Buying Behavior Of Purchasers In Traditional Vs Modern

Food and food constitute a major portion of private intake. This offers a large potential market for organised retail companies to tap into. However, credited to high proliferation of local kirana stores with the unbeatable advantage of closeness and customer familiarity questions the success of organised retail in this category. This review tries to discover the replies and the patronage behavior of customers towards traditional and modern food and grocery retailers.

Introduction

India is referred to be a nation of shopkeepers with about 15 million retail outlets of all types.

Of these, the majority is small neighbourhood grocery stores called "kirana stores". Food and food constitute a major part of the private intake. This offers a huge potential market for the organized retail companies to tap into. However, the high proliferation of local kirana stores with the unbeatable benefit of closeness and customer familiarity questions the success of arranged retail in this category. This analysis tried to find the reactions and patronage behavior of metropolitan customers towards traditional and modern food and grocery retailers.

Retailing is the greatest private industry in India and second largest job sector after agriculture. It contributes about 10% to the GDP of India and creates 6-7% of employment. Size of Retail Industry in India is $435 billion according to Technopak statement 2010. The Indian retail sector is divided into planned and unorganized retail. Share of Organized retail is 5% to 7 % in the total retail industry. Unlike almost every other countries, Indian retail sector is highly fragmented and almost all the business is in the unorganized sector

India gets the highest retail density on earth having over 15 million shops. Liberalization of the economy, go up in per capita income and growing consumerism has encouraged large business homes and manufacturers to set up retail formats.

Many foreign merchants like Metro and Wal-Mart have also entered in to the market through different routes such as low cost cash-and-carry, local processing, franchising, etc

Food & Grocery store is the key category that constitutes 70% of Total Retail Industry (According to Technopak record 2010)

Grocery has three components (CII-McKinsey &. Company, 2005) (1) Branded food products (including packed foods, soaps and detergents, toiletries and home items); (2) Dry unprocessed grocery store (including grains and cereals); and (3) Fresh grocery (including fruits and vegetables, meat and dairy products).

Unbranded category makes up about nearly 60% of most food sales. Fresh groceries in India take into account 40% of the food business, including 18% in milk, 13% in fruits and vegetables, and 9% in meat and seafood.

Food &Grocery store in India comes through both traditional types and modern formats like supermarkets, hypermarkets, discount stores and convenience stores.

Nielsen's Shoppers' Trend Study, 2008 has uncovered some changes in consumer shopping behavior and purchase pattern in the development of modem trade. A number of the key insights are as follows (Images F&R Research, 2009)

Shoppers are shopping at supermarkets more often than a year back and the common container size per trip is also increasing.

The local grocer/standard store, although still supreme, is, finding a steady erosion of customer platform and spends.

The attributes a customer searches for while choosing the store are also almost unchanged, with location convenience still supreme accompanied by perceived value for money, range and quality of stocking

Indian consumers are rapidly growing and acknowledging modern retail platforms. By 2011, India will have an additional 280 hypermarkets, 3, 200 supermarkets, 400 shops and roughly 1, 200 mega specialty stores (the category killers) and 20, 000 exclusive brand outlets

Purpose of the Study

There is a growing need to evaluate the true individuals of shopping behavior in the Indian framework. The Indian retailing scenario seems to be powered more by euphoria. To a large section of customers the new formats are perceived to add insufficient extra value, except for novelty. However many people in like to shop in modern retail outlets

The problem that is identified for this study is the fact why even after almost a decade of the growth of arranged retailing in the country, food and grocery store sector is not growing at the desired tempo, though such a humongous opportunity in food and food retail is so obvious.

Share of Modern Retail in Food & Food is 20% as per Technopak article 2010

On the face of computer, food and grocery section shows the most attractive potential for a modern retailer to enter into. While most observers have accepted the role of large format arranged retail in clothing and lifestyle markets, you may still find lingering doubts on how arranged retail will perform in the food and grocery section in India.

The following stand shows the different formats of food retail forms in India as stated in the paper by Zameer, Asif;Mukherjee, Deepankar, "Food and Grocery store Retail: Patronage Behaviour of Indian Urban Consumers", South Asian Journal of Management, 2011.

Model Type

Mom-n-Pop

Supermarket

In Mall

Hypermarket

Rationale for offering Food retail

Food retail (grocery) as center business.

Food retail (food) as key business.

Complete experience and offer.

Draw in customers and go through the offer.

Food Division

Large part of shop

Large part of supermarket

Part of mall management, normally outsourced.

Separate section or section.

Range of SKU's

Medium-large

Large

Not large

Large

Pricing strategy

Matches market rates

Matches supermarket placement, may discount.

Matches shopping center positioning

Discount below market rates.

Type of products

Dry, chilled, packaged, non-foods. Damp products normally not stocked.

Dry, chilled, packaged, limited wet stock.

Dry, chilled, packed.

Dry, chilled, packaged, wet, and fresh.

Supply String Model observed

Self managed

Self been able or outsourced or DC driven

Outsourced logistics, royalty founded or franchised.

Outsourced logistics, immediate supply from main resources.

Private Labels

Local labels, may not be high

High and increasing

Depends on store in shopping mall.

High and increasing.

(Source: The Economic Times Retail 2003)

Literature Review

Store choice and patronage have been widely studied around the world. However, there have been few tests done in India on these issues, since sorted out retailing has been a very recent trend.

Zeithaml (1988) talked about the consumer perceptions of price, quality and value. He has argued that from the consumer's perspective, price is what's given or sacrificed to obtain a product.

Howard (1989) identified the three key proportions of a shop image: convenience of the store's location, the price tag on its products and the information it provides about its products.

Studies by America's Research Group show that 83% of women and 91% of men have ceased shopping at a specific store because of long checkout lines

Supermarket buyers have cited fast checkout as more important than low prices in selecting grocery stores (Food Marketing Institute, 1985 and 1986).

Woodside A, Trappey III(1992) signifies that an individual's positive or negative evaluation of relevant behavior, is characterized by the person's values regarding the identified outcomes of doing the behaviour. For example it can explain why consumers do or do not buy products of a specific brand name or shop at certain kind of store.

Lindquist (1974-75) evaluated the publicized results of some 19 studies on retail store image and synthesized their frameworks into a set of six store image characteristics. They are Goods, clientele, Promotions, service, Convenience, Store Atmosphere, Post Business deal Satisfaction

BB Goyal and Meghna Agarwal, " Organized Retailing In India- An Empirical Review Of Appropriate Formats And Expected Fads, (2009) it reviews the knowledge of customers' perceptions, attitudes, desires, dreams and expectations has become very important for marketers. Customers provides many new ideas, which companies may not identify on their own.

Ritesh Kumar Dalwadi, " Key SHOP Qualities Determining Consumers Perceptions"(2010) this review emphasizes that product range, store structure, shopping convenience; promotional techniques, product pricing, customer support, employee behaviour, and store ambience significantly influence the customers.

Mohua Banerjee And Rajib Dasgupta, " Changing Routine of Consumer Behaviour in Kolkata with Arrival of Large Format SHOPS"(2010) this study says about the Suppliers and mall managers should be aware of the benefits identified by consumers at department stores, whether consumers are shifting their preference from traditional zone-based buying to shopping in department stores and the factors responsible for such change, to be able to optimally position themselves.

P. Narayana Reddy, " Impact Of Appearing Organized Retailing On Unorganized Retailing" (2009), This newspaper claim that the unorganized stores' turnover falls by 22. 8 % in the first year of the beginning of an sorted out outlet near the store Quite simply, as the structured and unorganized retail co-exist, there can be an increase in competitive response from the unorganized sellers and turnovers begin to show an optimistic trend.

Ch. J. S. Prasad and A. R. Aryasri, " Study Of Customer Romantic relationship Marketing Methods In Organised Retailing In Food And Food Sector In India" (2008)The quickly changing trends in life-style, food and diet plan of consumers have contributed generally to the growth and development of organised food and grocery store retail platforms in India. But, this sector is predominantly dominated by the original kirana stores, that have strong relationships with the clients for various complex and functional quality benefits long to them.

Decision Factors Used

Common to both Kirana and Modern Retail Stores

Convenience of Location

Parking Facility

Product Variety

Product Quantity

Prices

Phone Order

Home Delivery

Sales-Promotions

Bargaining Facility

Credit Facility

Product Quality

Self-Service

Work Convenience

HYPOTHESIS:

In order to determine the relevant decision variables influencing selecting a neighbourhood kirana store or a modern trade store for the purchase of food and grocery, the study proposes a couple of hypothesis after certain projected decision variables as research done in the newspaper by Zameer, Asif;Mukherjee, Deepankar, "Food and Grocery store Retail: Patronage Action of Indian Urban Consumers", South Asian Journal of Management, 2011. For every variable, the null hypothesis is as below

H ( 0 ): There is no significant perceptual difference in the importance mounted on each adjustable influencing the customer's decision on choosing between the two retail platforms to buy food and grocery.

This means that if the hypothesis is not accepted, there is a significant perceptual difference due to particular variables between your two retail formats.

H (1): There is a significant perceptual difference in the importance attached to each varying influencing the customer's decision on choosing between the two retail formats to buy food and grocery store.

Key Findings

Convenience of Location: Any place in India, generally a person can expect to discover a Kirana store within half of a kilometre of his dwelling, while the existence of supermarkets and convenience stores is mainly in cities and this too not so wide-spread. Hypermarkets are generally located in out-of-town locations.

Parking Facility: With, more people using own means of transport (two-wheelers and four-wheelers) to visit the most well-liked stores, a preference for enough and free auto parking very near the store has gained importance. For modern suppliers, who position themselves as one-stop outlets, such a facility is a must near their stores. The individuals are not likely to value travelling frequently for much longer distances necessary to reach such stores.

Product Variety: Final number of products (variety in conditions of brands and their Stock Keeping Items (SKUs). Their supply at modern shops is more than the neighbourhood Kirana shop.

Product Volume: Larger volumes are ordered at modern shops in comparison to small traditional retailers per shopping trip.

Prices: Price of a particular item can be described as economic value advantage that a customer perceives to own bought by purchasing that item from any store. Prices at modern sellers' are usually lower than that offered by kirana shops scheduled to bulk-purchases and disintermediation.

Phone Order: This is the facility prolonged by the stores where the customer can place his / her order over mobile phone and can later pick up the ordered items from the store at his/her convenience. This service is mainly provided by traditional merchants.

Home Delivery: That is thought as the service provided by the merchant to obtain the customer's ordered items delivered to his dwelling (generally expanded by the majority of the vendors in blend with the telephone ordering center). The kirana outlets want to fight your competition by extending these facilities to their customers.

Sales-Promotions:

These will be the sales incentives expanded by the suppliers to customers for a rise in off

take of that particular brand common at modern retail outlets.

Credit Facility: Generally an in depth personal knowledge of the client is a prerequisite for stretching the credit facility which aspect is available only at neighbourhood kirana retailers.

Bargaining Center: The range for negotiating the price tag on something at a retail installation is available more in unbranded grocery and fresh grocery store, where there are no printed Maximum Retail Price (MRP) or the MRP appears to have no significance. This facility is long only by kirana shops.

Product Quality: In India, typically, freshness is of leading importance in buying food and grocery products. Modem sellers with the long supply chain and storing capacity are recognized to be advertising food items (especially wet groceries) which are comparatively less fresh than kirana stores or super fruit and vegetable suppliers.

Working Time Convenience: It really is defined as the timings in your day whenever a particular store remains open up for customers to buy things. Generally kirana outlets have an extended working period as they open early each day and close late at night.

Most of the people have experience of shopping at Modern Retail at least once

Most people like to shop food & Food from Modern retail outlets

This shows that the entire benefits and the full total shopping experience at the present day retail outlets can influence a high degree of store patronage behavior.

Most of the folks do not use vehicle to attain to the most accepted Kirana store

However majority of people use Vehicle to look at modern retail outlets

Customers favoured Kirana outlets due to convenience of location, home delivery service, bargaining service; goods return facility and goods exchange facility.

On the other hands, decision variables like parking service, product variety, quantity of goods to be purchased, advantage of sales promotion plans, self-service center and good thing about loyalty programs drive the customers to organized retail stores.

Clearly location benefits is very crucial for Kirana shops plus more personalized services like home-delivery. The mental benefits of having the ability to bargain and at exactly the same time also compel the retailer to switch or go back goods are identified to be more easily available at Kirana outlets. The product quality is perceived to be better at Kirana retailers for food and grocery products

Organized stores are recognized to be having better car parking facilities, more variety and range of merchandize (hence offering far better product choice), self-service (hence the power of keeping and evaluating the merchandize), good thing about better discounts/schemes and devotion programs to incentivize duplicate purchases.

Even in Modern Retail there exists difference between shopping habits depending on psychographic and demographic factors

Majority of individuals who shop at modern shops are in the age group of 25-35 years

More female compared to Males shop from Modern retail outlets

In terms of occupation most of the employees and housewife shop from modern shops. Students shop least from Modern retail

In terms of Income, most of the people whose Income is between 10, 000 to 20, 000 monthly shop from Modern retail outlets

Why Folks are Adapting Modern Retail Formats

Most of the category available under one roofing is the major factor to transfer towards modern retail outlets

Air conditioning at modern shops is another factor, because AC cleans away the exhaustion and tiredness involved with shopping.

People also shop at excellent and hyper marketplaces because they're self-confident that owner is not cheating with them and consumers are willing to pay high quality for it

However few people who choose to look at Kirana store is due to Inability of consumer to deal at modern retail outlets

Conclusion

There is significant perceptual difference in the value mounted on each adjustable influencing the customer's decision on choosing between your two retail forms to buy food and grocery.

The major advantages which kirana stores are enjoying over modern suppliers are location convenience, custom-made convenience and easy goods come back/exchange facilities. With the best retail density on earth, the customers are sure to find an area food and grocery retailer, very close to their homes.

Without the difficulty of incurring any extra cost in product acquisition on account of gasoline/transportation charges, the attractiveness and simple reaching to the local store are enormous. Apart from location benefits, another factor creating patronage for kirana outlets is more personal services like home-delivery.

Kirana stores are also identified to be better on account of phone order center and credit center than organized stores.

The first major value that your customers perceive very important for the present day food and food suppliers to provide is the merchandise choice

With large merchandize range available under one-roof, the metropolitan customer can match almost all of his/her monthly necessity in a single shopping trip and prevent making frequent excursions to various kirana stores.

Proper ambience, cool aesthetic merchandizing, regular product availableness, complimentary product layout and useful check-out process will enhance the shopping experience for the clients. Another value-enhancer for the modem vendors can be increasing value-added services (like phone-order and home-delivery), goods exchange/return policy, packaging services, carry-bags, etc. Finally, an important factor which can result in increased patronage at the modern suppliers is customer romantic relationship management pursuits like loyalty extra/discounts, special customer cards, and free-parking facility etc.

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