Impact of Organised Retail Outlets on Unorganised

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International Journal for Management Research Vol.1. No.2, July 2011, pp. 109-151

Impact of Organised Retail Outlets on Unorganised Retailers: A Case Study of Punjab State (India)

Dr Amrinder Singh, Mr Gautam Bansal ABSTRACT

Retailing, one of the largest sectors in the global economy, is going through a transition phase not only in

India but the world over. For a long time, the corner grocery store was the only choice available to the

consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. In

India, retailing has caught up in a big way. Today one finds the presence of huge retail stores like

Crossroads, Shoppers Stop etc who are doing well. The Consumers today can shop for goods and services

in a wide variety of stores A variety of factors seem to influence the growth in the retailing industry.

Consumer Pull, however, seems to be the most important driving factor behind the sustenance of the

industry. In this context, in order to understand the spending pattern of the consumers of various income

groups an analysis of the monthly purchase basket of the consumers surveyed indicated that the average

monthly household spend on food and grocery related items varied across income segments.

KEYWORDS:Organised Retail,Retail Format

BIOGRAPHICAL NOTE:

Dr.Amrinder Singh is currently working as Reader in the School of Management Studies,Punjabi

University,Patiala.

Mr Gautam Bansal is presently working as Deputy Dean at the Punjab College Of Technical

Education,Baddowal,Ludhiana.He can be reached [email protected].

______________________________________________________________________________

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INTRODUCTION Retailing is the most active and attractive sector of the last decade. While the retailing industry

itself has been present through history in our country, it is only in the recent past that it has

witnessed so much dynamism. It is the largest bandwagon that has witnessed hordes of players

leaping onto it.

Retailing, one of the largest sectors in the global economy, is going through a transition phase not

only in India but the world over. For a long time, the corner grocery store was the only choice

available to the consumer, especially in the urban areas. This is slowly giving way to international

formats of retailing. The traditional food and grocery segment has seen the emergence of

supermarkets/grocery chains (Food World, Nilgiris, Apna Bazaar), convenience stores

(ConveniO, HP Speed mart) and fast-food chains (McDonalds, Dominos). It is in the non-food

segment, however that foray has been made into a variety of new sectors. These include

lifestyle/fashion segments (Shoppers' Stop, Globus, Lifestyle, Westside), apparel/accessories

(Pantaloon, Levi’s, Reebok), books/music/gifts (Archies, Music World, Hallmark, Crosswords,

Landmark),appliances and consumer durables (Viveks, Jainsons, Vasant & Co.), drugs and

pharmacy (Health & Glow, Apollo). The emergence of retailing in India has more to do with

increasing in the purchasing power of buyers, especially post- liberalization, increase in product

variety, and also increasing economies of scale, resulting from use of modern supply and

distribution management solutions.

Various types of Retail format

In India, retailing has caught up in a big way. Today one finds the presence of huge retail stores

like Crossroads, Shoppers Stop etc who are doing well. The Consumers today can shop for goods

and services in a wide variety of stores. The most important retail format types are described as

follows:-

Speciality store:- The store has less number of items but the variety in them is high,

such as apparel stores, furniture stores, bookstore etc.

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Department store:- The store has several product lines, with each line operated as a

separate department managed by specialist merchandisers.

Supermarket:- These types of stores are relatively large, operating on low cost low

margin, high volume sales and offering self service format. These stores are designed

to serve total needs for food, laundry and household maintenance products.

Convenience stores:- These are relatively small stores located near residential area,

open long hours, seven days a week, and carrying a limited line of high turnover

convenience products at slightly higher prices.

Discount stores:- In these stores standard merchandise is sold at lower prices with

lower margins and higher volumes.

Off price retailers:- The merchandise is bought at less than regular wholesale prices

and sold at less than retail: often leftover goods, overruns, and irregulars obtained at

reduced prices from manufacturers or other retailers. Factory Outlets are owned and

operated by manufacturers and normally carry the manufacturer's surplus, discounted

or irregular goods. Warehouse clubs sell a limited selection of brand- name grocery

items, appliances, clothing etc. to members who pay $25 to $50 annual membership

fees. They operate in huge, low overhead, warehouse like facilities offering rock

bottom prices.

Superstores:- They average around 35,000 square feet of selling space traditionally

aimed at meeting consumers' total needs for routinely purchased food and non food

items. Combination Stores are a diversification store into the growing drug-and-

prescription field. The area is around 55,000 sq.feet. Hypermarkets range between

80,000 to 2,20,000 square feet and combine supermarket, discount and warehouse

retailing principles.

THE PRESENT SCENARIO OF RETAIL SECTOR

According to a recent study on the retail sector in India by Morgan Stanley, the Indian retail

distribution is entirely fragmented with about 12 million primarily selling from small shops and

even hand held carts. The organized sector accounts for just 2.2% of the total relevant private

final consumption expenditure (PFCE). While the PFCE is estimated to have grown at 11.6% per

annum over the last three years, the organized retail sector is expected to grow at 15-20% per

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annum. According to the Investment Commission of India, the wholesale and retail sector

currently account for 13% of India’s GDP and employs about 40 million people.

SPREAD OF ORGANIZED RETAILING: -

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 in the

South. However, the Mecca of retailing is undoubtedly Chennai. What was considered a

‘traditional’, ‘conservative’ and ‘cost- conscious’ market, proved to be the home ground for most

of the successful retail names – FoodWorld, Music World, Health & Glow, Vitan, Subhiksha and

Viveks –to name a few.

The choice of Chennai as the `retail capital’ has surprised many, but a variety of factors acted in

its favour. Chennai, in spite of being a rapidly growing metropolis offers reasonable real estate

prices, one of the most critical elements for the industry. Chennai has been witnessing a high

industrial growth and increasing presence of the MNCs, both in the IT sector as well as outside it.

The industrial boom has led to the emergence of new residential areas with aggregation of

professionals as well as a rapid increase in the number of double-income households and growth

of the nouveau riche/upper middle class with increased purchasing power. This has been

combined with the increasing need for touch and feel shopping (especially for the large migrant

population). All the factors have acted favourably in nurturing the industry.

CONSUMER- THE PRIME MOVER:

A variety of factors seem to influence the growth in the retailing industry. Consumer Pull,

however, seems to be the most important driving factor behind the sustenance of the industry. In

this context, in order to understand the spending pattern of the consumers of various income

groups an analysis of the monthly purchase basket of the consumers surveyed indicated that the

average monthly household spend on food and grocery related items varied across income

segments.For instance, in the case of upper income households, the average spend was around

Rs.4,200 per month. As against this, the average spend in the case of a middle-income household

was around Rs.2,850 and lower income households Rs.1,250 per month. This is computed from a

sample of 100 customers having an average family size of four. Besides increasing purchasing

power, a variety of other factors also seem to fuel the retailing boom. With increase in double-

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income households and working women, there is an increasing pressure on time with very little

time being available for leisure. In this scenario, consumers are seeking the convenience of one-

stop shopping, whereby they could have better utility of time. They are also seeking speed and

efficiency in processing, as a result. Being more aware, consumers are on the lookout for more

information, better quality and hygiene as well as increased customer service. These changes in

consumer behavior also augur well for the retailing industry. However, in India there are no

uniform trends with respect to consumer buying behavior.

Organized retailing has definitely made headway in the upper class. However, even in this

segment, items such as milk, fruits, vegetables and a significant portion of through-the-month

purchases seem to be done at traditional outlets. The middle-income class prefers shopping for

processed food and personal care in supermarkets and fall back on traditional outlets for bulk

shopping. Organized retail outlets seem to be associated with branded items/special purchases.

Organized retailing does not seem to have made an impact on the lower class, except for

`curiosity’ shopping. The biggest question before organized retailers therefore, is whether this

really means a huge untapped potential for the organized retailers and whether the conversion in

mindset is going to be easy.

Domestic giants to retail biz

More and more corporate houses including large real estate companies are coming into the retail

business, directly or indirectly, in the form of mall and shopping center builders and managers.

New formats like super markets and large discount and department stores have started influencing

the traditional looks of bookstores, furnishing stores and chemist shops.

As the corporates – the Piramals, the Tatas, the Rahejas, ITC, HLL, S.Kumar’s, RPG Enterprises,

and mega retailers- Crosswords, Shopper’s Stop, and Pantaloons race to revolutionize the

retailing sector, retail as an industry in India is coming alive. Over the last five years, these groups

have set up a number of chain stores. For instance, West Side by Tatas, FoodWorld by RPG,

Shoppers’ Stop (Rahejas), and so on. Not to be outdone, local retail conglomerates are rising to

the challenge and racing to capture the best locations. Indian heavyweight like the Reliance group

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is planning to do a Wal-Mart in India. Reliance Industries has announced a $3.4 billion

investment to develop about 1,575 stores between December 2006 and March 2007.

Few of India’s top retailers are: -

1.Big Bazaar-Pantaloons: Big Bazaar, a division of Pantaloon Retail (India) Ltd is already

India’s biggest retailer. In the year 2003-04, it had revenue of Rs 658.31 crores by 2010; it is

targeting revenue of Rs 8,800 Crore.

2. Food World: Food World in India is an alliance between the RPG group in India with

Dairy Farm International of the Jardine Matheson Group.

3. Trinethra: It is a supermarket chain that has predominant presence in the southern state of

Andhra Pradesh. Their turnover was Rs 78.8 Crore for the year 2002-03.

4. Apna Bazaar: It is an Rs 140-crore consumer co-operative society with a customer base of

over 12 lakh, plans to cater to an upwardly mobile urban population.

5. Margin Free: It is a Kerala based discount store, which is uniformly spread across 240 Margin

Free franchisees in Kerala, Tamil Nadu and Karnataka. Wholesale trading is another area,

which has potential for rapid growth. German giant Metro AG and South African Shoprite

Holdings have already made headway in this segment by setting up stores selling merchandise

on a wholesale basis in Bangalore and Mumbai respectively. These new-format cash-and-carry

stores attract large volumes from a sizeable number of retailers who do not have to maintain

relationships with multiple suppliers for all their needs.

Reliance Fresh at pune,Bangalore,Hyderabad,Mumbai & Gujrat in 3 months. Having already

opened 49 ‘Fresh’ stores in Hyderabad, Jaipur, Chennai, NCR and few smaller cities of Andhra

Pradesh, Reliance Retail, the Rs. 30,000 crore retail initiative of Reliance Industries is gearing up

to open 250 ‘Fresh’ within the next two months, in Pune, Bangalore, Hyderabad, Mumbai,

Ahmedabad, Vadodara, Surat, Jamnagar, etc.

During the same period, apart from opening ‘Fresh’ stores, which is the existent food and grocery

neighbourhood convenience format, Reliance will also open hypermarket and niche retail format

stores. This may directly impact small retailers as customers could save time and effort on

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procuring goods without sacrificing on the advantages of buying from a big chain like Reliance.

According to reports, such deliveries may, however, be restricted up to the distance of three kilo

meters.Reliance Retail opens 9 ‘Fresh’ stores in NCR targets 1 trillion in revenues.Reliance Retail

juggernaut moved into National Capital region (NCR) today with the opening of nine ‘Fresh’

stores in Noida, Greater Noida, Gurgaon, Ghaziabad and Faridabad. NCR is one of the

economically fastest growing geographical regions of the country. Within the next three months,

Reliance wants to take the tally of these ‘Fresh’ stores to 100 in the Delhi- NCR region. Reliance

is believed to have invested about Rs. 1,100 crore in this region. Having launched the first cluster

of its ‘Fresh’ stores on 3rd November, 2006, today’s launch takes the pan-India tally of Reliance

‘Fresh’ stores to 49, spread across Andhra Pradesh (21), Jaipur (7), Chennai (12), and NCR (9).

Three of these stores in Andhra and 12 stores in Chennai were launched during the previous

week. Thus, 24 ‘Fresh’ stores have been launched within a short span of one week only. Reliance

expects to launch 1,000 stores before the year end. Occupying an aggregate retail space of about

1,10,00 square feet, these neighbourhood convenience format stores occupy an average retail

space of over 2,200 square feet and offer quality horticulture, grocery and dairy products at

competitive prices. Apart from catering to house hold customers, Reliance also makes supplies of

these items at wholesale prices to push-cart vendors and small kirana merchants through its

wholesale format “Rangers Farm.”

Shoppers’ Stop, the K Raheja owned, second biggest listed retailer in the country, has announced

increase of 29% in Q3 gross revenues, up 59 crore from Rs. 204 crore to 263 crore, and of 16% in

Q3 net profits, up 2 crore, from Rs. 12 crore to Rs. 14 crore, according to the quarterly financial

results announced by the company. Q3 Operating Profit (Profit before interest, depreciation and

tax) at Rs. 25 crore was 27% higher than Rs. 19.6 crore recorded in the corresponding period last

year.Q3 has been significant as it has in line with expectations has contributed 30% of projected

annual sales, this year.While, the margin of 31.5%, for the first nine months, is higher by 1.2%,

the company has more importantly been able to contain shrinkage below 0.5%, lower than the

international standards.While, Shoppers’ Stop opened a new store in Lucknow in the third

quarter, it has also added the Mothercare, Crossword and F&B format stores during the

period.Shopper’s Stop at the quarter end had a total of 87 stores/ doors comprising: Shoppers’

Stop (20), HomeStop (2), Mothercare (11), Crossword (41) and F&B outlets (13).

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Pantaloon adds 8 lakh sq ft in Q3 sales jump by 60%.While, Q3 sales of Pantaloon Retail (India),

the Kishore Biyani owned, biggest listed retailing company of India, jumped 60 per cent from Rs.

472 crore to Rs. 752 crore, the net profit increased from 18.6 crore to Rs. 43.9 crore against the

same quarter of the previous year. However, net profit was inclusive of exceptional income of Rs.

18 crore received against diveastment of a part stake in one of its subsidiaries to a private equity

fund.While Pantaloon has added 8 lakh sq feet of retail space in Q3, it plans to add larger than this

space in Q4. What is of significance, however, is the fact that unlike most of its competitors, who

have yet to make a beginning, Pantaloon has signed up a total retail space of about 27 million

square feet.

Titan to retail prescription eyewear.Titan, the biggest Indian watch and jewellery retailer, which

also sells “Fastrack” range of sunglasses and frames has decided to enter the prescription eyewear

retail market.Mr. Bhaskar Bhat, Managing Director, Titan Industries, disclosed this while talking

on the sidelines of a seminar on advertising organised by the Advertising Club Madras, in

Chennai.Initial introduction of the prescription eyewear products will be done from 3rd March,

2007 on a pilot basis in a few of the company’s “World of Titan” stores, he added. Glasses,

frames and lenses for a new yet to be named brand will be made by Titan on its own without

seeking help of any outside partner.The company has notified the stock exchanges of its proposal

to start the new business.

Jose Luis Duran, Chairman and CEO, Carrefour, the France-based, US$ 177 billion, second

biggest retailer of the world, is currently on a visit to India. He is meeting high ranking

government officials including Kamal Nath, the Union Minister of Commerce & Industries and

senior secretaries, to understand the government’s present policy framework and future roadmap

on retail. Carrefour Chairman during his visit is also likely to gain a hands-on understanding of

the growing retail business in India by meeting local business leaders. Carrefour (pronounced:

Cahr-uh-foor, meaning ‘cross roads’ in French), like the world’s biggest Wal-Mart, which

recently tied-up with telecom giant Bharti, will have to seek an Indian partner for its India foray

for front end operations as it is a multi brand retailer and present Indian policy framework on

retail does not allow majority FDI stake in such format.

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Present policy guidelines, it may be noted, allow FDI of up to 100% in wholesale format (cash

and carry) and up to 51% in single brand retail format. Speculations are, therefore, rife that during

this visit, he would explore possibilities of doing business jointly with major business leaders

including Kumar Mangalam Birla, Chairman of the A V Birla group. To put records straight, it

should, however, be said that Mr. Kumar Mangalam Birla, in several media interviews earlier, has

clarified that his group would like to go it alone without seeking any foreign partners. It may be

recalled that the AVB group, early this month, had unveiled its plans to foray into the retail

business and as a first step had announced acquisition of Hyderabad-based, food and grocery

supermarket retail chain, ‘Trinethra’ and ‘Fabmall’ – which has over 172 retail stores spread

across southern parts of the country.

ITC plans big on retail; to open 140 Chaupal ‘Fresh’ & over 50 ‘Sagar’ stores.Having launched

three Chaupal ‘Fresh’ stores in Chandigarh, Pune and Hyderabad, tobacco, food, packaging and

hospitality major ITC is gearing up to launch the fourth store in Kolkata. ITC has chalked out

plans to set up 140 of such fruits and vegetables stores in 54 towns, across the country. These

stores are slated to come up within three to four years. ITC’s ‘Fresh’ format, in contrast to most

others, is a combination of both the wholesale and the retail formats, where these stores remain

open between 4 and 7 AM for wholesale and thereafter for retail. ITC’s engagement with farmers

began a few years ago with the opening of its first Chaupal Sagar hypermarket in Sehore, a small

town near Bhopal in Madhya Pradesh. Today, while there are 12 Chaupal Sagar stores in

operation, 11 more are under construction. All of these stores are located in the rural areas of

Madhya Pradesh, Uttar Pradesh and Maharashtra. In the coming months, ITC has plans to set up

40 more of such stores. The concept of these stores is slightly different from hypermarkets.

Chaupal Sagar stores, besides selling home products but also sell farm inputs like fertilisers,

pesticides and implements required by the farmers. In addition to selling products, these stores

also procure farm produce from the farmers. They also disseminate information on commodity

prices, crop patterns, and farming methods to these farmers. Even, crop demos and cold chain

support are made available, where needed.In short, Chaupal Sagar stores have become meeting

points for farmers not only for transacting commerce but also for collecting and exchanging

useful information.

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Nirula’s ride retail boom; launch two new formats.With the recent launch of a Nirula’s “Express”

restaurants at Delhi’s domestic airport and MMX Mall at Mohan Nagar as well as Shoprix Mall at

Noida, the home grown, North Indian fast food retail chain has decided to ride the retail and real

estate boom.Nirula’s “Express” counters, admeasuring about 200 sq ft, to be located in high

traffic areas including airports, railway stations,.

REVIEW OF LITERATURE

To be able to formulate the problem precisely, it seems logical to present a brief review of the

researches done on the problems what follow make no pretense of being an exhaustive review of

all investigation done on this problem, rather it has been indicated in general way, all type of

work done in this direction in India and abroad.

Taneja (2006) conducted the study “Punjab to gain maximum from organized retail”). In this

study Mr.Taneja has find number of new opening of large retail malls in the Punjab and also the

average monthly consumption expenditure for the rural consumer in Punjab. Major point of the

discussion are nine new projects are scheduled to be completed by the mid of 2007. Punjab to

have 40 malls by 2010. Private consumption expenditure in Punjab during 2004-05 stood at

RS.61900 Crores, which is 33% of the total private consumption expenditures of Rs.1866000

Crores. Average monthly consumption expenditure for the rural consumers in Punjab is Rs

1022.05 much higher than the national average of Rs 635.75 per person per month.

Survey ( 2006) on “UK-based OC & C Strategy Consultants” The Consultants conducted a

survey because organized retailing in India has new EI Dorado even though government has

unlocking its doors slowly. They surveyed that only 3 percent of India’s $215 billion retail sector

is organized. Explosion of organized retail formats like supermarkets and hypermarkets. Food is

the largest retail segment in India comprises two-thirds of all retail.

Singhal ( 2006) “ Impending economic impact of a resurgent Indian retail sector”

An images retail forum has laid down some impact of large retailer on traditional retailers. They

said the retail sector Impact confined to perhaps 300,000 to 500,000 retailers across India largely

in relatively small towns coming in direct range of about 1000 Hypermarkets and about 3000

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supermarkets by 2011. Overall, the universe of traditional retailers will actually increase by 2011

and even by 2015. Importance of traditional channel to become even more for established FMCG

and other consumer product companies. Most have weak business processes and IT systems. Most

have no real margin drivers in their business model that can enable them to make exceptional

investments in the immediate future.

Biyani (2005) report “Organized retail to cross INR 1000 Billion mark by 2010” covers

major sectors like apparel footwear, jewellery, watches, food, consumer electronics, mobile

handsets and music & gifts says that within 7-10 years India will become one of the 4th largest

retail market in the world and a country wide network of several 100 department stores and

shopping malls across 100 plus cities will exist.

Mckinsey (2003) report on India says that organized retailing would increase the efficiency and

productivity of entire gamut of economic activities and would help in achieving higher GDP

growth at 6% the share of employment of retail is low even when compared to Brazil (14%) and

Poland (12%).

Mehta (2002) “Challenges of retailing in India” finds that the retailers in India have to learn

both the art and science of retailing by closely following how retailers in other parts of the world

are organizing, managing and copying up with new challenges in an ever changing marketplace.

Indian retailers must use innovative retail formats to enhance shopping experience and try to

understand the regional variations in consumer attitudes to retailing. Retail marketing efforts have

to improve in the advertising, promotion and campaigns to attract customers, building loyalty by

identifying regular shoppers and offering benefits to them. Efficiently managing high-value

customers and monitoring customer needs constantly are some of the aspects which Indian

retailers need to focus upon on a more pro-active basis.

Narayan (2001) “ Retailing Bringing Employment”. The retail sector can generate huge

employment opportunities and can lead to job-led economic growth. In most major economies,

services form the largest sector for creating employment. US alone have over 12% of its

employable workforce engaged in the retail sector. The retail sector in India employs nearly 21

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million people accounting for roughly 6.7% of the total employments. However employment in

organized retailing is still very low, because of the small share of organized retail business in the

total Indian retail trade. The share of organized retailing in India is at around 2% is very low as

compared to 80% in the U.S.A, 40% in Thailand or 20% in China thus leaving huge market

potential largely untapped.

Rajpal (2000) a senior consultant with retail research firm KSA Technopak August. More

and more corporate houses including large real estate companies are coming into retail sector

directly or indirectly, in the form of mall and shopping complex. New formats like super markets

and large discount and department stores have started influencing the traditional looks of

bookstores, furnishing stores and chemist shops. The retail revolution apart from bringing in

sweeping positive changes in the quality of life in the metros and bigger towns is also bringing in

slow changes in lifestyle in the smaller towns of India.

Outlook 2000; shows that increasingly consumers prefer “All under one roof” destination for

shopping as well as eating out and entertainment. These findings together indicate an excellent

potential for a mall with the following features. A superior well-managed leisure experience.

Targeted at all members of the household. Comprising of shopping, dinning and entertainment all

under one roof. A wide range of products and services. Proximity to homes,

Munshi (1999) “Heading towards India – retail”, said in India the retail sector is the second

largest employer after agriculture, although it is highly fragmented and predominantly consists of

small independent. There are over 12 million retail outlets in India and organized retail trade is

worth about Rs.1290000 crore. The country is witnessing a period of boom in retail trade, mainly

on account of a gradual increase in the disposable incomes of the middle and upper-middle class

households.

Kaushik (1998) “Wholesalers to Retailers”. All activities involved in selling goods or services

directly to final consumers for the personal, non-business use. Retailing is the final business in a

distribution channel that links manufacturer with consumers. Manufactures make products and

sell them to retailers or wholesalers. Wholesalers resell these products to retailers. While retailers

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resell products to consumers. In this chain wholesalers satisfy retailers need. While directs their

efforts to satisfy retailer’s needs. While retailers directs their efforts to satisfying need to ultimate

consumers. All transactions in which the buyer intends to consume the product through personal,

family or household use. Retailing is a business in which individuals engaged in the activity of

selling products to final consumers.

OBJECTIVES OF THE STUDY

To study impact of organized retail sector on sales of unorganized retailers.

To know the perception of unorganized retailer towards the organized retailer.

To study the problem faced by small retailers vis-à-vis organized retailers.

To know future strategies employed by small retailers to remain competitive with

organized retailers.

To study perception of consumers regarding organized retail outlets vis-à-vis unorganized.

Research Methodology

The present chapter describes the research methodology of the study. It presents the research

design, sampling procedure tools of investigation, collection of data and the limitation of the

study. The research has been done on two different elements

Retailers

Customer

The questionnaire has been formed for the research after doing pilot study and informal personal

interviews.

Nature of research: - My research design is exploratory and descriptive in nature. The study is

conducted to find the awareness and perception of the customer and the impact on small scale or

unorganized retailer of the organized retailer. To know the strategy employed by small retailers to

remain competitive with organized retailers and the problem faced by small retailers vis-à-vis

organized retailers. The design is used to produce a clear picture of the retail sector in Selected

cities of Punjab.

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Sample selection: - The primary study will be conducted in the city of Selected cities of Punjab

with he help of questionnaire for both the retailer as well as the customers The general statement

are collected with the help of pilot survey and informal personal interviews.

Data Collection:- The primary data ( for data analysis ) is collected from questionnaire for both

the retailer as well as the customers to get the results.Seconadry data which includes newspaper

economic times and times of India, Magazines like business world and Images retail and also

websites.

Sampling Plan (Retailers and Customers)

The sampling units for the primary study consist of retailers and customers who are from the city

Selected cities of Punjab. Sampling size for the primary study is 100 retailers and 1000 customers.

The method of selecting sample for retailers is simple random sampling techniques. Questionnaire

is used to collect the data from the respondents.

Sampling technique: - Simple random sampling.

Universe: - All the unorganized retailers and customers.

Population: - All the active unorganized retail outlets and customers in Selected cities of Punjab.

Sampling unit: -The unorganized retailers and customer of Selected cities of Punjab.

Sample Size: - 100 unorganized retailer and 100 customers as a respondent because it is easy to

calculate and do the analysis of the responses and also due to time constraints I was able to

capture only the 100 unorganized retailers and customers.

Data Analysis and Interpretation: - After gathering the data from primary and secondary

sources, next step is to proceed towards drawing of conclusion by logical inference. Till this

stage, those data are only responses that are incapable of interpretation until converted into

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significant statistical information. Tabulation of data is to be done to present data into an easily

understandable form. Percentages are to be used to analysis the data collected .In addition to

summarizing data in a tabular form, data is presented graphically to obtain significant insights.

Bar diagram, pie charts are used to represent the information.

In view of nature of the present study, the required data was collected through the structured

questionnaire designed for the purpose. The data so called was processed manually by tabulating

.For analysis the data percentage technique has been used to draw meaningful results. On the

bases of primary study the secondary study is conducted. The sample size of retailers and

customers are 100 each.

Analysis and Interpretation (Consumers)

All the consumers were aware of the organized retail outlets in the city. Out of 1000 respondents

all know about the organized retail outlets.

Table.2: Showing the retail outlets visited by the consumers

Retail Outlets Respondents

Vishal 940 Ebony 860

Ansal Plaza 970 V mart 510 K mart 400

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Graph: 8.2

Graph 2

0200400600800

10001200

Vishal Ebony AnsalPlaza

V mart K mart

Retail Outlets

No

of

Res

po

nd

ents

Series1

Interpretation: -

Above chart depicts that Ansal Plaza and Vishal mega mart are the retail outlets, which are

frequently visited by the consumers of Selected cities of Punjab city respectively. Then follows

the Ebony, V mart and K mart respectively which are less visited by the consumers of Selected

cities of Punjab city.

Table 3:- Showing awareness about the opening of new retail outlets in the Selected cities of Punjab

Options Respondents

Yes 980

No 20

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Graph:3

Interpretation: - The above chart depicts the awareness of new upcoming retail outlets in the Selected cities of

Punjab city among the consumers or population of the Selected cities of Punjab.980 respondents

are aware and 20 respondents out of 1000 respondents are not aware of the opening of new retail

outlet in the Selected cities of Punjab city. Out of 20 respondents who are not aware of opening of

new retail outlets 10 had never heard and 10 have heard but ignored.

Table 4: -Out Remaining 980 respondents about which new opening retail outlets are they

aware

New retail outlets Respondents (N=98)

MBD Neopolis 330

City Center 910

Flamez 800

Westend Mall 450

Omaxe 600

Yes98%

No2%

Respondents

Yes

No

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Graph:4

Interpretation: - The above chart depicts that question which was asked earlier regarding the awareness of new

opening of retail outlets 980 respondents had said yes. Out of which responded that the City

Center has more awareness among the consumer with 29% followed by Flamez, Omaxe and

Westend Mall with 26%, 19% and 15% respectively. Where MBD Neopolis has less awareness as

compared to other retail outlets.

127

Table.5: The factors that differentiate the organized retail outlets with unorganized retail

outlets. The ranking has been done on that basis the analysis is done the factor having less

percentage of rank is considered the best or has 1st rank.

Factors Percentage

of ranks

Ranking

a. Coverage’s of stores as per your convenience 16.7 8

b. Sales force dealing with customers 16 7

c. Price charged by stores 11.1 4

d. Discounts schemes & gifts 9.3 1

e. Advertising & promotion tool 10 2

f. Home delivery 14 6

g. Multiple choice of products 10.6 3

h. Infrastructure 12.3 5

Total

Graph:5

128

Interpretation: - The above chart depicts the ranking done on the basis of factor which differentiate organised

retail outlets from the unorganised retail outlets.the first factor the 1st rank is given to the factor

discounts schemes and gifts followed by advertisements and promotion tools , multiple choice

products , price factor , infrastructure , home delivery , sales force dealing and coverage of stores

as per convenience respectively.

Table 6: -Showing the overall experience with organized retail as compare to unorganized

retail outlets by the consumers

Interpretation: - The question was asked relating to the overall experience the consumer had about the organized

retail outlets compare to unorganized retail outlets. The above chart depicts that out of 1000

respondents 500 says that they feel good, 110 says that they feel very good and remaining 390

says that they have average experience with organized retail outlets as compare to unorganized

retail outlets. This shows that majority of respondents have good experience with organized retail

outlets.

Options Respondents( N=1000)

Very good 110

Good 500

Average 390

Bad 00

Very Bad 00

129

2 Analysis & Interpretation (Unorganized Retailers) Table 2.1: Showing the type of store they had

Type of store Respondents (N=100)

Kiryana 33

General store 18

Departmental store 14

Garment store 26

Others 9

Graph:2.1

Interpretation: - The above pie chart shows that 33 respondents owns Kiryana store, 18 had General store, 14 had

departmental store, 26 had Garment store and whereas other 9 had shoe store and toy store etc.

130

Table 2.2: - Indicating the time they are in the business of retailing

Graph: 2.2

Interpretation: - The above chart depicts that the majority of respondent retailers are in business of retailing from

more than 5 years they are assumed to have more knowledge of today’s market .How much their

business has been effected. The numbers of respondents more than 5 years of business are 68, for

more than 3 – 5 years are 18, where as 1 – 3 years are 8 and less than 1 year are 6 in numbers.

Options regarding time of their business Respondents (N=100)

Less than 1 year 6 1 year - 3 years 8 3 years - 5 years 18

Above 5 years 68

131

Table 2.3: - Showing the awareness of opening of new retail outlets in the city

Graph: 2.3

Interpretation: - The above pie chart depicts the awareness of new organized retail outlets in the city among the

existing unorganized retailer. Mostly all the respondents are aware of opening of organized retail

outlets. Out of 100 respondents 95 are aware and rest 5 are unaware. This show that majority

knows about the opening of new organized retail outlets in the Selected cities of Punjab city. Out

of 5 half never heard and half heard but ignored.

Options Respondents

Yes 95

No 5

132

Table 2.4: - Showing the organized retail effection on their business

Graph: 2.4

Interpretation:

This pie chart depicts that out of 95 respndents who are aware of opening of organised retail in

the city 72 says that organised retail will really effect heir business and 23 says that their business

will no be effected by the organised retail .

Table 2.5: Statement wise analysis those who think that organized retail will not effect their

business. Analysis on the basis of stongly disagrees, Agree and strongly agrees. Statements

are: -

a.We have both big customer as well as small customer

b. Middle & lower class is not going to afford big brands

c. Quality is provided by us at reasonable prices

d. Malls are offering no more than a collection of shop selling branded products

there by limiting one’s shopping experience

e. Only players with deep pockets have been able to make it big

f.. Customer changes every 5 km and customer loyalty for every Rs.5

Options Respondents

Yes 72

No 23

133

Table 2.5.1: - We have both big customers as well as small customer N=23

Graph: 2.5.1

Interpretation:

The above pie chart disclose that majority of respondents agree with the statement that we have

both big customer as well as small customer with 57%.

Table2.5.2: - Middle & lower class is not going to afford big brands

Strongly Disagree

Agree Strongly Agree

4

13 6

Strongly Disagree

Agree Strongly

Agree

3

16

4

134

Graph: 2.5.2

Interpretation:

Again the majority agrees with the statement middle & lower class is not going to afford big

brands with 70 % of responents .

Table 2.5.3: - Quality is provided by us at reasonable prices

Graph: 2.5.3

Strongly Disagree


6

7 10

135

Interpretation:

Here situation is different in this we can’t find the exact answer to this. The majority is being

equal to all reponses.Although 44% strongly agree with it at the same side 30% agree with

statement .

Statement.2.5.4: - Malls are offering no more than a collection of shop selling branded

products there by limiting one’s shopping experience

Graph:2.5.4

Interpretation:

This satement is being agreed by majority of the respondents with 61%

Table 2.5.5: - Only players with deep pockets have been able to make it big

Strongly Disagree


9

12 2

Strongly Disagree


4

10 9

136

Graph: 2.5.5

Interpretation:

Here the situation is also critical we can’t find the concrete answer to this statement but we can

find that almost all the respondent agree with the statement only players with deep pockets have

been able to make it big.

Table 2.5.6:- Customer changes every 5 km and customer loyalty for every Rs.5

Graph: 2.5.6

Strongly Disagree Agree Strongly

Agree

4 9 9

137

Interpretation:

Here also the situation is also critical we can’t find the concrete answer to this statement but we

can find that almost all the respondent agree with the statement.

Table 3:- Depicting how much Organized retail affect the sales of Small scale retailer store

Options Respondents (n=72)

Huge affect 17

Sharp decline 17

Partially affected 33

Not affected to the extent 4

Not affected at all 1

Graph: 3

Interpretation:

The above chart shows that out of 72 respondents 24% say that they has huge effect on their sales

due to organized retail and another 24% also says that there is sharp decline on their sales.

Whereas 45% says that there sales has been partially affected by the organized retail and only 1%

says that their sales is not affected at all by the organized retail.

138

Table 4: Showing the activities that differentiate the organized retail from unorganized

retail. The activity, which has less total numbers of rank, is considered best.

Graph: 4

Interpretation:

The above diagram depicts the rank given to various activities, which the unorganized retailer

thinks that differentiate them from organized retailers. The lowest rank is the best activity or

important activity the considered. Variety of product is at top followed by large space, schemes,

attractive prices, conveyance, long opening hours and providing services to customers.

Activities Total numbers of ranks

Percentage of responses

Rank

Large space 260 7.6 2

Variety of products 256 7.5 1

Schemes and coupons 290 8.5 3

Quality of products 416 12.2 4

Long openings hours 559 16.3 7

Attractive prices 469 13.7 5

Conveyance 516 15.1 6

Provides customer services 652 19.1 8

Total 3418 100

139

Table 5: Showing that the coming of organized retail has affected the consumer’s perception

Graph: 5

Interpretation:

The above bar diagram shows that 72 respondents says that consumers perception is being

effected by the opening of organized retail and whereas 23 respondents says that the perception is

not effected.

Options Respondents

(N = 95)

Yes 72

No 23

140

Table 6: -Showing that those who think that consumer perception is being effected the

following statement are being ticked by them

Statements Responses

Started spending more on less expensive products 32

Started getting branded products 21

Give more importance to facilities than products 41

They have become more choosy 43

More attraction on infrastructure 52

Graph: 6

Interpretation: - The above chart depicts that majority of respondents are agreeing with the last

three statements, which according to them has really effected the perception of consumer that are

(More attraction on infrastructure with 52 responses), (They have become more choosy with 43

responses) and last (Give more importance to facilities than products with 41 responses).

141

Table 7:- Showing the problems unorganized retailer are facing to overcome the

competition

Problems Responses

Store location 31

Price reduction 36

Increase in promotion activities 48

Increase in conveyance 12

Infrastructure 64

To increase size of the store 67

Not enough margins to hire the well-trained manpower 8

Graph: 7

Interpretation:

The above pie chart depicts that the major problem faced by the unorganized retailer are to

increase the size of the store and infrastructure followed by increase in promotion activities and

price reduction.

142

Table 8: Showing the strategies that will be adopted by the unorganized retailer to overcome the competitive environment. These strategies are being ranked the lowest rank is considered to be the best strategy among which will be adopted by the majority of unorganized retailers.

Strategies Total numbers

of rank

Percentages

of responses

Ranks

Diversify the business 625 18.3 8

Tie up with the company 513 15 6

Store expansion 255 7.5 2

Change the location 401 11.7 4

Increase the variety of products 236 7 1

Reduction in price 379 11.1 3

Providing schemes 402 11.8 5

Club with three or four retailers 596 17.5 7

Total 3407 100

Graph: 8

Interpretation:

The most favorable strategy, which will be adopted by unorganized retailer to overcome the

competitive environment, is increase in variety of products followed by store expansion,

reduction in prices, change the location, providing schemes, tie up with the company, club with

three or four retailer and the last is diversify the business.

143

Table 8.12: At the end statement was given and the respondents were asked to how much

extent they agree with them: the statements are: -

a. Organized retailer give better quality products than small retailer.

b. Idea of having large numbers of products under one roof attracts the customers.

c. Organized retail sector will disrupt unorganized retailer.

d. Organized retail are just playing with the psyche of consumers.

e. More number of people go for only to know the rates and enjoy than buying the

products.

f. Prices of organized retailer are highly competitive as compared to small retailer.

g. Organized retail understands the needs better and thus provide customized

products.

8.12.1: - Organized retailer gives better quality products than small retailer (N=95)

Strongly disagree Agree Strongly Agree

87 8 0

Graph: 8.12.1

Interpretation:- The above pie chart depicts that almost all the respondents strongly disagree the

statement that organized retailer give better quality products than provided by them .

144

Statement 8.12.2: - Idea of having large numbers of products under one roof attracts the customers


12 38 45

Graph: 8.12.2

Interpretation:

Here the majority of respondents agree with the statement that idea of having large numbers of

products under one roof attracts the customers .

Table 8.12.3: - Organized retail sector will disrupt unorganized retailer


68 22 5

145

Graph:8.12.3

Interpretation:

Here the majority of respondents strongly disagree with the statement the organized retail will

really disrupt the unorganized retailer from the market.

Table 8.12.4: - Organized retail are just playing with the psyche of consumers


16 50 29

Graph: 8.12.4

146

Interpretation:

Here the majority of respondents agree with the statement that organized retail are just playing

with the psyche of consumers in the competitive market.

Statement 8.12.5: - More number of people goes for only to know the rates and enjoy than

buying the products

Graph:8.12.5

Interpretation:

The statement more number of people goes for only to know the rates and enjoy than buying the

products is being strongly agreed by the respondents with the majority of 69% and where 26& is

simply agreed with that statement.


5 25 65

147

Statement 8.12.6: - Prices of organized retailer are highly competitive as compared to small

retailer

Graph: 8.12.6

Interpretation:

The above pie chart shows that as there is no clear indication of the result but we can says that

majority of respondents agree with the statement that prices of organized retailer are highly

competitive as compared to the unorganized retailer.

Statement 8.12.7: - Organized retail understand the needs better and thus provide

customized products


23 33 39


54 29 12

148

Graph: 8.12.7

Interpretation:

As it is clear from the above chart that the majority of respondents strongly disagree with the

statement that organized retail understanding the needs better and than provide customized

products to the consumers with 56%.

Results & Findings

1. The main motive of research was to find the impact organized retail sector on sales of

unorganized retailers. After the research we can say that majority of retailers says that

there business is affected and had huge effect on their sale in the market due to presence of

organized retail outlets in the city.

2. The perception that unorganized retailer had towards organized retail is that the organized

retailer provides variety of products, schemes, attractive price and large space under the

one roof to the customer and will have very bright future in the coming years.

3. The problems unorganized retailers are facing as compare to the organized retailer are

studied from the research, which are infrastructure, to increase the size of the store, price

reduction and to increase the promotional activities.

4. The future strategies which will be employed by the small retailers to remain in the

competitive with organized retailer are increase the variety of products, store expansion,

149

reduction in price, change the location and providing schemes .So that they can increase

the sales of their stores in the competitive environment to survive in the market.

5. The perception of consumers have been changed to much extent .All the consumers are

aware of opening of new organized retail outlets in the city and had also visited the

existing organized retail outlets. They had very good experience with organized retail

outlets as compared to the unorganized retailer. The various factors they think and which

actually make difference between the organized retail outlets and unorganized retailer are

discounts and schemes, advertisement and promotion, multiple choices in products, price

charge and infrastructure.

6. The small retailer says that they are providing the same quality product as compare to the

organized retailer the only difference is that they are providing large variety of products

under one roof which attract more customers. Some of the retailer says that certain

consumers go only to know the rates and for enjoyment purposes rather than doing

shopping in the malls.

7. Some of the retailer had strong beliefs that they will not be thrown out of the market by

the organized retail. That is their business will not be disrupt by the organized retail

outlets.

150

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Chakraborty Nupur -Images Retail (November 2005) IT Retailing: Are You In The Loop?, July 16, 2006. The New rules of the street “Business world” 27 November 2006,pp24. Indian Realty Snapshots “A compilation of articles by Trammell Crow Meghraj (2001-2005). Business world 30th September 2006- India by 2010. Bhattacharya Saon 2006- Images Retail (October 2006). Bostridge B (2005), “Many Happy Returns for Retailers this Holiday Season: How Companies Can Benefit from Returns, Complaints, and Unhappy Customers”.

Oliver, R (1981): “Measurement and Evaluation of Satisfaction Processes in Retail Settings”, Journal of Retailing 57(Fall), pp. 25-48. Gautam, J and Alden, SD (1985): “Adolescents’ Cognitive Structures of Retail Stores and Fashion Consumption: A Mean End Chain Analysis of Quality”, In Perceived Quality: How Consumers View stores and Merchandise, Edited by J Jacoby and JC Olson, MA: Lexington Books, Lexington pp.99-114. Berry, LL (1986): “Retail Businesses are Service Businesses”, Journal of Retailing 62 (Spring): 3-6 Baker, J, Grewal, D and Parasuraman, A (1994): “The influence of Store Environment on Quality inferences and Store Image”, Journal of the Academy of Marketing Science22 (Fall); 328-339

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Kaushesh, A (Ed) (2002): Retailing: The sunrise Sector, ICFAI Books. Sinha, Ashish and Sahgal, Anna (2003): The effect of multi-purpose shopping on pricing and location strategy for grocery stores, Peter T.L, Popkwski Leszczyc. Saverina, Valerie, Jordan J.Louviereb and Adam Finne (2004): The Stability of Retail Shopping Choice Over Time and Across Countries. Raju, M, Rathod (2005) “Challenges and Strengths of Supermarket”, Indian Journal of Marketing: 29.

http:/www.euromonitor.com/reportsummary.aspx?folder=Retailing_in_India&industryfolder=Retailing. http:/Indianbusiness.nic.in/India-profile/ser-retail.htm. http:/www.indiaonestop.com/retailing.htm. www.cpasind.com CPAS “Centre for Policy Alternatives 94 Uday Park”. http://www.valueotescom/onetime/indianretailsector_11oct06.asp?artcd=86179&cat=&id=&pf= www.timesofindia.indiatimes.com www.economictimes.indiatimes.com. www.ibef.org/industry/retail.aspx. www.wikipedia/ril.com. http://www.tcs.com/0_features/articles/retails_systems.htm. http://www.imagesfashion.com/back/feb/coverstory.htm.

Documents

Impact of Organised Retail Outlets on Unorganised