MBA II

ASSIGNMENT
SUB:PRINCIPLES OF RETAILING
TOPIC:IMPACT OF ORGANISED RETAILING ON SMALL GROCERY STORES
SUBMITTED TO: DR.RAJIV SAMUEL SIR
SUBMITTED BY:RISHITA BHATT
 Even though the Indian retail industry is dominated by
unorganized retailing, the share of organized retailing
should not be undermined. It is slowly but steadily growing
year over year and emerges as a force to reckon with in the
days to come. There has been a paradigm shift in the
preferences of customers from unorganized to organized,
which is evident from the increasing patronage towards
INTRODUCTI organized retailing .Studies in various parts of India
undertaken by researchers to evaluate the effects of
ON organized retailing on unorganized retailing have provided
some important observations. The effect of organized
retailing on the store operations like revenues, profits,
customer footfall, employment and closure rate of
unorganized retail sector indicates that unorganized
retailers (small grocery stores) in the neighborhood areas of
organized retailers witnessed a decline in their sales and
profit after the entry of big corporates into retailing.
Indian Retail market at a glance
The contribution of retail industry to India’s GDP is more than 13%. The retail industry in India is
of late often being hailed as one of the sunrise sectors in the economy. India's retail sector is on
its way of modernization. Traditional markets are making way for new formats such as
departmental stores, supermarkets and specialty stores.
Globally, India is the sixth-largest grocery market and has a humongous potential for
growth due to the rising population as well as disposable incomes. The Indian grocery
market, which accounts for 69% of India's total retail market, offers plenty of
opportunities to retailers. Many retail players have tried tapping into this potential
without substantial results. The local small grocery is still the epicenter of Indian grocery
business with 90% of distribution under its belt. Even as retail giants battle against each
other to become the consumer's habit when it comes to buying grocery, the small stores
have held their ground.
WHAT IS ORGANISED RETAILING?
Organized Retailing can be defined as a form of retailing whereby
customers can buy goods in a similar purchase environment across
more than one physical location for verticals from food, grocery,
apparel, consumer durables, jewellery, footwear, beauty care, home
décor, and books to music.

In organized retailing a proper record is maintain by the government

and retailers need to pay the tax to the government.
 WHAT IS UNORGANISED
RETAILING?
Unorganized retailing is characterized by a distorted real-estate
market, poor infrastructure and inefficient upstream processes, lack
of modern technology, inadequate funding and absence of skilled
manpower.
How are the two formats different?

ORGANISED UNORGANISED
Impersonal Personal
Formal Informal
Faceless & desolate Part of the community/Social space
Self-service Service provider
Transactional Patron-client relationship
EVOLUTION OF INDIAN RETAIL
Before the decade of eighties, India with hundreds of towns and
cities was a nation striving for development. The evolution was
being witnessed at various levels and the people of the nation
were learning to play different roles as businessmen and
consumers. The foundation for a strong economy were being
laid, youth were beckoning new awareness in all spheres. And
this brought in an opportunity for retail industry to flourish. First
in the metros and major cities later to impact sub urban and rural
market as well.
In olden days there used to be weekly Markets and village fares
from where people used to make purchase. Weekly markets and
melas are, even in existence. After some time Mom& Pop, small
grocery & convinence Store came into existence. Convince stores
are usually located near roads and petrol pumps and they used
to charge a little higher prices. During the time of independent
fight , the concept of khadi Bhandars came in existence.
Cooperatives were formed to provide products at lower prices to
customers.
CHANGES IN CUSTOMER’S BUYING BEHAVIOR
Consumer behavior in retailing is more unpredictable and volatile. Due to the change in lifestyle consumers
are demanding very large selection of producers and they expect more discount. Consumer are no longer
influenced by brand, but they are very cautious about quality and value. 34% consumer prefers unorganized
retail shopping while 26% consumer prefers organized retail shopping, but 40%consumers are still in
dilemma. 37% consumers purchase daily groceries from local small grocery store While 26% customer Shop
from Supermarkets,21% consumers from convenience store and rest 16% customer’s prefer hypermarket.
Thus, highest percentage is still with local small grocery stores however the difference between
supermarket and local small grocery is less. 40% customer’s visit fortnightly to the malls for various
purposes, 30% customers visit weekly, 20% monthly and rest 10% daily.
• 60% customers are satisfied with the pricing strategy of the malls after considering various discounts, sales
and other offers, while 40% customers are not satisfied. During the survey
• It was found 64% consumer’s finds best shopping deals in malls with various discount offers, gift packages
etc.28% customers are satisfied with the shopping deals served by the local small grocery stores while 8%
customers has no opinion. 32% of consumer’s declared an increase in spending, 21% indicated decrease and
the balance no change.
• Thus, the arrival of organized retail has enhanced spending in general. The reasons indicated for higher
spending have been mainly the purchase of larger quantities due to wider range of products, availability of
attractive offers like discounts and promotional schemes, and access to better quality products with higher
price.
Impact of modern Retail on Small Grocery stores.

• The concept of Hyper markets and shopping malls. Experts believe that modern Retail is going to be future
of retailing. To our surprise there was not a single mall in India a 15 years back and just a few years ago
only a handful of them were striving, today there are more than 50 malls across different cities and 2
years from now around 500 malls are predicted to come up.
• Unorganized retailers in the vicinity of organized retailers have been adversely affected in terms of their
volume of business and profit. Unorganized retail has maintained employment levels perhaps as a result
of competitive response. The major factors that attract unorganized retailers to consumers are proximity,
goodwill, credit sales, bargaining, loose items, convenient timings, and home delivery There is clear
evidence of a competitive response from traditional retailers who are gearing up to meet the threats from
organized retailers.
• Consumers have generally gained with the emergence of organized outlets through the availability of
better quality products, lower prices, one- stop shopping, choice of additional brands and products, family
shopping, and fresh stocks.
• Lower income consumers have saved more from purchases at organized outlets. These results are not
indicative of the countrywide scenario. For the country as whole, unorganized retail is growing at a
reasonable rate and will continue to do so for many years to come. India is however a latecomer to
organized retail expansion and the picture still remains unclear as to its future.
Impact of modern Retail on Small Grocery stores

• Retailers eliminate many layer of intermediary and since their purchase

quantity is big so they are in better position to negotiate with their suppliers.
Apart from lower prices also offers large choices and better merchandising of
products. Today customers don’t simply just shop they also think about
shopping experience thats where modern retailers win the race.
• They usually operate in specious shops where products are segregated as per
their category so customers can easily pick up the products they want. Whereas
traditional retailers operate in small shops.
 RECOMMENDATION
• Small grocery shop owners are not taking much efforts to attract customers, they feel that customers will come to them just only
because their shop is located nearby customer home, when ever customers wants to make a small purchase they will go to small grocery
shops. small grocery shop owners feel that they can’t do much to fight with modern retailers. small grocery shop owners can attract
more customers by increasing their product range, they reduce their margin and offer products at lower prices, offering credit facility in
only area, where small grocery stores have edge over modern retailers, and small grocery stores can also offer better packaging and
display of products.
• Since small grocery stores have less no. of customers they are in a better position to maintain relationship with customers. small
grocery store can also organize themselves by forming some association or franchise system. Under this system all retailers will come
together, that will in better position to negotiate with wholesalers and manufacturers.
• Small store owners can upgrade their shops to emulate practices of large retail chains, thus they can become more profitable than their
bigger counterparts, who continue to cut costs, consolidate and review operations on the back of poor consumer sentiment in a sluggish
economy. “Local retailers are growing profitably much faster than large retailers,” said the India Retail Report 2013, The Report also
mentions that about 57,000 local retailers in the country resorted to modern retail practices in the past two years.
• There are some small grocery stores who have adopted modern retail look and they can also help other retailers to upgrade their stores
to follow modern retail look and practices. For Ex :Sarvodaya Super Market—a 40-year-old 2,500 sq. ft food and groceries store in Dadar
West, Mumbai has helped close to 60 other traditional retailers in Gujarat, Uttar Pradesh and Maharashtra to upgrade their stores to
follow modern retail look and practices. “We are seeing more and smaller store owners interested in converting their traditional stores
to modern retail. The other area where small grocery shops can improve in Inventory, they need to manage inventory more efficiently.
 CONCLUSION
Both the formats of retail small grocery store and modern are essential to fulfil customer needs. Modern retail will see tremendous
growth in future but they wont be able to replace small grocery store store. Even today middle class people prefer to make
purchase from small grocery store stores. Even the customers who don’t grocery and other products on a monthly basis prefer to
buy from small grocery store stores. Given the time of recession modern retailers are putting their expansion plan on hold. The
growth of modern retail will hurt the profits of small grocery store stores but small grocery store store owners will able to make
their bread and butter due to increasing population.
The entry of foreign players in Indian market will make their job more difficult. But customer relationship and store timing will help
them to retain customers even during the time of slowdown. Factors that are playing a role in fuelling the bright future of the
Indian Retail are as follows:
• The income of an average Indian is increasing and thus there is a proportional increase in the purchasing power. • The
infrastructure is improving greatly in all regions is benefiting the market.
• Indian economy and its policies are also becoming more and more liberal making way for a wide range of companies to enter
Indian market. • Indian population has learnt to become a good consumer and all national and international brands are benefiting
with this new awareness.
• Another great factor is the internet revolution, which is allowing foreign brands to understand Indian consumers and influence
them before entering the market. Due to the reach of media in the remotest of the markets, consumers are now aware of the
global products and it helps brands to build themselves faster in a new region However despite these factors contributing to the
growth of Indian retail Industry, there are a few challenges that the industry faces which need to be dealt with in order to realize
the complete scope of growth in Indian market
Despite these challenges many international brands are thriving in the Indian market by finding solutions around these
challenges. A company that plans to enter Indian market at this time can look forward to great business if it analyzes and puts
efforts on all parameters.
 REFERENCES
• Impact of Organized Retailing on the Unorganized Sector: A Review of
the Study by ICRIER
• https://ukdiss.com/examples/retail-indian-industry.php
• https://www.slideshare.net/AshishKamble2/annual-report2011-12-
15960105?qid=fad68dc4-8f99-45bc-b949-
f38ad1d98ca8&v=&b=&from_search=1
• Arora Sweta, Rathi Priya, Malhotra Vaishali , “Impact of Organised
Retailing on Unorganized Sector", Journal of IPM Meerut, 2010, pp
36-48