Review of literature

Indian retail industry and Customer satisfaction

Gopal & Suryanayana in 2011 state that the retail market in India is becoming one of the
pillars of the economy and accounts for about 15% of the GDP. The current retail market of India
is estimated to be about US$ 450 billion and one of the top five retail markets in the world by
economic value (Garg, 2013). India is one of the fastest growing retail markets in the world with
1.2 billion people. The passing of 51% FDI in multi-brand retail despite intense uproar has proved
the way for retail innovation and competition with the multi-brand retailers such as Walmart,
Carrefour and Tesco, as well as single brand major such as IKEA, Nike and Apple. Foreign
retailers will now be allowed to open stores in cities that have a population of less than one
million. Earlier, supermarkets could only come up in 50 cities. A relaxation was permitted only in
case of states that did not have a single city with a population of one million. The move will allow
stores to come up in cities such as Gurgaon and Aurangabad.

Mohanty & Panda (2008) holds that retailing is a sector of India that occupies an
important place in the socio-economic growth strategy of the country. India is witnessing a
retailing boom that is being accentuated by mass exodus towards urban areas resulting in
increased urbanization, rising purchasing power parity (PPP) of an ever expanding and
increasingly educated middle class, a predominantly young population, technological revolution,
intense globalization drive etc.

Nagesh (2007) predicts that Indian retailing will undergo radical change in the next five
years, driving a consumption boom that has never been seen in the history of any country. The
current drought situation will give way to a flood of modern retail putting Indian retail on a path
of sustained growth for a number of years to come.

Mishra (2008) expects that 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 would result in a tremendous opportunity in this high growth industry.

Yuvarani (2010) cites a study according to which the size of the Indian Retail market is
currently estimated at Rs 704 corers, a meager 3% of the total retail market. As the market
becomes more and more organized the Indian retail industry will gain greater worth facilitated by
a rapidly growing market, favorable Policy making of the Government and emerging technologies
that are simplifying operations.
 Mullick, (2013) State that malls are the most popular format which have been adopted in
the Indian market. They range between 60,000 sq ft. From 2001, the small sized single category
speciality store with an average size of 800 sq ft dominated the organized retail market followed
by the department stores with an average 30,000 sq ft space and supermarkets or convenience
stores of 1000 sq ft average space. Basu in his treatise mentions that period 2000 to 2010, India
retail attracted about $ 1.8 billion in FDI representing a very small 1.5% of total investment flow
into India. India has years of debate and discussions on the risk and prudence of allowing
innovation and competition within retail sector. Many economists already recommended the
government of India that legal restrictions on organised retail must be removed, and retail
industry must be opened to competition.

Mehta, 2013 mentions now over 14 million outlets operate in the country and only 4% of
them are larger than 500 sq ft in size. India has about 11 shops outlets for every 1000 people. Devi
mentions that until the 1990s, regulations prevented innovation and entrepreneurship in India
retailing. Some retail faced with regulations such as signboard licenses and anti-branding measures
before they could open doors.

Manikyam Rao in 2013 describes how post liberalisation era of the 1995, the modern
formats started gaining mind share and market share from the traditional mom and pop stores,
Kiranas, Khadi stores or the government managed public distribution system.

Sahu (2010) describes that a rise in consumer confidence, improvement in profitability

Basu mentions that modern retail gained momentum around January 2006 with the
announcement of its progressive relaxation policy of 51% FDI in single brand retail trading,
Indian retail attracted about $ 1.8 billion in FDI in the period 2000 to 2010 representing a very
small 1.5% of total investment flow into India. India has years of debate and discussions on the
risk and prudence of allowing innovation and competition within retail sector. Many economists
already recommended the government of India that legal restrictions on organised retail must be
removed, and retail industry must be opened to competition. the Six Consumer decision making
styles. He described the traits as:

1. Perfectionism

2. Value Consciousness

3. Brand Consciousness

4. Novelty Fad-Fashion Consciousness

6. Confused, support seeking Decision Maker

Jagdish Bhagwati, Professor of Economics and Law at the Columbia University analysed
the relationship between growth and poverty reduction and then urged the Indian Parliament in an
invited address in 2010 to extend economic reforms by freeing up of the retail industry, further
liberalisation of trade in all sectors, and introducing labour market reforms. Professor Bhagwati
argued that such reforms would accelerate economic growth and make a sustainable difference in
life of India's poorest. Conceptualisation of the modern formats started mostly in the apparel
sector followed by a substantial investment committed by the indigenous corporate giants from
2005 onward, with an entry into the food and grocery segment across the top 100 cities in India
(Indian brand equity foundation, 2011).

Share of Organised and unorganized Retail in India

 Retail industry employs 40 million people with over 51million outlets and only 4% of
them are larger than 500 sq.ft. in size i.e. per capita retailing space is about 2 square feet,
lowest in the world and 3.3 % of India’s population is engaged in retailing as compared
to20% in U.S.

 Unorganised or traditional retail will remain predominant and its necessity and relevance
to Indian consumer will remain but their share will go down and settle at optimum level.

 Organized retail sector will steadily grow reducing share of unorganized retail sector and
size of and format of retail outlets consumer demography, urbanization, rise of middle
class, growing disposable income in metro, tier II & III cities, economic reforms and FDI
policy will determine future growth.

 Customer satisfaction and customer loyalty will assume importance and need for
implementing marketing principles and techniques will gain importance.

 Retail facilities like retail location, layout and space for movement, display of products
and bill settlement time, lighting, parking facilities, transport, eateries & restaurants and
multiplexes will gain importance.

 Various research studies by earlier researchers on customer satisfaction varies but can be
genralised as a) majority customers are price conscious b)Smaller number of customer are
influenced by sales promotion c) small number of customers go for bulk purchases d)
customers are generally brand loyal and not frequent brand switchers d) Customers feel
shopping at mall help them to raise social status e) customers prefer retail ambience &
exterior get up f) majority customers are happy with shelves & racks, trolleys and self-
help systems b) customers tend to be concerned about space for movement, crowded
stores and poor retail stores layout
 Earlier researchers have studied various aspects of retail stores and use of marketing
techniques on Customer satisfaction studies in organized retail stores in cities like Bhopal,
Erode, Kolhapur, Kochi, Bhubaneswar, Pune and Delhi and have mentioned price of
products, retail service, sales promotion are important consideration for customer
satisfaction but the demography of consumers are mostly relevant to tier II and tier III and
some on metros and major cities.