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Dr. Shruti Gupta, Associate Professor of Marketing, Division of Social Sciences, Penn State Abington

Dr. Shrute Gupta

Despite Unethical Retail Store Practices, Consumers at the Bottom of the Pyramid Continue to be Loyal

 

A growing stream of research under the labels of bottom of pyramid (BoP) and subsistence consumers has increasingly pointed out the market attractiveness of this segment to multinational companies. These poor consumers are individuals who earn approximately $2 per day. The largest BoP market in the world by size of population is in India where according to a 2011 World Bank estimate, 69% of the country’s total population (approximately 1.2billion) earns $2 per day.  In this lecture, Dr. Gupta explains the nature of widespread unethical retail practices prevalent amongst the neighborhood retail stores (or kirana as they are referred to in India) that serve the BoP consumer, types of patronage behaviors and the reasons why these consumers continue to support the kirana store. The data for this paper comes from a qualitative study conducted with urban poor consumers in India. Using an in-depth interview method, 58 urban poor individuals provided detailed accounts of their retail store experiences.

Data analysis shows that kirana stores regularly engage in the four unethical practices: selling outdated products beyond the expiration date of suggested use, counterfeit products, high price, withholding the promotional offer and only passing it to the consumer if asked for immediately following the purchase. All study participants were knowledgeable of these practices and viewed it as being “wrong” or unethical. Despite this, they continue to patronize the retailer. In this paper, we provide a detailed account of the different types of patronage behaviors and explain why BoP consumers choose to patronize the kirana store. We believe that there are four reasons why BoP consumers continue to be loyal to the kirana store keeper: revolving interest free store credit, sense of belongingness, sense of lineage and lack of fit with the organized retail store sector such as Big Bazaar, More and Reliance Fresh.