RURAL RETAIL OUTLETS IN PUNJAB: A STUDY OF FARMERS

PREFERENCES AND SATISFACTION

ABSTRACT
Dr Pratibha Goyal

Dr Gagandeep Banga Dr Babita Pawar**

Rajinder Singh



minig1200@yahoo.com
Retailing has emerged as one of the most dynamic and fast paced industries with several
players entering in the market. India's vast middle class and its retail industry are key
attractions for global retail giants wanting to enter newer markets. Driven by changing
lifestyles, strong income growth and favorable demographic patterns, Indian retail is
expected to grow 25 per cent annually. Retailing includes all the activities in selling
goods or services directly to final consumers for personal, non-business use. It consists of
the final activity and steps needed to place merchandise made elsewhere into the hands of
the consumer or to provide services to the consumer. The unorganized sector has
dominance over the organized sector in India, especially because of the low investment
needs. In India, organized retailing is only 2% of total retailing. The number of retail
outlets in India is more than the number of outlets in most of the other countries; small
size retail outlets dominate the Indian scene. Among all these, the biggest challenge is to
know the preferences and satisfaction of the farmers regarding rural retail outlets. The
study was conducted by selecting 120 farmers i.e twenty farmers from each outlet
(ten buyers and ten non buyers). Primary data was collected from these farmers
through questionnaires. The awareness level of farmers was found to be 100
percent. Both buyers and non-buyers were aware about various services of rural
retail outlets. Credit facility is the main barrier for preference of local shops in
comparison to rural retail outlets by the farmers. Buyers of Godrej Adhaars are
found to be more satisfied than other two outlets under study.

Associate pProfessor, Dept of Business Management, Punjab Agricultural University, Ludhiana

Assistant Professor, Dept of Business Management, Punjab Agricultural University, Ludhiana

Student, Dept of Business Management, Punjab Agricultural University, Ludhiana

RURAL RETAIL OUTLETS IN PUNJAB: A STUDY OF FARMERS
PREFERENCES AND SATISFACTION

ABSTRACT
Dr Pratibha Goyal

Dr Gagandeep Banga Dr Babita Pawar**

Rajinder Singh



Retailing has emerged as one of the most dynamic and fast paced industries with several
players entering in the market. India's vast middle class and its retail industry are key
attractions for global retail giants wanting to enter newer markets. Sound economic
growth, rising population and changing life style offer an attractive environment for
retailers (Dibb, 1996). Retailing is Indias largest industry, accounting for over 10 percent
of the countrys Gross Domestic Product (GDP) and around eight per cent of the
employment (FICCI, 2005). Driven by changing lifestyles, strong income growth and
favourable demographic patterns, Indian retail is expected to grow 25 per cent annually
(IBEF, 2007). Food and Grocery (F&G) items account for more than 70 percent of all
retail sales.
Retailing includes all the activities in selling goods or services directly to final
consumers for personal, non-business use.It consists of the final activity and steps needed
to place merchandise made elsewhere into the hands of the consumer or to provide
services to the consumer. Quite simply, any firm that sells merchandise or provides

Associate pProfessor, Dept of Business Management, Punjab Agricultural University, Ludhiana

Assistant Professor, Dept of Business Management, Punjab Agricultural University, Ludhiana

Student, Dept of Business Management, Punjab Agricultural University, Ludhiana

services to the ultimate consumer for personal or household consumption is performing
the retailing function.
Departmental stores, specialty stores, super markets, supercentres, convenience
stores etc are doing well not only in urban areas but they are getting popular in rural areas
also. Owing to increased derived demand of agri-inputs and realizing the advantage of an
integrated approach, input companies are trying to provide (in addition to conventional
offerings) agri inputs and all possible solutions to farmers field related problems. The
Indian rural market size which includes Fast Moving Consumer Goods (FMCG), agri-
inputs and farm machinery is estimated to be about Rs.1, 25,000 crores, 50% of which is
contributed by agri-inputs. It is expected to increase to two lakh crores in 2005-2007
(MANAGE, 2005).
The companies entering this arena are lured by two factors viz. the vast
untapped potential of the rural market and slowly increasing purchasing power of the
rural population. The huge potential of the rural market along with the benefit that can be
accrued by organizing the existing fragmented market has led to the phenomenon of
organized agri-input retailing or one stop shops. Companies like Indian Tobacco
Company (ITC), Rallis, Tata Chemicals, DCM Shriram Consolidated Ltd. (DSCL) and
Mahindra & Mahindra have quietly spawned innovative business models to tap this big
business opportunity (MANAGE, 2005). DSCL has started utility shopping centers called
Haryali Kissan Bazaars, Godrej Agrovet as Godrej Aadhar and Tata Chemicals as
Tata Kisan Sansar which seek to cater to all needs of farmers, under one roof.
The unorganized sector has dominance over the organized sector in India,
especially because of the low investment needs. In India, organized retailing is only 2%

of total retailing of worth US$ 180 billion (MANAGE, 2003). The number of retail
outlets in India is more than the number of outlets in most of the other countries, small
size retail outlets dominate the Indian scene. 96% of the outlets are lesser than 500 sq ft.
(MANAGE, 2003). Among all these, the biggest challenge is to know the perceptions and
expectations of the farmers regarding rural retail outlets. It is must because they are our
end consumers.
Perception is the process by which an individual selects, organizes and interprets
information inputs to create a meaningful picture of the world. It can vary widely among
individuals exposed to the same reality. Different individuals often perceive a situation
differently, both in terms of what they selectively perceive and how they organize and
interpret the things perceived. Expectations are beliefs about service delivery that
function as standards or reference points against which performance is judged because
customers compare their perceptions of performance with these reference points when
evaluating service quality.
Moreover, as the organized rural retailing is at its emerging stage, there is need to
study its concept, practices and farmers perceptions and expectations. Therefore present
study is aimed to explore this aspect with the following specific objectives:
1. To study farmers awareness and preferences regarding rural retail outlets in
Punjab.
2. To analyze farmers satisfaction with respect to various services provided by
organized rural retail outlets in Punjab.
3.
Research Methodology


Rural retail outlets of three companies are operational in Punjab. These companies
are DCM Shriram consolidated Limited, Godrej Agrovet and Tata Chemicals. Two retail
outlets of each company were selected on random basis i.e Haryali Kisaan Bazzars at
Ahmedarh and KotKapura, Godrej Adhaars at Samrala and Doraha and Tata Kisaan
Sansars at Doraha and KotKapura. Two villages were selected in the close vicinity of
each selected outlet. These localities were namely Ballowal and Manak in Samrala,
Raipur Rajputa and Gudani kallan in Doraha, Jandali Khurd and Begowal in Ahmedgarh
and Panjgrain Kalan and Deviwala in KotKapura.
List of those farmers who buy from the selected outlets was obtained from respective
outlets and a sample of ten farmers per outlet was randomly taken, making the sample
size of such farmers 60. In case of those farmers who do not buy from these outlets, a
sample of 60 farmers was taken on convenience basis from the area in close vicinity of
these outlets (Taking ten farmers from area near each outlet). Data was obtained from the
farmers with the help of self-designed nondisguised questionnaires.
Data were analyzed with the help of frequency distributions , percentages, mean
scores and t-test was used to see whether there is significant difference between the mean
scores of a factor for the two data samples at 5% level of significance.
Findings

Findings regarding awareness, sources of awareness, reasons for preference
product /services availed, expectations ,perceptions and satisfaction are discussed as
follows.
Awareness about rural retail outlets

Farmers were asked about their awareness regarding rural retail outlets. The
responses indicated that all the farmers, even among the non-buyers, were aware about
the existence of organized rural retail outlets. Out of these 60 farmers, 22 (39.28 per cent)
had visited these outlets but had not purchased anything due to non-availability of desired
product/services, higher prices and lack of credit facility.
Farmers were asked to indicate the source of awareness i.e. from where they got
information regarding rural retail outlets. Farmers gave first rank to advertisements,
which indicates that this is the main source of awareness. Exhibitions and kisan melas
got the second rank. Farmers told that when ever Punjab Agricultural University or
District Agricultural Department or companies organize exhibitions/kissan melas they
visit then regularly (Table 1). Companys websites was given the last rank indicating that
it is the least important factor for creating awareness among the farmers.
Table 1: Source of awareness regarding rural retail outlets among farmers (N=120)
Sr. No Factor Mean score Ranks
1. Advertisement 5.07 I
2. Newspapers or magazine article 3.31 VI
3. Exhibitions/Kissan mela 5.01 II
4. Fellow farmers 3.91 V
5. Farmer meetings /seminars 4.53 III
6. Field trials /demonstrations 4.14 IV
7. Company Website 1.04 VII

Preference of rural retail outlets in comparison to local shops
The farmers who purchased from organized rural retail outlets were asked why
they preferred to buy from there instead of buying from local shops. The respondents

were gave and second rank to quality and second rank to technical services while
veterinary services got the third rank (Table 2).


Table 2: Reason for organised rural retail outlet (N=60)
Sr.
No
Reason Mean score Ranks
1. Cheaper than the local shops 1.66 VI
2. Better quality 5.55 I
3. Easy availability 2.15 V
4. Home delivery 3.38 IV
5. Technical services 4.08 II
6. Veterinary services 3.91 III

Preference of local shops in comparison to rural retail outlets.
In the sample of 60 non-buyers 22 have been to these organized retail outlets but
have never purchased anything from there. They preferred to buy from the local shops.
These 60 farmers were asked to rank the factors influencing their decision to buy from
local shops.
Table 3. Reasons for preference of local shops (N=60)
Sr. No. Reason Mean score Rank
1. Lower Price 3.81 II
2. Better quality 1.65 V
3. Easy availability 3.10 III
4. Technical services 2.40 IV
5. Credit facility 4.91 I


Mean scores and ranks show that credit facility provided by the local shops is the
most important reason. Lower price was given second rank and easy availability of the
products was given third rank (Table3).
Products/services availed by farmers from various rural retail outlets
Farmers were asked to indicate about products/services availed by them from
various rural retail outlets. The responses are tabulated in Table 4.
In case of Haryali Kissan Bazaars, majority of the farmers (30 per cent) buy agri-
inputs and technical knowledge while 15 per cent of the respondents visit for agri-inputs,
FMCG and technical knowledge and another, 15 per cent visit these outlets to buy FMCG
only.
In case of Godrej Adhaar, majority of the farmers (30 per cent) visit for agri-
inputs, FMCG and technical knowledge, 20 per cent buy only FMCG.In Tata Kisan
Sansar 90 percent of the farmers buy agri-inputs only and rest 10 percent buy agri inputs
and take advantage of technical knowledge along with purchase of agri-inputs. It was
found that on the whole majority of the buyers (35 percent) buy only agri-inputs while 30
percent take technical knowledge or FMCG also along with agri-inputs.

Table 4. Products/services availed by farmers from various rural retail outlets (N=60)

S
No

Factor
Haryali Kisaan
Bazzar Frequency
(%)
Godrej Adhaar
Frequency (%)
Tata Kissan
Sansar
Frequency (%)
Total
1. Only agri-inputs 2 (10.00) 1 (5.00) 18 (90.00) 21(35.00)
2. Only FMCG 0 4 (20.00) 0 4(6.60)
3. Agri-inputs and FMCG 1 (5.00) 2 (10.00) 0 3(5.00)
4. Agri-inputs and technical
knowledge
6 (30.00) 1(5.00) 2 (10.00) 9(15.00)
5. Agri-inputs and implements 2 (10.00) 0 0 2(3.30)
6. Agri-inputs and veterinary services 1 (5.00) 2 (10.00) 0 3(5.50)
7. Agri-inputs, FMCG and technical
knowledge
3 (15.00) 6 (30.00) 0 9(15.00)
8. Agri-inputs, veterinary services
and technical knowledge
3 (15.00) 1 (5.00) 0 4(6.60)
9. Agri-inputs, FMCG, veterinary
services and technical knowledge
2 (10.00) 3 (15.00) 0 5(8.30)
Total 20(100.00) 20 (100.00) 20 (100.00)

60 (100.00)

Expectations and perceptions of farmers regarding various rural retail outlets

To measure the satisfaction level of customers, the difference between the mean
scores of expectations and perceptions regarding various facilities at these retail stores
was calculated. The level of satisfaction with respect to various facilities is indicated by
gap in expectation in perception. It was found that the gap between the expectations and
perceptions was the highest for credit facility and the minimum for the technical
knowledge.
Table 4.19 Satisfaction of farmers regarding various services of Rural Retail Outlets

Sr. No. Factors Expectations Perceptions Gap
1. Credit facility 7.70 2.13 5.57
2. Field trials/demonstrations 7.83 6.86 0.97
3. Home delivery 7.23 2.15 5.08
4. Soil testing 7.45 6.18 1.27
5. Water testing 7.13 6.10 1.03
6. Farmers meetings/seminars 8.03 6.90 1.13
7. Technical Knowledge 8.08 7.15 0.93
8. Veterinary Services 7.70 6.21 1.49
t- value 2.986* , d f =14
* Significant at 5% level of significance
It indicates that the customers want that credit facility should be provided by
the organized rural retail outlets and they expect that home delivery should be provided.
On the whole the gap between the expectations and perceptions was found significant at
five percent level of significance.

Conclusions
It was found that though the farmers are aware of the existence of rural retail
outlets in their area yet many of them are not buying from them due to various reasons-
non-availability of credit facility being a major reason among them. Those who buy from
hese outlets perceive that better quality products are available there. The expectations of

farmers are much more than what is delivered by these outlets and if credit facility, home
delivery are provided more number of farmers can buy.

References
Dibb S (1996) The impact of changing market environment in the Pacific Rim: Four case
studies. Int J of Retail & Dist Mgmt 24: 16-29.

FICCI (2005) Footfalls http://www.ficci.com/media-room/speeches presentations /2005 /
dec/dec7-footfalls.htm

IBEF (2007) The Retail Industry http://ibef.org/artdispview.aspx?in =57&art_id =15290
&cat_id=376&page=3

MANAGE (2003) Organized Retailing: The Emerging Opportunities in Agribusiness.
http://www.manage.gov.in/pgpabm/spice/Oct2k3.PDF

MANAGE (2005) Agri-retailing: Revolutionizing Indian agriculture. http://www.
manage.gov.in/pgpabm/spice/spiceaugust2005.pdf