Effect of Organized Retail on small Retail outlets in an emerging economy – An Empirical Study

Abstract

Retail is the fastest growing sector in Indian economy with the three year compounded annual growth rate of 46.64%. Driven by changing lifestyles, strong income growth and favorable demographic patterns, Indian retail is expected to grow 25 per cent annually. It is expected that retail in India could be worth US$ 175-200 billion by 2016. Traditional retailing format is the backbone of the Indian retail industry, and it dominates over 95 per cent of total retail revenues. India is at an early stage of evolution in the organized retail space, with the current penetration pegged at 4-5 per cent, which indicates a huge growth potential. The share of organized retail in the total Indian retail trade pie is projected to grow at 40 percent per annum. This research paper is intended to find out whether the growth of organized retail headed by large corporations has any effect on small mom-n-pop stores and other retail outlets which are in direct competition to the organized retailers. This study identified the factors determining customers’ preference of retail stores through factor analysis. The study finds the relationship between customers’ demographics and shopping behavior. The paper concludes by providing strategic marketing framework for both organized and unorganized retail to achieve customer satisfaction.