Chapter – 2

REVIEW OF LITERATURE 2.1) Introduction This topic covers all the material used in the form of various books, international

and national journals and research reports. The chapter has very purpose to state the

reference material used in the study, further it aims to review the relevant research

articles and, to find out the research gaps in the existing literature. Chapter further,

covers the outcomes of pilot study. The reference material is arranged

chronologically and reference numbers are mentioned alongside in brackets

according to the bibliography.

Literature review provides various insights associated with retail, retailing and

specifically the grocery retailing. Various books categorically mention types of retail

trade. Various books mention consumer related issues and factors affecting

customer‘s buying decision. Researcher from assessing the literature review tries to

find out the gaps in the existing research. Further, researcher has carried out the pilot

study to understand unfold theoretical issues which varies from city to city, from

customer to customer and from segment to segment.

In the 1980s, globalization of the world economy was largely confined to

manufacturing firms. However since the early 1990‘s, the services sector has started

to internationalize due to tremendous progress made in various aspects such as the

development of telecommunications and information technology, the err-regulation

of services industries and also the liberalization of foreign trade and investments

regimes world-wide following the establishment of the World Trade Organization‘s (WTO). One of the services sectors that grew impressively was the retail sector

where the intensified globalization of the retailing industry brought about the

emergence of retail multinationals – mostly food and general merchandise operators – such as Wal-Mart, IKEA, Courts Mammoth, Carrefour, Tesco, A hold, etc in

various countries. These trends have been spurred by both push and pull factors. The

mature character of the industry in developed countries characterized by high

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competition and low profitability (market saturation), as well as domestic regulation

restricting. 2.2) Review of related literature Author Andre Tordjmon France in European Retailing International journal of Retail

and Distribution Management (71)

, writes about the structure of European retailing

by mentioning the different components of it. The components are segmentation,

Retail formats, competition assessment, capitalization, concentration strategy, and

diversification. Firstly, segmentation is important dimension because manufacturers

will have to develop the product range which is more innovative and abundant. The

diversity in demand has led to the implementation of segmentation strategy secondly

the competition amongst the format. The competition has been observed in some

types of formats of retailing but not in different types of formats. Thirdly,

concentration strategy is getting stronger. In 1991, the top five food retailing groups

represented more than 45% of British market. Fourthly, internationalization of

retailing remains the important parameter. Internal and external factors are

considered for retail growth. These factors are saturation of national markets

lowering transportation cost. The German companies are largest in Europe.

Segmentation is equally well developed in the grocery sector with superstores being

the most dominant format, but also with discount supermarkets, hard discount stores

and convenience stores. Paper divides the formats into service-oriented format and

price oriented format. Paper gives the tabular presentation of .formats in various

countries like France, UK, Spain, Germany, and Italy. Paper gives the table

mentioning number of supermarkets, hypermarkets, superstores, convenience stores.

Paper mentions historical review of retailing from 1960 to 1990. Paper further

mentions the characteristics of retailing in 1990 to 1993 like fewer shops, large sales

area, less stock more customer service, fewer independence retailers, and more

affiliation. Paper concludes by stating that the wheel of retailing will continue to

turn.

In research paper ―Impact of recession on retailingǁ (73)

, the author describes that

recession creates significant difference on the expenditure pattern of customers.

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Retailing business has short term as well as long-term implication of the recession.

The recession is responsible for decline in profile.

The margin management becomes very difficult. Management attention was directed

towards sales and margins. If this is achieved effectively, it will provide a

satisfactory financial performance. This can be described with number of factors

mentioned in the retailing business model. These factors are mainly sales, current

assets, strategic decisions and operational decisions. Secondly, paper describes the

management responses during recession. The model describes different activities

and decisions to improve the effectiveness of the business. This model gives the

emphasis on sales generation, gross margin management, fixed asset management

operations margin management, fixed cost management. Thirdly, paper describes

about different stores like Marks and Spencer Kingfisher observational research has

been done.

The book with title ―Fundamentals of marketing managementǁ

(24), in 1994

mentions four P‘s of marketing and significance of it in consumers buying behavior.

Secondly, author mentions the importance of the service management and its

marketing for profitable as well as non-profitable organizations. Lastly, the author

gives importance upon the marketing appraisals of various industries.

In the book by John Teschohl (25)

, author mentions details about exceptional service

and ingredient of the service excellence. Secondly, the customer‘s mind is analyzed

by the author. Thirdly, author mentions that retailers need to formulate the long-term

strategy for achieving the excellence in the services.

V.W. Mitchell, senior lecturer in marketing at Manchester School of management,

UK In Paper: Consumer risk perceptions in grocery retailing (55)

, describes about

food retailing strategies and different types of risks like performance risk, physical

risk, psychological risk, financial risk and time risk. Performance is all about the

satisfaction of customers desires by the retailer. Product specific risk is important

when retailer is not the manufacturer of the product. It matters when supermarkets

are unable to reach to the customers. When customer saves his or her physical or

mental effort in the shopping trip or by the products purchased will help to reduce

physical risk. The first concern in risk is the time saved in shopping, and second

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dimension concerns the timing of convenience i.e. the stage of the consumption and

clearing up. Grocery retailers tries to enhance the convenience of families enabling

them to do nozzle free shopping by introducing facilities like car parking space,

quality of food.

Physical risk is all about dirtiness in store, creating unhygienic environment for

unpacked goods. Secondly paper states about the store attributes varies depending

on variables such as a type of product purchased, the type of store and type of

consumer, some attributes found to exert a consistent influence on store choice; they

include store location, merchandise, price, advertising and promotion, personnel,

services offered, physical design and nature of store clientele. Paper gives reference

of Tigert (1983) which states that product assortment, service and quality appears to

be important for food stores. Paper implicates that changing importance and nature

of store attributes results from the changing nature of shopper‘s needs motives and

perceived risks. These attributes have been put into categories and these

classifications can be useful in teaching. Paper describes the relationship between

risk factors and their relationship with shopping motives.

Paper describes that stores attributes and marketing mix components are closely

related with each other. Paper gives reference of generic versus branded grocery

items. Risk perception varies across product categories the factors like product usage

time are the factors which are also very important. Fourthly paper express the

relationship between situational factors and risk perception. Consumers are more

willing to accept greater risk during or after the discussion with other people than as

individual (Woodside, 1972). Group discussion factor is important for high-

involvement factors. The paper concludes that the risk theory is limited to the factors

and product categories.

In descriptive research paper on ―Examination of relationship between service

quality, customer satisfaction and store loyaltyǁ done author (65)

, describes about the

relationship between service quality and customer satisfaction. Secondly, paper

refers the conclusions made by Iacobucci et al (1995) which say that key difference

between service quality and customer satisfaction refers to the delivery of the

service while satisfaction reflects customer‘s experiences with that service. Author

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tests the relationship between service quality and recommendation made by the

customers to the others. Similarly, it tests the relationship between customer

satisfaction and stores loyalty. The research was carried out only on females. The

questions were asked about shopping frequency, satisfaction, and attitude. The

Likert scale is used. Thirdly, author describes about Oliver‘s four-stage model of

customer loyalty in retailing. These 4 stages are cognitive loyalty, affective loyalty,

thirdly co native loyalty and lastly action loyalty.

The book ―Consumer behaviorǁ published by new age international publisher

(11),

mentions various factors affecting the consumer buying behavior. Secondly author

describes about consumer motivation. Lastly, author introduces new concept in the

buying behavior of the customers. It is customer delight.

The book with title ―Commentary on consumer behaviorǁ (4)

, explains the basic

definition of the market segmentation and consumerism. Secondly, the consumer

describes about customer attitudes. Lastly, consumer describes about consumer

protection and buying decision process.

In research paper ―The mismanagement of customer loyaltyǁ

(61), Author A Werner

Reinartz and V. Kupamar in research paper with title ―The mismanagement of

customer loyalty Source in journal Harvard business Review July 2002, pp 6-14

states about the loyal customers and their attributes. The research has been made by

using company‘s customer database. The paper also describes that there is weak link

between loyalty and profitability of the organization. Paper further specifically

pointed out that loyal customers are less price sensitive, easy to handle and effective

in bringing new business. The paper speaks about the method what the researcher

has found which is more effective than the existing ones about loyalty. Paper further

mentions about its research findings that even though loyal customers are easy to

manage, they are more aware about the product offerings. Paper makes the private

inferences that work of mouth publicity is done by the consumers who are regular

visitors than the customers who are not the regular customers. After the survey

researcher tries to find out the reasons why customers are losing by the retailers.

The book ―Managing Indian Brandsǁ

(18), describes about the importance of

marketing to the sector of manufacturing and servicing. Secondly, the author

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describes about the brand positioning and various aspects of branding. Part III of

book gives insights upon the brand loyalty and brand extension. Further part IV

provides customer insights at branding.

Author YLR Moorthy in the book titled ―Brand Management (16)

, gives the details

of the importance of branding in case of the FMCG products. Secondly, author

describes about brand loyalty and personality. Further author gives insight to brand

image.

The author Lamba (14)

writes about the retail and retailing. Secondly, book takes the

review of global perspective of retailing in India, retail marketing and advertising.

Thirdly, book mentions about customers and their buying behavior. Lastly, book

takes the note of the services provided by the retailer.

The author Suja Nayar provides the insights about the consumers (17)

. In part II,

author describes the details of perception of the customers‘ personality, attitude and

motivation. The part III mentions the process of customers buying decision and

services offered to the customers.

In Paper with title ―The internationalization / globalization of retailing towards an

economic geographical research agendaǁ (34)

, the author gives insights on

internationalization of retailing author explains six different dimensions of

international retailing. Firstly, it states how international retailers are squeezing the

local retailers. It also explains the concerns over the supply chaining operations of

retailers. Second issue that paper explains about sector based competitiveness

between different international retailers. How they are competing among themselves

in different sectors in different countries. Third issue what is being discussed in the

article is the domination of supply chain operations the issue of local supply

chaining operations. The fourth issue, which is considered in the paper, is the impact

of domestic suppliers and chains in terms of global sourcing activities of foreign

retailers. Paper gives the reference of two recent studies, which are indicative of how

this kind of work might proceed (Huges, 2000). Fifth, the retailers are prone of

social, cultural change in host markets with respect to shopping and consumption

patterns. Paper further describes the different reasons of retail growth. Author

concludes that retail research needs to be performed in different geographical areas.

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The book by Dr. Gupta (7)

, provides special attention to retail branding. Secondly,

author describes the branding strategies in terms of integrated branding, context

branding and independent branding. Thirdly, author states that development of

whole branding view which is nothing but considering hypermarket or retail store as

a brand.

In the report Indian Retail on fast track time for bridging capability gap. KPMG

report 2005 at federation of Indian chambers of commerce and India (68)

, gives the

references of the years 2005 & further gives the remarks. The Paper through the

graph shows that the food and grocery sector is growing at 91% while clothing

sector is growing at 55%.The report describes that the opportunities for retail

business in tier two cities are growing. According to this report, there is a potential

of 82% in metro cities. In other places, it is app. 18%. Paper further implicates that

there are 6 major challenges retailers used to face. They are

1) Large geographic area

2) Infrastructure constraints

3) Distribution cost

4) Lack of national distribution network

5) Lack at distribution hubs

6) Lack of segmentation Paper further gives the information about the number of retailers and how they have

started with the original formats and then went for the other formats (14%). Paper

further commented on fastest growing formats in India (15%). They are specially

stores by (95%), supermarkets by (45%), Hypermarkets by (36%), Discount stores

by (18%), Convenience and E-Tailing formats by (7%). The paper has made the

comments on what kind of formats are suitable in Indian context.

In Paper on ―Service Quality in Retailing Relative efficiency of alternative

measurement scales for different product service environmentǁ (53)

, author describes

about the instrument called SERVE QUAL developed by Persuraman. It has 22

items. It covers 5 dimensions of tangibles- reliability, responsiveness, assurance and

empathy. The instrument is tested empirically in number of studies. Author

describes about uniqueness of the services offered by retail makes the use of sales

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developed for other service categories somewhat questionable. Data were collected

by means of structured questionnaire. The questionnaire consists of three sections.

Respondents were asked to rate 22 statements of service performance scale for both

their regular super market and electronic goods retailer. The convenience sampling

was used in research to gather the data. The correlation method is used to test the

reliability of the 5 dimensions mentioned above. Factor scaling method was used to

collect and organize the data.

In paper ―An analysis of organic retail market in NCRǁ author

(67), takes the insight

into existing market operations of key organic players. The survey was conducted to

17 retailers based on structure questionnaire that consists of 10 questions based on

the objectives. The paper gives the insights on shopper‘s behavior and finds that

major customers visiting their outlets are purchasing grocery stores. Paper finds that

marketing strategies are based on market demand and customers relations. Paper

further states about the relationship between organic suppliers and retailers.

In research paper ―Evolving Research on Price Competition in Grocery Retailing Industryǁ in magazine Agricultural and Resource Economic Review

(35), the author

mentions about the competition in grocery retailing and supermarket revolution. The

paper makes the conclusions that there are three forces for change in competitive

conditions in food retailing. The first is multiplication of retail formats. Second is the

vertical integration between retailers and their suppliers and third is strategic

decision making of the retailers.

According to CMIE report, Indian economy has been growing at an average rate of

more than 8% over the last six years (Shriniwas 2006). Infrastructure according to

paper played a major role in this development. The logistic cost in India is around 13

to 14% which is higher than 8% of USAs and lower than 21% i.e. of China.

However, supply chaining is going through paradigm shift. Secondly, paper states

that the Indian logistics is going through the change. Poor maintenance of equipment

over loading of truck beyond capacity is some of the tricks used by the companies

who are service providers in the industry. Thirdly, paper produces the references

given (by Prof. Sanyal 2006) from 2006. It shows that he major contributors in

logistics cost are spend on the transportation and warehousing and packaging are

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second in ranks while inventory and order processing are having 3rd and 4th rank

respectively. Paper explains the structure of supply chains of sample firms the

suppliers, plants, approved retailers and regional distributors are the main elements

of it. India has gone through the change from 2001-2005 (CMIE Data base 2006).

The liberalizing Indian economy is experiencing entry of large domestic and global

firms in the new business as well as enlargement of distribution network of many

regional Indian firms. The announcement of large retail projects by Reliance and

Bharati (in collaboration with wall most will bring new technology which will be

responsible for the addition of new warehousing capacity. The research paper

describes the innovative practices used by the GATI logistics. It has transformed to

become one of the leading end-to-end logistics and supply chain solutions provider

in India and continuous innovation and high end technological investments to

improve service quality and efficiency can be described as reasons behind their

success. It is starting to connect with mass retail market in several cities through

150customer convenient centre.

Paper further states the innovation in form of other company Amul which has

worked on the network of opening retail outlets. The third example of innovation is

Dabewallas from Mumbai and the forth example is ITCs e-choupal which has

reached to 3100villages in India and 520internet Kiosks and now covers variety of

agricultural business products. Paper expresses the challenges before the Indian

logistics which are at policy level. The first challenge is related to the infrastructure

i.e. the growth rate of mega high way has to increase. Poor road conditions increase

in vehicle turn over pushing the operating cost and reducing efficiency. The roads

and duty hours of works needs to modify to provide the quality of good service. In

India the per day travel of vehicle is 25 to 30 km while in other countries it is around

80 to 100km. This is because of poor roads.

According to Kearney report

(46), Retail in Industry CII – Confederation of Indian

industry mentions India‘s retail sector generated total revenues of approximately

$322 billion in 2007 of which the organized retail constitutes only 6%. However, the

sector is expected to grow at CARG of 12% to $427 billion by 2010 with the

organized retail expected to contribute 15% of total retail revenues.

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Indian retail sector has 12 million small retail outlets spread across India. India‘s

organized retail sector is also moving at a fast pace, aided by improving

infrastructure, a booming economy and changing customer preferences. The retail

space is also changing and increasing.

Retailers in India are presently focused on the essential building blocks of an

organized retail. Retailers are all the time searching for the preferred location and

retail space.

In the book with title ―Compendium of Brand Managementǁ (5)

, author states the ―Brand as value driverǁ. There are four types of brands – Generic brand, expected

brand, augmented brand and potential brand. Secondly, author states that each brand

stands for certain values. Thirdly, author states that value driver is what the brand

tells the consumer about its significance. Suja Nayar writes about the importance of

stores attributes such as merchandising, retail locations and pricing strategies. In part

III, author considers specific issues such as stores loyalty and technology for the

discussions. In part IV, author gives the emphasis upon customer related issues such

as services offered to them, importance of relationship between the customers and

retailers. Last part of the covers branding issues related with retailing.

In the book ―Retail Management a strategic approachǁ

(2), the author states that

Retailers and their suppliers have complex relationships because the retailers serve

two roles. They are part of a distribution channel aimed at the final consumer; and

they are major customers for their suppliers. Channel relations are smoothest with

exclusive distribution. Author secondly state that retailing has several special

characteristics like setting the A retail strategy, defining the business, setting

objectives, defining the customer market, developing an overall plan, implementing

an integrated strategy, and evaluating performance and making necessary

modifications. Secondly, author points out marketing concepts associated with

retailing in terms of testing. The total retail experience, customer service, and

relationship management and how these practices are applied in retail environment.

Author states that to achieve this retailer needs to know customer orientation, use a

coordinated effort, and are value-driven and goal-oriented. The total retail

experience consists of all the elements in a retail offering that encourage or inhibit

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consumers during their contact with a given retailer. Some elements are controllable

by a retailer; others are not. Customer service includes identifiable, but sometimes

intangible, activities undertaken by a retailer in association with the basic goods and

services sold. It has an effect on the total retail experience, and consists of two

components - expected services and augmented services. In relationship retailing, a

firm seeks long-term bonds with customers, rather than acting like each sales

transaction is a totally new encounter with them. Lastly, author discusses different

approaches of retailing like an institutional approach, a functional approach, and a

strategic approach.

In the book ―Retail buying techniquesǁ, the details of retail stores operations are

described (9)

. The book gives emphasis upon importance of merchandising in

retailing. Secondly, the book gives importance to the supply chain initiatives of the

retailers. In part three the importance is provided upon promotions and profitability

of retail stores. Lastly, the book gives the importance to the branding issues.

In research paper ―Current land space at Retail in Indiaǁ in June 2007 by Stanford University

(58), author explains about the growth at Indian economy during 2006-07

and 2007-08 and its impact on Indian customers in terms of rising income levels and

growth of middle class families. It focuses on changing spending pattern of Indian

customers. Paper describes about how Indian customer has gone through the change

and how the customers mind set has changed during the last decade. Paper makes

the remarks about the state of unorganized sector its advantages and disadvantages

to the customers. Paper presents the reasons of low productivity in unorganized

retail structure in terms of labor intensity supply chaining and absence of

competition. However, further paper does the SWOT analysis of unorganized

structure, specially mentions the advantages of Mom and Pop stores in terms of

proximity, credit facility and home delivery facility. The major advantage of the

unorganized retailers are having is that they need small space area, less man power

to operate with, less tax burdens and less utility value. Paper gives the examples of

China and USA and explains the model which is successful in those countries. Paper

gives the source at National Council at Applied Research (NCAER) 2001 for

defining Indian customers in retailing environment (21)

(exhibit 10). Paper gives the

break up at unorganized retail sector (exhibit 11) which is dominated by food and

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grocery sector followed by consumer durables, beauty care. Paper in its exhibit is

dominated by home décor (71%) and food and grocery (48%) paper further

graphically describes the business model followed by Kishore Biyani‘s Pantaloon Retail.

The book ―Principles of marketingǁ (12)

, defines retail, retailing and wholesaling.

Secondly, the author mentions the types of retailers and the various factors

considered by the retailers about marketing in form of selecting of product

categories, promotional measures, pricing decisions and customers.

In the book ―retail mall managementǁ (21)

, author states the steps involved in

setting up hypermarkets and malls. Which includes outlining merchandise plans;

gathering data on consumer demand; determining merchandise sources; evaluating

merchandise; negotiating the purchase; concluding the purchase; handling

merchandise; reordering merchandise; and re-evaluating regularly. Secondly, author

states that the principles of a retail audit, it‘s utility in controlling a retail strategy

and the difference between horizontal and vertical audits, and the possible

difficulties with auditing. The retail audit process has six steps - determining who

does the audit; determining when and how often it is conducted; setting the areas to

be audited; developing audit forms; conducting the audit; and reporting results and

recommendations to management. After the right executives read the audit report,

necessary revisions in strategy should be made.

In paper ―Impact of organized retailing on the unorganized retailingǁ by Indian Council for Research on International Economic Relations

(52), author represents the

largest survey of all the segments of the economy that could be affected by the entry

of large corporate in retailing industry. The survey was based on 202 unorganized

retailers across major cities, 1318 consumers, 10 intermediaries and 197 farmers

were taken for the study (VI). Control samples were taken of 805 unorganized

retailers who are in the vicinity of organized retailers. 12 large manufacturers are

taken for the interview and the study is done. Paper gives the references of global

retail sales, which is estimated to cross US$ 12 million in 2007. Globally retail sales

increase since 2001. The share of modern retail has increased from 45% to 52%

from 1996-2007. Total retail sales, total grocery sales and nominal GDP is

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mentioned in the case. Report further provides the record of share of organized retail

in selected countries showing that USA with total retail sales of 2983 $bn having

85% of share in organized retailing while Japan stand secondly with 1182 $bn and

66% of share of organized retailing. Third ranking in retail sales goes to China

having 785 $bn and 20% of the share of organized retailers The UK has the total

retail share of 475 $bn and 80% of organized retailer. The France has 436 $bn and

80% of the market share in organized retailing. India stands 7 with the retail

turnover which is in the range of 40$bn and share of 5% only. The paper states

about three waves of retailing. The first wave starts in mid 90s in South America,

second wave started in late 90sand third wave started in late 1990. The third wave

includes the countries like China. Paper further describes about GDP final and

annual growth rate. Paper through its empirical analysis shows the growth of India

retail. The growth from 2003-2007 is mentioned in the report. The figure speaks

about the domestic retailers. The empirical research further shows that different

strategies used by organized retailers helps in generating business models. Paper

further describes the marketing strategies used by retail players in India. Subhiksha

has the main segment of the customers who will be value the low price high volume

strategy by keeping no fancy frills front end and by keeping an intermediary at the

back end. Subhiksha provides discounted price on bulk purchases and cash

payments. Paper further presents the model used by ITC Choupal Sagar and

Choupal fresh which gives the impacts on the backward integration through I/T

based business model, leverages by building direct relationship with supply source

the farmers, to sell as well as purchase products and services. The paper further

discuses the market penetration strategy used by the retailers who are using cluster

approach to attract the consumers paper through observation method interprets that

approximately 45% of the total space of format is occupied by the grocery . The

gross margin on clothing is around 0% while on FMCG products, it is 1 to 2 % and

on staples, it is 10%.

Impact of organized retailing is described in terms of five-year plans. According to

11th

plan, organized retailing brings many advantages to producers and to urban

consumers while also providing employment of higher quality. Organized retailing

in agriculture products can set up supply chains, give better prices to farmers for

their products and facilitate agro processing industries. Modern retailing can bring in

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new technology and reduce customer prices thus stimulating demand and thereby

providing more employment in production. Organized retailing will work with

farmers to improve yields by enabling them to obtain quality input supplies.

Organized retailers will offer alternative market to farmers which are transparent

and more remunerative.

The paper describes about the research methodology used which is the sample

survey. It is done with unorganized retailers, consumers, intermediaries, farmers and

manufacturers. The survey in the research is conducted on two major categories of

the group‘s food and grocery textiles and clothing. The study was conducted on 202

shops out of which approximately 55% belonged to grocery and general stores and

20% on textiles and clothing 7 percent fixed fruit and vegetables. 501 retailers were

chosen for the study which is from four different formats (hypermarket,

supermarket, discount stores and departmental stores). Paper describes another

dimension which is nothing but the closure of unorganized outlets. The report

through its research implicates that 41% of the unorganized retail stores are closed

because of the competition from organized retail and further expresses that 1.7% of

the unorganized retailers are closed down per year. 1/3rd of retailers (35%) provide

cash credit to their customers. Many unorganized retailers have started changing

infrastructure i.e. 30% that they will change with modern times. Retailer would not

like to (29%) change the marketing strategies with business. 17% of unorganized

retailers were unable to given their opinion and 24% of the retailers said that they

don‘t have the necessary resources to change the business the 10% of unorganized

retailers had the opinion that they would like to become the franchises of organized

retailers. The report studies the preference for organized and unorganized retailers

from the consumer‘s angle. The reason of the preferences given by the consumers

are better quality product, lower price, one-stop shopping, choice of more brands,

family shopping, fresh stocks. The people who prefers to shop at unorganized

retailers gives the reasons such as proximity, good will credit availability,

bargaining, choice of loose items, convenient timings, home delivery. The report

explains various channels of distribution like farmers, intermediaries, retailers and

tentative percentages. Farmers will be benefited in this distribution channel only

when the channels are less in numbers.

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Report with title ―The latest FMCG and Shopper retailing trendsǁ (40)

conducted by

Nelson Retail and Shopper Trends Asia Pacific 2008, by Peter Gate, Managing

Director, Nelson Retailer services, Asia Pacific 2007 has shown the growth to the

retailing trends because of strong GDP and rising prices the sign had shown that

there will be tougher challenges before the industry. The report describes about the

surveys conducted by online consumer confidence survey which reveals that

consumer confidence down from 201 to 85 in 1st half of 2008 with concerns over

the economy after the survey of consumers the papers further explains that

consumers are willing to cut down their travels, eating out, and other entertainment.

The paper ranks different attributes that are important for them and the emphasis

given by them is on value for money than any other parameter. Secondly, consumers

say that they will shift the stores from one to another in order to take the advantage.

The paper findings reveal that advertisements from newspaper and direct flyers are

the biggest trigger for store choice.

The paper further describes through the report that sales in grocery is grown at 17%

in last few years and with year on year growth of 23%. In India, there are 4500

supermarkets which had the growth of 34% as compared it with the growth in 2006

with modern trade only accounting for 9% of sales in 23% of key metros centers and

monthly urban shopper penetration for super markets at just 34%. This is significant

in difference in the level of brand loyalty within the region, with shoppers in

developing countries much more likely to be loyal to their favorite. The report

graphically explains the grocery retail share in Japan. It also graphically shows the

share at trade of modern self-service outlets. Paper further explains the consumer

confidence index. Report further explains the growth in number of grocery stores

from 2006 to 2007 they are from 2401 to 2423. Similarly, retail structure records

about supermarkets in grocery sector.

The research paper ―Understanding consumer‘s attitude towards retail store in

stock out situationsǁ (60)

examined how customer‘s attitude towards retail stores gets

affected by – situational, consumer, store and product characteristics variables when

they face out of stock situations. In recent years, the more emphasis is given on

measuring customer‘s attitude towards retail store. The attitude measurement

becomes more significant under stock out situation for particular products. There is

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complete lack of understanding about consumers attitudes towards out of stock

situations. It is more important to understand attitude than behavior for two reasons.

Firstly, attitude affects behavior and secondly attitude serves as on important

measure for effectiveness of retailer strategies. For example, retailer will lose

revenue in out of stock opinion. Grocery manufacturers at America (2002) identified

stock out as on obstacle in meeting shopper‘s satisfaction objectives. Attitudes are

functions of indirect experience (Fazio and Zanna 1981; Eagly and Chaiken, 1993).

Paper states about the variables, such as specific time constraint, shopping trip, store

loyalty, shopping attitude, shopping frequency. Research paper found that

consumer‘s store attitude gets the substantially and positively affected and favorable

for price perception and available stock. Consumer often revisit store to purchase

out of stock item due to price reasons. Research paper used survey questionnaire

method for data collection. Exit interviews are conducted at storefront with

consumers who were asked to imagine stock out situation.

Fox in research paper with title ―How Does Assortment Affect Grocery Store

Choiceǁ in journal Indian journal of marketing (39)

, author describes impact of

product assortment along with convenience prices and feature advertising on store

choice. We add assortments as predictor specify a very general structure for

heterogeneity and estimate store choice and category needs models simultaneously

using household – level marketing basket data. Paper through its findings makes the

comment that number of brands offered in retail assortments has a positive effect on

stores choice for most households, while the number of brands offered in retail

assortment has positive effect on store choice for most households, while number of

stock keeping units (SKUs) per brand and proportion of SKUs sold at a store that are

unique to that store have a negative effect on store choice for most households.

Secondly, research paper put forth the findings that heterogeneity in the response to

assortment than to either convenience or price. Retail assortment has the third rank

after location and low pricing. (Arnold, Mg and Tigert 1978), (Arnold Roth and

Tigert 1981), (Arnold Oum and Tigert 1983).The research paper further speaks

about the ―law of retail gravitation.ǁ The foundational theory of stores choice

suggests that the probability of choosing retail outlet is to its size but inversely

related to its distance from the shopper‘s home (Reilly 1931, Hutt 1964 and Brown

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1984). The size of the outlet, a proxy for product selection, is the product of number

of categories offered and number of items within each category. Because most

grocery stores carry the same categories, differences in product selection across

stores depend almost entirely in category assortment. The number of available

brands and the availability of the brands preferred by households enhance the

probability of choosing the retail outlet. Forth finding what the paper makes is that

apart from proximity parameter, criteria of low pricing, shoppers prefer different

assortment criteria. Fifth finding the paper makes is that the store choice decisions

are generally more responsive to the changes in assortment than to changes in the

price. Paper through its literature review can be applied parsimoniously across

categories (Boat Wright and Nunes 2001). The availability of private label items in

assortments can also have an effect on store loyalty (Corstgens and Lal 2000). The

research paper considers the characteristics like store loyalty, Distance, Advertising, Price, assortment category specific, store loyalty in store‘s choice parameter.

In the book retail mall management (22)

, author states the importance of integrating a

retail strategy, with consumer behavior. Secondly, author explains the elements of

retail promotion: advertising, public relations, personal selling, and sales promotion.

Advertising involves any paid, non-personal communication and has the advantages

of a large audience, low costs per person, many alternative media, and other factors.

Author mentions the elements of Personal selling which involves oral

communication with one or more potential customers and is critical for persuasion

and in closing sales. Some advantages are the adaptability, flexibility, and

immediate feedback. Some disadvantages are the small audience, high per-customer

costs, and the inability to help lure customers into the store.

Author Evans (8)

, states about different marketing concept and significance with

consumer buying behavior .secondly author describes about retailing wholesaler and

retail trade practices. Thirdly, author describes about trade area analysis in book ‗Service Marketing‘. Literature review covers 28 books and 45 research papers from referred journals and

conference proceedings. Review of literature covers the review of grocery trade.

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Review of grocery trade is further elaborated in next section ―Historical

background of grocery retail tradeǁ 2.3) Historical background of grocery retail trade – This section describes the review of global and Indian scenario of retail trade in

grocery mentions the present retail formats in grocery. Further, the section mentions

about the history of retail trade right from its origin and the actual start-ups of

retailing and its formats. The top global retailers in grocery are mentioned. In

addition, it covers the Indian scenario of retail trade and its importance to the various

countries through the charts. In the last part of the topic, the state of retail trade in

Kolhapur is mentioned and the list of small grocery shopkeepers taken for the study,

hypermarkets considered for the study and wholesalers are mentioned in the

annexure.

a) Overview of Retail Trade

Retailing is worlds‘ largest private industry ahead of finance and engineering, over 50 fortune 500 companies and around 25 of the Asian top 200 firms are retailers.

Retailing in developed countries is far more organized than in the countries like

India, where organized retail trade accounts for only 6%. In last few decades, retail

formats have changed radically worldwide. There are three major factors influence

how the customers shop and will be shopping in near future (Ved Chudamani,

Gibson, 2006, Retail Management pp 1-25). The three factors are – cross border

movement, consolidation and migration of formats.

A retailer‘s strategy may vary from one market to another because strategies are

determined by consumer lifestyles, behavior and the pace of growth in the region or

country, as well as other macroeconomic factors. Therefore, being aware of the

differences between markets, their grocery retail structure and their consumers,

allows the supplier or manufacturer to gauge how best to position their product

offering (i.e. which format to target and which market to enter into).

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Opportunities for premium products are emerging as retail channels diversify and

consumers become more demanding in developed markets where purchasing power

is highest. However, despite the demand for higher quality and differentiation,

pricing has also gained importance globally as a result of the economic downturn.

This has direct repercussions on suppliers and manufacturers.

What‘s more, saturation in developed markets has created opportunities for retailers

to expand into emerging markets. This, in turn, creates new prospects for products

that may not have been as competitive in developed markets. By contrast, these

products could enjoy novelty status in emerging markets, where aggressive growth

is expected to return once the economy regains ground.

b) Global scenario of grocery retail trade – Following graph shows the share of organized retail trade in various parts of the

world like North America, Western Europe and Australasia during the years 1999 to

2009. The share of organized retailers in developed countries is different from the

developing countries. It is in the range of 55 % to 70 % of total grocery retail sold in

modern formats. As the India is developing country, the state of retail trade in

grocery needs special mention.

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Now, the following graph shows the share of organized retail trade in various parts

of the world like Asia Pacific, Middle East and Africa, Eastern Europe and Latin

America during the years 1999 to 2009. The share of organized retailers is

comparatively low in developed countries. It is in the range of 20 % to 50 %.

Global retailers are expected to continue to invest in developed markets such as

Western Europe, North America and Japan, in order to take advantage of high levels

of purchasing power, but growth in these markets is expected to slow. Developed

markets have the disadvantage of being saturated by world-class retailers, resulting

in greater competition. In addition, retailers expanding into European markets will

be prone to high regulatory interference, which has encouraged numerous European

retailers to venture outside their home region. However, retailers may still choose to

invest in developed countries if they believe they have a niche product offering that

would appeal to a smaller market segment. The global retailers expand their

businesses outside their traditional home markets, leading to the emergence of truly

global retailers. The expressions will increasingly be a function of logistics and

management across regions. The global retailers like Wal Mart have the presence in

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South America and Europe and strong base in Asia. Other global retailers include

Carrefour of France, mark and Spencer of UK, Ikea of Sweden etc.

The immense impact of the communication technology has narrowed the cultural

gap between various countries over the decades. The advancement of

communication technologies has made a major contribution towards educating

consumers about the products and services they require and the internet has made

this possible.

c) Formation of retail organization – Retail organizations are more interested in mergers and acquisitions in the third

countries so as to enhance its market share and consolidate themselves in the local

markets. The global retailers are adopting the classical formats of the departmental

stores, supermarkets, hypermarkets mail order as they customize their offerings to

different consumer segments.

d) International Retailing Trends - Impact – According to author Ved Chudamani, large chain stores, supermarkets and

hypermarkets offer broader selection of merchandise at lower prices than local

retailers, which makes the survival of these local retailers more difficult. Due to

economies of scale, better prices and an efficient distribution system, the organized

retail traders can sell the products at cheaper prices than small grocery shopkeepers.

The factors such as strategic locations, adoption of technology, better negotiating

power and innovative marketing with greater value for the money are some of the

important parameters used by the global retailers to operate in competitive

environment. The factors like proximity in terms of strategic location plays

important role. The trade area analysis plays most important role in success and

failure of retailers. The customer‘s buying decision is affected by the proximity of

the retailers. According to author, the role of technology is important so as to make

the shopping simpler and easier. The global retailers use to purchase groceries in

masses and can negotiate with the wholesalers and have better negotiating power.

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Multinational retailers have money to promote their business through innovative

marketing strategies. e) Theories of retailing – A number of theories have been formulated about how retail organizations grow,

develop, expand and succeed. Theories of retail change make sense of what has

happened to retail organizations in the past, and more importantly, help retailers to

foresee future scenarios for their business, and those of their competitors. There are

different categories of theory - Cyclical theories, Environmental theories, and

Conflict theory.

Cyclical theories are those which trace common patterns in retail development over

time and include the earliest theories of retail change. There are different cyclical

theories like Wheel of retailing conflict theory and Retail accordion. 2.4) Major players in global retail trade

The latter half of the 20th

century, in both Europe and North America has been

marked by the growth of supermarkets. Convenience, rise in the income levels led to

the birth of supermarkets. On the global retail stage, little has remained the same

over the last decade one of the few similarities with today is that Wal-Mart was

ranked the top retailer in the world then and even now. The global economy has

changed, consumer attitudes has shifted. Technology is changing the face of retail

business; supply-chaining innovations are becoming the need of the business. The

global retail industry has traveled a long way from small beginning to an industry

where the worldwide retail stores alone are valuable at 87. Some of the top retailers

in the world are –

a) Carrefour – The first Carrefour store opened on June 3, 1957, in suburban Amnesty in France.

Today it is the smallest Carrefour location in the world. In 1999 it merged with

Promodès, one of its major competitors on the French market. The Carrefour group

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introduced the concept of a hypermarket, a large supermarket and a department store

under the same roof. They opened their first hypermarket June, 15th 1963 in, near

Paris in France. The revenues of Carrefour had been calculated to be 74.497 billion

Euros. They were the first operators in Latin America, Brazil, Argentina, Colombia

and Dominican Republic. It is the first international trader to make its presence in

Asia in 1977 with the presence in 6 countries.

b) Tesco – Tesco was founded, as a one-man business, by Jack Cohen in London's East End.

The first Tesco store was opened in 192in Burnt Oak, Edgware and London. Tesco

floated on the London Stock Exchange in 1947 as Tesco Stores (Holdings) Limited.

The first self-service store opened in St Albans in 1947 and the first supermarket in

Maldon in 1956. During the 1950s and the 1960s Tesco grew organically, but also

through acquisitions to the point where it owned more than 80stores. In May 1987

Tesco completed its hostile takeover of the Hillards chain of 4supermarkets in the

north of England for GB220. In 1994, the company took over the Scottish

supermarket chain William Low million. In 1997, the country announced the

purchase of the retail arm of Associated British Foods for 64million pounds. The

acquisition gave it a larger presence in the republic of Ireland. In July 2001 it

became involved in internet grocery retailing in the USA when it obtained a 35%

stake in grocery works. In 2002 Telco acquired 13 HIT hypermarkets in Poland and

in 2003 it launched UK telecoms division. In January 2004 Tesco acquired

Adminstore, owner of 45 Cullens, Europa, and Harts convenience stores, in and

around London In late 2005 Tesco acquired the 21 remaining Safeway/BP stores

after Morrisons dissolved the Safeway/BP partnership. In mid 2006 Tesco purchased

an 80% stake in Casino's Leader Price supermarkets in Poland. They will be

rebranded into small Tesco stores. As of 24th February 2007, at the end of its

2006/2007 financial year, TESCO had 1988 stores under different formats.

c) Wal Mart – Wal-Mart is an American public corporation and currently the world‘s largest

retailer. It was founded by Sam Walton in 1962. It is the largest private employer in

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the world. Wal-Mart is the largest grocery retailer in the United States, with an

estimated 20% of the retail grocery. Wal-Mart operates in Mexico as Walmex, in the

United Kingdom as ASDA, and in Japan as The Seiyu Co., Ltd. wholly owned

operations are located in Argentina, Brazil, Canada, Puerto Rico, and the UK.

Walton opened the first Wal-Mart store in 1962 in and within five years, the

company expanded to 24 cities in Arkansas. The company was incorporated as Wal-

Mart stores Inc. in 1969. Wal-Mart continued to grow rapidly during the 1980s, and

by its twenty-fifth anniversary in 1987, there were 1,198 stores with sales of

$15.billion and 200,00associates. This year also marked the completion of the

company's satellite network, a $24 million investment, linking all operating units of

the company with their Bentonville Office via two-way voice, data, and one-way

video communication .At the time, this was the largest private satellite network, and

allowed the corporate office to track inventory, sales, and send instant

communication to their stores. Also in 1988, the first Wal-Mart Supercenter opened

in Washington, Missouri. Wal-Mart expanded their superstore concept during the

1990s, and shortly thereafter surpassed Toys RUs in toy sales. The company also

opened overseas stores during this period, entering the South American market in

1995 with stores in Argentina and Brazil, and purchasing ASDA in the United

Kingdom for0illion in 1999. In 1998, Wal-Mart entered the grocery business,

introducing their Neighborhood Market concept with three stores in Arkansas. By

2005, estimates indicate that the company controlled approximately 20% of the retail

grocery and consumables business.. On 26th June 2007 the Chinese government has

cracked down on 18food shops and uncovered more than 23,00food safety

violations. Wal-Mart Canada has imported 7percent of Garments from Burma.

d) Aldi – Aldi operates more than 5,000 stores in 13 different countries on three continents. It

has a wide spread network of stores all over Germany, its core market. Consistently

and vigorously pursuing a discount strategy, Aldi‘s focuses on providing a limited

assortment of private label products at low prices and good quality. In addition to a

core range of standard groceries and non-food household items, a ―Special

Purchasesǁ line of goods that changes once or twice a week is offered (overall below

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1000 items). Aldi‘s business model has proven to be highly successful, putting Aldi

on 18th place by sales of the world‘s largest retailers. 2.5) Grocery retail trade in India – Grocery retail in India is still at a very nascent stage. Most retail firms are

companies from other industries that are now entering the retail sector on account of

its amazing potential. There are only a handful of companies with a retail

background. The most important change that has come into operation offer

independence is the entry of the same.

India is world‘s second largest grower of fruits and vegetables after Brazil and China. While the agriculture sector has witnessed several leaps of innovation and

technological advancements, the processing sector is still in its infancy. Even with

less than 4% processing of fruits and vegetables, the Food Processing Industry

sector in India is one of the largest in terms of production, consumption within India,

export and growth prospects. The government has accorded it a high priority, with a

number of fiscal relief‘s and incentives, to encourage commercialization and value

addition to agricultural produce; for minimizing pre/post harvest wastage, generating

employment and export growth. As a result of several policy initiatives undertaken

since liberalization in early 90‘s, the industry has witnessed fast growth in most of

the segments. In the following few paragraphs, it can be noted that the processed

food market for India is vast and the amount of scope that retail chains would be

exposed to is phenomenal taking into consideration the demographics and raise in

standards of living. Retailers could throng the market with all these processed and

packaged foods with their private labels. With the emergence of the big private

corporate, NGOs (Non-Government Organizations) and Government organizations

into the food-processing scene, India is making big in-roads into the Food

Processing Industry. These corporate and NGOs have reached out to the farmers and

provided them with timely advice and help in the up gradation of farm practices with

valuable inputs on various areas of farming from sowing to harvesting which

includes quality seed procurement, manures, fertilizers and pesticides etc. Some of

the successful models are that of ITC‘s e-choupal a model that helps the soybean

farmers in contract producing for ITC for its commodity trading business. The

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PEPSI experimenting with Punjab farmers in growing the right quality tomato for its

tomato purees and pastes. Some of the leading food retail chains working with

farmers for contract growing greens for supply to their retail outlets etc. These

successful models are being replicated with required changes all over the country

and the food industry is getting integrated more strongly.

India has also seen a flurry of food chain majors like McDonalds, Pizza Hut and

Kentucky Fried Chicken finding their place among the Indian consumers. The trend

still follows for food chains in India to spread to almost all cities and towns.

These advancements have revolutionized the integration of the Indian Food Industry

and have played a vital role in solving, to a large extent, major supply chain issues

that prevailed. The trend is that these successful institutional intervention models be

replicated and spread in all segments of the food industry far and wide through the

country that benefit all the incumbents of the chain evolve. This finally helps the

retailer as his supply chain becomes much leaner and vertically integrated. He is in a

position to offer a wide variety and highest degree of convenience to his customer.

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2.6) Corporate in Indian Retailing -

Big industrial houses in the field of retail trade some of these players are a) Reliance Retail Reliance Retail is the retail chain division of Reliance Industries of India which is

headed by Mukesh Ambani. Reliance Industries Chairman Mukesh Ambani has

unveiled a Rs. 25,000-crore ($5.6billion) retail plan for the company on June 26th

2006. Mukesh Ambani has called this starting of reliance retail as an idea which has

the potential to revolutionize the Indian socioeconomic framework. He said

Conceptually, Reliance is creating a virtuous circle of prosperity by 16 bringing

farmers, small shopkeepers and consumers in a win- win partnership.

b) Spencer Spencer retail had a turnover of Rs 150 crores in financial year 2006-07. According

to its vice chairman Sanjeev Goenka the company aims to double its profits by the

end of this financial year and want to increase the number of stores into 200by 2009. c) Shoppers stop Shoppers stop was first lauched in 1991 in Andheri, mumbai and is a member of the

K Raheja corporation of companies Shoppers Stop is the first retail venture by the

K. Raheja Corp. Promoted by Mr. Chandru L. Raheja, Mr. Ravi C. Raheja and Mr.

Neel C. Raheja, the K. Raheja Corp. have been leaders in the construction business

for over 48 years. Their vision is to be a Global Retailer in India and Maintain No.1

position in the Indian Market in the Department Store Category.

d) Big Bazaar pantaloon After Bangalore, Hyderabad and Kolkata, BIG Bazaar, a division of Pantaloon

Retail (India) Ltd has stretched its brand to Mumbai by opening three hyper markets

in the city. Offering discounts ranging from 5 per cent to 60 per cent, discount stores

are still a new concept in India. Big bazaar has open stores in Bangalore, Hyderabad

and Kolkata in 2001. Marking an investment of Rs 10 crore into this new division,

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Pantaloon is expects to record the highest turnover from its Mumbai stores to the

tune of almost Rs 80 crore from Mumbai alone within the first year of operations. 2.7) Review of grocery retail trade in Kolhapur city Kolhapur city & retail market in Kolhapur is a historic city which was known as

South Kashi in ancient times. On the map of India Pilgrimage city occupy significant

place for being abode of Goddess Mahalaxmi. Kolhapur city is also the

administrative place of the district. Located on national highway [NH4] connecting

Pune with Bangalore city has any tourist attractions and potential to become tourist

city.

Kolhapur is part of famous sugar belt area of Maharashtra state and always being

front leader on per capita income have many industrial units agricultural and non

agricultural at two MIDC areas at Shiroli MIDC and Gokul shirgaon. In city itself

there is an area Shivaji Udayamnagar dedicated to small scale industries. In the

recent times Kolhapur city is shaping as budding IT hub of the state.

All the national & international brands like Adidas, Reebok, Onida, Rayban,

Samsung, L.G. Videocon, Whirlpool, Dish TV, Godrej, Levis, Dare, Peppe Jeans,

Peter England shirts have exclusive showroom. In the kolhapur ,hypermarkets like

Big Bazar, D-Mart, Lucky Bazar also helps to shopping lovers. Kolhapuri Chapal

[Chapal Lane] and Silver ornaments [Gujari] are must buy the visitors. Kolhapur

retail market is also famous for 1 gm Gold Jewelry.

Kolhapur is the city which is dominated by sugar industry. People are rich and open

to accept the change. Till 2005, Kolhapur retail industry was dominated by

unorganized retailers with hardly one or two departmental stores. From year 2005 to

2007 Kolhapur has seen many changes in the retail formats. The chain stores like

Subhiksha started the operations for one year at & different places. Within one year

Subhiksha has to close down its operations from Kolhapur. The supermarkets like

more had opened in late 2007 and again the some story was repeated. The spinach

has opened and closed. The hyper per markets like visual and magnet have started

their operations and closed down too.

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There is other side of the coin too. The lucky bazaar, which is owned and run by

local entrepreneur, is doing wonderfully well even though it is hypermarket. It is

important to know and understand the impact of organized retailers on unorganized

retailers in small cities like Kolhapur because from the observation it can be seen

that there is very little effect of organized retailers on unorganized retailers. It is

essential to understand the product, pricing, promotional strategies used by the

retailers. It is important to analyze and study the supply chain management used by

both organized and unorganized retailers. The retail sector in India is dominated by grocery sector where there will be the shoppers from both organized and

unorganized retailer could be seen and compared at so the different facets related with grocery retailing is taken for this study by the researcher.

2.8) Types of Retail formats The author V.S. Ramaswami and Naamkumari states that ―Formats are defined in

terms of location, layout, size, design, service and experience.ǁ The Indian food

retail market is characterized by several co-existing types and formats. These are –

1. The road side hawkers and the mobile (pushcart variety) retailers.

2. The kirana stores (the Indian equivalent of the mom-and-pop stores of the

US), within which are:

a. Open format more organized outlets

b. Small to medium food retail outlets. Forms of organized retailers –

1. The discounter

2. The value-for-money store

3. The experience shop

4. The home delivery Hawkers – „mobile supermarkets‟

The unorganized sector is characterized by the lari-galla vendors (also known as ―mobile supermarketǁ) seen in every Indian road and is, therefore, difficult to track,

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measure and analyze. The longer term, but is certainly replicable all over India.

Most retailing of fresh foods in India occurs in Mandis and roadside hawker parks,

which are usually illegal and entrenched. These are highly organized in their own

way.

Kirana/Grocers/ Provision Stores/Mom-and-Pop Stores Semi-organized retailers like kirana (mom-and-pop stores), grocers and provision

stores are characterized by the more systematic buying – from the mandis or the

farmers and selling – from fixed structures. Economies of scale are not yet realized

in this format, but the front end is already visibly changing with the times. These

stores have presented Indian companies with the challenge of servicing them, giving

rise to distribution and cash flow cycles as never seen elsewhere in Asia. The model

is very antithesis of modern retail in terms of the buyer (retailer)-seller (FMCG)

equations. It is not unknown for MNC leaders to link the supply of one line of

products to another slower moving line of products.

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The retail format is the store package that the retailer presents to the shopper. A

format is the defined as a type of retail mix used by a set of retailer. It is a place,

physical or virtual, where the vender interacts with its customer. The store format

depends on the mix of variable such as assortment, price, transactional

conveniences, and experience that retailers use to develop their business strategies.

Each retailer needs to evaluate the customers for succeeding in the marketplace.

This primarily involves identifying the key drivers of the growth, the shopper profile

and shopper expectation. It also requires the retailer to evaluate the nature of

competition and challenges in the marketplace. The retailer then decides the element

of the retail mix to satisfy the target market needs more effectively than its

competitors. The choices of retail mix elements enable it to decide the type of

format or structure of business.

Retail Institutions by ownership a) Ownership based classification – Retailing is one of the few sectors where entrepreneurial activity is extensive. More

than 8 % of all stores across the world operate with one outlet and more than one-

half of all firms have less than two paid employees. Retail firms may be

independently owned, franchisee operated, leased department, owned by

manufactures or wholesalers, or consumer owned form a positioning and operating

perspectives, each ownership format delivers unique value. In order to be successful,

retailer need to keep in mind the strength and weaknesses inherent in each of these

formats.

b) Independents – An independents retailer owns a single retail unit. Independents account for more

than 8 % of the total retail establishments. In India, their share is almost 98 per cent.

Most of these outlets have very basic offering and offer over the counter services.

These are highly competitive store due to cheap land prices and labor. There is

fierce competition among firms, resulting in a high rate of failure. Independent

enjoys a great deal of flexibility in choosing retail format and location.

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c) Chain Stores – A chain retailer operates multiple outlets (store units) under a common ownership

and name. Retail chains can range from comprising two stores to over 100stores.

Some retail chains are divisions of larger corporations or holding companies. In

developed economics, they account for nearly a quarter of retail out lets and over 5

per cent of retail sales. Chain retailers have several advantages. They enjoy strong

bargaining power with suppliers due to the volumes of purchases. They generally

bypass wholesalers-many of them buy directly from the manufacturers.

d) Franchising – Franchising is one of the most common modes of expansion in retailing. More than

one third of all retail sales are made by franchisees. It signifies a contractual

agreement that allows the franchise to operate a retail outlet using the name and

format of the franchiser. The franchisee pays a fee and royalty on all proprietary for

operating a store on behalf of the franchiser. The franchiser provides assistance in

locating and building the store, developing the products and services sold,

management training and advertising. In return, the franchisee operates the outlet

based on the norms and practices laid down by the franchiser. There are two types of

franchising product or trademark franchising and business format franchising. In

product or trademark franchising, the franchiser allows the use to identity but does

not control the operations. The franchisee may draw up certain operating rules in

consultation with the franchiser.

e) Leased Departments – A leased department is a department in a retail store rented by a manufacturer. The

manufacturer is responsible for running the departments are run on similar line as an

exclusive company store, except that they are located in another store. The leased

departments are generally given to non-core product lines. Some common examples

of leased departments are food courts,, studios, and banks. They require a different

set of skills that the main store personnel may not posses and hence complement

each other despite being independent.

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f) Consumer Co-operatives – A consumer cooperative is a retail firm where consumers investing in the enterprise.

The profits are distributed among the members as dividends. Consequently, even

when these stores sell at the same prices, consumers tend to gain. The stores are

managed by elected officials. They are started mainly to guard against the

malpractices that many retailers indulge in terms of higher prices or inconsistent

quality. Consumer cooperatives are limited in number because consumers are

usually not experts in buying, handling, and selling goods and services, and the cost

savings and low selling prices have not been as expected in many cases.

Store Based Retailing Retail institutions may be classified on the basis of store-based strategy mix and

divided in to food oriented and general merchandise retailers.

a) Food Oriented Retailers The major strategic formats used by food oriented retailer are conveniences Store,

conventional supermarkets. Food based superstores, combination stores, box stores

and warehouse store.

b) Conventional Stores A conveniences store is a neighborhood store. These stores are also known as kirana

store in India. Ease of shopping and personalized services are the major reasons for

the patronage of these stores, even when they charge average to above average

prices and carry a moderate number of items. They stay open for long hours and

provide although in India, they provide home delivery and credit as well.

c) Conventional Supermarket A conventional supermarket is a self service food store offering wet and dry

groceries and dry groceries with a limited range of non food items, such as health

and beauty aids and general merchandise. They carry 500to 10,00SKUs. They are

chosen due to variety, self services, and promotion. Self services allows supermarket

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to cut costs as well as increase volume. The conventional supermarket was once the

most common format. However, competition from other formats due to different

value driver, such as better prices from hypermarket and better services from kirana

store, has led to a reduction in the number of such developing markets. India

however is witnessing growth of this format.

d) Hypermarkets According to Suja Nayar, ―Hypermarkets provides unique value proposition in

terms of value added servicesǁ. Hypermarkets are combination stores that unite

supermarket and general merchandise sales in one stores, with latter typically

accounting for 25.4 per cent of total sales. Consumers choose them for one stop

shopping and do not mind traveling to visit these stores. Hypermarkets achieve

operational efficiencies and cost saveing through their large scale operations.

Impulse sales are high in such stores, even when the visit is planned.

e) Box (limited-line) Store The box store is a food based discounter that on a small selection of items and few

additional services. The merchandise consists of few or no refrigerated items and

few SKUs and brand per item. Items are displayed in cut case. Customers carry the

merchandise in their own bags. Box stores depend on low priced private label

brands. They aim to price merchandise 20-30 per cent below that of supermarkets.

They are very similar to conveniences stores except in terms of merchandise, prices,

and services.

f) Warehouse Stores A warehouse store or club is a retailer that offers food and general merchandise with

limited services and at low prices, mainly to other retailer, although the final

consumers can also buy directly from these stores. These stores appeal to prices

consumers who do not mind buying in large quantities and stocking them at home.

Warehouse stores are membership based retail outlets. Such stores are large in size

and are generally located In low rent areas. The stores layout is simple and race

track type. As in a warehouse, the aisles and rack are large suitable for large trolleys

to move around.

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General Merchandise Retailer The major formats used by general merchandise retailers are department stores, full

line discount stores, especially stores, off prices stores, variety stores, variety stores,

and flea markets.

a) Departmental Stores A department store is known for its large assortment and services. The goods and

services are organized into separate departments, with each department looking after

its own operation. These stores cater to customers who are not price- conscious and

ready to pay for the service. Ambience plays a very important role in such stores

offers full range of product and services. They offer branded products as well as

store brands that are known for quality. They have well planned merchandise return

polices and return loyalty programs. These stores are the anchors in a shopping

centre or mall. They help in attracting very high traffic. Conversion rates are low in

such stores. A development stores with 3per cent conversion rates is considered very

successful. These stores have to face competition from all formats as they deal in

several product and services.

b) Full Discount Stores A full-line discount store is known for offering an assortment at a price that is

discounted Up to 5per cent of the prices charged by department stores. It targets the

mass market that looks forward to the best bargain. it is likely to carry the range of

merchandise similar to a departmental store. It reduces its its costs through a very

low level of services, private brands, and Spartan fixture and services to the

customers without compromising on the price.

c) Specialty Stores A specialty store deals in a specific product or services. Specialty stores also provide

a high level of services to their customers. These stores are found in medicine,

books, photography, toys, jewelry, hardware, and home improvement products.

Category killers and do-it yourself stores belong to this category. Category killer is a

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specialist discount store. It attracts customers by offering a particular product at the

lowest price and the largest assortment.

d) Off –Price Store Off- price retailer sell branded merchandise and designer label at a low price. They

generally offer a range of out of season designs, seconds and order rejects. The

buying is totally opportunistic, though many of them have buying strategies that

establish long term relationships with suppliers. Three special types of off retailer

are factory outlets, closeouts and single prices retail stores. Off price retailer are

affected most by discount stores and better planning by the manufactures. However,

the unpredictable nature of fashion product results in excess stock and rejects.

Factory outlets have become popular formats mainly due to the trend of our town

shopping coinciding of the rise of discount formats, creating a climate suitable for

the growth of value retailing and the relaxation of planning guidelines for the

development of new out of town retail formats.

e) Variety Stores Variety stores handles a wide assortment of inexpensive and popularly priced goods

and services, such as stationery, gift items, women accessories, health and beauty

products, toys, imitation jewelry, and greeting cards. They do not carry full product

lines. Transactions are often on a cash basis. They face competition mainly from

specially stores, discount stores, hypermarkets and closeout off price retailers.

Thus, in this chapter the history and present scenario of the retail trade in the world,

India and Kolhapur city in particular is covered.

The study attempts of covering the working of organized and unorganized retailers,

wholesalers in the coming topic which includes the opinion of retailers about

awareness of changing retail practices, changing consumer behavior and other

parameters like space ambience ,parking facility provided home delivery facility and

other parameters related with operation of organized and unorganized retailers.

The city of Kolhapur consists of various formats of retail stores in grocery, FMCG

and apparels. Recently, specialty stores in electronics are appearing on the scene of

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Kolhapur retail industry. The study provides emphasis upon the grocery and hence, the hypermarkets and small grocery shops are taken the study. 2.9) Pilot study and gap analysis of present literature (Deficiencies

in present literature review) In the peer views, conference proceedings, research articles taken for the study, following research gaps are found –

1) Present literature is unable to test the state of the performance of grocery

retail trade.

2) Present literature emphasizes upon the growth of retail trades in metropolitan

cities but the comprehensive data has not available and prepared about the

progress of the hypermarkets in smaller cities.

3) The small grocery shopkeepers are dominant in small cities like Kolhapur. It

is essential to know the strengths and weaknesses of small grocery shops to

suggest the measures for both types of grocery retail traders. So far so good,

no research has been conducted on grocery retail trade in Kolhapur city.

4) Strategic marketing initiatives taken by the hypermarkets needs to re-look

Local market environment may be different in various parts of the country.

Thus marketing strategies should suit the customer needs.

5) Present literature is unable to link the role of retail mix with customer‘s

buying decision.

6) Present literature is unable to highlight the role of brand in grocery and its

impact on customer, s buying decision.

7) Inter relationship between shopping frequency, education, age,income level

and the place of shopping has not been analyzed.

8) Customer‘s attitude towards the retailers is not studied in the present

literature.

9) Impact of classification of the grocery products on the customer‘s buying

decisions has not covered in the present literature.

10) Upcoming problems of retailers such as LBT and shrinkage are not

covered.

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Pilot Study The pilot study was completed using non-probability sampling using random

sampling. These individuals from category of small grocery shop keeper‘s and

managers from hypermarkets and customers shopping from both retail trade are

being asked to participate in the study; however information was gathered in the

invitation that will provide information to the researcher as to whether their survey

will be included in the study. The changes made based on the pilot survey as to test

the length of time to complete the survey. The structure of survey and research tool

was also changed to make the study objective oriented. Secondly, the pilot testing

helped in understanding the gaps between observation made by the researcher and

existing literature review. Thirdly, it gave the clear idea to researcher whether

appropriate data is available to satisfy the developed objectives.

The researcher used the questionnaire in from of statements using ‗5‘ point like at

scale. Questionnaire was given to the customers to check the validity and feasibility.

The questions, which were confusing for the customer, were removed.

In few cases, customers raised the questions. So, few additions were made. While

doing the study, the researcher observed that customer‘s preference has affected the

retailing business. So, it was become inevitable to understand and learn the

responses of customers. Managers of organized retailers and small grocery shop

owners are handed over the questionnaire for testing and accordingly questionnaire

is modified. The topic covers the history and present scenario of the grocery retail

trade in the world, India and Kolhapur city in particular.

Thus, in nutshell, the literature review covers the various elements of grocery retail

trade and respective theoretical aspects. The emphasis is given on the particularly for

the city of Kolhapur, which predominantly consists of hypermarkets, small grocery

shops and co-operatives. The study is related with first two components. Various

books categorically mention types of retail trade. Various books mention consumer

related issues and factors affecting customers buying decision. Researcher from

assessing the literature review tries to find out the gaps in the existing research.

Further, researcher has carried out the pilot study and used the findings in the pilot

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study as the valuable inputs in the present study. These findings will vary from city to city,

customer to customer and segment to segment. The pilot study is related with customers,

small grocery shops keepers and hypermarkets. Based upon the pilot study and findings,

objectives and hypotheses are formulated and confirmed.

The research methods, which are appropriate for carrying out the study, are analyzed. These

methods are elaborated in the next topic i.e. ―Methodologyǁ.

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