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SYNOPSIS
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CHAPTER I: INTRODUCTION
1.1 A Brief History of India
India is known for its ancient civilization and culture. The ancient history of India is very
vast and significant. It laid the foundation of a civilization that is flourishing till today.
The history of ancient India dates back to the time when humans set foot in the sub-
continent. Food in ancient India was cultivated in the fertile river valleys. Rice was the
staple food that was eaten with cooked lentils, vegetables and meat. Wheat was used to
make flat breads known as "Chapatti". Many spices were cultivated in India and were
used in cooking for aroma and flavor. India flourished in the cultivation of spices and
many of them were later exported to foreign lands. There was a time when India was the
master of the foreign trade of Europe, Asia and Africa. The matchless fertility of the
Indian soil and numberless products of Indian arts and crafts caused enormous
development of commerce (Prakash Chandra Prasad,2003). It was during the British rule
that India encountered a huge drain of wealth. David Clingingsmith et al. (2005) have
noted that ―between 1772 and 1815 there was a huge net financial transfer from India to
Britain in the form of Indian goods. “India was a major player in the world export market
for textiles in the early 18th Century, but by the middle of the 19th Century it had lost all
of its export market and much of its domestic market. While India produced about 25
percent of world industrial output in 1750, this figure had fallen to only 2 percent by
1900.‖ When India finally emerged as an independent nation in 1947 it was a deeply
impoverished country, subject to the whims of monsoons and periodic famine. In 1950
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the country accounted for a mere 1.2 percent share of global GDP despite having over 14
percent of the world‘s population. (CIA 2007). 1991 marks the turning point when India
was forced to open itself out to the world. The ―opening‖ was not limited to the economy
but to all other aspects of life, and the process was sped up by the fact that it coincided
with the communications revolution — cable television, mobile telephones, and the
Internet (Worldscibooks.com). Post 1991, economic reforms have led to India
progressing from being the 16th
largest economy in the world in 1990 to the 13th
largest in
2005, surpassing countries such as Australia and Netherlands (McKinsey May 2007).
As India‘s economy has grown, so too has the spending power of its citizens. Real
average household income in India has roughly doubled over the past two decades. Along
with rising incomes have come greater consumption and the emergence of India‘s much
discussed ―new middle class‖ (R.K Shukla, et.al, 2004).
1.2 Retail trade in India
India like Britain is a nation of shopkeepers. With over 12 million retail outlets, India
has one of the highest densities of retail outlets in the world with one retail outlet for
~90 persons. (Pankaj Gupta, 2006). Till the mid 1990s retailing was a low cost
structure, mostly owner-operated, had negligible real estate and labour costs and little
or no taxes to pay. Consumer familiarity that ran from generation to generation was one
big advantage for the traditional retailing sector.
However in the past decade India has witnessed a retail boom. With the entry of modern
retailers over the last few years, the share of organized retail has been growing rapidly to
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reach 5% of the total market. In 2008 retailing accounted for over 10% of the country‘s
GDP and 8% of total employment (FICCI-Ernst & Young, 2007). Further, emerging
markets such as India and China are the final frontier for retail taking the focus away
from saturated Western markets. The Indian retail market was estimated at $350 billion
of which organized retail was estimated at only $8 billion. In other words organized retail
accounted for a mere 3.5% in 2005. In 2008, the share of organized retail was 7.5 per
cent or US$ 30 billion of the total retail market which was estimated to be around $400
billion. India's overall retail sector is expected to rise to US$ 833 billion by 2013 and to
US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent. Also,
organized retail, which is pegged at around US$ 8.14 billion, is expected to grow at a
CAGR of 40 per cent to touch US$ 50 billion by 2011 and US $107 billion by
2013(RNCOS). In other words, organized retail is growing at a faster rate than the overall
industry.
1.3 Factors leading to growth of retail industry
Retailing is seen as an important sector of an economy, both in terms of contribution to
GDP and share in the total employment. According to the 8th Annual Global Retail
Development Index (GRDI) of AT Kearney, in 2007 the retail trade in India had a share
of 8-10% in the GDP (Gross Domestic Product) of the country. In 2009, it rose to 12%.
The sector is labour intensive and contributes significantly to employment.
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The following factors have been identified as being responsible for the growth of the
overall retail industry in India
Growth in Private Final Consumption Expenditure
Steady saving rates
Rising share of organized retail
India seen as an attractive retail destination
1.4 Growth drivers of organized retail in India
Indian retail is witnessing a confluence of several favourable factors such as steady
economic growth, favourable demographics, easy availability of credit, unprecedented
investments in infrastructure creation, and supply of real estate and malls. This, coupled
with low penetration, creates a base for the next big leap of growth for the organized
retailing industry. A combination of the demand and supply side factors is the key driver
of a 42% CAGR in organized retail over FY07-11E. It is also predicted that the organized
retail can achieve sustainable growth due to two major factors: consumer/demand side
and retailer/supply side (Source: ICRIER Retail Report 2008, Angel Research)
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1.4.1 DRIVERS OF ORGANIZED RETAIL IN INDIA – SUPPLY SIDE FACTORS
The following factors have been identified as the drivers of growth of organized retail on
the supply side.
1. Easy Availability of Credit
The Indian consumers are gradually accepting plastic money. Indians spend just 1%
of their total purchases through credit cards, while the Koreans make one-fifth of their
total purchases through credit cards. The world average hovers around 9%. From a
mere 3.2 mn in 2000, the number of credit cards has grown to 22.6 mn in 2007 (Priya
Ayyar et al,2008). This increase boosts retail spend, as it enables impulse buying and
big ticket purchases.
2. Real estate development
Real estate availability is a key factor influencing the choice of the right location. It is
expected that 315 mn sq ft of retail space will come up by FY11E, taking modern
retail to USD 70 bn. In the next 4-5 years, the country will have over 1,000
hypermarkets and 3,000 supermarkets (Priya Ayyar et.al, 2008).
3. Supply chain efficiencies
The existing traditional supply chain in India has a minimum of five intermediaries
between the producer and the end-consumer. Under the modern supply chain channel,
retailers reduce the number of intermediaries to a maximum of three as compared to a
minimum five in the traditional format by extending their presence and control to the
wholesale operations and establishing direct linkages with the producers. Large
players like Reliance Retail, Pantaloon Retail, and Bharti-Walmart are planning large-
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scale investments in the back-end processes. These investments are likely to boost
efficiency for their wholesale cash-n-carry businesses and also allow better margins
in the front-end retail businesses.
4. Government Regulations
In January 2006, the Government of India relaxed FDI (foreign direct investment)
controls on retailing to allow foreign retailers to participate directly in the Indian
market for the first- time by allowing equity ownership in `single brand' retailing.
As of November 2010, multi-brand retail remained closed for foreign investors, 51
per cent FDI was permitted in single-brand retail and there were no restrictions on
inflows in wholesale cash and carry format business.
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1.4.2 DRIVERS OF ORGANIZED RETAIL IN INDIA – DEMAND SIDE
FACTORS
1. Growing young population
The median age of the Indian population is around 25 years, making it one of the
youngest countries in the world compared with the US, China, and Japan with median
ages of 35, 30, and 44 years, respectively1. Favourable demographics and increasing
incomes have changed the face of Indian consumerism. With the increase in
disposable income there has been shift from ―save‖ attitude to ―spend‖ attitude and
since large varieties of products of different brands (domestic as well as international)
are available in malls, Indian consumer is moving from local ―kirana shopping‖ to
―Mall shopping‖. (Ernst & Young Research-2009 for IBEF).
2. Rising Disposable Income
A recent study by the McKinsey Global Institute (MGI) suggests that if India
continues its recent growth, average household incomes will triple over the next two
decades and it will become the world‘s 5th-largest consumer economy by 2025, up
from 12th now. Further the consuming class, defined as population with annual
income higher than INR 90,000, has risen from 20% of total households in 1995-96 to
35% in 2005-06. This is expected to increase to 48% of total households by 2010.
The deprived section, which does not contribute to the consumption, will fall steadily
and decline at a CAGR of 2% over 2006-10E. This upward movement of the
population to the higher income level is one of the key drivers of organized retail (Mc
Kinsey, 2007).
1 Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat,
World Population Prospects: The 2008 Revision, http://esa.un.org/unpp, Thursday, January 14, 2010;
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3. Increasing proportion of working women
The number of working women, as a percentage of the total female population, has
risen from ~12% in 1961 to close to 25% in 2005. This has resulted in growing
disposable income, which in turn, leads to increasing retail spend.
4. Changing consumer preference
Over the years, consumer awareness about quality and price of products/services has
increased due to increasing level of literacy in the country and growing exposure to
the developed nations via satellite television or overseas work experience. Consumers
are more vocal about the quality of products/services that they expect from the
market. This awareness has made the consumer to seek more reliable sources for
purchases, and hence, the logical shift to buying from organized retail chains with
established corporate backgrounds and pronounced accountability.
1.5 Organized retail industry – Food and Grocery
Food and grocery is the second-largest segment of the retail industry and the potential for
new entrants in this segment is enormous, particularly in untapped markets like rural and
semi-rural areas. Growing at the rate of 30%, the Indian food retail is going to be the
major driving force for the retail industry. It is currently estimated at US$152 billion; it
accounts for over half the total retail market in India and is growing at 3.5% to 4%
annually (FICCI-Ernst&Young, 2007). The organized segment of the market, however,
represents just around 1% of the total market; i.e the lowest penetration level amongst all
major categories in the retail sector. This low penetration presents significant opportunity
for companies seeking to enter this retail sector.
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1.6 Need for Research
Given the changing retail scenario in India, it becomes imperative to understand the
consumer behavior in the plethora of choices available. The scope of the research is to
gain an understanding in the changing and evolving mindset of the consumer when it
comes to his shopping behavior. The research is focused on the food and grocery segment
given that this segment is the second largest segment. Today the consumer can walk
through air-conditioned aisles and take his time to select the best brands at the cheapest
prices. But these are many consumers who prefer the old traditional stores due to the trust
factor. Many consumers also believe that food should be as fresh as possible and hence
they prefer the hand-carts for fruits and vegetables. It is the aim of the present research to
study the consumer behavior in Food and Grocery in the context of traditional stores vs
new modern formats.
1.7 Benefit of the study
This study is expected to contribute to the existing body of knowledge on retail patronage
in food and grocery segment. Findings from the study will also be helpful to retailers of
traditional formats and modern formats to identify the hierarchy of attributes that drive
consumers towards a particular format. There is an economic basis for the existence of
different retail formats in the market and an understanding of this phenomenon can help
retail managers and owners of traditional formats in identifying the important attributes
for their format and consequently differentiate themselves to a large enough customer
segment thereby remaining viable.
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1.8 Operational Definitions
Retail
The term retail refers to ―the sale of goods or commodities in small quantities directly to
the consumers.‖ (The American Heritage College Dictionary, 4th ed). Thus a retailer is a
company or an organization that purchases products from individuals or companies with
the intent to resell those goods and services to the ultimate or final, consumer. Retailing
includes activities of marketing and selling products or services to end consumers for
their own household or personal use. The U.S federal government considers a retailer a
business that sells more than 50 percent of its products to the ultimate consumer directly.
Types of Retail
The retail industry is divided into organized and unorganized sectors. In India over 12
million outlets operate in the country and only 4% of them being larger than 500 sq ft (46
m2) 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. Unorganised 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.(
Indian Council of Research in International Economic Relations (ICRIER),2007).
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Chapter 2-Literature Review
Economic development is frequently characterized by greater use of large, multi-line
food retail outlets including supermarkets and hypermarkets (Veeck and Veeck, 2000).
Five types of analysis are found in the literature.
2.1 Satisfaction and store image in the food and grocery retail environment
(Carpenter and Fairhurst,2005) showed that utilitarian shopping benefits and hedonic
shopping benefits had a positive impact on satisfaction. (Eroglu et al. 2005) looked at the
relationship between perceived retail crowding, shopping value and satisfaction and
found that perceived retail crowding had a negative effect on shopping value and, in turn,
satisfaction. If the shopping experience provides qualities that are valued by the
customer, satisfaction with the store is likely to result.
The importance of studying the image is based on the assumption that the store
possessing the most congruent attributes with the image desired by consumer will have
better chance of being selected and patronized (Martineau, 1958, Doyle and Fenwick,
1974-1975, Amirani and Gates, 1993).Therefore, the store image can be used as a
―marketing tool‖ (Engel et al., 1995), or as a ―competition tool‖ providing useful
indications to managers about the most and the least appellative attributes to consumers,
and therefore, the insights for the marketing mix conception.
(Junfei Bai et al,2008) analyzed Chinese consumer behavior across different retail food
store formats and how household demographics affect shopping behavior. The main
findings show that hypermarkets may not bring significant competitive pressures on the
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traditional wet markets or small grocery stores and new convenience stores. The possible
reasons are linked to store characteristics such as location and quality control and may
also be related to potential substitutability and complementarity among various formats,
as well as consumers' demographics and shopping habits.
Tigert and Arnold (1981) reported how, in 14 different retail food store studies,
respondents were asked to ―please tell me all things considered, the single most important
reason you shop at the store where you shop most often‖. The important store
characteristics were found to be locational convenience, low prices, assortment/variety,
courteous helpful staff, high quality merchandise, quality of fresh food, fast checkout/fast
service, cleanliness, and shopping environment. Locational convenience and low prices
were clearly more important attributes than the other attributes.
2.2 Nutritional consciousness due to spread of supermarkets
A second strand of literature examines nutritional impacts of the spread of supermarkets.
(Lau & Lee, 1988) discovered from other developed Asian regions that consumers prefer
to shop daily for fresh food at open markets, given the convenient access to modern
supermarkets.
2.3 Profile of consumers shopping at supermarkets
A third strand of the literature examines the profile of consumers shopping at
supermarkets. The ‗classic‘ hypothesis on this was in Goldman (1974) which argued that
modern retail‘s structure would be amenable mainly or only to rich consumers in
developing countries who could drive to stores, buy big units, store the products, and
afford infrequent large shopping bills. But this early work did not use consumer or retail
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surveys, just anecdotal evidence. Carlson, Kinsey and Nadav (2002) use cluster analysis
to group consumers based on where they obtained their food and found that half were
"Home Cookers'-purchasing 93 percent of their food from grocery stores. Neven et al.
(2006) discusses the rise of supermarkets in urban Kenya, spreading well beyond the
richer consumers to derive more than a third of their sales and half of their customers
from low income and poor consumers.
2.4 Pricing practices by modern retail
A fourth strand of the literature examines pricing practices by modern retail in
developing countries. Empirical studies suggest that price, as a determinant of
satisfaction, varies by store format. For example, (Cox and Cox, 1990) find that overall
price image of a store affects store choice. ( Desai and Talukdar, 2003) state that price
image has implications for store patronage, and strategic decisions related to selecting a
target customer base and creating in-store environments. In an overview of recent
evidence, Minten and Reardon (2008) find that; (1) in the early stages of penetration of
modern retail in developing countries, prices offered in modern retail are generally equal
or higher (compared to traditional retail prices) for processed foods and significantly
higher for fresh foods, especially produce; For example, Ho (2006) illustrates this for
Hong Kong; (2) in the intermediate stages, processed food is cheaper in supermarkets but
the results for fresh food are mixed (tending toward only a few mass produce items being
cheaper but many others being more expensive in modern retail); (3) in the advanced
stage, food prices in modern retail tend to be generally lower (than traditional retail) for
almost all types of food products, in particular because procurement systems become
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more efficient through better supply chain management and in-store and in-distribution-
center inventory management and handling.
2.5 Assortment patterns in retail stores
A fifth strand of the literature examines the assortment available in retail stores. (Erica
Van Herpen and Pieters, 2002) summarised that product variety influences a customer's
perception of a store In turn, (Hoch et al. , 1999) stated that perceptions concerning
product variety influence both satisfaction and store choice. (Lumpkin and McConkey,
1984) inferred that the availability of a wide variety of products is ranked higher as a
store patronage attribute among department and discount store shoppers than specialty
store shoppers), indicating expectations surrounding product assortment vary by store
type.(Paulins and Geistfeld 2003) found that when a store had an appealing merchandise
selection, it became a key reason why that store was considered desirable.
Not many Indian research works were come across by the researcher with a focus on
identifying and analyzing consumer‘s buying behavior keeping the objective of
contrasting their preferences to buy from traditional versus modern retail formats.
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Chapter 3 Theoretical Framework
The overall purpose of the research is to study and understand the effect of modern retail
formats on traditional retail formats in India. It is a known fact that organized retailing is
making a strong impact in many parts of India's growing economy. With rapid change
and expansion in the retail environment, it has become all the more necessary to identify
the different parameters that drive overall satisfaction for modern retail formats and
traditional retail formats. Food and grocery retailers today must differentiate themselves
by meeting the needs of their retail shoppers better than the competition. There is general
agreement that a basic retailing strategy for creating competitive advantage is the delivery
of high service quality. Retailers are faced with several issues like: Is the consumer
ordering his monthly grocery and household items from the neighbourhood kirana store
since it is easy and convenient or does he prefer to go to a modern format like Big Bazaar
which offers him a superior shopping experience and great discounts on bulk purchases?
Does he prefer the modern format over the traditional mom and pop stores in certain
circumstances? Can the two formats co-exist given that the consumer may have different
expectations on different occasions? What are the challenges for the traditional formats
given that the housewife today is aware of the discounts being offered on items of daily
consumption like rice, sugar, edible oil etc? Are the modern formats lacking in certain
areas like ease of delivery of products and trust? The present study focuses on answering
these questions.
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3.1 Research Objectives
The following are the objectives of the research:
1. To study the satisfaction levels of shoppers among traditional formats and modern
formats and identify the key drivers of satisfaction among the two formats
To study the consumer‘s satisfaction levels with various attributes like location,
convenient store timings, promotions and discounts, ambience, freshness of
products stocked etc. for both traditional and modern formats. Further to derive a
hierarchy of attributes so that retailers can focus on the right mix which would
result in higher chances of being patronized.
2. To understand the shopper needs better and delve deeper into inner needs – to go
beyond functional needs and arrive at a hierarchy of needs.
A question in mind is when a consumer shops does he look at individual
parameters or do a bundle of parameters govern his overall satisfaction with the
two formats? Hence the present study will group the different attributes into a
few manageable dimensions so that retailers can focus on delivering on a bundle
of attributes.
3. To understand the primary triggers of visiting a modern retail format. What are
the other triggers that may have led to a shift from traditional formats to modern
format?
To study the sources of awareness of modern formats. To find out whether
advertising, or brand name or recommendation by friends and family was the
main reason of visiting modern formats.
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4. To understand if modern retail store today is an alternative that is attractive
enough to get shoppers to shift?
To study the overall disposition of consumers towards the two formats and
segment the market based on their attitude towards the two markets.
5. To identify the reorientation needed by the traditional retail outlets to retain their
place and consolidate their survival and growth which can take place despite the
establishing of the modern retail formats.
3.2 Hypotheses
A hypothesis is a proposition about the relationship between two variables that can be
tested for association or causality against the empirical evidence that is collected for the
study.
The following are the hypotheses that are proposed by the researcher:
Hypothesis 1: Consumers make frequent lower expenditure trips in traditional
formats and less frequent higher expenditure trips in modern formats.
The objective of the hypothesis was to find out how frequently consumers visit traditional
formats and modern formats in a month. Further having visited the two formats how
much do they spend on an average per visit on food and grocery?
Hypothesis 2: Consumer’s knowledge of traditional formats and modern formats
are from different media.
The objective of the hypothesis was to find the role of different sources of information in
providing knowledge of the two formats.
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Hypothesis 3: There is a relationship between types of food items purchased and
choice of formats.
3a. H1: Consumers prefer to purchase processed foods from modern
formats.
3 b. H1; Consumers prefer to purchase fresh produce from traditional
formats.
The above hypothesis sought to establish a relationship between type of food and
preferred format of store from where it is purchased. It was hypothesized that consumers
prefer to purchase fresh produce like fruits and vegetables from traditional formats and
processed foods like biscuits, juices, etc. from modern formats.
Hypothesis 4: Store satisfaction is stronger for modern formats than traditional
formats.
The objective of this hypothesis was to investigate whether consumers were more
satisfied with modern formats or with traditional formats.
Hypothesis 5: Satisfaction levels vary for the different attributes in traditional
formats and modern formats.
Here the objective was to find out which of the various attributes like convenient store
timings, location, free home-delivery, ambience, availability of wide range of products,
attractive discounts, schemes and promotions, courteous and well trained staff etc are
consumers more satisfied with and whether the satisfaction levels for all the parameters
vary among the two formats.
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For the above main hypothesis, sub hypothesis 5a to 5j have been developed and tested
for association between overall satisfaction and individual attributes which include
freshness of product stocked, promptness of handling customer complaints, long
association with store, etc.
The objective here was to establish that store satisfaction and long association have a
direct correlation and the relationship between the two variables is stronger for modern
formats than for traditional formats.
Hypothesis 6– Performance of the two formats on the drivers of satisfaction are
different
Here the objective was to find out which of the 22 attributes drive store satisfaction and
whether the drivers of satisfaction were the same or different for traditional formats and
modern formats.
Hypothesis 7 - Consumers are divided in their disposition towards traditional
formats and modern formats.
Here the objective was to find out the overall attitude that consumers have towards the
two formats.
7a - H1: Modern formats are highly recommended by consumers
Here the objective was to find out how likely were consumers to recommend modern
formats to their friends and relatives.
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7b - H1: As Income increases consumers shift in favor of modern formats.
Here the objective was to investigate whether there exists a relation between income and
overall attitude towards modern formats.
Hypothesis 8- Patrons of modern formats differ from patrons of traditional formats
on various demographic variables.
Here the objective was to establish the profile of the consumers of traditional formats and
modern formats on various demographic variables and ownership of durables.
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Chapter 4 Research Methodology
The scope of the present research is to determine the key drivers of satisfaction for
traditional formats and modern formats and also gauge the overall impact of modern
formats on traditional formats on preference of items purchased, amount of money spent,
disposition towards modern formats and future intention.
4.1 Preliminary Research
The phenomenon studied focused on identifying the key determinants for modern retail
formats and traditional retail formats. Further the objective of the survey is to understand
the needs of the shoppers in both traditional formats and modern formats with respect to
food, grocery and household items and determine whether modern formats have made an
impact on traditional formats on purchase preference, average monthly spends etc. The
study also made an effort to determine the dimensions of customer satisfaction.
4.2 Questionnaire Development and Instrument
Questionnaire‘s content and structure are critical factors for the success of any research.
Considerable time was spent in preparing an effective questionnaire. Required amount of
thought was given on the questionnaire design process, like the contents of the
questionnaire (what would be asked) , types of questions asked , including wording and
measurement scales (how would it be asked) as well as the structure of the questionnaire
(sequencing of questions).
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The questionnaire was divided into four sections:
1. Section 1 : Listing Information
Here the researcher gave an introduction of the research topic and mentioned the
objective of the research and the purpose of the research. This was followed by a
few questions on age, income, gender, number of family members, location, and
frequency of visitng traditional formats and modern formats. People above 25
years of age were included from the survey. Also only consumers who purchased
from both traditional formats and modern formats atleast once a month were
included in the survey.
2. Section 2 : Behavioural questions:
This section was concerned with general customer behavior and attitude. Here
average spends for the two formats, sources of awareness of the two formats,
purchase of different categories of food, grocery and household items and
preference between the two formats for various categories of items were asked.
3. Section 3 : Satisfaction and Disposition questions
This was the core part of the questionnaire. Here the focus was on overall
satisfaction with traditional formats and modern formats as well satisfaction on
individual parameters. Care was taken to see that the list of attributes was the
same for the two formats. Overall disposition towards the two formats and
likelihood of recommending modern formats were asked.
4. Section 4 : Demographics
Here demographic details like education level, ownership of durables and
occupation were asked.
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An important issue of the questionnaire is the order of the questions. As a general rule,
simple questions that are easily answered should appear first (Converse and Presser,
1986).
4.3 Pretesting
The main objectives of the pilot survey was to test whether the survey questions were
fully understood by the respondents and to examine the effectiveness of the questionnaire
in terms of structure, presentation etc. Usually the sample size depends on the complexity
of the issues being studies and the size of the full survey. Hence a total of 15 pilot
interviews were conducted among the target respondents. All aspects of the questionnaire
including question content, wording, sequence, form and layout, question difficulty, and
instructions were tested.
Care was taken to see that the respondents in the pretest were similar to those who would
be included in the actual survey in terms of background characteristics, familiarity with
the topic, and attitudes and behaviours of interest (Nina Reynolds et al., 1994). Further
participants who were part of the pretest were excluded from the final survey. Based on
the feedback from the pretest, the questionnaire was revised.
4.4 Population and Sample
The scope of the study was to understand the consumer buying behavior in organized
retail. Further the study attempted to analyze the shifting of purchases from the local
grocery stores to organized retail formats. Also, the study made an effort to focus on the
composition of the purchase basket of buyers at organized retail.
The target population is defined as follows;
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Elements: Male or female who are responsible for most of the shopping or equal amount
of shopping related to food and grocery at both modern and traditional formats.
Sampling Unit:
An attempt was made with a view to compare modern retail formats with traditional retail
formats with respect to food and grocery. For this the research considered individuals
who visit both modern formats and traditional formats at least once in three months.
Further, since the research focused on collecting information regarding various
dimensions like average spends in the two formats, purchase behavior for various items,
satisfaction with various attributes in the two formats and disposition towards the two
formats, it was decided to consider individuals with a minimum age of 25 years.
Individuals below 25 years of age are mostly pursuing their studies and are not involved
in the purchase behavior of food and grocery. Further the research focused on both males
and females. While traditionally females were involved in the purchase of household
items and fruits and vegetables, with the advent of modern retail male members in the
household are also exercising their choice. Dholakia (1999) inferred in a study that males
appear to be responsible for about 45 per cent of household grocery
shopping, either as the primary or as a joint shopper.
Age groups were identified as follows in the questionnaire – 25 to 34 years, 35 to 44
years and 45 years and above. No quotas have been set for each of the age group.
The sample constituted males and females in the proportion of 56% to 44% (Mumbai
population estimate).
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No other variables were used for target audience selection.
Extent: Currently organized retailing is focused in metropolitan cities and is expected to
extend to Tier II cities. Mumbai with 28 malls is second in India as compared to Delhi
NCR (60 malls) in the number of malls. Further most of the retail expansion is
concentrated around the big cities –Delhi and Mumbai account for more than half of the
total space projected, with the other metros and mini metros such as Bangalore, Pune and
Hyderabad etc. taking the total upto 90% of the space. (Devangshu Dutta 2006)
Hence the scope of the study included consumers from Mumbai. A small sample was also
taken from Delhi to see if the trends were very different or similar to the ones exhibited
by the Mumbai centre.
Sample Size : At the questionnaire design stage itself it was decided to use various
multivariate analyses like multiple regression, factor analysis and cluster analysis which
require large sample size. Hence a minimum sample size of 385 respondents from
Mumbai was proposed. The researcher collected 400 responses from Mumbai.
The sample size proposed for Delhi was 70. The researcher collected responses from 72
consumers in Delhi.
Synopsis-27
4.5 Data Collection Procedures
The method used for the data collection was a face-to-face interview, using a structured
questionnaire, with closed-ended questions, conducted at the residence of the respondents
and directed to the person responsible for shopping in the household. The sample was
probabilistic where area sampling was used.
The sample was drawn from Mumbai and it represented consumers with different
economical, social and geographical characteristics. A total of 450 questionnaires were
sent in Mumbai of which 400 questionnaires were completed and validated (response rate
of 90%). A total of 100 questionnaires were sent to Delhi of which 72 questionnaires
were completed and validated (response rate of 72%). This survey was done with the help
of volunteer students in Mumbai and professors and volunteer students in Delhi.
4.6 Data Analysis
Data analysis is not an end in itself. Its purpose is to produce information that will help
address the problem at hand. The questionnaires were thoroughly checked and edited.
The data was entered in SPSS 14. Various statistical tools and techniques were used to
analyze the data.
For non-metric data frequency, Chi Square Goodness of fit, Chi square test of
independence, Wilcoxon Signed Rank test were used while for metric data test of
hypothesis for one sample, Independent sample t-test for 2 samples, paired sample t test
for dependent samples and One-way ANOVA for more than two samples were used.
Multivariate techniques like cross tabulation, Discriminant analysis, Factor Analysis and
Cluster Analysis were used.
Synopsis-28
All hypothesis tests were consistently carried out using 5% level of significance. A 5%
level of significance was found to be the right tradeoff between Type I error and Type II
error. The decision rule for hypothesis testing was ―If the probability associated with the
calculated or observed value of the statistic is less than the level of significance (α), the
null hypothesis is rejected‖.
4.7 Ethical Considerations
One of the most important ethical principles is that coercion should not be used to force
people into taking part in research. The researcher did not offer any financial or other
material rewards to induce people to take part, to avoid biased results. Participants were
given fair and accurate information about the research and were told how much time it
would most probably take to fill the questionnaire. Anonymity and confidentiality was
offered to all the participants in the research. The participants were informed that the data
collected would be used in such a way that the information would not be traceable to any
particular individual.
Synopsis-29
Chapter 5 Results
5.1 Composition of the Sample
The first part of the questionnaire consisted of certain demographic information like age
of the consumer, gender, monthly household income and number of family members
As per the requirement for the survey, the minimum age for the consumers was 25
years. For Mumbai, majority of the sample (71%) consisted of people belonging
to the age group 25 years to 34 years. Close to 20% of the sample belonged to the
age group 35 years to 44 years and the remaining 10% of the sample belonged to
the age group of above 45 years.
In Delhi almost 90% of the sample belonged to the age group of 25 to 34 years
while 10% belonged to the age group of 35 to 44 years and just 1% belonged to
the age group of 45 years and above. Further analysis of the data has been done at
an aggregate level for Delhi since the sample size for individual age groups was
quite small.
The Mumbai sample constituted of males and females in the proportion of 57% to
43%. The Mumbai population estimate is 56% to 44% - Marketing Whitebook
2006.
The Mumbai data had been analyzed by gender to see if there existed any
significant differences for key parameters.
The Delhi sample constituted of males and females in the proportion of 25% and
75%. The sampling methodology was convenience sampling given the
researcher‘s inability to access the respondents directly. Hence the researcher‘s
contacts were used and the initial 10 contacts were all females. Hence the Delhi
Synopsis-30
sample has a higher proportion of females. In order to compare gender differences
for key parameters, the independent sample t test has been used. The independent
sample t test is used even for small sample sizes.
The monthly household income for Mumbai was distributed across the range
starting from Rs 10,000 up to greater than Rs 1, 00,000. The maximum proportion
of consumers was from the income group Rs 25,000 to Rs 50,000 (28%).
A similar trend was observed in the Delhi sample with responses being distributed
across the income range. The proportion of consumers was maximum for the
income group Rs 10,000 to Rs 25,000.
Both Delhi and Mumbai had approximately 50% of the sample with income less
than Rs 50,000 and the remaining had income greater than Rs 50,000.
One third of the Mumbai sample consisted of 4-member households. Around one
fourth of the sample has three members in their family and another one fourth had
5 to 6 members in their household.
35% of the Delhi sample had 5 to 6 members in their household and 13% had
more than 6 members in their household. Compared to Mumbai, the Delhi sample
had more number of family members.
Synopsis-31
5.2 Shopping habits and preferences
Hypothesis 1: Consumers make frequent lower expenditure trips in traditional
formats and less frequent higher expenditure trips in modern formats.
Consumers were asked to indicate the amount of times they visited/ordered food and
grocery from traditional formats and modern formats. The options given were upto 3
times a month, 4-5 times a month, 6-9 times in a month, 10+ times in a month. Almost
45% of the respondents order/purchase atleast 4 to 5 times in a month or more often from
the traditional formats as compared to only 18% of the respondents who purchase atleast
4 to 5 times in a month or more often from the modern formats in both Mumbai and
Delhi.
Modern formats are not so easily accessible to respondents on a daily basis as compared
to the neighbourhood kirana stores and grocery shops which are found everywhere.
Moreover food, grocery and household items are essential items and hence more often
people prefer to visit the local neighbourhood stores when they suddenly find themselves
short of items. Visits to modern formats are possibly restricted to weekends since
majority of the respondents indicated that they visited modern formats upto three times in
a month.
Consumers were asked to indicate the amount of money spent in the two formats in the
last one month. Here the time period was taken as last one month in order to get accurate
response. (Close to 56% of the respondents spent Rs 1000 and above in traditional
Synopsis-32
formats as compared to 73% of the respondents who spent Rs 1000 and above in modern
formats).
A test of hypothesis was conducted to confirm the findings of higher spends in modern
formats as compared to traditional formats.
The Wilcoxon Signed Ranks Test was conducted since the data on amount of money
spent in the two formats was ordinal. Here the same sample of respondents answered for
both traditional and modern formats. The results indicated that the respondents had spent
more in modern formats as compared to traditional formats and these results were highly
significant for Mumbai. For Delhi no significant difference was found in the amount of
money spent in the two formats.
Inference: Frequency of visiting traditional formats was more than frequency of
visiting modern formats. Amount of money spent per visit in traditional formats
was in the range of Less than Rs 1000 while it was in the range of Greater than Rs
1000 for modern formats. Thus, Consumers make frequent lower expenditure trips
in traditional formats and less frequent higher expenditure trips in modern formats.
Hypothesis 2: Consumers knowledge of traditional formats and modern formats are
from different media.
Respondents were asked to indicate how they first came to know about traditional
formats. This question was a single code. In other words respondents had to select only
one response from the multiple options provided. 70% of the respondents said that their
first source of awareness was when they saw the store in the locality. 18% reported that
friends and family members told them about the store.
Synopsis-33
An analysis of responses for modern formats revealed that various forms of advertising
contributed to the source of awareness. Close to 43% reported that they had come to
know about modern format from some source of advertising. Newspaper/magazines
(22%) followed by TV advertising (10%) and hoardings (6%) were the main forms of
advertising. As compared to traditional formats only 21% said that they saw the locality
in the store.
In Delhi only 50% of the respondents revealed that their first source of awareness was
when they saw the store in the locality as compared to 70% from Mumbai while 32% said
that friends and family members told them about the store as compared to 18% from
Mumbai.
For modern formats various forms of advertising contributed to the source of awareness.
Close to 62% reported that they had come to know about modern format from some
source of advertising. The source of awareness from advertising is higher in Delhi than
Mumbai. Newspaper/magazines (24%), TV advertising (24%) and hoardings (14%) were
the main forms of advertising. As compared to traditional formats only 13% said that
they saw the locality in the store.
The chi-square test (Snedecor and Cochran, 1989) was used to test if a sample of data
came from a population with a specific distribution. For the above hypothesis it was
attempted to test whether the responses were equally distributed for all sources of
awareness.
The Chi square test was conducted for traditional formats and modern formats separately
and the results were found to be significant.
Synopsis-34
Inference: The first source of awareness for traditional formats was the proximity
to the locality. To a small extent word-of-mouth also plays a role whereby family
and friends mention the store based on their past history. The first source of
awareness for modern formats was primarily advertising (TV, Newspaper, and
Hoardings etc.). Brand name also plays a role in spreading awareness regarding
modern formats. Traditional formats are easily accessible and hence they resort to
minimum advertising (Handbills/leaflets less than 5%). On the other hand, modern
formats like Big Bazaar, D Mart, Star Bazaar are located in prime locations, which
may not be convenient for all. Hence in order to lure the customers from the
traditional formats they resort to advertising primarily in newspapers and through
hoardings by announcing everyday low prices, lowest price on offer, etc.
Thus it was inferred that consumer’s knowledge of traditional formats and modern
formats are from different media and the hypothesis is true for both Mumbai and
Delhi.
Hypothesis 3 : There is a relationship between types of food items purchased and
choice of formats.
3a. H1: Consumers prefer to purchase processed foods from modern formats.
3b. H1: Consumers prefer to purchase fresh produce from traditional formats.
The objective of this question was to check the impact of modern formats on traditional
formts for the various categories of food, grocery and household items. Consumers were
asked to state whether they preferred traditional formats, modern formats or both were
equally preferred for each category of item
Synopsis-35
Table 1 : Preference of Purchase of various Items
Percentage of responses
Item Traditional
Only
Modern
Only
Both are
preferred
Staple foods (rice, wheat, pulses
etc) 45 29 26
Fruits 70 13 17
Vegetables 76 10 14
Milk 81 9 10
Fresh milk products (paneer,
curd) 59 23 18
Other milk products 36 37 27
Heat and serve/ready to eat food 19 57 24
Frozen vegetarian food (e.g
Frozen Peas) 18 58 26
Eggs 75 8 17
Food fresh non vegetarian 59 27 15
Frozen non vegetarian 26 54 20
Health drinks, tea, coffee,
squashes etc 26 42 32
Fruit drinks, soft drinks, other
packaged drinks 22 44 34
Snacks, savories, sweet and
confectionary 38 28 34
Other packaged food like sauces,
cereals 18 51 31
Toiletries and cosmetics 14 54 32
Homecare and cleaning 15 53 32
Organic food 19 53 29
A Chi square test was conducted to check for significant difference. The Chi Square
Goodness of Fit Test reveals a p value of 0.000 for almost all the categories. Since the p
value 0.000 is less than level of significance (0.05) the null hypothesis of responses being
equally distributed among the two formats is rejected.
Synopsis-36
Table 2: Chi square test of goodness of fit
Chi-
Square df
Sig.value
Staple foods (rice, wheat, pulses etc) 27.82 2 0.00
Fruits 272.09 2 0.00
Vegetables 363.01 2 0.00
Milk 440.51 2 0.00
Fresh milk products (paneer, curd) 127.37 2 0.00
Other milk products (cheese, butter) 7.81 2 0.02
Heat and serve/ready to eat food 81.02 2 0.00
Frozen vegetarian food (e.g Frozen Peas) 89.84 2 0.00
Eggs 205.42 2 0.00
Food fresh non vegetarian 71.83 2 0.00
Frozen non vegetarian 40.57 2 0.00
Health drinks, tea, coffee, squashes etc 17.77 2 0.00
Fruit drinks, soft drinks, other packaged
drinks 32.80 2 0.00
Snacks, savories, sweet and confectionary 5.53 2 0.063
Other packaged food like cereals, sauces etc 66.37 2 0.00
Toiletries and cosmetics 107.24 2 0.00
Homecare and cleaning 92.16 2 0.00
Organic food 49.85 2 0.00
People clearly preferred traditional formats over modern formats for perishable
items like fruits, vegetables, milk and fresh milk products. These categories were
also bought more often. The convenience factor, proximity to home and ease of
making purchases as and when required are possible factors for preference of
traditional formats over modern formats. People also preferred traditional formats
for staple foods like rice, wheat, pulses to some extent. However almost one third
of the respondents preferred modern formats for staple foods. Modern formats
like Big Bazaar and D Mart advertise the huge discounts for staple foods like rice,
wheat and sugar atleast once a week in the newspaper and through hoardings. It
Synopsis-37
looks like the huge discounts on 10 kg wheat, 5 kg rice etc has acted as a pull
factor.
Pre-processed foods, packaged goods and frozen food were preferred in modern
formats. Modern formats have better cold storage and better range and variety of
toiletries, cosmetics, fruit juices etc. In modern formats there are aisles for
specific product categories and this makes it easier for consumers to have access
to a variety of brands.
People preferred to buy snacks, sweets and savories from both modern formats
and traditional formats.
Inference: There was a relationship between types of food items purchased and
choice of formats whereby consumers preferred to purchase processed foods from
modern formats and fresh produce like fruits, vegetables, fresh milk products from
traditional formats.
5.3 Performance of the two formats on drivers of Store satisfaction
Hypothesis 4: Store satisfaction is stronger for modern formats than traditional
formats.
A 5 point Satisfaction scale was used to determine consumer‘s overall satisfaction with
both traditional formats and modern formats.
1 = Very satisfied, 2 = Somewhat satisfied, 3 = Neither satisfied nor dissatisfied, 4 =
Somewhat dissatisfied and 5 = Very dissatisfied
Synopsis-38
Table 3 : One sample t test for Overall satisfaction
Overall sat-Traditional Overall sat-modern
Mumbai N Valid 386 378
Missing 14 22
Mean 1.9067 1.8466
Median 2.0000 2.0000
Std. Deviation .80039 .81286
Delhi N Valid 69 66
Missing 3 6
Mean 1.8261 1.9848
Median 2.0000 2.0000
Std. Deviation .90678 .88565
The mean satisfaction score for traditional formats was 1.9 in Mumbai and 1.82 in Delhi.
The mean satisfaction score for modern formats was 1.84 in Mumbai and 1.98 in Delhi.
Majority of the respondents were satisfied with the two formats and it did not appear that
traditional formats had a lower score than modern formats.
A parametric test was conducted since the satisfaction scale was a 5 point scale and was
considered to be an interval scale. The two-related samples test concerns those situations
in which persons, objects, or events are closely matched or the phenomena are measured
twice. Here overall satisfaction was measured for traditional formats and modern formats
among the same set of consumers. Hence a paired sample t test was conducted to check
for significant difference in the overall satisfaction for the two formats. The paired
sample t test was conducted separately for Mumbai and Delhi.
Synopsis-39
Table 4 : Paired Samples Test
Mean
Diff
Std dev
of diff
t value Degrees of
freedom
p value
Mumbai
Overall sat
Traditional-
Modern 0.07 1.1 1.304 376 0.193
Delhi
Overall sat
Traditional-
Modern -0.12 1.13 -0.871 64 0.387
The Paired sample t test reveals a p value of 0.193 for Mumbai and 0.387 for Delhi.
Since the p value 0.193 and 0.387 are greater than level of significance (0.05) the null
hypothesis of overall satisfaction being the same for traditional formats and modern
formats is retained.
Inference: The hypothesis that store satisfaction was stronger for modern formats
than traditional formats was not proved. .The mean satisfaction with both the
formats was in the range of 1.83 to 1.98 which indicated high satisfaction level.
Hypothesis 5: Satisfaction levels vary for the different attributes in traditional
formats and modern formats.
Consumers were given a list of 20 attributes that related to different aspects of a retail
format and were asked to indicate their satisfaction level on a 5 point scale (1= highly
satisfied….5=highly dissatisfied). Here the objective was to identify which attributes
were consumers most satisfied with and least satisfied with if any.
Synopsis-40
Table 5: Mean Rating of Attributes of traditional formats
Mean Median Std dev Rank
Traditional Formats
Proximity to residence 1.6 1 0.8 1
Convenient store timings 1.63 1 0.8 2
Order is taken over phone 1.83 1 1.0 3
Free home delivery 1.88 2 1.0 4
Relationship/long association with the store 2.0 2 1.0 5
Quick Billing 2.19 2 1.1 6
Freshness of products stocked 2.2 2 1.0 7
Availability of credit 2.3 2 1.1 8
Error-free sales transactions and records 2.32 2 1.0 9
Hassle free exchange policy 2.37 2 1.1 10
Availability of products in pack sizes that
you need 2.47 2 1.2
11
Promptness of handling customer
complaints 2.57 2 1.2
12
Brand Image 2.60 3 1.1 13
Courteous and well trained staff 2.67 3 1.1 14
Availability of variety of brands and
products 2.76 3 1.2
15
Ambience 2.91 3 1.1 16
Loyalty program membership 3.09 3 1.3 17
Attractive discounts, promotions and
schemes 3.18 3 1.3
18
All modes of payment accepted-like cash,
credit card, Sodexo coupons etc 3.3 3 1.3
19
Availability of International products 3.41 4 1.3 20
Consumers were highly satisfied with the location of traditional formats as well as
the convenient store timings. Most neighborhood retail stores are open till 11 pm.
Further traditional formats offer free home delivery and take order over the
phone. This is the reason why people prefer to purchase items that get over or are
required as and when needed from traditional formats.
Synopsis-41
The next set of attributes that consumers were moderately satisfied with were the
long relationship that they had with the traditional formats, quick billing,
freshness of products stocked, availability of credit and error free sales and
transaction.
Traditional formats had a lower score (neither satisfied nor dissatisfied) on
parameters like ambience, loyalty program membership, attractive discounts and
promotions, acceptance of all modes of payment and availability of international
products. These attributes are differentiators for modern formats. Further the low
satisfaction with the parameter attractive discounts and promotions reemphasizes
the fact the people prefer modern formats for staple items like rice, wheat etc
where there are huge discounts offered by Big Bazaar, Star Bazaar etc.
The median rank for the parameter availability of international products was 4
indicating that 50% of the consumers are highly dissatisfied with traditional
formats.
Synopsis-42
Table 6: Mean Rating of Attributes of modern formats
Modern formats Mean Median
Std
Dev Rank
Ambience 1.41 1.00 0.66 1
All modes of payment accepted-like cash, credit
card, Sodexo coupons etc. 1.56 1.00 0.85 2
Availability of International products 1.58 1.00 0.70 3
Availability of variety of brands and products 1.63 1.00 0.81 4
Attractive discounts, promotions and schemes 1.70 2.00 0.83 5
Availability of products in pack sizes that you
need 1.85 2.00 0.96 6
Brand Image 1.86 2.00 0.83 7
Freshness of products stocked 1.93 2.00 0.90 8
Courteous and well trained staff 2.07 2.00 1.02 9
Convenient store timings 2.24 2.00 1.11 10
Loyalty program membership 2.29 2.00 1.01 11
Error-free sales transactions and records 2.30 2.00 1.08 12
Promptness of handling customer complaints 2.46 2.00 1.09 13
Quick Billing 2.62 3.00 1.39 14
Proximity to residence 2.68 3.00 1.19 15
Relationship/long association with the store 2.69 3.00 1.09 16
Hassle free exchange policy 2.75 3.00 1.16 17
Free home delivery 3.03 3.00 1.25 18
Availability of credit 3.16 3.00 1.31 19
Order is taken over phone 3.48 4.00 1.15 20
Consumers were highly satisfied with the ambience, acceptance of all modes of
payment, availability of international products and wide variety of brands.
For traditional formats, a high satisfaction was observed for four attributes (Mean
satisfaction rating of 1) while for modern formats consumers are highly satisfied
with 8 attributes (mean satisfaction rating of 1).
Synopsis-43
Traditional formats had got a higher rating for quick billing as compared to
modern formats indicating that despite a number of counters for billing,
consumers still view the billing process as slow in modern formats. This could be
a deterrent when consumers have a few items to purchase.
Consumers were moderately satisfied with courteous and well trained staff and
convenient store timings. Most of the modern formats are now open from 10.00
am to 10.00 pm. Hence convenient store timings are no longer a differentiator for
traditional formats.
Proximity to residence was a parameter which consumers have a neutral response.
Free home delivery, availability of credit and order taken over phone were
parameters that have got lower satisfaction ratings.
The parameter order is taken over phone had a median ranking of 4 indicating
50% of the consumers are highly dissatisfied with this parameter. Thus traditional
formats are able to differentiate themselves on the free home delivery, credit and
ease of taking order over the phone. Traditional formats continue to be extremely
convenient and hassle free for consumers.
Inference: Satisfaction levels varied for the different attributes in traditional
formats and modern formats. Consumers were highly satisfied with the attributes
proximity to residence, convenient store timings; order is taken over phone and free
home delivery for traditional formats. Modern formats scored highly on ambience,
all modes of payment are accepted, assortment of the products and the attractive
discounts and promotions.
Synopsis-44
As the satisfaction levels varied for the two formats on different attributes, it was
decided to study whether there was a significant relationship between overall
satisfaction and individual parameters for the two formats. It was hypothesized that
individual parameters like freshness of product stocked, promptness of handling
customer complaints etc would be positively related with overall satisfaction.
Further it was decided to study whether the relationship between individual
attributes and overall satisfaction was stronger for traditional formats or modern
formats.
In the following sub hypotheses under the main hypothesis of satisfaction with different
attributes in traditional formats and modern formats the research tried to establish a
positive correlation between overall store satisfaction and individual parameters. Hence a
bivariate correlation was conducted. Correlation offers additional information about an
association between two quantitative variables (thus excluding those measured on a
nominal scale) because it measures the direction and strength of any linear relationship
between them. In statistics, a correlation coefficient is a ‗measure of the linear
dependence of one numerical random variable on another‘ (Upton and Cook, 2006). The
two variables are not referred to as the dependent variable and the independent variable
because ‗they are measured simulatanously and so no cause-and-effect relationship can
be established‘ (Field, 2000).
Synopsis-45
Table 7: Correlation between overall satisfaction and individual parameters
Overall sat-
Traditional
Overall satisfaction-
Modern
Freshness of products
stocked
Pearson Correlation
.425(**)
0.299(**)
Sig. (2-tailed) .000 0.00
Relationship/long
association with the store
Pearson Correlation
.398(**)
0.165(**)
Sig. (2-tailed) .000 0.001
Attractive discounts,
promotions and schemes
Pearson Correlation .237(**)
0.250(**)
Sig. (2-tailed) .000 0.000
Promptness of handling
customer complaints
Pearson Correlation .322(**)
0.100(*)
Sig. (2-tailed) .000
0.042
Hassle free exchange
policy–Traditional
Pearson Correlation .333(**)
0.177 (**)
Sig. (2-tailed) .000 0.00
** Correlation is significant at the 0.01 level (2-tailed).
*Correlation is significant at the 0.05 level (2 tailed)
Freshness of products stocked and store satisfaction – Positive correlation observed
between the two variables and the relationship was stronger for traditional formats
(correlation of 0.425 for traditional formats vis a vie 0.299 for modern formats).
Hence Freshness of product stocked was positively related to store satisfaction for
both modern formats and traditional formats and the relationship between
freshness of product stocked and satisfaction was stronger for traditional formats
than for modern formats is proved.
Promptness of handling customer complaints and store satisfaction – Positive correlation
observed between the two variables and the relationship was stronger for traditional
formats (correlation of 0.322 for traditional formats vis a vie 0.10 for modern formats).
Synopsis-46
Hence promptness of handling customer complaints was positively related to store
satisfaction for both modern formats and traditional formats and the relationship
between handling customer complaints and satisfaction was stronger for traditional
formats than for modern formats is proved.
Long association/relationship and store satisfaction – Positive correlation observed
between the two variables and the relationship was stronger for traditional formats
(correlation of 0.398 for traditional formats vis a vie 0.165 for modern formats).
Hence Long association/relationship was positively related to store satisfaction for
both modern formats and traditional formats and the relationship between Long
association/relationship and satisfaction was stronger for traditional formats than
for modern formats is proved.
Hassle-free exchange policy and store satisfaction – Positive correlation observed
between the two variables and the relationship was stronger for traditional formats
(correlation of 0.333 for traditional formats vis a vie 0.177 for modern formats).
Hence Hassle-free exchange policy was positively related to store satisfaction for
both modern formats and traditional formats and the relationship between Hassle-
free exchange policy and satisfaction was stronger for traditional formats than for
modern formats is proved.
Attractive discounts, schemes and promotions and store satisfaction – Positive correlation
observed between the two variables and the relationship was stronger for modern formats
(correlation of 0.237 for traditional formats vis a vie 0.257 for modern formats).
Synopsis-47
Hence Attractive discounts, schemes and promotions was positively related to store
satisfaction for both modern formats and traditional formats and the relationship
between Attractive discounts, schemes and promotions and satisfaction was stronger
for modern formats than for traditional formats is proved.
Hypothesis 6– Performance of the two types of retail formats on the drivers of
satisfaction are different
In order to prove the above hypothesis a factor analysis and discriminant analysis was
conducted.
A factor analysis was conducted to see if there was any underlying grouping in the minds
of the consumers, when they shop at the two formats. In business research, there may be
a large number of variables, most of which are correlated and which may be reduced to a
manageable level. Relationships among sets of many interrelated variables are examined
and represented in terms of underlying factors.
In the present research, consumers were asked to evaluate traditional formats and modern
formats on a series of items on a 5 point satisfaction scale. Factor analysis was conducted
to analyze the item evaluations to determine factors underlying satisfaction with the two
formats.
The factor analysis was conducted for traditional formats and modern formats.
The factor analysis was performed on the explanatory variables with the primary goal of
data reduction. The principal components method, using varimax rotation, reduced the 20
explanatory variables to three factors having eigen values greater than 1.
Synopsis-48
This research summarizes the data by stating that consumers appear to seek three
major kinds of benefits from traditional formats when it comes to food, grocery and
household items: Enhanced shopping experience, smooth transaction and
interaction and ease of access.
In the present research, a two-group discriminant analysis was used to examine whether
those respondents who were satisfied with traditional formats versus those who were
dissatisfied with traditional formats, attached different relative importance to the three
factors related to satisfaction with traditional formats. The discriminant analysis was
conducted to determine which, if any, of the three factors predicted overall satisfaction
with traditional formats to a statistically significant degree. The factor scores for the three
factors were the explanatory variables. The dependent variable consisted of the
consumer‘s overall satisfaction rating with traditional formats, which was collapsed into
two groups (satisfied = combined 1 and 2, and dissatisfied = combined, 3,4,5).
Table 8: Standardized Canonical Discriminant Function Coefficients
Function
1
Enhanced shopping experience .779
Smooth transaction and interaction .558
Ease of access .387
Enhanced shopping experience followed by smooth transaction and interaction and ease
of access were the most important determinants of overall satisfaction with traditional
formats.
Synopsis-49
Importance of Attributes vs Satisfaction with Attributes
The table below lists the relative importance of Satisfaction with traditional formats
versus the mean satisfaction score for each variable. The importance of the three factors
was enhanced shopping experience followed by smooth transaction and interaction and
ease of access. Within the factors, the variables with higher factor loadings had a higher
rank.
Table 9: Importance vs Satisfaction of various attributes of traditional formats
Attributes
Order of
Imp Satisfaction
Enhanced shopping experience – RANK 1
Availability of International products 1 3.5
Availability of variety of brands and products 2 2.8
Availability of products in pack sizes that you need 3 2.5
Ambience 4 2.9
Freshness of products stocked 5 2.2
Attractive discounts, promotions and schemes 6 3.2
All modes of payment accepted-like cash, credit card,
Sodexo coupons etc. 7 3.3
Brand Image 8 2.7
Smooth transaction and interaction – RANK 2
Availability of credit 9 2.3
Promptness of handling customer complaints 10 2.6
Loyalty program membership 11 3.2
Hassle free exchange policy 12 2.3
Courteous and well trained staff 13 2.6
Error-free sales transactions and records 14 2.3
Ease of access-RANK 3
Proximity to residence 15 1.5
Convenient store timings 16 1.6
Order is taken over phone 17 1.8
Free home delivery 18 1.8
Synopsis-50
Factor 1 –Enhanced shopping experience is the most important dimension to consumers.
Within this factor it was found that consumers were quite dissatisfied with traditional
formats when it comes to availability of international products, various discounts and
schemes available, the ambience and non acceptance of modes of payment like credit
card and Sodexo coupons.
Factor 2 - Smooth transaction and interaction was the next most important dimension to
consumers. On these parameters traditional formats fare quite well where most
consumers were happy with parameters like availability of credit, error free sales and
transaction, hassle free exchange etc. These are clearly the strengths of traditional
formats. Personalized interaction is where traditional formats score. Loyalty program
membership is the only attribute where traditional formats fare poorly.
Factor 3 – Ease of access was the least important dimension and this was where
consumers are most satisfied with traditional formats. Traditional formats offer free home
delivery and consumers can place the order over the phone based on their requirement.
Also the stores are close to the residence and are open till late hours. However since this
dimension was the least important to consumers, traditional formats should bear in mind
that they need to work on providing more range of products and also better transaction
and interaction to have an edge over modern formats.
Drivers of satisfaction for Modern Formats
The factor analysis revealed that the underlying dimensions that govern consumers when
they shop at traditional formats or modern formats is the same. The factor analysis
reduced the 19 explanatory variables to 3 broad factors - Enhanced Shopping experience,
Smooth transaction and Interaction and Ease of access. The individual
Synopsis-51
parameters/attributes are the same for both the formats except for the attribute free home
delivery was part of the third factor – Ease of access for traditional formats while it was a
part of the second factor – Smooth transaction and interaction for modern formats.
Table 10: Standardized Canonical Discriminant Function Coefficients
Function
1
Enhanced shopping experience .865
Smooth transaction and interaction .448
Ease of access .298
Enhanced shopping experience followed by smooth transaction and interaction were
important factors. Ease of access is the least important factor when it comes to modern
formats. Further ease of access was not found to be a significant predictor of overall
satisfaction for modern formats.
Synopsis-52
Table 11: Importance vs Satisfaction of various attributes for modern formats
Rotated Component Matrix
Order of
Importance Satisfaction
Enhanced Shopping experience – RANK 1
Availability of International products 1 1.58
Availability of variety of brands and products 2 1.64
Ambience 3 1.41
Availability of products in pack sizes that you need 4 1.87
All modes of payment accepted-like cash, credit card,
Sodexo coupons etc. 5 1.58
Attractive discounts, promotions and schemes 6 1.7
Freshness of products stocked 7 1.95
Brand Image 8 1.9
Smooth transaction and interaction – RANK 2
Promptness of handling customer complaints. 9 2.52
Free home delivery 10 3.19
Hassle free exchange policy 11 2.8
Quick Billing 12 2.72
Availability of credit 13 3.27
Courteous and well trained staff 14 2.12
Loyalty program membership 15 2.36
Error-free sales transactions and records 16 2.37
Ease of access-RANK 3
Proximity to residence 17 2.72
Convenient store timings 18 2.31
Order is taken over phone 19 3.68
Enhanced shopping experience was the most important dimension for consumers while
shopping at modern formats. Consumerswere highly satisfied with the ambience of
modern formats. All other parameters in this factor scoreed quite high on the satisfaction
aspect. Clearly modern formats have distinguished themselves on the shopping
experience platform for something as mundane as food and grocery and consumers were
quite satisfied.
Synopsis-53
The second important parameter was smooth transaction and interaction. While
consumers weree quite happy with the physical aspects of the modern formats,
transaction aspects scored slightly poorly. Modern formats scored poorly on 5 attributes
out of eight in this dimension. Consumers were quite dissatisfied with the unavailability
of credit and lack of free home delivery. Further consumers found the exchange policy
cumbersome and handling of customer complaints was an area of dissonance. Quick
billing was also found to be a source of dissatisfaction. Modern formats may not be able
to do anything about availability of credit and free home delivery, however they should
try to improve the billing process and train the staff to handle customer complaints better.
Inference: Drivers of satisfaction for traditional formats were enhanced shopping
experience on which traditional formats score poorly, followed by smooth transaction and
interaction on which they perform quite well and ease of access was the least important
dimension on which traditional formats scored very well. On the other hand, modern
formats performed well on the most important driver of satisfaction that is enhanced
shopping experience. Further, on the second driver of satisfaction which was smooth
transaction and interaction, they performed average and on the third dimension which
was ease of access, they perform poorly. However ease of access was not an important
parameter. Thus the performance of the two formats on drivers of satisfaction was
different.
Synopsis-54
5.4 Disposition towards the two formats
Hypothesis 7 - Consumers are divided in their disposition towards traditional
formats and modern formats.
7a - H1: Modern formats are highly recommended by consumers
7b - H1: As Income increases people are shift in favor of modern formats.
Consumers were asked their disposition towards the two formats. Seven options were
presented and respondents were asked to select the statement which best represented their
overall attitude towards the two formats.
Table 12: Disposition towards the two formats
Observed
N
Expected
N Residual
I only shop at traditional format stores; I will not
consider any other alternative 13 67 -54
I am committed to traditional format stores, but I
keep track of offers, discounts and promotions of
modern format store 62 67 -5
I visit traditional format stores but also go to
modern retail stores from time to time. 156 67 89
I am not too happy with traditional format stores
and I am considering moving to modern format
stores 14 67 -53
While I shop at both traditional formats and
modern formats I prefer modern formats 63 67 -4
I only shop at modern formats; it is the best
shopping experience. 9 67 -58
For daily purchase I prefer to go to traditional
formats while for bulk purchases or weekly
purchases I prefer to go modern 150 67 83
Total sample size – 472.
Synopsis-55
Table 13: Chi Square test Statistics
Disposition
Chi-
Square(a) 358.835
df 6
Asymp. Sig. .000
a 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 66.7.
It was clearly inferred from the above analysis that the distribution of responses was not
uniform. 33% of the consumers indicated that they prefer traditional formats for daily
purchase and modern formats for bulk purchase. Another 32% indicated that they visit
traditional formats but also visit modern formats from time to time. 13% of the
consumers stated that they preferred modern formats while another 13% stated that they
preferred traditional formats.
The responses also led this research to infer that people prefer traditional formats and
modern formats for different reasons. Traditional formats were clearly preferred for daily
small ticket purchases while modern formats were preferred for planned bulk purchases.
Synopsis-56
Table 14: Disposition towards the two formats by Income
Less
than Rs
25000
Rs 25000
to Rs
75000
Greater
than Rs
75000 Total
I only shop at traditional format stores; I
will not consider any other alternative Count 6 4 3 13
% 5.8 2.2 1.8 2.9
I am committed to traditional format
stores, but I keep track of offers,
discounts and promotions of modern
format store Count 25.0 25.0 10.0 60.0
% 24.3 13.4 6.1 13.3
I visit traditional format stores but also
go to modern retail stores from time to
time. Count 36.0 75.0 37.0 148.0
% 35.0 40.3 22.7 32.7
I am not too happy with traditional
format stores and I am considering
moving to modern format stores Count 2.0 6.0 5.0 13.0
% 1.9 3.2 3.1 2.9
While I shop at both traditional formats
and modern formats I prefer modern
formats Count 5.0 25.0 32.0 62.0
% 4.9 13.4 19.6 13.7
I only shop at modern formats; it is the
best shopping experience. Count 4.0 2.0 3.0 9.0
% 3.9 1.1 1.8 2.0
For daily purchase I prefer to go to
traditional formats while for bulk
purchases or weekly purchases I prefer to
go mod Count 25.0 49.0 73.0 147.0
% 24.3 26.3 44.8 32.5
Total 103.0 186.0 163.0 452.0
Synopsis-57
Table 15: Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-
Square 53.158(a) 12 .000
Likelihood Ratio 53.483 12 .000
Linear-by-Linear
Association 30.552 1 .000
N of Valid Cases 452
Since the p value is 0.00 and is less than the level of significance 0.05, we can conclude
that Disposition towards the two formats is dependent on the Monthly Household
Income.
Inference: As the Monthly household income increased, disposition towards modern
formats increased. In other words people with higher income had a more favorable
disposition towards modern formats while people with lower income were more
inclined towards traditional formats.
H0: Consumers are indifferent to recommending modern formats to family and friends.
In other words the mean rating for Recommendation is 3 on a 5 point scale.
H1: Consumers are in favor of recommending modern formats to family and friends. In
other words the mean rating for recommending modern formats is less than 3 (1 =
Definitely recommend…5 = definitely not recommend)
Synopsis-58
Table 16: One sample t test
N Mean Std. Deviation
Std. Error
Mean
Recommend modern 467 1.7901 .86594 .04007
Test Value = 3
t df Sig. (2-tailed)
Mean
Difference
95% Confidence Interval
of the Difference
Lower Upper
Recommend modern -30.193 466 .000 -1.20985 -1.2886 -1.1311
Since the p value was 0.00 was less than the significance value of 0.05, we reject the null
hypothesis and infer that consumers are in favor of recommending modern formats.
Inference: Consumers were divided in their disposition towards traditional formats
and modern formats. Further as income increased people weree more in favor of
modern formats. Also modern formats were highly recommended by consumers
Hypothesis 8- Patrons of modern formats differ from patrons of traditional formats
on various demographic variables.
A cluster analysis was conducted to find the profile of patrons of the two formats. Cluster
Analysis makes no distinction between dependent and independent variables. Rather,
interdependent relationships between the whole set of variables are examined. The
primary objective of cluster analysis is to classify objects into relatively homogenous
groups based on the set of variables considered. Objects in a group are relatively similar
in terms of these variables and different from objects in other groups.
The output is derived by first doing a hierarchical cluster analysis to find the number of
clusters that exist in the data. The second stage is a K-means procedure (also called Quick
Cluster) with a predetermined number of clusters to be specified.
Synopsis-59
The Output from the Hierarchical cluster analysis suggested a 2 cluster or a 3 cluster
solution. A K means procedure was carried out first specifying a 2 cluster solution and
then a 3 cluster solution. The 3 cluster solution was found to be more interpretable.
Number of Cases in each Cluster
Cluster 1 159.000
2 75.000
3 233.000
Valid 467.000
Missing 5.000
The entire sample was used for the cluster analysis. Cluster 1 consists of 159
respondents; cluster 2 consists of 75 respondents and cluster 3 of 233.
Final Cluster Centers
Cluster
1 2 3
Disposition 6.94 1.83 3.60
The final cluster centers describe the mean value of each variable for each of the three
clusters. The mean for cluster 1 was 6.94 indicating people‘s preference for traditional
formats for daily purchase and modern formats for bulk purchases. The mean for cluster
2 was 1.83 indicating commitment to traditional formats and the mean for cluster 3 was
3.6 indicating people who are not very happy with traditional formats and are considering
moving to modern formats.
Synopsis-60
A cross tabulation has been done between the three cluster and the various attributes
related to spends, demographic variables etc.
Table 17: Profile of the three clusters
Cluster 1 Cluster 2 Cluster 3
Gender Male 57% 56% 48%
Female 43% 44% 52%
Location Mumbai 89% 88% 81%
Delhi 11% 12% 19%
Monthly Household
Income
Less than Rs
25,000
18% 43% 19%
Rs 25000-Rs
75,000
33% 40% 48%
>Rs75000 49% 18% 36%
Education Graduate 28% 41% 37%
Post Grad Gen 10% 11% 16%
Post Grad Prof 57% 32% 43%
Ownership of home Yes 89% 78% 835
Desktop ownership Yes 78% 64% 77%
Flat screen TV 29 inch and
above
Yes 74% 46% 66%
Hi end music system Yes 41% 20% 38%
Handicam Yes 56% 25% 45%
Laptop Yes 85% 51% 72%
Washing machine Yes 91% 76% 79%
Large refrigerator Yes 63% 43% 60%
PDA with mobile function Yes 48% 31% 41%
Home theater Yes 50% 18% 31%
TV game console Yes 29% 20% 27%
Four wheeler Yes 74% 35% 62%
Club membership Yes 47% 23% 34%
Satellite TV dish Yes 64% 26% 43%
Digital camera Yes 85% 54% 72%
Dishwasher Yes 15% 4% 11%
Two wheeler Yes 69% 52% 58%
Amount of money spent
per visit in traditional
Median Rs 500-
Rs1000
Rs 1000-
Rs2500
Rs 1000-
Rs2500
Amount of money spent
per visit in modern formats.
Median Rs 2500-
Rs5000
Rs 500-
Rs1000
Rs 1000-
Rs2500
Mean Recommendation
rating for modern formats
1=Definitely
recommend
1.54 2.21 1.82
Synopsis-61
Cluster 1 consisted of people who preferred traditional formats for everyday purchase and
modern formats for bulk monthly purchases. These consumers belonged to the higher
income group (Rs75000 per month and above), were highly educated (Post graduate
professional) and had a higher proportion of ownership for all durables like Flat screen
TV, Handicam, Hometheater, Satellite TV, Four wheeler. Their monthly spends were less
than Rs 1000 in traditional formats and more than Rs 2500 in modern formats. They
highly recommend modern formats to their friends and family. This cluster was highly in
favor of modern formats. This cluster was labeled as ―Advocates of modern formats‖.
Cluster 2 consisted of people who preferred traditional formats and were found to be
averse to changing their buyer behavior. They belonged to the lower income group
(Monthly income less than Rs25,000), were mostly graduates and were low on affluence
parameters like ownership of durables like Flat screen TV, Handicam, Home theater and
Four Wheeler. Their monthly spends were higher for traditional formats (Rs 1000 to
Rs2500) and lower for modern formats (Rs 500 to Rs1000). They recommended modern
formats but not as highly as the Advocates. These consumers were called ―Patrons of
traditional formats‖
Cluster 3 consisted of people who were consumers of traditional formats but where
seeking alternatives for a better shopping experience. These consumers belonged to the
upper middle income group (Monthly household income (Rs 25000 to Rs75000), were
post graduates and fared quite highly on the affluence parameters of ownership of
durables. However the ownership of durables was not as high as the Advocate group.
Their monthly spends were the same for both traditional and modern formats (Rs1000-
Synopsis-62
Rs2500). Hence this group was labeled as ―Ambivalents‖. Also these was a higher
proportion of consumers from Delhi in this group.
Inference; Patrons of modern formats differ from patrons of traditional formats on
various demographic variables.
Synopsis-63
Chapter 6 - Conclusion
In the past few years, India‘s retail journey seemed poised for huge growth given the
entry of several new players. Retail in India emerged as one of the most dynamic and fast
paced industries according to the FICCI-Ernst and Young 2007 report (Winning with
Intelligent Supply Chains). Favorable demographics, steady economic growth, easy
availability of credit, and large scale real estate developments were fuelling the growth of
India‘s approximately USD 25 billion organized retail market. However the global
meltdown had an impact on the Indian market. As per the Cartesian Economic Meltdown
Survey 2008, almost all key industries in India have been negatively impacted by the
slowdown and retail is no exception. Organized retail penetration, which was expected to
touch 16 percent by 2012 from the current 5 percent, is likely to trace to 10.4 percent
only (Businessworld-The Marketing Whitebook-2010-2011 pg283, Source:KPMG
Analysis and Retailers Association of India).The retail sector is still registering decent
growth, but heavy investments made during the boom period may make it difficult for
retailers to show profits.
6.1 Main Findings:
Consumers made frequent lower expenditure trips in traditional formats while they made
less frequent higher expenditure trips in modern formats for food and grocery. On an
average consumers visited/placed an order atleast once a week from the traditional
formats spending less than Rs 500 per visit while visits to the modern format took place
once in 15 days or once a month with spends being more than Rs 1000 per visit. The
findings were found to be significant for Mumbai. Further high Income households
shopped more frequently from modern formats Thus the traditional formats will retain
Synopsis-64
their hold in India even as organized retail evolves. Both will grow alongside, as has
happened in China. The traditional formats will preserve their popularity and viability
over organized retail.
There was a relationship between types of food items purchased and choice of formats
whereby consumers preferred to purchase processed foods from modern formats and
fresh produce from traditional formats. The street vendor and neighborhood store benefit
from Indian‘s habit of buying fresh food often and hence convenient location becomes an
important parameter for consumers. Among the consumers who were dissatisfied with
modern formats, the key reasons of dissonance were proximity to residence (modern
formats were not close to their residence), hassle-free exchange policy and freshness of
products stocked. On the other hand proximity to residence was found to be a parameter
where traditional formats scored very highly.
Satisfaction levels varied for individual attributes however overall store satisfaction was
the same for both modern and traditional formats. Traditional formats scored on location,
free home delivery and offering credit. These formats have long maintained accounts for
households, waiving payments till the end of the month and sending goods to the door, at
just a phoned in request. Modern formats have recognized this strength of traditional
formats and have made payment options like acceptance of all major credit cards and
Sodexo coupons a convenient alternative. Further, modern formats offer great in store
experience, with a variety of brands, access to international brands and ambience.
Modern formats need to work on improving in-store service. Consumers were dissatisfied
with the exchange policy as well as the slow billing. The transaction process was found to
Synopsis-65
be tedious at modern formats as compared with traditional formats. Further store service
was found to be positively related to store satisfaction for both modern formats and
traditional formats and the relationship between store service and satisfaction was
stronger for traditional formats than for modern formats. If modern formats can improve
on the factor smooth transaction and interaction then it will lead to substantial
conversions.
When consumers were defined on the basis of their involvement in the process of
shopping, a cluster analysis revealed, three distinct clusters. The size of each of these
segments was significant, with the ambivalent shopper accounting for the largest
proportion.
―Advocates of modern formats‖ accounted for 34% of the sample. Here the consumers
preferred traditional formats for everyday purchase and modern formats for bulk monthly
purchases. These consumers belonged to the higher income group (Rs75000 per month
and above), were highly educated (Post graduate professional) and had a higher
proportion of ownership for all durables like Flat screen TV, Handicam, Hometheater,
Satellite TV, Four wheeler. Their monthly spends were less than Rs 1000 in traditional
formats and more than Rs 2500 in modern formats. They highly recommend modern
formats to their friends and family. Interestingly this group had a higher proportion of
males. Modern formats have a clear edge with this segment since this segment is more of
an experiential shopper. This segment was very satisfied with the ambience, availability
of international products, assortment of products etc. However the transaction and service
aspect needs to be focused on. Modern formats should improve their billing efficacy and
exchange policy to convert the advocates into committed shoppers.
Synopsis-66
Cluster 2 consisted of people who preferred traditional formats and were found to be
averse to changing their buyer behavior. They were labeled as ―Patrons of traditional
formats‖. They belonged to the lower income group (Monthly income less than
Rs25,000), were mostly graduates and were low on affluence parameters like ownership
of durables like Flat screen TV, Handicam, Home theater and Four Wheeler. Their
monthly spends were higher for traditional formats (Rs 1000 to Rs2500) and lower for
modern formats (Rs 500 to Rs1000). They recommended modern formats but not as
highly as the Advocates. Retailers of traditional formats should actively cater to this
group as they are the committed to traditional formats. As of now they have little
interaction with modern formats. They were satisfied with most of the parameters of
traditional formats and are comfortable dealing with the same store due to the
relationship/long association. Retailers should focus on providing fresh products and
continue with free home delivery, order over phone and providing credit facility.
Cluster 3 consisted of people who were consumers of traditional formats but where
seeking alternatives for a better shopping experience. These consumers belonged to the
upper middle income group (Monthly household income (Rs 25000 to Rs75000), were
post graduates and fared quite highly on the affluence parameters of ownership of
durables. However the ownership of durables was not as high as the Advocate group.
Their monthly spends were the same for both traditional and modern formats (Rs1000-
Rs2500). Hence this group was labeled as ―Ambivalents‖. Also a higher proportion of
consumers from Delhi belonged to this group. This group is lured towards modern
Synopsis-67
formats for the attractive discounts and promotions. Also the ambience of modern
formats and the wide range of products is making them visit modern formats. Modern
formats can convert ambivalents into advocates by continuously pricing offerings such
that the consumers see a huge savings in their monthly grocery bill. Traditional formats
need to tackle this group with a different strategy given that perception of freshenss of
food is higher for modern formats amongst this group. This group seemed to be fickle
and more price-conscious and hence savings is the reason to defect to modern stores.
However if this consumer finds that the travel cost does not justify the net savings, then
this group of consumers will also patronize the neighborhood store.
6.2 Limitations:
The present research was a general study on understanding consumer behavior among
modern formats and traditional formats in food and grocery. Specifically the study
focused on the drivers of satisfaction for the two formats and patronage behavior for the
two formats. It also focused on understanding the hierarchy of shopper needs and arriving
at inner needs. However the study did not focus on different type of formats within
modern formats for example – discount stores, hypermarkets and supermarkets
separately. Also the research was restricted to the two metropolitan cities of Mumbai and
Delhi. The impact of modern formats on traditional formats was not studied for other
metros specifically South India namely Bangalore, Chennai and Hyderabad. Hence the
results may vary if one were to compare across 4 or 5 major cities.
Synopsis-68
6.3 Scope for future research
As for future research, there is need to study the development of modern formats in more
detail. A lot of research has been carried out in the modern retail sector in Asia, such as in
Thailand (Feeny et al. 1996), Hong Kong (Kawahara & Speece 1994), Vietnam (Venard
1996).
The present study was limited to Mumbai and Delhi. Further since the sample size for
Delhi was only 72, the Delhi findings are exploratory in nature. Studying the impact of
modern retail on traditional retail and understanding the shopper needs for food and
grocery in Tier II main cities like Surat, Kanpur, Indore, Jabalpur, Nagpur, Pune,
Kozikode etc. should be pursued. Further it would be interesting to study the rural market
and understand how retailers can aim their offerings to the rural market. It would be
interesting to study in detail the way neighbourhood stores and local grocery stores are
adapting themselves to the influx of modern retail giants like Big Bazaar, Reliance Fresh,
etc.
Synopsis-69
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