“Shop Awareness and Consumers” effecting factors in Purchase Decisions of Compulsive Buyers

Abstract The present research examines the relationship between consumers’ tendencies to buy products, services and their response to price based on a survey of customers at mall in Delhi & NCR among 200 respondents. Indian retail industry is growing at a phenomenal rate, employing around 8% workers and contributing 10% of the country’s GDP. These investments are expected to increase by 25% yearly. Indian retail industry is expanding itself most aggressively as a result of the great demand for real estate is been created. The research findings suggest that compulsive buyers possess greater knowledge of store prices, more brand conscious and prestige sensitive in comparison with non-compulsive buyers. In research survey, there are 16 attributes, which influence the overall growth of organized retail sector. Out of 16 attributes 6 factors (Escalation dimension, Attraction, Strategies, Eye Catching, Promotional Dimension, Competition are more dominant and play important role for the growth of organized retail sector. In spite of this exponential growth, the human resource factor in retail management is still largely ignored who lack of formal retailing education. Keywords Brand awareness, Compulsive buyers, foreign direct investment

Introduction

The retail sector is the largest source of employment after agriculture, has deep penetration into rural India and generates around 10 percent of India’s gross domestic product (GDP). In India organized retail trade accounts for only 4% of the total retail trade. The retail sector is very fragmented in India, with over 12 million outlets operating in the country and only 4% of them being larger than 500 square feet in size, 7 outlets per thousand people, and per capita retail space is 2 sq. ft. lowest in the world. Indian Retail Market is the second fastest growing market of the world after China. Indian economy will grow larger than Britain's by 2022; Japan by 2032 and by 2050 will become the second largest economy of the world after China. Indian market has become the most profitable market for retail investment in the world. Some of the factors, which have contributed to the growth of organized retail in India, are increase in the purchasing power of Indians, rapid urbanization, increase in the number of working people, large number of working young population. At present time organized retail sector emerging as a high growth and potentials with USD 530 Billions. Indian retail market is expected to raise USD 630 Billion by the year 2015. Based on research projections, the top five organized retail categories by 2015 would be food, grocery & general merchandise, apparel, durables, food service and home improvement. The purpose of this study is to evaluate the influencing factors of Indian consumer buying behavior in organized retailing.

CONCEPTUAL FRAMEWORK OF THE STUDY

Retailing: The word 'Retail' is derived from a French word with the prefix and the verb retailer meaning "to cut again". Evidently, retail trade is one that cuts off smaller portions from large lumps of goods. It is a process through which goods are transported to final consumers. In other words, retailing

consists of the activities involved in selling directly to the ultimate consumer for personal, nonbusiness use. Retailing Formats: The traditional formats like hawkers, grocers and paan shops co-exist with modern formats like Super- markets and Non-store retailing channels such as multi level marketing and teleshopping. Modern stores trend to be large, carry more stock keeping units, and have a selfservice format and an experiential ambience. The modernization in retail formats is likely to happen quicker in categories like dry groceries, electronics, means' apparel and books. Some reshaping and adaptation may also happen in fresh groceries, fast food and personal care products. Specialty Store: These formats focus on a specific product category, Medium sized layout in strategic location. Specialty stores provide a large variety base for the consumers to choose from.

Self – Enhancement Stores: A self enhancement store is an individual outlet that provides good depth and variety in apparels, Fashion accessories and Personal care products, which polish the external appearance of consumers in a revised style through a single outlet. Malls: The largest form of organized retiling today. Malls are located mainly in metro cities, in proximity to urban outskirts; this format ranges from approximately 60,000 sq ft to 7, 00,000 sq ft and above. Academic Literature

Much of the literature has focused on the Determinants of Organized Retail Sectors1. Blackwell et al. (2001) divide the different age groups into the children's, teenagers, young adults, and baby boomers.

2. Kotter and Schlesinger (1991) analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization’s supply and demand levels and its costs. 3. Porter (1985) Competitive Advantage, PEST also ensures that company’s performance is aligned positively with the powerful forces of change that are affecting business environment. 4. Rao (2001), foreign direct investment in the retail sector in India, although not yet permitted by government, is desirable, as it would improve productivity and increase competitiveness. 5. Kotter and Schlesinger (1991) analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization’s supply and demand levels and its costs. 6. Fishbein's (1967) inferred that attitudinal model; behavior is predominantly determined by intention. Other factors like attitudes, subjective norms and perceived behavioral control also are shown to be related to an appropriate set of salient behavioral, normative, and control beliefs about the behavior. 7. Swinyard (1991), the overall store atmosphere can influence transaction spend, repeat purchases, consumer opinion of the store, consumer opinion of products and the amount of time spent browsing in store. 8. Schiuffman and Kanuk (2000) Consumer behavior has been legitimized in marketing for it provides the conceptual framework and strategic thinking for carrying out successful segmentation of markets.

Scope of the Research

However, the academic papers investigating Global linkages have focused on the sociocultural environment encapsulates demand and tastes, which vary with fashion, disposable income, and general changes can again provide both opportunities and threats for organized retail players. (For example- Thompson (2002), Armstrong et al. (2005), Ittner and Larker (1998)

Research Objectives

The objective of study is to evaluate the growth Indian Retail Industry as well as identify the affecting factors of buying decisions 1. To examine the growth possibilities of Indian organized retail sectors. 2. To examine the factors which influence the buying behavior of consumers? Hypothesis Organized retailing is solution for India’s Economic growth and solution to many economic problems like unemployment, elimination of poverty, per capita low income, low living standard and control the wastage by proper preservations etc. The following null hypotheses have been framed for the meaningful interpretation of the primary data. On the basis of hypothesis as above the study will be conducted in its widest survey in different areas as mentioned in below1. H0 = Mostly customers are preferring shop in malls because of discount in latest brand and varieties 2. H0 = Compulsive buyers are more likely to be price conscious than non-compulsive buyers.

METHODOLOGY

The survey was conducted in 10 malls (Ansal-Gr.Noida, GIP, Centre Stage, Ritu, & Senior-Noida, V3S, Vishal, Big Bazar, Easy Day & Shoppers Stop –GZB) of Delhi & NCR regions. The selected city is metro area which is having the retail chains of major national and international retailers. Many new retail formats and operators are considering this place as a market of opportunities. Out of the randomly selected 200 respondents (120 males and 80 females) half of the data had been drawn through mall intercept interview and out of mall visits.

SPSS17.0 software used. Principal component analysis and factor analysis have been undertaken to identify the factors influencing the purchase decision. KMO test used for data adequacy. A factor with a minimum loading of 0.5 shall show the need of retention. Only those factors will be retained, having Eigen value more than 1.0 since they are considered significant. An Eigen value represents the amount of variance associated with the factor.

Empirical results
1. Consumer Buying Behavior Analysis/ Demographic information of Respondents

The population was selected in such a way that both the gender and age were represented proportionately. 200 questionnaires were distributed among the respondents selected through convenience random sampling. India is the 2nd most populous country in the world, with over 1.22 billion people more than a sixth of the world's population. Data analysis shows that out of 200 respondents 120 (60%), were male and 60 (40%), female (Table 1).

Based on data analysis researcher can infer that males more shop than female because of they are earning Members of family.

Table 01 Gender Cumulative Frequency Valid Male Female Total 120 80 200 Percent 60.0 40.0 100.0 Valid Percent 60.0 40.0 100.0 Percent 60.0 100.0

Table 02 Qualification Cumulative Frequency Valid Below 10+2 Graduate Post Graduate Others Total 7 200 3.5 100.0 3.5 100.0 100.0 17 56 120 Percent 8.5 28.0 60.0 Valid Percent 8.5 28.0 60.0 Percent 8.5 36.5 96.5

Table 02 shows that more qualified person prefer purchase in malls. Table 03 Valid Cumulative Frequency Percent Percent < 2O Year Valid 20-25 25-30 30-35 35-40 > 40 Total 11 43 71 53 15 7 200 5.5 21.5 35.5 26.5 7.5 3.5 100.0 5.5 21.5 35.5 26.5 7.5 3.5 100.0 Percent 5.5 27.0 62.5 89.0 96.5 100.0

Table 03 shows that youth consumers (25-30 Age groups) are using more shopping in malls. Table 04 Mostly customers are preferring shop in malls because of discount in latest brand & varieties Valid Frequency Valid Strongly Agree Agree Don’t know 45 114 24 Percent 22.5 57.0 12.0 Percent 22.5 57.0 12.0 Cumulative Percent 22.5 79.5 91.5

Disagree Strongly Disagree Total

13 4 200

6.5 2.0 100.0

6.5 2.0

98.0 100.0

Hypothesis testing

(1)H0 = Mostly customers are preferring shop in malls because of discount in latest brand & varieties of products. As the calculated Z value is less than the table value at 5 % level of significance, the null hypothesis is accepted. Table shows that both youth and adult respondents agree with the latest brand available in malls. (Refer Table 04)

Table 05

MEAN VALUE

S. No.

Statements

Out of (Max1 to Min 5) Male Female

Z

Mostly people shopping from the Organized retailers 1 because they offer incentive schemes & Discount on latest brands & varieties. Organized retailer keeps latest brands & varieties for 2 different segment in their range. 1.84 2.05 1.59362 2.34 2.26 0.89734

Table 05 1st statements shows that mean score of the youth (2.34) is slightly higher than adult respondents (2.26). It means adults are more in favour of the “Mostly people shopping from the organized retailers because they offer incentive schemes & discount offer on latest brands. However Z score (0.89734) has been found less than 1.96 at the 5 % level of significance. It reflects that there is no statistically significant difference in the opinion of the both youth and adults respondents for the above statements. Table 05 2nd Statements shows that the mean score of the male respondents (1.84) is less than female respondents (2.05). It means males are more supportive than females for the “Organized retailer keeps latest brands & varieties for different segment in their range” statements. And Z score (1.59362) has been found less than 1.96 at the 5 % level of significance. It reflects that there is no statistically significant difference in the estimation respondents for the above statements. (2) H0 = Researcher define store price knowledge as consumers’ subjective estimates of their awareness of the level of store prices across different stores. Previous research is unclear about how much buyers, in general, are aware and knowledgeable of prices in the stores and across stores (Monroe 2003; Vanhuele and Dreze 2002). Similarly as product experience (such as ownership, usage and information search) affects product knowledge, it has been suggested that the more consumers are exposed to prices, the more likely their store price knowledge (both subjective and objective) will increase (Mägi and Julander 2005). Exposure to prices can take place in a variety of ways, such as in the store itself, reading through stores’ ads, flyers, and catalogs, or shopping on a store’s website. (Refer Table 06) of the male and female

Table 06
MEAN VALUE

S. No.

Statements

Out of (Max1 to Min 5) Below 30 Yr. Above 30 Yr.

Z

Organized 1 hygienic

retailers products

offer in

quality comparison

and to 1.93 2.30 2.24864

traditional Kirana shop. Organized 2 hygienic retailers products offer in quality and to 2.12 2.05 0.386953

comparison

traditional Kirana shop.

The 1st statement of the table 06 express the “Organized retailers offer quality and hygienic products in comparison to traditional Kirana shop” Table No. 06 shows that mean score of the male (1.93) is slightly less than female

respondents (2.30). It means males are more in favour of the “Organized retailers offer quality and hygienic products in comparison to traditional Kirana shop”. However Z score (2.24864) has been found higher than 1.96 at the 5 % level of significance. It reflects that there is statistically significant difference in the opinion of the both male and female respondents.

The 2nd statement of the table 06 express the “Organized retailers offer quality and hygienic products in comparison to traditional Kirana shop.”

Table No. 06 shows that mean score of the youth (2.12) is slightly

higher than adult

respondents (2.05). It shows that the adult’s respondents are more favorable for the “Organized retailers offer quality and hygienic products in comparison to traditional Kirana shop” statement. However Z score (.386953) has been found less than 1.96 at the 5 % level of

significance. It reflects that there is no statistically significant difference in the opinion of the youth and adult respondents.

Factor analysis
The 200 respondents identified were factor analyzed to get the results. The extraction method was used the Principal Component Analysis (PCA). This procedure short-lists 16 attributes for factor analysis out of the 31 attributes. 16 factors were rotated to identify the important group of factors. A factor with a minimum loading of 0.5 was used to retain. KMO test shows that the sample has good adequacy for further analysis and Barlett’s test of sphericity indicates the presence of some shared Variance among the 16 items. The KMO score is above 0.50 (0.731) and Bartlett’s test is significant (_2 = 1071.974). Cronbach alpha coefficient is an indicator of internal consistency of the scale . That is .825> .500, indicate more reliability (Table 7 & 8)

Table 07 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square df Sig. .731 1071.974 120 .000

Table 08 Reliability Statistics Cronbach's Alpha .825 N of Items 16

Table 09ANOVA Sum of Squares Between People Within People Between Items Residual Total Total Grand Mean = 2.2778 916.837 225.010 2408.178 2633.188 3550.025 df 199 15 2985 3000 3199 Mean Square 4.607 15.001 .807 .878 1.110 18.594 .000 F Sig

The result was that there were 06 factors, which explained for (70.756%) of the total variance (Table 10). In the present study, six variables are drawn which in aggregate account for more than 72 % variance accounted for by the factor. Individual variance of various factors reveal that factor 1(V1) Escalation Dimensions has caused the highest (29.18%) variance in the respondents, factor 2(V2) Attraction, factor 3(V3) Strategies, factor 4(V4) Eye Catching, factor 5(V5) Promotional Dimension, factor 6(V6) Competition in that order with 11.90 % , 8.92 % , 7.42 %, 6.82 %, 6.421 %

variance respectively. It can be inferred that Escalation Dimensions, Attraction, Strategies, Eye Catching, Promotional Dimension, and Competition have considerably influenced the purpose behavior of the sample in that order. Table 10 Total Variance Explained Extraction Sums of Squared Initial Eigen values Loadings
Component

Rotation Sums of Squared Loadings

% of Total Variance 1 2 3 4 5 6 7 8 9 10 11 12 13 4.669 1.905 1.428 1.188 1.090 1.040 .790 .756 .609 .528 .459 .419 .352 29.183 11.906 8.928 7.427 6.815 6.498 4.939 4.726 3.806 3.300 2.866 2.617 2.197

Cumulative Total % 29.183 41.088 50.016 57.444 64.259 70.756 75.695 80.422 84.228 87.528 90.394 93.011 95.209 4.669 1.905 1.428 1.188 1.090 1.040

% of Variance 29.183 11.906 8.928 7.427 6.815 6.498

Cumulati Total ve % 29.183 41.088 50.016 57.444 64.259 70.756 2.331 2.303 1.874 1.762 1.618 1.434

% of Variance 14.570 14.391 11.715 11.011 10.110 8.960

Cumulativ e% 14.570 28.961 40.676 51.686 61.796 70.756

14 15 16

.296 .244 .227

1.850 1.523 1.418

97.059 98.582 100.000

Extraction Method: Principal Component Analysis.

Conclusion

There is significant relation between economic growth and market size of organized retail. After economic reforms 1990-91, Indian economic growth is gradually in increasing order with organized retail market size in 2007 (USD 300 billions) ,2008 (USD 365 billions), 2012 (USD 530 billions) and 2015 (USD 650 billions). India has the highest shopping density in the world with 11 shops per 1,000 people. It has 1.2 crore shops employing over 4 crore people; 95% of these are small shops run by selfemployed people .Mostly customers are preferring shop in malls because of latest brand and varieties of products . The entry of retail big players is likely to hot up competition, giving consumers a better deal, both in prices and choices. Mega retail chains need to keep price points low and attractive - that's the USP of their business. This is done by smart procurement and inventory management. Consumer compulsive buying behavior still remains an important concern from the consumer welfare perspective because of the frequency with which it occurs, the total amount these consumers spend on their purchases, and the dysfunctional consequences that result from compulsive buying behavior. An interesting supplement to the present research would be an in-depth qualitative study of a small number of compulsive buyers, focusing on their shopping experiences and the best options they have ever obtained, their motivations and justification for buying products on price promotions, as well as potential remorse when not taking advantage of a promotion. Further research could also explore

whether compulsive buying is a product- or product-category specific or a more generalized consumer behavior. This paper shows that future of retail sector depends on 6 factors (Escalation dimension, Attraction, Strategies, Eye Catching, Promotional Dimension, and Competition are more dominant and play important role for the growth of organized retail sector.

References

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