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Modernisation in Indian retailing: Managerial and policy perspectives

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The structure of a country's retail sector has an enormous influence on marketing strategy and marketing activities of firms. The Indian retail sector has arrived at a very critical stage. Stores in modern formats have emerged in the metropolitan cities but the bulk of the retail sales happen through traditional retail formats. The development of modern retailing is of great interest to marketing scholars, practitioners and policy makers. This paper analyses the developments in retailing in India. A literature survey of retailing in India and some newly industrialized countries is carried out. Factors stimulating modernization are discussed and some implications for managerial action and policy are derived. ____________________________________________________________________ 1 Professor, Indian Institute of Management, Prabandh Nagar, Off Sitapur Road, Lucknow 226013.
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Mulky and Nargundkar. “Modernisation in Indian Retailing: Managerial and Policy
Perspectives” , in Udyog Pragati, vol. 27, no.2, pp. 1-8, April-June 2003.
Modernisation in Indian retailing:
Managerial and policy perspectives
Avinash Mulky 1
Rajendra Nargundkar 2
ABSTRACT
The structure of a country’s retail sector has an enormous influence on marketing strategy
and marketing activities of firms. The Indian retail sector has arrived at a very critical
stage. Stores in modern formats have emerged in the metropolitan cities but the bulk of
the retail sales happen through traditional retail formats. The development of modern
retailing is of great interest to marketing scholars, practitioners and policy makers. This
paper analyses the developments in retailing in India. A literature survey of retailing in
India and some newly industrialized countries is carried out. Factors stimulating
modernization are discussed and some implications for managerial action and policy are
derived.
____________________________________________________________________
1 Professor, Indian Institute of Management, Prabandh Nagar, Off Sitapur Road,
Lucknow 226013.
Phone 0522-23618191 Extension 743. Fax : 0522-2361843
Email : amulky@iiml.ac.in
2 Professor, Indian Institute of Management, Kunnamangalam P. O., Kozhikode 673 571
rnargundkar@iimk.ac.in
2
Modernistaion in Indian retailing:
Managerial and policy perspectives
Introduction
Retailing has been defined as business activities involved in selling goods and services to
consumers for their personal, family or household use (Berman and Evans, 2001).
Although retailing has been around for millennia, the 20th century witnessed a lot of
change in the retail sector, especially in the developed countries. Modern formats such as
department stores, discount stores, supermarkets, convenience stores, fast food outlets,
speciality stores, warehouse retailers and hypermarkets have emerged. Retailing has
become more organized and chain stores have been growing at the expense of
independent shops. The chains are utilizing sophisticated information technology and
communication to manage their operations and have grown rapidly not only within their
home countries like US, UK, France, Germany and Holland but to other developed
countries. Walmart Stores, the US retailer, was recognized as the largest firm in terms of
sales in 2002 in Fortune magazine’s list of 500 largest global firms. Modern retail
formats have also spread beyond developed countries and are becoming more important
in the NICs and developing countries.
3
Modernisation in Indian retailing
The emergence of new formats and the evolution of modern retail in India has attracted
attention in recent years. The business press in India has carried several articles and news
items in the last three years about the modern formats (Shukla 2001; Anand &
Rajshekhar, 2001; Bhattacharjee, 2001). The consulting firm KSA Technopak has
organized retail meetings or summits in major metros which have witnessed participation
from major domestic and international retailers, and also from manufacturers. Venugopal
(2001), has discussed the census studies of retail outlets that the market research firm
ORG MARG conducted in the 1990’s. This census provided data and estimates on a
number of parameters relating to Indian retail such as number and type of outlets and
growth of outlets over time separately for urban and rural areas. Due to these reports and
activities, there is good deal of information available about what is happening in Indian
retail. However Indian retailing has received sparse attention by way of academic
research with the exception of a few articles in academic journals and some case studies.
The purpose of this paper is to develop an understanding of the factors influencing the
evolution of modern formats in Indian retailing and to derive implications for managerial
practice and policy. The paper is structured into three sections. In the first section
academic journal articles about Indian retailing are reviewed in order to identify
established findings about Indian retailing. The second section consists of a review of the
4
literature relating to the development of modern retailing in a few newly industrialized
countries with a view to examine if the patterns of retail development in these countries
could occur in India. The third section analyses the process of modernization in the
Indian retail sector, makes a prognosis about the likely pattern of future development of
retailing in India and derives implications for practice and policy
Overview of Indian retail sector.
Indian retailing is undergoing a process of evolution and is poised to undergo dramatic
transformation. The retail sector employs over 8% of the national workforce but is
characterized by a high degree of fragmentation with over 5 million outlets, 96% of
whom are very small with an area of less than 50 m2 (Aggarwal, 2000). The retail
universe more than doubled between 1978 and 1996 and the number of outlets per 1000
people at an All India level, increased from 3.7 in 1978 to 5.6 in 1996. For the urban
sector alone, the shop density increased from 4 per 1000 people in 1978 to 7.6 per 1000
people in 1996 (Venugopal, 2001). Because of their small size, Indian retailers have very
little bargaining power with manufacturers and perform only a few of the flows in
marketing channels unlike in the case of retailers in developed countries, ( Sarma , 2000).
The corner grocer or the ‘ kirana’ store is a key element in the retail in India due to the
housewife’s unwillingness to go long distances for purchasing daily needs. An empirical
study was carried out by Sinha et al ( 2002) to identify factors that influenced consumers’
choice of a store. Although convenience and merchandise were the two most important
5
reasons for choosing a store, the choice criteria varied across product categories.
Convenience was indicated by consumers as the most important reason in the choice of
groceries and fruit outlets, chemists and lifestyle items while merchandise was indicated
as the most important in durables, books and apparel.
The traditional formats like hawkers, grocers and paan shops co exist with modern
formats like supermarkets, and non store retailing channels such as multi level marketing
and teleshopping. Example of modern formats include department stores like Akbarallys ,
supermarkets like Food World, franchise stores like Van Heusen and Lee, discount
stores like Subhiksha, shop-in-shops, factory outlets and service retailers ( Nathan ,
2001). Modern stores tend to be larger, carry more stock keeping units have a self
service format and an experiential ambience. Modern formats also tend to have higher
levels of sales per unit of space, stock turnover and gross margin but lower levels of net
margin as compared to traditional formats (Radhakrishnan, 2003). Modernisation in retail
formats is likely to happen quicker in categories like Dry groceries, electronics, Mens’
apparel, Books, Music. Some reshaping and adaptation my also happen in Fresh
groceries, Women’s apparel, fast food, and personal care products (Fernandes et al,
2000).
In recent years, there has been a slow spread of retail chains in some formats like
supermarkets, department stores, malls and discount stores. Factors facilitating the spread
of chains are the availability of quality products at lower prices, improved shopping
standards, convenient shopping and display, and blending of shopping with
6
entertainment, and the entry of industrial houses like Goenkas, Rahejas, Piramals and
Tatas into retailing ( Ramaswamy and Namakumari, 2002).
However formats are not easily scalable across the country. Several companies have
found that it is not easy to expand beyond some regions and cities as evident from the
examples of Margin Free Market and Foodworld, which are active only in a few states or
cities. Affordable real estate prices and availability of sufficient number of economically
well off households in the catchment area are critical requirements that will determine
new store viability and thus the possibility of further expansion (Anand and Rajashekhar,
2001).
According to Rao (2001), foreign direct investment in the retail sector in India, although
not yet permitted by government, is desirable, as it would improve productivity and
increase competitiveness. New stores will introduce efficiency. Customers also gain as
prices in the new stores tend to be lower. The consequences of modernization in India
may be somewhat different due to lower purchasing power and the new stores may cater
to only to branded products aimed at upper income segments. However it will be wise for
old style stores to join together into wholesale and retail groups to improve bargaining
power as experience in developed markets such as UK has shown that the modernization
in retail has led to the decline of independent mom and pop stores.
The need for a fresh perspective while developing theories to explain the new
developments has been stressed by Bennett et al (1998). The Indian retail environment is
7
witnessing several changes on the demand side due to increased per capita income,
changing lifestyle and increased product availability. Experience of retailing in US shows
that existing theories of retail development based on changing consumer needs, are
inadequate to explain new developments. In developed markets, there has been a power
shift with power moving from manufacturers towards retailers. The strategies used by
retailers to wrest power include the development of retailers own brands, and the
introduction of slotting allowances which necessitate payments by manufacturers to
retailers for providing shelf space for new products. Retailers have also used technology
effectively to obtain usable information about consumer buying patterns. The increased
power of retailers has led to the introduction of new tactics by manufacturers such as
everyday low pricing, partnerships with retailers and increased use of direct marketing
methods. Because of these issues, a supply side perspective needs to be fused with the
demand side in developing theories for explaining modernization in retail.
Retail development in NICs
Thailand is one of the countries whose economy has developed rapidly in recent years. In
Thailand, there has been a tradition of independently owned outlets called shop houses.
These outlets were run by families, with the shop located on the ground floor and the
family’s living quarters on upper floors (Feeny et al, 1996). Thailand’s first department
store opened in 1956, and the first shopping centre in 1967. The first branded
convenience stores emerged in the mid-80’s, but these stores were not very successful.
Thai shopping habits and spending was still attuned to traditional shop houses and
8
disposable incomes were short of critical takeoff. Since the 1990’s however, economic
growth, more investment in retail and increasing westernization in lifestyles has led to a
faster growth of convenience stores. The master franchise for 7-11 in Thailand is CP, a
major Thai business group whose standing, influence and experience have been a key to
the success of 7-11 in Thailand. Discounts and superstores were introduced in 1989 by
the Dutch firm Makro in a joint venture with CP and have been a huge success. However
the presence of the supermarket format has been low due to ingrained habits of buying
fresh produce. Most sales in this format are accounted for by supermarkets attached to
department stores. Speciality stores, especially category killers were just emerging in
Thailand in the mid 1990’s.
Bennison and Boutsouki (1995), have analysed the development of modern retail in
Greece. Although not a classical NIC, Greek retailing has been dominated by small
independently owned and operated shops and modern retailing came to Greece only after
1991 in response to the need to harmonise legislation for a single European market.
During 1951-1990, Greek retail was characterized by a high density of 17 outlets per
1000 population compared to 5.9 for Germany and 6.1 for UK. During this period the
number of outlets more than doubled as limited employment opportunities and low entry
costs made retailing an attractive vocation. Greek retailing witnessed dramatic change in
the 1990’s. A large superstore hypermarket was introduced in 1991. This was followed
by the entry of large cash and carry stores such as Makro, foreign department stores such
as Marks and Spencers, supermarkets and a wave of franchising to Greek companies by
international companies such as McDonalds, Bennetton, Pizza Hut and Body Shop
9
Another country where the development of the retail sector has also followed an
interesting path is Brazil. The concept of self-service in shopping was introduced to
Brazil in 1953 but until 1972, there was no foreign influence in the Brazilian retail sector.
Food retailing especially, continued to be Brazilian owned and managed, although
international innovations were adopted (Alexander and Silva, 2002). In 1972, the Dutch
group Makro entered Brazil followed by Carrefour in 1975 and Ahold in 1996. The
1990’s have witnessed the introduction of technological innovations in retailing like
Electronic Data Interchange (EDI), retailer credit cards, retailers’ own brands and
efficient consumer response (ECR). Organisations like Carrefour and Walmart have set
up centralized distribution centres with electronic communication with suppliers.
Shopping centres are becoming important in the retail landscape because they provide a
variety of entertainment facilities that draw people to the retail stores. The number of
intermediaries in marketing channels is decreasing as the operation of traditional
wholesalers is under threat from the direct contact between retailers and suppliers,
although a few specialized distributors have emerged who provide value added services
such as distribution of frozen and chilled food.
Factors underlying evolution of modern retail in India
The foregoing review has provided some information that enables the construction of a
framework for analyzing the retail development in India. The driving forces towards
10
development can be broadly classified into categories shown in Table 1 below, which is
followed by a discussion on each of the driving forces.
--------------------------------------------
Table 1 about here
--------------------------------------------
Economic development
The development of the Indian economy is a necessary condition for the development of
the Indian retail sector. The example of Thailand shows that the impetus to modernization
of retail was provided by the economic boom in Thailand (Feeny et al, 1996).
Development increases the disposable income in the hands of consumers and leads to an
increase in the proportion of spending on discretionary non- food items. Economic
development also enfranchises new households as potential customers for modern retail
and leads to increased ownership of personal transportation among consumers, which in
turn can increase their willingness to travel longer distances to shop in new format stores.
The growth of the economy can also provide gainful employment to those who would
otherwise enter retailing in areas like hawking, roadside vending and other similar low
cost entries into the retail sector. Rapid economic development may also positively
influence the views of international retailing companies about the business prospects and
investment attractiveness in a country. A high degree of inflation in the economy is
11
however, not conducive to modernization of the retail sector. In Brazil, the real progress
in retail was noticed only after the stabilization of the economy and control of inflation
(Alexander and Silva, 2002). Development also has an influence on the regions and cities
where modern formats are initially set up. In the Greek, Thai and Brazilian cases, modern
formats initially appeared in the important cities. This has been noticed in India as well as
the modern formats first appeared in the metros like Delhi, Mumbai and Chennai and the
mini metros like Bangalore and Hyderabad due to the comparatively higher level of
disposable incomes available in these cities.
Improvements in civic situation
The civic situation includes factors like safety and security in the city and the various
municipal regulations governing the opening, location and operation of stores, and the
nature of public transport available. A safe and secure environment will encourage the
setting up of 24 hour convenience stores and the operation of shopping plazas and
encourage shopping expeditions for the whole family. The presence of adequate parking
facilities or excellent public transportation will encourage consumers to be more mobile
in their choice of store. City or state regulations on opening or closing hours, rent control
laws, availability of adequate electrical power and regulations relating to licensing will
affect both the time required to set up a new store as well as the cost of store operation
and its viability. Many of the civic factors mentioned above would be dependent on the
economic development and administrative policies in the area. The impact of the civic
12
situation may influence the choice of the cities, states, zones in which the modernization
investments will be made.
Changes in consumer needs, attitudes and behaviour
The growth of modern retail is linked to consumer needs, attitudes and behaviour.
Marketing channels including retailing emerge because they receive impetus from both
the supply side, and the demand side. On the demand side, the marketing channel
facilitates provides service outputs that consumers value. These service outputs may
include but are not limited to bulk-breaking, spatial convenience, waiting and delivery
time and assortment (Coughlan et al, 2001, pg 30). In Indian retailing, convenience and
merchandise appear to be the most important factors influencing store choice, although
ambience and service are also becoming important in some contexts (Sinha et al, 2002).
Modernisation will have to address convenience issues while presenting strong
alternatives to the weaknesses of traditional formats in selection of merchandise available
for sale. Modern formats need not be expensive and can offer lower prices to consumers
(Rao, 2001). Lower prices in turn will increase the attractiveness of modern formats and
rapid growth in the preference for purchasing from new format stores.
Store ambience includes issues such as lighting, cleanliness, store layout and space for
movement. Modern stores can offer a far better ambience compared to traditional stores.
On the service front, traditional stores especially kirana stores offer credit and home
13
delivery. These needs will have to be addressed by new format. Experience from Brazil
shows that the combination of entertainment and shopping provided by some shopping
centres, is attractive to consumers. This may become important in India as well because
of the limited entertainment options currently available in cities. While consumer needs,
attitudes and behaviour will influence the development in retail, it is likely that
investments in retailing and the creation of new stores offering value will in turn
influence consumers. This appears to have happened in Greece, Thailand and Brazil.
Changes in government policies
The Indian government has clarified on a number of occasions that foreign direct
investment will not be permitted in India. Major international retailer organizations will
be watching for signals of policy change especially because China has permitted foreign
investment in retail. In opening up the retail sector, the government may consider various
approaches such as insisting on joint ventures, limiting the foreign stake, or specifying
the cities areas where investment is permitted. Thailand’s example shows that in case of
joint ventures, the local partner can play a significant role in the success of the joint
venture. The Brazilian experience shows that local retailing groups can successfully
compete against international chains if they adopt innovations and restructure operations
in accordance with market needs. Some policy protection can be given to consumer
cooperatives which have been providing value to their members and customers. This
protection can be in the form of allowing these organizations to access capital from the
local market and operate in a more professional manner. The government can also play a
14
positive role in simplifying or eliminating the plethora of regulations governing retailing.
Specific laws relating to franchising will also be desirable for foreign and Indian brand
owners to adopt the franchise route in a bigger way.
Increased investment in retailing
The prospects for significant modernization and development in retailing will depend on
the nature of investment in this sector. The investment will be of two types- foreign and
domestic. The quantum and nature of investment will depend on the factors outlined
earlier namely economic development; civic situation; consumer needs, attitudes and
behaviour; and government policies.
Although FDI is not yet permitted in retailing, a number of global retailers are testing the
waters by signing technical agreements and franchises with Indian firms. Fast food chains
like McDonalds and Pizza Hut are already operating in the metros. A Marks and Spencer
store is already operational in Mumbai. Several global retailers are awaiting a change in
policy. However, the development of the Indian retail sector is dependent not just on
foreign investment but on Indian investment as well. Since the 1980’s industrial groups
such as Reliance and Raymonds have been active in encouraging development of well
appointed exclusive showrooms for their textile brands. In the 1990’s industrial houses
like Rahejas, Piramals, and Tatas have entered retailing. Several Indian and foreign
brands have used franchising to establish exclusive outlets for their brands.
15
At present the new format stores cater mostly to households belonging to the higher
income families. The catchment area for these modern stores has to be fairly large as the
number of such households is small in relation to the total population. This limits the
number of stores and constrains the growth of chains. The modern stores have also been
plagued by low conversion in relation to the number of footfalls. This means that
although a large number of people visit the store, the number of buyers and the average
bill amount is small. Due to low sales, the bargaining power of the retailers with suppliers
and manufacturers is low and this restricts their average gross margin. On the other hand
the expenses involved in setting up and maintaining a modern format store tend to be
much higher than traditional store due to the additional expenses on larger size, better
locations and superior ambience. Therefore if the returns on investment in the new
formats have to be attractive, modern retailers have to develop a strong supply chain that
provides them significant gross margins while delivering merchandise at attractive prices
to customers. In order to do this, modern retailers will need to eliminate middlemen and
buy directly from suppliers and make use of technology to control inventory. These
developments will impact the survival and existence of middlemen such as wholesalers
and agents who will have to find new business models to survive. Manufacturing firms
will also face pressure from strong buyers on price, delivery and service terms.
Increase in power of organized retail
Bargaining power of organized retail translates directly into higher gross margins for the
retailers. At present there are a large number of independent retailers with little
16
bargaining power vis a vis manufacturers, distributors and wholesalers. Manufacturers
have been promoting their brands and generating consumer demand for branded products.
This makes it necessary for all varieties of stores especially in urban areas to stock
branded products. Manufacturers take advantage of the consumer pull to limit margins to
the retailers. Retailers manage their profitability by operating on a very low cost basis.
This is possible because of low rental expenses due to historical reasons and low labour
costs due to employment of family members in the store. The modern stores have
somewhat higher gross margins, but their net margins are not very significant for
providing the cash flow required to fuel rapid growth in outlets.
Retailers can increase their power in several ways. They can invest efforts in developing
their own store brands. The supermarket chain Foodworld has begun doing this in a
limited way with foodgrains and pulses. Secondly they can invest in supply chain, buy
directly from the sources and eliminate middlemen. Thirdly they can attempt to obtain
volumes in buying by aggregating the requirements of various stores, and bargaining for
better prices by placing large orders. Although this strategy suits chain stores,
independent grocers may also get together by forming a cooperative or buying club in
order to benefit from scale economies in purchasing. Retailers can also obtain several
benefits from using information technology. They can monitor their stocks and sales
using IT and thus manage their working capital more efficiently. They can also analyse
data about customers and their buying habits and be in a position to develop marketing
strategies and promotional offers to increase customer purchasing at the outlet.
17
Manufacturing firms will need to develop new strategies for dealing with powerful
retailers. The first change required will be one of mind-set. Negotiations with powerful
retailers will have to be carried out at much higher executive levels within the firm. New
structures such as National account managers, Category managers etc. would need to be
deployed. Firms will have to reconsider their brand promise, brand promotion and their
brand building policies to deal with store brands that will be introduced by retail chains.
Firms will also have to re engineer their logistics policies to meet the demands of
powerful retailers for just in time delivery to their distribution centres or stores. New
product introductions will have to be coordinated with the retail chains so that adequate
shelf space is available at launch. The firms will need to carefully look at their product
cost structures both in terms of variable cost and allocated fixed costs in order to maintain
profitability in the face of pressures for price reductions from powerful retailers.
Conclusion
The Indian retail sector is largely traditional, but stores in modern format are emerging.
The contribution of organized retailing in the share of retail sales in India is currently
very small. Based on an analysis of retail developments in countries such as Thailand,
Brazil and Greece, and some experience in India, it is possible to conclude that
modernization of retailing in India would be influenced by some important factors. These
factors include economic development; improvements in civic situation; changes in
consumer needs, attitudes and behaviour; changes in government policies; increased
investment in retailing and rise in the power of organized retail. The development of
18
modern retail will have several implications for managerial practice in manufacturing
firms. Firms will need to proactively review and their sales structures, brand activities,
logistics policy and price structure to cope with pressures from powerful retailers.
Table 1
Factors underlying modernization in retailing
Sr. No. Underlying factors
1 Economic development
2. Improvements in civic situation
3. Changes in consumer needs, attitudes and
behaviour
4. Changes in government policies
5. Increased investment in retailing
6. Rise in power of organized retail
19
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New Delhi: Response Books
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... This protection can be in the form of allowing these organisations to access capital from the local market and operate in a more professional manner. The government can also play a positive role in simplifying or eliminating the plethora of regulations governing retailing (Mulky and Nargundkar, 2003). Sinha (2010) points out that global retail business does not travel well whereas the small-format store or the convenience store is almost always local in nature. ...
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The purpose of the study was to determine the key drivers which influence the shopping behavior of the customers in the retail store. In today’s competitive world with increasing number of retail stores, the retailers need to be more customer oriented. Retail has changed and expanded in all lines of business, be it apparel, jewelry, footwear, groceries.etc. The modern consumer is posing a challenging task for the Indian retailer. More aware, more confident and much more demanding, therefore the retailers are looking for ways to deliver better consumer value and to increase consumer purchase intention. Retailers tend to differentiate themselves by making their service easier to consumers. The study aims to study the key drivers that can influence shopping behavior in retail store. A survey (store intercept) method was employed to elicit primary information from 300 shoppers in different formats of retail stores of Lucknow. The findings reveal the factors that play a greater role in influencing the shopping behavior of customers in retail store. As such, a survey of retail store customer’s attitude towards reduced price, sales promotion, quality of the products, proximity to the home, customer service, store atmospherics were analyzed to identify the key drivers influencing shopping behavior in retail store. A questionnaire based on a five-item Likert scale, as well as random sampling, was employed for data collection. Data analysis was accomplished using SPSS software. The paper has found shopping experience, store image and value for money as three important variable out of which shopping experience emerged as a dominant factor which influences the consumer’s shopping behavior in the retail store. Since the research has established empirical evidences in determining the key drivers which influences the shopping behavior of the customers in the retail store, it serves as a foundation for a deeper probe into the shopping behavior of the customers in the retail store research domain in the Indian context
... Sanjeev Varshney 2006 study found that small town Indian shoppers outshop for pleasure and to seek variety. Mulky and Nargundkar (2003) identified that convenience and merchandise assortment were the most important factors influencing grocery store choice behavior. Sinha and Banerjee (2004) found that store convenience and customer service positively influence consumer store choice. ...
... stated that organised retail industry will mean thousand of new jobs, increasing income level, standard of living, better products, better shopping experience etc.Mulky et al, (2003) opined that the Indian retail sector is largely traditional, but stores in modem format are emerging. Ascompared to traditional stores, new format stores are pre-engineered retail outlets, characterised by well designed layout, ambience, display, self service, value added services, technology based operations and many more dimensions with modem outlook and practices. ...
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Indian government recently opened gates for global retailers by increasing FDI from 26 percent to 51 percent in both single branded and multi branded retailing. Some of the global retail giants like Wal-Mart already started their operations with joint ventures with Indian corporates whereas others are in plans to enter into Indian retail sector with their brands. Here the biggest challenge is how Indian retailers can compete with international retailers in pulling the customers towards their retail outlets. With this recently changed scenario in Indian retail sector, an attempt has been made to provide assistance for the Indian retailers by informing them about the determinants of retail outlet choice that is being made by the customer to shop in a particular retail outlet. The study identifies some determinants of retail outlet selection and proposes the retailers for better business performance to concentrate on the most significant determinants identified after performing factor analysis for data reduction for better business performance.
... FOR, in the Indian context, is defined as "chain stores, all owned or franchised by a central entity, or a single store that is larger than some cut-off point" (Joseph, Soundararajan, Gupta, & Sahu, 2008: 8) of shop size or revenue (Mulky & Nargundkar, 2003), and managed by hired professionals using modern supply chain management (Zameer & Mukherjee, 2011). In developed economies, the growth of FOR chains had led to the widespread closure of smaller informally organized retailers (D'Andrea, Aleman, & Stengel, 2006;Lenartowicz & Balasubramanian, 2009). ...
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Small informally organized family-owned grocery retailers—kiranas—are ubiquitous in India and have retained market dominance while facing increasing competition from large formally organized retailers (FORs). Yet, strategy literature has under-explored such informal businesses. We explore kiranas’ distinct strategic practices that give them competitive advantage over FORs, generating kiranas’ sustained market dominance. To explore kiranas’ informal strategizing, grounded theoretic analysis of our multi-year case study suggested the employment of strategy as practice (SAP) framework, enriched with the social exchange theory (SET) concepts of trust and reciprocity. We find that the kiranas’ sustained enactment of strategic practice such as free-of-charge home-delivery significantly depends on contextually rich, reciprocity-based social exchange relationships with customers which evolve through praxes involving continuous exchange of trust. The practice enactment and exchange relationships constitute strategy-practitioner’s emerging dual-identity, which in turn reinforces the practices, generating a self-reinforcing cycle of practice enhancement. Within this cyclic relationship, an inimitable enactment of a strategic practice can be a key source of competitive advantage for informally organized small retail retailers over large FORs. By linking two unconnected prominent approaches to understanding patterns of workplace interactions, namely SAP and SET, the study opens theoretical avenues for exploring strategizing of informal businesses.
... The and Hisam (2007) and Ghosh et al (2010) presented that 47% of India's population is under the age of 20 and this will increase to 55% by 2015 and this young population will immensely contribute to the growth of the retail sector in the country. Mulky and Nargundkar (2003) opined that the Indian retail sector is largely traditional, but stores in modern format are emerging. As compared to traditional stores, new format stores are pre-engineered retail outlets, characterized by well designed layout, ambience, display, self service, value added services, technology based operations and many more dimensions with modern outlook and practices. ...
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Government of India allowed 51% FDI in single brand retail and 100% in cash & carry only. But FDI in multi brand retail has not yet been allowed. One of the major steps taken by the Government recently to encourage the organized retailing in the country was the recent decision of the cabinet to allow 51% FDI in multi brand retail and 100% in single brand retail in Nov 2011. The government has ultimately taken the bold decision and notified the much-awaited policy allowing 100 % FDI in single brand retail from the existing 51%. In view of the above background, it was proposed to undertake a study to assess the impact of the government's decision to allow 51% foreign direct investment (FDI) in multi-brand retail and 100% in single brand retail on the Indian retail sector. This study is completely a review based study which throws light on reviewing FDI Policy in India, FDI Policy with regard to Retailing in India, Factors attracting FDI towards Indian Retail Sector and Impact of FDI on Retail Sector.
... McGoldrick and Andre (1997) advocated that the socio-economic, demographic and other characteristics allow us to discriminate those buyers who are more or less loyal to the store. Mulky and Nargundkar (2003) identified that convenience and merchandise assortment were the most important factors influencing the grocery store choice behaviour. Thang and Tan (2003) established the fact that merchandising, accessibility, reputation, in-store service and atmosphere influence customer preference for a store. ...
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Any person, who buys a product/service, may not be necessarily user or consumer. The subject of shopper behaviour has focused on individuals and the factors that impact their decisions to spend their resources on consumption-related items. The concepts and theories of shopper behaviour have drawn upon diverse disciplines as psychology, sociology, social psychology, cultural anthropology, and economics. Consumers who enjoy shopping are mostly female and are considered to be a noteworthy force in the retail market. Women think differently from men because there are biological, neurological, and behavioural variations between the brains of men and women. These differences in turn make an impact on their shopping behaviour. While men will load themselves with sufficient information of a product or service through internet, advertising, reviews; women would try to get benefit from others' experience by asking people around them. This article presents a review of literature, in the field of consumer shopping behaviour and the role of women in shopping. The main purpose of this article is to identify the different streams of thought that could help the future researchers and guide them. The researcher has gone through materials that had been investigated on consumer shopping behaviour and the role of women in shopping. The study of consumer behaviour is rapidly evolving as researchers recognize and implement new techniques and trans-disciplinary perspectives to understand the nature of purchase and consumption behaviour. This in-depth outlook attempts to study consumer shopping behaviour in the illumination of rapidly developing lifestyles, standards, priorities, and communal contexts. The overall goal of such research endeavour is to achieve better understanding of consumer shopping behaviour and the role of women in shopping.
... Sanjeev Varshney 2006 study found that small town Indian shoppers outshop for pleasure and to seek variety. Mulky and Nargundkar (2003) identified that convenience and merchandise assortment were the most important factors influencing grocery store choice behavior. Sinha and Banerjee (2004) found that store convenience and customer service positively influence consumer store choice. ...
Article
Full-text available
Along with the government's policy to convert from kerosene to LPG gas, LPG consumer demand is increasing. It requires the LPG distributors to be able to meet the needs of its customers. PT. Limas Raga Inti is an authorized distributor company PT. Pertamina LPG product devoted to distribute 12 kg. The company's main commitment is to provide the best service to the consumer. One of the efforts to improve the quality of service is to provide optimization of the distribution process. Optimization can be done by determining the distribution of the matrix saving method to obtain the optimal route. The purpose of the optimization of route determination is to provide effectiveness and efficiency of the distribution process. Effectiveness and efficiency can be seen with the speed of delivery time and can overcome the problems that exist in the company. In the process of determining the route to saving matrix, is done in the consumer sorting method which has produced the nearest neighbor and nearest the insert. Then do the repair method using 2-opt and or-opt in order to provide the best route to the selected proposal. Furthermore, the delivery time will be calculated based on the productivity of the proposal and indicating the optimal route. The results of this study are are 4 routes proposed by sorting nearest neighbor method with a total delivery time of 10 hours 30 minutes for 100 customers spread in the distribution area D14. The resulting productivity by 85.11%.
... FOR, in the Indian context, is defined as "chain stores, all owned or franchised by a central entity, or a single store that is larger than some cut-off point" (Joseph, Soundararajan, Gupta, & Sahu, 2008: 8) of shop size or revenue (Mulky & Nargundkar, 2003), and managed by hired professionals using modern supply chain management (Zameer & Mukherjee, 2011). In developed economies, the growth of FOR chains had led to the widespread closure of smaller informally organized retailers (D'Andrea, Aleman, & Stengel, 2006;Lenartowicz & Balasubramanian, 2009). ...
Conference Paper
Small, informally organized retail grocery shops or kirana shops are ubiquitous all over India and have historically existed as a dominant form of organizing in the Indian retail context. Despite increased competition from the relatively recent emergence of organized retail, kirana shops still hold an overwhelmingly large share of the Indian food and grocery market. Using a strategy as practice (s-as-p) approach, and focusing on the home delivery and informal customer credit as illustrative strategic practices, this study examines how the strategy actors in informally organized business settings practice strategy. This empirical study is based on observations and exploratory qualitative interviews with kirana shopkeepers and customers. The objective is to explore the enactment of strategy in informally organized business settings.
Article
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Retailing refers to the arrangement of activities required to sell goods and services (products) to end consumers for use by themselves, families and other households. From the shoppers’ point of view, the retailer serves him by providing the goods that he needs, in the required assortment, at the requisite place and point in time. The role of a retailer is to provide real added value or convenience to the shopper. This paper aims to develop a frame work of retail store environment dimensions and a reliable and valid scale to measure the dimensions of retail store factors in the purchase of food and groceries and lifestyle products in supermarkets. A total of 150 subjects were surveyed at supermarkets on sixty one orientation based questions to identify the purchase influence dimensions. The result of an exploratory principal component factor analysis suggested that retail store environment factors on food and groceries and lifestyle products purchase has seven distinct dimensions. The confirmatory factor analysis was used to establish the robustness of the retail factor dimensions. The result of these analyses demonstrates that the seven retail store environment dimensions, as represented by the 45-item shopping orientation scale, is reliable, valid, and generalizable for the purchase of food and groceries and lifestyle products in supermarkets.
Foreign investment in retail trade Some issues in retail management in India, Vision Can India’s largest retailer bounce back?, Business Today Deciding where to buy: Store choice behaviour of Indian shoppers Marketing Channel Management : A Customer Centric Approach
  • S L Rao
  • M K Sarma
  • S Shukla
Rao, S.L. ( 2001). Foreign investment in retail trade, Economic and Political Weekly, 36 ( 41) 389-392 Sarma, M.K. ( 2000). Some issues in retail management in India, Vision, 4 (1), 35-40 Shukla, S. ( 2001). Can India’s largest retailer bounce back?, Business Today, December 8 , 41-48 Sinha, P.K., Bannerjee, A. and Uniyal, D.P. ( 2002). Deciding where to buy: Store choice behaviour of Indian shoppers, Vikalpa, 27 (2) 13-28 Venugopal, P. (2001). Marketing Channel Management : A Customer Centric Approach. New Delhi: Response Books