Research Question:

Status of IT use in Retail sector of Pakistan :

problems and possibilities

Supervisor :
Mr Zahid Ali

Researcher:
Jamal Gill
Roll No.19
Bs.8
th
commerce


THE I SLAMIA UNI VERSI TY OF BAHAWALPUR
Executive Summary

The retail boom in Pakistan has given space to many companies who have mushroomed
out to benefit from this retail boom, which is nothing but a structured format of the
unorganized retail business which is being done in Pakistan from ages.
Many stores have come up with attractive interiors, state of the art infrastructure and the
best possible brands to the customer which has led to the growth of mall culture in
Pakistan. The stores try and attract customers by providing them with such services and
plethora of options in brands in different categories so that they can retail customers for
long and make them loyal towards their retail stores.
The retail business is booming in Pakistan and there has been remarkable shift in the
buying behavior of the people from traditional stores to these departmental stores. It
becomes important for the marketers to understand these relationships for successful
design and execution of retail strategies. It would also enable the researcher to
understand the organized retail formats and consumers buying attitude towards these
stores.
The data was collected by getting the questionnaire filled by the respondents who were
loyalty card holders to find out that what makes them loyal towards Westside stores and
makes them visit Westside again and motivates them to purchase more from here. The
purpose of this paper is to raise the question of the relationship between the various
factors and how they lead to store loyalty.






Introduction
Retailing consists of the sale of goods or merchandise from a fixed location, such as
a department store ,shopping mall etc .The retailer buys goods or products in large
quantities from manufacturers 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.
In the retail outlet various type of good and service are provide to the customer but all
the goods and services are generally homogenous in nature through all the other retail
outlets . Product and services of every company are available in every retail outlet. It is
also find that many customer only used to shopping in own decided outlet rather from
every outlets even there is homogenous among the product and service offer by the
every retail outlet .So This put the question in the mind of the every retailer that is there
is any gap between what customer expected from retailers and what retailer provides to
customer during shopping.
No two customers have the identical likes and preferences. Delivery value and
narrowing down the zone of tolerance is a tightrope walk for marketer in organized
retail sector. Especially in market like Pakistan the challenges is formidable because
organizations need to cater to a wide and diverse group of customers .Thus building
equity and generating volumes in such complex market tapers down to the function of
managing customer expectation.
Customers take their time to first sketch their needs and then arrive at a specific
decision. At the end of the day the question is what does the customer expect? How to
fulfill the glaring gap between need and expectations? The answers to this question are
by delivering the value
But in many case retailers are not aware of what their customer expect. Hence they are
unable to deliver the right value to the right customer and satisfy them .Especially in
this competitive scenario where the customer are well informed, commanding and
demanding at the same time it has become imperative for the organization to be updated
on the WHAT,WHYand HOW of each and every customer. This calls for
empathizing with the customer by indulging into their priorities and decision making.
Even in the case of a product as simple as beauty soap, customer have versatile
expectations like, good packaging fragrance, herbal or medical benefit, glowing skin
etc. and all this at an affordable price. A daunting task but companies have no option
but to offer the expected value, that too by keeping the operating costs low.


Following general expectations of a typical customer
Value of Money
Availability and location
Service expectations
Quality in Product
Need based solution
So in other to deliver the value, Retail outlets in addition to providing products and
services, need to cater for a wide range of motives. The various determinants of retail
outlet preference include cleanliness, well-stocked shelves, and range of products,
helpful staff, disabled access, wide aisles, car parking, multiple billing points and
environmentally friendly goods. These differing motives arise as retailers cater to
different types of shoppers who include economic consumers (concern with value),
personalized consumers (concern with relationships), recreational shoppers (shopping
as a leisure activity) and apathetic consumers (who dislike shopping). Retailers have to
satisfy budding customers, older consumers as well as time crunched individuals whose
motives all tend to be conflicting as well as different. Retailers need to establish a good
image to prevent customers from shopping around. They must cater to shoppers need
for pleasure and practicality.
If expressed as a calculation, customer satisfaction might look something like this:
Customer expectations = Companies Performance/ Companies Satisfaction
Satisfaction is a consumers post-purchase evaluation of the overall service experience.
It is an affective reaction (Menon and Dub, 2000) in which the consumers needs,
desires and expectations during the course of the service experience have been met or
exceeded (Lovelock, 2001). Satisfaction in this sense could mean that a supermarket has
just barely met the customers expectations, not exceeded nor disappointed those
expectations. The benefits of taking the customers response beyond satisfaction at this
level by exceeding expectations, is a competitive strategy many retailers aspire to
achieve. There is a recurrent struggle for existence and survival in the wake of deep
competition, drastically changing customer attitudes and expectation levels.
The study would enable us to understand the impact of various factors that influence a
consumers shopping behavior in a departmental store. It would also help in knowing the
magnitude and direction of movement of these factors amongst each other. These factors have
been divided into three heads- Store, Situation and Shopper factors.

Retail Industry: An Overview

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 producers 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.

Retail has played a major role world over in increasing productivity across a wide range
of consumer goods and services .The impact can be best seen in countries like U.S.A.,
U.K., Mexico, Thailand and more recently China. Economies of countries like
Singapore, Malaysia, Hong Kong, Sri Lanka and Dubai are also heavily assisted by the
retail sector.

Top Retailers Worldwide: Rank Retailer Home Country
1. Wal-Mart Stores, Inc. U.S.A.
2. Carrefour Group France
3. The Kroger Co. U.S.A.
4. The Home Depot, Inc. U.S.A.
5. Metro Germany

The retail industry in Pakistan 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 Pakistan as the second most attractive retail destination globally
from among thirty emergent markets. It has made Pakistan the cause of a good deal of
excitement and the cynosure of many foreign eyes. With a contribution of 14% to the
national GDP and employing 7% of the total workforce (only agriculture employs
more) in the country, the retail industry is definitely one of the pillars of the Pakistann
economy.

Retail sales in Pakistan amounted to about Rs.7400 billion in 2002, expanded at an
average annual rate of 7% during 1999-2002. With the upturn in economic growth
during 2003, retail sales are also expected to expand at a higher pace of nearly 10%.
Across the country, retail sales in real terms are predicted to rise more rapidly than
consumer expenditure during 2003-08. The forecast growth in real retail sales during
2003- 2008 is 8.3% per year, compared with 7.1% for consumer expenditure.
Modernization of the Pakistann retail sector will be reflected in rapid growth in sales of
supermarkets, departmental stores and hyper marts. Sales from these large-format stores
are to expand at growth rates ranging from 24% to 49% per year during 2003-2008,
according to a latest report by Euro monitor International, a leading provider of global
consumer-market intelligence.

A. T. Kearney Inc. places Pakistan 6th on a global retail development index. The
country has the highest per capita outlets in the world - 5.5 outlets per 1000 population.
Around 7% of the population in Pakistan is engaged in retailing, as compared to 20% in
the USA.

In a developing country like Pakistan, a large chunk of consumer expenditure is on
basic necessities, especially food-related items. Hence, it is not surprising that food,
beverages and tobacco accounted for as much as 71% of retail sales in 2002. The share
of food related items had, however, declined over the review period, down from 73% in
1999. This is not unexpected, because with income growth, Pakistanns, like consumers
elsewhere, have started spending more on non-food items compared with food products.
Sales through supermarkets and department stores are small compared with overall
retail sales. Nevertheless, their sales have grown much more rapidly, at almost a triple
rate (about 30% per year during the review period). This high acceleration in sales
through modern retail formats is expected to continue during the next few years, with
the rapid growth in numbers of such outlets due to consumer demand and business
potential. The factors responsible for the development of the retail sector in Pakistan
can be broadly summarized as follows:
In the past few years the whole concept of shopping has been altered in terms of format and
consumer buying behavior. With the increasing urbanization, the Pakistani consumer is
emerging as more trend-conscious. There has also been a shift from price considerations to
designs and quality as there is a greater focus on looking and feeling good (apparel as well as
fitness. With the emergence of organized retail and modern retail formats, private labels have
been gaining significance. They enhance the profitability levels of product categories, increase
retailers negotiation powers and create consumer loyalty. More retailers are introducing their
own brands in all categories including Food & Groceries, apparel, accessories, and footwear.
These own brands also do not have to manage intermediaries since retailers maintain oversight
of the supply chain. Today, customers buy experiences and not brands or products.
Following Sociological-Cultural factors are of great importance while drafting a retail strategy
Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural
market across most categories of consumption
Technology factors are the scientific advances, which influence the competitive position of the
retailer. Maintaining awareness of new technologies decreases the probability of becoming
obsolete and promotes innovation. Advancements in technology can impact the transformation
plan in many ways. New technology can change the demand for a product, render current
selling processes obsolete, and reduce costs to undercut competitors, produce new products and
a host of other possibilities. . Pakistan lacks a strong supply chain when compared to Europe or
the USA. The existing supply chain has too many intermediaries: Typical supply chain looks
like:- Manufacturer - National distributor - Regional distributor - Local wholesaler - Retailer -
Consumer. This implies that global retail chains will have to build a supply chain network from
scratch. This might run foul with the existing supply chain operators. In addition to fragmented
supply chain, the trucking and transportation system is antiquated. The concept of container
trucks, automated warehousing is yet to take root in Pakistan. The result: significant
losses/damages during shipping.
Therefore the implementation of IT in retail business is important in order to survive in the
market

Malls in Pakistan

Over the last 2-3 years, the Pakistann consumer market has seen a significant growth in
the number of modern-day shopping centers, popularly known as malls. There is an
increased demand for quality retail space from a varied segment of large-format
retailers and brands, which include food and apparel chains, consumer durables and
multiplex operators. Shopping-centre development has attracted real-estate developers
and corporate houses across cities in Pakistan. As a result, from just 3 malls in 2000,
Pakistan is all set to have over 220 malls by 2005. Today, the expected demand for
quality retail space in 2006 is estimated to be around 40 million square feet. While
previously it was the large, organized retailers with their modern, up-market outlets,
and direct consumer interface- who had been a key factor driving the growth of
organized retail in the country, now it is the malls which are playing the role.

Factors such as availability of physical space, population densities, city planning, and
socio-economic parameters have driven the Pakistann market to evolve, to a certain
extent, its own definition of a mall. For example, while a mall in USA is 400,000 to 1
million sq.ft. in size, an Pakistann version can be anywhere between 80,000 sq.ft. and
500,000 sq.ft. By 2005, total mall space in the 6 cities of Mumbai, Bangalore,
Hyderabad, Chennai, Kolkata, and National Capital Region (Delhi, Noida, Gurgaon) is
expected to increase to over 21.1 million sq. ft. Compared to other big cities, Kolkata
and Hyderabad are relatively new entrants in the mall segment, but are witnessing quick
growth. Smaller cities like Pune, Ahmedabad, Lucknow, Ludhiana, Jaipur, Chandigarh
and Indore, are also expected to see a formidable growth in the growth of malls in the
near future. But malls in Pakistan need to have a clear positioning through the
development of differential product assortment and differential pricing, in order to
compete effectively in a growing mall market. Segmentation in malls, like up-market
malls, mid-market malls, etc., proper planning, correct identification of needs, quality
products at lower prices, the right store mix, and the right timing, would Ensure the
success of the mall revolution in Pakistan.

Challenges of Retailing in Pakistan

Retailing as an industry in Pakistan has still a long way to go. To become a truly
flourishing industry, retailing needs to cross the following hurdles:
Automatic approval is not allowed for foreign investment in retail.
Regulations restricting real estate purchases, and cumbersome local laws.
Taxation, which favors small retail businesses.
Absence of developed supply chain and integrated IT management.
Lack of trained work force.
Low skill level for retailing management.
Intrinsic complexity of retailing rapid price changes, constant threat of product
obsolescence and low margins.

The retailers in Pakistan have to learn both the art and science of retailing by closely
following:

How retailers in other parts of the world are organizing, managing, and coping up with
new challenges in an ever-changing marketplace. Pakistann retailers must use
innovative retail formats to enhance shopping experience, and try to understand the
regional variations in consumer attitudes to retailing.

Retail marketing efforts have to improve in the country - advertising, promotions, and
campaigns to attract customers; building loyalty by identifying regular shoppers and
offering benefits to them; efficiently managing high-value customers; and monitoring
customer needs constantly, are some of the aspects which Pakistann retailers need to
focus upon on a more pro-active basis.

Despite the presence of the basic ingredients required for growth of the retail industry in
Pakistan, it still faces substantial hurdles that will retard and inhibit its growth in the
future.

One of the key impediments is the lack of FDI status. This has largely limited capital
investments in supply chain infrastructure, which is a key for development and growth
of food retailing and has also constrained access to world-class retail practices.

Multiplicity and complexity of taxes, lack of proper infrastructure and relatively high
cost of real estate are the other impediments to the growth of retailing. While the
industry and the government are trying to remove many of these hurdles, some of the
roadblocks will remain and will continue to affect the smooth growth of this industry.

Fitch believes that while the market share of organised retail will grow and become
significant in the next decade, this growth would, however, not be at the same rapid
pace as in other emerging markets. Organised retailing in Pakistan is gaining wider
acceptance. The development of the organised retail sector, during the last decade, has
begun to change the face of retailing, especially, in the major metros of the country.
Experiences in the developed and developing countries prove that performance of
organised retail is strongly linked to the performance of the economy as a whole. This is
mainly on account of the reach and penetration of this business and its scientific
approach in dealing with customers and their needs. In spite of the positive prospects of
this industry, Pakistann retailing faces some major hurdles (see Table 1), which have
stymied its growth. Early signs of organized retail were visible even in the 1970s when
Nilgiris (food), Viveks (consumer durables) and Nallis (sarees) started their operations.


Technology has transformed the buying behavior of customers everywhere. Technology in the
store is all moving toward integration and more and more savvy customers. Point Of Sale is
undergoing major changes because of broadband access, the need and ability for inventory
visibility, customers ordering online, returns and pick- up in the store and also the movement
toward an ASP (application service provider) model. It is broadband that will help to transfer the
information fast and help retailers to serve their customers on time
Information Technology In Retail Industry
Now days retailing industry has become a technology dependent industry. All kinds of
technology are employed in order to achieve maximum output. These systems and technologies
are applied to achieve customer satisfaction which is one of the main pillars of retailing industry.
Moreover introduction of technology in the industries have led to an increase in the production
speed as well as accuracy. Introduction of information technology has occurred in various
industries like textile, food, hospitals, automobiles, telecommunication devices etc.
People in rural areas are also taking interest in the new technological advancements because it
reduces much of their work and also helps them achieve their target much easily and quickly. For
example 50-60 years back a weaver used to take 3 days to make a saree. But after the coming up
of textile industries with new technological advancements, they can now make 2500 sarees in a
single day with the same accuracy and quality. Such mouth watering benefits of the technologies
lure the rural people into accepting them and using them. Many big textile units have already
adopted IT in their companies in various forms. They use machineries with latest technology
available in the world and these machines utilise IT in many areas such as production
monitoring, quality monitoring and control, etc. Also, these companies are using Enterprise
Resource Planning (ERP) in various levels.

Literature Review

1. (Pathak, D.S., W.J.E .Crissy, and R.W Sweitzer 1974, Customer Image Versus the
Retailers Journal of Retailing, Vol.50).
Loyalty is also influenced by shopper related variables. Several factors such as age, income and
social class of the shopper have found to influence on customers decisions.(Moore, Charles
Thomas , and Joseph Barry Mason 1969, A research Note on major Retail Centre Patronage)
Customers belonging to different age groups prefer different stores. There have been researches
done which suggests that the greater the congruence between self image and store image, the
greater is the probability that the customer is loyal.
2. (Roman and Cuestas, 2008)
E-retailers responsibilities concerned with treating the customers in a fair, honest and secure way
There are four main ethical dimensions in the Internet retailing context: privacy, security, non-
deception and, reliability. Privacy dimension is related to collection of the personal
information of the customers and how this information is used
3. ( S.Ramesh Babu, P.Ramesh Babu, Dr.M.S.Narayana, Retail Technology: A
Competitive Tool For Customer Service, Volume - 2, Issue - 1, 110 116 ,february 2012. )
Today the customer is in charge. Providing value to the customer has become a challenge for
retailers. Information technology (IT) helps retailers to manage costs and deliver better value to
customers. The use of technology enhances the shopping experiences by providing convenience,
better service speed, and value to the customer. Retailers take the help of IT in carrying out basic
functions such as systems for selling items, obtaining sales data item wise, control of stock,
buying, management reports, customer information, and accounting. the creative deployment of
technologies enable retailers save a great deal of time as well as precious resources which have
been channelized to provide the best of services to the customers.
4. (Moschis, G.P .1976, Shopping Orientations and Consumer Uses of Information)
Loyalty is also influenced by the situation related variables. These factors include task definition,
level of involvement, shopping orientation and usage of information. These indicate the intensity
of need and the comfort of the shopper in taking a purchase decision. The store choice has been
found to depend on buying situations that differ with the level of involvement


5. (Arnold , Stephen J., Tae H . Ourn, Tigert, and Douglas 1983, Determining Attributes in
Retail Patronage)
Loyalty has been found to be greatly influenced by Store Related Variables. Some of the
important store related variables are Shop location, Products Range and Store Image. In
consumer priorities, assortment and variety come after convenience and price
6. (Hubbard, Raymond 1978, A review of Selected Factors Conditioning Consumer Travel
Behavior, journal of Consumer Research)
Shop location is an influencing variable on loyalty as convenience of shopping is among the
main criteria of the customers. Location related variables are given importance in analyzing both
trade areas and retail patronage behavior
7. (zaheerspeaks.com, 2008)
The major issue most of the Pakistani Online Stores are facing is non-existence of Off-line
stores, as suggested by one of the local website, most of the online shopping stores in Pakistan
work as third party agents and the costs are high
8. (Tucci & Afuah, 2001)
According to Tucci and Afuah, the threat of new entrant forces incumbents to charge less for
their products or they take costly steps to keep them out which results in a low profit for
incumbents (Tucci & Afuah, 2001)
9. (Beath 1991; Howell and Higgins 1990; Palvia and Chervany 1995)
If a small business does not have slack resources, it cannot afford to have information technology
champions who can lead this adoption and diffusion process. In large corporations, research
indicates that these champions, who emerge from a pool of ordinary end users, play a critical role
in leading successful innovation adoption and diffusion processes the thin level of management
structure places most of the management burden directly on senior management.
10. (Mason et al 1993)
A typical retail organization has the business objective of procuring goods from suppliers and
reselling them to end customers or consumers. The chief value-added functions provided by the
retail organization are in terms of providing a buffer or cushioning effect between the supply and
demand and customer service.