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Consumer Preference towards Retail Stores for
Food and Grocery in Evolving Retail Market
Yadav, Rajesh K.; Verma, Manoj
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Yadav, R. K., & Verma, M. (2015). Consumer Preference towards Retail Stores for Food and Grocery in Evolving
Retail Market. International Letters of Social and Humanistic Sciences, 60, 102-111. https://doi.org/10.18052/
www.scipress.com/ILSHS.60.102
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Consumer Preference Towards Retail Stores for Food and Grocery in
Evolving Retail Market
Rajesh K. Yadav
*1
Manoj Verma
**2
1
Associate Professor, School of Banking & Commerce, Jagaran Lakecity University, Bhopal (M.P.),
India
2
Research Associate, Indian Institute of Management, lndore (M.P.), India
*, **E-mail address: drrajeshkyadav@yahoo.com, Manojv@iimidr.ac.in
Keywords: Customer Satisfaction, Customer Preference, Organised retail grocery store,
Conventional Karina stores, Grocery shopping etc.
ABSTRACT. The study reveals that young and high income consumer preferences for grocery
shopping are gradually shifting from local kirana stores to organized retail stores. The study was
carried out in the market of Indore. Multivariate statistical techniques were used to analyze the data
collected with the help of a structured questionnaire. The main objective of the study is to
understand whether Indian consumers are likely to move from conventional kirana stores to
organised retail grocery stores while shopping for groceries. The study found that the customer
perceived to be more satisfied with organised retail store when compared with conventional kirana
stores in relation with price and benefits in shopping.
1. INTRODUCTION
The Indian retail sector is experiencing a change and the evolving market is witnessing a
noteworthy change in its growth pattern. Both existing and new players are working out with new
retail formats. These emerging retail formats provide wide variety and offers an ideal shopping
experience to customers with a variety of product, entertainment and service, all under a single roof.
Changing tastes and preferences of consumers’ are leading to radical transformation in ways of life
and spending patterns and this in turn is giving rise to new business opportunities. Consumer
dynamics in India is also changing and the retailers need to comprehend the changing dynamics and
its effect on shopping behavior and plan their strategies in a way to deliver the expected value to the
consumers.
India is often known as the nation of shopkeepers with about 15 million retail outlets and small
neighbourhood grocery stores called “kirana stores” forms the majority of this number. Food and
grocery is the major segment of private consumption expenditure of the family. Food and grocery
comprises of 69 % of the total retail market. This great potential market provides the opportunities
for organized retail companies and at the same time local kirana stores having strong competitive
advantage of proximity and excellent customer relation questions the success of organized retail in
this category.[15]
Overview of Indian Retail Industry:
The Indian retail sector contributes over 14% of the country’s GDP and accounts for 8% to total
employment. The current estimated value of the Indian Retail sector is about 500 billion USD and
expected to reach 1.3 trillion USD by 2020. The contribution of modern retail is currently 8% is
expected to increase from 37 billion USD to 220 billion USD by 2020 according to ibef report. The
credit for this growth can be given to factors like higher income, evolving consumption pattern, new
technology and lifestyle trends, increase in easy access to credit, rapid urbanization, increase in
rural income, growth of modern trade format in Tier-I, Tier-II and Tier-III cities and towns etc. This
scenario is expected to continue for some.[16]
The study will identify the consumers’ behaviour towards emerging organised retail grocery stores
like malls, hyper/supermarkets, department stores, impact of demographic factors on consumers’
behaviour, and attributes influencing purchasing from these retail format and analyze factors that
International Letters of Social and Humanistic Sciences Online: 2015-09-22
ISSN: 2300-2697, Vol. 60, pp 102-111
doi:10.18052/www.scipress.com/ILSHS.60.102
© 2015 SciPress Ltd., Switzerland
SciPress applies the CC-BY 4.0 license to works we publish: https://creativecommons.org/licenses/by/4.0/
are important for deciding what to shop when to shop how to shop and more importantly where to
shop. These factors are important for the marketer to decide upon strategies to develop the store and
work specifically on the factor which directly impact the store choice of the customer. The focus of
the study is to compare and see the prospect of organized and unorganized retail formats especially
when grocery shopping is concerned. The other important question here to answer in the study is
whether consumer are shifting and preferring organised retail formats for shopping of grocery items
and if yes the kirana store need to prepare and work on the strategy to retain their customers and
also to attract new customers to continue making their business profitable.
Food and grocery purchase behaviour of consumers in emerging economies like India is
changing quickly as there is increase in income, communication and information technologies,
urbanisation, education and health awareness, shifting of households towards higher income groups,
changes in lifestyle and family structure (Rao, 2000; Shetty, 2002; Deshingkar et al., 2003; Vepa,
2004; KPMG, 2005; Kaushik, 2005; Kaur and Singh, 2007; Pingali, 2007). Consumer buying
behaviour for food and grocery products has always been influenced by a number of economic,
cultural, psychological and lifestyle factors (Shaw et al., 1993; Brokaw and Lakshman, 1995; Asp,
1999; Roux et al., 2000; Roslow et al., 2000; Roininen, 2001; Choo et al., 2004; Ling et al., 2004;
Ahlgren et al., 2004; Goyal and Singh, 2007; Nagla, 2007).
Increase in income, particularly of the lower and middle-income households, is having a
significant impact on the demand for food items, because these groups tend to spend a relatively
larger share of their income on food consumption. Middle income and urban consumers also spend
a greater part of their income on upgrading and diversifying their diet towards high value products
like fruits and vegetables, eating out more often and eating more processed and convenience food
items (Landes et al., 2004). With the emergence of the supermarket and hypermarket culture,
consumer preference for packaged food products has increased significantly in the recent years
(Stewart-Knox and Mitchell, 2003; Silayoi and Speece, 2004; Wells et al., 2007). The desire for
convenience and an increase in the number of working women are some of the important factors
driving a strong growth of packaged food products (Goyal and Singh, 2007). Besides, consumers
have now started preferring quality food intake and are becoming more conscious in terms of
nutritional diet, health and food safety issues (Ruth and Yeung, 2001; Rimal et al., 2001).
With the development of grocery retail modernization and quick changes in the buying
behaviour of consumers, the retail market for grocery is growing rapidly. To capture the
opportunities of a growing organized retail market in the country, big corporate organizations are
entering into this segment are in the process of making huge investment for making retail chain
stores. [5]
This paper covers food and grocery segment for the purpose of the research. Apart from the
Kirana stores food and grocery is being sold in India through modern formats like supermarket,
hypermarket, discount stores and convenience stores. The retail food industry is very competitive
and challenging industry and it is experiencing significant change in the past few decades. As
retailers have focused on creating successful retail formats, a common distinction has developed
between conventional and other organised grocery retail format stores.
Literature review
The objective of this paper is to predict of the possibility of customers switching from
traditional kirana stores to organized retailers while shopping for groceries, in this section, we first
discern factors related to grocery store patronage; and secondly, identify the dimensions of
customers’ needs and desires which are relevant for grocery store choice. As far as grocery store
patronage is concerned, though early studies, (Enis and Paul, 1970; Dunn and Wrigley, 1984) found
loyalty to be a characteristic of poorer shoppers [3], a recent study indicates significantly higher
incomes and weekly expenditures of the loyal shoppers [9] (McGoldrick and Andre, 1997). Knox
and Walker (2003) confirmed the existence of a weak but significant relationship between
involvement and brand loyalty in grocery markets [8]. Overall satisfaction with a store does not
significantly influence customers’ loyalty to that store and shoppers’ intention to remain loyal to
International Letters of Social and Humanistic Sciences Vol. 60 103
their ‘‘primary store’’ is influenced by factors like frequent-buyer reward schemes, travel distance,
preference for an in-store delicatessen, size of the average grocery bill, store signage and the level
of sale assistance[10] (Miranda et al., 2005).
However, given that grocery shopping patterns vary with culture, Indian grocery shoppers
are required to be investigated separately to determine, which grocery store attributes contribute to
store patronage[14](Shanon and Mandhachitara, 2005). The store dimensions which are relevant for
grocery store choice of customers may now be investigated. Grocery industry is strongly driven by
price competitiveness.
Product selection, assortment and courtesy of personnel are also very important in
determining format choice and cleanliness is the most important attribute regardless of the format of
grocery store[2] (Carpenter and Moore, 2006; Teller et al., 2006) .In an earlier study by Solgaard
and Hansen (2003) assortment was found to be the single most important driver for the choice
between store formats; price level and distance also being important drivers for consumers’ choice
between store formats; although quality and service were not found to be differentiator between
formats[17]. Fox et al. (2004) found that shopping and spending vary much more across than within
formats, and expenditures.Consumer respond more to varying levels of assortment and promotion
than price, although price sensitivity was most evident at grocers [4]. While supercenter primary
shoppers of food identified low price and assortment more often as the reason for store choice,
traditional supermarket primary shoppers were less willing to trade off locational convenience or, in
some cases, quality and assortment[12] (Seiders et al., 2000) .
Chinese supermarket shoppers found store location, price and product variety as the most
important store attributes influencing satisfaction. Hence, there is difference in the result of the
studies of different authors as far as relative importance of attributes are concerned, which might be
attributed to either changes in consumers over a period of time or to the place of study as grocery
shopping patterns vary with culture[13] (Shanon and Mandhachitara, 2005) . Customers attach
considerable importance to store location and private labeling is found to be a store selection
criterion of low importance for grocery shoppers.[1] ( Baltas and Papastathopoulou, 2003) .
Generally, national food brands were perceived as superior to own labels in terms of
quality, packaging, consistency and good image[11] (Omar, 1996) . Written shopping lists
significantly reduce average expenditure and the presence of children accompanying the shopper
significantly increases expenditure and time spent in store[18] (Thomas and Garland, 1993). The
major drivers for choosing a grocery store in India seem to be nearness to place of residence and the
comfort level that the respondents has in dealing with the store owner measured in terms of personal
relationship with the shopkeeper [14] (Sinha and Banerjee, 2004).
From the above discussion, we may conclude that the dimensions that are relevant for
grocery store choice are: price-consciousness, assortment, behavior of the store personnel,
cleanliness, quality, deals/specials/promotions, ease of shopping, time/day of shopping, no of
outlets visited, location/distance, home order/delivery, shopping list/ unplanned, recreational/time
spent at store, frequent buyer schemes, payment/credit facility, shopping companions, in-store
specialty, store signage/ambience, parking, expenditure/no of times shopping, apathy/stress,
refund/exchange.
2. OBJECTIVES OF THE STUDY
1. To study the customer satisfaction and preference of the customer towards conventional Kirana
stores as compared to organised retail grocery store.
2. To understand whether Indian consumers are likely to move from conventional kirana stores to
organised retail grocery stores while shopping for groceries
Hypothesis of the study:
H
01
: Perceived level of customer satisfaction is positively related to Perceived lower price of
products at organized retail store.
The above hypothesis is based on the assumption that customers perceive to get satisfaction
when they get products at low price. As price is important factor for customer in shopping.
104 Volume 60
Customer perception of organized retail is considered in the study. The variable s such as better
discounts and offers, better value for money and lower price is taken into account in the hypothesis.
The Variable Percieved lower price of the product was tested by sub variable like better
discounts and offers, Lower prices and Better value for money which was taken from literature
review of eminent scholars.
3. CUSTOMER SATISFACTION
The real or perceived value that a customer experiences or believes he is receiving through
interaction with a company. Benefits may include resolution of a problem, achievement of a
desired outcome or fulfilment of a need through a purchase; a feeling of confidence following
purchase; or satisfaction with post-purchase service. Giese and Cate (1999, p. 2) conducted an
exhaustive review of the extant literature on customer satisfaction and defined the construct as
follows: “satisfaction is comprised of three basic components, a response pertaining to a particular
focus determined at a particular time”. Thus, customer satisfaction is a response (cognitive or
affective) that pertains to a particular focus (i.e. a purchase experience and/or the associated
product) and occurs at a certain time (i.e. post-purchase, post-consumption). Thus based on the
above benefits list comparative test was tried to make and effort was made to find whether
customers were satisfied at benefits provided by organized retail stores.
4. DISCOUNTS AND OFFERS
Discount and allowances are reductions to a basic price of goods or services. It is becoming
important tool for the retailer for attracting customers as means of sales promotion. It is the
mentality of the customer to save while shopping and organised retailers are using this strategy
extensively. There are many purposes for discounting, including; to increase short-term sales, to
move out-of-date stock, to reward valuable customers, some discounts and allowances are forms
of sales promotion.
Lowering the overall over prices in the market
With the help of the above hypothesis the effort was made to find out whether overall price in
the market of the commodity is reduced and actually customers are benefitted by lower price in the
market
Better value for money
Value for money is based not only on the minimum purchase price (economy) but also on the
maximum efficiency and effectiveness of the purchase, here it was studied that whether customer
are getting Better value for money with the help of organised retail. The principal value elements
used in value studies, according to Kaufman (1998), are classified as: esteem value or “want”,
exchange value or “worth”, and utility value or “need”. Kaufman asserts that each decision to
acquire goods or services includes one or a combination of all the above value elements, where the
sum of the elements results in a buy decision. Kaufman (1998, p. 5) defines these elements as
follows: “Esteem value or “want” invokes the buyer's desire to own for the sake of ownership.
Exchange value or “worth” explains why the product interests the buyer and how and when the
buyer will use the product. Utility value or “need is the primary value element describes the
performance and physical characteristics of the product.”Zeithaml (1988) noted four types of
consumer definitions of value: low price (focus on sacrifice); whatever the consumer wanted in a
product or service (focus on benefits);the quality obtained for the price paid (trade‐off between one
sacrifice component and one benefit component);and total benefits obtained for total sacrifice
incurred (all relevant components considered)
H
02
: Perceived level of customer satisfaction is positively related to perceived benefits in
shopping at organized retail store.
The above hypothesis is based on the assumption that customers perceive to get satisfaction
when they get more benefit in shopping. For the purpose of the study benefit like better location,
one stop shopping convenience, time saving, money saving, better environment, security, parking
International Letters of Social and Humanistic Sciences Vol. 60 105