liberalisation & its impact on consumber behaviour in india?

Answer 1

More choices for consumers. It's Customer oriented and driven market. Customer is the king.

Answer 2

Spurring super-shopping
Simone Tata*

The world of retail merchandising has come a long way since the days when general stores, that stocked everything from groceries to stationery, and small shops that sold limited varieties of products, reigned supreme. There is a movement now from the unorganised to the organised sector. There are now more modern retail formats such as supermarkets and malls. Several companies are setting up exclusive showrooms and large format stores such as Westside and several others are expanding. The whole concept of shopping has altered in terms of format and consumer buying behaviour, ushering in a revolution in shopping in India.

These trends indicate that retailing, as an industry, has come into its own. According to a study by Economic Times Intelligence, the Confederation of Indian Industry and Tata Strategic Management Group, organised retail sales in India were Rs. 135 billion in 2000 and are estimated to grow to Rs 460 billion by the year 2005. Organised retail stores are characterised 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.

Taking their cue from foreign retail outlets with their focus on creative display of merchandise, a number of general stores donned a new garb. But the transformation was far from complete. The attitude remained the same. The traditional consumer, initially overawed by the new look and used to equating glitzy with expensive, refrained from entering the store. But newer consumer segments, including single women, collegians with allowances and working couples, enthusiastically took to the new concept.

A number of big players are entering the market. However, in spite of the momentum that the retail segment is experiencing, it is still seen as very nascent and unorganised. The per capita retailing space in India is very small in comparison with that in other countries.

There are many different retail stores in India -- convenience stores, supermarkets, hypermarkets, departmental stores, brand stores and discount stores. The consumer can choose between different stores for different needs.

Till the early nineties, the organised retail industry had not evolved. There was no consumer culture, there were limited brands and people bought what was available. There were no ‘shopping areas’. The retail industry lacked trained manpower. It was also difficult to compete with the unorganised sector because they operated with minimal labour costs and overheads. Tax laws and government restrictions added to the problem.

Liberalisation is changing all this. The customer has evolved. He has more spending power, is better educated, and most importantly, exposed to brands and products through television and foreign trips. The Indian customer now has the desire to acquire. Personal consumption is on the rise. Customer segments, already diverse, have been sub-divided with joint families giving way to nuclear families, and the increasing number of working couples.

These changes, along with increased availability of retail space and qualified manpower, have had a positive impact. New players are now entering the market.

In food retailing, the traditional method of shopping is changing. The Indian customer, who was used to shopping at the neighbourhood kirana, has a choice of going to a supermarket. While kiranas had their advantages — they sell goods on credit and offer home delivery service — they suffer due to shoddy display, poor hygiene and bad ambience.

The management of kiranas involves minimal labour costs since the entire family works there. The focus is on creating and retaining clients, since it is the only source of livelihood. The business passes hands down generations. As a result, shopping at a kirana, where the owner knows one’s shopping habits personally, has been ingrained in the psyche of the Indian consumer.

In contrast, a supermarket appeals because of its pleasant surroundings, better product display and the availability of a wide variety of brands. The store has accurate measure controls and allows economies of scale. A shopper also has the option of shopping for all household necessities under one roof.

In the days to come, supermarkets will face competition from kiranas. Perhaps, the Indian customer will go to the supermarket for his bulk needs and to his local store for his daily necessities.

A new concept in India is the hypermarket, exemplified in the Big Bazaar, the first of its kind in Mumbai. It is perceived as being successful because of its low pricing and the convenience of shopping for all items in one place.

The retailing boom in foodstuff has caught on only in urban India. Semi-urban areas, non-metros and rural areas are yet to feel the impact of retailing. Whether this will change will depend upon how near the supermarkets are located. Most people still associate supermarkets with "expensive" rather than "cost-effective". A number of stores have sought to counter this notion by projecting themselves as "value for money" stores.

In the apparel and consumer items segment, the retail industry has seen many changes. The Tata Group entered the retail industry in 1998 with Westside as it saw a growth opportunity in this sector. Today it has nine stores across the country. The metros now have exclusive shopping areas and upcoming malls.

Despite the aura associated with malls, they have not taken off on the scale they were expected due to space and cost constraints. Malls require a lot of real estate, something not easy to find in a prime location. The high overheads and labour costs make their setting up an even more expensive proposition.

The promoters of a mall must realise that they have to create a shopping destination. Globally, malls are built by real estate developers, who take the help of retail experts. Malls must have the right tenant mix so that the clientele gets a good blend of products. There cannot be designers and bargain corners in the same place.

It is too early to say whether malls will be successful in the long run. Most malls have many small shops with one or two anchor stores, consisting of the large format stores.

In the Indian context, success would involve attracting diverse customer segments, including nuclear families, working women etc to the mall. What would attract all these groups of buyers would be the wide choice and the comfort of being able to shop for everything in one place.

The only way in which the retailing industry can hold sway will be by being innovative and understanding the needs of the consumer. Since the scale is too large to build one-to-one relationships, the option is to create brand loyalty through promotions.

In order to achieve success, the retailing industry will also have to counter competition from the unorganised sector. Traditional retailing is too well established in India to be wiped out. Besides, traditional retailers have negligible real estate and labour costs and little or no taxes to pay. In contrast, players in the organised sector have big expenses to meet, and still have to keep prices low to be able to compete with the traditional sector.

Space and cost constraints have caused shopping areas to move to city suburbs. For instance, malls are being built in Gurgaon in the hope of drawing in customers from south Delhi. But once south Delhi gets its own malls, it will choke traffic that is going towards Gurgaon. The malls then become non-sustainable, unless they create a retail hook that will make people drive. Bluewater in London, built outside the city, is successful because the builders focused on tenant mix and designed the mall according to the tenants’ requirements. They also ensured all service facilities and amenities for customers, including ease of accessibility with good transport services.

There are other issues that are needed to make the retailing industry a force to reckon with. Qualified manpower is required to look after day-to-day operations and cater to the wide spectrum of customer expectations. A consumer research study, commissioned by Westside revealed that women in the south are smaller than those in the north. So the Westside store in Chennai stocks more small-sized garments. While retaining a common look and economies of scale across the country, you have to localise your products to suit the needs of customers.

Westside, which caters to the upper middle class segment, has built its customer base through its USP of affordable style. If customers are looking for style, they will probably go to Westside and buy something for Rs 400 rather than go to Mango (a UK-based chain). Another issue is convenience of parking space. Almost everyone in major metros has a car and doesn’t want to go through the hassle of finding parking space.

Success will depend on selecting the right location, which will depend on the customer target and store positioning, focus on merchandise in terms of the selection of suppliers, quality of goods and correct pricing and managing the inventory to ensure that products are available.

The store experience is what will bring the customer back. The layout should make browsing convenient, product display should encourage customers to try, and the billing interaction should be quick. The retailing industry also needs people with the right management skills to enable good customer interaction.

Also, one must remember that there is no right retail model. The perfect model is a question of management. The large scale of consumer diversity, in terms of size, geography, culture and socio-economic background, would necessitate a varied type of successful models.

Shopping in India is a family event and is seen as a kind of entertainment. In the West, departmental stores are spacious places, where one can shop at one’s own pace. In India, the per capita retailing space is very small. When entire families shop together, the store tends to get crowded.

Making the shopping experience more pleasurable seems to be the driving force in the retail industry. This is seen from the move to combine shopping with food and entertainment. But whether this combination will work will depend on customer segregation and needs.