MARKETING MANAGEMENT II

Organised and
Unorganised Retail
Consumer Behaviour

Retailing
Retailing consists of the sale of goods or merchandise from a fixed location, such as a
department store or kiosk, or by post, in small or individual lots for
direct consumption by the purchaser. Retailing may include subordinated services, such
as delivery. Purchasers may be individuals or businesses. In commerce, a retailer buys
goods or products in large quantities from manufacturers or importers, either directly or
through a wholesaler, and then sells smaller quantities to the end-user. Retail
establishments are often called shops or stores. Manufacturing marketers see the
process of retailing as a necessary part of their overall distribution strategy.

Shops may be on residential streets, shopping streets with few or no houses, or in

a shopping center or mall, but are mostly found in the central business district.
Shopping streets may be for pedestrians only. Sometimes a shopping street has a
partial or full roof to protect customers from precipitation. Online retailing, also known
as e-commerce is the latest form of non-shop retailing.

Shopping generally refers to the act of buying products. Sometimes this is done to

obtain necessities such as food and clothing; sometimes it is done as
a recreational activity. Recreational shopping often involves window shopping (just
looking, not buying) and browsing and does not always result in a purchase.

Unorganised Retail Industry

The retail stores in India are essentially dominated by the unorganized sector or
traditional stores. In fact the traditional stores have taken up 94% percent of the Indian
retail market. Now stores run by families are primarily food based and the set up is as
Kirana or the 'corner grocer' stores. Basically they provide high service with low prices.
If the stores are not food based then the type of retail items available are local in nature.

The traditional family run convenience stores serves the purpose of the housewives

who definitely wants to avoid traveling long distances to purchase daily needs. The
convenience factor in terms of items, among people in general can be highlighted as
below:

 Groceries
 Fruits
 Drug Store
 Necessary stationery
As such traditional family run convenience stores are here to stay and cannot be
oversized by the organized retail sector besides, it represents the variety of India.

Convenience Stores are open for long hours and are one of the formats of the Indian
retail stores that cater to basic needs of the consumer. These stores are found in both
residential as well as commercial markets. The food products of traditional family run
convenience stores are comprised of branded as well as non-branded items. The
benefits of family run convenience stores are that they give importance to: 

 Personal touch
 Facilities of credit
 Quick home delivery

Traditional rural retail fairs are an also important .The traditional items here are
handmade jewelry and other colorful items. Traditional rural retail fairs have atypical
rural set up like:

 Huts of mud
 Thatched platforms
 lamps of wood
 String cots
 Plainness ground

The small thatched stores are a vibrant display of handcraft items

Organised Retail Industry

India retail industry is the largest industry in India, with an employment of around 8%
and contributing to over 10% of the country's GDP. Retail industry in India is expected
to rise 25% yearly being driven by strong income growth, changing lifestyles, and
favorable demographic patterns. 

Shopping in India has witnessed a revolution with the change in the consumer buying
behavior and the whole format of shopping also altering. Industry of retail in India which
has become modern can be seen from the fact that there are multi- stored malls, huge
shopping centers, and sprawling complexes which offer food, shopping, and
entertainment all under the same roof. 
Retailing Format in India
 Malls::
 Discount stores:
 Department stores:
 Hyper marts/supermarkets:
 Convenience stores:
 Multi brand outlets

Opportunities in Indian Organized Retail sector

The Indian government in 2005 allowed foreign direct investment (FDI) in single brand
retail to 51%. This has opened up a lot of opportunities in India organized retail sector.
In fact 325 departmental stores, 300 new malls, and 1500 supermarkets are being built
which shows the tremendous opportunities in the organized retail sector in India

Many Indian companies seeing the various opportunities in organized retail sector in

India have entered it. Pantaloons have decided to increase its retail space to 30 million
square feet with an investment of US$ 1 billion. Reliance Industries Limited is targeting
for annual sales of US$ 25 billion by 2011. It is planning to invest US$ 6 billion in order
to open 1,500 supermarkets and 1000 hypermarkets. Bharti Telecoms is planning a
joint venture with Telco a global retail giant worth £ 750 million

The opportunities in the organized retail sector in India have also increased with the
desire of many global retail giants to set up shop here. The global retail giants who are
entering the Indian organized retail sector are:

 Tesco
 Wall- Mart
 Metro AG
 Carrefour SA
Survey
We undertook conclusive type of market research. We design a questionnaire and
conducted a survey. Our sample size is 87 comprising of all age groups. We went to
Chennai City Center and local Kirana Shops in Mylapore and Roypettah for our
survey.

Finding of our survey

1. Income wise consumer behavior

We found that as income of consumer increases their preference for shopping malls
(Organised Retail) increases.

VISIT SHOPPING MALL

INCOME No of people

LESS THAN 1.5 1

1.5 LAKH TO 3 LAKH 6

3 LAKH TO 5 LAKH 12

5 LAKH AND ABOVE 17

  36

SHOPPING MALL VISIT

90
80
70
60
50
40
30
20
10
0
LESS THAN 1.5 1.5 LAKH TO 3 3 LAKH TO 5 5 LAKH AND
LAKH LAKH ABOVE
 2. Age wise consumer behaviour

We found that the people in the age group of 16-28 generally prefer shopping malls as
compared to other age group of people.

SHOPPING MALL VISIT

AGE GROUP NO of people

16-21 11

22-28 12

29-45 7

46-ABOVE 6

  36

SHOPPING MALL VISIT

70
60
50
SHOPPING MALL VISIT
40
30
20
10
0
16-21 22-28 29-45 46-ABOVE

3. Kinds of goods purchased

We asked them that for what kind of products they prefer organised and unorganised
retail. Their answer indicates that, still for the daily usage (FMCG) Products they prefer
local Kirana shops. And for garments they prefer going to Spencer’s or to City Center.
   KINDS OF GOODS PURCHASED  

U O

FMCG products 22 12 10

Garments 23 10 13

ELECTRONICS 13 8 7

STATIONARY 12 6 6

KINDS OF GOODS PURCHASED

25

20

15
KINDS OF GOODS
PURCHASED
10

0
FMCG Garments ELECTRONICS STATIONARY
products

4. Frequency of visiting Shopping Malls

Results indicate that people at least in a month usually go to a complex.

VISITING MALL

No. of People

Once in a week 6

Every fortnight 10

Every month 15

Occasionally 5
 VISITING MALL
16
14
12
10
VISITING MALL
8
6
4
2
0
Once in a Every Every month Occasionally
week fortnight

5. Change in shopping style due to entry of new Shopping Malls Concept.

According to the view of Respondents there is drastic change in shopping style to

introduction of Shopping Malls Concepts.

CHANGE IN SHOPPING STYLE

YES 86%

NO 9%

CAN'T SAY 5%
 CHANGE IN SHOPPING STYLE

YES
NO
CAN'T SAY

6. What attracts you towards going for organised retail

When we asked that about this question the response was availability of products/
goods.

ATTRACTS YOU IN MALL

No. of People

Price 7

Offers 7

Availability 16

Brand 6
 16
14
12
10
8
6
4
2
0
Price
Offers
Availability
Brand

7. What kinds of facilities you want in a shopping mall concept

Though many respondents express their different opinion but most of them opted for
wide variety of products and easiness in buying (Convenience in Locating a Product).

FACILITY YOU WANTS

No. of People

Convenience in Locating a Product 11

Wide variety of products 13

Discounts / offers 10

Ambience 2
 FACILITY YOU WANTS
Ambien
ce; 2
Conven
Discou ience in
nts / Locatin
offers ; ga
10 Produc
t ; 11
Wide
variety
of
produc
ts; 13

8. Effect of family traditional on buying behavior

We found that family tradition has immense effect on buying behaviour. They still feel
that they purchase daily usage products from their traditional shop-keeper.

TRADITION AND BEHAVIOR

No. of Respondents

Yes 8

No 25

Can't say 3

TRADITION AND BEHAVIOR

Yes No Can't say

8%
22%

69%
Conclusion:-
From the survey it is quite obvious that Changing age profile and disintegration of joint
family and Growing disposable income of people are some basic main reason that
Organised retail industry is booming. Some other reasons include

 Favourable demographics
 Rising consumer incomes
 Real estate developments, especially the emergence of new shopping
malls
 Availability of better sourcing options - both from within India and overseas
and changing lifestyle

But people still believe that there is large untapped market for retail industry. So there is
future for the local Kirana shops (Unorganised Retail).

According to a survey “The unorganised retail sector is expected to grow at about 10

percent per annum to reach $496 billion in 2011-12 despite the steady expansion of
organised retailers”. And that report also shows that the Organised Retail industry will
also increase at higher rate. Its share in retail industry is increase to 14 to 18% by 2011-
2012.