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A study on consumers’ perception towards organised …

Title: A study on consumers’ perception towards organised and unorganised retail grocery stores.

 Authors:

 1.Venkatesh A Arakeri

Research Scholar

Bharathi Vidyapeeth University, Pune

Address: Flat No 201,Vaastu Placid Apartment, Chunchanaghatta Main Road,

Yelachanahalli,Bangalore-62

Mobile No.: 7795852804

E-mail: venkatesharakeri@gmail.com

  1. Dr.V.M.Chavan

Research Guide

Bharathi Vidyapeeth University, Pune

Abstract:

The Indian consumer is increasingly focusing on value, convenience, variety, and a better shopping experience. The increase in variety, quality, and availability of products, as well as increasing spending power has resulted in consumers using hypermarkets, supermarkets and department stores for their personal shopping. There are a significant number of new competitors in the retail sector, and the established unorganised stores are also making changes to sustain in the market. This paper discusses about the perception of consumers of Bangalore city regarding organised and unorganised retail grocery stores. The aim of this research paper is to observe the different factors that influence the purchase decision of consumers of the organised and unorganised retail grocery stores.

Key Words:

Consumer perception, purchase decision, organised grocery stores, unorganised retail, factors.

Declaration:  The contribution in this paper is my own work and not published or presented elsewhere.

 Acknowledgement:

The researcher is thankful to all respondents, for the valuable information provided by them.

 1. Introduction:

Indian retail sector is currently experiencing developments at a progressive rate, unparalleled anywhere else in the world; and the impact of this rate of development will be felt across the entire economy – from consumers and producers to manufacturers, service providers and retailers. In the past it was evidenced that, small traders in Bhopal and Indore (Madhya Pradesh), Ranchi (Jharkhand), and Delhi, attacked Reliance Fresh outlets, which sell fruits and vegetables. There have also been muted protests by traders in Chennai and other cities where the fear is apparent. Frontline’s reportage from across the country reveals the growing unease among different sections of society depending on retailing for their livelihoods. Most of the political opposition to the opening up of the retail sector has focused on whether Wal-Mart and other multinationals ought to be allowed to operate in the retail sector. According to some of the political parties, organised retailing has witnessed considerable growth in India in the last few years and is currently growing at a very fast pace.

The recent wave of reforms by the Government to incentivize Foreign Direct Investment (FDI) in various sectors is bringing a new zeal to the investment climate in India. One of the most debated reforms is the policy for allowing 51 per cent FDI in multi-brand retail. Deloitte, in the past, has expressed its views on FDI in multi-brand retail, while the policy was still at the proposal stage.   Food and Grocery retail and Apparel retail emerged as the most lucrative segments because of their large market size and high growth. As predicted, the Government has now notified 51 percent FDI in multi-brand retail and 100% in single brand retail.

The growth in the overall retail market will be driven, in the large part, by the explosion in the organized retail market. It includes the Western concept of chain outlets, department stores, supermarkets, etc. So we see that the strong underlying economic growth accounted by the population expansion, the increasing wealth of individuals and the rapid construction of organized retail infrastructure, are key factors behind the forecast growth. The economic liberalization of the country has not only facilitated the entry of international retailers but also provided Indian retailers the opportunity to adopt the best practices and formats of some of these successful international retailers. But being largely unorganized in nature, the Indian retail sector is in sharp contrast to the global scenario. There are several challenges that the Indian retailing has to face, like real estate issues, capital availability, legal frame work, human resources, and supply chain development and management. Retailing, as a major sector of the economy, has yet to receive any overt political or bureaucratic support. Its success and growth is largely dependent on the initiatives of the government.

  1. Review of Literature:

Miller and Besser (2000) has conducted research in order to identify factors that influence small-town consumers’ satisfaction with local independent retailers and the subsequent relationships of consumer satisfaction to in-shopping, community attachment, and support of local independent retailers. Oliver’s expectancy-disconfirmation model (1980) was used as the framework to predict consumer satisfaction. Their business strategies were being examined to meet the changing expectations of their local consumers. It is essential that independent retailers know their local customers and exploit niche strategies that big-box retailers do not provide.”The authors conducted the research and found out what are the factor that influences small town consumers and their satisfaction level when they deal with retailers from unorganized sector. How retailers from unorganized sector believe in making the relations with their customers so that they keep on doing purchase from them continuously.

Griffin, J (2004) has studied to determine the benefits offered to customers and activities taken by retailers whether or not they have formal customer loyalty programs, whether there are differences in benefits/activities of retailers with or without formal loyalty programs. A shift in focus from finding customer to keeping customers is adopted by broad spectrum of retailers. The benefits of participating retailers are demonstrated having customer interest heart, identifying customer’s preferences and recording them to guide further action. In addition model was developed that was used to predict the retailers with or without formal loyalty programs.

Gupta Himanshu, Dubey Neetu and Patani Pawan (2012) had studied consumer behaviour and customer satisfaction towards organised and unorganised retail stores in Indore. The primary data was collected from 50 organised and 50 unorganised retail outlets. The study revealed that there is an effect of organised retail on unorganised retail due to different facilities which is not available in the unorganised retail outlets like packing of goods, cleanliness, arrangement of products, all under one roof, different brands of same product available to choose from etc.

 

  1. Objectives:
  2. To study the perception of consumers regarding organised and unorganised retail grocery stores.
  3. To understand the different factors that influences the purchase decision of consumers.

 

 

  1. Hypothesis:

There is a significant correlation among factors that influence the purchase decision of consumers of organised and unorganised retail grocery stores.

 

  1. Limitations:

The time frame is limited and the study is restricted to Bangalore city only.

 

  1. Research Methodology:

This research paper is based on primary data and secondary data. The primary data was collected from 100 consumers through appropriate questionnaire. The questionnaire consisted of open ended and likert scale type. Formal and informal discussions were conducted with the consumers of kirana stores. Sample was selected on judgment and convenience basis. Secondary data collected from available resources i.e. internet, journals, books, articles, news papers, circulars etc. For the purpose of analysis of data SPSS package was used and data was analyzed by using percentage analysis. For the purpose of testing of hypothesis Karl Pearsons’ correlation was used as a statistical tool.

 

  1. Analysis and Discussion:

This section shows the analysis and interpretation of the collected data.

Table no. 1: Demographic details of the consumers

Particulars Frequency Percent Valid Percent Cumulative Percent
Marital status:

Married

72

72

72

72

Single 28 28 28 100
Total 100 100 100
Age:

21-30

29

29

29

29

31-40 41 41 41 70
41-50 19 19 19 89
Above 50 11 11 11 100
Total 100 100 100
Occupation:

Business

24

24

24

24

Professional 59 59 59 83
Service 17 17 17 100
Total 100 100 100
Education:

Graduate

43

43

43

43

PG 36 36 36 79
Doctorate 13 13 13 92
12th 8 8 8 100
Total 100 100 100

 

Table no. 1 displays the marital status, age, occupation and educational details of the consumers, who purchase from organised and unorganised retail stores. Out of the total a majority representing 72 percent are married and 28 percent are single i.e. unmarried.

It can be seen that 29 percent of the total respondents are in the age group of 21 to 30 years while 41 percent of the total respondents are in the age group of 31 to 40 years. 19 percent of the total respondents are in the age group of 41 to 50 years and 11 percent of the respondents are above 50 years of age. With respect to occupation of the respondents, majority of the respondents amounting to 59 percent of the total respondents were found to be professionals while 24 percent of the total respondents were found to be business people. Only 17 percent of the total respondents were found to be in service. Regarding education, around 43 percent of the total respondents were found to be graduates and 36 percent of the total respondents were found to be post graduates. There were 13 percent of the total respondents who were doctorates and only 8 percent were 12th standard educated.

Table no. 2: Other details of the consumers

Particulars Frequency Percent Valid Percent Cumulative Percent
Family Structure:

Nuclear

65

65

65

65

Joint Family 14 14 14 79
Single 21 21 21 100
Total 100 100 100
Shopping Companion:

Whole family

64

64

64

64

Parents 6 6 6 70
Children 3 3 3 73
Alone 14 14 14 87
Spouse 3 3 3 90
Friends 10 10 10 100
Total 100 100 100
Vehicle Owned:

2 Wheeler

61

61

61

61

4 Wheeler 7 7 7 68
4 & 2 wheeler both 32 32 32 100
Total 100 100 100
Average Monthly Income:

Below 20000

52

52

52

52

20001-40000 27 27 27 79
40001-60000 12 12 12 91
More than 60000 9 9 9 100
Total 100 100 100
Family size:

Below 3

24

24

24

24

3 to 5 34 34 34 58
5 to 7 32 32 32 90
Above 7 10 10 10 100
Total 100 100 100

 

Table no. 2 illustrates the family structure, shopping companion, vehicle owned, average monthly income and household size of the consumers. Around 65 percent of the total respondents have a nuclear family structure, followed by 14 percent of the total respondents who have joint family structure and 21 percent of the total respondents who are single.

64 percent of the total respondents say that their whole family goes together for shopping. 6 percent of the total respondents say that they take their parents as companion while shopping. 3 percent of the total respondents prefer children as companion for shopping while 14 percent of the total respondents say that they like to go alone for shopping. 3 percent of the total respondents take their spouse along for shopping and 10 percent of the total respondents take their friends along with them for shopping.

Majority of the respondents amounting to 61 percent of the total respondents owned two wheelers while 7 percent of the total respondents owned four wheelers. But a considerable amount of 32 percent of the total respondents owned both two wheelers and four wheelers.

Most of the respondents amounting to 52 percent of the total respondents have an average monthly income below Rs. 20,000/- and 27 percent of the total respondents have an average monthly income between Rs. 20,001/- to Rs. 40,000/-. A few respondents amounting to 12 percent of the total respondents had average monthly income in between Rs.40,001/- to Rs. 60,000/- while only 9 percent of the total respondents were found to have average monthly income above Rs.60,000/-

Around 24 percent of the total respondents were found to have a family size of below 3 members. 34 percent of the total respondents were found to have 3 to 5 family members. 32 percent of the total respondents were found to have 5 to 7 family members and 10 percent of the total respondents were found to have more than 7 family members.

Table no. 3: Opinion regarding retail grocery outlets:

Opinion Frequency Percent Valid Percent Cumulative Percent
Necessity of organised stores in cities:

Necessary

64

64

64

64

Neutral 11 11 11 75
Not clear 13 13 13 88
Not necessary 12 12 12 100
Total 100 100 100
Impact of organised stores on unorganised stores:

Yes

67

67

67

67

                            Not clear 14 14 14 81
No 19 19 19 100
Total 100 100 100

The opinion of the respondents regarding retail grocery outlets is presented in table no. 3. Around 64 percent of consumer expressed that organised stores are necessary in metropolitan and bigger cities. Around 11 percent were neutral to the question. Around 13 percent were not very clear about it and around 12 percent said not necessary as answer since they do not feel that organised stores are necessary in metropolitan and important cities as they affect small stores. 67 percent have expressed that the big stores will affect the business of small stores and sales may decline. So the small stores have to work on introducing new plans and strategies to handle the competition. Around 14 percent have no clarity about the issue and around 19 percent said that there will be no impact of organised stores on unorganised stores.

There are lot of perceptual differences despite the fact the product is same, but perception about the same product is different when it is offered in different store and the same people may not it in its right earnest. The researcher has made an attempt to study such factors that influence the minds of the buyers or consumers.  At the outset, buyers have a feeling that quality of products offered in the organized stores are superior to that of the product quality offered in unorganized stores.

Table no. 4: Factors that influence the consumers to choose retail store

Factors Strongly Agree Agree Neutral Disagree Strongly Disagree
O U O U O U O U O U
Quality of products 53 38 20 45 9 10 7 4 11 3
Proximity of the store 37 62 31 25 10 7 13 4 9 2
Choice / Variety 61 39 28 23 6 12 2 22 3 4
Easy availability of products 52 44 37 31 3 14 4 8 4 3
Supportive sales personnel 36 38 38 25 14 20 4 12 8 5
Proper parking facility 63 23 29 24 2 19 3 27 3 7
Proper packaging of product 31 19 45 22 14 17 4 30 6 12
Cleanliness of the store 61 61 33 24 4 5 2 5 0 5
Easy replacement of  goods 24 39 20 30 16 7 30 16 10 8
Fresh / New stock 31 21 48 29 11 10 6 16 4 24
Discount offers 59 19 30 20 6 7 3 32 2 22

[O = Organised store; U = Unorganised store]

Table no. 4 gives details regarding the factors that influence the customers to choose a retail store. While the organized retailers have their own set of variables to woo the consumers to their side, the unorganized players also have their own set of variables and factors that can be instrumental in retaining certain categories of consumers with them despite stiff competition; they face from the organized retailers. Researcher has tried to identify such factors that influence the consumers to choose a retail store. There are 11 factors which have been studied here. The table gives the information regarding the influence each factor has on the choice of organised and unorganised store. The quality of the products available with the organised stores is an important factor that influences the people to choose organised store according to 73 percent of the consumers while 83 percent say that they choose the unorganised store for the quality of the product. This means that good quality products are available in both the formats.

68 percent of the consumers choose the organised store and 87 percent choose the unorganised store for the proximity of the store. It means that the unorganised store is preferred for their proximity near the house. Regarding the choice / variety of products available with the store, 89 percent choose the organised stores and 62 percent choose the unorganised store. It means that more variety and choice of products are found in the organised stores than the unorganised stores. The organised store is chosen by 89 percent and unorganised store is chosen by 75 percent of the consumers for the easy availability of the products. This means that the products needed are easily available in both the type of stores.

74 percent choose the organised store and 63 percent choose the unorganised store for the supportive sales personnel of the store. 91 percent of the customers choose organised stores and only 47 percent choose unorganised stores regarding the availability of parking facility with the store. It means that the parking facility plays an important role in influencing the customers to choose organised store. Proper packaging of products is a factor considered by 76 percent of the consumers while choosing organised store and by 41 percent of the consumers while choosing unorganised store. This clearly indicates that the organised stores offer proper packed products. 94 percent of the consumers choose organised store for the cleanliness of the store and 85 percent of the consumers choose unorganised store for the cleanliness of the store. This means that both the type of stores maintain cleanliness.

The choice of organised store for the easy replacement of defective goods is made by 44 percent of the consumers while 69 percent of the consumers choose the unorganised store for the same. This clearly indicates that whatever the type of store the replacement of defective goods is not an easy procedure. 79 percent of the consumers choose the organised store for the availability of fresh / new stock and 50 percent choose the unorganised store for the same. This shows that the availability of fresh / new stock is better with the organised stores. 89 percent of the consumers choose the organised stores for the discount / offers given by the stores while only 39 percent choose the unorganised store for the same. This means that the organised store does attract the consumers by providing discounts / offers.

  1. Testing of Hypothesis:

Hypothesis: There is a significant correlation among factors that influence the purchase decision of consumers of organised and unorganised retail grocery stores.

 

Table no. 5: Correlation between the factors that influence the customers to choose

organised and unorganised retail grocery store.

Factors Pearson Correlation** N
Quality of products

Proximity

Choice / Variety of brand

Easy availability of products

Supportive sales personnel

Proper parking facility

Proper packaging facility

Cleanliness of the store

Easy replacement of defected products

Fresh / New stock

Discount / Offers

0.870

0.873

0.845

0.909

0.931

0.773

0.837

0.915

0.882

0.809

0.685

100

100

100

100

100

100

100

100

100

100

100

**Correlation is significant at the 0.01 level (2-tailed)

The correlation between 0.5 to 0.7 shows moderate correlation and correlation of 0.7 to 1 shows high level of correlation. The table no. 5 shows that the correlation is near about 0.08 in all the factors except the last one which has a correlation of 0.685. It confirms that there is a high degree of positive correlation among each factor that influences the customers to choose organised and unorganised retail grocery store.

 

  1. Conclusion:

The opinion of the consumers regarding the necessity of organised stores in cities was that it was necessary as said by a majority of the respondents.  The organised stores have made an impact on the unorganised stores with respect to their sales, turnover and have also made the unorganised store owners think again regarding their strategies to make changes in their stores to attract consumers. The factors that make a positive influence in choosing an organised store are the quality of products, proximity of the store, choice / variety of products, easy availability of products, supportive sales personnel, parking facility, proper packaging of product, cleanliness of the store, fresh / new stock and discount offers. The factors that influence the customers to choose the unorganised store is the quality of products, proximity of the store, easy availability of products, supportive sales personnel, cleanliness of the store and easy replacement of defective goods. The contribution of this study is that it has brought out the most important factors which influence the consumers to choose a retail grocery store, be it organised or unorganised. They are quality of the products, proximity of the store, easy availability of products, supportive sales personnel and cleanliness of the store. Both the organised and unorganised stores have to upgrade themselves by making the necessary changes in their business strategies to face competition.

  1. References:
  2. Miller, N.J. and Besser, T.L. (2000), “The importance of community values in small business strategy formation: evidence from rural Iowa”, Journal of Small Business Management, Vol. 38 No. 1, pp. 68-85.
  3. Griffin J. (2004), “Frequently asked questions about consumer loyalty”. Available at www.loyaltysolutions.com.
  4. Gupta Himanshu, D. N. (2012). Effect of Organised Retail on Unorganised Retail in India. Research Journal of Management Sciences , 7-13.
  5. Kothari, C. R. (2010). Research Methodology Methods and Techniques. New Delhi: New Age International Publishers.
  6. Retail Marketing Management – David Gilbert, Second Indian print 2001 p. 6

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