RESEARCH PROJECT REPORT CHAPTER 1 INTRODUCTION India started its Retail Journey since ancient time. In Ancient India there was a concept of weekly HAAT, where all the buyers and sellers gather in a big market for bartering. It takes a pretty long times to and step to shape the modern retail. In between these two concepts (i.e. between ancient retail concept and the modern one there exist modern Grocery/ mom and pop shops or Baniya ki Dukan. Still it is predominating in India So the Indian retail industry is divided into two sectors- organized and unorganized. The Indian retail industry is now beginning to evolve transformation that has swept other large economies. Retailing presently contributes about 10 per cent of India’s gross domestic product (GDP) and 6-7 per cent of employment. With some 15 million retail outlets, India has the highest retail density in the world. But only 4 per cent of these SUMIT SAXENA 1
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RESEARCH PROJECT REPORT
CHAPTER 1
INTRODUCTION India started its Retail Journey since ancient time. In Ancient India there was a concept
of weekly HAAT, where all the buyers and sellers gather in a big market for bartering. It
takes a pretty long times to and step to shape the modern retail. In between these two
concepts (i.e. between ancient retail concept and the modern one there exist modern
Grocery/ mom and pop shops or Baniya ki Dukan. Still it is predominating in India So
the Indian retail industry is divided into two sectors- organized and unorganized. The
Indian retail industry is now beginning to evolve transformation that has swept other
large economies.
Retailing presently contributes about 10 per cent of India’s gross domestic product (GDP)
and 6-7 per cent of employment. With some 15 million retail outlets, India has the
highest retail density in the world. But only 4 per cent of these outlets are more than 500
sq ft in size and almost all are family owned shops and establishments. The value of
organized retail is expected to grow 2.8 times in the coming four years to Rs 1,000 billion
industries, attracting many global retail chains like Wal-Mart, Tesco, and Carrefour.
Foreign direct investment (FDI) up to 51 per cent in single brand retail was permitted last
year and multi-brand retail is expected to open up to FDI soon. Meanwhile, Indian retail
chains like Reliance Retail, Croma, Aditya Birla group, S Kumars, Shoppers’ Stop,
Westside and Trinethra have all been consolidating their realty, brands, market shares and
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locations. However, to-date there is very little understanding of what the impact of
organised retail will be on the so-called unorganised retail sector and the agricultural
sector (the country’s two largest sources of employment).
The Indian retail market is currently estimated at USD 396 billion. Food segment
contributes largest part of total value of retail market, followed by fashion, leisure &
entertainment and fashion accessories. India's organized retail space is evolving fast and
achieves penetration level of 7 %, which signifies huge potential growth. Indian luxury
market currently stands at USD 3.5billion and expected to grow to make India the
twelfth- largest luxury retail market in the world by 2015
Concerns for small business establishments in townships stems from the fact that they
will now have to compete with national retail chains such as aditya birla, Big Bazar etc
which have large turnover. Small Township retailers are the source of survival for most
township dwellers as they contribute to income generation and employment in the
township. If these businesses are compelled to close down due to increased competition
from large retailers, many jobs would be lost and this has huge implications to business
and township communities. There may be business surviving on or thriving despite the
threat of new entrants in the market.
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ABOUT RETAIL INDUSTRY IN INDIA
Retail is India's largest industry. It accounts for over 10 per cent of the India's GDP and
around 8 per cent of the employment. Retail sector is one of India's fastest growing
sectors with a 5 per cent compounded annual growth rate. India's huge middle class base
and its untapped retail industry are key attractions for global retail giants planning to
enter newer markets. Driven by changing lifestyles, strong income growth and favourable
demographic patterns, Indian retail is expected to grow 25 per cent annually. It is
expected that retail in India could be worth US$ 175-200 billion by 2016.
The organized retail industry in India had not evolved till the early 1990s. Until then, the
industry was dominated by the un-organized sector. It was a seller’s market, with a
limited number of brands, and little choice available to customers. Lack of trained
manpower, tax laws and government regulations all discouraged the growth of organized
retailing in India during that period. Lack of consumer awareness and restrictions over
entry of foreign players into the sector also contributed to the delay in the growth of
organized retailing.
A number of factors are driving India's retail market. These include: increase in the
young working population, hefty pay-packets, nuclear families in urban areas, increasing
working women population, increase in disposable income and customer aspiration,
increase in expenditure for luxury items, and low share of organized retailing. India's
retail boom is manifested in sprawling shopping centres, multiplex- malls and huge
complexes that offer shopping, entertainment and food all under one roof. But there is a
flip side to the boom in the retail sector. It is feared that the entry of global business
giants into organized retail would make redundant the neighbourhood Karana stores
resulting in dislocation in traditional economic structure. Also, the growth path for
organized retail in India is not hurdle free. The taxation system still favours small retail
business. With the intrinsic complexities of retailing such as rapid price changes, constant
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threat of product obsolescence and low margins there is always a threat that the venture
may turn out to be a loss making one.
A perfect business model for retail is still in evolutionary stage. Procurement is very vital
cog in the retail wheel. The retailer has to fight issues like fragmented sourcing,
unpredictable availability, unsorted food provisions and daily fluctuating prices as against
consumer expectations of round-the-year steady prices, sorted and cleaned food and fresh
stock at all times.
Trained human resource for retail is another big challenge. The talent base is limited and
with the entry of big giants there is a cat fight among them to retain this talent. This has
resulted in big salary hikes at the level of upper and middle management and thereby
eroding the profit margin of the business. All the companies have laid out ambitious
expansion plans for themselves and they may be hampered due lack of requisite skilled
manpower.
But retail offers tremendous for the growth of Indian economy. If all the above
challenges are tackled prudently there is a great potential that retail may offer
employment opportunities to millions living in small town and cities and in the process
distributing the benefits of economic boom and resulting in equitable growth.
Table Number – 1.1
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PRESENT INDIAN RETAIL SCENARIO
The retail industry is divided into organized and unorganized sectors. Over 12 million
outlets operate in the country and only 4% of them being larger than 500 sq ft (46m²) in
size.
Organized retailing refers to trading activities undertaken by licensed retailers, that is,
those who are registered for sales tax, income tax, etc. These include the corporate-
backed hypermarkets and retail chains, and also the privately owned large retail
businesses.
Unorganized retailing, on the other hand, refers to the traditional formats of low-cost
retailing, for example, the local kirana shops, owner manned general stores, paan/beedi
shops, convenience stores, hand cart and pavement vendors, etc.
Unorganized market: Rs. 583,000 cores
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Organized market: Rs.5, 000 cores
5X growth in organized retailing between 2000-2005
Over 4,000 new modern Outlets in the last 3 years
Over 5,000,000 sq. ft. of mall space under development
The top 3 modern retailers control over 750,000 sq. ft. of retail space
Over 400,000 shoppers walk through their doors every week
47 global fortune companies & 25 of Asia's top 200 companies are retailers.
Growth in organized retailing on par with expectations and projections of the last 5
Years: on course to touch Rs. 35,000 corers (US$ 7 Billion) or more by 2005-06The
growth factors of the retail sector of Indian economy:
Increase in per capita income which in turn increases the household consumption
Demographical changes and improvements in the standard of living
Change in patterns of consumption and availability of low-cost consumer credit
Improvements in infrastructure and enhanced availability of retail space Entry to
various sources of financing.
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EVOLUTION AND TRENDS IN ORGANIZED RETAILING FORMATS AND RETAIL OUTLETS
Historical Indian retail market consisted of weekly markets, village fairs and mela’s and
the 19th century gave birth to the retail outlets which took the form of convenience stores,
Mom and Pop stores/ kirana stores. This helped the consumers on to stick to a particular
store for their day to day requirements and also avail the credit purchasing facility. And
in the 1980’s people have seen the new formats like supermarket, departmental stores and
discount stores entering into the Indian retail space. In less than a decade hypermarkets
have gained all the applause of the retail market and stood above all the other formats by
bringing in the concept of “one stop shopping.” This stood as an opening door for the
new generation of the retail industry. And very soon the malls became the trend setters in
the new millennium.
This has coined the term of ‘shoppertainment’ (shopping and entertainment) which can
be attributed to the changing life styles of the people.
Hypermarket: It is the largest format in Indian retail so far is a one stop shop for the
modern Indian shopper.
Merchandise: food grocery to clothing to spots goods to books to stationery.
Space occupied: 50000 Square feet and above.
SKUs: 20000-30000.
Example: PETER ENGLAND retail’s Big Bazaar, RPG’s Spencer’s (Giant), Vishal mega
mart.
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Supermarket: A subdued version of a hypermarket.
Merchandise: Almost similar to that of a hypermarket but in relatively smaller
proposition.
Space occupied: 5000 Sq. ft. or more.
SKUs: Around 10000.
Example: Nilgiris, Apna Bazaar, Trinethra/more.
Convenience store: A subdued version of a supermarket.
Merchandise: Groceries are predominantly sold.
Space occupied: Around 500 Sq. ft. to 3000 Sq. ft.
Example: stores located at the corners of the streets, Reliance Retail’s fresh.
Department store: A retail establishment which specializes in selling a wide range of
products without a single prominent merchandise line and is usually a part of a retail
chain.
Merchandise: Apparel, household accessories, cosmetics, gifts etc.
Space occupied: Around 10000 Sq. ft. – 30000 Sq. ft.
Example: Landmark Group’s LifeStyle, Trent India Ltd.’s Westside.
Discount store: Standard merchandise sold at lower prices with lower margins and
higher volumes.
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Merchandise: A variety of perishable/ non perishable goods.
Stacking of products- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied.
Visually attractive Store- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied.
Ambiance From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied.-
Spacious shop floor- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied.
Parking- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied.
Location- From unorganized sector customer highly satisfied and satisfied. But from organized sector customers are dissatisfied and highly dissatisfied.
Flexibility in payment mode- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied.
Convenient billing counters- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied .
Operating time- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied
Cleanliness of store- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied
Sincere to solve customer problem- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied
Individual attention- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied
Willingly handle exchanges- From unorganized sector customer highly satisfied and satisfied. But from organized sector customers are dissatisfied and highly dissatisfied.
Staff presentable- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied
Price of products From unorganized sector customer highly satisfied and satisfied. But from organized sector customers are dissatisfied and highly dissatisfied.
Promotion offers- From Organized sector customer highly satisfied and satisfied. But from unorganized sector customers are dissatisfied and highly dissatisfied
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CHAPTER 5
FINDINGS, RECOMMENDATION AND
LIMITATIONS
FINDINGS
1. In this study it is found that 63% customers prefer to purchase from unorganized
retail outlets as compare to organized retail outlets.
2. During the study it comes to know that customers are satisfied with extra facility
provide by organized retail outlets.
3. In this study it is found that organized retail outlets provide better quality, product
range as compare to unorganized retail outlets.
4. In this study it is observed that in future the market share of unorganized retail will
reduce 60% - 80%, because Customers shifting from unorganized retail outlets to
organized retail outlets.
5. During study it is observed that these organized retail outlets attracting the middle
& upper class customers, the lower class person still prefer to purchase from the
local Kirana Stores.
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6. The findings of the study conclude that 80% of the customers are youngsters aged
between 16-25 and among them more males from the urban sector visit mega
marts.
7. From the utility point of view, A large number of customers were more oriented
towards safety and parking facilities.
8. About 35% - 40% of peoples are least bothered about guarantee and warrantee as
compared to quality and discount that they prefer more.
SUGGESTIONS
1. The organized retail outlets should improve the willingly exchanges provide to
customers.
2. The organized retail outlets should provide the free home delivery facility.
3. The unorganized retail outlets should increase the no. of billing counters in their
outlets.
4. The organized retail outlets should also provide the credit facility to the lower
class customers so that they can increase their market share.
5. The organized retail outlets should also provide the mobile van facility in the areas
which are far away from the stores.
6. To attract the rural sector customers, mega marts may extend their advertisements
offering special sale promotion schemes to the rural areas.
7. The customers are dissatisfied with the safety and parking facilities at the
unorganized retail. Therefore, they should concentrate on developing these aspects 51
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properly, besides extending more cash discount and free gifts schemes to attract
the customers at a higher level.
8. The unorganized retail store should focus on quality, discount and attractive
display of products, as these are very important factors considered by the
customers while making purchase decisions.
LIMITATION
Due to the constraints of time, the study was confined to BAREILLY city.
The sample was taken on the basis of convenience; therefore the shortcomings of
the convenience sampling may also be present in this study.
The sample size chosen for the purpose was only indicative and not exhaustive
owing to time constraints.
There were some inherent limitations as far as collection of data is concerned. The
respondents replied may be biased in favour of their centres.
CONCLUSION
The crux of the study is that most of the customers prefer to purchase from unorganized
retail outlets as compare to organized outlets. Also its found that most of the respondents
are satisfied with the quality, price and product range of the goods provided by
unorganized retail outlets. In this study it is found that customers want to spend more at
organized retail outlets in comparison to other local Kirana stores. During the study its
also found that customers were happy from the services provided by organized outlets.
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ANNEXURE
BIBLIOGRAPHY
BOOKS AUTHORS
Marketing Management : Philip Kotler
Marketing Research : D. D. Sharma
Research Methodology : C. R. Kothari
Websites
www.vishalmegamart.net
www.easyday.in
www.wikipedia.com
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Questionnaire
A Study on Customer Satisfaction towards the organized and unorganized retail