Emerging Trends in Indian Retailing

Emerging trends in Indian Retailing

BY: Ms. Nishi Malhotra – Phd IIM Kozhikode

Nishi1582@gmail.com; +919873145005
& Ms. Priya Malhotra – FMS Delhi, Phd
Malhotrapriya1983@gmail.com
 Emerging Trends in Indian Retailing

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 Emerging Trends in Indian Retailing

Abstract

Table of Contents
INTRODUCTION.......................................................................................................................................3

1. Introduction.............................................................................................................................................5

2. Research Problem....................................................................................................................................5

3. Objectives................................................................................................................................................6

4. Approach & Methodology.......................................................................................................................6

5. Results.....................................................................................................................................................7

6. Conclusion.............................................................................................................................................12

7. Further Research....................................................................................................................................14

8. References:............................................................................................................................................17

Bibliography..............................................................................................................................................17

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 Emerging Trends in Indian Retailing

INTRODUCTION

Major objective of this paper is to study the consumer behavior and consumer attitude towards e-
commerce in Tier 2 cities. Consumer behavior is impacted by number of factors including
demographic, economic, and psychographic and socio - cultural factors. This paper aims to
identify the factors impacting the consumer attitude and buying behavior towards online
shopping across various segments in Tier 2 cities.

As a result, this paper will contribute towards designing Marketing strategy for those retailers
who wish to penetrate into the Rural India through ecommerce and online channel and designing
various Marketing promotions for retention of customers through online channel in Rural India.

De Facto Primary research was conducted using a standard questionnaire in Newai Village in
Tonk district of Rajasthan. Around 100 people were interviewed. On the basis of findings the
Hypothesis Testing was done to arrive at the conclusion.  The sample size for the purpose of
research was 100.

In this paper we have done a statistical testing of the data about consumer behavior through T-
test, correlation and regression. We have done hypotheses testing about the (1) Purchase
preference of the consumers between brick and mortar and e-commerce and (2) Factors
impacting the buying behavior across the segments in Tier 2 cities (3) Factors impacting loyalty
of the customer in purchase through online channel in Tier 2 cities

Our study established the fact that even in hinterlands, consumers are very very class conscious
and brand conscious. They prefer to purchase from big stores and trust branded product for
quality and safety. A small proportion of consumers who are below a certain income level, prefer
taking products on EMIs and some of them prefer unorganized retailers solely due to easy credit
availability and location. Demographically youth between age group of 20 to 40 years of age is
more likely to purchase online. Ease of shopping, access to range of brands and availability of
credit were sighted as the main reasons for promoting online shopping. Around 60% of Rural
India is still not aware about e-commerce. Lack of internet connectivity and logistics are the
major reason for not buying from e-tailers and preferring brick and mortar formats.

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As a result of research we concluded that Retailers should adopt an easy credit and financing
strategy for tapping Rural India, there is a need for a Life Cycle Marketing and Customer
Relationship Management approach and E Marketing strategy based on Mobile Applications and
technology compatible with Smart phones to increase penetration. Retailers should increase their
reach through better logistics and courier services in hinterland and retailers should spend more
on branding and building associations with the customer. Local advertising or Cultural
advertising should be adopted.

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1. Introduction

Indian retail sector is poised for a CAGR of around 40% and estimated to be around 490 bn
USD, out of which organized retail accounts for 3% of the entire retail. Indian retailing is highly
fragmented with around 97% of its business being run by the unorganized retail sector. This
sector is the main employment generator after agriculture, as Indian retailing accounts for 9 to
10% of the GDP (Gross Domestic Product).

As far as retailing in India through e-commerce is concerned, there is lot of opportunity. At

present only 39 million buyers buy online in India, a tiny fraction of the more than 1 billion who
live in the country. Only 69 percent of India's population has more than limited access to broad-
band and mobile Internet, so the market will still prove challenging for some time to come.
However, there have been some advances. In 2014, ecommerce in India increased 27 percent to
$3.8 billion, and over the next five years spending is expected to grow 21 percent, slightly higher
than the global average. Indian retailing is poised for a new phase of augmented reality, with lot
of technology giants looking to make investments in Retailing.

Besides e-commerce, with change in the demographics and psychographics of the consumers,
augmented reality has become the new way of retailing. With the emergence of mobile
application, 4G, 3G, smart phones, Quad Core processors things have changed dramatically. The
future holds lot of potential for Augmented Reality and Virtual Reality. A recent report from
Juniper Research suggests that the enterprise augmented reality app market is expected to reach
$2.4 billion by 2019, growing tenfold from 2014.

2. Research Problem

With Rural population constituting 78% of the total population, still they constitute a miniscule
percentage of population buying online. This paper is aimed at studying the underlying
association between the internet connectivity and frequency of purchase online of rural
consumers.

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3. Objectives

Major objective of this paper is to study the consumer behavior and consumer attitude towards e-
commerce in Tier 2 cities. Consumer behavior is impacted by number of factors including
demographic, economic, and psychographic and socio - cultural factors.

 To identify the factors impacting the consumer attitude and buying behavior towards
online shopping across various segments in Tier 2 cities
 To help in designing Marketing strategy for those retailers who wish to penetrate into the
Rural India through ecommerce and online channel

4. Approach & Methodology

In this paper we have used Primary research methodology for studying the consumer attitudes
and buying behavior in Newai Village, Tonk district, Rajasthan.

4.1Data Collection
In this paper, convenience sampling method was used to collect information. The researchers
personally collected information from 150 people in Newai Village, Tonk district, Rajasthan, out
of which 100 were found to be suitable. The survey was conducted in two months of September
and October, 2015 using a five point Likert scale, through a standard questionnaire in Newai
Village in Tonk district of Rajasthan.

4.2Analysis
In this paper we have done a statistical testing of the data about consumer behavior through T-
test, correlation and regression. We have done hypotheses testing about the
(1) Purchase preference of the consumers between brick and mortar and e-commerce and
(2) Factors impacting the buying behavior across the segments in Tier 2 cities
(3) Factors impacting loyalty of the customer in purchase through online channel in Tier 2 cities

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5. Results

Earlier researchers and various studies have emphasized the fact that in rural regions, consumers
still prefer brick and mortar over e – commerce. Our study substantiated the fact that out of 100
responses

5.1 Demographic Characteristics of population: Our sample comprised of mix of population

across different age groups, gender, occupations and marital status.

In our study, out of 100 population, 21% were part of age group between 15 – 20 years, 21%
were between age group 20 – 30 years, 14% between age group of 30 – 40 years, 36% in age
group of 40 – 50 years and hardly 7% were in age group of 50 -60 years

Age of the respondents Percentage

15-20 21%
20-30 21%
30-40 14%
40-50 36%
50-60 7%

Table 2: Demographic Characteristics- Age group of Sample

Our study sample of 100 respondents comprised of 30% woman and 70% man. The age
distribution for man and woman was

WOMAN MAN
15-20 4 17
20-30 6 15
30-40 6 8
40-50 10 26
50-60 4 4
Table No 3: Composition of Man and Woman across age group

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5.2 Occupation:Out of 100 respondents, 41% were businessman, 8% farmer, 25% student, 9%
working woman, 13% house makers and 4% retired.

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PROFESSION PERCENTAGE 4
BUSINESSMAN 41 9 41
FARMER 8
STUDENT 25
WORKING 9
WOMAN Business Man25 Farmer Student Working Woman
8
HOUSEWIFE 13 Housewife Retired
RETIRED 4

Table No 4: Occupation composition

BUSINESSMAN FARMER STUDEN WORKING HOUSEWIFE RETIRED

T WOMAN
15-20     21      
20-30 10 5 4 2    
30-40 5 3   2 4  
40-50 26     4 6  
50-60       1 3 4
GRAND 41 8 25 9 13 4
TOTAL

Table 5: Age and occupation details

 Of the entire sample of 100, around 25 respondents were of age group 15- 20 years, and
were students
 Around 14 are in age group 30 - 40 years, and 6 are in income group of more than INR
20,000 per month
 Around 21 are in age group 20 - 30 age group, out of which 8 business man are in income
group of more than INR 40,000 per month , 2 business man, 2 working woman and 3
farmers in income group of more than Rs 20,000

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 Around 36 are in age group 40 - 50 age group, and out of which 20 business man are in
income group of more than 15,000 per month, 6 businessman and 4 woman in income
group of more than Rs 20,000
 Around 8 are in age group 50 - 60 age group, and are in income group of less than INR
20,000

5.3 Results and Findings

Our statistics showed that of 100 respondents 20 had access to internet. These 20 respondents
were mainly business man in age group of 20 – 40 years. 50 respondents mainly employed
preferred purchasing from big recognized stores and preferably brick and mortar. 20 respondents
who prefer online over brick and mortar are buying across the segments telecom, fashion,
entertainment and travel.

Particulars Findings
Total Responses 100
Internet access 20
Purchase from Big Recognized 50
Retailer
Prefer Brick and Mortar 50

Table No.6: Responses from Primary Research

5.4 Hypothesis Testing

Hypothesis Testing Number I

We used the hypothesis testing using Chi – Square for degrees of freedom of 1 for 2 categories
man and woman. The Hypothesis and the findings are mentioned below

H0: In tier 2 cities there is no association between internet connectivity & customer buying
online

H1: In tier 2 cities there is an association between consumer online buying and internet
penetration

Variables: Internet penetration and online purchase

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Probability of purchasing basis the internet penetration: 20%

Expected Values

Purchase online 20
Purchase through Brick and Mortar 80

Observed values

Purchase online 5
Purchase through Brick and Mortar 95

Observations: 20 respondents had access to internet and broadband.

Particulars Brick & E Commerce Chi

Mortar square

E – Commerce (Observed) 95 5  
Expected 80 20  
(Observed - Expected) 15 -15  
(Observed - Expected)^2 225 225  
(Observed - 2.8125 11.25 16.3125
Expected)^2/Expected

Table 7: Chi square table

5.5 Findings and Results

Chi squared equals 14.063

Degrees of Freedom 1
The two-tailed P value 0.0002<0.05

By conventional criteria, this difference is considered to be extremely statistically significant.

The P value answers this question: If the theory that generated the expected values were correct,
what is the probability of observing such a large discrepancy (or larger) between observed and
expected values. A small P value is evidence that the data are not sampled from the distribution
you expected.

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Interpretation: Test is extremely significant and there is an association between the two
variables internet penetration and online buying. Results and observation about buying behavior
of the sample in Newai, Tonk district of Rajasthan where hardly 20% people have internet
connectivity, is not different from the expected values. Hence, there is an association between
the internet penetration and buying behavior online.

Hypothesis Testing Number II

H0: In tier 2 cities there is no association between internet connectivity & frequency of
customer buying online

H1: In tier 2 cities there is an association between consumer online buying and frequency
of customer buying online

Probability of purchasing basis the internet penetration: 20%

Tested at Significance level – 95%

Expected Values

Purchase online 20
Purchase through Brick and Mortar 80

Observed Values

  Once a Once 2 Once 3 Once in 6 Nothing Total

Month Months Months Months
Own Internet 11 3 4 2   20
Do Not Own Internet 40 16 12 2 10 80

Findings & Results

Chi squared equals 5.29

Degrees of Freedom 4
The two-tailed P value 0.259>0.05

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 Emerging Trends in Indian Retailing

Table 8: Chi square tests

Interpretation: Test is not significant and we can accept the hypothesis that there is no
association between the two variables internet penetration and frequency of online buying.
Results and observation about buying behavior of the sample in Newai, Tonk district of
Rajasthan where hardly 20% people have internet connectivity, is not different from the expected
values. Hence, there is an association between the internet penetration and buying behavior
online.

6. Conclusion

1. Reach:One of the major reasons for decline in sale through e- commerce is that rural
areas do not have reach to internet. There is a need for E Marketing strategy based on
Mobile Applications and technology compatible with Smart phones to increase
penetration. Retailers should increase their reach through better logistics and courier
services in hinterland.

2. Effectiveness of IT and e- commerce model: Models like ITC Chop pal, Airtel Free Wi
Fi Hotspots, Mobile Applications through broadband and 3G, 4G are highly effective.
Internet connectivity is extremely relevant in increasing adoption of product or changing
purchase behavior

3. Acceptability & Marketing: In transformation from brick to click, there are various
factors that impact the buying online. There is also difference in attitude in Tier 1 and
Tier 2 cities. Nielsen data found that 59% of tier 2 online shoppers as compared to tier 1
online shoppers purchase online because of advertisement. Retailers should spend more
on branding and building associations with the customer. Local advertising or Cultural
advertising should be adopted
4. Retailers can use internet as tool for Life Cycle Marketing and Customer Relationship
Management

6.Shortcomings

1.Mass Media Approach

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Emerging Trends in Indian Retailing

One of the major findings of the research was that “online sales” remains at the fringe till date.
This channel has huge potential to reach a vast population as compared to other mediums.
Existing approach in marketing is “Mass Media” approach and has been rendered it just another
tool to acquire leads. There is a need for the Marketers to online be just another “Lead

Figure Number 1: Marketing objectives of 1000 Marketerers

As per Web chutney Digital Media Outlook 2010 online channel is being used only for
increasing sales and not for customer satisfaction.
2. Language Used: According to research, just 25% of the respondents were aware that the
regional vernacular content exists over the internet. The actual usage is even lower. In order to
promote proliferation of internet use among rural internet users, it is important to provide content
that is local them and is accessible in language they are used to.

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 Emerging Trends in Indian Retailing

Figure 2: Estimate of rural local language internet users

Ref: I CUBE internet user’s estimate, June 2015

7. Further Research

Further research should be conducted to examine the barriers to reduced sales in rural areas
through internet. Existing research studies have cited non –awareness of internet as the main
reason why internet has not penetrated in rural awareness. As per I-CUBE survey, in 7 states
surveyed, about 84% of the respondents who had not used internet in the past indicated that they
are not aware of it. Further 38% do not feel the need for it. A fairly high percentage of
respondents either need guidance in using internet (25%) or a PC (28%).

Marketing to harness Goldmine at BOP (Bottom of Pyramid)

Rural and Urban BOP population distribution

22%
Rural
Urban
78%

Figure : Rural and Urban BOP

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Reference: CII – Rural Report, Euro monitor, FMCG Roadmap, 2020

Bottom of the Pyramid is the consumer who has less than INR 20000 per annum per household.
BOP (Bottom of the Pyramid) segment is at around 900 – 950 Million people in India, and are
largely Rural and under served. Most of their basic needs such as telephone, mobiles, electricity
are unmet. Rural BOP (Bottom of the Pyramid) is estimated to be around 78%. However the
Rural and Urban divide is fast blurring.

Our research established that of the 40 respondents were woman and they are highly brand
conscious and shifting towards brand used by their urban counterparts. Reach of the branded
products remain a challenge. Companies should spend more on marketing through internet and
mobile telephony channel.

7.1 Research on Alternate Channels of Marketing

A further research should be done about the viability of alternate channels of marketing such as
radio, local nukad Nataks and plays, fairs for creating awareness about the benefits of online
shopping

Radios: At present there are more than 250 radio channels operational in the country. The radios’
share in entire pie of advertising is as less as 4.2%. Radio advertising can be used for increasing
usage of internet and creating digital awareness about the IT applications and Mobile
applications.

Mobile Governance under NeGP (National e Governance Plan) – DIT (Department of

Information Technology) has put in place Mobile Governance plan to provide access to citizen
services like utility bill payments, funds transfer, payment of fees for citizen centric services,
direct cash transfer through mobile telephony to people in Rural areas. Research can be done on
maximizing the benefits of m-Governance.

7.2 Managerial Implications

1. More Investment: It would lead to need for more investment in the newer channels and
designing new marketing techniques and methods to tap the rural markets

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2. Fostering Innovation: It will lead to further need for innovation and redesigning
existing Marketing theories and concepts. Existing theories have become obsolete and
there is need for conducting more Marketing Research into Rural Marketing in age of
Automated and Virtual Reality.

3. Developing Human Capital: It would mean retraining existing work force to cater to the
need of rural areas and grooming people who can provide reach to rural areas through IT
interventions.

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8. References:
Bibliography

CII. (2010). FMCG Roadmap 2020 The Game Changers . Chandigarh: booz&co.

Hollander, S. C. ((1960) ). The wheel of retailing : Journal of Marketing 24.

Websites:  

http://www.indiaretailing.com/-

http://shodhganga.inflibnet.ac.in/bitstream/10603/9375/19/19_chapter%208.pd

http://www.ibef.org/industry/retail-india.aspx

Primary Research has been conducted in Tonk, Newai, Rajasthan

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APPENDIX

Sample Questionnaire

(Is done in Hindi & English)

Dear respondent we are conducting a research on “Need for Internet and e-commerce in your
region, Newai, Tonk, Rajasthan”. Kindly spare few minutes & provide your inputs for this
research.

1. Your Name…………………………………………………………………

2. Gender ….Male…..Female

3. Your age (Yrs)….0-15…15-20 …..20-30….30-50……50-60…..60 above

4. Your education………10th pass……..12th pass…….Graduate…..Post

Graduate…..Doctorate…….Other professional qualifications

5. Your Adhaar Card Number ……….

6. Do you have a Pradhan Mantri Jan Dhan Yojana Account………Yes………No

7. Have you been to (Common Services Center) in Newai, Tonk…..Yes……..No

8. Do you avail any Government scheme……..MNREGA…….Pradhan Mantri Bima

Suraksha Yojana…….Pradhan Mantri Jan Dhan Yojana?

9. Are you employed...

10. If yes, please choose………..

a. Farmer………………………………………

b. Self-employed ……………………………….

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c. Student ………………………………………

d. Housewife……………………………………

e. Farmer………………………………………..

f. Working Professional…………………………

g. Others (Pls specify)…………………………….

11. Whether you have a vehicle?...........................................................................................

a. Two Wheeler …………………

b. Three Wheeler ………………….

c. Four Wheeler …………………..

12. You live in your own house or rented apartment (Pls specify)………………………...

13. Your Monthly Income ……………………………………………………………………

a. Less than 1,000 per month ….b. 1,000 – 10,000 per month………….

b. 10,000 – 20,000 per month………….d.20,000 – 50,000 per month………

c. e. 50,000 & above………

14. Do you have a Mobile Phone ?.........Yes………..No

15. Do you have a smartphone with 3G and access to internet?..........Yes………No

16. Do you have computer?.............Yes……No

17. Do you have internet connectivity?.........Yes…….No

18. Have you heard about shopping online?........Yes……No

19. Have you shopped online?..............Yes…….No

20. Where you spend maximum of your income?

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 Emerging Trends in Indian Retailing

a. Utilities…….

b. Fashion……..

c. Electronics……

d. Mobiles………..

e. Travel………….

f. Others……specify

21. Given an opportunity, where will you pay your bills online, hassle free through internet
………Yes………..No

22. Given an opportunity, will you prefer sending money online, through a more secured
channel like Payment Gateway……Yes……….No

23. If your favorite brand provides you free internet through their portal, will you shop
online………….Yes…………No

24. Given an opportunity will you shop online and how frequently

a. Once a Month ……….

b. Twice a Month ………

c. Thrice a Month ………

d. Once 6 Month …………

e. Never…………………….

25. Have you heard about Mobile shopping?................Yes……..No

26. If you’re favorite brand is available through Mobile application, will you buy?

…………Yes……….No

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*******

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