To identify consumer behaviour of Bharat Petroleum s IN & OUT convenience store

Transcription

1 To identify consumer behaviour of Bharat Petroleum s IN & OUT convenience store Authors: Darshan Pagar Assistant Professor, Rustomjee Business School Kinjal Shethia Assistant Professor, Rustomjee Business School ABSTRACT: Indian Retail Sector has seen the dawn of the much needed day of reforms awaited by the industrialists and economists. India s retail sector is rising; currently India is the 5 th attractive destination India as per A.T. Kearney s Global Retail Development Index. Amidst all this developments, there is one sector of Indian Petroleum firms which are interested in retail developments and that too on different format viz. convenience stores. But unlike mature markets where contribution of non-fuel revenues is considerable, the condition in India is not that good. stores of BPCL, a leading petroleum company are decreasing. From 383 stores in , the number of stores has continuously decreased. As per March 2012, the Company has 182 stores. This paper tries to find out the consumer behavior of BPCL s In & Out convenience stores and to give answer to some of the questions. 1

2 Retail Scenario in India : Origin: The origin of retail in India dates back to ancient times, it was the time when melas & mandis made their presence felt. The changing socio economic patterns coupled with the consumption increase led to the emergence of the convenience stores, which became a part of the civic planning. The next step was the commercial plazas, which comprised merely shops offering a variety of goods and services clubbed together. The inconveniences caused by lack of parking place, toilets and maintenance, ushered in the entry big international brands opening their exclusive showrooms. The opening up of the economy only fueled this globalization. There are, however, certain bottlenecks as well; the scarcity of space, coupled with the stringent provisions of the Rent Control Act, act as a dissuasive factor for many players to initiate operations in the main markets. Present scenario: Retailing is one of the biggest sectors and it is witnessing revolution in India. It is the second largest employer after agriculture, although it is highly fragmented and predominantly consist of small independent, owner managed shops.there are over 12 million retail outlets in India, and organised retail trade is worth about USD 17.5 billion Global Retail Development Index stores retailing at Petrol Pumps in India: The words Non-Fuel Retailing applies mainly to Companies dealing in Oil & Gas, as these are generically called the Fuel Companies.Following the Western World, in India too, the Oil & Gas Distribution Companies have started extending their Services from Fuel to Non-fuel Retailing. This service of retailing is provided by companies in a retail format called convenience store often called C-store which is a small store or shop. They are often located alongside busy roads, or at petrol stations. This can take the form of fuel stations supplementing their income with retail outlets, or convenience stores adding gas to the list of goods that they offer. The products available at these stores depend on what the companies have decided to offer. Mainly FMCG products which generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, teeth cleaning products, shaving products, dairy products, cigarettes, detergents, etc. Some stores also keep non-durable products such as glassware, light bulbs, batteries, paper products, etc. 2

3 "The companies can also offer services which in turn are directed towards offering " convenience to their ardent Customers like laundry services, lottery tickets, Cricket match tickets, railway tickets, Courier, Photocopying, ATMs, bill payment services, etc. Companies running convenience Stores in India: Fuel Companies Indian Oil Corporation B.P.C.L (In & Out ) H.P.C.L. Essar Oil Non-fuel companies India Bulls (India bulls Mart) Bharti (Easy Day) Reliance (Reliance Fresh) Big Bazaar ( Big Bazaar Best Deals) Why Fuel Companies are looking for Non-fuel Stores: If one takes a look at the mature international markets, non-fuel revenues contribute around 30-40% of the total revenues of fuel stations. Conversely in India, the Allied Retail Business contributes less than 1% of total revenues and less than 5% of total profits. In India, the retail outlets of Petroleum Companies are evolving from a point of sales only to competitive differentiation, and this has been possible due to maturing customer, greater degree of competition and higher degree of sophistication of the end-use segment. The evolution of the Retail outlets is shown below: 3

4 Some activities that are altering the very nature of competition and its forces are: Oil Companies trying to supplement margins in retailing of oil with Oil companies having realized that they have huge retail space additional income source They have started thinking of getting into alliances with 3 rd parties to get in non-fuel retailing Companies have started increasing customer focus and differentiation to capture /protect market share in oil retailing Demand for vehicles have increased in combination with increased travelling B.P.C.L s Stores: In & Out The In & Out concept Realising the importance of a "greater" understanding of consumers needs and consistent with its core objective of continuously adding value to its customers through innovative means, Bharat Petroleum has launched its convenience retailing initiative under the In & Out brand. Bharat Petroleum is the 2nd largest oil marketing company in the country with 6553 retail outlets spread across the length and breadth of the country. The In & Out chain of convenience stores is being set up in the urban markets at strategically located retail outlet sites with high customer footfalls. The In & Out network The In & Out store at Bharat Petroleum petrol pumps, which was launched in 2001, offers a convenience proposition where a number of typical household errands are aggregated under one roof for the benefit of the customers. Today there are 323 In & Out stores across India, which bring in unmatched convenience at the petrol station. Strategic alliances have been formed with major brand owners and retailers in the country to further strengthen the convenience proposition. 4

5 Objectives of the Study To understand whether the refuelers coming at BPCL fuel stations, go for shopping at In & Out stores. To understand the behaviour of customers coming in BPCL s convenience stores In & Out Research methodology The study was done in 2 parts: In the 1st part, BPCL s fuel station at Mira Road was observed so as to "understand" that, out of the total no. of refuelers entering the fuel station s premises for refueling, how many did actually entered the In & Out convenience stores for shopping. In the 2nd part, the refuelers visiting the fuel "stations" were in person interviewed and their responses were recorded to have a better understanding of their buying behaviour. In the 1st part 500 vehicles were observed. In the 2nd part 60 customers were interviewed on BPCL s fuel station at Mira Road. Out of the 60 respondents 37 customers who had actually shopped in the convenience store. Tools used for Research Observation Observation was done at predetermined fuel station. All the vehicles that entered the fuel station for refueling were the subjects of observation. Interview A survey is a research technique used to gather information from a sample of respondents by employing a questionnaire or open. Data Collection: Primary Data: The primary data was collected by interviewing personally with the help of pre-set questions. Secondary Data: The secondary data was collected from Websites and Reports, Sales Officers and Distributors with the help of some short interviews and some informal chats. Facts & Findings: Results of observation: Sample size: 500 (No. of vehicles entering BPCL fuel stations for refueling) Observation of BPCL Fuel Station at Mira Road 5

6 Number of vehicles entered Number of vehicles halted for shopping at In & Out Two Wheelers Four Wheelers (Passenger) Total Number of vehicles entered 500 Number of vehicles halted for shopping at In & Out 33 Results of survey: Sample size: Number of customers who have shopped at BPCL In & Out Store Shopped Not Shopped Number of customers Frequency of visits to petrol pumps Number of times visited per week < & above Number of customers Visits to In & Out stores when went to petrol pump for refueling Every time Most of times Occasionally Rarely Number of customers Awareness of various products services available at In & Out stores Products/Services Yes No foods 28 9 Branded Groceries Confectionery Toiletries Beverages 30 7 Frozen Desserts Magazines ATM 32 5 Mobile Recharge Various products services purchased or used at In & Out stores Products/Services Nos. of customers foods 9 Branded Groceries 6 Confectionery 7 Toiletries 5 Beverages 9 Frozen Desserts 4 Magazines 8 ATM 11 Mobile Refill 4 6

7 6. Stores from where of items of regular use are purchased Stores in your neighborhood Number of customers Departmental Stores/ Super markets/ Malls Stores at Petrol Pumps of BPCL Stores at fuel Pumps of other Company Other Location Ranking of attributes which customers look forward while shopping for items of regular household purchase General Attribute Ranking Price Availability Credit Delivery 1 st nd rd th th Ranking of attributes of In & Out stores based upon customers experience General Attribute Ranking Price Availability Credit Delivery 1 st nd rd th th Customers perception of prices at In & Out Stores Expensive Value for money Justify Quality Number of customers Analysis & Inferences: Are refuelers shopping at In & Out? Percentage of refuelers shopping at 'In & Out' un shopped Shopped Shopped Not Shopped Number of customers

8 A good news is that almost 62% of the refuelers visiting BPCL fuel stations have at some point of time shopped at the In & Out stores. But the real news is that, these 62% people do not represent regular customers. These are the refuelers who may have visited the In & Out stores once in a while, may be just to try it out. These are not the regular buyers rather they visit or have visited In & Out stores occasionally or rarely. The above statement can be deducted by the following chart. Analysis of Customers regular purchases stores at fuel stations other than'in & Out' 5% In & Out' stores of BPCL 2% Department Stores / Malls 18% Other Location 12% Regular Purchases Nearby Stores 63% Stores in your neighborhood Department al Stores/ Super markets/ Malls Stores located at Petrol Pumps of BPCL Stores located at Petrol Pumps of other companies Other Location Customers One can easily make out that with 63% refuelers purchasing from nearby convenience stores, it is the most preferred destination for buying goods. This is followed by Departmental Stores and Malls. The In & Out stores of BPCL are used by a mere 2% of the population for their regular purchases. Frequency of Shopping at In & Out stores Frequency of Shopping at 'In & Out' Every time 0% Most of times 5% Rarely 60% Occasionally 35% 8

9 Every time Most of times Occasionally Rarely No. of customers As seen in the pie chart, the percentage of frequent shoppers, who visit the stores almost every time they visit the fuel station is zero which means no refuelers visit the In & Out stores every time they visit the fuel station. About 22% people rarely visit the In & Out stores. This conclusion is in alignment with the previous chart which signified the thing that a major portion of the refuelers who visit the fuel stations go in other convenience stores for shopping and thus people actually don t use the In & Out stores as a regular purchase location. Analysis of Ranking of Attributes based on Customer s Experience Attributes ranking based on Customer Experience 100% 80% 60% 40% 20% Delivery Credit Availability Price 0% 1st 2nd 3rd 4th 5th General Attribute Ranking Price Availability Credit Delivery 1 st nd rd th th From the share of each attribute at every rank gives a clear indication about which attribute is important and to what extent. Availability is the most dominant attribute for 1 st rank followed by Price. This signifies that a major part of In & Out customers are price sensitive but they rate availability a bit more important while shopping at In & Out. Delivery and Credit get the least importance. 9

10 Hypothesis 1 to be tested using Z-TEST It is believed that less than 10% of refuelers, shop at In & Out store. A sample of 500 refuelers was collected to test this notion at 5% significance level. H 0 : p = 10% refuelers entering fuel station, shop at In & Out stores. H 1 : p < 10% of refuelers entering fuel station, shop at In & Out stores. z pˆ p p * q n where, pˆ = sample proportion p = population proportion q= 1-p z * Calculated value of z = Hypothesized value of z = Observed value of z lies outside the acceptable region. Hence, we fail to accept the Null Hypothesis Less than 10% of customers entering BPCL petrol pump for refueling shop at In & Out stores. 10

11 Hypothesis 2 to be tested using χ2 H 0 : There is no association between different age groups & frequency of visits to In & Out Stores H 1 : There is association between different age groups and frequency of visits to In & Out Stores Observed Frequency Age Groups Frequency Below & above Total Most of the times Occasionally Rarely Never Total Expected Frequency Frequency Age Groups Below & above Total Most of the times Occasionally Rarely Never Total Calculation of χ2 i.e. ((Fo - Fe)^2)/Fe Observed Frequency Expected Fo Frequency Fe ((Fo - Fe)^2)/Fe Total 7.21 Therefore Calculated value of χ2 =

12 Table value of χ2 at 0.05 significance level at degrees of freedom 9 i.e. χ2 0.05,9 = Since Calculated value of χ2 < Table value of χ2, Accept the null hypothesis Therefore we conclude, There is no association between different age groups and frequency of visits to In & Out Stores Limitations of the Study A sample size of 60 numbers for the customer feedback survey for the understanding the consumer demography and other types may be insufficient to represent the population under study. Further, Some of the Respondents were resistant to reply some questions. Data was gathered from one convenience store. As the observation for vehicles was carried in specific hours, hence the figures are relevant for those hours. Conclusion As the retail market place changes shape and competition increases, the potential for improving retail productivity and cutting costs is likely to decrease. Therefore it is important for retailers to secure a distinctive position in the market place based on values relationships or experience. Value today is function of not just price quality and service but can also be enhanced by personalization and offering a memorable experience. What is to be seen is how organized retail can duplicate the same level of personalized customer service levels offered by the unorganized sector to have a higher conversion ratio. The magnitude and strategy of BPCL's retail foray is sure to have far reaching social and economic implications by directly influencing the lifestyles of hundreds of millions of consumers, besides indirectly impacting the livelihood of tens of millions. Business analysts feel that BPCL s advantage is his huge structure and presence of its Fuel outlets at many strategic locations coupled with a good track record of Quality Service. Reference Resources: Black K. (2004). Business Statistics. India: Wiley BPCL Annual Reports 12