grocery retailing in North Bangalore” by€œA study on the customer perception towards...

Acme Intellects International Journal of Research in Management, Social Sciences & Technology ISSN 2320 – 2939 (Print) 2320-2793 (Online) Let your Research be Global search– An Ultimate search of Truth- Reforms through Research Vol- 8 No. 8 Oct 2014

”Aano bhadraa krathavo yanthu vishwathaha”-"Let the noble thoughts come to all from all directions". Page No.1 Acme Intellects Research Center- A wing of Help to Help Charitable Trust®

“A study on the customer perception towards unorganized grocery retailing in

North Bangalore”

by

Dr. Ritika Sinha[a] &

Prof. Mohammed Naveed

[b]

ABSTRACT

The beginning of retail business in India can be traced back to the emergence of weekly

bazaars and rural fairs (melas). These weekly bazaars, used to be big attraction to both urban and

rural people by catering their day to day requirements of grocery, utensils, spices, grain, clothing,

livestock, wooden/handmade candles, fruits etc. besides serving source of entertainment. In

comparison to weekly markets, village fairs usually were bigger in size with a wide variety of goods

sold from handmade items, food, clothing, cosmetics and small consumer durables.

Then the traditional age saw the emergence of the neighbourhood ‘kirana’ stores (usually

known as convenience stores or mom-and-pop stores) to cater as per the convenience of the Indian

consumers.

Today, the Indian retail industry together organized and unorganized employs 40 million

people becoming the second largest employment provider in the country after agriculture. For every

one thousand people 11 outlets are found. The large portion of Indian retail sector operates under

unorganized sector with over 90% of the industry share.

The unorganized retail shops/ stores run low on some critical factors which may become

decisive in the coming future with all the changing preferences of customers, exposure to

westernisation, economic shift in the societal class, changing income patterns, customer oriented

marketing efforts and ever changing technological changes etc.

As a proverb it is said that ‘the only thing that doesn’t changes is the change’, it can be seen

in retail sector as the customer perceptions and expectations are ever changing and hence it becomes

essential for the retailers to have a system in place to continuously watch or predict these changes

proactively.

This paper is intended to study the customer perception towards informal/ unorganized retail

shops with reference to grocery in northern part of Bangalore.

Keywords—Retailing, Unorganized industry, Customer’s perception, Organized

[a]

Dr. Ritika Sinha

Associate Professor,

Canara Bank School of Management Studies,

Bangalore University, Bangalore

[b]Prof. Mohammed Naveed U

Assistant Professor,

Dept. Of Management Studies,

HKBK College of Engineering &

Research Scholar,

Canara Bank School of Management Studies,

Bangalore University, Bangalore

E mail: [email protected]

1. Introduction

Traditional retailing/Unorganized retailing continues to be the backbone of the Indian retail

industry, with traditional/unorganized retailing contributing to over 95 per cent of total retail

revenues. The prototypical ‘baniya’outlets or the corner store formats compromise a key part of

Indian retail store formats mostly run as small family businesses. The unorganized retailing

comprises of ‘mom and pop’stores or ‘kirana’stores.



These are very small shops located near the residential areas, popularly known as ‘baniya

shops’. The UMP (Unique Marketing Preposition) of these stores is location advantage. These shop

owners in order to retain their customers can even go their customers’ houses to get orders. Trading

hours are flexible and the retailer to consumer ratio is very low due to the presence of several

‘kirana’stores in the locality. Credit facilities vary from store to store and customer to customer.

Customers’ reliability and relation with the shop keeper is enough to avail credit facilities.

Branding is not the criterion to attract the customers, as customers prefer low priced

products. Further, retailers’ suggestion and recommendation regarding any product or service plays

a significant role in the customers purchase decision.

Indian consumer categories

Source:

In India, the retail sector is the second larger employer. The retailing sector in India is

highly fragmented and consists huge number of small, independent and owner managed shops.

There are some 12 million retail outlets in India. Besides the country is also dotted with low cost

kiosks and pushcarts. In 2001, retail trade in India was worth Rs. 11226.7 billion.

There has been a boom in the retail trade in India owing to a gradual increase in the

disposable income of the middle class households. More and more players are venturing into the

retail business in India to introduce new and innovative techniques to meet the changing ideology

and the mind-set of the customers in this modern era.

2. Objectives

1) To study the customer mindset towards unorganized retailing.

2) To study the factors which are considered for positive perception among customers.

3) To know the importance of creating positive impression in the minds of customers.

3. Methodology

The nature of the present study in descriptive. The information for the current paper had to

be gathered from both the sources (internal as well as external). The primary data was collected

from approximately 100 respondents in a simple random sampling method. The secondary sources

like Text Books, Newspapers, Magazines, Journals, websites, and conference proceedings.

Indian consumers

0 20 40 60 80 100

Very rich

Consuming class

Climbers

Aspirants

Destitutes

million households

2006-07

2001-02

1995-96



An objectively structured questionnaire was framed using different types of scaling and

rating methods to bring the insights of informal/unorganized retail customers in and around the parts

of North Bangalore. The primary data was gathered by administering a structured questionnaire with

100 customers of selected areas of North Bangalore city.

The selection of customers was based on the convenient sampling, according to the

availability of them in a specified time period of the data collection.

3.1 Data Analysis

The collected data was analysed using Percentage analysis and also making use of rating

method.

3.2 Limitations of the Study

Sample size may not be too feasible for the large population of the area where

the study is conducted.

It is limited to very small area as only selected parts of North Bangalore is

chosen.

Hence the results cannot be generalized as the retail sector is very large.

Following are some of the characteristics of retailers operating under unorganized sector:

Criteria Features

Ownership Household Business

Size of operation Small store

Nature of employment Generally family members

Product availability Selective range of branded and unbranded

products

Selling price MRP

Store ambience Average

Promotions Usually depend on company promotions only.

Tax payment Usually taxes are evaded

Market experience Long term

Locations Round the corner located

Technopak Advisors Pvt. Ltd have estimated the category wise share of different

consumer items traded under both unorganized and organized retail in India as on 2006,2011 and

projections of 2016.The details of these estimates are given as under:-

S.No Category 2006 2011 2016 CAGR %

(2011-16)

1 Food and Grocery 217 325 425 5.50

2 Restaurants & Food Junction 4.6 8.8 15.8 12.50

3 Apparel 25 35 50.2 7.50

4 Furniture & Furnishings 6.5 9.1 17.1 13.50

5 Healthcare & Fitness services 0.4 1 2.5 20.00

6 Consumer Electronics

&Information Technology

16.5 22.7 42.8 13.50

7 Pharmacy 8 13.9 23.4 11.00

8 Jewellery, Watches etc 16.5 25.6 44.2 11.50



Source: Computed from Technopak Advisors Pvt. Ltd data

From the above listed table it can be affirmed that Food and Grocery constitutes the bulk of

Indian retailing and its share is estimated at US$ 325 Bn in 2011 (69% of the overall retail ) and is

expected to grow to US$ 425 Bn by 2016 (63% of the overall retail ), @ CAGR of 5.5%.

Apparel market in India is estimated at US$ 35 Bn in 2011 and is expected to grow to US$

50 Bn by 2016, @ CAGR of 7.5%. The next in importance is clothing and footwear, the share of

which has been about is estimated at US$ 5.5 Bn in 2011 and is expected to grow to US$ 8 Bn by

2016, @ CAGR of 8.5%.This has been followed by others like furniture, furnishing, appliances and

services whose share rose.

4. Data Analysis And Interpretation

Description of the sample

Profiling variable Details Percent

Gender

Female

Male

68

32

Age

15-25

25-35

35-45

Above 45

22

29

30

19

Profession

Employed

Professional

Business

Student

22

45

14

19

Family size

Family with no Kids

Family with 1 kid

Family with 2 kids

Family with above 2 kids

12

33

29

27

Monthly Income

Student

10000-14999

15000-24999

25000-34999

Above 35000

16

62

14

5

3

Monthly spending on consumables 1000

1001-2000

2001-3000

Above 3000

18

33

37

12

9 Beauty services 0.6 1.3 3 18.00

10 Footwear 3.6 4.5 8.3 13.00

11 Others 11 23 42.5 13.10

Total US $(Bn) 310 420 675 7.50



Table 1.0 shows customer response on various attributes of unorganized or informal stores.

Table 1.0

Attributes Extremely

satisfied Satisfied Neutral Dissatisfied

Extremely

Dissatisfied

Store image 7 22 15 35 21

Range of product

availability 3 21 42 14 20

Brand choices 2 20 37 31 11

Prices 13 25 40 18 4

Product freshness 0 32 24 21 23

Customer care 4 21 25 35 15

Store ambience 2 14 25 31 28

Credit availability 3 20 26 38 13

complements 0 12 31 32 25

Inference: From the abvoe table it can be inferred that product freshness and the prices are

the features which seems to be satisfying customers with a reasonable percentage of respondents,

where as, other attributes such as range of product, credit availability and customer care getting a

neutral response. Finally store image, brand choice, customer care, store ambience, complementary

attributes seems to be dissatisfying for the respondents.

Table 2.0 shows the unavailaility of products with informal retailer and table 3.0 shows the

various motives of purchases with informal retailer.



Table 2.0

Availability of Products Percentage

very Often 13%

Often 21%

Rarely 29%

Not at all 37%

Table 3.0

Motive of Purchase Percentage

Based on Need 79

Impulsive purchases 21

Inference: From the abvoe table it can be analysed that the product availability doesn’t

seem to be at serious levels as many respondents does get the products which they regularly

consume or buy where as still a considerable percentage of respondents do not get the products of

their choice.

From the above table it can also be seen that most of the customers of informal retailers are

driven by need based rather than impulsive purchases.



Table 4.0 shows the availability of variety with informal retailers and tabel 5.0 shows the

action taken by respondents for not finding the product with the informal retailer.

Table 4.0

Availability of Variety and Assortment Percentage

Good 21%

Fair 36%

Low 43%

Table 5.0

Action for not finding the product Percentage

Postpone the purchase 21%

Buy from another Retailer 69%

Forego the Purchase 10%

Inference: From the above tables it can be analysed that the respondents do not find the

variety and assortment to be adequate and thus find it to be low, whereas a considerable amoutn of

respondents feel it to be fair enough and a interestingly a reasonable percentage of respondents find

it to be good enough.

From the above table the respondents loyalty can be measured as they are low in terms of

showing loyalty towards retailers as they simply buy it from other retailer if they do not get the



product from the existing retailer. There are very low percentage of respondents who feel they

forego or postpone the purchases by not finding it with the exiting retailer.

Table 6.0 shows the Promotional factors which influence the customer’s perception and

table 7.0 show the various factors that influence the customer’s purchases.

Table 6.0

Influencing Factors Percentage

Advertisement 23%

Attractive Display 65%

Suggestion from Friends & Relatives 12%

Table 7.0

Factors influencing Customer Purchases Percentage

Price 53

Quality 21

Packaging 8

Shape 8

Brand/image 10



Inference: From the above tables it can be analysed that attractie POP (Point of Purchase)

and other displays drive the customers impulse which prompts customers to buy.

From the second table it can be seen that price is the most influencing factor that drives the

customers to purchase from informal/ unorganized retailer, where as, rest of other factors doesn’t

seem to be inflencing to a great extent.

5. Suggestions based on the study

It is a good prospect for the informal retailers that the customers from age

group 25-35 and 35-45 are at large. Hence, they should try to retain these customers interest

with creative and innovative policies in pricing and promotion.

The retailers in unorganized sector are running low on store ambience and

credit facilities as they should try to improve on these factors.

The retailers must adopt customer orientation techniques such as CRM, good

customer care and complementary techniques as most customers do not find it to be good

enough.

The informal retailers should cash on the positive attributes like product

freshness and low prices as these are the most preferred attributes of unorganized retailers.

The Informal retailers should make products available which are high on cir-

culation so that the needs of all customers can be satisfied under one roof.

The retailers in unorganized sector attract more of need based buyers and

hence should try to attract more impulsive buyers as the retail sector is known for impulse

purchases.

It is seen that majority of customers in the study feel that informal retailers

run low on variety and assortments, hence, this should be countered for better prospects to re-

tain customers by creating brand loyalty.

As various previous studies have revealed that attractive displays play a vital

role in promoting the product than any other means especially in retail sector. Hence, informal

retailers must also make use of such techniques more efficiently.



6. Conclusion

With respect to the set objectives, following are the conclusion derived out of the study:

Pricing of the product has a great impact in deriving consumer perception while shopping

for grocery especially in unorganized retail market. The extent to which consumer‘s perception is

effected, decides the nature of the particular consumer‘s buying behavior. The buying behavior in

turn affects the way a consumer behaves towards the products that are availability with retailers.

Socio economic status and convenience of the consumer play very important role while purchasing

groceries.

The study establishes the fact that the players in the unorganized retail segment needs to do

more in today’s world of changing perception and to live up to the expectations of the customers to be

on competitive map.

7. References

1) Kotler, Philip (2004), “Managing Product Line, Brands, and Packaging”, Prentice Hall of

India, N.Delhi .

2) Schiffmann, Leon G., and Kanak, Leslie Lazar (2005), “Consumer Perception”, Consumer

Behaviour, Prentice Hall of India .

3) Aaker., David A., and Batra, Rajeev and Mayers, John G. (2000), “Brand, equity, image and

personality”, Advertising Management Prentice Hall of India, Pg 316-317.

4) Berman & Evans, “Retail Management # Strategic Approach”, Prentice-Hall of India, 9th

Edition.

5) Swapna Pradhan (2004), “Retailing Management”, Tata McGraw-Hill, N. Delhi.

6) Urvashi Gupta (2012), „Changing Consumer Preferences From Unorganized Retailing To-

wards Organized Retailing‟ Journal of Emerging Knowledge on Emerging Markets, Volume 4, Nov-

2012.

7) Arshad, S.A. and Hisam, M.W. (2008) “Issues in Retailing”, Research in Management and

Technology, Ed. by Aneet and Ramanjeet Singh, Deep and Deep Publications Pvt. Ltd., pp 109-118.

8) Dash, M and Chandy, S. (2009) “A study on the challenges and opportunities faced by orga-

nized retail players in Bangalore” http://ssrn.com/abstract=1435218.

9) Gupta, M. (2004) “Brand Position of General Store From Consumer‟s Perspective- A com-

parative Study on Departmental Store and Traditional Shop” Proceedings of Conference on IPR ,

Thapar University, Patiala, March 25-26, 2004.

10) Gupta, Urvashi (2012), “Impact of Organized Retailing on Unorganized Sector”, A study in

Jammu Region. International Journal of Research in Commerce, IT & Management, Vol. 2(2012), No

01, pp 112-15.

11) Ghosh, P. et. al., (2010) “Customer expectations of store attributes: A study of organized re-

tail outlets in India”, Journal of Retail & Leisure Property, Vol. 9, No 1, pp 75–87.

12) Goswami, P. and Mishra, M.S. (2008) “Would Indian consumers move from kirana stores to

organized retailers when shopping for groceries?” Asia Pacific Journal of Marketing and Logistics,

Vol. 21, No. 1, pp 127-143.

13) www.researchandmarkets.com

14) www.ciionline.org

15) www.retaileducation.ca

16) www.ibef.org

17) www.mindbranch.com

18) www.indiaretailing.com

19) www.commerce.nic.in

http://www.commerce.nic.in/

grocery retailing in North Bangalore” by€œA study on the customer perception towards...

Documents

Transcript of grocery retailing in North Bangalore” by€œA study on the customer perception towards...