Chapter 1

Introduction

Shopping in Malls has become the latest trend today. They are very popular among people of

all age groups. The reasons for their popularity are manifold. To begin with, they sell all

kinds of branded goods. People who opt for quality can get good products here without much

effort.

Furthermore, these Malls are not crowded and one can shop here with much comfort.

Shopping in these spacious places is indeed easy. Although they are crowded sometimes,

there is ample space for easy movement which makes shopping fun and a memorable

experience. To illustrate, since they are built in a large area they are very spacious. In

addition, climbing up and down the stairs can be avoided because of the escalators as well as

the lifts. Moreover, the malls not only sell commodities such as garments, gadgets, cosmetics

1
etc but also sell food items. In addition, there is a food court on the top floor which sells

various types of lip smacking food .These food joints are obviously very much in demand by

the teenagers.

Organized Retail Industry

Organized retailing, in India, refers to trading activities undertaken by licensed retailers, that

is, those who are registered for sales tax, income tax, etc. These include the publicly

traded supermarkets, corporate-backed hypermarkets and retail chains, and also the privately

owned large retail businesses.

Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its

GDP. The Indian retail market is estimated to be US$ 450 billion and one of the top five

retail markets in the world by economic value. India is one of the fastest growing retail

markets in the world.

The Project introduces to a detail study which describes the emergence and future of

organized retail industry in India, changing preference of Indian consumers in urban areas

towards the same. The study depicts the emerging trends in retail sector and investigates the

drivers for increasing preference in shopping of Indian urban customers towards organized

retail chains and list outs current position of Indian retailers.

2
 Objectives of the Study

 To study consumer preference for shopping towards organized retail store.

 To analyze the factors which influence consumers to prefer organized retailing over un

organized retailing and vice-versa

 To identify the problems faced by consumers from organized as well as unorganized retail

outlets.

 To identify the demographic profile of the customers visiting organized retail outlets and

unorganized retail outlets

 To provide suggestions to improve the services provided by the organized and unorganised

retailers.

Hypothesis

 H0. Consumer preference in shopping is slowly changing from unorganised retail towards

organised retail sector.

 H1. Consumer preference in shopping is rigid towards unorganised retail sector.

Need of the Study

 From the review of literature as well as appearance of organized retail in India there is a need

to study shifting preferences of consumers towards various retail formats. Whether there is

any relation between the demographic profile of the consumers and preferred retail format

and does income besides other family attributes play a role in selection of the retail formats

3
 are some of the questions require a probe in. The problems faced by consumers shopping

from organized as well as unorganized retail outlets also need a thorough study.

Research Design

The study was Exploratory in nature, followed by Descriptive Study.

Research Methodology

Collection of data

SOURCES OF DATA

PRIMARY DATA SECONDARY DATA

Primary Data:

 Primary research (also called field research) involves the collection of data that does not

already exist, which is research to collect original data. Primary Research is often undertaken

after the researcher has gained some insight into the issue by collecting secondary data. This

can be through numerous forms, including questionnaires, direct observation and telephone

interviews amongst others. This information may be collected in things like questionnaires

and interviews.

4
 Primary data were collected through Questionnaire and through personal interview with the

respondents. The questions multiple choice, rating and ranking scale questions, and open

ended questions. Open-ended questions were used to probe more deeply into issues of

interest which was impossible if the answer had been pre-categorized. These questions

provided valuable insights on the problem not previously thought, suggestions were provided

by the respondents in their own words which were included in the thesis.

Sampling and Sample Size

 The respondents were selected randomly but with the help of convenient sampling. The

participation was voluntary. When surveying people the approach was interview those who

are knowledgeable and who might be able to provide insight concerning the relationship

among variables.

Secondary Data:

 The methodology for collection data with reference to the secondary data was taken from the

different published books, journals and relevant company websites.

Scope of the Study

 This study gives an insight into the changing customer preferences from unorganized

retailers to organized retailers in Lucknow region. It also enables us to understand the factors

responsible for making a purchase from either of the retail formats. It will further help the

5
 retailers to make an analysis of internal as well as external factors which have an impact on

the customers to make a purchase from organized/unorganized retail outlets.

 By understanding this picture, retailers can focus and devise their strategies to increase their

trade and profits.

 The study can be extended to other cities of Maharashtra and other regions of the country.

Limitations of the Study

 The sample size was restricted to 30 which is comparatively very less as compared to the

entire population of the city/region

 Few respondents were unwilling to give an accurate response to certain questions and have

replied as per their own perception and experience thereby the possibility of personal bias

cannot be ruled out completely.

 The survey has been confined to Lucknow city; whereas other main city of the state has not

been concentrated upon .Other Metro cities of the nation were not included due to time

constraints.

6
 Chapter 2

Review of Literature

 Analytical Study of Organized Retail Outlets in Lucknow Metro Division Ch 7 (2013)

Slowly and steadily organized retail outlets are capturing the city but still there is an impact

of unorganized outlets. Organized retail outlets offer merchandise at cheaper prices and

provide a convenient shopping environment, unorganized retailers provide great convenience

in the form of cash credit on goods and home-delivery services. To justify this the researcher

reviewed the report of AC Nielsen presented in 2007, which focused on the buying

behaviours of consumers from organized and unorganized retail outlets, found that while

penetration of grocery retailing had occurred much more rapidly in processed, dry, and

packaged foods, household products and personal care items, for which supermarkets gain a

cost advantage due to economies of scale resulting from centralized procurement and

distribution, shoppers still mainly used wet markets and small vegetable stalls, where they

got low prices, credit, and personal service, for more frequent purchases of fresh produce .

Similarly, such different retail preferences for distinct categories of goods should enable both

modern and traditional retail stores in India to thrive. It is estimated that even though the

market share of organized retail will grow, the share of unorganized retail will also increase

having a corresponding growth in the overall retail sector.

7
 Arun Kumar Singh* and P.K. Agarwal, Study on Shifting Consumer Preferences from

Unorganised Retailing vis-à-vis to Organised Retailing in Lucknow, 2019.

The changes in the consumer behaviour, is bringing about change in retail industry, as India

migrates from the unorganized to organized retail. The past 4-5 years have seen increasing

activity in retailing. And, various business houses have already made investments in this

sector years. And though the retailers will have to face increasingly demanding customers,

and intensely competitive rivals, more investments will keep flow in. And the share of

organized sector will grow rapidly. Retailing in India is surely poised for a takeoff and will

provide many opportunities both to existing players as well as new entrants. The country is

witnessing a period of boom in retail trade, mainly on account of a gradual increase in the

disposable incomes of the middle and upper-middle class households. More and more

corporate houses including large real estate companies are coming into the retail business,

directly or indirectly, in the form of mall and shopping center builders and managers.

 The customers are attracting towards shopping malls & retail outlets.

 The shopping malls & retail outlets are targeting to middle class customers because the

purchasing power of this class is rapidly growing as well as the class is also growing.

 The young generation is fashion & show-off conscious so retail outlets are mainly focused on

them.

 Most of the family wants to purchase from big showrooms and malls because there are no

bargaining system so they have a trust that there is no cheating.

 The main strength of most of the retail outlets are providing attractive offers to attract

customers.

8
 Big retail stores are running customer loyalty programmes which has increased profits and

no. of customers, and increase their switching costs.

 The customer perception of retail service quality is an important segment to the

emerging and the existing retailers in the market. As the study reveals that perception

of service quality is influenced by the various natures among various customers, even

some of the general factors like Personal interaction, physical aspects are the

dimensions on which customer perception remains constant and common to the entire

customer on a majority basis. So the retail outlets have to frame their own strategies

in order to attract the customers on a longer basis.

 Due to the changing demographics, increase in DINKS families, urbanization, and

awareness due to electronic media especially internet the customers have multiple

options to choose from modern retail outlets to neighbourhood shops. Majority of the

consumers are visiting organized formats for variety, easy availability, cleanliness

with additional facility of entertainment for children and convenient parking facility

and restaurant etc. In case of unorganized outlets immediacy of the store, credit and

bargaining facility balance the tilt. Unlike higher age groups who prefer to visit

Kirana stores, the younger generation has more inclination towards organized retail.

Families with annual income less than 4.0 Lakh and having a single bread earner

prefer shopping with nearby mom-n-pop stores. Customers with higher qualification

were found to be more attracted towards organized retail outlets.

9
The organized formats have entered into the tier-II cities and other small cities and focusing

on the middle class people as it had almost covered the metropolitan cities. Both organized as

well as unorganized retailers need to add value added services to make the shopping

experience more comfortable and value oriented.

 Multiple regression analysis revel that income and the young age customers are

having a favourable effect on the choice of the retail store, apart from occupation and

the adult customers. organized retail stores need to analyze the customer data base

thoroughly so as to determine the type of customers who prefer the store and monitor

their buying behaviour customer preference at the organized stores, several other

items like grocery, books, car, two wheeler, audio system, etc. are not preferred.

Among these, the store should rank the item in the order of customer preference and

create value addition in such departments.

Study reveals linkage between customers who buy grocery and medicine and then start

impressing upon them the value addition created for grocery purchase. A similar approach

could be taken up for persuading customers to buy other items by highlighting the customer

value proposition to wean the customers from the traditional stores and also the other

competitor in the organized format. Study also throws light on the fact that gender is a vital

factor in the choice of retail trade. While men prefer to save time which is more possible in

traditional outlets, women prefer to go to organized retail outlets. The reason is obvious: that

10
women are more choosy, take time to compare various items and also look for others items

that are on display – this would vary from textiles and garments to shoes, chappals, hand

bags, etc.

One more finding of the study is that income and occupation are important factors

influencing the choice of stores.

11
Chapter 3

Secondary Data

Organized Retail Industry

Organized retailing, in India, refers to trading activities undertaken by licensed retailers, that

is, those who are registered for sales tax, income tax, etc. These include the publicly

traded supermarkets, corporate-backed hypermarkets and retail chains, and also the privately

owned large retail businesses.

Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its

GDP. The Indian retail market is estimated to be US$ 450 billion and one of the top five

retail markets in the world by economic value. India is one of the fastest growing retail

markets in the world, with 1.2 billion people.

As of 2013, India's retailing industry was essentially owner manned small shops. In 2010,

larger format convenience stores and supermarkets accounted for about 4 percent of the

industry, and these were present only in large urban centers. India's retail

and logistics industry employs about 40 million Indians (3.3% of Indian population)

Indian market has high complexities in terms of a wide geographic spread and distinct

consumer preferences varying by each region necessitating a need for localization even

12
within the geographic zones. 1.8 million Households in India have an annual income of

over 45 lakh (US$71,550.00).

While India presents a large market opportunity given the number and increasing purchasing

power of consumers, there are significant challenges as well given that over 90% of trade is

conducted through independent local stores.

Challenges Include:

 Geographically dispersed population

 Small ticket sizes

 Complex distribution network

 Little use of IT systems

 limitations of mass media

 Existence of counterfeit goods.

A number of merger and acquisitions have begun in Indian retail market. PWC estimates the

multi-brand retail market to grow to $220 billion by 2020.

Notable Indian Retailers

 Future Group

 Mahindra Group

 Reliance Industries

 Aditya Birla Group

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 Bharti Enterprises, including joint venture with Walmart

 Fabindia: Textiles, Home furnishings, handloom apparel, jewellery

 The Bombay Store: Indian Artifacts, Home furnishings, jewellery

 Shoppers Stop, Crossword, Hyper City, Inorbit Mall

Foreign Companies with Plans to Operate in India Include:

 Carrefour

 Costco Wholesale

 Tesco

14
 Growth Drivers for Growing Preference towards Organized Retail Shopping in India.

Currently, organized retail is in a nascent stage of growth in India as it just has a 5.9% share

in the total India retail trade. However, in recent years, organized retailing has been growing

at a robust rate due to rise in the number of shopping malls as well as in the number of

organized retail formats.

The key factors of growth of organized retail in modern India are discussed bellow.

 Rising Disposable Income of Indian Middle-Class

The Indian middle-class can be categorized into seekers and strivers, which is the consuming

class and the prime target segment for retailers in India. In 2012, these two categories

together constituted around 7% of total households in India but accounted for 20% of the

disposable income.

By 2015, the middle class is expected to constitute around 25% of total households and

account for 44% of the total disposable income, and by 2025, the respective figures are likely

to go up to 46% and 58%. The Indian middle-class population and their growing disposable

income levels will drive the future growth of organized retail in India.

 Changing Consumer Preferences and Shopping Habits

The prime reason for a paradigm shift in the shopping attitude of the Indian consumer is the

change in their preferences and tastes. Due to the increasing use of IT and telecom, Indian

15
 consumers have become aware of brands and shops for lifestyle and value brands according

to the need and occasion. Consumers will continue to drive the growth in the organized retail

by expanding the market and compelling retailers to widen their offerings in terms of brands

and in terms of variety.

The spending on essential commodities has been steadily falling over the years, whereas the

consumption of discretionary products has been growing at a healthy pace. If the composition

of Potential future credit exposure (PFCE) is studied, one can notice that the share of food,

beverages and tobacco in the total PFCE has declined, On the other hand, the share of

communication, entertainment, personal care consumption has been rising over the years.

Changes in lifestyle have brought about a paradigm shift in consumption, which will

undoubtedly continue to drive retail growth in segments like beauty, healthcare, telecom, and

entertainment.

Moreover, the rising reach of media coverage is increasing consumer awareness about

products, their prices and services, which is likely to further encourage growth in the

organized retail segment.

 Changing Demographics

India is one of the youngest and largest consumer markets in the world with a median age of

around 25 years, which is the lowest as compared with other countries. According to

estimates, India’s median age would be 28 by 2020.

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 It is expected that over 53% of the population will be under the age of 30 by 2020, which

means that the potential for the Indian retail segment will be enormous. Another plus about

this population is that they will be more dynamic than the previous generations because their

consumption is driven by wants rather than needs. Thus, the organized retailing, which

thrives on lifestyle products, is expected to receive a boost because of the young population

by 2020.

 Increase in Working Population

India is the second-largest country in the world in terms of population, and is the largest

consumer markets in the world owing to its favorable demographics.

In 2011 India’s working population (in the 15-49 years age group) constituted around 56% of

the population Further, the increase in the number of working women has fuelled the growth

in sales of discretionary items. There has been a 22% increase in the number of working

women in the last decade.

 Spurt in Urbanization

Historically cities and towns have been the driving force of overall economic and social

development. Currently over 377 million people of India reside in cities and towns, which

translates to around 32% of the total population.

17
The rapid growth in urbanization has facilitated organized retailing in India, and has caused

the speedy migration of population into major tier I and tier II cities, which have a significant

share in the retail sales of the country.

Migration to cities and towns grows rapidly in anticipation of higher income opportunities

provided by these epicenters. Moreover, the continuous development in urban areas has

invariably attracted substantial inflows of capital both from domestic and foreign investments

have led to the transition of urban areas. As the Indian organized retail is mainly concentrated

in the urban areas, its growth (urban areas) is imperative for the organized retail in the

country.

Notably, the urban areas are India’s growth centers and they are growing rapidly over the last

couple of years as compared to the world average as well countries like Brazil, the US and

UK among others. This would undeniably emerge as the India’s largest market for organized

retail, and therefore the challenge for the retail players to leverage the full potential of

flourishing urban areas.

Furthermore, due to the rapid infrastructure development in major tier I, II and III cities,

many rural inhabitants are attracted to cities, which increase the urban per capita income and

in turn offers unbound opportunities for the organized retail segment. Increased globalization

has also played a big role in the development of urban areas.

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 Rise in Monthly Per capita Consumption expenditure (MPCE) level in Urban Areas

The aggregate urban consumption in India has been growing steadily over the past few years

as the economy has been continuously flourishing during this period, owing to a rise in urban

population as well as a rapid per capita income growth.

In FY07-08, Average MPCE level of urban area was Rs 1472, while in FY09-10 Average

MPCE level had risen up 34% to Rs 1984 and in FY11-12 Average MPCE level had raised

more to 2401.68. As per NSS (national Sample Survey) reports

The NSS report clearly suggested that the consumption pattern in urban areas differed from

the rural areas. While the food items constituted 52.2% of the rural area’s consumption in

FY12 and the non-food items accounted for the remaining share, in the urban areas, the share

of food items in consumption was 38.4% and the non-food items accounted for the rest.

 Organized Retail Concentration in Tier II and III Cities

Initially the retail revolution began in the big tier I cities in India; however, as tier I cities are

relatively saturated now, retailers, especially value retailers, are finding their way to smaller

tier II and tier III cities as well. The changing landscape of the Indian retail segment and the

increasing competition has also forced retailers to tap growth opportunities in tier II and III

cities in India.

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 Internet Drives Awareness and Online Purchases

There has been a substantial increase in the number of Indians who use the Internet and a

concomitant increase in the number of online purchases. Indians have started using the

Internet not only for increasing awareness but also to shop online, which has opened a whole

new channel of retailing in the Indian retail scenario.

Online retailing offers consumers the convenience of ordering merchandise to their doorstep.

Recently, Future Group, which owns Pantaloon, has initiated a measure to capitalize on the

online opportunity through futurebazaar.com. A similar venture flipkart.com is also proving

the new channel to be highly viable, especially since it eliminates the biggest cost of the

physical store.

 Easy Credit Availability – a Boon for Organized Retail

The higher penetration of credit cards in India has also boosted the growth of the organized

retail sector; in fact, the young population’s increasing fancy for plastic money has further

fuelled their purchasing power. Even though the organized retail sector is at a nascent stage

(constituted 6.9% of the total retail industry in 2012), it is growing at a rapid pace.

Moreover, the spurt in issuance of credit cards and loans by both Indian as well as foreign

banks has further boosted the segment’s growth. According to the RBI, as on FY11, the total

number of outstanding credit and debit cards in India was 24.7 million and 137.8 million

respectively.

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Organised Retail Chains in Lucknow

Lucknowzone of Lucknow encompasses all of South Lucknow, Worli to Nariman Point, as

well as Prabhadevi, Dadar and Mahim. The major micro-markets covered in the Lucknoware

Nariman Point, Worli-Prabhadevi, Lower Parel and Haji Ali-Kemps Corner. Some of the

major malls in the zone include High Street Phoenix located at Lower Parel and Atria Mall

located at Worli.

Since the Lucknow is considered to be a fairly up market residential area, there are a large

number of national and international brands present here. Two out of the three major

highstreets that were covered in this study are present in this zone, further enhancing this

zone's exclusive status.

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Crossroads, the first mall in the country, located at Haji Ali was shut down and bought by the

Future Group in 2006 to convert it into office space with some amount of retail space as well.

The initially unorganised retail space has now been organised and is referred to as SoBo

(South Bombay) Central Mall, having a built up area of 0.1 mn. sq.ft. This name of the retail

space was given as recently as 2009. Currently, there is just a fraction of the space that is

used commercially, with the majority comprising retail space.

22
This zone saw the development of a new mall called Palladium, which is the newest part of

the High Street Phoenix Mall at Lower Parel. It is referred to as Phase 3, came into operation

in 2009 and has a built up area of approximately 0.2 mn. sq.ft.

The Lucknowonly accounts for 15 percent of the major operational malls in Lucknow with a

total built up area of 1.3 mn. sq.ft. As mentioned earlier, owing to the large volume of

organised retail in this zone, there is a lack of dependence on mall space. Furthermore, the

average mall vacancy is only 4 percent since there are only 5 major malls in the Island City.

With a smaller number of malls in the zone, it is unlikely that any of them would operate

without full capacity.

23
Reasons for Popularity of Malls and Rising Preference for Shopping towards

Organized Retail Chains in Lucknow.

People visit the mall due to convenience of shopping, eating and entertainment, time saving

followed by seating facilities while shopping with relaxation. The researches taken place by

experts also found out that it is status symbol and location convenience due to which the

respondents visit the malls.

People prefer to shop from mall due to other facilities competitive prices of goods provides

festival offers quality of customer services availability of all the facilities under one roof

facility of payment through credit cards .

There is another area which have made popular in the recent times and that is recreation

facilities and children amusement. Due to the vast facilities people are diverting towards

Shopping.

Malls for the purpose of shopping various products, one can shop for hours in air-conditioned

premises. Shopping Malls are getting more and more popularity mainly among teenage

youth. Modern generation slowly is drifting towards malls due to time constrains.

The past survey undertaken by experts also throws light on the fact that shoppers do not shop

exclusively at the organized or the unorganized outlets.

24
They shop at both outlets and the share of spending varies from product to product. Even

those who were interviewed by past researchers at organized outlets, declared that 43-46 per

cent of their spending on vegetables, fruit, non-staple food items, cooking oil and other

packaged food items was from unorganized outlets. On the whole, the shoppers at organized

outlets make their spending on food and grocery, and textiles and clothing at unorganized

outlets.

25
 Chapter 4

Questionnaire

Questionnaire has been chosen as medium for secondary data with an objective to extract

first hand information from respondents in order to study consumers’ preference of shopping

towards organized retail sector in Lucknow (island city).

Age: Occupation:

Gender: Qualification:

Income:

1. Factors which influence you to prefer organized retail outlet:

Factors Strongly Agree Neither agree Disagree Strongly

Agree nor Disagree Disagree

Quality of products

Immediacy of the store

Status

Relations with the shopkeeper

Choice/Variety of Brands

Easy availability of products

Supportive sales personnel

Proper packaging of products

Product Bundling Offers

Proper shelf display of the

26
products

Cleanliness of the Store

Billing Duration

Shopping Environment

Entertainment for children

Credit Availability

Bargain Facility

Proper parking facility

Easy replacement of defected

products

2. Factors which influence you to prefer unorganized retail outlet:

Factors Strongly Agree Neither agree Disagree Strongly

Agree nor Disagree Disagree

Quality of products

Immediacy of the store

Status

Relations with the shopkeeper

Choice/Variety of Brands

Easy availability of products

Supportive sales personnel

27
Proper packaging of products

Product Bundling Offers

Proper shelf display of the products

Cleanliness of the Store

Billing Duration

Shopping Environment

Entertainment for children

Credit Availability

Bargain Facility

Proper parking facility

Easy replacement of defected

products

3. What is your Age and how frequently you visit to unorganized retail Store?

Age Unorganized Retail Outlet (Kirana outlets)

Weekly Monthly Quarterly Half yearly Yearly

Below 25 years

26-40

41-60

Above 60 Years

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 4. What is your Age and how frequently you visit to organized retail Store?

Age organized Retail Outlet

Weekly Monthly Quarterly Half yearly Yearly

Below 25 years

26-40

41-60

Above 60 Years

5. Income and frequency of visits for shopping needs in organized retail Outlet?

Yearly household income Frequency of visits in Organized Retail Outlet

Weekly Monthly Quarterly Half yearly Yearly

Less than 1.5 Lakhs

1.5 lakhs-4 Lakh

More than 4 Lakh-8 Lakh

More than 8 Lakhs

6. Income and frequency of visits for shopping needs in unorganized retail Outlet

Yearly household income Frequency of visits in Unorganized Retail Outlet

Weekly Monthly Quarterly Half yearly Yearly

Less than 1.5Lakhs

1.5 lakhs-4 Lakh

29
More than 4 Lakh-8 Lakh

More than 8Lakhs

7. Education level and the type of store visited for Shopping Needs

Educational Qualifications Organized Unorganised Both

Below metric

Undergraduate

Graduate

Post graduate

8. Occupation and type of store preferred for shopping needs

Occupation Organised Unorganised Both

Business

Government Service

Private service

Students

Homemaker

Any other

9. Family size and type of store visited

Number of members in the family Organized Unorganized Both

Less than 4

30
5-8

9-10

Above 10

10. Number of working members in a family and type of store preferred

Number of working members in the family Organized Unorganized Both

2-4

More than 4

11. Problems faced by consumers at Organized Retail outlets (1-Least 2-mediocre 3-

most)

Problems faced by consumer Average Score

Inconvenient location

Long queue for billing

Non cooperative attitude of sales personnel

No Home delivery

Improper space management

Poor after sales service

Selling of counterfeiter products

Unavailability of goods

31
 12. Problems faced by consumers at Unorganized Retail outlets (1-Least 2-mediocre 3-

most)

Problems faced by consumer Average Score

Unhygienic Conditions of the store

Improper parking facility

Improper shelf space

Unavailability of branded items

Unavailability of desirable products

Selling of counterfeiter products

Lack of knowledge of Retailers

Billing Problems

32