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SHAIK BILAL AHMED
ROLL NO: 13325580164
IMA
24-E
TO STUDY THE CONSUMER BUYING BEHAVIOR
TOWARDS ORGANIZED FMCG RETAIL OUTLETS.
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INTRODUCTION
Every business conducted for the purpose of selling or offering for sale; any good, wares
and merchandise, other than as a part of wholesale business to the final consumer can be
defined as retail business.
Retail is the second largest business in the United States both in number of establishments
and the number of employees. The US retail industry generates $ 3.8 trillion in retail sales
annually ($ 4.2 trillion if food service sales are included), approximately $11,993 per
capita. The retail sector is also one of the largest worldwide.
Wal-Mart is the worlds largest retailer and the worlds largest company with more than $
312 billion (USD) in sales annually. Wal-Mart employs 1.3 million associates in the
United States and more than 400,000 internationally. The second largest retailer in the
world is finances Carrefour.
What Is Retailing?
Retailing is all the activities involved in selling goods and services directly to final
consumers for their personal non business use.
The word retail is derived from the French word retailer, meaning to cut a piece off or to
break bulk. A retailer buys goods or products in large quantities from manufacturers or
importers, either directly or through a wholesaler, and then sells individual items or small
quantities to the general public or end user customers, usually in a shop, also called a
store. Retailers are at the end of the supply chain. Marketers see retailing as a part of their
overall distribution strategy.
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TYPES OF RETAILING
Retailing can be classified under two heads:
Store Retailing
Non- Store Retailing
Store Retailing
Retail stores come in a variety of shapes and sizes, and new retail types keep emerging.
They can be classified by one or more of several characteristics:
Amount of service
Product line
Relative prices
Control of outlets
Type of store cluster
1) Amount of service:
Different products require different amounts of services and customer service preferences
vary.
Self service retailers:
Customers are willing to perform their own Locate Compare - Select process to save
money. Today self service is the basis of all discount operations, and typically is used by
sellers of convenience goods (such as super markets) and nationally branded; fast moving
shopping goods (such as catalog showrooms).
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Limited service retailers:
Retailers such as Sears and J.C Penrey, provide more sales assistance because they carry
more shopping goods about which consumers need information. Their increased operating
costs result in higher prices.
Full service retailers:
Like specialty stores and first class department stores, have sales people to assist
customers in every phase of the shopping process. Full service stores usually carry more
specialty goods for which customers like to be waited on. They provide more liberal return
policies, various credit plans, free delivery, home servicing and extras such as lounges and
restaurants.
2) Product line:
Retailers can also be classified by the depth and breadth of their product assortments. The
depth of a product assortment refers to the number of different versions of each product
that are offered for sale. The breadth of the assortment refers to the number of different
products that the store carries.
Specialty stores carry a narrow product line with a deep assortment within that line.
Examples include; stores selling sporting goods, books, furniture, electronics, flowers or
toys. Today specialty stores are flourishing due to the increasing use of market
segmentation, market targeting and product specialization.
A department store carries a wide variety of product lines. Each line is operated as a
separate department managed by specialist buyers and merchandisers.
Super markets are large, lowcost, lowmargin, highvolume, Selfservice stores
that carry a wide variety of food, laundry and household products.
Convenience stores are small stores that carry a limited line of high turnover convenience
goods. These stores located near residential areas and remain open long hours, seven days
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a week. Convenience stores much charge high prices to make up for higher operating costs
and lower sales volume. But, they satisfy an important consumer need.
Super stores, combination stores and hyper markets are all larger than the conventional
super market. Many leading chains are moving towards super stores because their wider
assortment allows prices to be 5-6 % higher than conventional super markets.
Combination stores are combined food and drug stores. Examples are A & Ps family
marts and Wal Marts - super centers. Hyper markets combine discount, super market and
warehouse retailing, and operate like a warehouse.
3) Relative prices:
Retailers can also be classified by the prices they charge. Most retailers charge regular
prices and offer normal quality goods and services at a higher price. Retailers that feature
low prices include:
Discount stores sell standard merchandise at lower prices by accepting lower margins and
selling higher volume. Occasional discounts or specials do not make a store a discount
store. A true discount store regularly sells its merchandises at lower prices, offering mostly
national brands, not inferior goods.
4) Control of outlets:
About 80 % of all retail stores are independents accounting for 2/3 of retail sales. Other
forms of ownerships include the corporate chain, the voluntary chain and retailer
cooperative, the franchise organization, and the merchandising conglomerate.
The chain store is one of the most important retail developments of this century.
Corporate chains appear in all types of retailing, but they are strongest in department,
variety, food, drug, shoe, and womens clothing stores. The size of corporate chains allows
them to buy in large quantities at lower prices, and chains gain promotional economies
because their advertising costs are spread out over many stores and over a large sales
volume.
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The voluntary chain is a wholesaler - sponsored group of independent retailers that
engage in group buying and common merchandising.
The retailer cooperative is a group of independent retailers that setup a jointly owned
central wholesale operation and conduct joint merchandising and promotion efforts.
A franchise is a contractual association between a manufacturer, wholesaler, or service
organization (the franchiser) and independent business people (the franchisees) who buy
the right to own and operate one or more units in the franchise system.
Merchandising conglomerates are corporations that combine several different retailing
forms under central ownership and share some distribution and management functions.
Examples include: DaytonHudson and J.C Penney.
5) Types of store cluster:
More stores today cluster together to increase their customer pulling power and to give
consumers the convenience of one stop shopping.
Central business districts: A central business district comprises of banks, departed stores,
specialty stores, and movie theatres.
A shopping center is a group of retail business planned, developed, owned and managed
as a unit.
NonStore Retailing
Although most goods and services are sold through stores, Nonstore retailing has been
growing much faster than store retailing.
Traditional store retailers are facing increasing sales competition from catalogs, direct
mail, telephone, home TV shopping shows, online computer shopping services, home
and office parties and direct retailing approaches.
Nonstore retailing includes; direct marketing, direct selling and automatic vending.
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RESEARCH OBJECTIVES
1. To study the Consumers Perceptions towards various aspects of Mega Marts.
2. To study the different demographic, psychographics and situational variables
which are affecting the selections of retail outlets.
3. To know the Products knowledge & promotional tools adapted by Organized
Retailers in Delhi
4. Understanding the needs of the customers.
5. To study various parameters taken into consideration by customers, while making
a buying decision.
6. To study the satisfaction level of consumers for Organized FMCG Retail outlets
likeHyper City, D-Mart, Big Bazaar, Reliance Super, Vishal Mega Mart.
7. To study about the changes those customers wants in these Organized FMCG
Retail Outlets.
8. To study about the quality, services, product range provided by these Organized
FMCG Retail Outlets.
9. To undertake a comparative analysis of Indian consumer buying habits at Local
KiranaWalasv/s Organized Retail Formats in the city.10. To suggest improvements to these Organized FMCG Retail Outlets in the city.
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INDIAN RETAIL INDUSTRY
Retailing in India is one of the significant contributors to the Indian economy and accounts
for 35% of the GDP. However this sector is in a fragmented state with over 12 million
outlets operating in the country and only 4 % of them being larger than 500 sq. ft. in size.
This is in comparison to 0.9 million outlets in USA, catering to more than 13 times of the
total retail market size. Thus, India has the highest number of outlets per capita in the
world with a variety spread retail network but, with the lowest per capita retail space (@ 2
sq. ft. per person as compared to 16 sq. ft. per person for USA).
The Indian retailing industry is currently estimated $ 205 billion (Rs. 930,000 crores) and
is expected to grow at 5% p.a. The current size of the organized retail market is $ 6 billion
(Rs. 28,000 crores), thereby a mere 3% of the total retailing market with a projected
growth rate of 25-30 % p.a. and it became $ 8 billion (Rs. 35,000 crores) by 2005 and $ 24
billion (Rs. 100,000 crores) by 2010, with its contribution to total retailing sales likely to
rise to 9% by decade end.
INDIAN RETAIL MARKET
The retail sector in India is highly fragmented and mostly owner-runMom and Pop
outlets. The entire sector is dominated by smallretailers consisting of local Kirana shops,
general stores, footwear andapparel shops, hand-cart hawkers andpavement vendors.
Thesetogether form the unorganized retail or traditional retail. Accordingto the
Investment Commission of India (ICI) estimates, there are over 15million such Mom and
Pop retail outlets in the country.
In terms oftotal sales, one can find a wide range of estimates and this definitelyreflects
lack of sound official government data. ICI had estimatedIndian retail sales figure at
US$262bn for 2010, although marketestimates ranged from US$200bn to as high as
US$386bn for that year. Various agencies have made efforts to project the growth rate
ofthe total retail market till 2013 and the figures hover around 13-15.5 percent
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Emerging Trends in Indian Retail Industry
Tier II phenomenon
Small towns with a population of 0.5 to 1 million ( likeSurat, Lucknow, Dehradun,
Vijayawada, Bhopal, Indore, Vadodara, Coimbatore, Nasik, Bhubaneswar, Varanasi and
Ludhiana etc.), are witnessing a defined increase in disposable income coupled with high
aspiration levels leading to enhanced spending on consumer goods along with lesser
aversion to credit. With consumption in metros with already being exploited (85% of retail
sales as of now), these TierII areas are fresh targets and are expected to contribute 20-25
% of organized retailing sales.
Retailers are introducing contemporary retail formats such as Hyper markets and Super
markets in these new pockets of growth. Mall development activities in these small towns
is also picking up, creating quality space for retailers to fulfill their aggressive expansion
plans. Keeping in view the relatively smaller size of the market, the average size of a retail
mall in Tier II cities ranges between 1,00,000-120,000 sq. ft. in comparison with the larger
metros where a number of malls measure over 5,00,000 sq.ft.
Entry of International Players
The fight today is not between big Organized Retail Stores (3%) and unorganized Kirana
shops (97%), but its between global giants like; Wal-Mart, Tesco and shoppers stop,
pantaloons. Entry of these global players will impact the way Indian retailers operate, as
much as it will change the way Indian consumers live and do their shopping. They will nolonger be just dependent on their local Kirana shop for their everyday needs. They could
just shop once a week or once a month at comparatively cheaper rates and remain hassle
free. Indian retailer will also need to quickly come to terms with the market realities. On
one hand they will fight size factor and the other hand great efficiencies.
Emergence of New Retail Formats
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Currently the new sector in India is populated with the traditional mom & pop stores and
some 1,000 odd supermarkets under organized retail chains. A daring few ventured into
the organized hypermarkets with successful results and this format is being fast replicated
by other players. This experience indicates that the Indian Consumer has matured to the
next level of shopping experience. Given the Indian conditions and the vast diversity a
single format may not be possible for the national presence, but region specific formats
may evolve. An interesting fact is that of lack of presence of organized retail chains in the
rural/semi-urban centers as over 60% of Indian population is still in these parts. An ideal
no-frills model to start with would be ideal for the rural markets; this would help to take
them to the next level of the supermarket experience.
Specialty Malls
Keeping in mind the astonishing pace with which new supply is expected to enter the
market, many mall developers in a bid to offer a distinctive value proposition, are planning
to develop specialty malls. These niche developments shall emerge as one - stop
destinations in their chosen product categories. The Delhi - based Aerens Group has
developed Gold Souk, an exclusively jewellery mall that is already operational in Gurgaon
and has ambitious plans to replicate the concept across the country. Further a number of
analogous developments like a wedding mall by omaxegroup, Automobile Mall, etc.
are also in the offering. In line with international trends, Home Malls offering the entire
range of building and interior decor solutions are also coming up in various parts of the
country including Pune (Ishanya promoted by Deepak fertilizers and petrochemicals
corporation Ltd.), Gurgaon & Kolkata.
Price Correction
Fallout of the surge in mall development activity shall be that developers will be forced to
offer retailers prime real estate spaces at costs lower than those prevailing today, as the
space required by retailers to fulfill their expansion plans is likely to be lesser than offered.
This correction could result in a more structured retail real estate market that would allow
retailers a higher margin on their real estate investments, thereby enabling them to expand
faster. Further, the relatively overserved cities could witness higher activity, as real
estate space becomes more affordable, thereby, reducing the breakeven period for
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retailers. Moreover, under - served markets could provide enough margins to retailers to
compensate for loss of margins in some of the overserved markets.
Transformations and Innovations of Supply Chain and Transportation Logistics
To counter the unbeatable advantages of convenience of a hop, skip and a jump access and
home delivery, organized retailers seem to have just one optionoffer attractive prices to
the consumer. A successful retailers winning edge will therefore come from sourcing
how best it can leverage its scale to drive merchandise costs down, increase stock turns
and get better credit terms from vendors. Efficient supply chains can achieve this objective
and fuel demand. The supply chain in India is full of inefficienciesa result of inadequate
infrastructure, too many middlemen, complicated laws and an indifferent attitude.
More Use of Technology
Retailing; as discussed before is at a nascent stage in India. The complicated information
systems and underlying technologies are in the process of being established. Most grocery
retailers like Food World have started tracking consumer purchases through CRM. The
lifestyle retailers through their affinity clubs and reward clubs are establishing their
processes. The traditional retailers will always continue to exist but organized retailers are
working towards revamping their business to obtain strategic advantages at various levels
market cost, knowledge and customer. With differentiating strategies value for money,
shopping experience, variety, quality, discounts, advanced technologies, change in the
equilibrium with manufacturers and a thorough understanding of the customer behavior,
the ground is alls et for the organized retailers.
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Community Involvement
Footfalls in most malls are observed to be significantly higher on weekends. To ensure
regular walk-ins on weekdays, mall developers have started to focus on involving the local
community. They have recognized that their centers need to be entertaining, and that
shoppers want their malls and town centers to blend with and reflect their own
communities. Their philosophy today is thus to create a center where people would want
to stay well beyond their shopping time to enact the rituals of urban life. Activities like
karate classes and painting competitions for children pull their salaryearning parents to
visit the mall.
For example, South - dale Mall, USA contains a school, an auditorium, an iceskating
rink and even a zoo for the same reason. Dandia and Navratre parties at Ansal Plaza and
Festival Parties at other malls also have the same objective.
The present best example would be the Infinity &Inorbit Mall within our locality is trying
to offer the complete family solutions with the delicious food courts to advanced gaming
zones.
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AN INVESTIGATION OF CONSUMER BROWSING BEHAVIOR
Browsing behavior is a significant form of consumer behavior which can occur
independently of specific purchase occasions.
The focus of the present study is upon a different aspect of non-purchase consumer
behavior-browsing. Most of us at one time or another has visited a retail store without a
particular purchase in mind. Such browsing may be done 'for the fun of it," to see new
developments in a product class, or perhaps just to fill time while waiting. Given the
pervasiveness of browsing behavior among consumers, it is surprising that this element of
consumer behavior has received so little research attention.
For purposes here, browsing is defined as the examination of a store's merchandise for
recreational or informational purposes without a current intent to buy. As defined,
browsing is both a form of leisure activity and a form of external search behavior.
Browsing can provide a consumer with a way to spend a rainy afternoon and in addition it
can add to the individual's store of information concerning new product developments,
brand differences, or sale prices. Furthermore, the search aspect of browsing may be
pleasurable in and of itself. The browser can satisfy his/her curiosity motives and add to
feelings of self-esteem through the acquisition of product-specific or marketplace
expertise.
Consumer Attitude
Consumer attitude helps the organization to understand the purchasing pattern of
consumer. For example customer wants to buy from local Kirana store (Mom & Pop store)
because of location is convenience for them. If the retailer comes to know what exactly is
the reason of purchasing so the retailer can change his store accordingly, because the main
reason for the existence of retailer is customer and I have to change according to customer.
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Consumer Attitude is very important in Retail consumer attitude means the behavior
which a consumer shows while purchasing. The consumer shows different consumer
attitude because of different names
Demographics
Psychographic
Situation
The main aim of this project is to find out The Attributes that customers keep in mind
while purchasing from Organized Retail Outlets.
Location
Ambience
Pricing
Quality
Variety
Customer Services
A Fair World
Allowing foreign direct investment in multi-brand retail has been a vexed issue formany years now. It returned to the public domain when the commerce ministry came upwith a discussion paper in July, inviting views from all stakeholders.
Last month, worlds largest retailer Wal-Marts CEO, Mike Duke flew down to thecountry, days before US President Barack Obamas visit, to hard sell the benefits ofinternational competition in multi-brand retailing to Indian consumers as well as smallgrocers.
While commerce and industry minister Anand Sharma and the Planning Commission havesupported FDI in retail, those opposing the idea include micro, small and mediumenterprises (MSME) ministry and communications & IT ministry, besides differentassociations of small retailers.
The biggest fear is that the arrival of the likes of Wal-Mart, Carrefour and Tesco willlead to a huge loss of jobs in traditional retail sector, which is considered the second-largest employer in the country after agriculture with more than 20 million people acrosssome 12 million shops and accounting for more than 95% of total sales.
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THE LATEST NIELSEN STUDY ALLAYS THAT FEAR
The Indian shopper, it says, flits across formats to buy different items from each storetype. For instance, they visit neighborhoodpaan shops for salty snacks and chocolates,
chemists for deodorants and milk beverages, and modern trade outlets for brandedgrocery and liquid toilet soap.
While modern trade is driving sales ofpremium household and food categories,traditional trade has begun selling more personal grooming products such as hairconditioners, fragrances, deodorants and hair dyes than ever before. Diapers, liquid soap,washing products and squashes are selling equally big from both the channels.
Grocers Grow Smarter
Price is a big factor though,of all the shoppers who participated in the Nielsen study,
nearly 40% said they know the prices of most items in both modern and traditional tradeformats, while 45% said they notice a difference in prices between the two formats.
Big retailers have an edge here, thanks to their ability to check operational costs, bargainhard with suppliers and launch private labels.
According to another Nielsen study, modern retail dropped prices by more, or increased
them by less, for more product categories than traditional retailers, or kiranas, betweenthe October-December 2009 quarter and the January-March 2010 quarter.
Small grocers too now offer decent discounts to consumers, thanks to joint purchases andtie-ups with top consumer product companies such as Hindustan Unilever, Procter &Gamble, Godrej Consumer Products, Dabur and Marico.
BharatiyaUdyogVyaparMandal, the biggest association of mom-and-pop stores in thecountry with more than 5 million members, has formed city-centric associations tonegotiate directly with manufacturers and do away with any middlemen. This has helpedkiranas offer 5-20 % discounts on MRP of branded products like detergents, shampoos,
soaps, oil and atta.
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They are helped by FMCG players, which are facing increased competition from privatelabels, or own-brands, of big retailers and are under constant pressure to increaseretailers margins. Programmes such as Hindustan Unilevers Perfect Store andDaburs Parivar adopt kiranas and teach them category management and effective
merchandising to make them more engaging and presentable.
Stores are a reflection of the aspirations of any society, says Godrej ConsumerProducts executive vice-president, marketing, TarunArora. Although modern trade isroughly around 6% of total retail, traditional stores have learnt a lot from it andconsumer companies have become catalyst in the process, resulting in the emergence ofcrossover shoppers, he adds.
All this has left consumer the winner. She gets never-before bargains from modern retailand never-before service from small grocers. Attitude of kirana owners has changed alot, especially in areas where catchments ofmodern retailers and mom & pop stores are
the same, says Ashwin Merchant, a Mumbai-based independent marketing advisor.
The countrys largest retailer Future Groups director, food strategy, Damodar Mallsays that any format, whether traditional or modern, that meets consumer needseffectively will do well. Modernization of all trade is in favour of the consumer, headds.
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CONCLUSION
From above survey we conclude that
The main factors that affect the retail business in location
Indians Consumers are price sensitive they seek value for money so price also
matter for Indian customers.
The purchasing pattern of the people in one location is totally different from other
location.
Customers service is not so much important in grocery retail, Quality & Price
matter a lot
The reason for which people prefer to buy from organized retail store is variety of
product available under one roof and customer has not to move from one shop to
another shop for his/her daily needs.
Most of the people use to purchase their daily needs whenever they require.
I can conclude my points.
1. The main factor that affects the retail business is the Location.
2. Indians are price sensitive they seek value for money so price also matter for
Indian customers.
3. The purchasing pattern of the people in one location is totally different from other
location in Country.
4. Customer service is not so much important in grocery retail, quality & price matter
a lot.5. The reason for which people prefer to buy from organized retail store is variety of
products available under one roof and customers has not to move from one shop to
another shop for his/her daily needs
6. Most of the people use to purchase their daily needs whenever they require.
7. Organized Retail is still a new concept in India and holds a lot of potential in
coming years.
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Suggestions
I have asked some of the customers to give suggestion to make it better place for
shopping. Some of the valuable suggestions are as follows:-
Pricing of products should be low inside the outlets as compared to outside stores.
Most of the customer suggested that the fruits and vegetables must be fresh in
stores otherwise its not worth.
Non- vegetarian & some of the vegetarian items should not be frozen for many
days because it loses its nutritious contents.
Credit facility must be provided to the customer just like local Mom & Pop
(Kiranawala) provides. CSAs should be well trained to provide good customer service.
Big brands must improve service quality as its name is big (reputed) in the market.
There must be enough number of POS and all must be in working conditions
during peak hours because customer has to wait in queue.
All items must be in enough quantity some time customer finds some items out of
stock (butter milk, curd, butter etc.)
More discounts schemes should be available in the other stores as like Big Bazaar.
Home delivery service system should be started.
RECOMMENDATIONS
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Economic times retail news (December 4, 2010)
Article by Knight Frank Research
http://retail-guru.com/indian-consumers-are-crossover-shoppers-nielsen-study/
http://www.indianbusiness.nic.in/economy/retail.htm
http://www.thoughtsofanordinaryman.com/2008/06/review-reliance-super-mumbai.html
http://www.financialexpress.com/news/bharti-launches-easy-day-stores-in-ludhiana/297827/
http://bigbazar.com
http://www.retailindustry.about.com/
http://hindubusinessline.com
http://www.indiaretailbiz.com/blog/2008/04/17/wal-mart-backed- bharti-enters-retail-with-debut-of-every-dat-chain-in -India-launches-3-convenience-stores in ludihana/
http://www.magportal.com
http://www.vishalmegamart.net
www.ril.com
www.reliancefresh.info