Impact of branded stores on kiranas

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BUSINESS RESEARCH METHODOLOGY

IMPACT OF BRANDED RETAIL CHAINS ON SMALL RETAIL SHOPS

FINAL REPORT

CHIRANJITH BASU (09BSHYD0234) 39HARSIMRAN (09BSHYD0313) - 61ISHWARYA.B (09BSHYD0326) 59ROHITH (09BSHYD0539) 60SNEHA MEGHANI (09BSHYD0830) - 71

GROUP 8

Submitted toProf. SashikalaBRM faculty

IBS, HYDERABAD

11, January, 2010

I.N.D.E.X


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INTRODUCTION.1

LITERATURE

REVIEW7a) ConceptualFramework.9

b) Attributes identified in theliterature.14

c) Store Image and Consumer Shopping Habits: IndianContext..17

d) Traditional Retailers Perceptions About OrganizedRetail.19

EXECUTIVE SUMMARY

22

PROBLEM DISCOVERY24

METHODOLOGY26

a) Perceived importance of store attributes27b) Exploratory

research.28c) Experience

survey.29i) Diagnosing a situation29ii) Depth Review.30

d) Secondary Data Analysis32i) Qualitative Fact Finding...32ii) Problem Definition..34iii) Questionnaire Formation.35iv) Questionnaire..36

SAMPLING..

43a) Sample planning43b) Sampling Generation....44c) Scales.4

6d) Survery Method.47

SPSS SCREEN SHOTS


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a) Factor Analysis49

b) Regression....53

ANALYSIS OF THE CONSUMER CHOICE OFFORMAT..55

CONCLUSION.59

REFERENCES

60

INTRODUCTION:

As economic figures suggest that consumers are slowing returning to the

high street and big flagship stores such as M& S report an increase in sales,

is the high street back in business?

The world of retail has the customary high and lows of a theme park roller

coaster and as one big high street name makes an attempt at a comeback

another sinks into despair and is deserted by its previously loyal following.

Marks and Spencers seems to have made inroads on its rather disastrous

past couple of years but in a high street saturated with stores, consumers

are presented with an increasing amount of choice and competition, we

wanted to discover how retail behavior changed in 2005 and the implications

and consumer trends for 2006.


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Consumers, who are as news aware as marketers, were conscious of the

much-reported down turn in consumer spending. News shows and

newspapers were not shy in telling us about the slump in high street

spending and the drop in profits at major retailers across Britain. And it did

not go unnoticed, either through personal experience or the media, that

Britain is a nation in a growing amount of debt, factors that have unarguably

shaped retail spending in 2005. While the boom might not be back, there is

increase in consumer spending this quarter. Why is this and how are

consumers behaving in the light of increased technological usage and more

sophisticated in store media and trendy environments?

The shift from one designated retail location, to the popularisation of out of

town retail centres and the move by supermarkets into non- food markets

has significantly altered our ideas of retail experiences. Time poor young

professionals and those working traditional working hours are able to

purchase many items at the supermarket rather than visiting the high street

at weekends. The internet has also led to a collapse in static shopping hours

and predictable times for certain sales.

Consumers wants are no longer restricted by opening hours or store location

and as such we are becoming much more fussy about where we spend our

money, making marketing increasing difficult as consumer spending patterns

become more erratic and are less dependent on whats on offer and instead


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becoming increasingly customer led. The range and number of sales of

random products on Ebay is testament to this. So while marketers might

seem to know what consumers want, it seems that want we want needs no

marketing at all. What consumers want is, in large numbers, items that just

arent available on the high street at bargain prices.

Ebay offers consumers the convenience to browse and compare a large

number of products from the comfort of their own homes and the ability to

determine or influence the selling price themselves, an experience that they

do not have on the high street and one which perhaps explains the

popularity of going to markets for the over 50s we interviewed as part of our

research. So taking part and feeling like they have some sway in the

purchasing process is one of the key elements we picked up on in our study

and something that is clearly lacking in the monotonous retail experiences

we are now presented with on the high street.

Online shopping of course offers considerable savings, which has played a

big part in its success and price deflation and the exponential growth of

discount stores are other factors that have shaped retail spending and

behaviour in 2005.

Though we may have become wealthier, we have also become more

watchful of the purse strings as the ability to shop around for a bargain

becomes easier. Price runner and 99p stores offer an avenue for acquiring


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goods at the best value and brand loyalty has been eroded by the saturation

of similar goods for less money. Why pay more indeed. Purchasing an item

for considerably less than someone else became a new form of pulling social

rank, inverting the traditional Keeping up with the Jones spending agenda;

Primark is enjoying its heyday, as consumers rush to snap up the latest

fashion bargains for next to nothing.

Brands themselves are becoming less important and more diluted by the

international competition and the increased volume of competition meaning

mediocre brands are finding it increasing difficult to stay afloat. We would

rather buy on brand at a cheaper price than a half decent branded version

that costs more.

In order to compete with financial savings stores have turned to making their

in store environment an superior experience, with interiors that are more

exciting and inviting with the increased use of in-store media and

technology. Deploying the latest gadgetry has been successful in luring back

customers, especially when it echoes internet capabilities. Consumers told us

that in store entertainment and machines no only makes a shop seem more

trendy, it can make they stay longer too. This is because they can act as a

source of distraction for bored boyfriends and partners and also because

they allow consumers to view more of the stores products without having to


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

experience.

In store media must never impose on store design though and layout is the

single biggest determining factor after price for high street store

preferences. Consumers want bright open spaces that are easy to navigate

and have products that are well-presented, especially older consumers that

find over stocked stores particularly annoying. Consumers are prepared to

sacrifice space and order, but only for significant reductions and value.

Improving in store environment seems essential for continual success and

our respondents demand air conditioning, better seating and displays and

more access to refreshments, suggesting an attraction towards stores that

provide food and drink dispensing.

Staffing is also an area that can make or break consumers retail

experiences. Obtaining the right balance between being overbearing and

non-existent staff is difficult but vital to creating a good store image and

something that consumers believe is still not being got right. Personal

service and not being held in a queue is something that we have gotten used

to on the internet. Self-service options, which are becoming standard in

many of the major supermarkets, go somewhere towards achieving this.


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Further initiatives for improvement suggested by our responses however,

hint that more interactive devices would be welcomed, including machines

that display information on stock in clothes and electrical shops. These again

point towards shopping experience that is almost completely dictated and

carried out by the customers themselves, not the staff.

Consumers with increasing amounts of disposable income are the over 50s

and tweens and we investigated their spending habits. The over 50s are

family orientated and much of their money is spent on family and friends

while the tweens spend their money on ensuring and impressing friends. And

while the two demographics have very different attitudes towards money,

brand awareness and desirability can be tracked in these age groups. We

discovered that from the age of eight strong brand associations have been

formed that can last into adulthood. Many of the over 50s we interviewed

admitted that the brands they still buy today are a hangover from their

childhood, the brands they were brought up on. Brands can be trusted

friends or representations of emotional stages and family ties.

Top stores for over 50s are Marks & Spencers, John Lewis and Next but

catalogue shopping is still a popular option of acquiring goods and as afore

mentioned shopping at markets or car boots sales are still a big part of this

demographics shopping experience, suggesting that value for money and


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involvement in the sales process are requirement that are missing from high

street shopping.

Our research showed that todays savvy consumers demand increasingly

creative and more importantly interactive strategies, to entice them into

stores. Discovering what makes consumers tick and buy from certain stores

can perhaps be achieved by returning to more traditional retail methods that

allow the consumer to participate or interactive with the seller on a more

personal level or implement new technology that streamlines the purchasing

process as smooth and painless as possible.


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LITERATURE REVIEW:

The Indian market has seen vast changes in political, economical and social

environment, which has a great impact on consumption. With the Indian as

well as international corporate entering into the Indian retail scenario the

market has been divided between the traditional and the organized sector.

The Indian retail scenario is presently facing the similar situations as the

mom and pop stores in the developing nations faced at the emergence big

box retailers. There are various issues that need to be addressed, like what

would be future patterns of consumption, which formats of retail would be

preferred by consumers and will the rise of organized retail affect the

traditional retailers.

This research was developed to overcome this gap. The first part of the

paper deals with a historical analysis of the Indian retailing structure followed

by the review of literature on store image reviewed and finally the last part

deals with the results of empirical studies in Indian metros is discussed.

This study contributes to the understanding that consumers and retailers in

most cases have different perceptions in relation to store image and


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shopping habits, justifying the need for consumer marketing research, which

is important in helping retailers, implement in a real marketing orientation.

The paper examines the choice of format the consumer has when he or she

decides to buy a particular product. The paper also describes the

development of organized retail in the future, focusing on aspects with

potential effect on purchasing behavior among the consumers. The focus is

on consumer expectations. The questions were formulated to capture the

overall behavior of the consumers and with the help of the survey

questionnaire the analyses was done.

An attempt has been made to explore the way organized retail has

dramatically changed not only the Indian traditional retailing structure but

also the consumption behavior. To understand the impact and choice of retail

format by the consumers a questionnaire was used, and the results show

that, for consumers, the shopping mall or variant of organized retail format is

the preferred type of retail store, due to convenience and variety.

Three questions were formulated in order to capture the overall purpose or

objective of this section of the research:


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1.What are the most favored retail attributes by consumers and how will

they change in future?

2. How are the conventional and organized retailers perceived?

3. What external forces influence the choice of consumers and how can

these

forces be accounted for in future?

A) Conceptual Framework:

This research enquiry begins with a description of a conceptual framework of

purchasing decision behavior. The framework captures purchasing behavior

in

general and was used as a guideline in the research and specific aspects of

the

framework were emphasized.

Product or service requirements refer to the buying motives and their

associated

purchase criteria. Retailer accessibility is the evoked set of product/supplier

options available to the consumer to satisfy his product requirements. The

model indicates that the competitive structure of the retail sector, the

corporate image of the retailer and marketing activities influence the retailer

accessibility.


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Based on the consumers requirements and product/retailer accessibility,

competing offers are evaluated by the consumer. We found that most

consumers buy many products, and they operate in a pressured work

environment with little time available to evaluate, in formal way, detailed

and subtle criteria. They therefore argued that buyers use only a subset of

product requirements (i.e., evaluative criteria) to decide between different

products and retailers when making actual purchasing decision.

The framework, briefly described above provided some guidance in framing

this

research and making the questionnaire to study the purchasing behavior of

Indian buyers while deciding the format to chose to shop from.

As the economy and society have changed, so retailers have responded and

shopping as an activity has altered enormously. Retailing is one of the most

dynamic and rapidly changing sectors of Indian industry bearing little

comparison with the business that operated 50 years ago. Multiple retail

companies now dominate the sector, to the threat and decline of small

independent business. These independent stores face increased pressure

from the multiple retailers, superstores, small store format (such as high

street stores), petrol forecourts and many are being squeezed out of


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existence altogether. Even the wholesale symbol groups have been

developing their own store portfolio. Independents who enjoyed over 80

percent of the market share till early 90s have seen this market share halve

by 1995 to just over 40%.

The decline in the number of small shops has different implications upon its

existing customers depending upon locations and alternative options to

shop. The closure of a local neighborhood shop with a superstore nearby

would affect the residents of a local neighborhood differently compared to

the closure of the only shop in a small locality without a superstore nearby.

Various arguments have been made in support to the only shop in a locality,

arguing that they play an important vital role in the community and work as

a support network of the locality. However People may have warm feelings

towards the ideal of a small shop, but unless that warm feeling converts to

hard cash, were all going to be in the nostalgia business.

If conventional retailers are to survive, it will be vitally important to

understand what the residents in a particular community want from their

retailers. Only those stores with a clear understanding of their customers

wants and the changes that are occurring within the market place can hope

to survive by identifying and then satisfying some of those needs more

effectively than their competitors. Independent retailers have increasingly


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been under threat with the growth of major multiple retailers in the

organized retail scene, but independent small

shops operating in local community locations do serve a function whether it

be a social or a community one, or providing a vital service to certain groups

of consumers. This might be through the provision of their total shopping

requirements or via top-up or emergency products. Although independent

small conventional shops comprise the majority of all retail businesses in

India, and have always provided a social as well as economic function to the

communities they serve, their share of retail sales has been eroding in favor

of the major

organized retail stores since the mid 1990s.


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B) Main Attributes Identified in the Literature:

The concept of store image, considered as the way consumers see the store

in their minds, based on tangible and intangible attributes, deserved a great

deal of academic and empirical attention, during the last four decades. The

importance of studying the image is based on the assumption that the store

possessing the most congruent attributes with the image desired by

consumer will have better chance of being selected and patronized.

Therefore, the store image can be used as a marketing tool (Engel et al.,

1995), or as a competition tool providing useful indications to managers

about the most and the least appellative attributes to consumers, and

therefore, the insights for the marketing mix conception.

In spite of the importance and the long history of academic research into

store image the relation between image/attitude and store

patronage/choice/preference is complex and polemic. In fact, even though


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the executives relate attitude and patronage, there are few studies that

support that relationship (Monroe and Guiltinan, 1975). The concept of

relative attitude reinforces the complexity of that relationship (Dick and

Basu, 1994). The authors conceptualize consumer loyalty as the relationship

between the relative attitude towards an entity (brand/service/store/vendor)

and patronage behavior. Two dimensions, the degree of attitudinal strength

(weak or strong) and the degree of attitudinal differentiation (existent or not)

seem to underlie an individuals relative attitude towards an entity.

Therefore, a weak but positively differentiated attitude may be more likely to

lead to loyalty than a very positive but undifferentiated one; however, it is

also important to consider the influence of normative and situational factors.

Besides being relative, the store patronage behavior is also dynamic, and

that is more explicit in buying situations of involvement, risk, evaluation of

alternatives and information search (Monroe and Guiltinan, 1975, Darden

and Dorsch,1999). This dynamism is crucial in order to understand the

changes in consumer behavior.

The literature refers to a great diversity of methodologies, to varying

temporal and spatial contexts, and to different store types, which make both

generalizations and typology construction difficult. Contradicting Martineaus

(1958) emotional and affective perspective of store patronage, empirical

evidences show a number of functional and objective attributes as the most


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important, such as price (Doyle and Fenwick, 1974-1975;Bearden, 1977;

Arnold et al., 1983; Hortman et al., 1990; Finn and Louviere, 1996); product

quality (Doyle and Fenwick, 1974-1975; Bearden, 1977; Hortman et al.,

1990); assortment (Stephenson, 1969; Doyle and Fenwick, 1974-1975;

Schiffman et al., 1977; Bearden, 1977; Finn and Louviere, 1996) and

location (Stephenson, 1969; Schiffman et al., 1977; Arnold et al., 1983;

Hortman et al., 1990).

Concerning intangible and emotional attributes, the most indicated are

the atmosphere and

store characteristics (Martineau, 1958; Stephenson, 1969); sales

personnel (Martineau, 1958; Stephenson, 1969; Schiffman et al., 1977) and

advertising (Martineau, 1958; Stephenson, 1969).


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C) Store Image and Consumer Shopping Habits: Indian

Context:

In India, some empirical studies provide important information about

consumer

behavior and its responses to the development of organized retail.

Economical

and social changes are major contributors for a growing fragmentation of

consumers into multiple segments with different values and buying priorities.


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Consumers have become more pragmatic, educated and demanding,

learning

how to manage money and time more efficiently. The focus on low prices

was

gradually replaced by a value for money perspective. The study developed

by

ETIG (Economic Times Intelligence Group, 2002) confirms these tendencies.

Concerning food, the most important attribute mentioned was quality,

followed

by price. Indian consumer has different reasons for preferring different store.

The formats, either modern or traditional; Sen (2000) confirms this in the

study

undertaken in Indian context. He confirms that in the case of hypermarkets,

the

main motives for preferences, in decreasing order are low prices, the

possibility

of buying everything in the same place and the general appearance of the

store. Several investigations emphasize the possible coexistence of different

store formats (Chandrasekhar, 2001) and others point out the relationship

between the type of store and the type of products (Sen, 2000; Bhatnagar,

2002). These studies show that, while specialized and traditional stores are

preferred for fresh products, hypermarkets are preferred for shopping in


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general, and also for frozen food, groceries and beverages. The purchase of

perishables in hypermarkets is reduced.


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D) Traditional Retailers Perceptions About Organized

Retail:

As already mentioned, organized retail has deeply changed the Indian

commercial structure. However, it is not exclusively responsible, as other

changes (economical, social and cultural ones) have occurred

simultaneously. Concerning the more direct effects of organized retail on

different types of commerce, it is possible to verify that the major impact is

felt on traditional retail and, in particular, on the food sector. The impact of

organized retail is also significant on other types of retail, namely toys,

stationery goods and household appliances; moreover, it is probable that

competition gets more intense in other sectors, such as clothing and

furniture.

A French study shows that the impact of organized malls and supermarkets

is especially strong over non-specialized stores; stores that use normalized

sales methods; generalist stores; very small stores operating on their

survival limits; stores located near hypermarkets and with no alternative

goods. In India, a study (Radhakrishnan, 2003) verified that, in the food

sector, the most affected stores are precisely the smaller stores (small areas,

few employees and low sales

volume) and the isolated stores (stores that do not develop partnerships with

other retailers).


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Concerning retailer's perceptions about problems in commerce, studies

developed in India show that the most mentioned motives for crisis are, in

the first place, related to political decisions. Retailers agree that their own

competitive attitude and behavior are among the causes for problems

associated with commerce. However, in their opinion, these are not the

major causes. In terms of the most important competitive factors of

organized retailers, traditional retailers mention lower prices, schedules,

products assortment and better adaptation to consumer shopping habits.

Concerning the way they analyze themselves, they identify the attendance

and the close relation with customers as their main advantages; in terms of

their main weakness, they mention the small dimension.

Hypermarkets is considerably superior, going from 8000 to 120,000 square

meter;

one of them is Spencer Plaza amongst the largest in the country. The review

of literature identified a number of studies focusing on buying behavior of

Indian consumers from organized retailers. The reviewed studies may

uncover important dimensions that purchasers use in their purchasing

process and will be used in our study of purchasing criteria and format

selection

of consumers.


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Shopping in the organized retail outlet is generally done on a regular basis

(around 40% buy once or twice per week), which goes against the decreasing

tendency and the systemization of visiting malls reported by Retail Biz (Sep

2003). This might be related to the fact that organized retail stores in Indian

cities are not far from large resident areas. In terms of period of the day, the

preferred ones are the morning and the afternoon, that is, the hours chosen

by the consumers to buy in malls and supermarkets match the schedules

practiced by the majority of traditional retail stores. This result may be

justified by the fact that a considerable part of the

sample is composed of housewives and retired people. Regarding goods

bought in the different kinds of stores, the results show that detergents,

household and personal cleaning products, groceries, beverages and dairy

products are, clearly goods that consumers buy in supermarkets (66, 66, 61,

63 and 61%, respectively), in detriment of traditional retail stores (21, 19,

23, 21

and 22% respectively). Besides these goods, fruit, frozen foods, toys,

plants/gardening and tools are also purchased with greater regularity in

malls and supermarkets than from traditional retailers, in spite of the small

differences. The retailers' and consumers' attitudes match in terms of

considering that hypermarkets offer more advantages than traditional retail

regarding prices, promotions, assortment, novelties and schedules.


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EXECUTIVE SUMMARY:

In the current world of globalization a constant adaptation and reinvention of

marketing strategies is needed to satisfy the local customers in the global

markets. The retail sector of India is currently witnessing tremendous

growth, but there has been a growing concern for the future of the traditional

small scale retail shops because of this all-pervading presence of branded

retail stores. In a country like India, there are huge differences across the

consumers in terms of their demographic orientation like culture, economic

condition, purchase attitude and so on. In this project we intend to find out


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the impact of the branded retail chains on small traditional retail shops. FICCI

has projected that the Retail Industry in India is likely to cross Rs. 10,000

billion by 2010 and the share of the organized sector in it is likely to exceed

20% which presently is at around 3% mark.

Branded Retail Chains: Chain stores are retail outlets that share a

brand and central management, and usually have standardized

business methods and practices. These characteristics also apply to

chain restaurants and some service-oriented chain businesses. The

displacement of independent businesses by chains has generated

controversy in many countries, and has sparked increased

collaboration among independent businesses and communities to

prevent chain proliferation. In India the retail chain sector consists of

roughly 14 Lifestyle stores, 6 Home Centre stores and 1 babyshop-

store across Chennai, Hyderabad, Bangalore, Gurgaon, Delhi, Noida,

Jaipur,Kolkata,Mumbai and other tier-2 cities. The Retail Industry in

India has come a long way from the traditional unorganized retail

sector consisting of petty shop-owners selling a wide variety of articles

both individually and collectively to the modern organized retail sector

consisting of Retail Chains and other departmental stores providing

everything under a single roof.
http://en.wikipedia.org/wiki/Retailinghttp://en.wikipedia.org/wiki/Brandhttp://en.wikipedia.org/wiki/Retailinghttp://en.wikipedia.org/wiki/Brand


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

spectrum. Usually owned by family, retail shops are run from

residential or commercial streets or from shopping centers. Such

a retailer buys goods or products in moderate quantity from local

stockist, manufacturers or importers, either directly or through a

wholesaler, and then sells individual items in small quantities to

consumers who are general public or end user customers.

PROBLEM DISCOVERY:

The Indian retailing industry is poised to grow from USD 322 billion in 2006-

07 to USD 590 billion in 2011-12(Source: According to CII(Confederation of

Indian Industry) National Committee on retail). It is set to enter a new growth

trajectory owing to rising household consumption and a host of factors.

Indian organized retail market has grown by 10% on an average for the past


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

Index.

From the above facts, it is clear that the unorganized retail sector in India

is going to face hard times in the coming years due to the advent of more

number of corporate retail giants. Hence there exists Uncertainty about

the future of the Indian Kiranawala. Our project focuses on the impact how

the local retailer faces in terms of sales, his attitude towards his future

corporate retail competitors(Does he ready to face competition?).


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METHODOLOGY:

Before explaining the methodology, two issues need to be discussed: the

commercial structure of India and the concepts of traditional retail and

organized retail to avoid possible ambiguities in terms of terminology.


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The Commercial structure of India has faced deep changes over the last few

years, which is greatly related to the development of organized retail.

Currently India boasts to contain 12 million retail outlets together in

conventional and organized formats with major aggregation of organized

formats in the cities like Delhi, Chennai, Kolkata, Hyderabad, Ahmedabad,

Bhubaneswar and Mumbai. Simultaneously, these cities have a large number

of grocery stores, a typical format of traditional food retail.

The concept of conventional retail is used as encompassing small-sized

commerce, i.e., groceries, minimarkets, pure food stores, specialized food

and non-food stores and bazaars. Regarding specialized stores, clothing

stores are considered as specialized ones. As for the concept of organized

retail, there is some confusion, Levy and Weitz define organized retail as a

multi-format retail stores offering low prices, and combines a discount store

and super store, while A.C. Nielsen, gives a different definition, considering

the organized retail as a commercial retailing establishment with a sales

surface superior to 2500 square meter, explored in free-service system and

commercializing a great variety of products. As data provided by Nielsen are

widely used in India and in the rest of the world, it was decided to adopt

them.

A) Perceived Importance of the Store Attributes:


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The respondents were asked to rank the attributes listed in the section two

of the questionnaire. There were no restrictions on the ranking system; the

respondent was allowed to give any rank from 1 to 7 for a particular

attribute. There were 23 store attributes listed in the questionnaire, these

attributes were studied in order to gauge the importance of organized sector

over the unorganized sector. All the attributes listed here are specific to the

organized sector and the assumption here is that if the consumers attach

much importance to these attributes then their preferred format is the

organized retail stores. In case the respondent felt that a particular attribute

was not of any importance, its presence or absence, did not

make any difference then they were asked to put a zero against it, the

blanks were also considered as zero importance and these cases were taken

as unanswered response.


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B) Exploratory Research:

To clarify the above Uncertainty, we conducted exploratory research to gain

better understanding of the dimensions of the problem. The purpose of

exploratory research is intertwined with the need for a clear and precise

statement of the recognized problem. There are three interrelated purposes

for exploratory research:

Diagnosing a situation.

Screening alternatives.

Discovering new ideas.

The methods we used for exploratory research are Secondary Data Analysis,

Experience Surveys, Case Study.


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C) Experience Survey:

I) Diagnosing the Situation:

To get the broader scope of the problem, we selected a few set of people

who are knowledgeable and working in the retail sector. As a part of the

study, we discussed the questions with few constraints to those set of

people. One of them was an MBA pass out who settled in his ancestral retail

business from the past 5 years. He was explaining the hindrances he is

facing because of the advent of theMore (Aditya Birla Group) to the city. He

Pointed out some reasons such as Target group constraints, Location

Constraints, increase in the disposal incomes with the people(especially 35%

hike in salaries with central government employees). He said that, because

of the salary hike with the central government and state government

employees, those people prefer Malls to Mom and pop shops. He also shared

that his revenue mainly comes from those employees. He proudly said that

before the advent of The More and some hypermarkets in the city, even the

district collector used to come to his shop to purchase the items. He also

expressed his idea that, he is ready to tie-up with the Corporate giants such

as Wal Mart and Reliance Fresh as a franchisee to run the business, if he

gets the chance.


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II) Depth Interview:

We had an depth interview with a women who is running retail business in

her locality from the past 20 years. She shared lots of intricacies involved in

the retail sector. We started our interview with a basic question:

Do you feel the corporate giants of retail sector such as Reliance

Fresh and More as your competitors?

She said that she is not feeling them as her competitors. She is not scared of

them even if a Big Bazar or any hyper market comes and start adjacent to

her shop. She had given the fact that during the recession times its not Big

malls resisted to global recession, small pop and shops resisted to the

recession. Their sales were not at all effected by global recession stating the

fact from the regional newspaper she read.

To get more clarity to the situation, I asked a probing question which gave us

clear understanding of the problem.

Can you tell more about the above facts by giving an example?

She has given a nice example how they take the advantage of those malls at

the time of inflation/recession. At times, when the price of the sugar in the


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market rises, instead of buying the sugar from the local wholesaler, they buy

from the big stores as these people have their own suppliers and get large

discounts on bulk purchases. Hence, we could sell the same product with

less price during the inflation times, taking the advantage of those stores.

Can you tell me the advantages you get over the big stores?

She smiled at me and gave a good example. She told that the countries like

India faces many Strikes(or bandhs) apart from various conventional

Holidays(such as holidays, festivals etc.,) because of diversified nature of the

country. During those times, we can take the advantage of opening the shop

for a period of 3-4 hours in the evening for the emergency needs of the

customer. Hence, we can make sales during those times also.

The facts we could find out from Experience surveys is that any average

retailer can earn a minimum of Rs.10,000 per month on an average in a year

in any part of our country even though he faces stiff competition from his

peer local shops.(N.B: this fact is not a conclusive figure, it is based on our

estimation of our subjects).

So far our exploratory research provided only qualitative evidence, which we

are trying to get conclusive evidence based on our subjective research. To

get more insight about the qualitative evidence, we have done secondary

data analysis. We have reviewed several published articles and books

discussing about this topic.


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D) Secondary Data Analysis:

I) Qualitative Fact-Finding:

One article we found on the Bharti Walmart entering into India. Walmart

opened its first wholesaler shop in Amritsar.

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

Ironically, it is the local kirana store-owners who have welcomed the

international cash-and-carry' chain. Offering low-priced wholesale products,


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Best Price Modern Wholesale' Bharti Wal-Mart's store has enabled kirana

store-owners increase their profit margins significantly. the mega store has

quickly begun to cater to more than 35,000 kirana store owners in Amritsar

alone. According to the company, the store has seen an average footfall of

75,000 kirana owners a month.

Shop-owners in the Ranjit Avenue area of Amritsar, some 10 km from the

Bharti Wal-Mart store, said, Our profit keeps increasing if we buy products in

bulk. The prices offered at the store enable us to sell it at lower prices than

our competition and still make a profit. For example, after buying products

from Bharti Wal-Mart for about Rs 10,000, we can easily make a profit of

about Rs 3,000 and still offer better prices to the customer. A Bharti Wal-

Mart spokesperson pointed out that the chain caters to the local mom and

pop stores as well as electronics retailers. In fact, some of our electronics

items offer retailers amazing profit margins, he said.

The local people also seem inclined towards the modern wholesale store

concept. Kirana stores which get their supplies from Wal-Mart offer better

prices, said by Aman Preet singh a resident from amritsar. The main reason

for the support of the local kiranas to Wal-Mart is, it offers massive range of

products under one roof spread over close to 50,000 sq. ft. The store has

6,000 SKUs(Stock Keeping Units) ranging from raw food to consumer

electronics. Hence, from the story of Wal-mart, it is being proved that Local


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Mom-and-Pop shops support Big Stores as they are gaining edge over the

prices from the bulk discounts.

But in the nascent stages people are ready to accept them. If the corporate

giants start their full-fledged operations , does a retailer ready to accept

him? Hence our paper focused on finding the changes in the behavioral

component of the retailer(especially in Rural India) to get conclusive

Evidence.

II) Problem definition:

Our research objective is to find the how the corporate retailer would

onslaught traditional retailer and how the behavioral component of the

retailer effects if he finds him as a near competitor.

To find out the above objectives, We adopted a survey method. In the survey

method we are using questionnaire method.


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III) Questionnaire Design:

Relevancy and accuracy are two important basic criteria a questionnaire

must meet. As our subjects are retailers of India, many of them were not

well educated, we used simple and Conversational language. In phrasing the

Questions we were as much specific as possible avoiding ambiguity. Even

though some of the retailers were well educated, they were not comfortable

with the words like Loyal, Corporate retailers. So we explained them about

the questions when we were taking survey to avoid ambiguity in responses.

To eliminate the major source of bias in question wording we tried to avoid

leading and loading questions which suggest or imply certain answers.


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IV) Questionnaire for Retailer

Name:

Age:

Year of Establishment of shop:

Place:


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1. Are you satisfied with the present system of handling your business?

a) Strongly agree

b) Agree

c) Uncertain

d) Disagree

e) Strongly Disagree

2. Who are your major customers?

a) Local people staying around the shop

b) Housewives

c) People from the other localities if their nearby Kirana shops are closed

d) Students

e) if others, specify ---------

3. How many customers pay a visit to your shop every day?

a) 400


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4. How satisfied are you with your present customer base and with your

current operations and profits?

a) Very satisfied

b) Somewhat satisfied

c) Dont know exactly

d) Somewhat dissatisfied

e) Very dissatisfied

5. Do you feel that your customers are loyal to your store?

a) Strongly agree

b) Agree

c) Uncertain

d) Disagree


6. How many hours per day you operate your shop?

a) 5 7

b) 8-10

c) 11-12

d)>12


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7. Do you give your current customers goods on credit basis?

a) Yes

b) No

c) Sometimes

If yes/sometimes, Please specify any of the choices

(i)Depends on the credit worthiness of the customers

(ii)Depends on how frequently the customers visit the shop

8. Would you prefer to home deliver the goods to your customers house, if

your customer calls you even for items worth small amounts?

a) Frequently

b) Occasionally

c) Not at all

d) All the time

9. Can you provide various products and make your shop a one stop shop

destination for your customers?

a) Strongly agree

b) Agree

c) Uncertain

d) Disagree


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10. How often does your shop stay closed on Sundays and on other public

holidays like the big players?

a) Always

b) Almost always

c) Most of the times

d) Part of the time

e) Hardly ever

11. Will you give discounts on bulk purchases as the big stores are already

selling below the prevailing market price?

a) Strongly agree

b) Agree

c) Uncertain

d) Disagree


12. do you think that the rise in Income levels of the people is a threat to

your business?

a) Strongly agree

b) Agree


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c) Uncertain

d) Disagree


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

the mall.

a) Strongly agree

b) Agree

c) Uncertain

d) Disagree


14. Do you think that the big stores should not be allowed to take up Retail

business as its a loss to your business?

a) Strongly agree

b) Agree

c) Uncertain


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d) Disagree


15. Do you maintain an appropriate level of all the goods especially those

required by the customers at any time?

a) All the time

b) very often

c) often

d) Sometimes

e) Hardly Ever

16. If I have to change the way your business operates, I would go for the

change?

a) Strongly agree

b) Agree

c) Uncertain

d) Disagree


17. There has been an increasing threat to your business in the recent times

due to the appearance of big retail houses. How are you taking it?


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a) Very seriously

b) Somewhat seriously

c) Not so seriously

d) Not at all seriously

e) Dont know

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

A)below 20,000

B)20,000-50000

C)50000-1lac

D)>1LAC

19. Did you made changes to your business from the year of establishment?

A)yes

B)No


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

Note: The Research done is purely for Academic purpose. The Analysis of the

research is not used for commercial Purposes.

The last open ended question is being asked for the reference of the

research to get more insights about the business. It is not asked for the

analysis purpose.

The Questionnaire also includes Questions about the Demographic

information such as Name, Age, year of Establishment of the Shop and Place.

SAMPLING:

A) Sampling Planning:

As our objective is to find Are the Mom and Pop shops in Rural India will face

cutthroat competition from the Corporate retailers, we planned our samples

to take from the secondary cities and towns. Since most of the traditional

retailers are not well educated(we found that most of the traditional retailers

are not comfortable with English), we preferred young retailers as our

subjects though they lack experience. Rather than selecting subjects from


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one place, we selected different respondents with different backgrounds

from different places of Andhra Pradesh and some parts of Punjab.

B) Sampling Generation:

There are two sampling techniques:

Probability Sampling

Non-Probability Sampling

Here in our project, we used our judgment and also convenience to select the

subjects. Hence we used Non-probability sampling technique. The subjects

we selected are most of them from small towns and some secondary cities Of


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Andhra Pradesh. The samples we selected are Local Kiranas, Small Retail

Cloth Showrooms and Wholesalers too(Considering Walmart entering India in

the wholesale sector).

Types Of Non-probability sampling we used are:

i) Convenience, Haphazard or Accidental Sampling:

Members of the population are selected based on the ease of access. To

sample friends, Co-workers, or shoppers at a single mall are all the examples

of Convenience Sampling.

Convenience sampling is conventionally used in exploratory research where

the researcher is interested in getting an inexpensive approximation of the

truth. As the name implies, the sample is selected because they are

convenient. This nonprobability method is often used during preliminary

research efforts to get a gross estimate of the results, without incurring the

cost or time required to select a random sample.

ii) Judgmental Or Purposive Sampling:

A purposive sample is one which is selected by the researcher subjectively.

The researcher attempts to obtain sample that appears to him/her to be

representative of the population and will usually try to ensure that a range

from one extreme to the other is included. This is usually and extension of

convenience sampling. For example, a researcher may decide to draw the


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entire sample from one "representative" city, even though the population

includes all cities. When using this method, the researcher must be confident

that the chosen sample is truly representative of the entire population.

In the project we used both judgmental and convenience sampling to select a

sample which represent the whole population. Most of the subjects we are

selected are from nearby town and most of the samples are our friends who

had experience and acquaintance with their own kiranas from their

childhood. We also used our judgement when selecting the specified

subjects. The subjects we selected also include Experienced retailers who

has experience of around 15 years. This provided lot of insights and

intricacies of the Retail Business in India.

The advantages of Non-probabilty sampling are:

Cheap

Fast

C) SCALES:

The scales we are using in the project is Likert scale and simple attitude

scale.


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i) Likert Scale:

The Likert scale is extremely popular and easy to administer for measuring

the attitudes. It allows respondents to indicate how strongly they agree or

disagree with carefully constructed statements that range from very positive

to very negative toward an attitudinal object. It is Balanced Rating Scale

which measures fixed alternative scale that has an equal number of positive

and negative categories; a neutral or indifference point is at the center sacle.

Most of the Questions in our Questionnaire are based on the Likert Scale.

ii) Simple attitude Scale:

We also used simple attitude scale which mainly used are Yes/No type

Questions. In the Questionnaire, we asked some simple questions such as

Did you made changes to your business from the year of establishment?

are based on the simple attitude scale. This measures are the retailers we

selected are customer-centric.

D) SURVERY METHOD:

The data in the Research comes from two ways.


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Personal Survey

Telephonic Survey

i) Personal Survey:

Since our subjects are local retailers, instead of giving Questionnaire directly

to them, we explained each question and options in local language Telugu to

get the responses from them. This is because most of the retailers we

selected are not well educated.

ii)Telephonic Survey:


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Telephonic survey has been a mainstay of commercial survey research. The

quality of data obtained by telephone is comparable to the personal data

collection. When we were conducting a personal survey, we found

reluctance from many local retailers. Even we found difficulty in explaining

them about the Research. To overcome this problem, we switched from

personal survey to Telephonic survey for most of the subjects in the sample.

To conduct Telephonic survey, the subjects we selected are well educated,

Experienced and young retailers. This survey helped us to get responses

from distant places like Nizamabad, Warangal, Medak in Andhra Pradesh and

even from some parts of Punjab. The advantages we found in the Telephonic

survey during the Research are:

Speed

Cost

Precise Information

Respondents Cooperation.

SPSS SCREENSHOTS:


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A) FACTOR ANALYSIS

KMO Bartletts Test:

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of

Sampling Adequacy..475

Bartlett's Test

of Sphericity

Approx. Chi-

Square87.371

df 66Sig. .040

Eventhough we got Kaiser-Meyer-Olkin Measure of Sampling Adequacy as .

475 which is approximated to 0.5. Hence we are going for factor analysis.

Our Rotated component matrix is:

Rotated Component Matrix(a)


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Component

1 2 3 4q1 .027 -.248 .726 .138q4 .112 .141 .829 -.102q5 -.093 -.021 -.054 -.800

q9 .768 .454 .085 .020q10 -.653 .078 -.408 .164q11 -.108 .908 .037 .018q12 .136 .478 -.450 -.380q13 .732 -.100 -.340 -.020q14 .562 -.141 -.066 .377q15 .675 .161 .372 .267q16 .364 .498 -.404 .199q17 .060 .613 -.103 .642

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a Rotation converged in 9 iterations.

Component Transformation Matrix

Compon

ent 1 2 3 41 .800 .500 -.009 .3312 -.302 .506 -.806 -.0563 -.517 .512 .481 .4904 .036 .482 .345 -.805

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.


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Factors(1):(Factor loading values>0.6).

Q9,q10,q15,q13,(q14)


Q11,q17


Q11,Q4


Q5,q17.

B) REGRESSION:

(1)Predictor Variable:Sales

Output:

Variables Entered/Removed(a)

Model

Variables

Entered

Variables

Removed Method


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1

q7a .

Stepwise

(Criteria:

Probability-

of-F-to-

enter = .100).

a Dependent Variable: q18

Model Summary

Mod

el R

R

Square

Adjuste

d R

Square

Std. Error

of the

Estimate

Change Statistics

R

Square

Change

F

Change df1 df2

Sig. F

Change

1.453(a) .205 .168 .726 .205 5.428 1 21 0.30

a Predictors: (Constant), q7a


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ANOVA(b)

Model

Sum of

Squares df Mean Square F Sig.

1 Regression 2.857 1 2.857 5.428 .030(a)

Residual 11.056 21 .526

Total 13.913 22

a Predictors: (Constant), q7a

b Dependent Variable: q18

ANALYSIS OF THE CONSUMER CHOICE OF FORMAT:

Preferred choice of shopping format for buying various products for Indian

Consumer in percentages in most households (84.2%), women are mainly

responsible for the shopping. The majority of respondents (50.4%) have a

considerably good educational level (mainly with only 15 years of studies

(40.7%) over 35 years old. Most respondents are married (80.23%),

belonging to households of more than four elements (54.3%), with a family

income in which several members contribute to the household income. Given


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the fact that it was not possible to directly obtain any data about the income.

Most part of the respondents (62.3%) frequently make their purchases in

supermarkets and malls, although it was also found that there is a high

percentage of consumers that buy in specialized food stores (78.3%), and

groceries/minimarkets (33.1%). These results emphasize the tendency that

there is the coexistence of several retailing formats. Malls and Supermarkets,

in the same way, the kind of commercial space in which, clearly, most people

enjoy purchasing (62.3%), which leads to the conclusion that buying in this

type of store has, in a way, an element of pleasure in it.

On the other hand, most of the respondents prefer to buy

goldsmith/jewellery (95%), books (84%), footwear (84%), clothing (82%),

furniture/decoration (93%) and household appliances (78%) in traditional

retail stores. Some perishable goods as meat, fish and vegetables are also

purchased more from traditional retailers (60, 58 and 41%, respectively),

than in supermarkets or malls (28, 26 and 35%, respectively). Nevertheless,

the difference compared to supermarket, especially regarding vegetables, is

small. The fact that the perishable goods are, bought from traditional


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retailers more than they are from organized retailers is an evidence that

emphasizes the results of other studies done by various research agencies.

However, this study shows that the purchase of some perishable goods

(vegetables and mostly

fruits) in hypermarkets is becoming considerable.

Another interesting result is that the consumers' responses suggest is their

almost exclusive preference for traditional retail shops when buying high

involvement goods (e.g. household appliances). On the contrary, the most

purchased goods in malls and supermarkets are essentially convenience

products and, consequently, of low involvement. As it is widely advocated in

literature, the involvement and risk have strong implications in the buying

behavior, so it is important for retailers to know how to influence these

variables.

Concerning the motivations that lead people not to buy goods in traditional

retail or only in traditional retail, the two main motives are: first, it is more

practical to buy all the goods at the same time in

hypermarkets/supermarkets and, second, the price in traditional retail shops


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is higher. That is, convenience and price are factors that determine why

consumers do not buy in traditional retail; and prefer one kind of store to the

other.

These results suggest a consumer is more pragmatic in his choices, and

more concerned with the management of his money and time. Even though

the answers refer to motivations why people do not buy some given products

in traditional retail, the results correspond to other studies, Sen (2000) which

highlights low prices and the possibility of buying everything in the same

place as main reasons for consumers to buy in hypermarkets, malls or

supermarkets.

The traditional retail offers more advantages than hypermarkets in relation

with the spent on shopping. Nonetheless, there is also a great difference

between retailers and consumers, especially, at the level of perception of the

quality of products, attendance, how easily the consumer can present

complaints and how they will be attended, and payment terms, in both kinds

of commerce.

Concerning these specific aspects, traditional retailers have a much more

positive opinion about themselves than consumers have about them. These

differences suggest a certain lack of realism by traditional retailers, which


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

corrected.

However, the divergence in the perceptions does not imply that the

consumers' opinion about traditional retail is negative. The essential matter

is that, in spite of not having an unfavourable opinion towards traditional

retail, the opinion towards organized retail is much more favorable, which

may result in preferring hypermarkets or malls in detriment of traditional

retail.

As literature suggests, in order to understand the consumer behavior in

terms of store choice, it is essential to understand his relative attitude also.


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CONCLUSION:

The hypermarket/mall/supermarket is the preferred kind of store by

consumers, even though the consumers buy in several establishments and

not exclusively in the organized retail outlet, which indicates that there is no

"single loyalty". While in organized outlets, consumers buy essentially

convenience goods with low level of risk; in traditional retail, they buy

essentially products of more involvement, which requires a more complex

buying behavior. The results also show that consumers evoke price and

convenience for not buying certain goods in traditional retail, which reveals

an attempt to optimize their time and money.


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REFERNCES:

o BUSSINESS RESEARCH METHODS BY WILLIAM G.ZIKMUND

o ESSENTIALS OF MARKET RESEARCH BY WILLIAM G.ZIKMUND

o STATISTICS FOR MANAGEMENT BY RICHARD I. LEVIN, DAVID

S.RUBIN

o Would Kiranas in Urban India Survive the Modern Trade

Onslaught Insight from Efficiency Perspective, A Research Paper

by Paromita Goswami, Xavier

Institute of Management Bhubaneswar, India

o An Introspective Study of Local Diversities in Retail Purchase

Behaviour to formulate Retail Strategy for the Global Players A

research Paper by Mrs. Mahua Datta, Lecturer , Institute Of

Business Management, Jadavpur University


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o www.ssrn.com
http://www.ssrn.com/http://www.ssrn.com/

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Impact of branded stores on kiranas

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