for retailers. Rapid evolution and adoption of new technologies present both opportunities
and risks for companies seeking to innovate. Thus, it may be worthwhile to understand the store choice
behaviour and offer recommendations for enhancing customer orientation of organized retail sector
RESEARCH METHODOLOGY
The literature indicates that store choice behaviour is influenced by the image and perception thus
influencing the selection of the retail store. The image is dependent on a number of factors such as
availability of goods, store format and size, distance from home, availability of parking space, cleanliness
of the store. The emergence of organised retail in not a very old phenomenon as a result the research
work related to shopping behaviour in these stores is limited. Therefore it was decided to go for an
exploratory research to identify the store attributes that were considered important by the consumers
for evaluation of stores.
The broad research objectives that formed the basis of this exploratory research are:
1. To identify factors considered important by the customers while choosing an organized retail
outlet for a visit.
2. To find the store choice attributes dimensions that retailers need to identify to be able to
concentrate on them strategically.
3.
To find out the extent to which customer choice behaviour varies by customer age, gender and
income.
Hypothesis
H1: There is no significant difference in importance of store choice attributes across age.
H2: There is no significant difference in importance of store choice attributes across gender.
H3: There is no significant difference in importance of store choice attributes across income.
The study involved collection of data from three areas in North India – The capital city New Delhi, Union
territory Chandigarh and prominent and prosperous city of Punjab Ludhiana as organised retailers made
their first move in these areas. The research was carried out in tightly controlled store intercept method.
A sampling frame from which a random sample could be drawn was unavailable, however. Judgemental
sampling was chosen to serve the purpose of Data collection. Initially, four organised retail outlets were
randomly selected from each city as primary data collection canters. Data was collected at different
days of the week as well as at uniformly distributed time intervals to assure high degree of
representation of the population of the sample and to minimize day and time related response bias.
Customers were approached in the vicinities of the selected locations and were asked to fill the
questionnaire. From each city data was collected with 40 questionnaires. A total of 120 questionnaires
were there, but 18 were excluded due to inconsistencies in response and incomplete answers. So, we
obtained 102 valid responses. The respondents were administered a structured questionnaire. The
responses were recorded using a set of 20 statements measured on a likert type scale. The statements
were derived from literature survey (Swinyard and Rinne, 1994; Lindquist, 1974: Arnold et al;
Solgaard and Hansen, 2003). The questionnaire was finalised on the basis of discussions with the
experts and retailers. Responses were also sought related to patronage behaviour. it was made
sure that the respondents had shopped at least thrice at organised retail outlet.
The profile of the sample is given below.
GENDER
Male
59
Female
43
Age
<20
11
20-29
35
30-39
29
40-49
20
50-59
4
>60
3
OCCUPATION
student
27
home maker
11
service
37
business
15
retired
2
self employed
10
MARITAL STATUS
unmarried
married
34
68
NO OF FAMILY MEMEBERS
Single
5
2-5
74
>6
23
NUCLEAR/JOINT
50
Nuclear
Joint
52
INCOME
<10000
6
10000-30000
26
30000-60000
36
60000-100000
19
>100000
15
Frequency of visiting organised retail outlet
more than twice a week
8
twice a week
14
once a week
34
once in fortnight
14
once in month
28
once in six months
4
The sample constituted of shoppers at Department stores 59.8% (Ebony, Pantaloon and Westside),
Supermarket 29.4% (More, Easy Day and Spencer’s) and Hypermarkets 10.8 %( Vishal Mart). Sixty eight
percent of the respondents had visited the organised retail store more than once a month. Thirty five
percent visited the store once a week. Men constituted of the 57 percent of the sample. And about 66
percent of the sample population was married. 73 percent of the sample is less than 40 yrs. The
minimum age of the respondents was 18 years of age as this is the age when an average Indian can shop
without the influence of parents independently.
STATISTICAL ANALYSIS
The 102 usable questionnaires were analysed using SPSS software version 12.0. frequencies were used
to generate a profile of the key demographic characteristics of the respondents. Descriptive statistics
were utilised to calculate the mean and standard errors scores of the 20 store selection attributes. An
exploratory factor analysis was used to uncover the underlying dimensions of the store selection
attributes which influence the store image and thereby influencing the store choice. A series of analysis
of variance (ANOVA) tests were performed to explore the differences among consumers with respect to
gender, age and income.
RESULTS AND DISCUSSIONS
The mean and standard deviation of the 20 attributes of retail store selection are shown in table.
Attributes with the mean score equal to or greater than 4 were considered important since the value
denoted moderately important on the scale used. The descriptive statistics revealed that the
respondents highly rated the importance of quality of merchandise, availability of good brands,
extensive assortment and range of merchandise and availability of good brands . These results are
consistent with earlier studies (e.g Kunkle Berry, 1968; Berry,1969; Bearden,1977,and Sinha and
Banerjee, 2004,). The respondents also gave importance to parking space and location of the store and
proximity to home. Arnold et al (1997) and Seiders Tigers(2000) found that location was very important
attribute in choosing a store. The attributes which were having rating with mean equal to or greater
than 3 were availability of required product, neat and clean public areas such as changing rooms and
restrooms and layout along with fairness of the prices. The lowest ratings were given to accepting
different payment modes, ease of walking around the aisles, fast check out even during peak hours and
convenient operating hours. Indians are used to carrying cash and in todays competitive
scenario
almost all the retailers are offering different modes of payment option, are open for convenient hours
and have multiple counters for payment.
Table: Means and Standard Deviation of Selection Attributes
Descriptive Statistics
Store Attributes
Store attributes
Store has what I want
Merchandise quality is good
Extensive assortment of
merchandise
Availability of good brands
Fairness of prices
Low priced advertised specials
Advertised goods are available
attractive design and layout
Neat and clean public areas
Mean Std.
Deviation
3.83
0.81
4.07
0.86
4.05
0.93
4.06
0.92
3.56
3.38
3.28
3.52
3.73
3.22
1.06
1.03
1.02
1.01
1.05
1.00
Excellent return policy
friendly and helpful staff members
Knowledgeable staff members
available
Store atmosphere is good
Ease of walking around the aisles
Location is convenient
Availability of parking space
Accept different payment modes
Convenient operating hours
Close to home
3.17
3.16
3.31
0.97
0.97
0.92
2.63
4.00
4.05
2.61
2.75
3.92
2.71
0.90
0.90
0.94
0.96
1.02
0.90
0.95
Grouping of Store Selection Attributes
Exploratory factor analysis was used to group 20 important attributes into meaningful , manageable
factors representing the dimensions of store selection in selected cities of North India. Before running
the factor analysis, the Kaiser –Meyer-Olkin (KMO) Measure of sampling adequacy and the Bartlett’s
test of sphericity were performed.
Table: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
Approx. Chi-Square
Bartlett's Test of Sphericity
df
Sig.
0.769
1729.24
190
0.000
The above table shows the suitability of the data for factor analysis. The Kaiser-Meyer-Olkin Measure of
Sampling Adequacy is a static which indicates the proportion of variance in our variables which is
common variance, i.e which might be caused by underlying factors. It can be seen that Bartlett’s test of
Sphericity is significant.the Kaiser-Meyer Olkin measure of sampling adequacy was larger than 0.6,
which showed that the use of factor analysis was appropriate.
Table: Factor Analysis of Store Selection Attributes
Store selection Attributes
Store has what I want
Merchandise quality is good
1
0.898
0.859
2
3
4
5
6
Extensive assortment of
0.841
merchandise
Availability of good brands
0.841
Fairness of prices
0.860
Low priced advertised specials
0.920
Advertised goods are available
0.894
attractive design and layout
0.880
Neat and clean public areas
0.834
Excellent return policy
0.829
Friendly and helpful staff members
0.910
Knowledgeable staff members
0.897
available
Store atmosphere is good
0.887
Ease of walking around the aisles
0.846
Location is convenient
0.873
Availability of parking space
0.909
Accept different payment modes
0.842
Convenient operating hours
0.912
Close to home
0.844
Fast check out even during peak
0.858
hours
Rotation converged in 6 iterations.
Percentage of variance explained 83.47%.
Extraction Method: Principal Component Analysis: Rotation Method : Varimax with Kaiser
Normalization
As shown in the table above four attributes had a high loading on the first factor. These attributes are
availability of goods required by the consumer, quality of the merchandise, extensive assortment of
merchandise and availability of good brands. This factor can be clubbed into “Merchandise” and it is
consistent with earlier findings that merchandise is the most important element of retail marketing mix.
The factors showed a high correlation amongst each other ranging from0 .771-0.832 at 0.01 significance
level. The second factor “Convenience” had high coefficients on the items ease of walking around the
aisles, accepting different payment modes, convenient operating hours and fast check out even during
rush hours. The attributes accepting different payment modes and fast check out exhibited high
correlation amongst each other (0.795) which is due to increasing paucity of time among customers. The
third factor can be labelled as “price and promotion” which had high co-efficient on fairness of prices,
low priced advertised specials and availability of advertised goods. The correlation among last two
variables is as high as 0.958. The fourth factor is “Store Atmosphere” with high coefficients among
attractive design and store layout, neat and clean public places and attractive appearance of the store.
The fifth factor is “Service” included excellent return policy of the store, friendly staff members and
availability of helpful and knowledgeable staff. The last two factors are having high correlation 0.942.
The sixth factor “Location and Access “had high coefficients on convenient location, availability of
parking space and proximity to home. In India the unorganised sector still is competing with the
organised sector as it is able t o provide easy accessibility to the customer.
Table: Reliability Indices for the dimensions.
Dimensions
Merchandise
Price and Promotion
Service
Location /Access
Convenience
Store atmosphere
Alpha Reliability
0.9406
0.9273
0.8848
0.8685
0.9077
0.8817
Demographic Characteristics and store choice Dimensions
The purpose of this section is to explore how respondents differ in terms of their demographic
characteristics – age , gender and Income across the six dimensions which have been identified with the
help of Exploratory Factor analysis. To achieve this series of one way analysis of variance (ANOVA) tests
were run. In these tests the factor scores produced by the factor analysis were used as dependent
variables. A summary of the results has been is displayed in the table. Major findings of the results are
that the importance of Service dimension differs across age. In Merchandise dimension only variable
related to quality of Merchandise showed variation. The male and female consumers had a significant
different importance for the location dimensions but did not show any variation across the other
dimensions of store. The results of ANOVAs test were significant across all the major dimensions
including Merchandise, convenience, Price and Promotion, Store atmosphere and Service. The last
dimension Location/Accessibility did not show any variations across the Income groups.
Table: Summary of ANOVA tests
age
gender
Income
Store choice Dimensions
Merchandise
Store has what I want
Merchandise quality is good
Extensive assortment of merchandise
Availability of good brands
Convenience
Ease of walking around the aisles
Accept different payment modes
Convenient operating hours
Fast check out even duting peak hours
Price and Promotion
Fairness of prices
Low priced advertised specials
Advertised goods are available
Store Atmosphere
attractive design and layout
Neat and clean public areas
Store atmosphere is good
Service
Excellent return policy
friendlyand helpful staff members
Knowledgable staff members available
Location /Accessibility
Location is convenient
Availability of parking space
Close to home
F
Sig.
F
Sig.
F
Sig.
1.055
2.491
1.51
0.654
0.390
0.036
0.194
0.659
2.920
2.677
0.057
2.734
0.091
0.105
0.812
0.101
4.859
8.925
7.200
6.324
0.001
0.000
0.000
0.000
0.501
1.261
1.317
0.766
0.774
0.287
0.263
0.576
6.344
0.358
1.667
1.987
0.013
0.551
0.200
0.162
2.949
4.543
3.940
1.877
0.024
0.002
0.005
0.121
0.108
0.624
0.385
0.990
0.682
0.858
2.310
1.626
0.550
0.132
0.205
0.460
5.203
6.190
6.960
0.001
0.000
0.000
0.817
0.46
0.865
0.541
0.805
0.508
2.331
0.848
0.011
0.130
0.359
0.916
3.389
4.128
1.694
0.012
0.004
0.158
3.227
4.91
4.323
0.01
0.000
0.001
0.554
1.474
1.675
0.458
0.228
0.199
5.707
12.885
11.592
0.000
0.000
0.000
0.604
1.04
0.588
0.697
0.399
0.709
9.035
9.909
1.590
0.003
0.002
0.210
1.840
1.106
1.420
0.127
0.358
0.233
Hypothesis testing
The study found that the there exists no significant difference in the importance of store choice
attributes across age and gender and therefore, H1 and H2 are accepted. There exists statistically
significant difference in importance of store choice attributes across income and therefore, H3 is
rejected.
CONCLUSION AND IMPLICATIONS
In this paper, we addressed the store selection criteria by collecting data from organised retail
outlets in selected cities of North India. The consumer survey revealed that Merchandise
related factors are the most important. Customers rated the quality of Merchandise, extensive
assortment and range of merchandise and availability of good brands as most important.
Interestingly, customers attach considerable importance to availability of parking space,
location of the store and proximity of the store to their home. This can be attributed to the fact
that due to lack of well planned shopping areas parking is a major problem being faced by the
people. They like to visit stores which are easily approachable and have ample of parking area.
Considerable importance was also given to factors such as availability of the required product
as well as neat and clean public areas such as trial rooms and rest rooms. In addition factors
such as acceptance of different payment modes, ease of walking around the aisles, fast check
out even during peak hours and convenient operating hours did not rate very high.
We tried to group these factors into more manageable dimensions and with the help of
Exploratory Factor Analysis generated six dimensions which are “Merchandise”, “Convenience”,
“Price and promotion”, Store atmosphere”, “Services” and Location /Accessibility. The
statistical analysis revealed that these dimensions importance did not differ across age and
gender. But we found that there exists significant difference across various income groups in
their importance dimensions of Merchandise, Convenience, price and Promotion, store
atmosphere, services but the sixth dimension location did not show variance. Store attributes
can help in formulation of store image and influence decision making for the store selection.
For researchers, the present findings shed some light on the under researched area of retail
store choice behaviour in North India. The dimensions identified in the study can be further
validated in the Indian Retail context. The retailing sector is evolving over time with consumers
becoming more confident about their choices and preferences. They are demanding newer
services and better quality.
Our limitations of the study are the use of relatively small sample and the study being restricted
to three main cities of North India. Future research in more cities can be conducted as there has
been considerable growth of organised retail even in II tier cities of India.
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