A PROJECT REPORT ON STUDY THE DETERMINATION OF RETAIL PATRONAGE IN RETAIL INDUSTRY

Under the guidance of: Dr. Amit Mittal SUBMITTED BY: Dilbagh Singh Roll No. 1208012 BBA-6th Sem. Session: 2008-2011

SUBMITTED TO

Maharishi Markandeshwar Institution of Management Mullana (Ambala) (M.M.I.M) 133203

DECLARATION
I hereby declare that the dissertation entitled STUDY THE
DETERMINATION OF RETAIL PATRONAGE IN RETAIL INDUSTRY submitted for the degree of Bachelors of Business

Administration is my original work and the dissertation has not formed the basis of award of any degree, diploma, associate ship, fellowship or similar other titles. It has not been submitted to any other University or Institution for the award of any degree or diploma.

Date Place

Dilbagh Singh 1208012

CERTIFICATE
Certified that the research
OF

project

entitled

STUDY
IN

THE

DETERMINATION

RETAIL

PATRONAGE

RETAIL

INDUSTRY as per my knowledge is an original piece of research

work done by Mr. Dilbagh Singh, Roll No. 1208012 during the period of his study under my guidance for the award of the Bachelors of Business Administration (BBA) degree

Date: Place Designation

Dr. Amit Mittal

ACKNOWLEDGEMENT
Gratitude is not a thing of expression; it is more a matter of feeling.

There is always a sense of gratitude which one express for others for their help and supervision in achieving the goals. I too express my deep gratitude to each and every one who has been helpful to me in completing the project report successfully. First, of all, I am highly thankful to Dr. Amit Mittal, Principal, M.M. Institute of Management for allowing me to pursue my Project Report on STUDY THE DETERMINATION OF RETAIL PATRONAGE IN RETAIL INDUSTRY. I give my regards and sincere thanks to _______________ who has devoted his precious time in guiding me and helping me it with in time. I feel self-short of words to thanks my parents and friends who had directly or indirectly instrumental in the completion of the project.

DILBAGH SINGH

EXECUTIVE SUMMARY

CONTENTS
Chapters Title Declaration Certificate Acknowledgement 1. Introduction 2. Review of Literature 3. Research Methodology 3.1Selection of the Topic 3.2Objective of the study 3.3Nature of the Study 3.4Sampling Procedure and design 3.5Methods of Data collection 3.6Analysis and interpretation of the data 3.7Scope of the study 3.8Sampling Method 3.9Significance of the study 4. Latest Developments in the Topic 5. Analysis and interpretation 6. Findings and conclusion 3.10 Limitations of the study Executive Summary Page No.

7. Suggestions and Recommendations Annexure Bibliography

Retail consists of the sale of goods or merchandise from a fixed location, such as a department store, boutique, or by mail, in small or individual lots for direct consumption by the purchaser.[1] Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, 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 power. Shops may be on residential streets, shopping streets with few or no houses or in a shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of nonshop retailing. Retail comes from the Old French word retaillier (compare modern French retailler), which means "to cut off, clip, pare, divide" in terms of tailoring .It was first recorded as a noun with the meaning of a "sale in small quantities" in 1433 (from the Middle French retail, "piece cut off, shred, scrap, paring"). Like the French, the word retail in both Dutch and German

(detailhandel and Einzelhandel, respectively) also refers to the sale of small quantities of items.

Types of retail outlets

Department stores Discount stores General merchandise store Supermarkets Warehouse stores

Variety stores

Demographic Mom-And-Pop (or Kirana Stores as they call them in India) Specialty Stores Convenience Stores Hypermarkets Supermarkets Malls Category Killers or Category Specialist Vending Machines Automated Retail Big-box stores Convenience store General store

Retail pricing
The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer. In Western countries, retail prices are often called psychological prices or odd prices. Often prices are fixed and displayed on signs or labels. Alternatively, when prices are not clearly displayed, there can be price discrimination, where the sale price is dependent upon who the customer is. For example, a customer may have to pay more if the seller determines that he or she is willing and/or able to. Another example would be the practice of discounting for youths, students, or senior citizens. EXAMPLE Psychological Pricing - Rs9.99 instead of Rs10.00! Cost-Plus Pricing - Calculation of the average cost (AC) plus a mark up Value Pricing - status products/exclusive products

Second hand retail

Some shops sell second-hand goods. In the case of a nonprofit shop, the public donates goods to the shop to be sold. In give-away shops goods can be taken for free. Another form is the pawnshop, in which goods are sold

that were used as collateral for loans. There are also "consignment" shops, which are where a person can place an item in a store and if it sells, the person gives the shop owner a percentage of the sale price. The advantage of selling an item this way is that the established shop gives the item exposure to more potential buyers.

Retail Sales
The Retail Sales report is published every month. It is a measure of consumer spending, an important indicator of the US GDP. Retail firms provide data on the dollar value of their retail sales and inventories. A sample of 12,000 firms is included in the final survey and 5,000 in the advanced one. The advanced estimated data is based on a sub sample from the US CB complete retail & food services sample. It has been published by the US Census Bureau since 1951

Indian Retail Industry

The India Retail Industry is the largest among all the industries, accounting for over 10 per cent of the countrys GDP and around 8 per cent of the employment. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. But all of them have not yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry. The total concept and idea of shopping has undergone an attention drawing change in terms of format and consumer buying behavior, ushering

in a revolution in shopping in India. Modern retailing has entered into the Retail market in India as is observed in the form of bustling shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment and food all under one roof. A large young working population with medium age of 24 years, nuclear families in urban areas, along with increasing working women population and emerging opportunities in the services sector are going to be the key factors in the growth of the organized Retail sector in India. The growth pattern in organized retailing and in the consumption made by the Indian population will follow a rising graph helping the newer businessmen to enter the India Retail Industry. In India the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the India Retail Industry to grow faster. Indian retail is expected to grow 25 per cent annually. Modern retail in India could be worth US$ 175-200 billion by 2016. The Food Retail Industry in India dominates the shopping basket. The Mobile phone Retail Industry in India is already a US$ 16.7 billion business, growing at over 20 per cent per year. The future of the India Retail Industry looks promising with the growing of the market, with the government policies becoming more favorable and the emerging technologies facilitating operations.

Retail Store Patronage

This can be broadly classified into two categories:
I. Trade-Area Related: These studies focus on the Product/Market

Characteristics. Convenience is the primary reason that consumers show patronage. These studies assume that convenience is the primary reason for loyalty. Most work in this area stems from a model proposed. The Huff Model states that customer patronage is directly proportional to utility factors given by square feet and inversely proportional to disutility factors given by physical distance. The limits to enhancing loyalty is essentially seen as the limited centripetal pull of a store/shopping centre. Location-related variables are given importance in analyzing both trade areas and retail patronage behavior. These studies most often count the benefits of locating a store in a shopping centre/mall to increase the store destination traffic rather than just stay with the convenience pull. In fact, these studies determine shopping centre traffic more accurately than single store traffic. The Huff model has subsequently been studied by introducing trade overlap areas for effects on store patronage. Generically speaking, these studies have resulted in the formation of the Theory of Gravitational Pull in the field of retailing patronage studies. Apart from distance, several other factors such as Income and social class perceptions have also been studied from the perspective of retail centre patronage decisions.

II. Product-related: Within a given trade area, these studies emphasize the uniqueness of assortment as a way of influencing store loyalty and patronage. In consumer priorities, assortment and variety comes after convenience and price. Given that consumers are favourably inclined to revisit a store where they have had positive shopping experiences (found something they could not find anywhere else), these studies suggest that competing stores need to differentiate themselves based on type and quality of assortment. The emphasis here is on tailoring the environmental cues using retail mix elements to foster patronizing. One oft used strategy is to develop own store Private Labels. Consumers have distinct perceptions of national and local brands vis--vis the retail private store brands. It is observed that there are certain product categories where quality believability of national brands is far too strong for store brands to make any impact on consumer loyalty. In India, grocery retailer brands in product categories like honey, jam etc. are showing a much more favorable sales impact as compared to ketchup. Internationally, coffee has greater store-brand loyalty as compared to loyalty to national brands. It is too premature for an Indian retailer to explore into the territory of brand building given the limited promotional budgets at present (In grocery retailing, store brands account for less than 2% of sales value in Food World and regional/local chains like Subhiksha (Chennai), Homeland (Pune) are yet to invest in private labels). But one expects that in a few years, push for greater margins and the need to retain the loyal consumer will mean more investment in this area. Internationally, private store brands account for 20-30% of total store sales in groceries.

Additionally, to fully understand the implication of removing (or in fact adding) items to assortment depth on customer purchase patterns, there needs to be an understanding of these implications coupled with issues of product substitution, price, store environment effects, and the presence of competing offers, as well as customers purchase goal in their study of fresh flower category, found that the store environment (either that of selected store for purchase or indeed that of competitors) made no significant impact on purchase decisions. However, if the store has a poor environment and a competitor is located close by, then, unsurprisingly, they found that it was likely that the customer would go to the competitor. Perhaps more interestingly, they reported that assortment size had a strong effect on the purchase. The actions required to keep loyal customers have two aims: the first is defensive, to give the customer no reason to leave a brand or company; the other is offensive, to create a personalized relationship with the clients, the basis of a more intimate and therefore involving bond, what Americans call Customer bonding. The attention of retail managers is increasingly focusing on how customers find their way around product ranges and brand knowledge within stores, as well as how they navigate store aisles. New consumers are looking for edited choices; that is visible guidelines to help them save time and efforts. Smart retailers who understand this particular consumer want are targeting specific grouping of products to appeal to specific segments of new consumers. For example, a supermarket, rather than following the traditional practices of locating additive-free products with other products found to be true in subsequent studies. Most consumers are multiple-store

shoppers though differences exist across store types. As quoted in a study Grocery Stores have fairly low loyalty in the sense of generally not satisfyingcustomers total needs. Extending this, one can intuitively say that consumers would display greater patronage behavior for furniture as compared to garments, more for garments as compared to grocery etc. In any case, exclusive shopping at a single store is rare. In the second definition, patronage is usually measured by comparing consumers total weekly/monthly purchase (in money terms) from the store, with the normal family consumption in a month. The third definition recognizes the multiple-store shopping behavior and measures patronage as the proportion of trips made to a particular store given the average number of trips made in a given time period. The fourth definition, more applicable in studies related to frequently purchased, low-value items like groceries, looks at number of items purchased and not its value as an indication of patronage behavior. The last definition presupposes that loyalty erodes fast. It has found application in situations where competitiveness is high, promotions and deals are constantly offered to lure shoppers, and retaining a customer is difficult given the numerous alternatives. Consequently this definition is more applicable in a more competitive scenario than afforded in India at present.

Store Patronage
Store Patronage involves the consumers choice for a particular retail store. Past retail and marketing studies have identified several consumer-oriented store attributes (e.g., price, quality, variety, discounts, and store reputation)

and their relationship to store patronage, but these studies overlooked how the physical environment affects retail store patronage. This examined differences in (a) Importance ratings of environmental dimensions for three shopping scenarios, (b) Importance ratings of environmental dimensions for each shopping orientation, (c) Perceptions of the store environment for each shopping orientation, and (d) Attitude toward the store environment and first store choice.

The statement of problem, research objectives, conceptual framework, hypotheses, conceptual definitions, assumptions, and limitations are presented in this chapter. Store choice is dependent on the timings of shopping trips (as consumers may go to a small or local store in short fill in trip) and go to a larger store for regular shopping trips. Consumers personal differences interact with situational factors and together they determine the store choice and shopping trip behavior. A consumers selection of a store is not completely random. The more recent he purchases experience and the more frequent visits the store, the more he is likely to repurchase that product in the store. This shows that the past experience influence on store choice and patronizing ability to either change, alter or reinforce the new shopping experience. Thus, we can say that consumers characteristics interact with situational variables to impact how information about the retail mix is processed, resulting in store choice and affecting store patronizing decisions. The store patronage is result of both the relative importance of

various motives and shopping assessment of alternative stores with respect to various factors (locations, store image, product availability, past shopping experience etc.) used in making the decisions Loyal shoppers, as per the first definition, are so rare as to be practically negligible. One of the earliest studies in this area was by. This has been found to be true in subsequent studies. Most consumers are multiple-store shoppers though differences exist across store types. As quoted in a study Grocery Stores have fairly low loyalty in the sense of generally not satisfyingcustomers total needs. Extending this, one can intuitively say that consumers would display greater patronage behavior for furniture as compared to garments, more for garments as compared to grocery etc. In any case, exclusive shopping at a single store is rare. In the second definition, patronage is usually measured by comparing consumers total weekly/monthly purchase (in money terms) from the store, with the normal family consumption in a month. The third definition recognizes the multiple-store shopping behavior and measures patronage as the proportion of trips made to a particular store given the average number of trips made in a given time period. The fourth definition, more applicable in studies related to frequently purchased, low-value items like groceries, looks at number of items purchased and not its value as an indication of patronage behavior. The last definition presupposes that loyalty erodes fast. It has found application in situations where competitiveness is high, promotions and deals are constantly offered to lure shoppers, and retaining a customer is difficult given the numerous alternatives. Consequently this definition is

more applicable in a more competitive scenario than afforded in India at present.

The India Retail Industry is the largest among all the industries, accounting for over 10 per cent of the countrys GDP and around 8 per cent of the employment. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. But all of them have not yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry. The total concept and idea of shopping has undergone an attention drawing change in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retailing has entered into the Retail market in India as is observed in the form of bustling shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment and food all under one roof. A large young working population with medium age of 24 years, nuclear families in urban areas, along with increasing working women population and emerging opportunities in the services sector are going to be the key factors in the growth of the organized Retail sector in India. The growth pattern in organized retailing and in the consumption made by the Indian population will follow a rising graph helping the newer businessmen to enter the India Retail Industry. In India the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the India Retail Industry to grow faster. Indian retail is expected to grow 25 per cent annually. Modern retail in India could be worth US$ 175-200 billion by 2016. The Food Retail Industry in India dominates the shopping basket. The Mobile phone Retail Industry in India is already a US$ 16.7 billion business, growing at over 20 per cent per year. The future of the India Retail Industry looks promising with the growing of the market, with the government policies becoming more favorable and the emerging technologies facilitating operations. Read more: http://www.articlesbase.com/career-management-articles/an-introduction-toindian-retail-industry-729290.html#ixzz1FpkKoLgr Under Creative Commons License: Attribution