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Impact of Organised Retail On Unorganised Retail Abstract
The revolution in Indian retail industry has brought many sweeping changes and also opened door for many Indian as well as foreign players. In Indian scenario there is always a constant clash between challenges and
opportunities but chances favors those companies that are trying to establish themselves. As every coin has two faces similarly it also has some pros and cons. In India about 96% of retail markets consist of unorganized retail players such as kirana stores. As a result of favorable demographic conditions such as changing life style of Indian consumers and government policies provide huge opportunities for Indian corporate houses as well as foreign players. If we compare today‟s scenario with earlier we found that at that time the price and the delivery mode is totally different .at present the markets and their processes are more flexible in all aspects. The new Snow-white market places have started to replace the traditional bazaar – kind of dwarfed tiny corner kirana shop. India has highest shop density in the world. It has more than 1.5crores retail shop thus providing 2ndhighest employment after agriculture. It employs 7% of total workforce and contributing more than 10% of India‟s GDP.But have we ever thought that what by the entry of big retailers what will be happened to those unorganized retail kirana stores which constitute 96% of it? It may not have an immediate effect but in long run it might affect the small kirana stores and thus many people would loose there job , many families could get affected thus in long run we should not ignore this issue . The main purpose of this report to study the impact of organized retail on the small kirana stores and to find:
How kirana stores can sustain themselves in long run? How they will cope in the competition from organized retail players? Are the steps taken by government enough for their safeguards?
This paper discusses the various challenges faced by both organized as well as kirana stores in Delhi NCR and how both can sustain in equilibrium without much affecting each others.
Retailing can be defined as the sale of goods or merchandise, from a fixed location such as a department store or kiosk, in small or individual lots for direct consumption by the consumer. Retailing is a well
recognized business function which compromises making available desired product in the desired quantity at the desired time. This creates a time, place and form utility for the consumer. The success of retailing is depend up on the efficient supply chain and assortment of merchandise mix. A well-developed supply chain reduces wastages and transaction cost thereby reducing the cost of inventories to be maintained by the producers and the traders. A reduction in the cost of inventory management leads to a reduction in the final price to the consumer. Retailing has been identified as a key source for promotion of textiles, processed foods, agricultural and horticultural products. Recently due to certain demographic and economic changes India retail sector has taken a new breathe. It has created a lot of opportunities for big corporate houses like Tatas , Reliance and Bharti etc as well as for many foreign players. As in present scenario Indian retail is in nascent stage therefore it is not much affecting the small kirana stores but in long run its affect can be ignore. Undoubtedly, revolution in retail is good for Indian consumers as well as government as it will increase the taxes i.e. income for government and consumer will have more choice. Broadly Indian retail sector can be classified into two segments:
Unorganized retailing is characterized by a distorted real-estate market, poor infrastructure and inefficient upstream processes, lack of modern technology, inadequate funding and absence of skilled manpower. Therefore, there is a need to promote organized retailing.
Organized Retailing can be defined as a form of retailing whereby customers can buy goods in a similar purchase environment across more than one physical location for verticals from food, grocery, apparel, consumer durables, jewellery, footwear, beauty care, home décor, and books to music.
In organized retailing a proper record is maintain by the government and retailers need to pay the tax to the government.
What is the threat for local organized stores?
India has highly fragmented retail industry. Today‟s scenario India, still have of the traditional formats & retailing .Today still local kirana shop, pan, bidi shop, hardware Store, weekly hatts,convenience stores & bazaars etc.It constitute about 96% of retail market .About 12 million outlets operating in country and only 5% of them being larger than 500 square feet in size. In India it is very important to understand what role it pays in lives of Indian citizens from social as well as economic prospective. Retailing is probably the primary form of
Disguised Unemployment In Our Country
As we have over crowded agriculture sector and stagnating manufacturing sector and the low wages and hard work in both sectors forced many Indians to jump in service sector. Here due to lack of opportunities it is almost become a natural decision for an individual to set up a small shop or store depending upon his financial condition .Thus retailer is born by circumstance not by choice. Ultimately it provides job of more than 6 crores people where as organized retail provides employment to roughly 7 lakhs peoples. So the policy makes should be careful about these 6 crores peoples, whose livelihood may get in danger in future.
Retail Industry Structure Global Scenario
Worldwide retail industry is one of the most attracting industry being controlled by a handful of powerful corporations based mainly in the U.S and Europe, namely, Wal-Mart, Tesco, Carrefour and Metro. Beside these their are many others big MNC retailers but they have saturated in their home countries only and are looking for penetrating emerging markets like India, China and Russia. As these players are penetrating in these countries thus providing a world class shopping experience to the consumers. Today consumers become more demanding want world class products as well as not only buying but an experiential shopping. Thus shift in consumer behavior in these emerging markets attracting world biggest players. Also the saturation in US retail market and other existing markets in developed countries forcing them to move in new market like India and china.
Retailing in United States
Retail Sector is the second largest industry in U.S. both in number of establishments and number of employees. The U. S. retail industry generates $3.8 trillion in retail sales annually ($4.2 trillion if food service sales are included), that is approximately $11,993 per capita. Wal-Mart is the world's largest retailer and the world's largest company with more than $312 billion (USD) in sales annually. Wal-Mart employs 1.3 million associates in the United States and more than 400,000 internationally. The second largest retailer in the world is France's Carrefour. Retail Trends in other Countries
China had initially restricted FDI in retailing to only joint ventures at 49 percent foreign holding and only at specified locations subject to a ceiling on the number of stores. Malaysia, Indonesia, Thailand and Japan have enforced zoning restrictions for mega-retailers. There are minimal capital requirements for foreign retailers in Sri Lanka. The Philippines has imposed “sourcing” and reciprocity requirements on foreign retailers.
Chicago and New York City have restricted the opening of Wal-Mart stores within city limits.
Share of Retail Market in world economy: Country U. In the US.S Taiwan Malaysia Thailand Indonesia China India Total Market ( bn US $) 4030 40 20 32 75 325 360
Indian Retail Scenario
. California. major cities such as Los Angeles.
In Japan. France enacted the Raffairin Act that regulates the growth of hypermarkets larger than 300 square feet. In Thailand. the government has set up an assistance fund for local retailers due to the impact of mega retailers. mega-retailers must seek the views and permission of small local stores before opening a new store.
Raymonds. Hyper-marts. which is moving towards a larger generation of employment opportunities in the times ahead. S Kumar‟s. This sector is slated to be the biggest contributor to GDP of around 10 percent and has promisingly generated ~8 percent employment in India. the organised retail market is 4 percent of the total retail. The Retail Industry‟s Size is presently Rs 1. and Grasim foraying into selling the product through their outlets and competition among FMCG players driving the forces towards retailing. Village Fairs in Small towns and villages to Kirana stores. Apparel Stores. that is around Rs 67. co-operative stores in Urban cities.310 crore and is expected to compound at 27 percent per annum. Variety and Volume. aggregating to Rs 1. etc. & unorganized players. organised retail will grow in the metros and large cities. organised retail is expected to expand in urban cities besides making an entry in semiurban and rural areas.Departmental Stores. The wave of retail began with various textile manufactures like Bombay Dyeing. Thus India is on the verge of an enormous multi-fold growth of organised retail.History
Traditionally Indian Retail can be traced back from Weekly Markets. catering to majorly all sectors of society providing the all-important 3Vs – Value. fairly dominated by scattered.103 crore (7.44
. Retail sector is expected to grow in tandem to the GDP growth-rate.75. Super-marts.
Future Of Organised Retailing In India
Due to the urban-rural divide.253 crores out of which the organized sector contributes to a mere 4 percent Of the market size. followed by semiurban and rural areas. PDS outlets. unregulated. In a span of just 5 years.
Retail Boom In India
Indian Retail Sector is at its inflexion point awaiting multifold growth. The evolution of retailing lead to an emergence of various modern formats like Shopping malls. Melas. Khadi Bhandaar. Presently. 44.
grains. The retail revolution signals softening of inflation rate on an yearly basis. being the most untapped pie. Pyramyd. Vimal. According to NSSO 60th round. Bombay Dyeing. 54 percent of the rural and 42 percent of urban expenditure was on food. and by big retailers like Pantaloon. Increasing disposable incomes and change in the lifestyle needs has pushed the segment. This is least penetrated segment across all verticals of around 1. The mantra expediting the retail growth is „Consumer is the King‟.percent of the total retail) in 2010-11.4 penetration level. ready to cook and ready to eat meals. staples. cereals.5 percent. processed food.
Segmental Growth of Retailing Food and Grocery
This is the largest vertical of 74. pulses.
Clothing and textile is a large organized vertical dominated by textile manufacturers Raymond. due to elimination of intermediaries in retailing and passing on of all the benefits to the consumer.4 percent of retail size compromising fruits and vegetables. The retail industry is assumed to grow at GDP growth rate.
Penetration of Organized Sector
Organized Share of retail sector is expected to increase to 8-9 percent in 2010-11 from 4 percent in 2007. spices and other eatables.
. milk and milk products. Koutons having ~16.
The organised players in Beauty Care are HLL (Lakme Salons).
Books. The stores like Oxford Bookstore etc are experiencing this upswing. Footwear segment is forming a big pie in the organised retail sector. There lies more unearthed growth in the verticals as the craze for electronic gadgets have been picking up with the advent of nuclear families. &Durian function as organized entities. Music and gifts
In addition to Tier-II and Tier-III cities. paving way to tap the unorganized segment. Health and Glow are having a huge growth impetus. Tanishq. Presently only a few players like Gautier.
Leaving aside the Apparel.
Home Décor and furnishing
The demand for furnishing is going to be spearheaded by a huge demand for the real-estate. Godrej. Swaroski. the habit of reading books and listening to music is picking up among the Tier-I cities. Orra. Gitanjali.The electronics and consumer durable is the biggest organized segment penetrated to ~20 percent. expected to grow to greater heights with foreign payers like Crocs Inc. & D‟damas driven by demand for fashion accessories.
Jewellery and Watches
Titan is the early entrant in the segment followed by MNCs Oyzterbay. and huge advertising and promotion campaigns.
. Marico (Kaya).
Tier I cities of Kanpur . large players contributing to meager 10 percent of the total pie. The sector is dominated by small-scattered unorganised regional players. Vizag.91 trillion in 2011. Mini Metros Ahmedabad and Pune. Bangalore. Vijaywada. Calcutta. around 87 percent of the retail opportunity comes from top 25 cities compromising Metro Delhi. The levels of penetration in the top 67 cities are expected to leap. Indore. According to CRISIL. Organized retail has been established in Metros and Tier 1 cities. Mumbai. 3. which is expected to increase to Rs.55 trillion.Organized Retail Growth in Indian Cities
The Retail sector contributes to around 36 percent of GDP in India and is largest employment generator. urbanization and migration due to transition in urban household growth and income distribution. Jaipur and Tier III cities Vadodara. 2. Thiruvananthpuram. Chandigarh. Lucknow. Chennai. Tier II cities Coimbatore. Organised retail is at its nascent phase wherein the large organised retail groups are having aggressive expansion plans to penetrate the Metros and Tier I cities and establish themselves amongst rural masses of Tier I and Tier II cities. Surat and Ludhiana. Kochi. The total retail market in the top 67 cities in India in 2006 was Rs. Bhopal. other cities having negligible level of penetration Retail Formats in India:
Conventional Formats Kirana
. Nashik and Madurai. There lies a challenge for retailers to experiment with new value formats along with developing customer loyalties. Since there will be demographic shift in population growth. Mini Metros Hyderabad. Nagpur.
The sellers bring across various products like eatables. Multi brand caterings.These are food and non-food neighborhood counter stores. pulses. also called „mom and pop stores‟ in western countries.
. spices etc. The most prominent of them are sabzi mandis found in most of the localities across India.run retail-outlets picking the goods from wholesalers totaling to around 12 million stores across India. from which mostly housewives makes purchases that too on credit. Modern organized retail formats:
Area -60000-700000 square feet Point of differentiation: Multi format. vegetables. Mandis are physically located at different regions to enhance convenient shopping.
These are the largest chunk of unorganised retail catering to urban and rural masses.
This form is operating in rural areas where buyers and sellers gather once in a week or month from nearby villages and small towns to cater their livelihood and leisure needs. These haats are a source of entertainment and socialization among rural masses.
Push Cart Vendors
The are categories of vendors roaming from door to door in various localities selling fruits. cereals.vegetables and fruits. and other eatables. These are familyownedand. Multi products. These are big chunks forming the segregated and unorganised retail segment. Lifestyle needs.
Single vertical. focusing on high & consumers
Area:-2000-5000 square feet
. laundry & household maintenance products. self service operations design to serve total need for food. several product lines
Area: 20000-25000 square feet Point of differentiation: Multi branded. Point of differentiation: low cost. low margin high volume.
Area: 20000-30000 square feet.Hyper market
Area: 50000 – 100000 square feet Point of differentiation: Multi vertical
Area: 5000-10000 square feet. Point of differentiation: single vertical .
multi branded. limited product line. Single products
8. Strong relations with customers.
Area: 500-5000 square feet Point of differentiation: Owned/Franchised. Convenience stores
Area: 200-500 square feet Point of differentiation: Located near residential area. Low operating hours. high turnover Advantages of conventional & Modern Organized retail formats Conventional formats:
Low operating cost & Overheads. seven days in a week.
. open long hours.Point of differentiation: Narrow product line with deep assortment . Single vertical on specific needs of the customers.
Modern organized retail formats:
Large bargaining power with suppliers. Proximity to consumers.
durability) Convenience & Hygiene
Business Models suiting Indian Scenario Cash-&-carry Wholesale Model
Cash-&-carry is a form of retail trade in which goods are sold from a wholesale warehouse operated either on a self-service basis where customers settle the invoice on-the-spot or pay cash and carry the goods away themselves. availability of space and proper technology in place. risk-bearing. This is win-win model is well-suited to the Indian business scene where large stores obtain supplies from the warehouse and supplies to the consumers. The cash-&-carry player also performs many value-added functions. supplying market information.
Growth Enabling Factors Higher Disposable Income
. bulk-breaking. involving both large payers acting as wholesalers and local kiranas as retail outlets. With efficient supply chain management. including selling and promoting. whereby one large store supports various smaller stores in the nearby residential areas. warehousing.
Range & variety of goods. The Piramyd Retail‟s Trumart Stores (food and grocery) in Mumbai and Pune are based on a similar model. financing. buying and assortment building.
Retail Chains are entering residential areas with the hub-andspoke model. Quality assurance( Brand related. transporting. this will not take much time. and providing management services.
This will fuel the growth of organised retail.3 percent over the next 8 years leading to new consumption patterns due to increasing depth in the consumers‟ pocket. 593 million people (58. the population of working women increased to 26 percent in 2001 as compared to 22 percent in 1991. at a CAGR of 9. the earning population is expected to increase to 62. In 2000.000) is expected to reach 48 percent by 2009-10 from 20 percent in 1995-95. translating into a population of 782 million.57 in 1991to 5.3 percent of total population) constituted the age bracket of 15-60 yrs – growing from an unprecedented level of 335 million people (54 percent of total population) in 1975 at a rate of 77 percent (CAGR of 2.
Baby Boomer Effect
The demographics of Indian population has a steep growth in earning population (15-60 yrs).3 times as compared by housewives.36 in 2007.3 percent) in contrast to a population growth of 64 percent (CAGR of 2 percent) over the same period of 25 years. expected to fall further to 5.
Growth in Urban Population
.The disposable income has been showing a rapid increase from the last few years and is expected to grow steadily because the proportion of the major consuming class (population having incomes higher than Rs 90.8 percent in 2015.
Growing Working women population
The propensity to spend in the case of working women is higher by 1. According to the census report.
Adoption of Nuclear Family culture
The increase in per capita income paved way to increase the nuclear-family culture. at the 2001-02 prices.02 by 2011. Over the next 15 years. The proportion of nuclear families as a percentage of total household population has increased as shown by fall in average household size from 5.
thereby pushing organised retail to new heights. covering a total space of 87 million square feet. Around 358 malls have come up by 2007.
Swot Analysis of Organized Stores
. Unitech are developing retail malls and leasing out the retail spaces to various retailers of varied products making it a one-stop shopping destinations in urban and semi-urban cities.7 percent over the last 10 years (1990-2000). The number of credit cards has grown at a CAGR of 28 percent and debit cards galloped by 140 percent. Omaxe. Piramal Group. Future Group.
Plastic Money becoming a greater Pie of credit
The use of plastic money in the form of debit and credit cards has expanded multifold in last 5 years. constituting 32. This has established the base for organized retail market in India.4 percent between 2000 and 2015. new trends and lifestyles are evolving among India masses resulting into 10-15 percent growth in branded products. These shopping-cumentertainment malls are wooing young buyers to increase their conversion rate backed by increasing footfalls.
Robust Outlook towards Branded products
Due to liberalization of manufacturing sector. Parsvnath. thereby developing and widening the basket for branded finished goods. the urban population was estimated to be 281 million (27. In 2015 the urban population is expected to be 401 million.2 percent of the total population. With the advent of International competition. various organized branded products have entered into Indian markets.Urbanization has increased at a rate of 2.
Growth in Retail Malls and various other new Formats
Real Estate players like Raheja‟s. DLF. The customers have adopted the habit of electronic payments and leveraging their pockets shifting from basic needs to lifestyle products. This trend is likely to continue and urbanization is expected to grow at 2. In 2000.7 percent of the total population).
As being technology intensive . According to KSA projections by 2015 India will have 55 crores people under the age of 20 reflecting the enormous opportunities possible in the kids & teens retailing segments. Poor Infrastructure Less develop shopping culture. As a result retail measure experiencing an ROI of only 8% to 10% Organized stores have less customer loyalty as compare to unorganized stores. Wide assortment show customer has variety of choice
Despite of high footfall the conversion rate is very low.these stores are able to forecast customer demand. shorten lead time reduce inventory holding & ultimately save cost.
High real estate rent. Low customer knowledge Lack of personal touch
Indian middle class is already 30 crores & projected to grow to over 60 crores by 2010 making India one of the largest consumer markets in the world.
. Due to fragmented market high distribution cost.
So the very existence of traditional store is in danger.
Increase in use of credit cards With huge stores coming up in catchments areas of 5-7 km of approachable distance & larges chains planning to set up hub & spoke. since organized retailer are unlikely to enter such reasons
Do not provide quality assurance. Less concern about ambience & hygiene issue. They enjoy a near monopoly in area that is backward or do not have a population with sustainable purchasing power like rural areas. Low or no bargaining power due to small scale of operations Due to smaller in size unable to stock a variety of goods. smaller stores.Customer needs & stock accordingly & thus gaining more business.
Low capital requirements Proximity to consumers and strong relationship help them to gauge .Swot Analysis of Unorganized Stores
Located in prime residential area. Rental for large stores in these area are generally not available.
But now retail market is moving toward big and also small cities . For this one of the important factors responsible is change in life style as well as disposable income.
Why Indian consumers want more experiential shopping today?
The Indian consumer is changing rapidly. it is not the key driver of the organized retail sector.000-10. India‟s 8. Chennai and Kolkata. While this segment is worth targeting for high-end premium products. approximately 209 million of total household in India 6 millions are rich having annual income of more than US$ 4700 . Today Indian consumers want not only buying but a full shopping experience. About 50% of these families are living in metros and spending more than eighteen billion annually. Consumers now value convenience and choice on a par with getting value for their hard-earned money.5% of the retail market concentrated in 8 big cities . As per Indian consumer‟s map . younger and more aspirational in his or her needs than ever before.
Provide not many options to the customers.As per an estimate among rich class top most 1 million customers comes under superrich category growing by 20% per annum and shows behavior similar to international consumers . This segment of about 40 million households earns USD 4.
. As per the need of these families around 62% market for premium products is concentrated in Mumbai.this number were 1 million household in 1994 and 3 million households in 1999-00 thus this class is growing very rapidly. A range of modern retailers is attempting to serve the needs of the „new‟ Indian consumer. The average consumer today is richer. The real driver of the Indian retail sector is the bottom 80% of the first layer and the upper half of the second layer of the income map (see „Map of India‟s income classes‟ below). Bangalore. This segment is expected to grow to 65 million households by 2010 and is currently the key driver behind explosive growth in passenger car sales (USD 5 billion in 2004) and mobile phone penetration (over 70 million).000 per household and comprises salaried employees and self-employed professionals.
increase in disposable income .The top 6 Indian cities -Mumbai. is now going a drastic change with a rapid growth in the organized sector with the entry of many corporate groups such as Tata. but contribute 14% of India‟s GDP. They mainly talk about the opportunities available in the Indian market for the growth of organized retail. increase in number of nuclear families . Now Indian consumers are much aware about domestic and foreign products by the different source of media.television and the internet Apart from this there are too many social changes like increase in working couples . RPG. Tata Tea. by the entry of fast foods (McDonalds). Food retailing was the most important area where players like food worlds establishing their outlets all over the India. which in early1990s was dominated by the unorganized sector.
. They represent 6% of the population. They are the centers of business. Kolkata. Beside it supermarket and departmental stores now replacing traditional grocery stores all over the India . The retailing industry. such as newspaper . Delhi. pharma and ITeS. Cafe Coffee and Barista) brought about significant changes in the eating habits of Indian consumers. packaged foods (MTR). Chennai. Bangalore and Hyderabad -are the darlings of India‟s exploding economy.increase in availability of retail space . availability of educated manpower also catalyzed the growth of organize retail . vending machines and specialty beverage parlors (Nescafe.goverment policies . politics and the emerging sunrise industries such as IT.
Indian retail sector still has long way to go till now many research work and articles have been return over Indian retail.
Are Indian consumers are ready for organize retail?
By the end of 20th century in Indian retail sector too many significant changes has taken place. finance. ITC and Bennett Coleman & Company. rapid Urbanization. which have put India on the global map. These cities are also the barometer of India‟s economic development and most foreign investors have flocked here. These articles and research work mainly focus upon huge untapped markets in Indian retail.
Mark & Spencer etc. “The great Indian retail story” has been written by Ernst & Young to help International players to understand some of the key features of the Indian retail industry environment. They also talk about the favorable demographic and geographic conditions. In this report they talk about different forms of retailing in India. and rate of organization and government policies which attract various Indian corporate houses as well as foreign corporate giants such as Wall Mart.In this report they talk about largely untapped potential in retailing in India. social factors. They also talk about the various upcoming challenges in Indian retail. On Nov-2007 BLB Research Limited has carried out a research on Indian retail and submitted their report. This report includes:
. In 2005-2006 a report is prepared by Mc Kinsey and company and the confederation of Indian industry (CII) predicted that many global retail giants such as Kingfisher. Similar work has been carried out by AC Neilson & KSA Techno Park in which they talk about the huge opportunity in Indian retail sector & also discussed the reason for highest shop density in India. In social and economical prospecting they discussed about the employment provided by organized retail (5 lakhs) and unorganized retail (5 crores) and stated organized retail as job less growth.they also talk about the present scenario of Indian retail sector. “FDI in Indian retail sector more bad than good” Written by Mohan Guru swami & Kamal Sharma of centre for policy alienations discussed about the prose & cons of FDI in Indian retail sector . Tesco Carrefour and Ahold were waiting in the wings to enter in the retail arena of India. They also talk about the consumption pattern of Indians.Some of the important research paper and articles which inspired me and catalyzed my thinking process over this topic are: “The evolving retail market in India” was written by Dale Anne Raiss and Ranjan biswas working as partner and head of market at Ernst & Young .
This survey answers the following points about the Indian Retail:
Which segment & formats have the maximum potential What is the right format in India? Are multiple formats necessary for success? Personal availability & capability of human resources in India with respect to retail. bidi-stores. New formats and strategic issues such as supply chain people and security.This paper mainly upon various factors stimulating modernization of Indian retailing .
In 2005 a survey is conducted by KPMG behalf of FICCI on Indian retail . Is this growth favorable for conventional retailing in India which include kirana stores. Key success factors for entering and setting a profitable retail business in India. Some of the key challenges that industry is likely to face. melas and haat .
.We cannot ignore that unorganized retail providing jobs to more than 6 crores people where as organized provides jobs to only 5 lakhs peoples.
One more important research paper” Modernization of India retailing” was return by Rajendra NarGundkar a professor of IIM Lucknow . paan. This paper discuss about the problem of low conversion rate of organized retail and suggest them to adopt flexible strategy like kirana stores to increase the conversion rate.
Consumer behavior and changing face of Indian consumerism. These are only few till today many research works has been done on Indian retail & most of them talk about various demographic & social changes which catalyzed the retail growth in India. Infrastructure in terms of quality and availability of real estate & mall space & logistics. “Kiranaizations of Indian malls” are written by Ranjan Johari.
Secondary data collection and their analysis. To study the alternative strategy adopted by unorganized stores to minimize the impact.
To study and analyze the impact of organized retail on sales of unorganized retail (local kirana stores). Indian retail industry analysis.
Sources of secondary data:
Newspapers Retail biz magazine
. To study the futuristic strategy of organized players to build competitive advantages over unorganized local retail players. To study the consumer‟s behavior towards unorganized and organized retail.
To study the challenges faced by organize as well as unorganized retail and also to draft a suitable roadmap to create a balance between them.This research paper mainly focus upon the impact of organized retail on local unorganized stores & it also focus on the study of consumer behavior towards organized & unorganized stores in India. Primary data collection through survey method by drafting a structured questionnaire.
Research design is basically a blue print or a road map for carry out the research process.
Techno park report Government publications Retail articles KPMG report on Indian retail Various websites like retail news . unorganized retailers and consumers prospective Sample size calculation
. Elements of Research Design Includes:
Target market selection Survey technique selection Designing three different questionnaire with organize retailers .
Questionnaire Design Process:
Determine the information needed for the research with the help of secondary data. Pretesting of the questionnaire with small sample to check performance. Organized retail
Discount stores Departmental stores Specialty stores Superstores Branded outlets
. scale. Specify individual questions to be asked during the survey.
Selection of sampling technique Basic Statistical Testing. and wording are appropriate or not. Determining the survey technique as per the requirement.
Target Market: Noida region
1. Decide whether question structure. Arranging the questions in proper order within the questionnaire. Survey by Questionnaire.
These clusters are designed to contain more population units than are required for the final sample. In the second stage population units are chosen from selected clusters to derive final sample.2.
Types of survey technique used:
Telephonic survey Direct Interview Survey by electronic mail
Sampling technique: Multi stage sampling technique:
Multi Stage Sampling
Involves selecting a sample in at lest two stages. In the first stage large group or clusters are selected. During the process of sampling whole Noida region were divided into sectors and these sectors are chosen as primary sample and then in next stage among these sectors those sectors has been chosen which have an organized stores (cluster sampling).
. Unorganized stores
Kirana stores General stores Grocery stores and food items Consumer durables and appliances stores Apparels stores.
unorganized and consumers about the impact of organized retail on local unorganized stores and visà-vis. unorganized local stores have been taken for the final interview process randomly. A survey of 200 consumers also has been conducted to know how consumers perceive both organized as well as unorganized stores so that a better insight can be obtained. Similarly for consumer‟s survey. respondents have been chosen randomly in different period of time as:
In morning shift In noon shift In evening shift
Sampling frame: Telephone directory has been used as reference frame for a particular sector during the survey of unorganized local stores.1
.After selecting sectors.Their analysis is as follows:
For organized retail: 15 Unorganized retail : 75 Consumers : 200
Primary data were collected in three phases in Noida region through three different prospective of organized stores. The data were feed into SPSS software .
7 6.0 86. In food and groceries.3 100.Organized retail stores‟ data analysis
Average footfall per day on an organized store: Frequency Percent Valid Percent 9 4 1 1 15 60. consumer durable the footfall lies within 1000.0
Less than 10%
.7 93. Whereas only few like big bazaar have footfall more than 5000.7 6. Where as in departmental stores footfalls lies from 2000-3000.0 26.0 26.0 60. fast food.0 20.0
less than 1000 1000-3000 3000-5000 more than 5000 Total
During the survey various formats have been visited and it has been found that about 60% of them have a foot fall of 500-1000.7 6.the basic reason behind it that those stores which have footfall below 1000 are very specific and meant for only certain segments .
Conversion rate per day
Frequency Valid Percent Valid Percent 3 20.0 Cumulative Percent 60.0 Cumulative Percent 20.7 6.7 100.7 100.
As it clear from the graph that average conversion rate of these stores is 20-25%.0 Cumulative Percent 60.7 33.0 6.0 60. Consumer‟s demography visiting organized retail outlets: Frequency Valid Percent 15-30 years 30-45 years Total Valid Percent 9 6 15 60.7 100.7 33.10% -20% 20%. Purpose to visit organized stores:
. Only few like big bazaar and discount store has conversion rate of more than 40%.3 100.0 6.0
Conversion rate is very important in terms of organized retail .0 40.30% more than 30% Total
6 1 5 15
40.0 66.as age increases frequency of visit of people of that age group decreases .0 100.0 40.all the firm emphasize more on to increase their conversion rate.3 100.0 100.0
In case of organized stores mostly youngster having age 20yrs to 25 yrs prefers visiting organized stores .0 100.
7 100.7 73.0 53.0
Percent 4 11 15
Valid Percent 26.0
Cumulative Percent 26.3 46.0
(c)For trying new products: Frequency Valid No Total Yes 9 15 Percent 6 60.7 100.0 26.7 73.0 Cumulative Percent 40.0 Valid Percent 40.3 100.Frequency Valid Yes No Total (B)For information Frequency Valid Yes No Total
Percent 8 7 15
Valid Percent 53.3 100.3 46.0
.0 100.0 40.3 100.0
Cumulative Percent 53.0 100.0 60.0 100.7 100.
Most of them not only want just buying but a shopping with entertainment.0 73.3 26.3 100. Relation between age group and purpose of visiting organized stores:
For entertainment Yes Age group of people mostly visits No 15-30 years 30-45 years Total 11 4 15 Yes 8 3 1 3 9 6 Total
.7 100.0 Cumulative Percent 73.(d)For entertainment: Frequency Valid Yes No Total Percent 11 4 15 Valid Percent 73.0
The main purpose of visiting peoples to the organized store is entertainment.7 100.3 26.
3 100. Availability of products in organized stores:
Only all popular brands:
Frequency Valid Yes no Total
Percent 7 8 15
Valid Percent 46.7 53.7 100.In the age group of 15-30 yrs most of the people (about 80%) visit organized stores for entertainment while in age group of 30-45 yrs about 50% of people visit with a purchasing motive.0
Wide range of products Frequency Percent Valid Percent Cumulative Percent
.3 100.3 100.0 46.0
Cumulative Percent 46.0 46.0
Only mostly demanded brands by customers: Frequency Percent Yes No Total 7 8 15 Valid Percent 46.7 53.7 100.7 53.7 53.3 100.0 Cumulative Percent 46.
33.7 100.0 46.3 100.0 Cumulative Percent 46.0
Do you keep local as well as national brands? Frequency Percent Yes No Total 7 8 15 Valid Percent 46.3 26.0
It is very true that selecting right kind of merchandise mix is a winning strategy for organized stores.7 53.3 66.Valid
Yes No Total
5 10 15
33. Majority of stores do product assortment on the basis of their target segment like big bazaar keep wide range of products whereas departmental stores like west side has most of their in house brands Consumer‟s perception about price: Frequency Valid Percent Valid Percent 8 4 Cumulative Percent 53.0
Higher than unorganized stores lower than unorganized stores
.7 53.3 26.3 100.7 53.3 100.3 66.7 53.7 100.3 80.
7 100.0 100.7 100.0 100.0
About 55% of consumers perceive that the price of these stores is higher than the organized stores.3 6.3 100. Unorganized local stores as your competitors Frequency Valid Yes No Total Percent 14 1 15 Valid Percent 93.0
Almost every organized store is much worried from local stores as their competitor.3 6.0 Cumulative Percent 93.can‟t say Total
20.0 93. This is the major area of concern for them.0
Targeting each segment with a definite a separate strategy is necessary for survival in long run. Key customers account
.7 100.7 100. Frequency Percent Valid Percent 14 1 15 Cumulative Percent 93.0 93.3 6.3 100.0
Strongly agree neither agree nor disagree Total
About 94% of the organized stores have a definite strategy for their target segment and on the basis of the various demographic.0 93.3 6. social and economical variables they choose their marketing mix.
0 53.Frequency Valid Yes No Total
Percent 8 7 15
Valid Percent 53.3 100.0 Cumulative Percent 53.0
On the basis of purchase amount about 55% of retail outlets have some loyalty programs for their customers whereas fast food restaurant like pizza hutt etc have home delivery option for their key customers.3 100.3 46.
Special service to your key customers Frequency Percent Yes No Total 8 7 15 Valid Percent 53.7 100.0
Cumulative Percent 53.7 100.3 46.7 100.3 46.0
various fast food outlets and specialized stores ( electronics) maintain key account of customers whereas discount stores such as cantabile don‟t have any such account of customer they have almost standard products for masses .0 53. Store loyalty influence the customers
.3 46.7 100.
Wide range of product influence the customers Frequency Valid Percent Valid Percent 3 1 6 1 4 6. In case of discount stores like Portland store loyalty does not influence much.7 40.3 13.7 40.7 73.3 86.3 100.0
Strongly agree Agree Neither agree nor disagree
Disagree Strongly disagree
.0 6.3 100.3 33.7 100.0 26.7 Cumulative Percent 20.0 53.3 13.0 53.0 20.7 26.0
Strongly agree Agree neither agree nor disagree Total
In case of apparels and footwear customers have more store loyalty because they get quality assurance from these stores.0 6.Frequency Valid
Valid Percent 8 5 2 15
Cumulative Percent 53.7 26.0 6.3 100.7 66.3 33.7 20.
About 25% of organized stores who cater all daily needs for them wide range of products pay important factors to influence customers whereas specialty stores such as planet M etc.7 20.3 100.7 20.7 100.0 40.0
Strongly agree Agree Neither agree nor disagree Total
Warranty / guarantee influence the customers Frequency Valid Percent Valid Percent 1 3 1 Cumulative Percent 6.3 26.0 33.7 100.7 6.0 33. are don‟t agree with this .7 33.0 73.Total
100. Friends' recommendations influence the customers Frequency Valid Percent Valid Percent 6 5 4 15 Cumulative Percent 40.0 6.7 6.0 6.0 40.3
Strongly agree Neither agree nor disagree Disagree
0 13.3 73.0 13.3 73.0
66.7 73.7 6.3 6.3 100.3 6.7 100.3
Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree Total
While choosing a store ambience and entertainment consumer‟s value most: Frequency Valid Percent Valid Percent 11 Cumulative Percent 73.7 100.0
While choosing a store multiple services under one roof consumers value most Frequency Valid Percent Valid Percent 2 1 7 1 4 15 Cumulative Percent 13.7 6.Strongly disagree Total
66.7 46.7 100.7 46.7 26.7 26.0 66.7 100.3 20.0
0 100.0 60.0
While choosing a store interaction with workforce consumers value most Frequency Valid Percent Valid Percent 3 9 3 15 Cumulative Percent 20.0 20.0 40.0 40.0
Strongly agree Agree Neither agree nor disagree
.0 20.0 20.Agree Neither agree nor disagree Total
1 3 15
6.7 20.0 20.0 40.0 100.0 100.0 100.0 60.0
80.0 20.7 20.0
Strongly agree Agree Neither agree nor disagree Total
While choosing a store distance from home consumers value most Frequency Valid Percent Valid Percent 3 6 6 Cumulative Percent 20.0 80.0 60.0 40.0 100.0 100.0 100.
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100.3 86. 3.3
Cumulative Percent 86.0
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Frequency Valid Yes No
Percent 13 2
Valid Percent 86.Total
100.7 13.7 13. 1.
7 96.0 100.Total
100.7 82. PHASE-2 DATA ANALYSIS FOR UNOGANIZED RETAIL STORES:
Number of people visit to shop per day Frequency Percent Valid Percent 41 21 10 3 75 54.0 100.7 28.7 28.0 100.3 4.0 13.0
Less than 200 ) 200-500 500-1000 more than 1000 Total
Most of the local shop have footfall of less than 200 per day only a few big kirana stores and general stores with kirana have foot fall of more than 500. Only after making post purchase evaluation he /she decide for repurchase.
100. of peoples who buy something
.3 4.0 54.0 Cumulative Percent 54.0
While consumer purchases something from organized outlets then he/she compares it with local stores because it is the new experience for him.
0 100.3 32.7 16.7 18. Age group of peoples mostly visits Frequency Valid 10-20 20-40 40.0 100.0 100.0 2.60 Total Percent 8 46 21 75 Valid Percent 10.0
Cumulative Percent 2.3 32.0 49.0 10.3 28.3 28. At present except specialty shop all of them have conversion rate of more than 30% whereas stores in few category like toys .7 68.7 72.45% 45%-60% Total
This is the area where local unorganized stores are in better position than organized stores .7 16.0
.0 100. cards and gift items have conversion rate of 15-20% but they have high margin .0
Less than 15% 15% -30% 30%.0 49.0 Cumulative Percent 10.0 100.Frequency Valid
Valid Percent 2 12 37 24 75 2.0 100.7 61.7 61.
Purpose to visit store: (a) For requirement Frequency Valid Yes No Total (b)Just for fun Frequency Valid Yes No Total (c) For trying new products Frequency Valid Yes Percent 11 Valid Percent 14.7 Percent 18 57 75 Valid Percent 24.7 Cumulative Percent 14.0 Cumulative Percent 24.0 84.0
.0 100.0 100.0 16.0 100.0 16.7 14.0 100.0 76.0 24.0 Percent 63 12 75 Valid Percent 84.0 Cumulative Percent 84.0 100.0 100.0 76.
3 100.7 100.0
100. Availability of products in unorganized stores: (a) Only all popular brands
. Thus whenever a customer visit to a local stores he pre decide what he has to take. As it is clear from above 85% of store owner believe that the people come here when they have requirement of some products.0
Cumulative Percent 17.3 100.0
Unlike organized stores in local unorganized stores most of the people visit for the purpose of purchasing only.0
Valid Percent 13 62 75 17.No Total (d)Any Other purpose Frequency Valid Yes No Total Percent
85.3 82.0 17.7 100.3 82. Only in case of cards gallery and gift shop or music shop few customers visit for fun or just trying new products.3 100.
Frequency Valid Yes No Total
Percent 16 59 75
Valid Percent 21.3 14.0
Only mostly demanded brands by customers Frequency Valid Yes No Total Percent 64 11 75 Valid Percent 85.7 100.0
Since kirana store operated in almost residential area have sufficient knowledge about the customers therefore they keep only mostly demanded products.3 14.7 100.0 Cumulative Percent 85.3 78.0 85.0 21.0 16.7 100.3 100.0
.7 100.0 Cumulative Percent 16. Wide range of products Frequency Valid Yes Percent 12 Valid Percent 16.3 78.0
Cumulative Percent 21.3 100.
0 100.0 100.0
Since local stores have good margin over local brands so well as national brands which are demanded by customers.0 44.No Total
84.7 Cumulative Percent 62.7
.0 56.0 100.0
84. Effect of organized stores Frequency Valid Yes Percent Valid Percent 47 62.0 Cumulative Percent 44.7 62.0 56.0
Local as well as national brands/products Frequency Valid Yes No Total Percent 33 42 75 Valid Percent 44.0 100.0 100. Thus while choosing the merchandize mix unorganized retailers keep: Mostly demanded products which have high turnover thus have much quick inventory replenishment.
3 69.0 20.0
About 60% of the local stores have affect of organized stores on their business in terms of price and margin.0 21.0 80.0 100. Target customers segment wise Frequency Valid Yes No Total Percent 15 60 75 Valid Percent 20. Maintain key customers accounts Frequency Valid Yes Percent 52 Valid Percent 69.0 100.0 Cumulative Percent 20.3 Cumulative Percent 69.7 100.0 21.3 100. About 20% of unorganized retailers are now started targeting customers segment wise to minimize the effect of organized stores.3
. The affected segment is apparel stores and footwear.0 80.0
Unlike organized stores they do not have any segment wise strategy.No cant say Total
12 16 75
16.0 100.3 100.
About 60% of unorganized retailers maintain their customer account on the basis of their relationship.7 98.0 100.0 24.0
100.0 72.7 100.0
Price is impotent for attracting customers Frequency Valid Percent Valid Percent 54 11 9 Cumulative Percent 72.0 Cumulative Percent 76.0 14.0 72.0 24.7
Strongly agree agree Neither agree nor disagree
30.0 100.0 76. Offer some special service to your key customer Frequency Valid Yes No Total Percent 57 18 75 Valid Percent 76.0 14.7 12.7 12.0 100.7 100.0 86. identity and trust.
3 30.0 90.7 96.0
Strongly agree agree
.0 24.0 100.3 100.0
Strongly agree agree Neither agree nor disagree disagree Strongly disagree Total
Customer knowledge is important for attracting customers Frequency Valid Percent Valid Percent 25 23 Cumulative Percent 33.disagree Total Quality is important for attracting customers Frequency Valid Percent Valid Percent
1.0 68.0 22.3 30.0 24.0
Cumulative Percent 18 33 17 4 3 75 24.0
1.0 44.3 100.7 5.0 22.7 5.3 4.3 4.0 44.7 33.3 64.0 100.0
100.0 100.7 33.
0 8.0 8.3 100.7 100.0
Strongly agree agree Neither agree nor disagree disagree Total
Customer asked for any new products Frequency Valid sometimes Percent Never 62 Valid Percent 13 82.Neither agree nor disagree disagrees Total Distance from home for customers is impotent Frequency Valid Percent Valid Percent
21 6 75
.3 82.0 100.0 100.7 17.3 13.3 13.3 24.7 17.0
Cumulative Percent 46 10 18 1 75 61.0 61.3 24.3 Cumulative Percent 17.7 98.3 74.0 1.0
28.3 100.3 100.0 1.0 100.0 61.
100.3 38.0 4.3 20.0 100.Total
100.0 33.3 5.0 100.3 20.3 37.0
Strongly agree agree Neither agrees nor disagrees disagree Strongly disagree Total
.3 5.0 96.0 4.7 76.0
"Providing credit on monthly basis" is very important for the survival of unorganized (local) stores Frequency Valid Percent Valid Percent 25 4 28 15 3 75 Cumulative Percent 33.3 37.0 33.