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INTERNATIONAL JOURNAL OF BUSINESS MANAGEMENT AND SCIENTIFIC RESEARCH
VOL : 3, March, 2015
RETAIL MARKETING: A MODERN APPROACH TO RETAILING
TARUNJIT SINGH,
Assistant Professor, KCL IMT, Jalandhar cum Research Scholar

PATWANT ATWAL
Asst. Prof, PG deptt. Of Commerce & Business Administration, Lyallpur Khalsa College, Jalandhar
ABSTRACT
The Retail Sector in India is amongst the top five growing sectors of the economy. It is expected to touch
$ 637 Billion by 2015. It has witnessed a sea change in the last one decade with the evolution of
organised retail. The current research study will be an attempt to analyse the buying pattern of
consumers from the organised retail outlets. It will also throw light on the critical factors which play a
deciding role on buying behaviour and the factors which are responsible for the preference of modern
retail. This study would be descriptive in nature as the consumer buying behaviour will be analysed
pertaining to organised retail. Indias vast middle class and their increased disposable income are
responsible for the paradigm shift from the traditional Kiryana store to the modern Hypermarkets and
Super Bazaars.
Keywords: Retail, organised retail, Buying Behaviour, unorganised retail, Customer, middle class.
INTRODUCTION
The retail sector is a significant contributor to Indias economic activity. That component, in which
retail (both organised and unorganised) is the dominant activity, accounts for around 18% of Indias
GDP. Within the services sector, this component is the largest contributor to the economy. As per the
estimates of the Associated Chamber of Commerce and Industry (ASSOCHAM) presented in one of its
recent retail reports, the contribution of both organised and unorganised retail stood at 22% of GDP.
This would mean that Indian retail sector size should measure closer to Rs 19.2 trillion in 2012-2013.
The retail sector has witnessed an unprecedented growth over the last decade, driven by robust economic
growth, rapid urbanisation and changing lifestyles and aspirations of the Indian retail consumer.
However, the ups and downs of the Indian economy had always taken its toll with changes in absorption
and vacancy over the years. Leading research institutions such as AT Kearney and ASSOCHAM
estimate that retail realty sector to grow at around 15% y-o-y, over the next three five years as against a
12% to 13% nominal growth of Indias GDP estimated by the International Monetary Fund (IMF).
Going by that logic, the sector should reach a size of Rs 34 trillion by 2016. The sector is also an
important contributor towards the socioeconomic well being of the economy as it employs close to 9.4%
of Indias labour force, as per the association. In its current form, the retail sector in India is mostly
unorganised in its structure, with the organised retail contributing a small 7% to the total sector as of
FY012.
INDIAN RETAIL SECTOR
Indias Retail Sector has seen a sea change in the last decade with the evolution of Organized Retail.
With the entry of International players and giant retailers taking key steps to woo the customers the
whole retail scenario has become more competitive. The next few years are likely to witness tremendous
growth in the retailing Industry with the International players establishing themselves in a big way and
the local players using their knowledge about the demographics of the market place. The Indian retail
industry is currently growing at a great pace and is expected to go up to US $ 637 billion by the year
2015. (Sikri & Wadhwa, 2012).

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The Indian retail industry has expanded by 10.6 per cent between 2010 and 2012 and is expected to
increase to US$ 750-850 billion by 2015, according to the report by Deloitte.
Organized retailing constitutes the activities undertaken by licensed retailers, i.e. those who
are registered for sales tax, income tax, etc. Whereas on the other hand Unorganized retailing, refers to
the low cost format which are not registered , like the local Kirana shop , hand craft vendors , hawkers
etc.

Retail Penetration in India

8%

Organised
Unorganised

92%

Source: indiaretailing.com, E&Y Report, Aranca Research

The retail sector in India is emerging as one of the largest sectors in the economy. By 2012, the total
market size reached USD518 billion, thereby registering a CAGR of 7.0 per cent since
1998.

600
400
424 514
200 321 368
201 204 231 278
0 Market Size (US $ Billion)
1998 2000 2002 2004 2006 2008 2010 2012

Source: Deloitte, indiaretailing.com, Economist Intelligence Unit, Euro monitor, Aranca Research

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VOL : 3, March, 2015
REVIEW OF LITERATURE
Popkowiski , L., Peter, T.L in Experimental Choice Analysis of Shopping Strategies(2001) have
observed that the changing retail structure has provided the consumer with more options in the form of
formats and services such as large variety of products , quality products and less travel time.
Gupta, M. A Comparative study on Departmental store and Traditional shop (2004) has highlighted
that last decade has witnessed a change in Indian consumer buying pattern. They are no longer shopping
from the local store; they are shifting towards malls which are catering to the needs of young population.
Availability of large assortment of major products is leaving an impact on consumption pattern of Indian
Consumers and responsible for such a behaviour.
Mishra Consumption Pattern of Indian consumers (2007) has found out that consumer demand
organized retail, and opines that mall space, demography, rising young population , availability of
brands, rising finance options, changing lifestyle, and FDI are strengths of modern retail.
Mishra (2008) says, there is a hectic activity in the sector in terms of expansion, entry of
international brands and retailers as well as focus on technology, operations, infrastructure and
processes. All these present a tremendous opportunity in this high growth industry.
Shivkumar, Executive Director and leader of Retail and Consumer Practices Price Warehouse
Co-operatives, (2009) also hold the opinion that retailing is the next sunrise segment of the economic
development of the country.
Yuvarani (2010) opines that according to a study the size of the Indian Retail market is
currently estimated at Rs 704 crores which accounts for a meager 3% of the total retail market. As
themarket becomes more and more organized the Indian retail industry will gain greater worth.
However,the future is promising, the market is growing, government policies are becoming more
favorable and emerging technologies are facilitating operations.
Handa, Vidushi & Grover, Navneet Retail Sector in India :Issues and challenges (2012) are of the
opinion that a large chunk of working population is young with nuclear families in urban areas, along
with increasing women population and emerging opportunities in the services sector are some of the key
drivers of retail sector in India. Organized retail sector is growing at a very fast pace and is impacting
other sectors also and at the same time helping its own competition (Unorganized sector) to shed its
shortcomings and inefficiencies.
Arshad et al (2007) and Ghosh et al (2010) stated that 47% of Indias population is under the age of 20
and this will increase to 55% by 2015 and this young population will immensely contribute to the
growth of the retail sector in the country. A study by Ali and Kapoor (2010) indicates that a higher
education level and income of consumers influences their decisions on purchase behavior.
Srivastava (2008) supported that consumers prefer Modern Retail formats to traditional stores because
of factors like ambience, assortment, sales promotion schemes and in-store services. The consumers
found it time saving and more satisfactory to shop from these places.
OBJECTIVES
With the opening up of organized Retail outlets and touch points the scope of retail sector has widened
up and it has given an altogether new dimension to the shopping avenues available nowadays with the
customers.
The main objective of the study is as follows:-
To study the Factors Responsible for the growth of modern retail in India.

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RESEARCH METHODOLOGY
This was a study conducted on the basis of secondary data. In literature review, research papers from
2001 to 2012 were consulted and significant results were taken from these studies.
TRENDS IN RETAIL SECTOR IN INDIA
There are a host of factors that are propelling the expansion of modern retail in India, including the
improving infrastructure, a move away from the socialistic pattern of economy, better educational
opportunities, and rising consumerism.
Emergence of organized retail: Real estate development in the country, for example, the construction
of mega malls and shopping malls, is augmenting the growth of the organized retail business.
Spending capacity of youth of India: India has a large youth population, which is a conducive
environment to growth of this sector.
Raising incomes and purchasing power: The per capita income in India has doubled between 2000-01
and 2009-10 resulting in improved purchasing power.
Changing mindset of customers: The customer mind set is gradually shifting from low price to better
convenience, high value and a better shopping experience.
Easy customer credit: Emergence of concepts such as quick and easy loans, EMIs, loan through credit
cards, has made purchasing possible for Indian consumers, for products such as consumer durables.
Higher brand consciousness: There is high brand consciousness among the youth; 60% of Indias
population is below the age of 30 leading to popularization of brands and products.
LISTED BELOW ARE SOME KEY DRIVERS OF GROWTH IN INDIAN MODERN RETAIL:
1.FDI In Retail
According to the news-paper Indo-Asian News Service, Washington, (dated December 09, 2011) U.S.
has said that they respect India for new retail stores. Until 2011, FDI in multi brand retail was denied
by Indian central government, forbidding foreign groups from any ownership in supermarkets,
convenience stores or any retail outlets. FDI in single-brand retail was restricted to 51%.
In November 2011, the retail reforms for both multi-brand stores and single-brand stores were
announced by India's central government. These market reforms paved the way for retail innovation and
competition with multi-brand retailers such as Wal-Mart, Carrefour and Tesco, as well single brand
majors such as IKEA, Nike, and Apple. Single-brand retail was limited to 51% ownership and a
bureaucratic process.1
In January 2012, India the reforms for single-brand retail stores were approved to 100% ownership, but
also imposed a requirement to source 30% of its goods from India. Then on 14 Sepetember 2012, the
Cabinet approved FDI of upto 51% in multi-brand retail.
2. Role of Technology
India is developing rapidly and if development is to be measured, how can we ignore the role of e
commerce in it. The internet user base in India might still be a mere 100 million which is much less
when compared to its penetration in the US or UK but it's surely expanding at an alarming rate. The
number of new entrants in this sphere is escalating daily and with growth rate reaching its zenith it can
be presumed that in years to come, customary retailers will feel the need to switch to online business.
Going by the statistics, the E commerce market in India was worth about $2.5 billion in 2009. It rose to
$8.5 billion by 2011 thus depicting a definite surge in the last two years. According to a statement

1
Sharma, Amol; Sahu, Prasanta (11 January 2012). "India Lifts Some Limits on Foreign Retailers". The Wall Street Journal.

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VOL : 3, March, 2015
released by the Internet and Mobile Association of India (IAMAI), these figures would reach up to $12
billion by 2012.
To understand this scenario, we can divide E-commerce into three broad categories which include
physical services, physical goods and virtual goods.
The 1st category of physical services is definitely the major contributor which includes travel
ticketing, jobs, matrimonial and event management websites with travel sites accounting for 75% of all
E-commerce industries! It provides attractive deals too.
The 2nd category of physical goods is the one currently gaining considerable attention, thanks to the
hype created by new startups/stores being launched daily. Leaders in this division are Flipkart, Amazon,
Snapdeal , Homeshop18, Indiatimes, Naaptol etc. each of which offers everything from mobile phones
to food items.
The 3rd and final category of virtual goods and gift vouchers like online music, software's, movies,
games, Taj Hotel gift vouchers, Reebok gift vouchers, Pizza Hut gift vouchers etc. have been relatively
lagging behind in India as compared to Europe and America, primarily due to piracy concerns and the
social perspective of Indians. But the scenario is expected to change with the digital downloads segment
expected to grow in the Indian E-commerce market due to the explosion of mobile devices and the
services available over the Internet at special discounts.
According to the latest research by Forrester, a leading global research and advisory firm, the e-
commerce market in India is set to grow the fastest within the Asia-Pacific Region at a CAGR of over
57% between 2012-16. The report, titled Asia Pacific Online Retail Forecast, 2011 To 2016, has
been issued by Forrester Research Inc. Analyst Zia Daniell Wigder, with Steven Noble, Vikram Sehgal
and Lily Varon. 2

E-commerce

E-commerce in India to explode in 2012, Indian e-shoppers will have a good time getting great deals
and services online. A recent pan-India report released by Com Score Inc reveals that online shopping
in India has touched a growth rate of 18 per cent and is only likely to grow further. The report found
that nearly 60 per cent of citizens in India visited a retail site in November 2011, with the number of
online shoppers increasing by 18 per cent in the past year. E-commerce can become an integral part of
sales strategy while it is one of the cheapest medium to reach out the new markets, if implemented
successfully.

2
The report, titled Asia Pacific Online Retail Forecast, 2011 To 2016

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A new report by the Boston Consulting Group says online retail in India could be a $84-billion industry
by 2016 more than 10 times its worth in 2010 and will account for 4.5 per cent of total retail. The
e-commerce platforms maximize its reach to the potential customers and provide them with a
convenient, satisfying & secure shopping experience.
While segments like apparel and luxury products have registered unprecedented growth in 2011,
jewellery, electronic appliances and hardware products have shown promising growth trends as well.
Indian consumers are showing greater appetite to transact online, fuelling the e-commerce boom, said
Anuj Kumar, CEO, Affle.
3. Infrastructure: Just five or six decades ago, connectivity was a big problem in India. Forget about
villages, even cities were not connected by road as there were hardly any bridges straddling major rivers.
Things have since changed and are still changing fast. Express highways are being built and all cities
and towns got electrified long ago. Several states even claim that they have electrified every village
within their borders.
4. Education: Until some decades ago, well over half of the Indian population could not read and write.
More than 50 percent of the districts in the country had no colleges. There was not a single engineering
or medical college in several states and hardly one or two women colleges in each. But now, India
boasts of the biggest English-speaking population on earth.
Industrialisation: India is the tenth biggest industrial country in the world. Instead of importing, it now
exports motorcycles, cars, watches, and a wide range of industrial products.
5. Communication: India today has the second-largest number of mobile phones in the world, next
only to China. SMS, emails, and fax are now the main mode of communication. Telephony was
introduced in India in 1882. The total number of telephones in the country stands at 957.61 million,
while the overall teledensity has increased to 76.75% as of 30 September 2014.[3] and the total numbers
of mobile phone subscribers have reached 930.20 million as of September 2014.[3] The mobile tele-
density had increased to 74.55% in September 2014.[3] In the wireless segment, 5.88 million subscribers
were added in September 2014.[3] The wire line segment subscriber base stood at 27.41 million.[3]3
6. Media: Cable TV and hundreds of channels with news, views, and entertainment have resulted in an
information explosion in India. Even the poorest man living in a slum today owns a TV set. Telephone
and TV are no longer parameters of luxurious living. Now, hundreds of magazines are printed in India in
all languages and read by the middle class.
7. Attitude: Todays youth in the metros is having 10 to 20 pairs of dresses, half a dozen pairs of
footwear and perhaps as many T-shirts. Fast-food chains like McDonalds, KFC, and Pizza Hut are
crowded with youngsters. The result of all the above was a proliferation of small shops all over India
mainly selling food grains, pulses, cooking oil, spices, dry fruits, tea and a few brands of toiletries and
cosmetics. However, in the last decade or so, department stores and malls have come up in all cities and
towns of India and new ones are being built every day.
An increasing number of people in India are turning to the services sector for employment due to the
relative low compensation offered by the traditional agriculture and manufacturing sectors. The
organized retail market is growing at 3.5 percent annually. Organized retail is expected to garner about
16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years. According to the tenth

3
Highlights on Telecom Subscription Data as on 30 September 2014

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report of GRID of AT Kearney, India is having a very favourable retail environment and it is placed
at 4th spot in the GRDI. 4
The main reasons behind that is the 9% real GDP growth in 2010, forecasted yearly growth of 8.7%
through 2016, high saving and investment rate and increased consumer spending. According to report,
organized retail accounts for 7% of Indias roughly $435 billion retail, market and is expected to reach
20% by 2020. Food accounts for 70% of Indian retail, but it remains under penetrated by organized
retail. Organized retail has a 31% share in clothing and apparel and continues to see growth in this
sector. A report by Boston Consulting Group has revealed that the countrys organized retail is estimated
at US $ 28 billion with around 7% penetration. It is projected to become a US $ 260 billion over the next
decade with around 21% penetration.
Retail should continue to grow rapidly up to US $ 535 billion in 2013, with 10 per cent coming from
organized retail, reflecting a fast growing middle class, demanding higher quality shopping
environments and stronger brands, according to the report Expanding Opportunities for Global
Retailers, released by A T Kearney.

Year % Share of Organised Source

Retail Sector Table 1:
Share of 2005 3.5% AT Kearney
2008 5% MC - Kinsey & Company
2010 8% AT Kearney
2013 10% AT Kearney
Organised Retail Sector in total Retail trade
Almost 40% of the respondents dont have any specific day for shopping, a quarter of the total
respondents shop on weekends, another quarter of them prefer to shop on holidays and a small minority
shop on weekdays and festivals.
FINDINGS & CONCLUSION
The percentage of organized retail has gone up from 3.5% in 2005 through 5% in 2008 to 10% in
2013.5 This is majorly attributed to increased facilities and options under one roof for the
customers.
Increase of FDI in Single brand retail and multi brand retail as already mentioned above is a
major contributor to the growth of organized retail in India.
Technology has also been a major contributor to the growth as expected sales through e-
commerce will touch $8.8 billion by 2016 from a mere $1.6 billion in 2012.
The attitude of the youth is the major contributor towards the increasing preference towards
organized retailers.
Infrastructure development has reduced travel times and good parking facilities, entertainment
options and parks attract people to places of organized retail.
The emergence of modern retail in India has thus been a two-pronged phenomenon. One has been the
evolution of traditional counter-format retail to self-service modern-format retail. The other has been
successful establishment of large-format retailers. Manufacturers, retailers and consumers all three

4
Tenth report of GRID of AT Kearney

5
AT Kearney report 2013

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major stakeholders in this process have had a role to play at the macro-level. At the micro-level, the
triggers were as diverse as entrepreneurial desire to provide better service, providing better price to the
masses, capitalizing on emerging business opportunity, increase footfalls in existing non-food formats.
The actual concept of retail is quite old as we have grocery stores, medical stores and lot many other
stores working in the country. With the entry of modern retail the unorganised retailers have become
more vigilant and have started to give more variety in terms of purchase to the customers.
The entry of organised retail has given more flexible options in terms of all the facilities under one roof.
But at the same time the traditional shops are those shops that take care of the individual needs of their
customers and bring those products that their customers demand from them. The shopkeepers
experiment with different products and see how this affects their sales.
No matter how much the companies talk about Customer Relationship management, they have actually
failed to give personal attention to the customers and build a long term relationship as the conventional
shops have been able to do.
Henceforth it is concluded that modern retail and traditional retail have to go hand in hand and there is
still and lots to be done by the organised retailers in terms of loyalty, customer retention etc. that needs
to be bundled together with the already existing benefits that they are offering. As far as the unorganised
retail is concerned it still enjoys a very healthy market share and in order to retain this in the years to
come it has to put its best foot forward in terms of matching the benefits given by organised retailers.
REFERENCES
1. Sikri Sunita & Wadhwa Deepti (2012) GROWTH AND CHALLENGES OF RETAIL INDUSTRY
IN INDIA: AN ANALYSIS. Vol.1 Issue 1, SEPTEMBER 2012.
2.Indian Retail Market Opening More Door A Report By Deolitte January 2013.
3. Popkowski, L & PeterT.L (2001). Experimental choice analysis of shopping strategies. J.Retailing,
77(4):pp493-509.
4. Gupta, M. (2004). Brand position of general store from consumers perspective-A comparative study
on departmental store and traditional shop. pp 25-26
5. Mishra, M.S (2007) The consumption pattern of Indian consumers: Choice between traditional and
organized retail.http//ssrn.com/abstract=994238.
6. Handa .Vidushi & Grover. Navneet (2012) in their work Retail Sector in India: Issues and
challenges.
7.Akash, S.B. (2009), Opportunities and challenges of retailing Business In India-An Explanatory Study,
KAIL Journal of Management And Research, 2(1).
8.Shivkumar, S(2009),Executive Director, Retail and Consumer Practices Price Warehouse Cooperative,
India Retail Report, An Images F&R Research, pp.6. Available at:www.indiaretailing.com.
9. Big Strategic Management Consultants, Jan, 2012.
10. Arshad, S.A. & Hisam, M.W. 2008, Issues in Retailing. Research in Management and
Technology, Ed. by Aneet and Ramanjeet Singh, Deep and Deep Publications Pvt. Ltd., pp109-118.
11.Ali, J., Kapoor, S., & Moorthy, J. 2010, Buying behavior of consumers for food products in an
emerging economy. British Food Journal, 112(2), pp 109-124.
12. Srivastava, R.K. 2008, Changing retail scene in India. International Journal of Retail and
Distribution Management, 36(9) 9, pp 714-721.
13. Hindustan TimesOne stop shop (our favorite weekend destination) 23rd February 2014, assessed at
6:30 PM.
14. Sharma, Amol; Sahu, Prasanta (11 January 2012). "India Lifts Some Limits on Foreign Retailers".
The Wall Street Journal

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Websites
1. http://www.moneycontrol.com/news/real-estate/an-overviewindian-retail-realty-
sector_965466.html?utm_source=ref_article
2. Source: Deloitte, indiaretailing.com, Economist Intelligence Unit, Euro monitor, Aranca
Research
3. http://www.indiaretailing.com/article-detail.aspx?mcatid=23&catid=26&aid=9650
4. Yuvarani, R. (2010), Future Trends of Retail in India, edit online article: www.articlesbase.com
5. www.forrester.com

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