what is organised retail

7/30/2019 What is Organised Retail

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INTRODUCTION

The Organised Retail industry has been the talk of the business

world with some of the big players like Reliance Digital, Chroma

& Big Bazaar. These stores are looking to maximise market share

by attracting consumers on the basis of competitive pricing

schemes as well as variety. Presently, single brand showrooms

and outlets dominate the lower middle class segment of

prospective buyers, these buyers reside mostly in sub-urban

areas as well as small cities & towns where there is less

infrastructure as compared to metropolitan cities. They provide

sales in smaller quantities along with highly personalised

relationship.

Nonetheless, only 3% of Indian market is organised retail

(Business Today, 2012) which leaves a gigantic gap for organized

retailers dealing in electronic goods to fill. A recent Price

Waterhouse Coopers study suggests that the size of organised

retail in India is only $666million which is likely to grow 30% per-annum. However, potential of organised-retail soars high as it is

a $300billion industry which has set the stage for organised

retailers to gain substantial market-share.


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(Economic-Times 2012)

There has been considerable growth amongst middle-class sector

in India, increasing the spending power of consumers.

(Indian-economic-survey 2012)

"With growth in disposable incomes and improving

infrastructure, consumers have a wide choice of stores

where they can choose to shop. It is therefore, necessary

for retailers to understand shoppers' motivations."

(Sinha & Bannerjee, 2004)

Moreover, significant changes in lifestyle with new tastes and

preferences have developed amongst consumers(Economic-Times, 2012).

As people gain purchasing power the market is shifting from

price-linked to value-linked where more value is given to design,

atmospherics and differentiation suggests

(Chand, 2008-Economic Times).

Retail Stores are offering a new shopping-experience to all

demographics by providing services that offer convenience and


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comfort along with great-value. In the cultural-context there has

been transformation and adaptation towards western ways of life

which has specifically influenced young and the middle-age

groups. Traditionally, joint-family culture persisted at Indian

homes however statistics determine a drastic shift towards

nuclear families.

Even looking at the Metros like Delhi, the census states the

average size of family in Delhi is 5 (http://delhiplanning.nic.in)

which has reduced from 10-15 members in one house-hold.

Standard of living is increasing because people aspire to live a

better life hence, usually both members of family work for higher

earnings. This has increased the pace of life and time is of great

value. Transformation to this lifestyle demands services that

keep-up with the pace and offer convenience & comfort. As a

result, the whole idea of all commodities available under the

same roof is likely to fit-in the newly formed culture.


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What is organized retail?

Organized retail is nothing but a retail place all the items are

segregated and brought under one roof, unlike the unorganized retail

where there are different things are sold in different shops. It also

aims to bring maximum of different brands making the same type of

producttogether.

Organised Retail refers to the set-up of any retail chain supported

by a well defined Supply Chain. This Supply Chain has less

number of middlemen compared to the unorganised sector. Due

to a number of factors like cutting down of middlemen, removing

of bottlenecks along the supply chain, efficient processes, etc.,

the end user gets a better product at a cheaper price compared

to the unorganized retail sector. As the Consumer base is

growing by the minute, the Organised Retail sector has immense

growth potential.


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Difference Between organized and unorganized retail

Retailing-An Introduction

The word "Retail" originates from a French-Italian word "retailer"

meaning someone who cuts off or shreds a small piece from

something. Retailing includes activities of marketing and selling

products or services to end consumers for their own household or

personal use. Retailer is a Person or Agent or Company or

Organization who is instrumental in reaching the Goods or

Merchandise or Services to the End User or Ultimate Consumer.

Kinds of Retailing

Unorganised

Traditional or Unorganized retail outlets are normally street

markets, counter stores, kiosks and vendors, where the

ownership and management rest with one person only. This

sector accounts for two thirds of the market and requires low

skilled labor. These are highly competitive outlets, with negligible


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rental costs (unregistered kiosks or traditional property), cheap

workers (work is shared by members of family) and low taxes

and overheads.

Organised Retailing

Organized retailing comprises mainly of modern retailing with

busy shopping malls, multi storied malls and huge complexes

that offer a large variety of products in terms of quality, value for

money and makes shopping a memorable experience.


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Organised Retailing In India.

The recent years have witnessed rapid transformation and

increase in profits in the Indian retail stores across various

categories. This can be contemplated as a result of the changing

attitude of Indian consumers and their overwhelming acceptance

to modern retail formats. Asian markets witness a shift in trend

from traditional retailing to organized retailing driven by the

liberalizations on Foreign Direct Investments. For example, in

China there was a drastic structural development after FDI

was permitted in retailing. India has entered a stage of positive

economic development which requires liberalization of the retail

market to gain a significant enhancement.

Domestic consumption market in India is estimated to grow

approximately 7 to 8% with retail accounting for 60% of the

overall segment. Of this 60%, organized retail is just 5% which is

comparatively lesser than other countries with emerging

economies. In developed countries organized retailing is the

established way ofselling consumer products. Despite the low

percentage, Indian textile industry has grown noticeably in


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organized retailing of textile products. The negative phase in

exports may have compelled the Indian textile retailers to

explore the opportunities in the domestic market substantially

causing the outstanding growth in the concerned segment. These

indications give a positive notion that organized retailing has

arrived in the Indian market and is here to stay. It is expected to

grow 25-30 per cent annually and would triple in size from Rs

35,000 crore in 2004-05 to Rs109,000 crore ($24 billion) by

2010.

India is on the radar screen in the retail world and global retailers

and at their wings seeking entry into the Indian retail market.

The market is growing at a steady rate of 11-12 percent and

accounts for around 10 percent of the country's GDP. The

inherent attractiveness of this segment lures retail giants and

investments are likely to sky rocket with an estimate of Rs 20-25

billion in the next 2-3 years, and over Rs 200 billion by end of

2010. Indian retail market is considered to be the second largest

in the world in terms of growth potential.

A vast majority of India's young population favors branded

garments. With the influence of visual media, urban consumer

trends have spread across the rural areas also. The shopping

spree


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Of the young Indians for clothing, favorable income

demographics, increasing population of young people joining the

workforce with considerably higher disposable income, has

unleashed new possibilities for retail growth even in the rural

areas. Thus, 85% of the retail boom which was focused only in

the metros has started to infiltrate towards smaller cities and

towns. Tier-II cities are already receiving focused attention

ofretailers and the other smaller towns and even villages are

likely tojoin in the coming years. This is a positive trend, and

the contribution of these tier-II cities to total organized retailingsales is expected to grow to 20-25%.


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Benefits of Organised Retail

Most Indian shopping takes place in open markets or millions of small,

independent grocery and retail shops. Shoppers typically stand outside

the retail shop, ask for what they want, and cannot pick or examine a

product from the shelf. Access to the shelf or product storage area is

limited. Once the shopper requests the food staple or household

product they are looking for, the shopkeeper goes to the container or

shelf or to the back of the store, brings it out and offers it for sale to

the shopper. Often the shopkeeper may substitute the product,

claiming that it is similar or equivalent to the product the consumer is

asking for. The product typically has no price label in these small retail

shops; although some products do have a manufactured suggested

retail price (MSRP) pre-printed on the packaging. The shopkeeper

prices the food staple and household products arbitrarily, and two

consumers may pay different prices for the same product on the same

day. Price is sometimes negotiated between the shopper and

shopkeeper. The shoppers do not have time to examine the product


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label, and do not have a choice to make an informed decision between

competitive products. Organized retail helps a consumer overcome

these issues which were associated with unorganized retail outlets.

India's retail and logistics industry, organized and unorganized in

combination, employs about 40 million Indians (3.3% of Indian

population). The typical Indian retail shops are very small. Over

14 million outlets operate in the country and only 4% of them

being larger than 500 sq ft (46 m2) in size. India has about 11

shop outlets for every 1000 people. Vast majority of the

unorganized retail shops in India employ family members, do not

have the scale to procure or transport products at high volume

wholesale level, have limited to no quality control or fake-versus-

authentic product screening technology and have no training on

safe and hygienic storage, packaging or logistics. The

unorganized retail shops source their products from a chain of

middlemen who mark up the product as it moves from farmer or

producer to the consumer. The unorganized retail shops typically

offer no after-sales support or service. Finally, most transactions

at unorganized retail shops are done with cash, with all sales

being final.

Hoarding measures" before they could open doors. There are

taxes for moving goods to states, from states, and even within

states in some cases. Farmers and producers had to go through

middlemen monopolies. The logistics and infrastructure was very


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poor, with losses exceeding 30 percent.

Through the 1990s, India introduced widespread free market

reforms, including some related to retail. Between 2000 to 2010,

consumers in select Indian cities have gradually begun to

experience the quality, choice, convenience and benefits of

organized retail industry.

Benefits of organised retail

Let us examine what organised retail involves. The organisedretail system enhances efficiency in the value chain. The farmer

gets a better price and grows a better quality of the product;

and, more importantly, is not forced to do so, and only gets into

such contracts with the corporate because it benefits him.

The value chain is truncated as the intermediate layers are

pruned and, in the process, an organised infrastructure structure

is created.

This starts at the purchase level at farm gate and moves across

the packing, transportation, warehousing (including cold storage,

when required), processing and packaging stages before being

delivered at the consumer's end.

The consumer buys from these outlets because he gets the right

quality at a lower price. Outlets such as Spinach, Big Bazaar,

Reliance Retail and Subhiksha have been delivering quality

produce at lower prices. Alongside, there are vast investments


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being made, which open up multiple employment opportunities of

a different kind. The Government also gains substantially as all

the taxes and duties are paid along the way and there are no

leakages. Therefore, all the parties concerned stand to gain.

However, there is one class that apparently gets affected

adversely, which is the trader. Given that retail is generally

unorganised, it is but natural that if there is a large retailer, it

could replace several small ones. How does one tackle this issue?

To begin with it must be stated that the so called 'mom and popstores', which is the name given to our friendly retail grocer, will

always have their own role to play. Home delivery services, the

convenience of being next door, availability of small quantities of

goods (like sachets and in low denominations), credit facilities,

personalised service etc are some of the benefits that retain

customer loyalty to these outlets. But, to the extent that there

would be some replacement of loyalty, there can be a social

problem even though this is not one for Economics to resolve.

But, there is a way out. The large retailers cannot be everywhere

as the investment involved is considerable. The small retailers

will become franchisees of the corporate enterprises and can

enjoy a fixed income plus commissions.

Trader-corporate link-up

Moreover, there is a growing trend of the these shops to get

associated with the larger corporate enterprises such as


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Hindustan Unilever, Marico and Dabber, which have set up their

own chains with such names as Super Value, Parivar and Mera

respectively where the goods are sold to them at the same price

as that to large retail chains on certain conditionality like focus on

display or walking space for consumers.

Alternatively, the smaller vegetable and fruits vendors could

become employees of the corporate retail chain, which is also

taking place in a gradual manner. Further, the local shop owner,

who is the last intermediary in the chain, can actually procurefrom these corporate retail stores and save on costs and sell

them to the consumer.

Thus, while the mindset has to change and some adjustment

made, it is certainly not going to be anywhere close to large-scale

substitution taking place.


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Consumer Buying Behavior in Organized Retail

INTRODUCTION

Consumer is the king and hence it is the consumer who determines

what a business is, therefore a sound marketing program was started

with a careful analysis of the habits, attitudes, motives and needs of

consumers. In particular, a marketer should find answer to the

following questions:


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CUSTOMER BUYING BEHAVIOUR

In todays world purchases made by a customer is to satisfy his or her

needs. All the behavioral activities carried out by a customer during

and after the purchase of a product is termed so as buyer behavior.

In this article we will come across the origin of buying ideas, what is

buyer behavior, how consumer buy, why consumer buy, types,

Decision process and what motives them.

WHAT IS BUYER BEHAVIOUR?

What are the kinds of products the customers buy?

Why they buy them?

How they buy them?

When they buy them?

Where they buy them?

How often they buy them?


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Our economy gets stronger depending upon the wealth of goods and

services produced within the country. A huge number of alternative

suppliers are present for almost all the products today: substitute

products are available to consumers, who make decision to buy

products. Therefore the main objective of the seller is please the

consumer at all times. In order to be successful, a seller need to

identify the customer, what they buy, when they buy, why they buy

and how they buy.

A buyer making a purchase of a particular product or a

particular brand can be termed asproduct buying motives and

the reason behind the purchase from a particular seller is known as

patronage motives

When a person gets his pay packet, and if he is educated, along with

his wife he prepares a family budget, by appropriating the amount to

different needs. It may happen that after a trip to the market, they

could have purchased some items, which were not in the budget, and

thus there arises a deviation from the budgeted items and

expenditure. All these behavioral changes within human beings during

the period of purchasing can be termed as buyer behavior.

Consumer buys according to his/her needs:

1. Consumer desire is recognized
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The first step the consumer determines that he is not satisfied (i.e.,

consumers perceived actual condition) and would be keen in improve

his/her situation (i.e., consumers perceived desired condition).

For instance, internal triggers, such as hunger or thirst, may tell the

consumer that food or drink is needed. External factors can also

trigger consumers needs. Marketers are particularly good at this

through advertising; in-store displays and even the intentional use of

scent (e.g., perfume counters).

2. Information to be searched

The next step is to undertake a search for information on possible

solutions. The sources used to acquire the information may be

minimized to the maximum like remembering the information from

previous experiences (i.e., memory) or the consumer may extend

considerable effort to collect information from outside sources (e.g.,

Internet, friends, other buyers etc.). How much amount of effort each

consumer directs toward searching depends on factors such as: the

importance of satisfying the need, similarity with available solutions,

and the time available to collect the information.

3. Options are evaluated after use


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Consumers efforts may result in a set of options from which a choice

has to be made. It should be noted that there may be two levels to

this stage. At level one the consumer may create a set of possible

solutions to their needs (i.e., product types) while at level two, the

consumer may be evaluating the particular product or service (i.e.,

brands) within each solution. For example, if a consumer wants to

upgrade his existing laptop with a new pr

4. Purchase In most of the cases the solution chosen by the

consumer will match with the product. However, this may change at

the actual time of purchase. The intended purchase may be altered

at the time of purchase for many reasons such as: the product is out-

of-stock, a competitor offers an incentive at the point-of-purchase

(e.g., store salesperson mentions a competitors offer), the customer

lacks the necessary funds (e.g., credit card not working), or membersof the consumers reference group take a negative view of the

purchase (e.g., friend is critical of purchase).

5. Evaluation after-purchase

Once the purchase is over an evaluation of the decision is made. If the

product performs below the consumers expectation then he/she will

re-evaluate the satisfaction with the decision, which at its extreme and

it may result in the consumer returning back the product. While in less


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extreme situations the consumer will retain the purchased product but

may take a negative view of the product. Such evaluations are more

likely to occur in cases of expensive or highly branded products. To

help the consumers to ease the concerns with their purchase

evaluation, marketers need to be receptive and also take initiative

steps to encourage consumer contact.Customer service centers and

follow-up market research are useful tools in helping to address the

purchasers concerns.

Why Consumers Buy:

Purchases are made to satisfy the needs of the consumers. Some of

these needs are basic and needed for survival, while other needs are

not required for survival and vary depending on the purchasers taste

and preferences. It probably makes more sense to classify needs that

are not a necessity as wants or desires. In fact, in many countries

where the standard of living is very high, a large portion of the

populations income is spent on wants and desires rather than on basic

needs.

For example, in planning for a family vacation the mother may make

the hotel reservations but others in the family may have input on the

hotel choice. Similarly, a father may purchase snacks at the grocery
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store but his young child may be the one who selected it from the

store shelf. So understanding consumer purchase behavior involves

not only understanding how decisions are made but also

understanding the dynamics that influence purchases.

Affect on Traders and Small Farmers:

Organised Retail Stores pose great threat to the small farmers as a

new supply-demand chain may be formed. Big stores would move

towards preferred suppliers, and set private grades and standards

which may be very difficult for the local and small farmers to achieve

(Humphrey, 2007). He further adds that UK supermarkets selling a lot

of fresh-food acquire it in ways that appear to be small-farmer-

unfriendly. Similar trend may be followed by the Indian supermarkets,

consequently, destroying small traders. Various


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supermarkets in India like Reliance-Fresh & Spencer's have already

had this impact on the livelyhood of traders (The Economic Times,

2007). Moreover, due to mass protest some supermarkets had to pull

out of two major states of India (Uttar-Pradesh and West-Bengal)

negatively effecting farmers, traders, supermarkets and employees

who lost their jobs. (http://economictimes.indiatimes.com).

Challenges that the Organized Retail Industry faces

Despite the rosy hopes, some facts have to be considered to

positively initiate the retail momentum and ensure its sustained

growth. The major constraint of the organized retail market in

India is the competition from the un-organized sector. Traditional

retailing has been deep rooted in India for the past few centuries

and enjoys the benefits of low cost structure, mostly owner-

operated, therein resulting in less labor costs and little or no

taxes to pay. Consumer familiarity with the traditional formats for


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generations is the greatest advantage to the un-organized sector.

On the contrary, organized sector have big expenses like higher

labor costs, social security to employees, bigger premises, and

taxes to meet.

Availability and cost of retail space is one major area where

Government intervention is necessary. Liberalizing policy

guidelines for FDI needs focus as well. Proper training

facilities for meeting the increasing requirements of workers

in the sector would need the attention of both Government and

the industry. Competition for experienced personnel would lead

to belligerence between retailers and higher rates

of attrition, especially during the phase of accelerated growth of

the retail industry. The process of avoiding

middlemen and providing increased income tofarmers throughdirect procurement by retail chains need the attention of policy

makers. Taking care of supply chain

management, mass procurement arrangements and inventory

management are areas that need the focus of entrepreneurs.

India is now on the radar of global retailers.

Accelerated development of retailing industry in the country and

building brand value of domestic products is essential not only for

marketing our consumer products more efficiently, but also for

the development of our own retailing industry.


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AMcKinsey study claims retail productivity in India is very low

compared to international peer measures. For example, the labor

productivity in Indian retail was just 6% of the labor productivity

in United States in 2010. India's labor productivity in food

retailing is about 5% compared to Brazil's 14%; while India's

labor productivity in non-food retailing is about 8% compared to

Poland's 25%.\

Total retail employment in India, both organized and

unorganized, account for about 6% of Indian labor work force

currently - most of which is unorganized. This about a third oflevels in United States and Europe; and about half of levels in

other emerging economies. A complete expansion of retail sector

to levels and productivity similar to other emerging economies

and developed economies such as the United States would create

over 50 million jobs in India. Training and development of labor

and management for higher retail productivity is expected to be a

challenge.

In November 2011, the Indian government announced relaxation

of some rules and the opening of retail market to competition.

LITERATURE REVIEW

According to the Rangarajan Committee, Modern Organised Retailwill help in containing inflation


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The subject matter of changing attitudes and cross cultureinfluences has had a considerable impact on the consumers ofIndia.

"Cultural meanings include common affective reactions, typicalcognitions, and characteristic patterns of behavior" stated in(Olson & Peter, 2005). There have also been common crosscultural changes over the world which can be applied to theIndian market due to considerable cultural transformation. Thewestern market's impact has created similar opportunities for thesupermarkets in India. On similar lines (Currah and Wrigley,2004) suggest that supermarkets are more prevalent across abroad range of developing countries. However, (Sinha &Bannerjee, 2004) argue that high levels of personalised services

such as credit and home-delivery offered by 'transformed kiranastores' (corner-shop) are making shoppers reluctant to thesupermarket format as a result several successful chains aredelaying their expansion.

Reference-Groups:

Store-choice decisions are influenced by different attitudes acrossthe society. India is rated relatively high on Hofstede'suncertainty-avoidance dimension showing increasing use ofopinion leaders, group-shopping, and reference-groups (Schutte1999). This certifies high intolerance of uncertainty and slowadaptation towards change which can further be supported bydiffusion of innovation, a framework developed by Everett Rogers

(Keegan 2005). In the Asian context the importance of responseby referrals along with acceptance of an innovation reduces theperceived risk of product/store choice.

The Economist (1997) contradicts the above by showing morethan 40% of the Indian population is vegetarian and consumersdislike frozen products including beef & pork. Hence, a trend that


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bends away from the supermarket-culture. Reardon et al (2003,1143) further adds that sales for processed and packaged food atthe supermarkets are relatively low as compared to fresh food.This may pose a serious threat to the supermarkets due to the

lack of interest in processed food.

However, demand for foreign food products is high and continuesto grow. About a decade ago people used to bring foreign goodsfrom trips abroad Bullis (1997). Now these products are availablein the supermarkets as major attractions for the ever-changingIndian society.

Supermarkets prevent these climatic and hygiene problems facedby the consumers, as regular shops don't have suitable

temperature control equipment nor are backed up by 24 hourelectricity.

Trivedi S (2008) has observed that standardization of malls isone of the common phenomenons among malls developers. Thelook and feel of all malls in general is same and somewhatpresents a uniform appearance to the customers. Standardizationhas its own benefits but uniformity may tend to dull customer'sdesire. Developers have not thought greatly about the local

catchment profile.

Shopping Malls have given birth to a new shopping culture -'Shoppertainment'. Nowadays, contrary to the real shopping takeplace, people are opting shopping more for their entertainmentpurpose.

Author talks about black spots of malls. He says malls attract

different level of footfalls and attention from shoppers within itsvarious parts. For example, ground floor attracts more footfallsthan any other floor. Shops around the atrium get the maximumnumber of shoppers. However, there are certain locations in themall which are overlooked by visitors. They are called black spotsof mall. Generally observed black spots are outlets near theentrance, outlets near escalators and elevators and outlets at the


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end of galleries.

Shinde D (2008) suggests that Customers are willing to travel toa nearby mall for that shopping experience that he doesn't get in

the local kirana store. The most common mistake done bynational retailers is Standardization. National retailers have totake care about making the brand relevant to the local consumerin the catchment area of the stores. Gopal P (2007)

When people go for shopping, they, especially youth spend theirentire day at the mall. They want entertainment also for spendingan entire day there at the mall. Strong entertainment needs to bein a mall to encourage loyalty to the mall. Increase in footfalls isnot only important but to convert those footfalls into consumption

is the key to success.

Need of the hour is to create a mall, where people can spendtime with their family.

Most of the malls are providing the same things forentertainment. Like movie theatres, bowling alleys, arcadegames, restaurants. No real differentiation could be seen amongthe malls , The research stresses on retail as a brand rather than

retailers merely selling brands. The focus of this study was onbranding the retail business itself. Store differentiation is missingfrom Indian organized retail. Leading retail stores like Shoppersstop, Lifestyle, Globus, Pyramid etc. offer common brands,similar ambience and a same commitment to improved service.Real differentiation is lacking among them. National andinternational retailers are finding difficult to understand thepsyche of the local Indian customers, their tastes or preferencesetc. Localization with Globalization is necessary for malls.

Situation of lack of professional suppliers in India is also testingthe supply-chain of these organized retail stores as theavailability of stock is one of the major factors for building loyaltyfor a particular store.


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Modern organised retail will be helpful in containing inflation andallowing foreign direct investment (FDI) in multi-brand retail leadsto development of back-end infrastructure that will benefit farmers,according to C Rangarajan, Chairman of the Economic AdvisoryCouncil to the Prime Minister.

Modern retail has been found to offer better prices to consumers

than traditional retail, thus helping to contain inflation, he said inhis inaugural address at a seminar on Organised Retailing vis-a-visFarm Economy of India held here on Friday.

According to Rangarajan, the decision to allow FDI in multi-brandretail would give a substantial boost to the retail sector. It wouldalso lead to growth in related infrastructure as 50 per cent of the

total investment brought in has to be invested in back-endinfrastructure.

He said the fear that allowing FDI could result in large-scalereplacement of small retailers was misplaced. India is a vastcountry. There will be place for both large retailers and smallfarmers, he added.

On the flip side, Rangarajan pointed out, kirana, small and marginaltraders would be affected once the share of the overall modern

retail in food reached 25-30 per cent.

However, he said, these kirana stores and street hawkers couldbecome a part of the modern retail change story if they could beassimilated into organised retail or upgraded through infusion ofcapital and better training. They could also organise themselvesthrough franchises.

Speaking to mediapersons, he said the FDI proposals in the retailsector were expected to be received in the next few months. Atpresent, it was not known how much FDI would flow into the retailsector in the country.

FDI will affect small traders unless they adapt:Rangarajan(rangarajan committee said it was a wrong notion


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that FDI in multi-brand retail would replace small retailers on alarge scale)

NEED AND SCOPE OF STUDY

The Indian retail industry has been fast growing and consumers havestarted to shift towards retail stores. The retail chain has been fastmultiplying with new outlets opening every day. It has a huge impacton the tradition buyers. To get all the things under one roof and get ridof the tradition bargain system. The consumers have started lookingtowards the retail stores. The change in the retail system and theeffect on the consumers need an in depth study to assess the impactof retail stores on the present retail system.


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The study will look into the different social and demographic reasons ofthe consumers for their shifting towards Retail Stores. Also the studywill extend it wings towards the factors affecting the consumer buyingbehaviour. There has been a change in the consumer's attitude

towards retail buying after the emergence of Retail Stores. The studywill try to assess the Impact made by the Stores on consumers andchange in the buying behaviour of the consumers.

RESEARCH OBJECTIVE


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INDIAN RETAIL SECTOR

The retail sector in India is witnessing a huge revamping exerciseas traditional markets make way for new formats such asdepartmental stores, hypermarkets, supermarkets and specialtystores. Western-style malls have begun appearing in metros andsecond-rung cities alike introducing the Indian consumer to a

shopping experience like never before.

The sector is at an inflexion point where the growth of organisedretailing and growth in the consumption by the Indian populationis going to take a higher growth trajectory. The Indian populationis witnessing a significant change in its demographics. Organised


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retail is on all time high in India.

The growth is boosted by various factors such as availability ofprofessional practices, media proliferation, various brands which

are gaining value thereby enhancing industry growth, availabilityof various funding options, regulations like VAT implementationto make processes simple, sea change in demographics ofcountry and international exposure.

The Indian retail sector is highly fragmented, consistingpredominantly of small, independent, owner-managed shops. Thedomestic organized retail industry is at a nascent stage. At themacro level factors such as rising disposable income, dominanceof the younger population in spending, urbanization, shift of the

traditional family structure towards the nuclear family arebuttressing the organized retail growth in India. Being consideredas a sunrise sector of the economy, several large businesshouses are entering the retail industry under multiple modernretail formats. On the one hand, the advancement of informationtechnology is improving end-to-end business processing byintegrating the entire value chain, backward and forward, foroperational efficiencies. On the other hand, rising real estateprices, infrastructure constraints, and expensive technology are

making the retail industry capital intensive. The current regulatory environment is not very conducive to the

growth of modern retail in India. The Government of India (GOI)prohibits FDI in retail except for single-brand JVs with up to 51per cent equity share. The recent growth of the retail industry isalready impacting the commercial real estate sector. As a resultof shortage of land and rising property prices, finding property incommercial markets is becoming difficult. Further, the landconversion process is complex. The licensing process for

organized retail is cumbersome requiring as many as 33 licensingprotocols. Taxes differ from state to state on the movement ofgoods: for instance, some states levy entry tax; a few levy exittaxes; in some states, the local municipal government also leviesoctroi. Presently, there is the central sales tax (CST) of 3 per centon inter-state sales and value added tax (VAT) of 4-12.5 per centon different products. Besides, the lobby against modern retail is


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mounting in recent months from traditional retailers.

Organised retailing has definitely made headway in the upperclass. However, even in this segment, items such as milk, fruits,

vegetables and a significant portion of `through-the-month'purchases seem to be done at traditional outlets. The middleincome class prefer shopping for processed food and personalcare in supermarkets and fall back on traditional outlets for bulkshopping. Organised retail outlets seem to be associated withbranded items/special purchases. Organised retailing does notseem to have made an impact on the lower class, except for`curiosity' shopping. There may be initial hiccups for the largeplayers in getting the sourcing and the supply chain to worksmoothly but sooner or later, the economies of an efficient supply

system will give the modern retailers a distinct edge over theunorganised, small ones.

Though there are positive outcomes of modern retail, with themost important one being the better price realization potential forthe farmer and the price-inflation dampening effect for thehundreds of millions of lower and middle income consumers. But,organized retailing has its own set of challenges:

Expected impact of FDI in Retail Ernst & Young India

Viewpoint

The Union Cabinet has approved 51% FDI in multi-brand retail and

raised the cap on FDI in single-brand retail from 51% to 100%.

Partner & National Leader - Retail and Consumer Products,

Pinakiranjan Mishra, and Partner - Tax, Paresh Parekh, share their

views on this development.

Growth of the Retail sector in India - Improvement in

Retail capability building


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About 5-7 years back, the industry was expected to grow at a much

faster rate than what it actually has. Lack of retail experience &

capability has been one of the primary reasons for this subdued

growth. FDI in retail will make way for inflow of knowledge from

international experts which can give boost to the overall growth of the

industry. Capability building apart from financial investments is

extremely important for the industry.

Push to Infrastructure - Improvement in management of

supply chain

FDI in retail will boost investment in infrastructure from the retail

players, 3rd party supply chain companies as well as the Government

in the back of a sophisticated front end that international players are

likely to bring. This will improve the efficiency of the supply chain,

which will bring down the wastage, increase efficiency and reduce the

overall cost to the consumer

Push to productivity - The Farming Community in India

Our productivity in food & agriculture is one of the lowest in the world

and there is a significant opportunity for up-liftment of output with

investment in better farming practices. FDI in retail will mean that the

farming community will have a new support group with a commoninterest which is expected to give a great push to productivity.


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The above views are shared by Pinakiranjan Mishra, Partner &

National Leader - Retail and Consumer Products, Ernst & Young

India.

Likely impact if there is relaxation of FDI policy in Retail

Single brand

This is a welcome step. FDI investment in single brand retailing till

now has just been 0.03% [Rs 204 cr / usd 44 mn] of total FDI

investments from April 2000 to September 2011. This relaxation is

likely to result in increase in FDI in retail sector, by way of either new

foreign entrants, or buy outs / increase in stake / M&A amongst

existing single brand JVs with foreign partners. We could also

potentially see present licensing / distributor / franchise arrangements

being converted to either JVs with respective foreign retailer / brands,

or, foreign retailers completely buying out the Indian licensee /

franchisee / distributor.

Multi brand

This is a welcome and historic step. This is likely to result in increase

in investments and growth in Indian retail sector, which is ranked

amongst the top retail destinations in the world. Besides new entrants

/ joint ventures, this could also result in combination of existing cash

and carry operations of foreign players with retail operations of Indian

retailers, or, foreign retailer acquiring stakes in existing Indian retail

entity. Also, this could provide further options to existing Indian retail


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chains / groups to raise long term capital for expansion and maybe to

attract partnerships with some global players. Also, foreign multi brand

retailers, who did not want to enter India through cash and carry

operations, may now explore Indian presence by having stake in

Indian retail compan

The above views are shared by Paresh Parekh, Partner - Tax,

Ernst & Young India.

The essay examples we publish have been submitted to us by

students. The essays are the students' work and are not examples of

our expert essay writers' work.

RESEARCH METHODOLOGY

QUESTIONNAIRE (CONSUMER )College Research ( Jagannath International Management School, Vasant Kunj)

Name

Age

Gender


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Occupation

Student

Service

Self Employed

Other:Annual Income

Below Rs 5,00,000

Between Rs 5,00,000 -15,00,000

Above Rs 15,00,000Why did you choose this organised retail outlet?

Variety

Attractive Offers

Personalized Service

Other:Was this your first time buying a laptop?

Yes

NoWere you sure of the model you wanted to buy?

Yes

NoDid you seek assistance?

Yes

NoTill what extent did you find the assistance helpful?

Rate on a scale of 1 to 5

1 2 3 4 5

Not Helpful

Selecta value from a range of 1,NotHelpful, to 5,Very Helpful,.

Very Helpful

Were the sales persons well aware of products and its features?


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Rate on a scale of 1-5

1 2 3 4 5

Unaware

Selecta value from a range of 1,Unaware, to 5,WellAware,.

Well Aware

Did the assistance provided influence your buying decision?

Yes

NoSuggestions for improvements in sales persons to make this experience better?

Submit

QUESTIONNAIRE(SALES PERSONNEL)College Research(Jagannath International Management School)

Name

Gender

Male

FemaleName Of Outlet

Prior Work experience in this field?

Yes

NoWere you trained before joining the outlet?


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Yes

NoAre you well versed with specifications of the product?

Yes

NoAverage number of customers attended to in a day?

Below 15

Between 15 - 30

Above 30On an average how many consumers become buyers after your assistance?

Till what extent do you think you are equipped to solve buyer query?

1 2 3 4 5

Not Equipped

Selecta value from a range of 1,NotEquipped, to 5,WellEquipped,.

Well Equipped

Do you feel you require further training?

Yes

NoAre you satisfied with the rewards and bonuses received for meeting sales targets?

"If Any"

1 2 3 4 5

Unsatisfied

Selecta value from a range of 1,Unsatisfied, to 5,Satisfied,.

Satisfied

Suggetions for improvement


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Submit


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FINDINGS (Consumer survey)

Occupation

Student 12 20%

Service 27 46%

Self Employed 17 29%

Other 3 5%

Annual Income

Below Rs 5,00,000 22 41%

Between Rs 5,00,000 -15,00,000

19 35%

Above Rs 15,00,000 13 24%


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Why did you choose this organised retail outlet?

Variety 33 55%

Attractive Offers 16 27%

Personalized Service 10 17%

Other 1 2%

Was this your first time buying a laptop?

Yes 23 37%

No 39 63%

Were you sure of the model you wanted to buy?

Yes 33 54%

No 28 46%


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Did you seek assistance of the employees at the outlet?

Yes 44 76%

No 14 24%

Till what extent did you find the assistance helpful?

1 2 4%

2 9 16%

3 22 39%

4 16 29%

5 7 13%


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Were the sales persons well aware of products and its features?

1 1 2%

2 15 26%

3 14 25%

4 19 33%

5 8 14%

Did the assistance provided influence your buying decision?

Yes 36 60%

No 24 40%


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FINDINGS(Sales Personnel Survey)

GENDER

Male 22 76%

Female 7 24%

Prior Work experience in this field?

Yes 20 69%

No 9 31%

Were you trained before joining the outlet?

Yes 22 73%

No 8 27%


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Are you well versed with specifications of the product?

Yes 26 93%

No 2 7%

Average number of customers attended to in a day?

Below 15 10 36%

Between 15 - 30 14 50%

Above 30 4 14%


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Till what extent do you think you are equipped to solve buyer query?

1 0 0%

2 6 21%

3 6 21%

4 11 39%

5 5 18%

Do you feel you require further training?

Yes 18 67%

No 9 33%


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INFERENCE

Consumer

People prefer organized retail outlets for the wide variety of

products available.

More than Two-third of prospective consumers that walk into

organized retail outlets seek the assistance of sales personnel

It was observed that at least 6 out of 10 were influenced in

their buying decision by employee interaction

Almost half of prospective consumers were from service sector

More than 50% were aware of they were looking for

beforehand


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Sales Personnel

More than 60% employees had prior experience in the field of

electronic goods.

Almost 90% of the sales personnel were well aware of product

specifications.

As many as 50% of employees attended to a minimum of 15customers a day.

67% of the sales force feels they need further training to meet

the ever changing technology


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Conclusion

Based on the data collected, analysed and interpreted we have

reached to the conclusion that employee interaction is the most

important factor in converting prospective clients into loyal

customers for the organized retail outlet. The tools used to arrive to

the following conclusion as mentioned above is a quantitative

primary source of data(Questionnaire),as well as a qualitative

aspect of the conclusion which was identified by a personal

interview of the consumer as well as a senior sales manager.


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Consumer Survey

46% of the consumers are employed in the service sector. This highlights

the fact that service sector employees have the highest demand among

people from varied occupations. This analyzed statistic helps the firm in

determining their target market.

As mentioned above a majority of purchases of the product (laptop) are

from consumers who earn less than 5,00,00 annually. This goes to showthat trained employees in organized retail outlets can overcome the major

limitation of said outlet i.e. personalized sales? Due to this a skewed

observation is made which is the variety of products as well as the trained

sales personnel enable the consumer to decide precisely what kind of

laptop is best suited for their needs.

More than half of the consumers prefer organized retail outlets primarilyavailability of a wide variety of products. This is because, the core

competency and USP of an organized retail outlet is the fact that it offers

multi branded products to the consumers as opposed to a traditional store

where products of a particular brand are available.

Two-thirds of the consumers had already purchased a laptop in the past,

this is an important detail because though most of the consumers have atsome point in time, owned a laptop, but feel the need to make the

purchase as a reason of technology getting obsolete, this is one of the

reasons why organized retail in electronics has tremendous potential in the

current scenario.


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The research shows that more than 80% of the consumers found the

assistance provided by trained employees to be more than moderatelyhelpful to the consumer to influence consumers buying decision.

The next facet of the enquiry of consumers was to determine whether or

not they thought that the employees were well aware of the product and its

features we have concluded that three-fourths of the consumers were more

than moderately Satisfied with the personal assistance this clearly

indicative that .


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Salesmen Survey


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Suggestions


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what is organised retail

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