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Would Indian consumers move Indian

consumers
from kirana stores to organized
retailers when shopping
for groceries? 127
Paromita Goswami Received July 2007
Revised June 2008
Xavier Institute of Management, Bhubaneswar, India, and Accepted June 2008
Mridula S. Mishra
ICFAI Business School, Kolkata, India
Abstract
Purpose – This article seeks to understand whether Indian consumers are likely to move from
traditional kirana stores to large organized retailers while shopping for groceries.
Design/methodology/approach – Two hypotheses were proposed: H1: customer patronage differs
for different grocery store attributes and H2: customer perceptions of grocery store attributes differ
for kirana stores and organized retailers. The study was carried out across four Indian cities- two
major and two smaller cities with around 100 respondents from each city. Stratified systematic
sampling design with a sample size of 409 was used for the study. Multivariate statistical techniques
were used to analyze the data collected with the help of a structured questionnaire.
Findings – Customer patronage to grocery stores was found to be positively related to location,
helpful, trustworthy salespeople, home shopping, cleanliness, offers, quality and negatively related to
travel convenience. Kiranas do well on location but poorly on cleanliness, offers, quality, and helpful
trustworthy salespeople. The converse is true for organized retailers.
Research limitations/implications – Kiranas have major disadvantages on all customer
perception scores except location. These scores being less important determinants of patronage
compared with location, in the short run kiranas may not be ousted out of customers’ favour.
However, in the long run if they do not work on these other factors, they would face oblivion.
Practical implications – Kiranas need to upgrade their facilities to be able to compete with the
organized retailers, who are expected to improve their location scores rapidly in the near future.
Originality/value – The paper predicts whether the foray of large organized grocery retailing
would close down millions of kirana shops and result in loss of livelihood, suggesting measures to
counter the onslaught.
Keywords Consumer behaviour, Customer loyalty, Shopping, Retailers, India
Paper type Research paper

Introduction
Food and grocery (F&G) segment comprises 62 per cent of the $ 270 billion
(Rs 1,200,000 crore) Indian retail market (India Retail Report, 2007). Only 0.8 per cent of
this segment is in the organized sector and the organized F&G sector witnessed a year-
on-year growth of 30.8 per cent in 2005-2006 as against 2.2 per cent growth of the total
F&G retail market (Refer to Exhibit 1 for the major players in India and their projected
sales) (India Retail Report, 2007). This indicates huge opportunities in organized retail.
Although traditional retail currently constitutes over 95 per cent of the total sales
in the country, smaller kiranas (Indian version of a combination of convenience and Asia Pacific Journal of Marketing
mom-and-pop stores with <500sqft area) that are unable to compete with new age and Logistics
Vol. 21 No. 1, 2009
retailers in terms of variety and scale have begun losing volume and share of pp. 127-143
customer’s wallet in several parts of the country (Vijayraghavan and Ramsurya, 2007; # Emerald Group Publishing Limited
1355-5855
in.nielsen.com, 2008). DOI 10.1108/13555850910926281
APJML Political concerns over the loss of livelihood by lakhs who run mom-and-pop stores
also need to be addressed (Bureau, 2007a; Jha and Guha, 2007). The Prime Minister’s
21,1 Office of India had initiated a study on the impact of retail giants on small retailers by
Indian Council for Research on International Economic Relations and this move had been
welcomed by the Confederation of All India Traders. This study reports that
unorganized retailers in the vicinity of organized retailers experienced a decline in their
volume of business and profit in the initial years after the entry of large organized
128 retailers, but the adverse impact on sales and profit weakened over time (Joseph et al.,
2008). The same study also reported that all income groups saved through organized
retail purchases and lower income consumers saved comparatively more. This apparent
conflict in the report as to why in spite of higher savings to consumers while shopping at
organized outlets the adverse impact on sales and profit of unorganized retailers reverses
over time, may be because the study takes a snapshot picture of the present without
delving into the possible reasons of why the customers behave the way he does.
Internationally, while some studies suggest that large scale retailers like Wal-Mart are
responsible for widespread closings of mom-and-pop stores (Wal-Mart Watch, 2005;
Basker, 2005) and question whether cost to communities in terms of labor displacements
and higher poverty is offset against benefits of lower prices and greater convenience
(Goetz and Swaminathan, 2006), other studies suggest that the process of creative
destruction unleashed by Wal-Mart has had no statistically significant long-run impact on
the overall size and profitability of the small business sector in the USA (Sobel and Dean,
2006). In Asia, with the exception of Hong Kong, Singapore and Malaysia, traditional
channels still command more than half of the grocery retail market in the rest of the
countries in Asia (KPMG, 2006). However, the experience in China and Indonesia has
shown that while both organized and unorganized sectors exist and grow for the first 5-10
years, albeit at different rates, the structural changes start hitting the unorganized sector
after the share of organized retail reaches 25-30 per cent (Gulati and Reardon, 2007). At
present certain Asian countries which have witnessed high growth rates between 2003-
2007 in modern grocery sales are China (105 per cent), Turkey (56 per cent), Vietnam (59
per cent), Indonesia (70 per cent) and India (49 per cent) (Gregory, 2008). Overall situation
in Asia for grocery retailing indicates shrinkage in the traditional grocery sales with South
Korea witnessing a 13 per cent decline in small retailers between 1996-2004, Hong Kong
facing a decline in market share of traditional grocery channels by 21 per cent between
1994 and 2004, Singapore witnessing a fall of 8 per cent between 2002 and 2003 in the
proportion of households spending bulk of their grocery money at traditional shops, Japan
facing a decline in contribution of small and independent businesses to the grocery retail
market to the tune of 7 per cent between 1998 and 2004, China having traditional style
markets contributing to only 68 per cent of grocery sales in 2004, and Indonesia facing a
shrinkage in traditional retailers, including wet markets, roadside stalls and independent
grocers (KPMG, 2006). In India modern trade or organized retailing already account for 30
to 40 per cent of grocery sales in the top 6-7 cities of the country (Kakkar, 2008).
To address the growing concern over the loss of livelihood, organized large-scale
retailers like Reliance Fresh is inviting small retailers as well as individuals to become
franchisees on a revenue sharing model (Thakkar and Bhatt, 2007) (Table I). The
Bharti-Wal-Mart venture may also follow the same model and offer employment
opportunities to 60,000 people by 2015 (Times News Network, 2007). Large domestic
retailers are trying to distance themselves from their foreign counterparts like Wal-
Mart and Tesco with claims that once foreign retailers are able to bring their own
equity, they would manipulate the markets on their own terms and conditions and
 Retail sales Retail space No of Indian
(INR crore) (sq ft) outlets consumers
Retailer (2006-2007) (2006-2007) (2006-2007)

Nilgiris 110 200 44

Spinach 90 154 60
Subhiksha 334 Data not available 315
Taj 19 29 4 129
Fab Mall (Trinethra) 277.99 526 198
Trumart Data not available 168 42
Food Bazaar Data not available 480 45
Spencers Data not available 181 68
SPAR Data not available 27 1
Natures Bazaar Data not available Data not available 3
Namdharis Fresh Data not available 20 13
Big Apple Data not available Data not available 3
Reliance Fresh Data not available Data not available 22
C3 14.4 22 6
Monday to Sunday Data not available 13 2
Foodworld Data not available 71 31
Fresh (Heritage Foods) Data not available 4 1
Arambagh Food Mart 26 13 24 Table I.
Major grocery
Source: Rajmohan, R. (2007), India Retail Report, 2007, Images Multimedia Pvt. Ltd. retailers in India

would even manipulate consumption patterns (Jha, 2007). To avoid political pressure
and adversity, the large-scale retail players are out to prove that there is no threat to the
smaller players and there is enough space for co-existence and are proposing plans of
B2B model to service kiranas (Reliance Retail), as well as suggesting formation of co-
operatives by kiranas (HyperCity Retail) and lauding the three-fold strategy of kiranas,
namely quality, service with a smile and ambience (Mukherjee and Himatsingka, 2007).
The Indian consumers are known to be price-sensitive and retailers have to manage
with razor-thin margins in order to compete for the share of wallet of the grocery
consumer. Consumer spends on food constitute around just under 50 per cent and
margins on food retail is around 12-15 per cent with a post-tax margin of 2 per cent
(Vijayraghavan, 2007).The entry of massive grocery format of Reliance and the venture
of Bharti-Wal-Mart is expected to further kick up competition in the business and put
pressure on margins (Daftari, 2007). Reliance Fresh, the fruit and vegetable store of
Reliance Retail made a mid-course correction of its product-mix by deciding to sell
groceries in an effort to increase the average bill value which is stagnated at Rs 120-130;
Subhiksha, the organized small format home-grown no-frills hard-discounter, has
evolved towards a 60:40 ratio in favour of grocery with an average bill size of the typical
customer of around Rs 300-320 (Daftari, 2007). Indications of cut-throat competition and
an impending price-war is evident in selling of different products to the end-consumer by
Reliance Retail to the tune of 15-20 per cent cheaper in grocery items like potatoes,
onions, atta and as much as 50 per cent in case of fruits compared to ongoing market rate
at the kiranas ( Jha and Guha, 2007). Recent national level advertisements by Subhiksha
claim that consumers save four times more when shopping at Subhiksha vis-à-vis
kiranas. The Indian consumer being extremely value-conscious with 80 per cent of his
spend comprising essential and need-based purchase from the store next door; the
critical question is whether he would travel all the way to the big store (Karwal as quoted
APJML by Tarun and Chopra, 2007). In fact, the 2,000 crores Future Group (Pantaloon Retail)
intends to increase its non-grocery business from the present 40 per cent to 50-70 per cent
21,1 in view of the increased competition in the grocery business in coming years wherein the
group’s grocery model might not be competitive enough (Vijayraghavan, 2007).
Understanding consumer insight is crucial to get to the shelf right and Wal-Mart went
wrong in Germany as they did not even understand that the pillow size of Germans is
bigger than that of Americans (Karwal as quoted by Tarun and Chopra, 2007). Indian
130 retailers understand the taste, preferences and culture of Indian consumers better (Biyani
of Pantaloons as quoted by Tarun and Chopra, 2007). Some experts also feel that if
Indian big retailers can compete with kiranas, which do not have any overheads and are
extremely presentable, they may compete with anybody and should not be worried about
competition from international players (Sanjiv Goenka of RPG Enterprises as quoted by
Tarun and Chopra, 2007). In fact, there might be emergence of several India-specific retail
business models and formats in view of the unique peculiarities of the behavior of Indian
consumers (Arvind Singhal, Chairman, Technopak Advisors as quoted by Tarun and
Chopra, 2007) like the proposed Argos retail format of Shopper’s Stop-Hyper CITY
Retail-Home Retail venture (which involves catalogue stores along with home shopping
(Hms) and on-line retail) (Bureau, 2007b). Sinha et al. (2005) carried out a study on format
choice of F & G consumer for one product and one customer segment with a sample of 26
respondents on five existing store formats namely kirana, upgraded kirana,
supermarkets, hypermarkets and wholesalers. They suggested that the type of product
influence the purchasing patterns of customers and commented that it would be
interesting to capture the utilities of each store format, given that shopping has been
found to be influenced by local culture, and suggested that it would be interesting to
study the format choice behavior of many customers.
Thus, on the one hand, there are the organized retailers who are making a foray into
the grocery market at a rapid rate and posing a threat to the livelihood of kirana shop-
owners; and on the other, there is the highly price-sensitive consumer forcing market
players to operate on thin margins. As rightly pointed out by Sanghvi (2007), so far
retailers who focused on developing only supply-side efficiencies need to think about
demand-side effectiveness as well to optimize business performance. Whether a
business adequately meets customers’ needs and desires may be measured by its
outputs like customer patronage and it is important to identify efficient levels of the
various dimensions of satisfaction of customers’ needs that directly link to measures of
specific firm outputs that firms intend to maximize (Blose et al., 2005). In this paper, we
shall examine the demand-side effectiveness of grocery retail formats existing in India
in terms of dimensions of satisfaction of customers’ needs and consequently relate it to
customer patronage in order to predict whether customers of traditional kirana stores
would move to organized grocery retailers in India. In other words, we shall be able to
examine whether loss of livelihood looms large on the kirana store operators.

Literature review
The objective of this paper being prediction of the possibility of customers switching from
traditional kirana stores to organized retailers while shopping for groceries, in this section,
we first discern factors related to grocery store patronage; and secondly, identify the
dimensions of customers’ needs and desires which are relevant for grocery store choice.
As far as grocery store patronage is concerned, though early studies (Enis and Paul,
1970; Dunn and Wrigley, 1984) found loyalty to be a characteristic of poorer shoppers, a
recent study indicates significantly higher incomes and weekly expenditures of the loyal
shoppers (McGoldrick and Andre, 1997). Knox and Walker (2003) confirmed the existence Indian
of a weak but significant relationship between involvement and brand loyalty in grocery
markets. Overall satisfaction with a store does not significantly influence customers’
consumers
loyalty to that store and shoppers’ intention to remain loyal to their ‘‘primary store’’ is
influenced by factors like frequent-buyer reward schemes, travel distance, preference for
an in-store delicatessen, size of the average grocery bill, store signage and the level of sale
assistance (Miranda et al., 2005). However, given that grocery shopping patterns vary with
culture, Indian grocery shoppers are required to be investigated separately to determine,
131
which grocery store attributes contribute to store patronage (Shanon and Mandhachitara,
2005). Based on the above literature, the first Hypothesis H1 was formulated.
H1. Customer patronage differs for different grocery store attributes.
The store dimensions which are relevant for grocery store choice of customers may now
be investigated. Grocery industry is strongly driven by price competitiveness (Taylor,
2003). ‘‘Credit’’ is a predictor of grocery shopping expenditures spent out of the
community and consumers spending a medium proportion of their grocery expenditures
out of a locality had the highest overall shopping expenditures in all categories (Sullivan
and Savitt, 1997). Product selection, assortment and courtesy of personnel are also very
important in determining format choice and cleanliness is the most important attribute
regardless of the format of grocery store (Carpenter and Moore, 2006; Teller et al., 2006).
In an earlier study by Solgaard and Hansen (2003), assortment was found to be the single
most important driver for the choice between store formats; price level and distance also
being important drivers for consumers’ choice between store formats; although quality
and service were not found to be differentiator between formats. Again, Singh and
Powell (2002) found that grocery shoppers consider quality to be most important,
followed by price, locality, range of products and parking. Fox et al. (2004) found that
shopping and spending vary much more across than within formats, and expenditures
respond more to varying levels of assortment and promotion than price, although price
sensitivity was most evident at grocers. While supercenter primary shoppers of food
identified low price and assortment more often as the reason for store choice, traditional
supermarket primary shoppers were less willing to tradeoff locational convenience or, in
some cases, quality and assortment (Seiders et al., 2000). Chinese supermarket shoppers
found store location, price and product variety as the most important store attributes
influencing satisfaction (McDonald, 1991). In an investigation of consumer shopping
destination choice behavior for convenience goods shopping trips in Taiwan, spatial
separation distance best explained respondents’ shopping destination choice behavior,
followed by store selection criteria (Yang, 2006). A study in Vietnam on the factors which
influence decision-making by consumers when selecting traditional bazaars vs
supermarkets revealed that freshness, price and convenience are important in shaping
the choice by consumers for traditional outlets for fresh food, while price played a key
role in selecting shopping outlets for processed food and drinks and non-food products
(Maruyama and Trung, 2007). Hence, there is difference in the result of the studies of
different authors as far as relative importance of attributes are concerned, which might
be attributed to either changes in consumers over a period of time or to the place of study
as grocery shopping patterns vary with culture (Shanon and Mandhachitara, 2005).
Customers attach considerable importance to store location and private labeling is
found to be a store selection criterion of low importance for grocery shoppers (Baltas and
Papastathopoulou, 2003). Generally, national food brands were perceived as superior to
own labels in terms of quality, packaging, consistency and good image (Omar, 1996).
APJML Customers can distinguish high-quality stores from low-quality stores, large stores
21,1 (associated with the great amounts of goods, special offers and a lot of walking and
searching) from small stores (associated with personal attention, accessibility,
nearness, high prices), hypermarkets from other retail formats, stores where weekend
purchases are made vs stores where only specific item/items are bought (Uusitalo,
2001). Consumers are not able to perceive an important difference between home
132 delivery and traditional grocery shopping (Teller et al., 2006). Older consumers are very
price-conscious, have different needs compared to younger grocery shoppers, enjoy
interactions more than younger consumers and prefer to shop in a store where they can
receive special-assistance services (Moschis et al., 2004).
Most people exhibit certain habits when they do their main trip to the supermarket
and have a usual day and a usual time of day to shop (East et al., 1994; Singh and Powell,
2002). Seventy percent of shoppers visit grocery stores with random intervals and 30 per
cent with relatively fixed intervals and ‘‘routine’’ shoppers spend more dollars for a given
shopping trip but have difficulty in visiting grocery stores more often and in switching
stores (Kim and Park, 1997). Segmentation based on time orientation and shopping
motivation provides a clearer picture of consumer behavior than socio-demographic data
or information on shopping attitudes (Chetthamrongchai and Davies, 2000). For some
households shopping may have a recreational aspect (Bawa and Ghosh, 1999), whereas
for others grocery shopping is stressful (Aylott and Mitchell, 1999). Time attitudes link
closely to behavior and time-pressured shoppers value certain specific store attributes
(Bergadaa, 1990; Berry, 1979; Umesh et al., 1989; Chetthamrongchai and Davies, 2000).
Recent work suggests that most time-poor consumers place a premium on saving mental
energy and confirmed that consumers could be segmented on time availability (Darian
and Cohen, 1995). A person-situation segmentation framework has been proposed which
integrates the demographic variable ‘‘income’’ and the situational variable time pressure’’
for grocery retail shopping (Kenhove and Wulf, 2000).
In some nations like Germany and UK, there is two-stop grocery shopping (in the
sense of frequenting a multiple and a limited line discounter on a regular basis (Schmidt
et al., 1994). On the other hand, multi-store shopping (MS) patterns, that is, division of
grocery purchases among supermarkets and other outlets is a distinct aspect of grocery
shopping behavior pattern of consumers of developing countries due to dietary habits,
preference for fresh food and fondness for cooking (Alawi, 1986; Tuncalp and Yavas,
1990). Packaged goods’ store patronage levels in Urban China for both contemporary and
traditional products co-vary with market shares, few consumers are exclusively loyal,
and a majority of consumers are divided in their loyalty, and they patronize other store
types/chains in line with market shares (Uncles and Kwok, 2008). Experience in China
shows that while consumers of developed cities shop weekly, those of less developed
ones prefer daily shopping of staples in wet markets (KPMG, 2006). More involved
grocery shoppers are more likely to shop at different supermarkets for various categories
of grocery items (Smith and Carsky, 1996). Grocery shopping may thus involve ‘‘sharing
patronages’’ or ‘‘split buying’’ between multiple stores rather than exclusively buying at
one store or ‘‘changing patronages’’ from unorganized grocery stores to stores of the
organized sector. Grocery shoppers are said to resort to main shopping trips (monthly/
fortnightly shopping contributing to the bulk of purchases) and top-up shopping trips
(contributing to the rest of grocery shopping) (Kakkar, 2008). Indian shoppers generally
use the modern format for their weekly and monthly shopping needs and use traditional
stores for ‘‘top-up’’ shopping (in.nielsen.in, 2008).
 An important factor that has an impact on grocery shopping behavior is unplanned Indian
buying (Park et al., 1989). Consumers list ~40 per cent of the items purchased, and 80
per cent of the items written on shopping lists were actually purchased (Block and
consumers
Morwitz, 1999). Written shopping lists significantly reduce average expenditure and
the presence of children accompanying the shopper significantly increases expenditure
and time spent in store (Thomas and Garland, 1993).
The major drivers for choosing a grocery store in India seem to be nearness to place
of residence and the comfort level that the respondents has in dealing with the store 133
owner (measured in terms of personal relationship with the shopkeeper) (Sinha and
Banerjee, 2004). In an age of increasing competition from large-scale organized grocery
retailers, local shops need to have the commitment and willingness to cater for the local
community for survival, which means focusing attention more closely on local
residents’ wants and needs (Broadbridge and Calderwood, 2002). Local shops are seen
to provide a vital social and community function, particularly for those undertaking
their main shopping locally (Smith and Sparks, 1997).
From the above discussion, we may deduce that the dimensions that are relevant for
grocery store choice are: price-consciousness, assortment, behavior of the store
personnel, cleanliness, quality, deals/specials/promotions, ease of shopping, time/day
of shopping, no of outlets visited, location/distance, home order/delivery, shopping list/
unplanned, recreational/time spent at store, frequent buyer schemes, payment/credit
facility, shopping companions, in-store specialty, store signage/ambience, parking,
expenditure/no of times shopping, apathy/stress, refund/exchange. Since we wish to
discern the difference, if any, between customer perceptions of grocery store attributes
for kirana stores and organized retailers, the following hypothesis is proposed:
H2. Customer perceptions of grocery store attributes differ for kirana stores and
organized retailers.
Having so far discussed about grocery store attributes relevant for store choice, as well
as issues related to patronage of grocery stores, we shall now discuss the methodology
followed in our study.

Research methodology
The study was carried across four Indian cities- two major metros (Kolkata and
Mumbai), and two smaller cities ( Jamshedpur and Nagpur) with around 100
respondents from each city. Four grocery formats relevant for India are kirana stores,
upgraded kirana stores, supermarkets and hypermarkets. From each city 25 customers
of each of the four grocery formats were interviewed. Stratified systematic sampling
design was followed. The strata were the four formats of grocery stores, namely,
kirana, upgraded kirana, supermarkets and hypermarkets. To maintain the systematic
design of the sample, every fifth customer leaving the store was intercepted and
interviewed with a structured questionnaire. The questionnaire was prepared after a
detailed literature review on customer perception of grocery store attributes and
customer patronage of stores. A detailed literature review suggested that the customer
perception variables of relevance as far as grocery store attributes are concerned are
price-consciousness, deals/specials/promotions, assortment, behavior of the store
personnel, cleanliness, quality, ease of shopping, time/day of shopping, number of
outlets visited, location/distance, home order/delivery, shopping list/unplanned
purchase (UP), recreational/time spent at store, frequent buyer schemes, payment/
credit facility, shopping companions, in-store specialty, store signage/ambience,
APJML parking, expenditure/number of times shopping, apathy/stress, refund /exchange. One
hundred and sixty eight statements were short listed from earlier studies on customer
21,1 perception of the aforementioned relevant grocery store attributes. Of these, 44
statements were carefully chosen to understand customer perception on different
grocery store attributes by a panel of experts, which were suitably modified to suit the
Indian context. We have taken customer patronage as the outcome variable, that is, if
consumers have a favourable perception of the grocery store attributes, they would
134 repeat patronage to the store. For measuring customer patronage, we used two
measures, namely percentage of total grocery shopping at a store over the last 12
months and duration of shopping at the store. Demographic details of customers were
recorded for community, place of residence (city), yearly household income, gender,
religion and socio-economic classification (SEC) of the highest income earner of the
family (Table II).
The 44 statements on grocery store attributes were factor analyzed to reduce the
data to meaningful factors. For this purpose, principal components analysis was used
with varimax rotation. The resultant factors were identified using eigenvalue greater
than one criterion. As a general rule, for factor analysis, the minimum is to have at
least five times as many observations as there are variables (Hair et al., 2003). So the
sample size of 409 was adequate and within acceptable limits. Instead of using factor
scores, items, which loaded highly on a factor, were averaged for subsequent analyses.
This method has been supported by Hair et al. (2003) and also used by Orth et al. (2004)
as it is easier to analyze and interpret the results rather than use factor scores which is
basically the linear combination of all the variables and not simply the variables which
load highly on a specific factor. The averaged items were submitted to two sets of step-
wise multiple regression, the first with the grocery store attribute factors as
independent variables and percentage of total grocery shopping at a store over the last
12 months as the dependent variable, and the second with grocery store attribute
factors as independent variables and duration of shopping at the store as dependent
variable. Next, step-wise discriminant analysis was done between kirana and
upgraded kirana stores as one group (that is traditional grocery retailing) and
supermarkets and hypermarkets as another group (that is modern grocery retailing or

South
Bengali Bihari Gujrati Marathi Marwari Punjabi Indian Others

Community 39.4 11.9 3.9 14.4 5.7 5.6 5.4 13.7

Mumbai Kolkata Jamshedpur Nagpur
City 19.6 31.8 24.2 24.4
<Rs 90,000 Rs 90,000- Above
200,000 Rs 200,000
Yearly 0.7 21.1 78.1
household
income
Males Females
Gender 65.8 34.2
Hindus Muslims Christians Others
Table II. Religion
Demographic details of A1 A2 B1 B2 C D E2
sample SEC 35.7 25.7 8.6 12.2 2.4 2.4 0.2
organized retailing) to discern the extent to which kiranas or traditional grocery Indian
retailing is different from organized grocery retailing. On the basis of the regression consumers
and discriminant analysis results, inference was drawn about the research question:
would Indian consumers move from kirana stores to organized retailers when shopping
for groceries.

Findings and analysis 135

At first, principal components analysis with varimax rotation was done on the 44
statements on grocery store attributes. The factor analysis of these 44 statements
resulted in 13 factors with eigenvalue >1. They accounted for 67.288 per cent of the
variance (which is satisfactory for social sciences) and had a Kaiser–Meyer–Olkin
measure of sampling adequacy of 0.739 which is middling as per guidelines (Hair et al.,
2003). Barlett’s test of sphericity yielded a 2 value of 7,517.931 at 946 df which is
significant at 0.000 level, implying overall significance of the correlation matrix. One
factor had to be dropped due to unacceptably low reliability which was measured with
Cronbach’s alpha. The factors were given names in accordance with their nature
keeping in mind the statements that had higher loading on a specific factor.
Accordingly, the factors were named: store cleanliness, store offers and product quality
(COQ), Store brands, family grocery shopping and parking facilities (BFP), Hedonic
shopping (HS), Location (L), Specific day shopping (SDS), HmS, MS, Planned shopping
(PS), In-store convenience (IC), Helpful and trustworthy salespeople (SP), Travel
convenience (TC), Unplanned purchase (UP). The following list shows the principal
components factor analysis with varimax rotation results of grocery store attributes
with corresponding Cronbach’s alpha scores and factor loadings of items in parentheses:
(1) COQ (7.307 per cent of variance, Cronbach’s alpha ¼ 0.6962)
. This is a clean and tidy shop (0.739)
. There is high quality of products in this store (0.6)
. I like to buy groceries on special offers (0.447)
. This store has frequent buyer program (0.380)
. For grocery shopping, it is important that the store accepts credit cards (0.587)
. This store has attractive appearance and décor (0.602)
(2) BFP (7.088 per cent of variance, Cronbach’s alpha ¼ 0.8059)
. It is easy to shop with family in this store (0.609)
. I usually shop for groceries with family (0.467)
. Store brands are available in this store (0.656)
. Specialty goods are available in this store (0.476)
. There are ample parking facilities around this store (0.766)
. There is security of parking area around this store (0.807)
(3) HS (6.59 per cent of variance, Cronbach’s alpha ¼ 0.8294)
. Grocery shopping is pleasurable even if you do not buy anything (0.789)
. Grocery shopping is recreational activity for me (0.804)
. Grocery shopping is stressa (0.752)
. Grocery shopping is tediousa (0.735)
(4) Location (L) (6.527 per cent of variance, Cronbach’s alpha ¼ 0.7546)
. This store is near to other stores where I shop (0.524)
. This store is close to where I live/work (0.686)
APJML . This store has convenient location (0.830)
21,1 . I prefer convenient grocery store location to bargains (0.676)
. There is low cost of travel to this store (0.683)
(5) SDS (5.017 per cent of variance, Cronbach’s alpha ¼ 0.8610)
. I usually shop on a particular day of the week (0.836)
. I normally go grocery shopping the same day of the week (0.810)
136 . HmS (4.827 per cent of variance, Cronbach’s alpha ¼ 0.8261)
. This store takes orders from home (0.834)
. This store delivers groceries at home (0.852)
(6) MS (4.817 per cent of variance, Cronbach’s alpha ¼ 0.7708)
. If I have time, I visit more than one grocery store on each shopping trip (0.776)
. I visit several grocery stores for best prices (0.812)
(7) PS (4.519 per cent of variance, Cronbach’s alpha ¼ 0.5592)
. I prepare a shopping list before going grocery shopping (0.721)
. I usually always stick to the grocery shopping list (0.590)
. When I go grocery shopping, I like to take my time and look around (0.599)
(8) IC (4.357 per cent of variance, Cronbach’s alpha ¼ 0.5447)
. It is easy to find the items you want in this store (0.547)
. There is absence of waiting time in this store (0.634)
. This store has everything under one roof (0.425)
. Convenience of location is of minor importance if it is a good place to shop
for groceries (0.491)
(9) SP (4.166 per cent of variance, Cronbach’s alpha ¼ 0.6949)
. This store has friendly and helpful personnel (0.832)
. Salesmen are trustworthy in this store (0.729)
(10) TC (4.050 per cent of variance, Cronbach’s alpha ¼ 0.5226)
. There is enjoyment of travel to this store (0.7)
. There is absence of traffic congestion in the locality of this store (0.657)
(11) UP (3.575 per cent of variance)
. No matter how hard I try, I end up spending more for groceries than I had
planned (0.740)
Note: aReverse scored
The first step-wise multiple regression with the grocery store attribute factors as
independent variables and percentage of total grocery shopping at a store over the last
12 months as the dependent variable yielded significant regression coefficients (B) for
location, COQ, SDS, SP, PS with values of 0.346, 0.186, 0.154, 0.214 and 0.145,
respectively. This suggested that customer patronage in terms of percentage of total
grocery shopping at a store over the last 12 months was positively related to location,
COQ, SP and PS and negatively related to SDS. The second step-wise multiple
regression with the grocery store attribute factors as independent variables and
duration of shopping at the store as dependent variable yielded significant regression
coefficients (B) for location, SDS, COQ, TC, HmS and PS with values of 0.653, 0.309,
0.439, 0.278, 0.191 and 0.251, respectively. This implies that customer patronage
manifested through duration of shopping at the store is positively related to location,
COQ, HmS and negatively related to SDS, TC and PS. Collinearity statistics were Indian
determined with tolerance values and its inverse; the variance inflation factor (VIF).
Very small tolerance values indicate high degree of collinearity (Hair et al., 2003). Both
consumers
Tables III and IV exhibit acceptable levels of tolerance values and VIF; with tolerance
values of >0.9 and VIF of >1. Thus, possibility of multi-collinearity is ruled out. Hence,
the two sets of step-wise multiple regression clearly shows that customer patronage is
positively-related location, COQ, SP and HmS and negatively related to SDS, TC and
PS. Hence, H1 (customer patronage differs for different grocery store attributes) is 137
supported.
Discriminant analysis was carried out to discern the extent to which traditional
grocery retailing comprising kiranas and upgraded kiranas is different from organized
grocery retailing of the supermarkets and hypermarkets (with grocery units). The
resultant discriminant function had a canonical correlation of 0.705 and hence
explained 0.7052 or 49.7 per cent of the variance. It had a Wilk’s lambda value of 0.503
with a 2value of 277.818 at 6 df which is significant at 0.000 level. The discriminant
function correctly classified 85.1 per cent of the cases and with leave-one-out cross
validation option too 85.1 per cent of the cases were correctly classified. Analyzing the
structure matrix (Table V) and functions at group centroids (Table VI), we deduce
that organized retailers score positively on BFP, COQ, UP and SP, whereas they
score negatively on location and MS. Similarly, kiranas score positively on location
and MS; and score negatively on BFP, COQ, UP and SP. Hence, H2 (customer
perceptions of grocery store attributes differ for kirana stores and organized retailers)
is supported.
This implies that kiranas have locational advantage and consumers shopping for
groceries in kirana stores are likely to indulge in MS and thereby are less likely to be
loyal to a specific kirana store. Organized grocery retailers have a better position in all

B Collinearity
(constant) SE  t Significant statistics tolerance VIF Table III.
Stepwise multiple
0.191 0.509 0.375 0.708 regression analysis with
Location 0.346 0.069 0.238 4.986 0.000 0.972 1.029 percent of grocery
COQ 0.186 0.079 0.115 2.344 0.020 0.915 1.092 shopping as dependent
SDS 0.154 0.050 0.152 3.062 0.002 0.891 1.123 variable and grocery
SP 0.214 0.093 0.113 2.292 0.022 0.905 1.105 store factors as
PS 0.145 0.067 0.104 2.174 0.030 0.961 1.041 independent variables

B Collinearity
(constant) SE  t Significant statistics tolerance VIF
Table IV.
1.572 0.646 2.432 0.015 Stepwise multiple
Location 0.653 0.109 0.289 5.966 0.000 0.813 1.230 regression analysis with
SDS 0.309 0.073 0.198 4.206 0.000 0.862 1.161 how long shopping at
COQ 0.439 0.111 0.177 3.948 0.000 0.949 1.054 store as dependent
TC 0.278 0.094 0.138 2.956 0.003 0.882 1.134 variable and grocery
HmS 0.191 0.072 0.126 2.652 0.008 0.845 1.183 store factors as
PS 0.251 0.097 0.117 2.583 0.010 0.936 1.068 independent variables
APJML Factors Function 1
21,1
BFP 0.904
COQ 0.507
In-store conveniencea 0.186
UP 0.184
HSa 0.162
138 Location 0.158
SDSa 0.122
PSa 0.080
TCa 0.068
MS 0.057
SP 0.011
HmSa 0.002

Notes: Pooled within-groups correlations between discriminating variables and standardized

Table V. canonical discriminant functions; variables ordered by absolute size of correlation within function;
a
Structure matrix this variable not used in the analysis

Function 1

Kirana 0.820
Table VI. Organized retailer 1.200
Functions at group
centroids Note: Unstandardized canonical discriminant functions evaluated at group means

attributes except location and MS. A negative perception on MS is actually positive

for organized retailers as it means the customers are actually likely to patronize
repeatedly.
The result of two sets of step-wise multiple regression having demonstrated that
customer patronage is positively related to COQ (with a regression coefficient (B) of
0.186 in the first equation and 0.439 in the second equation); SP (with a B value of
0.214); HmS (with a B value of 0.191 in the second equation) and location (with a B
value of 0.346 in the first equation and 0.653 in the second equation) (Tables III and IV).
Store patronage is negatively related to SDS (with a B value of 0.154 in the first
equation and 0.309 in the second equation), TC (with a B value of 0.278 in the
second equation), and PS (with a B value of 0.145 in the first equation and 0.251 in the
second equation). Now, an analysis of the discriminant analysis results in Tables V and
VI indicate that organized retailers have a positive customer perception on COQ as well
as SP. It does not do well however, on customer perception of location. Similarly,
examination of Tables V and VI also reveal that kiranas do well on location but poorly
on customer perception of COQ and SP. This brings us to the question: whether Indian
consumers are likely to move from kirana stores to organized retailers when shopping
for groceries. Our study shows that kiranas have a definite advantage over organized
grocery retailers as far as location is concerned; and location is a very important
determinant of patronage (as apparent from high B scores of 0.346 and 0.653 in the
regression equations). But, as pointed out earlier, kiranas have major disadvantage on
scores of COQ as well as SP. However, these scores are less important determinants of Indian
loyalty (with B scores of 0.186 and 0.439 for COQ and 0.214 for SP) compared to
location. Thus, in the short-run kiranas may not be ousted out of customer favour, but
consumers
if they do not work on COQ and SP, they would be under threat of being out of
business. The organized grocery retailing has just made its foray in India, and with
time they are expected to increase their outlets and thereby improve their locational
advantage. Hence, kiranas need to upgrade their facilities at a war footing to be able to
compete with the organized grocery retailers.
139

Conclusion
Kiranas as well as organized retailers have certain positive as well as negative aspects
that draw or repulse a consumer from buying from them. The major aspects that have
come out in this study is that organized retailer is preferred for their cleanliness, offers,
exclusive store brands, whereas kiranas are preferred because of their location and
possibility of MS. Patronage of a customer largely depends on the importance the
customer places on any of the above attributes of the store. The analysis also shows
that the organized retailers score better over the kiranas, which is indicative that the
consumers’ need for better attributes in terms of their demand for offers, cleanliness
and store brands. This means that kiranas are facing the threat from the organized
retailers in terms of providing the matching attributes and shopping experience.
Location being one of the primary deciding factors for grocery purchase, the kiranas
presently have an advantage, but with corporate involvement and large business
houses like Reliance, Subhiksha, Bharti and RPG Enterprises coming into foray by
opening stores in residential areas like the small-box retailers, this advantage seems to
be short lived.
The results indicate that it is inevitable that there should be a modernization of
commerce. In order to do so, first of all kiranas will have to make a realistic and critical
examination of their potentialities, as well as of their vulnerabilities. Another
implication has to do with the need and importance of ways of strategic co-operation of
small retailers in the competitive game that opposes organized retailer to kiranas
with ‘‘associativism’’ or coming together of smaller firms to compete with larger chains
like the initiative of Rajkot Small Retailers Association which has been formed to
centralize purchase (Ghosal, 2008). As Sanjiv Kakkar, Executive Director, Customer
Development, Hindustan Unilever Ltd foresees, kiranas have to evolve and re-invent
themselves and there would be three categories of kiranas in the near future: the top
(who would evolve into modern trade independents), the undifferentiated middle (who
are likely to get the blow in the future and need to leverage their location and expand
into new segments like bill pay and mobile cards) and the small kiranas (which would
get the highest negative impact and should try to leverage their proximity and offer
credit to customers and try building stronger relationship with customers) (Kakkar,
2008). We are probably looking into a future where there shall be a consolidation in the
trade with the larger kiranas surviving by changing over to self-service format from
over-the-counter format and the two other categories either evolving, moving on to a
different trade or simply withering away.
Concerning future investigation, we suggest that a similar study for non-grocery
retailers can be undertaken; it would also be interesting to compare various formats of
organized retail. Finally, it would be interesting to study thoroughly and separately,
both the kiranas that were negatively affected by organized retailers and the kiranas
who have not suffered from the impact.
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Corresponding author
Paromita Goswami can be contacted at: paromita@ximb.ac.in

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