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CHAPTER - I
INTRODUCTION
1.1 INTRODUCTION TO RETAILING
The Indian Retail Industry is the fifth largest in the world. Comprising
of organized and unorganized sectors, Indian retail industry is one of the
fastest growing industries in India, especially over the last few years. Though
initially the retail industry in India was mostly unorganized, however with the
change of taste and preferences of consumers, the Industry is getting more
popular these days and getting organized as well. The Indian Retail Industry is
expected to grow from US$330 billion in 2007 to US$640 billion by 2015.
According to the 10th Annual Global Retail Development Index (GRDI) 1 of A.T.
Kearney, India is having a very strong growth fundamental base that’s why it’s
the perfect time to enter into Indian Retail Market. Indian Retail Market
accounts for 22% of country’s GDP and it contributes to 8% of the total
employment. The total retail spending is estimated to double in the next five
years. Of this, organized retail –currently growing at a CAGR of 22%- is
estimated to be 21% of total expenditure. The unorganized retail sector is
expected to grow at about 10% per annum with sales expected to rise from
$309 billion in 2006-07 to $496 billion in 2011-12. This paper focused on
changing face of Retail Industry, organized or unorganized retail industry,
major players in retail industry and also highlights the challenges faced by the
industry in near future.

India’s Retailing Boom has acquired further momentum, dynamism


and vibrancy with international players experimenting in the Indian market
and the country’s existing giants taking bold innovative steps to woo the
consumer. At the same time, the early entrants are redefining their strategies
to stay competitive and suit the new market landscape. The next few years are
liking to witness rapid growth in the organized retailing sector with several
leading international players establishing their presence in India by adjusting
their formats to suit local tastes and buying behavior while regional players

1 A.T.kearney, 2006, “Emerging Market Priorities For Global Retailers”, Global Retail
Development Index, 2006

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have stepped up their defenses and are striving to gain edge over global
players by using their knowledge of local markets. Clearly the next wave of the
retail boom is upon us.

Retailing is the largest private industry in India and second largest


employer after agriculture. The sector contributes to around 10 per cent of
GDP and 6-7 per cent of employment. With over 15 million retail outlets, India
has the highest retail outlet density in the world. This sector witnessed
significant development in the past 10 years – from small unorganized family-
owned retail formats to organized retailing. Liberalization of the economy,
rise in per capita income and growing consumerism have encourage larger
business houses and manufactures to set up retail formats; real estate
companies and venture capitalist are investing in retail infrastructure. Many
foreign retailers have also entered the market through different routes such
as wholesale cash-and-carry, local manufacturing, franchising, test marketing,
etc. With the growth in organized retailing, unorganized retailers are fast
changing their business models and implementing new technologies and
modern accounting practices to face competition.

1.1.1 Evolution of Retailing


A revolution in the shopping habits of the people across the entire
world had virtually brought the supermarket to the main street. This
revolution was unparalleled in human history as it had engendered the
development of distribution system that delivers food and other products to
the consumer in unprecedented abundance, variety and quality. It had gone
through its natural process of evolution in all areas from the initial concept of
the supermarket and department store to the hypermarket and shopping
mall. It was believed that the first true department store in the world was
founded in Paris in 1852 by Aristide Boucicaut and was named Bon Marche.
Then, the department store business was a bare-bones operation. It was only
after World War II that retailers in the West began to upgrade their services,
facilities and merchandise selection to offer a fascinating array of additional
benefits to consumers through organized retailing.

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In the early part of the twentieth century, the consumers, while


shopping for their household purpose, bought different products at different
shops and at different places. It was back then that chain stores which existed
such as the Great Atlantic and Pacific Tea Company (now known as the ‘A & P’
chain of stores) started introducing new methods of food selling. Soon these
chain stores too began to sell different products under one roof (one-stop
shopping). This chain store revolution had compelled the small merchants to
open self-service stores of their own in order to reduce business expenses and
compete with chain store prices. The supermarket revolution was first
sparked off its span in the 1920s and by the 1930s; the self- service
supermarket concept had become quite popular with the housewives. It was
sparked off by the success of Michael Cullen, an independent operator who
opened the King Kullen Supermarket in Jamaica, New York. In 1950s, it had
won acclaim almost throughout America. It was in the mid-1930s, that A & P
too opened its first supermarket in the mid-West. Very soon other chains
followed, and large supermarkets replacing groups of small stores
everywhere. As supermarket grew, they extended the self-service concept to
other foods besides groceries.

In the 1940s, pre-packing of food and groceries began and customers


liked the speed and convenience of picking up a package of products that had
already been weighed and priced. Over a period of time, this pre-packaging
and supermarket of self- service had become the rule rather than an exception
all over America. By the late 1950s, about 40 % of the American population
was buying food and groceries from these organized retail stores. However,
the competition among the retail stores were so fierce that it had not only
precipitated dramatic changes in the international retailing industry,
especially in the latter half of the twentieth century, but also promises to
unleash more excitement in this new millennium. Many of the old and
informal store formats had been completely transformed into the scientifically
designed new formats.

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1.1.2 Evolution of Retailing in India


The word “Retail” is derived from the French Word “Retailer” meaning
to ‘cut a piece off’ or ’to break bulk’. In simple terms this means a firsthand
transaction with the customer. Retailing thus might be understood as the final
step in the distribution of merchandise, for consumption by the end
consumers.

It thus consisted of all activities involved in the marketing of goods and


services directly to the consumers for their personal, family or household use.
Retailing involves a direct interface with the customer and the coordination of
business activities from end to end- right from the concept or design stage of a
product or offering, to its delivery and post-delivery service to the customer.

Retailing forms an integral part of the Marketing Mix. In this marketing


mix “Place” refers to the distribution and availability of the products at the
various locations. Customers were first introduced to the product through the
retail stores. Organizations would sell their products and services through
these stores and also simultaneously get a feedback on the performance of the
product and the customer’s expectations of the product. Retail stores would
also serve as the communication hub of the customer. At the point of sale or
the point of purchase, the customer would transmit information to the
Marketing Manager through the retailer. Retail was the final stage of any
economic activity. By virtue of this fact, retail occupied an important place in
the world of economy.

According to Philip Kotler: “Retail includes all the activities involved


in selling goods or services to the final consumers for personal, non-business
use. A retailer or retail store was any business enterprise whose sales volume
comes primarily from retailing.

Any organization selling to final consumers whether it was a


manufacturer, wholesaler or retailer- was doing retailing. It would not matter
how the goods or services were sold (by person, mail, telephone, vending
machine, or internet or where they are sold- in a store, on the street, or in the
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consumer’s home)”. The North American Industry Classification system


(NAICS) specifies that the retail trade sector comprises establishments
primarily engaged in retailing merchandise, generally without transformation,
and rendering services incidental to the sale of merchandise.

India’s sheer market size and the purchasing power of its growing
middle class have contributed to its growing middle class have contributed to
its prominence as a retail destination. The market remains quite fragmented,
yet organized retail has made impressive gains in 10 years. Regulatory
challenges prevented many retailers from entering, while others were forced
into the unfamiliar stance of entering the country with a partner. Despite the
hurdles, postponing entry into India is not an option, given the crunch for
desirable real estate. Foreign retailers that can successfully forge local
partnerships and establish a network posed for growth will find India a
rewarding market.

According to Ireena Vittal, McKinsey said that she is clearly seeing five
trends in the Indian economy: (i) Shoppers are getting richer faster. India has
one of the youngest population in the world which has a high acceptance of
new brands. (ii) Many more Indians are emerging within the country
geographically and digitally. The top eight cities of India are countries in their
own right in terms of population and purchasing power. At least ten states
have developed a very large consumer base, with each going at differentiated
rates.

Additionally, the online consumer base in India is going to expand four


times to 350 million by 2015, leading to huge opportunities for retailers.
There is also a huge base of mobile users who have already started buying
through their phones. (iii) Habits and aspirations of consumers are changing
driven by supply cycles of product upgrades. For example, the typical Indian
customer changes his mobile every eight months. (iv) volatility in cost and
growth is here to stay, especially in terms of food, cotton and power prices;
and (v) the Indian industry is going to witness more fragmentation before
consolidation.

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1.1.3 Retailing in Hyderabad


As mentioned above, India is one of the oldest civilizations in the
history of mankind. The ensuing discussion gives us some general idea about
different phases of development of retail in India. But, it is important to
mention here that India is a very divers market, different forms of retailing.
Historically, all type of trading including retailing is being done through barter
system in India as is the case with parts of the world. At one point of time in
history, almost one-third of the world trade was routed though India and it
witnessed the growth of many cities on main trading route. Gradually, these
traders settled across various towns and cities. Trading community in India
has its origin in these settlers. With further expansion of trade, commerce and
urbanization, cites became centers of consumption of goods and services and
retailing flourished. The retailers used to visit city markets to replenish their
stocks. Presently kirana stores (traditional retailing) have been the hallmark
of Indian retailing till date. These formats naturally fit into Indian social
setting. Apart from kirana stores, there have been specialty retailers even in
the traditional retail set up such as cloth merchants, jewellery shops, footwear
shops, sweet marts and so on.

Before entry of the modern retail store chains in India, an early form of
‘supermarket’ had existed in India for the last many decades in the form of
Super-Kirana. It is a single-unit, family run, ambient, more efficient than
traditional kirana store. These are still popular, especially in small towns.
Economic reforms in 1990 provided the right kind of environment for the
development of modern retail in India. It is only for a decade or so that a
western-style supermarket, although on a smaller scale, appeared in India,
mainly in southern cities such as Hyderabad, Chennai, Bangalore, Madurai,
Coimbatore, Hubli - Dharwad, Visakhapatnam and also in New Delhi and
Mumbai. Traditional kirana stores and supermarkets are the most visible face
of retailing in India. Apart from these there had been many retail ventures in
India, mainly led by private sector, which over a period of time have become
modern face of Indian retailing. Retail growth is not just confined to metros

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like Delhi, Mumbai, Kolkata, Hyderabad, Bangalore, and Chennai, but non
metros like Vijayawada, Tirupathi, Mysore, Tiruchirappalli, Surat, and Indore,
Chandigarh and small cities and towns are catching up very fast. These cities
projected to touch over US$ 20,000 million by 2010-11. With the growth in
the IT / ITes sector and other sunrise sectors like bio-technology, hospitality,
etc. concentrated on these cities. The metros have experienced exponential
growth over the past few years, and are expected to demonstrate robust
economic performance in the coming years. Indian market is well diversified
and almost every type of customer is found here just like in other parts of the
world.

The southern part of India is undoubtedly the most literate part of the
entire country. It has the highest percentage of literacy and also has the
highest number of organised retail stores compared to any other region. It is
in many states of South India that most of the biggest global names in the
InfoTech industry have their offices and an extremely large pool of manpower
talent have brought more prosperity to these states. It is also said that the
organized retailing in India in-fact originated from the south and has been
gradually spreading to the other parts of the country. Metros like Bangalore,
Hyderabad, and Chennai are growing at an exceptional rate, with the retail
buzz in these cities becoming more pronounced day by day.

India is said to be the “second most attractive destination” for Retail


business among the thirty emerging markets globally. Retailing is the last
stage of Distribution process, where an interface is created between the
producer and the Individual consumer for personal consumption. Post-
Liberalization period, Indian retail industry is growing at a rate of 30% per
annum and provides has huge employment opportunities. There is been an
constant increase in the share of big players in the organized retail market,
but still unorganized sector dominates with 96.5% share in the Retail
Industry.

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Organized sector are those, which carries the trading activities by


licensed retailers which includes Branded stores, Specialty Stores,
Supermarkets, Hyper mart, Shopping malls etc. On the other hand,
unorganized sector consist of the traditional shops like Kirana stores,
Convenience stores, general stores etc.

Retail sector is said to be the fastest growing sector in the Indian


economy and India’s retail sector is the ninth largest retail market in the
world, where the huge middle class population is attracting the global players
to enter in to the country, and a 25% growth is expected in the organized
sector annually. There is been a growth of about 50-60% in small town and
35-40% in the large cities in organized sector. The rising income levels, a rise
in retailing through online shopping and global exposure has helped
the leading industrial houses to enter into this market to serve the needs of
the consumer.

A boom in the retail sector has helped the new players to explore new
markets, but still huge challenges are faced. The government has limited
the Foreign Direct Investment (FDI) for 51% in the field of retail for any Single
brand in a view to protect the small scale retailers and even delaying the FDI
approvals. Due to this in the long run, it would affect the opportunities and
Technological Innovations. The tax system in India differs from one state to
another, which is forcing the organized sector to restrict them in expanding
their business. A Uniform central tax system would be an ideal solution to get
rid of this hindrance.

Another huge challenge faced by the organized retail sector is the lack
of government initiatives is amendments in Labor Laws, Tenancy legislation
etc. The Labor laws should be relaxed, where it’s difficult to manage
employees in the operations. A special clearance should be taken for extended
working hours. Laws pertaining to restriction of Inter-state flow of goods
should be eased and the clearance of licenses and other regulations should be
done quickly. The factors that triggered the exponential growth in the sector.
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1.2 ORGANISED VS UNORGANISED RETAILING


In a sharp contrast to the retail sector in developed economies,
retailing in India - though large in terms of size - is highly fragmented and
unorganised. With close to 12 million retail outlets the country has one of the
highest retail densities worldwide.

Retailers include street vendors, supermarkets, department stores,


restaurants, hotels and even two-wheeler and car showrooms.

Counter stores, kiosks, street markets and vendors, where the


ownership and management rest with one person, are classified as traditional
or unorganised retail outlets. These formats typically require employees with
low skills and account for around two-thirds of the sector's output. These are
highly competitive outlets, with minimal rental costs (unregistered kiosks or
traditional property), cheap labour (work is shared by family members) and
negligible overheads and taxes.

However, unorganised retailers suffer due to poor shopping


experience and inability to offer a wide range of products and value-addition
due to lack of sourcing capabilities.

The modern Indian consumer is seeking more value in terms of


improved availability and quality, pleasant shopping environment, financing
options, trial rooms for clothing products, return and exchange policies and
competitive prices. This has created a rapidly growing opportunity for
organised, modern retail formats to emerge in recent years and grow at a fast
pace.

Inefficiency in the existing supply chains presents further opportunity


for organised players to draw on this large market even as lack of consumer
culture and low purchasing power restricted the development of modern
formats. Migration from unorganised to organised retail has been visible with
economic development in most countries.
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Indian retail industry is divided into organised and unorganized


sectors. The industry is highly fragmented, with a major share of its business
being run by the unorganised retailers like traditional family run stores and
corner stores. The organised retail however, is at a very nascent stage, despite
the attempts made to increase its proportion, bringing in a huge opportunity
for the prospective new players.

Unorganized Retail Sector


Indian retail is dominated by a large number of small retailers
consisting of the local kirana shops, owner-manned general stores, chemists,
footwear shops, apparel shops, paan and beedi (local betel leaf and tobacco)
shops, hand-cart hawkers, pavement vendors, etc. which together make up the
unorganized or traditional retail. It lacks technical and accounting
standardization. The supply chain and sourcing are also done locally to meet
local needs.

Organized Retail Sector


Organized retailing refers to trading activities undertaken by licensed
retailers. These include corporate-backed hypermarkets and retail chains and
also privately owned large retail businesses. The origin of organized retail in
India dates back to the pre-independence era when the country’s established
business houses, mostly textile majors, ventured into retail arena through
company-owned or franchisee outlets.

It was in 1995 the organized retail finally started procuring its


platform when the Indian government started relaxing its policies and the
market liberalization took place. The sector has undoubtedly drawn benefit in
that period because of the liberalization as the government encourages more
FDIs into the country when almost 90-95% of the retail sector remained
unorganized in India. The sector continued to flourish encouraging many
Indian industrialists to enter into the organized retail sector. The sector
reached its peak in 2006 when consumers seek organized retail format and
there was a greater exposure to foreign brands.
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Organized retailers often enjoy many advantages which an


unorganized store could not offer, for example at present a consumer who
shops in an organised retail store could enjoy a wider range of choices of
goods, better shopping experience, more convenience and many other
benefits. They also offer great discounts with some supermarkets offering
more than 5% below MRP whereas the unorganized stores generally sell
products at MRP. The number of SKUs available is also comparatively more in
organised stores and so there are less problems of out of stock or no stock.
The farmers are also benefited from organized retailing as they are in direct
contact with the retailers resulting in bypassing the intermediaries who eats
away the margin of both the retailer and the farmer. Companies are also in
direct contact with the customers and so they are aware of the products that
are sold and those that occupy more shelf space. By providing direct
employment to many people, it also enhances the employment potential. The
retail shopping districts started developing and more shopping centers,
lifestyle malls and shopping complexes have emerged in India offering people
shopping, entertainment and food chains at the same place. This concept first
took shape in tier-I cities. Many bigwigs have become popular in this industry
including Big Bazaar, Reliance Fresh, Spencers, More, Nilgiris and many
others. Right now, the industry has reached its matured phase with the
growing Indian economy. At this point of time, organized retailers focus more
on tier-II and tier-III cities where there is still scope of further growth.

1.2.1 Development of Organized Retailing in India


The ongoing journey of organized retail in India can be classified into
four phases:

Initiation (Pre 1990s)


The initial evolution of modern retail in India primarily transpired
through the established textile majors’ forward integration in retail. This
phase was essentially dominated by the manufacturers establishing their
presence in retail. The key players during this era include Bombay Dyeing,
The Raymond Group, The S Kumars Group, and Bata. Central and State

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Governments and Co-operative bodies such as Public Distribution System


(PDS), Mother Dairy, Kendriya Bazaar, Super Bazaar etc. are playing a key role
as prominent retailers in the Indian retail market. The early years also
witnessed the emergence of regional chains primarily in the southern region
and some of these chains later established a national wide presence.

Conceptualization (1990-2005)
The threshold of the year 1990 witnessed a new beginning in retailing
business. This time it was not the manufacturers looking for an alternative
sales channel, but it was the pure-play retailers who entered the retail market,
to expand the industry. Some of the notable examples are Pantaloon’s
Shoppers Stop and Lifestyle. It is interesting to note that most of the new
retailers in this era focussed on apparel and other fashion related categories.
An important occurrence during this time was the liberalisation of Indian
economy and opening of entry opportunities for foreign brands/retailers. The
first generation of international retailers to make an entry during this phase
include McDonald’s, Benetton, Levi Strauss, Adidas, Reebok, and Nike
(Cushman & Walkfield 2010).

Retail Expansion (2005-2010)


This is perhaps the most active phase of Indian retail industry in terms
of growth, entry of new players and development of new formats. A growing
middle income class, increasing disposable income and young consumer
population led to the rapid growth of the Indian retail market. Having realised
the vast potential of the relatively untapped domestic market, large industrial
conglomerates like Mahindra and Mahindra, Reliance, Tata, Aditya Birla and
Essar entered the Indian retail arena during this period. Most of these groups
are large investors in the retail sector and planned to establish pan-India
brand and enjoyed significant success in the years that followed. Their success
brought in global retailers such as Metro A. G., Max Retail, Shoprite, HyperCity,
etc and more recently Carrefour, Tesco and Zara have announced their Indian
entry and are optimistic about their growth in the market. Others like Bharti-
Walmart, SPAR, Debenhams, and Mother Care have already established their
presence in the retail market.

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Apart from international retailers and large conglomerates, a number


of regional players, particularly in the Supermarket segment also geared up
for their activity. New formats like Cash & Carry, large format discounters,
food courts, multiplexes, children’s play zones, and gaming zones have also
emerged in this phase.

In the real estate front, there is frenetic activity with a large number of
malls proposed or developed across major metros and upcoming tier-II cities.
One of the main reasons, for luxury retail not taking up in India is the lack of
luxury retail environment. There is an evident lack of space for premium
brands which led the early entrants to restrict their presence to star hotels in
big cities alone. (Cushman & Walkfield 2010).

1.2.2 Changing Age Profile and Disintegration of Joint Family


India is witnessing a change in the age and income profiles of its over 1
billion population, which is likely to fuel accelerated consumption in the years
to come. The country is believed to have an average age of 24 years for its
population as against 36 years for the USA and 30 years for China. A younger
population tends to have higher aspirations and spends more as it enters the
earning phase.

Besides, the gradual disintegration of the traditional Indian joint family


system has led to nuclearisation of families, which in turn has led to enhanced
demand. Add to this an increasing population of working women and new job
opportunities in emerging service sectors such as IT-enabled services, retail,
food services, entertainment and financial services.

With declining interest rates, the aversion of domestic consumers to


taking loans is also fast disappearing. Growing media penetration is leading to
a convergence of aspirations of various classes of consumers, bridging the
rural-urban divide.

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Growing Disposable Income


More Indian households are getting added to the consuming class with
the growth in income levels. The number of households with income of over
Rs 45,000 per annum is expected to grow from 58 million in 1999-2000 to 81
million by 2005-06.

This large base of households with growing disposable income is


expected to drive demand for organised retail. Of this, 56 per cent (44. 8
million households) are expected to be concentrated in urban India.

1.2.3 Segments Wise Retailing:


These are different segments concerned with food, beverage, grocery,
fashion & life style etc. it can be discussed separately:

Food Retailing Segment:


The Food World (FW) supermarket chain has been one of the
pioneers in organized food retailing in India. Before FW entered the food
retailing market, it carried out an extensive survey in consumer attitude
towards retailing. An important finding of the survey was that in terms of
overall satisfaction, traditional Indian grocery stores scored 5 – 6 on a 10-
point scale. FW believed that this was largely due to the absence of organized
retailing and low brand proliferation. The company thus decided to offer
people a pleasant shopping experience and work towards making grocery
shopping less cumbersome. The main challenge for FW was to alter the
existing mindset of Indians with respect to price and value and add
excitement to grocery shopping.

On the basis of the above information, FW defined its objective as: "To
offer the Indian housewife the freedom to choose from a wide range of
products at a convenient location in a clean, bright, and functional ambience
without a price penalty."

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Lifestyle Products Segment is the evergreen emerging segment in


India's organized retail revolution. The Shoppers Stop Limited (SSL) is the
concept of 'shopping' by making efforts to provide the Indian consumers with
an international shopping experience. In 1991, SSL set up its first outlet in
Mumbai, Maharashtra, with a floor space of around 4,000 sq ft. Since then,
SSL has established its stores in all major cities in India with store space
ranging from 18,000 sq ft to 60,000 sq ft.

SSL stores provide a complete and in – depth range of fashion and


lifestyle products and accessories to meet the lifestyle pattern of every
shopper. Around 85% of SSL's merchandise is branded and it stocks more
than 150 national and international brands.

Within a short period, SSL emerged as the largest single retailer for
Levis, Pepe, Lee, Arrow, Zodiac, Reebok, Nike, Parker, Ray Ban, Swatch,
Chambor, Revlon, Lego, Mattel and many other leading brands. The company
closely monitored the movement of all brands, and if any brand failed to meet
customer expectations, it was phased out. SSL also launched a range of
private labels like Life, Kashish and Karrot in the premium classic, value
classic and value fashion segments. A team of designers were recruited from
India's premier fashion design institutes to develop private labels.

Earlier, Indian customers were used to shopping for their apparel and
accessories at various shops (as no shops offered all the products at one
place), which paid little or no attention to the ambience or the comfort of their
customers. SSL, apart from offering a complete range of garments and
accessories, included central air – conditioning, impeccably maintained trial
rooms, beautiful rest rooms, play area for children, large car parking, in –
store café, and other services such as alterations, goods exchanged without
any questions and gift wrapping.

As a part of differentiating its product offerings from that of other


major lifestyle stores such as Life Style and Globus, SSL also began conducting

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many events and promotion campaigns to combine entertainment with


shopping. These included the 101 – day Seven Wonders of the World Festival,
Surprise Sale, Salon Streets, and Men in Vogue, Great Store Robbery, Campus
Stoppers and Valentine Promotion. One of the major events offered by SSL,
which attracts hoards of customers, is Parikrama a crafts fare aimed at
showcasing he diverse ethnic arts and traditions in India.

1.2.4 SWOT Analysis of Indian Retailing


Strengths
 Emerging retail formats like malls, hyper/supermarkets and specialty
stores which provide product, service and entertainment at one place.
 Indian consumers have high disposable incomes, which translates into
high consumption levels.
 Large number of earning young population.
 Growth of real-estate and Improvement in infrastructure.
 Huge agricultural sector offering an abundance of raw materials.

Weaknesses
 Demographic differences between the regions require a regionally
adjusted approach to business.
 Presence of a significant number of strong and well-established players in
the sector limits market entry potential.
 Relatively small domestic market limits growth opportunities.
 High real-estate and distribution cost are the obstacles for growth of retail
in India.

Opportunities
 Increasing awareness of consumers about products and services.
 Changing consumers’ requirements and lifestyles.
 Innovation for new product development.
 Private label sector has been boosted by economic downturn

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Threats
 Economic slowdown is having an adverse effect on consumer spending.
 Rigid government policies and regulations restrict the entry of new
players.
 Price competition among retailers puts downwards pressure on margins.
 Entry of International players in Indian markets consumes the share of
Indian retailers.

1.2.5 Demand for Mall Space: Future Potential


India is a late starter in the development of shopping malls. The first
Indian shopping mall (Spencer Plaza, Chennai) was built in 1990; however,
the real impetus came in 1999, when two more malls (Ansal Plaza in Delhi and
Crossroads in Mumbai) became operational. During the last decade, there has
been a sudden increase in the availability of mall space in India. From just
three malls in 1999, the country at present has nearly 200 operational malls
providing nearly 87 million square feet of mall space (Images Research,
2007). The year 2007 saw mall development growing at a rate of 76 per cent.
For 2008, growth was expected to be around 85 per cent; however, this was
dampened by the economic recession. India is expected to have 205 million
square feet of mall space by 2010, and a total of nearly 750 operational malls
providing 350 million square feet of mall space by 2015 (Taneja, 2007)2.

Although the concept of shopping malls originated in Western


countries, malls located in other countries around the world cannot merely
reflect a foreign business system. These malls have to be very specific in their
appeal by developing a tenant mix that reflects the needs of target customers,
local real estate demand and quality of competition. For instance, Indian malls
are not exact replicas of Western malls, as they are customized for specific
cultures and localities. They are smaller than their American counterparts,
with commercial space for offices as well. Indian malls are located within

2 Taneja, A. (2005) Keynote address. 2nd annual ICSC-India Shopping Center and Retail
Conference; 29–30 August, Mumbai.

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high-density urban areas, in contrast to the peripheral locations of US malls.


Hence, Indian malls are more ‘vertical’ (Singh and Bose, 2008)3.

The Indian retail revolution is being led primarily by young, new,


affluent shoppers who want to obtain an ultimate experience while carrying
out their shopping. The existing retail scenario does not provide quality retail
space to support this, and there is an urgent need for investment in building
quality retail and mall space (Singhal, 2007). Traditionally, residential housing
was the dominant segment of real estate development in India. However, with
the emergence of commercial office space, retail and hospitality, substantial
opportunities have been created in the non-residential segments.

The non-residential segment is predicted to occupy 26 per cent of the


overall market share in 2010 as compared to the 16.7 per cent held in 2005
(Mehta, 2007)4. Convinced of the promise and potential inherent in retail,
Indian corporate houses are upbeat about this sector, and their future
investments are pegged at nearly Rs 5 trillion. Reliance Retail alone is
investing Rs 300 billion in setting up multiple retail formats backed by a
strong distribution network. (Singhal, 2007). In short, India is expected to
achieve in 10 years what took 25–30 years in other major markets in the
world. An additional investment of Rs 5 trillion would require approximately
600–700 million square feet of additional retail space by 2011. Current
projections on construction do not exceed 200 million square feet, leaving a
gap of almost 400–500 million square feet. To meet this gap, investments are
required to the tune of US$ 10–15 billion, and additional investment of $8–10
billion is needed in retail fit-outs and related equipment (Puri, 2007).
However, such huge investments in development of quality retail space would
take break-even to levels that seem high during the initial phase of retail
growth.

3 Singh, H. and Bose, S.K. (2008) My American cousin: Comparison between Indian and the US
shopping Malls. Journal of Asia-Pacific Business 9 (4): 358–372
4 Mehta, R. (2007) A study on the Indian real estate market for investment: A qualitative

approach. MA (Finance & Investment) dissertation, University of Nottingham, UK.

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The decade-old history of shopping malls in India has been fairly


eventful. Despite initial euphoria among the masses and developers, malls
have suffered from issues such as availability and cost of quality real estate,
spiraling construction cost, poor infrastructure, non-conducive policy
framework, and unavailability of professional expertise in mall development
and management. This resulted in clustering of almost identical shopping
malls. Lack of concept planning and zoning is another serious issue. All kinds
of tenants are accommodated at all possible locations inside the mall. Such
poorly planned and executed malls fail to ensure 100 per cent occupancy at
the time of commencement of operations, or see plummeting level of
occupancy because of non-renewal of lease by existing tenants (Tiwari,
2008)5.

Source: Harvinder Singh “Management of Indian shopping malls:


Impact of the pattern of financing” 2010.

Despite this, mall developers are keen on having as many tenants as


possible as soon as possible. Traffic, infrastructure and ecological issues come
to the fore only after the situation becomes intolerable and unmanageable
(Taneja, 2005).

5 Tiwari, M. (2008) Big brands plan to pull out of malls. The Economic Times 21 September:

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1.3 THE EVOLUTION OF BRANDING


According to Manohar David of Philips (Director and Senior Vice
President, Philips India Limited, 1996), a challenge loving, risk taking Brand
Manager, who retired after a 31 year marketing career with Philips, and
responsible for its brand success has to say;

“In the 1970’s, products were made from the manufacturing, rather than
the customer point of view. But with the focus shifting to the consumer,
marketing has assumed a much larger role”.

Significant parameters in brand building literature have experienced a


dramatic shift in the last decade. Branding and the role of brands, as
traditionally understood, have been subject to constant review and
redefinition.

A traditional definition of a typical brand was: “the name associated


with one or more items in the product line, which is used to identify the
source of character of the item(s)” (Kotler, 2000).

A brand is a mixture of attributes, tangible and intangible, symbolized


in a trademark, which, if managed properly, creates value and influence. (Ovo
Portland, 2014).

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The marketing practice of creating a name, symbol or design that


identifies and differentiates a product from other products. An effective brand
strategy gives you a major edge in increasingly competitive markets. ... Simply
put, your brand is your promise to your customer.

A brand (or marque for car model) is a name, term, design, symbol, or
other feature that distinguishes an organization or product from its rivals in
the eyes of the customer.[2][3] Brands are used in business, marketing,
and advertising.

The AMA recognizes that, brands today are much more than that. As
can be seen, according to these definitions brands had a simple and clear
function as identifiers. Before the shift in focus towards brands and the brand
building process, brands were just another step in the whole process of
marketing to sell products. For a long time, the brand has been treated in an
off-hand fashion as a part of the product, . Branding is a major issue in product
strategy. As the brand was only part of the product, the communication
strategy worked towards exposing the brand and creating a brand image.
Within the traditional branding model, the goal was to build a brand image, a
tactical element that drives short-term results. It is mentioned that the brand
is a sign–therefore external-whose function is to disclose the hidden qualities
of a product which are inaccessible to contact. The brand served to identify a
product and to distinguish it from competition. In the journey from product-
centric brands to customer-centric brands, many consumer companies have
locked in on a transitional concept – segment-specific brands. While brand
Nike focuses on physically active consumers, brand Disney focuses on parents
with small children. This is a significant step in the right direction and it
reflects growing awareness of the power of customers.

A brand differentiates a product in several forms and it can be broadly


divided into two categories- The tangibles (rational), and the intangibles
(emotional and symbolic). Either way, while the product performs its basic
functions, the brand contributes to the differentiation of a product. These

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dimensions “distinguish a brand from its unbranded commodity counterpart


and gives it equity which is the sum total of consumers’ perceptions and
feelings about the product’s attributes and how they perform, about the brand
name and what it stands for, and about the company associated with the
brand”. A strong brand provides consumers multiple access points towards
the brand by attracting them through both functional and emotional
attributes. The tangible dimensions that a brand creates are product
innovations, high qualities, and/or attractive prices etc. Those are often
observable from the product’s marketing mix and product performance
(Keller, 2003). The intangible values of a brand will include those that cannot
be quantified. These intangibles go beyond the product level to become a
synaptic process in the brain. In other words, consumers will be able to
respond to this particular brand without the presence of the product. More
importantly, an intimate rapport may be developed between the consumers
and their brands. The attributes of a branded product add value for
consumers, the intermediaries, and the manufacturers. The most significant
contribution of a strong brand to consumers would be the reduced searching
time and cost when they are confronted with a set of identical products. It
helps consumers to identify and locate a product with less information
processing and decision time because of the expected quality from
accumulated brand knowledge. Consumers will be able to develop
associations and assumptions through brand name, package, label etc. A
strong brand also offers a high brand credibility: it becomes a signal of the
product quality and performance. This reduces the risks involved in the
purchase including the functional, physical, financial, social, psychological, and
time risks. Consumers do not only benefit from the functional values of a
brand, they also benefit from the emotional aspects. A strong brand mixes and
blends the product performance and imagery to create a rich, deep, and
complementary set of consumer responses towards the brand. Hence
consumers are attracted to more dimensions of a brand and will be more
likely to effectively bond with the brand. Consumers also use the brand as a
means of self image reflection, symbolic status, and an anchor in this forever
changing world. Finally, a brand smoothes consumers’ communication
process to others and enrich their everyday lives.

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In terms of the branding benefits to intermediaries such as retailers


and wholesalers, a strong brand with high brand recognition and brand
awareness speeds up the stock turnover rate, lowers the selling cost, and
leads to higher sales. Consumers will also be more inclined to (re)purchase in
their stores and spread word of mouth to others. These in turn facilitate the in
store activities related to the selling of the products with the brand. On the
other hand, a strong brand also implies that the manufacturer supplying the
products will be more committed to the in-store promotions . For
manufacturers, a strong brand is a valuable asset to the company. A well
recognized brand serves as a signal, and it increases the likelihood for
consumers to place the product in their consideration or choice set.
Manufacturers will also win a reputable name through consumers’ positive
attitudes and evaluation towards the brand. As discussed previously,
manufacturers with strong brands are more committed to their retailers, and
the retailers will in return invest more effort and resource in maintaining the
relationship. Therefore, a strong brand leads to mutual trust and commitment,
and fosters the manufacturer-retailer relationship.

Sometimes, the manufacturers may even gain greater bargaining


power over their retailers, and are presented with more distribution channels.
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1.3.1 Customer Centric Branding


Brand values must be calculated on an individual customer basis, and
segment-specific brands need to be developed. There is a shift in focus from
traditional product brand organizations to customer-segment focused
organizations. Brand experience is finally the aggregate of consumer
perceptions that come from interacting with a brand.

A successful brand experience is the process of exposing consumers to


the various attributes associated with a particular brand and creates an
environment in which the consumer will be surrounded by the positive
elements attached to the brand. A successful brand experience can operate on
multiple levels, including adding a new communication channel to reach the
consumer, adding a service element to the product that extends a stronger
offer, and extending the brand across seemingly unrelated products and
services. The overall brand experience represents a way to bring the
consumer to the brand and establish a close relationship.

A brand means much more even than its product and service features.
Brands are built from nothing less than the sum of a customer’s experiences
with a product, service or company. Customers’ total brand experience
determines whether a customer buys anything more from the company and,
just as importantly, whether the customer spreads awesome or awful word of-
mouth to friends and family. In effect, the brand experience moves a consumer
up the ladder of loyalty from a mere consumer to a brand evangelist.

A review of previous literature in the domain reveals that both


academics and practitioners are placing increased importance on the issue of
brand identity. For a variety of reasons, both academic and business interests
in brand identity have increased significantly in recent years.

Organizations have realized that a strong identity can help them align
with the marketplace, attract investment, motivate employees and serve as a

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means to better differentiate and position their products and services in the
minds of the consumers. Thus, many organizations are striving to develop a
distinct and recognisable corporate brand identity. Brand identity is based on
a thorough understanding of the firm’s customers, competitors and business
environment. The Brand identity needs to reflect the business strategy and
the firm’s willingness to invest in the programs needed for the brand to live
up to its promise to customers. Strong brands enjoy customer loyalty and a
potential to charge premium prices, and considerable brand power to support
new product and service launches. Companies need to have a thorough
understanding of the customer beliefs, behaviors, product or service
attributes, and competitors. Consumer-brand knowledge can be defined in
terms of the personal meaning about a brand stored in consumer memory,
that is, all descriptive and evaluative brand-related information.

Brands do have to maintain a modern look, and the visual identity


needs to change over time. But the key to successfully effecting a new look is
evolution, not revolution. Totally changing the brand visuals can give rise to
consumer concerns about changes of ownership, or possible changes in brand
values, or even unjustified extravagance. If there is a strong brand personality
to which consumers are attracted, then substantial changes may destroy
emotional attachments to the brand. People do not expect or like wild swings
in the personality behavior of other people, and they are just as concerned
when the brands to which they have grown used, exhibit similar
"schizophrenic" changes.

1.4 BRANDING BASICS


Branding has emerged as a top management priority in the last decade
due to the growing realization that brands are one of the most valuable
intangible assets that firms have. Driven in part by this intense industry
interest, academic researchers have explored a number of different brand-
related topics in recent years, generating scores of papers, articles, research
reports, and books. This paper identifies some of the influential work in the

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branding area, highlighting what has been learned from an academic


perspective on important topics such as brand positioning, brand integration,
brand equity measurement, brand growth, and brand management. The
paper also outlines some gaps that exist in the research of branding and brand
equity and formulates a series of related research questions. Choice modeling
implications of the branding concept and the challenges of incorporating main
and interaction effects of branding as well as the impact of competition are
discussed.

The following literature review mentioned various scholarly papers on


the similar topic done by researchers from various universities. There was an
attempt to cover the preliminary concept of managing a brand and the
effective communication involved to make the brand a success in the
competitive market. The important aspect of this literature review was the
detailed informative study on the choice of market – which is in this case,
India. The rise of the Indian consumer market, brands operating in the market
and the influence of future demographics and socio-economic structure of the
Indian market are included in this literature review. Global apparel retail
brands have entered the Indian market since 1980s and more rapidly after the

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1991 economic reforms. They have had competition from Indian apparel
retail brands and moreover with the rise of consumerism, the difference of
perception of various brands is decreasing thus bridging the gap between the
big cities and other urban centers. Regional differences in India have also been
incorporated in this review to uncover the changing Indian consumer market.

Studies done by various business analytics groups have been presented


to support the study of Indian consumer market.

1.4.1 Theory of Branding


There are brands and logos present all around us, starting from the
wine we consume to the clothes we wear, in the billboards along the
interstate, to the advertisements which don the buses, subway and yellow
cabs (Hampf & Lindberg-Repo, 2011). Branding has proven to be an essential
strategy for marketing even in noncommercial organizations like political
outfits and charities. It can be utilized for enhancing the profitability of actors,
sports personalities, celebrities and also cities (Moor, 2007). Branding is
considered as a separate industry which acts as a key mechanism to enable
the smooth functioning of a market-oriented economy (Moor, 2007;
Henderson & Arora, 2010). Some brands of specific countries are considered
superior to others in countries which raised the question of effect on
homogenization of culture (Moor, 2007; Bastos & Levy, 2012) but the brands
help create a working identity for a product influencing consumers’ purchase
intention.

Brand and advertising walks in continuum with each other creating a


composite industrial environment; this continued focus on advertising has
given rise to a functioning cultural economy at the expense of other forms of
promotion (Du Gay & Pryke, 2002). Branding converts a certain commodity
into a self-promotional form which creates an insatiable desire among
consumers who want to procure it (Lury, 1993). Before delving into further
discussion about brands and how they help to generate revenue for brands
and corporations, we should understand the proper definitions.
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A brand is a name, term, design, symbol, or any other feature that


identifies one seller's good or service as distinct from those of other sellers
(American Marketing Association Dictionary, 1960). The word "brand" is
derived from the Old Norse brandr meaning "to burn” which refers to the
practice of producers burning their mark (or brand) onto their products. The
concept of brands is not new but comparatively branding a brand is a product
derived from the start of modern globalization at the end of the Cold War. It
was actually during the 1990s, that a previously essential set of practices –
product design, retail design, point-of purchase marketing came together to
be known as branding (Bastos & Levy, 2012). The effects of branding caught
the unfettered attention after the publication of (Naomi Klein’s ,2000) No
Logo which created interest among scholarly circles to research more and
more on this concept. Promotional activities of brands and corporations have
always been subjected to public criticism and activism but Klein’s book dealt
more about identifying new avenues and creating guidelines for innovative
scope of marketing activity and to connect these to the ongoing globalization
of labor markets and analyzing its after-effects (Moor, 2007). There is another
definition which also defines brand as a unique property of a specific company
which has been developed over a certain time period enabling it to embrace a
defined set of values and attributes which meaningfully helps a consumer
identify products otherwise would resemble the similar attribute (Murphy,
1990). The perpetual rise of branding can be attributed as a method of a more
reflexive capitalism (Thrift, 1997) where a market is created for the
commodity to make the consumers slowly but steadily conform to the
structures presented in the concept envisaged by the certain company or
brand.

1.4.2 Benefits of Branding


Proper branding can result in higher sales of not only one product, but
on other products associated with that brand (Bennett & Hill, 2012). Some
people distinguish the psychological aspect; brand associations like thoughts,
feelings, perceptions, images, experiences, beliefs, attitudes, and so on that
eventually become linked to the brand from the experiential aspect (Hislop,
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2001). The experiential aspect invariably consists of the sum of all points of
contact with the brand and is known as the brand experience (Brakus et.al,
2009) which is a brand's action perceived by a person. Brand experience as a
concept is defined as certain sensations, feelings, cognitions, and behavioral
responses evoked by brand-related stimuli which arise as part of a brand’s
design and identity, packaging, communications, and environments (Brakus
et.al, 2009). The psychological aspect, sometimes referred to as the brand
image, is a symbolic construct created within the minds of people, consisting
of all the information and expectation associated with a product, service or
the company that is providing them (Engel, Blackwell & Miniard, 1995; Dacin
& Mitchell, 1986).

1.4.3 Expectations from Brands


People engaged in branding seek to align the expectations behind the
brand experience, creating the impression that a brand associated with a
product or service has certain qualities or characteristics that make it special
or unique. A brand is therefore one of the most valuable elements in an
advertising theme, as it demonstrates what the brand owner is able to offer in
the marketplace. So we can posit that the art of creating and maintaining a
brand is called brand management. “In marketing research, seven brand
management approaches have been identified during 1985–2006: the
economic approach, the identity approach, the consumer-based approach, the
personality approach, the relational approach, the community approach and
the cultural approach. These approaches reflect a development where the
focus has shifted from the sending end of brand communications in the first
period of time; have then turned their attention to the receiving end in the
second period; and finally have addressed contextual and cultural influences
on the brand to the global understanding of brand consumption”
(Heding,Knudtzen & Bjerre, 2008, p.15). Careful brand management seeks to
make the product or services relevant to the target audience. Lastly, brands
should be seen as more than the difference between the actual cost of a
product and its selling price as they represent the sum of all valuable qualities
of a product to the consumer (Duncan & Moriarty, 1997).
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1.4.4 Consumers’ Attachment to Brands


Holding onto a consumer base has never been easy in a foreign market
for a global brand in the presence of millions of local brands (Kapferer, 2012).
For example, nowadays within a five-minute walk in majority of cities or
towns, we can find at least five retail outlets selling similar merchandise each
competing for space and attracting for more customer patronage.
Corporations have spent billions of dollars trying to make consumers as loyal
to their products and services. Ever since consumers on market research
panels began weighing in on everything from baby food quality to shoe
shapes, companies have tried to tailor products to meet shoppers’ preferences
(Gronroos, 2004). More recently, as the Internet and other channels of
electronic commerce became common market-research tools in the mid-90s,
businesses have tracked what individual customers buy – and do not buy.
Now, with all that information at their fingertips, executives have been trying
to figure out which business practices make faithful customers loyal. Yet there
is this constant dilemma about why customers stick with a brand (Duncan &
Moriarty, 1997).

Today, the search for the ties that bind customers to brands has taken
on fresh urgency. The branding aspect of commodities acts as an integral part
of brand’s sustainability (Okonkwo, 2007). The brand is the reason why
consumers associated themselves with a company that creates and sustains
the attraction and desire for products (Bororian & Poix, 2010). The equity
markets are volatile and venture investors are chastened, so loyal customers
represent a company’s best prospects for pumping capital into a business
which can be counted on to build a solid base of revenues as well as to expand
profits.

1.4.5 Brand Analyses


Brand has always been portrayed as a powerful tool and its success
depends on its proper positioning among the consumers. Due to the immense
competition among the brands and diversification of consumers in global

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markets, the assessment of brand evaluation becomes more and more


challenging. To actually resolve this phenomenon, global marketers and
brands always seek for measures to strengthen their brands across national
boundaries by evaluating the effectiveness of the implementation of
marketing mix and positioning of the brands. Consumers always use brand
names and various product attributes as cues for information that help in the
purchase decision making process. More specifically, consumers often
recognize a status brand only with a brand name and image without any
knowledge of other features of the brand .

1.4.6 Brand-Specific Association


Brand-specific association has been linked to the feature, attribute, or
characteristic that makes consumers more associated with a brand and makes
it distinct from other brands (Dillion et al., 2001). As proposed by Lee et al.
(2008), perceived quality and emotional value are the two major dimensions
of brand-specific association as they form critical factors in product
perception. Emotional value is defined as the value that relates to individuals
to their feelings or affective states (Sheth, Newman, & Gross, 1991) or the
benefit derived from the sense of pleasure through either the purchase or
consumption of a brand (Sweeney & Soutar, 2001). Perceived quality has been
defined as a consumers’ appraisal or subjective evaluation of the overall
excellence or superiority of the products (Zeithaml, 1988).

1.4.7 General Brand Impression


The pivotal role in consumers’ decision-making process is played by
general brand impression. So much as marketers seek to add meaning to their
brands, the consumer also adds their own distinctive meaning to what the
brand represents, and the latter may be far more essential than anything the
marketer meant or intend to achieve (Hollis, 1995). Specifically, Keller (1993)
provided a conceptual framework for creation of general brand impressions
with two dimensional attribute – brand awareness and brand image. Brand
awareness is defined as the brand knowledge involving recognition of the

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brand name at the rudimentary level (Hoyer & Brown, 1990). In this context,
Rossiter and Percy (1987) related brand awareness to (a) the consumers’
ability to trace a brand in different conditions and (b) the likelihood that a
brand will easily come to consumers’ mind. Similarly, increase in brand
awareness raises the likelihood that the brand will be considered more
frequently while purchase is made (Baker et al., 1986). Brand image is
generally the perception of the product by the consumer which links features
or characteristics of a particular brand to consumers’ memory and builds a
general brand impression. It is quite evident that brand awareness and brand
image influence the formation and strength of general brand impressions.

1.4.8 Brand Commitment


Brand commitment has been defined as an enduring desire to maintain
a valued relationship with a brand (Moorman et al., 1992) and can be
classified into brand loyalty and purchase intentions. Brand loyalty has been
identified as an important strategy for brands to obtain a competitive
advantage in the market (Sirdeshmukh, Singh, & Sabol, 2002). Moreover
brand loyalty has been perceived a continuous long-term attachment to a
brand. Similarly, Gaedeke (1973) emphasized that developing economies such
as India, China, and Taiwan prefer brands from western or developed
countries and are more loyal towards them. Another important component of
brand commitment, purchase intention, indicates the tendency of consumers
to purchase specific brands in a routine manner compared to other brands.

1.5 BRAND DIMENSIONS


1.5.1 Brand Equity
Brand equity is a multidimensional construct, which consists of brand
loyalty, customer based brand awareness, perceived quality and brand
associations. Various researchers contended that brand associations could be
recalled in a customer’s mind as emotional impressions. Brand awareness
influences consumer decision making by affecting the strength of the brand
associations in their mind, (Keller, 1993). It is also pointed out that there are
several dimensions of brand awareness with brand associations.

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Customer-based brand equity occurs when customers are familiar with


the brand and hold favorable, strong and unique brand associations in
memory has stated that brand equity is a set of assets and liabilities. Five
brand equity assets – brand loyalty, brand awareness, perceived quality,
brand association and other proprietary brand assets – are fundamentals of
value creation. This study uses these five brand equity classifications from, as
they are the most acceptable to-date. As brand equity is a multidimensional
concept, research has various suggestions for measuring its dimensions –
some include brand loyalty and brand association.

Source: Tiwari (2008)


There is also brand knowledge, which comprises of brand awareness
and brand image (Keller, 1993). Furthermore, it is also suggested that
perceived quality, brand loyalty and brand awareness have a strong brand
association.

Among the five brand equity assets, it is very difficult to manipulate a


consumer’s perception of brand association in an experiment. Furthermore,
other proprietary brand assets, such as patents, are not easy to measure.
Therefore, the current study uses brand loyalty, brand association and
perceived quality as the measurements of brand equity. Brand loyalty is an
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important consideration when estimating the value of a brand as loyalty can


translate into profit . Brand loyalty is a barrier for new competitors and forms
the basis for a price premium. Brand loyalty also encourages repeated
purchase behavior from consumers, and discourages them from switching to
competitor brands. Therefore, the greater the customer loyalty, the higher the
brand equity will be. Perceived quality is another dimension of brand value
that can encourage customers to choose a product or service. “Perceived
quality can be defined as the customer’s perception of the overall quality or
superiority of a product or service with respect to its intended purpose,
relative to alternatives”. Customers’ product experiences, expenditure
situations and unique needs might influence their judgment of product
quality. Since customers make their choices based on product attributes and
compare these to other products, perceived quality is not an objective
measure. Perceived quality can increase customer satisfaction, provided the
customer has had some previous experience with the product or service.
Hence, perceived quality is generally associated with brand equity, and the
better the perceived quality, the greater the brand equity.

1.5.2 Brand Association


Brand association is anything that is linked in memory to a brand. The
association reflects the fact that products are used to express lifestyles
whereas other associations reflect social positions, and professional roles. Still
others will reflect associations involving product applications, types of people
who might use the product, stores that carry the product, or salespeople who
handle the product or even the country of origin. defines brand associations as
informational nodes linked to the brand node in memory that contains the
meaning of the brand for consumers. These associations include perceptions
of brand quality and attitudes towards the brand. Keller and Aaker both
appear to hypothesize that consumer perception of a brand are multi-
dimensional, yet many of the dimensions they identify appear to be very
similar. The image that a good or a service has in the mind of the consumer-
how it is positioned is probably more important to its ultimate success than

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are its actual characteristics. According to there are at least nine brand
associations. The associations convey either the concept, or the meaning of
the product in terms of how it fulfills a customer’s need. From a brand
association perspective felt that brand equity is closely related to brand
association. “A brand association is anything linked in memory to a brand”
(Aaker, 1996). The researchers also suggested that brand association can be
divided into three major categories: attributes (including product-related
attributes and non-product-related attributes such as price, brand
personality, emotions and experience), benefits (what customers think the
product or service can do for them, including functional benefits, symbolic
benefits and experiential benefits) and attitudes (customers’ overall
evaluations of the brand) (Keller,1998). The most powerful brand
associations are those that deal with the intangible or abstract traits of a
product. Brand association can assist with spontaneous information recall and
this information can become the basis of differentiation and extension. Strong
association can help strengthen brand and equity. Similar to perceived quality,
brand association can also increase customer satisfaction with the customer
experience.

1.5.3 Brand Identity


A Brand identity comprises a unique set of functional and mental
associations the brand aspires to create or maintain. These associations
represent what the brand should ideally stand for in the minds of customers,
and imply a potential promise to customers. It is important to keep in mind
that the brand identity refers to the strategic goal for a brand while the brand
image is what currently resides in the minds of consumers.

A corporate brand tries to establish a coherent perception of the


company for its different stakeholders and reflects a good corporate
reputation in the eyes of the general public. Nevertheless, the single most
important public of a corporate brand is its end consumers, who are drowning
in the overwhelming abundance of brands and brand communication.

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Brand identity is a unique set of brand associations implying a promise


to customers and includes a core and extended identity. Core identity is the
central, timeless essence of the brand that remains constant as the brand
moves to new markets and new products. Core identity broadly focuses on
product attributes, service, user profile, store ambience and product
performance. Extended identity is woven around brand identity elements
organized into cohesive and meaningful groups that provide brand texture
and completeness, and focuses on brand personality, relationship, and strong
symbol association. To be effective, a brand identity needs to resonate with
customers, differentiate the brand from the competitors, and represent what
the organization can and will do over time.

When brand faces aggressive competition in the marketplace, brand


personality and reputation of the brand help it distinguish from competing
offerings. This can result in gaining customer loyalty and achieve growth. A
strong brand identity that is well understood and experienced by the
customer helps in developing trust which, in turn, results in differentiating the
brand from competition. A company needs to establish a clear and consistent
brand identity by linking brand attributes with the way they are
communicated which can be easily understood by the customers. The brand
can be viewed as a product, a personality, a set of values, and a position it
occupies in people's mind- Brand Identity is everything the company wants
the brand to be seen as.

1.5.4 Sources of Brand Identity


Defining brand identity and the limits of its strength and weakness, it is
necessary to be aware of identity sources. With the lapse of time, every brand
can lose its independence and meaning, as well as lose a certain level of
freedom, as with the increase of brand reliability, its elements acquire a
particular form and define the possible territory. The revelation of identity
starts from typical goods or services, confirming brand, symbol, logo, country
of origin, advertising and package. (Kapferer, 2003) singles out the following
sources of identity: Good is the primary source of identity. Brand reveals its
plan and the uniqueness of its goods and services. A genuine brand never

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remains just as a printed record on a good. A brand transfers its equity into
the process of production and distribution, which constitutes the essence of
service sales as well. Brand values need to be embodied in a brand symbol.
The representatives of cognitive psychology state (Keenan, 1976; Lakof, 1987)
that it is easier to define certain categories indicating their typical features
instead of exactly naming the attributes of a good that require judicious parts
of those categories. Every brand forces to think spontaneously about
particular goods more in comparison with another, as well as about particular
actions as a means of communication. Prototype goods contain various
elements of brand identity. Some prototype goods are able or rendering brand
identity, regardless of the fact that brands, in essence, develop identity; Values
of brand identity transfer the essence of brand only then if they exist within
the essence of brand. Tangible and intangible realities go one after another as
values manage certainty and certainty manages these values. For example, the
identity of Benetton brand is constituted by tolerance and friendship.

1.6 DETAILED STUDY OF BRAND DIMENSIONS


Types of Brand Names
(i) Family Brand Name-A family brand name comprises usage of the name of
the corporate brand which is used for all products produced or marketed by
that corporate. By building customer trust and loyalty for the family brand
name, all products that use the brand can benefit. A family brand name is used
for all products.
TATA’s Brand Hierarchy

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By building customer trust and loyalty to the family brand name, all
products that use the brand can benefit. Good examples include brands in the
food industry, including Kellogg’s, Heinz and Del Monte. Of course, the use of a
family brand can also create problems if one of the products gets bad publicity
or is a failure in a market. This can damage the reputation of a whole range of
brands.

(ii) Individual Brand name-An individual brand name does not identify a
brand with a particular company. For example, take the case of Heinz. Heinz is
a leading global food manufacturer with a very strong family brand. However,
it also operates many well-known individual brand names. Examples include
Farleys (baby food), Linda MacCartney Foods (vegetarian meals) and Weight
Watcher’s Foods (diet/slimming meals and supplements). Why does Heinz
use individual brand names when it has such a strong family brand name?
There are several reasons why a brand needs a separate identity – unrelated
to the family brand name:
 The product may be competing in a new market segment where failure
could harm the main family brand name
 The family brand name may be positioned inappropriately for the target
market segment. For example the family brand name might be positioned
as an up market brand for affluent consumers.
 The brand may have been acquired; in other words it has already
established itself as a leading brand in the market segment. The fact that it
has been acquired by a company with a strong family brand name does not
mean that the acquired brand has to be changed.

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(iii) Combination Brand Name-A combination brand name brings together a


family brand name and an individual brand name. The idea here is to provide
some association for the product with a strong family brand name but
maintaining some distinctiveness so that customers know what they are
getting.

1.6.1 Brand Positioning


In this context, brand positioning gains importance as a strategic
marketing function. It further becomes vital for organizations to recognize the
consumer as a significant dimension in evaluating and positioning
organizational brands. This can be achieved through adoption of appropriate
brand management strategies. Our previous studies, as part of our research in
the domain of Branding have indicated that building customer centricity in a
brand is a significant strategic thought which organizations can explore in the
wake of the rising vulnerabilities of brands, in the face of rising consumer
empowerment. It creates new opportunities for brand-customer dialogue,
knowledge creation, and, critically, provides a new context in which the
interests of a corporation and those of its customers can be more closely
aligned. Our research further shows that Consumer Brand Knowledge is an
important contributor in the customer centricity of a brand.

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1.6.2 Brand Recall


Brand Recall relates to consumers’ aptitude to retrieve the brand from
memory given the product category, the needs fulfilled by the category or a
purchase or usage situation as a cue. It requires consumers to correctly
generate the brand from memory when given a relevant cue. It is the extent to
which a brand name is recalled as a member of a brand, product or service
class, as distinct from brand recognition. Common market research usage is
that pure brand recall requires "unaided recall". For example a respondent
may be asked to recall the names of any cars he may know, or any whisky
brands he may know. Some researchers divide recall into both "unaided" and
"aided" recall. "Aided recall" measures the extent to which a brand name is
remembered when the actual brand name is prompted. An example of such a
question is "Do you know of the "Honda" brand?" In terms of brand exposure,
companies want to look for high levels of unaided recall in relation to their
competitors. The first recalled brand name (often called "top of mind") has a
distinct competitive advantage in brand space, as it has the first chance of
evaluation for purchase.

1.6.3 Brand Personality


Distinct brand personality plays a key role in the success of a brand. It
leads customers to perceive the brand personality and develop a strong
connection to the brand (Doyle, 1990). A brand personality should be shaped
to be long-lasting and consistent. Besides, it should also be different from
other brands and meet consumer’s demands (Kumar et al., 2006). Hence, the
consumers of those toys and video games are like the brand spokespersons
and become the basis for suppliers to build brand personality. With the
specific brand personality, consumers of varying personality traits will be
attracted and their brand preference will then be further developed. In
addition, a company can maintain a good relationship with customers through
its brand personality . Since brands have their own particular personalities,
consumers may treat brands as real human beings. In this case, consumers
will expect the people’s words, attitudes, behavior or thoughts and so on to
meet their respective personality traits (Aaker, 1996).
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Consumers may likely use the brand and products in line with their
own personality traits, in other words, all the marketing activities are aimed
at having consumers believe and recognize a brand personality, and
reinforcing the communication between the brand and the consumer (Govers
and Schoormans, 2005), in order to enhance the brand’s loyalty and equity.
Brand personality has become a widely discussed issue in recent years. It has
been emphasized in many brands and products, including durables goods,
consumables goods, entertainment and luxury goods, and so on (Kumar et al.,
2006; Govers and Schoormans, 2005; Mengxia, 2007). Consumers may have
their own preference for the brand and product in compliance with their
brand personality and personality traits or their own concepts (Govers and
Schoormans, 2005). However, in fact, brand preference only involves in the
affection in brand loyalty, it may not develop any purchase behavior.

1.7 EVOLUITON OF CONSUMER BUYING BEHAVIOUR


Business environment today is turbulent as never before and the
service industry as promising as never before. In this era of intense
competition where customer is the king, success depends a lot on the
efficiency of the managers in delivering what they have promised and the
responsibility lies on the organisations to develop such a culture where
business ethics are followed, value for the services is provided and quality
services are offered to achieve higher level of customer satisfaction. For

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achieving customer satisfaction understanding dynamic consumer behaviour


is essential. As true believers in the marketing concept marketer should try
their best to meet needs of consumers.

Service firms should follow a proactive approach i.e. begin the service
and satisfaction management process before they even come in contact with
customers and also be reactive i.e. look forward for customers to complain,
welcome them and tell them what to do. This study is an attempt to develop a
thought on how to focus on enabling and keeping promises in service firms
because how promises are kept is a clear indication of how strong and for how
long shall the customer relationship be. The service sector dominates the
Indian economy today, contributing to more than half of our National Income.
Since services are intangible in nature and cannot be checked before the
purchase is actually made therefore, it is very critical to deliver what has been
promised to the target customer.

1.7.1 Consumption and Customer


Consumption process is related to different types of individuals,
purchaser, shopper or customer and is generally used synonymously to
indicate one who actively engaged in buying. The consumption process
involves three Interrelated activities of decisions: determine personal or
groups wants, seek out and purchase products and employ products to derive
benefits.

Customer: The term “customer” is typically used to refer to one who


regularly purchase from a particular store or company. The “consumer” more
generally refers to anyone engaging in any of the activities (evaluating,
acquiring, using or disposing of goods and services) used in the definition of
consumer behaviour. Therefore, a “customer” is defined in terms of specific
firm while consumer is not. Customers are value maximiser within the bounds
of search costs, limited knowledge, mobility and income. The most commonly
thought of consumer situation is that of an individual making a purchase with

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little or no influence of others.3 A consumer or buyer is one who determines


personal wants, buys products and uses those products. The traditional
viewpoint defines consumers strictly in terms of economic goods and services
or one who consumes goods.

The “customer is king‟ philosophy has become one of those marketing


fads and fashions that have continued to trail the growth and expansion of the
product economy.4 The term consumer is often used to describe two different
kinds of consuming entities personal consumer and organizational consumer.
Ultimate consumers are those individuals who purchases for the purpose of
individual or household consumption.

The “consumer” more generally refers to anyone engaging in any of the


activities used in our definition of consumer behaviour. Therefore, a customer
is defined in terms of specific firm while consumer is not. The traditional
viewpoint has defined the consumers strictly in terms of economic goods and
services whereas rational view defined the consumer in terms of potential
adopters of services (including free services, ideas, philosophies). Ultimate
consumers are those individuals who purchases for the purpose of individual
or household.

1.7.2 Consumer Behaviour and Buyer Behaviour


Consumer behaviour is seen to involve a complicated mental process
as well as physical activity (purchase decision). Consumer behaviour is a
decision process and physical activity individuals engage in when evaluating,
acquiring, using or disposing of goods and services. Consumer Behaviour
reflects the totality of consumers‟ decisions with respect to the acquisition,
consumption and disposition off goods, services, time and ideas by (human)
decision making units.

Buyer Behaviour particularly is the study of decision making units as


they can buy for themselves or others. Thus, buying behaviour particularly

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involves collective response of buyers for selecting, evaluating, deciding and


post purchase behaviour. Buyer behaviour is the study of human response to
services and the marketing of products and services. Buyer behaviour
researches continuously investigate a broad range of human responses
including human affective, cognitive and behavioural responses. The buying
behavior and purchase decisions are need to be studied thoroughly in order to
understand, predict and analyze critical market variations of a particular
product or service. The field of consumer behaviour is the broad study of
individuals, groups or organisations and the process they use to select secure
and dispose of products, services, experiences or ideas to satisfy needs and
the impacts that these processes have on the consumer and society. Consumer
behaviour studies are based on the buying behaviour of final consumers-
individuals and households who buy goods and services for themselves.8 The
collective behaviour of consumers has a significant influence on quality and
level of standard of living. Buyer Behaviour is broadly defined by various
scholars and researchers as:
1. It‟s the behaviour displayed by the consumers during the acquisition, use
and disposition of products/services, time and ideas by decision making
units.
2. It is the body of knowledge which studies various aspects of purchase and
consumption of products and services by individuals with various social
and psychological variables at play.
3. The process and activities people engage in when searching for, selecting,
purchasing, using, evaluating and disposing of products and services so as
to satisfy their needs and desires. The activities directly involved in
obtaining, consuming and disposing of products and services, including
the decision processes that precede and follow these actions.

1.7.3 Consumer Behaviour as a Dynamic Process


Consumer behaviour involves the understanding that acquisition, use
and disposition can occur over time in a dynamic sequence. In other words
the study of consumer behaviour is the study of how individuals make

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decisions to spend their available resources (money, time, efforts) on


consumption-related items.

The American Marketing Association (AMA) defines consumer


behaviour as “The dynamic interaction of cognition, behaviour and
environmental events by which human beings conduct the exchange aspect of
their lives.

Consumer behaviour is “The study of individuals, groups, or


organisations and the processes they use to select, secure, use and dispose of
products, services, experiences, or ideas to satisfy needs and the impacts that
these processes have on the consumer and society.” Behaviour occurs either
for the individual, or in the context of a group (e.g., friend‟s influence what
kinds of clothes a person wears) or an organisation (people on the job make
decisions as to which services the firm should use).

Product use is often of great interest to the marketer, because this may
influence how a product is best positioned or how we can encourage the
consumption of a product in market. Consumer behavior involves services
and ideas as well as tangible products. The impact of consumer behavior on
society is also relevant. For example, aggressive marketing of high fat foods, or
aggressive marketing of easy credit, may have serious repercussions for the
national health and economy. Services are also marketed in much the manner
as goods and commodities. Still there are wide difference between goods and
services based on their characteristics and attributes.

The Nature of Consumer Behavior:


The figure below is the model that we use to capture the general
structure and process of consumer behavior and to organize the text. It is a
conceptual model.

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Individuals develop self concepts and subsequent lifestyles based on a


variety of internal and external influences. These self concepts and lifestyles
produce needs and desires, many of which require consumption decisions to
satisfy. As individuals encounter relevant situations, the consumer decision
process is activated. This process and the experiences and acquisitions it
produces in turn influence the consumer’s self concept and lifestyle by
affecting their internal and external characteristics.

This model while simple is both conceptually sound and intuitively


appealing. Each of us has a view of ourselves and we try to live in a particular
manner given our resources

Consumer behavior is frequently complex, disorganized, nonconscious,


organic, and circular. The factors that affect the consumer behavior can be
broadly classified as external factors and internal factors.

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1.7.4 Applications of Consumer Behavior


The most obvious application of consumer behavior is for deriving
marketing strategy. New products initially adopted by a few consumers and
spread gradually to the rest of the population later. The companies that
introduce new products must be well financed so that they can stay afloat
until their products become a commercial success. It is also important to
please initial customers, since they will in turn influence many subsequent
customers‟ brand choices. Knowledge of consumer behavior can be an
important competitive advantage.

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Consumer behavior can also be applied in deriving regulatory policies


of companies. These rules will result in better(healthier or more economical)
choices by consumers. Effective regulation of many marketing practices
requires an extensive knowledge of consumer behavior.

Successful social marketing strategy requires a sound understanding of


consumer behavior. Social marketing is the application of marketing
strategies and tactics to alter or create behaviors that have a positive effect on
the targeted individuals or society as a whole. For example, Social marketing
has been used in attempts to reduce smoking

Literally thousands of firms are spending millions of dollars to


influence an individual, family and friends. These influence attempts occur in
ads, packages, product features, sales pitches, and store environments. Most
economically developed societies are legitimately referred to as consumption
societies. Most individuals in these societies spend more time engaged in
consumption than in any other activity, including work or sleep (both of
which also involve consumption).

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1.8 NEED FOR THE STUDY


Some of the most successful retailers in the world have developed into
strong brands without having consciously managed their brands. While this is
true, it is important to note that many successful retailers have developed
strong brands by – even if unconsciously, adopting the consumerism
principles of branding. From the very beginning, Big Bazaar, D-Mart, Metro
and others have had a clear and distinct profile. They pursued their own
marketing approach over several decades and, supported by a strong
corporate culture, have been very coherent in all their activities.
Differentiation, continuity and coherence in these cases were often ensured by
the founder(s), who, over the years, developed a clear understanding of what
their company should stand for – and followed that through rigorously.

Brand management gains additional relevance through the


internationalization of retailers, with the ongoing wave of mergers &
acquisitions in retailing and with multi-channel retailing. Especially in the
case of store retailers expanding their business to the Internet, the strategic
decision on using the same retail brand across channels or separating the
Internet shop from the store outlets, is crucial and far-reaching. In recent
years, competition and changing consumer behaviour have increased the
relevance of retail branding tremendously. Such branding aims at enhancing
differentiation and customer loyalty. Retail brand management includes all
components of the retail marketing mix and develops a strategic
understanding of the intended positioning of the retail company. In this
regard the Researcher felt there is a lot of scope to do an in-depth research on
Branding impact on Consumer buying behavior.

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1.9 SCOPE OF THE STUDY


The geographical scope of the study covers the multi cultured capital
city of Telangana state Hyderabad. The conceptual scope covers branding
strategies and policies in modern organized retail stores and does not
consider traditional retailing. The analytical scope covers fulfillment of
objectives set for the study. The functional scope covers meaningful
suggestions for the organized retail industry in Hyderabad.

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1.10 STATEMENT OF THE PROBLEM


The Hyderabad retail has come forth as one of the most dynamic and
fast paced sector. It offers immense potentiality; indeed consumer spending
over retail items has been increasing which would be the most attractive
factor for the global business people. Global retail giants like Metro,
wallmart’s Bes Price are investing in retail market in Hyderabad. The entry of
global giants in retail sector has changing the retail landscape in Hyderabad,
in terms of organization structure, consumer buying patterns, Investment and
infrastructure. It also increases the consumer expectations over Brand
conciseness and the services offered by the stores, this would be the biggest
challenge to the domestic and traditional players. It is often considered as a
complex to the domestic players, to fight with global brands and to formulate
strategies to compete with these changes.

In this regard, it is imperative to study the changing consumer buying


behavior towards brand elements and understanding their preferences in a
way, a retailer can recognize the changing needs and wants of the target
audience especially in terms of Branding behavior is a key for retailers to
survive. Thus, this research project is initiated to study the Significance of
Branding on Consumer Buying and decision variables affecting their brand
preferences in both organized and unorganized formats.

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CHAPTER - II
REVIEW OF LITERATURE

2.1 INTRODUCTION
Review of literature is an indispensable part of any research as it
enables the researchers to carry out their research in various dimensions. By
reviewing the earlier studies related to a relevant area in which the research
is intended to be carried on, the researcher comes across the various ways in
which it was initiated, the path through which such research explored and
how it reached its destination. Hence, this study is the upshot of the earlier
studies related to consumer behaviour in organized retail stores which could
be found in various international and national journals and magazines. The
review has led the present study to be meaningful and thought provoking. The
various reviews collected were grouped into four sections as reviews related
to retail industry, Branding, and consumer behaviour and brand related
consumer behaviour for better understanding.

The entire review presented in four sub themes:


 Review of Literature relating to Retailing
 Review of Literature relating to Branding
 Review of Literature relating to Consumer Behavior and
 Review of Literature relating to Branding related to consumer behavior
 Conclusion and Research Gap

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2.2 REVIEW OF LITERATURE RELATING TO RETAIL SECTOR


The various research studies relating to Retail Sector are discussed in
the following section:

Robinson (1998) and Herper et al (2000), mentioned in their study


that there is a need for consumer orientation rather than product orientation
for future developments in retailing.

The changing retail structure has provided the consumers with more
options in the form of formats and services such as less travel time, large
variety of products and quality products etc, as observed by Popkowski et al
(2001).

Fox et al (2004), found in their study that differences in marketing


policies exist across retail formats. Product assortment is much greater at
grocery chains; it offers many more product alternatives than mass
merchandisers, which in turn offers more product alternatives than drug
stores. Grocers offer more than three times the assortment of mass
merchandisers and more than four times the assortment of drug stores.

Dixon (2005), delineated that the recent best practice research and
guidance has emphasized the important role that can be played by retail-led
urban regeneration projects, particularly in ‘under-served markets’ in the UK.
His paper critically examined the role of retailing in urban regeneration
focusing on in-town shopping centres located in inner city areas of the UK.
The paper is based on the case study research in these centres, and was
completed during 2003 for the office of science and technology. The paper
examined how employment impact in retail-led regeneration is commonly
measured and calls for more research to determine the real impact of retail in
deprived communities using other relevant measures.

Hutchinson et al (2005), asserted that internationalization of large


multinational retailers is well documented and much research attention has
been given to the processes, motives and strategies for expansion. However, a

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successful international retailer does not necessarily have to be a large


retailer. Dynamic smaller retailers with strong concepts, formats and products
have shown themselves capable of rapid international growth. Till date there
has been a distinct lack of research on the internationalization of small to
medium-sized companies (SMEs) operating in the retail sector. Any discussion
of SME internationalization within the retail industry should recognise that
research on large multinational corporations is not directly transferable to
small and medium-sized firms who by their very nature and characteristics
embrace a very different set of opportunities in the international market. To
address this gap in research, they have drawn upon broader established
international SMEs and entrepreneurship literatures to provide a framework
for examining some of the key aspects of the internationalization of retail
SMEs.

Lather et al (2006) and Gupta (2007), in their study uncovered six


main indicators: viz., price, sales personnel, quality of merchandise,
assortment of merchandise, advertising services and convenience services
that play key role for retailers in choosing the type of retail formats that may
help them to cope up with the changing preferences of consumers.

Aggarwal (2007) and Bhardwaj et al (2007), indicated in their study


that organized retail industry will mean thousands of new jobs, increasing
income level, standard of living, better products, better shopping experience
etc.

Prasad & Reddy (2007) elucidated that Indian food and grocery retail
sector is in the transformation mode for various reasons like strong macro-
economic fundamentals. The changing socio-economic scene drives the
traditional and the small scale retail outlets into organised retail formats
which are aimed at catering to the evolving tastes and needs of the discerning
consumers. But the very fast changing trends in food and eating habits of
consumers have contributed immensely to the growth of ‘Western’ format
typologies such as convenience stores, departmental stores, supermarkets,

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specialty stores and hypermarkets. This has happened for various


conspicuous reasons namely demand and supply, socio-cultural, demographic,
psychographic, economic and technology advancements like a large segment
of young population, a rapidly expanding middle class, rising income levels,
growing literacy, increasing number of working women and nuclear family
structures which in turn have created an enormous demand for consumer
goods and paved the way for modern retail formats. The ever changing
consumer’s psychographic variables like activities, interests, opinions, values
and lifestyles have also completely changed the formats as convenience
stores, supermarkets and hypermarkets etc. which are the crystal clear
reflections of tectonic shifts in demographic and psychographic changes of
consumers. However, little is known about its actual influence and
contribution to the organized retailing in food and grocery sector from an
empirical analysis. Thus, understanding the demo-psychographic dynamics
has become imperative in designing modern food and grocery retail formats
based on the purchase patterns.

Sinha & Kar (2007), enumerated in their analysis that the Indian
retail sector is going through a transformation and this emerging market is
witnessing a significant change in its growth and investment pattern. Both
existing and new players are experimenting with new retail formats.
Currently, two popular formats hypermarkets and supermarkets are growing
very fast. Apart from the brick -mortar formats, brick -click and click-click
formats are also increasingly visible on the Indian retail landscape. Consumer
dynamics in India is changing and the retailers need to take note of this and
formulate their strategies and tactics to deliver value to the consumer. Their
analysis also investigated the modern retail developments and the growth of
modern formats in India.

Sinha and Uniyal (2007), in their study found that retailing is one of
the largest industry in India and one of the biggest sources of employment in
the country. Retail sales in India amount to $180 billion and account for 10-11
% of gross domestic product. The Indian retail market has around 14 million

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outlets and has the largest retail outlet destiny in the world. The retail
industry in India is largely unorganized and predominantly consists of small,
independent, owner-managed shops. However the retail sector in India is
witnessing a huge revamping exercise as the traditional retailers are making
way for new formats. These modern retail formats provide wide variety to
customers and offer an ideal shopping experience with an amalgamation of
product, entertainment and service, all under a single roof. The Malls,
convenience stores, department stores, hyper/supermarkets, discount stores
and specialty stores are the emerging retail formats that provide different
shopping experience to consumers, (Sinha and Kar, 2007).

Sreejith & Jagathy Raj (2007), in their study discussed that IT and
related services played a major role for India’s current 9.2. GDP growth.
Organized retailing in India is one more example for its open economy. The IT
industries were able to develop a demand for Indian talents all over the world
and improved their living standards. It directly impacts only a small minority
of Indian population while organized retail affects every single Indian and
every sector of Indian society. Their study gives a glimpse of the slow
evolution of retail markets over the years in India and its contribution for
economic growth. The likely positive impact of this revolution in different
sectors is enumerated. The study also reveals the consumption pattern of
society, increased customer satisfaction and likely change in the market
shares of the different types of sellers.

Anuradha Kalhan (2007), found in her study by taking small sample


survey of the impact of malls on small shops and hawkers in Mumbai points to
a decline in sales of groceries, fruits and vegetables, processed foods,
garments, shoes, electronic and electrical goods in these retail outlets,
ultimately threatening 50% of them with closure or a major decline in
business. Only 14% of the sample of small shops and hawkers has so far been
able to respond to the competitive threat of the malls with the institution of
fresh sales promotion initiatives.

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Vaishali Aggarwal (2008), concluded through her study that among


the factors important for customer satisfaction, ‘quality’, ‘convenient location’
and ‘availability’ got the highest rating in term of their importance to the
customer on a 5-point scale. Customers were not very price sensitive and they
did not pay more attention to the display and ambience of the store.

Sunayna Khurana (2008), examined in her study the differences in


consumers’ expectations and perceptions for service quality they received
while shopping at various retail stores in Haryana. She also considered
consumer demographic characteristics for the study. Statistically, she
identified five prime factors for service quality viz. physical aspects reliability,
personal interaction, problem-solving, and policy. Her study concluded that a
wide disparity existed between expectations and perceptions for personal
attention and policy factor.

Alisa Nilawan (2008), stated in her study that customers’ satisfaction


with Metro Mall at Sukhumvit station and revealed that food and beverage
shops, reasonable prices compared with the product quality modern
decoration and location of mall, word of mouth; availability of discount
coupons and prompt and attentive services of salespersons were the main
factors influencing customers on visiting Metro Mall at Sukhumvit station.

Sonia (2008), conducted a study on customers’ perception towards


Mega Marts in Ludhiana. The author highlighted that customers preferred a
particular mega mart due to its convenience in terms of space, product range,
billing system, multiple choice, etc., and location at an easy approach and
safety. She found that in Ludhiana, customers are generally not satisfied with
the safety measures and parking facilities at mega marts. She concluded that
customers preferred cash discount offers, followed by free gifts and financing
facility. Quality and discount were the most important factors in influencing
customers’ decision to purchase.

Dr. Biradar et.al. (2008), in their article pointed out that the
organized retail sector is registering tremendous growth fuelled by the

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unleashed spending power of new age customers who have considerable


disposable income and willingness to have new shopping experience. It is
emphasized that India’s top retailers are largely lifestyle, clothing and apparel
stores followed by grocery stores. The paper further mentions that increasing
number of nuclear families, working women, greater work pressure and
increased commuting time; convenience has become a priority for Indian
consumers. All these aspects offer an excellent business opportunity for
organized retailers in the country.

Rajagopal (2008) and Srivastava (2008), supported that consumers


choice of shopping malls over traditional market stores is influenced by
various factors like ambience, assortment, sales promotion schemes and in-
store services. The facility of one stop-shop had a positive response from the
consumers, who found it more convenient, time saving and satisfactory.

The study by Dash et al (2009) and CII (2008), depicted that growing
middle class, large number of earning youth customers, increase in spending,
and improvement in infrastructure, Liberalization of Indian economy and
India’s booming economy are the various opportunities for organized retailing
in India. On the other hand, complexity of taxes, lack of proper infrastructure
and high cost of real estate are the hurdles which need to remove for retail
success in India. Enjoyable pleasant and attractive in store shopping
environment increases the chances of impulsive buying among consumers,
Crispen et al (2009).

Jain and Bagdare (2009), in their study found that layout, ambience,
display, self service, value added services, technology based operations and
many more dimensions with modern outlook and practices are the major
determinants of modern retail formats.

Goswami P. and Mishra M.S. (2009), conducted a study that 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. The results suggest Kiranas would do best to try
and upgrade in order to survive.
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V.Ramanathan (2009), in his article mentioned that the entry of


organized retailers with their completely integrated marketing practices,
franchising agreements, contractual selling, joint ventures and co- promotions
creates a profound threat to unorganized retailers and compels them to
change their style of doing business from convenience to intensive. The article
reveals that unorganized retailers dealing in clothing and footwear, furniture
and appliances, and beverages were among the most affected. Further the
author suggests that the traditional retailers enjoyed the advantages of
proximity to the customers in neighborhood areas, long standing personal
relationship with customers and providing home delivery and credit facility.

Prasad & Ansari (2009), stated in their study that web store
environment and customer service have significant impact on the willingness
to buy from online retail stores. They have also identified that customer
service and online shopping enjoyment have significant impact on the
willingness to buy from online retail stores than the perceived trust.

Chavadi and Shilpa S. Koktanur(2010), tried to find out the various


factors driving customers towards shopping malls and consumer buying
response for promotional tools. They found four major factors that drive the
customers towards the shopping malls. Those factors are product mix,
ambience, services and promotional strategies. Customers consider fast
billing, parking facility and long hours of operations as prime services.

Arshad and Ghosh et al (2010), stated that 47% of India’s population


is under the age of 20 and this will increase to 55% by 2015 and this young
population will immensely contribute to the growth of the retail sector in the
country.

While the study by Ali and Kapoor (2010), indicated that a higher
income and educational level of consumers influences their decisions on
product and market attributes while gender and age seems to have no
significant impact.

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Mittal and Anupama Parashar (2010), explained in their study that,


irrespective of area, people prefer grocery stores to be nearby, product
assortment is important for grocery. Ambience of the grocery stores has been
perceived differently by people of different areas and prices are equally
important for all grocery. Perception and preference towards importance of
service was also different across different areas.

Sandip Ghosh Hazra and Kailash B.L. Srivastava(2010), found in


their study that firms are using service enhancement and are developing a
range of techniques to measure service quality improvement. The competition
between private and public sector has resulted in an increased need for
service providers to identify the gaps in the market in order to improve
service provisions to retain customers. Satisfactory service quality is an
indispensable competitive strategy. They concluded that customer value for
four dimensions of perceived service quality i.e. assurance-empathy, tangibles,
security and reliability.

Ghosh et al (2010), presented that the retail industry in India is


acknowledged as a sunshine sector and is driven by factors like strong income
growth, changing lifestyles and favourable demographic patterns. Having
cemented its presence in metros and tier-I cities, retailers are allured by
opportunities in tier-II and tier-III cities like low-cost real estate and shifting
consumption patterns of consumers who are graduating to affluence and
lifestyle purchases. Their study explored the shopping and purchase
behaviour patterns of consumers within organised retail outlets of Allahabad,
a tier- II city in India. Variables identified for shopping orientation were
treated with Factor Analysis. Motivating factors for store selection and
purchase patterns on each shopping trip have also been analysed. The
findings may offer an opportunity for retailers to formulate effective retail
strategies for tier-II and tier-III cities.

Mierdorf et al (2010), remarked that at the end of 2007, Germany’s


METRO Group had over 280,000 employees and an annual turnover of 66
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billion Euro making it the fourth largest retailer in the world behind Wal-Mart
(a turnover of 271 billion Euro), Carrefour (82 billion Euro) and Tesco (68
billion Euro). Further, nearly 60% of METRO Group’s revenues came from
outside Germany. The story of the growth and transformation of METRO
Group from its humble beginnings in the Ruhr valley of Germany just 45 years
ago to its present size and scope as a global retailing group is an interesting
and important case study, particularly from the viewpoint of providing
insights into successful international retailing and global expansion.

Reddy et al (2010), in their study on retailing undertaken in Andhra


Pradesh examined the growth and the performance of modern retailing and
its impact on traditional retailers. The study indicates that the number of
players is less in modern retailing than in the traditional retailing. Vertical
analysis between the two chains has also indicated the same results. For
instance, in case of vertical distribution in the traditional value chain, 19.8 per
cent of the gross value goes to farmers, 11.3 per cent goes to village
merchants, 14.3 per cent goes to middlemen, 15.3 per cent goes to
wholesalers, 12.0 per cent goes to commission agent, 16.8 per cent goes to
rythu bazaar and the remaining 10.8 per cent goes to traditional retailers.
Thus, the farmers rank first, and middlemen and wholesalers rank second,
whereas in modern retailing, supermarkets receive 38 per cent of the total
gross value. The study also reveals that there are both demand and supply
side factors that contribute to the emergence of traditional and modern
retailing. Hence, efficient, value chain management will certainly add value
and help in bringing the products to the market.

The recent time has been observed as growth of Indian organized retail
market with many folds. Numerous business groups are attracted in the past
few years, including some renowned business groups like Bharti, Future,
Reliance, and Aditya Birla to establish hold, showing the future growth in
times to come. In addition, organized retail sector has also grabbed the
attention of foreign companies, showing their interest to enter India,
(Dalwadi 2010).
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S.P. Thenmozhi Raja, D. Dhanapal & P. Sathyapriya(2011),


explained in their study that the most critical challenge for a business is the
improvement of service and product quality. They also explained that
perception of retail service quality varies across different cities, the retailers
can meet the customer expectations based on the factors drive them. Sharif
Menon(2011) explained that brand identities were designed to reassure a
public anxious about the whole concept of factory produced goods.

Murugavel (2011), expressed in their study that the retail scenario is


one of the fastest growing industries in India over the last couple of years.
Indian retail sector comprises of organized retail and unorganized retail
sector. Traditionally the retail market in India was largely unorganized
however, with the changing consumer preferences organized retail is
gradually becoming popular. More than 90% of retailing in India falls into the
unorganized sector whereas the organized sector is largely concentrated in
big cities. Also, organized retail in India is expected to grow around 25-30 per
cent yearly and it increased from Rs.35,000 crore in 2004-05 to Rs.109,000
crore ($24 billion) by 2010.

Rahman (2012), remarked that the Retail bazaar in India is booming


beyond everyone’s expectation. The Indian Retail sector has caught the
world’s imagination in the last few years. India’s retail growth is largely
driven by increasing disposable incomes, favorable demographics, changing
lifestyles, growth of the middle class segment and a high potential for
penetration into urban and rural markets. The organized retail sector
accounts for 5 % which has grown to 10 % by the end of 2011. A number of
large corporate houses like Aditya, Bharti, Reliance, Pantaloon, Vishal, Tata's,
RPG, Raheja's and Piramals's have diversified to add retail to their sector
portfolio. His study revolves around the opportunities and the challenges
faced by the organized retail players in India. It was found that organized
retailers face competition from the unorganized sector as their biggest
challenge, followed by the competition between the organized retailers and
the inefficiency of distribution channels, internal logistical problems and retail
shrinkage.

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The report on “Indian Retail Market Opening more doors” (2013)


states that various policy conditions for FDI in multibrand retail makes mass
grocery and apparel the two most favorable segments. Multi-brand specialty
retail segment such as Beauty & Wellness and Consumer Electronics are still
in their nascent stage. The study is mainly focused on government policy on
multi-brand retail trade-its evolution, policy implications and political
landscape with respect to new FDI policy[13]. Their current market size may
not hold a big potential for foreign retailers.

Prof. Kalpana (2015), stated in her study that “India’s total retail is on
increase. Recent policy changes and greater external liberalization of retail
sector will bring many more foreign retailers to India. It is expected that FDI
will accelerate the growth of organized retail. India’s huge population with
large proportion of young, increasingly brand- and fashion-conscious
population, high potential growth in consumer expenditure, growing middle
class are some of the factors due to which the macro trends for the sector
looks favorable. Organized retail whose share in total retail was 8% in 2012 is
expected to assume 24% share of total retail market in India in 2020. Among
organized retail segments, Mass Grocery and Apparel are segments growing
faster than other segments. In next few years, multi-brand organized retail is
expected to expand in specialty stores such as Consumer Electronics,
Footwear, Furniture and Furnishing etc.

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2.3 REVIEW OF LITERATURE RELATED TO BRANDING


Today the primary capital of many businesses is their brands. For
decades the value of a company was measured in terms of its real estate, then
tangible assets, plants and equipments. However it has recently been
recognized that company’s real value lies outside business itself, in the minds
of potential buyers or consumers.

Keenan (1976), Lakof (1987), the representatives of cognitive


psychology state that it is easier to define certain categories indicating their
typical features instead of exactly naming the attributes of a good that require
judicious parts of those categories. Every brand forces to think spontaneously
about particular goods more in comparison with another, as well as about
particular actions as a means of communication.

Corporations have only begun to realize the financial clout of an


effective brand in the last 10 years. All efforts are now being made to ensure
that decisions inside of a corporation are created synergistically and
represent a clear message to customers and prospects. In an era when the
emphasis is moving from product branding to corporate branding (Balmer,
1995; Mitchell, 1997), there is a need to better appreciate the management
approach for corporate branding as this needs managing differently from
product branding.

Arjun Chaudhuri and Morris B. Holbrook (2001), conducted a study


in the topic, “The Chain of Effects from Brand Trust and Brand Affect to Brand
Performance: The Role of Brand Loyalty”. The authors examine two aspects of
brand loyalty, purchase loyalty and attitudinal loyalty, as linking variables in
the chain of effects from brand trust and brand affect to brand performance
(market share and relative price). The results indicate that when the product-
and brand-level variables are controlled for, brand trust and brand affect
combine to determine purchase loyalty by high market share and attitudinal
loyalty by high relative price.

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Merrilees et al (2002), found in their study that some of the strongest


world brands were born based on their creators’ belief that while everyday
business activity focuses on profits, building brand equity focuses on
stimulating the identification of a product resulting in customer loyalty

Steve Hoeffler and Kevin Lane Keller (2002), conducted a research


study on the topic, “Building Brand Equity through Corporate Societal
Marketing”. In this article, the authors describe six means by which CSM
programs can build brand equity: (1) building brand awareness, (2)
enhancing brand image, (3) establishing brand credibility, (4) evoking brand
feelings, (5) creating a sense of brand community, and (6) eliciting brand
engagement. The authors also address three key questions revolving around
how CSM programs have their effects, which cause the firm should choose,
and how CSM programs should be branded. The results identified through
hypothesis are Co branding through a CSM program is most appropriate as a
means to complement the brand image with the specific associations
leveraged from the cause. Self-branding a CSM program is most appropriate as
a means of augmenting existing consumer associations through emotional or
imagery appeals.

Hatch and Schultz (2003), stated in their study that a corporate


brand tries to establish a coherent perception of the company for its different
stakeholders and reflects a good corporate reputation in the eyes of the
general public. Nevertheless, the single most important public of a corporate
brand is its end consumers, who are drowning in the overwhelming
abundance of brands and brand communication.

Swait and Erdem, (2004), in their study stated that for


manufacturers, a strong brand is a valuable asset to the company. A well
recognized brand serves as a signal, and it increases the likelihood for
consumers to place the product in their consideration or choice set.

Girish N. Punj and Clayton L. Hillyer (2004), conducted a research


work in the topic “A Cognitive Model of Customer-Based Brand Equity for

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Frequently Purchased Products: Conceptual Framework and Empirical


Results research” found that there are four cognitive components are labeled
as global brand attitude, strength of preference, brand knowledge, and brand
heuristic. The results indicate that all the identified cognitive components are
important determinants of customer-based brand equity. Specifically, the
brand heuristic component serves as an important mediator in 2 "cognitive
chains" that link global brand attitude to brand knowledge and global brand
attitude to strength of preference, respectively.

Sudhir and Talukdar (2004), study on store brand patronage found


that store brands do create differentiation for the stores in the eyes of the
customer and develop patronage towards the stores when introduced in the
market. suggests that when private labels become close substitutes for
national brands, wholesale price of the branded goods tends to increase. The
paper also highlights that introducing private labels helps in reducing the
double marginalization problem in the vertical structure.

Van Reil and Blomback (2005), in their study stated that brand
image, is the totality of consumer perceptions about the brand, or how they
see it, which may not coincide with the brand identity. Companies have to
work hard on the consumer experience to make sure that what customers see
and think is what they want them to, thus highlighting the notion of brand
identity. Brand identity is “the strategically planned and operationally applied
internal and external self-presentation and behaviour of the company”. Brand
identity is a vague but vital aspect of a company and now is considered to be
one of the most important factors in the strategic positioning of products in
the minds of the consumers (Bounfour, 2002).

Brand awareness and brand associations were found to be correlated


(Atilgan et al, 2005 and Pappu, 2005). Moreover, high levels of brand
awareness positively affect the formation of the product’s brand image
(association) (Ramos and Franco, 2005). It was also found that brand
awareness affects brand image (association) (Esch et al, 2006).

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Kumar et al., (2006), stated in his study that distinct brand


personality plays a key role in the success of a brand. It leads customers to
perceive the brand personality and develop a strong connection to the brand.
A brand personality should be shaped to be long-lasting and consistent.
Besides, it should also be different from other brands and meet consumer’s
demands. Hence, the consumers of those toys and video games are like the
brand spokespersons and become the basis for suppliers to build brand
personality. With the specific brand personality, consumers of varying
personality traits will be attracted and their brand preference will then be
further developed. In addition, a company can maintain a good relationship
with customers through its brand personality.

Zamardino and Goodfellow, (2007), found in their study that


consumers do not only benefit from the functional values of a brand, they also
benefit from the emotional aspects. A strong brand mixes and blends the
product performance and imagery to create a rich, deep, and complementary
set of consumer responses towards the brand Brand identity is a unique set of
brand associations implying a promise to customers and includes a core and
extended identity. Core identity is the central, timeless essence of the brand
that remains constant as the brand moves to new markets and new products.
Core identity broadly focuses on product attributes, service, user profile, store
ambience and product performance. Extended identity is woven around brand
identity elements organized into cohesive and meaningful groups that provide
brand texture and completeness, and focuses on brand personality,
relationship, and strong symbol association.

Steven A. Taylor, Gary L. Hunter and Deborah & L. Lindberg,


(2007), in their study "Understanding (customerbased) brand equity in
financial services", highlighted understanding of customer-based brand equity
(CBBE) within the context of a B2B financial service marketing setting. The
results suggest that these customers do differentiate brands, and that
Netemeyer et al.'s model of CBBE is generally supported. In addition, the
extended model of CBBE proposed herein explains more variance in loyalty

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intentions, while simultaneously demonstrating the importance of customer


satisfaction in CBBE models, and incorporates customer attitudes into
conceptualization of CBBE.

Florence Benoit-Moreau and Béatrice Parguel (2007), in their


research paper, “Building brand equity with environmental communication:
an empirical investigation in France”, examines the relationships between
consumers’ country-level and product-level images of a country, and the
equity they associate with a brand from that country. Results indicate that the
consumer-based equity of a brand was significantly associated with both the
macro and micro images of the country of origin of the brand. Furthermore,
each CBBE dimension contributed differently to the relationship according to
the product category, while the contribution of both country image
dimensions (macro and micro) was also product category specific. Results
also showed that cars, as a product category, are more sensitive to country
image than televisions.

Ruchan Kayaman (2007), in his research paper, titled “Customer


based brand equity: evidence from the hotel industry”, emphasized to explore
interrelations of the four brand equity components. The paper aims to explore
interrelations of the four brand equity components; brand awareness, brand
loyalty, perceived quality and brand image in hotel industry and improve the
conceptualization of customerbased hotel brand equity. Brand awareness
dimension was not found significant in the tested model for hotels. The
present study contributes to the understanding of customer-based brand
equity measurement by examining the dimensionality of this construct. The
paper shows that hotel managers and executives should try to influence;
perceived quality, brand loyalty, brand image and brand awareness and
design their service delivery process by considering relations between CBBE
components.

David N. Bibby (2009) , in the research study titled, “Brand image,


equity, and sports sponsorship”, explores the relationship between brand
image and brand equity in the context of sports sponsorship. customer-based
brand equity models are the conceptual inspiration for the research, with

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Faircloth, Capella, and Alford's (2001) conceptual model – adapted from the
work of Aaker (1991) and Keller (1993) – the primary conceptual model . The
study focuses on the sponsorship relationship between the New Zealand All
Blacks and their major sponsor and co-branding partner, adidas. Results
support the view that Keller (1993, 2003) proposes that brand image is
antecedent to the brand equity construct. Results are also consistent with the
findings of Faircloth et al. (2001) that brand image directly impacts brand
equity.

Maria Teresa Cuomo, Gerardo Metallo, Debora Tortora, Mario


Testa, Philip J. Kitchen, (2009) contributed a research paper on "Building
brand equity: the genetic coding of Mediterranean brands". The objective of
the study is to stimulate reflection on the concept of Mediterranean brands, to
map and qualify their specific genetic make up and their influence on brand
equity. This paper shows how the properties of Mediterranean elements are
reconciled with branding models and more in general, with sustainable
business. The paper highlights the generating drivers of value from a
Mediterranean marketing perspective. Management has to govern these
strategically in order to retain lasting competitive advantage.

Hilgenkamp & Heather (2009) , conducted a research study in the


topic, “Brand equity: Does the brand name and/or price affect perceptions of
quality?”, This project included the studies that looked at how the brand name
and price of consumer products can affect intended purchasing decisions. It is
found that when just looking at price, subjects were more likely to purchase
the cheapest product. Hence the results seem that the brand name associated
with a product can cause people to rate the quality of that product as either
higher or lower depending on the strength of the brand. Although they did not
directly measure quality, participants’ purchase intentions were based on
their perceived quality for consumable products. Overall, people tend to buy
products based on their perceptions of a brand name and the price of the
product itself, as well as other variables that how one look at in the future.

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Rosa E. Rios and Hernan E. Riquelme (2010), in the study “Sources


of Brand Equity for Online Companies”, has the main objective to test the
predictability of sources of brand equity and the influence of selected internet
marketing activities as antecedents of the sources. The study supports the use
of a traditional approach to explain brand equity. The brand associations
customers make in relation to brand recognition and trust, together with
brand loyalty, create brand equity for internet brands such as Amazon.com,
eBay. These sources of brand equity can be built by developing marketing
activities that create fulfillment, web functionality and customer service
online.

Xiao Tong and Jana M. Hawley (2010), in their research work in the
topic, Measuring Customer Based Brand Equity Empirical Evidence from the
Sportswear Market in China, examine practicality and applications of a
customer-based brand equity model in the Chinese sportswear market. Based
on Aaker’s conceptual framework of brand equity, this study employed
structural equation modeling to investigate the causal relationships among
the four dimensions of brand equity in the sportswear industry. The findings
conclude that brand association and brand loyalty are influential dimensions
of brand equity. Weak support was found for the perceived quality and brand
awareness dimensions. The paper shows that sportswear brand managers
and marketing planners should consider the relative importance of brand
equity in their overall brand equity evaluation, and should concentrate their
efforts primarily on building brand loyalty and image.

Rajat Roy and Ryan Chau, (2011), titled a research paper about,
“Consumer-based brand equity and status-seeking motivation for a global
versus local brand", The purpose of this research is to explore how a
successful global and a local brand may compete side by side in an existing
market place based on consumer-based brand equity and consumers' status-
seeking motivation for purchasing a global versus local brand. The results
show that a global brand is generally preferred in terms of all the dimensions
of consumer-based brand equity over a local brand. A global brand is strongly

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favoured in terms of awareness, perceived quality and overall brand equity by


high status seekers while a local brand seems to enjoy loyalty and overall
brand equity among low status seekers. Further, a local brand is clearly
preferred in terms of consumer-based brand equity over the global brand by
Australians whereas the global brand remains a clear favorite with non-
Australians.

Chieng Fayrene Y.L. and Goi Chai Lee, (2011) in their research study
on “Customer based brand equity: A literature review” envisaged that, Brand
equity is a concept born in 1980s. It has aroused intense interest among
business strategists from a wide variety of industries as brand equity is
closely related with brand loyalty and brand extensions. Besides, successful
brands provide competitive advantages that are critical to the success of
companies. Brand equity has been examined from financial and customer-
based perspectives. The aims of the study are to review the dimensions of
customerbased brand equity by drawing together strands from various
literature and empirical studies made within the area of customer-based
brand equity. A conceptual framework for measuring customer based brand
equity is developed to provide a more integrative conceptualization of brand
equity.

Abhijeet Agashe, Rupesh Pais and Rashmi Shahu(2011), studied


about Customer Perception Based Brand Equity Analysis of Dinshaw's Ice-
Cream. The study focuses on the study of the basic four dimensions of
customer-based brand equity on consumer`s perceptions of a brand viz. brand
awareness, brand loyalty, brand image, brand performance. This is based on
the assumption that all these dimensions of customer-based brand
personality have influence on consumer`s perception of brand. Most of the
customers are aware of the brand and majority of them are associating with
quality and flavor for the brand association. Regarding the association
between the brand loyalty and perceived quality of the brand, the study
reveals that the customers’ loyalty towards the brand Dinshaw is influenced
by perceived quality to an extent.

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Preethi Chamikutt & Sruthi Radhakrishnan (2015), have in their


study titled, “As online travel plans gain popularity in India, agencies beef up
presence on net [Brand Equity]”, which was conducted across 200,000
websites across all major cities in India and more than 7 million search terms
tracking to understand trip planning behaviour exhibiting how internet is
used as information source for planning pleasure trips, highlighted that "Word
of mouth about good or bad experience that a customer has with the brand
spread longer and faster through the web which enhances equity of the
brand.” Travel has become easier with the advent of online, but it's the
experience that makes a vacation memorable. It holds true as much for the
players offering their services as it does for the ordinary traveler.

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2.4 REVIEW OF LITERATURE RELATING TO CONSUMER BUYING


BEHAVIOUR
Buyer behaviour has been defined as “a process, which through inputs
and their use though process and actions leads to satisfaction of needs and
wants” (Enis, 1974, p.228). Consumer buying behaviour has numerous
factors as a part of it which are believed to have some level of effect on the
purchasing decisions of the customers.

Burns and Warren (1995), found in their study that consumers travel
beyond their local shopping area to other shopping centers in order to access
a wider selection of products than that available locally, and this satisfied ‘a
need for uniqueness’. At odds with this conclusion, research based on
consumer responses showed that convenient location has the greatest impact
on consumers’ choice of center.

Davies (1995), expressed in their work that the way we think about
retail location is dominated by the idea that the primary role of the retail store
or the retail center is to attract the shopper to the location. An alternative
paradigm exists, of taking retailing to where there are people, either at home
or in crowds and this is likely to become more important for a number of
reasons. Just because a crowd exists does not mean that the people in it can be
easily converted to being shoppers. A number of factors will determine the
likely levels of sales: the complementarity of the merchandise with the
primary activity being followed by the crowd; the ease with which they can
exit from that activity; the associated issue of how much time they perceive is
available to them; and the level of crowding.

Ashley (1997) and Templin (1997) both in their separate


researches, observed that over the years, the competition between shopping
malls had increased significantly, possibly due to the overbuilding of retail
centers and changing consumer shopping activities. Advancement in the
transportation system had further accelerated the level of competition.
Another contributing factor was the similarity of the attributes of most

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shopping malls, with too many stores offering too much of the same
merchandise. So given the apparent similarity in shopping center attributes,
shoppers will probably choose to visit the nearest shopping mall when faced
with the existence of more than one shopping mall within ‘reasonable’
traveling distance. However, not all shoppers seem to conform to such
normative behavior. Past research has revealed that many consumers make a
decision regarding where to shop based on their attitude toward a mix of
stores, the shopping center environment and entertaining shopping
experience.

Pashigian and Gould (1998), stated in their study that consumers are
attracted to malls because of the presence of well–known anchors –
department stores with recognized names. Anchors generate mall traffic that
indirectly increases the sales of lesser–known mall stores. Lesser–known
stores can free ride off of the reputations of better–known stores. Mall
developers internalize these externalities by offering rent subsidies to
anchors and by charging rent premiums to other mall tenants. The results of
this article suggested that mall developers are behaving rationally because
they know that anchors attract customers to the mall and increase the sales of
other mall stores.

Christiansen et al. (1999), in his study examined the effects of mall


‘entertainment value’ from the consumers’ perspective on mall profitability.
Consumers basically defined entertainment as some activity that provided a
diversion or relief from normal day– to–day activities and could include
movies, theatre, people watching, entertainment retail stores, shopping itself,
restaurants, bars and even the architecture and interior design of the mall
itself. The study found evidence that demonstrated that there is a positive
relationship between entertainment and mall profitability and value.

Severin (2001) and Yilmaz (2004), in their study highlighted that


convenient location has the greatest impact on consumers’ choice of center.

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Nicholls, Li, Kranendonk and Roslow (2002), in his study


investigated changes in the shopping behavior of today’s mall patrons as
opposed to those in the early 1990s. Although not many differences were
found between the demographics of the respondents in the earlier and later
periods, they discovered significant differences in shopping patterns and
purchase behaviors. Compared with the shoppers in the early 1990s, today’s
mall patrons tend to be more leisure driven, they have a greater concern for
merchandise selection, and they visit the mall less often but make more
purchases per visit. The findings also reveal that situational variables are
more likely to have an impact on shoppers’ purchase decisions today than
they did before.

Parsons (2003), in his paper analyzed common promotional activities


employed by shopping mall marketers, which were ranked by a sample of
customers on their likelihood of encouraging increases in the two key
performance indicators used by shopping malls – sales and visits. Whilst mall–
wide sales are the preferred promotion, a combination of general
entertainment and price–based promotions were found to be a strong
alternative way to encourage visits and spending.

Tuli and Mookerjee (2004), in his study found that some consumers
placed the greatest value on convenience and economic attributes including
convenience to home, accessibility, and the presence of services such as banks
and restaurants. Others however, emphasized recreational attributes
including atmosphere, fashion ability, variety of stores and merchandise.

Gupta (2006), in his research examined the extent to which different


promotional frames attached shoppers’ perception towards product service
and made a positive buying decision. His study found that significant
difference is found in two groups of discount and non–discount category,
seasonal sales and non–seasonal sales, coupons and non–coupons, so far as
indicators like general characteristics and physical characteristics. Location
convenience is concerned but no significant difference is found in two groups
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of membership discounts and non–memberships discounts. He has further


gone to suggest that store retailers must provide a setting that will allow
consumers to shop for their needs and wants in the marketplace and they
should find ways to tailor their environments to attract customers and
increase patronage.

Zameer (2006), in his study defined effective mall management as


differentiating a mall from the rest, getting maximum footfalls, converting
footfalls to purchase and keeping the tenants and the customers happy and
satisfied. According to him mall management entails retail–mix planning and
tenant selection, lease management, facilities management, utilities
management, parking and organizing events and collaborative promotions,
which according to him are critical factors for the success of any shopping
mall.

Ahmed, Ghingold and Dahari (2007), in their study assessed


international consumer behavior in regards to shopping malls in a non–
western country, specifically, Malaysia. A survey of Malaysian university
students was conducted to assess the mall–directed shopping habits and
shopping orientations of young adults in that country. A total of 132 usable
surveys were obtained from five university campuses in the Klang Valley
region of Malaysia. The findings revealed that the Malaysian students were
motivated to visit malls primarily by the interior design of the mall; products
that interested them; opportunities for socializing with friends; and
convenient one–stop shopping. Further analysis showed that younger
respondents have more favorable dispositions or shopping orientations
towards malls than somewhat older respondents. Post–secondary students in
the Klang Valley of Malaysia were frequent and long–staying visitors to
shopping malls, typically visiting six stores per 2.5 hrs mall visit. And, more
than one-third of respondents visited three or more different shopping malls
during the previous 30 days. Generally, the observed Malaysian shopping
behavior was similar to that observed of western shoppers in prior shopping
studies.

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Kaur and Singh (2007), opined that the retail boom in India has
brought tremendous opportunities for foreign as well as domestic players.
The changing lifestyle of the Indian consumer makes it imperative for the
retailers to understand the patterns of consumption. The changing
consumption patterns trigger changes in shopping styles of consumers and
also the factors that drive people into stores. Hence, the key objective of their
paper was to uncover the motives that drive young people to shop in
departmental stores or malls. A sample of 115 students was taken and their
responses were gauged through a personally administered, structured
questionnaire. The results revealed that the Indian youth primarily shop from
a hedonic perspective. They importantly serve as new product information
seekers and the retailing firms can directly frame and communicate the
requisite product information to them.

Srivastava (2008), through his research presented a picture of the


changes in retail taking place in India. His paper looked at the changing scene
in the retail sector in view of many MNCs and large industries entering into
this segment. The findings presented that malls are more developed in the
North and West part of India. Food, groceries, and apparel purchase by
customers contributed to 52%. On an average, 75% of customers spend about
1 – 3 hours in the mall. Malls with multiplexes such as cinema theatres, food
courts, play–pens for children are becoming the center of family outings. Small
retailers have improved their service to cater to Indian consumers. Credit
limits and home service are helping them to hold on to their customers.
Retailing focus is changing towards satisfying the different hierarchy of needs
of customers.

Bhatnagar (2009), in her paper examined the extent to which the


various factors comprising the internal vibes of the stores influence the
visitors. The author concluded that the seven attributes against which the
opinion was taken, were lighting in the store, colour scheme, window display,
smell, music, design layout and cleanliness. She further explained that in the

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present age, goods are not only consumed for their use or exchange value, but
are also consumed as signs of luxury, exoticism, and excess. Thus consumers
need to be seduced and delighted when they come to a store for shopping.
Stores with a beautiful display, perfect lighting coupled with appealing smell
and music can create sensations and affect consumer shopping attitude and
patronage behavior.

Atiq (2010), in her article suggested that the Indian retailers should
understand that retailing has to be taken as a brand in itself. A single large
retailer should not be allowed to capture the larger market share. The Indian
government should not make haste in inviting the foreign retailers; instead it
should wait to see the great power of the Indian retailers. But then, Indian
retailers have to master both the art and the science of retailing by looking at
the way the giant retailers are organizing and managing their activities. Indian
retailer needs to be innovative and needs to understand the regional
variations in consumer tastes.

Alternatively, consumer buying behaviour “refers to the buying


behaviour of final consumers, both individuals and households, who buy
goods and services for personal consumption” (Kumar, 2010, p.218). From
marketers’ point of view issues specific aspects of consumer behaviour that
need to be studied include the reasons behind consumers making purchases,
specific factors influencing the patterns of consumer purchases, analysis of
changing factors within the society and others.

Maiyaki & Mokhtar (2011), in their paper Determinants of Customer


Behavioral Responses: A Pilot Study aims that the validity and reliability of
the instrument of an ongoing project in preparation for the large scale study.
Hence, the conclusion of this study is tied to its objective which is mainly
statistical in nature at this stage.

Consumer buyer behaviour is considered to be an inseparable part of


marketing and Kotler and Keller (2011) state that consumer buying

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behaviour is the study of the ways of buying and disposing of goods, services,
ideas or experiences by the individuals, groups and organizations in order to
satisfy their needs and wants.

Manocha & Pandey (2012), analysed in their paper “Organised


Retailing in India: Challenges and Opportunities” that the retail landscape in
India is changing rapidly and is being scrutinized by large scale investments
by foreign and domestic players. Market liberalization and changing consumer
behaviour have sown the seeds of a retail transformation. Indian retailing is
growing fast and imparting the consumer preferences across the country.
Today retailing is largest contributing sector to country's GDP i.e. 10% as
compared to 8% in China, 6% in Brazil. Modern retailing is capable of
generating employment opportunities for 2.5 million people by 2010 in
various retail operations and over 10 million additional workforces in retail
support activities. Organised retail which presently account for only 4-6
percent of the total market is likely to increase its share to over 30% by 2013.

Sharma (2014), depicted in his study “Customer Attitude Towards


Shopping Malls in Mumbai” that the “customer attitude towards shopping
malls in Mumbai” which is found to be positive. Today multi storey shopping
malls are a shopaholic’s paradise in Mumbai. These shopping malls
accommodate every taste, pocket and style. Also, the city of Mumbai offers
ample shopping opportunities to tourists who come here to spend their
vacation. it is revealed that a majority of ‘Mumbaikars’ do prefer to shop at
shopping malls as it is a convenient place to buy anything they desire. Most
respondents expressed that the shopping malls are just not a place to shop
due to its constant availability, but has also created an ideal environment for
social interaction for people of all ages. shopping malls offer excellent parking
facilities, create value for money, credit / debit card facilities, and so on. As a
result, higher customer traffic is attracted towards shopping malls. All thanks
to shopping malls for bringing about an overall development in Mumbai.

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Sikri & Wadhwa (2015), concluded in their paper “Growth and


Challenges of Retail Industry in India: An Analysis” that Many agencies have
estimated differently about the size of organized retail market in 2011. The
one thing that is common amongst these estimates is that Indian organized
retail market will be very big in 2011. The status of the retail industry will
depend mostly on external factors like Government regulations and policies
and real estate prices, besides the activities of retailers and demands of the
customers also show impact on retail industry. As the retail market place
changes shape and competition increases, the potential for improving retail
productivity and cutting costs is likely to decrease. Therefore it is important
for retailers to secure a distinctive position in the market place based on
values relationships or experience. Finally, it is important to note that these
strategies are not strictly independent of each other; value is function of not
just price quality and service but can also be enhanced by personalization and
offering a memorable experience.

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2.5 REVIEWS ON BRANDING RELATED TO CONSUMER BEHAVIOR


The relationship between brand image and consumer behaviour will
be investigated while identifying the major aspects of brand image that
influences the consumers’ purchasing decision using a case study on how
brand image affects the consumer behaviour. The study will also investigate
and analyse the changes in the relationship between brand image and
consumer’ purchasing decision, while focusing on the value of the brand and
establish the impact of brand image on consumer’ observation about quality,
value and benefits of the product, overall attitude toward the product, and
decision to purchase the product.

Gabbott and Hogg(1998), in their study stated that brand attitudes


are defined as “consumers’ overall evaluations of a brand” also they
incorporate summary evaluations of information which represent how
consumers feel in a long run, lying in a continuum from positive to negative.
Keller (1993) also indicates that brand images are closely related to how
favorably the brand is evaluated. According to Keller the higher the brand
approach, the higher the brand image is and he points out that a positive
overall brand attitude can be arranged if consumers believe that the brand has
attributes that can satisfy their wants and as well as their needs.

Winkielman et al, (2000), in his study said that branding ultimately


works as a signal. It allows consumers to quickly recognise a product as one
they are familiar with or one they like. It acts as a memory cue, allowing
consumers to retrieve relevant information from memory. This information
may be about past experience of the brand, brand perceptions or brand
associations. The information we have stored about brands is crucial in
guiding our decisions.

Hislop (2001), in his study said that branding is the process of


creating a relationship or a connection between a company's product and
emotional perception of the customer for the purpose of generating
segregation among competition and building loyalty among customers.

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More recently, Aggarwal (2004), in his research has noted that


consumers differ not only in how they perceive brands but also in how they
relate to brands. This line of research has suggested that people sometimes
form relationships with brands in much the same way in which they form
relationships with each other in a social context.

Sheth & Mittal (2004), in their study found that the purchasing
process is a combination of mental and physical activities that ends with an
actual purchase almost daily Therefore it is interesting to study the
connection within “what we buy” and “why we buy it”. In this circumstance,
brands play a leading role in customer decision making. There are many
factors or attributes of consumers effecting their view and decisions. In
today’s increasing competitive marketplace, Consumers differ in their
perceptions; they would necessarily hold different images for any specific
brand and often have to make a choice among a range of products or brands in
the market that differ very little in its price or unction.

Kahle and Kim(2006), found in their research that in the present day
’s growing competitive market place, consumers have to make their choice
between a variety of product or brands in the market that differ very small in
its price or function. They argue that in such situations, their final decision
depends on the image they relate with dissimilar brands. Additionally the
authors express that the brand image has increased reputation as the feelings
and images associated with brand and a well known and accepted brand
image is one of the most important assets a firm possesses

Keller (2008), stated that brand awareness is one of major


determinants of brand equity and he stated that it can be referred to as the
degree of consumer’ familiarity with a brand. According to Keller
conceptualized Brand awareness as comprising of brand recall and brand
awareness. Keller also stated that the Brand awareness relates to consumers’
capacity to verify previous exposure to the brand when given the brand as a
cure. In addition he indicates that the Brand recall relates to consumers’
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capability to recover brand when given the product category and the needs
fulfilled by the category, or some other type of search as a indication.

According to NMCC (2009) Report “ the urban market accounts for


the major share (65 percent) of the total revenues in the consumer durables
sector in India. Despite the high growth rate, the penetration level of
consumer durable categories is still very low relative to the size of the Indian
market. The report by RNCOS finds that the penetration level of many
appliances was very low. For example, the use of refrigerator stands at around
18%; washing machine 6%; microwave oven about 1% and air conditioner
less than 2%. The low penetration of these products unveils a rewarding
untapped market. Further, established brands account for less than 10% of
the total consumer good market in India.

Loken, Ahluwalia, Houston (2010), opined that brands are important


to brand owners at two quite different levels. Firstly, they serve as a focus for
consumer loyalties and therefore develop as assets which ensure future
demand and hence future cash flows. They thus introduce stability into
businesses, help guard against competitive encroachment, and allow
investment and planning to take place with increased confidence

A study by PricewaterhouseCoopers (PwC) and Federation of


Indian Chambers of Commerce and Industry (FICCI), for the National
Manufacturing Competitiveness Council (NMCC), points out that its favorable
demographics and untapped market potential, India is emerging as an
attractive market for consumer durables.

Holt (2015), stated in his study that branding has become one of the
most important aspects of business strategy. Branding is central to creating
customer value, not just images and is also a key tool for creating and
maintaining competitive advantage.

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Aggarwal (2007) and Tusharinani (2007), highlighted in their study


that the emergence of organized retailing in India and view the catalytic
effects of retail on the Indian Economy. Employment generation, growth of
real estate, increase in disposable income and development of retail ancillary
market are the various catalytic effects on Indian economy. Further the
researchers noted that the transformation of traditional formats into new
formats, viz., departmental stores, hypermarkets, supermarkets, speciality
stores and malls taking the lead in attracting consumers in the metro and mini
metros.

Aggarwal (2007) and Bhardwaj et al. (2007), indicated in their


study that the organized retail industry will mean thousands of new jobs,
increasing income level, improved standard of living, better products, better
shopping experience etc. Consumers have multiple options to choose - ranging
from the shopkeeper to the most sophisticated supermarkets, departmental
stores, plazas and malls which provide the latest and better quality products.
All this has made India the top spot among the favoured retail destination as
observed by Gupta (2004), Jasola (2007), India Retail Report (2009), and Hino
(2010).

The study by Dash et al. (2009), Kaur et al. (2008) and CII (2008),
depicted that the growing middle class, large number of earning youth
customers, increase in spending, and improvement in infrastructure, and
liberalization of the Indian economy offer tremendous opportunities for
organized retailing in India. Accordingly, six emerging retail formats viz. malls,
speciality stores, convenience stores, discount stores, hyper/supermarkets
and departmental stores have been taken up in the present study.

Mittal et al. (2008); Ghosh and Tripathi (2010), revealed in their


study that consumers visit malls not only for shopping only but also for
entertainment purposes like multiplexes and enjoying food courts,. Further to
create excitement in order to attract customers to their stores, and potentially
increase profit margins, several prominent retailers have expanded their
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assortment with private label brands including Wal-Mart, Tesco, Reliance and
Marks & Spencer’s. Other important strategies which retailers cannot put
behind are: free gifts and discounts as these strategies attract all groups of
consumers to visit retail formats and shop in large quantities, (Kocas and
Bohlman, 2008; Dalwadi et al., 2010; Fam et al., 2010; Grewal et al., 2011).
Accordingly, twenty marketing strategies have been taken up. These are:
advertisement, competitive pricing; free gifts, discounting options, loyalty
programs, developing public relations, attractive merchandising, private label
branding, customer segmentation, customized technology adoption, better
internal environment, entertainment facilities, personal selling, after sale
services, store image/positioning, training to sales personnel, festival offers,
customer delight / satisfaction, understanding the customer and franchise/
joint venture.

2.6 RESEARCH GAP


From the preceding extensive review it has been observed that most of
the earlier studies focus on either the overall retail scenario or retailing
formats from the retailer’s point of view.

Only few studies have covered the consumer perspectives, but even
these studies have focused on only one or two sectors, basically the food and
the apparel sector.

Moreover there is hardly any study covering all the important aspects
of retailing like emerging retail formats, influence of retail attributes on
consumers’ choice for these retail formats, impact of demographic factors on
consumers buying behavior, type of products and marketing strategies of
retailers. So there is enough scope of research in this area. In the present
study, an attempt has been made to provide the consumers’ and retailers’
perspective regarding the preferences of emerging retail formats and the
important marketing strategies of retailers to attract consumers. Finally,
based upon the results, a framework covering all these aspects of retailing has
been developed for consumers’ preferences for emerging retail formats.

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CHAPTER - III
RESEARCH METHODOLOGY

3.1 INTRODUCTION
Research methodology is considered as “lifeline” for any type of social
science research especially in behavioral studies. The researcher need to
narrate the methodology perfectly and navigate things accordingly which
yields a fruitful research outcome for any emerging researcher as well as
society. The methodology which is consider as path finder for defined
problems in any research, where it helps in choosing valid sample and
relevant sampling technique along with adequate sample size . The unit also
describes valid statistical tolls used for the purpose of interpretation
“and concludes results in an efficient way, where the readers can understand
the research outcome easily.

The present chapter focuses on the Objectives and Hypothesis stated


for the study. The chapter includes an insight in to the Research Design,
Sampling Procedure, Data collection instruments used, Analysis of data and
Limitations of the study.

3.2 RESEARCH QUESTIONS


After an extensive literature survey, the summary of the literature
extracted some research question, which needs to be addressed in the further
analysis.
1. What are the most influencing factors for consumers in choosing retail
outlets in Hyderabad city?
2. What is the impact of brand and brand related factors on the choice of
consumer behaviour?
3. What are the various customer services and merchandise factors that
influence choice of consumer?

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3.3 OBJECTIVES OF THE STUDY


The present study was undertaken with the following objectives:
1. To study the growth and recent developments in the retail industry in
general and with respect to Hyderabad city in Particular.
2. To Study the various factors influencing the Consumer Buying Behavior of
consumers with respect to durable and non-durable goods in retail malls
of Hyderabad.
3. To study the influence of Brand Prism in terms of preferences, loyalty &
image of brands during on store purchase decision.
4. To Study the impact of Brand related factors on the Buying Behaviour of
Consumers in Hyderabad retail malls.
5. To Study the impact of various Demographic factors such as age, gender,
income, occupation etc. on Branding and on Consumer Buying Behavior.
6. To Study the impact of Customer Services and other Merchandise provided
at the store on Consumer Buying Behaviour.
7. To study the impact of additional facilities provided by the store on Buying
Behaviour of Consumers.

3.4 HYPOTHESIS STATED FOR THE STUDY


1. H0: There is no significant effect of Brand Image related factors on on-
store purchase decision.
Ha: There is a significant effect of Brand Image factors on on-store
purchase decision.

2. H0: There is no significant impact of Brand Preference, Brand Image and


Brand Loyalty on Consumer Buying Behaviour.
Ha: There is a significant impact of Brand Preference, Brand Image and
Brand Loyalty on Consumer Buying Behaviour

3. H0: There is no significant relationship between income and Consumer


Buying Behaviour
Ha: There is a significant relationship between income and Consumer
Buying Behaviour

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4. H0: There is no significant difference between the buying behaviour of


males and females.
Ha: There is a significant difference between the buying behaviour of
males and females.

5. H0: There is no significant association between Education, Occupation and


Family Size and Consumer Buying Behaviour factors
Ha: There is significant association between Education, Occupation and
Family Size and Consumer Buying Behaviour factors

6. H0: There is no significant association between Gender, income, Education,


Occupation and Family Size and brand related factors
Ha: There is significant association between Gender, Education, Income,
Occupation and Family Size and brand related factors

7. H0: There is no significant relationship between the Income and Brand


Dimensions like brand preferences, brand image, brand loyalty
Ha: There is significant relationship between the Income and Brand
Dimensions like brand preferences, brand image, brand loyalty

8. H0: There is no significant difference among the brand preferences, brand


image, brand loyalty are not statistically significant with respect to Age of
the Customer
Ha: There is a significant difference among the brand preferences, brand
image, brand loyalty are not statistically significant with respect to Age of
the Customer

3.5 RESEARCH DESIGN


Research design carries an important influence on the reliability of the
results attained. It therefore provides a solid base for the whole research. It is
needed due to the fact that it allows for the smooth working of the many
research operations. This makes the research as effective as possible by
providing maximum information with minimum spending of effort, money
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and time. Planning of design must be carried out cautiously as even a small
mistake might mess up the purpose of the entire project. The design helps the
investigator to organize his ideas, which helps to recognize and fix his faults, if
any. In a good research design, all the components go together with each other
in a coherent way. The theoretical and conceptual framework must with the
research goals and purposes. In the same way, the data gathering method
must fit with the research purposes, conceptual and theoretical framework
and method of data analysis.

3.5.1 Sampling Design


According to Mildred Parton, “Sampling method is the process or the
method of drawing a definite number of the individuals, cases or the
observations from a particular universe, selecting part of a total group for
investigation.” The sampling can be defined as the method or the technique
consisting of selection for the study of the so called part or the portion or the
sample, with a view to draw conclusions or the solutions about the universe
or the population.

3.5.2 Population of the Study


A sample in any research study is drawn from a population (sometimes
called a universe). For example, when conducting political polls, our
population is the people that who can vote in the next election. When
conducting studies of fast moving consumer goods (e.g., breakfast cereal,
laundry detergent), our population is grocery buyers.

The population for the present study consists of the frequent buyers
/visitors of retail outlets and shopping malls in Hyderabad city. The
population for the present study is infinite population.

3.5.3 Sample Frame


A sampling frame includes a numerical identifier for each individual,
plus other identifying information about characteristics of the individuals, to
aid in analysis and allow for division into further frames for more in-depth

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analysis. The sample frame for the present study can be defined as the retail
consumers in Hyderabad and Secunderabad of Telangana state, who are
frequent buyers of different items preferably once in a month from their
nearest shopping malls in study zone.

3.5.4 Sample Size


For the purpose of the present study, a sample size of 900 respondents
were selected, who were the consumers to various retails outlets in
Hyderabad. The total population for the present study was divided into four
stratas on the basis of geographical areas, i.e East, West, North and Central.
The major retail outlets in these areas were identified and few retail outlets
were randomly selected from these. The acceptable sample size from an
unknown infinite population with 95% level of confidence and 3% margin of
error was 885.

Formula for sample size calculation is being used by the researcher to


justify that the sample considered is a valid sample. For this, error rate,
significance level and standard deviation are considered to extract required
sample size for this study. The formula with relevant calculation is presented
below.
no = ( Z2) (p) (q)
-------------- * 100
(d2)

no = (1.96)2 (0.5) (0.5)


-------------------------- *100 = 885
(.03) 2
Where Z = normal deviate for two-tailed alternative hypothesis at a level of
significance= 1.96. (the alpha level of .05 indicates the level of risk the
researcher is willing to take that true margin of error may exceed the
acceptable margin of error).

Where (p)(q) = estimate of variance = .25. (Maximum possible proportion (.5)


* 1- maximum possible proportion (.5) produces maximum possible sample

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size). Where d = acceptable margin of error for proportion being estimated =


.03 (error researcher is willing to except).

The study analysis done with 900 responses, which is > 601,
considered as statistically valid sample. From this calculation, the Scholar
decided to distribute 40 each questionnaires in major 30-35 shopping malls in
the study zone and expected to get above 890 filled in valid forms, the
researcher succeed to get nearly 900 valid forms, with the help of these 900
responses, the researcher proceed for data analysis.

This justifies that the sample considered for the purpose of the study is a
valid sample and accordingly the statistical analysis carried out in chapter IV
may be considered as representative of the population.

3.5.4 Sampling Technique


Stratified random sampling is a method of sampling that involves the
division of population into smaller groups known as strata. Stratified Random
Sampling Technique was adopted for the present study. The present
population is divided into 4 strata’s (East, West, North and Central regions of
Hyderabad). Each of these regions include the following areas:
East : Dilshuknagar, A.S Rao Nagar, L.B. Nagar, Malakpet, Uppal
West : Banjara Hills, Hi-tech City, Jubilee Hills, Madhapur, Yousufguda
North : Kukatpally, Hafeezpet, Serilingampally, Gachibowli
Central: Abids, Ameertpet, Begumpet, Himayatnagar, Narayanaguda,
Mehidipatnam, Punjagutta, Secunderabad, Somajiguda.
In the next step, major retail outlets were identified in each of these
regions and few outlets amongst these were randomly selected for the
purpose of the study. A representative sample of 40 customers were drawn
randomly from each of these retail outlets. Malls were visited and structured
questionnaires were personally distributed to the customers to capture valid
data.

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Table 3.1: Distribution of Collected sample of Various Mall’s


No. of valid
Number of
S. filled in
Shop Name & Location Questionnaire’s
No Questionnaire’s
Distributed
Retained
1. Life Style, Begumpet 40 27
2. Reliance Fresh, Kacheguda 40 27
3. Titan Raaga Watches, Kukatpally 40 31
4. Kalanjali Shopping, Himayathnagar 40 22
5. Vishal Mega Mart , Abids 40 23
6. Inorbit Mall , Madhapur 40 19
7. City Center Mall , Panjagutta 40 28
8. The Chennai Shopping Mall (Patny Center) 40 21
9. Ratnadeep Super Market , Ramanthapur 40 30
10. MPM Mall, Abids 40 27
11. D Mart Retail Super Market , Kukatpally. 40 29
12. Big Bazaar Supercentre (Ameerpet) 40 22
13. GVK One Mall (GVK 1 Mall), Banjara Hills 40 19
14. Spencer's Hyper Store , Musherabad 40 29
15. Big Bazaar (L B Nagar) 40 22
16. CMR Shopping Centre, Secunderabad 40 33
17. The Chennai Shopping Mall (Kukatpally) 40 40
18. The Forum Sujana Mall , KPHB 40 37
19. Brand Factory, Secundrabad 40 29
20. Metro cash and carry , Kukatpally 40 22
21. Best Price, Uppal 40 26
22. Maheswari Mall, Kacheguda 40 29
23. Spencers, RTC x Roads 40 39
24. R S Brothers, Ameerpet 40 39
25. Chermas, Abids 40 34
26. Megamart, Tirumalgiri 40 33
27. RKS Grand, Ameerpet 40 32
28. Kalanikethan, Secunderabad 40 29
29. Kalamandir, Ameerpet 40 31
30. Shopper’s Stop, Begumpet 40 35
31. D Mart Retail Super Market , Malakpet 40 36
TOTAL 1240 900

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3.5.5 Sampling Unit


Individuals and families regularly visiting retail outlets in both
Hyderabad and Secunderabad were considered as a sampling unit. Sample
respondents include males, females and students of different age groups who
were regular visitors to the retail outlets.

3.6 DATA COLLECTION PROCEDURE


The study is exploratory in nature and is based on both primary and
secondary data.

Primary Data:
For the present study, primary information is gathered by using a
structured questionnaire. Questionnaire method was employed as it allows
the researcher to gather structured information from a large number of
individuals, allows for anonymity and it is economical to use. Moreover,
analysis of questionnaires is easy due to structured information in the
questionnaire with few open- ended questions. To elicit the responses, a
detailed questionnaire has been designed. Information is obtained from
frequent buyers in Shopping malls and conventional stores of all around
Hyderabad city. A preliminary questionnaire is developed using 5 point Likert
scales. The questionnaire is pre-tested several times to arrive at appropriate
wording, format, length and sequencing of the questions. Pre-test feedback is
used to refine the questionnaire until it is ready for data collection. After fixing
the questions for the independent and dependent variables based on the type
of questions different values are assigned to the Likert scale.A covering letter
explaining the purpose of the research and assuring respondents of the
anonymity and confidentiality of the research accompanied each
questionnaire. The survey was done during February 2015 to March 2016.

For a positive statement highest number (5) is assigned for “Strongly


Agree‟, highest frequency and lowest number (1) for “Strongly disagree‟
lowest frequency‟ responses. A pilot study was conducted with 75 customers

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with draft questionnaire and 52 respondents have given their opinions which
accounts of 76% response rate.

Secondary Data
Secondary information is collected from the different journals, internet
and periodicals, retail service providers websites.

The main sources of qualitative and quantitative secondary data


include the following
 General business sources
 Private research publishers
 Professional bodies
 Organised Retail Stores

Paper based Sources: Books, Journals, Periodicals, Abstracts, Directories,


Research reports, Conference Papers, Financial and Business Newspapers and
Magazines.

Electronic Sources: CD- ROMs, Online Databases, Internet.

3.8 DATA COLLECTION TOOLS EMPLOYED


The objectives of the present study require those tools that measure
the following major dimensions:
 Consumers Buying Behavior with special reference to Brand Preferences
in Retail Malls in Hyderabad.
 Consumers’ Shopping preferences with special reference to Branding
dimensions such as Brand Image, Brand Loyalty and Brand Preference in
Retail Malls in Hyderabad.

The questionnaire preparation was made after extensive literature


review and opinion from industry expert and eminent academicians and also
a few inputs adopted from previous research reports namely “A Study On
Consumer Buying Behaviour Towards Consumer Cooperative Retail Stores ,

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By Sneha Vasant Chavan (2012) , “Consumer Purchasing Behaviour on


Selected durables and non-durable Products-with Special reference to
Chennai city “ By N.Chitra (2011), C R Mathuravalli “An Investigation of
Consumer Preferences Towards Store Brands Purchase In Madurai District”
Kalasalingam University, 2013, Priyanka Patni “A Study on Brand
Management of Apparels Sector in Ajmer District” Bhagwat University, 2012
and Haresh B. Vaishnavi “Effects of Sales Promotions on Consumer
Preferences and Brand Equity Perception” Saurashtra University, 2011.

On a careful survey it was found that no single instrument would


measure all the dimensions mentioned above. As a result, taking into
availability and suitability of the various instruments, the following scales
were identified.
 A Study on Consumer Buying Behavior Towards Consumer Cooperative
Retail Stores , By Sneha Vasant Chavan (2012) and
 “Consumer Purchasing Behavior on Selected durables and non-durable
Products-with Special reference to Chennai city “ By N.Chitra (2011)
 “An investigation of Consumer Preferences towards store Brands purchase
in Madurai district”, Kalasalingam University, 2013 by C.R. Mathura Valli.
 “A study on Brand Management of apparel sector in Azmir district”,
Bhagwat University, 2012 by Priyanka Patni.
 Consumers’ Perception Scale developed by Vasanth Chavan (2012) was
used in the present study. The scale was used to study Consumers’ Buying
Behavior in Cooperative stores. The resulting 20- item Scale examines
seven dimensions. Internal Consistency, or coefficient alpha, was
determined for the scale in the pilot study is reported as 0.77. The
instrument reflects 5 dimensions: Store Image, Brand Preferences, Brand
Choices, Store Ambiance, Shop Proximity. Scoring for the instrument was
on a five- point scale: 1= Strongly disagree, 2= Disagree, 3= Neutral, 4=
Agree, 5= Strongly agree. The total score range is 20 (score 1 each item
*20 items) to 100 (score 5 each item *20 items). A mean score for the
entire instrument was computed as well as a mean score for each item.

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Keeping in view the objectives of the present study only 14 items were
chosen.
 Consumers’ Shopping Experience Scale developed by N.Chitra. (2011)
was used in the present study. The scale was used to study Consumers’
Shopping Experience in Malls with reference to durable and Non durable
products. The resulting 12- item Scale examines 7 dimensions. Cronbach
alpha, was determined for the scale in the pilot study is reported as 0.79.
The instrument reflects 6 dimensions: Store Accessibility, Freshness of
items, Variety of Items in the Store, Impulse Buying, Service Quality and
Amusement.
 Consumer Brand Preference Scale was developed from C R Mathuravalli
“An Investigation of Consumer Preferences Towards Store Brands
Purchase In Madurai District” Kalasalingam University, 2013, Priyanka
Patni “A Study on Brand Management of Apparels Sector in Ajmer District”
Bhagwat University, 2012 and Haresh B. Vaishnavi “Effects of Sales
Promotions on Consumer Preferences and Brand Equity Perception”
Saurashtra University, 2011. Scoring for the instrument was on a five-
point scale: 1= Poor, 2= Average, 3= Good, 4= Very Good 5= Excellent. The
total score range is 12 (score 1 each item *12 items) to 60 (score 5 each
item *12 items). A mean score for the entire instrument was computed as
well as a mean score for each item. Keeping in view the objectives of the
present study, only 10 items were chosen and were reframed to suit the
requirement.

 “An investigation of Consumer Preferences towards store Brands purchase


in Madurai district”, Kalasalingam University, 2013 by C.R. Mathura Valli.
Scoring for the instrument was on a five- point scale: 1= Poor, 2= Average,
3= Good, 4= Very Good 5= Excellent. The total score range is 12 (score 1
each item *12 items) to 60 (score 5 each item *12 items). A mean score for
the entire instrument was computed as well as a mean score for each item.
Keeping in view the objectives of the present study, only 10 items were
chosen and were reframed to suit the requirement.

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 “A study on Brand Management of apparel sector in Azmir district”,


Bhagwat University, 2012 by Priyanka Patni. Scoring for the instrument
was on a five- point scale: 1= Poor, 2= Average, 3= Good, 4= Very Good 5=
Excellent. The total score range is 12 (score 1 each item *12 items) to 60
(score 5 each item *12 items). A mean score for the entire instrument was
computed as well as a mean score for each item. Keeping in view the
objectives of the present study, only 10 items were chosen and were
reframed to suit the requirement.

3.7 Pilot Study:


A pilot study was conducted with 100 sample from above shopping
malls with the help of 87 questions draft questionnaires, after receiving
various inputs and suggestions from respondents and also analyzing with
reliability analysis the researcher found 18 (Eighteen ) questions need to be
removed due to nearby repetition and irrelevancy to the present study. Pilot
study is a small scale preliminary study conducted in order to evaluate
feasibility, time, cost, adverse events, and effect size (statistical variability) in
an attempt to predict an appropriate sample size and improve upon the study
design prior to performance of a full-scale research.

3.7.1 Final Instrument


The final instrument thus consisted of totally 67 items, out of which 21
items were categorized under Consumer Buying Behaviour Scale in order to
study various factors influencing Buying Behaviour of Consumers and 29
items were categorized under Brand Dimension Scale in order to study the
various Brand related factors considered by Consumers. 17 items were
categorized under shopping experience scale. The Final Instrument consists of
four parts
Part I : Deals with Demographic variables.
Part II : Deals with Consumer Buying Behaviour Scale.
Part III: Deals with Brand Dimension Scale.
Part IV : Deals with Shopping Experience Scale.

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3.7.2 Measurement of Key Variables


For the purpose of key variable measurement for proposed study ,
extensive literature survey done in India and abroad on same study and
observed so many seminal papers are found that most measured variable in
this type of studies. Such variables are customized and adopted for present
environment.

With respect to the dependent and independent variables, independent


variable is the core of the experiment and is isolated and manipulated by the
researcher. The dependent variable is the measurable outcome of this
manipulation, the results of the experimental design. For many physical
experiments, isolating the independent variable and measuring the dependent
is generally easy.

The dependent variable is the variable a researcher is interested in.


The changes to the dependent variable are what the researcher is trying to
measure with all relevant statistical techniques. In this study, dependent
variables like gender, occupation, income and family size, the researcher
trying to measure the consumer buying behavior.

Dependent Variables:
An independent variable is a variable believed to affect the dependent
variable. This is the variable that, the researcher, will manipulate to see if it
makes the dependent variable change. To reiterate, the independent variable
is the thing over which the researcher has control and is manipulating. In this
experiment, the researcher testing with the help of consumer income, brand
awareness like things impact on buying behavior.

Independent Variables:
Confounding variables are a specific type of extraneous variable.
Extraneous variables are defined as any variable other than the independent
and dependent variable. So, a confounding variable is a variable that could
strongly influence your study, while extraneous variables are weaker and
typically influence your experiment in a lesser way.
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3.8.1 Reliability Analysis.


Reliability Analysis will be done with the help of (Cronbach's alpha) of
questionnaires to check the survey reliability. If the score cross above 0.6, it is
statistically considered that questionnaire got reliability by data and
responses.

Reliability Analysis
Analysis of the measurement model starts with the assessment of the
significance level of the indicators, followed by verification of the scale
validation. According to Nunnally (1978), Cronbach‟s α-value must be higher
than 0.7. Hence the 36 factors for testing customer satisfaction have a high
reliability score i.e., Cronbach‟s alpha of 0.802 as could be seen in below table.
As per statistical rule (>0.7) the reliability analysis is satisfied perfectly.

Table 3.2 : Reliability case processing summary

N %
Valid 897 99.4
Cases Excludeda 03 .6
Total 900 100.0
a.Listwise deletion based on all variables in the procedure.

Table 3.3 : Reliability statistics values

Cronbach's Alpha No. of. Items


0.802 67

Reliability
Table 3.4 : Reliability Analysis dimension wise.

Reliability Statistics
Cronbach's N of
Dimensions
Alpha Items
Consumer buying Behaviour (Durable) .746 10
Consumer buying Behaviour (Non –Durable) .854 10
Factors influencing consumer buying behavior in mall .820 11

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Brand preferences 0.631 05


Brand image 0.835 08
Brand loyalty 0.837 06
Additional facilities compare with Traditional malls .834 9
customer service and merchandise provided at the store .821 8
Over all 0876 67

Inference: Cronbach’s alpha has been run dimensions wise for to check their
reliability. The above table displays some of the results obtained. The alphas
for the all the dimensions of consumer buying behavior (durable), consumer
buying behavior (non durable), factors influencing consumer buying behavior
in mall, brand preferences, brand image, brand loyalty, comparison between
facilities in organized mall and un organized malls, customer service and
merchandise provided at the store and overall variables the alpha values are
0.746, 0.854, 0.820, 0.631, 0.835, 0.837, 0.834, 0.821 and 0.876 all the values
are greater than 0.6 it indicates good internal consistency among the
variables.

Content Validity
Content validity is often seen as a prerequisite to criterion validity,
because it is a good indicator of whether the desired trait is measured. If
elements of the test are irrelevant to the main construct, then they are
measuring something else completely, creating potential bias. Content
validity, sometimes called logical or rational validity, is the estimate of how
much a measure represents every single element of a construct.

Content validity is often seen as a prerequisite to criterion validity,


because it is a good indicator of whether the desired trait is measured. If
elements of the test are irrelevant to the main construct, then they are
measuring something else completely, creating potential bias. In addition,
criterion validity derives quantitative correlations from test scores. Content

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validity is qualitative in nature, and asks whether a specific element enhances


or detracts from a test or research program.

The present study content validity tested by academic experts like


professors in the area of marketing research and some industry experts like
car show room managers and senior sales executives.

Construct Validity
Construct validity is the appropriateness of inferences made on the
basis of observations or measurements (often test scores), specifically
whether a test measures the intended construct. Constructs are abstractions
that are deliberately created by researchers in order to conceptualize the
latent variable, which is the cause of scores on a given measure (although it is
not directly observable). Construct validity examines the question: Does the
measure behave like the theory says a measure of that construct should
behave?

Construct validity is essential to the perceived overall validity of the


test. Construct validity is particularly important in the social sciences,
psychology, and psychometrics and language studies.

ANALYSIS OF DATA
The following statistical tools were used to analyse the collected data.
1. Means and Standard Deviations for each individual item in all the Scales
i.e. Consumer Buying Behavior Scale, Branding Scales and Shopping
Experience Scale(customer services and store facilities) were computed.
Overall Means and Standard Deviations were also computed for all the
scales.
2. Factor Analysis was used to filter the various factors influencing the
buying behavior of consumers with respect to durable and non-durable
goods. Factor Analysis was also done for identifying the most influencing
factors on Consumer Buying Behaviour.

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3. Regression Analysis was done to study the impact of brand related factors
such as Brand Image, Brand Loyalty and Brand Preference on the
Consumer Buying Behaviour.
4. Chi- Square tests were computed to study the association between various
Demographic Variables such as education, occupation, family size etc. on
Consumer Buying Behaviour.
5. Chi- Square tests were computed to study the association between various
Demographic Variables such as education, occupation, family size etc. on
Brand dimensions.
6. Correlation was computed to study the relationship between age and
Consumer Buying Behaviour
7. T-test was computed to study whether there is any significant difference in
the Consumer Buying Behaviour between males and females
8. ANOVA was done to study whether there is any significant difference
between age, income and Consumer Buying Behaviour.

LIMITATIONS OF THE STUDY


The following are the limitation of the present study:
 The sample was limited twin cities of Hyderabad and Secunderabad only.
The results of the study cannot be generalized to the complete universe.
 The data was collected through questionnaire which was self reported by
the respondents had its own limitation of subjectivity.
 The reliability of study can not be guaranteed as the same study may yield
different results in another context.
 Time has been the biggest constraint because of the work schedule.

In spite of the above limitations the researcher has made all the efforts
to derive the results with the available data.

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CHAPTER SCHEME
The present study is divided totally into 6 chapters.

Chapter I provides an overview of the theoretical background that provides


the premise of the study. The concept of Branding factors and other consumer
buying behavior factors that actually shape a customer’s preferences are
presented.

Chapter II deals with the Review of Literature. It presents the various


research studies along with their findings in the respective areas of Retailing,
Branding, Consumer Buying Behaviour and Brand related Buying Behaviour.

Chapter III provides perspective on the Objectives and Methodology adopted.


The Chapter describes the details such as Sample Selecton and Size, Data
Collection Methods and Procedures followed and the Statistical Techniques
employed to analyse the data and the Limitations of the Study.

Chapter IV discussed the Retail Industry profile and includes various aspects
such as organized and unorganized Retail Sectors in India, Classification of
Retail formats, current trends in Retailing in India, the challenges or organized
retailing in India Challenges and opportunities in the organized retailing in
India and he projected trends in Retailing.

Chapter V focuses on the analysis of Consumer BEhaviour with reference to


Retail Malls in Hyderabad.

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CHAPTER - IV
RETAIL INDUSTRY:
GLOBAL AND DOMESTIC PERSPECTIVE

4.1 THE CONCEPT OF RETAILING


The term "retailer" is also applied where a service provider services
the needs of a large number of individuals such as a public utility, like electric
power. According to Swapana Pradhan (2013)6, Retailing includes all the
business activities involved in selling goods and services to the final
consumers for personal, non business use. It is the final step in the
distribution of merchandise for consumption by the ultimate consumers.

The retailing environment has visualized a tremendous growth in the


size and the market dominance of larger players, with greater store size,
increased retail concentration and the utilization of a range of formats. This
growth has intensified the level of competition in retail business, stimulating
the retailers to reposition and diversify their retail formats and innovate in
their distribution systems. The maturity of core markets, the erosion of
traditional shopping patterns through urbanization and the social and the
demographic changes of developed markets have stimulated several major
players to focus more on establishing themselves in the developing markets.

The global retail industry has been growing at a rapid pace during the
last few decades. A retail sale through modern formats is rising faster than the
total retail sales. The share of modern retail has risen from about 45 per cent
in 1996 to over 52 per cent in 2006. However, the spread of organized
retailing in different countries varies depending upon the socio-economic
factors related to the country. In the developed economies, organized retailing
is in the range of 75-80 per cent of total retail, whereas in developing
economies, the unorganized sector dominates the retail business. The share of

6 Swapna Pradhan, Retailing Management, Text & Cases, TMH,2013.

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organized retailing varies widely from just 1.00 per cent in Pakistan and 4.00
per cent in India to 36.00 per cent in Brazil and 55.00 per cent in Malaysia.
Modern retail formats such as hypermarkets, superstores, supermarkets,
discount and convenience stores are widely present in the developed
countries, whereas such forms of retail outlets have just begun to spread in
developing countries in recent years, where the retailing business continues
to be dominated by family-run neighborhood shops and open markets.

The modern retail in developing countries cropped up in three


successive waves. The first wave took place in the early to mid-1990’s in
South America (e.g., Argentina, Brazil, and Chile), East Asia outside China
(South Korea, Malaysia, Philippines, Thailand, and Taiwan), North-Central
Europe (e.g., Poland, Hungary, and Czech Republic) and South Africa. The
second wave emerged during the mid to late 1990’s in Mexico, Central
America (e.g., Ecuador, Colombia, and Guatemala) and Southeast Asian
countries (e.g., Indonesia), Southern-Central Europe (e.g., Bulgaria). The third
wave eventuated in the late 1990’s and early 2000’s in certain parts of Africa
(e.g., Kenya), a few countries in Central and South America (e.g.,Nicaragua,
Peru, and Bolivia), Southeast Asia (e.g., Vietnam), China, India, and Russia.
Thus, the third wave countries which include China, India and Russia are the
late comers in the diffusion of modern retailing. The below table indicates the
percentage of organized retail trade in various countries.

As per AT Kearney's annual Global Retail Development Index (GRDI)


2014, India is ranked third in the list of the most attractive markets for retail
investment. India has one of the largest numbers of retail outlets in the world.
Out of the 12 million small and medium retail outlets existing in the country,
nearly 5 million sell food and grocery items. The market is witnessing a
migration from traditional retailing to modern/organised retailing formats,
with an explosive proliferation of malls and branded outlets.

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Source: AT Kearney Global Retail index survey

Modern retailing outlets in India are increasingly becoming global in


their standards and are witnessing an intense competition. With a share of
over 95 per cent of total retail revenues, traditional retailing continues to be
the backbone of the Indian retail industry. Traditional retail is highly
pronounced in small towns and cities, with a primary presence of
neighbourhood 'kirana' stores, push-cart vendors, 'melas' and 'mandis'.

4.2 GLOBAL SCENARIO:


The retailing environment has visualized a tremendous growth in the
size and the market dominance of larger players, with greater store size,
increased retail concentration and the utilization of a range of formats.

4.2.1 North America:


In revenue terms, North America is the leading region in the global
retail industry, with a 37 percent share of the largest 250 retailers. Generally
the sector has grown over the last few years, showing a direct link to
economic recovery and a return to retailer expansion. There has been
increased activity in Canada recently, driven by US brands such as Saks,

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Target and Nordstrom establishing bases there. Though around 90 percent of


sales are currently made in store, technology is playing a greater supporting
role. Retailers are creating digitally enhanced spaces to showcase their
products and providing more information through hand-held technology both
pre and post sale.

4.2.2 Latin America


There has been sustained economic growth of between two and seven
percent across Latin America in recent years, driven primarily by rising
prosperity in the middle classes. High disposable incomes in the upper middle
class and the lack of a culture of saving mean that spending is beating
inflation. The growing lower middle class is increasing demand for
automotive, household goods and clothing. Young, fashion-conscious
consumers dominate, with strong brand awareness and an appetite for the
latest high tech products. Brazil is the strongest retail market, with numerous
new shopping and automotive retail facilities in planning and construction.
Mexico, Chile, Colombia and Peru are also growing, driven in part by US and
European investment. Retail banks are also undertaking modernization
program across major cities.

4.2.3 United Kingdom


2014 has seen an upswing of growth in the UK’s retail sector, driven by
an improving economy and resurgent housing market. While still volatile to
wider economic shocks, increasing corporate investment is encouraging a
slow and steady build for this sector. Food retail still accounts for over 70
percent of core retail spending and we will see convenience shopping grow
over the next 12 months. We expect innovative new convenience offers to
appear following key acquisitions by a number of food retailers. Though over
90 percent of retail spending is through physical stores, those retailers
enjoying the most success combine bricks and mortar with an online
presence. Looking further ahead, we can expect more change on the UK’s high
streets, and greater scrutiny around investment decisions, particularly for
retail banking.
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4.2.4 Europe
Retail markets across Europe vary widely, depending on their level of
maturity and the local economic situation. Investment and development in
Eastern Europe is constant and growing. Poland is entering its third decade of
dynamic growth with new overseas retailers and luxury brands entering the
market. Thirty new global brands set up operations in the country last year. In
Russia, a retail boom is just beginning with 63 new complexes in 40 Russian
cities completed in 2013. In long-established markets, such as the
Netherlands, certain retailers have had a slow year, although growth
continues in the food sector. A trend in Western Europe sees investment in
outdated shopping centres to allow retailers to expand locally.

4.2.5 Middle East


Increasing populations, local and expatriate wealth, strong household
consumption and a thriving luxury tourism industry have been the drivers for
a growing retail sector in the Middle East. Luxury vehicle manufacturer Jaguar
Land Rover experienced a 36 percent increase in sales in the region this year.
As one of the fastest growing industries, and the second largest behind oil,
retail is a major contributor to ongoing economic growth in the region. The
most dynamic markets, and those with the highest potential for growth, are
the United Arab Emirates, Qatar, Saudi Arabia and Kuwait. With many
substantial developments in the pipeline, international retailers continue to
enter the market, competing with established global brands. The Middle East
will remain an exciting player on the global retail stage.

4.2.6 Australia
Though the Australian retail sector previously sustained a downturn,
domestic retailers have emerged in better shape than other developed
economies. Retail property in particular is performing well, with revenues
growing at 3.6 percent on average over the past five years – mirrored by
increased investment from foreign retailers extending or establishing
operations in Australia. This is expected to continue for the next five years.
The retail market is divided into two sectors – consumer goods and fast-

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moving consumer goods (FMCG). FMCG has enjoyed a steady average annual
growth of 2.4 percent, forecast to continue at 2.3 percent up to 2019.
Consumer goods has seen negative growth of nine percent on average,
however is expected to return to two percent growth per year for the next five
years.

4.2.7 Asia
Asia remains a hospitable environment for retailers, who are
continuing to deliver innovative brand showcases and make large investments
to secure prime locations. We have seen a drastic shift from a ‘build it and
they will come’ approach to more strategic decision making when it comes to
retail facilities. Developed markets such as Hong Kong, Singapore, Malaysia
and Japan continue to benefit from both strong domestic demand and an
influx of tourist dollars from China, India and the West. There is also growth in
India and China, although recent spikes in Chinese consumer confidence have
been driven by demand in tier four, and not major, cities. Automotive retailers
are anticipating huge growth opportunities in China, where 22 million
vehicles were sold last year. Vietnam and Indonesia are still largely based on
independent retailers, and are seen as longer term prospects.

Over the next five years Asia and Australasia will deliver the strongest
retail volume growth of any region, averaging 4.6% annually. With sales of
almost US$7 trillion in 2014, Asia is also comfortably the world’s largest
regional retail market, with China accounting for much of this. However, this
outlook comes with a degree of risk attached. Decelerating growth in China,
weakness in Japan and mixed signals from India will all weigh on the regional
outlook. Large players are now showing signs of switching emphasis to
smaller Asian markets, notably Indonesia and Vietnam, with the former
supported by strong demographic and income growth and the latter opening
up more to foreign retail investments.

Regulatory issues and a strategic refocus on domestic markets have


also prompted a rethink among global retailers. As the likes of Carrefour,

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Metro and Tesco seek to recapture revenues in their core home markets they
have divested or rationalized operations in emerging Asia. Asian retail
markets are also evolving quickly, with e-commerce channels showing
particularly strong growth. Indeed, declining investment in physical stores
from firms like Walmart has been replaced by a greater commitment to
investing in fast-growing e-commerce channels.

The global retail landscape is evolving and nowhere is the pace of


change faster than in Asia, where convergence and innovation in e-commerce
and m-commerce has forced a rethink in the channel strategies of key retail
players.

The Internet has tipped the balance of power in the favour of


consumers. As barriers between physical and virtual channels blur, retailers
are exploring multichannel solutions—such as click-and-collect stores, pop-up
shops or using beacons (which can send notifications of offers to nearby
smartphones)—to drive engagement.

While m-commerce and the threat of “showrooming” (where users test


products in-store but buy online) remain a threat to physical stores, mobile
devices are also acting as a hybrid channel to drive footfall by allowing
consumers to locate stores and interact through apps, beacons or QR codes.

A global drive toward convenience channels is already well established


in Asia with the likes of Japan, Taiwan and South Korea setting a global
precedent for small, well-located outlets. The declining role of the
hypermarket has therefore had a muted impact in Asia. Amid the overarching
shift towards convenience and online shopping there is still substantial
investment in flagship retail outlets, notably by fast fashion retailers and
technology firms like Apple. In the case of markets like China, the
development of flagship stores is moving further and further inland towards
tier three and four cities, with retail brands hoping to use such stores to
generate a buzz among Chinese consumers. Property consultants CBRE
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singled out second tier city Chengdu as the world’s most active retail
development market in 2012. In India, too, the relaxation of FDI laws around
single brand retail stores has allowed the development of well sited flagships
in key city locations. The likes of H&M, IKEA and Marks & Spencer have been
quick to seek market entry.

Rising incomes in many parts of the region mean that the dramatic
shift towards discount retail channels taking place in regions like Western
Europe is not as apparent in Asia, although it is catching on. A price sensitive
public in Japan means that 100 Yen shops, led by Daiso, already proliferate but
bargain-hungry Chinese consumers is also joining the fray.

Research Consulting Group reported in June 2014 that online discount


retailing in China has experienced triple digit annual growth since 2008,
although the sales figures remain comparatively small, forecast to be just
US$18 billion by 2016.

The Asian clothing and apparel sector is expected to grow rapidly over
the next five years. Annual average expenditure growth on clothing and
footwear, at 9.5%, will comfortably outstrip that of any other region as rising
incomes lead more Asian households towards discretionary purchases. As
more households move into middle class income brackets, consumer
complexity will increase and fashion will form a sizeable part of the identity of
an increasingly sophisticated Asian consumer base.

Demographics will help too. The fact that India and China accounted
for a combined population of 2.6 billion people in 2013 (37% of the world’s
population) means that the overall market size for clothing is also larger than
that of any other region. Consumer expenditure on clothing and footwear in
Asia is expected to reach almost US$920 billion by 2018, compared to an
estimated US$625 billion in 2014. The Chinese market will account for over
US$500 billion of this total by 2018, equivalent to those of Western Europe or
North America.
2015-16
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4.3 INDIAN JOURNEY


The emergence of first phase of organized retailing in India can be
traced back when a shopping centre into existence in the year 1869 with
Mumbai Crawford Market. After that, in the year 1874 Hogg market, popularly
and better known as new market came into existence in Calcutta (Now known
as Kolkata) this shopping centre was designed by an East Indian Railways Co.
Architect R.R. Banya and was named after the then municipal commissioner of
Calcutta Sir Stuart Hogg.

Earlier the Hogg market even had a garden with a beautiful fountain
adding to its ambience and benches too for tired shoppers. Today, the New
Market continues to be a premier shopping area in Kolkata despite a part of it
being incinerated in late 1985. Its red-brick Gothic clock-tower today bears
testimony to the past Grandeur of this first shopping centre in India.

Today from linen to cakes and fruits to fishes everything is available at


the New Market Atta reasonable price and this has made the New Market
sustain its popularity among the metro customers of Kolkata. The tenant mix
of this first shopping centre is unique as it has a large number of 2000 stalls
which are organized in an order of merchandize. There are rows of stalls
dealing with one particular line of Goods.

A retail researcher by name Christine Furedy in 70’s has observed in


her article in the capital on 24th Dec. 1979 tracing the emergence of the New
Market, thus “The most complex retail business of late nineteenth century
Calcutta, establishment which were to dominate the modern retail sector,
were the departmental stores. Although everyone has closed its doors, many
Calcuttans still remember the name or recognize their converted, subdivided
building:

Francis, Harrison and Hathaway; Hall and Anderson; the Army and
Navy stores; white a way; laidlow and Co. In their scope and outreach these

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shops rivaled those to be found in cities of the same size in Britain, Europe or
the United States”.

The second phase of development of organised retailing can be traced


back to the year 1931 when Bata shoe Co. took lead in opening its chain stores
at various cities & towns. It was followed by DCM and Raymonds extensively.
The earliest seed of the so-called specialty malls can be traced to shopkeepers
who stocked goods of the same product category in a particular locality.
Evolution of Indian Retail

Source: Indian Retail Market by Ayush Khandel, 2012.

If one were to go back to the early 80s, it can be said that organised
retail, to a great extent was visible in the functioning of stores such as
‘Akbarally’ in Mumbai and ‘Nilgiris’ and ‘Spencers’ in Chennai. These stores
later evolved into multi chain outlet and were the first to bring on the ‘onset of
organised retail’ in India.

The evolution of PDS (Public Distribution System) of Grains in India


having its origin in the rationing system introduced by the British during
World War II was example of single largest retail chain in the country the
canteen stores Department and the Post Offices in India are also among the
largest network of outlets in the country, reaching populations across state
boundaries.
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The Khadi and Village Industries (KVIC) was set during post
Independence and today it has more than 7000 stores across the country.
While Independence retail stores like Akbarally’s, Vivek’s and Nallis have
existed in India for a long time, Reliance , Garden silk mills, Madhura
Garments, Arvind mills etc have set up show rooms for retail sale of their
branded products. It is important that for centuries now, India has been
operating within her unique concept of retailing. Retailing in its initial period
was witnessed at the weekly Haats or Gathering in a market place where
vendors put on displays their produce. Off course this practice is still
prevalent in many towns and cities in India: then the market saw the
emergence of the Local banias and his neighborhood Kirana shop. Infact these
were the common local mummy-dady or multipurpose departmental store
located in the residential areas such shops stocked goods and multipurpose
utility and were with the vision of providing convenience at the door step of
the consumer. While barter would be considered to be the oldest form of
retail trade, since Independence, retail in India has evolved to support the
unique needs of our country, given its size and complexity. Haats, mandis and
melas have been a part of India landscape. They will continue to be present in
most part of the country and form an essential part of life and trade in various
areas.

The food and beverages segment accounts for the largest share with
more than 70 per cent of the total retail pie. Traditional retail dominates food,
grocery and allied products sector, with the grocery and the staples largely
sourced from kirana' stores and push cart vendors. Food and grocery
constitutes the bulk of Indian retailing and its share is about 60%. Organized
retailing accounts for about less than 2 per cent of the food retailing industry
in India. However, the share of organised retailing in food and grocery
segment could grow to 15-20%, if the current trends in expansion of
organised retail continue has been studied by Reardon et al (2008). Nilgiris,
established in 1905 as a dairy farm near Ootacamund in South India could
perhaps be the first organised supermarket in India. Though Spencers has

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been a part of Indian retail landscape since 1863, it began selling groceries
only in 1920. Safal, established in 1988 by the National Dairy Development
Board (NDDB), was the first organised retailing venture for fruits and
vegetables in North India particularly in Delhi. Establishment and expansion
of the Food World outlets by the RPG Group starting with the first outlet in
Chennai in 1996 led to enhanced corporate interest in food retailing. RPG
(Spencers), Reliance (Fresh), ITC (Choupal Fresh), Aditya Birla (More),
Heritage (fresh@), Pantaloon Retail (Food Bazaar), Bharti (Easy day), Express
Retail (Big Apple) are some of the major corporate houses currently active in
food retailing in India. Much of the expansion in food and grocery retailing in
India is currently concentrated in the southern states, in and around Chennai,
Hyderabad and Bangalore.

4.4 RETAIL FORMATS IN INDIA


In India, at present, retailing activities are being carried through wide
varieties of formats ranging from ‘pheri wala’ in streets to Modernised Malls
in Metro cities. However from study point of view these formats can easily
classified into following three Groups.

4.4.1 Classification of Retail Format


The store based retailing is categorized on the basis of :
1. Ownership and 2. Merchandise offered

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 Independent Retailer: An independent retailer is one who owns and


operates only one retail outlet. The owner and few other local hands or
family members working as assistants in the shop manages such an outlet.
Many independent stores tend to be passed on from generations to
generations.
 A Chain retailer or a corporate retail chain: When two or more outlets
are under a common ownership it is called a retail chain. These stores are
characterized by similarity in merchandise offered to the consumers, the
ambience, advertising and promotions.
 Franchising: A franchise is a contractual agreement between the
franchiser and franchisee which allows the franchise to conduct business
under an established name as per a particular business format in return
for a fee or compensation. Franchising can be a product or trademark
where the franchise sells the products under franchiser's name.
 Leased Department: They are also termed as shop in shops. When a
section of a department in a retail store is rented to an outside party, it is
termed as a leased department.
 Consumer co-operative: A consumer co-operative is a retail institution
owned by its member customer. These many arise largely because of
dissatisfied consumer whose needs are not fulfilled by the existing
retailers.

4.4.2 Classification on the Basis of Merchandise Offered

 Convenience store: They are relatively small stores located near


residential areas. They are open for long hours, seven days a week and
offer a limited line of convenience products like bread, eggs, milk etc.

 Department store: It is large scale retail outlet, often multileveled whose


merchandise offer spans a number of different product categories. They
are defined as those establishments depending on good, clothing and
home related items.

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 Super markets and hyper markets: Super markets are large, low cost, low
margin, high volume, self service operations designed to meet the needs for
food, groceries and other non food items like health and beauty care
products. Hyper markets are a combination of super markets and
departmental stores. A retail store with a sales area of over 2500 square
meter, with at least 35 per cent of selling space devoted to non-grocery
products like clothes, jewellery, hardware etc. are called hyper markets.

 Specialty stores: A stores specializing in a particular type of merchandise


or single product goods categories is termed as a speciality store. Speciality
stores are owing to their unique designs and patterns. There is dramatic
increase in the availability of apparel products due to consumers rising
demand and higher disposable income. These are characterized by a narrow
product line with deep assortments in that product line. Specialty stores
usually concentrate on apparel, jewellery, fabrics, furniture etc.

 Off-price retailers: They buy products from manufactures in off seasons as


a deep discount and sell them at less than retail prices. The merchandise
may be in odd sizes, unpopular colors or with minor defects. They may be
manufacturer owned and care called factory outlets.

 Catalogue showroom: Catalogue retailers usually specialize in hard good


such as house wear, jewellery, and consumer electronics. A customer walks
into this retail show room, goes through the catalogue of the products that
he would like to purchase.

4.5 THE MALL SPACE DISTRIBUTION


Today in Indian economy, the retail sector is very promising
particularly organized retailing, it is spreading in the entire tier – I, II, III cities
of India. Every year the organized retail outlets and malls are opening up in
good numbers in all the cities of India. As per the study conducted by knight &
Frank India shows that by the year 2012, the total mall space available in
India is approximately 75 million sq. ft. the following table shows the mall
space distribution in the major cities of India.

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Table 4.1: Mall Space distribution in selected cities in India, 2016.

S.No City Area Sq.Ft % Distribution


1 Delhi 22500000 30
2 Mumbai 20250000 27
3 Hyderabad 5250000 7
4 Bangalore 3750000 5
5 Pune 3750000 5
6 Others 19500000 26
75000000 100
Source: Knight & Frank Study

Recognizing the short-term and long-term growth of retail in India, a


number of domestic business giants have entered the retail industry or are
planning to do so in the near future. Some like Pantaloon Retail, Shopper‘s
Stop and Pyramid Retail have been in the industry for a decade. Others like
Reliance Retail Ltd. (RRL) have just entered and opened up a number of stores
across the country. Still other domestic players like Birla and Bharti330 are
planning their foray into this sector. In fact retail in India has also attracted
global giants like Wal-Mart who have also indicated their interest in the sector
by forming a Joint Venture with Bharti. Each of these domestic and
international retail giants have or will introduce a number of modern retail
formats like malls, hypermarkets and supermarkets. Initial consumer
response to these novelties in the retail sector has been very promising and as
the middle-class continues to grow, organized retail in India is sure to see
large returns. In fact, organized retail is growing at a staggering 35 per cent
per year.

As organized retailers enter the Indian market, however, they must be


mindful of the unique status of retail in the country. Retail in the country has
been dominated by millions of unorganized retailers who have used consumer
proximity and home-delivery as their operating ideals to cater to the Indian
consumer that has become accustomed to this convenience. Unorganized
retail has both shaped the mentality of the Indian consumer and been shaped

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by it. As of 2005 retail contributed 39 per cent of India‘s GDP, but even with
this, the percentage of retail in the organized sector is only a measly 6 percent.
These counter-stores and street vendors might seem small fish in a retail
industry that is soon to be dominated by giants like Pantaloon and Reliance.
Yet, they cater to a different set of preferences of the Indian consumer and
have traditionally survived on low turnover and thin margins. Individually
they are a minor factor in the retail plans of any giant organized retailer but
collectively they represent the historic state of retail in India that is so deeply
intertwined in the economy of the country and the psyche of the Indian
consumer that co-existence with them is a better policy rather than
competition.

Another factor that major retailers must be vary of is the lack of


infrastructure to support supply chains and efficient retail operations in India.
Companies like Wal-Mart that grew from the ground-up leveraged the
infrastructure of U.S.A to build a large supply-chain which has been the
backbone of its success. The story in India is very different. Inadequate
highways, the absence of cold storage facilities, an underdeveloped supply
chain, limitless bureaucracy and the lack of regulations created a situation
where the local corner-stores and hawkers thrived. What was the street-
vendors gain will be a major hurdle for large-scale organized retailers. They
will have to demonstrate unprecedented innovation, adaptation and
experimentation to succeed in the Indian retail industry.

Journey of Organized Retail in India

S.No Year Growth Function


1 2000 First Phase Entry, Growth Expansion, Top line focus
2 2005 Second Phase Range, Portfolio, Former options
End to end supply chain management, Backend
3 2008 Third Phase
operation, Technology, Prices
4 2011 Fourth Phase M&A, Shakeout, Consolidation, High investment

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As mentioned in table , India has started emerging as a new market for


all the global players because of changing demand and growing economy. The
economy is one of the biggest magnetic factors which is pilling every major
retail player outside this economy to enter and get the biggest possible bite of
the cake as the cake called Indian market is the most tempting one today. The
booming economy itself is not just an invitation but also is creating a necessity
for the country to get some major players in the country to serve the demand.
The economy of India is a growing economy in every aspect so even the
demands are growing.

4.6 INDIA RETAIL - THE PAST, PRESENT AND FUTURE


Before the decade of eighties, India with hundreds of towns and cities
was a nation striving for development. The evolution was being witnessed at
various levels and the people of India were learning to play different roles as
businessmen and consumers. Retail-which literally means to put on the
market, is a very important aspect of every city. Without a well organized
retail industry we would not have our necessities and luxuries fulfilled. Be it
our daily groceries or fashion accessories and everything in between, retail
industry brings us the blissful experience of shopping. Though organized
retailing industry began much earlier in the developed nations, India had not
actively participated. However with its vast expanse and young population,
India in the 21st century emerges as a highly potential retail market. The
journey of retailing in India has been riveting and the future promises further
growth. Here is a complete picture deciphering the past, present and future
trends of Indian Retail Market.

4.6.1 Retail in India Past Scenario


Before the decade of eighties, India with hundreds of towns and cities
was a nation striving for development. The evolution was being witnessed at
various levels and the people of the nation were learning to play different
roles as businessmen and consumers. The foundation for a strong economy

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were being laid, youth were beckoning new awareness in all spheres. And this
brought in an opportunity for retail industry to flourish. First in the metros
and major cities later to impact sub urban and rural market as well.

Retailing in India at this stage was completely unorganized and it


thrived as separate entities operated by small and medium entrepreneurs in
their own territories. There was lack of international exposure and only a few
Indian companies explored the retail platform on a larger scale. From
overseas only companies like Levi's, Pepe, Marks and Spencer etc. had entered
targeting upper middle and rich classes of Indians. However as more than 50
percent population was formed by lower and lower middle class people, the
market was not completely captured. This was later realized by brands like
Big Bazaar and Pantaloons who made their products and services accessible
to all classes of people and today the success of these brands proves the
potential of Indian retail market. A great shift that ushered in the Indian Retail
Revolution was the eruption of Malls across all regional markets. Now at its
peak, the mall culture actually brought in the organized format for Retailing in
India which was absent earlier. Though malls were also initially planned for
the higher strata, they successfully adapted to cater to the larger population of
India. And it no wonder, today Malls are changing the way common Indians
have their shopping experience. However there is still great scope for
enhancing Indian mall culture as other than ambience and branding many
other aspects of Retail Service remains to be developed on international
standards.

To your surprise there was not a single mall in India a decade before
and just a few years ago only a handful of them were striving, today there are
more than 50 malls across different cities and 2 years from now around 500
malls are predicted to come up. Indeed this shows a very promising trend
ahead, however before taking a leap into the future of Retail in India, let's see
what the Indian retail Industry is currently occupied with.

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4.6.2 Retail in India Present Scenario


Organized Retail in India refers to the modern retail formats like
supermarkets and hypermarkets prevalent in most developed countries. This
form of retail accounts for a painfully low 2 per cent of the retail industry, but
is growing at a healthy 35 per cent and is expected to cross the INR 1000
billion mark by 2020. Organized retail remained a dormant sector largely due
to the lack of infrastructure for large-scale retail, absence of product variety
and a conservative Indian consumer. Today the flood of products in the
market coupled with a wealthier, more informed Indian consumer have
created the atmosphere for the entry of organized retail to tap into the $320
billion Indian retail industry. At present the Retail industry in India is
accelerating. Though India is still not at an equal pace with other Asian
counterparts, Indian is geared to become a major player in the Retail Market.
The fact that most of the developed nations are saturated and the developing
ones still not prepared, India secures a great position in the international
market. Also with a highly diverse demography, India provides immense
scope for companies brining in different products targeting different
consumers.

According to the Global Retail Development Index, India is positioned


as the foremost destination for Retail investment and business development.
The factor that is presently playing a significant role here is the fact that a
large section of Indian population is in the age group of 20-34 with a
considerably high purchasing power; this has caused the increase in the
demand in the urban market resulting in consistent growth in the Retail
business. And though the metros and other tier 1 cities continue to sustain
Retail growth, the buzz has now shifted from these great cities to lesser
known ones. As the spending power is no longer limited to metros, every tier
2 city in the country has good market for almost every product or service. Due
to this, tier 2 cities like Chandigarh, Coimbatore, Pune, Kolkatta, Ahmedabad,
Baroda, Hyderabad, Cochin, Nagpur, Indore, Trivandrum etc. provide a good
platform for a brand to enter Indian market.

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As the Indian retailing is getting more and more organized various


retail formats are emerging to capture the potential of the market.
 Mega Malls
 Multiplexes
 Large and small supermarkets
 Hypermarkets
 Departmental stores are a few formats which flourishing in the both big
and small regional markets

As the major cities have made the present retail scenario pleasant, the
future of the Indian Retailing industry lies in the rural regions. Catering to
these consumers will bring tremendous business to brands from every sector.
However as the market expands companies entering India will have to be
more cautious with their strategic plans. To tap into the psyche of consumers
with different likes and dislikes and differing budgets a company has to be
well prepared and highly flexible with their product and services. In this
regard focusing on developing each market separately can save a brand from
many troubles.

4.6.3 Present Challenges in Retailing


1. The industry is facing a severe shortage of talented professionals,
especially at the middle management level. Most Indian retail players are
under serious pressure to make their supply chains more efficient in order
to deliver the levels of quality and service that consumers are demanding.
Long intermediation chains would increase the costs by 15 per cent.
2. Lack of adequate infrastructure with respect to roads, electricity, cold
chains and ports has further led to the impediment of a pan-India network
of suppliers. Due to these constraints, retail chains have to resort to
multiple vendors for their requirements, thereby, raising costs and prices.
3. The available talent pool does not back retail sector as the sector has only
recently emerged from its nascent phase. Retailing is yet to become a
preferred career option for most of India‘s educated class that has chosen
sectors like IT, BPO and financial services.

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4. Even though the Government is attempting to implement a uniform value-


added tax across states, the system is currently plagued with differential
tax rates for various states leading to increased costs and complexities in
establishing an effective distribution network. Stringent labor laws govern
the number of hours worked and minimum wages to be paid leading to
limited flexibility of operations and employment of part-time employees.
Further, multiple clearances are required by the same company for
opening new outlets adding to the costs incurred and time taken to expand
presence in the country.
5. The retail sector does not have industry status yet making it difficult for
retailers to raise finance from banks to fund their expansion plans.

4.6.4 Retail in India the Future Scenario


According to a study the size of the Indian Retail market is currently
estimated at Rs. 704 crores which accounts for a meager 3 percent of the total
retail market. As the market becomes more and more organized the Indian
retail industry will gain greater worth. The Retail sector in the small towns
and cities will increase by 50 to 60 percent pertaining to easy and inexpensive
availability of land and demand among consumers. Growth in India Real
estate sector is also complementing the Retail sector and thus it becomes a
strong feature for the future trend. Over a period of next 4 years there will be
a retail space demand of 40 million sq. ft. However with growing real estate
sector space constraint will not be there to meet this demand. The growth in
the retail sector is also caused by the development of retail specific properties
like malls and multiplexes.

According to a report, from the year 2003 to 2008 the retail sales are
growing at a rate of 8.3 percent per annum. With this the organized retail
which currently has only 3 percent of the total market share will acquire 15-
20 percent of the market share by the year 2020.
 Indian economy and its policies are also becoming more and more liberal
making way for a wide range of companies to enter Indian market.

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 Indian population has learnt to become a good consumer and all national
and international brands are benefiting with this new awareness.
 Another great factor is the internet revolution, which is allowing foreign
brands to understand Indian consumers and influence them before
entering the market. Due to the reach of media in the remotest of the
markets, consumers are now aware of the global products and it helps
brands to build themselves faster in a new region.

However despite these factors contributing to the growth of Indian


retail Industry, there are a few challenges that the industry faces which need
to be dealt with in order to realize the complete scope of growth in Indian
market. Foreign direct investment is not allowed in retail sector, which can be
a concern for many brands. But Franchise agreements circumvent this
problem. Along with this regulations and local laws and real estate purchase
restrictions bring up challenges. Other than this lack of integrated supply
chain and management and lack of trained workforce and flux of the market in
terms of price and product choice also need to be eliminated. Despite these
challenges many international brands are thriving in the Indian market by
finding solutions around these challenges. A company that plans to enter
Indian market at this time can definitely look forward to great business if it
analyzes and puts efforts on all parameters, with Good Planning, Timely
Implementation and a media campaign that touches Indian consumers any
brand can go far ahead in the Indian Retail Revolution.

They must also understand the tastes of the Indian consumer who has
only recently started treating retail as a form of leisure. Meanwhile organized
retail will continue to displace many unorganized retailers who are no
competition for the large-scale corporations. Those street-vendors of the
bottom or unorganized retail will be forced to turn back to agriculture or
some other form of livelihood. Yet, corner-stores and hawkers will continue to
be a part of the Indian retail experience. These retailers have always survived
on small, diverse sales with small margins. In that regard, they do not compete

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in the same market as organized retail. The Indian consumer may have
undergone a transformation, but the transformation is only partial. His higher
income, increased exposure and greater willingness to spend will spur the
organized retail sector. Meanwhile the conveniences of home-delivery,
purchases on credit and proximity offered by the unorganized sector will
drive him to the nearest corner-store or street vendor for his small, just-in-
time purchases. Organized retailers have not are and are unlikely to worry
about the threat of unorganized retail as both forms of the retail business
cater to different preferences.

4.6.5 Expected Trend in 2020


Long-term cycles are coming to a close. New market forces are
becoming more prevalent. As these trajectories converge between now and
2015, they will change the retail business environment—and the ways we do
business— forever: This can be
 The Baby Boom—which has dominated retail thinking for decades—will
stand on the precipice of age 70—and will start turning over the keys to
younger generations.
 Interconnectivity will be a part of life—and also a way of life. It will impact
the way people get and share information, communicate, transact
business, even the way they socialize.
 Many existing retail concepts will reach the end of their expansion runway.
 Spending on services will grow at the expense of spending on goods.
 The prevailing belief that bigger is better will break down—aggregation of
small will be the new big. Leading companies will combine global scale
with excellence at local execution.
 Global scope has been an option. In 2020, it will be a requirement to
support large-scale growth and sound business economics.
 Consolidation of retailing into a global oligopoly will continue, as major
players seek expansion in emerging markets experiencing rapid growth of
the middle class and rapid modernization of retailing.

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 ―Point of purchase‖ will be the battlefield for consumer dollars—


replacing the confines of ―shelf space‖ and ―selling floor‖.
 Technology will be pervasive—driven by falling costs, widespread access
and adoption, a working infrastructure and increased standardization.
 Retailing will evolve toward true demand—replacing the artificial demand
dictated by the limitations of shelf space—in an increasingly digital retail
environment where shoppers will have almost infinite visibility into
product choice and increasing input into product creation.
 Digital and personal media will continue to grow exponentially and create
new channels for customer insight, interaction and engagement.
 The value chain will become more intimate: Consumers will share more
information with retailers and suppliers but expect to get more value in
return.

Organized Retail Outlets in India from 2004 to 2015 (Rs.Cr)

S.No Areas 2004 2015


1 Food & Grocery & Gen. Merchandise 2950 10% 102546 42%
2 Cloth Textile and Fashion 10900 39% 40605 16%
3 Durables and Mobiles 3340 12% 28891 12%
4 Food Service 2000 7% 24351 10%
5 Home Appliances 2500 8% 16346 7%
6 Jewellery and Watches 1960 7% 8770 3%
7 Footwear 2500 9% 6508 3%
8 Books, Music, Toys & Gifts 800 3% 3722 1%
9 Others 1350 5% 14692 6%
Total 28000 100% 246431 100%
Source: A Report by Earnest and Young for IBEF, www.ibef.org

To succeed in 2020, retailers and suppliers must remember what got


them there—and also embrace new assumptions that drive the new outlook.
Past business drivers will wane but won‘t entirely disappear. The above
mentioned facts can be understood in a better way with help of the following
table which shows the transitional growth of organized retail industry from
year 2004 to year 2020.

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The above table indicating the contribution of organized retail outlets


to Indian economy from 2004, It also gives an idea about the future position of
various formats in the economy and their contribution to the Indian economy.
As per the table it is clear the food grocery and general merchandise
contributed Rs 2950 (Cr) and occupied about 10% of the total space in the
economy, Cloth Textile and Fashion contributed Rs 10900 (Cr) and occupied
about 39% of the total space in the economy, Durables and Mobiles Rs 3340
(Cr) and occupied about 12% of the total space in the economy, Food Service
Rs 2000(Cr) and occupied about 7% of the total space in the economy, Home
Appliances Rs 2500 (Cr), Jewellery and Watches Rs 1960 (Cr) and occupied
about 7% of the total space in the economy, Footwear Rs 2500 (Cr) and
occupied about 9% of the total space in the economy, Books Music Toys and
Gifts Rs 800 (Cr) and occupied about 3% of the total space in the economy,
and others also contributed Rs 1350 (Cr) and occupied about 5% of the total
space in the economy in 2004, but it is predicted that by year 2015 Food
Grocery and General Merchandise is going to contribute Rs 102546 (Cr) and
occupy about 42% of the total space in the economy, Cloth Textile and Fashion
is going to contribute Rs 40605 (Cr) and occupy about 16% of the total space
in the economy, Durables and Mobiles is going to contribute Rs 28891 (Cr)
and occupy about 12% of the total space in the economy, Food Service is going
to contribute Rs 24351(Cr) and occupy about 10% of the total space in the
economy, Home Appliances Rs 16346 (Cr) and occupy 7% of the total
economy, Jewellery and Watches is going to contribute Rs 8770 (Cr) and
occupy about 3% of the total space in the economy, Footwear is going to
contribute Rs 6508 (Cr) and occupy about 3% of the total space in the
economy, Books Music Toys and Gifts is going to contribute Rs 3722 (Cr) and
occupied about 1% of the total space in the economy, and others also are
going to contribute Rs 14692 (Cr) and occupy about 6% of the total space in
the economy by 2015. Further from the table it is clearly stated the by 2015
the total earnings from organized retail outlets which is R 28000 (Cr) will
increase to Rs 246434 (Cr) with maximum contribution being from Food
Grocery and General Merchandise.

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4.7 FDI in INDIAN RETAIL FORMAT


On 26th November 2011, the Government of India lifted certain
restrictions in FDI in the retail sector. Since then, there have been a lot of
debates regarding the implications of this new policy. We believe that this
new policy is beneficial to our economy. In this report, we analyze the current
policy, its limitations and the advantages of liberalizing this sector.

‘Retail’ is defined as the sale of physical goods or merchandise to the


ultimate consumer for personal consumption. It is the last link in the supply
chain of a product.

Source: Taneja (2006)

India’s retail industry is broadly divided into the organized and the
unorganized sector. Organized retailing refers to trading activities undertaken
by retailers who possess legal permissions or licenses to undertake the
activity and are registered for income tax, sales tax, etc. These include the
hyper-markets, super-markets, retail chains, and also the privately owned
large retail businesses. Although the organized sector has seen exponential
growth in recent years, it still contributes to only 3% of the establishments of
the entire retail sector.

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The rest is taken up by the un-organized sector which includes the


traditional formats of retailing like the local kiranas, owner-manned general
stores, convenience stores, pavement vendors, etc. The retail trade sector is
the second largest source of employment after agriculture, employing around
33 million people and has deep penetration into rural India. The Business
Monitor International (BMI) India Retail Report for the fourth-quarter of 2011
forecasts that the total retail sales will grow at a CAGR of 18% from $411
billion in 2011 to $804 billion by 2015. The organized retail sector is expected
to grow at a much higher CAGR of 40%. Large Indian players like Reliance,
Tatas, K Rahejas, Bharti, ITC and many others are making significant
investments in this sector, which can be further classified into;
 Food and grocery retail (Reliance fresh, Spencers)
 Apparel retail (Westside, Pantaloons)
 Gems and jewelry retail (Tanishq)
 Personal care retail (Health & glow)
 Music and books retail (Landmark. Odyssey)
 Consumer durables retail (Croma, Viveks)

4.7.1 Current FDI policy for Retail


The current regulations allow 100% FDI in wholesale cash-and-carry
trading (building of large distribution infrastructure to sell goods to local
retailers) and export trading. FDI up to 51% is allowed in single brand
products with prior government approval. FDI is prohibited in multi-brand
retailing.

The current entry options for foreign players include


1. Franchisee agreements – e.g., Dominos, Pizza Hut, Marks and Spencer
2. Cash-and-carry wholesale trading – e.g., Metro AG, Wal-Mart
3. Strategic licensing agreements – e.g., SPAR, Mango
4. Wholly owned subsidiaries – e.g., Nike, Reebok

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However, these retailers are subjected to the following restrictions:


 only single brand products can be sold (i.e., retail of goods of multi-brand
even if produced by the same manufacturer would not be allowed),
 products should be sold under the same brand internationally,
 single-brand product retail can only cover products which are branded
during manufacturing, and
 any addition to product categories to be sold under “single-brand” would
require fresh approval from the government.

Besides these, any large organized retailer must also get approvals
from a variety of government departments, which also creates barriers to
entry and raises the administrative costs.

If we take the example of a large foreign player involved in groceries,


we would find that it would not be able to set up shop in India. This is because
these chains usually source products and brand it with their private labels,
but the regulations require the products to be branded at their manufacturing
stage.

Large international retailing giants like Wal-Mart, Ikea, Tesco,


Carrefour, etc. see India as the last retailing front for growth as China’s market
gets saturated. The BMI India Retail Report estimates the retail industry in
India to be worth $804 billion by 2015. These retailers are therefore pushing
for implementing FDI in multi-brand retailing in India and allowing 100% FDI
in single brand retailing.

4.7.2 Issues in Retail due to present set-up


For a country that produces around 180 MT of fruits and vegetables
annually, India has an abysmally low capacity for cold storage which is around
23.6 MT. Almost 80% of this is used for potatoes. The supply chain for the
perishable horticultural products is highly fragmented and it is difficult for

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most of it to reach distant markets. The low storage capacity causes heavy
losses to the farmers. A study shows that post-harvest losses of farm produce,
especially of fruits, vegetables and other perishables, have been estimated to
be over Rs. 1 trillion per annum, 57 per cent of which is due to avoidable
wastage. Though FDI is permitted in the supply chain, companies have not
invested in it. Experts believe that without a contractually-binding demand
from the retail sector, the installation of expensive cold storages is not
economically viable.

Due to the involvement of a large number of intermediaries in the


value chain, pricing lacks transparency. According to some reports, Indian
farmers realize only 1/3rd of the total price paid by the final consumer, as
against 2/3rd by farmers in countries that have a higher share of organized
retail. The 60%+ margins for middlemen and traditional retail shops, who add
no value to the supply chain, have limited growth and prevented innovation in
Indian retail sector.

In spite of heavy food subsidies, the overall food inflation in the


country has been quite high and is a matter of concern. We have witnessed
events where the price of a commodity has increased by more than 8 times in
the space of a few months. The absence of an efficient retail supply system
forces the consumer to pay the premium for the wastages and shortages.

4.7.3 Concerns for allowing FDI in Retail


Opponents of FDI believe that opening up this sector to FDI would
jeopardize the unorganized retail sector. About 15% of the country’s total GDP
comes from retail trade and the unorganized sector contributes to around
94% of it. They believe that it would lead to unfair competition in this sector
and result in large-scale displacement of people employed in domestic retail,
around 40% of who are in the urban areas.

The opponents are of the view that even the domestic organized retail
sector would be affected since it is still in its nascent stage and may not be

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able to compete with these established global players, whose resources and
technical knowhow cannot be matched by the Indian retailers.

The opponents also believe that the global players would conspire and
exert monopolistic powers and raise prices for the consumers and reduce the
prices received by suppliers, which would result in lower profit margins for
the farmers. The UK Competition Commission report in its 2000 study found
that farmers come under severe pressure from super-markets due to the
latter’s requirement of large volumes for each product. The Indian farmers
may not be able to keep up with the demand from these retailers, who would
then start sourcing agricultural products from other countries. This would
affect the entire agriculture sector which provides employment to roughly
half of the total workforce.

However, our analysis shows that India’s capacity for increasing its
food grain production is very high. Over 25% of its total irrigation potential is
still untapped. India’s current food grain productivity is exceedingly low
despite farmer incomes growing at a healthy rate of 12% (2005-2010). This is
because of difficulty in the procurement of fertilizers, seeds and other raw
materials due to bottlenecks in the supply chain.

From our analysis we find that India will face a threat to self-
sufficiency in food grain production in the next 5-10 years. Food grain
shortage is expected to range from 20-25% by 2025. India’s subsidy bill in
fertilizers amounting to about 1% of the GDP in 2010 is also expected to grow.
This suggests that improvements need to be made in fertilizer usage,
irrigation and technology to attain maximum potential in agricultural
production. We believe that FDI in retail will have positive spill-over effects in
this sector also.

4.7.4 Advantages of allowing FDI in Retail


A burgeoning middle-class, a good talent pool, abundant resources and
unlimited opportunities is expected to make India the world’s best retail

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economy by 2042, according to industry experts. Global retailers such as Wal-


Mart, Carrefour, Tesco, etc. would be looking to take advantage of more
favorable FDI rules, if implemented, to enter India through partnerships with
local retailers.

If these retailers set up shop in India, it would lead to an increase in the


flow of money in the economy. This is because Indians have a tendency to
shop abroad to get quality products. If such commodities were available in
India, then it would lead to an increase in spending in the country. Also
allowing 100% FDI in single brand retail can mutually benefit the foreign
retailer and the Indian partner – the foreign player gets local market
knowledge, while Indian partner can access global best management
practices, designs and technological prowess.

Food price inflation is a major problem in India and this is essentially


because of the under-developed supply chain infrastructure. It is believed that
the supply chain would improve by utilizing the technical knowhow and
capital of foreign players. Improved technology in the sphere of packaging of
agriculture products and increased use of cold-storage facilities would reduce
wastage and prevent shortages significantly. This will create better linkages
between supply and demand, and will improve the price signals that farmers
receive. By eliminating middlemen farmers stand to get a bigger share of the
final price paid by the consumer.

Retail sector is also highly dependent on the real estate sector as any
retail outlet would require adequate space and infrastructure. The growth in
real estate in India can be stimulated through FDI investments in multi-brand
retail.

4.7.5 Social networks will serve as Shopping platforms


Over the last several years, brands have used social media to market
their products, talk to customers, and even make merchandising decisions;
but in the coming months, it is anticipate merchants to add “selling” to the list
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of things they can do on social sites. The recent launches of shopping


functionalities in the social realm (i.e. Facebook’s and Twitter’s “buy” button
and Curalate’s Like2Buy platform for Instagram) tell us that social is going to
get a whole lot more shoppable in 2020. Retailers that have already started
participating in the trend.

Consumers these days are more drawn to retailers that invest in


Corporate Social Responsibility (CSR). A surbey by Cone Communications and
Echo Research uncovered that 87 percent of global consumers factor in CSR
into their purchase decisions. How does CSR improve the shopping
experience? Simple, It makes customers feel good knowing that they were
contributing to a worthwhile cause. In 2020, I expect more merchants to
launch ethical and good deed initiatives.

Retailers will adopt and experiment with technology.


Merchants will adopt and experiment with tech innovations and figure
out how they can use them to improve the shopping experience. We will likely
see more of the technology like digital merchandising, virtual cart etc, in
coming year.

The most successful retailers will be the ones that have “complete
control of their value chain, from creation all the way to consumption.”
Retailers will realize this in 2020, which is why we will likely see an increase
in value chain initiatives, single product retail, and private label merchandise.
Additionally, more retailers will get creative with how they fulfill orders and
distribute products. Speed and convenience will become more important than
ever, so merchants will come up with better and faster ways to get products
into the hands of their customers.

The retail sector has played a phenomenal role throughout the world
in increasing productivity of consumer goods and services. It is also the fourth
largest industry in India in terms of number of employees and establishments.
There is no denying the fact that most of the developed economies are very
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much relying on their retail sector as a locomotive of growth. The India Retail
Industry is the largest among all the industries, accounting for over 10 percent
of the counties GDP and around 8 percent of employment.

The Retail industry in India has come forth as one of the most dynamic
and face paced industries with several players entering the market. But all of
them have not yet tasted success because of the heavy initial investments that
are required to break even with other companies and compete with them. The
India Retail Industry is gradually inching its way towards becoming the next
boom industry. The future trend in retail will be more technology driven. In
2020 this is expected that India will pick up growth momentum will seen into
retail. And it is also expected that the retail will come out from the fragile
growth.

Key players in the Indian retail market are as follows:

Pantaloon Retail Ltd Over 2 million sq.ft of retail spread over 35 cities
(Future Group Venture) with 65 stores and 21 factory outlets
Shoppers Stop Over 3.21 million sq. ft of retail space spread over
(K.Raheja Group Venture) 23 cities with 51 stores
Spencers Retail Retail footage of close to 1 million sq. ft across 45
(Part of RP-SG Group) cities with 200 stores
Lifestyle Retail Approximately 15 Lifestyle and eight Home centre
(Landmark Group Venture) stores
Bharati Retail 74 Easyday stores with plans to invest about 2.5
billion USD over the next five years to add about 10
million sq. ft of retail space in the country
Reliance Retail 700 stores with a revenue of 7,600 crore INR
Aditya Birla ‘More’ 575 stores with approximate revenue of 2,000
crore INR. Recently purchased stake in Pantaloon
Retail
Tata Trent 59 Westside stores, 12 Starbazar hypermarkets and
26 Landmark bookstores

The Indian retail sector accounts for over 20% of the country’s gross
domestic product (GDP) and contributes 8% to total employment. The
cumulative foreign direct investment (FDI) inflows in single-brand retail
trading, during April 2000 to June 2011, stood at 69.26 million USD.

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Studies like the MasterCard Worldwide Index of Consumer Confidence


have ranked Indian consumers as some of the most confident in the world.
The more confident the consumers are about the strength of the economy,
their personal finances, their career growth, etc., the more they tend to
increase their consumption, purchase non-essential products, experiment
with products, brands, categories, etc. Besides, the country’s rural population
of 700 million presents an opportunity for retail and consumer companies
that cannot be ignored.

The current estimated value of the Indian retail sector is about 500
billion USD and is pegged to reach 1.3 trillion USD by 2020.

The penetration level of modern retail (currently 5%) will increase six-
fold from the current 27 billion USD to 220 billion USD in 2020. The Indian
retail sector is expected to grow at a CAGR of 15 to 20%. Factors driving the
organized retail sector include the following:
• Higher incomes driving the purchase of essential and nonessential
products
• Evolving consumption patterns of Indian customers
• New technology and lifestyle trends creating replacement demand
• Foreign entrants in the Indian segment are as follows:
• Germany-based Metro Cash & Carry opened six wholesale centres in the
country.
• Walmart with Bharti Retail, owner of Easyday stores.
• British retailer Tesco Plc (TESCO), signed an agreement with Trent Ltd
(Trent), the retail arm of Tata Group to set up cash-and-carry stores.
• Carrefour opened its first cash-and carry store in New Delhi.

HYDERABAD RETAIL MALL INFORMATION:


The economy of Hyderabad, the capital of Telangana, India, is based on
traditional manufacturing, the knowledge sector, and tourism. Starting in the
1990s, the economic pattern of the city changed from a primarily service hub

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to a more diversified economy, but the service industry remains a major


contributor. As of 2006, the largest employers of Hyderabad are the
governments of Andhra Pradesh and India, with 113,000 and 85,000
employees, respectively.

Today, Hyderabad has the presence of a host of popular brands a cross


segments such as apparel, footwear, music and entertainment, F&B as well as
multiplex operators. While some of the large retail players like Lifestyle and
Shoppers Stop and mall projects like Hyderabad Central arelocated on
Begumpet-Punjagutta strip, other prominent mall projects like GVK One and
City Centre Mall are located on Banjara Hills Road No 1. Lumbini Mall on
Banjara Hills Road No. 3 and Inorbit Mall at Madhapur form a part of the retail
stock in the city as well.

Mall from the study conducted on the various rental structures of the
tenants, it was apparent that the anchor tenants’ rentals remain more or less
the same across different floors. The average range for anchor tenants is in the
range of Rs 38-52/sq ft per month. The vanilla tenants’ rentals on the ground
floor vary from Rs 70-100/sq ft per month in the Old CBD areas, whereas the
CBD/Off CBD range between Rs 70-130/sq ft per month. The sub urban and
the peripheral zone range from Rs 100-250/sq ft per month. There is a
difference of 20-25 per cent for the first three floors and beyond that there is
no major difference in the rental values. This scenario remains the same in all
operational malls except in GVK One where the rental ranges are more or less
the same across all floors.

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The rental for a revenue share model with minimum guarantee varies
between Rs 28-40/sq ft per month with a revenue share of 5-15 per cent;
whereas rentals for tenants, who are not on the revenue share model, range
from Rs150-300/sq ft per month. The rentals for vanilla tenants in 2007 were
purely on a Leave and Licence agreement. But post 2008, with the economic
slump there has been a shift in the trend and an increasing number of tenants
are going for a minimum guarantee plus revenue sharing model. This is
particularly noticeable in the recently launched large format malls like GVK
One and Inorbit.

At present the suburban zone has five operational malls with anchor
tenants like Shoppers Stop, Inox, Globus, Max, Crosswords and X-cite. The
average anchor rental is approximately Rs 52/sq ft per month. On the other
hand, the peripheral zone has the presence of only Inorbit Mall asretail stock.
The main anchors are Hypercity, Shoppers Stop, Lifestyle and Cinemax. The
average anchor rentals are approximately Rs 43/sq ft per month.

Mall
Malls in Hyderabad have a healthy occupancy rate of over 90 per cent
in most of the micro-markets. For anchor tenants it has been observed that
hypermarkets/ departmental stores occupy a major quantum of the space in
malls, accounting for 37 per cent of the total anchor tenant occupying built-up
area in the malls studied. The hypermarkets are followed by ‘Apparels &
Accessories’ absorbing around 30 per cent of the total existing mall space
occupied by anchor tenants. Multiplexes are the third largest occupiers, to the
tune of around 29 per cent of the mall space stock occupied by anchor tenants,
as they are considered to be the main crowd-pullers in a mall. The remaining
anchor tenant area is accounted for by F&B, Electronics & White goods and
other stores.

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Major Retailers in Hyderabad


Pantaloon:
Pantaloon is one of the biggest retailers in India with more than 450
stores across the country. Headquartered in Mumbai, it has more than 5
million sq. ftretail space located across the country. It's growing at an enviable
pace and is expected to reach 30 million sq. ft by the year 2010. In 2001,
Pantaloon launched country's first hypermarket ‘Big Bazaar’. It has the
following retail segments:
• Food & Grocery: Big Bazaar, Food Bazaar
• Home Solutions: Hometown, Furniture Bazaar, Collection-i
• Consumer Electronics: e-zone
• Shoes: Shoe Factory
• Books, Music & Gifts: Depot
• Health & Beauty Care: Star, Sitara
• E-tailing: Futurebazaar.com
• Entertainment: Bowling Co.

Tata Group
Tata group is another major player in Indian retail industry with its
subsidiary Trent, which operates Westside and Star India Bazaar. Established
in 1998, it also acquired the largest book and music retailer in India
‘Landmark’ in 2005. Trent owns over 4 lakh sq. ft retail space across the
country.

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RPG Group
RPG Group is one of the earlier entrants in the Indian retail market,
when it came into food & grocery retailing in 1996 with its retail Food-world
stores. Later it also opened the pharmacy and beauty care outlets ‘Health &
Glow’.

Reliance
Reliance is one of the biggest players in Indian retail industry. More
than 300 Reliance Fresh stores and Reliance Mart are quite popular in the
Indian retail market. It's expecting its sales to reach ` 90,000 crores by 2010.

AV Birla Group
AV Birla Group has a strong presence in Indian apparel retailing. The
brands like Louis Phillipe, Allen Solly, Van Heusen, Peter England are quite
popular. It's also investing in other segments of retail. It will invest ` 8000-
9000 crores by 2010.

Types of Retail Malls Hyderabad


 Departmental stores: are general retail merchandisers offering quality
products and services.
 Convenience stores: are located in residential areas with slightly higher
prices goods due to the convenience offered.
 Hypermarkets / supermarkets: large self-servicing outlets offering
products from a variety of categories.
 Shopping malls: the biggest form of retail in India, malls offers customers a
mix of all types of products and services including entertainment and food
under a single roof.

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 E-trailers: are retailers providing online buying and selling of products and
services.
 Discount stores: these are factory outlets that give discount on the MRP.
 Vending: it is a relatively new entry, in the retail sector. Here beverages,
snacks and other small items can be bought via vending machine.
 Category killers: small specialty stores that offer a variety of categories.
They are known as category killers as they focus on specific categories,
such as electronics and sporting goods. This is also known as Multi Brand
Outlets or MBO's.
 Specialty stores: are retail chains dealing in specific categories and provide
deep assortment. Mumbai's Crossword Book Store and RPG's Music World
are a couple of examples.

Consumer Behaviour Model:


Traditional models
 Economic model: The economic model of consumer behavior focuses on
the idea that a consumer's buying pattern is based on the idea of getting
the most benefits while minimizing costs. Thus, one can predict consumer
behavior based on economic indicators such as the consumer's purchasing
power and the price of competitive products.
 Learning model: This model is based on the idea that consumer behavior
is governed by the need to satisfy basic and learned needs. Basic needs
include food, clothing and shelter, while learned needs include fear and
guilt.
 Psychoanalytic model: The psychoanalytical model takes into
consideration the fact that consumer behavior is influenced by both the
conscious and the subconscious mind. The three levels of consciousness
discussed by Sigmund Freud (id, ego and superego) all work to influence
one's buying decisions and behaviors. Sociological model: The
sociological model primarily considers the idea that a consumer's buying
pattern is based on his role and influence in the society. A consumer's
behavior may also be influenced by the people she associates with and the
culture that her society exhibits.

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II. Contemporary models


 Howard-Sheth Model
 Engel-Kollat-Blackwell Model
 Nicosia Model
 Stimulus-Response Model

Howard-Sheth model (1969)


It is one of the most comprehensive models of consumer buying
behavior and it uses the concept of stimulus-response in order to explain
buyer’s brand choice behavior over a period of time.

Input variables:
The input variables are the stimuli come from the environment. The
input variables consist of informational cues about the attributes of a product
or brand (i.e. quality, price, distinctiveness, service and availability).
Significant Stimulies are the actual elements constituting a brand that the
buyer confronts. EG. price, quality, service, availability. They influence the
consumer directly through the brand's attributes. Symbolic Stimulies are
created by manufacturer representation of their products in symbolic
form.ge.advertisemnet, publicity.

Output variables:
The five output variables in the right hand portion of the model are
buyer's observable responses to stimulus inputs. They are arranged in order
from Attention to Actual Purchase. The purchase is the actual, overt act of
buying and is the sequential result of the attention (buyers total response to
information intake), the brand comprehension, brand attitude (referring to
the evaluation of satisfying potential of the brand) and the buyer intention (a
verbal statement made in the light of the above externalizing factors that the
preferred brand will be bought the next time the buying is necessitated.

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Source: Batra (2008) , Pg. no:278

Hypothetical constructs:
Hypothetical constructs have been classified in two groups - perceptual
constructs and learning constructs. The first deals with the way the individual
perceives and responds to the information from the input variables,
accounting for stimulus ambiguity and perceptual bias. The second deals with
the stages from the buyer motives to his satisfaction in a buying situation. The
purchase intention is an outcome of the interplay of buyer motives, choice
criteria, brand comprehension, resultant brand attitude and the confidence
associated with the purchase decision. The motives are general or specific
goals impelling to action, impinging upon the buyer intention are also the
attitudes about the existing brand alternatives in the buyer's evoked set,
which result in an arrangement of an order of preference regarding brands.

Exogenous variables:
The model also includes some exogenous variables which are not
defined but are taken as constant. They can significantly affect buyer
decisions. Some major exogenous variables included in the model are
importance of purchase, personalty variables, culture, social class, financial
status.

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Engel-Kollat-Blackwell Model
The Engel, Kollat and Blackwell Model, also referred to as the EKB
model was proposed to organize and describe the growing body of
knowledge/research concerning consumer behavior.

The model consists of five parts, viz. information input, information


processing, decision process stage, decision process variables, and external
influences.

Information input:
The information input includes all kinds of stimuli that a consumer is
exposed to and triggers a kind of behavior. The consumer is exposed to a large
number of stimuli both marketing (advertising, publicity, personal selling,
demonstrations, store display, point of purchase stimuli) as well as non-
marketing sources (family, friends, peers); thus the various stimuli compete
for consumer’s attention. These stimuli provide information to the consumer
and trigger off the decision making process.

Source: Del Hawkins (2007) pg. no 214

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Information processing:
Stimuli received in the first stage provide information; the information
is processed into meaningful information. The stage comprises consumer’s
exposure, attention, perception/comprehension, acceptance, and retention of
information. The consumer is exposed to stimuli (and the accompanying
information); attention determines which of the stimuli he will focus upon;
thereafter he would interpret and comprehend it, accepts it in his short term
memory and retains it by transferring the input to long-term memory.

Decision-process stage:
At any time during the information processing, the consumer could
enter into this stage. The model focuses on the five basic decision-process
stages, viz., problem recognition, search, alternative evaluation, choice, and
outcomes (post-purchase evaluation and behavior).

There is problem recognition; this is followed by a search for


information, which may be internal based on memory. The search of
information is also impacted by environmental influences. Thereafter, the
consumer evaluates the various alternatives; while evaluation, belief lead to
the formation of attitudes, which in turn affect the purchase intention. The
next stage is the choice and purchase, which gets impacted by individual
differences. Finally there is an outcome, in the form of satisfaction and
dissatisfaction. This outcome acts as a feedback on the input and impacts the
cycle again. However, EKB proposed that it is not necessary for every
consumer to go through all the five stages; it would depend on whether the
problem is an extensive or a routine problem-solving behavior.

Decision process variables:


The model proposes individual influences that affect the various stages
of the decision making process. Individual characteristics include constructs
like demographics, motives, beliefs, attitude, personality, values, lifestyle,
normative compliance, etc.

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External influences:
The model also proposes certain environmental and situational
influences that affect the decision making process. The environmental
influences include “Circles of Social Influence,” like culture, sub-culture, social
class, reference groups, family and other normative influences; situational
influences include consumer’s financial condition.

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