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Department store business in pakistan

Pakistan retail industry is a derivative of the growing economy, changing demographics and preferences of the Pakistani consumers. Retailing format like supermarkets, department stores, mega stores, shopping malls and retail chains had come up on the country with varying intensity during the 1980’s and 1990’s, have now started proliferating. Organized retail is booming and creating huge opportunity for enterprises. Ever increasing number of hypermarkets, departmental stores and shopping malls are inviting potential investor to invest in Pakistan. Data was collected from over a 100 people including college going crowd and young professionals as they would be more interested in trying out new Department Stores and were more cognizant. Analysis was carried out using statistical tools. Findings of this research could provide useful information to potential investors for investment in departmental stores of Pakistan.

Keywords : Booming, Creating opportunities, Invitation to Potential Investor, Investment


Department stores are places where you can find everything you need. And by “everything” means clothes, shoes, perfumes, cosmetics. home appliances, electronics and even home furnishings. These goods are separated into divisions and departments supervised by managers and buyers. There are also departmental divisions of merchandising, advertising, service, accounting, and budgetary control.

The rise of department stores has made shopping easier and more convenient for most people. Now we no longer have to travel far and wide because these places have materialized everywhere in various cities. And since there are abundant sources of these shops, searching for the perfect shopping center has been a tad tricky for the eager shoppers.

Department stores are often classified according to the kinds of goods they carry and the prices they charge; typical categories include discount, general merchandise, fashion or high fashion, and specialty. Many offer additional services, including gift wrapping, alterations.


Years ago, shopping was a task that can only be completed through personal visits to stores. There were only a limited number of stores to purchase the people’s wants and needs. Shoppers also used to pay for the merchandise through cash. But today, shopping has become a complex yet easy process for most people. Because of the rise in the number of department stores and the various ways to shop for the things you need, shopping has become a simpler task for everyone.

Department store shopping can now be done through personal or online visit. Shopping personally for the items you need would require you to visit several shops. Many prefer this type of shopping because they can have a personal view of the items they need.

Department store shopping can also be performed online. Those with hectic schedules can now conveniently shop for everything they need through the internet. And like personal shopping, you will be presented with different choices of the things you need.

Regardless of the way people shop, they need to have access to the various department stores nearest to their areas. Take a peek at the smallest to largest department stores within vicinity is the basic desire of each customer.


In recent years, people get used to buy daily use items from department stores and this trend is increasing in Pakistan. Some of the Foreign Multinationals like Metro, Banner Store International (Pvt) Ltd,Makro etc. have invested in departmental store business by seeing this huge opportunity.

Most of the stores are running in urban cities of Pakistan. The total urban population of Pakistan is 56 Million. By applying statistical tools on data acquired through questionnaire it is observed that each 4th person who belongs to urban cities like to get shopping from Department Store. Data of some big cities of Pakistan is given below with reference to number of customers and renowned Department Stores in each city.

It is observed that huge percentage of customers visiting Department Stores belongs to Middle and Upper class, with an average income of Rs.35000. The lower class is not much interested to buy goods from Departmental stores, they are more eager to buy things from small general stores, because these general stores provide credit facility to them. As both shopkeeper and shopper belongs to same vicinity, so there is less element of uncertainty of payment involved in these kind of transactions.

Departmental Store business is not successful in rural areas of Pakistan, because the culture of rural areas restrict Departmental Stores to operate their business in these areas. The major obstacle for Department Store in rural areas is that the most of the payments are made at the time of crops harvesting,.people are used of these kind of practices, so they are not in a position to accept a sudden change.

There wasa continuous rising number of Department Stores since year 2000 as investigated in the present research. There was a linear relationship in number of Department Stores per year until 2004. However an exponential rise was observed after 2005. Major reason attributed to this rise was the awareness and convenience felt by the customers by making purchases from Department Stores. In the year 2000 the total numbers of renowned Departmental Stores in big cities of Pakistan were 25 and now their figure increased upto 108. This trend clearly shows that the future of Department Stores is bright in Pakistan.


Following factors should be considered before starting a departmental store:

a) Is there a definite need for the store?
b) Do you have expertise and experience in operating this type of business?
c) Will you get enough customers to make it profitable?
d) How will you finance the property and the inventory?
e) Can you find a good location?
f) Can you be competitive in price and still make a profit?


It is an overall framework that indicate what information is to be collected and from which source and by which procedure in research project. In this research, the first stage is exploratory, in which clarification of the specific problem is identified, in second stage we are interested in knowing the characteristics of certain group such as – age , sex , income , education , occupation for which descriptive study is necessary.

This study involves the field survey conducted across different departmental stores in Islamabad and Rawalpindi. The respondents were approached outside the billing counter of departmental stores after they had finished shopping, before leaving stores. It also focused on the decision about choice of stores for specific purchase incident, since each purchase occasion might actually be a different decision.

The respondents were given the questionnaire to respond their views about particular departmental stores. In some of the cases respondent were subjected to personnel interview. Responses were sought regarding customer patronage behavior.

In Pakistan, departmental stores are proliferated with number of brands and their offering and almost all the stores is used for stocking or displaying the merchandise. The departmental stores are larger mostly 2000-3000 sq. ft. But very few of them have more than 5000 sq. ft. and are being designed for better display and browsing by the shoppers. The format was distinguished based on the facility provided to the shopper to browse and choose by themselves. This study was conducted in old as well as new format of departmental stores. The store was chosen from different part of cities to enable a wider spread of sample.

The general hypothesis about stores choice drivers were that for routine purchase such as grocery items and apparels choice driver should be include in stores services dimensions and attractiveness of the physically layout. It is important to validate this hypothesis. Since the indication is that departmental stores should be providing more evolved dimensions of services to attract shopper it remain to be proven that such dimension do actually improved departmental stores.

Secondary Research:External secondary data has been generated to obtain volume of sales regarding Department Stores.

Survey Research: (1)Data was collected from candidates using questionnaire. The questionnaire was distributed in colleges and people on the street.(2)I distributed the questionnaires outside the Department Stores to gather data from people who hadcome to visit there.(3)I made an online questionnaire and circulated on the internet and gathered results from those

The aim was to collect 100 samples for the analysis. The samples should be such that they are consumers of Department Stores. I also tried to get an adequate ratio of men and women in the samples. The main demographics targeted were the younger age group as they are more aware of such Department Stores. Also I tried to focus more on the college going crowd and young professionals as they would be more interested in trying out new Department Stores and were more cognizant. Buyers who have been visiting Department Stores were better able to answer the questions regarding the influencing factors and the reasons for their consumption and purchase. The samples collected from internet have also been very valuable in the research.

Measurement Instruments: The measurement instruments in the questionnaire was a 5 point lickert scale for values as strongly disagree = 1, disagree = 2, neutral = 3, agree =4, strongly agree =5 for shopping at Department Store. Apart from details regarding their choice of Department Stores, their frequency of visits and their spending patterns will also be mapped. The data was extracted and put in MS Excel. All the further analysis was then carried out by using Statpro. The measurement was designed to get a fair idea about the various attributes and conducted factorial analysis of the important attributes.

a) Reliability Test:
Reliability test is to find out the reliability of the instrument. In this test the value of alpha is found to be 0.783 which is nearly equal to 0.8, and according to the thumb rule of alpha reliability is good.

b) One Sample Test
From the results of one sample test, we can say that:
1. Respondent are considering adequate sign board, quality of products, variety of products, plastic money service as important factor in deciding where to shop.
2. Parameters which less important for deciding where to shop are availability of open space, layout of the place, offer coupons and mobile charging zone.
3. Furniture and decor, colour and lighting, comfort and feel, adequate sign boards, courtesy and friendly atmosphere are moderately important.

c) ANNOVA test
From the results of ANOVA test, we can say that:
1. The F value of table is 2.18. Thus, we can accept the hypothesis that the factors quality of products, coupon and advertisement, variety of products, overall ambience affects the customer satisfaction.
2. Value of nearness to store is 3.586. Thus, we reject the hypothesis that nearness to store affect the customer approach to Department Store..

It was observed that customers are ready to travel even far from their residence for buying in departmental stores because of quality services and products.

d) From the given data of Spendings and Visits of customers in a departmental store, a scatter plot has plotted, in order to analyze that whether a number of visits at departmental store have any impact on customer spendings. It was observed that as much time a customer visit Department Store, there are 85.4% chances that it will increase customer spendings. Customer spendings and Customer visits are positively correlated which is 0.854. It could be analyzed that if a customer make more visits at Department, there are 85.4% chances that the customer will make more purchases from Department Store.

The broad conclusion about store choice among consumer indicates that image and perception have significant impact on final outcome. Perception about is driven substantially by tangible characteristics of departmental stores such as format of stores, size, distance from home, looks, as well as intangible factor like environment of stores. Given the limited information is available on shopping behavior of customer as even customer doesn’t know that what they like, so it was decided to design an exploratory study to identify major factor which affect behavior of customer and their satisfaction.

e) From the result of time series plot , we can conclude that the major portion of spendings on department stores are made by people who belongs to the age group of 35 to 55. By offering attractive packages any Department Store can increase its share in both upper and lower age groups.


As a result of an exhaustive investigation of all the parameters and methodology adopted above, following findings were established:

a) Customers have several reasons to choose any departmental store. But the primary reasons are ‘value for money’, ‘quality of product’, ‘variety of product’ and ‘service of the store’. More than 80% respondent indicated that these are the important reasons. Out of all respondents provided, 70% respondent responded that ‘ambience and layout’ was equally important as a buying behavior. This indicated that customer have one or mostly two good primary reason and other reason to visit departmental stores.

b) Number of Department Stores had a steady rise from 2000 to 2005 in Pakistan. However the customers observed an exponential growth after 2005 because of the awareness and convenience of these Department Stores..

c) Speed of transactions and ease at Department Stores was a major parameter that motivated customers for visiting Department Stores to fulfill their needs.

The responses were gathered through close ended questions. The respondents were probed for much reason the first reason being the top of the mind. The responses which were gathered through the questionnaire is used for further analysis. The study captured about different responses that could be classified into seven important categories.


Grocery and food items are choose by the customer strongly based on the more proximity and patronizations. The customer would like to reduce the time. However as indicated by the higher scores if customer have been buying for longer period off time , they do not mind buying from a store located at greater distance. The importance of relationship, comfort level with the departmental stores is stressed with regard to grocery and food items story.

This seems to be some indication of an inherent loyalty to the stores in this category. So when experience of shopping is good there is a high chance of next visit. The customer is willing to trade-off the extra travel with the experience. However the proximity is the most important driver of loyalty to a grocery store. Ambiance is not important factor for customer in this category.

In the case of consumer durable stores, consumers give more importance to merchandise, referral, and ambience. They prefer to visit those stores that depth and wide range of product. Customer in these stores looks for variety. Stores that offer good price and discount are also visited. The ambience reflected in terms of lighting, setting and comfort is also relevant in determining store choice. A good display of product, so that customer can look around and touch and feel the product becomes an important consideration in departmental stores.

Leisure sections of departmental stores (books and music, accessories and lifestyle products) tend to attract customers on the basis of ambience of stores. The customer wants comfortable store as they tend to stay for longer on each visit. The lighting display and attractive decor of the store become an important factor.

In case of apparels, customers value merchandise, ambience and brand. They want variety and would like to touch and feel the product. Range of merchandise, in terms of product and price, attract shopper to a store. They would like to satisfy themselves about making right choices by trying them out before finalizing their product.


Customer satisfaction is the key to keep existing customer. Customer satisfaction must be matching or greater than the customer expectation. From the research study I have done, I concluded that the overall customer satisfaction regarding the departmental stores in Pakistan is reasonably good. If we define it in percentage term then it is approximately 61% in urban areas. Yet there are some aspects as noted in guideline section where the departmental stores in Pakistan need to focus more in order to increase market share:

1. The checkout counters are crowded, especially in peak hours and holidays. Customers have to spend 20 minutes to 45 minutes in queue. Departmental stores should take proper measures to increase number of checkout counters in case of such occasions.

2. Products kept in sections such as toys and children’s sections should not be kept at height. According to suggestions given few customers, specially children, find it difficult to get access to such products.

3. In case of trolleys used, there is not enough space to move around the departmental stores on holidays or in peak hours. This may cause hindrance in case of emergency or in case of families with small children. Departmental stores to take proper measure so as to allocate enough space for movement of trolley even during holidays or peak hours.


1. Kothari C.R., (2004) “Research Methodology- Methods and techniques”, New Age international Publication.

2. Businesss Today (2010), “Retail revelation”. 22 July-6 August.

3. Jones T. O. And Sasser W. E. (1995), “Why satisfied Customer Defect”, Harvard Business Review, Vol. 73, No. 6. pp 88-99.