Mall mania

Mall Mania in India – Changing Consumer Shopping Habits

Mall Mania in India –
Changing Consumer
Shopping Habits

A dissertation submitted to The University of
Nottingham for the degree of Ma in
Management

Kanika Taneja
Business School, University of Nottingham
September, 2007


ACKNOWLEDGMENT

I deeply thank God and my family for showing me the way, no matter how difficult the
time was.

For his aspiring and invaluable guidance, I wish to express my heartfelt gratitude to my
Supervisor, Dr. Andrew Smith, without whose support this dissertation could not have
been successfully realized.

My sincere gratitude to the interviewees and all respondents for their invaluable time,
acknowledging that, this study would not have been possible without their assistance and
support.

Finally, special thanks to all my friends for their constant support and encouragement,
and making this year in Nottingham memorable.

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Abstract

For the current generation of consumers, the meaning of shopping has changed.

It is not just a mere necessity, as it was earlier, but much more than that. The

factors that affect store choice and draw customers to the shopping centre

include space, ambience, and convenience and moreover an array of choice

under one roof. The growth of integrated shopping malls, retail chains and

multi-brand outlets is evidence of consumer behaviour being favourable to the

growing organized segment of the business. Space, ambience and convenience

are beginning to play an important role in drawing customers. Malls, which are

now anchored by large outlets such as Westside and Lifestyle and are resided by

a lot of Indian and international brands, are also being seen as image benchmarks

for communities.

Thus, this dissertation aims at studying the changing shopping trends of

consumers in the Indian economy. For doing this, semi structured interviews

from the Indian retailers as well as consumers have been used as a tool. Various

factors on which the Indian consumers base their choice of going to the shopping

mall or the unorganized markets have been analyzed in this research.

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Table of contents

ACKNOWLEDGEMENT Page 1

Abstract Page 2

List of Tables and Figures Page 7

Chapter One Introduction Page 8

1.1 Background of the Study............................................................8

1.2 Research Objectives ..................................................................10

1.3 Chapter Summary ……….........................................................11

Chapter Two Literature Review Page 15

2.1 Introduction................................................................................15

2.2 Definition of Shopping .............................................................15

2.3 Types of Shoppers..................................................................... 18

2.4 Consumer Buying Behaviour ..................................................21

2.5 Organization of the Retail Industry ........................................25

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2.6 Types of Retail Formats .............................................................26

2.7 Shopping Malls ...........................................................................30

2.8 Determinants for Choice of Shopping Malls………...............31

2.8.1 Number of Stores and the Tenant Mix………..........34

2.8.2 Location of the Shopping Mall ..................................37

2.8.3 Shopping Experience………………...........................38

2.8.4 Shopping Mall Image...................................................40

2.9 Conclusion………………………………………………............41

Chapter Three Methodology Page 42

3.1 Introduction..................................................................................42

3.2 Research Objectives.....................................................................43

3.3 Qualitative vs. Quantitative Research ......................................44

3.4 Data Collection………….............................................................46

3.4.1 Secondary and Primary Data.......................................46

3.4.2 Interviews ......................................................................48

3.4.2.1 Interview Sample............................................50

3.5 Research Procedure .....................................................................52

Chapter Four The Indian Scenario Page 55

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4.1 Introduction ………………………………................................55

4.2 Past Trends of Shopping in India .............................................56

4.3 Conclusion ……………………………………………………...58

Chapter Five Findings and Analysis Page 60

5.1 Retailers’ Perspective ..................................................................60

5.2Consumers’ Perspective ………...................................................68

Chapter Six Discussion Page 80

6.1 Introduction ...................................................................................80

6.2 Choice Variables for Shopping Malls…….................................81

6.2.1 Anchor Stores ………………………………………….81

6.2.2 Location…………………………………………………83

6.2.3 Shopping Experience ………………………………....84

6.2.4 Image …………………………………………………...85

6.2.5 Price Sensitivity ………………………………………..86

6.3 Interdependence of the Retail and Real Estate Industry..........88

Chapter Seven Conclusion Page 89

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7.1 Introduction...................................................................................89

7.2 Recommendations........................................................................90

7.2.1 Recommendations for the Government…………….90

7.2.2 Recommendations for the Developers………………92

7.2.3 Recommendations for the Retailers………………….93

7.3 Limitations…..................................................................................93

7.4 Conclusion …..................................................................................95

References Page 96

Appendices Page 130

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List of Tables and Figures

Table 1 - Motives of Shopping By Tauber (1972) ......................................17

Table 2 – Store Based Retail Formats……………………………………..29

Table 3 – Profile of Retailers Interviewed………………………………..51

Table 4 – Retailers’ Perspective…………………………………………...60

Figure 1 - Framework to Understand Shopping Behaviour……………22

Figure 2 – A Two Dimensional Matrix of Consumer Buying..................24

Figure 3 – Process of Format Selection………………………....................27

Figure 4 – Store Choice Model for Evolving Markets...............................32

Figure 5 – Experience Realms and Shopper Preferences..........................39

Figure 6 – Shopping Malls Choice Variables…………………………….87

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Chapter One
Introduction

1.1 Background of the Study

The real estate market in India continues to be on its buoyant growth trend. The

entry of global players and international equity management firms into the sector

points to the abundance of enthusiasm and confidence that the investors have

towards the potential and prospects of the sector in the years to come. The

demand for commercial space for organized retailing is expected to reach 200

million sq. ft. by 2010 (Times Property, July 13, 2007). The retail sector in India,

which is dominated by small and unorganized entrepreneurs consisting of

standalone stores, boutiques and kirana stores, is radically changing its face.

There has been a massive development of new retail formats such as malls,

hypermarkets, supermarkets and lifestyle stores. The organised sector represents

a mere 2 per cent share of this market (Business Today, 1999). It is very low as

compared to other developed economies of the world (Sinha and Banerjee,

2004). However, as the spending power in the economy is growing fast, this

development has gained importance not only in the metropolitan cities but also

in the Tier II and III towns. These upcoming formats are giving

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consumers a lot to spend on, especially with existing players such as Pantaloon,

Shopper’s Stop and the Tata and RPG Group Scaling up fast and the new players

such as Birlas and Sunil Mittal investing a lot in the retail market (Hindustan

Times, New Delhi, July 22, 2007). With this transition taking place, the shopping

behaviour of consumers is likely to change as these formats were not in existence

in the country until recently.

In these circumstances, in which these new retail formats are growing at a rapid

pace in India, there remains a need among Indian businesses to understand the

changing behaviour of consumers towards shopping in these organized retail

outlets. Also, due to the limited success of these outlets, it is necessary for

retailers to be aware of shoppers’ motivations and to understand ways of

attracting the consumers (Sinha and Banerjee, 2004). Till date, there has been

very limited research on the shopping habits of consumers in the less developed

economies of the world, India being one of them. In this research paper, I

attempt to fill these gaps, thereby investigating the shopping behaviour of the

Indian consumers, particularly with the new retail formats emerging. This study

would concentrate on the behaviour the consumer exhibits while visiting or

making purchases in the newly opened malls. It would explore the purpose and

motive behind the Indian consumers’ visit to these newly established shopping

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malls, the values they derive from the shopping trip and their shopping

bahaviour in terms of impulse purchases, time and money spent at the shopping

mall, etc. A final objective is to establish a baseline for examining changing

behaviour in future as developments continue (Millan and Howard, 2007).

1.2 Research Objectives

There have been many motivations for me to choose this topic for my

dissertation. Firstly, there have been massive changes in the demographic factors

of the Indian consumer. Some of the factors include income and consumption

growth, increasing literacy levels, changes in family structure and women’s role

in the family, growing role of children as influencers, gradual acceptance of

frozen goods as a viable alternative to fresh produce and the growing influence

of TV. These factors have been a driving force of organized retailing in India

which has further driven the growth of the real estate industry with more and

more demand for retail space within malls.

The second motivator behind my choice of topic was that it would help me in my

future career. As my father is into the business of real estate within India, I plan

to join him after the completion of this course. Also I have always been interested

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in the marketing perspective of it. Therefore, this research would be helpful for

me as it would give a clear idea about the consumers in malls.

To carry out this research the research questions that have been formulated by

me are-

• What is the impact of the development in real estate industry on the

organization of the retail industry in India?

• How are the consumers’ shopping habits changing with upcoming retail

formats, specifically malls?

• What are the determinants of consumers when choosing between a

shopping mall and the unorganized market?

1.3 Chapter Summary

In this section, a description of the organization of the whole study is provided,

also describing briefly the content of each chapter of the dissertation. The

structure of the dissertation is as follows.

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Chapter 1 will introduce the research area of the study. It will be an overview of

the purpose and the background of the whole essay. It describes the dissertation

contexts, followed by the brief description of developments taking place in the

Indian real estate Industry and the dissertation’s research objectives.

Chapter 2 is Literature Review, which sets the academic tone for the research. It

contains the review and a comprehensive discussion of the rich and diverse

literature available in the area of consumer shopping behaviour. It is divided into

various sections, which include the motives of shopping, the types of shoppers,

the various types of the available retail formats, specifically the description of

shopping malls, consumer’s buying behaviour and their choice determinants for

choosing a shopping mall.

Chapter 3 is the chapter describing the Research Methodology which identifies

the research questions. It explains the objectives and procedures of carrying out

the research. The framework utilized in this study is described and the basis for

its use is provided. A detailed description of all the research techniques that have

been used for data collection and analysis in order to conduct the study has been

provided in this chapter.

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Chapter 4 is the description of the Indian Scenario in context to the retail

industry which gives an overview of the past trends of growth over the years in

the Indian retail and real estate industry from several perspectives and their

interdependency. It also discusses the consumer shopping behaviour in the

country prior to the development of shopping malls.

Chapter 5 is the Findings and Analysis chapter which reports the findings of the

interviews and discusses reasons for the changes in consumer shopping habits

and provides the results from two main perspectives – the consumers’

perspective and the retailers’ perspective.

Chapter 6 which is the Discussion reports the results of the in-depth qualitative

interviews and discusses them against the current literature. The additional

findings have also been analyzed in this chapter, also giving a framework which

consumers follow while choosing between a shopping mall and the unorganized

market.

Chapter 7 is the Conclusion which summarizes the key findings of the entire

research. It draws together all the key elements of the findings and proposes an

overall conclusion to the research conducted. It also provides some future

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recommendations for the shopping mall developers and the retailers in India.

The limitations of the research will also be provided in this chapter.

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Chapter Two
Literature Review

2.1 Introduction

Rowley and Slack (2004) describe literature review as “a summary of a subject field

that supports the identification of specific research questions”. McCraken (1998)

specifies that a literature review offers “deconstruction” of the existing literature

by establishing a survey of the ground and assessing the categories and

relationships that must be investigated, an approach I would attempt to

undertake in this research. The aim of this chapter is to examine and present a

comprehensive analysis of existing literature on the research topic.

2.2 Definition of Shopping

According to Dholakia (1999), the rationale for shopping is making physical

visits to a shopping site. It is considered as a household task as well as a form of

recreation, relaxation and entertainment. As per the definition of Lunt and

Livingstone (1992), going out to shop is a conspicuous moment in consumption

(Dholakia, 1999). Most researchers, who have studied shopping behaviour,

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consider shopping a gendered activity. In their studies, South and Spitze (1994)

and Flam and Axelrod (1990), have revealed that shopping is a women’s activity

and they were the ones responsible for household shopping. Many other

consumer research studies about shopping have also had a greater part their

respondents as women (Dholakia, 1999).

Shopping is also considered by Oakley (1974), to having the most positive

attribute of being a leisure activity along with work (Dholakia, 1999). Howard

(2007) also believes shopping to be a leisure pursuit and with the rapid

development of shopping centers, both retailers and developers are trying to

make it more of a pleasure activity. Of the many studies done in an attempt to

identify motives of shopping, the one by Tauber (1972) is a prime one. He

identified eleven motives of shopping in a market based economy apart from the

acquirement of products and services and classified them as role playing and

social experience outside home (Howard, 2007).

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Table 1. Motives of Shopping By Tauber (1972)

Source- Howard (2007)

Social reasons are important, as Lunt and Livingstone (1992) describe shopping

as a spectacle in which the person who is shopping is both a spectator and a

performer (Dholakia, 1999). However, most of these motives that have been

mentioned in the table can be described as pleasure or leisure related. Many

studies that have followed Tauber’s (1972) study have made an attempt to

generate some evidence from reality to confirm these motives. A lot of consumer

behaviour researches have investigated and found insights into the personal and

situational experiences of shopping and its emotional and behavioural effects

(Howard, 2007).

Many other studies have also explored into the motives behind shopping. Babin

et al. (1994) explained that the purpose of shopping can be utilitarian that is

shopping for goods and non utilitarian or hedonic outcomes (Howard, 2007).

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These two broad motives being product and experiential have been related to

emotions while shopping and to the outcomes of shopping by Dawson et al.

(1990) (Millan and Howard, 2007). Another research on the key determinants

and motivations of shopping behaviour by Dholakia (1999) has explored and

empirically tested three reasons behind going for shopping as ‘interactions with

family’, ‘utilitarian’ and ‘shopping as pleasure’.

2.3 Types of Shoppers

There are many types of shopping behaviours and shopper types (Dholakia, 1999).

Broadly, shoppers are divided into two categories based on their objectives

which are markedly different. Utilitarian shoppers are those according to whom

shopping is a form of work or a task which is to be accomplished (Babin et al.,

1994; Batra and Ahtola, 1991), until they make a purchase. The other category

constitutes of hedonistic shoppers who give importance to enjoyment and

excitement they experience during the shopping trip. These kinds of shoppers

consider shopping as a leisure activity and derive pleasure from it, along with

the purchase of products (Rook, 1987). Previous researches have also stated that

majority of shoppers combine both utilitarian and experiential values during

their shopping activities (Nicholls et al., 2000) (Nichols et al., 2002). According

to Babin et al. (1994), developed market economies have consumers with high

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levels of hedonic shopping values; however, these values are less noticeable in

less developed countries (Millan and Howard, 2007).

CWHB’s (2002) survey on Where People Shop covering 12 countries of Europe

has identified six types of shoppers on the basis of demographic, attitude and

behavioural characteristics. These can be segmented as pleasure seeking

shoppers, principled shoppers, discerning food shoppers, independent shoppers,

enthusiastic shoppers and negative shoppers. Apart from considering food

shopping as essential, pleasure seeking shoppers enjoy the leisure oriented side

of shopping and mostly shop for designer clothes or stop by at a coffee shop or

snack bar. Principled Shoppers who are mostly older women, are governed by

strong moral principles where shopping is concerned. In terms of food, they buy

organic, natural and non factory framed food and in terms of clothes, they prefer

to shop for fashion brands. Discerning food shoppers constitutes of the

population which buys food in markets and local shops around the

neighbourhood instead of going to the supermarkets. The younger population

with children, a part of the independent shoppers category, shop for clothes

more often than food and they do not prefer to be assisted while shopping,

especially for clothes. The enthusiastic shoppers are most likely to shop in streets

rather than going to shopping centers and are influenced by the offers that are

given in the various retail outlets. The last group of shoppers, known as the

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negative shoppers has the highest ratio of males who have a negative perception

of shopping and they cannot spend good time in a shopping area.

Consumer Centre (2007) also classifies shoppers into six kinds of shopping

personalities. The window shopper visits the shopping mall for leisure, usually

walks around in the mall with a friend enjoying the whole atmosphere, without

an intention to buy. The second type is the bargain hunter who prefers to shop at

discount stores and mostly buys when the retail outlets offer sales. The power

shopper does not visit the shopping centers that often, but are very organized

when they are shopping. They carry a shopping list with them, buy only what

they need and know where to get it. The shopaholics have been further divided

into two segments, one being the consumers who enjoy the whole shopping

experience, and the other being the compulsive spenders. The second kinds of

shopaholics are people with low self esteem and get pleasure out of spending

money, which is not a healthy thing to happen. Their urge to shop returns back

every few days. The shopping phobic people are the ones who just hate the

experience of shopping in a shopping centre and cannot find anything positive

out of going out to shop. They would rather sit at home and shop online. The

indecisive shoppers find it very difficult to decide what to buy. They run around

each store just to evaluate the price and quality of one product, which they don’t

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end up buying at all. Lastly, the shopping misers are somewhat similar to the

shopping phobics, who just have to take out faults from everything they see in

the shopping centers including the parking lots, prices of the merchandise, the

return policy of the outlets, etc.

In reference to mall shopping behaviour, Bloch et al. (1994) has classified

shoppers into four segments. They are enthusiasts, raditionalists, grazers and

minimalists. Researches like Bellenger and Korgaonkar (1980) and Lesser and

Hughes (1986) have also emphasized on recreational shoppers (Dholakia, 1999).

2.4 Consumer Buying Behaviour

The traditional shopping choice behaviour of consumers was related to need

recognition, when the consumer comes to know that he wants to purchase a

product. Once the need has been recognized, then he moves on to search for

information about the product and evaluates the alternatives available to him

before finally makes a decision to purchase the product. He might visit certain

outlets stocking that product, consult his friends, buying guides or store

employees about it. Even after making the purchase, he might reevaluate it

(Taylor and Cosenza, 2002).

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Shopping behaviour of consumers is different in different countries. The reasons

of this varying shopping behaviour are the diverse cultures and the changing

economies of the various countries (Millan and Howard, 2007). A study of the

various kinds of shopping behaviours, therefore needs to be done, covering the

various shopping contexts. Dholakia (1999) has provided a framework to

understand the shopping behaviour of consumers.

Figure 1.- Framework to Understand Shopping Behaviour

Source – Dholakia (1999)

Solomon (2002) and Stern (1962) have recognized four types of purchase

behaviours namely, planned, unplanned, impulse and compulsive buying

behaviour. Planned buying behaviour involves information search about the

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product to be bought, evaluation of alternatives and then rational decision

making. This is time consuming. Unplanned buying behaviour does not involve

this kind of an initial planning. It arises when the consumer is unfamiliar with

the store layout, has a shortage of time or just remembers to buy the product

when he sees it on the store shelf (Shoham and Brencic, 2003; Hausman, 2000).

Impulse buying behaviour occurs when a consumer finds a product on the store

shelf and is unable to resist the urge of buying it. It accounts for a large quantity

of products sold that are bought every year and also covers a wide range of

product categories. It has been portrayed by many researchers as a signal of

immaturity, irrationality and risk and an absence of behavioural control (Levy,

1976 and Solnick et al., 1980) (Hausman, 2000). Repetitive and excessive

shopping by consumers due to anxiety, boredom and tension is referred to as

compulsive buying behaviour (Solomon, 2002). According to O’Guinn and

Faber (1991), compulsive buying has been defined as a ‘chronic, repetitive purchasing

that becomes a primary response to negative events or feelings’. Such consumers are

characterized by depression, obsession, tend to fantasize and have lower levels of

self esteem (Shoham and Brencic, 2003).

Wilson (1998) represented consumer buying for social, recreational and

therapeutic reasons in the form of a matrix.

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Figure 2 – A Two Dimensional Matrix of Consumer Buying

Source – Wilson (1998)

Many other factors may also affect purchase decisions. A person is likely to be

influenced in making his/ her purchase decisions if he/ she is accompanied by

another individual while making a shopping trip. A study by Nicholls et al.

(1994) also found that a person will tend to shop more and spend more money

when going out with someone. Other situational factors can also have an impact

on shopping behaviour and purchase decisions. They include task definition,

antecedent states, social and physical surroundings and temporal perspectives.

For example, scarcity of time, any pre-existing affects, choice of the retail outlet

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and store attribute salience, variety of merchandise available in the store and

even store fragrance have an effect on buying behaviour (Nichols et al., 2002).

Shopping frequency is also a significant concept while studying consumer

shopping behaviour. It is defined as the number of incidences when a product is

purchased by someone in person. The shopping frequency is subjective to the

time and effort that is put by a person and his/ her gender and shopping

responsibility for the household. It is also determined by the shopping context

(Dholakia, 1999).

2.5 Organization of the Retail Industry

According to Dixon (2005), for the development of cities and towns, the retail

industry has a very important contribution to make (Howard, 2007). The retail

industry these days is not just about selling products in the shops. With a lot of

development taking place in the retail industry, the retailer, along with that,

needs to survey the consumers in the markets, identify and understand their

needs, provide them with more choice and experience offering competitive

prices. Apart from that, he is also required to maintain a relationship with the

consumers in order to retain them for long

(http://www.etretailbiz.com/dec2002/specialfeat.html).

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Unorganized retailing is defined as having outlets or stores run locally by the

owner or caretaker of a shop that lacks enough technical and accounting

standardization. Both the supply chain and sourcing are done locally to meet

local needs (Sathyaraj, 2006).

Organized retail stores have been defined as stores characterized by large

professionally managed format stores providing goods and services that appeal to

customers, in an ambience that is conducive for shopping and agreeable to customers

(Tata, 2007).

2.6 Types of Retail Formats

Reynolds et al. (2007) defined a retail format as a physical representation in the

form of firm’s activities which relates to the business model developed by the

retailers and their business strategy. It is a kind of a retail mix followed by a

group of retailers, which they can present to the customers and where an

interaction with the shoppers can be made. It is an assortment of variables such

as the merchandise, price, ease of payment and the whole, shopping experience

that is offered to the customers, through which the business context and strategy

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can be conveyed. To convince the target audiences and to compete with other

players in the market, the retailer needs to represent himself with an appropriate

retail format. While deciding on the retail formats, the retailers ought to assess

certain factors such as drivers of growth, the customers’ profile and their

expectations, the competitors and the challenges faced from them. The process of

format selection by the retailer is represented in the figure below (Sinha, 2004).

Figure 3 – Process of Format Selection

Source- Sinha (2004)

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With continued development of the retail industry, newer retail formats are

emerging everyday. Many researchers have tried to explain as to why this

occurrence of new retail formats takes place. These explanations have given

credit to demanding consumers, competitive retailers and manufacturers. Some

studies have proposed the idea that value oriented consumers demand for new

formats and in a response to these demands; the retailers are driven to develop

these. The retailers’ perspective suggests that as a result of expense control and

operational efficiencies, the competitive retailers are pushed towards bringing

new formats. Other researchers explain this phenomenon with the help of

globalization of the manufacturing base. Rousey and Morgansky (1996) has

suggested that whoever may be responsible for the emergence of newer retail

formats, but in the end the consumer is gaining as he is being provided with a

variety to chose from (Rousey and Morgansky, 1996).

The most common types of retail formats are listed in the table below.

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Table 2 – Store Based Retail Formats

Source – Sinha (2004)

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With a diverse range of retail formats available, consumers tend to get confused.

Consumer try to stick to certain retail formats, however, their preferences change

with the development of newer retail formats. Although patronage patterns

occur, they are specific to certain product categories like food and clothing. Shifts

are bound to take place in other product categories. With the increase in the

number of retail formats from which the consumers can make choices, the

retailer should try to understand the market and consumer shopping habits from

a dynamic rather than a static perspective (Rousey and Morgansky, 1996).

2.7 Shopping Malls

A shopping mall is typically, a shopping complex connected by walkways. It provides

shopping as well as entertainment options to the target consumers. It generally, contains

one anchor store, which consumes twenty five percent of its retail space. In addition a

mall contains specialty stores for clothes, accessories, home needs, books, as well as food

court, multiplexes and entertainment zones (Sankar, 2005).

According to Nicholls et al. (2002), a shopping mall is a place where a wide mix

of retail outlets are situated under one roof, and is usually anchored by one or

30


more stores like departmental stores, which also helps to attract consumer traffic

to that place. Shopping malls have grown larger over the years and have

expanded to include service outlets and entertainment providers (Ooi and Sim,

2007). They are advertised as both shopping and recreation centers. An added

advantage of the shopping mall is that all merchandise, entertainment such as a

theatre or amusement park, food, services and atmosphere in the mall are all

available under one roof and it is environmentally protected. This advantage also

acts as a crowd puller. Moreover, the consumer can shop without the tensions of

any traffic congestions or parking problems, security issues or crime districts

(Bloch et al., 1994; Roulac, 1994; Erkip, 2003) (Ooi and Sim, 2007; Nicholls et al.,

2002). The collection of shops in the shopping mall is managed together and is

taken as one single unit (Prendergast et al., 1998).

2.8 Determinants for Choice of Shopping Mall

In the views of Sinha and Banerjee (2004), store choice behaviour of a consumer

is considered a cognitive procedure. It is believed to be a process of information

processing as the brand choice or any purchase decision is considered. It is very

similar to the decision of making a brand choice except the fact that store choice

is influenced by the location factor, which does not need to be considered when

making a selection of brands (Fotheringham, 1988; Meyer and Eagle, 1982).

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According to a study conducted by Kenhove et al. (1999), the choice of store by

the consumer was differentiated by the nature of the task that had to be executed

by him. The different tasks that were described by the respondents included

urgent purchases, large quantity purchases, difficult job, regular purchases and

getting ideas (Sinha and Banerjee, 2004).

Figure 4 – Store Choice Model for Evolving Markets

Source – Sinha (2004)

Store choice decision is also driven by other tangible and intangible

characteristics provided by the store. They include the store size, format, distance

32


from home and environment of the store. Mattson (1982) found that store choice

can also be influenced by situational factors such as time constraints and gift

versus self shopping, further which can be classified as the competitive setting,

the individual’s situational set and the shopping occasion. However, if store

choice is evaluated by the nature of situational factors, then these factors need to

be studied for each shopping visit of the consumers to the various stores, also

looking into the costs incurred and the benefits made by them during the

shopping task (Sinha and Banerjee, 2004).

Many other researches are also based on the store choice behaviour of consumers

and have given various different viewpoints about the factors on which it

depends. Oppewal and Timmermans (1997) consider the major determinants of

store choice behaviour to be external factors such as retail floor space, distance,

parking facilities, etc (Zhu et al., 2006). Malhotra (1983) suggests that shoppers

choose a particular store if the perceived value of visiting that store is the same

as the threshold value attached to it by the shopper. The threshold value is also

allotted on the basis of the image associated with that store. Dodge and Summer

(1986) found that store choice is a function of variables like socio economic

background, the personality and the past purchase experiences of the consumers.

Lumpkin et al. (1985) who conducted a study to compare the behaviour of

young and elderly shoppers found that instead of basing their store choice on

33


price and distance from residence, the elderly shoppers chose a store which was

high on entertainment value (Sinha and Banerjee, 2004).

Various factors, both spatial and non spatial, have also been discussed in

literature about what attracts shoppers towards a shopping mall (Ooi and Sim,

2007). Although a lot of differences have been noticed among the different age

groups while studying their preferences of the shopping malls (Anderson et al.,

2003), general shoppers of all age groups are attracted to innovation and

uniqueness (Wang et al., 2000) (Wilhelm and Mottner, 2005). Attractiveness of

the shopping mall also determines the rent that the various retailers have to pay

in order to open an outlet in the mall (Sirmans and Guidry, 1993; Gatzlaff et al.,

1994; Hardin and Wolverton, 2000). The major factors which affect the

attractiveness of a shopping mall have been discussed below.

2.8.1 Number of Stores and the Tenant Mix

Wilhelm and Mottner (2005) have considered the number of retail outlets in a

shopping mall as one of the factors that helps shoppers decide which mall to

choose. While studying mall preferences of teenagers, Baker and Haytko (2000)

have said that not only the number but the variety of different stores is also a

decisive aspect for them. The assortment of stores and services, known as the

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retail mix, as well as less repetition of stores are also key factors for a number of

shoppers (Wang et al., 2000; Anderson et al., 2003). Therefore, the tenant mix is

also an important construct.

The range of tenants in the shopping mall can include departmental stores,

supermarkets, apparel stores, and entertainment and leisure facilities (Abratt et

al., 1985; McGoldrick and Thompson, 1992). The anchor tenants are also a

major part of the tenant mix as they help to generate a lot of shopper traffic to the

mall. Miceli et al. (1998) said that apart from considering the profit of a store, the

mall management (who is the deciding authority of the assortment of outlets)

should also take into consideration its consumer drawing power to the mall, as

more consumers would also lead to the profit generation for other stores in the

mall as well. To ensure the success of a shopping mall, one or more anchor

tenants should be selected by the management so that they initially attract

customers, which can be charged lower rent (Ooi and Sim, 2007). According to

Brown (1992, 1993 and 1994), the anchor store for a shopping mall in the central

city is more likely to be a departmental store, whereas for a mall in the suburbs,

the anchor store would be a supermarket. He also suggested that the layout of

the mall should be such that the anchor stores should be placed at the both ends

of the mall, service outlets on the side malls closer to the exits and entrances of

the mall and outlets like pet shops and dry cleaners should be positioned away

35


from the food stores (Prendergast et al., 1998). Moreover, if a large number of

similar stores are clustered together, this would bring agglomeration benefits

and thus more customers would be drawn towards the shopping mall

(Hotelling, 1929; Miceli et al., 1998). Also, with smaller shopping malls coming

up, tenants like restaurants and fast food outlets, clothing stores, retail service

providers and institutional tenants such as banks and post officers are gaining

more importance (Prendergast et al., 1998).

As the tenant mix is a very important factor, the decision of correct assortment of

tenants should be the starting point for any shopping mall. Apart from being a

crowd puller, it also affects the image of the shopping mall, its patronage and

rentals (Kirkup and Rafiq, 1994; Gerbich, 1998). It also influences the length of

stay of customers in the mall and their level of excitement (Wakefield and Baker,

1998). However, the definition of what should be called the ideal tenant mix

would keep developing over time. It has also become difficult for the mall

management to find the appropriate tenants for the malls, reasons being large

number and competition between shopping malls, upcoming newer retailing

formats and the downturn in economies (Kirkup and Rafiq, 1994; Prendergast et

al., 1998).

36


2.8.2 Location of the Shopping Mall

Location is an important aspect of marketing and a good location can be a source

of competitive advantage for the retail outlet (Dickinson, 1981; Vigoda, 1981).

Some researchers have even shown that, while good business practices may not

compensate for poor location, good location may compensate for poor business practices

(Achabal et al., 1982; Craig et al., 1984; Ghosh and Craig, 1983; Simkin et al.,

1985; Wehrly, 1967) (Prendergast et al., 1998).

Various theories and formal models have been provided in the literature to help

retailers and developers to decide the location of outlets or shopping malls. One

of them is the traditional hierarchical model of retail development by Brown

(1991). It compares and finds out the relationship between a major metropolitan

area and its neighbourhood communities and regional communities. Another

research by Clarkson et al. (1996) has also categorized retail location theory into

four areas. These are the central place theory, spatial interaction theory, land

value theory and the principle of minimum differentiation (Prendergast et al.,

1998). The Law of Retail Gravitation Model by Reilly (1931) and Huff (1964),

tested that the magnetism of a shopping mall decreases with distance and

increases with increase in its physical size. The gravity and potential models also

recommend that while choosing between shopping malls, the customers try to

37


find a balance between the utility, which is measured by the size of the shopping

mall, and the cost, which is measured by distance. Shoppers patronize a

shopping mall by finding out the correct balance between these two attributes

(Ooi and Sim, 2007).

In relation to the location of the shopping mall, accessibility and visibility are the

two determinants which need to be noted (Simmons, 1992; Ownbey et al., 1994;

Forgey et al., 1995). The size, quality and design characteristics should also be

favourable as these impact the accessibility and visibility factors (Brown, 1999).

2.8.3 Shopping Experience

The prime advantage of an experience product is the experience that the shopper

goes through by purchasing that product or service. Consumers derive value

from purchasing these goods or services because of their unique qualities and are

ready to pay a little extra for them. Mall developers have also tried to cope up in

the experience economy by providing the consumers with good store ambience

as well as entertaining and amusing experiences apart from shopping. They have

added movie theatres or keep organizing live performances for the consumers in

which they can get engaged and enjoy their experience while shopping in the

mall. An example is the various entertainment activities, like theme park and an

38


ice skating rink along with a huge variety of stores that are provided in the Mall

of America (Wilhelm and Mottner, 2005; Sinha and Banerjee, 2004).

According to the findings of Wilhelm and Mottner (2005), the age group of

teenagers also preferred going to a shopping mall whose atmosphere was

friendly and made them feel welcomed. They wanted a mall which provided

cool stores, entertainment options, attractive designing and a good place to

spend time with friends, on the whole a good shopping experience.

Figure 5 – Experience Realms and Shopper Preferences

Source - Wilhelm and Mottner (2005)

39


Consumers these days are becoming very variety seeking and searching for

novel and unique experiences (Berry et al., 2002). They see malls as a source and

venue for recreation (Wilhelm and Mottner, 2005). Thus the overall shopping

experience which includes shopping, leisure as well as entertainment is a key

determinant of mall attractiveness.

2.8.4 Shopping Mall Image

The authors of “Shopping and the Fear of Others” have found out that

shopping malls have an important role to play in the formation of the social

identity of the shoppers as they are connected to particular societal groups

(Arnould, 2000). Shopping mall image has been defined by Houston and Nevin

(1980) as the total of consumers’ perceptions of a shopping mall based on functional and

emotional attributes. The image of the shopping mall is also related to the

frequency of customer visits to that mall and is important for customers when

choosing between different shopping malls. Shopping mall developers should

expend resources towards the communication of the right image of the shopping

mall and this communication should be driven towards improving its image and

thus frequency of visits. The image is also subject to the presence of anchor stores

and other physical characteristics (Ooi and Sim, 2007; Hunter, 2006).

40


2.9 Conclusion

After discussion of the factors influencing choice of shopping malls, it is worth

mentioning that the effect of some of these factors like retail floor space, number

of shops and distance weaken over time, whereas the effects of other factors like

anchor stores, tourism site strengthen over time (Zhu et al., 2006). A healthy

assortment of all these factors increases the attractiveness of the shopping mall.

However, studying individual choice decisions would not help us to understand

the behaviour of the market as a whole (Millan and Howard, 2007).

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Chapter Three
Research Methodology

3.1 Introduction

Many attempts have been made to provide a formal definition of the research

activity. Neuman (2000) defines research as “research is a collection of methods

people use systematically to produce knowledge”. Research has also been defined as

an organized and deliberate effort to collect new information or to utilize existing

knowledge for a new purpose, seeking to answer worthwhile and fundamental

questions, by employing valid and reliable techniques. In addition, research

involves the use of more appropriate tests to justify the methods employed, and

provides logical and objective data collection where conclusions can be drawn.

Ultimately, it contributes to the gaining of new knowledge and a better

appreciation for the issues involved by the researcher (Gill and Johnson, 1997;

Punch, 2001).

Every piece of research has its own aims. Keeping in mind those aims, the

research objectives and the method to accomplish these objectives should be

derived. It is necessary for the researcher to know the suitability and the

limitations of choosing the appropriate method so as to be able to take necessary

42


precautions for increased validity, reliability and generalizibility of the research

(Miles and Huberman, 1994).

The use of appropriate methodology is very essential as it is an important part of

a research investigation. A well-defined methodology is a crucial step in

activities that require concrete results as the process of achieving the result can

both be studied and verified. In this chapter, the methodology employed in

carrying out the study will be discussed. In doing so I would discuss the research

objectives and the use of different forms of qualitative research methods which

helped me to carry out this research successfully.

3.2 Research Objectives

In order to conduct this research, the research questions that have been formed

are-

• What impact does the development in real estate industry have on the

organization of the retail industry in India?

• How are the consumers’ shopping habits changing with upcoming retail

formats, specifically malls?

43


• What are the determinants of consumers when choosing between a

shopping mall and the unorganized market?

To answer these research questions I would look into the past trends in the

Indian real estate and the Indian retail industries. With the help of the data that I

have collected, I would compare the past trend with the present trends with

respect the gradual movement in the consumer shopping habits in the country

and the factors leading to it. With the continuing drift in their shopping habits,

the future prospects of organized retailing in India would also been discussed.

3.3 Qualitative vs. Quantitative Research

Qualitative and quantitative research methods are two major approaches

employed by researchers. These two methods are distinct from each other.

Qualitative research seeks to describe and decode the meaning of naturally

occurring phenomena in the social world through interpretative approaches

(Van Maanen, 1983, cited in Easterby-Smith, Thorpe and Lowe, 2002), and

thereby provides “well-substantiated conceptual insights that reveal how broad

concepts and theories operate in particular cases” (Gephart, 2004). In other words,

qualitative research focuses on the nature of reality constructed from societal

44


members’ ‘concepts-in-use’ (Schutz, 1973). Due to the direct access to the social

behaviours of humans, qualitative researchers are able to collect information “in

a detailed and complete form” (Sarantakos, 2005), and are allowed to examine

social phenomena in depth and offer insightful depictions. In brief, qualitative

research enables the researchers to see the world through others’ eyes

(Goodyear, 1990) and to understand individuals’ attitudes, perceptions, beliefs,

views and feelings (Hakim, 1994). On the other hand, quantitative research

“emphasizes measurement and analysis of causal relations among variables” (Denzin

and Lincoln, 2000) and tests general propositions using the hypothetical-

deductive model (Gephart, 2004). Quantitative research “imposes scientific

meanings on members to explain a singular, presumed-to-be true reality” (Gephart,

2004).

“Qualitative research thus has an inherently literary and humanistic focus, whereas

quantitative research is grounded in mathematical and statistical knowledge”. The

former uses richly descriptive words, talk, and texts as meaningful

representations of concepts; the latter, in contrast, seeks significant

representations of concepts through coding, counting, and quantifying

phenomena (Gephart, 2004). The choice of research methods is not always an

either-or question, rather a careful evaluation of the suitability for research

purpose and the type of questions posed. In effect, both of research methods can

45


be used in a single piece of work to deal with different types of research

questions. However, qualitative research methods have been used by me in

order to conduct this research because qualitative research can provide ‘in-depth’

understandings of research subjects in comparison with quantitative research

(Easterby-Smith et al., 2002; Silverman, 2000). Quantitative research methods

were also analyzed while choosing a method of research for this study, however

the behaviour of consumers cannot be quantified and thus it would be difficult to

analyze. Thus qualitative research methods have been used.

3.4 Data Collection

Both primary and secondary data were used in order to conduct this research.

3.4.1 Secondary and Primary Data

Secondary data is very important in research because this can help the researcher

to avoid duplication on research that has already been conducted. This saves the

researcher’s time and cost in conducting repetitive work. By conducting

secondary research prior to primary research, the researcher can assess the

availability of information and use it as a basis to design the methods to collect

the primary data (Parsuraman, 1986). In addition this can only enable a

46


researcher to develop a hypothesis or assumptions about the topic. Secondary

research also has the benefit of being carried out in privacy without anyone

knowing about it (Wright and Crimp, 2000). This is a cheap and impersonal form

of research compared to primary research as this can be done at the researcher’s

own convenience, either at home or at the university. The data sought from

secondary forms of research are historical as they are from the past, thus

meaning that comparisons can be made by comparing the past and current

situations (Saunder et al., 2000).

This research was carried out by using news paper articles, internet reports, and

academic journals from sites such as Mintel, Science Direct and Emerald Insight,

textbooks, industry reports, etc. Data from academic journals and textbooks was

particularly useful in reviewing the existing literature on consumer buying

behaviour and their choice determinants for shopping malls. However, one of

the major drawbacks of this method of research is that sometimes the

information gathered may not directly fit into your research area and some data

can also be out of date and not valid at the present moment (Kemp, 2002). The

information gathered from the sources can have an impact on the level of bias

and in addition may not be very accurate. Some research reports about

companies or retailers can be confidential and thus not published and difficult to

obtain (Saunders et al., 2002).

47


The second type of research method carried out was primary research. Saunder

et al. (2003) has defined primary research as “Data collected specifically for the

research project undertaken”. The three main types of primary research that can be

used are observation, interviews and surveys. For the purpose of this research I

have used interviews as a form of primary research.

3.4.2 Interviews

Interviewing has been one of the most widely used research approaches among a

variety of qualitative methods (Have, 2004; King, 2004).

Interviews can be used conducting various techniques such as telephone

interviews, face to face interviews and focus group interviews. Interviews are a

very common and flexible form of gathering qualitative data and according to

Parsuraman (1991) this is an effective form of conducting exploratory research,

which can allow opinion of those with expertise in areas related to the subject

matter under investigation to be examined.

In social research there are four main types of interviewing techniques. Firstly,

fully structured interviews are where the situation is fully controlled by the

questionnaire in terms of questions and potential answers (Crouch and

48


Housden, 1996). Secondly, semi structured interviews are where open ended

questions are used and the interview’s job is to probe for more depth answers.

Thirdly, unstructured interviews are where neither the interviewer nor the

interviewee has set questions. Instead, a topic guide forms the basis of the

interview, and the interviewee is encouraged to explore his/ her thoughts on the

topic of research. Finally, in the in depth interviews, the respondent is

encouraged to go deeper and deeper into their levels of thinking to develop into

the subject area (Crouch and Housden, 1996).

A semi-structured format has been adopted for this research, which means open-

ended questions are used across all interviews and some questions are prepared

in advance. This type of interview can help the researcher focus on research

topics. On the one hand, it makes the most of the value of time spent with the

interviewees (McCraken, 1988), on the other, it ensures that the interview

questions cover all research topics more fully, and facilitates the comparability

between interviews (Karantinou and Hogg, 2001; Selltiz, Jahoda, Deutsch, and

Cook, 1964). This type of interviewing provides the researchers with the

opportunity to explore answers, where the researchers want their interviewees to

build up on the responses. It has been sought that open ended questions are

designed to encourage the interviewees to offer extensive and developmental

answers and can be used to reveal the interviewees attitudes or obtain facts

49


(Grummit, 1980). Additionally, it also gets the interview to gain unpredictable

viewpoints from the interviewees. Thus this method of analysis has been used

for this research paper.

3.4.2.1 Interview Sample

For conducting the interviews, two different sample populations were chosen.

The first sample consisted of retailers who had already opened their outlets in

the shopping malls of Delhi and NCR. For conducting these interviews,

purposeful sampling was used. Purposeful sampling selects information rich

cases for in depth study (Mugo, 2007). This could be a help as most of these

retailers already had their outlets in the unorganized markets before opening

shop in the shopping malls. Thus, they could give their views on the consumers’

shopping habits in the malls and how was it different from the outlets in the

markets. Qualitative research typically uses a relatively small sample yet focuses

in depth on it (Patton, 1990). Therefore, a sample size of 15 respondents was

chosen for taking the interviews of retailers.

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Table 3 – Profile of Retailers Interviewed

RETAILER BUSINESS E – MAIL

Dockers Men’s Apparel ravibdravibd@yahoo.co.in

Royal Sporting House Sports Wear & manuvijay@hotmail.com

Accessories

Shringis Women’s Western shringis@yahoo.com

Wear

Satya Paul Women’s Ethnic Wear satyapaul@genesiscolors.net

VIP Travel Accessories anupambhatia@yahoo.com

Stupid Cupid Women’s Accessories umesh_mathur2002@yahoo.com

First Impression Women’s Traditional honey12@rediffmail.com

Wear

Nextt 2000 Women’s Western nextt2000@rediffmail.com

Wear

Abhinetri Women’s Ethnic Wear abhnetri_rjrgdn@yahoo.com

Timex – The Time Watches bhalla_preeti@yahoo.co.in

Factory

Bose Music Systems joseph_jt@boseindia.com

Roop Vatika Women’s Ethnic Wear roopvatika@hotmail.com

& Accessories

OSHO bharti_ravindra@gmail.com

51


For choosing the second sample, a simple random sampling technique was used.

A simple random sample is obtained by choosing elementary units in search a

way that each unit in the population has an equal chance of being selected. A

simple random sample is free from sampling bias (Mugo, 2007). This sample

consisted of consumers living in India, who have seen a drastic change in the

organization of the retail scenario in India and are familiar with it. Random

people were chosen from family, friends and employees who are a part of the

consumer group and are a witness to this transition. To get a wider view, the

respondents that were chosen belonged to diverse age groups and income levels.

The sample size for this was 20.

3.5 Research Procedure

In order to perform a successful research, it is very important to have a well

defined procedure of carrying it out. To start this research I started reading a

literature that was relevant to my area of study, which took a very long time.

Reading that, I formulated the literature review which consisted mostly of

consumer buying behaviour and their choice determinants for choosing a

shopping mall. After a careful examination of the literature, questionnaires were

formulated for conducting the interviews from the retailers who had opened

their outlets in the malls and the Indian consumers.

52


For conducting the research, 6 major malls in the parts of West Delhi, South

Delhi and NCR were visited. Conducting the interviews from the retailers was

not a very easy task to do. Even though I approached them in their non peak sale

time of the day, they seemed to be busy and disagreed to give the interviews.

Furthermore, most of the retailers who agreed to be interviewed by me were

reluctant of giving recorded ones. However, I got hold of 15 retailers from

different malls and conducted their interviews and writing down their responses

side by side. For the interviews of the consumers, approaching them was quite

easy as most of them were familiar with my area of study. Face to face interviews

with some and telephonic interviews with the others helped me complete my

field research.

Gaining trust was a crucial part of the whole process of conducting the interview

because if the researcher is not trusted the interviewee may not refuse to give the

interview but may desire and act such that the interview gets over as quickly as

possible with enough detail to satisfy the researcher that she is getting something

of value but without saying anything that touches the core of what is actually

being believed and cared about in the research (Jones, 1985 quoted in Easterby-

Smith, 2002). Thus the purpose of the interview and the study was explained

clearly to each interviewee before taking the interview.

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The data that was collected was then analyzed and results were evaluated. Some

recommendations for the future were then suggested for the real estate

developers and the retailers.

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Chapter four
The Indian Scenario

4.1 Introduction

The key areas on which the real estate industry in India is focused are residential

and commercial. The commercial area is majorly dependent on the retail

industry. India has been ranked fifth of the thirty emerging retail markets of the

world by the global real estate consulting group Knight Frank (Real trends: The

boom continues, 2006). There is a transition taking place from the conventional

unorganized retail sector to an organized one, for example, the big super markets

are replacing the small neighborhood kiranawalas

(http://www.etretailbiz.com/dec2002/specialfeat.html). This organized retail

sector in India now boasts of having preferences of almost all consumers which

include apparel and accessories, appliances, electronics, cosmetics and toiletries,

home and office products, travel and leisure products and much more (Retail

Sector in India, 2007). The organized retail segment which is currently only 2

percent of the retail industry is estimated to grow at a rate of 20 percent by 2010.

This development in the retail industry is leading to a boom in the real estate

sector. In a report by Merrill Lynch, the real estate trends of the country

55


indicated the growth in the number of malls in the major cites from 40 to about

250 by the end of this decade (Real trends: The boom continues, 2006). Not only

are these shopping malls becoming familiar in the larger cities, but this boom is

also racing its way to the Tier II cities or the smaller cities.

4.2 Past Trends of Shopping in India

Earlier, the retail industry in India could be labeled as highly unorganized

comprising of large, medium and small grocery stores and drug stores

(Organized Retail Industry in India, 2006). The concept of shopping in India

was led by the general stores that supplied everything from groceries to

stationery, and small shops in localities that stocked limited varieties of products.

Before the evolution of organized retailing and with limited brands available in

the market, the people only used to buy what was offered to them. The existence

of consumer culture was very limited and there were no defined ‘shopping areas’

(Tata, 2007). Since then, the idea of retail merchandising and consumer shopping

has changed by leaps and bounds (India Retail: Global Brands and Chains Set

Sights, 2007). Modern retail formats came into existence such as malls and

supermarkets. Many companies also started to set up exclusive showrooms and

other larger retail formats such as Westside, Shoppers Stop, etc. Most of these

organized retailing formats are mainly concentrated in the metropolitan cities;

56


however they are getting diversified into smaller cities and towns (Organized

Retail Industry in India, 2006). The introduction of these larger and more

diverse formats provided the consumers with more options to shop from and

novel experiences for the Indian population.

However, the traditional forms of retailing which provided a great amount of

personalized service to the shoppers, made them vary about shifting from their

usual methods of shopping. “The traditional consumer, initially overawed by the new

look and used to equating glitzy with expensive, refrained from entering the store” (Tata,

2007). Also, the new formats were perceived to be having not enough added

values for most of the customer segments. One of the obstacles that came in the

way of the success of these formats was the perception of consumers about the

price of the merchandise that was offered. They thought that the products they

purchased at malls were far more expensive than the ones they shopped from the

unorganized markets, however, providing no extra value

(http://www.etretailbiz.com/dec2002/specialfeat.html). Another key challenge

faced by the developers to make their shopping centers a success is the scarcity

of anchor retailers which are considered a key source of crowd pulling. The

number of anchor retailers in India is limited. With huge number shopping mall

developments that are currently taking place and are projected for the future,

there is a shortage of the alternatives available for selection of anchor stores. This

57


creates a lack of ability for the developer to form a unique and characteristic

positioning of the shopping center in the minds of the consumers (Images

Report 2005 on shopping centre development in India – II, 2005). Stringent

trade laws and government regulations, further added to this difficulty. Thus,

these shopping centers received only moderate success in the Indian market in

their introduction phase. Looking at this, many of the retail chains held back

their expansions into the organized segment (Sinha and Banerjee, 2004).

However, liberalization has changed all this. There was an effort made by the

organized retailers as well as the consumers to make this new found trend a

success.

4.3 Conclusion

With consumer demographics becoming more and more favorable to the

organized segment of the retail industry and the increase in the availability of

retail space and a skilled workforce, there has been a complimenting growth in

retail chains, multi brand outlets and integrated shopping malls. A variety of

newer retail formats are being introduced. Enormous networks of stores are

getting scattered on the Indian landscape, starting with larger cities and then

moving on to smaller towns as well (India Retail : Global Brands and Chains

58


Set Sights, 2007). The infrastructure and supply chain mechanisms of malls are

getting organized and spreading across the country. This brought about a

revolution in shopping in terms of the consumer buying behaviour. The

introduction of these larger and more diverse formats is providing the

consumers with more options to shop from and novel experiences for the Indian

population. This changing retail environment is leading to a change in shopper

expectations and factors effecting store choice (Sinha and Banerjee, 2004).

According to the research on store choice behaviour in an evolving market by

Sinha and Banerjee (2004), both the consumers and retailers are in the testing

phase as to what will be the factors effecting store choice behaviour in the Indian

context. It is being currently evaluated by a few big players such as Pantaloon

Retail, Food World, Spencers, Shoppers Stop, Lifestyle, Subhiksha and a number

of other smaller entrepreneurs (India Retail : Global Brands and Chains Set

Sights, 2007).

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Chapter Five
Findings and Analysis

In this chapter, the findings of all the semi structured interviews have been

stated. Also, the analysis and investigation of the data that is collected has been

carried out. The interviews have been broken down into themes aiming to carry

out a comprehensive in-depth analysis. This part has been broken down into two

sections – the retailer’s point of view and the customers’ perspectives.

5.1 Retailers’ Perspective

The interviews that had been taken from the retailers who had already opened

their retail outlets in the malls have been analyzed in the following section. The

responses by the retailers have been listed in a table format question by question

and then analyzed later using points that have been listed in the literature about

choice determinants of mall.

Table 4 – Retailers’ Perspective

QUESTION ANALYSIS OF RESPONSES

Q1. How long has it been All the retailers who were interviewed had opened

since you have opened the their outlets in the malls since a period of less than

shop in this mall? 2 years except one, for whom it had been two and a

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half years.

Q2. Why did you choose to Different retailers gave different responses to this

open your outlet in the question. The most common reasoning that was

mall other than the given by them was the upcoming trend of mall

unorganized market? shopping and the changing customer preferences.

As all their needs get fulfilled under one roof and

they get the required quality, price and

environment, they are attracted more towards the

malls. Another reason for the customers getting

fascinated to the malls is the hot and rainy weather

conditions in India. Other responses included

bigger retail space which is not available in the

congested unorganized markets, and also for the

separation of the commercial establishments from

the residential areas.

Q3. Do you have another All retailers who were interviewed had their

retail outlet other than in outlets in unorganized markets of different areas as

this mall? well as other malls except two retailers who only

had outlets in malls and one who only had another

outlet in the unorganized market area.

Q4. Do you reach the There was a mixed response of this question. Seven

targeted sales level in this of the interviewed retailers were happy with the

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outlet or as much as the amount of sales level that they were getting in their

other outlets? mall outlet as their target was being achieved. Out

of them, one women’s ethnic wear retailer was

achieving the best sales level in that outlet out of

all others. The reasoning that was given by them

was that the customers were attracted by their

brand name. However, the other retailers were not

achieving as much sales as they did in the

unorganized market outlets. Different explanations

were given for it. They said that the outlets in the

markets were very old and well known to the

customers. Other reasons were mall specific such

as not much foot fall in the mall and absence of a

cinema due to which fewer customers are attracted

towards the mall.

Q5. What do you do to A variety of promotional tools were being used by

attract customers to your the retailers to get the customers’ attention towards

outlet? their outlets in the malls. End of season sales was

the most common form of the promotional

schemes being used. Customer databases were

maintained by most of the retailers and different

schemes were provided to them by different

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retailers. These included informing the clients

regularly about change of stock and in store

promotions, coupon schemes, etc. Some of the

bigger country wide known brands were also

advertised in magazines, newspapers as well as

television. Word of mouth and brand loyalty were

also used as other modes of promotions.

Q6. What do you think can Attraction of customers is the most important for

be done to attract the success of malls. According to the responses

customers to a mall? What provided by various retailers, location, having a

do you think of anchor good mix of brands within the mall, having an

stores? ambassador for promoting the mall or the various

branded outlets present in it, timely promotions

using banners and posters, economical prices of

merchandise, provision of regular weekend and

monthly schemes to keep the customers loyal,

organization of events and programs within the

mall, positive behaviour of the staff, cleanliness,

promotion of the mall as a whole instead of the

different retail outlets present in the mall are the

various methods of pulling the customers towards

the mall. One of the retailers also held a fashion

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show within the mall to promote their outlet.

Positive responses were also provided by majority

of the interviewees about having an anchor store in

the mall as it is a positive point to have such an

outlet in the mall and has advantages like “it is a

great help in attracting customers” and they visit the

other shops as well, it increases “walk – ins” into a

mall. One of the retailers also believed that “the

crème customers”, who have the buying capacity are

attracted towards the anchor stores. However, one

of the retailers differed in his views about having

the anchor store in the mall. According to him,

“although the anchor store attracts customers towards

the mall, but the other brands suffer due to it”.

Q7. What do you think of Majority of the retailers say that a major part of the

consumers’ perception of customer base still perceives that the merchandise

mall shopping? in the mall is highly priced. According to one of the

retailers, “50 percent of the consumers think that

products in the malls are expensive and so they just

hang out in the mall and go. For shopping they go to the

markets which they perceive to be cheaper”. However,

some of them also believe that the mindset of the

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consumers is changing and they are getting more

convinced about the prices. Also, the prices of

branded products are found to be similar in the

malls as well as the unorganized markets. The

customers also tend to receive many benefits if

they come to the malls for shopping which

compensates for the high price factor. These

include better infrastructure, comfort of one stop

shopping, good experience and ambience,

protection from the harsh Indian weather

conditions, etc.

Q8. What benefits do Several facilities are made available to the

consumers obtain from consumers when they visit a mall. Firstly, “they can

coming to a mall rather shop for so many things at one place, they can eat and

than the unorganized hang out and entertainment places like PVR are

market? What effect do available, all this can be done along with shopping”.

these benefits have on Other than this, comfort, security, parking

sales? facilities, air conditioned environment, neat and

clean atmosphere and easier commuting are the

other benefits that a customer can get when he/

she comes to a mall. Unlike the markets, this also

saves time and the customers also get rid of traffic

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jams. All these factors affect sales because “this is

why people come to malls” and “any mall having all

this attracts customers”. “If people don’t have to shop

then also they can come to just hang around with

friends. This sometimes affects sales as some people end

up purchasing goods.” According to another retailer,

“When people come to a mall, they are mentally

prepared to spend money.”

Q9. If you have to open a Few of the respondents have mentioned various

new outlet, would you criteria for this decision, the major being location of

choose to open it in the the mall or the market, foot fall of the mall,

upcoming malls? consumer preferences for the mall and government

policy. However, a good number of the retailers

would prefer to open their next outlet in the

upcoming malls of the country as “markets are doing

better currently but in the future malls would be the

only thing” and “the coming time will see an end of the

markets”. “It will take time for the malls to develop and

grow; patience is required to get sales in the malls

however the future prospects are bright”. Two of the

retailers also had tie ups with two of the biggest

mall developers of the country; this was one of the

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reasons that they opened their outlets in the malls,

and would plan any further expansions within the

malls developed by those companies.

It can be analyzed from the responses that the introduction of the so called “mall

mania” has not been there in India for a long time. It is a novice situation for the

retailers as well as the consumers. Therefore, it is going to take a little while for

both the parties to get along with this rapid development taking place in the

country. The government is also encouraging this growth that is taking place in

the retail as well as the real estate industry of the country. Various steps are

being taken by it in the different parts of the country to make this development a

success. For example, in the capital city of New Delhi, the government started

sealing activity of the retail outlets that had been opened in the residential areas

in order to discourage the growth of unorganized markets, due to which the

retailers had to buy retail space in malls for expansion; in Mumbai as well, the

freeing up of much needed real estate has been responsible for the development

of the city in terms of retail space. Accessibility of real estate at affordable prices

has been made easier partly due to easier availability of finance and bank loans.

The investors are also motivated towards this development as they get a higher

return of 14 percent on the mall business as compared to 11 and 6 percent in the

office segment and the residential segment, respectively (Bist, 2004). All these

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economic activities along with the gradually changing consumer preferences are

responsible for the ongoing boom in the mall activity in India.

5.2 Consumers’ Perspective

To get the Indian consumers’ viewpoint on the upcoming trend of shopping in

the malls, interviews that were taken from the consumers have to be analyzed.

The respondents’ views have been generalized as the views of the consumer

population in India. These interviews have been analyzed in the following

section taking one question at a time and quoting consumer responses.

The current preferences of consumers between the shopping malls and the

unorganized markets were asked. On the one hand, majority of the consumers’

preferences had now shifted from unorganized markets to shopping malls as

development is taking place in diverse parts of the country including smaller

lesser developed cities and in different areas within a city. Many respondents

have also stated various criteria for choosing between the malls and the locality

markets which have been stated in the following quotes listed below.

“The choice between unorganized and malls depends upon a number of other factors such

as mood, type of shops etc.”

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“Price is the factor associated with the choice. For items priced equally in the malls I

would prefer the malls or else the markets.”

“It depends on the weather if it is really hot I would like to shop in a mall. It also depends

on when I am looking to buy and what is my budget. If I am looking for something

special then maybe I will prefer a mall but if I am looking for something which is

available every where I would buy for the place which is nearest.”

“Depends on the purpose, if I have time to spare and want to spend an entire day

shopping, eating, watching a flick then mall would be the preferred choice because it

would be convenient, if only shopping for a particular item or grabbing a bite then local

markets will be more convenient”

On the other hand, few of the respondents also preferred the unorganized

markets over malls as they did not think that malls that have currently been

opened in India can offer everything that a consumer needs and also a majority

of the population stayed away from the malls due to high prices of the products.

This mixed response indicates that the consumers in India are changing and are

overall beginning to prefer the malls instead of the markets. Probably, it is

dependent on the income group the consumers belong to. A higher income

group consumer would indicate a higher preference for malls and vice versa.

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“I would prefer unorganized local markets because shopping malls which Cater to all the

needs of a customer or provide all popular brands under one roof are yet to come to

India.”

“Shopping malls provide many facilities under one roof but lack in providing goods at a

cheap price. This makes Local markets more famous among the Common Man as they

provide largely the same goods at a competitive price.”

A very mixed response was obtained when the consumers were questioned

about the frequency of their mall visits for the purpose of shopping. Few of the

respondents visited only the mall whenever they would move out with the

intention of shopping. Others visited a mixture of both, which must be

dependent on various factors. From the responses it can be analyzed that the

customers who initially visited only the unorganized markets with the shopping

motive in mind has also started to consider the malls for specific product

categories or brands. This again indicates a gradual change in the consumer

preference for malls.

“In a week I go around 3 to 4 times for shopping and all the time in malls.”

“Once in a fortnight I go out for shopping. And alternatively I go to malls and markets.”

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“At least once a week in the unorganized market and once a month in malls.”

“I go out for shopping five to six times a month - 80% to local markets and rest of the

time to malls”

“Around 4 times monthly, and twice to malls.”

There is also a difference in the kind of merchandise that a consumer buys from

the mall and that he/ she buys from the unorganized markets. The Indian

consumer has been very used to picking up products form the local markets

which is proximity of their homes. Although, they are getting used to visiting the

mall for their shopping needs, they still shop for their daily needs from the

market itself. The respondents have also stated various advantages and

disadvantages that they have associated with the visit to the malls.

“Branded items are bought from malls and day to day items from markets.”

“Malls: because they are comfortable, you get everything under one roof, air-conditioned

environment and non-tiring. Unorganized Markets: they too tiring, messy at times but

they are good for getting little things which you normally don’t get in the malls.”

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“Malls are visited at all times but most purchases are done from local markets which offer

a wider variety of branded goods.”

“In shopping malls everything is organized and a person does not have to face the terrible

heat of Delhi.”

“Malls have a comfortable environment with a good parking facility and all brands are

available under one roof. And unorganized markets are visited for fulfilling the daily

requirements.”

“Unorganized local markets provide all essential goods in a confined small area whereas

malls only house a few selected brand stores.”

“Local Markets are more accessible, better priced & have a large variety.”

Almost all of the consumers associated leisure activities with malls. For many

consumers, malls have become a destination where they can hang out and

socialize with friends in coffee shops like Barista and Cafe Coffee Day. An

entertainment factor has also been associated with shopping in the malls as many

consumers have started to view shopping as an enjoyable pastime. All their

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purposes of shopping, entertainment, socializing with friends and eating out

could be fulfilled by a single visit to the malls. It can be inferred from the

respondents’ views that some of the visitors who come to a mall can be

categorized as serious shoppers who are attracted by the convenience of buying a

wide variety of products under one roof. However, most of them are still

overawed by the whole experience that they go through when they visit a

shopping mall which includes gazing at luxurious branded products, cooling off

in air conditioned comfort and enjoying an ambience that was never experienced

while shopping in the markets but was “only seen in Hollywood movies” (Bist,

2004). Also, it has been seen that shoppers these days are also combining the

shopping and leisure activities. They can do this by visiting the mall where they

can get an environment where they are able to carry out their leisure activities

along with shopping.

“Oh yes, because apart from shopping, there are road shows, movies, trivia contests,

lucky draw and all of the same can be associated to leisure.”

“I go to malls four to five times a week for a coffee, shopping is just as per the needs.”

“Malls are visited once in a month, they are not as accessible as local markets so going to

a mall is more of an outing than fulfilling the purpose of shopping.”

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“Yes malls are good for catching up with friends.”

“Malls because of convenience of parking, everything is organized, combines leisure with

shopping and better ambience.”

“Yes, malls are mostly associated with entertainment and food.”

Considering the location factor, majority of the respondents did not care about

the proximity of the shopping malls from their homes. The reason for this

probably would be that there are only a few shopping malls currently and all the

consumers want to experience this new way of shopping, therefore, they do not

mind even if they have to travel a long distance to visit the shopping mall

occasionally. However, few of the interviewees associated their decision of their

shopping destination with respect to its proximity from their home.

“Yes because it is very near to my house, I can go there anytime when I feel like, even

alone.”

“As long as I get what I want in terms of the brands and variety, I don’t mind shopping

anywhere. However malls would be more convenient, if they are closer and have similar

variety.”“If I have decided on the shop and know what exactly to buy, then I would

consider proximity as a major factor that would affect my decision. Apart from this

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variety can also affect my decision making, for example due to availability of space, the

shop in the mall would be bigger and would store more variety of the product, then in that

case the mall shop would be a better option.”

“Proximity can be related to time, if I have some extra time then I prefer going to the

mall, otherwise local shopping would be just fine.”

In general consumers’ perception, there exists a pricing difference between

merchandise in the mall and that in the unorganized markets. The products

available in the malls are considered to be more expensive than those available in

the markets. However, from the responses that were obtained, it was evident that

the consumers’ outlook is completely changing and they are becoming more

spend thrift. In addition, this difference in pricing does not seem to be affecting

their shopping decisions. This is also a change that can be seen in the consumer

population as a whole, as compared to a few years earlier.

“Well I don’t think that there is any price difference and if it is then that’s something a

consumer wont mind spending for the leisure a consumer gets in the mall.”

“Generally, for some goods it is assumed that malls are expensive. But I buy mostly

branded goods from malls, and they have the same process all over. So doesn’t really make

a difference.”

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“I think it’s a misconception that malls are more expensive that local markets. If the same

shop is present in both the market types then pricing would be the same. It so happens

that generally there are better quality shops present in the malls which can shoot up a

price of a product, so its generally perceived that malls are more expensive, but if you put

the same shops in local markets then the price would be just as expensive.”

After going through the literature, a question that was formulated for the

interviewees enquiring them if going to the shopping mall has an effect on their

image or status in the society. Almost all of the respondents denied this fact.

They did not find any relation between image and visiting the shopping mall.

Any image was not assumed to be associated with the shopping malls and the

image factor was immaterial if they bought the products from the markets or the

shopping malls.

“No, shopping is all about buying stuff I like, where I find it is immaterial.”

“Shopping in the mall does not influence the status because status is related to the shop

that you are shopping in, whether it be in the mall or market.”

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“As long as what you shop appeals to you and you have the confidence to carry it out it

does not matter where you have bought it. However, shopping malls are characterized by

branded stores.”

According to the findings of my research, the shopping experience is a very

important factor for the consumers. In their views, shopping experience includes

variety of stores within a mall and the collection within the stores, the gentry that

comes to the mall; time that is saved by coming to the mall and getting

everything under the same roof is the biggest advantage. They are also

considered to be easier and more sophisticated.

“Shopping experience to me means actually buying stuff that I like irrespective of the fact

whether it is in a mall or a local market but malls are definitely a better and more

convenient place to shop in.”

“Shopping experience is very important for me because if I am not satisfied from a place

then I might not go there again.”

“It is a very important criterion because not always do we go with a motive to shop.

Sometimes it is for fun, or just time pass. In those cases shopping malls are a better

option.”

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“As an experience malls would be rated higher because of the sheer variety of shops, and

convenience of a multiplex, kids’ corner, eateries, all under one roof.”

When asked about their future shopping preferences, all of the respondents

chose mall shopping over the unorganized market shopping where one could

find all the brands, entertainment as well as food joints. The markets would only

be selected by them in case whatever they needed would not be available in the

malls. It has also been viewed that with a rapid growth in the real estate

industry, the malls will eventually take over all forms of markets. However, this

possibility is not visible in the near future as the unorganized retail sector in

India is almost 97 percent. Also, this trend has not even been seen in developed

countries where malls have now lost the importance that they used to hold in the

past.

“If there is growth in the mall industry then it will eventually take over all forms of

unorganized market.”

“Malls are preferable. But there is no bargaining in malls and you at times don’t get

minute and little things, which you get from markets. So, both hold their own

importance.”

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Chapter Six
Discussion

6.1 Introduction

From the analysis above, it can be inferred that there is a slow and steady change

that is taking place and the preferences of the Indian consumers are shifting from

shopping in the unorganized markets to shopping in the newly developed malls.

The vast Indian consumers’ population is varied among diverse income

segments. According to secondary data, there exists a significant difference in the

shopping patterns of consumers across these income segments and there are no

uniform trends in their buying behaviour. Researchers who have done their

research on the organized retailing sector of India have also said that organized

retailing has made headway in the upper class. However, even in this segment,

items such as milk, fruits, vegetables and a significant portion of ‘through-the-

month’ purchases seem to be done at traditional outlets. The middle income class

prefers shopping for processed food and personal care in supermarkets and fall

back on traditional outlets for bulk shopping. For them, organized retail outlets

seem to be associated with branded items/special purchases. Organized retailing

does not seem to have made an impact on the lower class, except for ‘curiosity’

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shopping (Chandrasekhar, 2001). This fact can also be supported by the findings

of my study as it was conducted on consumers who belonged to varied income

groups.

On the whole this study has found out that a large number of consumers have

started choosing the malls over the unorganized markets for the purpose of

shopping which is also associated with leisure. The attributes of the malls, which

attract the consumers towards it and are responsible for this change of choice of

the consumers, have been represented in the form of a decision tree. In this

chapter, the analysis has been done by comparing the findings with what has

been said in the literature. A few extra points that came up in the findings have

also been analyzed and this fills the gap in the studies that have been conducted.

The significance of the various mall attributes has also been discussed below.

6.2 Choice Variables for Shopping Malls

6.2.1 Anchor Stores

As stated in the literature, the anchor tenants are an important part of the tenant

mix as they help to generate a lot of shopper traffic to the mall. It has also been

said that the mall management (who is the deciding authority of the assortment

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of outlets) should also take into consideration its consumer drawing power to the

mall, as more consumers would also lead to the profit generation for other stores

in the mall as well. All retailers have agreed to this fact that anchor stores are a

major factor responsible for pulling crowd towards a mall. There are a variety of

anchor retailers in India. They include US and European chains like McDonald's,

Lacoste, Pizza Hut, Benetton, Subway, Marks & Spencer and Mango. This has

also led to the emergence of Indian chains such as Pantaloon, Globus, Shoppers

Stop, Giant, Lifestyle and Big Bazaar that can act as anchor stores in a mall. Other

branded outlets like Tommy Hilfiger, Swatch, Arrow, Louis Vuitton and Nike

are also considered as effect anchors in the Indian malls which are effective in

attracting customers towards a mall (Chadrasekhar, 2001).

However, one of the retailers also contradicted this fact from his personal

experience of having an outlet in the mall, with a very valid point. The

departmental stores in India, which act as anchor outlets, carry a variety of

branded merchandise other than non branded ones. If the same brands also have

their exclusive outlets in the mall, the anchor stores tend to cannibalize the sales

of the individual outlets as most of the crowd is attracted towards them.

Although this is a convincing argument, but majority of the retailers have

supported the literature that successful anchor stores are a key to increasing foot

fall in a mall.

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6.2.2 Location

Literature has stated that location is an important aspect of marketing and a

good location can be a source of competitive advantage for the retail outlet. Also,

according to a survey conducted by global property consultancy firm Cushman

& Wakefield, not all mall operators are likely to benefit equally. The report also

informs that "Only the ones in favorable locations and having the right format

and suitable strategies are likely to remain long-term players" (Chandrasekhar,

2001). However, in the Indian context, the factor of location of a shopping mall

does not seem to affecting the consumers’ visits to these malls. As it has been

discussed above that there are only a few shopping malls that have come up in

the country and the consumers are finding it to be a very novel experience to

visit a shopping mall for shopping. They are still overawed by this new method

of shopping, therefore they even travel long distances to capture the advantage

of getting everything under one roof. However, their daily needs are still fulfilled

by the unorganized markets that are situated close to their homes.

With the speedy development in the number of shopping malls in the country,

soon there would be a shopping mall in every area. The consumers would then

prefer to visit the malls that are closer to their homes, for their daily needs as

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well. Thus, location has still been considered a significant factor while choosing a

shopping mall.

6.2.3 Shopping experience

The literature has been backed up by the findings that consumers derive value

from purchasing goods or services because of their unique qualities. Mall

developers have also tried to cope up in the experience economy by providing

the consumers with good store ambience as well as entertaining and amusing

experiences apart from shopping. They have added movie theatres or keep

organizing live performances for the consumers in which they can get engaged

and enjoy their experience while shopping in the mall. Consumers these days are

becoming very variety seeking and searching for novel and unique experiences.

The shoppers in the Indian market also tend to look at visits to stores and malls

as an enjoyable experience, an outing for the family, receiving value for money

while shopping and also as an entertainment available there. The players in the

retail industry who are competing with one another, are trying to come up to the

expectations of shoppers giving the shoppers a great international shopping

experience, a wonderful ambience and something or the other, for everyone in

the family (Retail Industry: Changing Trends, 2007). Thus the overall shopping

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experience which includes shopping, leisure as well as entertainment is a key

determinant of mall attractiveness.

6.2.4 Image

As stated in the literature, the authors of “Shopping and the Fear of Others”

have found out that shopping malls have an important role to play in the

formation of the social identity of the shoppers as they are connected to

particular societal groups (Arnould, 2000). Self image is also exceptionally

important for Indians, however, they do not tend to attach self image with

shopping in a shopping mall. This factor has been falsified in the findings

because India has not yet reached that stage of development that it tends to

associate image with a shopping mall. The unorganized market in India still has

a very significant proportion; therefore, all consumers have to visit the

unorganized markets for the fulfillment of some or the other needs. It does not

affect his/ her personality or status. Thus image has not been considered a

substantial factor in the Indian context, when the consumer chooses between a

shopping mall and the unorganized market for making purchases.

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6.2.5 Price Sensitivity

Not much has been said about price sensitivity of consumers in the existing

literature. This is due to the fact that almost all studies that have been conducted

are directed towards the developed countries of the world, where the income

level of the consumers is quite high as compared to India and they do not mind

spending on expensive branded products. However, looking at the Indian

context, about which much has not been said, a large part of the population

belongs to the middle income group who cannot afford these luxurious brands.

Therefore, this was one of the additional major aspects that came up in the

research.

Although, from secondary data it has been found that the income level and the

purchasing power of the Indian consumers is increasing, majority of the retailers

are still in the perception that the most of the consumer population is still price

sensitive. Even though a market for high end luxurious brands exists in the

country, a major chunk of the population does not buy these brands. However

with globalization taking place throughout the world, the consumers are getting

the hang of the branded products and their demands are changing with growing

income levels. From the consumers’ perspective, it has also been seen that a high

price level in the malls does not stop them from purchasing what they want. On

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the whole, there has been seen a slight positive change in the consumer spending

habits with respect to the price. Thus, it can be concluded that the consumers

shopping habits are changing slowly but surely.

Figure 5 – Shopping Malls Choice Variables

MALL CHOICE VARIABLES

STORES LOCATION EXPERIENCE PRICE LEVEL

VARIETY ANCHOR ENTERTAINMENT ENVIRONMENT
STORES

CINEMA AMENITIES

EVENTS FACILITIES

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6.3 Interdependence of the Retail and Real Estate Industry

The present time has seen a boom in the Indian economy, especially in the retail

and the real estate sectors. The prospects of both these have been found to be

mutually dependent on each other and the factors that are driving growth in

these two sectors are low share of organized retailing in the economy, falling real

estate prices, increase in the disposable income and customer aspirations as well

as increase in the expenditure for luxury products by consumers.

The retail industry is one of the largest industries of the modern days, especially

in India. It has emerged as one of the most dynamic and fast growing industries

in the economy with several players entering the market. Unlike traditional

retailing, the contemporary retail sector is mirrored by shopping centers,

multiplex malls and huge complexes that offer shopping, entertainment and

food, all under one roof. The concept of shopping in India is also in its alteration

phase in terms of the buying behaviour of the consumers and the retail formats.

This has also led to the growth in the real estate sector, with large investments by

national and global players taking place with a motive of developing the

infrastructure and construction of the retailing business (Retail Sector in India,

2007).

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Chapter Seven
Conclusion and Recommendations

7.1 Introduction

The revolutionary development in the Indian real estate and retail industries is

driven by large expectations, keen interest by the Indian and international

companies who are eager to invest and the operation of large scale development

of shopping malls that is taking place throughout the country. The Indian and

international brands are using these retail malls as a medium to spread

themselves throughout the Indian cities in these high profile brand formats

(India Retail : Global Brands and Chains Set Sights, 2007). They get the

required image for their brand, the environment and the clientele that they want

in a shopping mall which is difficult to achieve if they open an outlet in the

unorganized market.

The most important activity for mall owners is to attract the maximum number

of people and to convert them into buyers. As discussed in the previous chapter,

a mix of attributes such as variety of stores in the mall, the location of the

shopping mall, the shopping experience offered to the consumers in the

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shopping mall and the correct pricing of the available merchandise would make

a shopping mall successful in the Indian retail environment. Apart from these, a

seven point strategy for a successful mall in India has been recommended by a

well known property consultant firm of India. Location, product mix, right-

footfall, right pricing, strong infrastructural support, circulation and differential

pricing are the factors which will be sought and appreciated by the customers

and would lead to the success of the mall (Retail Industry: Changing Trends,

2007). If these attributes are present in the shopping malls of India, they would

further push the consumers, who are already in the transitional phase of shifting

their preferences from the unorganized markets, towards shopping in these

malls.

7.2 Recommendations

In this section, recommendations for the government, the shopping mall

developers and the retailers have been suggested to further this development

that is taking place in the real estate and the retail industries of India which will

also drive the changes in the shopping habits of the consumers.

7.2.1 Recommendations for the Government

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The government should open up the retail sector by further liberalizing foreign

investment norms. This will not only favor development in the retail sector in

terms of design concept, construction quality and providing modern amenities

but will also help in creating a consumer-friendly environment. The government

should allow FDI in select specialty retail areas like electronics, building

equipments, furniture, sports goods and stationery. Such reforms in FDI will

induce a number of global chains to set up shops in India without posing any

threat to Indian retailers dealing in multiple brands.

“FDI in retail trade can not only organize a significant part of the largely unorganized

domestic retailing, but also invite established global retail brands into the Indian market,

thereby creating greater outlets for outsourcing and marketing Indian products.”

- Recommendations from Economic Survey of 2004-05.

(Organized Retail Industry in India, 2006)

FSI norms should also be liberalized by the government for designated retail

projects in order to reduce the project cost and encourage builders as wells as

retailers to undertake new projects. The government, in order to boost retail

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sector growth should accord industry status and ease labour laws. Apart from

this, the local government authorities of each state must provide the necessary

infrastructure such as roads, public transport and communication facilities

without which the most modern and expensive malls would not achieve their

goal. Providing the necessary infrastructure will certainly will provide the

required boost for the development of the local economy, employment and a

promising business climate (Retail Industry: Changing Trends, 2007).

7.2.2 Recommendations for the Developers

The developers of the malls have to realize that they have to create a entire

shopping destination for the shoppers which has a mix of retail outlets, eating

joints, entertainment places which offers them the whole shopping experience.

The promoters should take the help of retail experts to create a balanced tenant

mix so that the shoppers are able to get everything they want under one roof,

which will solve their purpose of coming to the shopping mall.

The developers should try to create a specific image of the shopping malls by the

process of segmentation and creation of a particular shopping environment. For

example, the high end luxurious brands and the brands for price sensitive

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consumers should not be put under one roof. This will help them capture

audience belonging to different customer segments. Apart from this, the

developers can also promote their shopping malls as specialized shopping

destinations. For example, there can be specialized malls where a consumer can

go to buy specific products, like a mall for jewellery, or a mall for furniture, etc.

7.2.3 Recommendations for the Retailers

The organized retailers can be suggested to target the untapped middle income

group population of India. Although, it may not be so easy to change the

mindsets of these consumers might not be an easy task, it can be a means of

attracting the global retail giants that want to enter into the Indian economy.

Another recommendation for the retailers would be that they should build

relationships with their existing customer segments. The retailers should be well

versed with the consumer preferences and they should also offer them additional

services apart from the products. For developing loyal customers, the employees

of the retail organizations would play an important role. Therefore, the must hire

the right kind of employees and train them.

7.3 Limitations

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Every piece of research has its own set of limitations which can arise during the

course of conducting it. This research faced the following limitations -

• Penaloza (1994) suggests that the researcher should be careful enough to

avoid any kind of bias with the research subjectivity. This is mainly

because of the reason that researchers working in their own culture tend

to avoid keeping a critical distance from their work as they may hold a set

of assumptions about their own culture (McCracken, 1998) hence

influence the interpretation of data analysis (Kapur, 2006). This research is

based on analyzing an Indian perspective and I, being an Indian, had

awareness of a lot of facts which might have influenced the results at some

point of time.

• The sample size of the population being tested should be large enough to

increase its validity. However, the findings and analysis are based on

semi-structured interviews taken from fifteen retailers and twenty

consumers which can be unrepresentative of the population. The rest of

the information has been collected from secondary sources, reducing the

validity of the data collected. It was very difficult to get interviews from

the retailers. Hence, gathering empirical evidence for the research faced

certain restrictions.

93


• This research mainly relies on secondary sources such as the research of

other people; hence it was difficult to come to strong recommendations.

7.4 Conclusion

It can be concluded from the research that the consumer markets in India have

potential for the future development of the retail industry as the market is

growing, government policies are becoming liberal and the technological

developments in the country are favourable for operations in India. Due to these

promising factors, more and more retail investors have been encouraged to

invest into the Indian market which has further impelled investments in the real

estate industry.

However, the success of malls in the long run in the Indian market would

involve attraction of diverse consumer segments towards the malls which

includes diverse income groups, nuclear families, working women, etc. The

provision of wide choice and the comfort of being able to shop everything under

one roof would attract all these groups of buyers.

94


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128


APPENDICES

APPENDIX 1

Factors Leading to Change in Consumer Shopping Habits

India has undergone certain fundamental changes in it political, economic and

social structure over the years. Each of these factors has brought about changes

in the way people perceive, select and finally purchase products. In this section,

the PEST (Political, Economic, Social and Technological) factors that are affecting

the organization of the retail industry and are responsible for the change in the

shopping habits of the Indian consumers have been discussed.

Political Factors

Earlier, the foreign mall operators were not allowed to enter and operate in the

Indian market as foreign companies and could not own real estate in India. The

foreign brands like Nike, Reebok and McDonalds still operate in the country

through their subsidiaries or franchises

(http://www.atimes.com/atimes/South_Asia/FG24Df01.html). However, the

government is changing the FDI norms and making them more liberal so that it

is easier for the foreign players to enter the Indian market. Currently,

129


Government allows 100% FDI in cash-and-carry retail through the automatic

route and 51% in single branded products (Indian Organized Retail Industry

(2005-2007) Pub Time: 2006/03

http://www.the-infoshop.com/study/rnc36720-retail-industry-india.html).

Most of the foreign players that are entering the market are setting up their

outlets in shopping malls and are providing the consumers with international

shopping experiences. Moreover, the government of the states like Delhi and

National Capital Region (NCR) is also permitting the use of land for commercial

purposes, thus increasing the availability of land for retail space

(http://www.indianground.com/retail/retail-sector-in-india.aspx).

Economic Factors

Also, according to Jeff Immelt, Chief Executive, GE, “We believe that India is a

rising star at the beginning of a growth cycle, with consumer spending

increasing at a strong rate, and people seeking and demanding a better quality of

life. India is going to be one of the fastest-growing regions of the future. All

conditions are right to invest in India.”

(http://www.icmr.icfai.org/casestudies/catalogue/Marketing/MKTG114.htm)

130


There has been an immense amount of economic development in the country

which has led to the growth of the retail industry. The high and middle income

population is growing at a pace of over 10% per annum and the disposable

income of these households is also increasing, With strong GDP performance, the

rising income levels and growing purchasing power of people, consumer

spending has grown at an average of 11.5% annually over the past decade

leading to enormous growth potential and future prospects for the organized

retailers (http://www.indiainbusiness.nic.in/india-profile/ser-retail.htm). Thus,

there has been a significant amount of growth in the retail industry and there is

still a lot of scope in the coming years due to factors such as the presence of a

vast market, higher disposable income and consumer spending as well as

increasing awareness of the consumers about new products and their quality

(http://www.icmr.icfai.org/casestudies/catalogue/Marketing/MKTG114.htm).

With the increase in the disposable incomes, the malls, which were earlier,

perceived to be carrying highly priced merchandise has now come into the reach

of a wider group of consumers.

Social Factors

The increasing demand which is the driving force of organized retailing in India

is also because of a few major changes in the demographics of the consumers. As

131


stated in the Chesterton Meghra findings in the Images Report 2005 on shopping

centre development in India, the increase in the spending power of India’s

middle class which forms 20-25 percent of the total population is the major

driving factor of demand. With increased purchasing power and changing

lifestyle of people, the upper class is expected to double itself in the coming three

year period. Other major demographic factors which are responsible for this

development are income and consumption growth, increasing literacy levels,

changes in the family structure and the role of women in the society and the

growing role of children as influencers

(http://www.etretailbiz.com/dec2002/specialfeat.html). Besides that, the

majority of the population is under the age of 40

(http://www.expresstextile.com/20051115/apparelbiz02.shtml) and there is also

an increase in the young working population. The traditional consumers which

constituted of joint families are being replaced by new consumer segments which

include nuclear families, single and working women, collegians with allowances

and increase in the number of working couples with hefty pay packets, who

actively support the new concept. All this has led to a positive impact on the

development and success of the new retail formats

(http://www.tata.com/trent/articles/20030305_spurring_super_shopping.htm).

132


Besides these, few other social factors also contribute to this revolution in the

Indian retail scenario and the consumer mindset. With increase in the number of

working women, very little time is available to them for leisure activities,

shopping being one of them, and there is increasing pressure on time. Therefore,

they are looking for the convenience of one stop shopping, and speed and

efficiency in the processing through which they can utilize their time in a better

manner. Consumers these days have also started paying attention to better

quality, hygiene as well as customer service. These changes in consumer

behaviour also compliment the development of the retailing industry

(http://www.afferguson.com/bulletin/ret-pri.htm).

Technological Factors

Developments in the technological factors have provided a new dimension to the

retail sector and the changing consumer shopping routine. It is technology that

differentiates organized retailing from the unorganized

(http://www.indianmba.com/Occasional_Papers/OP129/op129.html). The

introduction of point of sale equipment, bar codes and huge storage capacity for

billing and payment database has not only facilitated the management of large

set-ups with ease but it also allows operations to be recorded in a structured and

systematic way, enabling detailed analysis of the huge volume of sales and

133


transactions. As retail is becoming more and more organized huge investments

have to be planned for supply chain infrastructure. With this, information

sharing becomes important across the whole chain. Additionally, IT solutions are

required for inventory planning, elimination of wastes, mapping consumer

behaviour and trends, planning of merchandise sourcing, management of multi-

format stores and improved store experience.

With improvement in technology, consumers are being facilitataed as the

managers can now lay more emphasis on consumer needs. Flexibility in the

mode of payment and cashless transactions has helped in driving sales. Another

step which retailers are taking towards consumer satisfaction is by the means of

relationship marketing and improving delivery systems as well as enhancing

their response to customer demands

(http://icfaiuniversitypress.org/books/RetailIndustryChangeingTrends_ovw.as

p). Through this they are trying to retain their old customers by laying more

emphasis on customer preferences and contentment. They maintain a track of

loyal customers as they are now aware that it is cheaper to retain an existing

customer than to acquire a new one. Customers are being provided a lot of

convenience in terms of methods of payment and membership cards providing

134


offers and discounts for frequent customers

(http://www.etretailbiz.com/dec2002/specialfeat.html).

All these technological developments along with improved infrastructure and

better facilities like parking places, air conditioned atmosphere, elevators and

escalators, etc that are made available to the customers in a shopping mall, play a

significant role in pulling the customers towards the mall, making mall shopping

a success and thereby improving realty prospects in any area

(http://www.indianrealtynews.com/indian-states/).

135


APPENDIX II

QUESTIONNAIRE FOR INTERVIEW OF THE RETAILERS IN THE

MALL

1. How long has it been since you have opened the shop in this mall?

2. Why did you choose to open your outlet in the mall other than the

unorganized market?

3. Do you have another retail outlet other than in this mall?

4. Do you reach the targeted sales level in this outlet or as much as the other

outlets?

5. What do you do to attract customers to your outlet?

6. What do you think can be done to attract customers to a mall? What do

you think of anchor stores?

7. What do you think of consumers’ perception of mall shopping?

8. What benefits do consumers obtain from coming to a mall rather than the

unorganized market? What effect do these benefits have on sales?

9. If you have to open a new outlet, would you choose to open it in the

upcoming malls?

136


APPENDIX III

INTERVIEW QUESTIONNAIRES FOR CONSUMERS

1. Given the choice of shopping malls and unorganized local markets in

India, where do you go for shopping?

2. How frequently do you go for shopping and out of that how many times

do you go to malls?

3. Why do you shop in malls/ unorganized market?

4. Do you associate leisure activities with the shopping malls?

5. Do you go to malls for shopping, entertainment, eating out or socializing?

6. What all do you shop in malls and what all from the market?

7. Given a choice to going to the same shop in the mall and the unorganized

market, where would you go and what factors would effect your decision?

8. Does proximity to the mall affect your shopping decision?

9. Do you find a pricing difference in malls and unorganized market and

does it affect your shopping habits?

10. How important is the whole shopping experience, and how do you rate

the shopping experience in malls and in the unorganized markets?

11. Do you associate image with shopping in the shopping mall? Does it

influence your personality/ status?

137


12. Eventually with the constant growth in the number of malls, where would

you prefer to shop?

138

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