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Introduction
Food and grocery (F&G) segment comprises 62 per cent of the $ 270 billion (Rs 1,200,000 crore) Indian retail market ([26] India Retail Report, 2007). Only 0.8 per cent of this segment is in the organized sector and the organized F&G sector witnessed a year-on-year growth of 30.8 per cent in 2005-2006 as against 2.2 per cent growth of the total F&G retail market (Refer to Exhibit 1 for the major players in India and their projected sales) ([26] India Retail Report, 2007). This indicates huge opportunities in organized retail. Although traditional retail currently constitutes over 95 per cent of the total sales in the country, smaller kiranas (Indian version of a combination of convenience and mom-and-pop stores with <500 sq ft area) that are unable to compete with new age retailers in terms of variety and scale have begun losing volume and share of customer's wallet in several parts of the country ([68] Vijayraghavan and Ramsurya, 2007; in.nielsen.com, 2008).
Political concerns over the loss of livelihood by lakhs who run mom-and-pop stores also need to be addressed ([11] Bureau, 2007a; [29] Jha and Guha, 2007). The Prime Minister's Office of India had initiated a study on the impact of retail giants on small retailers by Indian Council for Research on International Economic Relations and this move had been welcomed by the Confederation of All India Traders. This study reports that 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, but the adverse impact on sales and profit weakened over time ([30] Joseph et al. , 2008). The same study also reported that all income groups saved through organized retail purchases and lower income consumers saved comparatively more. This apparent conflict in the report as to why in spite of higher savings to consumers while shopping at organized outlets the adverse impact on sales and profit of unorganized retailers reverses over time, may be because the study takes a snapshot picture of the present without delving into the possible reasons of why the customers behave the way he does.
Internationally, while some studies suggest that large scale retailers like Wal-Mart are responsible for widespread...