Topic:

IMPACT OF ORGANIZED RETAIL ON SMALL AND MEDIUM SCALE

UNORGANIZED RETAILERS IN JALANDHAR.

Submitted to Lovely Professional University

MGT 738

Capstone II

Submitted by:

Akhlesh Kumar RR1903A54

Gulshan Kumar RR1904A01

Rahul Verma RR1904A04

Rajad Sharma RR1904A07

Supervisor:

Ms. Savita Dhingra

Lecturer.

DEPARTMENT OF MANAGEMENT

LOVELY PROFESSIONAL UNIVERSITY

PHAGWARA

1 | P a g e

INDEX

2 | P a g e

S. No. Chapter Page No.

1 Introduction 3-16

2. Review of literature 17-28

3 Need, Objective, Scope & Methodology 29-31

4 Data analysis and Interpretation 32-54

5 Limitation, Findings, Recommendations & Conclusion 55-57

6 References 58-59

7 Appendix (Questionnaire) 61-69

EXECUTIVE SUMMARY

Retailing is emerging as a sunrise industry in India and is presently the largest employer after

agriculture. Despite the global economic recession and a consequent slowdown in the Indian

economy, organized retail continued to make headway although at a slower pace in 2009.

Nonetheless, if the current retail landscape is compared with that of 2004, it has undeniably

become a much larger environment. Retail stalwarts such as Wal-Mart, Tesco and Marks &

Spencer have already made inroads into the Indian retail industry and with multi-billion dollar

investments by major domestic players such as Reliance Retail; the market is expected to go

from strength to strength, as Indian retailing has embarked on a long-term growth trajectory.

The global economic crisis and its impact on India resulted in a slowdown of the Indian economy

in 2009. This caused consumers to tighten their purses, and the availability of financial support

for retail expansion dried up. This put a halt to the unprecedented expansion seen over the review

period. Lower consumer confidence resulting from the recession, as well as job losses, resulted

in fewer visits to retail stores, and consequently sales plummeted for major retailers. With

consumers becoming highly discretionary, spending on non-essential items such as lifestyle

goods was highly impacted, making it one of the worst performing categories and with rising

disposable incomes, expansion of stores and supporting economic factors, India's retail sector is

expected to grow to about $ 900 billion by 2014, according to a report by global consultancy and

research firm PricewaterhouseCoopers.

Credit from banks and other lenders has been difficult to obtain in the current environment, and

retailers have suffered severely as a result. Some retailers are unable to pay rental fees because

all lines of credit have dried up. In such a tough operating environment, retailers under the

umbrella of a diversified holding company with access to internal funds are faring better than

other players. For example, Reliance Retail and Aditya Birla Retail emerged relatively unscathed

compared with smaller players such as Vishal Retail.

3 | P a g e

INTRODUCTION

RETAILING is the interface between the producer and the individual consumer buying for

personal consumption. This excludes direct interface between the manufacturer and institutional

buyers such as the government and other bulk customers. A retailer is one who stocks the

producer’s goods and is involve in the act of selling it to the individual consumer, at a margin of

profit. As such, retailing is the last link that connects the individual consumer with the

manufacturing and distribution chain. Some of the key features of retailing include

o Selling directly to customers with out having any intermediaries

o Selling in smaller units / quantities, breaking the bulk

o Present in neighborhood or in the location which is quite convenient to the

customers.

o Very high in numbers

o Recognized by their service levels

o Fitting any size or location

It is assumed that due to the entry of a number of retail outlets in the urban and semi urban areas,

the mindset of the existing customers have undergone drastic changes. Besides it is also reported

that the traditional retailing such an age old Grocery shops have directly faced competition with

the organized retailing sector. In some parts of the country, it is reported that the traditional

retails are resisting the entry of organized shopping malls.

ORGANIZED VS UNORGANIZED RETAIL

In the developed economies, organized retail is in the range of 75-80 percent of total retail,

whereas in developing economies, the unorganized sector dominates the retail business. The

share of organized retail varies widely from just one per cent in Pakistan and 5 per cent in India

to 36 per cent in Brazil and 55 per cent in Malaysia Modern retail formats, such as hypermarkets,

superstores, supermarkets, discount and convenience stores are widely present in the developed

world, whereas such forms of retail outlets have only just begun to spread to developing

4 | P a g e

countries in recent years. In developing countries, the retailing business continues to be

dominated by family-run neighborhood shops and open markets. As a consequence, wholesalers

and distributors who carry products from industrial suppliers and agricultural producers to the

independent family owned shops and open markets remain a critical part of the supply chain in

these countries.

Country Sales (US$ bn) Share of Organized Retail

(%)

USA 3183 85

Japan 1282 66

China 885 20

United Kingdom 575 80

France 536 80

Germany 521 80

India 410 5

Source: Planet Retail and Technopak Advisers Pvt. Ltd

RECENT TRENDS

Retailing in India is witnessing a huge revamping exercise.

India is rated the fifth most attractive emerging retail market; a potential goldmine.

Estimated to be US$ 900 billion by 2014

As per a report by KPMG the annual growth of department stores is estimated at 24%

Ranked second in a Global Retail Development Index of 30 developing countries drawn

up by AT Kearney.

GROWTH FACTOR

India’s economy is booming, due to so many reforms: -

The rise in the working population which is young and reduction of the unemployment

rate

Pay packets which are hefty and having a huge package of salary package.

5 | P a g e

More nuclear families in urban areas

More disposable income and customer aspiration

Western influenced life style is adopted by all the people.

Growth in expenditure for luxury items increases.

REASON FOR THE GROWTH

Existing Indian middle classes with an increased purchasing power

Rise of upcoming business sectors like the IT and engineering firms

Change in the taste and attitude of the Indians

Effect of globalization

Heavy influx of FDI in the retail sectors in India

PRESENT SCENARIO

Unorganized market: Rs. 583,000 crores

Organized market: Rs.5, 000 crores

Over 4,000 new modern Outlets in the last 3 years

Over 5,000,000 sq. ft. of mall space under development

The top 3 modern retailers control over 750,000 sq. ft. of retail space 

Over 400,000 shoppers walk through their doors every week

The reasons might be- 

1. In smaller towns and urban areas, there are many families who are traditionally using these

kirana shops/ 'mom and pop' stores offering a wide range of merchandise mix. Generally these

kirana shops are the family business of these small retailers which they are running for more than

one generation.

2. These kiran shops are having their own efficient management system and with this they are

efficiently fulfilling the needs of the customer. This is one of the good reasons why the customer

doesn’t want to change their old loyal kirana shop.

3. A large number of working class in India is working as daily wage basis, at the end of the day

when they get their wage, they come to this small retail shop to purchase wheat flour, rice etc for

6 | P a g e

their supper. For them this the only place to have those food items because purchase quantity is

so small that no big retail store would entertain this.

4. Similarly there is another consumer class who are the seasonal worker. During their

unemployment period they use to purchase from this kirana store in credit and when they get

their salary they clear their dues. Now this type of credit facility is not available in corporate

retail store, so this kirana stores are the only place for them to fulfill their needs. 

5. This unorganized stores are having n number of options to cut their costs. They incur little to

no real-estate costs because they generally operate from their residences.

Their labour cost is also low because the family members work in the store. Also they use cheap

child labour at very low rates. As they are operating from their home so they can pay for their

utilities at residential rates.

The present value of the Indian retail market is estimated by the India Retail Report to be

around Rs. 12, 00,000 crore ($270 billion) and the annual growth rate is 5.7 percent. Retail

market for food and grocery with a worth of Rs. 7, 43,900 crore is the largest of the

different types of retail industries present in India. Furthermore around 15 million retail

outlets help India win the crown of having the highest retail outlet density in the world. The

contribution of retail sector to GDP has been manifested below:

Country Retail Sector's share in GDP (in %)

India 10

USA 10

China 8

Brazil 6

Source:CII-AT Kearney Retail Study

As can be clearly seen, retailing in India is superior to those of its contenders. Retail sector is a

sunrise industry in India and the prospect for growth is simply huge. There are many factors that

7 | P a g e

have stimulated the rise of the shopping centers and multiplex-malls in a jiffy. Some of them can

be listed as follows:

INDIAN RETAIL: PAST Vs PRESENT

It is widely accepted that the retail industry has undergone a drastic change in last five years and

there is yet more to come. Let us compare the image of Indian retailing in 2006-07 to that of its

status in 2009-10 in the following table: Magnification of the Indian Retail Industry

Yardstick Situation in 06-07 Situation in 09-10

Value of retail sales Rs. 10,20,000 crore Rs 14,00,000 crore

Annual growth rate 5% 7.7%

Value of organized market Rs 35,000 crore Rs 56,000 crore

Share of organized market in the sector 3.4% 5%

Forecasts about growth rate of organized retail market Around 30% Around 35%

The above table clearly shows that the retail market as well as the mindset required for it has

experienced a thorough revisal in the last three years. This is just the beginning and Indians are

sanguine that the sector will see rosy days in the future. This confidence has helped India acquire

the No.1 position among 30 most attractive retailing destinations in the world according to the

Global Retail Development Index of 2009 (by AT Kearney, India). Among emerging markets,

India holds the second position after China in the list of most favored retail destinations. The

retail industry employs a huge share of the total workforce in India. It is the second largest

employer after India. Presently 7 percent of the total labor force is employed in the retail sector.

According to available data it is also the largest employer in the services sector and maximum

growth in the non-agricultural sector has been witnessed by retail trade. According to market

analysts 300 new malls, 1,500 supermarkets and 325 departmental stores are going to come up in

India in the next few days. The shopping revolution that has led to this retail boom is going to

8 | P a g e

continue and this is good news for the government as well as those who wish to work in the

organized sector.

RURAL RETAILING

India's huge rural market has also attracted retail investments and is seen as a viable opportunity

for growth by corporate India.ITC launched the countries first rural mall "Chaupal Sagar" with

diverse products being offered ranging from FMCG to electronics appliance to automobiles, with

a view to provide farmers a one stop center for all their consumption requirements. Many more

new trends could possibly be tried in rural markets to unearth the huge potential.

CHALLENGES FACED BY INDUSTRY

The tax structure in India favors small retail business

Lack of adequate infrastructure facilities

High cost of real estate

Dissimilarity in consumer groups

Restrictions in Foreign Direct Investment

Shortage of retail study options

Shortage of trained manpower

Low retail management skill

THE FUTURE

India's retail sector is expected to grow to about $ 900 billion by 2014, according to a report by

global consultancy and research firm PricewaterhouseCoopers. It is further expected that the

retail sales in India would grow at an average of four per cent between 2010 and 2014 and will

reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As the country has got a high growth

rates, the consumer spending has also gone up and is also expected to go up further in the future.

In the last four year, the consumer spending in India climbed up to 75%. As a result, the India

9 | P a g e

retail industry is expected to grow further in the future days. By the year 2013, the organized

sector is also expected to grow at a CAGR of 40%.

TECHNOLOGY IN RETAIL:

The ERP Initiative

Over the years, during the turn of twentieth century as the consumer demand increased and the

retailers geared up to meet this increase world over, technology evolved rapidly to support this

growth. The hardware and software tools that have now become almost essential for retailing can

be classified into 3 broad categories:

Customer Interfacing Systems

Bar Coding and Scanners : Point of Sale (POS) systems use scanners and bar coding to

identify an item, use pre-stored data to calculate the cost and generate the total bill for a

client.

Payment : Payment through credit cards has become quite widespread and this enables a

fast and easy payment process. Electronic cheque conversion, a recent development in

this area, processes a cheque electronically by transmitting transaction information to the

retailer and consumer's bank.

Internet : Internet is also rapidly evolving as a customer interface, removing the need of a

customer physically visiting the store.

Operation Support Systems

ERP System : Various Enterprise Resource Planning (ERP) vendors have developed

retail-specific systems which help in integrating all the functions from warehousing to

distribution, front and back office store systems and merchandising. An integrated supply

chain helps the retailer in maintaining his stocks, getting his supplies on time, preventing

stock-outs and thus reducing his costs, while servicing the customer better.

CRM Systems: The rise of loyalty programs, mail order and the Internet has provided

retailers with real access to consumer data. Data warehousing and mining technologies

10 | P a g e

offers retailers the tools they need to make sense of their consumer data and apply it to

business.

Advanced Planning and Scheduling Systems: APS systems can provide improved

control across the supply chain, all the way from raw material suppliers, right through to

the retail shelf. They enable consolidation of activities such as long term budgeting,

monthly forecasting, weekly factory scheduling and daily distribution scheduling into one

overall planning process using a single set of data.

Strategic Decision Support Systems

Store Site Location : Demographics and buying patterns of residents of an area can be

used to compare various possible sites for opening new stores. Today, software packages

are helping retailers not only in their locational decisions but in decisions regarding store

sizing and floor-spaces as well.

Visual Merchandising : The decision on how to place and stack items in a store is no

more taken on the gut feel of the store manager. A larger number of visual merchandising

tools are available to him to evaluate the impact of his stacking options.

TYPES OF RETAIL

The retail industry is divided into organized and unorganized sectors. Organized retailing refers

to trading activities undertaken by licensed retailers, that is, those who are registered for sales

tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also

the privately owned large retail businesses.

Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing,

for example, the local kirana shops, owner manned general stores, paan/beedi shops,

convenience stores hand cart and pavement vendors, etc.

Retailing Formats in India

Malls: The largest form of organized retailing today. Located mainly in metros cities, in

proximity to urban outskirts. Ranges from 60,000 sq ft to 7, 00,000 sq ft and above. They lend

an ideal shopping experience with an amalgamation of product, service and entertainment, all

11 | P a g e

under a common roof. Examples include Shoppers Stop, Vishal Mega Mart, India Bulls, and

Pantaloon.

Specialty Store: Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer

Crossword, RPG’s Music World and the Times Group’s music chain Planet M, are focusing on

specific market segments and have established themselves strongly in their sectors.

Discount Stores : As the name suggest, discount stores or factory outlets, offer discounts on the

MRP through selling in bulk reaching economies of scale or excess stock left over at the season.

The product category can range from a variety of perishable/ non perishable good

Department Stores: Large stores ranging from 20000-50000 sq. ft, catering to a variety of

consumer needs. Further classified into localized departments such as clothing, toys, home,

groceries, etc.

Hyper Markets / Super Markets: 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.

Convenience Stores: These are relatively small stores 400-2000 sq. feet located near residential

areas. They stock a limited range of high-turnover convenience products and are usually open for

extended periods during the day, seven days a week. Prices are slightly higher due to the

convenience premium.

MBO’s: Multi Brand Outlets, also known as Category Killers, offer several brands across a

single product category. These usually do well in busy market places and Metros.

MAJOR PLAYERS

BIG Bazaar

Big bazaar is owned and operated by Future Bazaar India Ltd., a subsidiary of Pantaloon Retail

Limited. As part of India’s largest retail chain, it enjoys the benefits of buying in bulk for the

entire group and keeps the margins low, so that customers get a great range of products at great

prices. Pantaloon Retail Limited led by Kishore Biyani is the country’s largest retailer. It owns

12 | P a g e

and operated multiple retail formats including Pantaloons, Big Bazaar, Food Bazaar, Central, E-

Zone, Fashion Station, Depot and many others.

Pantaloon Retail was selected as the Best of Best Retailers in Asia by Retail Asia-Pacific Top

500 magazine in 2006. Big Bazaar was awarded the CNBC-Awaaz Consumer Awards in 2006

and the Readers’ Digest Platinum Brand Award 2006.

VISHAL MEGA MART

Vishal Mega Mart is India’s first hyper market which is having 126 showrooms in 83 cities/20

states. Vishal is one of the fastest growing retailing groups in India. Its outlets cater to almost all

price ranges. The showrooms have over 70, 000 products range which fulfills all your household

needs, and can be catered under one roof.

EBONY

Ebony launched its store in 1994 at South Extension, New Delhi. Its main goal is to give world-

class shopping experience to the Indian consumer. It has successfully opened seven stores across

seven cities in India.

Ebony Retail Holdings Ltd has initiated several industry trends, making a distinguished place for

itself in the industry. The most prominent a successful Ebony in-house bran are ETC and a

special books and music venture called Wordsworth. Ebony has opened its stores in Chandigarh,

Noida, Ludhiana, Jalandhar, Amritsar and Faridabad apart from New Delhi.

Lifestyle International

Lifestyle is an international fashion store of the Landmark Group, a Dubai-based company.

Lifestyle created a revolution in the Indian Retail Industry by bringing a truly international

shopping experience. It was launched in Chennai, and now it is one of the largest professional

retailers spread across 3, 25,000 sq. ft. in various cities such as Chennai, Gurgaon, Mumbai,

Hyderabad and Bangalore.

It is a heaven for shoppers with a vibrant and spicy lifestyle. It provides a wide choice of

products at affordable prices with a convenient world-class environment and a friendly layout.

13 | P a g e

Being one of the best shopping destinations, it has won the ''Most Respected Company in the

Indian Retail Sector' and the 'Most Admired Large Format Retail Company' awards in India.

PIRAMAL

Piramal Enterprises made its foray into the retail industry in 1999. It entered the market with a

lifestyle department store called Piramyd Megastore, a shopping mall called Crossroads and a

family entertainment center called Jammin.

The current annual turnover of the organization stands at $20 million. The company has over

50 retail outlets across the country, first of them launched in North India. The CEO of the

company is Mr. Ajay Piramal.

The flagship company of Piramals is Nicholas Piramal. The organization owns a shopping mall

in Mumbai known as Crossroads. The mall is spread over 1, 50,000 square feet in four

buildings across the city. The stores will also be located in Ludhiana, Delhi, Pune and

Ahmedabad.

RPG RETAIL

The history of RPG Enterprises goes back to the 19th century. In 1979 Mr. RP Goenka took

the initiative to set up RPG Enterprises. Presently it has a turnover of US$ 1.65 billion (Rs.

7472 crore) and assets worth US$ 1.8 billion.

Among the fastest growing groups in India, it is operating successfully through more than 20

companies in 7 business sectors, namely Retail, IT & Communications, Power, Transmission,

Entertainment, Life sciences and Tyres.

WEST SIDE

14 | P a g e

Tata Group founded Trent Ltd. (Westside) in 1998. The acquisition of a London-based retail

chain Littlewoods by the Tatas was followed by the establishment of Trent Ltd, which was later

renamed as Westside.

It is one of the largest and fastest growing chains serving the customers in various categories,

including men's wear, women's wear, kid's wear, footwear, cosmetics, perfumes and handbags,

household accessories, lingerie and gifts. The company offers products with a balance between

style and price. There are 25 Westside departmental stores operating in various cities like

Mumbai, Hyderabad, Pune, Delhi, Bangalore, Noida, Gurgaon, Nagpur, Kolkata and many

others.

WILLS LIFE STYLE

ITC has made a presence in the Retail sector through its exclusive specialty store - 'Wills

Lifestyle'. It has developed itself as a fashion destination offering a range of apparels and

accessories. Top designers of the industry design these clothes. The store offers Wills Classic

work wear, Wills Sport relaxed wear, fashion accessories and bath & body care products. Wills

Lifestyle has also developed John Players as a brand that offers a fine collection of clothes for

dynamic and vibrant people. ITC believes in the philosophy of enjoying the changing

environment. This season Wills Lifestyle has brought a complete array of products for very

aspect and mood of life be it work, relaxation or party. The store offers a truly 'International

Shopping Experience' through world-class environment and a robust portfolio of offerings

Super brands Council of India awarded the title of Super brand 2006 to Wills Lifestyle. It is the

title partner of the premier fashion event - Wills Lifestyle India Fashion Week. Leading

designers such as Rahul Khanna, Manish Malhotra and Monisha Jaising have been promoting the

brand. Wills Sport was designated as the 'The Most Admired Brand Launch of the Year' at the

Images Fashion Awards 2001. ITC entered the youth fashion market with the brand known as

John Players in December 2002. John Players is available across the country in over 125

exclusive stores and over 1500 multi-brand outlets; also declared as 'The Most Admired Shirt

Brand of the Year' at the Images Fashion Awards 2005.

CROSSWORD

15 | P a g e

Crossword, the largest bookseller in India, came into existence on 15th October 1992. Crossword

Bookstores Ltd. is a subsidiary of Shopper's Stop Ltd. It is widely known in various countries for

its achievements. It featured in Advertising Age International, USA, as one of the Marketing

Superstars for 1994. It has established itself as a lifestyle bookstore, with bright interiors and

enough space for movement, suitable for all kinds of people. The simple and intelligent

modifications in the store such as electronic POS, proper classification, a dedicated helpdesk,

inventory control systems and smart displays have won the hearts of the people visiting the store.

GLOBUS

Globus was launched in 1998 as a part of the Rajan Raheja Group. The company opened its first

outlet in Indore followed by two more in Chennai. The flagship store was opened on 1st

November 2001 in Mumbai, followed by a vibrant store in New Delhi. Subsequently, its stores

were launched in Bangalore, Ghaziabad, Kanpur, Ahmedabad, Noida, Lucknow, Varanasi and

Hyderabad.

The organization has an innovative and adaptive environment. Globus has achieved customer

delight by presenting value products and services through continuous improvement. It has a team

of dedicated and passionate employees maintained by constant training.

RELIANCE

Reliance is one of the biggest players in Indian retail industry. More than 300 Reliance Fresh

stores and Reliance Mart are quite popular in the Indian retail market. It's expecting its sales to

reach Rs. 90,000 crores by 2010.

AV BIRLA GROUP

AV Birla Group has a strong presence in Indian apparel retailing. The brands like Louis Phillipe,

Allen Solly, Van Heusen, and Peter England are quite popular. It's also investing in other

segments of retail. It will invest Rs. 8000-9000 crores by 2010.

16 | P a g e

LITERATURE REVIEW

LITERATURE REVIEW

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.

17 | P a g e

How retailers from unorganized sector believe in making the relations with their customers so

that they keep on doing purchase from them only in coming tike period.

WHY:- 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 only in coming tike period.

Source: 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.

Sen (2000) studied that in India; some empirical studies provide important information about

consumer behavior and its responses to the development of organized retail. Economical and

social changes are major contributors for a growing fragmentation of consumers into multiple

segments with different values and buying priorities. Consumers have become more pragmatic,

educated and demanding, learning how to manage money and time more efficiently. The focus

on low prices was gradually replaced by a value for money perspective. He confirms this in the

study undertaken in Indian context. He confirms that in the case of hypermarkets, the main

motives for preferences, in decreasing order are low prices, the possibility of buying everything

in the same place and the general appearance of the store.

WHY:- The above study states that people in India have now shifted their focus from low price

of products to value for money, they are more concerned about getting value of their hard earned

money rather than sticking on low prices. Although price of product still play a very formidable

part during the purchase of product but if people feel that they are getting more value for their

money then they will go for the purchase of product or service even on higher prices. This study

will help to know what are the recent trend of people buying behavior as the study has already

revealed a very important aspect that there is a shift of people buying behavior in India from low

prices to value for money this will help in drawing recommendations in the study.

18 | P a g e

Arons (2001) has conducted a means and chain analysis of the food sector and explore the extent

to which these findings made can be used to inform the retail positioning strategies of food

retailer. Consumer research is un-doubtfully one of the key elements in informing the retail

strategy and the key facilitation in the race of the competitive advantage. The paper shows that

the food retail positioning strategies should be focused on emphasising the fact that the retail

offer act as a vehicle for the attainment of the personally relevant and status of existence for the

consumers

WHY:-

Anand (2003) found that before 20th century there are not so much supermarkets in our country

but after 20th century the need of the same came into existence but there is a direct competition of

these from hawkers or kirana holders because they have already created their goodwill in the

market but the retail sector make this position in the market and run their business successfully

after that organized retailing spread their presence felt in different parts of the country in the year

2000 approx. 400,000 crores retail markets are un-organized there is a large trend of super

market in the Indian market. They also have to face competition from them so as to reduce this,

they adopted a method to provide the customers discounts and better home delivery facility and

create goodwill & he can also try to remove the hawkers from the roadside to increase their sale

& saw.

WHY:- The above research will help us to know how the market has changed over the years

and what small retail stores are doing to respond to the competition offered by the organized

sector is being discussed here. This will help us to give recommendations to the small retailers

that whether whatever they are doing in order to increase their sale is sufficient or they need to

do more and what are the effects of their strategies against big organized retailers.

Source: Anand (2003) “using assessments of sandwich year and academic work performance on

business studies degree course.” Management research news. Vol.-13, no.-2, PP- 9 to 99.

Radhakrishnan (2003) studied that the traditional Retailers Perceptions about Organized retail.

Organized retail has deeply changed the Indian commercial structure. However, it is not

19 | P a g e

exclusively responsible, as other changes (economical, social and cultural ones) have occurred

simultaneously. Concerning the more direct effects of organized retail on different types of

commerce, it is possible to verify that the major impact is felt on traditional retail and, in

particular, on the food sector. The impact of organized retail is also significant on other types of

retail, namely toys, stationery goods and household appliances; moreover, it is probable that

competition gets more intense in other sectors, such as clothing and furniture.

Why:- The above research helped us to know what are the other factors that has actually helped

the organized retail sector to grow up to such a large extent and in changing the buying behavior

of the customer. This research will help us to know what where the retailers have to concentrate

while deciding about the promotional and advertisement strategies.

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 programmes, 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 are 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.

WHY:- The above study reveals that the trend of making more customers have been replaced

by retaining the old customers by the organized retailers. This study will help us in

recommending the un-organized retailers what they need to focus on. Whether to go for new

customers or retain the old ones.

Source: Griffin J. (2004), “Frequently asked questions about consumer loyalty”. Available at

www.loyaltysolutions.com.

Klein and Dawar (2004), has studied to find out which retail business practices lead to

perception of CSIR from customer’s perspective and to develop a measurement scale for this

construct. The analysis was conducted using quantitative data from paper based and online

20 | P a g e

survey, a high order, multi-group confirmatory factor analysis. It was found that there were

factors i.e. natural environment, local business, foreign economies, local employment, societal

rules, employee benefits, employee wages, local working conditions, employee discrimination,

foreign labour, sales practices, dishonesty, offensive materials and pricing policies which

represent perception of CSIR in retailing.

WHY:- This paper will help us in knowing what are the factors that actually are the perception

of CSIR from customer point of view in retailing this will help us to know what actually the

customers think about the retail business whether it is organized or unorganized.

Source: Klein, J and Dawar, N (2004), “consumer social responsibility and consumer’s

attributions and brand evaluations in product harm crisis” International journal of research in

marketing, Vol. 21 No.-3, PP-203-17.

Indian Council for Research on International Economic Relations (2007) has conducted a

research and found that there will be no negative impact on employment. At the same time, there

will be a positive effect on farmers' earnings. Also, any adverse impact on small shops will wear

off over a period of time. The study has also found that the presence of organized retailers will

firm up the supply chain deficiencies, which has been bothering the sector.

WHY:- The above research states that there will be no negative impact on employment because

of the introduction of organized retail but this has been found in various studies that definitely

there will be a positive impact on unemployment. This research is a bit of unexpected one and

thus could prove to be a crucial one in giving new directions to the findings and

recommendations in the research.

Shivakumar (2007) written that organized retail has not penetrated and will not penetrate rural

India for obvious reasons – it is just unviable. It is only the urban areas that organized retail is

slowly but not steadily growing in.

21 | P a g e

WHY:- This study states that the organized retail is and will not penetrate into the rural market.

Since India’s rural market is having huge potential so organized sector need to penetrate into this

market otherwise they will lose their potential market to their unorganized counterparts. This

study helps in knowing where will the organized sector face difficulties in establishing

themselves and where the un-organized retailers can take advantage over the organized retailers.

Joseph and Gupta (2008) studied that the Indian retail sector is booming and modernizing

rapidly in line with India’s economic growth. In this review the author talked about the impact of

organized retailing on traditional retailing. With the increase in number of various formats for

shopping like malls, departmental stores, hypermarkets etc the Indian consumer’s preferences are

changing towards and that’s the reason foreign investors like the king of retail Wal-Mart also

came into the Indian retail ground in collaboration with Bharti. There is a huge untapped market

is present in India right now which contains a number of opportunities for retailers.

WHY:- The above study reveals that there is a huge untapped market of retail in the rural as well

as in urban area. However there are huge number of un-organized retail kirana store in the rural

areas as well as in urban areas but because of the organized retail their survival is in danger.

This study clearly reveals what are effects of introduction of organized retail on un-organized

retail stores.

Joseph et al. (2008) studied how consumers and farmers benefit from organized retailers. The

study has also examined the impact on intermediaries and manufacturers. The results are

indicative of the mega-and-mini- metro cities around a limited number of organized retail outlets.

Based on the results of the surveys, the study has made a number of specific policy

recommendations for regulating the interaction of large retailers with small suppliers and for

strengthening the competitive response of the unorganized retailers.

WHY:- The above study reveals what are the advantages of the organized retail sector to the

farmers and cosumers. This study will help us to know what were the side effects of un-

organized retail sector and what are the benefits of organized retail. It also will help in knowing

that whether we should give boost to organized retail sector or should stick with un-organized

retail stores.

22 | P a g e

Kacker (2008) written that it is quite possible for both the organized and unorganized sector

retailers to co-exist and flourish. He said that India has a huge potential for growth in retailing

sector. It is picking up at a reasonable pace. The organized and unorganized retail sectors will go

from strength to strength together. Whatever problems the unorganized sector retailers are facing

today need to be articulated and should be addressed. The government will be more than happy

to work with trade bodies to ensure that dynamism in the unorganized sector remains intact

WHY:- The above study has been included to know whether both organized and un-organized

retail sector can co-exist or not. The study states that yes both of them can co-exist, so this will

change the direction of recommendations to un-organized retail sector for their survival in the

market.

Krishnamoorthy (2008) studied that developing economies, specifically India, are appearing on

the world retail industry radar due to the size and potential of their markets. As organized retail

presents enormous business opportunities, big names such as Reliance, Birlas and Tatas along

with the foreign supermarket chains (in partnership with Indian companies), have been making

an entry into this sector. Fearing loss of business and employment, traders and hawkers have

held large-scale protests in various parts of the country. In the light of this, the Ministry of

Commerce and Industry commissioned the Indian Council for Research on International

Economic Relations (ICRIER) the to analyze impact of organized retailing on unorganized retail,

farmers and intermediaries as a possible input to future policy-making.

WHY:- The above research has been included to analyze impact of organized retailing on

unorganized retail, farmers and intermediaries as a possible input to future recommendations to

both organized as well as un-organized retailers.

Nath (2008) written that the Government has instituted a study through Indian Council for

Research on International Economic Relations to assess the impact of organized retailing on

unorganized retail trade. The government has also commissioned a study to the Nation Council

of Applied Economic Research on growth linkages of Foreign Direct Investment (FDI) in India.

23 | P a g e

The study will also focus on the impact of FDI on the rural economy. The government has

received a number of representations against permitting FDI in retail trade from various industry

associations, including small scale industry and retail traders.

WHY:- This study will help us in giving the recommendation whether more and more FDI

should be allowed in the organized retail or not and what will be its effect on the un-oganised

retailers.

Goswami and Mishra (2009) found that customer patronage to grocery stores was found to be

positively related to location, helpful, trustworthy salespeople, home shopping, cleanliness,

offers, quality and negatively related to travel convenience. Kiranas do well on location but

poorly on cleanliness, offers, quality, and helpful trustworthy salespeople. The converse is true

for organized retailers and also found that Kiranas have major disadvantages on all customer

perception scores except location. These scores being less important determinants of patronage

compared with location, in the short run kiranas may not be ousted out of customers’ favour.

However, in the long run if they do not work on these other factors, they would face oblivion.

WHY:- The above study has been included so as to recommend un-organized retilers what small

things customers take into consideration while deciding to go shopping in retail stores. These

things play a very important role in deciding whether one should go for shopping from that store

or not.

Kumar, Babu and Sucharitha (2009) studied that the retailing concept is classified as

Organized Retailing, Unorganized Retailing. We can find organized retailing mostly in

Developed countries like in US, UK etc. Emergence of retailing has been linked with the

civilizations and their culture. Whereas, unorganized Retailing is confined mostly to the under

developed and developing countries. Indian retailing and Chinese retailing may be taken as the

examples for unorganized retailing. After liberalization of Indian Economy in 1990.s the

employment and income from the service sector has lead to the burgeoning of the so-

called .Middle Class Consumers. The lifestyle and purchasing power of this segment has fueled

24 | P a g e

the growth of organized retailing (CII National Retail Summit, 2006). The Organized retailing in

India initially began with the availability of land at prime locations coupled with lower real

estate prices enabled the construction of multi-storied shopping complexes and the growing

purchasing power of the middle class consumers (Retail Symposium, 2008). Organized retailing

is spreading and making its presence felt in different parts of the country. The trend in grocery

retailing, however, has been slightly different with a growth concentration. However, it was

considered a traditional, conservative and cost-conscious market, proved to be the home ground

for most of the successful retail names.

WHY:- How the organized retailing is spreading and making its presence felt in different parts

of the country. The trend in grocery retailing, however, has been slightly different with a growth

concentration. However, it was considered a traditional, conservative and cost-conscious market,

proved to be the home ground for most of the successful retail names. This study helped in

knowing what factors are responsible for the spreading of organized retail in India.

Sadasivan and Premkumar (2009) studied that organized retail segment has been growing at a

blistering pace, exceeding all previous estimates. According to a study by Deloitte Haskins and

Sells, organized retail has increased its share from 5 percent of total retail sales in 2006 to 8 per

cent in 2007. The fastest growing segments have been the wholesale cash and carry stores (150

per cent) followed by supermarkets (100 per cent) and hypermarkets (75-80 per cent). Further, it

estimates the organized segment to account for 25 per cent of the total sales by 2011. India tops

the AT Kearney’s annual Global Retail Development Index (GRDI) for the third consecutive

year. The Indian retail market, which is the fifth largest retail destination globally, according to

industry estimates is estimated to grow from the US$ 330 billion in 2007 to US$ 427 billion by

2010 and US$ 637 billion by 2015.

WHY:- This study helped in knowing the growth movement of the organized retail in India. This

shows that India now is one of the favourite destination of organized retailers across the world

and is a waking call for un-organized retailers.

25 | P a g e

Sharma (2009) said that there would be no negative impact of organized retailing on the

unorganized sector, which accounts for 96 per cent of retail business. Moreover, 3.5 crores

people have got jobs in the retail sector and the incomes too have increased in recent times. He

added the study reveals that unorganized retail sector is expected to grow at about 10 per cent per

annum with sales rising from $309 billion in 2006-07 to $496 billion in 2011-12. He also added

that there is no restriction on the entry of domestic investors into retail sector.

WHY:- This study has been included in the research in order to know that whether the organized

retail will have effect on un-organized retailers or not. This study focuses on the positive side of

the introduction of organized retail sector in India.

Shukla (2009) studied that the marketing function depends heavily on the presence of

intermediaries between the Producer and consumer. These intermediaries provide broad and

convenient access to products for a wide range of customers. The retailing function adds value

for producers and consumers in a number of ways, most of which are difficult for manufacturers

to replace.

WHY:- This study has been included as it reveals which type of assortment of products is done

in organized retail stores so that customers can achieve one-stop shopping, creating an inventory

buffer between production and consumption so that products are available when desired, and

providing support services such as display, demonstration, credit, delivery, assembly, repair, and

return and warranty services. This will help in recommending the un-organized retailers to what

tactics they can apply while selling their products.

Wadekar (2009) studied that with huge malls and skyscrapers coming all over the country and

with cry for customer delight and satisfaction getting shriller, it was expected that organized

26 | P a g e

marketing would make a buyers paradise. Right from selling vegetables to banking services,

marketing is believed to be getting organized to gain customer loyalty and enriched customer

experience. Indian consumers had never dreamt it before, everything available under a roof, with

facilities for children care and a café to relax with crunchy snacks and a central air conditioning

keeping them cool and a low music adding up in their high, it was a sheer luxurious purchasing

experience. The researcher conducted a survey in different malls, in the city of Pune to verify the

claims of the malls of serving ultimate quality at a reasonable price rather a price lower than the

ruling market price. The findings of the survey however are quite different from the

presumptions. The survey poignantly shows the sophisticatedly manipulated prices, overcharged

items and declaring of sales and discounts are a big eye-wash. Malls and super/big bazaars may

have been a hit in the metros and urban centers, however how long would it last.

WHY:- This study has helped us in knowing that no doubt the organized retail sector is growing

in urban and metros but in rural India which is one of the biggest untapped market in the world

still the survival of organized retail in rural India is still a matter of discussion.

Krishnan(2010) found that it is important to note that value is function of not just price, quality

and service but can also be enhanced by personalization and offering a memorable experience. In

fact, building relationships with customers can by itself increase the quality of overall customer

experience and thus the perceived value. But most importantly for winning in this intensely

competitive marketplace, it is critical to understand the target customer's definition of value and

make an offer, which not only delights the customers but also is also difficult for competitors to

replicate.

WHY:-

27 | P a g e

Rao (2010) written that Foreign Direct Investment (FDI) is one of the major sources of

investments for a developing country like India wherein it expects investments from

Multinational companies to improve the countries growth rate, create jobs, share their expertise,

and research and development in the host country. There have been many discussions on this

issue and recently the Government had decided to put up a paper for discussion in the month of

July to take views from all the stake holders about the impact and their views on allowing FDI in

the multi brand retailing and the commerce ministry is planning to process all the views of the

stake holders on October 15th 2010 before putting up the issue in front of political leadership

WHY:-

Singh (2010) studied that mall and supermarkets are not threat to Indian retail industry. Even the

biggest of domestic players in organized retail lack the muscle and resources to cater to

significant proportion of Indian population. The bulk of future growth in retail will come from

rural population, which is a segment that organized retailers will not be able to cover. The

biggest draw for organized retail all over the world has been an innovative format – called the

discount stores. These stores sell grocery items at hugely discounted prices, for the simple reason

that high margins make such a move possible. In India, the margins are already wafer thin, even

at the retailer’s level. Therefore, supermarkets will find it very hard to attract customers on the

price front – unless they are ready to bear huge losses for a long, long time. Despite of what the

media and business leaders want us to believe, the average Indian customer has very limited

purchasing capacity. Even the affluent buyers are not profligate spenders – we Indians love to

extract maximum ‘value for money’. Purchasing at the local kiranawalla gives us valuable

opportunity to bargain

28 | P a g e

Objective of the Study

1) To find out the effect of organized retail on small and medium scale unorganized retailers

2) To know the factors which are responsible for shifting of customers from unorganized

retail to organized retail.

Scope of the study

This research study throws light on the Retailing concept and the main objective of the research

is to find the “impact of organized retail on unorganized retail sectors” This research work and

survey would help to know the impact of organized retail on unorganized retailers and over all

29 | P a g e

employability and economic growth of the country. The location in which this study is conducted

is Jalandhar and the duration of the study is from October 2010 to April 2011.

Need of study

Retail is clearly the sector that is poised to show the highest growth in the next five years. The

sector is set for a revolution, as both the present players and new entrants are gearing up to

explore the market. This sector contributes 10% of India's GDP and the current growth rate is

8.5%. The present size of the organized retailing sector is approximately 3% and is expected to

grow to 25-30% by the year 2010. There are about 300 new malls, 1500 supermarkets and 325

departmental stores currently under construction. Many players are coming up with huge

investments, due to which the present 12 million mom-and-pop shops and kirana stores fear

losing their business. Most predictions say that the sector might reach to US$ 900 billion by the

year 2011.

So due to such huge entry of organized retail sector in India growth of unorganized retailer

declined and affected from organized retailer sector. So it became necessary to study what

impact has been seen and will be in coming future due to such huge entry of organized retailer

sector.

RESEARCH METHODOLOGY:

Defining the problem: 

This study deals with the “Impact of organized retail on small and medium scale unorganized

retailers” is a descriptive research design.

Developing the research plan-

The research plan calls for decision on data sources, research instruments, sampling plan and

contact method.

Collection of Data :

30 | P a g e

Primary Data: In this study primary data is collected through Questionnaire. Two types of

questionnaires are used for survey, one questionnaire is for retailers and other is for customers.

Secondary Data: In this study secondary data is collected from various publications of

organized retailing, various papers and journals published time to time and newspaper.

Research Approach: The method adopted for research is a field survey.

Research instrument-

The research methodology for collecting the primary data is in the form questionnaire.

Questionnaire consists of set of questions presented to respondents for the answers.

Questionnaire will have open–ended and close-ended questions. There is a set of 8 to 9 questions

which are asked from unorganized retailers and the customers of organized and unorganized

retailers.

c) Sampling plans- Sampling plans call for three decisions:

Sampling Unit: - The target population will be the vendors, organized retailers customers etc of

Jalandhar.

Sample Size: - Sample size of 100 unorganized retailers and 100 customers of organized and

unorganized retailers are taken.

Sample procedure: - Convenience sampling is used for conducting this study.

d) Research Technique: -

In this study three types of research techniques are used namely Factor Analysis, Chi-square, and Percentage method.

31 | P a g e

INTERPRETATION

CUSTOMER’S POINT OF VIEW

(1) Where do you purchase from?

Response % of Respondents

Organized retails 28

Unorganized retail 39

Both 33

32 | P a g e

Interpretation :

From above data it can be interpreted that large number of people purchased from unorganized

retailers. It means the trend to purchase from unorganized retrial is still alive but purchasing from

organized retailers are catching up.

(2) How frequently you purchase from these organized stores?

Response % of Respondents

Yearly 7

Monthly 33

Fortnightly 37

Weekly 33

33 | P a g e

Interpretation :

From the above data it can be interpreted that people prefer to visit organized retail stores once in

a week, it means they don’t purchase from organized stores as frequently as from unorganized

one

(3.) How much amount you spend monthly while purchasing from retail store (organized)?

34 | P a g e

Response % of Respondents

Less than 500 8

500-1000 18

1000-2000 46

Above 2000 28

Interpretation:

From above it is found that around 32% of customer spends around Rs.1000-2000 in a month

and around 28 % of customer are very regular and spend more that Rs.2000 in a month when

they purchase from organized retailers.

About 5% of Customer still prefer going to the Kirana Store as they just spend around Rs.500 per

month from organized retailers.

(4.) How much amount you spend monthly while purchasing from unorganized retail?

35 | P a g e

Response % of Respondents

Less than 500 0

500-1000 42

1000-2000 36

Above 2000 22

Interpretation:

From above it is found that around 42% of customers spend between Rs.500-1000 in a month

when they do purchasing from other than organized shops or stores. And around 36% Customers

are very regular and spend around Rs.2000 and above.

(5) Rate the factors which influence you to visit organized retail store instead of unorganized

retail store? (Please rank as 1 to ‘Most Influential’ and 5 to ‘Least influential’)

KMO and Bartlett’s Test- Measures of sample adequacy such as Bartlett’s test of spnerecity

and KMO value showed that data was fit for factor analysis. Generally, KMO value greater than

0.5 is desirable. The KMO value is 0 .590, it makes the data fit for factor analysis and Bartlett’s

test also satisfied the condition of significance of chi square value.

36 | P a g e

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy.

.590

Bartlett's Test of Sphericity

Approx. Chi-Square 141.416

df 105

Sig. .010

Principal Component Analysis- It was used for extracting factors and seven (7) factors were

retained depending on eigen values and variance explained by each factor. The standard practice

normally used is that all the factors with an Eigen value of 1 or more should be extracted. Table

clearly shows that there are 7 factors having Eigen value more than 1. Total variance explained

by extracted seven factors was 65.053%.

Total Variance Explained

Component

Initial Eigenvalues Extraction Sums of Squared Loadings

Total% of Variance

Cumulative % Total

% of Variance

Cumulative %

1 1.873 12.488 12.488 1.873 12.488 12.488

2 1.757 11.711 24.199 1.757 11.711 24.199

3 1.489 9.927 34.126 1.489 9.927 34.126

4 1.286 8.572 42.697 1.286 8.572 42.697

5 1.211 8.076 50.774 1.211 8.076 50.774

6 1.126 7.505 58.278 1.126 7.505 58.278

7 1.016 6.775 65.053 1.016 6.775 65.053

8 .945 6.299 71.352

9 .851 5.674 77.026

10 .742 4.950 81.976

11 .674 4.493 86.469

12 .640 4.264 90.733

13 .526 3.505 94.237

14 .467 3.116 97.353

15 .397 2.647 100.000

37 | P a g e

Total Variance Explained

Component

Initial Eigenvalues Extraction Sums of Squared Loadings

Total% of Variance

Cumulative % Total

% of Variance

Cumulative %

1 1.873 12.488 12.488 1.873 12.488 12.488

2 1.757 11.711 24.199 1.757 11.711 24.199

3 1.489 9.927 34.126 1.489 9.927 34.126

4 1.286 8.572 42.697 1.286 8.572 42.697

5 1.211 8.076 50.774 1.211 8.076 50.774

6 1.126 7.505 58.278 1.126 7.505 58.278

7 1.016 6.775 65.053 1.016 6.775 65.053

8 .945 6.299 71.352

9 .851 5.674 77.026

10 .742 4.950 81.976

11 .674 4.493 86.469

12 .640 4.264 90.733

13 .526 3.505 94.237

14 .467 3.116 97.353

Extraction Method: Principal Component Analysis.

Rotated Component Matrix- The results were obtained through orthogonal rotations with

variance and all factors loadings greater than 0.40 were retained.

38 | P a g e

Component Matrixa

Component

1 2 3 4 5 6 7

PRICE -.562 .120 .562 -.025 -.005 -.133 .078

QUALITY -.491 .081 -.040 .512 .327 -.164 -.218

OFFER -.344 .229 .656 .080 .181 .176 -.086

CONVENIENCE .101 -.358 .154 -.042 .596 .077 .052

IMAGEOFSTORE .022 -.550 .210 -.133 .111 .265 -.278

VARIETY .469 .529 .017 .101 .335 .081 -.246

AMBIENCE .453 -.102 -.460 -.049 -.034 .141 .508

AFTERSALESERVICE .310 .174 -.109 .382 .060 -.505 .294

ADVERTISEMENT -.096 .246 .378 -.477 .261 -.388 .382

CREDITCARD -.139 .460 .149 .110 .070 .569 .260

RECREATION .659 .165 .175 -.045 .387 -.066 -.284

PARKING .117 .371 .552 .179 -.082 .431 .184

FRIENDS .119 -.192 .338 .664 -.199 -.035 .043

PEERS .163 .667 .117 .209 .133 .135 .256

FAMILYMEMBERS .387 .116 .152 -.086 -.548 -.094 -.274

Extraction Method: Principal Component Analysis.

Naming of Factors- All the factors have been given appropriate names according to the

variables that have been loaded on each factor. Factor No

Factor Name Statements Factor Loading

1 Product

Features

Pricing of organized player is one of the reason for

the shift

.562

Quality of products is the reason for the shift of

customers from unorganized to organized retailers

.512

39 | P a g e

Variety of products available for one category of

products is the reason for the shift

.529

Offers given by organized retailers is the reason of

shift

.656

2

Facilities

Credit card facility given by organized retailers is the

reason for shift

.569

Availability of good parking space is the reason for

shift

.552

3 Environment

Ambience of the store is the reason for the shift .508

Source of Recreation .659

4 Influencer

Customers are influenced by their friends to visit .667

Customers are influenced by their peers to visit .664

INTERPRETATION

Product Feature

Organized retailers are providing the customer with wide Variety of products inside one roof

with good Quality and Reasonable Price and these are the tool which attracts number of

40 | P a g e

customers towards organized retail stores but there are some other factors too, which makes

customer to purchase from organized stores such as offers available on the products.

Thus product features like quality, price, and variety are the reason for the shift of customers

from unorganized retailer to organized retailers.

Facility

Credit card facility given by organized retailers is the reason for shift because this facility allows customer to do shopping without carrying the money with them. The parking facility given by organized retailer is also the reason of shift of customer from unorganized to organized retailing because people don’t get space to park their vehicle while visiting unorganized retailers.

Thus facilities like credit card and parking are the reason for shift of customers from unorganized to organized retailer

Environment

Organized retailer gives its customer with the best Shopping Experience by providing them the

Luxury through the Ambience which is their in the Store (AC, Music, Announcement,

Promotions).

Thus ambience and shopping experience are the reason for shift of customers from unorganized

retailers to organized retailers.

Influencers

As per the analysis majority of people purchase or visit organized stores due to the influence of

media, i.e. the advertisement by the retailers, their promotion schemes ( BigBazar -Isse sasta aur

kahan), their offers like (Bigbazar-Biggest Sale in last week of month) but our friends and family

are even very much important in influencing us to purchase from the Big Retailers. Thus we can

say friends and peers plays very vital role to influence the customer to visit the organized

retailers.

41 | P a g e

(6) What do you purchase from these stores?

Response % of Respondents

Clothes 28

Groceries 23

Utensils 27

Other 22

Interpretation :

Customer usually visit the Store for purchasing the Clothes, Utensils and Groceries and some

other items too but the prefer Clothes the most .The result found from analysis indicates that the

purchasing item from organized stores is clothe instead of any other things.

42 | P a g e

(7) Where would you suggest your friends to go for shopping?

Suggestion % of Respondents

Organized retail 75

Unorganized retail 25

Interpretation :

Due to the luxuries shopping experience in the retail store and availability of good merchandise

of better quality and price customers always suggest their friends and relatives to visit to a

Organized Stores.The result taken from analysis indicates that customers have better experience

with organized retailers and that’s why they suggest their near and dear to go to organized stores

43 | P a g e

DEALER QUESTIONNAIRE

DATA INTERPRETATION & ANALYSIS

(1) When we talk about ‘Organized Retail Store’, what comes first into your mind?

Name of store Percentage of Respondents.

Vishal Mega-Mart 27

Big Bazar 43

Easy Day 17

Other 13

44 | P a g e

Interpretation:

The Graph shows that majority of people are aware of organized retail stores and awareness

about” Big Bazar” highest, followed by Vishal Mega Mart and than by Easy Day.

(2) Due to fast growing organized retail chains across the country, what impact it may have on

the small and medium scale unorganized retail stores?

KMO and Bartlett’s Test- Measures of sample adequacy such as Bartlett’s test of spnerecity

and KMO value showed that data was fit for factor analysis. Generally, KMO value greater than

0.5 is desirable. The KMO value is 0 .545, it makes the data fit for factor analysis and Bartlett’s

test also satisfied the condition of significance of chi square value.

45 | P a g e

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy.

.545

Bartlett's Test of Sphericity

Approx. Chi-Square 51.204

df 55

Sig. .620

Principal Component Analysis- It was used for extracting factors and six factors were retained

depending on eigen values and variance explained by each factor. The standard practice normally

used is that all the factors with an Eigen value of 1 or more should be extracted. Table clearly

shows that there are 6 factors having Eigen value more than 1. Total variance explained by

extracted seven factors was 67.282%.

Total Variance Explained

Component

Initial Eigenvalues Extraction Sums of Squared Loadings

Total% of Variance

Cumulative % Total

% of Variance

Cumulative %

1 1.498 13.618 13.618 1.498 13.618 13.618

2 1.341 12.187 25.805 1.341 12.187 25.805

3 1.276 11.599 37.404 1.276 11.599 37.404

4 1.178 10.706 48.110 1.178 10.706 48.110

5 1.077 9.790 57.900 1.077 9.790 57.900

6 1.032 9.382 67.282 1.032 9.382 67.282

7 .962 8.742 76.024

8 .798 7.252 83.276

9 .677 6.156 89.432

10 .644 5.853 95.285

11 .519 4.715 100.000

Extraction Method: Principal Component Analysis.

46 | P a g e

Rotated Component Matrix- The results were obtained through orthogonal rotations with

variance and all factors loadings greater than 0.40 were retained.

Component Matrixa

Component

1 2 3 4 5 6

LOWSALES .632 -.356 -.008 .124 -.181 .407

LOWMARGINS .161 -.047 -.033 .613 .564 -.277

COMPETITION -.362 -.190 -.288 -.462 .516 -.030

LOWGROWTH .239 .020 .366 -.256 .274 -.027

ALTERNATIVE .590 .234 .375 -.152 .376 .420

REDUCELOYALTY -.472 .514 .213 .137 -.328 .375

STAFFREDUCTION .532 .399 -.126 .160 -.263 -.513

NEWPRODUCTS -.390 .102 .398 .661 .182 .133

STORESPACE -.101 .561 -.538 .014 .348 .239

REDUCTIONINPRODUCT .076 .631 .364 -.331 .051 -.246

HOMEDELIVERY .259 .509 -.526 .124 -.056 .269

Extraction Method: Principal Component Analysis.

a. 6 components extracted.Naming of Factors- All the factors have been given appropriate names according to the variables that have been loaded on each factor. The seven factors depicted in Table 4.4, the factors were labeled as

Factor No Factor Name Statements Factor Loading

Lower the sales revenue .632

47 | P a g e

1 Direct Impact Lower the Margin in the product .613

Reduce the loyalty and retention among

customers

.514

2 Indirect Impact

Reduction in staff .522

Addition of New Product Line .661

Increase in the store space .561

Improved Home Delivery System .509

Interpretation

Direct Impact

Organized retailers have reduced the sales and profit margin of the unorganized retailers. But the

sales revenue of unorganized retailers is most affected by organized retailers because most of

customers like to purchase from organized retailers, as organized retailers offer every thing under

one roof. They have also increased competition and diminished the growth of small and medium

retail store which is reducing the profit margin of unorganized retailers.

48 | P a g e

Organized retailing has also affected the loyalty of customers for unorganized retailers because

the growth of organized retailing has also increased the option for customers.

Indirect Impact

The result shows that unorganized retailers have reduced their staff to reduce cost so that they

can give discounts or other services to their customers in order to compete with organized

retailers.

Unorganized retailers have also added new product line in their stores in order to attract

customer customers on the basis of variety and range of product.

Unorganized retailers have increased the store space in order to give increase variety, add new

product line and to give feel of organized retailers.

Unorganized retailers are putting their best effort to retain their customers base by improving

Home Delivery System and by providing the good combination of Assortment and Variety.

(3) Up to what extent these retail stores have affected the sales of your store.

Response % of Respondents

Decrease in sales by around less than 10 % 51

11-20% 25

20 -30% 14

More than 30% 10

49 | P a g e

Interpretation:

As per the analysis, organized stores have profound impact on the sales of unorganized stores but

it is very less, it means organized stores have not affected their business badly.

(4) What are you doing to cope up with these organized retailers?

Response % of Respondents

Improving the quality 40

Improving the delivery system 12

Increasing the variety 20

Providing credit facility 28

50 | P a g e

Interpretation:

The result shows that unorganized retailers are giving more preference in improving the quality

as the customer is getting the better quality product in the organized retail stores. They have even

started the giving the product on Credit basis for Retaining their customer base and are thus

putting in their best efforts to cope up with organized retailers by improving their Delivery

system and by providing the good combination of Assortment and Variety.

(5) How they have affected your business?

Reason % of Respondents

By Better quality 33

Wide variety 21

Deep assortment 22

Quick service 24

51 | P a g e

Analysis and testing

Chi-square test has been used in this study to find out the affect of organized retailer on

unorganized retailers.

Null Hypothesis Ho: Organized stores don’t have affected the business of unorganized

stores through quality

Alternative Hypothesis H1: Better quality of organized stores have affected the business of

unorganized retail stores.

CHI-SQUARE TEST

observed alue(O) Expected value(E) O-E (O-E)*(O-E) {(O-E)*(O-E)}/E

41 25 16 256 10.24

22 25 -3 9 4.36

17 25 -8 64 2.56

20 25 -5 25 1

Chi-square = 18.16

Degree of freedom =3

Table value at 5% level of significance = 7.815

From above it is found that the tabulated value is less than the calculated value, so the null

hypothesis is rejected and alternative hypothesis is accepted.

Interpretation

The Organized Retail store is affecting the business by providing the best and better quality

product, giving the customer a greater choice i.e. the best mix of merchandise assortment and

variety. The automated systems like the billing counters, checkouts result in providing the

52 | P a g e

quick service to the customers. Thus the result which has been found from the analysis

concluded that the most of the fast growing retail chain has impact on unorganized retail stores.

(6) Why do you feel threaten by organized retailers?

Reason % of Respondents

Lack of strategy 24

Lack of resources 35

Lack of money 29

Lack of skilled full staff 12

Interpretation:

53 | P a g e

The Organized Retail Sector is one of the Booming Sector so most of the Skilled Person and

Other Personnel are attracted towards it. And on the other had the local shop owner will hire the

local staff. As per the analysis, unorganized retailers feel threatened by the openings of organized

retrial in nearby locality because they don’t have as many resources as organized retailers and as

result they are fail to compete with them and finally their shares decreased.

(7) What do you think government should take initiative to curb the rampant growth of these organized

stores?

Steps % of Respondents

Govt should increase the taxes 19

Increase the norms and procedures 30

Increase the entry barriers 35

All of the above 16

54 | P a g e

Interpretation:

The result found from analysis shows that majority of unorganized retailers are in favor of

increasing entry barriers for FDIs and other foreign retail organizations so that the heat of

competition could be removed. They even want the government to tighten the Procedure and

Norms in entering the Market and increasing the amount of Tax or imposing some duties will

help the Unorganized Retailer to stay in the market for a long way.

(8) Do you think Govt. should provide more facilities and subsidies to unorganized retailers?

Facilities and subsidies % of Respondents

It will be a boost up for them 23

it will bring them to main steam 29

it will give them a chance of survive 37

it will heal their wounds 11

Analysis and testing

We have used chi square test for the current analysis and the tabulated value for the chi-

square test has been given below

Null Hypothesis Ho: Government should not provide any facility to unorganized retailers

Alternative Hypothesis H1: Government should provide facilities and subsidies to

unorganized retailers.

CHI-SQUARE TEST

55 | P a g e

Observed value(O) Expected value(E) O-E (O-E)*(O-E) {(O-E)*(O-E)}/E

23 25 -2 4 0.16

29 25 4 16 0.64

37 25 12 144 5.76

11 25 -14 196 7.84

Chi-square = 14.4; Degree of freedom =3; Table value at 5% level of significance = 7.815

From above it is found that the tabulated value is less than the calculated value, so the null

hypothesis is rejected and alternative hypothesis is accepted.

Interpretation

From above it is found that the more government would provide facilities to the unorganized

retailers; the more it would give them chances of survival and encouragement to carry on their

business.

LIMITATIONS

1. There was lack of time on the part of retailers and customers

2. There may be some biased information provided by the retailers and customers

3. It is very much possible that some of the respondents might have given the incorrect

information.

4. Lack of coordination towards retailers due to busy schedule

5. As the respondents were scattered so to find out them was difficult.

FINDINGS

56 | P a g e

• Unorganized retailers in the surrounding area of organized retailers experienced a decline in

their volume of business and profit after the entry of large organized retailers.

• The adverse impact on sales and profit weakens over time.

• There is competitive response from traditional retailers through improved business practices

and technology up gradation.

• A majority of unorganized retailers is keen to stay in the business and compete, while also

wanting the next generation to continue likewise.

• Small retailers have been extending more credit to attract and retain customers.

• Consumers have definitely gained from organized retail on multiple counts

• Overall consumer spending has increased with the entry of the organized Retail.

• Proximity is a major comparative advantage of unorganized outlets.

RECOMMENDATIONS

Unorganized Retailers should take feedback from the customer regarding their services and

qualities rendered to them

Unorganized Retail store should provide more credit facility to their customer so that

customer will purchase more beyond their capacity and it will increase the sale of retail store

Quality ,variety and assortment has to be improved , if unorganized retailers have to

compete with organized retailers

Every new technique should be used to attract the customers which are used by organized

retailers

An unique positioning strategy should be used either through product, workforce or anything

else to attract more and more customers

Unorganized Retailers should try to match the demand and supply so that they will sale the

thing to the customer without any delayed

Unorganized Retailers should concentrate more on their existing customers and should try to

retain them as long as possible.

57 | P a g e

CONCLUSION

To conclude, it can be said that though the unorganized retail industry has reached its maturity

and the organized retail industry is at its infancy. But with the huge potentiality existing in the

Indian market, it is expected to grow in leaps and bounds in the near future.

Organized stores have profound impact on un organized retail stores

Organized retail stores has been contributing to the nation through employment

generation, GDP contribution and eradication of poverty

Overall, it can be said that “Retail Industry" in India will emerge as one of the best 5

Business sectors in this decade.

Although there are rampant growth of organized retail stores but still majority of

customers of middle class and lower middle class prefer to buy from unorganized retail

stores

Above middle class and small portion of middle class are main beneficiaries of

organized retail stores

The percentage of closures of unorganized retail stores due to the openings of organized

retail stores are very less

Unorganized retailers still fighting well with organized retailers through credit

facility ,relationship and loyalty.

58 | P a g e

REFERENCES

Anand, V. (2003) “Using assessments of sandwich year and academic work performance

on business studies degree course” Management research news. Vol.-13, no.-2, PP- 9 to

99.

Arons, L. (2001),”Does TV viewing influence store image and shopping frequency?

“Journal of retailing, vol. 37n0.3, pp.1-13.

Business Standard (2009), “No negative impact of organized retail on unorganized

sector”http://www.business-standard.com/india/news/no-negative-impactorganized-

retailunorganized-sector/79169/on, accessed on 11 November 2010.

59 | P a g e

Goswami, P. and Mishra, S. (2009), “Would Indian consumers move from kirana stores

to organized retailers when shopping for groceries?", Asia Pacific Journal of Marketing

and Logistics, Vol. 21 Iss: 1, pp.127 – 143

Griffin J. (2004), “Frequently asked questions about consumer loyalty”. Available at

http://www.loyaltysolutions.com accessed on 12 November 2010

Joseph, M., Gupta, M., Soundararajan, N., Sahu, S. (2008), “Impact of Organized

Retailing on the Unorganized Sector”

http://www.eSocialSciences.com/data/articles/Document12392008160.7534143,

accessed on 11 November 2010.

Kacker, R. (2008), “Organized and unorganized retail segments can coexist and grow

together”, http:// www.indiaretailbiz.com , accessed on 10 November 2010

Klein, J and Dawar, N (2004), “consumer social responsibility and consumer’s

attributions and brand evaluations in product harm crisis” International journal of

research in marketing, Vol.: 21, Iss: 3, pp: 203-17.

Krishnan, R. (2010), “Random Rables”, http://ravekris.blogspot.com/2010/03/organized-

retail-in-india.html, accessed on 11 November 2010

Krishnamoorthy, S. (2008), “Impact of organized retailing on the unorganized sector: A

review of the study by ICRIER”, Labour File, Vol: 6, Iss: 2, pp: 45-48

Kumar,D.,Babu,C., Sucharitha, J.(2009), “Issues and Challenges for New Entrants” ,

Delhi Business Review X, Vol. 10, Iss: 1, pp.57-79

Miller, N.J. and Besser, T.L. (2000), “The importance of community values in

smallbusiness strategy formation: evidence from rural Iowa”, Journal of Small

BusinessManagement, Vol. 38, Iss: No. 1, pp. 68-85.

60 | P a g e

Nath, K. (2008), “Government studies organized retailing on unorganized retail trade”,

http://www.thaindian.com/newsportal/india-news/government-studies-organized-

retailing-on-unorganized-retail-trade_10043629.html, accessed on 10 November 2010

Rao, A. (2010), “FDI in Multi Brand Retailing in India”,

http://www.articlesbase.com/strategic-planning-articles/fdi-in-multi-brand-retailing-in-

india-3406940.html, accessed on 7 November 2010.

RediffBusiness.(2007), “Organied retail not to hit kiranas: Govt”

http://www.rediff.com/money/2007/dec/13retail.htm, accessed on 7 November 2010.

Sadasivan, K.,and Premkumar, B.(2009), “Organized Retailing Issues and challenges in

Indian Scenario”, Delhi Business Review X, Vol. 10, Iss:1, pp.121-143

Shivkumar, S. (2007), “Organized vs. unorganized retail: Making an issue of a non-

issue”, http://www.merinews.com/article/organized-vs-unorganized-retail-making-an-

issue-of-a-non-issue/125090.shtml, accessed on 10 November 2010

Shukla, P. (2009), “Store Choice Decision in Organized Retail-Building and Retaining

Competitive Advantage: Issues, Challenges and Future Prospects”, Delhi Business

Review X, Vol. 10, Iss: 1, pp.205-219, accessed on 11 November 2010.

Singh, S. (2010), “Malls & Supermarkets – Are They Threats to Indian Retail Industry?”,

http://indianblogger.com/malls-supermarkets-%E2%80%93-are-they-threats-to-indian-

retail-industry.htm, accessed on 5 November 2010

61 | P a g e

APPENDIX

QUESTIONNAIRE

(FOR RETAILER)

I am a student of “LOVELY PROFESSIONAL UNIVERSITY”, DEPARTMENT OF

MANAGEMENT, Jalandhar-Ludhiana GT Road, (District- Kapurthla) want to know

“Impact of Organized Retailer on Small and Medium Scale Unorganized Retailers”

Name ……………………. …………. Occupation: ………………………..

Address…………………….. .…… Contact No..:………………………..

62 | P a g e

1) When we talk about ‘Organized Retail Store’, what comes first into your mind?

Big Bazaar Vishal Mega Mart

Easy Day Reliance Fresh

Other Specify_____________

2) Due to fast growing organized retail chains across the country, what impact it may have

on the small and medium scale unorganized retail stores.

(Please rank as 1 to ‘Most Influential’ and 5 to ‘Least influential’).

FACTOR 1 2 3 4 5

Lower the sales

Lower the margins

Increase the competition

Lower the growth of small and medium retail stores

Increase the number of alternative products/services in

market

Reduce the loyalty and retention among customers

Staff Reduction

Add in new products

Increased Store Space

Discontinuation of some product lines

Improved Home Delivery

63 | P a g e

3) Up to what extent these retail stores have affected the sales of your store?

Decrease by less than 10% Between 11%-20%

Between 21% - 30% More than 30%

4) What are you doing to cope up with these organized retailers? (Rate on 1 for Mostly

Used and 5 Least Used)

Improving the quality _________

Improving the delivery system _________

Increasing the variety _________

Providing credit facility _________

Improving the ambience _________

5) How they have affected your business?

6) Why do you feel threaten by organized retailers?

64 | P a g e

1. By Better quality

2. Wide variety

3. Deep assortment

4. Quick service

1. Lack of strategy

2. Lack of resources

3. Lack of money

4. Lack of skilled full staff

7) Do you think government should take initiative to curb the rampant growth of these

organized stores?

8) Do you think Govt. should provide more facilities and subsidies to unorganized retailers?

9) Do you think these emerging organized stores have any contribution to national

economy?

Yes---------------------------------------------------No

65 | P a g e

1. Govt. should increase the taxes

2. Increase the norms and procedures

3. Increase the entry barriers

4. All of the above

1. It will be a boost up for them

2. It will bring them to main steam

3. It will give them a chance of

survive

4. It will heal their wounds

10) Any Suggestions

………………………………………………………………………………………………….

Thank you very much

QUESTIONNAIRE

(FOR CUSTOMER)

I am a student of “LOVELY PROFESSIONAL UNIVERSITY”, DEPARTMENT OF

MANAGEMENT, Jalandhar-Ludhiana GT Road, (District- Kapurthla) want to know

“Impact of Organized Retailer on Small and Medium Scale Unorganized Retailers”

Please help us by providing information to us through filling this Questionnaire.

Name: ……………………………………….. Occupation: ……………………………………...

Address:………………………………………Contact No: ………………………………………

66 | P a g e

1) Where do you purchase from?

2) How frequently you purchase from these organized stores?

Yearly Monthly

Fortnightly Weekly

3) How much amount you spend monthly while purchasing from retail store (organized)?

Up To 500 501-1000

1001-2000 Above 2000

4) How much amount you spend monthly while purchasing from unorganized retail?

Up To 500 501-1000

1001-2000 Above 2000

5) Rate the factors which influence you to visit organized retail store instead of unorganized

retail store? (Please rank as 1 to ‘Most Influential’ and 5 to ‘Least influential’)

67 | P a g e

1. Organized retails

2. Unorganized retail

3. Both

6) What do you purchase from these stores?

7) Don’t you think these items are available at unorganized stores as well?

YES--

------- -------

------- -------

------- -------

-NO

8) Where would you suggest your friends to go for shopping?

68 | P a g e

Options Features 1 2 3 4 5

A Price of Products

B Quality of Products

C Offers on Products

D Convenience to buy

E Brand Image is store

F Variety of Products

G Ambience

H After Sale Service

I Advertisement

J Credit Card Facility

K Recreation For Family

L Parking Space

M Friends

N Peers

O Family Members

1. Clothes

2. Groceries

3. Utensils

4. All of the above

1. Organized retails

2. Unorganized retail

3. Both

9) What prompts you for this suggestion?

10) Any Suggestions

………………………………………………………………………………….

……………………………………………………………………. ……………………………….

Thank you very much

69 | P a g e

1. Experience

2. Quality

3. Ambience

4. Attitude of employees

70 | P a g e