Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-9, 2016
ISSN: 2454-1362, http://www.onlinejournal.in
Challenges and Success techniques for
Unorganised Retail sector against Organised
Retail sector in Jharkhand.
Mrs. Shilpa Tiwary & Dr. Rekha Jha
PG Dept. of Economics, Ranchi University, Ranchi
Abstract : The Retail sector in Jharkhand is one of
the most dynamic and fast paced sector with
several players entering the market. The Jharkhand
Retail sector is one of the largest among all the
industries. The growth in organized retailing in
recent years can also be gauged by the rise of
shopping malls as well as the rising number of
modern retail formats. Shopping in Jharkhand has
witnessed a revolution with the change in consumer
buying behaviour and the format of shopping. The
market witness a shift in trend from traditional
retailing to organized retailing.
The purpose of this research paper is to seek
various challenges faced by unorganized retailers
from organized retailers and suggests various
effective strategies to unorganized retailers to
overcome the competition offered from the
organized retailers. The initiatives should be taken
to protect the interest of traditional retailers as this
sector is having the employment opportunity of
society and this is one of the areas of
entrepreneurship development in the state.
The challenges of unorganized includes lack of
technology, limited storage place, low investments
and many more .The various strategies may be
adopted by unorganized retailers are by updating
as modernizing their existing stores, making the
store air conditioned, hiring right employee for the
job, active advertising and promotion of the
business, etc. By implementing these course of
action the unorganized retail can sustain and
survive in the competitive market.
Introduction
The retail sector is expanding and modernizing
rapidly in line with Jharkhand’s economic growth.
It offers significant employment opportunities in all
city of Jharkhand. The Jharkhand Retail sector is
gradually inching its way towards becoming the
next boom industry.
Jharkhand retail is dominated by large number of
small retailers consisting of local kirana shops,
owner manned general stores, chemists, footwear
Imperial Journal of Interdisciplinary Research (IJIR)
shops, paan, beedi shops, hawkers etc. which
together make up the ‘unorganized retail’ or
traditional retail. The last eight to ten years have
witnessed the entry of a number of organized
retailers opening stores in various modern formats
in different cities of Jharkhand state.
The growth of organized retailing in recent years
can also be gauged by the rise of shopping malls as
well as the rising number of modern retail formats.
In 2005 Jharkhand state had only four shopping
complexes measuring less than ten lakh square feet.
Shopping is Jharkhand has witnessed a revolution
with the change in consumer buying behavior and
the format of shopping. The retail industry in
Jharkhand has modernized and this can be seen
from the fact that there are multi stored malls and
sprawling complexes, that offers food, shopping &
entertainment under the one roof. The market
witness a shift in trend from traditional retailing to
organized retailing.
Purchasing power of Jharkhand urban consumer is
growing and branded merchandise in categories
like apparels, cosmetics, shoes, watches, beverages,
food and even jewellery, is slowly becoming
lifestyle products that are widely accepted by the
Jharkhand’s urban consumer. Jharkhand retailers
need to take the advantage of this growth and
aiming to grow, diversify and introduce new
formats to pay more attention to the brand building
process.
The initiatives should be taken to protect and
safeguard the interest of traditional retailers as this
sector is having the good employment opportunities
for the society and this is one of the important areas
of entrepreneurship development in the state as
most the respondents are having less than 5 lakh
initial investments and belonging to the large
families.
Objectives of the study
Organized retailers have entered into the
unorganized retail sector in Jharkhand. Although
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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-9, 2016
ISSN: 2454-1362, http://www.onlinejournal.in
their entry has improved the well being of
shoppers, there is also an unpleasant impact on
unorganized retail. The traditional retailers have the
challenges in the period of modern retailing. The
proposed study covers the issues related to the
survival strategies and methods adopted by
unorganized retail sector to survive with the
organized retail sector. The purpose of this research
paper is to investigate various challenges faced by
unorganized retailers and to suggest a variety of
strategies to overcome the competition offered
from the organized retailers. The following
research objectives have been formulated to guide
the study:
1. To investigate various challenges faced by
unorganized retailers from the
organized retailers.
2. To analyse the various strategies adopted
by the unorganized retailers to
overcome competition.
Research Methodology
Research methodology deals with the research
design used and methods used to present the study.
The present study is based on primary and
secondary data and majorly focusing on the various
issues and strategies involved in unorganized retail.
Primary data has been collected from pre-structured
questionnaire format. That filled and collected from
the different city (viz. Ranchi, Jamshedpur, Bokaro,
Dhanbad, Deogarh) with 500 respondents were
questioned i.e. 100 respondents from each selected
city of Jharkhand while Secondary data has been
collected from various national and international
journals, magazines, newspaper, articles, books,
internet. The study is based on descriptive research
design.
Retail Defined
Retailing is all around us. It permeates our lives.
Retailing involves the sale of merchandise from a
fixed location, such as store, for direct consumption
by the customer. It can be defined as an activity
that ensures that customers derive maximum value
from the buying process. This involves activities
and steps needed to place the merchandise made
elsewhere in to hands of customers or to provide
services to the customers. Retailers organize the
availability of merchandise on a large scale &
supply them to consumers on a small scale.
Retailing is the set of business activities that adds
value to the products and services sold to
consumers for their personal or family use. In 2004,
The High Court of Delhi defined the term ‘retail’ as
a ‘’sale for final consumption in contrast to a sale
Imperial Journal of Interdisciplinary Research (IJIR)
for further sale or processing (i.e. wholesale), a sale
to the ultimate consumer’’.
‘Any business that directs its marketing efforts
towards satisfying the final consumer based upon
the organization of selling goods and services as a
means of distribution.’
Thus, retailing can be said to be the interface
between the producer and the individual consumer
buying for personal consumption. This excludes
direct interface between the manufacturer and
institutional buyers such as the government and
other bulk customers. Retailing is the last link that
connects the individual consumer with the
manufacturing and distribution chain. A retailer is
involved in the act of selling goods to the
individual consumer at a margin of profit.
Division of Jharkhand Retail sector
The Jharkhand retail sector is generally divided
into two major segments – organized retailing and
unorganized retailing.
(a) Organized Retailing – it is refers to trading
activities undertaken by licensed retailers that
is, those who are registered for sales tax,
income tax, etc. These include the corporate-
backed hypermarkets and retail chains and
also the privately owned large retail
businesses. This is a critical part of the
Jharkhand economy.
(b) Unorganized Retailing – refers to the
traditional formats of low-cost retailing, for
example, the local kirana shops, owner
manned general stores, paan /beedi shops,
convenience stores, hand cart and pavement
vendors, etc. The unorganized retail sector is
expected to grow at about 10% per annum.
Meaning and Definition of Unorganized
Retailing
Unorganized retailing is defined as an outlet run
locally by the owner or caretaker of a shop that
lacks technical and accounting standardization. The
supply chain and sourcing are also done locally to
meet the local needs.
According to Dr. Ram Kishen Y.“Unorganized
retailing is that part of retailing where the retailer is
not providing a standardized bill to the customers,
not filing the returns for income tax purpose and
operates more at the local level with customized
offering ”.
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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-9, 2016
ISSN: 2454-1362, http://www.onlinejournal.in
The above mentioned definition explains how
unorganized retail is different from organized
retailing wherein retailers pay their taxes to the
government and also provides customers with a
proper bill. Unorganized retailers provide
customized services such as credit facilities,
personalized services etc., which organized
retailers cannot provide.
The Story of Unorganized Retailing
Jharkhand is a state of traditional HAAT’s &
mom and pop stores, which have an extensive
reach and have been ruling the retail sector for
many years. The traditional unorganized retail
outlets provide customized services to their small
local client, including credit sales and home
delivery.
The Jharkhand retail sector is highly fragmented
and the unorganized sector has around 35 lakhs
retail outlets. Kirana store retailing has been one of
the easiest ways to generate self-employment, as it
requires limited investment in land, capital and
labour. It is generally family run business with lack
of standardization and the retailers who are running
this store are lacking education, experience and
exposure. In smaller towns and urban areas, there
are many families who are traditionally using these
Kirana shops/mom and pop stores offering a wide
range of merchandise mix. When it is narrowed
down to grocery shoppers, customers are faced
with decisions to make a choice between different
types of retail formats like stores of varying sizes,
discount stores, supermarkets and hypermarkets. In
Jharkhand, the organized retailers are entering the
grocery market at a rapid rate and posing a threat to
the livelihood of Kirana shop-owners.
Challenges Faced By Unorganized Retailers
from Organized Retailers
Lack of latest Technology
Others
18%
Yes
53%
No
29%
Imperial Journal of Interdisciplinary Research (IJIR)
1. Lack of latest technology– as per the primary
data collected from the different cities of
Jharkhand, the primary challenges is lack of
latest technology which is favoured by 53% of
respondents and denied by 29% while 18%
answered something else reasons stating as
Unorganized retailers do not have a system
with high end technology, which will help
them to functions faster and give real time
information to companies in terms of which
product is sold and so on. Due to low
investment, the unorganized sector cannot
invest in technology, which helps in the
logistics and supply chain of the organization.
Low Investment
Others
8% Yes
43%
No
49%
2. Low Investments– For growth, the most
important factor is money, which is often
lacking in the unorganized segment. They
mostly run on very low net profits since they
do not have a fixed amount of customers
walking in the store, hence they are unable to
invest in space and technology such statement
is favoured by 43% of respondents and denied
by 49% while 8% answered some thing else
for the failures of the retails system in
Jharkhand.
[VALUE]% High Discount and Offers
others
[PERCENTAG
E] No [PERCENTAG
E] Yes
3. Higher Discounts & Offers– The most
burning issue is discounts are not provided in
unorganised sector and sold on MRP’s
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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-9, 2016
ISSN: 2454-1362, http://www.onlinejournal.in
(Maximum retail price) by unorganised
retailers. With many organized retailers
reducing and bargaining with leading
manufacturer, they can offer higher discounts
and pass on this benefits to the stores. The
higher the number of product’s purchased, the
higher is the discount. Many retailers also run
promotions on food grains and give offers like
“Buy one get one free” which an unorganized
players cannot afford to do. This statement is
made by 61% of respondents and denied by
33% while 6% answered else.
Strategies for Unorganized Retailers
Traditional retailers in Jharkhand faced a major
challenge with the entry of organized retail sector
in the market. In response to competition from
organized retail, unorganized retailers can take
certain measure like:
• Adding new product lines and brands.
• Better displays.
• Renovation of the store.
• Introduction of self service.
• Enhancing the store ambience.
• Enhanced home delivery.
• Acceptance of credit cards.
Some of the other strategies that can be adopted are
as follows:
1. Modernize Existing Stores– as per the
respondent’s options 77% are favoured and 15%
denial while 8% have other suggestions about the
modernizing the existing stores. As the next
generation of owners takes over, kirana stores
located in small localities are fast logging into
technology solutions. Traditional retailers can use a
Imperial Journal of Interdisciplinary Research (IJIR)
number of modern technological facilities. They
can offer a number a benefits to customers by using
modern technology, which can be easily learnt and
implemented for example accepting credit and
debit cards by installing a swiping machine in their
retail outlets.
2. Computerized Billing and Air Conditioned
Stores–
59% respondents suggested for Scanning and bar
coding, computerized accounting and inventory
control can also be practiced for more reliable and
authentication about the shops as refrigerant,
freezer and hot case facilities are already being
used by some retailers. Retailers can used
electronic weighing as many consumers do not rely
on the old practices of weighing and measuring
products. The stores can be upgraded with various
facilities and can be converted in to air conditioned
stores. Such facilities are denied by 26% of
respondents and 15% says it is of wastage of
money only.
3. Corporate Support – 42% respondents suggest
to ask for corporate support for their survival while
39% denied and 19% have different opinion about
the financial backup. It is due to most of the FMCG
companies are ready to assists small retailers by
adopting them and helped them to upgrade service
levels, systems and operations. They anticipate
that, in the next few years, the number of such
adopted stores will be almost double.
4. Store Promotion – Organized retailers and
corporate are ready to support kirana stores by
developing promotional offers customized to their
set of customers. Unorganised retailers should be
encouraged to approach such companies for
promoting their product and services such
statement was favoured by 78% and denied 15% of
the respondents in Jharkhand state. .
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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-9, 2016
ISSN: 2454-1362, http://www.onlinejournal.in

STRATEGIES
Yes No Others

120

100 4
8 7 11 8 9
15 19 19 12
15 15 12
80 19
21
26
24
60 39

40 79 84
77 78 73
68
59 57
20 42

0
Moderise Computerised Coporate Store Promotion Active Prominent Discounts and Customer Hiring Right
Exisitng Shop Billing Support Advertisement Feedback Home Delivery Information and People
Customer care

Graph 01: showing the percentages of respondents with suggestions as strategies.

5.
Actively Advertise and Promote the Business–
When small retail businesses are in their infancy or
are feeling cash flow pressures, advertising
expenditures are often the first item cut. Many
times this is when advertising and promotion
efforts are of the most benefit, such statement were
made by 68% of the respondents while 21% were
in denied such statement while 11% have different
opinions.
6. Prominent Feed Back System– Feedback
system from the customers are favoured by 73% of
respondents, but 19% don’t think its necessity
while 8% are of different opinions. Feedback is
important because of Unorganized retailers have to
understand the concept of individual customer
communication outside the stores as a necessity. It
is very much essential that they seek to add a new
form of dialogue with their customers.
7. Phenomenon of Discounting and Free Home
Delivery:
79% of the respondents suggested that in a middle
class-dominated, price-sensitive market, price
manipulation is a strong weapon in the arsenal of
the small independent retailer. Therefore, small
retailers should promote discounting phenomenon
in order to retain customers for their stores and free
Home delivery mechanism will build a rapport with
the customers. But 12% responds denied for such
discounts and 9% of the respondents were have
different thoughts about the discounts and free
home delivery system to combat from organised
retail sector.
8. Customer Information and Customer Care:
Small retailers potentially must provide better and
more services than their larger competitors.
Customers must be treated more as individuals with
increased attention given to their respective needs.
Unique services such as customized packaging,
mailing of merchandise, and package carryout must
be extended. Such opinion was favoured by 57% of
the respondents but 24% were denied for the same
while 19% were have some different thoughts.
9. Hire the Right People– The retailer should
appoint the right person at right place for better
result and productivity. During the research survey
it was suggested by 84% to choose right personals
for the improvement of unorganised retails while
12% respondents were not suggested the same and
4% were suggested for different options.
Conclusion
Various strategies have been studied to determine a
solution to overcome the threat from the organized
retailers in Jharkhand . Therefore the unorganized
small retailers must give importance to these
factors to overcome the competition faced by them

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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-9, 2016
ISSN: 2454-1362, http://www.onlinejournal.in
as all these strategies contribute to the positive
perceptions of retailers towards effective
sustainability in the market. The analysis of this
research paper and the results obtained will provide
a strong base to the marketing authorities on
various factors to be taken into consideration, to
minimize the impact of organized retailers and to
focus attention on the strategies for the effective
management of the same. The unorganized retailers
clearly understood the impact of the organized
retailers on their business in terms of sales, profit
and employment. But they are struggling to
introduce changes in their existing retail practices
due to their financial illness.
Some kind of intervention is required for their
future existence. So the initiatives should be taken
to protect the interest of the unorganized sector as
this sector having the employment opportunity to
the majority of the society and this is the one of the
areas of entrepreneurship development in the
country as the most of the retails respondents are
having less than one lakh rupee investment and
belonging to the low income families. The
unorganized retailers should make strategies to
retain their customers by providing quality goods
and services and they should also go for
collaborations within the regional level then only
they can survive in this globally competitive world
and in their surrounding market competitions.
Imperial Journal of Interdisciplinary Research (IJIR)
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