Study of the Impact of Store Environment and Discounts/Offers on

Consumer Shopping Behaviour

A Research Report Submitted in Partial Fulfilment for the Degree of Masters in
Business Administration

Submitted By:
Avee Saroya
E-12
Ashish Behara
E-10
Soumyasundar Sanyal E-44
Vignesh Srikant
E-47

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

SYMBIOSIS INTERNATIONAL UNIVERSITY, PUNE
October 2014

Acknowledgement

We take this opportunity to express our gratitude to the people who have been instrumental in
the successful completion of this project.
We are extremely thankful to Professor Dr Asha Nagendra, the Guide of this project. She has
guided us on this research and correcting various documents and amending them with
attention and care. She has taken pain to go through the project and make necessary
correction as and when needed at each and every step.
We express our thanks to the Director of Symbiosis Institute of Management Studies, Pune
for extending his support.
We would like to show our greatest appreciation for the support extended to us by the
respondents, which was vital for the success of the project.
We are also thankful to all my friends and also to various parents for their kind and
valuable guidance, whom we consulted for the research work.

Table of Contents

SNo

Chapters

Introduction

Review of Literature

Methodology

Results

Summary

Conclusion

Bibliography

Appendix

Page No

List of Tables

S No

Table Heading

General Information of respondents

Frequency of purchase of household goods

Preference of knowing shopkeeper at a personal level

Capacity of refrigerators used by respondents

Preference of branded foods over locally manufactured

food items
Appeal of brand name Wal-Mart over Indian retail stores

6
7
8
9

Response to acceptance of Wal-Mart amongst Indian

customers
Response to whether FDI is good for Indian economy

10

Appeal of Walmart in association with Bharti appealing

more than Walmart alone
Response to discounts attracting consumers

11

Response to large volume discounts attracting consumers

12

Response to Indian Consumers preferring Fresh food items

compared to packaged food

Page No.

List of Figures

S No
1
2
3
4

Figure Heading
Appeal of brand name Walmart more over Indian retail stores

Response to acceptance of Walmart amongst Indian

consumers
Response to FDI being good for the Indian Economy
Response to large volume discount attracting consumers

Page No

Abstract

In order to analyze the impact of Wal-Mart store on the buying behaviour of customers, a
study was conducted on 100 respondents of different income bands and age groups at various
locations. The focus of the study was to see how a customer behaves with respect to value
added by high discounts on large volume purchases. In addition to an all-inclusive store the
study was also done to find out whether a customers buying decision is impacted by the
distance to the store and the attractiveness of large volume processed foods in and Indian
ecosystem. Based on these factors a questionnaire was prepared and floated amongst people
and their response was recorded. It has been observed that though the idea of the Wal-Mart
model for customers generates interests, they are yet not fully oriented to such a super store
with the constraints it brings of distance and insistence of large volumes.
Keywords: volume discounts, Wal-Mart, super-stores, customer, buying decision

CHAPTER 1
Introduction

Wal Mart with its "everyday low prices" philosophy has benefited millions of consumers. In
early 2005, Wal Mart, the world's largest retailer proposed to expand its business into India,
which is the world's 4th largest retail market in the world. India's $180 billion retail market
was a potential opportunity for Wal Mart's global expansion. However before the entry into
the Indian market it faced challenges like the strict Foreign Direct Investment regulations,
competition from the unorganised retail sector (constituting 98% of India's retail sector) and
the growing organised retail sector. Wal Mart also had a series of Labour Lawsuits that
alleged low wages, gender discrimination and illegal immigrant labour. These factors
hampered the company's image. Anti globalisation activists also blamed the company for
exploiting the labour in shops of Bangladesh, China and other Asian countries to offer low
prices to customers.

Objectives:
1. To assess the challenges that Wal-Mart faces in India due to FDI.
2. To understand business model of Wal-Mart and its influence on the customers in
distribution, logistics and its acceptance in the Indian market.

Limitations:
1. The study is limited to the city of Pune, Maharashtra.
2. The data collected was restricted to middle income and upper-middle income
consumers only.

CHAPTER 2
Review of Literature

1. Knee, 2002, spoke about Wal Mart in India. He mentions the Indian retail sector and
how Wal Mart faces different challenges to enter into the market. The study has
reviewed various journal articles and articles from reputed local newspapers in order
to give an idea of Wal-Marts successes and failures in the international market. He
found about the e-branding issue, the people issue, the growth issue, the customer
issue and the performance issue faced by Wal Mart. In addition to the general
challenges he also found about the country specific challenges which included poor
infrastructure, power supply, high wastages in transit and high logistics cost,
differential and high taxes, inconsistency in government policies, soaring cost of real
estate and restrictions on foreign direct investment (FDI).
2. Owens and Quinn, 2007, wrote about problems related to coordination between
retail joint ventures. They conducted a study to investigate the problems encountered
in international retail joint ventures. They found out that in a market-driven joint
venture activity, retailers appear to have a shorter and intensive adjustment period to
effectively co-ordinate operational activity and bridge the corporate and behavioral
differences between themselves and the partner.
3. Walton and John, 1992 said that the stores which were obsessed with keeping the
prices below competitors prices and how the profit per item would be less but the
overall profit would increase. Wal Mart built a retail link system that provides sales
data, by item, store and day, to its vendor partners. They hired personnel who has
sound knowledge of warehouse and distribution system, data processing and
technology. They were doing well in terms of profit and customer service but they did
not emphasis much on quality.
4. Robert, 2003, observed that when PR could have actually helped the company, the
executives at the company faltered in utilizing the opportunities. When Wal Mart
planned to expand by setting up supercenter stores, it was opposed by the union
saying that the stores were against the unionized labour policies. The company was,
however reported to have out rightly opposed the move, not allowing any employee to
interact with the union workers.
To conclude, Wal-Marts volatile practices including the labour policies have led to an
obstruction in its growth. Also, Wal-Mart would have impact on the Indian retail market, if
the Indian Government opens up the restriction on Foreign Direct Investment in the retail
sector. The major reason behind this is that the Indian culture is being influenced by the
American culture. However, the Indian retailers are capable of adopting the best practices and
reading the minds of an ordinary Indian consumer. The Indian retailers should come out with
different formats and try to establish their presence in almost all parts of the country before
Wal-Mart establishes itself in the Indian sub-continent.

CHAPTER 3
Methodology
1. Selection Of Topic
The issue of FDI in Multi-brand retail has been a hot topic of discussion in the recent past,
with equal weightage for, as well as against. In each case the ideal example quoted has been
the model of Wal-Mart. They have a very specific and unique business model that allows
them to be effective in developed markets. We would like to study if this same model would
actually work in the Indian social and economic scenario.
2. Size of Sample
The sample chosen for this study was restricted to 100 people or families of the middle and
upper middle income group of society in the geographic limitations of Pune area.
3. Pilot Study
To test the feasibility of the tool of data collection a pilot study was conducted on 20
respondents. A questionnaire of 10 questions was made and administered. Based on the
results, certain modifications were made and final questionnaire was prepared.
4. Hypothesis
Based on the results of the pilot study the following hypotheses were formulated:
1. Hypothesis 1
H0: The benefits of convenience of availability and familiarity do not outweigh the
benefits of volume based discounts at distant locations
H1: The benefits of convenience of availability and familiarity outweigh the benefits
of volume based discounts at distant locations.
2. Hypothesis 2
H0: The various practices of Wal-Mart has positively affected the image and operation
of the company
H1: The various practices at Wal-Mart has negatively affected the image and operation
of the company in India.
5. Data Collection
Primary Data
A Primary research, involved a questionnaire consisting of questions that try to bring out
relevant data to meet the objectives of the research, was developed and used for the survey.
The response of the respondents was taken by floating a Google document or one on one
meeting. A copy of final questionnaire is attached as Chapter 8 in appendix.
Secondary Data:

It was collected from journals, books & internet to gather work done by other researchers
prior to the present study.

6. Analysis of Data
The data collected was tabulated and presented in the form of tables and graphs in Chapter 4.
The hypotheses have been rejected/accepted. Appropriate statistical tools have been applied
to establish correlation among the variables.

CHAPTER 4
Results and Discussions
Table 1: General information of respondents
SNo

General Information

n=100

Percentage

1)

Age (in years)

a.

20-24

29

29%

b.

25-30

44

44%

c.

30-40

28

28%

d.

Above 40

19

19%

2)

Gender

a.

Male

64

64%

b.

Female

36

36%

3)

Income Group ( lakhs per annum) INR

a.

3-5

48

48%

b.

5-10

40

40%

c.

Above 10

12

12%

Table 2: Frequency of purchase of household goods.

SNo

Frequency of purchase

n=100

Percentage

1)

Once a month

9%

2)

Twice a month

30

30%

3)

Thrice a month

49

49%

4)

More than three times a month

12

12%

Discussion: Almost have the people purchase household goods thrice a month. 30%
people purchase them twice a month and the percentage below people purchasing
household goods less than twice a month and more than thrice a month is very less.

Table 3: Preference of knowing shopkeeper at a personal level

SNo

Preference of knowing
shopkeeper at a personal level

n=100

Percentage

1)

Yes

79

79%

2)

No

21

21%

Discussion: Maximum people, i.e. 79%, like to know the shopkeeper personally. The
rest think it does not really matter.
This rejects the null hypothesis of Hypothesis 1, that states that,H0: The benefits of
convenience of availability and familiarity do not outweigh the benefits of volume
based discounts at distant locations. Hence the alternate hypothesis i.e. H1: The
benefits of convenience of availability and familiarity outweigh the benefits of
volume based discounts at distant locations is accepted

Table 4: Capacity of refrigerator used by respondents

SNo

Refrigerator capacity (in litres)9

n=100

Percentage

1)

165

39

39%

2)

185

21

21%

3)

205

25

25%

4)

More than 205

15

15%

Discussion: Maximum people/families use 165L refrigerators. People/families using

185L and 205L are almost the same. Bigger families, especially the higher income
group, prefer more than 205L refrigerators.
This rejects the null hypothesis of Hypothesis 1, that states that,H0: The benefits of
convenience of availability and familiarity do not outweigh the benefits of volume
based discounts at distant locations. Hence the alternate hypothesis i.e. H1: The
benefits of convenience of availability and familiarity outweigh the benefits of
volume based discounts at distant locations is accepted

Table 5: Preference of branded food over locally manufactured food

SNo

Branded food Vs Local food

n=100

Percentage

1)

Branded food

68

68%

2)

Locally manufactured food

32

32%

Discussion: 68% people prefer to buy branded food, especially packed or tinned food,
32% people prefer to buy local food from the smaller retail stores.
This rejects the null hypothesis of Hypothesis 2, that states,H0: The various
practices of Wal-Mart has positively affected the image and operation of the
company. Hence the alternate hypothesis i.e. H1: The various practices at Wal-Mart
has negatively affected the image and operation of the company in India. is accepted

Table 6: Appeal of brand name Walmart more over Indian retail stores
Appeal of brand name Walmart more
over Indian retail stores

SNo

n=100

Percentage

1)

Yes

44

44%

2)

No

56

56%

Appeal of brand name Walmart more over Indian retail stores

60%
50%
40%
30%
20%
10%
0%

yes

no

Fig1: Appeal of brand name Walmart more over Indian retail stores

Discussion: People find the brand Walmart fascinating but not much over Indian
Retail stores. The number of people preferring Walmarts appeal over Indian Brands is
44% as compared to the Indian Brands appeal which is 56%.

This rejects the null hypothesis of Hypothesis 2, that states,H0: The various
practices of Wal-Mart has positively affected the image and operation of the
company. Hence the alternate hypothesis i.e. H1: The various practices at Wal-Mart
has negatively affected the image and operation of the company in India. is accepted

Table 7: Response to acceptance of Walmart amongst Indian consumers

SNo
1)

Response to acceptance of Walmart amongst

Indian consumers
Yes

n=100

Percentage

71

71%

2)

No

29

29%

Response to acceptance of Walmart amongst Indian consumers

80%
70%
60%
50%
Axis Title 40%
30%
20%
10%
0%

yes

no

Fig 2: Response to acceptance of Walmart amongst Indian consumers

Discussion: 71% people feel that the brand Walmart would be accepted successfully
in India whereas 29% feel that the competition for Walmart in India is already very
high Therefore, the brand would not be accepted.
This accepts the null hypothesis of Hypothesis 2, that states,H0: The various
practices of Wal-Mart has positively affected the image and operation of the
company. Hence the alternate hypothesis i.e. H1: The various practices at Wal Mart
has negatively affected the image and operation of the company in India. is rejected

Table 8: Response to FDI being good for Indian economy

SNo

FDI good for Indian economy

n=100

Percentage

1)

Yes

53

53%

2)

No

47

47%

Response to FDI being good for the Indian Economy

54%
53%
52%
51%
50%
Axis Title 49%
48%
47%
46%
45%
44%

Yes

No

Fig3: Response to FDI being good for the Indian Economy

Discussion: 53% people feel that FDI will be good for the Indian Economy. While the
rest 47% people did not agree to it.

Table 9: Appeal of Walmart in association with Bharti appealing more than Walmart
alone
SNo

Better Appeal

n=100

Percentage

1)

Yes

41

41%

2)

No

59

59%

Discussion: The appeal of Walmart in association with Bharti being better was
accepted by just 41% people and disagreed by 59%. Hence proving the partnership
was not something people were very aware of.
This rejects the null hypothesis of Hypothesis 1, that states that,H0: The benefits of
convenience of availability and familiarity do not outweigh the benefits of volume
based discounts at distant locations. Hence the alternate hypothesis i.e. H1: The

benefits of convenience of availability and familiarity outweigh the benefits of

volume based discounts at distant locations is accepted
Table 10: Response to discounts attracting consumers
SNo

Discount attracts consumers

n=100

Percentage

1)

Strongly agree

21

21%

2)

Agree

57

57%

3)

Neither agree nor disagree

16

16%

4)

Disagree

6%

5)

Strongly disagree

Discussion: A majority of the people agree to the fact that discount attracts
consumers, while 21% strongly in favour of it 16% were indifferent to discounts
while 6% said discounts really did not matter much.
This accepts the null hypothesis of Hypothesis 1, that states that,H0: The benefits of
convenience of availability and familiarity do not outweigh the benefits of volume
based discounts at distant locations. Hence the alternate hypothesis i.e. H1: The
benefits of convenience of availability and familiarity outweigh the benefits of
volume based discounts at distant locations is rejected

Table 11: Response to large volume discounts attracting consumers

SNo

Discount attracts consumers

n=100

Percentage

1)

Strongly agree

19

19%

2)

Agree

61

61%

3)

Neither agree nor disagree

17

17%

4)

Disagree

2%

5)

Strongly disagree

1%

Response to large volume discounts attracting consumers

Strongly Agree
2%1%
17%
19%

Agree
Neither Agree nor
Disagree
Disagree
Strongly Disagree

61%

Fig4: Response to large volume discount attracting consumers

Discussion: In line with the previous question 61% people agree that large volume
discounts attract consumers while 19% strongly agree in contrast to 3% people who
did not agree while the rest neither agreed nor disagreed with the notion.
This accepts the null hypothesis of Hypothesis 1, that states that,H0: The benefits of

convenience of availability and familiarity do not outweigh the benefits of volume

based discounts at distant locations. Hence the alternate hypothesis i.e. H1: The
benefits of convenience of availability and familiarity outweigh the benefits of
volume based discounts at distant locations is rejected

Table 12: Response to Indian Consumers preferring Fresh food items compared to
packaged food
SNo

Fresh food over packaged food

n=100

Percentage

1)

Strongly agree

21

21%

2)

Agree

43

43%

3)

Neither agree nor disagree

15

15%

4)

Disagree

19

19%

5)

Strongly disagree

2%

Discussion: In total 64% people were in agreement about having fresh food rather
than packaged food while 21% disagreed to it and 15% neither agreed nor disagreed
with the idea.

Chapter 5
Summary
According to the study it can be seen maximum people like to know the shopkeeper
personally. This rejects the null hypothesis of Hypothesis 1, that states that,H0: The
benefits of convenience of availability and familiarity do not outweigh the benefits of
volume based discounts at distant locations. Hence the alternate hypothesis i.e. H1:
The benefits of convenience of availability and familiarity outweigh the benefits of
volume based discounts at distant locations is accepted
Most of the population possess low capacity refrigerators. This shows that their
capacity to store large stocks of food supplies is limited. Bigger families, especially
the higher income group, prefer more than large refrigerators. This rejects the null
hypothesis of Hypothesis 1, that states that,H0: The benefits of convenience of
availability and familiarity do not outweigh the benefits of volume based discounts at
distant locations. Hence the alternate hypothesis i.e. H1: The benefits of
convenience of availability and familiarity outweigh the benefits of volume based
discounts at distant locations is accepted.
A large part of the population prefer to buy branded food, especially packed or tinned
food, though smaller number yet a large chunk of 32% people, prefer to buy local
food from the smaller retail stores. This rejects the null hypothesis of Hypothesis 2,
that states,H0: The various practices of Wal Mart have positively affected the image
and operation of the company. Hence the alternate hypothesis i.e. H1: The various
practices at Wal Mart has negatively affected the image and operation of the company
in India. is accepted. People find the brand Walmart fascinating but not much over
Indian Retail stores. The number of people preferring Walmarts appeal over Indian
Brands is 44% as compared to the Indian Brands appeal which is 56%. This rejects
the null hypothesis of Hypothesis 2, that states,H0: The various practices of Wal
Mart has positively affected the image and operation of the company. Hence the
alternate hypothesis i.e. H1: The various practices at Wal Mart has negatively
affected the image and operation of the company in India. is accepted
The appeal of Walmart in association with Bharti being better was accepted by just
41% people and disagreed by 59%. Hence proving the partnership was not something
people were very aware of. This rejects the null hypothesis of Hypothesis 1, that states
that,H0: The benefits of convenience of availability and familiarity do not outweigh
the benefits of volume based discounts at distant locations. Hence the alternate
hypothesis i.e. H1: The benefits of convenience of availability and familiarity
outweigh the benefits of volume based discounts at distant locations is accepted
In line with the previous question 61% people agree that large volume discounts
attract consumers while 19% strongly agree in contrast to 3% people who did not
agree while the rest neither agreed nor disagreed with the notion. This accepts the null

hypothesis of Hypothesis 1, that states that,H0: The benefits of convenience of

availability and familiarity do not outweigh the benefits of volume based discounts at
distant locations. Hence the alternate hypothesis i.e. H1: The benefits of
convenience of availability and familiarity outweigh the benefits of volume based
discounts at distant locations is rejected.

Chapter 6
Conclusion

The first objective was to assess the challenges that Wal-Mart faces in India due to FDI. It is
well known that FDI in multi-brand retail is a sticky subject among legislators. The study has
shown that even the population is not very sure of the benefits It could get from FDI in the
retail sector. Though a slim majority feel FDI is good a large chunk do not agree with it and
hence hampering the image of Wal-Mart as a foreign chain, with in the country. For this
reason the link with Bharti has proved useful to retain a positive image with the Indian
consumer.
The second objective was to understand business model of Wal-Mart and its influence on the
customers in distribution, logistics and its acceptance in the Indian market. From the study we
can see that most of the people are still not very open to the concept of purchasing goods in
high volume, which is the core competence of Wal-Mart business model. The Indian
population prefers buying products which will remain fresh from local vendors than
processed goods.

RECOMMENDATIONS
The study hence proves that the association of Wal-Mart with Bharti is helpful for W so as to
cover the grounds in terms of understanding the local market of India. They should also try
setting up shops which is easily accessible like Reliance stores and Big Bazars to the
customers unlike the model they use in the USA of having a big retail stores which is still not
feasible in a developing country like India.

Chapter 7
Bibliography
1. Jha, S and Singh, B.(2013, April). Impact of ambient music and affability of sales
persons on consumer behaviour in a real retail setting with emphasis on gender
difference. Indian Journal of Marketing.
2. Michon, R, Chebat, J C, Turley L W (2003, July).Mall atmospherics: the interaction
effects of the mall environment onshopping behaviour.Journal of Business Research
58 (2005) 576 583
3. Mohan G, Bharadhwaj S and Sharma P (2013)."Impact of store environment on
impulse buying behaviour", European Journal of Marketing, Vol. 47 Iss: 10, pp.1711 1732
4. Wirtz, J., Mattila, A.S. and Tan, R.L.P. (2007). The role of arousal congruency in
influencing consumers' satisfaction evaluations and in-store behaviours. International
Journal of Service Industry Management

Chapter 8
Appendix

Elicit Information on Suitability of Wal-Mart Model

for the Indian Market
Dear Respondent,
We, the students of Masters of Business Administration from Symbiosis International
University, Pune, are conducting a survey on Suitability of Wal-Mart model in India. We
seek your co-operation in answering the questionnaire given below. We assure you that the
information provided by you will be kept strictly confidential and will be used for academic
purposes only.
Kindly put a tick against the appropriate answers.

General information
1. Name:

__________________________________________

2. Gender:

Male

3. Age (in years):

2 2-24 years

4. Income group
(per annum)

3-5 lakhs

Female
25-30 years

30-40 years

5-10 lakhs

>10 lakhs

Specific Information:
1.

How often do you go to purchase household items and provisions?

a. Once a month
b. Twice a month
c. Thrice a month
d. More than thrice a month

2. Is it better to know the shopkeepers on a personal note?

Yes
No

3. What is the capacity of the fridge you use?

>40 years

 165 L
185 L
205L
More
4. Would you like to get the foods from a branded place or any general store?

Yes
No
5. Does the Brand name of Walmart appeal more than the Indian retail stores?

Yes
No
6. Will Walmart be a shop which all Indians will warm up to?

Yes
No
7. Do you think FDI is good for the Indian economy?

Yes
No
8. Will the association of Bharti with Walmart have a better appeal in India, as compared to
Wal-Mart alone?

Yes
No

9. What is the first thing that comes into your mind when you think of Walmart?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
10. Give your opinion on foreign retailers wanting to set up shop in India

11. What more can be done by the Indian retailer shops to make them more competitive with the

likes of the foreign retailer?

Large volume discounts attract consumers:

Strongly disagree
Disagree
Neither agree nor
disagree

Agree

Strongly agree

12. Indian Consumers prefer Fresh food items as compared to Canned or packaged food
items:
Strongly disagree
Disagree
Neither agree nor
Agree
Strongly agree
disagree