Factors Influencing the Buying Behavior of Consumers towards Organized Retail Stores in Jalandhar, Punjab

By Pandey, Mithilesh; Verma, Rajesh | IUP Journal of Marketing Management, February 2015 | Go to article overview

Factors Influencing the Buying Behavior of Consumers towards Organized Retail Stores in Jalandhar, Punjab


Pandey, Mithilesh, Verma, Rajesh, IUP Journal of Marketing Management


Introduction

All over the world, the organized retail sector has performed extremely well since its beginning in the 20th century. Retailing has been defined as business activities involved in selling goods and services to consumers for their personal, family or household use (Berman and Evans, 2001). The 20th century witnessed a host of changes in the organized retail sector, particularly in the developed countries. Modern-day formats such as discount stores, fast food outlets, supermarkets, convenience stores, departmental stores, warehouse retailers, speciality stores, and hypermarkets have emerged. Retailing has become more organized and chain stores have been growing at the cost of old-fashioned single retail shops.

In India, retailing has remained in the unorganized sector, largely untouched by the corporate. The first decade of contemporary retail in India has been categorized by a shift from conventional channels to new formats, including hypermarkets, supermarkets, specialty stores and departmental stores across a variety of categories. Modern retail formats have not only blossomed in metros and mini-metros in the last few years, they have also made their presence felt in the tier-II cities, thus exposing the residents of these cities to shopping options they have never experienced before.

Indian market is highly complex in terms of a wide geographic spread and distinct consumer preferences varying by each region, necessitating a need for localization even within the geographic zones. As per the report of Deloitte (2011), the Indian retail market is currently US$396 bn and is expected to grow in future at 12% to increase to US$574 bn by 2015. The retail sector in India is the second largest employer after agriculture, employing more than 35 million people, with wholesale trade generating an additional employment of 5.50 million more. The disposable income in India is growing and has resulted in increased consumer spending habits. The total retail spending is estimated to double in the next five years. Of this, organized retail is currently growing at a CAGR of 22% and is estimated to be 21% of total retail expenditure. The report also observes that the food and grocery segment is the highest contributor to the retail sector with maximum contribution coming from traditional retailing, while penetration of modern retail is highest in the clothing and fashion segment, at a growth rate of 23%.

The growth of modern retail is linked to consumer needs, attitudes and behavior. Marketing channels, including retailing, emerge because they receive impetus from both the supply side and the demand side. On the demand side, the marketing channel facilitates service outputs that consumers value. These service outputs may include but are not limited to bulk-breaking, spatial convenience, waiting and delivery time and assortment (Coughlan et al., 2001). In Indian retailing, convenience and merchandise appear to be the most important factors influencing store choice, although ambience and service are also becoming important in some contexts (Sinha et al., 2002).

Kotler (1973) suggests atmospherics as an important aspect for retailers. Most shoppers find multiple motives in a single trip to stores which may include socializing or browsing, not necessarily purchasing. According to Bloch et al. (1994), atmospherics an d entertainment aspects should be focused on. Arnold and Reynolds (2003) suggest that in spite of this trend of entertainment as a retailing strategy, less attention has been paid to the Hedonic Shopping Motivations.

In addition, staff-attitude, queue lengths, etc. influence the customers' store choice pattern (Goodwin and McElwee, 1999). Hence, tangible and intangible factors such as staff attitude, location and ambience are vital for consumer appreciation. In comparison of traditional shops, supermarkets have an advantage in terms of space, ambience and other physical characteristics, creating a better environment to attract more customers. …

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