Loyalty in Indian Retail

ABSTRACT

India with its growing economy is becoming one of the most attractive nations for investments at present. The country’s most significant industry is the retail industry (Jain et al, 2009). It is currently the 5th largest retail industry in the world and the industry contributes around 12% to the country’s Gross Domestic Product, it is also expected to grow at a very healthy rate and contribute around 22% by the end of 2011 (Srivastava, 2008). However the dominant sector in the retail industry is the unorganised sector, with the organised sector consisting of only 4% in the total industry.

As India as a nation develops, there will be more foreign and domestic players looking to grab a share of the market. Along with domestic companies such as TATA, Future Group etc, Tesco of the UK and Wal-Mart from the USA have already set up plans to expand their business in the country, these are two of the heavy weights in the global retail industry.

The organised sector in an effort to retain customers have introduced a variety of loyalty programmes and schemes, however due to the dominance of the unorganised sector in India the effectiveness and the consumer’s perception about such schemes have not been studied comprehensively. Therefore this dissertation aims to understand the consumer’s perception towards such loyalty schemes, how effective they are in building loyalty amongst the organization and the consumer, and to also understand the future and roles of the two retail sectors in the Indian retail industry.

Key literature regarding this topic has been reviewed by the author, which focuses on:

1. Relationship Marketing.

2. The constructs in building a relationship.

3. Customer Loyalty

4. Customer Loyalty and Behaviour

5. Customer Satisfaction and Service quality

6. Loyalty Programmes & its effect on Customer loyalty

These have then been conceptualized and then discussed by the author and a conceptual diagram has also been presented which tie these themes together.

For this research the author chose a qualitative approach and this study was inductive in nature. In order to understand the perceptions of the consumers In-depth interviews were conducted, however due to time constraints and for reaching out to a larger sample size open ended questionnaires were also used for this dissertation. The justification and issues regarding validity and reliability of the research methods have also been discussed.

Lastly findings were compared and contrasted with the existing literature and the presented to the reader in chapter five of this dissertation which is followed by the discussion, the scope