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A STUDY ON SHIFT OF CONSUMER LOYALTY FROM


UNORGANISED TO ORGANISED RETAIL SECTOR

Submitted To

I.K.G. PUNJAB TECHNICAL UNIVERSITY


JALANDHAR

In partial fulfillment of the requirement for the


award of degree of
Master of Business Administration (MBA)

Submitted by Project Guide


Daksh Arora

Session (2015-2017)
APEEJAY INSTITUTE OF MANAGEMENT TECHNICAL CAMPUS
JALANDHAR
INTRODUCTION TO RETAILING

Retailing involves all activities incidental to selling to ultimate consumer for their
personnel family and household use. It does this by organizing their availability on a
relatively large scale and supplying them to a customers on are latterly small scale.
Retailer is any person/organization instrumental in reaching the goods or merchandise
over services to the end users. Retailer is a must and cannot be eliminated.
The Indian retailing industry is becoming intensely competitive, as more and more
payers are Vying for the same set of customers. The major retail players are Pantaloon
Retail, Shoppers Stop, Reliance, etc.., Retailing is one of the biggest sectors and it is
witnessing revolution in India. The new entrant in retailing in India signifies the
beginning of retail revolution. India's retail market is expected to grow tremendously
in next few years.

Retail means selling goods and services in small quantities directly selling to
customers. Retailing consists of all activities involved in marketing of goods and
services directly to consumer for their personnel family and household use. The
Indian retailing industry is becoming intensely competitive, as more and more payers
are Vying for the same set of customers. The major retail players are Pantaloon Retail,
Shoppers Stop, Reliance, etc. Retailing is one of the biggest sectors and it is
witnessing revolution in India. The new entrant in retailing in India signifies the
beginning of retail revolution. India's retail market is expected to grow tremendously
in next few years. According to AT Kearney, The Windows of Opportunity shows that
Retailing in India was at opening stage in 1995 and now it is in peaking stage in 2006.
India's retail market is expected to grow tremendously in next few years. India shows
US$330 billion retail market that is expected to grow 10% a year, with modern
retailing just beginning. India ranks first in 2005.
REVIEW OF LITERATURE

Numbers of studies had been presented about the shift of consumer loyalty from
unorganised retail sector to organised retail sector but due to paucity of time, a few
snapshots of literature are given here.

Mauri (2007) conducted that in the 1990's all the largest grocery retailers have
introduced loyalty cards with the specific goal of acquiring consumer knowledge. The
use of loyalty cards as a knowledge tool has become so critical that retailers offer
customers rewards in return for card subscription and continuous use, because
knowledge accumulates only if consumers keep on using the cards they have
subscribed. These cards have opened a rich debate in marketing literature, which is
still going on. All the analyses of card data have however assumed that consumers are
card loyal that is they use the card they have subscribed. Is card ownership and use
tangible evidence of consumer loyalty? The paper offers a framework for testing the
feasibility of this fundamental assumption.

Memon (2008) found that the Indian retail industry has now become very vibrant.
This is the age when many new players are set to get a good hold in the Indian
market. The national as well as international players are introducing new concepts and
cultures, thus making retailing - a magnum opus. This paper is focused on the buying
behavior of Indian shoppers in the organized market, leaving not even the kirana
stores against it. However, the days are not too far when the merchandised will have
to be considered, and value chain and value delivery be revised.

Dey (2010) found that the General Agreement on Trade on Services (GATS) has
opened up opportunities before the entrepreneurs of the developing countries to
participate in international trade as one of the many small suppliers to the global retail
chains. The paper has been divided into two parts. Part-I deals with the basic concepts
of GATS, the driving forces behind the retail boom and the theoretical construct of the
retail model. In Part II, we analyzed some of the concerns expressed world wide
against organized retailing and tried to identify the limitations of this business model.
As global consolidation is more pronounced in food business, we focused our
discussion mainly on food retailing sector though few examples from apparel sector
are also cited.

Agarwal (2010) found out (using Regression, Data Envelopment Analysis and
Sensitivity Analysis) how efficiently some of the top organized India retail companies
have been performing relative to each other over the years and thereby to identify
factors that help increase the efficiency of a retail company. The paper is deemed to be
helpful to enable Indian retail companies gain a competitive advantage in the face of
increased competition being faced in the emerging organized retail sector in India.
The findings brought forth Advertising and Marketing expenses as the significant
performance determining factors to be paid attention to.

Nikolaeva (2012) found that to investigate the determinants of e-commerce adoption


in the retail sector using duration analysis. The study proposes a conceptual model
based on technology adoption and population ecology models. It identifies specific
determinant factors organized under three areas: perceived benefits, organizational
readiness, and external influences. Organizational readiness and external influences
were the main driving factors of the adoption decision. It appears that many retailers
mimetically responded to the online entry of other retailers. Managers should be also
aware of the suitability of e-commerce adoption to their organization. The paper
investigates the e-commerce adoption decision among retailers using a unique
database collected from public sources, avoiding potential subjectivity bias. It traces
the timing of e-commerce adoption incorporating both fixed and time-varying
covariates.

Nisa (2013) found that India is one of the largest emerging markets, with a population
of over one billion. India is one of the largest economies in the world in terms of
purchasing power and has a strong middle class base of 300 million. Around 70 per
cent of the total households in India (188 million) reside in the rural areas, where
mostly traditional retail outlets, commonly called kirana stores exist. However,
recently organized retailing has become more popular in big cities in India and most
of the metropolitan cities and other big cities are flooded by modern organized retail
stores. Many semi-urban areas also witnesses entry of such organized retail outlets.
Till now, entry of foreign retailers was restricted in Indian retail market because of the
ban on Foreign Direct Investment in Indian Retail Sector. But recently, as government
has changed its policy and the cabinet has allowed 51 per cent FDI in single-brand
retail, the prospects of foreign players entering India became high.

Chavadi and Kokatnur (2014) found that with retailing picking up and consumers
becoming choosy, it becomes vital for the retailers to look out for new avenues and
opportunities to make their customers happy. Intense competition in the market has
forced retailers to rethink on their strategies. Popular brands having national presence
are able to create entry barriers through their strong distribution channel and heavy
promotion. The objective of developing and delivering private label is to close the
value gaps not delivered by so called national brands. This paper makes an attempt to
identify the factors driving customers to the stores, examines the relationship of
various variables with store loyalty explores the possible growth rate in categories
such as apparels, consumer durables, life style products and food products and
estimates overall percentage contribution of private labels in total sales of the stores.

Sahu (2015) studied that the retail business, in India, is estimated to grow at 13 per
cent per annum from US$ 322 billion in 2006-07 to US$ 590 billion in 2011-12. The
unorganized retail sector is expected to grow at about 10 per cent per annum from
US$ 309 billion 2006-07 to US$ 496 billion in 2011-12. Organized retail which now
constitutes a small four per cent of retail sector in 2006-07 is likely to grow at 45-50
per cent per annum and quadruple its share of total retail trade to 16 per cent by 2011-
12. The study has indicated 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.

Dash and Chandy (2016) studied that Indian retailing is hailed as a huge sector in
India; in reality it is not so rosy when compared to the retail scenario in developed and
other developing countries. This study revolves around the opportunities and
challenges faced by organized retail players in Bangalore. It was also found that
organized retailers see Bangalores growing middle class as their greatest opportunity
followed by large number of earning youth customers. Thus, the study found that the
major challenges as well as opportunities of organized and unorganized retail are
almost the same. This means that mitigating the challenges and leveraging on the
opportunities could benefit both sectors.

The perusal of review of literature revealed that focus was on the buying behavior of
Indian shoppers in the organized market, leaving not even the kirana stores against it.
The use of loyalty cards as a knowledge tool has become so critical that retailers offer
customers rewards in return for card subscription and continuous use, because
knowledge accumulates only if consumers keep on using the cards they have
subscribed. Indian retail companies gain a competitive advantage in the face of
increased competition being faced in the emerging organized retail sector in India. It
was found that the major challenges as well as opportunities of organized and
unorganized retail are almost the same. This means that mitigating the challenges and
leveraging on the opportunities could benefit both sectors.
NEED OF THE STUDY
The need of the study was to know the reasons of shift of consumer loyalty from
Unorganised Retail Sector to Organised Retail Sector and also to analyze the reasons
of growing popularity of Organised Retail Sector and also to examine the expected
future growth in Indian Retail Sector. The main focus of previous studies has been
mainly on the buying behaviour of Indian shoppers in the organized market, leaving
not even the kirana stores against it. It also revealed that 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. This
research enables to cover the gap identified from review of literature. That is why
need was felt to conduct a fresh research in this area.

SCOPE OF THE STUDY


The scope of the study was limited to the geographical areas of Jalandhar city only.
The research had very wide scope as today different customers had different
preferences while purchasing.

OBJECTIVES OF THE STUDY


The current study under taken to achieve the following objective:
To study the preference of people towards unorganized and organized retails
stores.
To study the factors of organized retail outlet with regard to satisfaction level.
To study the benedits from traditional stores.
To study the product related factor with regard to organized retail outlet to
satisfaction level.
QUESTIONNAIRE

I am a student of Apeejay Institute of Management Technical Campus is conducted a


research on Study on Shift of Consumer Loyality from Unorganised to
Organised Retail Sector as a part of curriculum. I need you to fill this
questionnaire, it will take only 3-5 minutes of yours. I promise information will be
kept confidential and thank you for your cooperation.

Demographics
Name:
Gender: Male / Female
Occupation:
Businessman Service
Housewife Student
Self employed

1. Are you a regular costumer of organized outlets like Reliance fresh, More, Easy
Day etc?
a) Yes b) No

2. Where you usually go for shopping?


a) Retail outlets b) Traditional outlets
c) Both

3. How often you visit to organized retail outlets in a month?


a) 1-5 times b) 5-10 times c) More than 10
times

4. Do you agree that shopping in organized retail store is more convenient than
shopping in an unorganized retail store?
a) Yes b) No
5. What benefits you get from the traditional stores?
a) Credits
b) Friendly relations
c) Free home delivery
d) Any other

6. Check these factors of organized retail outlet with regard to satisfaction level?
Statements Strongly Agree Neutral Disagree Strongly
Agree Disagree
1) Parking Facilities

2) Visual
Merchandise,
Display etc.
3) Centrally Air
Conditioned

4) Well Equipped
Lifts & Elevators

5) Cleanliness

6) Enjoy shopping
while eating
7) Ease of payment
through credit and
debit cards

7. What do you think are the reasons for declining popularity of unorganized retail
sector in India; please rank the factors on the scale of 1 to 5 (1 being most important
and 5 being least important)
a) Globalization b) Young Population
c) Role of media d) High Income
e) Change of role of
women in the society
8. Check the product related factor with regard to organized retail outlet to satisfaction
level?
Statements Strongly Agree Neutral Disagree Strongly
Agree Disagree
1) Competitive
Prices

2) Latest Branded
Varieties
3) Better Selling
Service

4) Promotional
Gifts

5) Price Discounts

9. According to you what would be the future of traditional stores?


Will they stay in the market for another 10 years or not?
a) Yes b) No c) Cant say

10. According to you the boom in the retail industry will reach to the rural area or will
it only concentrated to the urban area?
a) Yes b) No c) Cant say

Thanks for cooperation

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