Customer Perception of Csr and Its Impact on Retailer Evaluation and Purchase Intention in India

By Dutta, Kirti; Singh, Swati | Journal of Services Research, April-September 2013 | Go to article overview

Customer Perception of Csr and Its Impact on Retailer Evaluation and Purchase Intention in India


Dutta, Kirti, Singh, Swati, Journal of Services Research


The Indian organized retail industry holds immense promises and opportunities as a sunrise sector. The rising awareness levels of the consumers through education and media have begun to make the corporate more accountable in their CSR practices. This study focuses on the relative influences of Corporate Social Responsibility (CSR) practices on the consumer's perception and intention to purchase from organized retailers in the Indian market. This study is of importance to the retail practitioners and organized retail players who plan to enter and target the attractive Indian market. It shows that CSR can be used as a strategic tool to help create a differential advantage over competitors as results showed significant positive relationship between all the variables used to measure CSR and consumer's purchase intention. It also examines the perception of CSR activities of some well known established retailers by the consumers and delineates the importance of corporate communication of the practiced CSR activities.

Introduction

The Indian retail industry is predominantly unorganized and comprises 95-97% (approx.) of the retail market. The organized retail is made up of corporate backed retail chains, hyper marts, department stores, etc. and has shown considerable growth over the years on account of changes in consumer profile, aspirations, demographics, exposure to international brands, urbanization and availability of credit besides others. The value of Indian retail business stands at around US$ 550 billion (aaprox.) as on December 2011, of which about four percent is accounted by the organized sector.

A study conducted by the Boston Consultancy Group (BCG) revealed that India's organized retail is likely to reach US$260 billion in the next decade with a penetration of about 21% (Indian brand equity foundation, 2011). Moreover, organized retail which was initially restricted to the metros or large Indian cities now has vast opportunities due to the presence of a large, aspiring, affluent upper and middle class in the Tier II & III cities. The increased availability of credit, better mobility, have all furthered the growth of organized retail. The attractiveness and relative stability of the Indian market attracted numerous Indian as well as international retailers to set up shop in India. The domestic players include the likes of Wills Life style (ITC), Aditya Birla (More), Westside (Tata), Easy Day (Bharti Walmart), Reliance Fresh as well as the Future Group. So far, the international players have been given restricted entry into the Indian market due to restrictions imposed by the government. Currently the government allows only 51% FDI in single brand stores and 100% FDI in wholesale trading. This policy led numerous international brands to set up shop in India some of which include Fendi, Louis Vuitton, Nike, Damro, etc. Foreign retailers have used numerous routes to enter into the lucrative Indian market like licensing agreements, cash and carry and franchising arrangements. As conditions of entry get further relaxed in the future, retailers like Carrefour, Wal-Mart, Tesco to name a few wait earnestly in the wings to set up shop in India. The entry of these foreign players is likely to improve the existing retail infrastructure, remove intermediaries and encourage sourcing directly from the farmers, provide more variety to customers and reduce in - transit wastage.

The government has already made a foiled bid to allow 51% FDI in multi-brand and 100% in single-brand retail (Varma, 2011) and once this is allowed the competitive scenario is bound to heat up further for organized retail. Retailers therefore need to promote themselves in a way so as to elicit unique and more positive feelings about their brand vis-à-vis competitors. Corporate social responsibility (CSR) can be one such tool that can be used by companies to differentiate themselves and generate positive feelings among consumers (Sen and Bhattacharya, 2001). …

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