Consumer preference towards Online
Retail stores and Offline Retail stores in
FMCG Sector
ABSTRACT
INTRODUCTION
Fast-moving consumer goods (FMCG) sector is India's fourth-largest sector with household and
personal care accounting for 50% of FMCG sales in India. Growing awareness, easier access
and changing lifestyles have been the key growth drivers for the sector. The urban segment
(accounts for a revenue share of around 55%) is the largest contributor to the overall revenue
generated by the FMCG sector in India. However, in the last few years, the FMCG market has
grown at a faster pace in rural India compared to urban India. Semi-urban and rural segments are
growing at a rapid pace and FMCG products account for 50% of the total rural spending.
The FMCG market in India is expected to increase at a CAGR of 14.9% to reach US$ 220
billion by 2025, from US$ 110 billion in 2020. The Indian FMCG industry grew by 16% in
CY21 a 9-year high, despite nationwide lockdowns, supported by consumption-led growth and
value expansion from higher product prices, particularly for staples. The rural market registered
an increase of 14.6% in the same quarter and metro markets recorded positive growth after two
quarters. Final consumption expenditure increased at a CAGR of 5.2% during 2015-20.
According to Fitch Solutions, real household spending is projected to increase 9.1% YoY in
2021, after contracting >9.3% in 2020 due to economic impact of the pandemic. The FMCG
sector's revenue growth will double from 5-6% in FY21 to 10-12% in FY22, according to
CRISIL Ratings. Price increases across product categories will offset the impact of rising raw
material prices, along with volume growth and resurgence in demand for discretionary items, are
driving growth. The FMCG sector grew by 36.9% in the April-June quarter of 2021 despite
lockdowns in various parts of the country.
Indians' online buying is no longer limited to books, electronics, clothing or shoes. Their online
shopping list now includes consumer items such as soap, shampoo, hair oil, and household items
such as grocery, vegetables, and packaged foods, among others.
While leading e-commerce portals Flipkart and Amazon sell soap, shampoo, hair oil and other
personal care products online, there are a handful of small e-tailers - localbanya.com,
mangoshoppers.com, zopnow.com, ekstop.com, onekirana.com, eazygrocery.com,
citykirana.com, easyration.com, mygrahak.in, dilligrocery.com, bigbasket.com, etc - that deliver
grocery goods, vegetables and packaged food items at the consumers doorstep. While most of
these follow a free delivery model and are city-specific, there are national players, too.
The huge potential of online shopping has caught the attention of top fast-moving consumer
goods (FMCG) companies such as Dabur, Marico, Bisleri and ITC, which have started pushing
their products through the online route. Notably, some of these are gearing up to launch their
own e-commerce portals, while a few have already done so.
While ITC has already started selling its food products through its own website
shopping.kitchensofindia.com, some of its products such as Dark Fantasy (biscuits), Farmlite
(biscuits), and Kitchens of India (ready-to-eat Indian dishes) will be sold through other e-
commerce websites over the next few months
LITERATURE REVIEW
Fast Moving Consumer Goods (FMCG) is the fourth biggest sector in the Indian economy.
There are three primary segments in the sector food and refreshments, which represents 19
percent of the sector; medical services, which represents 31 percent of the offer; and family unit
and individual consideration, which represents the staying 50% offer (T.P. Ram Prasad 2019)
The paper first outlines the factors affecting the growth of online retailing. In addition to the
factors of technology, consumers and brands, the paper highlights the role of the physical retail
landscape in the explosion of online retailing. It describes kirana stores, which have received
littler research attention to date; it then uses a business model perspective to demonstrate that
kirana stores deliver a unique set of values. ( Piyush Kumar Sinha 2015 )
Could grocery e-tailing ever replace traditional shopping to any extent? It is debatable.
Characteristics such as impulse purchases, browsing, instant gratification, and product freshness
are hard to replicate online. Our view is that both channels will coexist. For consumers in
general, this is good news. They will have more than one way to buy their groceries. ( Hean taet
Keh 2001)
This study will focus on the retail industry, and more specifically on grocery shopping. The
retail grocery industry has during the immediate phases of Covid-19 witnessed changes in
collective patterns of consumer behavior, even a radical change in demand for certain products,
online shopping and home delivery services (Niklas Eriksson 2020)
OBJECTIVES
In general, this study is conducted to study the consumer Preference towards online/ offline
retail stores in FMCG and with reference to its background factor, Convenience satisfaction
etc. The specific objectives are:
To study the frequency of purchases in offline retail store.
To study the frequency of purchases in online retail store.
To identify the driving factor for offline or online shopping.
To understand the relationship between the age group and preference towards online and
offline shopping.
To study the customer’s perception towards the sustainability of the online retail stores
in india.
Hypothesis
H1: There is a relationship between age of the consumers and preference for online shopping.
H2: There is a relationship between the occupation of consumers and their preference for online
shopping.
H3: There is a relationship between gender and preference for online shopping.
H4: There is a relationship between category of product and satisfaction level of consumer for
online shopping.
Research methodology
We have used a descriptive study method in this research paper. The sample size of the study is
180 and most of them are from the area of Surat and Navsari. The data are collected through a
self- administered questionnaire. We have used snowball sampling and convenience sampling as
we have sent questionnaires by uploading it on social media and also sharing it with some
people and asking them to share it with others. We have applied Chi square test for
independence variable and descriptive statistics in this study. The data was analyzed using
Statistical Package for Social Sciences (SPSS).
DATA ANALYSIS AND INTRPRETATION
H1: There is a relationship between age of the consumers and preference for online shopping.
Age and Do you prefer online shopping?
Do you prefer online shopping ?
No Yes Total
Age 15-25 Count 18 114 132
Expected 20.5 111.5 132.0
Count
26 and Count 10 38 48
above Expected 7.5 40.5 48.0
Count
Total Count 28 152 180
Expected 28.0 152.0 180.0
Count
Chi-Square Tests
Asymptotic Significance
Value df (2-sided)
Pearson Chi-Square 1.388a 1 0.239
a. 0 cells (0.0%) have expected count less than 5. The minimum expected
count is 7.47.
b. Computed only for a 2x2 table
Above hypothesis shows the relationship between age and preference of consumer towards
online shopping whether they prefer online shopping or not. In the responses there are total 132
responders between age 15 to 25 and out of that 114 responders prefer online shopping and 18
responders dose not prefer online shopping and there are 48 responders between age 26 and
above out of that 38 responders prefer online shopping and 10 responders dose not prefer online
shopping.
From the above table of chi-square test it can be interpret that there is a relationship between age
and preference of consumer towards online shopping. The level of significance is 0.05.
From that we can interpret that the age group 15-25 prefer online shopping more but people
above the age of 26 are less familiar with online shopping.
H2: There is a relationship between the occupation of consumers and their preference for online
shopping.
Occupation Do you prefer online shopping?
Do you prefer online shopping ?
No Yes Total
Occupation Student Count 16 84 100
15.6 84.4 100.0
Expected
Count
Service Count 6 32 38
Expected 5.9 32.1 38.0
Count
Others Count 6 36 42
Expected 6.5 35.5 42.0
Count
Total Count 28 152 180
Expected 28.0 152.0 180.0
Count
Chi-Square Tests
Asymptotic Significance
Value df (2-sided)
Pearson Chi-Square .068a 2 0.966
a. 0 cells (0.0%) have expected count less than 5. The minimum expected
count is 5.91.
Above mention hypothesis shows the relationship between occupation of the consumer and their
preference towards online shopping whether they prefer online shopping or not. In which out of
180 responders 100 responders are students, 38 responders are services people and 42
responders are others, some of which are doctor, housewife, self-employed, businessmen or
social worker. Out of 100 students 84 students prefer online shopping, out of 42 service people
36 people prefer online shopping and out of 42 responders with miscellaneous occupation 36
people prefer online shopping.
From the above table of chi-square test it can be interpreting that there is no significant
relationship between occupation of the consumer and preference of consumer towards online
shopping. At 0.05 level of significant.
From the above chi square test, it can be interpreting that consumer preference for online
shopping is not dependent on his/her occupation. People with any kind of occupation can have
positive preference towards online shopping. Which means that every class of the society use
online shopping.
H3: There is a relationship between gender and preference for online shopping.
Gender and Do you prefer online shopping?
Do you prefer online shopping ?
No Yes Total
Gender Female Count 11 81 92
Expected 14.3 77.7 92.0
Count
Male Count 17 71 88
Expected 13.7 74.3 88.0
Count
Total Count 28 152 180
Expected 28.0 152.0 180.0
Count
Chi-Square Tests
Asymptotic Significance
Value df (2-sided)
Pearson Chi-Square 1.856a 1 0.173
a. 0 cells (0.0%) have expected count less than 5. The minimum expected count
is 13.69.
b. Computed only for a 2x2 table
Above mention hypothesis shows the relationship between gender of the consumer and their
preference towards online shopping whether they prefer online shopping or not. Out of 180
responders 92 were female and 88 were male. Out of 92 female responders 81 female prefer
online shopping and out of 88 male responders 71 male prefer online shopping.
From the above table of chi-square test it can be interpreting that there is a significant
relationship between gender of the consumer and preference of consumer towards online
shopping. At 0.05 level of significant.
From the above graph we can say that out of 169 responders most of the people prefer to
purchase cloths online. 125 people says they prefer cloths to purchase online which is 74% of
total Reponses, 89 people says they prefer to purchase footwear online which is 52.7% of total
Reponses, 81 people says they prefer to purchase electronics item online which is 47.9% of total
Reponses, 74 people says they prefer to purchase accessories online which is 43.8% of total
Reponses, 59 people says they prefer to purchase books online which is 34.9% of total
Reponses, 55 people says they prefer to purchase cosmetics online which is 32.5% of total
Reponses, 51 people says they prefer to purchase grocery online which is 30.2% of total
Reponses, 20 people says they prefer to purchase services online which is 11.8% of total
Reponses and some of the people also prefer to purchase banking services, foods, stationaries
items, medicine from online platform.
From the above it is interpreting that consumer who prefer online shopping are more likely
prefer to purchase cloths from online shopping.
a (satisfaction level of clothes)
a (satisfaction level of clothes)
a (satisfaction level of clothes)
a (satisfaction level of clothes)
a (satisfaction level of clothes)
a (satisfaction level of clothes)
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