Today, India is the world’s second-fastest growing major economy. Several global studies predict that India will fare better than most of her counterparts in the developing world in terms of robust economic growth.

India is experiencing a surge of economic growth, and with this comes an increased vibrancy and buoyancy in her desire to become a pre-eminent player in the global arena.

Some of India’s major economic sectors include agriculture, automotive, manufacturing, pharmaceutical and services-based exports.

The real GDP of India is expected to grow at 8-10 per cent per annum and as a result, the consuming class with annual household incomes above Rs. 90,000 is expected to rise from about 370 million in 2006-07 to 620 million in 2011-12.

An important aspect of the current economic scenario in India is the emergence of organized retail. Often described as a “sunrise sector,” the Indian retail sector comprises 13 percent of GDP and employs 6 percent of the nation’s workforce. There has been considerable growth in organized retailing business in recent years and it is poised for much faster growth in the future. It is estimated to grow at 13 per cent annually from US$ 322 billion in 2006-07 to US$ 590 billion in 2011-12.

The retail sector, in addition to rapidly evolving, is becoming increasingly complex to operate within. Shifting demographics, globally exposed and educated consumers, new channel formats and changes in consumption patterns require that sector participants quickly adjust and modify to meet the needs of demanding current (and future) consumers.

While the Indian retail sector is still waiting to be granted industry status, many of India’s leading retailers recognize that it is becoming increasingly important to serve customers, provide them with an optimal price-quality relationship, add value to the shopping experience and foster customer loyalty.

Major industrial houses have entered this area and have announced very ambitious future expansion plans. Transnational corporations are also seeking to India and set up retail chains in collaboration with big Indian companies. However, opinions are divided on the impact of the growth of organized retail in the country. Concerns have been raised that the growth of organized retailing may have an adverse impact on retailers in the unorganized sector. It has also been argued that growth of organized retailing will yield efficiencies in the supply chain, enabling better access to markets to producers (including farmers and small producers) and enabling higher prices, on the one hand and, lower prices to consumers, on the other. In the context of divergent views on the impact of organized retail, it is essential that an in-depth analytical study on the possible effects of organized retailing should be undertaken at all levels (local as well as national).

Because of the growing importance, impact and the kind of investment involved, it becomes imperative for the organized retail to develop understanding on the reasons why will a particular segment shop with them, who will shop for what benefit with them which in turn would help them maximize benefits from the operations.

Literature Review:

Various statistics and forecasts have been indicating the increase in disposable income, favorable development of spending habits and population that is responsible for the growth of organized retail in the country. (Kawal Gill; The Retail Digest; 2010 “Dynamics of Indian Organized Retail”).

In the Indian retail arena, interesting times lie ahead (Devashish Das Gupta; Retailing in India and the Role of the Marketing Mix: European Retail Digest of August 2010). The world’s largest middle class is waking up to the retail revolution. It will take more time to reach optimal penetration, but it has already become tough for retailers to operate with low margins and high costs. Proper marketing strategies hold the key. Gone are the days of fixed pricing strategies like everyday low pricing (EDLP), loss leader strategies and perceived value pricing are making the life of retailers more and more difficult by the day.

A definite shift has been observed in the consumer behaviour towards organized retailers in particular in kirana purchase. The major reasons for this changing behaviour are location, helpful, trustworthy salespeople, home shopping, cleanliness, offers, quality and negatively related to travel convenience. (Paromita Goswami and Mridula S. Mishra; Would Indian consumers move from kirana stores to organized retailers when shopping for groceries? : Asia Pacific Journal of Marketing and Logistics Vol. 21 No. 1, 2009).

Tighter supply chains can be related to betterment in retailer’s performance in select categories. (Suman Basuroy, Murali K. Mantrala, and Rockney G. Walters; “The Impact of Category Management on Retailer Prices and Performance: Theory and Evidence”; Journal of Marketing Vol. 65, October 2001). This factor may result in improving margins for the retailers who may pass on a percentage of the savings hence made to the customer or else may utilize the same in improving facilities. Here the organized retailers have an upper hand.

The position of a brand in a vertical or horizontal retail display also influences quality expectations and, thus, choices (Raghubir and Valenzuela 2008). Hence limited display in kirana store may be a factor of concern. There is growing trend of using the point of purchase as an advertising medium aimed at building brand awareness and image over the long run and not just as a distribution channel (Egol and Vollmer 2008).

All the above researches hint towards need of fresh look to develop further understanding in particular in our region i.e. Chhattisgarh so that both unorganized and organized retailers may target suitable customers with inventory of suitable merchandise in order to enhance customer service along with improving operating margins.

Research Methodology:

Questionnaire-based exit survey was conducted on consumers’ shopping at organized retail outlets and also consumers’ shopping at unorganized outlets.

Area Surveyed: - Raipur and Bhilai (Chhattisgarh), India.

Research Method: -Survey method, Structured Interview through Questionnaire.

Sample size: - 150

Sample Composition:

Consumers:	Strata	Sample Size
	Students	15
	New Job Holder (Male)	10
	New Job Holder (Female)	10
	Working People (Male)	30
	Working People (Female)	30
	Home maker	30
	Old/Retired Persons	25
	Total:	150

· Type of sampling: Simple Random Sampling and Stratified Random Sampling Method.

· Source of Primary Data: - Visiting the organization (With Questionnaire.), Using structured questionnaire for the customer leaving the store after purchase.

· Design of the Questionnaire: - It carries a set of multiple type questions which are easily answered by the customers in a short period of time.

· Methods Used for Analysis: Bar Chart is the tools that has been used in analyzing the data.

Findings and Analysis:

Similar to the whole country, organized retail has come up in the retail business in Raipur and Bhilai. Even though all the organized retail outlets are in the entry level still, but within a less time it became successful. The comparison analysis between these two types of retailing in readymade garments is done by focusing on few factors.

These are:

1. Income Levels of Shoppers

2. Location Advantage for the Unorganized Retailers

3. Mode of Conveyance

4. Preference for Organized vs. Unorganized Retailers

5. Savings from Organized Outlets

6. Consumers’ View on Opening of More Organized Outlets

All these are discussed below:

1. Income Levels of Shoppers

As per the expectation, consumers shopping at organized outlets generally had higher income levels than consumers shopping at unorganized outlets. The middle class (monthly household income range between Rs.10, 000 to Rs. 1, 00,000) which is the mainstay for retail, shop at both organized and unorganized outlets.

Table 1: Average Monthly Household Income of Shoppers (%Share)

Income Groups in (Rs.) Per Month	At Organized Retail Outlets	At Unorganized Retail Outlets
Up to 10000	8	24
10001 – 20000	25	30
20001 – 50000	30	16
50001 – 100000	7	4
100001 – above	2	1

Income Groups in (Rs.) Per Month

Series 1	At Organized Retail Outlets
Series 2	At unorganized Retail Outlets

2. Location Advantage for the Unorganized Retailers

Unorganized retailers enjoyed location as a comparative advantage as the mean distance to the residence for consumers at unorganized outlets is <1.0 km as compared to compared to 2.1 km for consumers at organized outlets.

Table 2

Distance Travelled	At Organized Retail Outlets	At Unorganized Retail Outlets
.5 KM	19	45
.6 - 1 KM	17	18
1 - 2 KM	12	5
2 - 4 KM	11	3
4 KM and above	14	2

Distance Travelled

Series 1	At Organized Retail Outlets
Series 2	At unorganized Retail Outlets

3. Mode of Conveyance

As expected, majority of consumers walk to unorganized outlets, while most of the consumers use own vehicles to reach organized outlets confirming to the average distance travelled being low for the unorganized retailers apart from the general income level of shoppers being higher for the shoppers of organized retailers. Car and two wheelers score high and equal as against two wheelers clearly outnumbering the cars for unorganized outlets.

Table 3

Mode of Transport	At Organized Retail Outlets	At Unorganized Retail Outlets
Walk	9	40
Car	24	3
Two Wheeler	24	17
Other	16	13

Mode of Transport

Series 1	At Organized Retail Outlets
Series 2	At unorganized Retail Outlets

4. Preference for Organized vs. Unorganized Retailers

Shoppers at organized outlets mainly shop for the reasons like better product quality, decent price, one-stop shopping hence saving time, availability of more products and brands, shopping pleasure, fast turnover of the stocks, etc. on the other hand shoppers at unorganized outlets ascribed that proximity to residence, relations and goodwill, credit availability, possibility of bargaining, choice of loose items, convenient timings, home delivery, etc.

Study also revealed that no shopper shopped exclusively at either of outlets. They shop at both outlets and the share of spending varies from product to product as shown in Table 4. On the whole, the sample shoppers at organized outlets make a 33 per cent of their spending on food and grocery, and textiles and clothing at unorganized outlets.

Similarly, consumers interviewed at unorganized outlets also spend at organized outlets; on an average, 36 per cent of their monthly shopping is done at organized outlets. This is relatively higher for toiletries (59 per cent), household cleaning products (45 per cent), readymade garments (45 per cent), and cooking oil (41 percent).

On being asked about the change in spending after start of shopping from organized outlets, around 50 per cent of sampled consumers recalled increase in spending, 17 per cent indicated a decrease and the rest reported no change. Hence helping conclusion that shopping at organized retail generally increased spending mostly unintended.

The reasons indicated for higher spending have been mainly the purchase of larger quantities due to wider range of products, availability of attractive offers like discounts and promotional schemes, and access to better quality products with higher prices.

Table 4 Share of Average Monthly Spending by Product Category of Consumers at Organized/ Unorganized Outlets (% Share)

Consumers at Organized Outlets		Consumers at Unorganized Outlets
Consumers at Organized Outlets		Consumers at Unorganized Outlets
Spending at Organized Outlets	Spending at Unorganized Outlets	Spending at Organized Outlets	Spending at Unorganized Outlets

5. Savings from Organized Outlets:

Savings in purchase from organized retail outlets was expected as one of the major reasons for the customer shift from unorganized to organized retail outlets. Purchasers going for high value buying were expected to gain more; similarly consumers with high household income who are more frequent visitors to the organized outlets were expected to save more due to higher experience in the modern formats. True, savings are there. But the degree of saving depended on the type of modern formats. An overall saving of 4 percent was found for the shoppers of organized retail outlets. The saving is higher at 8 per cent at discount stores and supermarkets, and a low of 2 per cent at hypermarkets and hardly one per cent at departmental stores (textiles and clothing outlets). Contrary to the popular belief, the findings show that small spenders have saved more from shopping at organized outlets (Table 5).

To understand this we may assume two possibilities: a) Targeted buying by the individuals for special discounts and offers and b) the sampled consumers with smaller household incomes being more savings conscious and planned rather than being leisurely and pleasure shoppers purchased more from the formats like discount stores and hence made more savings. Table 6 clearly shows that it is really the low-income households who save more at organized outlets and the savings percent dramatically reduces with increase in household/ disposable incomes.

6. Consumers’ View on Opening of More Organized Outlets

Regarding the consumers opinion towards opening of more organized outlets in the region of study, 63 per cent of the shoppers at organized outlets, as against only 47 per cent of shoppers at unorganized outlets preferred to have more organized outlets. Among both shoppers, around 25% did respond against more organized outlets.

Table 5

Savings from Buying at Organized Outlets by Format (as % of Spending)
Spending at Sampled Visit (Rupees)	Discount Store	Supermarket	Hypermarket	Departmental Store	Overall
Up to 250	12	10	6	0	10
251-500	9	6	6	2	6
501-1000	7	9	6	4	7
1001-2000	7	10	3	2	6
2001-5000	5	4	0	1	1
5000 and above	0	0	2	0	0.4
Overall	8	8	2	1	4

Table 6

Savings from Buying at Organized Outlets by Format (as % of Spending)
Monthly Household Income	Discount Store	Supermarket	Hypermarket	Departmental Store	Overall
Up to 10000	17	10	6	0	10
10001-20000	7	10	4	4	7
20001- 50000	7	6	2	1	3
50001-100000	7	3	1	1	2
100001 and above	0	7	0	0	1
Overall	8	8	2	1	4

Table 7

Attitude towards Opening of More Organized Outlets
	Organized Outlets	Unorganized Outlets
Yes	47	35
No	18	16
no opinion	7	22

Findings of the Study

• Consumers have definitely gained from organized retail on multiple counts.

• Overall consumer spending has increased with the entry of the organized retail

• While all income groups saved through organized retail purchases, the survey revealed that lower income consumers saved more. Thus, organized retail is relatively more beneficial to the less well-off consumers.

• Proximity is a major comparative advantage of unorganized outlets.

• Unorganized retailers have significant competitive strengths that include consumer goodwill, credit sales, amenability to bargaining, ability to sell loose items, convenient timings, and home delivery.

CONCLUSION:

The study very clearly establishes that the customers are very open in their choices and hop around depending upon their requirements. This indicates that as far as the selling preposition at the retail outlets is concerned, it is examined critically by the customers and depending upon the objective of buying the customers choose organized or unorganized retail destination. The retail revolution is at very nascent stage in the region and sufficient space is available for all the formats of organized retailing as well as unorganized retailing. Yes, unorganized retailing should capitalize on the areas of advantage and at the same time have plans for adopting the features of organized retailing so as to serve the customers aspirations better.

REFERENCES:

1. Kawal Gill; The Retail Digest; 2010 “Dynamics of Indian Organized Retail”

2. Devashish Das Gupta; Retailing in India and the Role of the Marketing Mix: European Retail Digest of August 2010

3. Paromita Goswami and Mridula S. Mishra; Would Indian consumers move from kirana stores to organized retailers when shopping for groceries?

4. CRISIL Research-Retailing Annual Review 2009

5. Indian Council For Research On International Economic Relations Report 2008

6. Goswami P., Mishra M.S. (2009) (to be published), ‘Would Indian Consumers move from Kirana Stores to Organized Retailers when Shopping for Groceries?’, Asia-Pacific Journal of Marketing and Logistics, abstract may be viewed at http://papers.ssrn.com/ 1abstract=983303, last accessed on May 15, 2008

7. Kakkar S. (2008) , ‘The Future of Kirana Stores and Implications for National Brands’, 9th Marketing and Retail Conclave, Organized by Technopak, February 19-21, The Taj Palace, New Delhi, India

8. Tata Strategic Management Group-Organised Retailing in India: The next growth frontier, 2006

9. Suman Basuroy, Murali K. Mantrala, and Rockney G. Walters; “The Impact of Category Management on Retailer Prices and Performance: Theory and Evidence”; Journal of Marketing Vol. 65, October 2001

Received on 04.08.2012 Accepted on 23.08.2012

Asian J. Management 3(3): July-Sept., 2012 page 169-173