Buying Preferences of Customers for Agri-Inputs

from Organized Rural Retail Stores

Prof.( Dr.) Syed Haider Ali
Director, Goel Institute of Management Studies, Lucknow
Email:SYEDHAIDERALIABIDI@gmail.com

Smriti Srivastava
Faculty, Department of Management studies
BBDNIIT, Lucknow
smriti__srivastava20@yahoo.com

Abstract

Statement of the Problem: Organized retailing after set its foot in urban markets in India, is
prompting to turn its energies to rural retailing. Rural markets in the country offer a sea of an
opportunity for the organized retail sector as rural India is home to 720 million consumers across 6.2
lakhs villages and 87 percent of rural markets do not have access to any sort of organized marketing
and distribution. Agri-input retailing for products such as seeds, crop protection and fertilizer are
emerging fast in rural markets in India. The buying preferences and decisions of farmers are highly
influenced by social customs, traditions and beliefs in the rural markets. Therefore, knowing buying
preferences of farmers in the organized retailing has become one of the critical success factors for the
retail service providers to tap the serve farmers and gain long term sustainable competitive advantage.

Objective: The study aims to investigate farmers’ buying preferences of agri inputs towards organized
rural retail stores.

Methodology: Multistage random sampling approach was adopted to select farmers from retail outlets
of ITC, DCM & Godrej, and connected villages making a sample size of 360. A structured
questionnaire was administered personally to them to gather primary data on specific aspects of the
study.

Findings: The data results shows that there was a significant difference between the farmers who
purchase agri- inputs from organized stores and those from traditional stores on the attributes of
product quality, range of products, rate, packaging, brand-choice, credit availability, serviceability,
shop proximity and complements.

Managerial Implications: Agri-inputs remain a price and quality sensitive market as factors like
packaging; credit availability and product variety were considered relatively less important. The rural
retailers need to minimize the cost of inputs through technological improvements and also maintain the
quality standards and trustworthiness.

Keywords: Rural retailing, agri-inputs, India

1. INTRODUCTION
Retailing in India can be broadly categorized into organized and unorganized form of retailing.
Till today, unorganized players are predominantly occupied this sector. With several states in the
country permitting retailers to purchase products directly from the farmers, there is a new kind of
revolution afoot in rural India. Farmers are taking special care of produce to garner higher prices,
selling to retail companies such as ITC, Companies such as Godrej and DCM Shriram Consolidated
are launching `one-stop shops' for farmers and their communities. and finally making money after

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centuries of social and economic exploitation. For instance, Andhra Pradesh more than 2,000 small
farmers are benefiting from organized retailing, since they are dealing directly with companies without
middlemen or intermediaries in between. Over the next two decades, production agriculture agricu is
expected to undergo several fundamental changes on a worldwide basis thereby fundamentally
changing agricultural input markets. The agricultural sector is already beginning to feel the effects of
market globalization, agricultural industrializatio
industrialization,
n, and trade liberalization.For example, advances in
transportation and information technologies have enabled the globalization of agricultural input
formulation and distribution.There
There are several studies that opine that organized retail is affecting
buying g behavior of Indian consumers (Gupta, Agarwal, & Sinha, 2008).Various researchers have
studied opportunities, challenges, formats and trends for big players in India in the recent past
(Rahman, 2012) (Akhter & Equbal, 2012) (Mittal & Prashar, 2011). It ha hass been observed that store
size and location plays a significant role in determining the operational efficiency of retail stores
(Choudhary & Sharma, 2009).There have been some studies conducted on the effect of socioeconomic
and other influencing demand ffactors on consumer expectations from retailers (Rajmohan &
Panchanathan, 2005). Studies indicate that Indian retail is a booming sector, specially the organized
retail is witnessing a radical change with the transformation of Indian consumers’ outlook for product
variety.
It has been observed that shopping motive is an important functional element that leads the
consumer to the marketplace and the change in buying motives depends on culture, retail format and
economic and social environment (Chakraborty, 22010). 010). Consumers’ perceptions of stores often get
affected by demographic, situational and store variables when they make purchase decisions (Dalwadi,
Rathod,& Patel, 2010). A study in Secundrabad and Hyderabad in India showed that customer
preference of a store depends on location (Shah, 2011). In one study on the buying behavior of rural
customers of agri-inputs
inputs in organized retail outlets, it was found that the customers are wealthy farmers
having large landholdings. They considered price, fresh inventory and trust worthiness as most
important factors in their choice of outlet rather than quality, brand and packaging (Dharni & Singh,
2011).
The purpose of this study is to identify the various impacts of organized retailing on un- un
organized retailers and too find out the attitude of customers towards organized and unorganized
retailers.

2. DATA AND PROCEDURE

This study is based on a comprehensive farmers’ survey using a structured questionnaire, administered
personally. A multi-stage
stage random sampling approach wa wass adopted to select a total 360 farmers from 12
villages of 6 blocks in two districts of Uttar Pradesh namely Lucknow and Ghazipur, as per given plan
(Figure 1).
Figure 1: Multistage sampling procedure

• 2 districts
Districts

• 6 blocks (3 from each selected district)

Blocks

• 18 villages (3 from each selected block)

Villages

• 360 farmers (20 from each selected village)

Farmers

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Keeping stated objectives into account, the questionnaire was subdivided into five sections. Five point
Likert type scale were used to rank farmers responses on various aspects of input retailing. The data
obtained through the surveys has been processed by means of SPSS 15.0 statistical software. The
descriptive statistics (mean), chi-square test and F-test were attempted to analyze data.

3. RESULTS AND DISCUSSION

3.1 Profile analysis

The demographic profile of respondents exhibited in Table 1, reveals that, majority 90% were
male and some 10% female. Most of the respondents were lying in the age group of the range 25-45
years that is approximately 44% of the population followed by 34% in the age groups of 46-65. About
38% respondents were illiterate, 40% were having some schooling, and 17% were graduated. More
than half (55%) of the respondents belongs to OBC social category followed General (24%) and least
20% from SC/ST category. The yearly household income from the agriculture shows that only the rich
farmers are purchasing from organized stores. Income distribution pattern indicates that most of the
respondents belong to above poverty line (APL) groups with annual household income of more than
Rs. 25000. Some 12% respondents belong to high income group of more than Rs. 4 lacks.

Table 1: Demographic profile of respondents

N %
Gender
Male 324 90.0
Female 36 10.0
Age
<25 years 52 14.5
25-45 158 44.1
46-65 121 33.8
>65 27 7.5
Education
Illiterate 135 38.0
JHS & above below 71 20.0
H. Sec./Sr. Sec. 73 20.6
Graduation 61 17.2
Professional Diploma 15 4.2
Social Category
General 87 24.5
OBC 195 54.9
SC/ST 73 20.6
Yearly household income
<Rs. 25000 22 6.4
25001-50000 37 10.7
50001-100000 91 26.3
100001-200000 82 23.7
200001-400000 73 21.1
>Rs. 400000 41 11.8

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3.2 Perceived attributes of input purchase stores
Table 2 demonstrates the perceived attributes of input purchase stores. It is clear from the
analysis that there is significant difference between organized and unorganized retail stores on various
attributes as presented in the table. At the organized retail store, the quality of the inputs are better than
from the unorganized store/ local market however the rates of these items are slightly higher at
organized store than from the local markets.

Table 2: Perceived attributes of input purchase stores

Unorganized Store/Local Organized Retail
Total* F Sig.
Market Store
Convenience 2.7 3.3 2.2 84.894 0.000
Serviceability 2.5 3.5 1.5 266.217 0.000
Availability/Stock 2.9 3.8 2.0 206.931 0.000
Variety/Brand Choice 3.0 3.8 2.2 162.627 0.000
Quality 2.8 3.8 1.9 247.756 0.000
Rate 2.9 3.4 3.6 2.171 0.142
Credit facility 3.3 3.9 2.7 68.929 0.000
Value for money 3.0 3.9 2.1 307.967 0.000
Material handling 3.1 3.9 2.3 261.764 0.000
*Strongly agree-1,….., strongly disagree-5

3.3 Constraints at input purchase stores

Table 3 presents major constraints faced by farmers at input purchase stores. The organized
retail stores provide proper supply of quality farm inputs as compared to unorganized retail stores but
the prices of these inputs are slightly higher at the organized retail stores in comparison to the
unorganized retail stores/local market. The quality of the inputs provided by the organized retail stores
is significantly better than local markets/ unorganized retail stores. However, in case of promotional
activities for awareness and shop assistance, the local market/ unorganized retail stores take edge over
organized retail store. Organized retail are also significantly better in providing post purchase services
and offer credit facility to the farmers than the unorganized retail stores. The unorganized stores have
constrained by unsuitable timings of operations.

Table 3: Constraints at input purchase stores

Unorganized Organized
Total* Store/ Local Retail F Sig.
Market Store
Shortage of input supply 3.5 2.8 4.2 198.835 0.000
High prices for inputs 2.8 2.9 2.7 3.066 0.081
Poor quality 3.7 3.1 4.4 182.077 0.000
Lack of input variety / brand choice 3.6 3.0 4.2 124.233 0.000
Lack/poor post purchase services 3.4 3.1 3.8 55.621 0.000
Lack of credit facilities 3.4 3.0 3.8 32.261 0.000
Unsuitable hours of operation 3.4 4.1 2.6 143.638 0.000
Inconvenience/Uneasiness 3.2 2.9 3.4 24.383 0.000
Lack of transportation facility 3.1 3.0 3.2 4.784 0.029
Lack of sitting & drinking water facilities 3.7 3.1 4.4 169.509 0.000
Lack of promotional activities for awareness 3.0 3.5 2.6 30.063 0.000
Lack of shop assistance 3.6 4.4 2.8 156.397 0.000
*Strongly agree-1,….., strongly disagree-5

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 4. CONCLUSION AND IMPLICATIONS

Farm inputs greatly contribute to the produce quality and quantity both. The Governments based
stores/cooperatives and traditional retail stores/local markets are findings themselves difficult to
respond the farmers’ desire qualitative and quantitative demand of agricultural inputs such as seeds,
fertilizers and pesticides. Therefore, there is growing importance of organized rural retail stores.
However, due to poor promotional activities to increase awareness about the products and services;
unsuitable hours of operation, and lack of shop assistance helps, the organized stores are prevented to
get the desire pace. However, the changing demographic structural of rural India and improving
literacy and income status, signs for the shining future of organized rural retailers. Though, the
organized rural retailers also required to understand the rural customers and their demand for the desire
attributes of farm inputs.

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