Emerald Emerging Markets Case Studies

The voice of the customer in the design of organized retail stores

Gyan Prakash, Sangeeta Sahney, Abhinav Vohra,
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Emerald Emerging Markets Case Studies, Vol. 5 Issue: 6, pp.1-7, https://doi.org/10.1108/EEMCS-10-2014-0261
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 The voice of the customer in the design
of organized retail stores
Gyan Prakash, Sangeeta Sahney and Abhinav Vohra
Gyan Prakash is Student
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and Sangeeta Sahney is
Associate Professor, both
at the Indian Institute of
Technology, Kharagpur,
India. Abhinav Vohra is
Assistant Manager at the
Vodafone India Limited,
New Delhi, India.
Disclaimer. This case is written
solely for educational
purposes and is not intended
to represent successful or
unsuccessful managerial
decision making. The author/s
may have disguised names;
financial and other
recognizable information to
protect confidentiality.
DOI 10.1108/EEMCS-10-2014-0261
1. Introduction
Mrs Sharma is a housewife who lives in a small town called Pataudi in the state of Haryana
(India). In her late 40s, she has been a shopaholic all her life. Until a few years ago, she
used to haggle with the local shopkeepers of traditional kirana stores for the best prices.
However, things have changed rapidly since then. Although there are not any organized
retail stores in Pataudi, the access to such stores has definitely improved, as many have
sprung up in the nearby city of Gurgaon, which is located 26 km away.
This has been reflected in Mrs Sharma’s lifestyle as it has in many others in her
neighborhood. She can now be spotted wearing branded items. Every couple of weeks,
she drives to an organized retail store, Super Mart, located on the outskirts of Gurgaon to
replenish her supplies. However, as it is not possible for her to shop at Super Mart
frequently, Mrs Sharma continues to buy perishable items from local kirana stores even
though the quality of products is not as good. But she is not alone in this problem; her
friends from Pataudi also have to live with it.
Super Mart is a multinational corporation and has tasked a data insights company, PPCA
Analytics, with conducting a study on the factors which Indian customers deem important
when it comes to their shopping preferences. The company has identified a sufficiently
large area wherein it intends to conduct its survey and offer insights to its client. As part of
this survey, Mr Mukul Sahay, an employee of PPCA Analytics, is to sweep Mrs Sharma’s
neighborhood.
2. Organized retail in India
The liberalization of the Indian economy in 1991 brought altogether new types of products
and services to the country (Mathur, 2010). A relatively open economy meant competitive
wages, increased propensity to consume goods and services and higher standards of
living. It was then that the country had its first brush with organized retail which
subsequently paved the way for a major shift in shopping habits of a good portion of Indian
population (Khare, 2011). Over the past few years, regulations, such as opening up of
foreign direct investment (FDI) to up to 51 per cent in multi-brand retail and 100 per cent
in single-brand retail, have augured well for consumers while heating up the competition.
Access to a plethora of global brands and wider choices have changed their lifestyles
significantly (Lakha, 2005). Late adopters and laggards have also been brought into the
loop, thanks to the aggressive promotions by these retailers, including loyalty programs,
flash sales and even brighter displays. People are willing to pay a premium for
higher-quality goods and services which are characteristics of organized retail stores
(Prahalad, 2005; Rosa and Viswanathan, 2007). Studies suggest that, although Indians are
known to be price-sensitive, they are also open to experimenting with brands and would
VOL. 5 NO. 6 2015, pp. 1-11, © Emerald Group Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
 like more foreign brands to be introduced in the Indian market (Mukherjee et al., 2012).
Consequently, traditional Indian kirana stores are poised to face their toughest competition
since their inception. But, at the same time, the organized retail stores are themselves
having a tough time fending off competition from their online counterparts. As organized
retail is in a relatively nascent stage in India, it is unable to provide access to a large variety
of goods to people the way online businesses do. This has forced some of the players to
resort to omnichannel retailing, pointing observers to the fact that a convergence of online
and offline media is in the works.
Although the Indian retail industry, which is the fifth largest in the world, stands
predominantly unorganized, it continues to clock 46.6 per cent annual growth rate
(Planning Commission, 2010). The share of unorganized retail sector is as high as 94 per
cent, according to a Technopak study (Kapoor and Saraiya) but the organized retail sector
has been catching up lately at a staggering pace. This is corroborated by the fact that,
although organized retail seems upbeat in reaching US$200 billion turnover and with its
annual growth pegged at 25 per cent, kirana stores are expected to grow at just 5 per cent
annually and touch the mark of US$650 billion (76 per cent) by 2020 (Deloitte, 2013). This
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surge is driven by strong income growth which has changed lifestyles, thereby creating
favorable demographic patterns (Pradhan and Mangaraj, 2008). As choices increase,
customers will have the luxury of evaluating the organized retail set ups with respect to
goods and services provided and choosing the best. This entails conforming to the best
customer practices on the part of retailers.

3. Factors and consequences

An average customer’s predilection for a grocery store is influenced to a large extent by its
location, sales assistance, trustworthiness, cleanliness, offerings, quality and ability to shop
remotely (Goswami and Mishra, 2009). As kirana stores seldom perform well on these
parameters, a shift to organized retail seems inevitable. Better infrastructure, economic
growth and changing demographics of customers have fuelled the growth of organized
retail in India (Jhamb and Kiran, 2011), but factors such as proximity, ease of shopping,
credit facility and personal connections are expected to keep kirana stores in business in
the time to come.
As the competition in this sector becomes fiercer, large retailers are likely to face four major
retail challenges: strategic, environmental, customer and supply chain challenges
(Singh et al., 2011). Out of these, customers pose the most subtle challenge to the
organized retailers. This is not just because of varying demographics but also due to their
natural tendency to shop from traditional stores. Consequently, a lot of effort has to go into
understanding what these customers prefer. This is especially so in the case of organized
retailers, as they are not only competing with traditional stores (which still command the
lion’s share) but also with other players in the market who are intent on taking a bite of this
burgeoning marketplace.
In their pledge to identify, understand and target various customer segments, these players
are keen on profiling their customers by their choice of sales promotion mix (Ubeja and
Bedia, 2012). Retailers want to create the perfect ambience with apt use of colors, music
and lighting in their stores to induce extra spending by their customers (Ghosh et al., 2010).
This is vindicated by the correlation between utilitarian shopping value and emotional
stability and conscientiousness traits, as reported by various works on shopping motives
(Guido, 2006). In this respect, researchers have also carried out pairwise comparisons of
some of these relevant factors to scale them on a relative basis using analytic hierarchic
process (AHP) (Saaty, 2008). This allows the customer preferences to be structured into a
hierarchy in terms of the overall objective, the selection criteria and the decision
alternatives (Deb and Lomo-David, 2014).

PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 5 NO. 6 2015

 4. Design characteristics of organized retail stores
Mr Sahay had worked on similar projects in the past, and he was ready with his
questionnaire when the task was assigned to him. He identified 26 different variables
(“Initial Factors”) using a preliminary survey in the Gurgaon region and subsequently
grouped them into six categories (“New Factors”) as listed in Table I.
His survey was meant to cover diverse aspects of retailing including, but not limited to the
following:
 information about retail outlet;
 demographic data;
 buyer behavior and decision-making; and
 success factors for organized retail outlets in India.
The last were rated by prospective and existing customers on a Likert scale of 1 to 5 with
the former being the least important and the latter the most important. Mrs Sharma had her
say when approached by Mr Sahay and was quite vocal about issues such as distance of
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stores from home, discounts offered and sales service.

Mr Sahay also put up an online survey for a month and received 200 responses with roughly
equal numbers from the online survey and the offline survey (in the Gurgaon region). While
the sample space for the former comprised officer employees and youngsters, the latter
factored in the shopping habits of housewives and elderly shoppers. Mr Sahay used
descriptive statistical methods such as factor analysis and reliability analysis to
quantitatively analyze the data collected.
To his surprise, Mr Sahay found out that all the variables were statistically significant (p ⱕ
0.05). The correlation coefficients were all less than 0.9, thereby negating the potential
issues arising from data singularity. He also calculated Cronbach’s ␣ which was found to

Table I Matrix showing 26 variables grouped into six factors

Initial factors New factors

Range of products Unique selling proposition

Variants of the same product
Latest items
Range of brands
Accessibility
Fresh stock
Less price
Proximity to residence Service advantages and convenience
Better service
Trust
Less time
Overall shopping experience
Post sales service Post-sales experience
Complaint redressal
Personalized experience
Responsive staff
Air conditioning Ambience
Ambience of outlets
Parking facility
Social recognition Satisfaction of social needs
Entertainment
Private labels
Family experience
Foreign goods
Promo schemes Discounts
Discounts

VOL. 5 NO. 6 2015 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3

 be 0.926 in normal and 0.928 in standardized form. A value greater than 0.7 is generally
considered acceptable. This ensured the internal consistency of the data.

5. Voice of the customer

Satisfied with the results of his survey, Mr Sahay decided to take up a similar survey with
the same set of people on a limited scale. His purpose was to study the correlation between
the design elements and the extent of coherence between customer needs and design
elements. He conducted the survey on a one-on-one basis by identifying focus groups
comprising housewives, working men and women, ex-servicemen and students. Acting as
the moderator, Mr Sahay monitored the discussions and collected responses given by the
groups. Mrs Sharma featured in one of the eight focus groups organized.
Mr Sahay had a good knowledge of AHP developed by Saaty in the 1970s. This structured
technique finds its extensive usage in the analysis of complex decision-making by
decomposing the problems into a hierarchy of criteria and alternatives. Both qualitative as
well as quantitative inputs can be used to derive weights and rankings. The process is put
to use widely in areas such as strategic planning, resource allocation, source selection,
public policy, business policy and program selection, among others. Mr Sahay collected
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the sampled data from his fellow colleagues and applied the concept of AHP to
decompose the variables into a hierarchy of criteria and alternatives. His final findings have
been illustrated in an AHP matrix given in Table II.
Conceived by Mizuno and Akao (1993), quality function deployment (QFD) is often used to
incorporate voice of the customer (VOC) using a QFD matrix which is also called the house of
quality (HOQ) matrix. The method follows an integrative approach by establishing relationships
between customer requirements and design elements and then finding cross-relations among
the various design elements themselves (Hauser and Clausing, 1988). The conical section of
HOQ is used to comprehend the inter-relationships between the design elements. A scale of 1
(least important) to 5 (most important) is used to quantify the importance of customer
requirements, whereas the linkages between the requirements and the elements are quantified
on a scale of 1 (very weak) to 9 (very strong). Figure 1 illustrates the HOQ.
The relationships between customer needs and design elements were quantified in terms
of low relationship (1), medium/moderate relationship (3) and high relationship (9). The
design elements were related to each other in four ways:

1. strong negative;
2. negative;
3. positive; and
4. strong positive relationship.
The design elements are listed horizontally, whereas the customer requirements are
mentioned in vertical columns. The aim of such an exercise is to comprehend customer
needs and conceive products/services to address them (Akao, 1990). An illustration of the
HOQ showing all the calculations has been given in Figure 2.

Table II AHP matrix

Unique selling Service Post-sales Ambience and Satisfaction
proposition advantages service infrastructure of social needs Discounts

Unique selling proposition 1.00 1.67 1.67 3.00 0.57 1.00

Service advantages 0.60 1.00 2.00 3.00 0.67 0.33
Post-sales service 0.60 0.50 1.00 0.33 0.67 0.13
Ambience and infrastructure 0.33 0.33 0.33 1.00 0.17 0.60
Satisfaction of social needs 1.75 0.67 1.49 5.88 1.00 3.00
Discounts 1.00 3.00 7.69 1.67 0.33 1.00

PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 5 NO. 6 2015

 Figure 1 An illustration of HOQ
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Figure 2 HOQ depicting correlations

VOL. 5 NO. 6 2015 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5


Downloaded by Telkom University, Teaching Note Telkom At 01:26 03 January 2019 (PT)
Keywords:
Quality function deployment,
Retail,
Analytic hierarchic process,
Design elements,
Organized retail stores
PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES
6. Problems
PPCA Analytics has now completed both phases of the survey, and all the data have been
passed on to a high performance team (HPT) consisting of consultants headed by
Mr Sinha. In front of the team lies an uphill task of getting everything together, formulating
a hypothesis and making recommendations based on which the client, Super Mart, can
make strategic business decisions. As the stakes are high, the team has to get the best out
of every bit of data; otherwise, it might end up hampering the prospects of the client.
After a brainstorming session, the team identified some problems that need to be
addressed. Starting with the basics, the first task is to find the relative order of factors which
influence the shopping intent of customers. This can help Super Mart in prioritizing its
offerings and making the optimal use of its resources. Not only this, such a list can also
enable the client to assess its performance and compare it with its competitors wherever
possible.
Next on the list is the priority order of customer requirements. In today’s cutthroat
competition, it may not make economic sense to do well on all the parameters. In fact,
companies have lately been focusing on excelling in only some of the major parameters
which can get them noticed and reap economic benefits for them. The team should be able
to answer several strategic questions at the end of the analysis.
What kind of perks can be included if Super Mart is to offset the commuting problems faced
by shoppers such as Mrs Sharma? To figure this out, a relative order is indispensable, so
that important factors can be compensated with others. Unless there is conclusive
information about the relative importance of customer requirements, it is difficult to take
cost-saving steps in this regard by vitalizing the focus on the most sought-after parameters.
Even if the HPT is successful in addressing the above issues satisfactorily, it is unlikely that
the team or the client Super Mart would be able to carve out a coherent strategy to fuel the
growth of the business. This is because it would be still unknown which design elements
complement each other. In other words, it is important to identify those elements which
superimpose on each other to produce an effect which is greater than their combination.
Only if such complementarity is achieved, can it be expected that Super Mart would be
able to increase its profitability over time. Consequently, a major part of problem solving
has to go into inculcating the VOC into the design of Super Mart. How should they go about
this?
Last, but far from least, it is important to identify the future trends in retailing in India so that
the client can remain relevant with changing times. In the event of not being able to gauge
this aspect, all other strategies could potentially be unsuccessful. Based on the current
economic outlook, what can be said about the adaptability or lifestyle of the next generation
of shoppers? What can we comment on about the current set of shoppers? What could be
the innovations that would be required to bridge the gap between the shoppers and the
retailer(s)? These are some of the challenges that Super Mart needs to tackle.
References
Akao, Y. (1990), Quality Function Deployment, Productivity Press, Cambridge, MA.
Deb, M. and Lomo-David, E. (2014), “Evaluation of retail service quality using analytic hierarchy
process”, International Journal of Retail and Distribution Management, Vol. 42 No. 6, pp. 521-541.
Deloitte (2013), Retail Sector: An HR Point of View, Deloitte.
Ghosh, P., Tripathi, V. and Kumar, A. (2010), “Customer expectations of store attributes”, Journal of
Retail and Leisure Property, Vol. 9 No. 1, pp. 75-87.
Goswami, P. and Mishra, M.S. (2009), “Would Indian consumers move from kirana stores to organized
retailers when shopping for groceries?”, Asia Pacific Journal of Marketing and Logistics, Vol. 21 No. 1,
pp. 127-143.
VOL. 5 NO. 6 2015
 Guido, G. (2006), “Shopping motives, big five factors, and the hedonic/utilitarian shopping value: an
integration and factorial study”, Innovative Marketing, Vol. 2 No. 2, pp. 57-67.

Hauser, J.R. and Clausing, D. (1988), “The house of quality”, Harvard Business Review, pp. 389-413.

Jhamb, D. and Kiran, R. (2011), “Organized retail in India – drivers facilitator and SWOT analysis”,
Asian Journal of Management Research, Vol. 2 No. 1, ISSN 2229-3795.

Kapoor, P. and Saraiya, A., Food Retailing: Backbone of Organized Retail Formats, Technopak.

Khare, A. (2011), “Mall shopping behaviour of Indian small town consumers”, Journal of Retailing and
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Lakha, S. (2005), “The state globalisation and Indian middle-class identity”, in Pinches, M. (Ed.),
Culture and Privilege in Capitalist Asia, Routledge.

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Mizuno, S. and Akao, Y. (1993), QFD: The Customer-Driven Approach to Quality Planning &
Deployment, Asian Productivity Organization, Tokyo.

Mukherjee, A., Satija, D., Goyal, T.M., Mantrala, Murali, K. and Zou, S. (2012), “Are Indian consumers
brand conscious? Insights for global retailers”, Asia Pacific Journal of Marketing and Logistics, Vol. 24
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No. 3, pp. 482-499.

Pradhan, D. and Mangaraj, B.K. (2008), Reliance Fresh Stores in Food Retailing, London Business
School, London.

Prahalad, C.K. (2005), The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits,
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Sheela, A.M. (2010), “Impact of the growth of organised food retailing and its impact on traditional
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Ubeja, S.K. and Bedia, D.D. (2012), “Customer satisfaction in shopping malls: an empirical study”,
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Further reading
Ritchie, R. and Sridharan, S. (2007), “Marketing in subsistence markets: innovation through
decentralization and externalization”, in Rosa, J. and Viswanathan, M. (Eds), Product and Market
Development for Subsistence Marketplaces: Consumption and Entrepreneurship Beyond Literacy and
Resource Barriers, Elsevier.

About the authors

Gyan Prakash is Integrated Master’s student at the Department of Chemistry, Indian
Institute of Technology Kharagpur, West Bengal, India.

Sangeeta Sahney is Associate Professor at the Vinod Gupta School of Management, Indian
Institute of Technology, Kharagpur, West Bengal, India. Her areas of specialization are
quality management, marketing management and organizational behavior. Sangeeta
Sahney is the corresponding author and can be contacted: sahney@vgsom.iitkgp.ernet.in
Abhinav Vohra is Alumnus of Vinod Gupta School of Management, Indian Institute of
Technology Kharagpur, West Bengal, India. He is currently working at Vodafone India Ltd.
as Assistant Manager – Sales and Marketing. His areas of specialization are marketing
strategy, brand communication, integrated marketing and channel sales management.

VOL. 5 NO. 6 2015 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7