A STUDY ON THE ROLE OF DEMOGRAPHIC

AND PSYCHOGRAPHIC DYNAMICS IN

FOOD AND GROCERY RETAILING

Ch. J. S. Prasad and D. Raghunatha Reddy

The Indian food and grocery retail sector is in the transformation mode for various reasons like strong
macro-economic fundamentals and the changing socio-economic scene are driving what were once traditional
and small scale retail outlets into organised retail formats aimed at catering to the evolving tastes and
needs of the discerning consumers. But the very fast changing trends in food and eating habits of consumers
have contributed immensely to the growth of ‘Western’ format typologies such as convenience stores,
departmental stores, supermarkets, specialty stores and hypermarkets. This has happened for various
conspicuous reasons namely demand and supply, socio-cultural, demographic, psychographic, economic
and technology advancements like a large segment of young population, a rapidly expanding middle class,
rising income levels, growing literacy, increasing number of working women and nuclear family structures
which in turn have created an enormous demand for consumer goods and paved way for modern retail
formats. The ever changing consumer’s psychographic variables like activities, interests, opinions, values
and lifestyles have also completely changed the formats namely convenience stores, supermarkets and
hypermarkets etc. are the crystal clear reflections of tectonic shifts in demographic and psychographic
changes of consumers. However, little is known about its actual influence and contribution to the organised
retailing in food and grocery sector from an empirical analysis. Thus, understanding of demo-psychographic
dynamics has become an imperative in designing modern food and grocery retail formats based on the
purchase patterns. The study is purely based on primary data and necessary secondary data to reinforce
the model. A total of 200 retail customers in Hyderabad actively participated in the survey. Findings, various
managerial and marketing implications are extensively discussed.

Key Words: Demographics, Psychographics, Convenience Stores, Supermarkets, Hypermarkets,

Food and Grocery Retailing.

INTRODUCTION 2007). According to IMAGES India Retail Report, 2007

of the Rupees 12, 00,000 crore retail market, food and

T
HE Retail sector is one of the fastest growing
industry in India, catering to the world’s second
largest consumer market. Retailing is being hailed
as the future of Indian industry, spurred by country’s
huge consumer market of Rupees 17 trillion at present
and forecasts that aggregate consumption will grow to
Rupees 70 trillion by 2025 (McKinsey Report, 2007).
The Food and grocery is the second largest segment of
the retail industry that constitutes 53 percent of the total
private consumption expenditure (USD 154 billion) and
70 percent of total retail sales (KSA Technopak Report,
grocery retail is by far the single largest block estimated
to be worth a whopping Rupees 7, 43,900 crore, but more
than 99 per cent of this market is dominated by the
neighborhood kirana (grocery) stores. The food and
beverage retail market in India is estimated at $4.6 billion
(Rupees 21000 crore) and makes up for 2 percent of the
country’s total retail market, out of which organised food
and beverage retail market accounting for 5 percent of
the total food and beverage market. The coffee retailing
segment is estimated at $45 million (Rupees 200 crore)
22 Prasad and Reddy
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and growing at the rate of 25 percent per year (KSA
Technopak Report, 2007).
But the current Indian retailing is highly fragmented
with an estimated 15 million retail outlets. Most of the
food and grocery products reach the consumers through
traditional markets which are unorganised (Baja et al,
2005). But the very fast changing trends in food and
eating habits of consumers have contributed immensely
to the growth of ‘Western’ format typologies such as
convenience stores, departmental stores, supermarkets,
specialty stores and hypermarkets for various
conspicuous reasons namely, demand, supply, socio-
cultural, demographic, psychographic, economic,
technology and government policies. Out of these,
demographic forces like a large segment of young
population, a rapidly expanding middle class, rising
income levels, growing literacy, increasing number of
working women, and nuclear family structure have
created an enormous demand for consumer goods and
paved way for the modern retail formats. The ever
changing consumer’s psychographic variables like
activities, interests, opinions, values and life styles have
also completely changed the retail formats in India. In
the post-liberalisation, consumer buying behavior and
lifestyles in India too are changing and the concept of
“value for money” and “value for time” is fast catching
on in Indian retailing. Thus, it is imperative to understand
the modern formats (a) Convenience Stores: These stores
have an area of 500 - 1000 sq. ft, usually located near
residential areas or in petrol bunks. They are open for
long hours e.g. Speed Mart and In and Out. The prices
are generally higher and volumes are low-to-medium.
Mom and Pop stores are informal versions of
convenience stores (b) Supermarkets: These stores
Figure 1: Organised Retail Market in India as per population projections
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operate in an area of 800 – 5000 sq. ft. They are self-
service, low cost, low margins and high volume operators
e.g. Food World, Food Bazaar and Nilgiri’s (c)
Hypermarkets: These are the largest stores offering food
as one of their categories in an area of 40,000 - 75,000
sq. ft. e.g. Big Bazaar and Giant (Lamba 2003). The
empirical study examines the impact of ever changing
demographic and psychographic dynamics of the
consumers on type of food and grocery retail formats.
REVIEW OF LITERATURE
The demographic variables such as age, sex, marital
status, family size, occupation, income/purchasing
capacity, educational levels, race, religion and
community are the most decisive and wield significant
influence on the prospects of retail business. Each
variable of the demographic factors has played its own
unique role in the growth and development of modern
retail formats like apparel, food and grocery. The
population explosion has triggered a massive demand
for consumer goods and services. The recent trends have
indicated that this ever increasing demand for consumer
goods will reach a new high in the years to come. The
size of the population is an important determinant of
demand for many products and services. Out of the total
population of 1027 millions, about 742 million live in
rural areas and 285 million in urban areas (Census 2001).
The net addition of population in rural and urban areas
during 1991- 2001 has been to the tune of 113 million
and 68 million respectively is an obvious indicator of
increasing demand for consumer goods. The burgeoning
population growth has significant influence on growth
and development of retail market shown in figure 1.
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 A Study on the Role of Demographic and Psychographic Dynamics in Food and Grocery Retailing 23
The census figures for 2001 show that 54 percent of
the population i.e., 540 million is below the age of 25,
and 45 percent below 19 years. The median age of an
average Indian is about 25 years i.e.100 million and will
have about 325 million people in the 25 - 35 age group by
2020 (Sinha, 2004). The largest young population in the
world over 890 million people below 45 years of age is in
India. The working age population between 15 and 64
years will increase by a staggering 71 million in India to
reach 762 million by 2010 (UN Report, 2005). This creates
a whopping 600 million-plus effective consumers by the
year 2010 (A. T. Kearny Report, 2006). Rapid changes
have taken place in family sizes (5.4 people), the family
lifecycle and the disintegration of joint family system has
led to the formation of nuclear families tempting
consumers to splurge on more consumer goods purchases
in apparel, food and grocery retail formats. The changing
composition of work force and growing number of women
employees in public and private organisations i.e., the
participation of women in the labour force and in
professional and technical workforce in India is 34 percent
and 21 percent respectively (source: NCEAR Report,
2005) contribute a lot in the emergence of retail outlets
because lack of abundant time for doing all house hold
chores and therefore save time. About 2 million graduates
every year of which 10 percent are engineers and are
available for employability. The annual growth in
employment has accelerated from 1.6 percent levels of
1993 - 2000 to 2.5 percent during 1999 - 2005 due to IT
and IT enabled services. India’s middle-income group
(popularly called middle class) is about 25% of the total
population base of which, about 4 percent are extremely
rich and about 10 percent have just graduated into the
middle class and are feeling their way through the material
world. The wealthy middle class is estimated at over 300
million and go up to 400 million by 2025. These middle-
income earning segments that believe in good things of
lifestyle and indulge in conspicuous consumption would
have about $ 2.8 trillion a year to spend that is how any
one would expect the true potential of retail business in
India. The average household income in urban areas has
grown at a 5 percent Compounded Annual Growth Rate
(CAGR) over the last decade. Nearly 37 percent of the
urban population constitutes chief earners who earn
regular salaries/wages. The number of people who earn
over US$ 5,000 plus per annum is growing at fast pace
and this is primarily attributed to the rapid rise in the young
earners (those in their mid twenties). The 70 million-plus
people earn over Rupees 8,00,000 ($18,000) a year –
number to rise to 140 million by year 2011. Expenditure
in urban areas accounts for 62 percent of income compared
with 56.2 percent in rural areas. Household income levels
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are expected to rise, with the lowest income group to
comprise only 24 percent in 2004 from its current level of
31.5 percent. The cumulative growth of the other income
groups is likely to be about 7 percent i.e. growth in
consumers who favour the emerging trends in retailing.
Households in the top 4 income categories (over a lakh of
annual income) account for about 53 percent of the total
household consumption expenditure. On an average the
expenditure on consumables; food, clothing and consumer
durables by the lower income category is as high as 74
percent while in the higher income category this forms
only 57 percent of their expenditure. Though the
percentage contribution of consumables is relatively higher
by the lower class, the purchase location is predominantly
traditional outlets, as compared to the higher income
category, which prefer to shop through organised outlets
to a greater extent. The positive change both direction and
magnitude in demographics and the Indian consumer’s
increasing disposable income has been highlighted by
several studies. Increasing double income families in cities
is another positive factor. Salary hikes in India are also
expected to increase at a faster pace than other developing
countries. All these portend a sustained growth in
discretionary spending and reiterate the chronic need of
modern retail formats.
Psychographic Dynamics
In the past few years the whole concept of shopping had
been altered in terms of format and consumer buying
behaviour. With the increasing urbanisation, the Indian
consumer was emerging as more trend conscious and
wanted everything under one roof where diverse quality
products are available. With an increase in double-
income households, lack of adequate leisure time
compelled to seek the convenience of one-stop shopping
where the speed and efficiency was the norm in order to
make the best use of their time. The concept of “value
for money” had fervently changed the consumer
behaviour towards the retail business in India. The
Intrinsic factors such as needs, motives, perceptions,
attitudes, interests, opinions, activities and lifestyles had
mostly influenced the consumer behaviour in a rapid
changing retail environment. Personal and social motives
were the most influential in increasing consumerism and
creating necessity for modern retail formats that cater to
meet the needs and preferences of consumers. Traditional
demographic variables cannot identify the complete
characteristics of an evolutionary retail market because
consumers in the same demographic group have very
different psychographic make-up. The tool which helps
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24 Prasad and Reddy
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a retailer to segment the population is psychographics
involving the use of psychological, sociological and
anthropological factors. Psychographic research
primarily allows us to understand why consumers behave
the way they do (Schiff Man et al., 2001). Most
psychographic research attempts to segment customers
in accordance with their activities, interests and opinions
(AIO). An AIO instrument consists of large number
statements with which a large number of respondents
express degrees of agreement or disagreement
(Blackwell and Miniard, 1994). Psychographics or
lifestyle studies include attitudes or evaluative statements
about the people, place, ideas, products and so on
(Hawkins et al., 2002).
Other psychographics are values, self-concept and
lifestyle. Values are end-states of life, the goals one lives
for. Psychologist Milton Rokeach has identified two
groups of values; each group measuring different but
complementary types of personal values. The first group
consists of 18 terminal value items, which are designed
to measure the relative importance of end states of
existence (personal goals). The second group consists
of 18 instrumental value items, which are the
measurements of the basic approach an individual might
make to reach end-state values. Thus, the first half of
the instrument deals with ends and the second half
consider means. Consumer researchers felt a need for
values more directly relevant to everyday consumer
behaviour. For this purpose, consumer researchers Lynn
Kahle et al, (1986) developed a list of values (LOV)
consisting of nine terminal values based on Rokeach’s
(1973) terminal value survey instrument and is a cross-
cultural generalisation of the values and life styles system
(VALS) so that the individual can easily be classified
according to the level of importance that he assigns to
each of them. Self–concept is self-image of who he or
she is. Furthermore, Sirgy (1982) in his study described
the self-concept as an idea of what the person currently
is and what he or she would like to become; these two
concepts of actual self and ideal self influences a person’s
consumption deeply, for people live their self-concepts
in large measure by what they consume. Marketers can
apply the principle of self-concept by obtaining a self-
concept profile of customers in terms of selected
personality traits, then obtaining the self-consumer’s
perceptions of a brand on the same traits. From these
profiles, it is possible to identify the match or gaps
between consumers’ self-concept and their perceptions
of the personality of the brand. Lifestyles are determined
by (a) a customer’s personal characteristics namely,
genetics, race, gender, age and personality (b) his or her
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personal context, namely culture, institutions and
reference groups and personal worth (c) needs and
emotions. These three sets of factors together influence
the pattern of activities (Sheth and Mittal, 2003). One of
the most popularised approaches to lifestyle research for
markets segmentation is called values and lifestyles
system (VALS), developed by SRI International, Inc.,
in California. According to Stanford Research Institute
(SRI) people pursue and acquire products, services and
experiences that provide satisfaction and give shape,
substance and character to their identities (Gonzalez and
Bello, 2002). In view of the above, the study has
undertaken certain psychographic variables which reflect
the quintessence of consumers’ ulterior motives and
needs that are deemed to be satisfied by purchasing food
and grocery products from the choice of modern retail
formats like convenience stores, supermarkets and
hypermarkets.
OBJECTIVES OF THE STUDY
The main objectives of the present study are:
1. To understand the role and contribution of
consumers’ demo - psychographic duo in the
growth and development of organised food and
grocery retail formats.
2. To examine the impact of consumers’
demographic and psychographic variables in
various types of organised food and grocery
retail formats.
HYPOTHESIS OF THE STUDY
H1a: Consumer’s age has significant influence on
purchasing from different types of food and
grocery retail outlets.
H1b: Consumer’s gender has significant influence on
purchasing from different types of food and
grocery retail outlets.
H1c: Consumer’s family size has significant influence
on purchasing from different types of food and
grocery retail outlets.
H1d: Consumer’s occupation levels have significant
influence on purchasing from different types of
food and grocery retail outlets.
H1e: Consumer’s income levels have significant
influence on purchasing from different types of
food and grocery retail outlets.
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 A Study on the Role of Demographic and Psychographic Dynamics in Food and Grocery Retailing 25
H1f: Consumer’s education levels have significant
influence on purchasing from different types of
food and grocery retail outlets.
H2: Consumer’s psychographic variables like
activities, opinions, values and lifestyles have
significant impact on purchasing from different
types of food and grocery retail outlets.
METHODOLOGY
The present study is based on an empirical analysis of
retail customer’s demographic variables like age, family
size, income levels, occupation, education and
psychographic variables like activities, interests,
opinions, values and lifestyles on organised food and
grocery retail formats. The study is based on primary
data as well as secondary data. The population of this
study is retail customers in the city of Hyderabad in
India. Respondents were selected by using the stratified
random sampling method and participation was
voluntary. A total of 250 customers were surveyed and
only 222 customers responded and returned the survey
instrument. This is an 88.8% response rate. Out of this,
only 200 were usable as 22 were rendered unusable
because of incomplete data.
The questionnaire was framed with notable
demographic and psychographic variables like age,
gender, family size, occupation, education, income
levels and psychographic variables consisting of
activities, interests, opinions, values, and lifestyle. A
psychographic instrument of 35 interest and opinion
statements were used to understand the respondents’
interests and opinions of modern food and grocery retail
formats; 12 activities statements were used to understand
their activities, and LOV scale with 7 values were used
from the list of 9 values developed by Lynn Kahle et al.
(1986) to understand the values that were important to
the respondents since the selected list of values
corresponding well to the needs of Maslow’s hierarchy
as the respondents were described in terms of
demographic variables on socio-economic classification
(SEC). Out of 35 interest and opinion statements used,
10 statements were adopted from the VALS instrument
(VALS Survey) on the basis of the relevance to the
Indian context. For the interest and opinion statements,
a 5-point agree-disagree scale was used and for the
activities statements a 5 point (5 standing for frequently
and 1 standing for never) scale was used and for the
LOV a 7 point (extremely important and extremely
unimportant) scale was used. The respondents were
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segmented as per AIO list of inventory and LOV scale
described in terms of demographic variables as well as
socio-economic classification.
Statistical tools like Mean, Standard Deviation and
Chi-square tests were applied to test the H1 hypothesis.
As Chi-square (c2) test is very popularly known as test
of independence of two categories and test of goodness
of fit for the reason that enables us to ascertain how
appropriate the distributions from the sample data fit
empirically. Moreover, the test is good and strongly
recommended for demographic variables (such as age,
gender, education, occupation, income levels, family size,
religion, etc.) measured on nominal or ordinal scale. The
test of concordance (goodness of fit) can be made just by
inspection of the sample data, but such a test is obviously
is inadequate. Hence, Chi-square (c2) test was used to
get the precision (Griffin, pp.263). For testing the H2
hypothesis, Mitchell’s (1994) approach which is the
famous statistical tool combination of factor analysis,
cluster analysis and discriminant analysis was used.
Gonzalez et al.’s approach was used in factor analysing
the responses from interests and opinions, activities and
values. The principle component analysis was used with
varimax rotation in all the three analyses (Hair et al.,
2003). The resultant factors were identified by using
eigenvalue greater than one criterion and for further
analyses, instead of using factor measures; items which
loaded highly on a factor were averaged.
STATISTICAL RESULTS AND ANALYSIS
Apart from the descriptive statistics shown in tables 1, 2,
3, 4, 5 and 6, information on respondents association and
choice of preferences of retail outlets from which they
regularly purchase food and grocery items show that 20
percent have been with the retail outlet for less than one
year, 58 percent have been with the retail outlet for 3 years,
15 percent have been with the retail outlet for more than 3
years and 7 percent are in the habit of changing retail outlets
as per their convenience. Approximately 18 percent of the
respondents visit retail outlets once in a week in a given
month, 34 percent visit retail outlets more than two times
in a given month, 48 percent visit retail outlets at least for
once in a given month. These results proved that
respondents show a significant level of purchasing
behaviour towards modern food and grocery retail formats.
Hypotheses Testing For Demographic Variables
It is conspicuous from the table 1 that 42.5 percent
respondents from the age group 15 - 25 do purchase from
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26 Prasad and Reddy
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hypermarkets. Majority of the respondents 42.5 percent Table 2 reveals that male and female
from age group 25 - 35 do purchase food and grocery respondent’s patronage of food and grocery retail
from supermarkets and 40 percent in the same group do outlets is almost same irrespective of type of retail
purchase from hypermarkets. 42 percent of the outlet. As calculated c2 value (2.63) is less than the
respondents from 36 - 45 years age group do purchase table value (5.99) at 5 percent level of significance
from convenience stores and 36 percent in the same age for 4 degrees of freedom.
group followed supermarkets for purchase. 40 percent
Hence, alternative hypothesis (H1b) is rejected i.e.
of the respondents from age group 45 years and above
, null hypothesis is accepted. Thus, consumer’s gender
do equal purchase from both convenience and
has not shown any significant influence on the type of
supermarkets. Most of the young and adults below 35
food and grocery retail outlets. Therefore, both are
years of age do shopping from hypermarkets and
independent with each other.
supermarkets as they seek for a lot more varieties of
branded and qualitative products. It is evident from table 3 that respondents (52 percent)
in family size 1- 2 do purchase from hypermarkets.
Table 1: Influence of Respondent’s Age on Food and Grocery
Respondents (42.6 percent) in family size of 3 - 4 members,
Retail Outlets
52.7 percent in 5-6 members and 50 percent in 5 - 6
Type of 15 - 25 25 - 35 36 - 45 45 Total members of family size do purchase food and grocery
Retail Years Years Years Years
items from supermarkets as they have felt that more large
Format and above
self-service outlets catering to varied shopper needs
Convenience 9 15 21 12 57
because of location in or near residential high streets.
Store
Supermarket 14 34 18 12 78 As calculated c2 value (21.5) is more than the table
Hypermarket 17 31 11 6 65 value (16.812) at 1 percent level of significance for 6
degrees of freedom. Hence, alternative hypothesis (H1c)
Total 40 80 50 30 200
is accepted i.e., demographic variable with respect to
As the calculated c2 value (14.59) is more than the respondent’s family size has significant impact on type
table value (12.59) at 5 percent level of significance for 6 of food and grocery retail outlets. As the family size
degrees of freedom, the alternative hypothesis (H1a) is increases, consumers do purchase from the nearest
accepted and it could be concluded that consumer’s age convenience stores and super markets and both are
has significant influence on type of food and grocery retail dependent with each other.
outlets from which they purchase the products. The age Table 4 reveals that respondents (50 percent) and
groups and retail formats are dependent with each other. (33 percent) from student category purchase from
Table2: Influence of respondents gender on Food and
supermarkets and hypermarkets respectively.
Grocery retail outlets Respondents 52 percent from housewife category do
purchase from supermarkets. Respondents from paid
Type of Retail Format Male Female Total
employee category are equally purchasing from super
Convenience Stores 33 29 62 and hypermarkets. Respondents 45 percent from business
Supermarket 26 41 67 category purchase from hypermarkets.
Hypermarket 31 40 71
Since the calculated c2 value (20.56) is more than
Total 90 110 200 the table value (16.812) at 1 percent significance level

Table 3: Influence of Respondent’s Family Size on Food and Grocery Retail Outlets
Type of Retail Format 1- 2 members 3 -4 members 5 – 6 members More than Total
6 members
Convenience Store 7 26 19 09 61
Supermarket 12 32 29 15 88
Hypermarket 21 17 07 6 51
Total 40 75 55 30 200

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 A Study on the Role of Demographic and Psychographic Dynamics in Food and Grocery Retailing 27 ●

Table 4: Influence of Respondent’s Occupation on Food and Table 6 shows that respondent’s increasing literacy
Grocery Retail Outlets levels have proved the direct relation with the type of
Type of Student House- Paid Busi- Total food and grocery retail outlet. As calculated c2 value
Retail Format wife Employee ness (10.49) is more than the table value (9.488) at 5 percent
Convenience 5 16 17 10 66 level of significance for 4 degrees of freedom.
Store
Hence, alternative hypothesis (H1f) is accepted i.e.
Supermarket 15 26 31 12 72 consumer’s increasing knowledge, awareness and
Hypermarket 10 08 32 18 62 educational levels have significant influence on types
Total 30 50 80 40 200 of food and grocery retail outlets. Therefore, dependency
among them is obvious.

for 6 degrees of freedom, hence, alternative hypothesis
(H1d) is accepted i.e. demographic variable with respect
to consumer’s occupation levels have significant impact
on type of food and grocery retail outlets. Hence,
occupation and type of retail formats for purchase of food
and grocery products are dependent with each other.
It is apparent from table 5 that respondents (40
percent) from below Rupees 10,000 do shopping from
convenience stores. Respondents (66 percent) from
Rupees 10,000 – 20,000 do shopping from supermarkets.
Respondents (50 percent) from above Rupees 30,000 do
shopping in hypermarkets for food and grocery products.
Since calculated c2 value (25.68) is more than the
table value (16.812) at 1 percent level of significance
for 6 degrees of freedom. Hence, alternative hypothesis
(H1e) is accepted i.e. consumer’s growing income levels
and availability of disposable money in hand have
significant influence on type of food and grocery retail
outlet from which they do shopping. Therefore, income
levels and types of food and grocery retail outlets are
dependent with each other.
Hypotheses Testing For Psychographic Variables
The scores on different statements, which indicated the
same psychographic aspects, were averaged. These
aspects were novel idea, value, leisure activity,
socialisation, uniqueness, family oriented, variety seeker,
utilitarian, price quality conscious, innovation,
intellectual, career oriented, self respect, belongingness,
accomplishment, religious and leadership minded.
Firstly, the principal component analysis with varimax
rotation was applied on 35 interest and opinion
statements, the 12 activity and 7 LOV statements were
used separately. The factor analysis of opinion and
interest statements emerged in 8 factors with eigenvalue
greater than 1. They are with 64.2 percent of variance,
which is acceptable and above the lower limit for social
sciences and determined the statistical significance of
each eigenvalue at 1 percent level of significance. The 8
factors emerged in factor loading were innovator,
utilitarian, values, fun and entertainment type, family-
orientation, intellectual, leader, quality and price
sensitive. Multivariate analysis was carried out on the
basis of 26 interest and opinion statements (Exhibit 1).

Table 5: Influence of Respondents Monthly Income Levels on Food and Grocery Retail Outlets
Type of Below Rs. 10000- Rs. 20000- Rs. 30000 Total
Retail format Rs. 10000 20000 30000 above
Convenience store 16 14 10 6 46
Supermarket 14 50 28 7 99
Hypermarket 10 11 22 12 55
Total 40 75 60 25 200

Table6: Influence of Respondents Education Levels on Food and Grocery Retail Outlets
Type of Retail format SSC/ Diploma Degree P.G Total
Convenience store 14 13 12 39
Supermarket 18 45 28 91
Hypermarket 8 42 20 70
Total 40 100 60 200

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28 Prasad and Reddy
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Exhibit 1 Multivariate Analysis
Principal components factor with varimax rotation results
of interest and opinion statements with corresponding
Cronbach’s alpha scores and factor loading of items.
Factor 1-Innovator (Cronbach’s alpha= .7246, 5.6%
variance)
I like doing things that are new and different (.714)
I like to use new and different things in my life time
(.704)
I do enjoy making my own decisions (.6690)
I like the challenge of doing something I have never done
before (.763)
Factor 2-Values (Cronbach’s alpha. 7890, 4.5%
variance)
I do shopping to keep up with the trends (.745)
I do shopping to see what new products are available
(.689)
I like to have warm relationship with others while doing
shopping (.745)
Factor 3- Utilitarian (Cronbach’s alpha .7468, 3.5%
variance)
I go for shopping to find value for money (.653)
I go for shopping to find different branded products I
need (.728)
I go for shopping to have a look at products being
considered for purchase (.679)
Factor 4-Family orientation (Cronbach’s alpha .6590,
4.8% variance)
If it is good enough for my wife, it is good enough for
me also (.792)
My family is the single most important thing to me (.662)
I always take opinion of my family before taking
purchase decision (.690)
A women’s life is fulfilled only if she can provide a happy
home for her family (.678)
Factor 5 Entertainment seeker (Cronbach’s alpha
.5742, 3.4% variance)
I like to have a lot of variety in my life (.623)
I like to have excitement and fun in doing shopping (.642)
I go shopping to make me feel better (.590)
Factor 6 Price/Quality sensitive (Cronbach’s alpha
.5382, 5.9% variance)
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The price of product is good indicator of its quality (.521)
I always like for branded products irrespective of the
price tag (.589)
I agree with that higher the price of the product, higher
is the quality (.490)
Factor 7 Leader (Cronbach’s alpha .4780, 4.2%
variance)
I like to lead others (.524)
I like being in charge of a group (.590)
Other people usually follow my ideas (.646)
I can usually organise people to get things done (.605)
Factor 8 Intellectual (Cronbach’s alpha. 5230, 3.2%
variance)
I have more ability than the most people (.612)
I consider myself as an intellectual (.608)
In the second stage 10 activity statements were factor
analysed by applying principal component analysis with
varimax rotation. Three factors with eigenvalue greater
than 1 factorised with 58.3 percent of variance and
examined the statistical significance of each eigenvalue
at 1 percent level of significance. In the third stage, the 6
LOV statements were factor analysed through principal
component analysis with varimax rotation. Two factors
with eigenvalue greater than 1 resulted with 56 percent of
the variance and examined statistical significance of each
eigenvalue at 1 percent level of significance. At the next
stage two value scale scores three activity scale scores, 8
interest and opinion scale scores, were put to hierarchical
clustering analysis by using Ward’s method and four
clusters were resulted as most acceptable. The average
scores of the items were loaded highly on factors and had
reliability, measured by Cronbach’s alpha. These average
scores also put for examination in the agglomeration
matrix and dendogram resulted three clusters to be most
acceptable. MANOVA test was used to find out any
differences exhibited on the basis of activities, interests,
opinions and values. The multivariate test using Wilks’
Lambda was conducted on marginal means obtaining
value 0.81 at significance level of 0.000. The clusters were
different across the values and AIO’s. At the last stage,
the four clusters were used as dependent variables and
the averaged interests and opinions, activities and LOV’s
scores were used as independent metric variables for
multiple discriminant analysis. The four canonical
discriminant functions account for 87 percent of the
variance in the dependent variable. All the four functions
were statistically significant and means of functions
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 A Study on the Role of Demographic and Psychographic Dynamics in Food and Grocery Retailing 29
differed across four clusters and further examinations of
the structure matrix and functions at group centroids,
simultaneously c2 tests of association and cross-tabs
between clusters shows the results of four clusters.
1. Hedonic Consumers (16.2 percent)
These are the sort of consumers who use products or
services for the sake of intrinsic enjoyment rather than
to solve some problems. These shoppers are low on need-
based buying, high on idea shopping and have high
unplanned purchases. Window shopping and storage
display is important to them. Location of the store is not
important criteria for purchase of items. Students consist
of equal number of male and female are proportionately
more than non-students. They have the highest
propensity to spend more and do purchase food and
grocery items from hypermarkets.
2. Utilitarian Consumers (34.8 percent)
These kinds of consumers are high on need-based
buying, low on idea shopping and never resort to
unplanned purchase. This group has more female
consumers than male in middle and upper middle income
levels. Location of the store is immaterial for them
because of having sole interest in quality products and
variety of brands. They are moderate in frequent
purchasing and do purchase food and grocery products
from supermarkets.
3. Conventional consumers (28.2 percent)
This kind of consumers hardly shows interest either in
window shopping or socialisation at all. They least show
interest in product quality and assortment. Location of
the store is very important for them. Frequency of
purchase is more than 2 times in a month and do purchase
food and grocery products from type of convenience
stores and supermarkets.
4. Socialisation Type Consumers (20.8 percent)
These are the sort of consumers like to socialise with
their near and dears. They are high in window-shopping.
They are moderately need based and not much of idea-
shoppers. Location of the outlet is somehow important
for them. They do not indulge in much unplanned
purchase. The frequency of purchase is at least once in a
month. Propensity to purchase is more in male consumers
than female. They do purchase from supermarkets and
hypermarkets where they can meet their social groups
and fulfil needs.
VISION—The Journal of Business Perspective Vol. 11 No. 4 October–December 2007
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The results show that 85.5 percent of the cases
correctly classified. The leave-one-out cross-validation
option, the hit ratio was 82.4 percent, revealing a sense of
strength of the estimate in using each respondent as valid.
Hence, the alternative hypothesis (H2) is accepted i.e.
consumer’s psychographic dynamics plays a great role in
selecting the type of food and grocery retail outlets.
MANAGERIAL IMPLICATIONS
This empirical analysis has a great number of managerial
implications on organised food and grocery retail outlets.
In the fast changing face of organised retailing especially
in food and grocery, shopping for products is no more a
matter of non-fun mundane activity but an exciting and
entertainment activity. Although consumer’s
involvement of shopping for food and grocery items is
very low, yet it is in metamorphosis state due to
increasing levels of consumer awareness and availability
of manifold branded products on qualitative and
competitive basis. The rapid sea changes occurring in
consumer’s demographic and psychographic profiles
posed a great challenge for organised retailers to identify
the required style and type of food and grocery retail
format. The study shows that consumer’s education,
occupation; family size and income levels are the major
determinants for type of food and grocery retail outlets.
The working women create a huge demand for time-
saving products and services. The psychographic
segments are differed in terms of consumer’s activities,
interests and opinions and values for the purchase of
items from the retail outlets. It is an up hill task to serve
today’s pragmatic and enigmatic consumer because
consumer is looking for huge variety of quality products,
offering self-service, pleasant ambience, and store
services like assistance, baggage, promotions, credit
facilities etc. Hence it is imperative to bear in mind that
consumer behaviour and shopping habits with regard to
demo–psychographic duo conspicuously influence the
choice of food and grocery retail outlets.
LIMITATIONS AND FUTURE STUDY
Although most of the objectives of the study were fully
met, a few limitations were identified in the course of this
study. First, the study focuses on only the nascent
organised retail outlets in Hyderabad. Such focus could
limit the generalisations of the findings to the entire
organised retail outlets in India. Second, the sample size
of respondents, although 200 was achieved in this study,
which is considered as an acceptable size, nevertheless, it
is felt that for a consumer research as this, using a larger
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30 Prasad and Reddy
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sample size will be preferable and more representative of
the whole population of retail customers in Hyderabad or
elsewhere. Third, the study exclusively confined to
demographic and psychographic variables of consumers.
This limitation creates an opportunity for future research
study in this area to include socio-economic and
technological and more psychographic statements. Fourth,
the study exclusively concentrates upon convenience
stores, supermarkets and hypermarkets. This limitation
creates an opportunity for future research studies in other
than these stores e.g. departmental stores, discount stores
and specialty stores. These future studies should improve
the sample size in order to get greater validity and
generalisation of the inferences to the whole population.
CONCLUSION
This empirical study investigated the influence of
demographic and psychographic dynamics of consumers
on organised food and grocery retail outlets. Consumers
are now into food and grocery shopping in a more involved
manner than ever before. The organised food and grocery
retails outlet are the preferred kind of stores by consumers.
The perceptions and opinions of consumers vary while
buying items in different types of retail outlets. Working
women and housewives are more likely to do shopping in
supermarkets. Consumer’s income levels play a pivotal
role in the determination of demand for type of modern
format. The results show that consumers are more sensible
towards optimization of time and money while shopping.
The results also prove that most of the consumers are price
and quality association conscious. Hence, it is concluded
and suggested that organised retailers should exercise
caution in serving the utmost needs, wants and preferences
of potential and existing consumers in order to acquire
and retain.
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