Impact of Organized Retailers on Small Retailers

8/3/2019 Impact of Organized Retailers on Small Retailers

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Impact of Malls on Small or Medium SizedRetailers In Mumbai :

A Study Of North East Mumbai

Research Title

Abstract

Indian Retail Scenario at Glance

Objectives of the Study

Research Methodology

Analyses of Impact of Organized Retail (O.R) sector on small retailers

Major Findings of the study

Conclusions


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This Paper attempts to study and analyze the impact of malls on localretailers dealing with Ready to wear Cloth Merchandise, Wooden

Merchandise and Electronic items- in North East Mumbai.

Small Retailers:

-Most of the clientele belong to existing customer base

-Creation of new customer base is not at all on their marketing agenda

-Concentration is on personalized customer touch-Mass marketing not the area of interest, yet.

Modern Retailers:

-Practices modern as well as aggressive marketing strategies

-Prime goal to woo and expand the customer base steadily.

Automation, professional human resource management are some otherareas which were neglected as un important for a long time by traditionalretail sector in general and now need to be looked into in the competitiveera of 21st century.

Abstract


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The Indian retail market, over the last decade, has shown greateracceptance for organized retailing formats. Rapid urbanization, changes inshopping pattern, demographic dividend and pro-active measures by theGovernment are abetting the growth of the retail sector in India.

Sector Highlights:

Indian retail sector accounts for 14% of the country's GDP and contributes

to 7% of total employment

India retail market is dominated by the unorganized sector. More than 90%of retailing in India fall into the unorganized sector

The top five companies in retail hold a combined market share of less than2%.

The Indian retail market has been ranked by AT Kearney's eighth annualGlobal Retail Development Index (GRDI), in 2009 as the most attractiveemerging market for investment in the retail sector.

More than 80% of the retail sector in the country is concentrated in the

large cities. A study reveals that among the more than 20 locations, fororganized retail in India, Mumbai was found to be the most preferred



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Key Players in Indian Retail Sector:

AV Birla Group

Trent is a subsidiary of the Tata group; Also includes Westside, Croma.

Landmark Group Lifestyle International is their international brandbusiness.

K Raheja Corp Group

Reliance has more than 300 Reliance Fresh stores

Pantaloon



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To study and analyze the impact of malls Organized Retailing on

local retailers dealing with,

Ready to wear Cloth Merchandise,

Wooden Merchandise

Electronic items

Objectives of the Study


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Research Design

- The study undertaken aims at describing impact of malls on localretailers in suburbs of Mumbai in select product categories. Thedescriptive as well as diagnostic design was found to be appropriatefor the purpose of the study.

Sample Design

- The population or universe for the study covers North East Mumbaicovering Mulund, Bhandup, Kanjurmarg, Vikhroli and Ghatkopar areasof this region. Sampling unit include independent respondent in thedefined Category. Convenience sampling method was used for eliciting

the responses from different components of the study.

As per the official data supplied by Municipal Corporation of GreaterMumbai during the study, total number of small retail shops registeredin the selected area of study as on 31.3.2010 under Mumbai Shopsand Establishment Act, 1948 are ready to wear Cloth Merchandise-

338, Furniture- 183, and Electronics 194.

Research Methodology


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General impact of organized retailers on small retailers

An attempt was made by the researcher to find out general opinion ofthe trading community on the perceived impact of various formats oforganized retailers on small retailers. The respondents were alsoasked to mention the degree of impact on the local traders. Theanalyses of the data are presented as under:

General Impact of O.R. (Organized Retailers) on small retailers

Table 1

Source: Compiled from Primary data

Analyses of Impact of Organized Retail (O.R)sector on small retailers

Sr. No. Impact of O.R. No. of Shops Response in %

1 Yes, very much impacted 82 48.2

2 Yes, Moderately 82 48.2

3 Not at all 6 3.5

Total 170 100


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Specific impact of organized retailers on small retailers on products

under the study (sales and profit)

- Impact of O.R. on Average Annual Sales of small retailers

A Table depicted below give detailed idea about the depth of impact of O.R onsales in the three product categories under study

Impact of Organized Retailers on Average Annual Sales of Small Retailers

Source: Compiled from primary data

Sr. No. Impact of O.R. Response in %Ready to Wear

Cloth Merchandise

Wooden

Merchandise

Electronics

Goods

1 Increase in Sales Up to 10% 3 4 1

2 Between 10 - 20 3 0 0

3 Between 20 -40 1 1 0

4 Above 40% 0 0 05 Decrease in Sales Up to 10% 12 6 5

6 Between 10 - 20 19 4 13

7 Between 20 -40 10 6 12

8 Above 40% 10 1 5

9 No Change 31 18 5

Total 89 40 41


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Table 2-A, and Table 2-B, & 2-C depicts the Impact of the organized

retailers on Average Annual Sales of small retailers both in the context ofthe product & area wise as appended:

Table 2 A


(Product wise & Area wise)

Ready to wear Cloth MerchandiseSr.No. Impact of O.R. Response in %

MUL

BHAN

KNG

VIKH

GHAT

Total

1 Increase in sales Up to 10% 0 1 1 0 1 3

2 Between 10 - 20 1 2 0 0 0 3

3 Between 20 -40 1 0 0 0 0 1

4 Above 40% 0 0 0 0 0 05 Decrease in sales Up to 10% 7 0 1 1 3 12

6 Between 10 - 20 10 8 0 0 1 19

7 Between 20 -40 8 2 0 0 0 10

8 Above 40% 8 0 0 0 2 10

9 No Change 6 5 7 10 3 31

Total 41 18 9 11 10 89


Table 2 B



Wooden Merchandise

Sr.No. Impact of O.R. Response in %

MUL

BHAN

KNG

VIKH

GHAT

Total


2 Between 10 - 20 0 0 0 0 0 0

3 Between 20 -40 1 0 0 0 0 1


6 Between 10 - 20 1 2 1 0 0 4

7 Between 20 -40 4 2 0 0 0 6

8 Above 40% 0 1 0 0 0 1

9 No Change 2 3 1 2 10 18

Total 10 13 3 2 12 40


Table 2 C



Electronic Goods


MUL

BHAN

KNG

VIKH

GHAT

Total


2 Between 10 - 20 0 0 0 0 0 0

3 Between 20 -40 0 0 0 0 0 0

4 Above 40% 0 0 0 0 0 0

5 Decrease in sales Up to 10% 0 1 2 2 0 5

6 Between 10 - 20 6 3 0 0 4 13

7 Between 20 -40 5 3 0 1 3 12

8 Above 40% 1 1 0 2 1 5

9 No Change 2 2 1 0 0 5

Total 14 10 3 6 8 41



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Impact of O.R. on Average Annual Profit of small retailers

- Profit is another important parameter to gauge the impact of theemergence of modern retail culture on small retailers. For the purpose ofanalyses, impact on the profit is considered both in totality as well asproduct and area wise. The analysis is presented herewith.

Impact of Organized Retailers on Average Annual Profits of Small Retailers

Source: Compiled from Primary data


Sr. No. Impact of O.R. Response in %Ready to Wear

Cloth Merchandise

Wooden

Merchandise

Electronics

Goods

1 Increase in Sales Up to 10% 3 4 1

2 Between 10 - 20 3 0 0

3 Between 20 -40 1 1 0

4 Above 40% 0 0 0

5 Decrease in Sales Up to 10% 12 6 5

6 Between 10 - 20 19 4 13

7 Between 20 -40 10 6 12

8 Above 40% 10 1 5

9 No Change 31 18 5

Total 89 40 41


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Table 3-A, and Table 3-B, & 3-C depicts the Impact of the

organized retailers on Average Annual Sales of small retailers bothin the context of the product & area wise as appended:


Table 3 A



Ready to wear Cloth M erchandiseSr.No. Impact of O.R. Response in %

MUL

BHAN

KNG

VIKH

GHAT

Total


2 Between 10 - 20 1 2 0 0 0 3

3 Between 20 -40 1 0 0 0 0 1


6 Between 10 - 20 10 8 0 0 1 19

7 Between 20 -40 8 2 0 0 0 10

8 Above 40% 8 0 0 0 2 10

9 No Change 6 5 7 10 3 31

Total 41 18 9 11 10 89


Table 3 B

Impact of Organized Retailers on Average Annual Profit of Small Retailers


Wooden Merchandise


MUL

BHAN

KNG

VIKH

GHAT

Total


2 Between 10 - 20 0 0 0 0 0 0

3 Between 20 -40 1 0 0 0 0 1


6 Between 10 - 20 1 2 1 0 0 4

7 Between 20 -40 4 2 0 0 0 6

8 Above 40% 0 1 0 0 0 1

9 No Change 2 3 1 2 10 18

Total 10 13 3 2 12 40


Table 3C



Electronic Goods

Sr.

No. Impact of O.R. Response in %

MU

L

BHA

N

KN

G

VIK

H

GHA

T

Tota

l


2 Between 10 - 20 0 0 0 0 0 0

3 Between 20 -40 0 0 0 0 0 0

4 Above 40% 0 0 0 0 0 0

5 Decrease in sales Up to 10% 0 1 2 2 0 5

6 Between 10 - 20 6 3 0 0 4 13

7 Between 20 -40 5 3 0 1 3 12

8 Above 40% 1 1 0 2 1 59 No Change 2 2 1 0 0 5

Total 14 10 3 6 8 41


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Business of local retailers in North East Mumbais all selected 5 areas is

affected in terms of sales and profit in all three product categories, thoughthe degree of impact differs area wise and product wise. In Ready to WearCloths & Furniture category, the impact is unevenly spread area wisewhereas in Electronic goods the impact is felt throughout the North EastMumbai.

Business of small retailers in the suburb of Mulund is majorly affected in allthree select product categories, followed by other two suburbs, namelyBhandup and Ghatkopar. These are the suburbs where more density of allformats of organized retail is found.

Among all suburbs, small traders in Kanjurmarg, have witnessed less

impact of organized retail due to unique demographic composition and thedistance of OR formats.

As far as Vikhroli is concerned, small retailers dealing with electronicproducts are affected due to the entry of specialty retail chains. As thereare no malls or specialty retail chains in other two product categories,

small local retailers are less affected. Local retailers are shedding their age old practices and are reformulating



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Continued..

Local retailers are shedding their age old practices and are reformulatingbusiness strategies to retain their customers.

Local Retailers in Ready to Wear Cloths category need to be very alert

and innovate themselves as the customers in all age groups are gettingattracted to modern retailers due to their irresistible appeal.

Increasing and clear preference of young consumers towards modern

retailers due to aggressive branding

Small retailers may have tough times ahead if Indian government goesahead with its plan of opening up of consumer durables sector for FDI



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The paper focuses on the impact of organized retail industry on small

retailers dealing with selected Merchandise in Selected suburbs ofMumbai, and following can be concluded from the study:

Organized retail sector is all set to establish its footprints in selectedsuburbs.

The effect of O.R. is spread on diverse sections of traders.

Instead the awareness about changing retail scenario, traditional retailersare still dependent upon conventional methods for conducting theirbusiness.

Creation is not at all on the marketing agenda of Small retailers as most ofthem still concentrate on personalized customer touch rather than mass

marketing.

On the other hand, modern follow modern as well as aggressive marketingstrategies.

Automation, professional human resource management are some otherareas which were neglected as un important for a long time by traditionalretail sector in general and now need to be looked into in the competitive

Conclusions


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Thank You!

Impact of Organized Retailers on Small Retailers

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