Indian food retail industry: Challenges and opportunities of traditional Kirana stores VS organized retail

Abstract

Purpose: The purpose of this paper is to provide an insight into the food retailing industry in India and analyze various factors that drive the consumer preference and influence their choice of shopping outlet. The paper also examines the implications for these findings and tries to analyze the opportunities and challenges for the various shopping outlets like the traditional kirana stores and organized retail. Design/methodology/approach: Using survey data collected from 100 respondents spread across the tier 1 cities in India, the paper tests the hypothesized relationships using a several statistical techniques. Findings: The paper finds that there are several factors like proximity and purchase frequency, association of kirana stores with perceived freshness and economy, payment convenience of consumers through easy credit facilities and personal relationship with consumers, which are responsible for kirana stores having an advantage over organized retail. Organized retail on the other hand scores on several parameters over kirana stores like nice ambience, convenience in shopping, discounts on bulk purchases and easy payment facilities. The paper also finds that the factors which give an advantage to kirana stores over organized retail also discriminate between the two groups of consumers shopping at kirana stores and organized retail. This result suggests that these factors are very important and influence the choice of shopping outlet for consumers. Research limitations/implications: The study has several limitations including sample size and skewed demographics of respondents. In addition to this, some other factors that influence consumer choices have also not been taken into account. Nevertheless, the paper depicts a contemporary picture of young urban Indian consumers and gives a holistic picture about their choice of shopping outlet and the factors that influence it in the current societal and economic setup of urban India. Practical implications: The finding of this study informs both the kirana store and organized retail about the current market scenario and highlights the challenges and opportunities for both of them. It also analyses what needs to be done by each of them to gain competitive advantage over the other and also focuses on what cannot be done by them. Originality/value: The paper focuses on consumer perspective with the goal of determining the parameters which actually influence his/her store choice and also analyzes the implications for the industry with respect to the same. Results from this study provide support/ contradiction for several pre-conceived ideas about Indian consumers and provide implications of these for the industry.