why people buy in organized retail store?

1 SIT Journal of Management Vol. 3. No. Special. November 2013. Pp. 1-10

Zia & Nuruzaman ISSN : 2278-9111

Why People Buy In Organized Retail Store?

Adil Zia* & Agha Nuruzzaman**

Abstract

Organized retail provides a new dimension to shopping activity. After liberalization in India in

1991, the retailers have shown a major shift in selling strategies. Accordingly, shoppers have

also shown more optimistic consumer behavior and are ready to welcome a wide array of new

mechanize. There are number of factors which motivate consumers to visit an organized store.

This paper is an attempt to unearth some important factors, for which shoppers visit an

organized store. This study uses Booms and Bitner’s 1981 extended marketing mix (7Ps) to

investigate factors for buying in an organized store. A judgmental sample of 97 college goers

from South Delhi was asked to participate in the survey. The two types of retail stores most

frequently named were food outlets and apparel retailers. The main reason to visit these stores

was largely based on product or service quality and price, but locality and the behavior of the

staff were also found to be significant.

Key Words: Organized Retail Store, Customer Preference, Product or Service Quality, Price,

Locality, Behavior

*Adil Zia, Assistant Professor, Dept. of Business Administration, Aligarh Muslim University,

Murshidabad Center, India E-mail: [email protected]; M:+91-9647674809

**Agha Nuruzzaman, Assistant Professor, Dept. of Business Administration, Aligarh Muslim University,

Murshidabad Center E-mail: [email protected]; M +91-9412545474



Introduction

The Indian retail industry is divided into organized and unorganized sectors. It 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 shops, hand-cart hawkers,

pavement vendors, etc. which together make up the so-called “unorganized retail” or traditional

retail. These days’ consumers have witnessed the entry of a number of organized retailers

opening stores in various modern formats in metros and other important cities. Still, the overall

share of organized retailing in total retail business has remained low.

Organized retailing refers to trading activities undertaken by retailers in an organized way, they

follow certain principles. Further these organized retailers have well structured business

activities and well developed supply chain. Moreover there is departmentalization of business

activities like procurement, warehousing, distribution, sales, marketing, recruitment, etc. These

are mainly licensed retailers registered for sales tax, income tax, etc. These include the retail

chains, independent stores, corporate-backed hypermarkets and also the privately owned large

retail businesses etc.

The Indian retail sector accounts for over 20% of the country’s gross domestic product (GDP)

and contributes about 8% to total employment as reported by Price Waterhouse Cooupers, a

research agency in September 2012. 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 5-7 %) will increase six-fold from the current 27 billion USD to 220

billion USD in 2020.

Literature Review

There are researches to classify shopping into various basic types and most of the researches

have divided all shopping into four types. They are Recreational Shopping, List Shopping, Item

Shopping and Impulse Shopping. The categorization is based on planned vs. spontaneous nature

of shopping trip and the focused vs. open-ended nature of the purchases made as mentioned by

Narasimha, CEO, MASH Madsion Shopper Marketing.



Retailing studies have provided a great deal of knowledge about shop attributes, store

preferences and shopping satisfaction. Effective marketing-mix factors in retailing have been

identified and tested over the last few decades (e.g. Arnold et al., 1983; Bloemer & Odekerken-

Schröder, 2002; Hoffman & Turley, 2002). The multitude of variables can be grouped along a

continuum from the tangible/“hard” to the intangible/“soft” (e.g. Gilmore and Carson, 1993).

Yip, Chan & Poon (2012) in their study attempts to identify the common attributes of the

physical retail outlets favored by Hong Kong youths and to assess the relative importance of

“hard” and “soft” aspects of the retail marketing mix in appealing to this consumer segment.

They found that two types of shop most frequently named were food outlets and apparel retailers.

The attractiveness of these stores was mainly based on product or service quality and price, but

location and the behavior of the shop assistants were also cited as influential. Ranking as “my

favorite shop” was a combination of tangible qualities and intangible services.

According to Taylor & Cosenza (2002) Malaysia Generation Y adults love to visit the mall. They

visit the shopping mall very frequent at least 1 or 2 times a week. However, Generation Y adults

treat shopping mall activities as a social activity. They prefer hanging out with friends. Prior to

that, they follow and tag along with peers' opinion. As a result, their expenditure increases as

they shop with friends. They are also loyal customer that will constantly visit the same stores

each time they visit the shopping mall. Surprisingly, older Generation Y in Malaysia is not brand

conscious. Other than visiting some branded stores they do visit stores that provide them the

latest and updated trend.

Goswami & Mishra (2009) did a study on Would Indian consumers move from kirana stores to

organized retailers when shopping for groceries? In their study customer patronage to grocery

stores was found to be positively related to location, helpful, trustworthy salespeople, home

shopping, cleanliness, offers, quality and negatively related to travel convenience. Kiranas do

well on location but poorly on cleanliness, offers, quality, and helpful trustworthy salespeople.

The converse is true for organized retailers.

Zia, Akhtar, & Azam (2012) identified the key factors influencing the customers of organized

retail setup. It was found that two factors namely Execution related excellence and Problem



recovery have positive and significant impact where as one factor which is Expediting have

negative but insignificant impact on shopping experience under organized retail. Further, it was

concluded that pleasure found in shopping was first connected with tourism, the idea of the

leisurely spending of time, of going somewhere else, away from the spheres of home and work,

in order to be freed from duties and in order to enjoy oneself. Thus, despite consumers supposed

desire to nest or cocoon in their homes, shopping by catalog, phone or computer, brick-and-

mortar shopping still offers a unique appeal to many consumers and the opportunity to get out of

the house and experience a change of scene.

On the basis of above arguments and researches, following objectives were framed.

Objective

1. To find the type of retail store, shoppers like to visit in an organized retail setup.

2. To investigate the factors that attracts shoppers to an organized retail store.

Methodology

This study adopted a qualitative approach to identifying the attributes of college going

consumers’ reasons to visit an organized retail store. Retail stores were defined as physically

existing retail outlets in south Delhi. The data were collected in February 2013. Students from

Delhi University, South Campus in Delhi, India were selected. Sample of 97 respondents was

collected through a non-probability judgmental sampling technique where the researcher selects

units to be sampled based on their knowledge and professional judgment. Each respondent was

required to name retail store and the things they liked during that visit in past. The respondents

were then asked why they liked that particular shop or store, and to recall experiences related to

shopping there. No limit was set on the number of reasons provided. All participants were

required to share two experiences of their retail store, one for exterior layout and the other for a

specific element inside the shop that the respondent particularly liked.

Extension of the 4Ps - 7Ps Services Marketing Framework by Booms and Bitner

The 4Ps marketing mix which represents Product, Process, Pricing and Promotion, have been

most widely employed as a model for product marketing. It shows the company preparing an



offer mix of the product and price, with an integrated promotion mix to reach the target

consumers through the selected distribution channels. The 4Ps of marketing have been the key

areas where marketing managers allocate scarce corporate resources to achieve the business

objectives. Services have unique characteristics: intangibility, heterogeneity, inseparability and

perish ability. To discern the differences between services and physical products, Booms and

Bitner suggested the extension of the 4Ps framework to include three additional factors: People,

Physical evidence and Process as marketing mix variables for services marketing.

These additional 3 P’s are mentioned below:

(i) People refer to all people directly or indirectly involved in the consumption of a service,

example employees or other consumers,

(ii) Physical evidence, that related to the environment in which the service is delivered, and

the tangibles that help to communicate and perform the service, and

(iii) Process is the delivery and operating systems of procedures, mechanisms and flow of

activities which services are consumed. The additional 3Ps has gained widespread

acceptance in the services marketing literature. The 3Ps together represent the service

and provide the evidence that makes services more tangible.

Data analysis

As the study adapted a qualitative approach of analysis, all responses collected were grouped

into similar themes. These themes were based on the 7p’s structure of Booms & Bitner’s (1981).

These themes then were used to deduct and comment on the findings. Marshall & Rossman’s

(1999) comparison analysis technique was used throughout the data analysis process to develop a

linked data by constantly comparing and contrasting them (Strauss, 1987). Similar answers were

grouped and frequencies were computed.

Findings

The respondents were asked to name a store that they like the most based on their past purchase

experiences. Respondents were given option to name only one type of retail store. The types of

stores were the representative of different varieties of stores in south Delhi region. These types of

retail stores are listed in Table 1. The top two types reported as most liked stores were food &

beverages and clothing stores. Shops for durable goods and shops selling luxury goods were

seldom reported as there most liked stores.



Table 1 Summary of results for “store I like the most”

Type of store Frequency

S. No Type of retail stores Frequency

1 Bookshop 5

2 Beauty and cosmetics 4

3 Convenience store 5

4 Entertainment 3

5 Fashion and clothing 31

6 Fashion and causal wear 15

7 Executive wear 10

8 Sportswear 6

9 Bags and accessories 3

10 Food & Bevrages 34

11 Dessert and ice cream 9

12 Fast food restaurant 7

13 Café or Western restaurant 6

14 Japanese restaurant 5

15 Noodle shop 4

16 Chinese restaurant 3

17 Snack and confectionery store 3

18 Take-away snacks and drinks 4

19 Street food stall 2

20 Furniture and lifestyle store 9

21 Gifts and toys 6

22 Supermarket 3

Total 97



Reasons for liking a particular store the most

The respondent’s reasons for liking a particular retail store were organized into seven categories

using the 7Ps framework. Table 2 shows the results.

Table 2 Reasons for liking a particular store

Reasons Frequency

Product 97

1 Excellent product quality 47

2 Product Variety 23

3 Trendiness and fashion 12

4 Uniqueness of the product 9

5 Others (guarantees, availability , packaging) 6

Price 61

1 Affordable prices 49

2 Value for money 12

Place 59

1 Proximity to school/work/home 32

2 Accessibility 24

3 Opening hours 3

Promotion 4 5

1 Discounts 22

2 Events 9

3 Free samples 5

4 Coupons 3

5 Friends’ recommendations 6

People 56

1

Customer-salesperson contact (e.g. friendliness, helpfulness,

personal attention of the employees)

25

2 Not being monitored by the employees 20

3 Knowledge of the employees or salespersons 4

4 Appearance/attractiveness of the employees or salespersons 4

5 Gentry in the shop 3



Process 24

1 Free to stay as long as I wish 16

2 Efficiency 6

3 Self-help service format 2

Physical evidence 92

1 Attractive decor and color scheme 32

2 Cozy setting 24

3 Attractive window display and organized interior layout 11

4 Atmospherics (air-conditioning, background music, lighting) 10

5 Clean and tidy environment 8

6 Spacious environment 7

* Respondents were allowed to choose more than one reason for the store they like the most.

Discussion

The two most mentioned types of retail stores were food & beverages stores and clothing stores.

Both sell non-durable goods. Stores selling durable goods like electronics and electrical

appliances, home appliances, motor vehicles and parts, watches and jewelry were hardly ever

reported as most liked stores. Luxury brand stores were also not often mentioned. This is in line

with the results of a past study which mentioned that ownership of luxurious brands among

adolescents is low (Chan, 2010). The attribute “affordable price” was deemed important because

it enabled people to be fashionable and stylish without digging deep into their pockets. However,

our findings indicate that location, the environment and the people are also important for South

Delhi consumers. Unfocused shopping is not the same as product-specific buying, so the

evaluation of an attitude object (liking for a store) is that situation which is highly influenced by

the consumption context. For example, superior interior design or a comfortable environment can

reinforce the worth of a product or service. A store liking is not just for a food, clothing or

cosmetics retailer rather it is the supplier of a good shopping experience which is mostly

emphasized by the organized retail stores. Every organized retail store tries to lay emphasis on

proximity, accessibility and convenience which ware also some of the important store attributes

that respondents highlighted as supplementing the interpersonal attributes. Liking a store can

apparently be regarded as a cumulative effect of a customer’s contentment and perceptions, both

rational and emotional. The data show that the relative that when classified under the 7Ps



framework, the attributes seem separate in the analysis, but they are in fact interrelated and

interdependent.

Table 3 Reason for liking a particular retail store in Descending order

S. No 7 P's Frequency

1 Product 137

2 Physical Evidence 92

3 Price 61

4 Place 59

5 People 56

6 Promotions 45

7 Process 24

Conclusions

All the attributes mentioned in Table 3 come together in various proportions in any particular

physical retail store. It can be said that the physical evidence may influence these evaluations

directly by providing consumers with a peripheral cue or a tangible evidence for assessing the

service and merchandise quality of a store, or by transfer of meanings from the environment

(Parasuraman, Zeithaml and Berry 1988; Bitner 1992).

The traditional 4 P’s of marketing management that is product, price, place and promotions are

certainly significant for almost all consumers, but physical evidence and people are significant

too. As shown in Table 3 it seems that product is the most important variable followed by

physical evidence. On the other hand process and the promotions seem to be the least important

factors among the 7P’s. A successful retailing formula in South Delhi must plan the relationships

and relative importance of these attributes, so determining the relative weights of the attributes.



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why people buy in organized retail store?

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