A STUDY ON EVOLUTION OF RETAILING

FORMATS

SUBMITTED BY
BAHUBALI J.
2nd year MBA

SRINIVAS INSTITUTE OF MANAGEMENT STUDIES

PANDESHWAR, MANGALORE.

SUBMITTED TO
ALOYSIUS INSTITUTE OF MANAGEMENT & INFORMATION TECHNOLOGY

MANASAMANTHANA – 2009

A NATIONAL LEVEL PAPER PRESENTATION COMPETITION

CONTACT:

Bahubali J

Phone No: 9902555820

E-mail: bahu_bali 86@yahoo.co.in

0
 INDEX

SL NO. CONTENT PG NO.

I ABSTRACT 2

II RETAILING –CHANGE IN FORMATS 3

- Introduction

III RETAIL EVOLUTION 4-5

- Traditional format
- Established format
- Emerging format

IV SOME RECENT HAPPENINGS IN RETAIL 6

V CHALLENGES AHEAD FOR INDIAN RETAIL 7

VI RESEARCH 7-17

A Study on Customer Perception About Change in

Retailing

19
VII CONCLUSION

VII ANNEXURE 20-21

- Hypothesis test
- Questionnaire

VIII BIBILOGRAPHY 22

1
 Table and Figures Index

SLNO Tables Table no. PGNO.

.
1 India’s largest retail chains Table -1.1 02

2 Established Retail Formats Table – 1.2 03

3 Indian Economy: Sectoral Sources of Growth Table – 1.3 04

4 Awareness of retail formats. Table -2.1 06

5 No.of customers visited retail outlets in mangaluru city. Table – 2.2 07

6 People ready to purchase at retail outlets during the recession. Table – 2.3 08

7 Numbers of people prefer to visit traditional shops or retail outlets. Table – 2.4 09

8 Satisfaction level of customers due to changed retail formats. Table – 2.5 10

9 Factors that influence customers to purchase at retail outlets. Table – 2.6 11

10 Changes in retail formats that make customers feel happy. Table – 2.7 12

11 Product that customer prefers to buy at retail outlet. Table – 2.8 13

12 Customer satisfaction with changes in retail format. Table – 2.9 14

13 People perception about upcoming retail outlets. Table – 2.10 15

SLNO FIGURES FIGURE NO. PG NO.

.
1 Retailing – Change in Formats Figure – 1.1 02

2 Estimated share of Organized Retail in 2025 Figure – 1.2 O6

3 Awareness of retail formats. Figure – 2.1 06

4 No. of customers visited retail outlets in mangaluru city. Figure – 2.2 07
5 People ready to purchase at retail outlets during the recession. Figure – 2.3 08

6 Numbers of people prefer to visit traditional shops or retail outlets. Figure – 2.4 09

7 Satisfaction level of customers due to changed retail formats. Figure – 2.5 10

8 Factors that influence customers to purchase at retail outlets. Figure – 2.6 11
9 Changes in retail formats that make customers feel happy. Figure – 2.7 12

10 Product that customer prefers to buy at retail outlet. Figure – 2.8 13

11 Customer satisfaction with changes in retail format. Figure – 2.9 14

12 People perception about upcoming retail outlets. Figure – 2.10 15

2
 RETAILING – EVOLUTION

- BAHUBALI J.

I. ABSTRACT

Indian consumers had confined been for a long time to traditional family or ‘Mom and Pop stores’.
Gradually there was a shift and today there are plenty of formats available at our convenience and today
retail industry is of late being hailed as one of the sunrise sectors in the economy. Retailing is going
through a transformation and the change in the format has made retailers to grow from rural reach to
international reach, unorganized to organize. Hence, this paper concentrates on two studies: Firstly, the
evolution of retailing, which give a gist about past, present and future retail formats. Secondly,
information on perception of customers about the change in formats, and customer willingness to
purchase at retail outlets during recession at Mangalore city a survey was conducted on the topic
“customer perception about change in retail formats in mangaluru city to get primary information on
the same.

RETAILING – CHANGE IN FORMATS

II.INTRODUCTION

The word ‘retail’ derived from the French word ‘retailers’ meaning cut a piece off or to break
bulk. In simple terms, it implies a first-hand transaction with the customer.
3
 According to Philip Kilter, “Retailing includes all the activities involved in selling
goods/services to the final consumer for personal, non-business. A retailer or retail store in any business
enterprises where each volume comes primarily from retailing.

Any firm that sells product to the final consumers is performing the function of retailing. If there
consists of all activities involved in the marketing of goods and services directly to the consumer for
their personal, family /household use.

“Retail may be redefined first point of customer contact”

III.RETAILING – CHANGE IN FORMATS

Rural Traditional Govt. Modern/

Reach Reach Support International

Figure – 1.1

Source of Neighborhood Availability/Low Shopping

Entertainmen store/convenien cost/Distributio experience/
t ce n Efficiency

Weekly Markets Convenience -Khadi stores Hyper/Super

Source of Mom and pop Cooperatives Markets, malls
Entertainment
-Kirana shops -Fast food
Melas, Haats, outlets

-speciality sto

Retailing is maturing into a more microscopic and systematized process.

4
 A. TRADITIONAL FORMATS:
Traditionally retailing in India can be traced to the emergence of the neighborhood ‘Kirana’
stores catering the convenience of the consumers’ Haats, Mandis and Melas have always been a part of
Indian landscape.
 HAATS: Haats are periodic market that form a major part of the rural market system in India, this is a
location which witnesses a public gathering of buyers & sellers of fixed times and at fixed locations.
 MELAS: Melas are fairs and they can range from commodity fairs to religions fairs. It is estimated that
more than 25000 Melas are held annually in country.
 MANDIS: Mandis are market set up by the state government for the sale of agricultural producer direct
from the farmers.

B. ESTABLISHED FORMATS:
Era of government support for rural retail, indigenous franchise model of stores chain run by
Khadi and Village Industries Commission 1980’s experienced slow change as India began to open up
economy.
The PDS or the public distribution system would easily entry as the single largest retail chain
existing in the country. The evolution of the public distribution of grains in India has it origin in the
“rationing” system introduced by the British during WORLD WAR II the canteen stores department and
the Past office in India are also among the largest network of outlets in the country, reaching
populations across state boundaries.
The Khadi & Village Industries are more than 7000 stores across the country. The Co-operative
Movement was again championed by the government, which operating a network of 112 stores & 42 fair
price shop across the country. In Maharastra, Bombay-Bazaar runs stores under the label Sahakari
Bhandar and Apna Bazaar, sum of large chain of co-operative.

Table -1.1 India’s largest retail chains

PDS POSTOFFICE’S KVIC CSD STORES

4,63,000 160,000 7000 3400

Other established formats are

 Multi Brand show rooms

 Pan/Beda stores

 Convenience/Department stores.

Table – 1.2 Established Retail Formats

Format Description Size Sq. ft. Examples

5
 ( Intl) ( India)
Category Offer a narrow variety with a very 50,000+ 15,000 + Circuit city, Kumara
Specialist deep assortment of the merchandise ( Chennai), Toykemp
( Bangalore), Home
depot.
Convenienc Located near residential areas and open 3000 to 500 to 7-Eleven, Speed mart,
e store. long hours. Offers mix of products 8000 1000 In and out.
including Milk, Bread, Eggs
Department Large store selling several product line 75,000 + 5,000 to Marks and Spencer,
store with each operating as a department. 40,000 Pantaloons, Shopper’s
Product mix is largely non-food like stop, Globes, Ebony.
apparel, Books, Music etc level of
service is high
Factory Stores which sell branded merchandise 5,000 to 500 to Levis factory outlet,
outlets at discount. Levels of service are low, 10,000 1,000 Reebok factory outlet,
located away from the main markets. Wrangler factory outlet.
Hyper Large self service stores selling a mix 80,000 to 40,000 to Wal-Mart, Big Bazaar,
market of products. Food and nonfood items 2,22,000 75,000 Giant, Saba Bazaar.
like apparel, CD’s, footwear ,etc. price
is a key attraction for customer.
Single price Offer an assorted mix of branded and 5,000 to 500 + Family dollar, Dollar
stores. unbranded merchandise, to appeal to 20,000 general, 9 to 9, 49 to 49
the budget conscious customer.
Speciality Focus on brand or a particular category, 5,000 to 2,000 to Walgreens, Boots,
stores offer a narrow product but good depth. 8,000 5,000 Planet M, Music world.
Service is high.
Super Offer food, laundry, and house hold 8,000 to 800 to Food bazaar, Nigeria’s,
market maintenance products. Self service low 20,000 5,000 Foodland, Food world,
cost, low margin & high operators Tesco, Kroger.

C. EMERGING FORMAT:
It was at their time that many restrictions on private companies were lifted, and in the 1990’s the
Indian economy slowly progressed from being state-led to becoming “market friendly”.
While independent retail stores like Akbar Ally’s, Vivek’s & Nalli’s have existed in India for a
long time, the fixed attempts at organized retailing were noticed in the textile sector. One of the pioneers
in this field was Raymond’s, today comprises more than 20000 retailer’s & over 256 exclusive
showrooms in over 120 cities of the country.
Next Reliance set up Vimal showroom’s & garden silk mills, which was set up Garden Bareli
Showroom’s, next wave of organized retail in India saw the like of Madura Garment, Arvin Mills etc set
up showrooms for branded menswear. Next came the departmental stores-Super market-Other specialty
stores.

The concept of retail as entertainment came to India with the advent of malls. The development came to
India with the advent of malls. The development of malls is now visible not only in major Metros but also in
other parts of country.

IV. SOME RECENT HAPPENINGS IN RETAIL SECTOR

 Sunil Mittal’s Bharti signed a pact with Wal-Mart

6
  Adi Godrej also initiated talks with four leading global retailers, including Carrefour & Tesco,
for a tapping $7-billion organized retail business
 Reliance Fresh which has already started its operations with Raipur is expected to open a
hypermarket in Ahmadabad this year
 New York-based high-end fashion retailer Saks Fifth Avenue has tied up with DLF Properties to
set up shop in a mall in New Delhi.
 India is rated the fifth most attractive emerging retail market.

It is no secret that the future lies in services. This service boom has really pushed retailing to forefend.
The following table shows the growth of service sector among other prominent sectors in India.

Indian Economy: Sectoral Sources of Growth

Table – 1.3
(Percentage contribution to increase in GDP)
1992-93 to 1996-97 1997-98 to 2003-04
Agricultural & allied sectors 20.3 13
Manufacturing & construction 30.9 23.1
Services 48.8 63.9

FOREIGN DIRECT INVESTMENT (FDI)

The government of India has opened up 51% FDI in single brand retail outlets since 2006. And as
the government is in process to initiate a second phase of reforms, it is cautiously exploring the avenues for
opening up various and luxury categories and sports goods before opening the multi –brand goods.

India’s vast middle class and its almost untapped retail industry are key attractions for global retail
giants wanting to enter new markets. Changing lifestyles, strong income growth and favorable demographic
patterns offers an excellent opportunity for organized retailers in the country who accounts for just 6%. The
retail business in India in the year 2007 was US$385billion (rs.1, 540,000cr) and a McKinsey study says it is
estimated to go to US$1.52 trillion (rest. 6.080, 000cr) by 2025. By then the share of organized retailing will be
in the vicinity of 20%

Figure – 1.2 Estimated share of Organized Retail in 2025

Retail Sales 2007 Retail Sales 2025

sha sha
re re
of of
org
ani org
sha sed sha ani
re ret re sed
of ail of ret
tra 6% tra ail
diti diti 20
on on %
al al
ret ret
ail ail
94 80
. % %

V. CHALLENGES AHEAD FOR INDIAN RETAILERS

7
  The country requires a uniform tax system for the organized retailing.
 Lack of adequate infrastructure.
 Unorganized sector has the dominance over the organized sector in India, especially because of the low
investment needs.
 Government restrictions on FDI would block any attempt by the domestic industry to become
competitive internationally.
 Labour employment problems, as organized retailing is 24*7 active business this is much restricted
currently in India.

VI. A STUDY ON CUSTOMER PERCEPTION ON CHANGING RETAIL FORMATS AT

MANGALURU CITY.

As a support to the study of changing retail formats a survey was conducted in the city of
Mangaluru taking the sample of 100 from city population, to study the customer awareness of Retail Formats,
customer perception about changing Retail Formats, and the changes in footfalls during recession period to
retail outlets.

Objectives of the Research:

 To know the changes in footfalls during recession of retail outlets.

 To understand the level of awareness of retail formats.
 To know the people’s opinion about the changing retail formats.
 To know the factors influence while people are preferred to purchase in retail outlets.
 To study the satisfaction level of customers.

Scope of the study:

The main purpose of the study is to know, the awareness of retail formats in customer and
customer perception about changes in the retail formats, in mangaluru.

Methodology:

Quota sampling

Sampling units:

The retailing survey was conducted for the “Retailing – change in formats”. For this purpose, convenient
samplings of 100 respondents were chosen and sampling units were Business Persons, Professionals,
Youngsters, House-Wife, and Retired Persons and survey was conducted in places like, Colleges, Offices,
Public places and commercial areas, Houses.

Analysis of data and interpretation:

8
 The data collected has represented in table and graphical form to understand it in a better way.

Table -2.1 Awareness of retail formats.

Sl.no. Particulars’ No. of people

1 People aware about retail formats 96 ( 96.00 % )

2 People not aware about retail formats 04 ( 04.00 % )

Figure – 2.1

100
90
80
70
60
50
40
30
20
10
0
Awareness
Not Aware

No of People in Per centage

Interpretation:
The above diagram states 96 % people are aware about the retail formats and 4% of people are not aware. As
the retail sector is a sunrise industry, and as it is offering a vast benefit to the society, it was found that most of
the people are aware of established and emerging retail outlets at mangaluru. And also proved by formulating
hypothesis.
H0: p > 80 % = More than 80% of People are ready to visit retail outlets.

H1: p < 80 % = less than 80% of People are ready to visit .

*Annexure of hypothesis test is attached.

9
 Table – 2.2 No. of customers visited retail outlets in mangaluru city.
Sl. No. Particulars No. of people

1 No. of visited people’s 93

2 Non visited people’s 07

visitors and Non visitors to retail outlets in Mangaluru.

100
90
80
70
60
50
40
30
20
10
0
Visited people's Non visited people's
Figure - 2.2

Interpretation:

The above diagram states out of 100 respondents, 93% people were visited and 7% people were not visited
to retail outlets in Mangaluru. From the above information it is clear that mangaluru people’s life style is
changing according to change in the retail formats, as most of the people visit the retail outlets.

10
 Table – 2.3 People ready to purchase at retail outlets during the recession.

Sl. No. Response No. of people

1 Ready 86
2 Not ready 14

90
80
70
60
50
40
30
20
10
0
Footfalls towards retail outlets Changed footfalls towards retail
outlets.

Figure-2.3

Interpretation :

The above table and diagram is shown out of 100 people 86% people are prefer retail outlets and14%
people are not prefer retail outlets during the recession period. The recession has not affected the retail outlets
sales in large, very few people were not ready to purchase during recession.

11
 Table – 2.4 Numbers of people prefer to visit traditional shops or retail outlets.

Sl. no. Particulars No. people

1 Traditional shops 18

2 Retail outlets 60

3 Both 22

Figure – 2.4

60

50

40

No. of people in %
30

20

10

0
Traditinal Shops. Retail outlets. Both of the above

Interpretation:

The above diagram shows 18 % of people prefer traditional shops. 60 % of people prefer retail outlets and.
22 % of people prefer both. From this data it is observed that the the traditional Kirana shops are not in red,
most of the people still prefer that

12
 Table – 2.5 Satisfaction level of customers due to changed retail formats.

Sl.no. Particulars No. of people

1 Very happy 41
2 Happy 48
3 Not happy 11
Figure – 2.5

Satisfaction level of customers about changes in retail

formats.

50
45
40
35
30
25
20
15
10
5
0
Very happy Happy Not happy

Interpretation:

Due to changed in retail formats 41% of people were very happy, 48% of people were happy and 11% of
people were not happy. As still 11% of population needs to be satisfied its better the retailers should go to
specialization.

13
 Table – 2.6 Factors that influence customers to purchase at retail outlets.

Sl. no. Particulars No. of people

1 Price 16

2 Quality 18

3 Convenience 18

4 Service 22

5 Brand 22

6 Others 04

Figure – 2.6

Influencing Factors in %.
Others Price
Service 16%
22% 4%

Convenience
18%

Brand Quality
22% 18%

Interpretation:
The above diagram shows 57.6 % of people were influenced by price, 64.8% by convenience,
64.8% by Quality, 79.2% by Brand, 79.2% by Service and 14.4% were influenced by other factors like
entertainment, offers and gifts etc. The retailers have to work on the price factor and also find creative ideas to
attract customers.

14
 Table – 2.7 changes in retail formats that make customers feel happy.

Sl. No. Particulars No. of people

figure 2.7

1 Affordability 10

2 Accessibility 37

3 Availability 53
Availability

Accessibility

Affordability

0 10 20 30 40 50 60

Interpretation:

The above diagram shows 10 % of people were influenced by affordable factor, 37% by accessible and
53% by availability. The still improvement in the service and making customer convenience to get many
products in a place may increase the footfalls.

15
 Table – 2.8 Product that customer prefers to buy at retail outlet.

Sl. No. Particulars No. of people

1 FMCG 30
2 Prestigious products 54
3 Service 12
4 Others 04

Figure – 2.8

no. of people in %

54

30

12

FMCG Prestigious Services Others

Interpretation:

The above diagram shows 30% of people go to retail outlets to purchase FMCG product, 54% to buy
prestigious products, 12& to buy services and 4% to others like entertainment, offers, and gifts etc. So the
upcoming malls need to be more costumers focused.

16
 Table – 2.9 Customer satisfaction with changes in retail format.

Sl. No. Particulars No. of people

1 Yes 92
2 No 08

Figure – 2.9

100

90

80

70

60
No. of people in %
50

40

30

20

10

0
Yes No

Interpretation:

The above diagram shows 92% of people were satisfied changed retail outlet and 8% were not satisfied.
So the retail outlets can go for more and more investment on their business by using economic scales to forecast
their future demand from market.

Table – 2.10 People perception about upcoming retail outlets.

17
 Sl. No. Particulars No. of people
1 Have better market 86
2 Don’t have 14

Figure – 2.10

people perception about upcoming outlets.

90
80
70
60 No. of people in %
50
40
30
20
10
0
Have better market Don't have

Interpretation:

From the above table and graph it can be analyzed that 86% of people believe that upcoming retail
outlets have better market in future and 14% of people don’t agree with it. As the opinion for the future
upcoming malls finds positive response from customer no doubt the 4-6 upcoming malls have better market.

VII. FINDINGS AND SUGGESTIONS:

18
 This study aims primarily at knowing the awareness of Change in Retail Formats, Effect of
Recession on footfalls of Retail Formats and to know the customer perception about Changing Retail Formats.
The evaluation of data has given rise to the following major findings listed below:

FINDINGS:

 The research observed that majority of the population in Mangalore are aware about Retail Outlets and
also they visit the Retail Outlets.
 It was observed that recession has not much effected to the footfalls at retail outlets, as major portion of
the sample population said they purchased in Retail Outlets during the Recession.
 The changes in the Retail Formats have attracted large portion of population, majority now prefer only
Modern Retail Outlets than the Traditional Shops.
 Availability and convenience has played a major role to increase footfalls to Retail Outlets.
 Though the retail outlets include all kinds of products, prestigious products play a dominant role in
attracting customers, which also tells that Kiranas are not in red.
 Customers are found very happy with the evolution that is taking place in Retail Formats and from the
study it was found that the upcoming Retail Outlets and Malls have a better market

SUGGESTIONS:

Based on the findings of the study, following suggestions can be drawn:

 This modern format of Indian retailing need to gear up and join the Global Players to give the more and
more international retail experience to its customers.
 The Kiranas though not affected at large need to work smart to survive in competitive market.
 The retailers need to concentrate on supply chain and customer relations followed by merchandising
and facilities management as they are the areas that have significant gap and proactive training is a key
imperative for overcoming these.
 Operations of retailers and suppliers need to get integrated to increase to make the retail business get
more organized.
 Consumer preference should be given more reference in upcoming malls.
 As there is lack of differentiation among malls, upcoming malls need to look at more specialization.

19
 VIII. CONCLUSION:

Though retailing in India faces innumerable challenges, the attitudinal shift 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. As the organized retail model establishes and also the entry of
international players like Walmart, Tesco, and Carrefour will give the experience of increased job
opportunities, enhanced lifestyles. This modern format of retailing is here to stay for long and provides
international retail experience to the citizens of the world.

IX. ANNEXURE:

1. Testing of Hypothesis:
20
 Case: In a survey of 100 people, during recession 86 respondents are ready to visit the retail
outlets for future purchase. Test it at 5% level of significance, the percentage of visitors is less than 80% during
recession.

Solution:

Testing for proportion:

X = 86 , n = 100 , p = x/n 86/ 100 = 0.86

P = 80% = 0.80 , Q = 1 – P = 1 – 0.80

= 0.20

H0 : p > 80 % = More than 80% of People are ready to visit retail outlets.

H1 : p < 80 % = less than 80% of People are ready to visit .

p−P
Standard equation is Z=
√ PQ /n
0.86−0.80
=
√ 0.80∗0.20 /100
0.06
=
√ 0.16/100

0.06
=
√ 1.6

21
 0.06
=
1.264911

Z cal = 0.048

5 % = 0.05

∴ 0.5−0.05

= 0 . 45

Z table = 1.645

Hence ,

Z cal < Z tab

⋮ z ⋮=0.48 ⋮ z ⋮=1.645

So,

 Ho is Accepted
 H1 is Rejected

Conclusion:

During recession period also, more than 80% of people ready to visit the retail outlets for
future purchase according to survey.

2. QUESTIONNAIRE

22
Name:
Gender:
Occupation:
Age:
Place:
1. Have you heard about the term “Retail Outlet” in Mangaluru city?
Yes
No
2. Have you ever visited retail outlet in Mangaluru city?
Yes
No
3. Are you ready to purchase at retail outlets during recession?
Yes
No
4. Do you prefer traditional shop or retail outlet?
(a) Traditional shop
(b) Retail outlet
5. How did the changed retail format satisfy you?
(a) Very happy
(b) Happy
© Not happy
6. Which factors influence you to purchase retail outlet?
(a) Price (b) Quality
© Convenience (d) Service
(e) Brand (f) Other

7. What changes in retail format made you feel happy?

(a) Affordable (b) Accusable
© Availability
8. Which product do you prefer to buy at retail outlets?
(a) FMCG (b) Prestigious
© Service (d) Others
9. Are you satisfied with the change in the retail format?
Yes
No
10. Do you think the upcoming retail outlets have better market?
Yes
No

23
X. BIBILOGRAPHY

1. Ramanathan V, Hari K, “Structural Changes in Indian Retail Market: From Unorganised to Organised”,
Indian Journal of Marketing, Volume-xxxviii, No-12, Pg No.34-40, 59, December 2008.
2. Pradhan Swapn, “Retailing Management- Text and Cases”, Tata McGraw-Hill Publishing Company
Limited, New Delhi, 2nd edition, 2008.
3. Sahoo Debajani, Govind Mishra Hari, “Organized Retail in India- A case study of Bal-Wart”, Indian
Journal of Marketing, Volume-xxxviii, No-1, Pg No.35-43, January 2008.
4. Singh Harpreet, Kaur Narinder, “Retailing in India- Recent Trends and Challenges”, Indian Journal of
Marketing, Volume-xxxviii, No-4, Pg No. 49-54, April 2008.
5. Suja S, Arumugam Insuvai, Lakshmi b Vidhya, “Emergence of Corporate Retail- Future Implications”,
GIM Journal of Management, Volume-3, No-1, Pg No.59-67, January-June 2008.
6. Vedamani G Gibson, “Retail Management- Functional Principles And Practices”, 3rd edition, Jaico
Publishing House, 2008
7. Prof. Venkateshwarlu H, Dr. Ranjani C.V, “Small v/s Mall”, Indian Journal of Marketing, Volume-
xxxvii, No-10, Pg No.29-33, October 2007.

24