I, Mohit Yadav student of MBA IV from DIMS , Meerut Here by declares that the project
The imperial finding in this report is based on the data collected by me. This project
has been submitted to G.B.T.U., Lucknow, .or not Submitted any other university for the
M.B.A. IV Sem)
1
ACKNOWLEDGEMENT
The descriptive study intends to explore the Factors considered by consumers for
patronizing a retail outlet with the emergence of new formats of retail chains it becomes
essential to examine the behaviour pattern of the consumer. In this regards, store Location
becomes the key driving factor in Retail Industry. The information assimilated in this
research project guide Mr. Sudheer Kumar Faculty of Management , Meerut was
categorized primarily on the nature of the sources i.e. primary sources (interviewing
customers with a designed questionnaire) and secondary sources (published articles, text
2
LIST OF CONTENT
Introduction 05
Research objectives 08
Research Methodology 09
Industry Overview 11
Organized retail 15
Growing economy 63
Store location 68
Data analysis 94
Conclusion 97
Appendix 99
Bibliography 101
3
INTRODUCTRION
The customers process the information around them and approach the retail spaces to
consume according to their expectancy level. Consumers approach different store types to
explore product reviews and to shop products according to their needs and their desired
estimates. Some customers frequently visit the brand stores to update themselves with the
brand portfolio and some visit to other forms of retail shops with competing brands to enjoy
But consumers buying or selecting a particular retail outlet is the behavioral issue influenced
by their reference groups (friends, relatives and so on) culture, their upbringing, family
lifecycle etc. The store image is a major determinant which helps customer to patronize a
retail outlet. The shopping environment factors bridge a relationship with the prospects for
At present scenario, time is constraint and money has become luxury. So customers have
focused on selecting an appropriate retail outlet which gives a value added services, focuses
on customer’s needs, attentiveness for queries and customers’ Location those retail space if
As Indian Economy is growing at a higher pace, more and more sophisticated retail formats
are giving a competitive edge their unorganized counterparts in attracting footfalls. Retail
sector in past one decade in India has shown enormous growth. The impact can be seen all
over. The kind of growth seen and felt is never before. In India itself in the year 1998 the total
organized was 1.8% and by the year 2005 it reached 3%. Today the organized retail is
growing @ 30% – 35% per annum. The total retail size is Rs.930 million and the organized
retail is just 3 % of it by Dec. 2005. The expected growth by AC Neilson is by 2009 - 2010
the organized retail would be 8 – 10%. India is looked upon as most haunted destination by
different global companies and is on radar of global retailers. Young India factor and the PPP
4
are there to add on to this. Ultimately it is the customer who is changing and the businesses
are to take the advantage. As Indian economy is growing at a higher pace, more and more
sophisticated retail formats are giving a competitive edge to their unorganized retailers in
increasing footfalls.
There is just not a change but a phenomenal change in customers & their demands. The
psychological framework has changed as well as lifestyle of individual are getting affected
changes, literacy rate, high & better income due to opening of BPO’s, etc..
This all combined together has an impact on individuals purchasing & consumption behavior.
As a result of the change in the customers there is a dramatic change that retail industry in
India has gone through. With change the explosion that Indian Retail Industry has shown is
also exceptional. Looking to the opportunity into this area, big Industry giant
have entered into the retail business. Competition is pruning at a tremendously fast pace. Any
retailer cannot ignore the customer and cannot make the mistake of not keeping his customer
for lifetime. Thus the industry has to focus on the Patronizing. Committing this act of
ignoring the customer loyalty the retailers how so ever big will be loosing in long term. Thus
to sustain and grow in future patronizing is what should be looked into by the retail giants.
5
RATIONALE OF THE STUDY
Every retail marketer focuses on niche marketing to develop a long term relationship with
their customers and develop a customer centric environment for generating positive word of
The consumers process the information around them and approach different retail spaces to
consume according to their expectancy level. Consumer approaches different store types to
Few customers visit the brand outlets for upgrading with latest in fashion and trend and few
visit other retail forms with competing brands to access higher prize saving. But consumers
buying or selecting a particular retail outlet is largely influenced by their influence groups
Consumers process the over communicated information by the marketers and select a retail
outlet which meets their expectancy level (satisfaction of right shopping, appreciated on
product purchased and feeling a sense of not being over charged on prices etc.) as well as
develops a trust. And their patronizing ability leads to highly competitive marketing exercises
for the same product by different competing brands and stores Store Location is been
classified into store factors consists of ambience, layout (physical evidences), product display
and availability, trained personnel and consumer behaviour aspects along with shopping
orientations. In this study, the store factors are primarily aimed to act as a catalyst by different
individuals or group of individuals for patronizing a retail outlet. The durable product is
available at manufacturer’s retail outlet across the region as well as at another store types
packed with same brand and other brands too. Customer analysis the product category and
rest factors like technical support, price offerings at various locations, store image, value
6
Research Objectives
This project aims at understanding the factors that affect of location on retail outlet sales and
services on product and identifying the store attributes for developing store Location.
I would like to develop a model which must focus the store factors considering by consumers
for store Location. Because of varied lines of retail formats in existence in India, as well as
changing customer; marketers have identified Location a strategic tool for developing a long
Consumer’s first store selection plays a decisive role in designing a retail mix of a brand. For
any product category, the retail counters are channelized according to the customers’
preferences leads to an interactive sales bridge. And continuous up gradation with knowledge
and adapting innovative means to generate interest of visiting the store regularly which could
probably transform him into a long term customer. Customers’ Location any retail outlet
where they feel they are valued as well as find a sense of satisfaction of their personal needs.
This cycle keep moves on and enhance brand equity for that particular store. Sometimes it is
difficult to design a common brand theme and buying environment because of large
Each brand preciously defines its positioning strategies then starts formulating a set of actions
for achieving those objectives. A customer is being focused and over communicated by
competing brands through innovative communication tools. And sometimes this stimulus
affects his/her buying decision even selection a retail outlet with competing brands.
7
RESEARCH METHODOLOGY
This study is primarily based on secondary data available from various reference books,
working papers, text books, journals, research material and web pages.
shopping scenarios.
Questionnaire design:
The questionnaire is a suitable tool to collect relevant data from the target group and
evaluation becomes easier. The questions are derived from the objective of the study and
formulated in order to get error free responses from the respondents and close ended
This questionnaire contains all measures regarding store factors like convenience, store
layout, personnel attentions and knowledge, store image, product availability, display
management at the store, customers’ attitudes towards a single or multi brand outlets, pre and
The data collected from primary and secondary researches is analyzed on the following
variables:
ii. Store Factors: Store type (brand outlet/ multi brand outlet), ambience, product display
iv. Unique assortment: unique product availability with value added services.
8
Assumptions
A. Respondents included in the sample could accurately answer questions related to their
durables
B. Store Location experiences.
C. Environmental dimensions included in this study exist in both the types of retail stores
(i.e. brand outlet and a multi brand outlet).
included in this study.
E. Respondents could read and understand the questionnaire.
LIMITATIONS
A. This study focused on the subjects’ responses based on scenarios and not their actual
behavior while shopping for durables in the retail stores.
B. This study involves only one product category (i.e. durables) and results may not
apply to shopping for other products.
9
10
INDUSTRY OVERVIEW
Modern retailing has entered India in form of malls and huge complexes offering shopping,
entertainment, leisure to the consumer as the retailers experiment with a variety of formats,
still continue to score over modern formats mostly due to the convenience factor i.e. near to
their house.
enforcement of taxation mechanisms and better labour law monitoring system. It's no longer
about just stocking and selling but about efficient supply chain management, developing
vendor relationship quality customer service, efficient merchandising and even the labour
class is also in the working process timely promotional campaigns. The modern retail formats
are encouraging development of well-established and efficient supply chains in each segment
ensuring efficient movement of goods from farms to kitchens, which will result in huge
savings for the farmers as well as for the nation. The government also stands to gain through
more efficient collection of tax revenues. Network marketing has been growing quite fast and
has a few large players today. Gas stations are seeing action in the form of convenience
In the coming years it can be said that the hypermarket route will emerge as the most
preferred format for international retailers stepping into the country. Estimates indicate that
this sector will have the potential to absorb many more hypermarkets in the next four to five
years
11
List of retailers that have come with new formats:
Traditionally, the kirana retailing has been one of the easiest ways to generate self-
employment, as it required minimum investment in terms of land, labour and capital. These
store are not affected by the modern format of retailing. In order to keep pace with the
modern formats, kiranas have now started providing more value-added services like stocking
ready to cook vegetables and other fresh produce. They also provide services like credit,
The organized retailing has helped in promoting several niche categories such as packaged
fruit juices, hair creams, fabric bleaches, shower gels, depilatory products and convenience
and health foods, which are generally not found in the local kirana stores. Looking at the vast
opportunity in this sector, big players like Reliance has announced its plans to become the
country's largest modern retainers by establishing a chain of stores across all major cities.
12
Apart from metro cities, several small towns like Nagpur, Nasik, Ahmedabad, Aurangabad,
Sholapur, Kolhapur and Amravati has seen the expansion of modern retails. Small towns in
Maharashtra are emerging as retail hubs for large chain stores like Pantaloon Retail because
many small cities like Nagpur have a student population, lower real estate costs, fewer power
However, retailers need to adjust their product mix for smaller cities, as they tend to be more
conservative than the metros. In order for the market to grow in modern retail, it is necessary
that steps are taken for rewriting laws, restructuring the tax regime, accessing and developing
India 62 34 91 80 1st
Russia 52 58 71 92 2nd
China 68 40 53 90 4th
Turkey 51 56 66 65 9
Thailand 64 41 59 71 12
Malaysia 70 49 58 40 18
Egypt 51 35 85 30 25
Brazil 52 56 57 20 29
India’s
Rank 24th 14th 1st 7th 1st
13
Socio demographic factors will lead to faster growth of Organized retail in India:
14
ORGANIZED RETAIL:
India, Russia, China and Vietnam top the list of the most attractive emerging markets for
retailers' investment in 2007, While India and Russia have held the top two spots since 2004,
China's booming consumer spending, together with retailers moving into second-tier cities,
helped it rise to No. 3 from its No. 5 spot last year, according to the 2007 Global Retail
The study based its results on four variables: 'country risk', measuring political risk, debt and
credit ratings; 'market attractiveness', encompassing retail sales per capita, population,
The higher the ranking, the more urgency for retailers to enter the market, according to the
study, which ranks the top 30 emerging countries for retail development and focuses on mass-
"If you want to be an international player in retail, these are the markets that demonstrate the
characteristics (where) you can be successful," said Laura Gurski, a co-author of the study
India has already attracted the attention of global retailers like Wal-Mart Stores Inc., which is
working with India's Bharti Enterprises to set up a joint venture for a cash-and-carry business.
In India, foreign multiple-brand retailers, which sell diverse brands under one roof, are
"India's window of opportunity continues to be wide for retail investment and development,"
the report said. "Once India's window closes for grocery retailers, there will be little
15
The country's growing population of young urban professionals with disposable incomes and
the nouveau riche has also made India attractive for luxury retailers. India has attracted "the
low end and the high end because of the breadth of the consumer segments that are
When variables stay constant, Gurski said, do-it-yourself, apparel and electronics retailers
usually enter emerging markets some two years after international grocers establish
themselves. Middle Eastern countries are also represented on the list, with Saudi Arabia
ranking No. 10 India has emerged as the world's most attractive destination for mass
merchant and food retailing, maintaining its 2005 position in an annual study of retail
investment attractiveness among 30 emerging markets. India was given the top ranking in
(GRDI). "The Indian retail market is gradually but surely opening up, while China's market
Industries and Retail Practice and leader of the GRDI study. Much to the surprise of market
observers, China was ranked fifth in this year's tally, declining one more place since 2005.
While China remains very attractive, the market is becoming increasingly saturate as and
United Arab Emirates No. 18. Gap Inc announced last week it had struck a deal with two
franchisees to open Gap stores in Saudi Arabia starting at the end of this year. Dubai has
capitalized on consumer desire for a more Western lifestyle and has established itself as a
retail mecca, Gurski said. Despite its focus on luxury, Dubai is "just beginning to be
populated by the bread-and-butter retailers of the United States and the Western world," she
said. Retailers that have already established a presence in major Chinese cities like Shanghai
and Beijing, or those that have been slow to gain a foothold there, are now looking at less
developed markets in second-tier cities, the study found. "If the markets are saturated, they're
16
But she cautioned that a separate strategy is needed for the smaller markets since consumer
tastes, ability to spend and willingness to embrace new formats may be different than in
larger urban areas. International retailers rush to establish a presence and build market share,
the study reveals. According to the study, Asia with a large 40 per cent of the top 20 markets
has surpassed Eastern Europe as the 'dominant region for global retail expansion.'
"The learning is that timing is the most important source of competitive advantage for global
and regional retailers in the globalization race. Knowing when to enter emerging retail
markets is the key to success," said Farra. Powering Asia's charge are Vietnam, which has
risen five places to third place, and countries like Thailand, South Korea and Malaysia, all of
which are in the top 15, After topping the ranking for two consecutive years in 2003 and
2004, Russia slipped to second place behind India last year and remained there in 2006 too.
Early Trade:
When man started to cultivate and harvest the land, he would occasionally find himself with a
surplus of goods. Once the needs of his family and local community were met, he would
attempt to trade his goods for different goods produced elsewhere. Thus markets were
formed. These early efforts to swap goods developed into more formal gatherings. When a
producer who had a surplus could not find another producer with suitable products to swap,
he may have allowed others to owe him goods. Thus early credit terms would have been
developed. This would have led to symbolic representations of such debts in the form of
17
HOW RETAIL DEVELOPED:
The Retail Trade is rooted in two groups, the peddlers and producers. Peddlers tended to be
opportunistic in their choice of stock and customer. They would purchase any goods that they
thought they could sell for a profit. Producers were interested in selling goods that they had
produced.
General Store:
This division continues to this day with some shops specializing in specific areas, reflecting
their origins as outlets for producers (such as Pacific Concord of Hong Kong), and others
providing a broad mix, known as General Store (such as Casey's in the Midwest of the
U.S.A.).
Although specialist shops are still with us, over time, the general store has increasingly taken
on specialist products. Customers have found this to be more convenient than having to visit
many shops - thus the term "Convenience Store" has also been applied to these shops. As the
popularity of general stores has grown, so has their size. This combined with the advent of
Early Markets:
Over time, producers would have seen value in deliberately over-producing in order to profit
from selling these goods. Merchants would also have begun to appear. They would travel
from village to village, purchasing these goods and selling them for a profit. Over time, both
18
producers and merchants, would regularly take their goods to one selling place in the centre
of the community. Thus, regular markets appeared.The First Shop : Eventually, markets
would become permanent fixtures i.e. shops. These shops along with the logistics required to
get the goods to them were, the start of the Retail Trade.
Defined as sales of goods between two distant parties where the deliverer has no direct
interest in the transaction, the earliest instances of distance retailing probably coincided with
the first regular delivery or postal services. Such services would have started in earnest once
When individuals or groups left their community and settled elsewhere, some missed
foodstuffs and other goods that were only available in their birthplace. They arranged for
some of these goods to be sent to them. Others in their newly adopted community enjoyed
these goods and demand grew. Similarly, new settlers discovered goods in their new
surroundings that they dispatched back to their birthplace, and once again, demand grew. This
soon turned into a regular trade. Although such trading routes expanded mainly through the
growth of traveling salesmen and then wholesalers, there were still instances where
individuals purchased goods at long distance for their own use. A second reason that distance
selling increased was through war. As armies marched through territories, they laid down
communication lines stretching from their home base to the front. As well as garnering goods
from whichever locality they found themselves in, they would have also taken advantage of
Origins of Retail
19
It is likely that, as markets became more permanent fixtures they evolved into shops.
Although advantageous in many respects, this removed the mobility that a peddler or
traveling merchant may still have enjoyed. For some shopkeepers, it made sense to obtain
extra stock and open up another shop, most probably operated by another family member.
This would recover business from peddlers and create new business and the greater volume
would allow the shopkeeper to strike a better deal with suppliers. Thus the retail chain would
have started. Its thought that this process would have started in china over 2200 years ago
This all changed in 1915 when Albert Gerrard opened the Groceteria in Los Angeles, the first
documented self-service store. This was soon followed a year later by the Piggly Wiggly®
Growth:
This new type of shopping was more efficient and many customers preferred it. Although
personal service stores remain to this day, this new concept started a rapid growth of self-
service stores in the United States. Other countries were slow to take up the idea, but there
has been a steady rise in the global amount of self-service stores ever since.
Efficiency
These entrepreneurs noticed that their staff had to spend a great deal of time taking grocery
orders from customers. The groceries were stacked on shelves allowing customers to walk
around and browse, collecting their shopping in a basket that was supplied. The shopkeeper
20
would only need to tot up the final bill at the end of the process and transfer the goods from
Although retail chains would have been mostly run by families, as some chains grew, they
would have needed to employ people from outside of their family. This was a limiting factor
as there would have been a limit to the amount of trusted non family members available to
help run the chain. Another, even more definite limiting factor was the distance the furthest
shop would have been from the original shop. The greater the distance, the more time and
effort would have been needed to effectively manage outpost shops and to service them with
goods. There was, therefore, a natural barrier to expansion. That was the case until transport
and communications became faster and more reliable. When this happened towards the end
of the 19th century, chains became much bigger and more widespread. Many of these
businesses became more structured and formalized, leading to the retail chain that we see
today.
21
22
INDIAN RETAIL INDUSTRY:
Today, retailing doesn’t involve just dealing or marketing from shops, it includes analyzing
the market in an effort to provide reasonable prices together with an array of options and
experience to customers. The sole purpose of all this is retaining the brand loyalty of
customers. Indian retail is currently a US$ 245 billion market and is anticipated to extend to
almost US$ 385 billion mark by the next five years. The Indian retail sector is currently
sporting a brand new look and together with a 46.64 per cent three-year Compounded Annual
Growth Rate (CAGR), Conventional marketplaces are paving way for new shopping malls,
the likes of superstores, shopping plazas, supermarkets and brand label stores. International
style shopping centers have started dotting the skyline of cities and smaller towns,
acquainting the Indian customer to a unique shopping experience. The retail industry in India
23
The unorganized retail sector includes the big, average and modest grocery stores and the
chemist shops. A changeover is taking place from the conventional retail sector to organized
retailing. But the unorganized segment still dominates and leads the industry. By 2010, the
Indian retailing sector is anticipated to become an Rs12.5 trillion market. The share of
organized retailing is supposed to jump to about 10 per cent from the existing three per cent.
the market for both established and new players. According to the latest report India Retail
Sector Analysis (2006ñ07)I by RNCOS, the total retail market is primarily focused in rural
regions, which makes up 55 per cent or US$ 165 billion of the overall retail market as
opposed to urban segment, which represents 45 per cent or US$ 135 billion of the gross retail
market. The rural market is spread over 627,000 villages, even though its centre of attention
is focused around a core group of 100,000 villages that makes up 50 per cent of the rural
population.
India represents the most compelling international investment opportunity for mass merchant
and food retailers looking to expand overseas, according to management consulting firm AT
Kearney's 2005 Global Retail Development Index (GRDI), an annual study of retail
investment attractiveness among 30 emerging markets. India is rated as the fifth largest
emerging retail market and is seen as a potential goldmine. Driving global brands into India is
the greatly improved investment climate due to the recent relaxation of direct ownership
restrictions on foreign retailers. The country's retail market totals $330 billion, is vastly
underserved and has grown by 10 per cent on an average over the past five years. The
message for retailers on India is clear – move now or forego prime locations and market
positions that will soon become saturated. Global retailers that missed opportunities to
24
Though India has more than five million retail outlets, they are greatly unorganized. There is
no supply chain management perspective. In fact, out of the entire retail sector in India, the
organized sector is only 25 per cent and the rest is unorganized. 96 per cent of the retail
outlets are smaller in area than the standard norms. The retail industry is divided into
organized and unorganized sectors. Organized retailing refers to trading activities undertaken
by licensed retailers who are registered for sales tax and income tax. These include corporate
backed hypermarket and retail chains and so on. Unorganized retailing is the traditional low-
cost shops, handcarts and pavements and is by far the prevalent form of trade in India. The
urban/metropolitan India – the produce is cleaner, fresher, well packed and often cheaper than
the local shopkeeper. This is possible because of the far more efficient distribution system,
which organized retail chains are employing, by cutting the layers of middlemen involved.
There are other benefits too, of transforming the unorganized retail sector into an organized
sector. Firstly, a number of new jobs will be created, far better paid than the underage labor
working in the local shops. Secondly, the benefits to the producer and consumer through
better prices and lesser wastage; throwing up exportable surpluses, which will also benefit the
economy as a whole. Thus one can see that allowing FDI in retailing is beneficial to all the
stakeholders involved
The Big Bazaars and Spencer’s, the huge unorganized retail sector is finally beginning to see
Taxation policies also push you to automate and the push is even harder for those looking to
25
Though it’s early days yet to measure it penetration in the unorganized retail industry, interest
levels are surely raising fast. “It’s good to at least answer their questions. Though the interest
Software available to the retailers is ShawMan’s RetailMagiK, which takes care of the front-
end store needs, as well as the back-end warehouse requirements. “It would surely help the
unorganized sector to get into technologies like bar-coding, which will make their operations
more efficient. Some other features are a user-defined billing screen and discount with
control mechanism from the head-office, delivery order management, batch control and quick
information search, among others. The product is a simple to use. The screen design and the
functionality are designed in such a way that the user need not press too many keys to get
things done,” says Khushroo Bagwadia, business development manager, Shawman Software.
To begin with, most retailers look at decent entry-level solutions starting at Rs 25,000.
However, there are cheaper quick-fix solutions available too. One can even deploy a
computer and start with financial accounting programmers like Microsoft Excel, FoxPro and
Tally.
Small retailers seem next in line and vendors are also warming up to the opportunity. At the
low-end however, smart inexpensive solutions are the need of the hour. And solutions
providers like Microsoft, Polaris and Shawman are now working on developing smart tools
for the retail enthusiasts. For small players with just one store, the investment on retail
solutions go really low, anywhere between Rs 10,000 to Rs 25,000. Most of the time these
solutions are developed by local firms, who at times compete with the big names in the
industry.
26
According to Oberoi of Polaris, generally the mom-and-pop stores like to go for technology,
which will get their work done at a reasonable cost. They avoid the high-end technology, and
consider these as frills. “They are not even bothered about upgrading, so the cheap systems
are more than welcome. These solutions might not work for the mid-sized retailers with five
stores, as then one need to scale it up and take care of inventory and supply chain
management,” he says.
Comparing the case with China, Vedamani suggests India is on the right track. “In China, we
find the organized sector to be 20-23% of the total industry. Here, the technology has
27
Stores offering discounts on the retail price
Discount
through selling high volumes and reaping Low Prices
Stores
economies of scale
Larger than a supermarket, sometimes with Low prices, vast choice
(Shoppe) Supermarket(FoodBAZAR)
Pantaloon Retail
Department Store Hypermarket (Big Bazaar) Mall (Central)
(Pantaloon)
Department Store
(Crossword)
Tata/ Trent Department Store Hypermarket (Star India Bazaar)
28
(Westside)
Department Store
Landmark Group Hypermarket (TBA)
(Lifestyle)
Discount Store (Subhiksha, Margin Free, Apna Bazaar), Supermarket (Nilgiri's),
Others
Specialty Electronics
SPECIALITY STORES:
Food retail :
Food dominates the shopping basket in India. The US$ 6.1 billion Indian foods industry,
which forms 44 per cent of the entire FMCG sales, is growing at 9 per cent and has set the
growth agenda for modern trade formats. Since nearly 60 per cent of the average Indian
grocery basket comprises non-branded items, the branded food industry is homing in on
The retail market for mobile phones -- handset, airtime and accessories -- is already a US$
16.7 billion business, growing at over 20 per cent per year. In comparison, the consumer
electronics and appliance market is worth US$ 5.6 billion, with a growth rate that is half of
Kids retail:
29
International brand Zapp tied up with Raymond to foray into kids' apparel.
Pantaloon's joint venture with Gini & Jony will set up a retail chain to market kids'
apparel.
Turner International India Pvt Ltd. will launch Cartoon Network Townsville and
Planet POGO--two theme parks designed around its channels--in the National Capital
Region.
content from Spacetoon Media Group, Middle East's largest kids' entertainment brand for
Leading the kids' retail revolution is the apparel business, which accounts for almost 80 per
cent of the revenue, with kids' clothing in India following international fashion trends.
According to research firm KSA Technopak, the branded segment comprises US$ 701.7
Industry experts say kids' retailing will touch annual growth of 30-35 per cent. Toys,
theme parks, TV channels… the segment is growing rapidly at 10 per cent per annum.
Margins are in the range of 20-25 per cent (for dealers and distributors), while companies
Agricultural retail:
30
Agriculture across India is heralding the country's second Green Revolution. 14 states,
including Maharashtra, Punjab, Andhra Pradesh and Rajasthan amended the Agricultural
Produce Marketing Committee (APMC) act this year, along the lines of the Model APMC
Act, '02, which allows farmers to sell their produce directly to buyers offering them the best
price.
conditions and services related to agro and allied sectors are open to 100 per cent FDI
For its e-Choupal scheme, ITC built internet kiosks in rural villages so farmers can access
With a US$ 5.6 billion, multi-year investment in agriculture and retail, Reliance Retail will
establish links with farms on several thousand acres in Punjab, West Bengal and Maharashtra.
FieldFresh, planning to become India's first large-scale exporter of produce, will annually pay
farmers over US$ 30,000 to lease land for vegetables, to hire tractors and to pay their
workers.
Besides a five-year program with the Punjab government to provide several hundred farmers
with four million sweet-orange trees for its Tropicana juices by 2008, PepsiCo--with
rice, mangoes, potatoes, chilies, peanuts, and barley for its Frito-Lay snacks.
Export potential and a rapidly growing domestic demand for reliable produce from new
supermarket chains is driving change. With 77 per cent of India's population relying on
31
agriculture for a living, improved efficiency and new markets can benefit a large number of
people.
International retailers :
The Australian government's National Food Industry Strategy and Austrade initiated a test
marketing food retail in India wherein 12 major Australian food producers have tied up with
the areas of food processing, agri retail and manufacturing. It is also likely to press for the
US-based home delivery and logistics company, Specialised Transportation Inc, will enter the
Indian market through a strategic alliance with Patel Retail, a subsidiary of Patel Integrated
Logistics.
Among other big international players, Wal-Mart has announced its plans for India in
partnership with Bharti, Tesco is sure to try again, and Carrefour too might finally find the
right partner.
32
Supermarkets:
Large self service outlets, catering to varied shopper needs are termed as Supermarkets.
These are located in or near residential high streets. These stores today contribute to 30% of
all food & grocery organized retail sales. Super Markets can further be classified in to mini
3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.
Supermarkets are relatively new entrants in the market. They are so called pioneers in
organized food retailing and go by the western model in look and feel and format. This is
33
Franchise outlets:
Like Tommy Hilfiger and Wal Mart, other US retailers are firming up their India entry
strategies and if they are already in, they are undergoing rapid expansion. Fashion brands
DKNY is also al set to foray into the Indian fashion Industry through a franchisee agreement
with Indian company, S. Kumar Starbucks recently expressed their interest in entering Indian
company
Like Tommy Hilfiger and Wal-Mart, other US retailers are firming up their India entry
strategies and if they are already in, they are undergoing rapid expansion. Fashion brand
DKNY is also all set to foray into the Indian fashion Industry through a franchisee agreement
with Indian company, S Kumar’s.Starbucks recently expressed their interest in entering India
through the franchise route, like their AmericanF&B counterparts Pizza Hut, Subway, and the
very successful McDonald’s. McDonald’s has major expansion plans lined up; in the next 3
Hypermarket:
supermarket.
The specific features of a hypermarket are the wide range of goods offered, quality service,
quality display of goods on the shelves and complex systems providing for customers loyalty.
Hypermarket is known for a wide range of goods offered. It consist of dozens of thousands of
items, while similar goods can be offered in several forms. In order to work with such an
34
assortment it is necessary to group it into categories and sub categories that would unite
Shopping Malls:
The new shopping malls that have been expanding their footprint across Indian cities are well
and restaurants to provide a complete family experience. Over 300 malls are expected
to be built over the next two years and most Indian cities with over a million
Shopping malls have existed in India since several decades but were designed and built to
house several shops in a single facility. These malls also known as Shopping Arcades offered
only rows of shops, most of which were small stores that promised bargains for their various
wares. These Shopping Arcades tried to maximize on their store space and did not offer any
The present day malls are a creation of the past few years post 2000. They are designed
professionally using a lot of international experience and combine shopping with a lot of
brand building, recreation, food and entertainment. Malls also have a large format store that
serves as their anchor for shopping and a prominent restaurant that anchors the food needs of
visitors. Most malls also feature a multiplex cinema that offers entertainment to the visitors of
the mall. Finally the mall has large atria and open spaces to allow visitors and families to
hang-out.
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Organized Retail Sector –
Product Segments:
The organized retail business in India is very small. This is despite the fact that India is one of
the biggest markets. Retail business contributes around 10-11 per cent of GDP. India also has
the largest number of retailers, about 12 million, though they are mostly small. Most of the
organized retailing in the country has just started recently, and has been concentrated mainly
in the metro cities. Organized retailing in India has a huge scope because of the vast market
and the growing consciousness of the consumer about product quality and services.
Organized retail only accounts for 3% of the total retail industry as yet and is estimated to
grow to $64 billion by the year 2015. As a result, the retailing space in the country will also
rise by 15-20% by 2010. 50 million sq ft of quality space under development 7 major cities to
account for 41 million sq ft development 300 malls, shopping centre and multiplexes under
construction To open 35 hypermarkets, 325 large department stores, 1500 supermarkets and
over 10,000 new outlets To add US $ 10 billion of business to organized retail. ASSOCHAM
president, Anil K Agarwal says:” The organized sector retailing is all set to grow at much
faster speed than unorganized sector and the higher growth speed will alone be responsible
for its higher market share which has been projected for $17 billion by 2010-11. Cities and
metropolis in which retailing will show booming prospects include Mumbai, Delhi, Chennai,
Kolkata, Bangalore and Kanpur, said Agarwal adding that the popular mode adopted for
building shopping malls in these cities will be based on build, operate, lease and sell basis".
The 4 major organized retail sectors are Food & Grocery, Clothing, Consumer Durables and
1,690,000 crores (USD 375 billion) of which, retail sales constitute about 61% (USD 230
billion).In terms of penetration by the organized retail sector, footwear is the highest category,
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followed by clothing. Footwear is driven by the dominance of home –grown players like
Liberty as well as the 15% market share that MNC retailer Bata Commands. Foreign
Presence, especially through the franchisee route, e.g. Adidas, Reebok, Nike etc. adds to this
slice of the pie. Franchisee activity in this category, especially in Tier II Cities, is pegged to
rise.
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MAJOR INDUSTRY PLAYERS:
Nanz in North India, Nilgiris in the South, Pantaloon in the East and Crossroad in the West
were the pioneers of the retail revolution in India. Nanz faced several obstacles (See Case
Study) in their business and had to finally down their shutters. Nilgiris, due to some strange
reason, did not see any logic to expand beyond the southern frontiers. Pantaloon went to scale
up and become bigger and bigger to form the Future Group, that is now omnipresent in
almost all formats right from small groceries to e-tailing. Crossroads in Mumbai imparted
some valuable lessons to their parent, the Piramyd Group, who has since then gone on an
The big players in Indian retail landscape now are the Future Group, Shoppers Stop,
Westside, Subiksha and RPG Spencer. The newcomers who are knocking at the gates are
Reliance Retail, Bharti Walmart and Aditya Birla Trinethra. Here, we intend to do a brief
profiling of the major players in order to understand the retail business in a better manner.
The Future Group, which was earlier known as PRIL (Pantaloon Retail India Limited) began
as a trouser manufacturer in the mid 1980s. The Future Group is divided into six verticals –
Future Retail, Future Capital, Future Brands, Future Space, Future Media and Future
Logistics. The Future Group started operations in the mid 1987s by incorporating the
company as Manz Wear Private Limited. The company went on to manufacture ready made
trousers under the “Pantaloons” brand name. It came out with a public issue in 1991 and later
The first exclusive men’s store called Pantaloon Shoppe was inaugurated in 1992. Pantaloons
went for a franchisee route to expand the number of retail outlets and by 1995, it had reached
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to a crucial number of 70. The first departmental store called Pantaloons was opened in
Kolkata in 1997 with an investment of Rs 0.7 million. The store was a success and recorded
revenues of Rs 100 million within the first year of operations. In 1999, the company’s name
The success of Pantaloons departmental stores encouraged PRIL to come up with other
retailing formats such as “Big Bazaar” to retail low cost general merchandising, and “Food
Bazaar” to retail food products. As of 2005, the Future Group has 3.5 million sq ft of retail
space and over 100 stores across 25 cities in India. It employs more than 12,000 people and
Kishore Biyani, the promoter of the group who likes to address himself as “Chief Knowledge
Officer” has plans to launch 18 formats and over 3,340 stores, thereby turning the Future
Group into a US$7 billion company with over US$1 billion in profits by the year 2010.
2 Shoppers Stop
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Shoppers’ Stop, promoted by the real estate group K Raheja, was one of the first movers to
have set up a large retail outlet in New Delhi with international ambience. Shopper’s Stop
Ltd now has a considerable presence all over the country with overr 7 lakh square feet of
retail space and stocks over 200 brands of garments and accessories. The stores are spread all
over India with presence in Mumbai, Delhi, Bangalore, Hyderabad, Jaipur, Pune , Kolkata,
Shoppers’ Stop is also very well known for having pioneered several quality retailing
concepts in India like CROSSWORD, HyperCITY and Mothercare. They are the only
With its wide range of merchandise, exclusive shop-in-shop counters of international brands
and world-class customer service, Shoppers’ Stop brought international standards of shopping
to the Indian consumer providing them with a world class shopping experience. Shoppers’
Stop’s core customers represent a strong SEC A skew. They fall between the age group of 16
years to 35 years, the majority of them being families and young couples with a monthly
household income above Rs. 20,000/- and an annual spend of Rs.1,50,000/-. A large number
of Non - Resident Indians visit the shop for ethnic clothes in the international environment
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The stores offer a complete range of apparel and lifestyle accessories for the entire family.
From apparel brands like Provogue, Color Plus, Arrow, Levi’s, Scullers, Zodiac to cosmetic
brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers’ Stop caters to almost every
lifestyle need.
Shoppers' Stop also retails its own line of clothing namely Stop, Life , Kashish, Vettorio
Fratini and DIY. The merchandise at Shoppers’ Stop is sold at a quality and price assurance
Shoppers’ Stop’s customer loyalty program is called “The First Citizen”. The program offers
its members an opportunity to collect points and avail of innumerable special benefits.
Currently, Shoppers’ Stop has a database of over 2.5 lakh members who contribute to nearly
The Organisation, in 2000, along with ICICI ventures also acquired the reputed bookstore,
“Crossword”, which offers the widest range of books along with CD-ROM, music, stationery
and toys. Services like Dial-a-book, Fax-a-book and Email-a-book enable customers to shop
Realising the role of IT way back in 1991, Shoppers’ Stop was among the first few retailers to
use scanners and barcodes and completely computerise its operations. Today it is one of the
few stores in India to have retail ERP in place, which is now being integrated with Oracle
Financials and the Arthur Planning System, the best retail planning system in the world. With
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the help of the ERP, they are able to replicate stores, open new stores faster and get
information about merchandise and customers online, which reduces the turnaround time in
Shoppers Stop has been very keen to understand the importance of distribution and logistics
in ensuring that merchandise is available on the shop floors. This has led the retail chain o
streamline its supply chain. The company has developed process manuals for each part of the
logistics chain. These modules include vendor management, purchase order management,
stock receiving systems, purchase verification and inventory build up, generation and fixing
of price and store tags, dispatch of stocks to the retail floor and forwarding of bills for
payment.
Shoppers’ Stop has a grand ambition to position itself as a global retailer. The company
intends to bring the world’s best retail technology, retail practices and sales to India.
2 Trent – Westside
Established in 1998, Trent operates some of the nation's largest and fastest growing retail
store chains. A beginning was made in 1998 with Westside, a lifestyle retail chain, which was
followed up in 2004 with Star India Bazaar, a hypermarket with a large assortment of
products at the lowest prices. In 2005, it acquired Landmark, India's largest book and music
retailer.
In a recently signed deal, Trent has agreed to anchor 12 malls set up by DLF Universal Ltd
across the country, at its Westside, Landmark and Star India Bazaar outlets. This amounts to
Trent retails garments and household accessories for men, women and children, cosmetics
and perfumes at Westside, food, beverages, health and beauty products, vegetables, fruits,
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dairy products, consumer electronics and household items at Star India Bazaar and books,
Westside has 25 outlets across 17 cities in India offering a variety of designs and styles in
garments, footwear and accessories, as table linens, artifacts, home accessories and
furnishings. Well-designed interiors, sprawling space, prime locations and coffee shops
Trent also runs another chain of retail stores called Star India Bazaar. Launched in 2004, Star
India Bazaar provides a large assortment of high quality products made available at the
lowest prices coupled with a unique shopping experience. Star India Bazaar is located in
Ahmedabad and offers a wide choice of staple food, beverages, health and beauty products,
vegetables, fruits, dairy products, consumer electronics and household items at the most
affordable prices.
Trent has also recently acquired a 76 per cent stake in Landmark, one of the largest books and
music retail chains in India. Landmark commenced its operations in 1987 with its first store
in Chennai, and now has nine stores in the major metros of the country. Earlier Landmark
was focused on books, stationery and greeting cards. In 1996 it added music to its product
portfolio and also started the trend of stocking curios, toys, music, CDs and other gift items.
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4.Piramyd
Piramyd Retail is part of the Piramal Group, which has presence in diverse sectors spanning
Pharmaceuticals, Textiles, Real Estate, Engineering, Family Entertainment and Retail with
manufacturing operations in 19 locations across five states and employing over 18,000
people.
The promoters launched the apparel business in 1999 under Piramyd Retail and
Merchandising Pvt. Ltd. (PRMPL) while its food; home & personal care businesses (FHPC)
were housed under Crossroads Shoppertainment Pvt. Ltd. (CSPL). As the apparel and food
businesses individually reached a critical mass the management merged the two companies
into Piramyd Retail Ltd. due to distant synergies in two businesses in March 2005. Pyramid
also has a smaller format of stores called TruMart that caters to Food and Personal Care
products.
Piramyd Retail currently has 5 Mega stores and 8 TruMart stores mainly in Maharashtra . The
company plans to increase these numbers to 17 Mega stores and 69 TruMarts by 2008. The
The FHPC (Food & Personal Care) business is volume driven while the Lifestyle store is a
margin driven business. Piramyd Retail plans to increase the contribution of private labels
from existing 7% to 18-20% of the revenues by 2010. Gross margins from private labels are
over 40% and hence the company is planning to increase this business. Most of the stores
are on the lease format and the company is prone to higher lease rentals due to the overall
increase in real estate prices. This may bring the profit levels down substantially.
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Piramyd Retail did have a first mover advantage in many locations but it has actually failed to
capitalise over this advantage. Its competitors like Pantaloon, Shoppers Stop and Trent gained
larger benefits of their far more aggressive business & marketing strategy in the retail space.
2 Subiksha
The Chennai based Subiksha grocery chain runs around 200 outlets all over the country and
it’s current turnover stands at Rs 224 crores. Their target customer is the middle income value
conscious buyers. The main aim of Subiksha is to offer a functional and transactional
shopping experience. This retail chain has no qualms and spends almost no money on
creating a pleasant shopping experience, and all stores are non-air conditioned. There is no
A few years ago, Subiksha did not even offer shoppers self service. The customer had to
place an order at a computerized teller and the goods were billed and delivered after cash is
45
collected. Customers had to bring their own carrybags or pay to buy them from the store.
However, now Subiksha has slightly tweaked their business model in order to create a better
appeal to customers who were defecting to the competitors. The store formats are still small
and non-airconditioned. But customers have the option to pick from shelf spaces. They also
get shopping bags and free home delivery. But the selling USP(unique selling proposition)
remains the same --- Subiksha tries to be as close to the customer as possible and offers the
lowest price and huge savings in comparison to competitors. It’s slogan happens to be ---
2 RPG Spencer
RPG’s Spencer presently has 125 stores across 25 cities covering a retail trading area of half a
million square feet and with a clientele of 3 million customers a month. Spencer's has a
national footprint with seven hypermarkets, three supermarkets and 70 daily use outlets,
called Dailies.
All the newly opened Spencer's stores stock every conceivable product that is required by a
household on a daily basis. At Spencer's Daily shoppers can get fresh fruits, vegetables, fast-
moving consumer goods, household items, groceries, with regular offers and discounts.
Spencer's outlets are divided in to three retail formats. These are, Spencer's Hyper, the over
25,000-sq ft hypermarkets stocking over 25,000 items. The 8,000sq ft to 15,000-sq ft mini
hyper stores, branded as Spencer's Super and the daily purchase 4,000-sq ft to 7,000-sq ft
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Spencer's Daily for groceries, fresh food, chilled and frozen products, bakery and weekly top
up shopping.
2 Reliance Retail
On June 26, 2006, Mukesh Ambani, Chairman and Managing Director, Reliance Industries
Reliance Retail started it’s retail operation with “Reliance Fresh”, a grocery store that sells
vegetables, fruits, personal care items and other food products. Soon, these retail outlets will
also be selling apparel and footwear, lifestyle and home improvement products, electronic
goods and farm implements and inputs. They will also offer products and services in energy,
travel, health and entertainment. In addition to this, partnerships would be developed to bring
Reliance Retail plans to extend it’s footprint to cover 1,500 Indian cities and towns with
stores and hypermarkets. Reliance also plans to open restaurant outlets, financial services
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Mukesh Ambani’s ultimate ambition seems to be to create the Indian equivalent of Wal-Mart
by scaling up the business to unprecedented heights to reach every nook and corner of the
country. With it’s retailing venture, Reliance expected a revenue target of US $20 billion
through it’s retail operations by 2010. Over a span of five years, RRL expects a 20% return-
on-investment.
The first store christened “Reliance Fresh” opened in November 2006 at Hyderabad. Within a
few months they have now opened stores in Mumbai, Pune and Ahmedabad and plans foray
2 Bharti Wal-Mart
Bharti Retail (Pvt.) Ltd. unveiled the roadmap for its retail venture on 19 th February, 2007
envisaging an investment of $2.5 billion with expectation of revenue of $4.5 billion (about
Rs. 20,000 crore) from this business by 2015. The first retail outlet is expected to open
48
Bharti’s plan is to invest $2.5 billion by 2015 and open stores across all major cities. This
investment would be only for setting up front-end stores. The modalities for its back-end
linkage, including its joint venture with the world's largest retailer Wal-Mart, are in the
A high-level team from Wal-Mart was visited India in the later part of February to work out
the details of the back-end chain. While Bharti would manage front-end of the retail venture,
Wal-Mart would be involved in the back-end, including logistics, supply chain and cash-and-
carry, he added.
The JV was presently scouting for 10 million sq. ft. of retail space, which would include
hypermarkets, supermarkets and convenience stores and would provide employment to about
60,000 people. The company would open multi-format retail outlets in all cities with a
population of about one million. Bharti is now conducting a massive consumer survey to take
However, Bharti and Wal-Mart have been facing stiff opposition from the left parties and
other political outfits who fear that the entry of the Bentonville giant will make life difficult
for the small grocers and create massive unemployment. They also expect Wal-Mart to take a
tough stance on lowering prices and force farmers to sell their produce at lower rates. A
lurking fear of monopolistic regime in the retail sector is also enhancing their fears. Both
Bharti and Walmart are presently having a tough time in convincing the ministers, politicians,
agriculturists, the NGOs and other pressure groups that their business model would serve to
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2 Aditya Birla – MORE
The Aditya Birla Group is India's first truly multinational corporation. Global in vision,
rooted in values, the Group is driven by a performance ethic pegged on value creation for its
billion and in the League of Fortune 500, it is anchored by an extraordinary force of 100,000
employees belonging to over 25 different nationalities. Over 50 per cent of its revenues flow
from its operations across the world.” Our mission is to change the way people shop. We will
give them more.” says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group. The
more. for you advantage: more. promises a world-class pleasurable shopping experience to
Indian consumers in their very own neighborhood. more. Quality, more. variety, more.
convenience and more. value are the four delivery cornerstones of the more. chain of
MORE. Value MORE. promises best in market pricing. Linking up directly with farmers to
source fresh fruits, vegetables and staples ensure great quality as well as great price. Add to
this, the membership program Club more. which provides convenience, customized shopping
solutions and savings, and the more. value promise becomes all the more evident.
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More. Is an inspirational brand for an inspirational country. We have a bright and committed,
enthusiastic team that represents the best experience from India and globally. MORE. also
has a range of products from its own stable available across value, premium and select
ranges. The products have been quality-checked and are available in attractive packaging at
competitive prices. To avail additional benefits, at no extra charge, customers can also enroll
2 VISHAL RETAIL :
Vishal is one of fastest growing retailing groups in India. Its outlets cater to almost all price
ranges. The showrooms have over 70,00 products range which fulfills all your household
needs, and can be catered to under one roof. It is covering about 1282000 sq. ft. in 18 state
across India. Each store gives you international quality goods and prices hard to match. The
cost benefits that is derived from the large central purchase of goods and services is passed on
to the consumer. What started as a humble one store enterprise in 1986 in Kolkata(erstwhile,
hyper-market has also been opened for the Indian consumer by Vishal. Situated in the
national capital Delhi this store boasts of the singe largest collection of goods and
commodities sold under one roof in India. The group’s prime focus is on retailing.
51
The Vishal stores offer affordable family fashion at prices to suit every pocket. The group’s
philosophy is integration and towards this end has initiated backward integration in the field
of high fashion by setting up a state of the art manufacturing facility to support its retail
endeavors. Company has already tied up for 5-lakh sq ft space and is looking for more.
Company will come up with 32 new stores this year. Company is doing research on more
apparels business at 53% may slightly come down to 50%. India is a big country and there is
huge space for four-five big retail players. Vishal can always sustain growth in this big
market. Company can sustain margins as it is going for backward integration. Currently
manufacturing contributes 10% of the business, which in the next two to three years, will go
up to 25%. Company is increasing its focus on the non-apparel and FMCG segment. The
current share of FMCG at 15% could go up to 20-25%. Apparel sales currently at 63% in the
next 2-3 years should come down to 50% as the company is now also focusing on different
segments. With growth in volumes, the cost of sourcing will come down in the near future.
Company will venture wherever it gets real estate space. Currently, it has very little space in
METRO Group today, is the third largest trading and retailing group in the world. The
company employs over 2,50,000 staff in 30 countries. In the year 2005 METRO Group had
generated sales of over €55.7 billion; 53% of total sales came from outside Germany.
METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in
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Bangalore. With this METRO introduced the concept of Cash & Carry to India. These
Centres offer the benefit of quality products at the best wholesale price to over 150,000
businesses in Bangalore. METRO offers assortment of over 18000 articles across food and
non food at the best wholesale prices to business customers such as Hotels, Restaurants,
Caterers, Food and Non-food Traders, Institutional buyers and professionals. METRO's Cash
& Carry business model is based on a Business to Business (B2B) concept and focuses on
meeting all the needs and requirements of business customers. It is a modern format of
Vivek Limited is a professionally managed public limited company carrying three retail
brands - Viveks, Jainsons, Premier and continuously adding to the formidable strength of
1000 employees. Vivek Ltd is the largest consumer electronics & home appliances retail
chain in India. Viveks popularized several brands by creating visibility and have the
53
distinction of being market leaders and trendsetters with continuous support from the
principal companies. Viveks evolved its strategies to suit the larger scene where there was a
stigma attached to borrowing. Very few hire purchase options were available and hence
Viveks started Vivek Hire Purchase and Leasing Ltd to finance consumer durables, which
enhanced the core retailing business also.Viveks grew from 3 stores to more than 52 stores
and turnover increased to over Rs. 350 crores (USD 80 million) and also become a public
limited company from a family run enterprise. In this process, 14 store Jainsons was bought
over in 1999, 2 store Premier in 2001 and Spencers in 2002 and have recently absorbed
Spencers into the Premier brand. With the liberalization of economy and other changes in the
global scene, Viveks streamlined the marketing and advertising activities and shopping
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THE GROWTH DRIVERS:
30 years of age.
Plastic Revolution: Increasing use of credit cards for categories relating to Apparel,
Urbanization: increased urbanization has led to higher customer density areas thus
enabling retailers to use lesser number of stores to target the same number of
Covering distances has become easier: with increased automobile penetration and an
become easier than before. Now a customer can travel miles to reach a particular
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DRIVERS FOR GROWTH:
Indian consumers are rapidly evolving and accepting modern formats overwhelmingly. Retail
Space is no more a constraint for growth. India is on the radar of Global Retailers and
suppliers / brands world-wide are willing to partner with retailers here. Further, large Indian
corporate groups like Tata, Reliance, Raheja, ITC, Bombay Dyeing, Murugappa & Piramal
Groups etc and also foreign investors and private equity players are firming up plans to
identify investment opportunities in the Indian retail sector. The quantum of investments is
likely to sky-rocket as the inherent attractiveness of the segment lures more and more
investors to earn large profits. Investments into the sector are estimated at INR 20 – 25 billion
in the next 2-3 years, and over INR 200 billion by end of 2010.
Stocks in the retail sector are also becoming increasingly attractive from an investor's point of
view. Successful development of value based concepts as well as development of retail space
in smaller cities and towns shall drive the organized retail into the next levels of cities.
such as hypermarkets and supermarkets in the new pockets of growth. Prominent ‘tier-II'
cities and towns which are witnessing a pick-up in activity include Surat, Lucknow, Dehra
Dun, Vijaywada, Bhopal, Indore, Vadodara, Coimbatore, Nasik, Bhubaneswar, Varanasi and
With consumption in metros already being exploited, manufacturers and retailers of products
services etc are increasingly targeting consumers in tier II cities and towns. In addition, petro-
retailing efforts of petroleum giants scattered through out the country's landscape have also
ensured that smaller towns are also exposed to modern retailing formats.
56
On the supply side, mall development activity in the small towns is also picking up at a rapid
pace, thereby, creating quality space for retailers to fulfill their aggressive expansion plans.
Thus, the ‘retail boom', 85% of which has so far been concentrated in the metros is beginning
to percolate down to smaller cities and towns. The contribution of these tier-II cities to total
products and brand communication are some of the factors that are driving the retail in India.
Over the last few years, many international retailers have entered the Indian market on the
strength of rising affluence levels of the young Indian population along with the heightened
awareness of global brands and international shopping experiences and the increased
Development of India as a sourcing hub shall further make India as an attractive retail
opportunity for the global retailers. Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M,
Karstadt-Quelle etc stepping up their sourcing requirements from India and moving from
third-party buying offices to establishing their own wholly owned / wholly managed sourcing
& buying offices shall further make India as an attractive retail opportunity for the global
players.
Manufacturers in industries such as FMCG, consumer durables, paints etc are waking up to
the growing clout of the retailers as a shift in bargaining power from the former to the latter
57
becomes more discernible. Already, a number of manufacturers in India, in line with trends in
developed markets, have set up dedicated units to service the retail channel. Also, instead of
viewing retailers with suspicion, or as a ‘necessary evil' as was the case earlier, manufacturers
are beginning to acknowledge them as channel members to be partnered with for providing
The next level of opportunities in terms product retail expansion lies in categories such as
apparel, jewellery and accessories, consumer durables, catering services and home
improvement. These sectors have already witnessed the emergence of organized formats
though more players are expected to join the bandwagon. Some of the niche categories like
Books, Music and Gifts offer interesting opportunities for the retail players.
Indian consumer goods market is expected to reach $400 billion by 2010. India has the
youngest population amongst the major countries. There are a lot of young people in India in
In India they do not have to face this dilemma largely because rapid urbanization, increase in
demand, presence of large number of young population, any number of opportunities are
available . The bottom line is that Indian market is changing rapidly and is showing
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1. Income
2. Socio-Economic status
3. Age demographics
4. Geographical dispersion
1. Income Classification
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2. Socio-Economic Classification:
In addition to income classification and consumer classification, Indian households can also
be segmented according to the occupation and education levels of the chief earner of the
household (the person who contributes most to the household expenses). This is called as
market before launching their new products. SEC is made to understand the purchase
3. Age Demographics:
India is a very young nation, if compared with some advanced and developed countries.
Nearly two- thirds of its population is below the age of 35, and nearly 50 % is below 25.
Year/
2006 2001 1996
Age
Below 4 yrs 113.5 108.5 119.5
5-14 yrs 221.2 239.1 233.2
15-19 yrs 122.4 109.0 90.7
20-34 yrs 279.1 246.8 224
35-54 yrs 239.2 207.3 178.1
55 & above 118.7 101.7 88.7
Total 1094.1 1012.4 934.2
Marketers explain that the boom in the consumption level and leisure related expenditure is
because of this young population. It will have a significant impact over the consumer goods
60
market. In addition to that, it is expected that this will generate trade opportunities and
There is huge potential for further consumption of goods and services due to the increased
level of disposable income. The expenditure on essential goods and services has a higher
Consumption Trends
There is large difference in economic prosperity levels among several states in India, linked
to the wealth creation from trade, industrial, and agricultural development. There are poor
districts in many states, classified according to their market potential. India has 500 districts,
out of which 150 districts (category A) and next 150 districts (category B) account for 78%
and 15% of the national market potential respectively. Remaining 200 districts (category C)
61
are backward and account for only 7% of national market potential. Category C districts have
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GROWING ECONOMY
Most of the global powerhouses in the retailing sector such as Wal-Mart, Carrefour, Tesco etc
have adopted multi-format and multi-product strategies in order to customize their product
The important thing is to identify the 'future that has already happened' - Peter Drucker
The important and distinctive are always the result of changes in values, perceptions and
goals of people. Identify the changes that have already happened, exploit the changes that
have already occurred and use them as opportunities. Dr William T Wilson, Chief Economist
for Keystone India ñ a Chicago-based firm providing cross-border trade facilitation and asset
management services in US are likely to be exhibited in India as all formats present prospects
Further, with the emergence of larger store formats like superstores and hypermarkets in
countries like UK, France, Germany, Spain since the 1980s and Eastern Europe more
recently, traditional food retailers have been able to stock more extensive non-food ranges. In
fact, Tesco, UK's leading grocer, has become the number one apparel retailer in the Czech
Republic and also a major player in Hungary apart from being one of the fastest growing
clothing retailers in the UK. Together with its rival, Wal-Mart-owned ASDA, Tesco is one of
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DISPOSABLE INCOME
There is no point complaining, accusing or justifying that retailing business is only for larger
players and multinational retailing companies. That's total rubbish and rather an assumed
limitation. Recent research finding is that by the year 2010, India will have at least three
million people with an annual income of over Rs 4,000,000. Mind you, this is the official,
declared and straight income meaning there will be a considerable number of consumers with
other sources of income! (I suppose). One could comfortably presume that one fourth of the
three millions would reside in Bangalore. Considering the third successive year with great
economic growth in India, it is obvious that we shall have more people with higher
disposable income. With higher disposable income, the discerning Indian consumers are not
going to be conscious about price alone. This emerging consumers would want something
special, unique, different, better, customized and more. Find the synonyms and transliterate
these into value offerings in your field of business and you have a gold mine, especially when
you manage to connect with the customers' value and perception and India, said that after
or surpass Japan as the world's third largest sometime in the year 2006. Dr Wilson also added
that India's economy measured in PPP (purchasing power parity) terms will eclipse the US$
four trillion mark in 2006, making it equal to or greater than Japan's. Indian consumers are
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RISING INCOMES
Over the past deacde , India’s middle and High Income group has grown at a rapid pace of
over 10% per annum . Though this growth is most evident in urban areas, it has also taken
place in rural markets. Further, the number of house holds earning above Rs.150,000 per
annum is about 30 million today and is expected to grow to 80 million by 2007. This growing
high-income population is triggering the demand for consumer goods, leading to the
EXPLOSION OF MEDIA
There has been an explosion in media as well during the past decade . Kick-started by the
cable-explosion during the gulf war, television has accelerated to a pint where there are more
cable connections than telephones in Indian homes and more than 100 channels are being
aired at all times .This media bombardment has exposed the Indian consumer to the lifestyles
of more affluent countries and raised their aspirations from the shopping experience – they
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Private Labels
Brands, store labels, private label brands, store brands. These terms may seem to be
synonyms of each other. However, when it comes to retailing, each of these terms has a
different meaning. While we all know what a brand is, a private label and a store label are
different from any other brand because they are product lines that are owned, controlled,
merchandised and sold by a specific retailer in its own stores. Among Indian retailers, Stop,
Life and Kashish by Shoppers' Stop, and ETC by Ebony are private label brands. According
to Synovate, is the market research arm of global communications specialist Aegis Group, the
growth of private labels is about 2-3 times more than that of advertised brands .Among the
product lines launched by retailers, the ones whose nomenclature is the name of the store
itself are called store labels. Foodworld and Nilgiris have launched their own brand of
supermarket products under the "Foodworld" and "Nilgiris" brand names. There is a distinct
advantage in naming the brand launched by the retailer after the same name as that of the
store. But at the same time, the store label also carries the burden of not only the success of
the brand, but also the failure, which may have a negative rub-off effect on the retailer's
image. A store brand on the other hand is a brand name the retailer carries. Each retailer,
because of its unique offering, is a brand in itself, which is what the store brand signifies.
Nallis, Modern Bazaar and The Home Store are store brands since each of them stands for a
Retailers are now aggressively moving into developing their own private labels as it not only
makes economic sense in the form of retailers achieving higher margins, it also helps them to
plug gaps in their product portfolio. For instance, in menswear, retailers say that gross
margins on branded products vary from 25-38 per cent. Compared to that, the retailers can
earn whopping margins of around 55-60 per cent on private labels. Private label products
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contribute to a retail brands differentiation. A retailer can achieve differentiation through a
large (but not necessarily exclusive) portfolio of private label products. Service adds to the
differentiation, and together with a unique product range, results in a strong retail brand. They
are not perceived as being interchangeable with similar private label products launched by
other retailers (unlike manufacturers of branded products, which are the same regardless of
the retailer). Introduction of an in house brand of products helps the retailer to have means
with which they can compete head on with the other branded products. An established private
label brand provides the retailers a platform to negotiate with suppliers, and the retailers are
thus self-sufficient in a certain category. They have more control over the merchandise and
are able to make the required changes and modifications to suit the changing customer profile
much quicker. This brings about a more consistent and acceptable product portfolio, which
also helps reduce mark-downs. A retailer can create a stronger emotional connect with the
consumer as the experience is not just the store experience but also the product experience.
An outside brand could be purchased from any outlet. This is not so in the case of private
The question is: why would retailers want to get into the trouble of launching an own brand
when there are "n" number of local, regional and national brands for practically all kinds of
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STORE LOCATION
Store Location involves the consumer’s choice for a particular retail store. Past retail and
marketing studies have identified several consumeroriented store attributes (e.g., price,
quality, variety, discounts, and store reputation) and their relationship to store Location, but
these studies overlooked how the physical environment affects retail store Location. This
shopping scenarios, (b) importance ratings of environmental dimensions for each shopping
orientation, (c) perceptions of the store environment for each shopping orientation, and (d)
attitude toward the store environment and first store choice. The statement of problem,
research objectives, conceptual framework, hypotheses, conceptual definitions, assumptions,
and limitations are presented in this chapter.
Store choice is dependent on the timings of shopping trips (as consumers may go to a small
or local store in short fill – in trip) and go to a larger store for regular shopping trips.
Consumer’s personal differences interact with situational factors and together they determine
A consumer’s selection of a store is not completely random. The more recent he purchases
experience and the more frequent visits the store, the more he is likely to repurchase that
product in the store. This shows that the past experience influence on store choice and
patronizing ability to either change, alter or reinforce the new shopping experience.
Thus, we can say that consumer’s characteristics interact with situational variables to impact
how information about the retail mix is processed, resulting in store choice and affecting store
patronizing decisions.
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The store Location is result of both the relative importance of various motives and shopping
assessment of alternative stores with respect to various factors (locations, store image,
product availability, past shopping experience etc.) used in making the decisions
Loyal shoppers, as per the first definition, are so rare as to be practically negligible. One of
the earliest studies in this area was by.This has been found to be true in subsequent studies.
Most consumers are multiple-store shoppers though differences exist across store types. As
quoted in a study “Grocery Stores have fairly low loyalty in the sense of generally not
satisfying…customer’s total needs.” Extending this, one can intuitively say that consumers
would display greater Location behaviour for furniture as compared to garments, more for
garments as compared to grocery etc. In any case, exclusive shopping at a single store is rare.
weekly/monthly purchase (in money terms) from the store, with the normal family
consumption in a month.
The third definition recognizes the multiple-store shopping behaviour and measures Location
as the proportion of trips made to a particular store given the average number of trips made in
The fourth definition, more applicable in studies related to frequently purchased, low-value
items like groceries, looks at number of items purchased and not its value as an indication of
Location behaviour.
The last definition presupposes that loyalty erodes fast. It has found application in situations
where competitiveness is high, promotions and deals are constantly offered to lure shoppers,
and retaining a customer is difficult given the numerous alternatives. Consequently this
definition is more applicable in a more competitive scenario than afforded in India at present.
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RETAIL STORE LOCATION
Convenience is the primary reason that consumers show Location. These studies assume that
convenience is the primary reason for loyalty. Most work in this area stems from a model
proposed1.
The Huff Model states that customer Location is directly proportional to utility factors given
by square feet and inversely proportional to disutility factors given by physical distance. The
store/shopping centre.
Location-related variables are given importance in analyzing both trade areas and retail
Location behaviour. These studies most often count the benefits of locating a store in a
shopping centre/mall to increase the store ‘destination’ traffic rather than just stay with the
convenience pull. In fact, these studies determine shopping centre traffic more accurately
than single store traffic. The Huff model has subsequently been studied by introducing trade
overlap areas for effects on store Location. Generically speaking, these studies have resulted
in the formation of the Theory of Gravitational Pull in the field of retailing Location studies.
Apart from distance, several other factors such as Income and social class perceptions have
also been studied from the perspective of retail centre Location decisions.
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II. Product-related: Within a given trade area, these studies emphasize the ‘uniqueness of
assortment and variety comes after convenience and price. Given that consumers are
favourably inclined to revisit a store where they have had positive shopping experiences
(found something they could not find anywhere else), these studies suggest that competing
stores need to differentiate themselves based on type and quality of assortment. The emphasis
here is on tailoring the environmental cues using retail mix elements to foster patronizing.
Consumers have distinct perceptions of national and local brands vis-à-vis the retail private
store brands. It is observed that there are certain product categories where ‘quality
believability’ of national brands is far too strong for store brands to make any impact on
consumer loyalty. In India, grocery retailer brands in product categories like honey, jam etc.
are showing a much more favorable sales impact as compared to ketchup. Internationally,
coffee has greater store-brand loyalty as compared to loyalty to national brands. It is too
premature for an Indian retailer to explore into the territory of brand building given the
limited promotional budgets at present (In grocery retailing, store brands account for less than
2% of sales value in Food World and regional/local chains like Subhiksha (Chennai),
Homeland (Pune) are yet to invest in private labels). But one expects that in a few years, push
for greater margins and the need to retain the loyal consumer will mean more investment in
this area. Internationally, private store brands account for 20-30% of total store sales in
groceries.
Additionally, to fully understand the implication of removing (or in fact adding) items to
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implications coupled with issues of product substitution, price, store environment effects, and
the presence of competing offers, as well as customer’s purchase goal 2 in their study of fresh
flower category, found that the store environment (either that of selected store for purchase or
the store has a poor environment and a competitor is located close by, then, unsurprisingly,
they found that it was likely that the customer would go to the competitor. Perhaps more
interestingly, they reported that assortment size had a strong effect on the purchase.
The actions required to keep loyal customers have two aims: the first is defensive, to give the
personalized relationship with the clients, the basis of a more intimate and therefore involving
The attention of retail managers is increasingly focusing on how customers find their way
around product ranges and brand knowledge within stores, as well as how they navigate store
aisles. New consumers are looking for ‘edited choices’; that is visible guidelines to help them
save time and efforts. Smart retailers who understand this particular consumer want are
targeting specific grouping of products to appeal to specific segments of new consumers. For
example, a supermarket, rather than following the traditional practices of locating additive-
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Store Presentation and Store Setting
Internal layout and presentation are most important for the retailer. As they make a clear
statement about the standard and quality of the merchandise and service (total product)
offerings. At first glance, customers utilize the physical (and social) surroundings to gather
the vital clues that inform their expectations prior to service delivery. Throughout these
assessments, the effect of physical evidence – such as design features and images presented-
are highly important and unquestionably guide customers’ decision making and evaluate
process.
The overall appearance of a retail setting will therefore tend to pre-determine a customer’s
attitude towards the organization. Newcomers will certainly base their expectations on the
first visual encounter, which then becomes a reference for future visits.
A physical environment that provides appropriate cues that might result in approach
behaviour may then, after consideration of social environment, be avoided. A customer may
be attracted to a restaurant on the strength of its exterior and a glimpse of its interior from
across a busy street. But, if on closer inspection the establishment is bereft of customers, that
fact alone may produce enough of a negative impression to ensure that the potential customer
suggests that positive moods (outcomes) can result from this constant interaction with the
physical setting. People continually scan their inanimate (built) environment for evidence, in
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This communication can be seen in the context of the promotion mix that in turn completes
the marketing mix model with its 4 Ps including product, price, place, and promotion.
Besides the attraction of existing customers to continue patronizing the retail outlet, the
The overall purpose of in-store merchandising is obviously to make products more attractive
Several studies report direct linkages between Store Image and intensity of Store Loyalty.
Thus, we can conclude that more positive the Store Image the greater is the degree of loyalty.
image to relevant target market. A successful retail image depends upon the firm’s ability to
appropriately match store attributes and benefits with target market characteristics. Thus the
retail strategies. Because the characteristics are important in retailing, considerable attention
has been given to developing classification of consumers which may be useful for retail
managers
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ANTECEDENTS TO STORE IMAGE
based on his references to several other studies, proposes a model that Location is the result
of past purchasing experience and the customers’ (favourable) image of the store. He stresses
2. The congruity of the Store Image between the retailer and the consumer.
Several studies have established the linkage between various elements of the retail mix and
impact on store image and hence loyalty. varied assortment, one of the retail mix elements,
may be the key driving force to store choice. If retail mix elements are in congruence with the
desired benefits, it results in customer loyalty. These studies indicate that Retailers adapt their
retail mix according to what they perceive as important attributes to their target market and
how they perceive their consumers as processing the information conveyed by the retail
elements. The aspect of congruity between the retail mix elements as designed by the retailer
and the self-image/self-concept of the consumer has received much attention. Research has
shown that greater the congruence between Self Image and Store Image, greater is the
elements is processed:
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Based on the above interactional relationship, we can identify Consumer Characteristics as
Characteristics (which impacts the store choice and the shopping patterns), Competitive
Environment (as determined by the competing outlets in the trade area) and Store
Characteristics (as defined by the specific retail mix elements). Studies that have incorporated
individual differences have studied its impact on store image through a variety of
intervening/influencing/moderating variables.
“The Store patronized is a result of both the relative importance of various motives and the
shopper’s assessment of alternative stores with respect to the various factors used in making
the selection.” This leads us to examine two aspects related to individual dispositions: one
related to customer motives in shopping and the other related to information processing about
stores as well as being a store loyal for any brand. They are also much more trend oriented
The recreational shopper is not a discount shopper and wants the atmosphere and services
associated with loyal stores. This concept supports a retail image associated with full service,
well known brands, exciting atmosphere, meaningful communication methods and a self
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Behaviour and the effect of Environment: A psychological perspective
Store Location is defined and measured in behavioral terms. There are five ways of looking at
5. Is the consecutive trips made to Store X ‘significantly’ more than consecutive runs made to
Earlier environmental studies conducted by and identified the emotional responses (i.e.,
behaviors to show preference or lack of preference for several types of retail stores. Of the
performance/satisfaction) discussed by these researchers, physical approachavoidance was
expressed as store Location; however, these researchers did not explore the relationship
lighting) and physical approachavoidance (i.e. store Location).
While randomly assigned subjects to different stores and investigated responses to stores
under different situations (i.e., different day, time of day), this study examined the influence
77
scenarios. Subjects were asked to complete a survey questionnaire to address this gap in the
retail store Location literature.
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The impact of the interplay between physical environment and behaviour is also of interest of
outside the sphere of retailing. The most general consideration of these types of impact- the
psychology. Within this field, developed a theoretical model that they argued is applicable to
suggested that the outcome of the impact of various stimuli (present in the environment) was
and the behavioral outcomes of approach or avoidance are three emotional states: pleasure,
arousal, and dominance (PAD). The combination of these three emotional states is seen to
determine whether or not a person wishes to remain in a particular environment – i.e. engage
Retailers have to establish mechanism by which they are able to ensure, or at least increase,
the likelihood of approach behaviour being stimulated. This means that retailers must make a
careful and conscious use of stimuli that make a physical environment. Such management
therefore needs to consider both its upper and lower layers. However, the greatest degree of
control can be associated with the specifics of the retail unit itself. It is here that retailers can
attempt to create approach behaviour that will result in customers being attracted to the
particular retail environment. Once in the environment – and in the store- the retailer’s next
task is to continue to provide and environment (giving particular stimuli) that ensures
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Environment Responses
Social Approach
Stimuli Customer
Physical Avoidance
At first level, the retailer’s task is to select locations that are congenial to the intended
customers. These locations are determined bye core elements of brand proposition, nature of
the neighborhood.
At the second level, the task is to design an internal store environment which elicits the
appropriate behaviour response. Within the general model – using the notion of approach and
Second category implies the extent of exploration of the environment that may lead to a
The third degree concerns the degree to which a customer feels comfortable with
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Environmental Responses and ApproachAvoidance Behavior
Developed a framework for environmentuser relationships in service organizations.
The overall objective of this model is to explore the role of the physical environment in
service organizations. His framework proposes that consumers and employees in service
settings perceive a variety of environmental factors. These factors are ambient conditions;
space/function; and signs, symbols and artifacts. Ambient conditions consist of temperature,
air quality, noise, music, and odor. The space/function dimension includes the layout,
equipment and furnishings. Signage, styles of décor and personal artifacts are among the sign,
symbols and artifacts dimension. Both consumers and employees respond to the environment
behavior of consumers and employees, as well as affect their social interactions. Furthermore,
Bitner states that the perceived servicescape (i.e., physical setting, environment in service
organizations) and environmental factors does not directly cause people to behave in certain
ways. Instead, consumer perceptions of the servicescape lead to certain beliefs, emotions and
physiological actions that influence behaviors.
To discuss individual behavior, states that individuals react to environments in two ways to
show preference (i.e., approach) or lack of preference (i.e., avoidance) for a particular
Location) and encourage social interactions, present many challenges for service
optimal design for others. For example, a setting that is conducive to an employee’s work
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needs may not enhance the social interaction between employees and consumers 40.
Furthermore, an environment that promotes approach or Location behavior for one consumer
may not elicit the same response in another consumer or group of consumers.
Decision making with regard to retail outlet selection is very similar to consumer decision-
making on brands where the consumer goes through a process starting from identifying needs
to post-purchase issues. There are a few interesting and important dimensions associated with
Does the retail outlet have psychological implications on the target segment? When Titan and
Timex watches were retailed through exclusive shops, consumers wanting lower-end watches
probably felt that a typical Titan showroom was too elitist, which could have had a negative
impact.
Does selection of outlets varies in accordance with types of product categories? While buying
choosing outlets? What is the sequence in which consumers are likely to go about their
decisions? Will they select the brand or the category first before choosing the outlet?
What is the impact of the image developed by a retail outlet? Is FoodWorld different from a
neighborhood grocery shop in the minds of consumers? What kind of perception are
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consumers likely to have with regard to shopping from an online outlet such as Fabmart vis-
Would consumers be interested in store or retail brands? Traditionally, retailers have been
carrying manufacturers' brands. But in recent times (at least to a significant extent in the
foods category), supermarkets such as Food World have started carrying retail or store
brands. Nilgiri's is another example in the South which carries its own brands of chocolates,
Marketers need in-depth knowledge about the various dimensions which link retailing and
context. McDonald's found that a major chunk of its consumers decide to eat a few minutes
before they make the purchase decisions and hence it is building small outlets in large
supermarkets such as Wal-Mart and Home Depot. It is providing play areas to ensure a
number of families visit its outlets with children. A few companies also operate through
kiosks in airports, malls and high-traffic areas. Sunglass Hut is a brand which operates kiosks
at various places which displays about 1,000 different models along with their prices.
Consumers could place an order through these kiosks and the product is home-delivered.
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There are three fundamental patterns which a consumer can follow and they could be:
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The Consumer Decision Process
Developed the consumer decision process and the store choice decision model. The decision
process model can be applied to all decisions that consumers make in the marketplace;
however, the store decision model applies only to decisions made about specific retail stores.
Seven stages are included in the consumer decision process model. They are need
when a perceived difference between the desired and the actual state of affairs occur.
For instance, a consumer may recognize the need for a new dress. Next, the consumer
engages in an information search to facilitate decision making and to reduce the perceived
risk often associated with purchasing a dress. Prepurchase evaluation involves assessing
appropriate dress.
At the purchase stage, the consumer makes decisions related to whether to buy, when, what,
and where to buy, as well as how to pay for the dress. After purchase and use of the dress, the
consumer makes a postevaluation. This evaluation involves determining whether the dress
meets the expected level of performance. The consumer often expresses their satisfaction or
dissatisfaction with the dress. Finally, after using the product over time the consumer
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disposes of the dress because it no longer meets functional or psychological needs or because
the item is obsolete.
At the purchase stage in the consumer decision process, the consumer decides where or what
stores to purchase a product (e.g., a dress) once the need is recognized. With respect to the
store decision model, examined store choice as a function of consumer characteristics and
store characteristics. The store decision process involves four variables: evaluative criteria or
unacceptable stores.
The model proposes that consumers form images (i.e., overall perception) of stores based on
the combination of perceived criteria or attributes. Often these attributes are combined to
form categories. Some attributes include location, assortment breadth and depth, price,
advertising and sales promotion, store personnel, services, and other store characteristics.
In retail studies, consumers list attributes that come to mind when thinking about a particular
store or store type or they are often given a list. Consumers rate stores relative to each
attribute or category on Likerttype scales of importance (e.g., 1to7). At the comparison
process (i.e., in the mind of the consumer), the consumer compares the importance of store
attributes with the store’s image (i.e., overall perception) to determine which stores are
acceptable and those that are unacceptable. For example, if quality is important to the
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consumer, and if store A is perceived as having lower quality, while Store B is perceived as
having higher quality, the consumer will choose Store B rather than Store A.
After understanding the factors that affect the customer’s buying process, it is necessary for
the retailer to understand the manner in which a customer makes a decision. This requires an
The decision process model can be applied to all decisions that consumers make in the
marketplace; however, the store decision model applies only to decisions made about specific
retail stores. Seven stages are included in the consumer decision process model. They are
when a perceived difference between the desired and the actual state of affairs occur.
For instance, a consumer may recognize the need for a new dress. Next, the consumer
engages in an information search to facilitate decision making and to reduce the perceived
risk often associated with purchasing a dress. Prepurchase evaluation involves assessing
appropriate dress. At the purchase stage, the consumer makes decisions related to whether to
buy, when, what, and where to buy, as well as how to pay for the dress. After purchase and
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use of the dress, the consumer makes a postevaluation. This evaluation involves determining
whether the dress meets the expected level of performance. The consumer often expresses
their satisfaction or dissatisfaction with the dress. Finally, after using the product over time
the consumer disposes of the dress because it no longer meets functional or psychological
needs or because the item is obsolete.
o Location convenience
o Range of merchandise
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Typically, the need for a product or a service starts at the time when the need for the
needs are associated with personal gratification that the customer may get from purchasing or
The next stage is where the consumer seeks information about the product and the place
where he can make the purchase. The source of this information may be a magazine, family,
newspaper, friends and the Internet. Any earlier experience of buying the product or the
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Media
Internet & Ad
Store Evaluation of
Visits options……..
purchase
Need Search for
recognize informatio
d n Store
Customer
This arises when the customer becomes aware of his need for a particular product or service.
Typically, a consumer may realize that he needs a product when the current that he is using
The second step involves the gathering of information on how to solve the problem. This
search may be internal (from memory), or external (friends, family. Published resources,
salesperson, the internet, etc). Based on the information gathered, the consumer arrives at an
evoked set or a consideration set of products and services that he may choose from
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These evaluative criteria are used by consumers use to consider different options. These
would vary from person to person and may be influenced by the situation. For durable
products, after sales service would be a key differentiator after the brand purchased.
At this stage, the decision is made about first, whether to buy or not. It is possible to get close
to a purchase, but abort the decision to buy a number of reasons, such as declined for
The experience during and after the purchase leads to satisfaction or dissatisfaction with that
particular store. The customer assimilates the experience that he has had while shopping and
his, post purchase satisfaction or dissatisfaction. He is also influenced by opinions and the
experiences that friends and family have had with the store. Over a period of time, all these
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Past
Beliefs &
shopping
attitudes
experience
Store
Recognise Evaluate options & Decisi Outcome
visit
desire to select store on
Info (s)
shop
rma
tion
sear
ch
Retailers need to understand this process and tap into the buying process, so that they can
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RETAIL LOCATION BEHAVIOR
emotions about the environment, which then determine whether a consumer will approach
(i.e. patronize) or avoid a particular setting.
used Location model of consumer behavior as the theoretical framework in the first of a two
part study. Darden’s model proposed shopping orientations as the key construct, and
information sources and personal characteristics as antecedents to shopping orientations.
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He also hypothesized that shopping orientations determine the importance of store attributes,
which in turn impact Location behavior. In 1992, proposed relationships among the
following: (a) personal characteristics and importance of store attributes, (b) personal
characteristics and Location behavior, (c) information sources and importance of store
attributes, (d) information sources and Location behavior, and (e) shopping orientations and
Location behavior.
Fig: Factors influencing Patronizing a retail outlet
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Statistical Analysis
This research is a qualitative study used to test for statistical differences in
(a) Importance ratings of selected environmental dimensions for each shopping scenario, (b)
mechanism) for each shopping orientation, (c) perceptions first store choice, and (d) attitude
toward first store choice and store Location (repeat brand purchase from the same outlet).
95
A set of qualitative data is collected from different response groups at a Samsung brand outlet
and a multi brand outlet present in the same retail premise through a questionnaire which
were focused on their their past shopping experiences and store selection techniques.
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Summary of Data Analysis
your shopping?
How often do you shop from the same store? 80% freq 20% depends
purchase?
Do you differentiate two forms of outlet on 90% 10%
assurance?
97
f requent depends
Does store ambience affect your decision?
12
0
1.00 1.25 1.50 1.75 2.00 1.00 1.25 1.50 1.75 2.00
f requent depends
100%
Bars show percents
75%
Percent
50%
25%
0%
1.00 1.25 1.50 1.75 2.00 1.00 1.25 1.50 1.75 2.00
98
Does the product display and demos affect purchase?
f requent depends
1.0
Bars show Means
0.8
0.6
0.4
0.2
1.00 1.25 1.50 1.75 2.00 1.00 1.25 1.50 1.75 2.00
Does store ambience affect your decision? Does store ambience affect your decision?
sometimes
10.0
7.5
5.0
2.5
Count
0.0
12.5
10.0
always
7.5
5.0
2.5
0.0
frequent depends frequent depends
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CONCLUSION
The store Location is a result of both the relative importance of various motives and shopping
assessments of alternative stores with respect to the various factors used in making the
selection.
Store choice is dependent on the timings of shopping trips as consumers may go to a small
local store in short fill-in trips and go to a larger store for regular shopping trips. Consumers’
personal differences interact with situational factors and together they determine the store
For every merchandise category the factors would be different for patronizing a retail outlet.
Durable products certain factors that extremely affect the customer is the store image and for
that the location comes secondary. The store image is developed due to store ambiance,
If the manufacturers brand is preferred then an individual would like to go to specific branded
outlet, where as if the brand has to b e finalized then he / she prefers going to the MBO, yet
the ultimate factor that comes in is the trust factor. For patronizing for durable products the
store image plays the major role along with the after sales service.
A consumer’s selection of a store is not completely random. The more recent he purchases
experience and the more frequent visits to the store, the more he is likely to purchase that
100
product in the store. This shows that the past experience influences store choice and
patronizing ability to either change, alter or reinforce the new shopping experiences.
Thus, we can say that consumers’ characteristics interact with situational variables to impact
how information about the retail mix is processed, resulting in store choice and impacting the
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APPENDIX
Questionnaire
Name ………….
Age …….
Gender ………
O Yes O No
Do you purchase product from brand outlet or retail shop with competing brands?
O Yes O No
O Yes O No
O Yes O No
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How often do you shop from the same store?
O Frequently O Depends
O Yes O No
Do you differentiate two forms of outlets on their after sales services of durables?
O Yes O No
Does the knowledge of store staff help you to repeat purchase from the same store?
O Yes O No
Is value added services an important factor for selecting a durable outlet for quality
assurance?
O Yes O No
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BIBLIOGRAPHY
Marketing Research (Author- G C Beri)
Third Edition(2002)
Second Edition(2001)
Ninth Edition(2002)
WEB SITES:
www. Google.com
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