A Study On Measuring Customer Satisfaction At ‘reliance Fresh’ Retail Outlet In New Delhi

DISSERTATION REPORT OF A STUDY ON MEASURING CUSTOMER SATISFACTION AT ‘RELIANCE FRESH’ RETAIL OUTLET IN NEW DELHI “Submitted in the Partial Fulfillment for the Requirement of Post Graduate Diploma in Management in International Business” (PGDM-IB)

Submitted To:

Submitted By:

Dr. Vandana Mehta

Obaid Yaseen

Assistant Professor

Roll No: 32/PGDM (IB) Batch: 2017-2019

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DISSERTATION REPORT ON A STUDY ON MEASURING CUSTOMER SATISFACTION AT ‘RELIANCE FRESH’ RETAIL OUTLET IN NEW DELHI “Submitted in the Partial Fulfillment for the Requirement of Post Graduate Diploma in Management in International Business” (PGDM-IB)

Submitted To:

Submitted By:

Dr. Vandana Mehta

Obaid Yaseen

Assistant Professor

Roll No. 32/PGDM (IB) Batch 2017-2019

Jagannath International Management School Kalkaji, New Delhi 11

DECLARATION

Title of Dissertation Report Program: A Study on Measuring Customer Satisfaction At ‘Reliance Fresh’ Retail Outlet in New Delhi I declare, (a) That the work presented for assessment in this Summer Internship Report is my own, that it has not previously been presented for another assessment and that my debts (for words, data, arguments and ideas) have been appropriately acknowledged. (b) That the work conforms to the guidelines for presentation and style set out in the relevant documentation.

Date: …………….…

Obaid Yaseen 32/PGDM-2017(IB) 2017-2019

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CERTIFICATE This is to certify that Mr. Obaid Yaseen of PGDM (IB) has completed his Summer Training Project on “A Study on Measuring Customer Satisfaction At ‘Reliance Fresh’ Retail Outlet in New Delhi” of his own. His work is up to my satisfaction.

Project Guide ----------------------Dr. Vandana Mehta Assistant Professor

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ACKNOWLEDGEMENT A project is never the work of an individual. It is moreover a combination of ideas, suggestions, review, contribution and work involving many folks. It cannot be completed without guidance I am thankful to my internal faculty guide of my institute DR. J.K BATRA (Director at JIMS Kalkaji) and my internal mentor DR. VANDANA MEHTA (Assistant Professor at JIMS Kalkaji) for guiding me with all the rules and regulations of internships and clearing the doubts whenever required. I choose this moment to acknowledge their help gratefully. It is my radiant sentiment to place on records my best regards and deepest sense of gratitude to the constant support I have received through my Family, Friends and Co-workers during the Internship period. I perceive as this opportunity a milestone in my career development. I will strive to use gained skills and knowledge in the best possible way, and I will continue to work on their improvement to attain desired career objectives. Hope to continue cooperation with all of you in the future.

Obaid Yaseen 32/PGDM-2017(IB) 2017-2019

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EXECUTIVE SUMMARY Retailing is the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. A retailer is one who stocks the producer’s goods and is involved in the act of selling it to the individual consumer, at a margin of profit. As such, retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. The retail industry in India is of late often being hailed as one of the sunrise sectors in the economy. AT Kearney, the well-known international management consultancy, recently identified India as the ‘first most attractive retail destination’ globally from among thirty emergent markets. It has made India the cause of a good deal of excitement and the cynosure of many foreign and domestic eyes. The entry of foreign and Indian retail giants like Wal-Mart, Metro, Reliance, Birla, Tata etc. made Indian market more competitive which is at cut throat level. So how retailers can reach to their end customers, to win the mind share and increase the basket size of each shopping trip. India retail industry is the largest industry in India, with an employment of around 8% and contributing to over 10% of the country's GDP. Retail industry in India is expected to rise 25% yearly being driven by strong income growth, changing lifestyles, and favorable demographic patterns. It is expected that by 2016 modern retail industry in India will be worth US$ 175200 billion. India retail industry is one of the fastest growing industries with revenue expected in 2007 to amount US$ 320 billion and is increasing at a rate of 5% yearly. A further increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption. It has further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion. The growth of scope in the Indian retail market is mainly due to the change in the consumer’s behavior. For the new generation have preference towards luxury 15

commodities which have been due to the strong increase in income, changing lifestyle, and demographic patterns which are favorable. Reliance Retail is the retail chain division of reliance industries of India which is headed by Mukesh Ambani. Reliance has entered into this segment by opening new retail stores into almost every metropolitan and regional area of India. Reliance plans to invest Rs 25000 crores in the next 4 years in their retail division and plans to begin retail stores in 784 cities across the country. The reliance fresh supermarket chain is ril’s Rs 25,000 crore venture and it plans to add more stores across different regions, and eventually have a pan-India footprint by year 2011to the company. As the twentieth century has come to and we have moved in to third millennium, we can see many development and changes taking place around us with all the industries and firms within each industry trying to keep pace with all the industries and firm within each industry trying to keep pace with the changes and diverse need of people. Marketer have regarded “customer” as the king and evolved all activities to satisfy him or her, this concept gaining more momentum and importance today. More than a century ago, the father of our nation, Mahatma Gandhi, had made visionary and deep meaningful statement at Johannesburg, South Africa in 1980. A customer is the most important visitor of our premises. He is not dependent on us. We are dependent on him He is not interruption on our work. He is the purpose of it and not an outsider on our premises. He is a part of it. We are not doing him favor by serving him. Today the entire firm engaged in a process of creating a life time value and relationship with customers. This report starts with discussion on the diversity of consumer behavior and the need for studying consumer buying behavior and consumer as a related field of marketing. this can be largely be attributed to the prevailing market situation. Today the company image is built and made known by its customers. Thus, success of the firm determined how effective it has been in

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meeting the diverse consumer need and wants by treating each customer as unique and offering products and services to suit has or her need. Consumer buying behavior will be a primary force in determining how this transition will evolve. Getting closer to the customer in today’s highly competitive landscape is essential for the entire industry and is no longer just a retail issue. It requires all organizations across the supply chain to work as a single enterprise, sensing and responding rapidly to consumer demand in a coordinated manner. analysis of the changing patterns of consumer demand, shopping trends. This research report is based on to know the •

Major factors influencing consumer buying behavior.

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Buying decision process.

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The stage in buying decision process

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Awareness of consumer towards organized retail sector

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Detailed

CONTENTS CHAPTER 1: INTRODUCTION ....................................................... 21 INTRODUCTION ............................................................................................. 21 RETAIL MEANING AND DEFINITION ............................................................ 22 IMPORTANCE OF RETAIL MARKETING....................................................... 22 DEFINITION OF RESEARCH ......................................................................... 23 NEED FOR THE STUDY ................................................................................ 24

CHAPTER 2: INDUSTRY AND COMPANY PROFILE .................... 26 INDUSTRY PROFILE...................................................................................... 26 GROWTH OF RETAIL COMPANIES IN INDIA ............................................... 37 COMPANY PROFILE ...................................................................................... 45 COMPANY HISTORY ..................................................................................... 47 CORPORATE SOCIAL RESPONSIBILITY ..................................................... 53

CHAPTER 3: THEORETICAL PERSPECTIVE ............................... 56 STATEMENT OF THE PROBLEM .................................................................. 57 LITERATURE REVIEW ................................................................................... 57 OBJECTIVES OF THE STUDY ....................................................................... 58

CHAPTER 4: RESEARCH METHODOLOGY ................................. 60 RESEARCH DESIGN...................................................................................... 60 TOOLS OF DATA COLLECTION .................................................................... 61 SAMPLING PLAN ........................................................................................... 62 PLANNING AND ANALYSIS ........................................................................... 62 LIMITATION OF THE STUDY ......................................................................... 63 SCOPE OF THE PROJECT ............................................................................ 63

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CHAPTER 5: DATA ANALYSIS AND FINDINGS ........................... 65 DATA ANALYSIS ............................................................................................ 65 FINDINGS ....................................................................................................... 87

CHAPTER 6: CONCLUSION AND RECOMMENDATIONS ............ 90 RECOMMENDATIONS ................................................................................... 90 CONCLUSION ................................................................................................ 91

BIBLIOGRAPHY ............................................................................. 93 BOOKS ........................................................................................................... 93 WEBSITES...................................................................................................... 93 MAGAZINES & JOURNAL .............................................................................. 93

ANNEXURE QUESTIONNAIRE ...................................................... 94

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CHAPTER 1 INTRODUCTION

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CHAPTER 1: INTRODUCTION INTRODUCTION Customer satisfaction is a measure of how product and services supplied a company can meet the customer expectations. Customer satisfaction is still one of the single strongest predictors of customer retention. It’s considerably more expensive to attract new customers than it is to keep old once happy. In a climate of decreasing brand loyalties, understanding customer service and measuring customer satisfaction are very crucial. There is obviously a strong link between customer satisfaction and customer retention. Customer perception of service and quality of product will determine the success of the product or service in the market. With better understanding of customer perceptions, companies can determine the customers need e actions required to meet the can customer’s needs. They can identify their own strengths and weaknesses, where they stand in comparison to their competitors, chart out path future progress and improvement. Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the company. In a sharp contrast to the retail sector in developed economies, retailing in India – though large in terms of size - is highly fragmented and unorganized. With close to 12 million retail outlets the country has one of the highest retail densities worldwide. Retailing like rest of the world retailing is one of the largest industries in India with sales amounting to about $350 billion, but organized retail is estimated at only US$ 8 billion. It is country’s largest source of employment after agriculture, has deepest penetration into rural India and accounts to about 10-11 % of’ India’s GDP and around 8%of the employment. Inefficiency in the existing supply chains presents further opportunity for organized players to draw on this large market even as lack of consumer culture and low 21

purchasing power restricted the development of modern formats. Migration from unorganized to organized retail has been visible with economic development in most countries The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crores in 2004-05 to Rs. 109,000 crores by the year 2010.

RETAIL MEANING AND DEFINITION To distribute in small portions or at second hand; to tell again or to many (what has been told or done); to report; as, to retail slander. The sale of commodities in small quantities or parcels; -- opposed to wholesale; Sometimes, the sale of commodities at second hand. Done at retail; engaged in retailing commodities; as a retail trade; a retail grocer. the consumer; as, to retail cloth or groceries.

IMPORTANCE OF RETAIL MARKETING The retail landscape is in a constant state of change. As retail marketing is one of the most dynamic and exciting areas of growth in the global economy so, to beat the competition, stand out in a saturated marketplace and succeed despite tightening margins, savvy retailers are focusing on customer-centric service, personalization and loyalty programs to attract and retain customers.

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A successful retail organization understands their market, their customers, and the importance of strategic location. Because competition in the retail industry can be fierce, such organizations need the best micro marketing tools available to analyze where to place new stores, establish customer profiles, and determine best marketing practices in order to find new customers. The trick in retailing, therefore, is to find things that you can do for customers that will modify their behavior in profitable ways. As retailers strive to touch consumers at every step of the purchase cycle, retail marketing has evolved to become a mosaic of mass media branding, tactics for driving store traffic, in-store experience, and loyalty programs.

DEFINITION OF RESEARCH Research is a more systematic activity directed towards discovery and development of an organized body of knowledge. •

It is directed towards aiming at a solution to a problem

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It emphasizes development of general principles of theories helpful in predicting in future occurrence

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Based on observed experience or empirical evidence

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It involves gathering new data from primary or firsthand sources and using the existing data for the new purpose

PRINCIPLES OF SAMPLING The idea behind principle of sampling is that we seek knowledge about the total units by observing a few units and extend our inference about the sample to the entire population.

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QUESTIONNAIRE This method of data collection is quite popular in case of big enquiries. A questionnaire consists of a number of questions printed or typed in a defined order on a set of forms. The questionnaire is mailed to respondents who are expected to read and understand the questions and write down the reply on the space meant for the purpose in the questionnaire itself.

NEED FOR THE STUDY Over the years, research has been done in different service sectors, even in retail services, to find out the drivers of customer satisfaction with respect to service quality and service features of Reliance Fresh products. To survive in competitive market and make the necessary improvements in the service quality and feature trend and comparison on is a need for study.

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CHAPTER 2 RESEARCH METHODOLOGY

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CHAPTER 2: INDUSTRY AND COMPANY PROFILE INDUSTRY PROFILE A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing. Retail organizations exhibit great variety and new forms keep emerging. There are store retailers, non-store retailers, and retail organizations. Consumers today can shop for goods and services in a wide variety of stores. The best-known type of retailer is the department store. Japanese department stores such as Takashimaya and Mitsukoshi attract millions of shoppers each year. These stores feature art galleries, cooking classes, and children’s playgrounds. A retailer is at the end of the distributive channel. He provides goods and service to the ultimate consumers. This he does through his small organization, with the help of a few personnel. In an individual retail store there is not much scope for organization except in the sense that the shopkeeper has to organize apportions his time and resources. The need for organization becomes essential as soon as he hires people o enters into partnership or takes the help of members of his family in running his store. A retailer deals in an assortment of goods to cater to the needs of consumers. His objective is to make maximum profit out of his enterprise. With that end in view he has to pursue a policy to achieve his objective. This policy is called retailing mix. A retailing mix is the package of goods and services that store offers to the customers for sale. It is the combination of all efforts planned by the retailer and embodies the adjustment of the retail store to the market environment. Retailing mix a communication mix and a distribution mix. The maximum satisfaction to the customers is achieved by a proper blend of all three. The success of the retail stores, therefore, depends on customers’ reaction to the retailing mix which influences the profits of the store, its volume of turnover, its share of the market, its image and status and finally its survival.

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RETAILING Retailing is the set of business activities that adds value to the products and services sold to the consumer for their personal or family use. A "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power. •

Retailing is an important institution in our society,

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Retailing provides considerable value to consumers while giving people opportunities for

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Rewarding and challenging careers.

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Retail formats and companies are now major factors in the industry.

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The key to successful retailing is offering the right product, at the right price, in the right

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Place, at the right time, and making a profit.

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Retailers must understand what customers want and what competitors are offering now and in the future.

THE WORLD OF ORGANIZED RETAILING •

Retailers are using sophisticated communications and information systems to manage their business. The use of new technologies helps retailers reduce their operations costs, while better serving their customers.

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To compete against non-store retailers, stores are now becoming more than just places to buy products. They are offering entertaining and educational experiences for their customers.

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In this dynamic environment, entrepreneurs are launching new companies and concepts and becoming industry leaders, while traditional firms have 27

had to rethink their business. •

Retail managers today must make complex decisions on selecting target markets and Retail locations, determining what merchandise and services to offer, negotiating with Supplier and distributing merchandise to stores, training and motivating sales associates, and deciding how to price, promote and present merchandise.

RETAIL MIX The retail mix is the combination of factors retail used to satisfied customer needs and influences their purchase decision. It includes the type of merchandise and services offered, merchandise pricing, advertising, promotional programs store design merchandise display, assistance to customer provided by salespeople, and convenience of the store’s location. Retail mix is the term used to describe the various elements and methods required to formulate and execute retail marketing strategy. Retail managers must determine the optimum mix of retailing activities and coordinate the elements of the mix. While many elements may make up a firm’s retail mix, the essential elements may include: •

Store Location,

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Merchandise Assortments

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Store Ambience,

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Customer Service,

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Price,

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Communication with Customer

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Personal Selling

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Store Image

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Store Design

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Sales Incentives

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People

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Process 28

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Physical Evidence

COMPOSITION OF RETAIL MIX •

Place

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Product

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Price

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Promotion

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People

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Process

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Physical Environment

KEY ELEMENT 1. Place (store location) 2. Product (merchandise) •

Target market Product development

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Channel structure Product management

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Channel management Product features and benefits

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Retailer image Branding

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Retail logistics Packaging

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Retail distribution

3. Price 4. Promotion •

Costs developing promotional mixes

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Profitability Advertising management

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Value for money Sales promotion

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Competitiveness Sales management

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Incentives Public relations

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Quality Direct marketing

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Status 29

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After-sales services

5. People element 6. Process element •

Staff capability Order processing

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Efficiency Database management

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Availability Service delivery

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Effectiveness queuing system

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Customer interaction Standardization

RETAIL INDUSTRY IN INDIA Retail is India's largest industry. It accounts for over 10 per cent of the India's GDP and around 8 per cent of the employment. Retail sector is one of India's fastest growing sectors with a 5 percent compounded annual growth rate. India's huge middle-class base and its untapped retail industries are key attractions for global retail giants planning to enter newer markets. Driven by changing lifestyles, strong income growth and favorable demographic Patterns, Indian retail are expected to grow 25 per cent annually. It is expected that retail in India could be worth US$ 175-200 billion by 2016. The organized retail industry in India had not evolved till the early 1990s. Until then, the Industry was dominated by the un-organized sector. It was a seller’s market, with a limited Number of brands and little choice available to customers. Lack of trained manpower, tax Laws and government regulations all discouraged the growth of organized retailing in India During that period. Lack of consumer awareness and restrictions over entry of foreign players into the sector also contributed to the delay in the growth of organized retailing. Foundation for organized retail in India was laid by Kishore Biyani of Pantaloon Retails India Limited (PRIL). Following Pantaloon's successful venture a host of Indian business giants such as Reliance, Bharti, Birla and others are now entering into retail sector. A number of factors are driving India's retail market. These include: increase in the young working population, hefty pay packets, nuclear 30

families in urban areas, increasing workingwomen population, increase in disposable income and customer aspiration, increase in expenditure for luxury items, and low share of organized retailing. India's retail boom is manifested in sprawling shopping centers, multiplex- malls and huge complexes that offer shopping, entertainment and food all under one roof. But there is a flip side to the boom in the retail sector. It is feared that the entry of global Business giants into organized retail would make redundant the neighborhood Kirana stores resulting in dislocation in traditional economic structure. Also, the growth path for organized retail in India is not hurdle free. The taxation system still favors small retail business. With the intrinsic complexities of retailing such as rapid price changes, constant threat of product obsolescence and low margins there is always a threat that the venture may turn out to be a loss making one. A perfect business model for retail is still in evolutionary stage. Procurement is very vital cog in the retail wheel. The retailer has to fight issues like fragmented sourcing, unpredictable availability, unsorted food provisions and daily fluctuating prices as against consumer expectations of round-the-year steady prices, sorted and cleaned food and fresh stock at all Times. The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crores in 2004-05 to Rs. 109,000 crores.

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Fig 3.1 PRESENT INDIAN RETAIL INDUSTRY SCENARIO The retail industry is divided into organized and unorganized sectors. Over 12 million outlets operate in the country and only 4% of them being larger than 500 sq. ft (46 m²) in size. Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately-owned large retail businesses. Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. •

Unorganized market: Rs. 583,000 cores

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Organized market: Rs.5, 000 cores

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5X growth in organized retailing between 2005-2012

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Over 4,000 new modern Outlets in the last 3 years 32

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Over 5,000,000 sq. ft. of mall space under development

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The top 3 modern retailers’ control over 750,000 sq. ft. of retail space

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Over 400,000 shoppers walk through their doors every week

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47 global fortune companies & 25 of Asia's top 200 companies are retailers

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Biggest player in India is Pantaloon Retail India Limited.

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Growth in organized retailing on par with expectations and projections of the last 5 Years on

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Course to touch Rs. 35,000 corers (US$ 7 Billion) or more by 2005-06 The growth factors of

SCOPE OF THE INDIAN RETAIL MARKET The scope of the Indian retail market is immense for this sector is poised for the highest growth in the next 5 years. The India retail industry contributes 10% of the country’s GDP and its current growth rate is 8.5%. In the Indian retail market, the scope for growth can be seen from the fact that it is expected to rise to US$ 608.9 billion in 2009 from US$ 394 billion in 2005. The organized retailing sector in India is only 3% and is expected to rise to 25- 30% by the year 2010. There are under construction at present around 325 departmental stores, 300 new malls, and 1500 supermarkets. This proves that there is a tremendous scope for growth in the Indian retail market. The growth of scope in the Indian retail market is mainly due to the change in the consumer’s behavior. For the new generation have preference towards luxury commodities which have been due to the strong increase in income, changing lifestyle, and demographic patterns which are favorable. The scope of the Indian retail market has been seen by many retail giants and that’s the reason that many new players are entering the India retail industry. THE FUTURE INDIAN RETAIL SCENARIO The retail industry in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone up and is also expected to go up 33

further in the future. In the last four year, the consumer spending in India climbed up to 75%. As a result, the India retail industry is expected to grow further in the future days. By the year 2013, the organized the retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Westernstyle malls have begun appearing in metros and second-rung cities alike introducing the Indian consumer to a shopping experience like never before. The sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. Organized retail is on all-time high in India. The growth is boosted by various factors such as availability of professional practices, media proliferation, various brands which are gaining value thereby enhancing industry growth, availability of various funding options, regulations like VAT implementation to make processes simple, sea change in demographics of country and international exposure. This report is structured into three major parts. First part comprises of Executive Summary and highlights of the retail sector. Second part consists of 12 chapters which includes an introduction and discusses vital topics in retail industry like A Brief Overview of Global Retail Industry, Indian Retail Industry, Organized Retail Formats in Indian retail, Food Retail in India, Apparel Retail in India, Growth Drivers of Indian Retail, Technology implications, Issues & Challenges faced by the sector, Critical Success Factors, Regulations and Policies and Future Outlook of the industry. The third and final part consists of supporting literature in the form of Annexure. This report will be useful to entrepreneurs interested in getting insights of retail industry for doing direct and indirect business in the sector, management consultants, banks evaluating retail sector growth trajectory. The Indian population is witnessing a significant change in its demographics. Organized retail is on all34

time high in India. The growth is boosted by various factors such as availability of professional proposals, investors who are interested in this sunrise sector, retail professionals for getting larger picture of the sector. Last but not the least this report can also be useful for educational institutions imparting courses in retail sector is also expected to grow at a CAGR of 40%. The retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearing in metros and second-rung cities alike introducing the Indian consumer to a shopping experience like never before. The sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher practice, media proliferation, various brands which are gaining value thereby enhancing industry growth, availability of various funding options, regulations like VAT implementation to make processes simple, sea change in demographics of country and international exposure. This report is structured into three major parts. First part comprises of Executive Summary and highlights of the retail sector. Second part consists of 12 chapters which includes an introduction and discusses vital topics in retail industry like A Brief Overview of Global Retail Industry, Indian Retail Industry, Organized Retail Formats in Indian retail, Food Retail in India, Apparel Retail in India, Growth Drivers of Indian Retail, Technology implications, Issues & Challenges faced by the sector, Critical Success Factors, Regulations and Policies and Future Outlook of the industry. The third and final part consists of supporting literature in the form of Annexure. This report will be useful to entrepreneurs interested in getting insights of retail industry for doing direct and indirect business in the sector, management consultants, banks evaluating retail sector proposals, investors who are interested in this sunrise sector, retail professionals for getting larger picture of the sector. Last but not the least this report can also be useful for educational institutions imparting courses in retail management. 35

THE OPPORTUNITIES IN INDIAN ORGANIZED RETAIL The opportunities in Indian organized retail sector are many for this sector is witnessing a boom. The retail industry in India amounted to US$ 200 billion in 2006, and out of this amount the Indian organized retail sector amounted to US$ 6.4 billion. The opportunities in India organized retail sector can be judged from the fact that by 2010 it is expected to rise to US$ 23 billion. The various opportunities in the organized retail sector in India are mainly there for the Indian consumers behavior pattern has changed. Now the Indian consumer gets more hefty pay- packages, is younger, a large number of women are working, western influences, and more disposable income have opened a lot of opportunities in Indian organized retail sector. The Indian consumer wants to shop, eat and get entertainment in one place and is having also given Indian organized retail sector an opportunity to grow. The Indian government in 2005 allowed foreign direct investment (FDI) in single brand retail to 51%. This has opened up a lot of opportunities in India organized retail sector. In fact, 325 departmental stores, 300 new malls, and 1500 supermarkets are being built which shows the tremendous opportunities in the organized retail sector in India. Many Indian companies seeing the various opportunities in organized retail sector in India have entered it. Pantaloons have decided to increase its retail space to 30 million square feet with an investment of US$ 1 billion. Reliance Industries Limited is targeting for annual sales of US$ 25 billion by 2011. It is planning to invest US$ 6 billion in order to open 1,500 supermarkets and 1000 hypermarkets. Bharti Telecoms is planning a joint venture with Telco a global retail giant worth £ 750 million. The opportunities in the organized retail sector in India have also increased with the desire of many global retail giants to set up shop here. The global retail giants who are entering the Indian organized retail sector are:

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Tesco, Walmart, Metro AG, Carrefour SA

The opportunities in Indian organized retail sector are varied and it must be fully exploited by the Indian retailers. GROWTH OF INDIAN RETAIL According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, India retail industry is the most promising emerging market for investment. In 2007, the retail trade in India had a share of 8-10% in the GDP (Gross Domestic Product) of the country. According to a report by Northbridge Capita, the India retail industry is expected to grow to US$ 700 billion by 2010. By the same time, the organized sector will be 20% of the total market share. It can be mentioned here that, the share of organized sector in 2007 was 7.5% of the total retail market.

GROWTH OF RETAIL COMPANIES IN INDIA Growth of Retail Companies in India exhibits the boom in the retail industry in India over the years. The increase in the purchasing power of the Indian middle classes and the influx of the foreign investments has been encouraging in the Growth of Retail Companies in India.

OVERVIEW Growth of Retail Companies in India is still not yet in a matured stage with great potentials within this sector still to be explored. Apart from the retail company like Nilgiri's of New Delhi, most of the retail companies are sections of other industries that have stepped in the retail sector for a better business. The Growth of Retail Companies in India is most pronounced in the metro cities of India; however the smaller towns are also not lagging behind in this. The retail companies are not only targeting the four metros in India but also is considering the second graded upcoming cities like Ahmedabad, Baroda, Chandigarh, Coimbatore, Cochin, Ludhiana, Pune, Trivandrum, Simla, Gurgaon, and others. The South Indian zone 37

have adopted the process of shopping in the supermarkets for their daily requirements and this have also been influencing other cities as well where many hypermarkets are coming up day to day.

REASONS FOR THE FAST GROWTH OF RETAIL COMPANIES IN INDIA: The retail companies are found to be rising in India at a remarkable speed with the years and this has brought a revolutionary change in the shopping attitude of the Indian customers. The Growth of Retail Companies in India is facilitated by certain factors like - existing Indian middle classes with an increased purchasing power rise of upcoming business sectors like the IT and engineering firms change in the taste and attitude of the Indians effect of globalization heavy influx of FDI in the retail sectors in India. THE EMERGING TRENDS IN THE INDIAN ORGANIZED RETAIL SECTOR The emerging trends in the Indian organized retail sector would help the economic growth in India. There is a fantastic rise in the Indian organized retail sector in a very short period of time between 2001 and 2006. Eventually, out of the shadows of the unorganized retail sector, India has a chance of tremendous economic growth, both in India and abroad. The emerging trends in the Indian organized retail sector are also adding up to the development of the Indian organized retail sector. The relaxation by the government on regulatory controls on foreign direct investments has added to the process of the growth of the Indian organized retail sector. The infrastructure of the retail sector will evolve radically in the recent future. The emergence of shopping malls is increasing at a steady pace in the metros and there are further plans of expansion which would lead to 150 new ones coming up in India by 2008. As the count of super markets is going up much faster than rate of growth in retail sector, it is taking the lions share in food trade. The growth of the Indian organized retail sector is anticipated to be heavier than the growth of the 38

gross domestic product. Alterations in people's lifestyle, growth in income levels, and encouraging conventions of demography are proving favorable for the new emerging trends in the Indian organized retail sector. The success of this retail sector would also lie in the degree of penetration into the lower income strata to tap the possible customers in the lowest levels of society. The demands of the buyers would also be enhanced by more access to credit facilities. With the arrival of the Transnational Companies (TNC), the Indian retail sector will undergo a transformation. At present the Foreign Direct Investments (FDI) is not encouraged in the Indian organized retail sector but once the TNC'S get in they inevitably try to oust their Indian counterparts. This would be challenging to the retail sector in India. CHALLENGES FACING THE INDIAN ORGANIZED RETAIL SECTOR The challenges facing the Indian organized retail sector are various and these are stopping the Indian retail industry from reaching its full potential. The behavior pattern of the Indian consumer has undergone a major change. This has happened for the Indian consumer is earning more now, western influences, women working force is increasing, desire for luxury items and better quality. He now wants to eat, shop, and get entertained under the same roof. All these have led the Indian organized retail sector to give more in order to satisfy the Indian customer. The biggest challenge facing the Indian organized retail sector is the lack of retail space. With real estate prices escalating due to increase in demand from the Indian organized retail sector, it is posing a challenge to its growth. With Indian retailers having to shell out more for retail space it is affecting their overall profitability in retail. Trained manpower shortage is a challenge facing the organized retail sector in India. The Indian retailers have difficulty in finding trained person and also have to pay more in order to retain them. This again brings down the Indian Retailers profit levels. The Indian government has allowed 51% foreign direct investment (FDI) in the India retail sector to one brand shops only. 39

This has made the entry of global retail giants to organized retail sector in India difficult. This is a challenge being faced by the Indian organized retail sector. But the global retail giants like Tesco, Wal-Mart, and Metro AG are entering the organized retail sector in India indirectly through franchisee agreement and cash and Carry wholesale trading. Many Indian companies are also entering the Indian organized retail sector like Reliance Industries Limited, Pantaloons, and Bharti Telecoms. But they are facing stiff competition from these global retail giants. As a result, discounting is Indian unorganized retail sector & its challenge India is the only one country having the highest shop density in the world, with 11 outlets per 1000 people (12 million retail shops for about 209 million households). Rather we can see the democratic scenario in Indian Retail (because of low level of centralization, low capital input and due to a good number of self-organized retail). India started its Retail Journey since ancient time. In Ancient India there was a concept of weekly HAAT, where all the buyers & sellers gather in a big market for bartering. It takes a pretty long times to & step to shape the modern retail. In between these two concepts (i.e. between ancient retail concept & the modern one there exist modern kirana/ mom and pop shops or Baniya ki Dukan. Still it is predominating in India so the Indian retail industry is divided into two sectorsorganized and unorganized. Organized retail sector refers to the sectors undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate retail formats of the exclusive brand outlets, hypermarkets, supermarkets, departmental stores and shopping malls. Unorganized retailing, on the other hand, refers to the traditional formats of lowcost retailing, for example, hand cart and pavement vendors, & mobile vendors, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hardware shop at the corner of your street selling everything from bathroom fittings to paints and small construction tools; or the slightly more

40

organized medical store and a host of other small retail businesses in apparel, electronics, food etc. CHARACTERISTICS OF UNORGANIZED RETAIL Small-store (kirana) retailing has been one of the easiest ways to generate selfemployment, as it requires limited investment in land, capital and labor. It is generally family run business, lack of standardization and the retailers who are running this store they are lacking of education, experience and exposure. This is one of the reasons why productivity of this sector is approximately 4% that of the U.S. retail industry. Unorganized retail sector is still predominating over organized sector in India, unorganized retail sector constituting 98% (twelve million) of total trade, while organized trade accounts only for 2%. THE REASONS FOR RESISTANCE TO ORGANIZED RETAIL: •

In smaller towns and urban areas, there are many families who are traditionally using these kirana shops/ 'mom and pop' stores offering a wide range of merchandise mix. Generally, these kirana shops are the family business of these small retailers which they are running for more than one generation.

•

These kirana shops are having their own efficient management system and with this they are efficiently fulfilling the needs of the customer. This is one of the good reasons why the customer doesn’t want to change their old loyal kirana shop.

•

A large number of working class in India is working as daily wage basis, at the end of the day when they get their wage, they come to this small retail shop to purchase wheat flour, rice etc for their supper. For them this the only place to have those food items because purchase quantity is so small that no big retail store would entertain this.

•

Similarly, there is another consumer class who are the seasonal worker. During their unemployment period they use to purchase from this kirana store in credit and when they get their salary, they clear their dues. Now this 41

type of credit facility is not available in corporate retail store, so this kirana stores are the only place for them to fulfill their needs. •

Another reason might be the proximity of the store. It is the convenience store for the customer. In every corner the street an unorganized retail shop can be found that is hardly a walking distance from the customer’s house. Many times, customers prefer to shop from the nearby kirana shop rather than to drive a long-distance organized retail store.

RETAIL FORMATS IN INDIA •

Hypermarkets/supermarkets:

large

self-servicing

outlets

offering

products from a variety of categories •

Mom-and-pop stores: they are family owned business catering to small sections; they are individually handled retail outlets and have a personal touch

•

Departmental stores: are general retail merchandisers offering quality products and services

•

Convenience stores: are located in residential areas with slightly higher prices goods due to the convenience offered

•

Shopping malls: the biggest form of retail in India, malls offer customers a mix of all types of products and services including entertainment and food under a single roof

•

E-trailers: are retailers providing online buying and selling of products and services

•

Discount stores: these are factory outlets that give discount on the MRP

•

Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and other small items can be bought via vending machine

•

Category killers: small specialty stores that offer a variety of categories. They are known as category killers as they focus on specific categories, such as electronics and sporting goods. This is also known as Multi Brand Outlets or MBO's

•

Specialty stores: are retail chains dealing in specific categories and 42

provide deep assortment. Mumbai's Crossword Book Store and RPG's Music World is a couple of examples EVOLUTION AND TRENDS IN ORGANIZED RETAILING FORMATS AND RETAIL OUTLETS IN INDIA •

Hypermarket: It is the largest format in Indian retail so far is a one stop shop for the modern Indian shopper.

•

Merchandise: food grocery to clothing to spots goods to books to stationery.

•

Space occupied: 50000 Square feet. And above.

•

SKUs: (Stock keeping Unit) 20000-30000.

•

Example: Pantaloon retail’s Big Bazaar, RPG’s Spencer’s (Giant), Vishal mega mart.

•

Supermarket: A subdued version of a hypermarket.

•

Merchandise: Almost similar to that of a hypermarket but in relatively smaller proposition.

•

Space occupied: 5000 Sq. ft. or more.

•

SKUs: (Stock keeping units) Around 10000.

•

Example: Nilgiris, Apna Bazaar, Trinethra/more.

•

Convenience store: A subdued version of a supermarket.

•

Merchandise: Groceries are predominantly sold.

•

Space occupied: Around 500 Sq. ft. to 3000 Sq. ft.

•

Example: stores located at the corners of the streets, Reliance Retail’s fresh, More Retail

•

Department store: A retail establishment which specializes in selling a wide range of A product without single prominent merchandise line and is usually a part of a retail chain.

•

Merchandise: Apparel, household accessories, cosmetics, gifts etc.

•

Space occupied: Around 10000 Sq. ft. – 30000 Sq. ft. 43

•

Example: Landmark Group’s Lifestyle, Trent India Ltd.’s Westside.

•

Discount store: Standard merchandise sold at lower prices with lower margins and higher volumes.

•

Merchandise: A variety of perishable/ nonperishable goods.

•

Example: Viswapriya Group’s Subiksha, Piramal’s TruMart.

•

Specialty store: It consists of a narrow product line with deep assortment.

•

Merchandise: Depends on the stores

•

Example: Bata store deals only with footwear, RPG’s Music World, Crossword

•

MBO’s: (Multi Brand outlets), also known as Category Killers. These usually do well in busy market places and Metros.

•

Merchandise: Offers several brads across a single product category.

•

Kirana stores: The smallest retail formats which are the highest in number (15 million approx.) in India.

•

Merchandise: Mostly food and groceries.

•

Space occupied: 50 sq ft and even smaller ones exist.

•

Malls: The largest form of organized retailing today located mainly in metro cities, in Proximity to urban outskirts.

•

Merchandise: They lend an ideal shopping experience with an amalgamation of product, Service and entertainment, all under a common roof.

•

Space occupied: Ranges from 60,000 sq ft to 7, 00,000 sq ft.

• Example: Pantaloon Retail’s Central, Mumbai’s Iorbit.

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COMPANY PROFILE

"Growth has no limit at Reliance. I keep revising my vision. Only when you can dream it, you can do it." Dhirubhai H. Ambani

OVERVIEW Reliance Industries Limited (RIL) is India's largest private sector company on all major financial parameters with turnover of Rs1,18,354 crores (US$ 27.23 billion), cash profit of Rs17,678 crores (US$ 4.07 billion), net profit of Rs11,943 crores (US$ 2.75 billion) and net worth of Rs63, 967 crores (US$ 14.72 billion) as of March 31, 2007.RILis the first and only private sector company from India to feature in the Fortune Global 500 list of 'World's Largest Corporations' and ranks amongst the world's Top 200 companies in terms of profits. RIL is amongst the 25 fastest climbers ranked by Fortune. RIL also features in the Forbes Global list of worlds’ 400 best big companies and in FT Global 500 list of world's largest companies Reliance Industries Limited (RIL) is India's largest private sector company on all major financial parameters with turnover of Rs. 73,164 crores (US $ 16.7 billion), cash profit of Rs. 12,087 crores (US $ 2.8 billion), net profit of Rs. 7,572 crores (US $ 1.7 billion), net worth of Rs. 40,403 crores (US $ 9.2 billion), and total assets of Rs. 80,586 crores (US $ 18.4 billion). RIL is the first and only private sector from India to feature in 2005 Fortune Global 500 list of 'World's Largest Corporations' 45

and ranks amongst the world's Top 200 companies in terms of profits. Reliance in now putting up a completely export oriented unit with 30 MMPTA capacity under Special Economic Zone (SEZ) at Jamnagar. Construction will commence very shortly and the project is schedule to go into operation by March 2008. RIL group is about to establish yet another industrial landmark by putting up the world's largest grass root refinery totally dedicated for exports with an outlay of over Rs. 27,000 crores. RIL group, as a corporate citizen, has always believed in creating "employability" apart from providing employment. Towards this, it is process of establishing a World Class Craft Training Institute This world class facility will have latest generation equipment’s and machineries imported from best of class manufacturers and will be located at Jamnagar. The Scheme We will bring in thousands of youngsters - skilled / semi-skilled / partially skilled / unskilled from all over the country and provided temporary barracks - labor accommodation with full facilities through contractors. The institute will train them in respective trades with proper process for "Certification". Current estimate warrants training of (assuming 50% will be Certified): Welders - 8000, Carpenters - 5000, Pipe Fitters - 5000, Grinders - 5500, Mill Wright Fitters - 2000 Immediately on certification, they will be absorbed by our contractors and be deployed on our world scale project at Jamnagar for a period of approx. of 2 years. Thereafter, Reliance is confident that these skills, which are badly required, will have an unlimited market and therefore, offer a great earning future prospect to these youngsters around the globe. Reliance Fresh falls under Reliance Industries. It is the first retail venture of the Group. The company offers fresh fruits and vegetables, staples, groceries, fresh juice bars, FMCG products and dairy products and non-vegetarian items. Reliance Industries has invested nearly Rs. 3,000 crores to expand the Reliance Fresh stores. Reliance Fresh directly buys stock from the farmers to cut down on the wastage. The stores work on The Ranger Format which means selling of fresh vegetables to the road sellers. Reliance Retail has signed a pact with Apple for the establishment of a chain of Apple Specialty Stores branded as iStore, starting with New Delhi. 46

Reliance Fresh is the convenience store format which forms part of the retail business of Reliance Industries of India which is headed by Mukesh Ambani. Reliance plans to invest in excess of Rs 25000 crores in the next 4 years in their retail division. The company already has in excess of 560 reliance fresh outlets across the country. These stores sell fresh fruits and vegetables, staples, groceries, fresh juice bars and dairy products. A typical Reliance Fresh store is approximately 3000-4000 square feet and caters to a catchment area of 2–3 km.

THE RELIANCE EMPIRE Reliance being the all-encompassing company has entered into all the sectors, retail being their latest. Reliance Industries Limited Chairman and Managing Director: Mukesh Ambani Market Capitalization: INR 39,609,150,020 (Sept, 2006) Total Shares Outstanding: 22,405,900 (Sept, 2006) Closely Held Shares: 11,365,943 Sales: INR 10,512,963,000. According to the company website "1 out of every 4 investors in India is a Reliance shareholder. RIL is ranked at 342 in the 2006 Fortune Global 500 list among the world’s largest corporations.

COMPANY HISTORY Post launch, in a dramatic shift in its positioning and mainly due to the circumstances prevailing in UP, West Bengal and Orissa, it was mentioned recently in news dailies that, Reliance Retail is moving out of stocking fruits and vegetables. Reliance Retail has decided to minimize its exposure in the fruit and vegetable business and position Reliance Fresh as a pure play super market focusing on categories like food, FMCG, home, consumer durables, IT and wellness, with food accounting for the bulk of the business. The company may not stock fruit and vegetables in some states. Though Reliance Fresh is not exiting the fruit and vegetable business altogether, it has decided not to compete with local vendors partly due to political reasons, and partly due to its 47

inability to create a robust supply chain. This is quite different from what the firm had originally planned. When the first Reliance Fresh store opened in Hyderabad last October, not only did the company said the store’s main focus would be fresh produce like fruits and vegetables at a much lower price, but also spoke at length about its “farm-to-fork’’ theory. The idea the company spoke about was to source from farmers and sell directly to the consumer removing middlemen out of the way. Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trendz, Reliance Footprint, Reliance Wellness, Reliance Jewels, Reliance Timeout and Reliance Super are various formats that Reliance has rolled out. In addition, Reliance Retail has entered into an alliance with Apple for setting up a chain of Apple Specialty Stores branded as I Store, starting with New Delhi. Reliance Fresh, the $20 billion Reliance Industries' brand for its grocery outlets, Monday opened nine new stores in the national capital region (NCR) with an investment of about Rs.8 billion ($180 million).The stores have been opened in Ghaziabad, Faridabad, Noida, Greater Noida and Gurgaon covering a total area of 19,000 sq. ft. Mukesh Ambani's Reliance Industries Ltd. entered the retail trade last year with an investment of $5.6 billion and has plans to expand its footprint in the NCR in multiple formats of hypermarkets, supermarkets and convenience stores. 'We plan to have a pan-India presence and achieve a target of Rs.10 billion revenue by 2010 by which time we hope to complete Phase I,' Raghu Pillai, president and chief executive of Reliance Retail, said at a press conference here. 'In the first phase we have plans to employ 500,000 people. We are following an all-inclusive model giving the right affordability across all income groups,' Pillai added. According to him, Reliance will open 100 stores in the NCR by the quarter ending in June 2007.'We are aggressively partnering farmers by following a farmto-fork strategy in our supply chain management model and ensure that we deliver fresh fruits and vegetables at affordable prices to our consumers.' Currently, Reliance Fresh has 49 stores across the country covering an area of 109,000 sq. ft. Reliance Fresh also offers a membership and loyalty program – Reliance One 48

to deliver customized benefits to frequent shoppers. Currently, it has 200,000 loyalty customers across Hyderabad, Jaipur and Chennai. With a vision to generate inclusive growth and prosperity for farmers, vendor partners, small shopkeepers and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to lead Reliance Group’s foray into organized retail. Since its inception in 2006, Reliance Retail Limited (RRL) has grown into an organization that caters to millions of customers, thousands of farmers and vendors. Based on its core growth strategy of backward integration, RRL has made rapid progress towards building an entire value chain starting from the farmers to the end consumers. In the last year, Reliance Retail Limited (RRL) continued to fulfill its commitment of enriching Indian consumer’s shopping experience and providing quality merchandise at an attractive value proposition. More than 3 years into operation, RRL has now expanded its presence in more than 85 cities across 14 states in India. RRL forged ahead with its expansion plans and rolled out stores across the country. RRL’s footprint now spans a network of more than 1,000 stores. RRL operates several ‘value’ & ‘specialty’ formats. The ‘value’ formats that RRL operates are: ‘Reliance Fresh’, a neighborhood concept, ‘Reliance Mart’, an all under one roof supermarket concept & ‘Reliance Super’, a mini-mart concept. The ‘value’ formats offer a wide range and assortment of products required for daily household needs. The ‘specialty’ formats are: ‘Reliance Digital’, a consumer durables & information technology concept, ‘Reliance Trends’, an apparel & accessories concept, ‘Reliance Wellness’, a health, wellness & beauty concept, ‘I Store by Reliance Digital’, an exclusive Apple products concept, ‘Reliance Footprint’, a footwear concept, ‘Reliance Jewels’, a jewelers concept, ‘Reliance Time Out’, a books, music & entertainment concept, ‘Reliance AutoZone’, an automotive products & services concept and ‘Reliance Living’, a home ware, furniture, modular kitchens, furnishings concept. RRL rapidly expanded the stores network it operates through strategic partnerships with world-class companies such as Marks & Spencer and Pearl 49

Europe. RRL also entered into an exclusive distribution arrangement with Asics Corporation Japan to market Asics brands of shoes. and accessories in India. RRL has recently opened its flagship store under its franchise agreement with Hamleys and plans to expand the store network in the coming year. RRL has also expanded its presence in business-to business office supplies through its joint venture with Office Depot. Through ‘Reliance One’, RRL’s loyalty membership program, RRL enjoys the patronage of over 5.5 million customers. In the coming year, RRL will continue on its mission to delight the customers every visit. RRL will continue to provide unprecedented value to customers across all its formats and stores.

CONTROVERSY Recently their stores in Jharkand faced the ire of mobs comprising of local vegetable vendors. They vandalised and attacked the stores claiming that they were stealing their livelihoods. In August 2007, Uttar Pradesh Chief Minister Mayawati ordered to close 10 new stores keeping view of Law & order situation. In November 2007, Reliance Fresh stores are attacked by Bharatiya Janshakti Party supporters headed by Uma Bharti. ‘Suicide’ squad against Reliance Fresh outlets Bhubaneswar/Cuttack: Traders and roadside vendors opposing the opening of Reliance Fresh outlets in Orissa on Saturday formed a “suicide” squad. “As many as 100 youth today joined the squad as they prefer to die while fighting rather than facing starvation,” All-Orissa Roadside Vendors and Small Shop Owners Association president Pratap Sahu said. Reports said the vendors formed the squad soon after a meeting. — PTI But some vegetable vendors don't want a job at Reliance, if offered one, because they want to be their own boss. 50

KEY EXECUTIVES MANAGEMENT TEAM

Mukesh D. Ambani - Chairman & Managing Director Nikhil R. Meswani Executive Director Hital R. Meswani Executive Director H.S.Kohli Executive Director Ramniklal H. Ambani Mansingh L. Bhakta Yogendra P. Trivedi Dr. D. V. Kapur M. P. Modi S. Venkitaramanan Prof. Ashok Misra Prof. Dipak C Jain Dr. Raghunath Anant Mashelkar

FUTURE PLANNING Company plans to have a pan-India presence by opening stores in 784cities and 600 small towns and achieve a target of Rs.10 billion revenue by 2010 by which time it hopes to complete Phase 1. In the first phase company plans to employ 500,000 people. It is following an all-inclusive model giving the right affordability across all income groups. Company is aggressively partnering farmers by following a farm-to-fork strategy in its supply chain management model and ensures that it delivers fresh fruits and vegetables at affordable prices to consumers. Currently, Reliance Fresh has over 100 stores across the country. Reliance Fresh also offers a membership and loyalty programmed -Reliance One - to deliver customized benefits to frequent shoppers. Currently, it has 200,000 loyalty customers across Hyderabad, Jaipur and Chennai.

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Reliance Retail, the 100% subsidiary of Reliance Industries, on October 28 unveiled Reliance Fresh, the first of its multi-format retail foray involving an investment of Rs 25,000 crores. Reliance Fresh is the company’s brand for neighborhood fresh-food outlets. It will also sell kitchen equipment and other edibles. Besides, it has planned hypermarkets, supermarkets, discount stores, department stores, convenience stores and specialty stores, to be unveiled shortly. The Reliance Fresh supermarket chain is RIL’s Rs 25,000 crores venture and it plans to add more stores across different geographies, and eventually have a panIndia footprint by year 2011. The super marts will sell fresh fruits and vegetables, staples, groceries, fresh juice bars and dairy products and also will sport a separate enclosure and supply-chain for non-vegetarian products. Currently, selling through company-owned stores currently totals just$8 billion in India. Industry estimates say that the country’s retail industry is worth $300 billion, that is about Rs 13, 50,000 crores. This stands a chance to blossom to $427 billion in the next four years.

FARM TO FORK MODEL OF RELIANCE RETAIL The Reliance retail company sources say it is setting aside Rs 50,000 crores to build its farm- to-fork linkage. Reliance has drawn up plans for a presence in 784 towns and6,000 mandi (wholesale market) towns with 1,600 rural business hubs to service these. It has already rolled out 177 Reliance Fresh stores across major towns in 11states. According to a company report, RIL is targeting a turnover of Rs 40,000 crores in the next few years.

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TRADITIONAL MODEL OF RETAIL

RELIANCE FARM TO FORK

CORPORATE SOCIAL RESPONSIBILITY Today when most of the companies are busy in making profits by any means, there are few Ones who are focused to return this society, a part of what they have earned through this society. Reliance retail is one of them. Following efforts of reliance retail are aimed at benefiting the society making reliance socially responsible: 1. Reliance Retail aims at recruiting people from the under privileged community in society. "Hence, we are planning to train students from corporation schools and schools run by NGOs. And, we consider this as a part of our corporate social responsibility, "he said. Asked whether the company will take students on an employment basis and pay them a stipend 53

during the course period, he said that actually, it is planning to charge a "small fee" from those who want to join the course "as we want to bring in some discipline and regularity among the students", and will reimburse that once they are inducted into service 2. Farming in India is highly fragmented and subject to harsh climatic conditions: once harvested, it is very difficult to keep fruits and vegetables fresh. To secure high quality, Reliance Retail is directly sourcing fresh agricultural produce from thousands of farmers from villages through Collection Centers. With this concept, Reliance has built a business model generating shared value that links the company supply chain more closely to poor farmers in Indian villages. Reliance is providing a guaranteed market for the farmers’ produce, reducing transaction costs and training the farmers in better and sustainable farming practices. This initiative results in higher income and upgrading of skills for the farmers, and reduced spoilage of produce (up to35 percent) and better-quality products f or Reliance retail stores. 3. Reliance retail has adopted “farm to fork” theory which means it is procuring directly from the farmers thus offering them quite reasonable prices for their produce as now no intermediaries are involved. In return Reliance is giving farmers information about how can farmers improves their productivity. They have centers in villages who apart from providing information make farmers aware of market rates of different crops so that farmers can choose crops they want to sow to become profitable. Farmers are provided technical help as well like information about quality of seeds and fertilizers.

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CHAPTER 3 THEORETICAL PERSPECTIVE

55

CHAPTER 3: THEORETICAL PERSPECTIVE India’s service sector has matured considerably during the last few years and has been globally recognized for its high growth and development. The Indian retail market, which is the fifth largest retail destination globally, has been ranked as the most attractive emerging market for investment in the retail sector by AT Kearney's eighth annual Global Retail Development Index (GRDI), in 2009. As per a study conducted by the Indian Council for Research on International Economic Relations (ICRIER), the retail sector is expected to contribute to 22 per cent of India's GDP by 2010. In today’s complex business environment, it has become very crucial for companies to attain high customer satisfaction for long term sustainable growth and like companies of the other business domains. Retail also considers their customers as the most important asset, is not just a theory but also an economic fact. Therefore, in the current scenario, the research on customer satisfaction on business domain of retail sector is quite important and critical for understanding of customer satisfaction and retention, it is very crucial for any company to learn what actually differentiates the satisfied customers from the unsatisfied ones. In a sharp contrast to the retail sector in developed economies, retailing in India though large in terms of size - is highly fragmented and unorganized. With close to 12 million retail outlets the country has one of the highest retail densities worldwide. Retailing like rest of the world retailing is one of the largest industries in India with sales amounting to about $350 billion, but organized retail is estimated at only US$ 8 billion. It is country’s largest source of employment after agriculture, has deepest penetration into rural India and accounts to about 10-11 % of’ India’s GDP and around 8%of the employment. Inefficiency in the existing supply chains presents further opportunity for organized players to draw on this large market even as lack of consumer culture and low purchasing power restricted the development of

56

modern formats. Migration from unorganized to organized retail has been visible with economic development in most countries. Thus, the study is conducted to understand the satisfaction level of consumer that may be influenced by the Price, Quality, and Service Convenience of the products. The project reveals satisfaction level of the customers on ‘Reliance Fresh’ products, comparison between Kirana shop and the retail outlets, Future trend of retail sector in India. Customers are moving towards the new trend of retail shopping in shopping malls. Most of the competitors are existing in the market in that ‘Reliance Fresh’ is trying occupying market share it shows a good market potential.

STATEMENT OF THE PROBLEM Indian organized retailing is under transition today, bringing a lot of changes in format of retailing. In this regard measuring customer satisfaction in organized ‘Reliance Fresh’ outlets in New Delhi, preferences and experiences will be of use to shape the retail out lets and their offerings. The changing attitude of consumers led them to step forward from unorganized Kirana stores to the organized retailing formats.

LITERATURE REVIEW India has been rather slow in joining the organized retail revolution that was rapidly transforming the economics in the other Asian tigers. The food retailing outlets in India are growing at a very fast rate in every city. The food retailing outlets in the recent years have shown tremendous impact in buying decision of the consumers. Retailing is one of the largest in the global economy, is going through a transition phase in India. The need of catering the shopping experience has been fulfilled by the shopping malls. They let customers experience their freedom of choice. They not only offer variety but also executive transparent pricing.

57

Technical, in its “retail outlook October 2007” reports that the total retail market will grow from $336 billion in 2006 to $590 billion dollar in 2011, which translated to an annual growth rate to 12%. Even while the share of modern retailing to four-fold from 4% in 2006 to 16% in 2011 and further to 2016, traditional retail will still grow in absolute terms from $324 billion dollar in 2006 to $493 billion dollar in 2011. A study by McKinsey point out that the Indian market for consumer goods is expected to reach $400 billion by 2010.Indian market is one of the five largest markets in the world. Liberalization of economy in the 1990’s and the entry of large players in the retail business have bought the retail industry in spot light. India's retail industry is the second largest sector, after agriculture, which provides According to Associated Chambers of Commerce and Industry of India (ASSOCHAM), the retail sector will create 50,000 jobs in next few years.

OBJECTIVES OF THE STUDY •

To study the latest trends of retailing in India

•

To study customer satisfaction in organized retail outlets towards branded retailing

•

To compare branded retailing shops and Kirana stores on the basis of consumer perception and satisfaction

•

Level of satisfaction of ‘Reliance Fresh’ outlet users

•

Reasons for dissatisfaction

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CHAPTER 4 RESEARCH METHODOLOGY

59

CHAPTER 4: RESEARCH METHODOLOGY Research is the systematic process of collecting and analyzing information (data) in order to increase our understanding of the phenomenon about which we are concerned or interested. Research is a common parlance refers to a search for knowledge. The urge of understand things may be rightly termed as research, in other words we can also refer research as a scientific and systematic search of pertinent information of specific topic. The concept of research is thus closely linked with human endeavor for better understanding of his evolution, environment and growth through diverse stages of human history. Research therefore, has been an integral part of academic pursuits in the past. It has served two-fold purpose, intellectual sharpening and evolving new theories to explain diverse phenomenon through which mankind survived with the progress of modern era. Human curiosity has leads to understand his environment in different angles. This process of studying this awareness of man manifested in a process known as research

RESEARCH DESIGN Descriptive Research is a fact-finding investigation which is aimed at describing the characteristics of individual, situation or a group (or) describing the state of affairs as it exists at present. The type of research method used is descriptive. The aim of descriptive research is to verify formulated hypotheses that refer to the present situation in order to elucidate it. Descriptive research is used because the research is primarily concerned with describing the nature and conditions and degree in detail of the present situation. A descriptive research is conducted using 100 respondents, where in the detailed analysis of preference of shopping, preference on organized and unorganized outlets, latest trend towards branded retail outlets especially on ‘Reliance Fresh’. Satisfaction level of customers towards more retail outlets. Where in the detailed analysis of the quality of the service is analyzed with respect to various variables 60

and compared with the competitors to arrive at a conclusion on the basis of finding and suggestions, which would help the company to provide greater service and make necessary improvements in the service quality.

TOOLS OF DATA COLLECTION In present study both primary as well as secondary data will be used, which will help in identifying the customer satisfaction towards ‘Reliance Fresh’ retail outlets and towards the ‘KIRANA’ shops and the latest trends of retailing in India. DATA SOURCES In present study both primary as well as secondary data is used, which helps in identifying the customer satisfaction towards ‘Reliance Fresh’ retail outlets and towards the ‘KIRANA’ shops and the latest trends of retailing in India. PRIMARY DATA The primary data for the study will be collected by means of structured questionnaire and will be distributed personally to the 100 respondents to get their responses. SECONDARY DATA The secondary data will be collected from company websites, lounge books, referrals, internet browsing, Journals. DESIGN OF QUESTIONNAIRE The questionnaire will be designed to collect the data to keep in view the objective of the study. It will be mostly closed ended and open-ended short questions for the convenience of respondents.

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SAMPLING PLAN Sampling is that part of statistical practice concerned with the selection of a subset of individual observations within a population of individuals intended to yield some knowledge about the population of concern, especially for the purposes of making predictions based on statistical inference. SAMPLING METHOD: CONVENIENCE SAMPLING Convenience sampling procedure was adopted for selecting respondents; the respondents will be mainly from New Delhi city, where the company has its retail outlets. Samples will be collected by survey method and the response of 100 respondents will be considered for analysis of data & interpretation. Sampling Unit: The sampling unit will be customers who will shop in the retail store or the similar store. Sample Size: Sample size will be taken as 100 respondents with respondents from inside and outside the similar retail outlet.

PLANNING AND ANALYSIS The primary data will be collected by means of structured questionnaire from 100 respondents and the secondary data will be collected from websites, company reports, magazines, referrals and lounge books. The data collected from the study will be analyzed and will be represented by simple graph, tables, and charts and will be interpreted for providing relevant recommendation. FIELD WORK The data is collected from the people doing shopping in New Delhi city (Aiyappa temple near Jalahalli cross, Kodigehalli, Ramaiah Layout, Malleshwaram) where the company has outlets.

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DATA PRESENTATION AND ANALYSIS The primary data was collected by means of structured questionnaire from 100 respondents the secondary data was collected from websites, company reports, magazines, referrals and lounge books. The data collected from the study is analyzed by simple graph, tables, and charts and interpreted for providing relevant recommendation.

LIMITATION OF THE STUDY •

This study is restricted to New Delhi city only and therefore, the results obtained out of this study cannot be generalized to other parts and rural area of the country.

•

Due to time constraints the sample size is restricted to 100 customers.

•

The analysis will be based on the current data; as such it may lose its relevance in the future.

•

The response of the respondents may be biased.

SCOPE OF THE PROJECT •

The project aims to reveal the market status & competition for ‘Reliance Fresh’

•

It helps the company in strategy formulation and planning for further improvements.

•

The study aims to reveal the customer satisfaction towards organized retail outlets.

•

To know where ‘Reliance Fresh’ is facing problems and where it is having new opportunities in retail sector.

•

To compare with organized retail outlets and unorganized retailers and to study the latest trends of retailing in India.

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CHAPTER 5 DATA ANALYSIS AND FINDINGS

64

CHAPTER 5: DATA ANALYSIS AND FINDINGS DATA ANALYSIS Data collection is the systematic recording of information; data analysis involves working to uncover patterns and trends in data sets; data interpretation involves explaining those patterns and trends. Analyzing survey data is an important and exciting step in the survey process. It is the time that you may reveal important facts about your customers, uncover trends that you might not otherwise have known existed, or provide irrefutable facts to support your plans. By doing in- depth data comparisons, you can begin to identify relationships between various data that will help you understand more about your respondents, and guide you towards better decisions. Here data collected on the basis of questionnaire survey on customer satisfaction on organized retail outlets is on Reliance in New Delhi. Walter H De vries, Zeithaml and Berryand Cronin and Taylor (2001). They conducted a study on Quality of services by considering its various dimensions like reliability, availability, performance, serviceability, reputation, competent staff, responsiveness and courtesy, technical facilities, operational facilities, technical procedure and communication. In contrast “Universal dimensions determining” the quality of services as received by customers is tangibility, responsiveness, assurance and empathy Cronin and Taylor (1992) the conceptualization of service quality as a gap between expectations and performance is inadequate. The research points out the confusion is pertaining literature over the relationship between service quality and customer satisfaction. According to that research, the concept of service quality should be customer’s attitude towards the service, since the concept of satisfaction is defined as a gap between expectations and performance or disconfirmations of expectations.

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Table 4.1 Age of respondents Age Group

No of respondents

Percentage

18-28

58

58%

29-39

22

22%

40-50

12

12%

51-60

8

8%

> 60

0

0%

Total

100

100%

Age of respondent

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ANALYSIS From the above graph and table presented above it is evident that majority of the respondents are of age in between 18-28 years. INFERENCE The above figure shows that most of respondents belong to age group between 18-28 years. Table 4.2 Gender of the Respondents (Gender ratio) Gender

No of Respondents

Percentage

Male

68

68%

Female

32

32%

Total

100

100%

Gender Ratio No of respondents

No of respondent

Percentage Male

Female

Gender

INFERENCE From the table and bar graph presented above, the distribution of the shoppers is evident. This question was aimed to identify the distribution between the two genders. It can be deducted that male respondents are more as compared to female respondents. 67

Table 4.3 Income of respondents No of Respondents

Percentage

< 10,000

34

34%

10000-20000

40

40%

21000-30000

18

18%

>30000

8

8%

Total

100

100%

No of respondents

Income Ratio

INFERENCE From the above graph it is evident that most of respondents are having income level in between 10000-20000.

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Table 4.4 Shopping frequency Particulars

No of Respondents

Percentage

Daily

10

10%

Weekly

40

40%

Monthly

44

44%

Occasionally

6

6%

Total

100

100%

Frequency of Shopping 6%

10% Daily

44%

40%

Weekly Monthly Occasionally

ANALYSIS From the above graph frequency of shopping is evident. Of the 100 respondents it shows that 10% of the respondents do shopping daily, 40% of the respondents do shopping weekly, 44% of the respondents do shopping monthly and 6% of the respondents shop occasionally. INFERENCE The above figure shows that most of the respondents do shopping weekly and monthly. It can be deduced that people who visit once a month and weekly are 69

those people who visits various stores for their regular needs and also may be because of the benefits by the stores such as discounts and offers. Table 4.6 Service of Retail outlets Particulars

No of Respondents

Percentage

Excellent

18

18 %

Good

56

56 %

Satisfactory

20

20 %

Not Satisfactory

6

6%

Total

100

100

ANALYSIS From the above table and graph the satisfaction level respondents is evident with respect to services provided by the retail outlets. Of the 100 respondents 18% of the respondents are agreed with excellent rating service. 56% of the respondents agreed with good rating service. 20% of the respondents agreed with satisfactory rating service and 6% of the respondents agreed with not satisfactory rating service. INFERENCE From the responses it can be inferred that most of the respondents are happy with the service provided by the retail outlets and there are very less people who are not satisfied with the services provided by retail outlets.

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Table 4.7 Expectation of Gifts and discounts From Company Preference

No of Respondents

% Respondents

Yes

86

86 %

No

14

14 %

Total

100

100%

Preference

14%

Yes No 86%

ANALYSIS From the above table and graph the expectation of respondents is evident. Of the 100 respondents it shows that 86% of the respondents except to receive free gifts and discounts offered by the retail outlets and 14% of the respondents do not expect any free gifts and discounts. INFERENCE Majority of shoppers expect free gifts and discounts from the retail outlets. It can be deduced that free gifts and discounts attracts a greater number of customers.

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Table 4.8 Perception about ‘Reliance Fresh’ Products Perception

No. of respondents

Percentage

Excellent

8

8%

Good

58

58 %

Satisfactory

28

28 %

Not Satisfactory

6

6%

Total

100

100%

ANALYSIS From the above graph the perception of respondents towards “Reliance Fresh” products are evident. Of the 100 respondents 8% respondents has excellent perception about ‘Reliance Fresh’ products, 58% of respondents’ has good perception about ‘Reliance Fresh’ products, 28% of respondent’s has satisfaction about ‘Reliance Fresh’ products and 6% of respondents not satisfaction about ‘Reliance Fresh’ products.

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INFERENCE Majority of respondents are satisfied with the products available in Reliance Fresh because of features like price, quality, variety and brand.

Table 4.9 Factors Influence Purchase of Reliance Fresh Products

Number of resp Factors

Very %

Imp

%

Normal % Least % Not % Total Total

Imp

Imp

Imp.

resp.

%

Price

76

76

12

12

6

6

3

3

3

3

100

100

Quality

84

84

10

10

2

2

2

2

2

2

100

100

Convenience

22

22

66

66

6

6

3

3

3

3

100

100

Availability

38

38

54

54

2

2

3

3

3

3

100

100

Brand

34

34

42

42

16

16

4

4

4

4

100

100

Freshness

80

80

12

12

2

2

3

3

3

3

100

100

Image

14

14

52

52

22

22

6

6

6

6

100

100

73

Chart Title

70 60 50 40 30 20 10 0

Price Quality Important

Convenience Normal

Availability

Brand Freshness Least Important

Image Not Important

ANALYSIS From the above graph it shows that factors affecting on purchase of more products Price Factor 76% respondents have rated price very important, 12% rated important, 3% rated least important, and 3% not important. Quality factor 84% respondents have rated quality as very important, 10% rated important, 2% rated normal, 2% rated least important and 2% not important. Convenience Factor 22% respondents have rated convenience as very important, 66% rated as important, 6% rated as Normal, 3%rated as least and 3% as not important.

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Availability Factor 38% respondents have rated availability as very important, 54% rated as important, 2% rated as normal, 2% rated least important and 2% not important. Brand Factor 34% of the respondents have rated brand as very important, 42% rated as important, 16% rated as normal, 4% rated as least important and 4% not important. Freshness Factor 80% of the respondents have rated freshness as very important, 12% rated as important, 2% rated as normal, 3% rated as least important and 3% rated as not important. Image factor 14% of the respondents have rated image as very important, 52% rated as important, 22% rated as normal, 6% rated as least important and 6% rated as not important. INFERENCE Majority of the customers prefer quality with lesser price along with availability of product. The other factors which influence the buying behavior of customers are brand, convenience of the store, freshness and image. The influencing factors differ for different customers according to their taste and preferences. Table 4.10 Employees Behavior Behaviour

No. of respondents

Percentage

Strongly agree

16

16%

Agree

72

72%

Somewhat Agree

6

6%

Disagree

6

6%

Total

100

100%

75

Sales Behavior

6%6% 16%

Strongly Agree Agree Somewhat Agree

72%

Disagree

ANALYSIS From the above table and graph the employee behavior towards customers in “Reliance Fresh” is evident. Of the 100 respondents 72% respondents agree that employees in store are polite and friendly, 16% have strongly agreed, 6% have somewhat agreed and only 6% respondents have disagreed about the employee behavior. INFERENCE Maximum number of customers that is 72% are happy with behavior of employees in the Reliance Fresh retail outlets. Table 4.11Factors Influencing purchase Factors

No. of respondents

Percentage

Advertisement

11

11 %

Brand ambassador

4

4%

Product display

42

42%

Suggestion from friends & relatives

27

27 %

76

Others

16

16 %

Total

100

100%

Sales Advertisement 16%

11%

Brand Ambassador

4%

Product display 27%

Suggestion from friends & relatives

42%

Other

ANALYSIS From the table and graph presented above the effect of media towards the purchase of products is evident. Of the 100 respondents 8% of the respondents are influenced by advertisement, 4% of the respondents are influenced by brand ambassador, 42% of the respondents are influenced by product display, 27% of the respondents are influenced by suggestion from friends and relatives and 17% of the respondents are influenced by other media. INFERENCE The purchase of products is mainly influenced by display of the product and then it is followed by suggestion from friends and relatives and advertising.

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Table 4.12 Price Comparison Price Range

No. of Respondents

Percentage

High

38

38%

Low

22

22%

Average

40

40%

Total

100

100%

No. of Respondents

40 35 30 25 20 15 10 5 0 High

Low

Average

No. of Respondents

ANALYSIS The above table and graph show comparison of Price of Reliance Fresh products with other retail outlets and Kirana shops. 40% of the respondents have said that price of Reliance Fresh products is high. 22% of the respondents said that price of Reliance Fresh products is low and 40% of the respondents have said that price of Reliance Fresh products is Average. INFERENCE Analyzing the responses from customers and above table and graph it can be said that price of the Reliance Fresh products is average as compared to other similar retail stores. 78

Table 4.13 Satisfaction parameters on Reliance Fresh outlets

Factors

Very

%

Satis

%

Unsatis

%

satis Overall

Very

%

Unsati

Total

Total

resp

%

29

29

53

53

12

12

6

6

100

100

52

52

42

42

3

3

3

3

100

100

38

38

54

54

6

6

2

2

100

100

8

8

68

68

20

20

4

4

100

100

Assortment

26

26

68

68

3

3

3

3

100

100

Credit

0

0

10

10

30

30

60

60

100

100

Quality Value for money No.of cash counters Complaint handling

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By analysis of above graph and table we come to know that Overall quality From the 100 respondents 29% are very satisfied, 53% are satisfied, 12% are unsatisfied remaining and 6% are very unsatisfied. Value for money Out of 100 respondents 52% are very satisfied, 42% are satisfied, 3% are unsatisfied and 3% are very unsatisfied. No of cash counters Of the 100 respondents 38% are very satisfied, 54% are satisfied, 7% are unsatisfied and 2% are very unsatisfied. Complaint Handling Out of 100 respondents 8% of respondents are very satisfied, 68% of respondents are satisfied, 20% are unsatisfied, and 4% are very unsatisfied. Assortment Of the 100 respondents 26% respondents are very satisfied, 68% are satisfied, 3% are unsatisfied and 3% are very unsatisfied. Credit facility Out of 100 respondents 0% respondents very satisfied, 10% are satisfied, 30% are unsatisfied and 70% are very unsatisfied. INFERENCE Above data shows that most of the respondents are satisfied with quality of the product, service, and value for money, number of cash counters and assortment of the product in store. Customers are very unsatisfied with the credit facility provided by retail outlets.

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Table 4.14 Satisfaction level Rating

No. of respondents

Percentage

Very satisfied

12

12 %

Satisfied

70

74 %

Not sure

11

11 %

Unsatisfied

7

7%

Total

100

100%

Rating

7%

11%

11%

Very Satisfied Satisfied Not Sure Unsatisfied 71%

ANALYSIS The above graph shows overall satisfaction level of Reliance Fresh products. 12% of the respondents are very much satisfied with Reliance Fresh products, 70% of the respondents are satisfied with the Reliance Fresh products, 11% of the respondents are not sure and 7% of the respondents are unsatisfied with the Reliance Fresh products.

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INFERENCE Analyzing the responses from customers and above table and graph it can be said that maximum number of customers are satisfied with the ‘Reliance Fresh’ products. Table 4.15 Service Rate of Kirana shops Rate

No. of respondents

Percentage

Excellent

5

5%

Good

17

17 %

Satisfactory

28

28 %

Not Satisfactory

50

50 %

Total

100

100 %

ANALYSIS The above figure shows the satisfaction level of customers with respect to services provided by the Kirana shop. Of the 100 respondents 5% rated excellent, 17% rated as good, 28% rated as satisfactory and 50% respondents rated as not satisfactory. 82

INFERENCE From this analysis we come to know that most of the customers are moving towards retails stores rather than Kirana shops. Service provided by the stores is better than Kirana shop. Table 4.16 Price differentiation

Price Range

No of respondents

% of respondents

High

58

58 %

Low

7

7%

Average

35

35 %

Total

100

100 %

35%

High Low 58%

Average

7%

ANALYSIS The above graph shows the price differentiation between ‘Reliance Fresh’ retail outlets and Kirana shops. Of the 100 respondents 58% of respondents rated as high, 35% rated as average and only 7% respondents rated as low.

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INFERENCE From this analysis we come to know that price of retail outlets is more as compared to kirana stores because of variety, quality and brand availability. Table 4.17 Future trend in retail sector Rating

No of respondents

% of respondents

Strongly agree

41

41%

Agree

44

44%

Somewhat agree

10

10%

Disagree

5

0%

Strongly disagree

0

0%

Total

100

100%

11% 0%

Strongly agree 43%

Agree Somewhat Agree Disagree

46%

Strongly Disagree

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ANALYSIS From the graph and table presented above future aspect of retail outlets is evident. Of the 100 respondents 41% of the respondents strongly agree with the future trend, 44% are agreed, 10% are somewhat agree, 5% disagrees and 0% strongly disagrees with the future trend. INFERENCE Future trend about retail shopping is very high. Table 4.18: Recommendation of Stores Stores

Respondents

Percentage

Reliance Fresh

33

33 %

Nilgiris

14

14 %

Big Bazar

20

20 %

More

24

24 %

Smart

9

9%

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ANALYSIS From the above table and chart, it is evident that how many respondents are satisfied with the store and are willing to recommend the various stores to their friends and relatives for shopping. Of the 100 respondents 33% recommended Reliance Fresh, 24% recommended More, 20% recommended Big Bazar, 14% recommended Nilgiris and 9% respondents recommended Smart for shopping. INFERENCE Shoppers visit to many different stores to get more effective price, quality, varieties and other benefit provided by the stores such as discounts and offers which plays an important role to provide satisfaction. But they recommend the store when they get the full satisfaction. The mostly recommended store for shopping is listed in the following descending order: Reliance Fresh, More, Big Bazar, Nilgiris and Smart.

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FINDINGS In the survey, interviews and study conducted above, I came across many factors that influence the consumers’ satisfaction on organized Reliance Fresh retail store and their subsequent shopping and buying decisions. Here, I present the findings gathered and the suggestions I offer to companies based on the data gathered and analyzed. •

The number of male respondents was more that is 68% as compared to the female respondents that was only 38%

•

40% of respondents fall under the income category of 10000 to 20000

•

70% of the shoppers who visit retail outlets regularly are the youth between the ages of 18 to 39 years

•

The survey indicates that the 44% of the respondents visit the retail store once a month and 40% of the respondents visit weekly

•

The most preferred store by respondents is Reliance Fresh that is 44%

•

Compared to competitors Reliance Fresh is the most visited store to shop

•

Due to competition respondents have different favorite stores according to their taste and preferences

•

The highest number of responses is attributed to Reliance Fresh for attracting people of many income groups

•

Mostly customers are satisfied with the service provided by the retail stores

•

Stores performing well in attracting the customers

•

Reliance Fresh provides better shopping experience

•

86% of the respondents are expecting huge discounts and offers from Reliance Fresh stores

•

Cleanliness and hygiene maintained in the store is up to the mark

•

Majority of customers prefer retail outlets for shopping

•

Forty four percent of customer prefer to purchase products on Reliance Fresh retail outlets that indicates customers are attracted towards Reliance Fresh outlets it indicates it has a good market potential in future

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•

Majority of the respondents are happy with the behavior of the employees towards customer service

•

Service provided by the retail stores is very good as compared to the Kirana stores

•

The majority of customers are aware about Reliance Fresh advertisements, product display, suggestion from friends and relatives and there is a lot of scope to promote through print media

•

The main parameters for purchase in preferred store are price, quality and variety

•

Many of the people go for unplanned shopping

•

Most customers prefer shopping at retail outlet due to the wide assortment of products available

•

Giving gifts, offers and discounts have more effect on consumer buying decisions

•

The study reveals that the employees in the retail stores are not pressurizing customers to purchase

•

It is evident that majority of the respondents are more concerned with quality and price of the products provided in the retail stores

•

Satisfaction towards retail stores is highly dependent on price & quality of product

•

Giving gifts, offers and discounts have more effect on consumer buying decisions

•

Maximum number of the respondents are shopping in retail outlets it shows that future trend and growth of retail sector is very high

•

Satisfaction level of respondents on Reliance products shows that Reliance Fresh has good quality products

•

Customer Service provided by the Kirana stores is satisfactory but most of the respondents are willing to visit the retail outlet

•

Reliance Fresh is the most recommended store by the respondents to their friends and relatives for shopping.

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CHAPTER 6 CONCLUSION AND RECOMMENDATIONS

89

CHAPTER 6: CONCLUSION AND RECOMMENDATIONS RECOMMENDATIONS •

Create awareness & manage home delivery services properly

•

There should be proper assortment of various product categories

•

Cleanliness and hygiene should be maintained regularly

•

Proper training should be provided to sales person so that they can deal with the customer efficiently and demonstrate about the products

•

Various schemes and festival offer, cash discounts on bulk purchase can be provided to attract new customers

•

Providing credit facility to loyal customers it increases sales volume.

•

Most of the customers are expecting gifts, discounts, offers so Reliance Fresh has to introduce special benefits on huge purchase

•

Reliance Fresh has to improve promotion strategy

•

Selecting the store location is very important. It may include parking space for vehicles, lighting and fixtures arrangement of merchandise, location of billing counter

•

Quality and variety of the products should be up to the mark, in Retail stores so that it attracts a greater number of customers

•

Different advertising medium should be adopted to bring awareness in shoppers about the retail store and its product

•

There should be proper assortment of various product categories

•

In an era of hyper competition retailers could adopt E- retailing which would benefit to deliver better services, assortments, products information, speed, price and so on

•

International brands could be made available in retail stores.

•

The no. of cash counters needs to be increased, keeping in view the customer traffic intensity

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CONCLUSION The study is an attempt to measure customer’s satisfaction at Reliance Fresh outlets in New Delhi. The customers are the main asset for any organization, without satisfying them no organization can be run well. Customer satisfaction towards retail stores is affected by various factors. This survey was meant to identify the customer satisfaction level towards Reliance Fresh retail stores. Findings of this research suggest that the level of customer satisfaction is highly affected by the quality and price of the products, wide range of products and location and conveyance are more attracting customers to visit the retail outlet. It is found that most of the customers of Reliance Fresh retail store New Delhi are satisfied by the quality of service, convenience, complaint handling, and employee’s behavior availability of products, branded products. But the customers are not satisfied with the credit facility, high price and lesser number of outlets. The analysis shows that Reliance Fresh outlets have been fairly successful with their marketing strategies and customer retention, but they still have to upgrade services like more efficient billing, better parking facilities and wider range of product availability to meet the competition. The store should concentrate more on the F & V (fruits and vegetables) section. As it is perishable in nature and has a short shelf life, it requires more concentration. Store should take care of indent because proper indent can solve half of the problem and the rest can be handled by following various practices like reducing wastage by the means of proper handling of F&V (fruits and vegetables). This includes treatment of green vegetables, proper cleaning etc. and last but not the least by increasing the sales not only of F&V. But also, for other products which is only possible by retaining our customers by the way of promotions. From the study and research survey I can conclude that the Reliance Fresh is a good retail outlet for shopping comparing to other retail outlets such as More, Big Bazar, Smart, Nilgiris etc. The strategy of Reliance fresh is very effective as they know very well how to attract customers, which is reflected in the vast custom they enjoy in relation to others. A good and friendly behavior of sales personnel’s in the store is also a 91

reason for increase in sales. Due to the upsurge of the retail sector, unorganized sectors are perishing because of their old concepts, poor service, non - competitive pricing etc. Therefore, they have to upgrade their performance in order to compete with the big leagues. To conclude it can be said that most of the Reliance Fresh customers are happy with the service received. More, Nilgiris, Total, Smart, Big Bazaar are tough competitors of Reliance Fresh even though Reliance Fresh is trying hard to attract the customers by introducing new offers schemes etc. to capture the market share. According to customer there is huge potential for increasing market share of supermarket. Findings of this research suggest that the level of customer satisfaction is highly dependent on various parameters such as price, brand, customer service, quality and variety of the products. Hence it is very much important for the retail stores to consider all those parameters to enhance the level of customer satisfaction.

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BIBLIOGRAPHY BOOKS •

Schiffman Leon.Gand Leslie Lazar Kanuk; Consumer Behavior; Pearson Education; 7th edition;2002

•

Levy Michael;Retailing Management;Tata McGraw-Hill, New Delhi,5th edition;2004

•

Kothari.C.R;Research Methodology;New Age International(P) Ltd. New Delhi,2nd edition;2009

•

Zeithamil Valarie,A,Service Marketing;Newyork McGraw-Hill

WEBSITES •

http://www.wikipedia.com

•

http://www.researchindia.com

•

http://www.slideshare.net/jas.bhatia/reliancefresh

•

http://corporate.reliance.com/home.aspx

•

http://retail.about.com/od/location/a/selecting_site_2.htm

MAGAZINES & JOURNAL •

Indian journal of marketing

•

Retail Magazine by Abijit Ghosh

•

Business line (catalyst)

•

Economic Times (Brand Equity)

•

Business World

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ANNEXURE QUESTIONNAIRE I am Obaid Yaseen, student of PGDM IB (VII) Semester, Jagannath International Management School, Kalkaji, New Delhi. I am undertaking a dissertation project work as a part of my academics doing this survey in order to a study measuring customer satisfaction in Reliance Fresh outlets in New Delhi. I kindly request you to co-operate with me for few minutes and respond to the following questions and I assure that the information provided by you will be kept confidential and will use only for academic’s purpose. Personal data Name : Age

:

Sex

:

Contact details: Occupation : Income: 1) How often do you do your shopping? i.

Daily

ii.

Weekly

iii.

Monthly

iv.

Occasionally

2) Which one do you prefer more? A) Branded retail outlets, if yes specify a) Reliance fresh b) More c) Nilgiris d) Big market e) Smart f) Other B) Kirana shops If yes then go to Q.no 12 & 13 3) Service provided by retail outlets is i.

Excellent

94

ii.

Good

iii.

Satisfactory

iv.

Not satisfactory

4) Do you expect gifts, discounts etc. from the company? i.

Yes

ii.

No

5) What is your perception about ‘Reliance Fresh’ products? i.

Excellent

ii.

Good

iii.

Satisfactory

iv.

Not satisfactory

6) How much importance do you give to the following factors, when you purchase a “Reliance Fresh’’ retail products?

Very Factors

important Normal

Important

Least

important Important

Price Quality Convenience Availability Brand Freshness Image

7) The employees at the store are polite and friendly i.

Strongly agree

ii.

Agree

iii.

Somewhat agree

Not

95

iv.

Disagree

8) Which of these factors affect your purchase? i.

Advertisement

ii.

Brand ambassador

iii.

Product display

iv.

Suggestion from friends & relatives

v.

Others

9) How is the price of ‘Reliance Fresh’ products as compared to the other retail outlets and kirana shops? i.

High

ii.

Low

iii.

Average

10) How do satisfied with following parameters of Reliance Fresh outlets Particulars

Very satisfied Satisfied Unsatisfied Very Unsatisfied

Overall Quality Value for money No. of cash Counters Complaint handling Assortment (Variety& Choice) Credit facility

11) Overall how you are satisfied with ‘Reliance Fresh’ outlets i.

Very Satisfied

ii.

Satisfied

iii.

Not sure

iv.

Unsatisfied

12) Service provided by kirana shop is

96

i.

Excellent

ii.

Good

iii.

Satisfactory

iv.

Not satisfactory

13) How is the price of Kirana products as compared to the ‘Reliance Fresh’ retail outlets? i.

High

ii.

Low

iii.

Average

14) Do you think the future trend – the market share of organized retail will increase i.

Strongly Agree

ii.

Agree

iii.

Somewhat Agree

iv.

Disagree

v.

Strongly disagree

15) Refer the Retail Store. a) Reliance Fresh b) More c) Nilgiris d) Big Market e) Smart 16) If any additional comments on Reliance products regarding customer satisfaction. ………………………………………………………………………………………… ……… ………………………………………………………………………………………… ……… …………

Thanking you 97