MEDI-CAPS INSTITUTE OF TECHNOLOGY AND

MANAGEMENT

MINOR PROJECT ON

Study of changing customer behavior from

Unorganized to organized retailing

SUBMITTED TO: SUBMITTED BY:

DR. Rajendra Jain Swapnil Sarethe

Seepie Jain
MBA-3rd sem
Seaction-X
 BONA FIDE CERTIFICATE

This is to certify that project report titled “Study of customer preference from unorganised
to organised retailing ” Submitted by Swapnil Sarethe and Seepie Jain in partial fulfillment
of requirements MBA in finance, embodies the work done by them under my supervision.

Signature of Guide Signature of Director

 Table of Content
SERIAL No. TITLE
CHAPTER-1
1. Introduction to Indian Retail Industry
CHAPTER-2
2. Classification
CHAPTER-3
3. Consumer Buying Behavior
CHAPTER- 4
4. Organized v/s Unorganized Retail
CHAPTER- 5
5. Selection of the topic
CHAPTER-6
6. Purpose and Significance of the study
CHAPTER -7
7. Literature Review
CHAPTER -8
8. Sampling design
CHAPTER-9
9. Data analysis & Interpretation
CHAPTER-10
10. Finding

CHAPTER-11
11 Limitation
CHAPTER-12
12 Conclusion
CHAPTER- 13
13 Appendices
CHAPTER-14
14 Bibliography
1. Introduction to Indian retail industry:

.
RETAILING Means “Re-tailing” to the customers so that they comeback.
Retailing consists of all activities involved in selling goods and services to consumers for
their personal, family, or household use. It covers sales of goods ranging from automobiles to
apparel and food products, and services ranging from hair cutting to air travel and computer
education. Sales of goods to intermediaries who resell to retailers or sales to manufacturers
are not considered a retail activity
Retailing in India has remained in the unorganized sector and
largely untouched by corporate. The first decade of modern retail in India has been
characterized by a shift from traditional channels to new formats including department stores,
hypermarkets, supermarkets and specialty stores across a range of categories.
Modern retail formats have mushroomed in metros and mini-metros, in the last few years
modern retail has also established its presence in the second rung cities. Thus, exposing the
residents of these cities to shopping options, they have never experienced before. It has been
forecasted that the share of modern retail will increase from 2 per cent currently, to about 15-
20 per cent over the next decade. To begin with, retailers today will have to support large
retail infrastructure in terms of Malls and Superstores that are being created
1.1 Traditional Convenience Stores:
Traditional convenience stores are too well established in India than to be wiped out and
besides there is uniqueness in the traditional items that represent the sub-continent. The retail
stores in India are essentially dominated by the unorganized sector or traditional stores. Infact
the traditional stores have taken up 98 percent of the Indian retail market.
The traditional family run convenience stores can take pride in the fact that the Kirana is the
most common outlet forms for the consumers. The tough competition for convenience stores
are coming from organized retail stores dealing in food items, like:
• Apna Bazaar
• Canteen stores
• Food World
• Subhiksha
• Food Bazaar
Convenience Stores: 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 is that they give
importance to:
• Personal touch
• Facilities of credit

• Quick delivery.

The future of such stores as they face competition from organized sector, would depend on
the following particulars:

• Place and capacity

• Customer service and satisfaction

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

1.2 Indian organized retail market:

Indian organized retail market is growing at a fast pace due to the boom in the India retail
industry. In 2005, the retail industry in India amounted to Rs 10,000 billion accounting for
about 10% to the country's GDP. The organized retail market in India out of this total market
accounted for Rs 350 billion which is about 3.5% of the total revenues.
Retail market in the Indian organized sector is expected to cross Rs 1000 billion by 2010.
Traditionally the retail industry in India was largely unorganized, comprising of drug stores,
medium, and small grocery stores. Most of the organized retailing in India have started
recently and is concentrating mainly in metropolitan cities. The growth in the Indian
organized retail market is mainly due to the change in the consumers behavior..

Retail market in the organized sector in India is growing can be seen from the fact that 1500
supermarkets, 325 departmental stores, and 300 new malls are being built. Many Indian
companies are entering the Indian retail market which is giving Indian organized retail
market a boost. One such company is the Reliance Industries Limited. It plans to invest US$
6 billion in the Indian retail market by opening 1000 hypermarkets and 1500 supermarkets.

Classifying Indian retail:

(A)Modern Format retailers
1) Supermarkets (Foodworld)
2) Hypermarkets (Big Bazaar)
3) Department Stores (shoppers stop)
4) Specialty Chains (Ikea)
5) Company Owned Company Operated (BP)
(B)Traditional Format Retailers:
1) Kiranas: Traditional Mom and Pop Stores
2) Kiosks
3) Street Markets
4) Exclusive /Multiple Brand Outlets
(C)Large Indian retailers
1. Hypermarket
1) Big Bazaar
2) Giants
4) Star
II Department store
1) Lifestyle
2) Pantaloons
3) Pyramids
III Entertainment
1) Fame Adlabs
2) Fun Republic
4) PVR

2. Classification of Indian retail sector:

a) FOOD RETAILERS
There are large number and variety of retailers in the food-retailing sector Traditional types
of retailers, who operate small single-outlet businesses mainly using family labour, dominate
this sector In comparison, super markets account for a small proportion of food sales in India,
However the growth rate of super market sales has being significant in recent years because
greater numbers of higher income Indians prefer to shop at super markets due to higher
standards of hygiene and attractive ambience.

b) HEALTH & BEAUTY PRODUCTS

With growth in income levels, Indians have started spending more on health and beauty
products .Here also small, single-outlet retailers dominate the market. Although these retail
chains account for only a small share of the total market their business is expected to grow
significantly in the future due to the growing quality consciousness of buyers for these
product

E) DURABLE GOODS
The Indian durable goods sector has seen the entry of a large number of foreign companies
during the post liberalization period. A greater variety of consumer electronic items and
household appliances became available to the Indian customer. Intense competition among
companies to sell their brands provided a strong impetus to the growth for retailers doing
business in this sector.

F) LEISURE & PERSONAL GOODS

Increasing household incomes due to better economic opportunities have encouraged
consumer expenditure on leisure and personal goods in the country. There are specialized
retailers for each category of products (books, music products, etc.) in this sector. Another
prominent feature of this sector is popularity of franchising agreements between established
manufacturers and retailers.
3. Consumer behavior and retailing decisions:

Consumer behavior refers to the mental and emotional process and the observable behavior
of consumers during searching, purchasing and post consumption of a product or service.

Factors Affecting Consumer Buying Behavior

Consumer buying behavior is influenced by the major three factors:

• Social Factors
• Psychological Factors
• Personal Factors.

A. Social Factors
Social factors refer to forces that other people exert and which affect consumers’ purchase
behavior. These social factors can include culture and subculture, roles and family, social
class and reference groups.
B. Psychological Factors
These are internal to an individual and generate forces within that influence her/his purchase
behavior. The major forces include motives, perception, learning, attitude and personality.

C. Personal Factors These include those aspects that are unique to a person and influence
purchase behavior. These factors include demographic factors, lifestyle, and situational
factors.
Consumer decision-making process generally involves five stages:

Information Search

Problem Recognition

Purchase Action

Alternative Evaluation

Post purchase Actions

3.1 Retail outlet selection and brand selection:

There are three fundamental patterns, which a consumer can follow and they
could be:
(I) Brand first, retail outlet second
(ii) Retail outlet first, brand second
(iii) Brand and retail outlet simultaneously.
A consumer wanting to buy a car may collect information on brands and purchase it from a
retail outlet based on his perception of price offered or after sales service provided by the
outlet (typically, search for information on brands is followed by retail outlet selection in
durables). In certain product categories, especially where `category killers' exist, consumers
may think of the retail outlet initially and then the brands (television, refrigerator and audio
products retailed through outlets like Vivek and Co. in the South, could be an example).
One more dimension may be to compare brands in the evoked set at retail outlets which also
exist in an evoked set of their own. This is highly possible, especially in the Indian context
where dealers develop a social relationship with consumers, especially in semi-urban and
rural areas. Primary research could be used to discover the specific sequence involved in a
situation of this kind. A `brand first' dimension may need feature-based advertising and a
`retail outlet first' dimension may require a set of point-of-purchase (POP) materials and
special training to sales personnel to recognize the needs of consumers.
Brand first and outlet second: The brand was probably thought of by the consumers
because-
(i) the consumers may not have developed a relationship with any retailer which is strong
enough to get into the `evoked retail set' or
(ii) the brand has got into the evoked set because of advertising or positive word of mouth.
Local advertising with the mention of brand names which have already got into the evoked
set would enable consumers to be `pulled' to the outlet. Primary research may be required to
identify the brands in the evoked set.
4. Organized vs Unorganized Retail:

In the developed economies, organized retail is in the range of 75-80 per cent of total retail,
whereas in developing economies, the unorganized sector dominates the retail business. The
share of organized retail varies widely from just one per cent in Pakistan and 4 per cent in
India to 36 per cent in Brazil and 55 per cent in Malaysia (Table 2.2). Modern retail formats,
such as hypermarkets, superstores, supermarkets, discount and convenience stores are widely
present in the developed world, whereas such forms of retail outlets have only just begun to
spread to developing countries in recent years. In developing countries, the retailing business
continues to be dominated by family-run neighbourhood shops and open markets. As a
consequence, wholesalers and distributors who carry products from industrial suppliers and
agricultural producers to the independent family-owned shops and open markets remain a
critical part of the supply chain in these countries.
Table 2.2: Share of Organized Retail in Selected Countries, 2006
CountryTotal Retail Sales (US$ bn) Share of Organized Retail (%)
USA 2,983 85
Japan 1,182 66
China 785 20
United Kingdom 475 80
France 436 80
Germany 421 80
India 322 4
Source: Planet Retail and Technopak Advisers Pvt.
5. Selection of Topic

This research project “Study on changing consumer preferences towards Organised

retailing from un-organised retailing ” is an attempt to find out the change in consumer’s
purchasing behavior, which is shifting towards organized retailing like malls, shopping
complexes etc from traditional kirana stores.
Why indore:- The malls and shopping complexes are building here at a high rate and a large
number of population shifted towards this format of retailing so for my project indore is
appropriate place to go for the research

6. Purpose and Significance of the study:

Organized retail has started to spread its roots in the Indian market since past one decade and
is gradually making mark among all sections of the society. This project report tries to
explore the way organized retail has dramatically changed not only the Indian traditional
retailing structure by also the consumption behavior. The consumption behavior was
examined with the help of a structured questionnaire. The results show that, for consumers,
the shopping mall or variant of organized retail format is the preferred type of retail store, due
to convenience and variety.
The Indian market has seen vast changes in political, economical and social environment,
which has a great impact on consumption. With the Indian as well as international corporate
entering into the Indian retail scenario the market has been divided between the traditional
and the organized sector. The Indian retail scenario is presently facing the similar situations
as the mom and pop stores in the developing nations faced at the emergence big box retailers
This study will contributes to the understanding that consumers and retailers in most cases
have different perceptions in relation to store image and shopping habits, justifying the need
for consumer marketing research, which is important in helping retailers, implement in a real
marketing orientation. The study will examines the choice of format the consumer has when
he or she decides to buy a particular product and also describes the development of organized
retail in the future, focusing on aspects with potential effect on purchasing behavior among
the consumers. The focus is on consumer expectations.
7.Literature Review:

Mathew Joseph and Manisha Gupta_September 2008: The Indian retail sector is booming
and modernizing rapidly in line with India’s economic growth. In this review the author
talked about the impact of organized retailing on traditional retailing. With the increase in
number of various formats for shopping like malls, departmental stores, hypermarkets etc the
Indian consumer’s preferences are changing towards and that’s the reason foreign investors
like the king of retail Wal-Mart also came into the Indian retail ground in collaboration with
Bharti. There is a huge untapped market is present in India right now which contains a
number of opportunities for retailers.Sen-2000: Store Image and Consumer Shopping Habits:
Indian Context: In India, some empirical studies provide important information about
consumer behavior and its responses to the development of organized retail. Economical and
social changes are major contributors for a growing fragmentation of consumers into multiple
segments with different values and buying priorities. Consumers have become more
pragmatic, educated and demanding, learning how to manage money and time more
efficiently. The focus on low prices was gradually replaced by a value for money perspective.
The study developed by ETIG (Economic Times Intelligence Group, 2002) confirms these
tendencies. Concerning food, the most important attribute mentioned was quality, followed
by price. Indian consumer has different reasons for preferring different store formats, either
modern or traditional; Sen (2000) confirms this in the study undertaken in Indian context. He
confirms that in the case of hypermarkets, the main motives for preferences, in decreasing
order are low prices, the possibility of buying everything in the same place and the general
appearance of the store
Radhakrishnan, 2003: Traditional Retailers Perceptions about Organized Retail
As already mentioned, organized retail has deeply changed the Indian commercial structure.
However, it is not exclusively responsible, as other changes (economical, social and cultural
ones) have occurred simultaneously. Concerning the more direct effects of organized retail on
different types of commerce, it is possible to verify that the major impact is felt on traditional
retail and, in particular, on the food sector. The impact of organized retail is also significant
on other types of retail, namely toys, stationery goods and household appliances; moreover, it
is probable that competition gets more intense in other sectors, such as clothing etc;

8. Sampling Design:

1. Sampling unit Respondents of (few malls)

2. Size of sample 100 respondents
3. Sample Method Random Sampling
4. Types of questionnaire Close ended

8.1 Type of Data:

Data type collected for analysis is PRIMARY i.e. data has been observed and recorded by the
researchers for the first time to their knowledge. Data collected through journals, newspapers
& internet is SECONDARY type.

8.2 Method of data collection:

This study is a research which utilizes interrogation and observation method for data
collection. Secondary data was obtained from intensive analysis & observation. The primary
data are those, which are collected afresh and for the first time, and thus happen to be original
in characters. This is a simple survey conducted by filling in questionnaire from the people
who visit malls.

8.3 Collection of the Primary data: As this study is of descriptive type, the primary data has
been collected through Questionnaire.
9. Analysis of Data:

Data collected through questionnaire is being processed .This processed data is:
a. Age wise distribution:
A) <20 [ 12 RESPONDENTS ]
B) 20-29 [ 45 RESPONDENTS ]
C) 30-39 [25 RESPONDENTS ]
D) >40 [18 RESPONDENTS]

• On the basis of above respondents the figures shows that maximum respondents i.e.
45 out of 100 are young age people. It means maximum no of customers belongs to
young age group.

b. Gender wise distribution:

A) MALE [ 58 RESPONDENTS ]
B) FEMALE [ 42 RESPONDENTS ]

• On the basis of above respondents the figures shows that maximum respondents i.e.
58 out of 100 are males. It means maximum no of customers are male in malls due to
family responsibility.

1) Which type of place do you visit frequently for your shopping needs?
a) Supermarket [ 80 Respondents]
b) Wholesaler [ 8 Respondents]
 c) Local Stores [ 12 Respondents]

• On the basis of above respondents the figures shows that maximum respondents i.e.
80 out of 100 are agree that they frequently visit shopping mall for their shopping
needs. It means maximum no of customer are preferred Shopping Malls for
purchasing.

2) From where would you prefer to buy products?

a) Single brand store [ 24 Respondents]
b) Multi brand store [ 60 Respondents]
c) Factory outlets [ 4 Respondents]
d) Local Big Retail Store [ 12 Respondents]

• i.e. 60 out of 100 are preferred multi branded store for shopping. It means maximum
no of customers are time conscious and desire for many brand under one roof.

3) Which one from malls/ Local Stores (kirana store) is more convenient for all your
shopping needs?
a) Malls [ 72 Respondents]
b) Local stores [ 28 Respondents]

• i.e. 72 out of 100 are preferred shopping in malls for all their shopping needs. It
means maximum no of customers are feels good in shopping for their needs in malls
because they can get everything from there under one roof.

4) What are the prime factors for shopping in malls?

a) Variety in product.
b) Serviceability
c) Discounts
d) Mode of payment
e) All [ 100 Respondents]
 • i.e. 100 out of 100 are preferred shopping in malls because of the various factors
which make the whole shopping experience good.

5) What are the prime factors for shopping in kirana stores?

a) Emergency buying [ 65 Respondants]
b) For grocery items only [35 Respondants]
c) Discounts
d) Serviceability

• i.e. People preferred shopping from kirana stores just when they need something
urgent and grocery items only. It shows the limited shopping experience one customer
have with these stores.

6) What influences your buying selections?

a) Availability of range b) Reasonable price
c) Availability of size e) Customer service
f) Brand name
1st OPTION 30 20 30 8 10
2nd OPTION 22 32 25 10 13
3rd OPTION 20 18 15 14 33
4th OPTION 16 17 19 32 16
5th OPTION 12 13 11 36 28

• On the basis of above respondents the figures shows that maximum respondents are
attracted towards the Store due to this ranking-
CUSTOMER SERVICE, BRAND, PRICE, RANGE, SIZE
It means maximum no of customers are prefer to the Malls for customer service.

7) What do you look for in a product during your purchase?

a) Price [60 Respondents]
b) Brand Name [ 12 Respondents]
c) Customer Service [ 16 Respondents]
d) Variety available [12 Respondents]

• i.e. 60 out of 100 preferred price during their purchasing. It means maximum no of
customers are price conscious so maximum customers belongs to middle class.

8) When do you prefer to shop Most in Store?

a) During Sale [ 18 Respondents]
b) During Fresh season stock [54 Respondents]
c) During Discount [ 24 Respondents]
d) When required [4 Respondents]

• On the basis of above respondents the figures shows that maximum respondents i.e.
60 out of 100 are prefer shopping during fresh season stock. It means maximum no of
customers did not compromise quality with discount and offers.

9) How frequently you visit the Store (wherever you go for the shopping)?
a) <1 month [ 60 Respondents]
b) 1-3 month [ 28 Respondents]
c) 1-6 month [ 4 Respondents]
d) 1 year [ 8 Respondents]

• On the basis of above respondents the figures shows that maximum respondents i.e.
60 out of 100 are visited the store with in one month. It means maximum no of
customers are visiting the store monthly.
10) What more fascinates you at shopping in malls?
a) Membership Card [ 28 Respondents]
b) Discount Mailers [ 20 Respondents]
c) Parking Facility [ 30 Respondents] d) Lucky draw offer [ 22
Respondents]

• On the basis of above respondents the figures shows that there are almost same
numbers of respondents agrees for all the facilities provided by malls. It means every
respondent is inclined towards the facilities provided by malls.
10. Findings

• Customer’s preferences for grocery shopping are gradually shifting from local kirana
stores to organized convenience stores.
• Age is one of the most important factors responsible for the changing preference of
customers.
• Payment through credit cards is increasing purchases from convenience store.
• Brand
• Choice of customers is changing and this is also influencing shift from kirana to
convenience store. .

• It means maximum no of customers having nucleur family.

• Maximum no of customers are price conscious so maximum customers belongs to

middle class.
• Maximum no of customers did not compromise quality with discount and of
•
 11. Limitation

Every report has its pros and cons so mine also have some limitations.
They can be pointed as:
• Sample size restricted to 100 only which was very less according total population.

• The responses given by respondents were not always accurate because the
respondents gave the response according to their understanding.

• Survey is a time consuming process but the time to collect the data for research was
very less.

• Sometimes the respondents are not willing to fill the questionnaire and hence the
resultant may not be correct.
Conclusion

The past 4-5 years have seen increasing activity in retailing. And, various business houses
have already planned for few investments in the coming 2-3
years. And though the retailers will have to face increasingly demanding customers, and
intensely competitive rivals, more investments will keep flow in. And the share of organized
sector will grow rapidly. retailing in India is surely poised for a takeoff and will provide
many opportunities both to existing players as well as new entrants
New formats like super markets and large discount and department stores have started
influencing the traditional looks of bookstores, furnishing stores and chemist shops. Increase
in literacy, exposure to media, greater availability and penetration of a variety of consumer
goods into the interiors of the country, have all resulted in narrowing down the spending
differences between the consumers of larger metros and those of smaller towns. Lastly I want
to conclude my project in some points-

 The customers are attracting towards shopping malls & retail outlets.
 The shopping malls & retail outlets are targeting to middle class customers because
the purchasing power of this class is rapidly growing as well as the class is also
growing.
 The young generation is fashion & show-off conscious so retail outlets are mainly
focused on them.
 Most of the family wants to purchase from big showrooms and malls because there
are no bargaining system so the have a trust that there is no cheating
 14. Bibliography:

Goswami. P and Mishra. M, 2009, Would Indian consumers move from kirana store to
organized Retailers when shopping for groceries, Asia Pacific Journal of Marketing and
Logistics, Vol. 20, No. 1

ICRIER journal paper, September 2008

http://ssrn.com/abstract=994238

BOOKS:-
Marketing Management. ----Kotler & Keller
Marketing Management in Indian Perspective
----V. S. Ramaswamy & S. Namakumari
Retail management ---Levy & Weitzs

WEBSITES:-
www.emraldinsight/1355-5855.htm
www.Fibre2fashion.com/industry-article
www.tataretail.com
www.retailindia.net
www.retailyatra.com
www.retailbiz.com
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