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College of Business Administration
                   University of Rhode Island

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Standing up to Goliaths: How Small Traditional Stores Influence Brand
Choices in India

Atish Chattopadhyay, Nikhilesh Dholakia, Ruby Roy Dholakia


                                                   2010/2011               No. 7

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Standing up to Goliaths: How Small Traditional Stores
             Influence Brand Choices in India

Atish Chattopadhyay

Associate Professor, S.P. Jain Institute of Management and Research, Mumbai, India

Email: atishc@spjimr.org

Nikhilesh Dholakia

Professor, University of Rhode Island, Kingston, RI, USA

Email: nik@uri.edu

Ruby Roy Dholakia

Professor, University of Rhode Island, Kingston, RI, USA

Email: ruby@uri.edu

December 2010




                                                                                1|Page
Standing up to Goliaths: How Small Traditional Stores
             Influence Brand Choices in India

Summary
       Like other emerging and fast growing markets, India is experiencing major
transformations in its retailing sector. India, however, is also home to the largest number of
Small Traditional Stores (STS) in the world. Our research indicates that even as modern
retailing makes rapid inroads in India, most STS outlets are resilient in terms of their service
mix and remain competitive. Shoppers, even in large metro cities, are still loyal to
neighbourhood STS outlets. Based on the research themes found in our ongoing retail studies,
a mixed retail system comprising of large modern stores and STS outlets can be expected to
continue in India for the foreseeable future.


Keywords
India, Retailing, Retail Competition, Brand Choice, Traditional Store, Brand Management

Introduction
       It is well accepted that there are major transformations in retailing structures in
periods of rapid economic development (Reardon and Berdegué 2002). The wheel of retailing
and accordion theories (Hollander 1966) – used to explain retail evolution in the advanced
economies, particularly the United States – have limited relevance at current stages of
development of emerging economies. Traditional retail stores, which dominate in these
economies, differ significantly from the modern, organized sector along many dimensions
besides costs and margins. Studies of retail evolution in emerging economies like India
require examining of the impact of the organized sector on the traditional retail sector rather
than focus on competition between different formats within the organized, modern sector.

       In recent years, the “Walmart effect” has been proposed to explain the demise of
smaller, proprietary retail outlets in many advanced economies, including the United States.
This effect refers to the growth of multi-store retail outlets and the decline of independently
owned, smaller stores located in downtown and neighbourhood locations (Goetz and
Swaminathan 2006). Walmart, as the most successful large retailer, has come to symbolize
the dominance of this format. In addition, Walmart is seen to negatively affect large retail

                                                                                       2|Page
chains as well as supermarket chains (Franklin 2001). The dominance of Walmart is so
strong in the United States that it defines the very idea of ‘retail competition’: 67 percent of
all retail stores in the U.S. are located within 5 miles of a Walmart (Basker 2007). Since
Walmart has entered emerging markets such as China and Malaysia even before other multi-
store retail chains have fully evolved. While not allowed full-scale entry in India yet.
Walmart has achieved a toehold in the Indian retail sector through its joint venture with
Bharti. Retail evolution, therefore, has to account for the effect of multi-store retailers
generally and Walmart specifically.

       India is an exception in many respects. Aware of the historical changes in other
countries, the Indian government and the Indian private sector have taken proactive steps to
shape the retail evolution. To understand retail evolution in India as it is currently unfolding,
this paper examines changes in the retail sector. The paper is organized in the following way.
After a brief introduction of the Indian context, the next section outlines the methodological
elements that were employed in a major 4-city study as well as in supplemental fieldwork.
This is followed by a section on research findings, summarized in the form of emergent
themes. Concluding comments are offered at the end.


The Indian Context
       India is experiencing rapid transformations in its retail structure (Dholakia and Sinha
2004, Reardon and Gulati 2008, Srivastava 2008). India’s retail sector is expected to grow to
$635 billion by 2015. Population growth together with an increase in disposable incomes is
providing the impetus to this boom. Food retail in particular is going to experience significant
growth. Food and Grocery (F&G) segment constitutes 62% of the Indian retail market.

       India, however, is exceptional in terms of the massive size of the ‘unorganized retail’
sector composed of traditional retail stores. Despite the rapid growth of the large modern
retail sector, the bulk of retailing in India continues to happen via the small and traditional
General Trade Store (called “Kirana” stores in India, see Kumar and Vishvas 2010). In India,
all socioeconomic groups purchase their food and groceries from these general trade outlets,
and such stores constitute the basic entrepreneurial institutions in the country. For
international comparability, we would use the term Small Traditional Store (or STS) to
characterize such small general trade stores – keeping in mind that they take various locally-
adapted forms and names such as Tiendas in Latin America, Sari Sari stores in Southeast

                                                                                       3|Page
Asia, and Kirana stores in India. Such stores continue to compete successfully even as
modern retailing advances rapidly (Humphrey 2007, Traill 2006).

       Contemporary India has the largest number of ‘unorganized’ retail outlets or STS in
the world. As far as retail institutions are concerned, it is mainly the kirana stores and
government run public distribution shops (PDS) which serve the basic needs of most
consumers. Across-the-counter service rather than self service is the dominant format and
these stores sell food and grocery items in the form of fast moving consumer goods (FMCG)
at maximum retail price (MRP). Today, as far as numbers are concerned, it is the grocery
kirana stores which dominate, but in terms of value, it is the wet markets (agglomerations of
small retailers selling produce, meat, and fish) which account for about 70% of the Food and
Grocery (F&G) sale; only 0.8% is in the organized and modern sector.

       Such ‘unorganized sector’ stores are not necessarily unprofitable or badly managed.
Most such stores in fact are profitable, usually with a great locational convenience and
friendly service (Kumar and Vishvas 2010). The one major drawback of STS stores in India
is that they cannot offer highly discounted prices, as their purchase volumes are limited. Also,
in most traditional neighbourhood stores, space constraints restrict the stocking of a wide
assortment – and often the cramped store formats mean that the merchandise is invisible and
out of reach of the shoppers.

       Government policy has encouraged the introduction of domestic, large format modern
retailing, but not foreign owned. As a result, there has been a spate of new large, organized
store chains in India but most of these have been launched by industrial business houses
without prior experience in retailing.     While these stores are growing, STS, however,
continue to exist and offer valuable services, particularly to customers in lower income
neighbourhoods or interior parts of the country. Even in the most modern and urban settings,
such as Andheri West area of Mumbai – where outlets of all modern retail chains are present
within about two square kilometres – the most adaptive STS outlets continue to thrive.

       The STS-style retail outlets differ significantly from modern retail outlets. In addition
to size and location, the primary distinction is in the nature of direct in-store access to
products and brands. In modern outlets, self service is the norm and the store layout and
product display are all designed to facilitate shopper navigation and maximize shopper-
product interactions.   In the STS, on the other hand, in-store access is minimal. It is
                                                                                     4|Page
important, therefore, to understand, how in spite of these distinctions, general trade outlets
continue to retain shopper patronage. In other words, how does the STS ‘David’ survive in
the context of rise of multiple modern retail ‘Goliaths’?

       The goal of this paper is to understand the key influencing tactics that shoppers in the
General Trade STS sector are exposed to and the role of the shopkeeper in influencing
shoppers’ brand choices. We draw upon one major shopper behaviour study in STS stores in
four cities in India, supplemented by multiple completed as well as ongoing case studies of
STS and modern stores in India.


Methodological Elements
       This paper is part of a series of studies – some already carried out and others in
progress – to understand shopper behaviour in India’s small and large-format retail outlets,
and the examination and evaluation of shopper marketing and brand communication
strategies in the complex mixed-format retail scene of India. As already noted, we expect this
mixed format retail scene to continue for decades – well into the foreseeable future, and
beyond.

       Table 1 summarizes the methods used in the main as well as supplemental studies that
form the empirical bases for this paper.


STS Outlets in India: Emerging Themes
       Based on the major 4-city study of the STS outlets as well as past and ongoing
supplemental research on the retail sector of India, we are able to draw some distinct and
research-informed themes about the ways STS outlets serve their customers and the way
shoppers interact with such stores.

Familiarity Breeds Comfort: Convenience of STS Shopping
       The stores offer a variety of services, including credit, delivery, phone orders. The
biggest competitive advantage against modern retail stores is the ability of general stores to
cater to a wide spectrum of shoppers across socioeconomic classes. As the owner of a store
in Kolkata noted:

       …one can come dressed in only a towel to shop at my store; a shopper has to dress up
       to go to a modern store…
       The majority of these stores have regular customers who typically know what they
                                                                                      5|Page
will get from that store, where the product is located and how much it costs. Shoppers query
storekeepers only when they want to verify some aspect of the product that is not familiar to
the shopper. When a customer arrives, the storekeeper would usually ask the customer
questions to determine which variant the customer intends to buy. Most do not allow their
customers direct access to the product – the tactile aspects of self service shopping are
usually missing or minimally available.

Table 1: Summary of Methods and Research Approaches

4-City Multimethod Study of STS Outlets and Shoppers
Cities         Mumbai – Maharashtra or Western zone       Besides geographic
               (W), Kolkata – Eastern zone (E), Aligarh   distribution, the first two are
               – Northern zone (N), and Vizag –           large metro cities and the other
               Southern zone (S)                          two are smaller cities.
Methods        Observations of shopper behaviours,        Principal researchers were
Employed       personal interviews with individual        assisted by local research
               shoppers, in-depth interviews with general experts, and by trained
               trade store owners and operators, and      postgraduate-level field
               ethnographic sketching of shops and        observers
               neighbourhoods.
Data           Shopper Intercept Interviews;              Principal researchers actively
Collection     Accompanied Shopper Trips;                 involved in all phases
Methods        Observation: In-person, Photos, Video;
               Fieldnotes; Shopkeeper Interviews,
               Ethnographic Cases
Sample Sizes 16 stores (Kirana, chemists), 287 shopper Structured observation forms
               observations, 264 shopper intercept        and interview forms, plus
               interviews, 8 accompanied shopper trips    detailed fieldnotes
Supplemental Research Approaches for Studying Retailing in India
Pilot Study    Cities: Mumbai and Ahmedabad               Selected stores, shoppers
                                                          observed and interviewed
Case Studies Mainly in Mumbai – completed, ongoing        Approximately 30 stores
Introspection Self-reflective notes by one of the         Multiple locations in metro
               principal researcher who owned bakery      city of Kolkata (formerly
               stores in the past                         Calcutta)
Mall Case      Jalgaon, western India                     Field-based study of new mall
                                                          in a second tier city


       In general, we found support for the following key characteristics of general trade:

           •   An average store is quite small and a retailer is typically located very
               conveniently close to residential areas.
           •   Visual and physical navigation is constrained and verbal navigation is the
               common method by which a shopper participates in the process.

                                                                                    6|Page
•   Product assortment can be wide but not very deep.
           •   Product display allows more visual than tactile inspections.
           •   Personalized services, credit and delivery are conveniently available.
           •   Store hours are long and a high proportion of regular customers visit stores
               frequently.
       The stores at which the shoppers were interviewed were the stores normally
patronized by our respondents. They visited these stores frequently; location convenience
was the most important reason for patronizing the store.
       In India, 20 percent of the shoppers interviewed with a structured questionnaire
reported visiting the store at least once daily and 45 percent frequent the store once a week.
Location convenience was the most important reason for patronizing the store.




Planned and Unplanned Shopping: Role of STS
       The shoppers at these general trade stores not only frequent them regularly and often,
they also occasionally buy packaged goods from more modern, big stores. A few of them (a
small minority at this juncture), however, go to modern big stores regularly – especially in
the largest metro city, Mumbai. We identified five distinct shopping missions undertaken in
the STS outlets:

   •   Comprehensive/Main Shopping: Large planned grocery shopping undertaken
       regularly, usually monthly
   •   Replenishment or Top-up: Trip triggered by need to top-up grocery shopping
   •   Meal for the Day: Buying items for consumption on the same day or within one or
       within one or two days. For example, sachets of shampoo
   •   Emergency: Items needed immediately


                                                                                    7|Page
In terms of the corner general stores, the shoppers regularly place their monthly
requirements in one large order and supplement that with shopping trips for specific items.
Ordering by phone is not very common, occurring occasionally and home delivery also
occurs occasionally. Most shoppers carry their purchases themselves. Ordering of items by
phone and home delivery of merchandise by the STS retailer, however, have increased in
major metro cities like Mumbai and Delhi.

Brand Specification, Targeted Transactions
       In nearly 65% of observed shopping in India the brand and brand-plus-SKU was
specified by the shopper in the first action itself. Here is a relevant comment from a Mumbai
shopper:

       However I specified the brands for each product, i.e., Maggie-tomato sauce (500 gm),
       Nescafe-coffee (100gm), Mother’s Recipe pickle (350 gm), Kissan orange squash
       (750ml).


       When the shopper is not the decision maker, the brand is specified by the user or the
decision maker from home.

       Even though I live with my mother, my mother buys her own shampoo. Her brand is
       Pantene. Sometimes she asks my children to buy her shampoo in sachets from the
       store.



       The specific transaction that featured most in our intercept interviews in the 4-city
study entailed few items per shopper. In most cases, the shopper knew exactly the brand and
even the brand variant (the Stock Keeping Unit or SKU) of the desired item and called it out
to the shopkeeper or shopkeeper’s assistant.

       I entered the shop, Good Luck General Stores, located 200 meters from my residence,
       and was welcomed by the shopkeeper and his assistant. The assistant inquired about
       the products that I wanted to buy. I took out the list of monthly household items that I
       had prepared and then asked the assistant to note down the items (Mumbai shopper).



       Around 44 percent of shoppers bought for the entire family and 40 percent of
shoppers made their monthly comprehensive purchase from these stores. About 34% of the



                                                                                     8|Page
shoppers came with a list of items to be purchased; they called out the products they wanted
to buy.

          I first make a list of things to be bought as it gives me a clear picture of my budget
          (Vizag shopper).



          The shopping trips were successful in the sense over 90% of the shoppers interviewed
purchased everything they wanted. The transaction value was small – an average of Rs. 270 –
but it was larger among those who came with a list (Rs. 452) than for those who did not come
with a list (Rs. 174).

Wait Time, Limited Access: Some STS Negatives
          Given the physical characteristics of general stores where most shoppers do not have
direct access to product shelves, the interaction is at-the-store rather than in-the-store.
Waiting to get the shopkeeper’s attention is quite common at various stages of the purchasing
process. Even when there is no initial waiting time, the shopper usually has to wait for one or
more items to be fetched. This creates “waiting time windows” ranging from under a minute
to several minutes, depending on how busy the store is.

          Some people try to minimize waiting time in various ways including going to the
store when they think the shopkeeper will be relatively free, leaving the list of items with the
shopkeeper, picking up the items later or asking for delivery. Visual scanning of
displays/POP materials by the shopper is very common while the shopper waits for
shopkeeper attention.

Rising Importance of Display/POP in STS
          Even though brand specification is high, we observed considerable visual scanning of
Point-of-Purchase (POP) material and visible display items during the “waiting time
windows”. Our research suggested 33 percent of all shoppers scan POP of which 47 percent
made purchases. Of purchases in these stores studied in our intercept interviews, 34 percent
were unplanned – and of these, 39 percent were POP reminded.
          In particular, we observed instances of:
          •   Display-influenced addition of items to the purchase bundle;
          •   POP-influenced addition of items to the purchase bundle;

                                                                                     9|Page
•    Deal-oriented POPs leading to deal-related inquiry, purchase;
       •    Display shelf or POP reminding shoppers of items they forgot to put on the list;
       •    Shopper pointing to specific items that are visible;
       •    Shopkeeper pointing to visible items to show what is available;
       •    Shopper reaching and self-selecting items for purchase.
       These in-store signs and displays perform several valuable roles and the shoppers’
comments from various Indian cities indicate that they are very conscious of these functions
and actively seek them out:


       After I had finished dictating the list I ran my eyes over all the shelves in the shop to
       see if I had missed out anything and to check out any new arrivals (Mumbai shopper).
       Although I try to carry a list of things most of the time, the goods displayed on the
       shelves also serve to remind me of things to buy sometimes (Kolkata shopper).

Shopkeeper Relationships and Recommendations
       The relationships between shopkeepers and shoppers appear to be of the
identification-based trust type. The general stores have close and long relationships with their
shoppers with average length of store patronage being 9 years. The owners of the stores
usually appear to know more than 100 of their regular shoppers by name. Credit is often
extended based on personal relationships. The store also charged less than Maximum Retail
Price (MRP, printed by law in India) to their regular shoppers.

       In this type of relationship, both parties come to closely identify with each other’s
wants and needs, display empathy, and engage in personal and family-related conversations.
Some of the relationships have been established over many years, as these comments
indicate:

       Meanwhile the shopkeeper as well as his assistant kept on suggesting other items, not
       included in the list, to enable me to recollect any item that I might have missed out
       like tomato sauce, coffee, pickle, orange squash and the newly arrived 5-in-1 grain
       biscuits of Britannia all of which I asked to be included in the list (Mumbai shopper).
       The shopkeeper is well acquainted with my husband. My husband visits this shop
       often, as the shopkeeper is an old man who besides exchanging pleasantries with my
       husband almost always offers him a chair to sit upon and take rest. When he saw me
       approaching he stepped forward to offer me a chair and inquired about my husband’s
       health (Kolkata shopper).
       I am purchasing my monthly supplies from the same shop for the last 13 years after
       experimenting with all leading shops of the area and I came to the conclusion that at
                                                                                    10 | P a g e
this shop you get not only the variety but also the quality and also you are well
       attended and there is lots of space in the shop so you can stand easily (Aligarh
       shopper).


       Shopper-shopkeeper relationships had multiple impacts on the nature of transactions.
Deeper relations resulted in a variety of observed behaviours such as:

       •    Credit sales and purchases
       •    Money being deposited with the store in advance (the opposite of credit sales)
       •    Arrangements for later item pickups (after work, after other shopping)
       •    Home delivery arrangements
       •    Telephone ordering and delivery
       •    Reliance on shopkeeper for brand, SKU, and substitute recommendations
       •    Relying on a surrogate (servant, others) doing appropriate shopping
       •    Shopkeeper making efforts to procure out-of-stock or special need items
       •    Children being offered freebie treats
       •    Even instances of children being left at store for “babysitting” for a little while



       The product related information exchange – whether in response to shopper queries or
information volunteered and offered by the shopkeeper – varied in credibility, depending on
the relationship between the store and the shopper. When the shopper-store relationship was
strong, the product information from the shopkeeper was perceived as highly credible. The
shopkeeper was seen as looking out for the customer's interest. In around 6 percent cases the
brand asked for by the shopper was out-of stock. In two-thirds of such cases, however, the
shopper accepted the alternative brand suggested by the shopkeeper. In some cases, the
shopkeepers cemented the credibility further by offering a personal guarantee or additional
services:

       I inquire the shopkeeper about the validity and reliability of the advertised new
       product. A little conversation with the shopkeeper gives me knowledge about the
       particular brand. Being a regular shopper is an advantage over others in that the
       shopkeeper sometimes supports me with advice about buying the new product or not
       (Aligarh shopper).
       For the past one year the shopkeeper himself rings up to inform about any new offers
       on products available at the store. So he feels that for him this store is the best in this
       locality (Vizag shopper).
                                                                                       11 | P a g e
I made the payment and was about to leave when he asked whether I wanted potatoes
        or onion. I said I didn’t, but added that I was going to buy 2kgs of green peas from the
        vegetable seller which also his assistant would have to carry home for me. He agreed
        (Kolkata shopper).

Theoretical Implications
        Theories of retail evolution have to be reformulated in order to take into account the
nature of retail competition occurring between the unorganized and organized sector in India
in addition to changes occurring within the organized sector. Furthermore, because of
government policy, ownership structure – foreign vs. domestic – has added a further twist to
retail evolution in India. It would appear that retail specialists are currently more dominant in
the urban markets; however, their presence has to consider government policy which has –
hitherto – allowed entry of only single-brand, foreign-owned retailing (such as, for example,
Ermengildo Zegna apparel). The role of government policy in shaping retail evolution has
not played a big part in existing theories of retail evolution to date, and this is a fertile area
for future research.


Managerial and Policy Implications
        Both managerial and public policies have benefited from past developments in retail
institutions in other advanced and emerging markets. Branded manufacturers like Unilever,
Procter & Gamble, Colgate-Palmolive – who have seen their channel power erode as a result
of the growth of large-scale, multi-store retailing in other countries; and specifically because
of the Walmart effect – have started to take initiatives to protect their channel power. As
large, organized retailers extract more favourable terms of trade from these manufacturers,
the STS sector becomes even more important to these manufacturers. Several initiatives
attempt to improve the market standing of these general trade stores. For example, Unilever
awards the “Super Value” store distinction to their best performing STS outlets, who are
given special incentives to not only promote the brands but also offered higher margins and
new product introductions to increase their competitiveness with larger stores.

        Retailers who are investing in multi-store, large scale organized stores have also
benefitted from past experience and have started to extract better terms of trade from these
manufacturers at a much earlier stage of retail evolution. Private labels are also being
introduced at a much earlier stages shaping the influence of brands (national vs. private) and



                                                                                         12 | P a g e
customer loyalty. With the power of customer relationship management tools, these retailers
are shaping the customer experiences at a much earlier stage of retail evolution.

       At the same time, these large-scale retailers have to consider the nature of the Indian
consumers. The entry of Reliance Retail and Bharti-Walmart has been based on low prices.
Reliance Retail, for instance, offers several different products to the end consumers at prices
that are 15-20% cheaper than the ongoing market rate at the Kirana stores.           This has put
tremendous pressure on retail margins and the question remains whether the value-conscious,
Indian consumer will also incur the travel and time costs to shop regularly in the large-scale
retail stores. Furthermore, the frequency of shopping and different shopping missions leads
consumers who have accepted the large format stores to split their purchases and patronize
both large supermarkets and neighbourhood stores. There is an open question whether the
share of the consumer wallet will favour the large-format or the neighbourhood stores.

       Public policy is taking these developments into consideration as well. In India, the
size of the unorganized sector and its ‘employment’ of massive numbers of people, has
prompted political concerns. A study by the Indian Council of Research on International
Economic Relations has concluded that – with the entry of large organized retail chain outlets
– unorganized retailers in vicinity of organized retailers have undergone a decline in their
volume and business profit initially. But this negative impact on sales and profit has
decreased over time. The data from international studies is similarly mixed. A recent study
conducted in Florida suggests that entry and exit rates of small stores depend on proximity to
Walmart as well as specific product overlap (Paruchiri et al. 2009).           In Asia, with the
exception of Hong Kong, Singapore and Malaysia, traditional channels still control more than
half of the grocery retail market. The experience in China and Indonesia shows, however, that
– while both organized and unorganized sectors exists and grow for the first 5-10 years,
although at different rates – the structural changes create an adverse impact on the
unorganized sector after the share of the organized retail reaches 25%-30%.

       In India, the active role of Government policy has resulted in protection of the
traditional retailer, at least in the short term, from the threat posed by large foreign retailers.
Foreign investment in wholesale operations, for instance, as in the case of the German
multinational chain Metro cash-and-carry, is an attempt to allow the economies of scale to
benefit the traditional retailers. Similarly, single-brand foreign retailing, has been allowed

                                                                                      13 | P a g e
since it poses no threat to STS, and yet allows affluent, urban consumers to benefit from the
quality and product assortment of these modern retailers.

       As a result of all these forces, the threat posed by self-service modern retailers is
unlikely to eliminate the STS sector in the immediate future. Both the shopper and the retail
systems are in transition and will remain so for the foreseeable future. Even in the most
advanced urban settings there are no “true modern shoppers” – shoppers divide their custom
between modern stores and STS.


Concluding Observations
       Our research suggests that even in markets where there are modern retail outlets,
consumers continue to shop at these traditional stores. Consumers in the large Indian cities
are starved for time and the percentage of grocery shopping is the highest from the
neighbourhood store.

       The general trade offers the convenience of taking orders over phone and making
home delivery which enables these stores to get a sizeable comprehensive shopping even at
places where modern trade retailers are present in close proximity.

       General trade retail – as was the case in the past, prior to the rise of modern retail
formats – continues to get the major chunk of emergency and replenishment shopping due to
the convenient location of STS outlets. The provision of home delivery services by larger
STS retailers and the extending of credit to their regular shoppers, often even by very small
STS outlets, also help the STS format stores to be resilient in the face of modern, large-scale
competition.

       A vast majority of Indians are employed in the unorganised sector. Such workers have
no fixed income. These consumers are daily wage earners and small business owners who
make regular purchases for daily consumption. This group is catered to by the general trade
stores as they stock smaller SKUs like sachets, extend credit and also offer a small discount
on the MRP. From a social policy perspective also, therefore, it is unlikely that large-scale
modern retailing will be allowed to have a Walmart-style free reign in the fast-evolving retail
sector of India.




                                                                                   14 | P a g e
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        (2), 163-174.




                                                                                  15 | P a g e
Founded in 1892, the University of Rhode Island is one of eight land, urban, and sea grant
                    universities in the United States. The 1,200-acre rural campus is less
                    than ten miles from Narragansett Bay and highlights its traditions of
                    natural resource, marine and urban related research. There are over
                    14,000 undergraduate and graduate students enrolled in seven degree-
                    granting colleges representing 48 states and the District of Columbia.
                    More than 500 international students represent 59 different countries.
                    Eighteen percent of the freshman class graduated in the top ten percent
                    of their high school classes. The teaching and research faculty numbers
                    over 600 and the University offers 101 undergraduate programs and 86
                    advanced degree programs. URI students have received Rhodes,
Fulbright, Truman, Goldwater, and Udall scholarships. There are over 80,000 active alumnae.

       The University of Rhode Island started to offer undergraduate business
administration courses in 1923. In 1962, the MBA program was introduced and the PhD
program began in the mid 1980s. The College of Business Administration is accredited by
The AACSB International - The Association to Advance Collegiate Schools of Business in
1969. The College of Business enrolls over 1400 undergraduate students and more than 300
graduate students.

                                          Mission

    Our responsibility is to provide strong academic programs that instill excellence,
    confidence and strong leadership skills in our graduates. Our aim is to (1)
    promote critical and independent thinking, (2) foster personal responsibility and
    (3) develop students whose performance and commitment mark them as leaders
    contributing to the business community and society. The College will serve as a
    center for business scholarship, creative research and outreach activities to the
    citizens and institutions of the State of Rhode Island as well as the regional,
    national and international communities.




    The creation of this working paper series
    has been funded by an endowment
    established by William A. Orme, URI
    College of Business Administration,
    Class of 1949 and former head of the
    General Electric Foundation. This working
    paper series is intended to permit faculty
    members to obtain feedback on research
    activities before the research is submitted to
    academic and professional journals and
    professional associations for presentations.                        Ballentine Hall
                                                                           Quadrangle
    An award is presented annually for the most                  Univ. of Rhode Island
    outstanding paper submitted.                                Kingston, Rhode Island

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Standing up to Goliaths: How Small Traditional Stores Influence Brand Choices in India

  • 1. College of Business Administration University of Rhode Island William A. Orme WORKING PAPER SERIES encouraging creative research Standing up to Goliaths: How Small Traditional Stores Influence Brand Choices in India Atish Chattopadhyay, Nikhilesh Dholakia, Ruby Roy Dholakia 2010/2011 No. 7 Office of the Dean This working paper series is intended to College of Business Administration facilitate discussion and encourage the Ballentine Hall exchange of ideas. Inclusion here does not 7 Lippitt Road preclude publication elsewhere. Kingston, RI 02881 It is the original work of the author(s) and 401-874-2337 subject to copyright regulations. www.cba.uri.edu
  • 2. Standing up to Goliaths: How Small Traditional Stores Influence Brand Choices in India Atish Chattopadhyay Associate Professor, S.P. Jain Institute of Management and Research, Mumbai, India Email: atishc@spjimr.org Nikhilesh Dholakia Professor, University of Rhode Island, Kingston, RI, USA Email: nik@uri.edu Ruby Roy Dholakia Professor, University of Rhode Island, Kingston, RI, USA Email: ruby@uri.edu December 2010 1|Page
  • 3. Standing up to Goliaths: How Small Traditional Stores Influence Brand Choices in India Summary Like other emerging and fast growing markets, India is experiencing major transformations in its retailing sector. India, however, is also home to the largest number of Small Traditional Stores (STS) in the world. Our research indicates that even as modern retailing makes rapid inroads in India, most STS outlets are resilient in terms of their service mix and remain competitive. Shoppers, even in large metro cities, are still loyal to neighbourhood STS outlets. Based on the research themes found in our ongoing retail studies, a mixed retail system comprising of large modern stores and STS outlets can be expected to continue in India for the foreseeable future. Keywords India, Retailing, Retail Competition, Brand Choice, Traditional Store, Brand Management Introduction It is well accepted that there are major transformations in retailing structures in periods of rapid economic development (Reardon and Berdegué 2002). The wheel of retailing and accordion theories (Hollander 1966) – used to explain retail evolution in the advanced economies, particularly the United States – have limited relevance at current stages of development of emerging economies. Traditional retail stores, which dominate in these economies, differ significantly from the modern, organized sector along many dimensions besides costs and margins. Studies of retail evolution in emerging economies like India require examining of the impact of the organized sector on the traditional retail sector rather than focus on competition between different formats within the organized, modern sector. In recent years, the “Walmart effect” has been proposed to explain the demise of smaller, proprietary retail outlets in many advanced economies, including the United States. This effect refers to the growth of multi-store retail outlets and the decline of independently owned, smaller stores located in downtown and neighbourhood locations (Goetz and Swaminathan 2006). Walmart, as the most successful large retailer, has come to symbolize the dominance of this format. In addition, Walmart is seen to negatively affect large retail 2|Page
  • 4. chains as well as supermarket chains (Franklin 2001). The dominance of Walmart is so strong in the United States that it defines the very idea of ‘retail competition’: 67 percent of all retail stores in the U.S. are located within 5 miles of a Walmart (Basker 2007). Since Walmart has entered emerging markets such as China and Malaysia even before other multi- store retail chains have fully evolved. While not allowed full-scale entry in India yet. Walmart has achieved a toehold in the Indian retail sector through its joint venture with Bharti. Retail evolution, therefore, has to account for the effect of multi-store retailers generally and Walmart specifically. India is an exception in many respects. Aware of the historical changes in other countries, the Indian government and the Indian private sector have taken proactive steps to shape the retail evolution. To understand retail evolution in India as it is currently unfolding, this paper examines changes in the retail sector. The paper is organized in the following way. After a brief introduction of the Indian context, the next section outlines the methodological elements that were employed in a major 4-city study as well as in supplemental fieldwork. This is followed by a section on research findings, summarized in the form of emergent themes. Concluding comments are offered at the end. The Indian Context India is experiencing rapid transformations in its retail structure (Dholakia and Sinha 2004, Reardon and Gulati 2008, Srivastava 2008). India’s retail sector is expected to grow to $635 billion by 2015. Population growth together with an increase in disposable incomes is providing the impetus to this boom. Food retail in particular is going to experience significant growth. Food and Grocery (F&G) segment constitutes 62% of the Indian retail market. India, however, is exceptional in terms of the massive size of the ‘unorganized retail’ sector composed of traditional retail stores. Despite the rapid growth of the large modern retail sector, the bulk of retailing in India continues to happen via the small and traditional General Trade Store (called “Kirana” stores in India, see Kumar and Vishvas 2010). In India, all socioeconomic groups purchase their food and groceries from these general trade outlets, and such stores constitute the basic entrepreneurial institutions in the country. For international comparability, we would use the term Small Traditional Store (or STS) to characterize such small general trade stores – keeping in mind that they take various locally- adapted forms and names such as Tiendas in Latin America, Sari Sari stores in Southeast 3|Page
  • 5. Asia, and Kirana stores in India. Such stores continue to compete successfully even as modern retailing advances rapidly (Humphrey 2007, Traill 2006). Contemporary India has the largest number of ‘unorganized’ retail outlets or STS in the world. As far as retail institutions are concerned, it is mainly the kirana stores and government run public distribution shops (PDS) which serve the basic needs of most consumers. Across-the-counter service rather than self service is the dominant format and these stores sell food and grocery items in the form of fast moving consumer goods (FMCG) at maximum retail price (MRP). Today, as far as numbers are concerned, it is the grocery kirana stores which dominate, but in terms of value, it is the wet markets (agglomerations of small retailers selling produce, meat, and fish) which account for about 70% of the Food and Grocery (F&G) sale; only 0.8% is in the organized and modern sector. Such ‘unorganized sector’ stores are not necessarily unprofitable or badly managed. Most such stores in fact are profitable, usually with a great locational convenience and friendly service (Kumar and Vishvas 2010). The one major drawback of STS stores in India is that they cannot offer highly discounted prices, as their purchase volumes are limited. Also, in most traditional neighbourhood stores, space constraints restrict the stocking of a wide assortment – and often the cramped store formats mean that the merchandise is invisible and out of reach of the shoppers. Government policy has encouraged the introduction of domestic, large format modern retailing, but not foreign owned. As a result, there has been a spate of new large, organized store chains in India but most of these have been launched by industrial business houses without prior experience in retailing. While these stores are growing, STS, however, continue to exist and offer valuable services, particularly to customers in lower income neighbourhoods or interior parts of the country. Even in the most modern and urban settings, such as Andheri West area of Mumbai – where outlets of all modern retail chains are present within about two square kilometres – the most adaptive STS outlets continue to thrive. The STS-style retail outlets differ significantly from modern retail outlets. In addition to size and location, the primary distinction is in the nature of direct in-store access to products and brands. In modern outlets, self service is the norm and the store layout and product display are all designed to facilitate shopper navigation and maximize shopper- product interactions. In the STS, on the other hand, in-store access is minimal. It is 4|Page
  • 6. important, therefore, to understand, how in spite of these distinctions, general trade outlets continue to retain shopper patronage. In other words, how does the STS ‘David’ survive in the context of rise of multiple modern retail ‘Goliaths’? The goal of this paper is to understand the key influencing tactics that shoppers in the General Trade STS sector are exposed to and the role of the shopkeeper in influencing shoppers’ brand choices. We draw upon one major shopper behaviour study in STS stores in four cities in India, supplemented by multiple completed as well as ongoing case studies of STS and modern stores in India. Methodological Elements This paper is part of a series of studies – some already carried out and others in progress – to understand shopper behaviour in India’s small and large-format retail outlets, and the examination and evaluation of shopper marketing and brand communication strategies in the complex mixed-format retail scene of India. As already noted, we expect this mixed format retail scene to continue for decades – well into the foreseeable future, and beyond. Table 1 summarizes the methods used in the main as well as supplemental studies that form the empirical bases for this paper. STS Outlets in India: Emerging Themes Based on the major 4-city study of the STS outlets as well as past and ongoing supplemental research on the retail sector of India, we are able to draw some distinct and research-informed themes about the ways STS outlets serve their customers and the way shoppers interact with such stores. Familiarity Breeds Comfort: Convenience of STS Shopping The stores offer a variety of services, including credit, delivery, phone orders. The biggest competitive advantage against modern retail stores is the ability of general stores to cater to a wide spectrum of shoppers across socioeconomic classes. As the owner of a store in Kolkata noted: …one can come dressed in only a towel to shop at my store; a shopper has to dress up to go to a modern store… The majority of these stores have regular customers who typically know what they 5|Page
  • 7. will get from that store, where the product is located and how much it costs. Shoppers query storekeepers only when they want to verify some aspect of the product that is not familiar to the shopper. When a customer arrives, the storekeeper would usually ask the customer questions to determine which variant the customer intends to buy. Most do not allow their customers direct access to the product – the tactile aspects of self service shopping are usually missing or minimally available. Table 1: Summary of Methods and Research Approaches 4-City Multimethod Study of STS Outlets and Shoppers Cities Mumbai – Maharashtra or Western zone Besides geographic (W), Kolkata – Eastern zone (E), Aligarh distribution, the first two are – Northern zone (N), and Vizag – large metro cities and the other Southern zone (S) two are smaller cities. Methods Observations of shopper behaviours, Principal researchers were Employed personal interviews with individual assisted by local research shoppers, in-depth interviews with general experts, and by trained trade store owners and operators, and postgraduate-level field ethnographic sketching of shops and observers neighbourhoods. Data Shopper Intercept Interviews; Principal researchers actively Collection Accompanied Shopper Trips; involved in all phases Methods Observation: In-person, Photos, Video; Fieldnotes; Shopkeeper Interviews, Ethnographic Cases Sample Sizes 16 stores (Kirana, chemists), 287 shopper Structured observation forms observations, 264 shopper intercept and interview forms, plus interviews, 8 accompanied shopper trips detailed fieldnotes Supplemental Research Approaches for Studying Retailing in India Pilot Study Cities: Mumbai and Ahmedabad Selected stores, shoppers observed and interviewed Case Studies Mainly in Mumbai – completed, ongoing Approximately 30 stores Introspection Self-reflective notes by one of the Multiple locations in metro principal researcher who owned bakery city of Kolkata (formerly stores in the past Calcutta) Mall Case Jalgaon, western India Field-based study of new mall in a second tier city In general, we found support for the following key characteristics of general trade: • An average store is quite small and a retailer is typically located very conveniently close to residential areas. • Visual and physical navigation is constrained and verbal navigation is the common method by which a shopper participates in the process. 6|Page
  • 8. Product assortment can be wide but not very deep. • Product display allows more visual than tactile inspections. • Personalized services, credit and delivery are conveniently available. • Store hours are long and a high proportion of regular customers visit stores frequently. The stores at which the shoppers were interviewed were the stores normally patronized by our respondents. They visited these stores frequently; location convenience was the most important reason for patronizing the store. In India, 20 percent of the shoppers interviewed with a structured questionnaire reported visiting the store at least once daily and 45 percent frequent the store once a week. Location convenience was the most important reason for patronizing the store. Planned and Unplanned Shopping: Role of STS The shoppers at these general trade stores not only frequent them regularly and often, they also occasionally buy packaged goods from more modern, big stores. A few of them (a small minority at this juncture), however, go to modern big stores regularly – especially in the largest metro city, Mumbai. We identified five distinct shopping missions undertaken in the STS outlets: • Comprehensive/Main Shopping: Large planned grocery shopping undertaken regularly, usually monthly • Replenishment or Top-up: Trip triggered by need to top-up grocery shopping • Meal for the Day: Buying items for consumption on the same day or within one or within one or two days. For example, sachets of shampoo • Emergency: Items needed immediately 7|Page
  • 9. In terms of the corner general stores, the shoppers regularly place their monthly requirements in one large order and supplement that with shopping trips for specific items. Ordering by phone is not very common, occurring occasionally and home delivery also occurs occasionally. Most shoppers carry their purchases themselves. Ordering of items by phone and home delivery of merchandise by the STS retailer, however, have increased in major metro cities like Mumbai and Delhi. Brand Specification, Targeted Transactions In nearly 65% of observed shopping in India the brand and brand-plus-SKU was specified by the shopper in the first action itself. Here is a relevant comment from a Mumbai shopper: However I specified the brands for each product, i.e., Maggie-tomato sauce (500 gm), Nescafe-coffee (100gm), Mother’s Recipe pickle (350 gm), Kissan orange squash (750ml). When the shopper is not the decision maker, the brand is specified by the user or the decision maker from home. Even though I live with my mother, my mother buys her own shampoo. Her brand is Pantene. Sometimes she asks my children to buy her shampoo in sachets from the store. The specific transaction that featured most in our intercept interviews in the 4-city study entailed few items per shopper. In most cases, the shopper knew exactly the brand and even the brand variant (the Stock Keeping Unit or SKU) of the desired item and called it out to the shopkeeper or shopkeeper’s assistant. I entered the shop, Good Luck General Stores, located 200 meters from my residence, and was welcomed by the shopkeeper and his assistant. The assistant inquired about the products that I wanted to buy. I took out the list of monthly household items that I had prepared and then asked the assistant to note down the items (Mumbai shopper). Around 44 percent of shoppers bought for the entire family and 40 percent of shoppers made their monthly comprehensive purchase from these stores. About 34% of the 8|Page
  • 10. shoppers came with a list of items to be purchased; they called out the products they wanted to buy. I first make a list of things to be bought as it gives me a clear picture of my budget (Vizag shopper). The shopping trips were successful in the sense over 90% of the shoppers interviewed purchased everything they wanted. The transaction value was small – an average of Rs. 270 – but it was larger among those who came with a list (Rs. 452) than for those who did not come with a list (Rs. 174). Wait Time, Limited Access: Some STS Negatives Given the physical characteristics of general stores where most shoppers do not have direct access to product shelves, the interaction is at-the-store rather than in-the-store. Waiting to get the shopkeeper’s attention is quite common at various stages of the purchasing process. Even when there is no initial waiting time, the shopper usually has to wait for one or more items to be fetched. This creates “waiting time windows” ranging from under a minute to several minutes, depending on how busy the store is. Some people try to minimize waiting time in various ways including going to the store when they think the shopkeeper will be relatively free, leaving the list of items with the shopkeeper, picking up the items later or asking for delivery. Visual scanning of displays/POP materials by the shopper is very common while the shopper waits for shopkeeper attention. Rising Importance of Display/POP in STS Even though brand specification is high, we observed considerable visual scanning of Point-of-Purchase (POP) material and visible display items during the “waiting time windows”. Our research suggested 33 percent of all shoppers scan POP of which 47 percent made purchases. Of purchases in these stores studied in our intercept interviews, 34 percent were unplanned – and of these, 39 percent were POP reminded. In particular, we observed instances of: • Display-influenced addition of items to the purchase bundle; • POP-influenced addition of items to the purchase bundle; 9|Page
  • 11. Deal-oriented POPs leading to deal-related inquiry, purchase; • Display shelf or POP reminding shoppers of items they forgot to put on the list; • Shopper pointing to specific items that are visible; • Shopkeeper pointing to visible items to show what is available; • Shopper reaching and self-selecting items for purchase. These in-store signs and displays perform several valuable roles and the shoppers’ comments from various Indian cities indicate that they are very conscious of these functions and actively seek them out: After I had finished dictating the list I ran my eyes over all the shelves in the shop to see if I had missed out anything and to check out any new arrivals (Mumbai shopper). Although I try to carry a list of things most of the time, the goods displayed on the shelves also serve to remind me of things to buy sometimes (Kolkata shopper). Shopkeeper Relationships and Recommendations The relationships between shopkeepers and shoppers appear to be of the identification-based trust type. The general stores have close and long relationships with their shoppers with average length of store patronage being 9 years. The owners of the stores usually appear to know more than 100 of their regular shoppers by name. Credit is often extended based on personal relationships. The store also charged less than Maximum Retail Price (MRP, printed by law in India) to their regular shoppers. In this type of relationship, both parties come to closely identify with each other’s wants and needs, display empathy, and engage in personal and family-related conversations. Some of the relationships have been established over many years, as these comments indicate: Meanwhile the shopkeeper as well as his assistant kept on suggesting other items, not included in the list, to enable me to recollect any item that I might have missed out like tomato sauce, coffee, pickle, orange squash and the newly arrived 5-in-1 grain biscuits of Britannia all of which I asked to be included in the list (Mumbai shopper). The shopkeeper is well acquainted with my husband. My husband visits this shop often, as the shopkeeper is an old man who besides exchanging pleasantries with my husband almost always offers him a chair to sit upon and take rest. When he saw me approaching he stepped forward to offer me a chair and inquired about my husband’s health (Kolkata shopper). I am purchasing my monthly supplies from the same shop for the last 13 years after experimenting with all leading shops of the area and I came to the conclusion that at 10 | P a g e
  • 12. this shop you get not only the variety but also the quality and also you are well attended and there is lots of space in the shop so you can stand easily (Aligarh shopper). Shopper-shopkeeper relationships had multiple impacts on the nature of transactions. Deeper relations resulted in a variety of observed behaviours such as: • Credit sales and purchases • Money being deposited with the store in advance (the opposite of credit sales) • Arrangements for later item pickups (after work, after other shopping) • Home delivery arrangements • Telephone ordering and delivery • Reliance on shopkeeper for brand, SKU, and substitute recommendations • Relying on a surrogate (servant, others) doing appropriate shopping • Shopkeeper making efforts to procure out-of-stock or special need items • Children being offered freebie treats • Even instances of children being left at store for “babysitting” for a little while The product related information exchange – whether in response to shopper queries or information volunteered and offered by the shopkeeper – varied in credibility, depending on the relationship between the store and the shopper. When the shopper-store relationship was strong, the product information from the shopkeeper was perceived as highly credible. The shopkeeper was seen as looking out for the customer's interest. In around 6 percent cases the brand asked for by the shopper was out-of stock. In two-thirds of such cases, however, the shopper accepted the alternative brand suggested by the shopkeeper. In some cases, the shopkeepers cemented the credibility further by offering a personal guarantee or additional services: I inquire the shopkeeper about the validity and reliability of the advertised new product. A little conversation with the shopkeeper gives me knowledge about the particular brand. Being a regular shopper is an advantage over others in that the shopkeeper sometimes supports me with advice about buying the new product or not (Aligarh shopper). For the past one year the shopkeeper himself rings up to inform about any new offers on products available at the store. So he feels that for him this store is the best in this locality (Vizag shopper). 11 | P a g e
  • 13. I made the payment and was about to leave when he asked whether I wanted potatoes or onion. I said I didn’t, but added that I was going to buy 2kgs of green peas from the vegetable seller which also his assistant would have to carry home for me. He agreed (Kolkata shopper). Theoretical Implications Theories of retail evolution have to be reformulated in order to take into account the nature of retail competition occurring between the unorganized and organized sector in India in addition to changes occurring within the organized sector. Furthermore, because of government policy, ownership structure – foreign vs. domestic – has added a further twist to retail evolution in India. It would appear that retail specialists are currently more dominant in the urban markets; however, their presence has to consider government policy which has – hitherto – allowed entry of only single-brand, foreign-owned retailing (such as, for example, Ermengildo Zegna apparel). The role of government policy in shaping retail evolution has not played a big part in existing theories of retail evolution to date, and this is a fertile area for future research. Managerial and Policy Implications Both managerial and public policies have benefited from past developments in retail institutions in other advanced and emerging markets. Branded manufacturers like Unilever, Procter & Gamble, Colgate-Palmolive – who have seen their channel power erode as a result of the growth of large-scale, multi-store retailing in other countries; and specifically because of the Walmart effect – have started to take initiatives to protect their channel power. As large, organized retailers extract more favourable terms of trade from these manufacturers, the STS sector becomes even more important to these manufacturers. Several initiatives attempt to improve the market standing of these general trade stores. For example, Unilever awards the “Super Value” store distinction to their best performing STS outlets, who are given special incentives to not only promote the brands but also offered higher margins and new product introductions to increase their competitiveness with larger stores. Retailers who are investing in multi-store, large scale organized stores have also benefitted from past experience and have started to extract better terms of trade from these manufacturers at a much earlier stage of retail evolution. Private labels are also being introduced at a much earlier stages shaping the influence of brands (national vs. private) and 12 | P a g e
  • 14. customer loyalty. With the power of customer relationship management tools, these retailers are shaping the customer experiences at a much earlier stage of retail evolution. At the same time, these large-scale retailers have to consider the nature of the Indian consumers. The entry of Reliance Retail and Bharti-Walmart has been based on low prices. Reliance Retail, for instance, offers several different products to the end consumers at prices that are 15-20% cheaper than the ongoing market rate at the Kirana stores. This has put tremendous pressure on retail margins and the question remains whether the value-conscious, Indian consumer will also incur the travel and time costs to shop regularly in the large-scale retail stores. Furthermore, the frequency of shopping and different shopping missions leads consumers who have accepted the large format stores to split their purchases and patronize both large supermarkets and neighbourhood stores. There is an open question whether the share of the consumer wallet will favour the large-format or the neighbourhood stores. Public policy is taking these developments into consideration as well. In India, the size of the unorganized sector and its ‘employment’ of massive numbers of people, has prompted political concerns. A study by the Indian Council of Research on International Economic Relations has concluded that – with the entry of large organized retail chain outlets – unorganized retailers in vicinity of organized retailers have undergone a decline in their volume and business profit initially. But this negative impact on sales and profit has decreased over time. The data from international studies is similarly mixed. A recent study conducted in Florida suggests that entry and exit rates of small stores depend on proximity to Walmart as well as specific product overlap (Paruchiri et al. 2009). In Asia, with the exception of Hong Kong, Singapore and Malaysia, traditional channels still control more than half of the grocery retail market. The experience in China and Indonesia shows, however, that – while both organized and unorganized sectors exists and grow for the first 5-10 years, although at different rates – the structural changes create an adverse impact on the unorganized sector after the share of the organized retail reaches 25%-30%. In India, the active role of Government policy has resulted in protection of the traditional retailer, at least in the short term, from the threat posed by large foreign retailers. Foreign investment in wholesale operations, for instance, as in the case of the German multinational chain Metro cash-and-carry, is an attempt to allow the economies of scale to benefit the traditional retailers. Similarly, single-brand foreign retailing, has been allowed 13 | P a g e
  • 15. since it poses no threat to STS, and yet allows affluent, urban consumers to benefit from the quality and product assortment of these modern retailers. As a result of all these forces, the threat posed by self-service modern retailers is unlikely to eliminate the STS sector in the immediate future. Both the shopper and the retail systems are in transition and will remain so for the foreseeable future. Even in the most advanced urban settings there are no “true modern shoppers” – shoppers divide their custom between modern stores and STS. Concluding Observations Our research suggests that even in markets where there are modern retail outlets, consumers continue to shop at these traditional stores. Consumers in the large Indian cities are starved for time and the percentage of grocery shopping is the highest from the neighbourhood store. The general trade offers the convenience of taking orders over phone and making home delivery which enables these stores to get a sizeable comprehensive shopping even at places where modern trade retailers are present in close proximity. General trade retail – as was the case in the past, prior to the rise of modern retail formats – continues to get the major chunk of emergency and replenishment shopping due to the convenient location of STS outlets. The provision of home delivery services by larger STS retailers and the extending of credit to their regular shoppers, often even by very small STS outlets, also help the STS format stores to be resilient in the face of modern, large-scale competition. A vast majority of Indians are employed in the unorganised sector. Such workers have no fixed income. These consumers are daily wage earners and small business owners who make regular purchases for daily consumption. This group is catered to by the general trade stores as they stock smaller SKUs like sachets, extend credit and also offer a small discount on the MRP. From a social policy perspective also, therefore, it is unlikely that large-scale modern retailing will be allowed to have a Walmart-style free reign in the fast-evolving retail sector of India. 14 | P a g e
  • 16. References Basker, E. (2007), “The causes and consequences of Wal-Mart’s growth” Journal of Economic Perspectives, 21: 177-198. Dholakia, Nikhilesh & Sinha, Piyush Kumar (2004), “Observations on Observation in India's Dynamic Urban Markets” [38 paragraphs], Forum Qualitative Sozialforschung / Forum: Qualitative Social Research, 6(1), Art. 13, Available at: http://nbn- resolving.de/urn:nbn:de:0114-fqs0501131, Accessed on: September 29, 2010. Franklin, A.W. (2001), “The impact of Wal-Mart’s supercenter on supermarket concentration in U.S. metropolitan areas”, Agribusiness, 17:105-114. Goetz, S.J. and Swaminathan, J. (2006), “Wal-Mart and country-wide poverty” Social Sciences Quarterly, 87: 211-226. Hollander, Stanley (1966), “Notes on the retail accordion”, Journal of Retailing, Vol. 42, pp. 29-40. Humphrey, John (2007), “The supermarket revolution in developing countries: tidal wave or tough competitive struggle?”, Journal of Economic Geography, 7 (4), 433-450. Kumar, S. Ramesh and Vishvas, Radhika (2010), “The old world of ‘Kirana Shops’ Vs new world of glitzy retail; a case study in an emerging market – The Indian context”, Research Paper 2010/01, ISSN 0265 9778, Indian Institute of Management, Bangalore. Paruchiri, Srikanth, Baum, Joel A.C. and Porter, David (2009) “The Wal-Mart Effect: Wave of Destruction or Creative Destruction?” Economic Geography, 85 (2), 209-236. Reardon, Thomas and Berdegué, Julio A. (2002), “The Rapid Rise of Supermarkets in Latin America: Challenges and Opportunities for Development”, Development Policy Review, 20 (4), 371-388. Reardon, Thomas and Gulati, Ashok (2008),“The Rise of Supermarkets and Their Development Implications: International Experience Relevant for India”, IFPRI Discussion Paper 00752, Available at: http://bit.ly/9pqQPM, Accessed on: September 29, 2010. Srivastava, R.K. (2008), "Changing retail scene in India", International Journal of Retail & Distribution Management, 36 (9), 714-721. Traill, W. Bruce (2006), “The Rapid Rise of Supermarkets?”, Development Policy Review, 24 (2), 163-174. 15 | P a g e
  • 17. Founded in 1892, the University of Rhode Island is one of eight land, urban, and sea grant universities in the United States. The 1,200-acre rural campus is less than ten miles from Narragansett Bay and highlights its traditions of natural resource, marine and urban related research. There are over 14,000 undergraduate and graduate students enrolled in seven degree- granting colleges representing 48 states and the District of Columbia. More than 500 international students represent 59 different countries. Eighteen percent of the freshman class graduated in the top ten percent of their high school classes. The teaching and research faculty numbers over 600 and the University offers 101 undergraduate programs and 86 advanced degree programs. URI students have received Rhodes, Fulbright, Truman, Goldwater, and Udall scholarships. There are over 80,000 active alumnae. The University of Rhode Island started to offer undergraduate business administration courses in 1923. In 1962, the MBA program was introduced and the PhD program began in the mid 1980s. The College of Business Administration is accredited by The AACSB International - The Association to Advance Collegiate Schools of Business in 1969. The College of Business enrolls over 1400 undergraduate students and more than 300 graduate students. Mission Our responsibility is to provide strong academic programs that instill excellence, confidence and strong leadership skills in our graduates. Our aim is to (1) promote critical and independent thinking, (2) foster personal responsibility and (3) develop students whose performance and commitment mark them as leaders contributing to the business community and society. The College will serve as a center for business scholarship, creative research and outreach activities to the citizens and institutions of the State of Rhode Island as well as the regional, national and international communities. The creation of this working paper series has been funded by an endowment established by William A. Orme, URI College of Business Administration, Class of 1949 and former head of the General Electric Foundation. This working paper series is intended to permit faculty members to obtain feedback on research activities before the research is submitted to academic and professional journals and professional associations for presentations. Ballentine Hall Quadrangle An award is presented annually for the most Univ. of Rhode Island outstanding paper submitted. Kingston, Rhode Island