EFFECT OF ORGANIZED RETAIL ON UNORGANIZED RETAIL: Methotology

Methotology

A two page, Questionnaire was designed keeping in mind the objectives of the study which were To analyze the impact of orgenised retailing on unorganized retail and to find out the survival strategies adopted by unorgenised retailers in mall culuture The Literature survey and pre study consultation with industry experts were taken into account. The questionnaire consisted of few open ended questions, some questions were either using ranking scale or Likert scale,and dicotomes type of questions and open ended question. Youth in Peacebuilding

This survey intends to analyse the impact of organised retailing on unorganised retail sector in Delhi/NCR. This research explicates various aspects like the perceived and expected levels of satisfaction of the consumers and the factors which unorganised retailer should take cognizance of in the course of establishing and enhancing their business.

The survey is based on interviewing grocery store consumers at various catchment areas in Indore. Four areas Gumastanagar, Sch no71, A.B Road, Laxmi Nagar are selected based on number of households and income groups in the catchments.The data is collected using a random sample of consumers. Consumers who have significant knowledge of the topic were identified and selected at random for questioning. As per questionnaire, interviews were conducted face to face so as to capture the attitude and experience of consumers who had just purchased grocery items from organised and unorganised retail outlets. Both qualitative and quantitative data analysis is done in order to get deeper insights into the consumer behaviour and store loyalty for local grocery stores. Larger the sample size greater is the precision or reliability when research is replicated. But constraints on time, manpower and costs have influenced decisions on the study sample size.

Impact of Organised retailing on Unorganised sector

Unorganized retailers in the vicinity of organized retailers experienced a decline in their volume of business and profit in the initial years after the entry of large organized retailers. According to the Indian Council for Research in Impact of Organised Retailing on Unorganised sector International Economic Relations (ICRIER), there would be no long term impact due to the entry of organised retail chains on the neighbourhood kirana shops in the country. In clear terms the impact of organised retailing on unorganised sector is as follows:

1. The adverse impact on sales and profit weakens over time.

2. There is some decline in employment in the North and West regions which, however, also weakens over time.

3. The rate of closure of unorganized retail shops in gross terms is found to be 4.2% per annum which is much lower than the international rate of closure of small businesses

4. The rate of closure on account of competition from organized retail is lower still at 1.7% per annum.

The Kirana stores and pan shops are seen as part of community life and hence unorganised retail will stay but ICRIER observes that if organised retail does not grow, the unorganised sector will not be able to handle the surging demand. Hence the share of organised retail will grow at a rate between 45 and 50% per annum. The observation rings true as well, this is being witnessed in some urban centres already.

It has come out with certain valuable recommendations. It suggests a nationwide uniform licensing policy to aid modern retailing which will help carry the countries retail sector to the USD (US Dollar) 590 billion mark in 2011-12. It suggests better access to cheaper institutional credit so the Kirana stores can take on competition from organised retail. Presently, only 12% of unorganised retail enjoys access to institutional credit. Another recommendation by ICRIER is worth a serious try. It suggests cash and carry outlets which will sell to unorganised retail and procure from farmers. This can help unorganised retail to buy at wholesale prices for eventual retailing, thereby generating a handsome margin. Farmers too can benefit since they can sell at lucrative prices and realise the sale proceeds in a swift and transparent manner. Once this cushion is provided, unorganised retail can have no grouse against the government and even if it has, the government can ignore it. Being unorganised retailing is at serious step; there are still challenges for organised retailing in India. Traditional retailing has been established in India for some centuries. It has a low cost structure, mostly owner operated, has negligible real estate and labour costs and little or no taxes to pay. Consumer’s familiarity that runs from generation to generation is one big advantage for the traditional retailing sector. In contrast, players in the organised sector have big expenses to meet, and yet have to keep prices low enough to be able to compete with the traditional sector. Moreover, organised retailing also has to cope with the middle class psychology that the bigger and brighter sales outlet is, the more expensive it will be.