FOOD PRICES AND MODERN RETAILS: THE CASE OF KOCHI
Loading...
Date
2011
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
IARI, Division of Agricultural Economics
Abstract
Modern retail is emerging as the prime factor responsible for changes in food markets,
especially in developing countries like India. The retail sector is expected to show strong
growth during the coming years in the country given the expectations in underlying economic
growth, population expansion and rise in per capita income. The effect of modern retail on
food prices and a comparison between modern retails and traditional retail formats with
respect to the pricing of selected commodities in the city of Kochi was done. Data from 30
modern retail stores and 30 traditional retail stores in Kochi was collected through primary
field survey using structured questionnaire following stratified random sampling procedure.
Data on retail purchase behavior, preferences and other socio-economic variables from sixty
randomly selected households were also used in the study. The impact of different variables
affecting pricing of commodities in different retail formats including the type of retail format
were studied using regression analysis for six selected commodities (Potato, Onion, Banana,
Apple, Rice , Coconut oil). Logit model was employed to study the factors affecting the
choice of retail formats by the consumers. The behavioral responses of consumers towards
organized retailing and their preferences for specific attributes of modern retails were studied
using conjoint analysis. The results of the analysis of prices using t-test indicated that
significant price difference existed between traditional and modern retail formats in all the
commodities studied. The difference was most prominent in rice, attributable to the consumer
preference for branded rice, mainly sold through modern retails. The quality of the
commodity has been found significantly affecting price for potato, apple, rice and coconut
oil. The type of the retail format was significant in the case of banana, apple, rice and
coconut oil. Whereas bargaining was found to significantly affect price of onion and banana.
The part-worth value obtained from conjoint analysis for price less than traditional retails
(1.029) point out the importance of price competition to attract consumers. The level of
excellent quality received low part-worth score (0.726) showing that consumers were willing
to compromise on quality for the sake of lower price. The presence of still evolving modern
retail format in food retailing has got implications for different consumer groups. The modern
retail stores need to make significant changes in their customer orientation in terms of pricing
and complementary facilities like credit to make its presence sustainable and to enhance its
customer base.
Description
T-8489