A study of the perception of mall shoppers in the city of Kolkata, India

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A study of the perception of mall shoppers in the
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  • 1. A study of the perception of mall shoppers in the city of Kolkata, India Present affiliation of Authors Dr. Atish Chattopadhyay Professor of Marketing, SPJIMR, India atishc@spjimr.org And Dr. Kalyan Sengupta Professor of IT and Systems, IISW&BM, Kolkata, India kalyansen2002@yahoo.co.uk 1
  • 2. 1. IntroductionThe retailing industry in India, estimated at INR 930,000 crores (2003-04) is expected togrow at 5 percent per annum. The size of the organized retail market in 2004 stood atINR 28,000 crores, there by making up a mere 3 percent of the total market. The retailrevolution in India has provided a much wider range and depth of products for the Indianconsumers along with a choice of retail destination that reflect global formats. The late1990s witnessed the proliferation of well endowed modern malls which caused the oldershopping destinations to move down the scale. Shopping malls have now become thevisible face of Indian retail. There are over two hundred malls in planning or underconstruction stage throughout India. Over 35-40 million square ft. of new retail spacemay come to the market in the next 12-24 months (including re-developments) in over 50cities across the country. Further, by 2010, 500-600 malls occupying approx 120 millionsquare ft. are at various stages of planning at this point in time. Indian retailing havewitnessed fundamental shifts in the shopping behavior of customers (India Retail Report,2005).United States which has been a fore runner in the evolution of the organized retailingwitnessed the emergence of malls in the 1950s. In 1960s, Express highways tookorganized retail to smaller town in US like the Wal-Mart (1962) and Gap (1969). In1970s value retail chains gained prominence and competition dictated the course in theUS. This was the period when growth of retail gained at the expense of competition andvolumes became the name of the game. The 1980s saw retail developments in the US intwo distinct fronts – Off-price retailing as compared to Mega Malls with unique shoppingexperience. It may be noted that the evolution of organized retail may hold certainlessons for retailers in developing economies like India.With the imminent opening of the retail sector by the Government of India and easing ofFDI norms, global retailers like Wal-Mart, Carrefour, Tesco and Home Depot will in allprobability enter India. “The battle with Wal-Mart is not about money, or low prices, butfor the mind space of customers” says Kishore Biyani of Pantaloons, India (Dasgupta,2005). Experts opine that right positioning will be the key to success of shopping malls 2
  • 3. in India in the face of increased competition. The paper aims to study the existingcustomer perception of the shopping centers of in the city of Kolkata, India.2. Background LiteratureConsumers today have a growing choice of shopping destination which includesfreestanding stores, retail parks, malls, specialty and festival centers, and ancillaryretailing (Guy, 1994), as well as an increasing variety of home shopping by mail,computer, television and telephone. Shopping centers can no longer rely on a captivemarket, and there is an increasing need for centers to compete and to market themselveseffectively.Since the early – 1990s the need for effective marketing of shopping centers has beenbrought into sharp focus. In extreme cases, some shopping mall schemes have requiredrepositioning or conversion to other land uses (Houlder, 1992). Some American malloperators have been accused of marketing myopia (Turchiano, 1990) and centers havebeen urged to strive for market dominance as never before (Gruen, 1993). Shoppingcenters need to plan for the newly competitive environment.Definition of “shopping centers” focus on their fundamental differences compared totraditional high street retail locations – i.e. planned developments that are managed andmarketed as a unified whole (Guy, 1994). Often implicit is the suggestion that shoppingcenters are coherently and proactively marketed, and that centers typically have a strongmarketing profile (Guy, 1994). However, many studies have pointed out the noticeablelack of marketing orientation among shopping centers (e.g. Cooke, 1993). Howard(1995) blames the property management emphasis in the industry and there is alsoconfusion as to what marketing actually means in the context of shopping centers.The marketing task for managed shopping centers may be viewed as offering of a servicefor targeted consumers to gain convenient access to a desirable mix of retailers within themanaged environment that provides a satisfying and safe shopping and leisure experience(Kirkup and Rafiq, 1999). This definition differentiates “managed shopping centers” 3
  • 4. from other forms of shopping destinations like High Streets, Department Stores, homeShopping etc. The marketing task for shopping centers includes major decisions to bemade prior to the opening of the center – relating to design of the center, location andmarket positioning.There exist a range of studies on the design and development process (e.g. Dawson,1983; Beddington, 1991), center success and failure factors (e.g. Ordway et al., 1988),occupancy dynamics (Kirkup and Rafiq, 1994a), and discussions on particular aspects ofshopping center management such as tenant relationships and their implications formanagement. However, little research has been undertaken on the marketing issues withrespect to shopping centers.The current research addresses the issue of understanding the shopper’s needs andperceptions, so that shopping center managers can meet today’s market challengeseffectively.3. MethodologyThe research was carried out empirically by using a number of shopping centers ofsimilar nature. Our approach was comparative in nature. The steps adopted in our studywere (1) identification of the shopping centers under study and their profile (2) customersurvey to measure perception of the shopping centers (3) interpretation of marketingstrategies of shopping centers in the light of the perception of shoppers.In step 1, we looked for a group of shopping centers in the city of Kolkata, which wereimportant in terms of growth and opportunity. In step 2 we were concerned about theshopper’s perception with respect to the shopping centers. For this purpose, a customersurvey was conducted. A questionnaire was designed for the purpose of extractinginformation on the following – (1) customer characteristics of respondents (2) Generalcharacteristics of the shopping centers (3) Ratings of a number of selected parameters toevaluate customer’s perception on a five point scale. Also, level of importance for such 4
  • 5. individual parameter was collected on a five point scale. The overall quality factors in ourcase were derived through factor analysis technique.As mentioned earlier, with the imminent opening of the retail sector by the Governmentof India and easing of FDI norms, shoppers’ perception may be critical for success.Thus, it was important to study present perception of shoppers of the shopping centers inIndia. A set of prominent shopping centers in the city of Kolkata were chosen, namely 22Camac Street, Forum, Vardaan, New Market, Metro Plaza, City Center and Metropolitan(abbreviated names CS, Frm, Vdn, NM, MP, CC, Mpol).Typical marketing strategies of the shopping centers were studied through case studymethod. The case studies were developed based on business reports and direct interviewswith top level managers/owners of the firms based on their perception of the targetsegment and competition. Also, the shopping centers were studied by way of visits,collection of catalogs, promotional materials like advertisements etc.The consumer survey was based on simple random sampling. Target population wasthose who visited the shopping centers in the city of Kolkata. The study was based ondata collected in 2005 through a sample survey which included respondents’demographic attributes, shopping motivations, situational factors and purchase behaviors.The sample frame consisted of existing large shopping malls where customers wereinterviewed as they left the centers. Randomized selection procedure was used wherebyinterviewers walked from exit door to exit door consecutively, approaching the shopperas he or she exited the mall (Sudman, 1980). These respondents were approached andfrom which 408 agreed to be interviewed. Finally, 389 respondents filled in thequestionnaire, which was the sample size. Through the questionnaire, an attempt wasmade to gather facts about the most recent visit and perception of the shopping centersthe respondents were aware of. As far as the scale for measuring the perception of theshopping centers was concerned, a pilot survey was conducted to identify the parameters.In the pilot survey, a set of 16 parameters was given to respondents and only 10parameters were found to be suitable for the purpose. 5
  • 6. 4. Result and Discussions4.1 Profile of the Shopping CentersKolkata was flooded by numerous mall projects recently. Forum was promoted bySunsam Properties on Elgin Road, City Center in Salt Lake by Bengal Ambuja andMetropolitan by Calcutta Metropolitan Group on the E M Bypass. The other popularshopping centers of the city are Vardaan Market, Metro Plaza, 22 Camac Street and NewMarket. New Market is the oldest and located in the heart of the city since the British Raj.Vardaan and Metro Plaza are more of shopping complexes rather than organized malls.Vardaan Market is a combination of small retail stores with various types of merchandise.Metro Plaza is also developed on the same format like that of Vardaan Market andcomprises of small retail stores with very few branded retail formats. 22 Camac Street isa combination of office complexes, eating joints and retail stores. It houses offices ofBengal Ambuja, Glaxo Consumer Division and Ernst & Young etc. It also houses largebranded retail formats like Westside, Pantaloons and Planet M. and also Food Joints likePizza Hut and Grain of Salt. Most importantly 22 Camac Street is located among theother office complexes making it a very accessible shopping location for workingexecutives. Metro Politan is located on the EM By-pass and houses Big Bazar as itsanchor. City Centre at Salt Lake houses a host of national as well as international brandedstores such as Shopper’s Stop, Jockey, Reebok, Wills Life Style, Planet M, C 3, KFC,Pizza Hut etc. It is located in the heart of Salt Lake City and thereby attracts shoppersfrom all locations in and around Salt Lake.4.2 Shopper PerceptionsThe survey data provided a fair amount of information on shopper perceptions of theshopping centers. The data set was tested for reliability and was found to be satisfactory.The respondents were asked about the shopping center from which they made their lastvisit. They were also asked about their favorite shopping destination. It was observedthat approximately 30 percent of the respondents considered Forum to be their favorite 6
  • 7. shopping destination followed by 22 Camac Street which was considered favorite by around 21 percent of the respondents. New Market was considered favorite by around 19 percent of the respondents and City Center by around 13 percent of the respondents. This clearly demonstrates that New Market has lost its leadership as the preferred shopping destination of Kolkata (refer to table 1). It was further observed that around 49 percent of customers visiting Forum considered it to be their favorite shopping destination and the figure was around 51 percent for New Market. This clearly demonstrates that the majority of the population purchasing from New Market still considers it to be their favorite shopping destination though its preference among the total shopping population of Kolkata has declined considerably. It was also interesting to note that 22 Camac Street and City Center were considered to be their favorite shopping destination by around 45 percent and 34 percent of the shoppers respectively. It may also be noted that Vardaan Market, Metro Plaza and Metropolitan enjoys very poor preference amongst the shoppers at less than 10 percent (refer to table 1). Table 1: Favorite Shopping Destination Vs. Last Shopping Center VisitedFavorite Shopping Shopping Center Last Visited Destination CS (%) Frm (%) NM (%) MP (%) CC (%) Mpol (%) Total (%) CS 44.8 27.0 10.8 10.9 16.4 20.0 21.2 Frm 37.9 49.2 15.4 34.4 9.0 32.7 29.3 Vdn 1.7 3.2 3.1 10.9 7.5 4.6 NM 8.6 6.3 50.8 6.3 22.4 18.2 19.1 MP 5.2 4.8 3.1 18.8 6.0 6.5 CC 1.7 6.3 10.8 9.4 34.3 12.7 12.9 Mpol 1.6 1.5 12.7 2.4 Others 1.6 6.2 9.4 3.0 3.6 4.0 Total 100 100 100 100 100 100 100 Studies were carried out to investigate why some of the shopping centers preferred by the shoppers while others were not. Also it would be of interest to investigate the perception of shopping destination like New Market which is no longer preferred by a vast majority of shoppers of Kolkata. 7
  • 8. Factor analysis was performed on all the quality attributes to investigate presence ofsignificant factors among the attributes under study. A number of indicative attributeswere considered for this purpose. The factors considered were:i. Value for moneyii. Locationiii. Shop décoriv. Customer servicev. Parking facilityvi. Eating joint/cafévii. Promotional activitiesviii. Loyalty programix. Kids cornerx. EntertainmentThe respondents were asked to assess the shopping centers for each of these factors on arating scale. It was also assumed that each of these factors is not considered by theshoppers to be of equal importance and only a few might be of high importance and therest may be of less importance. In order to accommodate these subjective variations, therespondents were asked to indicate the level of importance attached to each of the factors.Using the attitude data for all the shopping malls, factor analysis was performed on all thequality attributes in order to investigate dominant factors in the systems under study.Results of the factor analysis are illustrated in the tables 2 & 3. It was interesting to notethat all the attributes converged into only two prominent factors. These may beinterpreted as 1) overall quality and 2) locational convenience. 92 percent of thevariance could be explained by these two factors. The rotated components of thesefactors, after applying Varimax method became very distinct (table 3). Only onecomponent, viz. location patronized for the second factor while the rest of the variablescomposed the first factor – overall quality. 8
  • 9. Table 2: Total Variance ExplainedComponent Initial Eigen Values Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings Total % of Cumulative Total % of Cumulative Total % of Cumulative Variance % Variance % Variance % 1 6.133 76.660 76.660 6.133 76.660 76.660 6.025 75.309 75.309 2 1.256 15.695 92.356 1.256 15.695 92.356 1.364 17.046 92.356 3 0.290 3.626 95.982 4 0.243 3.041 99.022 5 0.055 0.685 99.707 6 0.023 0.293 100.000 7 -1.5E-016 -1.84E-015 100.000 8 -9.1E-016 -1.14E-014 100.000 Table 3: Rotated Component Matrixa Component 1 2 Location 0.100 0.966 Décor 0.970 0.187 Parking Facility 0.816 -0.369 Eating Joint 0.942 -0.072 Promotion 0.922 0.339 Loyalty 0.873 0.333 Kid Centre 0.982 0.162 Entertainment 0.971 0.046 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a. Rotation converged in 3 iterations Individual factor scores for each shopping center were estimated and two scatter diagrams were constructed with value for money as the X-axis for both (figure 1a and 1b). It may be observed in figure 1a that City Centre, Forum and 22 Camac Street are successful in creating a perception of quality amongst the shoppers. 22 Camac Street also enjoys a good perception in terms of Value for Money. Erstwhile leader New Market though enjoys good position in terms of Value for Money but has lost out on account of quality perception, explaining its reduced patronage. 9
  • 10. Figure 1a: Positioning of the Shopping Centres (Overall Quality vs. Value forMoney) 1.50000 City Centre 1.00000 Forum Camac Street 0.50000 Overall Quality 0.00000 Metro Plaza Metropolis -0.50000 New Market -1.00000 Vardhan Market -1.50000 17.00 18.00 19.00 20.00 Value for MoneyFigure 1b: Positioning of the Shopping Centres (Locational Convenience vs. Valuefor Money) 1.50000 Camac Street Forum 1.00000 Vardhan Market 0.50000Convenience 0.00000 New Market Metro Plaza -0.50000 Metropolis -1.00000 City Centre -1.50000 17.00 18.00 19.00 20.00 Value for Money 10
  • 11. Locational convenience as observed from the factor analysis is an important factor in thechoice of shopping centres / destinations. City Center has significant disadvantage interms of locational convenience. It is evident that 22 Camac Street and Forum scoreshighly with respect to locational convenience which has played an important role in theirsuccess. It is interesting to observe from the two positioning maps that both Forum and22 Camac Street could create a perception of higher quality and at the same time wasconveniently located – as such they enjoyed higher shopper preference. New Marketenjoyed shopper preference on account of the perception of good Value for Money.5. Managerial ImplicationsThere are various ways malls can build brand. This includes combining the consistency interms of perception people associate with a brand with something special that makes amall stand out. Mall owners try to position their properties in specific ways. For example,Forum, the first mall in Kolkata has revolutionized the concept of mall experience in thecity. It is a 2, 00,000 sq. ft mall with Shopper’s Stop as its anchor occupying around60,000sq.ft. space spread across three floors. Forum offers a product mix of shopping,food and entertainment. Since, it targets the premium segment it houses top-notchdesigner brands. Shopper’s Stop is the anchor which provides a unique shoppingexperience to customers especially those having preference towards premium pricedbrands.A mall needs to operate in a manner similar to a retail store. For example, the tenant mixat Forum was decided at the planning stage itself. The developer decided on who thetenants would be along with the rentals and designed the mall accordingly. The productmix was planned right down to how much of the retail space should stock accessories,women’s apparels, men’s formal wear, kids wear etc (Agarwal 2004).Once product mix is decided, and the relevant shops rented out, it is up to the stores tofigure out their pricing and brand strategies. Mall developer’s need to monitor the trafficin each section of the mall to figure out which sections were doing well, and which werenot. This is the reason why mall space is generally rented out and not sold. Overall, 11
  • 12. renting helps in controlling the deliverables- performance, service and structure ofretailers in the mall. In case of unsatisfactory performance by any retailer, the same isreplaced. This is done to maintain continuity of products sold and provide a holisticshopping solution to each customer.Besides deciding on the tenant rentals and product mix, a mall developer needs to plan aformat for all stores within the mall. The question to be answered here is not just ‘howmuch and what?’ but also ‘where?’ Shops must be located on the basis of customerconvenience and preference, following directly from the tenant mix. Forum, for example,houses all sports brands like Nike, Planet Sports, Adidas, and Woodland Shoes etc on theground floor to provide a complete range of similar products to shoppers. Allcomparisons can be made on the same floor before buying a product category. Similarly,level 1 is the fashion level for up market women, both homemakers and working withshops like Satya Paul, Be:, Bizarre, Swarovski etc, level 2 for trendy college goingstudents and Level 3 comprising mostly men’s apparels and accessories. Level 4 consistsof restaurants and Inox ticket counters while the actual multiplex is on Level 6. Level 5 isdedicated entirely to food court. The strategy behind placing the food court on a floorbetween the ticket counters and movie halls is to drive the crowd towards food before andafter movie watching. Shopping and entertainment activities complement each other andare synonymous with lifestyle.6. ConclusionOur findings provide marketers with a current understanding of mall shoppers and theirperceptions. It addresses the issue of how malls can leverage their particular strength andcompete more effectively by adjusting their strategies in the face of competition. It is acrucial learning period especially for real estate developers entering into malldevelopment, which is the case in India. Malls need to position themselves distinctivelyand develop appropriate marketing strategies by aligning their marketing mix with theirdesired positioning in the face of global competition. 12
  • 13. References:Agarwal, P. (2004): “Branding of a Mall: Kolkata is happening @ Forum”, MarketingMastermind, pp.44-51, June.Cooke, J. (1993): “The shopping challenge – centres without a future”, in Henry StewartConference Studies (Ed.), Latest Developments in the Ongoing Marketing and Promotionof Shopping Centres, pp.1-9.Dasgupta, S. (2005): “Who’s afraid of Wal-Mart?” Business Standard, 03 December.Dawson, J.A. (1983): Shopping Centre Development, Longman, London.Beddington, N. (1991): Shopping Centres, Butterworth Architecture.Gruen, N.J. (1993): “The reinvention of retailing”, Journal of Property Management,Vol.58, No.1, pp.40-46.Guy, C. (1994): The Retail Development Process, Routledge, London.Houlder, V. (1992): “The new centre of discontent”, Financial Times, 31 January.Howard, E.B. (1995): Partnerships in Shopping Centres, OXIRM, Oxford.India Retail Report (2005): “Evolution of Organized Retailing: The Global Experience,Images Multimedia, New Delhi, pp.16-17Kirkup, M.H. and Rafiq, M. (1994a): “Tenancy development in new shopping centres”,International Review of Retail, Distribution and Consumer Research, Vol.4, No.3,pp.345-360. 13
  • 14. Kirkup, M.H. and Rafiq, M. (1999): “Marketing shopping centres: challenges in the UKcontext”, Journal of Marketing Practice in Applied Marketing Science, Vol.5, No.5,pp.119-133.Ordway, N., Bul, A.A. and Eakin, M.E. (1988): “Developing a visibility index to classifyshopping centres”, Appraisal Journal, April.Sudman, S. (1980): “Improving the quality of shopping center sampling”, Journal ofMarketing Research, Vol.17, No.2, pp.423-431, November.Turchiano, F. (1990): “The (un)malling of America”, American Demographics, Vol.12,No.4, pp.36-39. 14