Customer expectation and perception towards organized and unorganized retail

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In this research paper, I take a peek into the organized retail sector of India. It started making its presence felt nearly a decade after the first lot of entrepreneurs set up shop.

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International Journal of Management (IJM) Volume 8, Issue 3, May– June 2017, pp. 159–168, Article ID: IJM_08_03_018 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=8&IType=3 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication CUSTOMER EXPECTATION AND PERCEPTION TOWARDS ORGANIZED AND UNORGANIZED RETAIL K. Jegan Research Scholar, Sathyabama University, Chennai, India Dr. N. Kannan Research Supervisor, Sathyabama University, Chennai, India ABSTRACT In this research paper, I take a peek into the organized retail sector of India. It started making its presence felt nearly a decade after the first lot of entrepreneurs set up shop. A brief introduction and evolution shows how the organized retailing changed its gears over the period from mom and pop stores to chain stores across the length and breadth of India. Retailing can be said to be the network between the producer and the individual consumer. Retailing is the last link, this connects the individual consumer with the manufacturing and distribution chain. Retail involve the sale of goods from a single point (malls, market, departments, stores etc) directly to the consumer in small quantities for personal consumption. The changing scenario o f Indian consumers give a proof to the potential opportunity in the retailing arena. SWOT and its subheads take you to the crux of analysis into retail industry, out of which we formulate the future prospects. FDI in retail has been continuous issue and may face resistance, given the perceived political scenario. The Paper identify the different forms of retailing. The Research Study discussed how organized retailing has increased their way of targeting consumers. Key words: Organized Retailing, Unorganized Retailing, FDI in Retail. Cite this Article: K. Jegan and Dr. N. Kannan, Customer Expectation and Perception Towards Organized and Unorganized Retail. International Journal of Management, 8(3), 2017, pp. 159–168. http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=8&IType=3 http://www.iaeme.com/IJM/index.as 159 editor@iaeme.com
Customer Expectation and Perception Towards Organized and Unorganized Retail 1. INTRODUCTION Retailing means „Re-tailing‟ to the customers so that they come back towards them. Retailing consists of all activities involved in selling goods and services to consumers for their personal, family, or household use. In 2004, The High Court of Delhi defined the term „retail‟ as a sale for final consumption in contrast to a sale for further sale or processing (i.e. wholesale).India is the 2nd fastest growing in the world. It is 3rd largest economy in the world in terms of GDP and fourth largest economy in terms of Purchasing Power Parity. India presents a huge opportunity to be used as a hub to the world. India is the “promised land” for global brands and Indian retailers A “Vibrant Economy”. Retailing in India is progressively moving towards becoming the next fastest growing industry. According to A.T. Kearney, retailing accounts for $410 billion and organized retailing accounts for only 5% of the above market. According to the Global Retail Development Index 2012, India ranks on 5th among the top 30 emerging retail markets. The recent announcement by the Indian government with Foreign Direct Investment (FDI) in retail, especially allowing 100% FDI in single brands and multi-brand FDI has created positive attitudes in this sector. Retail industry in India has a huge growth potential and opportunities existing in multiple sectors and segments. For a long time, the corner grocery stores (kirana stores) were the single choice available to the consumers. But with the LPG policy in 1991 the international formats of retailing paved their way in India. As the time passes, organized retailing especially has been creating curiosity amongst Indian consumers to sketching them into malls for shopping in huge numbers. However the growth in organized retailing has been limited primarily to the urban markets in the country. Even the large chunks of unorganized retail have not fell depressed from this nominal growth in organized retailing and have tried to restructure and redefine themselves by introducing self- service formats, and value- added services, such as credit and home delivery. To safeguard the position in the market retailers have made an attempt to attract customers by offering newer service dimensions and creating unique shopping experiences for the customers. Perceptions about these retailers are largely determined by tangible characteristics of stores, such as format or size, proximity, varieties available as well as intangible factors like the store atmosphere, complaint handling, etc. Growth Drivers of the Retail Sector The Indian retailing sector is at an inflexion point where the growth of organized retailing and consumption by the Indian population is going to take a higher growth trajectory. The Indian population is observing a noteworthy demographics change. An increasing young working population under age of 24 years, sharp rise in the per capita income, an increase of dual income nuclear families in the urban areas, along with increasing working women population, internet revolution and emerging opportunities In the services sector are going to be the key growth drivers of the organized retail sector in India. The whole model of shopping has altered in terms of format and consumer shopping behavior pattern, which ultimately could lead to a shopping revolution in India. http://www.iaeme.com/IJM/index.as 160 editor@iaeme.com
K. Jegan and Dr. N. Kannan Organized Retailing Unorganized Retailing Ownership Corporate business house Household business Size of operation Comparatively large Small store Selling price Less than MRP MRP Nature of employment Hired members Generally family members Store ambience Excellent Poor Location Distantly located Located round the corner Wide range of branded and non Selective range of branded Product availability Promotions branded Joint products promotions and non branded Company products Promotions only Greater enforcement of taxation Tax payments Market experience mechanism Short term Evasions Long termof taxes Supply Chain Efficient Inefficient Range Wide range of products Limited products 3. REVIEW OF LITERATURE Rama Venkatachalam and Arwah Madan (2012) in their have highlighted on level of prices , quality of fresh groceries & availability of exotic fruits and vegetables, display & cleanliness and hygiene, home delivery & credit facility provided by both the organized and unorganized retailer. Change in customer preference has been noticed while shopping fresh grocery from unorganized or organized retailers. The author has also mentioned that organized retailing is doing the right things to sustain, survive and grow. According to Ms. Monika Talreja and Dr. Dhiraj Jain (2013) both modern and traditional retailers will co-exist in India for some time to come, as both of them have their own competitive advantages. The Kirana stores have a low- cost structure, location advantage, and customer familiarity whereas organized retail offers a mixture of product width and depth and a better shopping. http://www.iaeme.com/IJM/index.as 161 editor@iaeme.com
Customer Expectation and Perception Towards Organized and Unorganized Retail Vidushi Handa, Navneet Grover- This paper provides detailed information about the growth of retailing industry in India. It examines the growing awareness and brand consciousness among people across different socio-economic classes in India and how the urban and semi-urban retail markets are witnessing significant growth. It explores the role of the Government of India in the industries growth and the need for further reforms. The paper includes growth of retail sector in India, strategies, strength and opportunities of retail stores, retail format in India, recent trends, and opportunities and challenges. This paper concludes with the likely impact of the entry of global players into the Indian retailing industry. It also highlights the challenges faced by the industry in near future Medha Kanetkar-(2013) The study shows that there is no doubt the world is changing and consumer behavior is evolving faster than what would have normal expected. Consumers and producers are brought together electronically in ways we have never before experienced. One of the most exciting aspects of the new digital world is that consumers can interact directly with other people who live around the block or around the people. Lakshmi Narayana K, Ajata Shathru Samal and P Nagaraja Rao-(2013) :The concept of retail is primitive in Indian context. We had Grocery stores, medical stores and lot many other stores working surprisingly well all over the country. Recently people are getting idea of the traditional stores going to be vanished. But just to remind us, we should never forget how deep rooted is this old concept. The very modern organized stores have taken the idea of retailing nowhere else then from these old shops. Dhruv Grewal, Kusum L. Ailawadi, Dinesh Gauri, Kevin Hall, Praveen Kopalle, Jane R. Robertson: - (2011) :This article synthesizes recent advances in pricing and promotions findings as they pertain to enhanced targeting, new price and promotion models, and improved effectiveness. A retail business model articulates how a retailer creates value for its customers and appropriates value from the markets. Innovations in retail business models are increasingly critical for building sustainable advantage in a marketplace defined by unrelenting change, escalating customer expectations, and intense competition. Nancy M. Puccinelli, Ronald C. Goodstein, Dhruv Grewal, Robert Price Priya Raghubir, David Stewart- This study seeks to enrich this understanding by providing an overview of existing consumer behavior literature and suggesting that specific elements of consumer behavior—goals, information processing, memory, involvement, attitudes, affective processing and customer attributions and choices play an important role. Urvashi Gupta-(2012): This study was conducted for the purpose of understanding the changes taking place in the minds of consumers towards modern retail formats and traditional retailers. It was observed that due to the changing demographics, urbanization, and awareness due to electronic media especially internet the customers have multiple options to choose from modern retail outlets to neighborhood shops. Majority of the consumers are visiting organized formats for variety, easy availability, cleanliness with additional facility of entertainment for children and convenient parking facility and restaurant etc. In case of unorganized outlets immediacy of the store, credit and bargaining facility balance the tilt. Unlike higher age groups who prefer to visit Kirana stores, the younger generation has more inclination towards organized retail. Both organized as well as unorganized retailers need to add value added services to make the shopping experience more comfortable and value oriented. http://www.iaeme.com/IJM/index.as 162 editor@iaeme.com
K. Jegan and Dr. N. Kannan Suman Yadav, Sadaf Siraj, Richa Arora-(2012): This paper highlights the research done in last two decades on customer patronage behavior in shopping mall and identifies areas for future research with India as focus. Organized retailing is changing the whole concept of shopping in terms of consumer buying behavior. Shopping today is much more than just buying – it is an experience itself. The retailing business in India has witnessed huge growth due to emergence of supermarkets as well as centrally air-conditioned malls. The Indian consumer is 4. OBJECTIVES OF THE STUDY 1 . To study the factors influencing the consumers to buy from Organized and unorganized retail. 2. To study the influence of demographic factors on buying decisions from organized and unorganized retail. 3. To study the perception of customers towards organized and unorganized retail. 5. HYPOTHESIS FRAMED FOR THE STUDY 1 . There is no significant difference between the choices of retail format across shopping items. 2 . There is no significant difference in the choices of retail formats across the family income level. 3. There is no significant difference between the choices of retail format across various shopping factors. 4. There is no significant difference between the choices of retail format across the respondents age. 5 . There is no significant difference between the choices of retail format across the respondents gender. 6. RESEARCH METHODOLOGY Research Design Descriptive Research Sample Design Sampling Frame Consumers who purchase from both organized and unorganized retailers at Chennai. Sampling Unit Consumers from different age groups, gender, locations income levels and educational backgrounds. Sampling Size 100 customers Sampling Methods Purposive sampling Data Collection Methods Survey Method(The entire schedule is standardized Primary Data And formalized) Data were collected from respondents and journals and from previous Secondary data study related to the retailing sector. Type Of Schedule Structured Questionnaire with suitable scaling. Type of Questions Likert scale, Close ended and multiple choice questions. Statistical Tool Used Chi square test, Weighted Average http://www.iaeme.com/IJM/index.as 163 editor@iaeme.com
Customer Expectation and Perception Towards Organized and Unorganized Retail 7. RESEARCH INSTRUMENT Research instrument, for the purpose of primary data collection were Questionnaires. The questionnaire was divided into 3 parts. Part-1 had questions related to demographic information of respondents. Part-2 was related to some basic information regarding respondent’s choice to visit particular retailer for purchasing an item. Part-3 contained semantic differential scale to measure customer perceptions regarding store attributes related to its image. Table 1 Demographic Profile of Sample Respondents Demographic No. of Respondents Frequency Percentage Male 45 45 Gender Female 55 55 Total 100 100 Less than 20 yr 17 17 20-30yr 42 42 Age-group 30-40yr 27 27 40-50yr 11 11 Above 50yr 3 3 Total 100 100 Single 53 53 Marital Status Married 47 47 Total 100 100 12th 20 20 Educational Graduate 35 35 Qualification Post Graduate 31 31 Professional 14 14 Total 100 100 Student 30 30 Private Employee 25 25 Occupation Government Employee 12 12 Business 17 17 Housewife 16 16 Total 100 100 Nuclear 35 35 Family Nature Joint 64 64 Total 100 100 less than 20000 Rs. 22 22 20000-30000 Rs. 34 34 Monthly Family Income 30000-40000 Rs. 23 23 Above 50000 Rs. 21 21 Total 100 100 http://www.iaeme.com/IJM/index.as 164 editor@iaeme.com
K. Jegan and Dr. N. Kannan The demographic characteristics of the respondents (Table 1) show that majority of respondents (55%) were female. It is further revealed that most of the respondents (42%) belonged to the 20-30yr, age group, with 27% of the respondents falling in the age group of 30-40 year. Students comprise of a maximum portion of 30%, followed by private employees with 25%. Most of the respondents were single (53%). A majority of respondents (35%) were graduates, followed by post graduates (31%). This revealed that education level also played a dominant role in the preference of retail outlets Table 2 Frequency of Visit for Shopping Needs Source of Purchases No. of Respondents Percentage Organized Retail 37 37 Unorganized Retail 63 63 TOTAL 100 100 Under the Organized Retail Format Supermarket 19 51 Chain Stores 14 38 Departmental Stores 4 11 TOTAL 37 100 Under the Unorganized Retail Format Conventional Stores 10 16 Neighborhood Stores 44 70 Others 9 14 TOTAL 63 100 From the table 2, it can be concluded that 37% of the respondents shop for essentials at organized retail formats and 63% of the respondents purchase from unorganized retailers. It further revealed that 51% of the respondents‟ buy from Supermarkets, 38% from Chain Stores and 11% from Departmental Stores. Around 16% of the respondents preferred to buy from conventional stores, 70% and 14% preferred to buy from neighborhood stores and from other places like kirana stores etc. 8. VARIOUS SHOPPING ITEMS Chi-square test used (At 5% Level significance) Table 3 (Respondents' Opinion of Products Purchased From Retailers) From Organized From Unorganized Items Purchased Retailers Retailers Grocery, Vegetables & Food items 5 18 Homemade Appliances & Electrical & Electronics 6 7 Textiles 10 9 All of above 16 29 TOTAL 37 63 χ 2calculated = 4.8 χ 2tabulated(at 5% degree of significant)=7.8 http://www.iaeme.com/IJM/index.as 165 editor@iaeme.com
Customer Expectation and Perception Towards Organized and Unorganized Retail Interpretation The above study shows that there is no significant difference between the choices of retailers‟ format across the shopping items while shopping and hence as the null hypothesis is accepted. On the basis of the shopping items these retailer formats is not considered by the respondents. Ho3: There is no significant difference in the choices of retailer’s format across the family income level. Table 4 (Majority of Purchases Made by Respondents According to their Monthly Family Income) Opinion on Majority of Purchases Respondents' Income Organized Unorganized less than 20000 5 17 20000-30000 13 21 30000-40000 8 15 Above 40000 11 10 Total 37 63 χ2calculated =4.1 χ 2tabulated (at 5% degree of significant) =7.8 Interpretation The analysis provides enough evidence not to reject the Null Hypothesis. In other words, there is no significant difference in the choices of retailers‟ formats across family income levels. Ho3: There is no significant association between the choices of retailers’ format across various shopping factors. Chi square test used (At 5% Level of significance) Table 5 (Response for buying from Organized Retail as well as from Unorganized Retail ) No. of Respondents Factors From Organized From Unorganized Retail Retail Variety of Product 8 10 Good Quality 4 11 Attractive schemes & Discounts 5 9 Mode of Payment 3 3 For Grocery Items Only 0 10 Door delivery 3 4 Emergency Buying 0 6 Affordable price 0 7 Good relationship with store owner 0 1 Credit facility 1 2 Complaint Handling 5 0 Self service & satisfaction 8 0 TOTAL 37 63 χ 2calculated =37.9 χ 2tabulated (at 5% degree of significant)=19.7. http://www.iaeme.com/IJM/index.as 166 editor@iaeme.com
K. Jegan and Dr. N. Kannan Interpretation As the null hypothesis has been accepted we can conclude that there is no significant difference between the choices of retailers‟ formats across age. HO5: There is no significant difference between the choices of retailers’ formats across the respondents gender Chi square test used (At 5% Level of significance) Table 6 (Majority of Purchase Made By Respondents According to their Gender) Respondents' Opinion on Majority of Purchases Sl. No Gender Organized Unorganized 1 Male 24 21 2 Female 13 42 Total 37 63 2 2 χ calculated =9.4 χ tabulated(at 5% degree of significant) =3.8 Interpretation Table 7 (Preferences of respondents towards organized retail over traditional retail ) Ratings Factors 5 4 3 2 1 Weight Rank Convenient 30 44 15 7 4 3.62 2 Proximity 12 52 26 9 1 3.16 5 Comfortable 35 41 18 4 2 3.7 1 Value Added Services 36 30 25 7 2 3.44 3 Services Better than Traditional Retailers 14 34 42 4 6 2.65 6 Entertainment 11 22 30 29 8 2.42 7 Quality & Quantity Up to Expectations 19 42 25 12 2 3.17 4 As the null hypothesis is rejected, we can conclude that there is asignificantdifference between the choices of retailers‟ format across gender. Thus the above table concluded that the consumers‟ perception towards organized sectors was high because of their comfortable shop atmosphere and convenience of shopping. The unorganized retail could give adequate importance to value added services to create good relationship with customers that will help them to retain the existing buyers as well as attract new customers. 9. CONCLUSION India is at the crossroads with respect to the retail sector. Both modern and traditional retailers will co-exist in India for some time to come, as both of them have their own competitive advantages. The kirana has a low- cost structure, convenient location, and customer intimacy whereas modern retail offers product width and depth and a better shopping experience. One of the prime objectives of this study was to find the consumer perception towards organized and unorganized retailers across demographic profiles. This study indicated that Customers like to buy fruits & Vegetable from air-conditioned supermarkets because of its quality products but due http://www.iaeme.com/IJM/index.as 167 editor@iaeme.com
Customer Expectation and Perception Towards Organized and Unorganized Retail to the high prices they still feel conservative to buy these kinds of products either from the local mobile vegetables seller or from the nearest market. The study further revealed that Proximity was a major comparative advantage of unorganized outlets. Unorganized retailers are having a comparatively strong advantage because of their ability to sell loose items, provision of credit, bargaining and home delivery facilities. The organized retail are having a greater advantage because of the store image, product availability, and price discounts. From this study it was observed that due to changes in the disposable income and increased awareness of quality, the consumers perception towards organized and unorganized retailers differ on the basis of quality and price. They prefer to buy different products from the organized and different from the unorganized retailers. From the study it was found that when compared to the unorganized retail format most of the respondent had a good image about the organized retailers. Even the unorganized retail had a good share in Market, but due to factors such as space, parking etc, a gap existed between both the formats. The customers wish for more outlets being opened. In spite of the enormous potential and growth opportunities available for the organized sector, it will not create a major impact on the unorganized retail because of the mindset of the Indian consumers will who cannot think of a life’s without having a local kirana store near their locality. REFERENCES [1] Michael .J. Baker, The Marketing Book, Fourth edition. Viva Books Private ltd p.p639-667. [2] Michael R. Solomon, Elnora. W Stuart, 2005, Marketing Real people, Real choices, Pearson Education, Ltd.p.p563-564. [3] Suja Nair, Retail Management, Himalaya Publishing House, pp. 401-429. [4] Jim Dion& Ted Topping, Retailing, Jaico Publishing House, pp. 127-150. [5] Swapna Pradhan, Retailing Management Text& Cases, Tata Mc Graw Hills Company pp. 127 141, 342-350. [6] Levy Weitz. Retailing Management, Tata Mc Graw Hills Company Ltd New Delhi p.p472-502. [7] David Gilbert, Retail marketing Management, Pearson Education, New Delhi p.p45-50 [8] Philip Kotler, 2004, Marketing Management, Pearson Education, New Delhi p.p544-545 [9] Debajani Sahoo, Hari Govind Mishra, Organized Retail in India: A case study of Wal-Mart, Indian Journal of Marketing, Jnuary,2008, pp 35-36 [10] Debajani Sahoo, Hari Govind Mishra, Organized Retail in India: A case study of Wal-Mart, Indian Journal of Marketing, Jnuary, 2008, pp. 35-3. http://www.iaeme.com/IJM/index.as 168 editor@iaeme.com