Types Of Organized Retail Formats

Published Date: 02 Nov 2017

Types of Organized Retail Formats: The Retail Industry in India has shown an upward trend in different formats of retailing. The retailers are venturing into a number of formats as Indian retail transits through the experimental phase. Since most of the formats are new to the consumers, retailers will have to choose models that are customised to Indian taste and habits.

Hypermarkets: Huge stores offer everything from foods to dry grocery to hardware to electronics. Pantaloon’s Big Bazaar, Spencer’s hypermarket and Trent’s Star India fit this category.

Supermarkets: self-service stores focussed on regular groceries, household goods and personal care products, located in residential areas. For e.g. FoodWorld

Departmental stores: like the name reveals this format carries various departments such as Apparel, furniture, jewellery etc, but is much smaller than a hypermarket in terms of space. For e.g. Shoppers Stop, Lifestyle

Convenience stores: small stores located at convenient locations in crowded neighbourhoods. Like ‘More’, in Pune or ‘24/7’ in Delhi.

Exclusive outlet: stocking a single brand and could be either company owned or franchised. For e.g. Raymonds, LG

Discounters: aimed at bargain buyers

Various new retails formats and combinations are expected to continually emerge to allow key players to operate in multiformats to utilize their brand value across different segments and profiles of customers.

The Dynamic customer: customers are displaying a range of behaviours from demanding shopping to impulsive purchases:Indian customer behaviour is gradually changing in response to the changing social structure. The increasing number of nuclear families, double income house holds, influence of children, specially the young working population is driving the changes in consumption habits & spending patterns. This should bode well for the growth of modern retail formats in India.

The other important factors in the Indian landscape are, increasing per capita income (according to NCAER [1] forecasts, the number of "rich" households is expected to nearly double from 57million in 2002 to 107million in 2010), improving literacy rates, increasing proportion of young population joining workforce (it is estimated that nearly 80% of the Indian population is below the age of 45 yrs). A large young working population with a median age of 24.66 years forms the focal point of the Indian economy [2] . As the young wage earning population tends to spend more on entertainment and leisure, with fun-filed shopping experience is a major attraction. Besides this consumers’ different attributes are reflected in their attitude, perception and behaviour. Some consumers are impulsive trialists, or compulsive shoppers (browsers/ spenders), some consumers display their demanding, aspiration nature in their behaviours. It is imperative that retailers begin to dissect and understand each segment of consumers in the market. In addition, knowledge of demographic profiles can lead to a better understanding of consumer preferences for various retail formats. Here the researcher intends to explore narrower slices within the existing segments to get differential edge. The following perspectives of consumer behaviour are significant with this perspective:

A paradigm shift in consumer behaviour: Shopping for Necessities to shopping for Pleasure: Till recently, Indian consumers have been shopping whenever there was a genuine need to buy something. But nowadays the number of consumers, who go on shopping as a leisure time activity or as a feel-good factor, has increased enormously. Indians have started replacing their personal wardrobes of clothing and accessories much more frequently than they did earlier. The shopping behaviour, buying patterns of Indian consumers have displayed a wide range of changes to enlist a few:

-Change in consumer lifestyle, from traditional look to modern outlook

-Itemized purchase to bulk purchase (specially purchasing everything under one roof)

-Fresh food to preserved food

-Utility based products to lifestyle products

-Conservative spending to liberal spending – better employment opportunities and higher per capita income have shifted the attitude of consumers from conservative spending to liberal spending

-Increased buying during holidays and festive seasons

-Demographics reinvented – earning youngsters spend more on entertainment and leisure

-Increased service orientation, quality and convenience

-Availability of wide range of product category

Shopping has become an experience not a chore: Shopping, like many other activities has evolved over the course of time. Shopping is no longer restricted to the acquisition of goods but is an experience in itself. However due to increase in strip malls & department stores and the marketing plans that are geared towards families & specially women; shopping took on a more leisure based purpose. Shopping is said to be a transforming experience, a method of becoming a newer, perhaps even slightly better person. Shopper Behaviour in malls is described as a willingness or desire to stay, explore, work or affiliate. As modern retail has ensured shopping has become an experience that can be enjoyed and its voyage of discovery.

Leisure Shopping Behaviour: Leisure or free time is a period of time spent out of work or essential domestic activity. It is also the period of recreational and discretionary time. Michael Guiry, SUNY New Paltz, Richard J. Lutz proposed definition of Recreational Shopping (Leisure Shopping) as, "Recreational shopping is shopping activity that is characterized by the shopper experiencing gratification from the shopping process per se, either in conjunction with or independent of the acquisition of goods and services". [3] To many, shopping is considered a recreational and diversional activity in which one visits a variety of stores in search of a suitable product to purchase. "Window shopping" is an activity that shoppers engage in by browsing shops with no intent to purchase, possibly just to pass the time between other activities, or to plan a later purchase.

Buying Decision making process: The retail self-service stores which largely operate in chain are based on the rationale of Touch, feel and pick which provide consumers a wide range of options to make buying decisions. The in-stores promotions and do it yourself (DIY) opportunities constitute the major motivation for the buyers and also support their decision making process. Shoppers buy the product based on touch and trial, close to 90% of new products fail mainly because people don't try them. 23% of Asian-American shoppers tore open packages to check the product. [4] Hence DIY opportunities make considerable impact on buying decision making process.

Impulsive Buying Behaviour: It has been observed in some studies that consumers who intend to do shopping in short notice, generally lean towards impulsive or compulsive buying behavior. The buying patterns have displayed a remarkable transformation. It is observed that nearly 70% of the buying decisions are made in the stores [5] . Earlier shopping was more or less a planned Affair but market revolution has created a new category of buyers who are ready to spend an inevitable amount on spontaneous buys, giving way to a new segment- the ‘Impulse shoppers’. The visual merchandising strategies, efficient sales personnel, the in-store sampling and promotions with discount offers induce customers to make unplanned/ impulse purchases. Impulse buys account for about one-third of all sales in a typical department store. But in the cosmetics department, those spontaneous purchases can mushroom to up to two-thirds of sales because promoters are constantly stopping customers, convincing them the product attributes.

Post purchase behaviour: Consumer satisfaction/dissatisfaction is determined by the overall feelings or attitude a person has about a product after it has been purchased. It is influenced by the perception of quality, price, follow up etc. Satisfaction or dissatisfaction with the product will influence a consumer’s subsequent behaviour. If the customer is satisfied, he or she will exhibit a higher probability of purchasing the product again. Retailers should try to use consumer post purchase behaviour as a way of assessing their performance as perceived by their consumers and should use this opportunity to delight them by showing their commitment to consumer service. Retailers have identified consumer retention as a major concern, as research has shown that even satisfied consumers can’t be termed as loyalists and often switch to competing brands to get a better deal.

Retailing strategies adopted by organized retailers: The organised retail have revolutionised the concept of retailing and they pose a serious competition to their conventional counterparts in terms of service, ambience, price, access to the brands etc. Furthermore the organised retail outlets especially shopping malls malls are creating a niche in the minds of customers through a perception of innovation, style and status. A shopper Marketing plan acts as a blueprint that will standardize the processes necessary for efficient and effective retail strategies. The retailers use various marketing stimuli i.e. any marketing effort that builds brand equity and has the potential to engage or influence an individual to shop or make a purchase. Some examples of shopper marketing stimuli include:

Visual Merchandising and window display: Visual Merchandising enriches the overall in-store experience, it include various tools for eg. signages serve as guides, colours, scent, music and props displayed create an overall ambience. ‘Visual Merchandising is everything the customer sees, both exterior and interior that creates a positive image of a business and results in attention, interest, desire and action on the part of the customer’. [6] Pooja D Kunwar finds Visual Merchandising as Silent Salesperson [7] , Visual Merchandising is a significant influencer of the retail experience and shopper’s decision making process. It provides competitive advantage and helps in building the overall image of the store.

In-store promotions and sampling: Sales Promotions in shopper marketing include a variety of marketing tools where a sale is sought to be induced by offering some kind of incentives, such as a price discount, a discount coupon, free gift, free sampling etc. R.Harish and K.Suchitra are of the opinion that Sales promotion campaigns are aimed at making psychological and emotional impact on target consumers. The main aim is to encourage purchase, increase the quantity of purchase and/or the purchase frequency. [8] A study conducted by Instore Marketing Institute observes in-store sampling indeed, drive sales on the day of the sampling event. Moreover in-store sampling can drive trial and sampling has a well-established track record for boosting sales of new product launches. [9] 

Customer Loyalty programs: Stores use loyalty programs to reward loyal users and encourage them to visit the store often and buy more by offering wide range product categories under one roof. Here sales promotions also help to reward loyal customers. Moreover an integrated information system of loyalty program proves to be guideline to understand shopper behaviour and devise customer retention strategies.

Customer service: The recognition and identification of shopper segments and providing them quality services delivers a value-added offer and experience that truly distinguishes the brand and retailer in the minds of shoppers. Customer service quality is perceived as a tool to increase value for the consumer; as a means of positioning in a competitive environment to ensure consumer satisfaction, retention and patronage. [10] 

Consumers’ desire for convenience and one-stop shopping has led to the use of scrambled merchandising strategies but there is an increasing importance of planned, centrally managed and enclosed shopping centers and application of more shopper-centric retailing strategies. This purpose can be attained with effective Shopper Marketing Plan.

The Study Design:

This research study is descriptive cum diagnostic in nature.

Framework of Hypothesis:

Retailing firms attract consumers through in-store marketing activities, the Do It Yourself simulations act as stimulus to consumers who intend to elicit a positive response. Mridula Mishra (2007) [11] is of the opinion that shopping in Indian organized retail has increased because consumers feel that the visit to the outlet is important, to chose from the variety of wares displayed. Besides this the consumers enjoy shopping at organized retail outlets as they provide huge variety, friendly store layouts, offer self-service, pleasant ambience, and store services like baggage, promotions etc. The consumers feel that the market is exposed to new brands every other day and a visit gives them an option to choose. The impact of in-store ambience can be measured in reference to degree of stimulation and pleasure gained by consumers. Interactive tools on product learning provided in the retail stores significantly affect the level of arousal and pleasure which contribute towards experience, and thereby influence the buying behaviour. Moreover impulsive purchase is higher due to organized display of related products or items with promotional incentives for the consumer. The retail sales performance and the customer value approach are conceptually and methodically analogous. The customer's perception of the value received in a transaction is satisfaction, and it helps in making re-patronage decisions. Many retailers develop innovative approaches to prospect new customers for new products by strengthening customer relationship and value management strategies.

Hence it is important to remember that a key aspect of shopper marketing is the creation of programs that will differentiate a retailer from the competition and the retailer should focus on shopper-centric strategies. This transforms the visit from pure shopping to an entertainment experience and results in extended stay, increased spending per visit and more frequent visits [12] .

In the light of review of key conceptual elements and literature review, following hypothesises are formulated and would be tested with adequate evidence:

Hypothesis 1: Effective In-Store shopper marketing plan and Shopper- centric Retailing Strategies build brand and store loyalty.

Hypothesis 2: The impact of in-store ambience and visual merchandising stimulate impulse buying and enhance shopping experience.

Hypothesis 3: Innovative in-store sales promotion and sampling techniques increase the new product trials and the sales.

Hypothesis 4: Influence of the store ambience and recreational facilities leads to higher store loyalty of customers.

Hypothesis 5: There is a positive correlationship between in-store services provided and the customer satisfaction.

After having understood the key conceptual elements in retailing and Shopper Marketing the following objectives are developed to carry forward the research:

Research Objectives:

To ascertain the significance of In-store Shopper Marketing Plan and shopper-centric strategies in organized retailing.

To carry out segmentation of shoppers based on suitable parameters

To analyse the Shopper Behaviour cycle and the path to purchase.

To analyse the marketing, merchandising and operational tactics applied by retailers for increasing sales and building brand and store loyalty.

To investigate the relationship between in-store marketing stimuli and impulsive buying behaviour of shoppers.

To investigate the role of Sales Personnel and the shoppers’ perception of service standards.

To identify any major difficulties or frustrations encountered by the shoppers.

To develop a framework of strategic, operational and organizational requirements that retailers will need to effectively integrate shopper marketing into existing business practices.

Research Methodology

Research Area:

Mumbai and Pune are very vibrant cities where most of the residents of different cultures are educated, affluent and knowledgeable. They have multiple sources of income and have multiple modes of financial transactions. Along with this the key players in retail market have established multiformat retail stores in these two cities for e.g. Pantaloon Retail (Central, Big Bazaar), K Raheja Group ( Inorbit Mall, Shoppers Stop) and so on. Hence the researcher plans to conduct research in these two cities to get the better representation of Indian consumers and retailers.

Sampling Plan:

To study the Shopper Marketing Plan and its significance in Organised retailing; the researcher plans to conduct the research in shopping Malls as it would give a complete 360degree view of shoppers in organised retail outlets. The researcher plans to conduct research in 2 shopping malls of Pune city and 1 from Mumbai and 1 shopping mall from Navi Mumbai.

-Sample frame:

Retail outlets would be chosen, from Mumbai and Pune area; moreover the retailer samples would be drawn from the shopping malls (hypermarkets). Whereas the customer sample to be designed in this particular case would be drawn out of infinite population. The population would be shoppers/ visitors to selected retail outlets.

-Sampling method:

Here the researcher feels the stratified random sampling method would be appropriate to collect the data as it would give better representation of shopper different segments.

-Sample size:

Sample size to taken for the survey and investigation of retail outlet visitors would be calculated by a formula of proportion of the footfalls of the outlets.

Data collection:

-Primary Data collection:

In order to identify Shopper insights and investigate the path to purchase in organized retail formats, the data is planned to be collected on different variables arising during course of the study related towards influencing the customer values. These variables would include various perspectives of In-store Shopper behaviour and the Retailing Strategies applied in positioning and attaining high brand value and improving the store profitability and value.

It is planned to collect primary data with muti method consumer research.

Survey of shoppers visiting selected outlets to be conducted with a structured questionnaire. A pilot testing of questionnaire is planned to be conducted in the selected two cities.

Interviews of shoppers

Observation method to support the surveys.

Here the researcher proposes to collect the primary data during peak leisure time (holidays) or festive occasions for e.g. Diwali/ Christmas/ valentine day etc. to better understand the shopper behaviour and retailing tactics.

-Secondary data collection:

Secondary data would be collected through review of books on retailing and promotional tools, articles in newspapers, magazines. And previous studies done by researchers / agencies would be explored with the use of library search, and internet search to have in-depth knowledge of Shopper Marketing phenomenon.

The relationships among pertinent shopping and marketing stimuli would be examined through the survey data, and secondary data with the help of statistical tools of data analysis and interpretations. This would help to build a framework for defining the Shopper Marketing Plan and its significance in organized retail.

With this planned research the findings of the study would provide strong evidence on the variables covered in this investigation. This would provide strategic insights to retailers/ mall managers on different issues to develop more shopper-centric retail strategies.

Limitations of the study:

Functional limitation: The researcher feels that due to time and cost constraints it is not feasible to conduct the research in all the organized retail outlets located in the city. Only four shopping malls within the competitive structure are chosen due to time and accessibility constraints

Geographical limitation: this research is proposed to be conducted in Pune and Mumbai cities only.

Sampling and non-sampling errors might occur during the course of the study

Inherent response errors such as subjective bias, relative measurement of variables might occur.

The research would be conducted on in-store shopper behaviour and strategic marketing stimuli irrespective of the product categories.

In the shadow of these limitations, the research would be established within the ambit of the chosen area of the study and the materials obtained from the source.

Significance of the study:

We find that in most of the organised retail outlets the shopper insights and shopper marketing competencies have not been adequately translated down to their field sales and category management organizations. Transformation to a shopper insights capability is seriously lacking. There is a lack of understanding as to the potential value shopper insights and shopper marketing investment may mean to the store. This proposed research would bridge the gap and may propose some guidelines to develop a knowledge base of shopper insights and shopper-centric strategies.

Survey data planned to be collected which would examine the relationships among a number of shopping related variables, like experiential marketplace activities, leisure-based dimensions of shopping, impulsive buying, and frequency of visits, response to promotional schemes (including other relevant variables which might arise during the course of the study). Then, depth interviews ard other data collection methods which would be used to flesh out the lived experience of shopper marketing, yielding a rich theoretical framework for understanding this imperative phenomenon. Today, more and more shopping centers, malls and retailers are finding that to stay competitive and attract shoppers in the increasingly competitive retail environment and experiential economy, they must offer unique visual merchandising, innovative promotional schemes and create unique experiences in their retail mix and facilities.

Here the researcher is of the opinion that, this extensive research of instore shopper marketing would develop a strong theoretical base and this would provide strong evidence on the variables covered in this investigation. Most major retailers can add up shopper insights functions and upgrade their marketing capabilities to support shopper insights and shopper marketing initiatives.