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Chapter-1

Introduction

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1.1 Introduction To Retailing

Retailing consists of all business activities that involve in selling goods and services

to the final customer for personal and household use without any intention to resale.

Retailing has evolved globally into a high-tech business. Global Retail companies like

Wal-Mart have already topped fortune 500 companies in turnover. At the same time,

customers are gradually getting more quality conscious and preferring shopping in a

better environment. As the preferences of customer are changing, new business

opportunities are also coming up in retailing. This also gives rise to new areas of

study in retailing e.g. „Shopper buying behaviour‟ that retailers can use while making

shopper targeting strategy. Shopper is an individual who visits the retail outlet to

purchase merchandise unlike the consumer who uses the product. Many researchers

have studied consumer buying behaviour, but shopper behaviour is still a less

explored area. Shopper plays a critical role in retailing while developing target market

strategy.

Retailing can be defined as the last stage in a channel of distribution of goods and

services to end-users. So, retailers are the final businesses in distribution channel that

link manufacturers, wholesalers, other suppliers and the final consumers. A typical

distribution channel is shown in figure 1.1.

Distribution Channel:

Fig: 1.1

Source: Berman, B. and Evans, J., Retail Management, pp. 9

Often it is thought that retailing deals with the sale of tangible goods in stores.

However, retailing also involves sales of services. It does not have to involve a store.

Different services like stay in a hotel, haircut, a videotape rental, car rental, airline

travel etc. where service becomes a shopper‟s primary purchase also fall under the

purview of retail. Web transactions and vending machine sales also come under the

scope of retail. Examples of non-store retailing can be sales through internet, direct

sales and catalogue sales. Moreover, retailing does not have to involve an exclusive

retailer. Manufacturers, importers, wholesalers can act as retailers if they directly sell

Manufacturer Wholesaler

Retailer

Final

Cust

omer

3

the goods or services to the final consumer (e.g. Sony Center, Nokia Show Room

etc.). However, purchases made by manufacturers for their uses inside the

organization don‟t constitute part of the retailing.

1.1.1 Special Characteristic of Retailing

There are some special characteristics of retailer that distinguishes retailing from

all other type of Business. These can be small average sale, more impulse

purchases and maintaining store image that together influence the retailer‟s

strategy (fig-1.2)

Special Characteristics affecting Retailers:

Fig-1.2 Source: Berman, B. and Evans, J., Retail Management, pp. 12

The average sales transaction for a retailer is much less than for manufacturers.

The final consumers make many unplanned purchases compared to those who buy

for resale (wholesalers) or use in manufacturing products or running a business that

are much more systematic and planned. The customers for a retailer are mostly

drawn from a particular area (trade area) that is comparatively much smaller than

the trade area of a wholesaler or a brand owner.

The average sale per transaction (per trip of a particular customer) is much smaller.

These low amounts create a need for tight control on all sorts of cost associated

with each transaction like credit verification, sales personnel, bagging etc.

Small average sale

per transaction

Impulse purchase

Store Image

Retailer‟s

strategy

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Moreover, it becomes more important for a retailer to entice the customers to visit

the outlet more and more. To maximize the number of customers drawn to the

outlet, the retailer puts special emphasis on ads and special promotions and tries to

increase impulse sales by visual merchandising and more aggressive selling. In

addition, small transactions bring new problems in retailing; demand forecasting,

inventory management and merchandising are often difficult for retailers because

of many small scale transactions to a large number of customers and rapidly

changing life style and preference of customers. A typical supermarket has 6000 to

7000 customer transactions per week and this makes harder for retailers to monitor

the existing stock and determine the popularity of various brands, sizes and prices

of merchandise. This needs computerized inventory and demand forecasting

systems. At the same time not all footfalls lead to transactions. So it necessitates

converting shoppers to actual buyers by different merchandising techniques.

A large percentage of customers don‟t have a shopping list before going to

shopping mall and also make purchases that are fully unplanned. This makes retail

sales often unplanned or impulse purchases. This sort of customer behaviour

indicates the value of point of purchase displays, attractive store layouts, well-

organized visual merchandising etc. Items like chocolates, snack foods, magazine,

ice cream, cosmetics can be sold as impulse goods if placed in high visible and

high traffic areas. Since, customers buy so many goods and services in an

unplanned manner, the retailer‟s ability to forecast, budget, order merchandise and

allocate right number of manpower on the selling floor becomes critical.

Store based retailers cater to the need of people from a particular location only

(unlike for a brand owner, where their customers are spread throughout the nation).

So, the retailer has to invest money to establish his brand in that particular area, as

the product or services, the outlet deals with may be available in other outlets also.

So, store location becomes quite critical for a retailer to ensure adequate footfall.

1.1.2 Functions performed by a Retailer

In a distribution channel retailers play a key role as the contact between

manufacturers, distributors, wholesalers, and other suppliers and the final

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consumers. Retailers undertake all the business activity and perform the function

that adds value to the products and services to consumers.

Providing a large assortment of products and services

Holding the inventory

Breaking the bulk

Providing services that manufactures can‟t

Many manufacturers make only one or few basic type of items and sell their entire

inventory to few buyers (distributors or wholesalers). But the final consumers want

to choose from a variety of goods and services if they purchase a limited quantity.

So retailers collect an assortment of goods and services from various sources in

large quantities and offer them in small quantities to end consumers. This is called

sorting process (fig-1.3).

Sorting Process in Retailing:

Fig: 1.3 Source: Berman, B. and Evans, J., Retail Management, pp. 9

Manufacturer

Brand A

Manufacturer

Brand B

Manufacturer

Brand C

Manufacturer

Brand D

Manufacturer

Brand E

Manufacturer

Brand F

Wholesaler

Wholesaler

Wholesaler

R

E

T

A

I

L

E

R

Brand A

Customers

Brand B

Customers

Brand C

Customers

Brand D

Customers

Brand F

Customers

Brand E

Customers

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To reduce transportation cost, manufacturers and wholesalers ship big volumes of

merchandise to retailers. Retailers then offer the product in smaller quantities

tailored to individual customer‟s needs and as per household consumption patterns.

This is called Breaking the bulk.

Holding Inventory: Retailers keep a huge amount of inventory so that products

will be available to the consumers whenever they want them. This enables

consumers to maintain a low level of inventory, as they know that the product is

available with the retailer all the time. So, retailers store products on behalf of the

customers and it reduces the storing cost of the customers. Apart from that retailers

provide various services to customers as well as to manufacturers. Retailers

provide credit to customers, display products, and provide information and help

customers purchase products. Retailers communicate both with customers and

manufacturers. Shoppers learn about availability and characteristic of goods and

services from ads, sales people and displays. Manufacturers, wholesalers get

informed about forecasts, customer preferences, delivery delays, customer

complaints etc. by the retailers. So, retailers act as a conduit between the original

manufacturer and end consumer in providing feedback to the manufacturer and

information on products to the consumer. Apart from that for small manufacturers

and wholesalers, retailers assist in transportation, storing, marketing and

advertising their products. In addition, retailers also provide additional customer

services as gift-wrapping, delivery and installation to customers.

Retailing is the last step of any distribution system that connects the end user and

the channel. Retailing acts as a two way communication between the consumers

and brand owners. However, the role of retailer and activities at the point of

Purchase has come out to be critically influential on shoppers because of the

evolution of modern formats of organised retailing. Shoppers have now more

choice in terms of retail outlets. At the same time they are bombarded with

multiple choices of product categories and variants. This is leading to shift in

buying behaviour of shoppers and the intention for shopping are gradually

changing from merely need based to hedonistic and impulsive.

1.1.3 Decision Process in Retailing

The very first step in retail decision process is to understand the retailing concept.

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Retailing concept is a management orientation that focuses a retailer on

determining its target market‟s needs and satisfying those needs more effectively

and efficiently than its competitors. The retail strategy indicates how the retailer

plans to focus its resources to accomplish its objectives, which start with the

identification of the opportunities and deciding the market to enter. It defines: First

the target market towards which the retailer should direct its efforts (understanding

the shoppers‟ profile and their expectation and the competition in the said

category), 2nd the nature of the merchandise and services, the retailer will provide

considering the needs of the target market and finally how to build a long term

advantage over all competitors (sustainable value proposition). The retail Value

Proposition consists of:

Merchandise you offer (category of merchandise, items, brands etc.)

Supply chain strategy to make logistics costs lower and transfer the value

add to the customer in reducing prices, quick delivery etc.

Retail location, proper site selection

Having the optimum Lay out to help customers shop in favoured ambience

Promotion

Competitive Pricing

HR: managing the store employee to provide the best customer service

The key strategic decision areas in retailing strategy are:

1. Retail market strategy

2. Retail Financial strategy

3. Retail location

4. Site selection

5. Merchandising

6. Organizational structure and Human resource management

7. Supply chain management

8. Handling information systems

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To implement the retail strategy, the retailer develops a retail mix that satisfies the

needs of the target market better than the competitors. The various elements in

retail mix include the type of merchandise and services offered, merchandising

pricing, advertising and promotional programmes, store designing, merchandise

display, assistance to customers and convenience of the store location.

The retail strategy boils down to merchandise management and Store management.

Merchandise management consists of:

Planning merchandise assortments

Organizing Buying systems

Buying merchandise

Pricing

Retail Communication Mix

Store management consists of:

Managing the store

Store layout, design and visual merchandise

Providing Customer services

1.2 Global Retail Scenario

Retail has played a major role world over in increasing productivity across a wide

range of consumer goods and services. The impact can be best seen in countries like

USA, UK, Mexico, Thailand and more recently China. Economies of countries like

Singapore, Malaysia, Hong Kong, Sri Lanka and Dubai are also heavily assisted by

the retail sector. In 1990, there was not a single retailer in the fortune 500 companies,

now there are close to 50 and Wal-Mart is the largest of all companies. At the same

time, the share of organised retailing has increased over past few years (table-1.1).

Retail is the second-largest industry in the United States both in number of

establishments and number of employees. It is also one of the largest worldwide. The

retail industry employs more than 22 million Americans and generates more than $3

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trillion in retail sale annually. Wal-Mart is the world‟s largest retailer and the world‟s

largest employer with over 1million associates. Wal-Mart has become the most

successful retail brand in the world due its ability to leverage size, market clout, and

efficiency to create market dominance.

Global Retail Industry:

1999 2002 2005

Total Retail 150 180 225

Organised Retail(US

$ billion) 1.1 3.3 7

%share of organised

Retail 0.7 1.8 3.2

Table-1.1 Source: CSO, MGI Study

The latter half of the 20th

Century, in both Europe and North America, has seen the

emergence of the supermarket as the dominant grocery retail form. The search for

convenience in food shopping and consumption, coupled to car ownership, led to the

birth of the supermarket. As incomes rose and shoppers sought both convenience and

new tastes and stimulation, supermarkets were able to expand the products offered.

The invention of the bar code allowed a store to manage thousands of items and their

prices and led to 'just-in-time' store replenishment and the ability to carry tens of

thousands of individual items. Computer-operated depots and logistical systems

integrated store replenishment with consumer demand in a single electronic system.

This has led to many more modern formats of retailing.

On the Global Retail Stage, little has remained the same over the last decade. The

global economy has changed, consumer demand has shifted, and retailers‟ operating

systems today are infused with far more technology than was the case few years ago.

Saturated home markets, fierce competition and restrictive legislation have

relentlessly pushed major food retailers into the globalization mode. Since the mid-

1990s, numerous governments have opened up their economies as well, to the free

markets and foreign investment that has been a plus for many a retailer. However, a

more near-term concern has been the global economic slowdown that has resulted

from dramatic cutback in corporate IT and other types of capital spending. Consumers

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themselves have become much more price sensitive and conservative in their buying,

particularly in the more advanced economies.

From an operational point of view organized retailing has given rise to few concerns:

deflation, lack of pricing power, global over-capacity, low interest rates, economic

stagnation, etc. But the global economic slowdown forced retailers into monitoring

costs more effectively. Technology has become the real enabler for retailers over the

last few years leading to cost control and supply chain innovations. There are few

positive forces also at work in retail consumer markets, that include high rates of

personal expenditures, low interest rates, low unemployment that are expected to give

fillip to the modern formats of retailing.

The global retail industry has traveled a long way from a small beginning to an

industry where the world wide retail sales alone were at $ 7 trillion1 and has gone up

to $12 trillion in 2010. The top 200 retailers alone account for 30% of worldwide

demand. Retail sales being generally driven by people‟s ability (disposable income)

and willingness (consumer confidence) to buy, compliments the fact that the money

spent on household consumption worldwide keep on increasing year on year. The

leader in retailing has in-disputably been the USA where some two-thirds of

American economy is consumer spending. About 40% of that is spending on

discretionary products and services. Coming to Europe, retail turnover in the EU is

approximately Euros 4000 billion and the sector average growth looks to be following

an upward pattern. The Food Retail Industry in the Far East has evolved into what

could be called „the breeding ground‟ for emerging models with countries like

Singapore being the home to some of the big players in the industry in these parts of

the world. The presence of all the major players of the retailing industry is found in

Singapore. Singapore is dominated by 2 hypermarkets, one run by Carrefour and the

other by Giant Hypermarket, part of Dairy Farm International. There are more than

11,000 market stalls operating in 150 markets located all across Singapore Island. The

markets further spread to China, Thailand, and Malaysia; thanks to the major support

that the local governments provided in creating the necessary regulatory framework in

establishing their presence. Singapore, Malaysia and Thailand not only fuelled the

retail industry within the country, but also attracted hordes of tourists to experience

1 Source:2010 Global Retail Report, Deloitte Touche Tohmatsu

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the shopping “experiences” that they created in these islands. The markets are now

saturated with no additional space for a new entrant and are getting consolidated

gradually.

Apart from Singapore, which is a more recent development, Japan enjoys an active

spot on the retailers‟ map. The retail industry is as huge as US$ 1088 Billion, with a

split of US$ 594.8 Billion in the non-food segment and US$ 493.2 Billion in the food-

retailing sector. The leaders in sales in Japan are Ito-Yokado, Aeon, Daiei and

Takashimay. Several retailers, however, have made recent improvements in their

warehousing and distribution technologies to make their presence felt in the Japanese

market. Convenience stores, which are small and suitable in a country where land is

very expensive, continue to do well. Food, in fact, has been one of the few sectors that

have experienced growth over the last several years. In China, the retail markets have

mushroomed over the years of intense economic development to a very considerable

size. The total volume of retail sales for consumer goods and food increased by 10.6

percent in China over the last couple of years which shows tremendous growth.

Consumer spending has held strong. A decade ago, the top five retail enterprises in

China were all traditional merchandise companies, but now the top five are mainly

supermarkets and chain stores. In Indonesia, wet markets and supermarkets have

remained the major distribution channels for food products. In Thailand, the rapid

growth of the economy, particularly during the decade before the financial crisis

began, has led to dramatic changes in the structure of the food-retailing sector.

Modern supermarkets, superstores, hypermarkets and convenience stores developed at

breakneck pace to service the growing middle class with their demand for more

sophisticated food stores and a greater variety of products, many of which were

imported.

Over the years, few retailers have expanded their base and diversified into multiple

countries. The list of top ten Retailers (as per their Turnover) is as below in Table no

1.2.

Top 10 retailers worldwide:

Fortune

Rank

Retailer Revenue $

Million

1 Wal-Mart Stores 287, 989

2 Carrefour Group 90,382

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3 The Home Depot, Inc 73, 094

4 Metro AG 70, 159

5 Royal Ahold 64, 676

6 The Kroger Co. 56, 434

7 Target Corporation 49, 934

8 COSTCO Wholesale 48, 107

9 Albertson‟s, Inc. 40, 052

10 Aeon 38, 943

Table-1.2 Source: Fortune, July 25, 2005, pgs. 119-139

The global retail sector is supposed to have grown in a phased manner. The organized

retail graduated from traditional mom and pop store. Though there is no substantial

evidence on the evolution of the retail industry, it is assumed that the retail sector

went through the following stages-

Development of retail chains as the retailers sought to increase their buying

power (consumer co-op- national retail chains).

Development of large retail formats- started in Belgium followed by France

and other European companies.

Development of large dedicated distribution systems by the large integrated

retailers- changing stage: traditional wholesaler and cash and carry to the more

integrated supply chain model.

Emergence of retail chains as national brands in their own right- this is in

effect to move from head to head price competition to a differentiation

strategy based on the range, service store format and location.

1.3 Indian Retail Scenario:

It is beyond doubt that Retailing in India is the most attractive sector of this decade.

While the retailing industry itself has been present through history in our country, it is

only the recent past that has witnessed so much dynamism and growth. It's the latest

bandwagon that has witnessed hoards of players leaping onto it. While international

retail store chains have caught the fancy of many travellers abroad, the action was

missing from the Indian business scene, at least till last 5 to 7 years. Among other

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reasons the importance of retailing is its impact on the economy, its function in

distribution and relationships with firms selling goods and services to retailers for

resale. Moreover, after agriculture, the retail sector is the largest employer in India. In

addition to that, retail sector gives unique career opportunities and business

opportunities to the budding literate class of India.

Retailing, one of the largest sectors in the Indian economy, is still going through a

transition phase. For a long time, the corner grocery store was the only choice

available to the consumer, especially in the urban areas. This is slowly giving way to

new formats of retailing. The traditional food and grocery segment has seen the

emergence of supermarkets/grocery chains (Spenser‟s, Nilgiris, Reliance Fresh, More,

Star Bazaar) and fast-food chains (McDonalds, Dominos). The non-food segment has

also forayed into a variety of new sectors. These include lifestyle/fashion segments

(Shoppers' Stop, Globus, LifeStyle, Westside), apparel/accessories (Pantaloon, Levis,

Reebok), books/music/gifts (Archies, MusicWorld, Crosswords, Landmark),

appliances and consumer durables (Godrej Interio, Viveks), drugs and pharmacy

(Health and Glow, Apollo).

1.3.1 Indian Retail Segments:

In India, the organised retailing is making its presence felt, the share of organised

retailing has increased from 3% to 5.9% from 2004 to 2007 and to 8% in 2010.

Share of Organised Retail in total Indian Retail Market:

Retail Segment 2004 2005 2006 2007

Clothing, Textiles & Fashion

Accessories

13.60% 15.80% 18.90% 22.70%

Jewellery 2.00% 2.30% 2.80% 3.30%

Watches 39.60% 43.50% 45.60% 48.90%

Footwear 25.00% 30.30% 37.80% 48.40%

Health & Beauty Care Services 6.00% 7.60% 10.60% 14.30%

Pharmaceuticals 1.80% 2.20% 2.60% 3.20%

Consumer Durables, Home 7.80% 8.80% 10.40% 12.30%

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Appliances/equipments

Mobile handsets. Accessories &

Services

6.50% 7.00% 8.00% 9.90%

Furnishings, Utensils, Furniture-

Home & Office

6.70% 7.60% 9.10% 11.00%

Food & Grocery 0.50% 0.60% 0.80% 1.10%

Out-of-Home Food (Catering)

Services

5.70% 5.80% 6.90% 8.00%

Books, Music & Gifts 9.80% 11.70% 12.60% 13.40%

Entertainment 2.60% 3.30% 4.10% 5.30%

TOTAL 3.00% 3.60% 4.60% 5.90%

Table- 1.3 Source: F& R Research, 2009

2In the overall Retail pie, Food and Grocery is the dominant category with 59.5 per

cent share, valued at Rs.792,000 crore, followed by Clothing and Accessories with a

9.9 per cent share at Rs.131,300 crore. Interestingly, out-of-home food (catering)

services (Rs.71,300 crore) has overtaken Jewellery (Rs.69,400 crore) to become the

third largest retail category, with a 5.4 per cent market share.

Consumer durables (Rs.57,500 crore) is the fifth largest retail category followed by

Health & Pharmaceuticals (Rs.48,800 crore), Entertainment (Rs.45,600 crore),

Furniture, Furnishings & Kitchenware (Rs.45,500 crore), Mobiles & Accessories

(Rs.27,200 crore), Leisure retail (Rs.16,400 crore), Footwear (Rs.16,000 crore),

Health & Beauty Care services (Rs.4,600 crore) and Watches & Eyewear (Rs.4,400

crore) in the order.

In the Organised retail segment, the picture is different altogether. Clothing & Fashion

Accessories is the largest category with 38.1 per cent of the market share, valued at

Rs.29,800 crore, followed by Food & Grocery accounting for 11.5 per cent of the

organised retail market at Rs.9,000 crore , Footwear with 9.9 per cent of the organised

retail market share at Rs.7,750 crore, Consumer Durables with 9.1 per cent market

share at the fourth place (Rs.7,100 crore), and Out-of-home food (catering) services

and Furniture, Furnishings & Kitchenware retail in the order.

2 India Retail Report 2009 by IMAGES F&R Research

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India‟s biggest USP and asset base is its youthful population, whose appetite for

leisure and entertainment is galloping at 14 per cent p.a. With the rapid addition of

malls with multiplexes, there is a coming together of leisure retail, cinema and

gaming. It is indeed difficult to analyze each of these components in isolation. All

players are after all trying to get to capture a share of consumer‟s mind – his time and

money. As the consumer‟s spend on leisure and entertainment increases, the mix of

his spends is going through a churn like never before. The affluence across the

country has touched a large part of the population. Multiplexes, leisure retailers across

books, music, gaming all form a shared existence and whilst the shares of the pie keep

shifting the overall leisure and entertainment business is well on its way to become

big in future.

In the organized retail segment, however, the fastest growth has been recorded in the

health & beauty care services category (Rs.660 crore), which is expected to be

growing at 65%. The second fastest growing organised retail category is that of

Entertainment (53.8%), followed by the mobile phones & accessories and the food &

grocery retail categories.

At constant prices, growth in the fashion & accessories retail category, both in the

overall market and the organised retail segment, have been consistently positive since

2004: while the overall market is growing at 12.8 per cent, the organised segment is

growing at 35.5 per cent.

The overall market growth in the timewear category is declining over the years.

Popularity of mobile phones is to a large extent responsible for the dampening of the

overall market growth in this category while the renewed enthusiasm in the organised

segment is on account of the fillip from luxury brands and offerings that are

positioned more as a hi-end lifestyle statement than on the functionality aspect of the

product.

Footwear retail, the overall market as well as its organised segment, has been growing

faster year after year. The global brands have actually turned the heat on, and the

domestic brands too appear to have accepted the challenge in the true spirit.

Growth in the health and beauty care category has been remarkable. The demand is

stupendous but organised players have hardly much to boast of in terms of innovative

concepts and global standards when it comes to providing the customers with an

experience that is superior and radically different from what the unorganized segment

offers. This category needs to be positioned as a “wellness” category that provides

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individualized services to customers with synergies of health & beauty care,

pharmaceuticals and specialized clinical services – all at one place.

Another category that merits special mention is Furnishings and Furniture retail,

where the overall market is growing at seven per cent, the organised segment is

showing a growth rate of 29.7 %, but this Rs.45,500 crore category calls for better

attention from organised players. Global players need to understand that Indian homes

are different and so are the Indian environments, maintenance standards. At present

most large players entering this segment are busy experimenting and in the process

have lost monies too.

Consumer durables and the mobile phone & accessories categories have both grown

in recent years. At constant prices, the overall food & grocery retail market is showing

single digit growth rate, but the organised retail segment in this category is growing at

more than 30% growth rate. Valued at Rs.9,000 crore, this organised market

constitutes barely 1.1 per cent of the total food & grocery retail market.

Timewear (48.9%) and Footwear (48.4%) are the most organised of all retail

categories. Clothing & fashion accessories retail comes next with the organised

segment controlling 22.7 per cent of the market.

Food and Grocery, that constitutes the majority of Indian Retail has less space in

organised retailing. However in last few years, Food and Grocery segment has shown

remarkable growth in organised retailing. Apart from Food and Grocery; Mobile

handsets and services and Health and Beauty care services are other two segments

that have shown phenomenal growth in past years (Table no- 1.4)

Indian Retail Market Segmentation (Total and Organised):

Retail Segments 2006

(Total

Retail

Market)

2007(Tota

l Retail

Market)

Gro

wth

2007

>

2006

(%)

2006

(Organ

ized

Retail

Marke

t)

2007

(organ

ized

Retail

market

)

Grow

th

2007

>

2006

(%)

Clothing, Textiles &

Fashion Accessories

113,500 131,300 15.7 21,400 29,800 39.3

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Jewellery 60,200 69,400 15.3 1,680 2,300 36.9

Watches 3,950 4,400 11.4 1,800 2,150 19.4

Footwear 13,750 16,000 16.4 5,200 7,750 49

Health & Beauty Care

Services

3,800 4,600 21.1 400 660 65

Pharmaceuticals 42,200 48,800 15.6 1,100 1,540 40

Consumer Durables,

Home

Appliances/equipment

s

48,100 57,500 19.5 5,000 7,100 42

Mobile handsets.

Accessories &

Services

21,650 27,200 25.6 1,740 2,700 55.2

Furnishings, Utensils,

Furniture-Home

40,650 45,500 11.9 3,700 5,000 35.1

Food & Grocery 743,900 792,000 6.5 5,800 9,000 55.2

Out-of-Home Food

(Catering) Services

57,000 71,300 25.1 3,940 5,700 44.7

Books, Music & Gifts 13,300 16,400 23.3 1,680 2,200 30.9

Entertainment 38,000 45,600 20 1,560 2,400 53.8

TOTAL 1,200,000 1,330,000 10.8 55,000 78,300 42.4

Table- 1.4 Source: F& R Research, 2008

Despite the recent developments, retailing industry unlike in the west is less

structured and organized in India. Organized retailing was an evolution in the West

over more than 50 years where as it can be called as a revolution in India as the

exponential growth has happened in just last 5-7 years. Now, because of availability

of more number of retail formats and malls, customers have got abundance of choice

in relation to selection of a retail store and purchase of merchandise. Assuring quality

product or investment in brand building activities is not enough to acquire new

customers or to retain the existing customers. Customers are bombarded with more

and more options and the customers are confused on what to buy. This often results in

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customers switching from one brand to the other, or to a substitute product. This

makes customers less „brand loyal‟ and more „variety seekers‟. In this case, product

availability and visual merchandising play critical role. Moreover, visual

merchandising also instrumental in inducing impulse purchase of unplanned

merchandise in customers.

1.3.2 Food and Grocery retailing in India

The research deals with shopper behaviour in supermarkets, that predominantly deal

with food and grocery merchandise. So, it becomes imperative to understand the

present scenario of food and grocery in India. Traditionally commodities like wheat

and sugar was preferred by the Indians to be bought from their neighbourhood stores,

conventionally called the kirana stores. A typical kirana store has a retail area of 200

sq ft and sells 500 to 800 stock keeping units (SKUs). The kirana stores used to focus

on dry food products because the infrastructure for cold storage was lacking. Thus,

inventory was a problem. There are huge risks of food getting spoiled and thus letting

out an impression of the place giving out unhygienic products.

Initially, the modern food retail format was seen in A-Class or tier I cities like

Mumbai, Delhi and Chennai. Mumbai began with, „Apna Bazaar‟ and Delhi with,

„Kendriya Bhandar‟. Escorts group in the late eighties diversified into non-auto

sectors by getting into food retailing. The first visible sign of the change in food

retailing was seen in mid-eighties. Around that time a few new food stores were set up

in all metro cities in India. Calcutta was the only exception where it started a little

later. At that time couple of leading food stores started operating such as "Morning

Stores" and "Modern Stores" in Delhi, "Nilgiri" in Bangalore, “Food Land" in

Mumbai, "Spencers Food Stores" in Chennai. Spencers were the first to tie up with a

Singapore based large retail chain "Dairyland" to set up the food stores in Chennai. In

Mumbai, Garware group during the late eighties had set up a large food store, which

is now reported to have been closed down.

Until the late 1990s, food retailing has been concentrated in the south of the country.

Southern India has been witnessing revolutionized activity in food retailing. It has

thoroughly experienced the food retailing in various formats such as the supermarkets,

hypermarkets and neighbourhood stores. These include Food World, Subhiksha,

Nilgiris, Margin Free, and Big Bazaar. Since then, however, organised food retailing

has emerged across the country, inspired by the presence of high potential markets in

19

the north, west and east as well as the success of some non-food retailers and food

services companies in these regions. Table no. 1.5 below mentions different grocery

retailers in India.

Top Grocery Retailers in India 2008:

Retailer Fascia/s

Market

entry date Format/s

No of

stores

Pantaloon

Retail

Food Bazaar,

Pantaloons,

Big Bazaar,

KB's Fairprice,

Central Mall 2002 S, O, H, D 693

Reliance

Retail*

Reliance

Fresh,

Reliance Mart 2006 C, H 688

RPG

Spencer's

Hyper,

Spencer's 1996 H, S 420

Aditya Birla

Retail

more.for you,

more.

MEGASTORE 1986 S, H 251

Dairy Farm

Foodworld,

Health &

Glow 1999 S, H&B 74

Trent

Star India

Bazaar 2004 H 4

Spar

International Spar 2004 H 3

Shoprite Shoprite 2004 S 1

* Reliance also operates a number of non-food fascias.

Key: S – Supermarkets, H&B – Health & Beauty, H – Hypermarket,

D – Discount, C – Convenience, C & C – Cash & Carry, O – Others

Table: 1.5 Source: IGD estimates, retailers 2008

3Food and grocery (F&G) segment comprises 60 per cent of the $ 270 billion (Rs

1,200,000 crore) Indian retail market. Only one per cent of this segment is in the

organized sector and the organized F&G sector is witnessing a year on- year growth

3 Source: (India Retail Report, 2009)

20

of 30.8 per cent compared to 2.2 per cent growth of the total F&G retail market. This

indicates huge opportunities in organized retail in food segment.

1.3.3 Opportunities in Indian Retail

Favourable demographic and psychographic changes relating to India‟s consumer

class, international exposure, availability of quality retail space, wider availability of

products and brand communication are some of the factors that are driving the retail

in India. Over the last few years, many international retailers have entered the Indian

market on the strength of rising affluence levels of the young Indian population along

with the heightened awareness of global brands, international shopping experiences

and the increased availability of retail real estate space.

Development of India as a sourcing hub will further make India as an attractive retail

opportunity for the global retailers. Retailers like Wal-Mart, GAP, Tesco, JC Penney,

H&M, Karstadt-Quelle, Sears, etc stepping up their sourcing requirements from India

and moving from third-party buying offices to establishing their own wholly owned /

wholly managed sourcing & buying offices shall further make India an attractive

retail opportunity for the global players.

Manufacturers in industries such as FMCG, consumer durables, paints etc are waking

up to the growing clout of the retailers as a shift in bargaining power from the former

to the latter becomes more discernible. Already, a number of manufacturers in India,

in line with trends in developed markets, have set up dedicated units to service the

retail channel. Also, instead of viewing retailers with suspicion, or as a „necessary

evil‟ as was the case earlier, manufacturers are beginning to acknowledge them as

channel members to be partnered with for providing solutions to the end-consumer

more effectively.

Though lucrative opportunities exist across product categories, food and grocery,

nevertheless, presents the most significant potential in the Indian context as consumer

spending is highest on food. Further, „wet groceries‟ i.e. fresh fruits and vegetables is

the most promising segment within food and grocery though initially all retailers

foraying in to this segment had to face had wide spread protest from traders, small

shop keepers.

21

The next level of opportunities in terms of product retail expansion lies in categories

such as apparel, jewellery and accessories, consumer durables, catering services and

home improvement. These sectors have already witnessed the emergence of organized

formats though more players are expected to join the bandwagon. Some of the niche

categories like leisure and entertainment (Books, Music and Gifts in particular) offer

interesting opportunities for the retail players.

Currently the fashion sector in India commands a lion‟s share in the organised retail

pie. This is in line with the retail evolution in other parts of the world, where fashion

led the retail development in the early stages of evolution and was followed by other

categories like Food & Grocery, Durables etc. Fashion across lifestyle categories

makes up for over 50 per cent of organised retail and with the kind of retail space

growth that India is witnessing we can certainly foresee a very healthy prospect for

the fashion industry.

The most important categories for luxury goods are housing, travel, education, higher

end automobiles, electronics and other home improvement products besides fashion,

lifestyle and fine dining. The most important reason for luxury retail not taking off in

India so far has been the lack of luxury retail environment. The presence has been

primarily confined to luxury hotels‟ with shopping plazas.

In nutshell India provides an atmosphere for both luxury and staple merchandise

retailing not only in metros, but also in smaller towns.

1.4 Visual Merchandising

Visual Merchandising (VM) is the activity of promoting the sale of goods, especially

by their presentation in retail outlets4. This includes combining product, environment,

and space into a stimulating and engaging display to encourage the sale of a product

or service. It has become an important element in retailing that is a team effort

involving senior management, architects, merchandising managers, buyers, the visual

merchandising director, designers, and staff. Visual merchandising starts with the

store building itself. The management decides on the store design to reflect the

4 New Oxford Dictionary of English, 1999, Oxford University Press

22

products the store is going to sell and how to create a warm, friendly, and

approachable atmosphere for its potential customers.

In other words, Visual Merchandising is the art of displaying merchandise in a

manner that is appealing to the eyes of the customer. It includes everything that a

customer sees from the time he walks up to, into and through a retail environment.

This is also called Point of Purchase Display. VM is very important to create a lasting

first impression in the minds of the consumers. Customers entering the store are

greatly influenced by the information they gather in the first few seconds after

entering a retail outlet. A successful retailing business requires that a distinct and

consistent image be created in the customer‟s mind that permeates all product and

service offerings. Visual merchandising can help create that positive customer image

that leads to successful sales. It not only communicates the store‟s image, but also

reinforces the stores advertising efforts and encourages impulse buying by the

customer.

Many elements can be used by visual merchandisers in creating displays, including

colour, lighting, space, product information, sensory inputs such as smell, touch, and

sound as well as technologies such as digital displays and interactive installations.

Visual merchandising is not a science; there are no absolute rules. Visual

merchandising is one of the final stages in trying to set out a store in a way that

customers will find attractive and appealing and it should follow and reflect the

principles that underpin the store‟s image. Visual merchandising is the way one

displays 'goods for sale' in the most attractive manner with the end purpose of making

a sale.

Visual merchandising is the art of implementing effective design ideas to increase

store traffic and sales volume. VM is an art and science of displaying merchandise to

enable maximum sale. This is a tool to achieve sales and targets, a tool to enhance

merchandise on the floor, and a mechanism to communicate to a customer and

influence his decision to buy. VM uses season based displays to introduce new

arrivals to customers, and thus increase conversions through a planned and systematic

approach by displaying stocks available. Recently visual merchandising has gained in

importance as a quick and cost effective way to revamp retail stores.

23

1.4.1 Purpose of Visual merchandising

The basic objective for visual merchandising is a desire to attract customers to a place

of business in order to sell the merchandise. Visual merchandising is offered to the

customer through exterior and interior presentation. Each should be coordinated with

the other using the store‟s overall theme. Creating and maintaining a store‟s visual

merchandising plan, however, is not a simple task. It is necessary to continually

determine what the customer sees. This evaluation from the customer‟s perspective

starts on the exterior and works through the interior of the store. Each customer has a

mental image of a store and its merchandise. A store should have an inviting

appearance that makes the customer feel comfortable and yet eager to buy. The

purpose of visual merchandising can be summarised below:

- Informing the customer about the various products creatively and effectively

- Adding value to the store ambience and enhancing the selling process from

browsing to buying

- Creating an atmosphere conducive to buying

- Offering a distinct identity to a retail outlet vis-à-vis competitors

- Linking fashion, product design and marketing keeping the product in prime

focus

- Routing Traffic into and within the store

- Promoting the sale of merchandise

- Catching attention and enticing entry into the store

- Creating awareness about the type of merchandise available in the store

- Enhancing quick product identification

- Attracting attention to stimulate impulsive buying

1.4.2 Techniques of Visual Merchandising

a) Idea oriented Presentation: It is a method of presenting merchandise base on

the idea or an image of a store. Individual items are grouped to show customers

how the items could be used and combined. This approach encourages customer

to make multiple complementary purchases.

24

b) Style/Item presentation: All discount stores, grocery stores, hardware stores

and drugstores employ this method for nearly every category of merchandise. For

e.g. in a departmental store, when customers look for specific merchandise, like

trousers, they expect to find all items in the same location.

c) Colour presentation: A colour symbolizing a specific theme is used by

displaying the same colour apparels throughout the store in a specific period.

d) Price lining: A price conscious customer is taken care of, by the price lining

type of merchandise presentation technique, wherein customer can easily find an

item at a price he wants to pay. All SKU‟s of a product are arranged in such a way

that it gives the flexibility to the customers in terms of selection.

e) Vertical merchandising: This technique uses a simple fact of eye movement

of a customer, after entering and during searching for the specific item. Arranging

national brands at eye level and store brands on lower shelves can be said to be a

part of vertical merchandising as customers scan from eye level down.

f) Tonnage Merchandising: Huge quantities of merchandise is displayed

together to perceive the items as “low price “items as customer always-associate

large quantity to the less price. The “price image “of the store is portrayed by

using Tonnage Merchandising presentation technique.

g) Frontage presentation: The product is exposed to the customer to the

maximum possible extent in frontage presentation technique.

For e.g.- In Crossword bookstores, the “New arrival “ category of books is so

arranged as to see the entire front cover.

1.4.3 Various Components of Visual Merchandising

Visual Merchandising can be carried out in various ways; however, a proportionate

mixture of an assortment of components is essential to creating the desirable impact

on the prospective buyers. These components can be listed as below:

25

– Architecture/ Facades

– Decoratives and props

– Fixtures

– Flooring

– Furniture

– Lighting

– Mannequins

– Ceilings

– Wall coverings

– Store windows

Various Components of Visual merchandising can be categorised as below:

1. Addressing the senses:

Music, lighting, smell etc come under addressing the senses. These components

create the right store atmosphere for a customer to shop in the outlet. This

means creating a sensual experience in the store by paying attention not only to

sight, but also to smell, touch and sound. Sound/Music is an essential element

in any store. It helps accentuate and build your atmosphere. It can also add

texture to the environment. Customers tend to stay longer in environments with

appropriate music and if they stay longer, they typically buy more.

2. Housekeeping Standards:

Housekeeping standards are also critical for maintaining a proper atmosphere

within a retail outlet. Housekeeping standards enhance the image of the store

and provide the right ambience.

3. Store windows:

The storefront windows are an ideal opportunity to attract customers‟ attention

and drag them into the store. Store windows can be used for sales promotion,

seasonal changes, new arrivals or high demand items to facilitate higher stock

turnover.

4. Creative displays: Creative displays portray the image of the store.

5. Signages : Majority of sales for low involvement products are generated at

point of purchase by signage, displays and events within the store. Signage is

the "silent salesperson" for the retailer and must reflect the image.

Signages can be of following types:

26

• Promotional signs: For off-price events or specials.

• Location signs: For direction to specific departments.

• Institutional signs: For store policies, charitable events.

• Informational signs: For product related features/benefits/prices.

Retailers try to make the most profitable use of every square foot of space in the store

and in the warehouse. Since this space is so costly, retailers take a strategic approach

to its use. Floor patterns, location of merchandise, levels of inventory and appropriate

displays are all key factors in the proper use of space. It is very important for every

store to create a suitable atmosphere and appealing visual presentations in order to

trigger the consumer's buying decision. In a world where one can find identical

merchandise in more than one store, presentation of merchandise becomes the key

differentiating factor.

Visual merchandising has to be aimed at the target customer. A retailer can have the

most unique, creative and different store on the planet, but if doesn't conform to what

customers want and expect, then it is of no value. The entire store concept has to be

built around the target customer. So how does one go about building the visual

merchandising, the answer lies in Planogram.

Plan-o-grams: A plan-o-gram is nothing more than a picture of how various fixtures,

shelves and walls will present your merchandise. It is a simple but a very powerful

tool because it takes into consideration what is known about the psychology of

consumer buying habits. Creating a plan-o-gram forces the retailer to carefully

evaluate which products go where and how many will be displayed.

1.5 Visual Merchandising In Indian Retail

Visual merchandising is given a high priority in Western countries. But the Indian

Industry understanding and practice of this concept is still in its growth stage. This

concept was first used in a scientific and organised way in the Indian textile Industry

to project the uniqueness of each product in an innovative way to attract consumers.

For most retailers, this concept was unknown and hence not adopted in a strategic

manner. For them, it jus meant dressing up a window and cluttering it with all the

27

available products. As seasons change, the merchandise collections too change in a

retail store. When such changes take place the store too undergoes a transformation in

decor and visual presentation to appeal to the consumers while announcing new

arrivals in merchandise collection. This phenomenon of transformation of visual

presentations and displays of merchandise accompanied by relevant thematic props, is

still very new in India.

5According to the Global Retail Development Index 2009, by the management

consulting firm A.T. Kearney, India has retained its topmost position in the annual

study of retail investment attractiveness among 30 emerging markets. With the fast

emerging trend of retail, the lifestyle of people has undergone various changes.

Promotion of the store and its products has become essential. Customers are driven by

glamour and trends. Hence, many retailers have started considering this concept and

adopting it in the design of the retail outlet. Many international design trends are also

being adopted in the Indian market. As the concept of large retail stores gains ground

in India, the practice and concept of VM is likely to grow exponentially.

1.6 Retail Location

Retail site location is a very strategic decision. It is often said within the retailing

industry that only three things matter: location, location and location. The logic of this

is that if the right site is acquired, success should be a simple matter of opening for

business. The selection of the location site is of key importance and this requires a

systematic approach to the acceptance or rejection of certain areas in favour of others.

This is because of several issues:

1. Consumer choice: The location is often the most important consumer

behaviour consideration in a customer‟s decision of where to shop.

2. The need for competitive advantage: The decision over where to develop a

retail outlet will be of strategic importance because retailers can gain long-

term competitive advantage if they develop in the best locations.

3. Consideration of trends: any decision on location has to consider the

recent social and structural changes- greater use of the motor car, the

5http://www.atkearney.com/index.php/Publications/a-game-changing-year-for-global-

retailers-eaxii-1.html

28

importance of out-of-town shopping centers, regional shopping areas, the

growth of multiple retailers, the power of retailer brands, and so on;

4. High investment: development of a retail site is accompanied by high

investment and rental costs and long lead times, which requires decisions

regarding long-term financial implications;

5. Property asset: it is important to select carefully as the final property

assets of a company can be valued as high as their annual turnover;

1.6.1 Trade Area

A trade area is a geographic area that will contain the potential customers of a specific

retailer or shopping area and hence accounts for the majority of the store‟s sales and

customers. This is based upon three zones which take the retail outlet or shopping

centre as the epicenter from which bands emanate, based upon access, distance and

travelling time. The trade area is made up of following three zones:

1. Primary trade area is the geographic area from which the store or shopping

centre derives 60-65 % of its customers

2. Secondary trade area can be any distance from two to seven miles, or

under 20 minutes drive time from the outlet, deriving around 20% of the

sales

3. Fringe or tertiary trade area (the outermost ring) includes those who

occasionally shop as an alternative to local shopping. This zone depends

on the type and size of outlet, and the alternative size and experience to be

enjoyed in other market areas.

1.6.2 Factors affecting the demand for a Trade Area

The best regions and trade areas are those that generate the highest demand or sales

for the retailer. To assess overall demand in a particular region/ market or trade area,

the retailer analyst considers:

a) The population‟s demographic and lifestyle characteristics

b) The business climate

c) Competition from other retailers in the area

d) The retailer‟s propensity to manage multiple stores and economies of scale

versus cannibalization.

29

1.6.3 Location Sites

The types of location are associated with different types of site selection. A number of

different options exist but a retailer may decide to locate in one of three typical types

of site:

A solitary site- a single free-standing retail outlet isolated from other

retailers and positioned on a road or street. Its strengths are lack of

competition, low rental costs, lower operating costs which can be passed

on to the customer, higher impact of presence given traffic visibility is not

a problem, and probable ease of parking.

An unplanned shopping area site- a retail location with two or more outlets

in close proximity to each other. Unplanned retailing, as the term implies,

has evolved in a gradual or piecemeal pattern.

A planned shopping district/centre- a retail location which has been

architecturally planned to provide a unified theme for a number of outlets.

The planned retail area is a deliberately developed site with

complementary retail outlets. They are developed as an amalgam of

different retailers to reflect the market catchment area.

1.6.4 Factors affecting choice of the site

Three factors confront the owner-manager in choosing a location: selection of a city;

choice of an area or type of location within a city; and identification of a specific site.

If one plans to relocate in another city, the following factors need to be considered:

• Size of the city's trading area.

• Population and population trends in the trading area.

• Total purchasing power and the distribution of the purchasing

power.

• Total retail trade potential for different lines of trade.

• Number, size, and quality of competition.

• Progressiveness of competition.

In choosing an area or type of location within a city the factors that are evaluated are:

• Customer attraction power of the particular store and the shopping

district.

• Quantitative and qualitative nature of competitive stores.

• Availability of access routes to the stores.

30

• Nature of zoning regulations.

• Direction of the area expansion.

• General appearance of the area.

Pinpointing the specific site is particularly important. In business districts, small

stores depend upon the traffic created by large stores. Large stores in turn depend on

attracting customers from the existing flow of traffic. However, where sales depend

on nearby residents, selecting the trading area is more important than picking the

specific site. Following factors are critical when choosing a specific site:

• Adequacy and potential passing the site.

• Ability of the site to intercept traffic en route from one place to

another.

• Complementary nature of the adjacent stores.

• Adequacy of parking.

• Vulnerability of the site to unfriendly competition.

• Cost of the site.

Site Selection Checklist:

Customers-

potential/actual

Accessibility Competition Costs

Numbers by

demographics

Income/

employment by

occupation,

industry, trends

Spending

patterns

Population

growth, density

and trends

Lifestyles

Car ownership

Site visibility

Pedestrian

Barriers such as

railway tracks,

rivers

Type of location

zone

Road conditions

and network

Parking

Public transport

Amount and

level

Type and

Numbers

Saturation

index

Proximity of

key

competitors,

traders, brand

leaders

Buildin

g costs

Rent

Costs

Rates

payable

Deliver

y costs

Insuran

ce costs

Labour

rates

Table: 1.6

31

1.7 Problem Statement

Retailing industry, unlike in the West, is less structured and organized in India.

Organized retailing was an evolution in the West where as it can be called as a

revolution in India in last 5-7 years. So, now because of availability of more number

of retail formats and malls, customers have got abundance of choice in relation to

selection of a retail stores and purchase of merchandise.

Although “organised” retailing has been in practice for a long time in some product

categories like textiles and shoes, they have been driven by the manufacturer. The

changes witnessed in the industry where the retailers are organizing themselves

started only in the last decade. The traditional small and unorganized entrepreneurs

dominate the sector. India has the highest number of retail outlets (more than 12

million) in the world, though the per capita retail space is the lowest (CII-Mckinsey &

Company, 2009). The organised sector‟s share is very low compared to other

countries including those in Asia. Up to 80 per cent of all retail sales in the United

States is controlled by the organised retail sector. The corresponding number in

Western Europe is 70 per cent. The scenario of organised retailing in Asia is lopsided.

In Taiwan the share of the organised sector is 81 per cent, followed by Malaysia and

Thailand, at 45 and 40 per cent, respectively, whereas China and India stand at 15 and

8 per cent, respectively. Each of the new retailers is trying different formats. Most of

them are yet to find out a successful formula. With the emergence of big players (both

local and national), the street corner kirana shop has also transformed itself, giving

rise to a unique format. A number of traditional “kirana” shops have expanded in size

allowing self service and provided customers with deeper and wider assortments.

These “transformed kirana stores” have offered facilities like home delivery,

replacements and credit. Despite the current changes, there is a lack of studies that

have focused on the nature of shopping behaviour exhibited in the Indian

environment. Most research in this area is still proprietary in nature and hence is

outside the public domain. In such a scenario, there remains a need for studying the

shopper behaviour. Given the rapid rate at which new retail formats have been

introduced in the Indian market in recent times, many with limited success, it is

imperative for Indian businesses to understand changing shopping behaviour among

consumers, especially with regard to their preferred points of purchase. With growth

in disposable incomes and improving infrastructure, consumers have a wide choice of

32

stores where they can choose to shop. It is therefore, necessary for retailers to

understand shoppers‟ motivations and to attract customers residing beyond the

catchment areas around their stores.

Assuring quality product or investment in brand building activities is not just enough

to acquire new customers or retain the existing customers. As customers are

bombarded with more and more options, they are confused on what to buy. This leads

to customers being less brand loyal and more variety seekers. This often results in

customers switching from one brand to the other, or to a substitute product. In his

case, product availability and visual merchandising plays important role. Moreover,

visual merchandising is helpful in inducing impulse purchase of unplanned

merchandise in customers also. Though visual merchandising a critical decision area

in retail, the importance of same has not yet been felt in India. Most modern formats

of retailing arrange their merchandising without any scientific study or use of a

planogram. Similarly stores come up on the basis of availability of real estate and

price proximity. But hardly any study has been done to understand the implications of

retail location and visual merchandising.

So this research aims at studying the shopper decision process „in selection of retail

outlet‟ and „the impact of visual merchandising‟ on select category of products. This

will be helpful in identifying factors determining shopper buying behaviour and

understanding the importance of visual merchandising and store selection in modern

formats of organised retailing. Retailers can use the research in designing their

merchandising and market targeting strategy.

The primary research is limited to supermarkets in Pune. The research first tries to

understand the different attributes that influence shopper buying behaviour. The

understanding of the attributes is developed from existing literature and the same is

verified by exploratory survey with shoppers in Pune. Once the attributes are

finalised, data from shoppers are collected on those attributes on an importance scale.

The data is processed through SPSS using factor analysis to create factors that affect

shopper buying behaviour and subsequently factor scores are computed. Factor scores

are used in cluster analysis to create shopper clusters and understand their

demographics and behaviour.

33

1.8 Aims And Objectives

1. Explore consumer decision process in retail by understanding

the different triggers for shopper buying behaviour

2. Identify the various factors influencing customer behaviour and

create an understanding of retailers‟ approach towards consumer

behaviour

3. Understand the different factors (after clubbing different

triggers into factors) and their relative importance in shopper

buying behaviour.

4. Impact of visual merchandising on select merchandise sell

5. Understand shopper clusters in terms of their buying behaviour

###