Store Choice and Store Loyalty: An Investigation on Shopper's Behaviour towards Organized versus Unorganized Retail Stores

Article excerpt


Retailing is one of the pillars of the economy in India and accounts for 10 percent of GDP (Chatterjee, 2009). This sector has become one of India's fastest growing sectors with a 5 percent compounded annual growth rate. India's huge middle class base and its untapped retail industry are key attractions for global retail giants planning to enter newer markets. Driven by changing lifestyles, strong income growth and favorable demographic patterns, Indian retail is expected to grow 25 percent annually and could be worth US$ 175-200 billion by 2016.

Roots of modern trade can be traced back to the 60s with the formation of cooperative stores; this was the time when Indians experienced their first self service format. Till 1980s, India knew only kirana stores. Things started to change slowly after that, with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim opening their company owned outlets. Later on, Titan, maker of premium watches, successfully created an organized retailing concept in India by establishing a series of elegant showrooms. Early 90s witnessed the family managed stores modernizing their operation and gaining scale over a period of time. Late 90s and the beginning of the new century (year 2000) saw some of the key players scale up operations, introduce multiple formats and roll out larger stores.

The organized retail industry in India had not evolved till the early 1990s. Until then, it was a seller's market, with a limited number of brands, and little choice available to customers. Lack of trained manpower, tax laws and government regulations all discouraged the growth of organized retailing in India during that period. Lack of consumer awareness and restrictions over entry of foreign players into the sector also contributed to the delay in the growth of organized retailing. Foundation for organized retail in India was laid by Kishore Biyani of Pantaloon Retails India Limited (PRIL). Following Pantaloon's successful venture a host of Indian business giants such as Reliance, Bharti, Birla and others are now entering into retail sector.

There is no doubt about the potential of retailing in India but it is still at a very early stage. Most retail firms arc companies from other industries that arc now entering the retail sector on account of its amazing potential. There are only a handful of companies with a retail background. One such company is Nilgiri's from Bangalore that started as a dairy and incorporated other areas in its business with great success (Mukherjee and Patel, 2005). Their achievement has led to the arrival of numerous other players, most with the backing of large groups, but usually not with a retail background. Most new entrants to the India retail scene are either from real estate groups who see their access to knowledge of land, location and construction as prime factors for entering the market or from non-retailing sectors (like textiles, communication, pharma industry) which is evident by the fact that out of top 15 retailers in India 12 are from non-retailing background (Akhter and Iftekhar, 2012). Further, it appears that the retailing scenario in India is driven more by euphoria which is evidenced by the fact that new expansions are adaptations from the western formats resulting in moderate to lukewarm success, resulting in the need to evaluate the true drivers of shopping behaviour in the Indian context (Sinha, Banerjee and Uniyal, 2002).

It is also important to note that there is limited information and literature available in the public domain regarding Indian shopping behaviour, especially in the context of the changing retailing environment (Sinha, Banerjee and Uniyal, 2002, Mittal and Mittal, 2008).

This back ground makes it very relevant to make a study about Store choice and its relation with other important concepts like store patronage and loyalty. Thus, the primary objective of this research is to find out if the store patronage helps in determining the selection of store as well as the purchasing outcome and to find out if the concept of loyalty exists in today's scenario or is it a myth. …