Impact of branded stores on kiranas | Retail | Survey Methodology

BUSINESS RESEARCH METHODOLOGY IMPACT OF BRANDED RETAIL CHAINS ON SMALL RETAIL SHOPS FINAL REPORT CHIRANJITH BASU (09BSHYD0234

) – 39 HARSIMRAN (09BSHYD0313) - 61 ISHWARYA.B (09BSHYD0326) – 59 ROHITH (09BSHYD0539) – 60 SNEHA MEGHANI (09BSHYD0830) - 71 GROUP 8

Submitted to Prof. Sashikala BRM faculty

IBS, HYDERABAD 11, January, 2010

I.N.D.E.X

INTRODUCTION………………………………………………………………………………. 1 LITERATURE REVIEW…………………………………………………………………………7 a) Conceptual Framework…………………………………………………………….9 b) Attributes identified in the literature……………………………………….14 c) Store Image and Consumer Shopping Habits: Indian Context…..17 d) Traditional Retailers Perceptions About Organized Retail……….19 EXECUTIVE SUMMARY…………………………………………………………………… 22 PROBLEM DISCOVERY…………………………………………………………………… 24 METHODOLOGY…………………………………………………………………………… 26 a) Perceived importance of store attributes………………………………27 b) Exploratory research…………………………………………………………….28 c) Experience survey………………………………………………………………….29 i) Diagnosing a situation…………………………………………29 ii) Depth Review……………………………………………………….30 d) Secondary Data Analysis………………………………………………………32 i) Qualitative Fact Finding……………………………………...32 ii) Problem Definition……………………………………………..34 iii) Questionnaire Formation…………………………………….35 iv) Questionnaire…………………………………………………..…36 SAMPLING…………………………………………………………………………………..… 43 a) Sample planning…………………………………………………………………43 b) Sampling Generation……………………………………………………..…..44 c) Scales………………………………………………………………………………….4 6 d) Survery Method………………………………………………………………….47 SPSS SCREEN SHOTS

a) Factor Analysis…………………………………………………………………… 49 b) Regression….. ……………………………………………………………………..53 ANALYSIS OF THE CONSUMER CHOICE OF FORMAT………………………..55 CONCLUSION…………………………………………………………………………………. 59 REFERENCES………………………………………………………………………………… …60

INTRODUCTION:

As economic figures suggest that consumers are slowing returning to the high street and big flagship stores such as M& S report an increase in sales, is the high street back in business?

The world of retail has the customary high and lows of a theme park roller coaster and as one big high street name makes an attempt at a comeback another sinks into despair and is deserted by its previously loyal following. Marks and Spencer’s seems to have made inroads on its rather disastrous past couple of years but in a high street saturated with stores, consumers are presented with an increasing amount of choice and competition, we wanted to discover how retail behavior changed in 2005 and the implications and consumer trends for 2006.

Consumers, who are as news aware as marketers, were conscious of the much-reported down turn in consumer spending. News shows and newspapers were not shy in telling us about the slump in high street spending and the drop in profits at major retailers across Britain. And it did not go unnoticed, either through personal experience or the media, that Britain is a nation in a growing amount of debt, factors that have unarguably shaped retail spending in 2005. While the boom might not be back, there is increase in consumer spending this quarter. Why is this and how are consumers behaving in the light of increased technological usage and more sophisticated in store media and trendy environments?

The shift from one designated retail location, to the popularisation of out of town retail centres and the move by supermarkets into non- food markets has significantly altered our ideas of retail experiences. Time poor young professionals and those working traditional working hours are able to purchase many items at the supermarket rather than visiting the high street at weekends. The internet has also led to a collapse in static shopping hours and predictable times for certain sales.

Consumers wants are no longer restricted by opening hours or store location and as such we are becoming much more fussy about where we spend our money, making marketing increasing difficult as consumer spending patterns become more erratic and are less dependent on what’s on offer and instead

becoming increasingly customer led. The range and number of sales of random products on Ebay is testament to this. So while marketers might seem to know what consumers want, it seems that want we want needs no marketing at all. What consumers want is, in large numbers, items that just aren’t available on the high street at bargain prices.

Ebay offers consumers the convenience to browse and compare a large number of products from the comfort of their own homes and the ability to determine or influence the selling price themselves, an experience that they do not have on the high street and one which perhaps explains the popularity of going to markets for the over 50s we interviewed as part of our research. So taking part and feeling like they have some sway in the purchasing process is one of the key elements we picked up on in our study and something that is clearly lacking in the monotonous retail experiences we are now presented with on the high street. Online shopping of course offers considerable savings, which has played a big part in its success and price deflation and the exponential growth of discount stores are other factors that have shaped retail spending and behaviour in 2005.

Though we may have become wealthier, we have also become more watchful of the purse strings as the ability to shop around for a bargain becomes easier. Price runner and 99p stores offer an avenue for acquiring

goods at the best value and brand loyalty has been eroded by the saturation of similar goods for less money. Why pay more indeed. Purchasing an item for considerably less than someone else became a new form of pulling social rank, inverting the traditional ‘Keeping up with the Jones’ spending agenda; Primark is enjoying its heyday, as consumers rush to snap up the latest fashion bargains for next to nothing.

Brands themselves are becoming less important and more diluted by the international competition and the increased volume of competition meaning mediocre brands are finding it increasing difficult to stay afloat. We would rather buy on brand at a cheaper price than a half decent branded version that costs more.

In order to compete with financial savings stores have turned to making their in store environment an superior experience, with interiors that are more exciting and inviting with the increased use of in-store media and technology. Deploying the latest gadgetry has been successful in luring back customers, especially when it echoes internet capabilities. Consumers told us that in store entertainment and machines no only makes a shop seem more trendy, it can make they stay longer too. This is because they can act as a source of distraction for bored boyfriends and partners and also because they allow consumers to view more of the stores products without having to

trawl the store. Product finders are popular because they ease the customer experience.

In store media must never impose on store design though and layout is the single biggest determining factor after price for high street store preferences. Consumers want bright open spaces that are easy to navigate and have products that are well-presented, especially older consumers that find over stocked stores particularly annoying. Consumers are prepared to sacrifice space and order, but only for significant reductions and value. Improving in store environment seems essential for continual success and our respondents demand air conditioning, better seating and displays and more access to refreshments, suggesting an attraction towards stores that provide food and drink dispensing.

Staffing is also an area that can make or break consumers’ retail experiences. Obtaining the right balance between being overbearing and non-existent staff is difficult but vital to creating a good store image and something that consumers believe is still not being got right. Personal service and not being held in a queue is something that we have gotten used to on the internet. Self-service options, which are becoming standard in many of the major supermarkets, go somewhere towards achieving this.

Further initiatives for improvement suggested by our responses however, hint that more interactive devices would be welcomed, including machines that display information on stock in clothes and electrical shops. These again point towards shopping experience that is almost completely dictated and carried out by the customers themselves, not the staff.

Consumers with increasing amounts of disposable income are the over 50s and tweens and we investigated their spending habits. The over 50s are family orientated and much of their money is spent on family and friends while the tweens spend their money on ensuring and impressing friends. And while the two demographics have very different attitudes towards money, brand awareness and desirability can be tracked in these age groups. We discovered that from the age of eight strong brand associations have been formed that can last into adulthood. Many of the over 50s we interviewed admitted that the brands they still buy today are a hangover from their childhood, the brands they were brought up on. Brands can be trusted friends or representations of emotional stages and family ties.

Top stores for over 50s are Marks & Spencers, John Lewis and Next but catalogue shopping is still a popular option of acquiring goods and as afore mentioned shopping at markets or car boots sales are still a big part of this demographics shopping experience, suggesting that value for money and

involvement in the sales process are requirement that are missing from high street shopping.

Our research showed that today’s savvy consumers demand increasingly creative and more importantly interactive strategies, to entice them into stores. Discovering what makes consumers tick and buy from certain stores can perhaps be achieved by returning to more traditional retail methods that allow the consumer to participate or interactive with the seller on a more personal level or implement new technology that streamlines the purchasing process as smooth and painless as possible.

LITERATURE REVIEW:
The Indian market has seen vast changes in political, economical and social environment, which has a great impact on consumption. With the Indian as well as international corporate entering into the Indian retail scenario the market has been divided between the traditional and the organized sector. The Indian retail scenario is presently facing the similar situations as the mom and pop stores in the developing nations faced at the emergence big box retailers. There are various issues that need to be addressed, like what would be future patterns of consumption, which formats of retail would be preferred by consumers and will the rise of organized retail affect the traditional retailers.

This research was developed to overcome this gap. The first part of the paper deals with a historical analysis of the Indian retailing structure followed by the review of literature on store image reviewed and finally the last part deals with the results of empirical studies in Indian metros is discussed.

This study contributes to the understanding that consumers and retailers in most cases have different perceptions in relation to store image and

shopping habits, justifying the need for consumer marketing research, which is important in helping retailers, implement in a real marketing orientation.

The paper examines the choice of format the consumer has when he or she decides to buy a particular product. The paper also describes the development of organized retail in the future, focusing on aspects with potential effect on purchasing behavior among the consumers. The focus is on consumer expectations. The questions were formulated to capture the overall behavior of the consumers and with the help of the survey questionnaire the analyses was done.

An attempt has been made to explore the way organized retail has dramatically changed not only the Indian traditional retailing structure but also the consumption behavior. To understand the impact and choice of retail format by the consumers a questionnaire was used, and the results show that, for consumers, the shopping mall or variant of organized retail format is the preferred type of retail store, due to convenience and variety.

Three questions were formulated in order to capture the overall purpose or objective of this section of the research:

1. What are the most favored retail attributes by consumers and how will they change in future? 2. How are the conventional and organized retailers perceived? 3. What external forces influence the choice of consumers and how can these forces be accounted for in future?

A) Conceptual Framework:
This research enquiry begins with a description of a conceptual framework of purchasing decision behavior. The framework captures purchasing behavior in general and was used as a guideline in the research and specific aspects of the framework were emphasized.

Product or service requirements refer to the buying motives and their associated purchase criteria. Retailer accessibility is the evoked set of product/supplier options available to the consumer to satisfy his product requirements. The model indicates that the competitive structure of the retail sector, the corporate image of the retailer and marketing activities influence the retailer accessibility.

Based on the consumers’ requirements and product/retailer accessibility, competing offers are evaluated by the consumer. We found that most consumers buy many products, and they operate in a pressured work environment with little time available to evaluate, in formal way, detailed and subtle criteria. They therefore argued that buyers use only a subset of product requirements (i.e., evaluative criteria) to decide between different products and retailers when making actual purchasing decision.

The framework, briefly described above provided some guidance in framing this research and making the questionnaire to study the purchasing behavior of Indian buyers while deciding the format to chose to shop from.

As the economy and society have changed, so retailers have responded and shopping as an activity has altered enormously. Retailing is one of the most dynamic and rapidly changing sectors of Indian industry bearing little comparison with the business that operated 50 years ago. Multiple retail companies now dominate the sector, to the threat and decline of small independent business. These independent stores face increased pressure from the multiple retailers, superstores, small store format (such as high street stores), petrol forecourts and many are being squeezed out of

existence altogether. Even the wholesale symbol groups have been developing their own store portfolio. Independents who “enjoyed” over 80 percent of the market share till early 90’s have seen this market share halve by 1995 to just over 40%.

The decline in the number of small shops has different implications upon its existing customers depending upon locations and alternative options to shop. The closure of a local neighborhood shop with a superstore nearby would affect the residents of a local neighborhood differently compared to the closure of the only shop in a small locality without a superstore nearby. Various arguments have been made in support to the only shop in a locality, arguing that they play an important vital role in the community and work as a support network of the locality. However “People may have warm feelings towards the ideal of a small shop, but unless that warm feeling converts to hard cash, we’re all going to be in the nostalgia business”.

If conventional retailers are to survive, it will be vitally important to understand what the residents in a particular community want from their retailers. Only those stores with a clear understanding of their customers wants and the changes that are occurring within the market place can hope to survive by identifying and then satisfying some of those needs more effectively than their competitors. Independent retailers have increasingly

been under threat with the growth of major multiple retailers in the organized retail scene, but independent small shops operating in local community locations do serve a function whether it be a social or a community one, or providing a vital service to certain groups of consumers. This might be through the provision of their total shopping requirements or via top-up or emergency products. Although independent small conventional shops comprise the majority of all retail businesses in India, and have always provided a social as well as economic function to the communities they serve, their share of retail sales has been eroding in favor of the major organized retail stores since the mid 1990’s.

B) Main Attributes Identified in the Literature:

The concept of store image, considered as the way consumers see the store in their minds, based on tangible and intangible attributes, deserved a great deal of academic and empirical attention, during the last four decades. The importance of studying the image is based on the assumption that the store possessing the most congruent attributes with the image desired by consumer will have better chance of being selected and patronized. Therefore, the store image can be used as a “marketing tool” (Engel et al., 1995), or as a “competition tool” providing useful indications to managers about the most and the least appellative attributes to consumers, and therefore, the insights for the marketing mix conception.

In spite of the importance and the long history of academic research into store image the relation between image/attitude and store patronage/choice/preference is complex and polemic. In fact, even though

the executives relate attitude and patronage, there are few studies that support that relationship (Monroe and Guiltinan, 1975). The concept of relative attitude reinforces the complexity of that relationship (Dick and Basu, 1994). The authors conceptualize consumer loyalty as the relationship between the relative attitude towards an entity (brand/service/store/vendor) and patronage behavior. Two dimensions, the degree of attitudinal strength (weak or strong) and the degree of attitudinal differentiation (existent or not) seem to underlie an individual’s relative attitude towards an entity. Therefore, a weak but positively differentiated attitude may be more likely to lead to loyalty than a very positive but undifferentiated one; however, it is also important to consider the influence of normative and situational factors.

Besides being relative, the store patronage behavior is also dynamic, and that is more explicit in buying situations of involvement, risk, evaluation of alternatives and information search (Monroe and Guiltinan, 1975, Darden and Dorsch,1999). This dynamism is crucial in order to understand the changes in consumer behavior.

The literature refers to a great diversity of methodologies, to varying temporal and spatial contexts, and to different store types, which make both generalizations and typology construction difficult. Contradicting Martineau’s (1958) emotional and affective perspective of store patronage, empirical evidences show a number of functional and objective attributes as the most

important, such as price (Doyle and Fenwick, 1974-1975;Bearden, 1977; Arnold et al., 1983; Hortman et al., 1990; Finn and Louviere, 1996); product quality (Doyle and Fenwick, 1974-1975; Bearden, 1977; Hortman et al., 1990); assortment (Stephenson, 1969; Doyle and Fenwick, 1974-1975; Schiffman et al., 1977; Bearden, 1977; Finn and Louviere, 1996) and location (Stephenson, 1969; Schiffman et al., 1977; Arnold et al., 1983; Hortman et al., 1990).

Concerning intangible and emotional attributes, the most indicated are the atmosphere and store characteristics (Martineau, 1958; Stephenson, 1969); sales personnel (Martineau, 1958; Stephenson, 1969; Schiffman et al., 1977) and advertising (Martineau, 1958; Stephenson, 1969).

C) Store Image and Consumer Shopping Habits: Indian Context:

In India, some empirical studies provide important information about consumer behavior and its responses to the development of organized retail. Economical and social changes are major contributors for a growing fragmentation of consumers into multiple segments with different values and buying priorities.

Consumers have become more pragmatic, educated and demanding, learning how to manage money and time more efficiently. The focus on low prices was gradually replaced by a value for money perspective. The study developed by ETIG (Economic Times Intelligence Group, 2002) confirms these tendencies. Concerning food, the most important attribute mentioned was quality, followed by price. Indian consumer has different reasons for preferring different store.

The formats, either modern or traditional; Sen (2000) confirms this in the study undertaken in Indian context. He confirms that in the case of hypermarkets, the main motives for preferences, in decreasing order are low prices, the possibility of buying everything in the same place and the general appearance of the store. Several investigations emphasize the possible coexistence of different store formats (Chandrasekhar, 2001) and others point out the relationship between the type of store and the type of products (Sen, 2000; Bhatnagar, 2002). These studies show that, while specialized and traditional stores are preferred for fresh products, hypermarkets are preferred for shopping in

general, and also for frozen food, groceries and beverages. The purchase of perishables in hypermarkets is reduced.

D) Traditional Retailers Perceptions About Organized Retail:
As already mentioned, organized retail has deeply changed the Indian commercial structure. However, it is not exclusively responsible, as other changes (economical, social and cultural ones) have occurred simultaneously. Concerning the more direct effects of organized retail on different types of commerce, it is possible to verify that the major impact is felt on traditional retail and, in particular, on the food sector. The impact of organized retail is also significant on other types of retail, namely toys, stationery goods and household appliances; moreover, it is probable that competition gets more intense in other sectors, such as clothing and furniture.

A French study shows that the impact of organized malls and supermarkets is especially strong over non-specialized stores; stores that use normalized sales methods; generalist stores; very small stores operating on their survival limits; stores located near hypermarkets and with no alternative goods. In India, a study (Radhakrishnan, 2003) verified that, in the food sector, the most affected stores are precisely the smaller stores (small areas, few employees and low sales volume) and the isolated stores (stores that do not develop partnerships with other retailers).

Concerning retailer's perceptions about problems in commerce, studies developed in India show that the most mentioned motives for crisis are, in the first place, related to political decisions. Retailers agree that their own competitive attitude and behavior are among the causes for problems associated with commerce. However, in their opinion, these are not the major causes. In terms of the most important competitive factors of organized retailers, traditional retailers mention lower prices, schedules, products assortment and better adaptation to consumer shopping habits. Concerning the way they analyze themselves, they identify the attendance and the close relation with customers as their main advantages; in terms of their main weakness, they mention the small dimension.

Hypermarkets is considerably superior, going from 8000 to 120,000 square meter; one of them is Spencer Plaza amongst the largest in the country. The review of literature identified a number of studies focusing on buying behavior of Indian consumers from organized retailers. The reviewed studies may uncover important dimensions that purchasers use in their purchasing process and will be used in our study of purchasing criteria and format selection of consumers.

Shopping in the organized retail outlet is generally done on a regular basis (around 40% buy once or twice per week), which goes against the decreasing tendency and the systemization of visiting malls reported by Retail Biz (Sep 2003). This might be related to the fact that organized retail stores in Indian cities are not far from large resident areas. In terms of period of the day, the preferred ones are the morning and the afternoon, that is, the hours chosen by the consumers to buy in malls and supermarkets match the schedules practiced by the majority of traditional retail stores. This result may be justified by the fact that a considerable part of the sample is composed of housewives and retired people. Regarding goods bought in the different kinds of stores, the results show that detergents, household and personal cleaning products, groceries, beverages and dairy products are, clearly goods that consumers buy in supermarkets (66, 66, 61, 63 and 61%, respectively), in detriment of traditional retail stores (21, 19, 23, 21 and 22% respectively). Besides these goods, fruit, frozen foods, toys, plants/gardening and tools are also purchased with greater regularity in malls and supermarkets than from traditional retailers, in spite of the small differences. The retailers' and consumers' attitudes match in terms of considering that hypermarkets offer more advantages than traditional retail regarding prices, promotions, assortment, novelties and schedules.

EXECUTIVE SUMMARY:
In the current world of globalization a constant adaptation and reinvention of marketing strategies is needed to satisfy the local customers in the global markets. The retail sector of India is currently witnessing tremendous growth, but there has been a growing concern for the future of the traditional small scale retail shops because of this all-pervading presence of branded retail stores. In a country like India, there are huge differences across the consumers in terms of their demographic orientation like culture, economic condition, purchase attitude and so on. In this project we intend to find out

the impact of the branded retail chains on small traditional retail shops. FICCI has projected that the Retail Industry in India is likely to cross Rs. 10,000 billion by 2010 and the share of the organized sector in it is likely to exceed 20% which presently is at around 3% mark.

Branded Retail Chains: Chain stores are retail outlets that share a brand and central management, and usually have standardized business methods and practices. These characteristics also apply to chain restaurants and some service-oriented chain businesses. The displacement of independent businesses by chains has generated controversy in many countries, and has sparked increased collaboration among independent businesses and communities to prevent chain proliferation. In India the retail chain sector consists of roughly 14 Lifestyle stores, 6 Home Centre stores and 1 babyshopstore across Chennai, Hyderabad, Bangalore, Gurgaon, Delhi, Noida, Jaipur,Kolkata,Mumbai and other tier-2 cities. The Retail Industry in India has come a long way from the traditional unorganized retail sector consisting of petty shop-owners selling a wide variety of articles both individually and collectively to the modern organized retail sector consisting of “Retail Chains” and other departmental stores providing everything under a single roof.

 Mall traditional retail stores: this is the smallest unit of retail

spectrum. Usually owned by family, retail shops are run from residential or commercial streets or from shopping centers. Such a retailer buys goods or products in moderate quantity from local stockist, manufacturers or importers, either directly or through a wholesaler, and then sells individual items in small quantities to consumers who are general public or end user customers.

PROBLEM DISCOVERY:
The Indian retailing industry is poised to grow from USD 322 billion in 200607 to USD 590 billion in 2011-12(Source: According to CII(Confederation of Indian Industry) National Committee on retail). It is set to enter a new growth trajectory owing to rising household consumption and a host of factors. Indian organized retail market has grown by 10% on an average for the past

5 years. The fact can be traced from the below Global Retail Development Index.

From the above facts, it is clear that the unorganized retail sector in India is going to face hard times in the coming years due to the advent of more number of corporate retail giants. Hence there exists Uncertainty about the future of the Indian Kiranawala. Our project focuses on the impact how the local retailer faces in terms of sales, his attitude towards his future corporate retail competitors(Does he ready to face competition?).

METHODOLOGY:
Before explaining the methodology, two issues need to be discussed: the commercial structure of India and the concepts of traditional retail and organized retail to avoid possible ambiguities in terms of terminology.

The Commercial structure of India has faced deep changes over the last few years, which is greatly related to the development of organized retail. Currently India boasts to contain 12 million retail outlets together in conventional and organized formats with major aggregation of organized formats in the cities like Delhi, Chennai, Kolkata, Hyderabad, Ahmedabad, Bhubaneswar and Mumbai. Simultaneously, these cities have a large number of grocery stores, a typical format of traditional food retail.

The concept of conventional retail is used as encompassing small-sized commerce, i.e., groceries, minimarkets, pure food stores, specialized food and non-food stores and bazaars. Regarding specialized stores, clothing stores are considered as specialized ones. As for the concept of organized retail, there is some confusion, Levy and Weitz define organized retail as a multi-format retail stores offering low prices, and combines a discount store and super store, while A.C. Nielsen, gives a different definition, considering the organized retail as a commercial retailing establishment with a sales surface superior to 2500 square meter, explored in free-service system and commercializing a great variety of products. As data provided by Nielsen are widely used in India and in the rest of the world, it was decided to adopt them.

A) Perceived Importance of the Store Attributes:

The respondents were asked to rank the attributes listed in the section two of the questionnaire. There were no restrictions on the ranking system; the respondent was allowed to give any rank from 1 to 7 for a particular attribute. There were 23 store attributes listed in the questionnaire, these attributes were studied in order to gauge the importance of organized sector over the unorganized sector. All the attributes listed here are specific to the organized sector and the assumption here is that if the consumers attach much importance to these attributes then their preferred format is the organized retail stores. In case the respondent felt that a particular attribute was not of any importance, its presence or absence, did not make any difference then they were asked to put a zero against it, the blanks were also considered as zero importance and these cases were taken as unanswered response.

B) Exploratory Research:
To clarify the above Uncertainty, we conducted exploratory research to gain better understanding of the dimensions of the problem. The purpose of exploratory research is intertwined with the need for a clear and precise statement of the recognized problem. There are three interrelated purposes for exploratory research:  Diagnosing a situation.  Screening alternatives.  Discovering new ideas. The methods we used for exploratory research are Secondary Data Analysis, Experience Surveys, Case Study.

C) Experience Survey:
I) Diagnosing the Situation: To get the broader scope of the problem, we selected a few set of people who are knowledgeable and working in the retail sector. As a part of the study, we discussed the questions with few constraints to those set of people. One of them was an MBA pass out who settled in his ancestral retail business from the past 5 years. He was explaining the hindrances he is facing because of the advent of the”More (Aditya Birla Group)” to the city. He Pointed out some reasons such as Target group constraints, Location Constraints, increase in the disposal incomes with the people(especially 35% hike in salaries with central government employees). He said that, because of the salary hike with the central government and state government employees, those people prefer Malls to Mom and pop shops. He also shared that his revenue mainly comes from those employees. He proudly said that before the advent of The More and some hypermarkets in the city, even the district collector used to come to his shop to purchase the items. He also expressed his idea that, he is ready to tie-up with the Corporate giants such as Wal Mart and Reliance Fresh as a franchisee to run the business, if he gets the chance.

II) Depth Interview: We had an depth interview with a women who is running retail business in her locality from the past 20 years. She shared lots of intricacies involved in the retail sector. We started our interview with a basic question:

Do you feel the corporate giants of retail sector such as Reliance Fresh and More as your competitors? She said that she is not feeling them as her competitors. She is not scared of them even if a Big Bazar or any hyper market comes and start adjacent to her shop. She had given the fact that during the recession times its not Big malls resisted to global recession, small pop and shops resisted to the recession. Their sales were not at all effected by global recession stating the fact from the regional newspaper she read. To get more clarity to the situation, I asked a probing question which gave us clear understanding of the problem.

Can you tell more about the above facts by giving an example? She has given a nice example how they take the advantage of those malls at the time of inflation/recession. At times, when the price of the sugar in the

market rises, instead of buying the sugar from the local wholesaler, they buy from the big stores as these people have their own suppliers and get large discounts on bulk purchases. Hence, we could sell the same product with less price during the inflation times, taking the advantage of those stores. Can you tell me the advantages you get over the big stores? She smiled at me and gave a good example. She told that the countries like India faces many Strikes(or bandhs) apart from various conventional Holidays(such as holidays, festivals etc.,) because of diversified nature of the country. During those times, we can take the advantage of opening the shop for a period of 3-4 hours in the evening for the emergency needs of the customer. Hence, we can make sales during those times also. The facts we could find out from Experience surveys is that any average retailer can earn a minimum of Rs.10,000 per month on an average in a year in any part of our country even though he faces stiff competition from his peer local shops.(N.B: this fact is not a conclusive figure, it is based on our estimation of our subjects). So far our exploratory research provided only qualitative evidence, which we are trying to get conclusive evidence based on our subjective research. To get more insight about the qualitative evidence, we have done secondary data analysis. We have reviewed several published articles and books discussing about this topic.

D) Secondary Data Analysis:
I) Qualitative Fact-Finding: One article we found on the Bharti Walmart entering into India. Walmart opened its first wholesaler shop in Amritsar.

An inside view of the Walmart_bharti store on Amritsar-Jalandhar highway

Ironically, it is the local kirana store-owners who have welcomed the international ‘cash-and-carry' chain. Offering low-priced wholesale products,

‘Best Price Modern Wholesale' Bharti Wal-Mart's store has enabled kirana store-owners increase their profit margins significantly. the mega store has quickly begun to cater to more than 35,000 kirana store owners in Amritsar alone. According to the company, the store has seen an average footfall of 75,000 kirana owners a month.

Shop-owners in the Ranjit Avenue area of Amritsar, some 10 km from the Bharti Wal-Mart store, said, “Our profit keeps increasing if we buy products in bulk. The prices offered at the store enable us to sell it at lower prices than our competition and still make a profit. For example, after buying products from Bharti Wal-Mart for about Rs 10,000, we can easily make a profit of about Rs 3,000 and still offer better prices to the customer.” A Bharti WalMart spokesperson pointed out that the chain caters to the local mom and pop stores as well as electronics retailers. “In fact, some of our electronics items offer retailers amazing profit margins,” he said. The local people also seem inclined towards the modern wholesale store concept. “Kirana stores which get their supplies from Wal-Mart offer better prices,” said by Aman Preet singh a resident from amritsar. The main reason for the support of the local kiranas to Wal-Mart is, it offers massive range of products under one roof spread over close to 50,000 sq. ft. The store has 6,000 SKUs(Stock Keeping Units) ranging from raw food to consumer electronics. Hence, from the story of Wal-mart, it is being proved that Local

Mom-and-Pop shops support Big Stores as they are gaining edge over the prices from the bulk discounts. But in the nascent stages people are ready to accept them. If the corporate giants start their full-fledged operations , does a retailer ready to accept him? Hence our paper focused on finding the changes in the behavioral component of the retailer(especially in Rural India) to get conclusive Evidence.

II) Problem definition:
Our research objective is to find the how the corporate retailer would onslaught traditional retailer and how the behavioral component of the retailer effects if he finds him as a near competitor. To find out the above objectives, We adopted a survey method. In the survey method we are using questionnaire method.

III) Questionnaire Design:
Relevancy and accuracy are two important basic criteria a questionnaire must meet. As our subjects are retailers of India, many of them were not well educated, we used simple and Conversational language. In phrasing the Questions we were as much specific as possible avoiding ambiguity. Even though some of the retailers were well educated, they were not comfortable with the words like Loyal, Corporate retailers. So we explained them about the questions when we were taking survey to avoid ambiguity in responses. To eliminate the major source of bias in question wording we tried to avoid leading and loading questions which suggest or imply certain answers.

IV) Questionnaire for Retailer

Name: Age: Year of Establishment of shop: Place:

1. Are you satisfied with the present system of handling your business? a) Strongly agree b) Agree c) Uncertain d) Disagree e) Strongly Disagree

2. Who are your major customers? a) Local people staying around the shop b) Housewives c) People from the other localities if their nearby Kirana shops are closed d) Students e) if others, specify ---------

3. How many customers pay a visit to your shop every day? a) <100 b) 100-199 c) 200-299 d) 300-400 e) >400

4. How satisfied are you with your present customer base and with your current operations and profits? a) Very satisfied b) Somewhat satisfied c) Don’t know exactly d) Somewhat dissatisfied e) Very dissatisfied

5. Do you feel that your customers are loyal to your store? a) Strongly agree b) Agree c) Uncertain d) Disagree e) Strongly Disagree

6. How many hours per day you operate your shop? a) 5 – 7 b) 8-10 c) 11-12 d)>12

7. Do you give your current customers goods on credit basis? a) Yes b) No c) Sometimes If yes/sometimes, Please specify any of the choices (i)Depends on the credit worthiness of the customers (ii)Depends on how frequently the customers visit the shop

8. Would you prefer to home deliver the goods to your customers’ house, if your customer calls you even for items worth small amounts? a) Frequently b) Occasionally c) Not at all d) All the time

9. Can you provide various products and make your shop a “one stop shop” destination for your customers? a) Strongly agree b) Agree c) Uncertain d) Disagree

e) Strongly Disagree

10. How often does your shop stay closed on Sundays and on other public holidays like the big players? a) Always b) Almost always c) Most of the times d) Part of the time e) Hardly ever

11. Will you give discounts on bulk purchases as the big stores are already selling below the prevailing market price? a) Strongly agree b) Agree c) Uncertain d) Disagree e) Strongly Disagree 12. do you think that the rise in Income levels of the people is a threat to your business? a) Strongly agree b) Agree

c) Uncertain d) Disagree
e) Strongly Disagree

13. Your customers opt for your shop because your shop opens earlier than the mall.

a) Strongly agree b) Agree c) Uncertain d) Disagree e) Strongly Disagree

14. Do you think that the big stores should not be allowed to take up Retail business as it’s a loss to your business? a) Strongly agree b) Agree c) Uncertain

d) Disagree e) Strongly Disagree 15. Do you maintain an appropriate level of all the goods especially those required by the customers at any time? a) All the time b) very often c) often d) Sometimes e) Hardly Ever

16. If I have to change the way your business operates, I would go for the change? a) Strongly agree b) Agree c) Uncertain d) Disagree e) Strongly Disagree

17. There has been an increasing threat to your business in the recent times due to the appearance of big retail houses. How are you taking it?

a) Very seriously b) Somewhat seriously c) Not so seriously d) Not at all seriously e) Don’t know

18. What is the average sales you generate per month?

A)below 20,000 B)20,000-50000 C)50000-1lac D)>1LAC

19. Did you made changes to your business from the year of establishment? A)yes B)No

20) If any changes, Please specify the major changes you made:

Note: The Research done is purely for Academic purpose. The Analysis of the research is not used for commercial Purposes.

The last open ended question is being asked for the reference of the research to get more insights about the business. It is not asked for the analysis purpose.

The Questionnaire also includes Questions about the Demographic information such as Name, Age, year of Establishment of the Shop and Place.

SAMPLING: A) Sampling Planning:
As our objective is to find Are the Mom and Pop shops in Rural India will face cutthroat competition from the Corporate retailers, we planned our samples to take from the secondary cities and towns. Since most of the traditional retailers are not well educated(we found that most of the traditional retailers are not comfortable with English), we preferred young retailers as our subjects though they lack experience. Rather than selecting subjects from

one place, we selected different respondents with different backgrounds from different places of Andhra Pradesh and some parts of Punjab.

B) Sampling Generation:
There are two sampling techniques: • • Probability Sampling Non-Probability Sampling

Here in our project, we used our judgment and also convenience to select the subjects. Hence we used Non-probability sampling technique. The subjects we selected are most of them from small towns and some secondary cities Of

Andhra Pradesh. The samples we selected are Local Kiranas, Small Retail Cloth Showrooms and Wholesalers too(Considering Walmart entering India in the wholesale sector). Types Of Non-probability sampling we used are: i) Convenience, Haphazard or Accidental Sampling: Members of the population are selected based on the ease of access. To sample friends, Co-workers, or shoppers at a single mall are all the examples of Convenience Sampling. Convenience sampling is conventionally used in exploratory research where the researcher is interested in getting an inexpensive approximation of the truth. As the name implies, the sample is selected because they are convenient. This nonprobability method is often used during preliminary research efforts to get a gross estimate of the results, without incurring the cost or time required to select a random sample. ii) Judgmental Or Purposive Sampling: A purposive sample is one which is selected by the researcher subjectively. The researcher attempts to obtain sample that appears to him/her to be representative of the population and will usually try to ensure that a range from one extreme to the other is included. This is usually and extension of convenience sampling. For example, a researcher may decide to draw the

entire sample from one "representative" city, even though the population includes all cities. When using this method, the researcher must be confident that the chosen sample is truly representative of the entire population. In the project we used both judgmental and convenience sampling to select a sample which represent the whole population. Most of the subjects we are selected are from nearby town and most of the samples are our friends who had experience and acquaintance with their own kiranas from their childhood. We also used our judgement when selecting the specified subjects. The subjects we selected also include Experienced retailers who has experience of around 15 years. This provided lot of insights and intricacies of the Retail Business in India. The advantages of Non-probabilty sampling are: • • Cheap Fast

C) SCALES:
The scales we are using in the project is Likert scale and simple attitude scale.

i) Likert Scale: The Likert scale is extremely popular and easy to administer for measuring the attitudes. It allows respondents to indicate how strongly they agree or disagree with carefully constructed statements that range from very positive to very negative toward an attitudinal object. It is Balanced Rating Scale which measures fixed alternative scale that has an equal number of positive and negative categories; a neutral or indifference point is at the center sacle. Most of the Questions in our Questionnaire are based on the Likert Scale. ii) Simple attitude Scale: We also used simple attitude scale which mainly used are Yes/No type Questions. In the Questionnaire, we asked some simple questions such as “Did you made changes to your business from the year of establishment?” are based on the simple attitude scale. This measures are the retailers we selected are customer-centric.

D) SURVERY METHOD:
The data in the Research comes from two ways.

 Personal Survey  Telephonic Survey i) Personal Survey:

Since our subjects are local retailers, instead of giving Questionnaire directly to them, we explained each question and options in local language Telugu to get the responses from them. This is because most of the retailers we selected are not well educated.

ii) Telephonic Survey:

Telephonic survey has been a mainstay of commercial survey research. The quality of data obtained by telephone is comparable to the personal data collection. When we were conducting a personal survey, we found reluctance from many local retailers. Even we found difficulty in explaining them about the Research. To overcome this problem, we switched from personal survey to Telephonic survey for most of the subjects in the sample. To conduct Telephonic survey, the subjects we selected are well educated, Experienced and young retailers. This survey helped us to get responses from distant places like Nizamabad, Warangal, Medak in Andhra Pradesh and even from some parts of Punjab. The advantages we found in the Telephonic survey during the Research are: • • • • Speed Cost Precise Information Respondents Cooperation.

SPSS SCREENSHOTS:

A) FACTOR ANALYSIS KMO Bartlett’s Test: KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test Approx. Chiof Sphericity Square df Sig.

.475 87.371 66 .040

Eventhough we got Kaiser-Meyer-Olkin Measure of Sampling Adequacy as . 475 which is approximated to 0.5. Hence we are going for factor analysis.

Our Rotated component matrix is: Rotated Component Matrix(a)

Component 1 2 3 4 q1 .027 -.248 .726 .138 q4 .112 .141 .829 -.102 q5 -.093 -.021 -.054 -.800 q9 .768 .454 .085 .020 q10 -.653 .078 -.408 .164 q11 -.108 .908 .037 .018 q12 .136 .478 -.450 -.380 q13 .732 -.100 -.340 -.020 q14 .562 -.141 -.066 .377 q15 .675 .161 .372 .267 q16 .364 .498 -.404 .199 q17 .060 .613 -.103 .642 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 9 iterations.

Component Transformation Matrix Compon ent 1 1 .800 2 -.302 3 -.517 4 .036 Extraction Method: 2 3 4 .500 -.009 .331 .506 -.806 -.056 .512 .481 .490 .482 .345 -.805 Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

Factors(1):(Factor loading values>0.6). Q9,q10,q15,q13,(q14) Factors(2):(Factor loading values>0.6). Q11,q17 Factors(3):(Factor loading values>0.6). Q11,Q4 Factors(4):(Factor loading values>0.6). Q5,q17.

B) REGRESSION: (1)Predictor Variable:Sales Output:
Variables Entered/Removed(a)
Variables Model Entered Variables Removed Method

1

Stepwise (Criteria: Probabilityof-F-toq7a . enter <= . 050, Probabilityof-F-toremove >= .100).

a Dependent Variable: q18

Model Summary

Change Statistics Adjuste Mod el 1 R .453(a) R Square .205 dR Square .168 Std. Error of the Estimate .726 R Square Change .205 F Change 5.428 df1 1 df2 21 Sig. F Change 0.30

a Predictors: (Constant), q7a

ANOVA(b)
Sum of Model 1 Regression Residual Total a Predictors: (Constant), q7a b Dependent Variable: q18 Squares 2.857 11.056 13.913 df 1 21 22 Mean Square 2.857 .526 F 5.428 Sig. .030(a)

ANALYSIS OF THE CONSUMER CHOICE OF FORMAT:

Preferred choice of shopping format for buying various products for Indian Consumer in percentages in most households (84.2%), women are mainly responsible for the shopping. The majority of respondents (50.4%) have a considerably good educational level (mainly with only 15 years of studies –– (40.7%) over 35 years old. Most respondents are married (80.23%), belonging to households of more than four elements (54.3%), with a family income in which several members contribute to the household income. Given

the fact that it was not possible to directly obtain any data about the income. Most part of the respondents (62.3%) frequently make their purchases in supermarkets and malls, although it was also found that there is a high percentage of consumers that buy in specialized food stores (78.3%), and groceries/minimarkets (33.1%). These results emphasize the tendency that there is the coexistence of several retailing formats. Malls and Supermarkets, in the same way, the kind of commercial space in which, clearly, most people enjoy purchasing (62.3%), which leads to the conclusion that buying in this type of store has, in a way, an element of pleasure in it.

On the other hand, most of the respondents prefer to buy goldsmith/jewellery (95%), books (84%), footwear (84%), clothing (82%), furniture/decoration (93%) and household appliances (78%) in traditional retail stores. Some perishable goods as meat, fish and vegetables are also purchased more from traditional retailers (60, 58 and 41%, respectively), than in supermarkets or malls (28, 26 and 35%, respectively). Nevertheless, the difference compared to supermarket, especially regarding vegetables, is small. The fact that the perishable goods are, bought from traditional

retailers more than they are from organized retailers is an evidence that emphasizes the results of other studies done by various research agencies.

However, this study shows that the purchase of some perishable goods (vegetables and mostly fruits) in hypermarkets is becoming considerable.

Another interesting result is that the consumers' responses suggest is their almost exclusive preference for traditional retail shops when buying high involvement goods (e.g. household appliances). On the contrary, the most purchased goods in malls and supermarkets are essentially convenience products and, consequently, of low involvement. As it is widely advocated in literature, the involvement and risk have strong implications in the buying behavior, so it is important for retailers to know how to influence these variables.

Concerning the motivations that lead people not to buy goods in traditional retail or only in traditional retail, the two main motives are: first, it is more practical to buy all the goods at the same time in hypermarkets/supermarkets and, second, the price in traditional retail shops

is higher. That is, convenience and price are factors that determine why consumers do not buy in traditional retail; and prefer one kind of store to the other.

These results suggest a consumer is more pragmatic in his choices, and more concerned with the management of his money and time. Even though the answers refer to motivations why people do not buy some given products in traditional retail, the results correspond to other studies, Sen (2000) which highlights low prices and the possibility of buying everything in the same place as main reasons for consumers to buy in hypermarkets, malls or supermarkets.

The traditional retail offers more advantages than hypermarkets in relation with the spent on shopping. Nonetheless, there is also a great difference between retailers and consumers, especially, at the level of perception of the quality of products, attendance, how easily the consumer can present complaints and how they will be attended, and payment terms, in both kinds of commerce.

Concerning these specific aspects, traditional retailers have a much more positive opinion about themselves than consumers have about them. These differences suggest a certain lack of realism by traditional retailers, which

can be detrimental for their future viability, and, as such, needs to be corrected.

However, the divergence in the perceptions does not imply that the consumers' opinion about traditional retail is negative. The essential matter is that, in spite of not having an unfavourable opinion towards traditional retail, the opinion towards organized retail is much more favorable, which may result in preferring hypermarkets or malls in detriment of traditional retail. As literature suggests, in order to understand the consumer behavior in terms of store choice, it is essential to understand his relative attitude also.

CONCLUSION:

The hypermarket/mall/supermarket is the preferred kind of store by consumers, even though the consumers buy in several establishments and not exclusively in the organized retail outlet, which indicates that there is no "single loyalty". While in organized outlets, consumers buy essentially convenience goods with low level of risk; in traditional retail, they buy essentially products of more involvement, which requires a more complex buying behavior. The results also show that consumers evoke price and convenience for not buying certain goods in traditional retail, which reveals an attempt to optimize their time and money.

REFERNCES:

o BUSSINESS RESEARCH METHODS BY WILLIAM G.ZIKMUND

o ESSENTIALS OF MARKET RESEARCH BY WILLIAM G.ZIKMUND

o STATISTICS FOR MANAGEMENT S.RUBIN

BY RICHARD I. LEVIN, DAVID

o

Would Kiranas in Urban India Survive the Modern Trade Onslaught Insight from Efficiency Perspective, A Research Paper by Paromita Goswami, Xavier Institute of Management Bhubaneswar, India

o

An Introspective Study of Local Diversities in Retail Purchase Behaviour to formulate Retail Strategy for the Global Players A research Paper by Mrs. Mahua Datta, Lecturer , Institute Of Business Management, Jadavpur University

o

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