Influence of Economic Benefits and Social Interaction on Buyer Participation in a Rural Retail Institution: Study of an Indian Periodic Market

Abstract

Retail institutions offer economic and social benefits to the participants in a market. It is expected that in a less developed economy the social factors influence economic behaviour much more than in developed economies. The rural markets offer increased opportunities for the influence of social factors on economic transactions. This study examined the case of a rural periodic market. To ensure reliability the case study protocol questions reflected propositions developed on the research questions. It was expected that the participants would exhibit the influence of social relations in their market transactions. The results indicated that the economic benefits than social considerations influenced participant behaviour in the rural periodic market. Contrary to expectations not all consumers in a less developed economy exhibit social embeddedness in economic behaviour. Implications are for policymakers involved in planning and regulating rural markets. They need to take into consideration the differing behaviour of consumer groups in designing or regulating retail markets. This study examining the social embeddedness of buyer behaviour in the rural retail context of a less developed economy is presumably the first.

Keywords

Rural retailing social influence retail format periodic market economic factors

Introduction

Shopping motivation influenced by utilitarian and hedonic aspects (Babin et al. 1990) is moderated by social influences. This embeddedness of economic behaviour in social relationships is more in transition economies than capitalist economies (Machado 2011). A related view is that the influence of social relations on economic behaviour decreases with an increase in marketness (Block 1990). All these suggest that the social factors influence the economic behaviour in retail transactions in rural areas of a less developed economy. Hinrichs (2000) observed the influence of social ties and interaction on economic behaviour in direct markets in a developed economy. This study examines the motivations for participation in a periodic market (PM) in the rural location of a less developed economy. PMs are markets characterised by periodicity, retailer mobility and retailer agglomeration. The PMs in rural India are weekly markets where traders buy or sell agricultural produce or retail consumer goods. Some producer farmers use this market to sell their produce. With an increase in population and income and the entry of full-time traders it was expected that the PMs would be replaced by permanent shops (Bucklin 1972; Tinkler 1973). The PMs, however, have continued to function in rural India (Velayudhan 2014). There are 43,384 PMs in India retailing fresh produce and other consumer goods (RMAI 2011). A study on PMs suggests lower transaction costs for mobile retailers compared to those for permanent shops as a possible reason for the resilience of the PMs (Rozelle et al. 2003). An important aspect that this study seeks to understand is the influence of economic considerations motivating participation in the rural periodic markets.

The social relationship is limited in large organised markets compared to more personalised relationships in local markets (Lyson and Green 1999). Dholakia et al. (2012) examined competition among retail formats in the Indian context. They observed that consumer shopping behaviour and retailer-consumer relationships helped the small store compete effectively with modern organised retail stores (Dholakia et al. 2012). Relationships built on commitment and trust are observed to be an influence on retail performance (Morgan and Hunt 1994). A study that sought to explain the resilience of PMs suggests that PMs offer an opportunity for social interaction (Bromley et al. 1975). The influence of social interactions on economic behaviour is possibly more in emerging economies than in developed economies (Granovetter 1985) and this possibly is one other reason for the resilience of PMs. The embeddedness of economic behaviour in direct markets was examined in the context of developed economies (Hinrichs 2000). Published research in the context of developing countries is limited. In the Indian context evidence of embeddedness is observed among the Tibetan community. The efforts to preserve their cultural identity are reflected in different economic forms (Mohan et al. 2019). In the Chinese context, the aspect is examined for job search (Elena Obukhova and Zhang 2017). Social embeddedness is also used to understand entrepreneurial behaviour among the members of religious schools ‘peasantren’ in Indonesia (Rahayu 2018). The second aspect that this article examines is the social embeddedness of economic behaviour for a PM in a less developed economy. The research questions in this study are as follows:

Do economic benefits and social relationships contribute to participation in rural PMs? How well do social relations explain the economic behaviour of the participants in rural PM?

Theoretical Considerations

Central place theory predicts the presence of PMs in areas where the density of demand is low. It also assumes that the consumers are willing to travel a certain distance and that the vendors seek viability by operating in these markets for a short period (Stine as quoted by Webber and Symanski 1973). As income and population increased and transportation infrastructure improved the PMs were expected to be replaced by permanent shops (Skinner 1964; Tinkler 1973). The continued presence of the PMs in rural India suggests that it provides value despite competition from the permanent shops.

Literature in retailing offers evidence for the coexistence of different retail formats (Hirschman 1978; Miller et al. 1999). The presence of different retail formats is explained by variations in consumer behaviour and the ability of different retail formats to serve these different consumer segments. Social relationships that develop between consumers and retailers differ by type of retailers and this is also a reason for the presence of different retail formats. Multiple theoretical frameworks are therefore required to explain the performance of retail formats (Dholakia et al. 2012). This article uses central place theory along with resource advantage theory and also social embeddedness of economic behaviour framework to understand participant behaviour and motivations in PMs.

Propositions

Creating Economic Value for Participants

Reducing the costs of retailing or offering greater value to consumers by different types of retailers reflects their differential utilisation of resources. Resource advantage theory is used to understand the competitiveness of PMs. This study following the perspective of Kozlenkova et al. (2014) draws on the resource advantage theory framework to examine the issue at the level of the type of retailer, that is, the PM. To compete effectively an entity must produce greater net benefits by differentiation and/or lower cost (Peteraf and Barney 2003) through superior use of physical, human and organisational resources (Barney 1991). The participation by buyers and sellers in PMs is possible because these markets offer economic benefits through the efficient use of resources.

Consumer Benefits of Assortment, Price and Location

The central place theory states that in case sufficient demand is not generated for a product at a location, the retailer may provide the product only on certain days to achieve viability (Stine as quoted by Webber and Symanski 1973). Tinkler (1973) suggests that with increasing income permanent shops replace the PMs. Increasing income can generate continuous demand for at least lower-order goods (lower-priced frequently purchased goods) encouraging the setting up of permanent shops (Tinkler 1973). An economic rationale for the continued existence of the PMs is the presence of higher-order goods (expensive and infrequently purchased) that otherwise would not be available in a given market centre (Bromley et al. 1975). This is because the mobile retailer can increase stock turnover by visiting different markets and capturing greater demand than the permanent shops.

Studies on competition between retail formats are also used to understand the benefits sought by consumers from different retail formats. A study that examined competition between types of retailers in India observed the influence of shopping behaviour on the consumers’ choice of the type of retailer. The Indian shopper does frequent shopping trips and therefore convenience is important. The small permanent shops are preferred over modern retail format because of its convenient location (Dholakia et al. 2012; Goswami and Mishra 2009). The convenience of location for the consumer does not differ between PMs and permanent shops adjacent to the PMs. The difference is in the daily availability of permanent shops and this can result in a preference for the permanent shop over PMs. This preference may differ according to the type of products. In the case of staples, the preference may be for permanent shops. It is for infrequently purchased products that the PMs may be of value to consumers because of the greater variety on offer. Variation in product assortment for different types of retailers was observed by Hirschman (1978). The central place theory and the study on competition between retail formats suggest that the PMs would offer expensive goods that are infrequently purchased.

P1: Consumer participation in PMs is for the reason that expensive and infrequently purchased goods would be available in a location that would otherwise be not available there. Permanent shops would meet the demand from consumers for lower-priced and frequently bought goods.

PMs increase competition and this allows for a better price to the consumer. In addition to this, the PMs in adjacent locations have different market days to avoid competition (Hay and Smith 1980; Tinkler 1973; Webber and Symanski 1973). This would, however, gives a choice for consumers to visit different markets and they gain through a better variety of products and retailers to choose from. It not only introduces competition and therefore better prices but also better variety within a category. It also offers a greater number of product categories within the market than would be available in permanent shops.

P2: Though the density of demand may increase, PMs may persist because of better prices and variety offered to the consumers. The adjacent PMs function on different days and these markets offer consumers an additional choice of retailers. This too results in consumers being offered variety and better prices than permanent shops.

Many consumers perform multi-purpose shopping trips and this possibly justifies outshopping visits to the PMs instead of local shops in interior villages (Velayudhan 2014). Outshopping literature suggests a greater variety of products as the reason for attracting consumers to the PMs. Dissatisfaction with the price and variety of goods offered by shops in interior villages influence outshopping in larger markets (Jarratt 2000; Johnson et al. 2006; LaForge et al. 1984; Lee et al. 2008).

P3: Variety in the PMs attracts consumers from interior locations to these markets and possibly the reason for these outshoppers participating in PMs.

Social Interactions and Their Influence on Economic Behaviour

Granovetter (1985) observes that economic behaviour is influenced by social relations. There is support for this in the retail context as retail performance is influenced by relationships built on commitment and trust (Morgan and Hunt 1994). Specific to retailing in developing economies there is not much evidence of published research. The research in the context of retailing in rural India presumes the framework. In a study in the context of retailing in rural India the social embeddedness framework is presumed. The framework is used to understand the social and economic roles of rural unorganised retailers (Sarkar et al. 2018). The importance of this framework requires examining such embedded behaviour in rural retailing.

Relational Benefits

Dholakia et al. (2012) observed that small permanent shops developed personal relationships with customers. These shops also used social networks within the community to retain customers and increase sales. The customers were familiar with the retailer and the products the retailer offered and the service to expect. The familiarity provided consumers comfort and ease of doing business with these retailers. The retailer too was aware of customer requirements. This helped the small permanent shops to compete with the modern retail format. The result was supported by studies on consumer comfort. Consumer comfort created commitment and trust with the service provider (Spake et al. 2003). The influence of social relations is higher in rural areas as there is evidence that in contrast to urban consumers the rural consumers prefer to shop where they know the people (Patel et al. 2015).

P4: The retailers in the PMs may be familiar with consumers and the relationship possibly results in consumers preferring the retailers in PM from whom they buy regularly.

Dholakia et al. (2012) observed that the shopkeeper in the small permanent shops and their customers knew each other. They identified with each other’s wants and needs, displayed empathy, and engaged in personal and family-related conversations. This identification helped create trust and increase commitment to the shop. The shopkeeper extended credit based on personal relationships, offered discounts to their preferred regular customers, offered children candy and they even sometimes babysit when parents did some quick errands. They also offered home delivery.

The small permanent shops carried limited stocks and therefore when a product that a customer demanded was not available, the shops made the product available quickly through an arrangement with the wholesaler or by fetching the product from a nearby shop. The relational benefits helped improve the commitment of the consumer and increased consumer loyalty (Morgan and Hunt 1994). These reflect economic instrumentalism in social interactions (Hinrichs 2000). It is possible that in some of these transactions it is the social considerations that are the dominant motive (Izumi et al. 2010). Whether it is instrumentalism or social interaction benefit, the retail transactions reflect the influence of social relationships.

P5: The retailer in the PMs may develop familiarity with customers and may strengthen the relationship by extending credit or making available an out-of-stock product that the customer requires in the retailers’ next visit to the PM.

Social Interactions in PMs

The social and cultural influences on PMs were examined by Bromley et al. (1975). In their view, the markets originate with producer sellers seeking a place and time to sell. The market day was based on the existing routine of production, religion, etc. (Bromley et al. 1975). They, therefore, suggest that understanding the development and presence of PMs require examining the social and cultural influences than just the economic functions that these markets perform. There are other studies too that suggest that a market is also a place for social interaction (Masaru and Badenoch 2013; Veeck 1992). Participants visit the weekly market not only to make purchases but also expect to meet and interact with friends and relatives.

P6: The PMs are an opportunity for social interactions and a reason for the consumers to visit the PMs.

Case Study Research

The case study method of research was used as the number of variables was large and the relationships complex. The study also required collecting data from multiple sources. A single case study was used for this research (Yin 2014). The unit of analysis was the PM with the economic and social aspects examined to understand the implications for the PM. The generalisability was based on analytical generalisability.

The PM identified for the study was located in a semi-urban location in the south Indian state of Tamil Nadu. The market was governed by a town panchayat (a form of local government for locations bigger than villages but not an urban location). Semi-urban location was selected as this would have reasonably high demand density and the continued presence of PM in a location with high demand density would help understand the possible reasons for the competitiveness of PMs as a retail institution.

The PM identified for the study was large (RMAI 2011). Multiple sources were used for data collection. These were the village officer (state government official for the semi-urban location, the town panchayat (local body) official, an official of the agricultural department and participants in the PM. In addition to this, information was collected by enumerating the number of shops and recording the items sold in the market. Information was also collected from the website of the state administration. Case study protocol guided data collection (Appendix 1). Operational definitions were developed for ‘identifying PMs, distinguishing between higher/lower order goods, and for the size of PMs’ (Table 1). The operational definitions were used as part of the case study protocol.

Table 1.

Operational Definitions.

Construct	Operational Definition	Measure
Higher-order/lower-order goods	High-order goods/services: a good or service, usually expensive, that people buy only occasionally, e.g., furniture, computers and jewellery Low-order goods/services: a good or service, usually inexpensive, that people buy on a regular, often daily basis, e.g., newspapers, bread and milk	Price and frequency of purchase
Periodic market/permanent shops	Periodic markets are locations where people assemble to buy and sell goods and services. These markets usually operate in a weekly cycle with stable periodicity	Periodicity, mobility of vendors and vendor agglomeration
Characteristic of periodic market	The products sold and volume of transactions differ and this usually differs by the size of the population where the periodic market is located.	Large periodic market located in population 10,000 numbers or more

Source: Compiled by author from works of Barcelona Field Studies Centre (2020); Webber and Symanski (1973); RMAI (2011).

Case study data were collected in two phases. In the first phase, the data was collected from the three officials, a long-time resident of the semi-urban location, a shopkeeper in a permanent shop selling stationery items, two vegetable retailers selling from permanent shops, four retailers in PM and four buyers in the PM. Data was collected once again after an initial write-up of the case and after organising the information collected into propositions. Thirteen buyers and 13 retailers from PM were interviewed in the second phase. This helped fill the information gaps and clarify aspects that were not clear.

The case analysis was carried out by writing up the case, checking with propositions and follow-up visit for additional information and clarification. Data analysis followed a general analytic strategy of ‘relying on theoretical propositions’. The interpretation was done by comparing the data with the propositions to explain the motivation for participation in the PMs. The events or circumstances of the case were compared to those predicted by the propositions. The deviation from the proposition was sought to be explained.

Construct validity was ensured by operational measures, using multiple sources of evidence and establishing a chain of evidence. A chain of evidence was sought to be ensured by linking the initial research questions, the data collected and the inferences made. Internal validity was through pattern matching, that is, the logic linking the data to the propositions. Reliability was ensured through the use of case study protocol and the chain of evidence (Yin 2014).

Analysis of the Case

Case study data is organised according to the different propositions to establish a chain of evidence and to facilitate pattern matching.

Creating Economic Value for Participants

Consumer Benefits of Assortment, Price and Location

Product category in PM: The Thingalnagar PM functions on Mondays. The officer from Thingalnagar local body and the village officer indicated that the number of retailers varies and, on average, there would be 100 retailers in the PM. The number of retailers was 120 and 125 on the two days that the author visited the PM. The author observed that the products sold in the PM included vegetables, coconut, banana and a few utility items like knives, mirrors, scissors and clips. A couple of retailers sold low-priced ready-made garments. The village officer, an officer with the local body, and an official in the agricultural department indicated that the PM sold mostly fruits and vegetables. Interviews with 13 retailers in the PM also indicated this. In addition to the PM, there were permanent shops in Thingalnagar panchayat town. These shops sold goods on all days of the week. The author observed that the number of permanent shops in the daily market selling vegetables, fruits, fish and a few other grocery items to be more than 110, and the village officer placed this at 120. The village officer indicated that in addition to the permanent shops in the daily market selling fruits and vegetables there were about 350 permanent shops in the panchayat town. The author counted the number of permanent shops selling products other than fruits and vegetables and this was more than 330. These included garment shops, jewellery shops, shops selling packaged goods, grocery shops, stationery shops, pharmacies, sweet shops, shops selling utensils, consumer durable shops, automobile spare parts shops, etc. In addition to these, there were restaurants, tea shops, cigarette shops and also services of auto repair and health clinics. The agricultural official and a retailer interviewed during the researcher’s first visit indicated that the retailers in the PM were mostly mobile traders and also a few producer farmers. According to the official of the agricultural department the small producer farmers usually sold coconut, banana and amaranths.

The data indicates that the permanent shops offer all types of consumer goods, including high-order goods like consumer durables. The data is in agreement with the expected relationship between demand density and the presence of permanent shops. What is not in agreement with expectations is the presence of the PM despite a large number of permanent shops. The economic rationale that was expected to explain the resilience of PMs was that higher-order goods would be available in PMs. This was not supported as the higher-order goods like consumer durables were available in the permanent shops and not in the PMs. The goods available in the PMs were lower-order goods like fruits and vegetables.

Benefits in PM: All the four buyers in the PM surveyed in the first phase of data collection indicated that the reason for buying from the PMs was for the better price compared to the price offered in the permanent shops. In the second phase of data collection, 13 buyers were interviewed and eight of them indicated that many retailers were selling different products. Almost all the buyers interviewed indicated that they benefited by participating in the market and the value was in the better prices and variety within categories. Many of the buyers indicated that they visited other markets too and these included the daily market. This comparative shopping helped them to purchase products that were of good quality and at a lower price.

The lower costs of retailers in the PM were possibly the reason for the lower prices than just a large number of retailers, resulting in competitive price. The official from the local body stated that the local administration allocated space for both PMs and permanent shops. The permanent shops were constructed and auctioned at market-determined prices but the charges levied on retailers in the PM were fixed by the administration and were low.

A shopkeeper in a permanent shop interviewed in the first phase of data collection indicated that the consumers differed by income groups. Consumers in the middle- and higher-income groups were not very sensitive to price. The convenience of time was important than price to these consumers. The competitiveness of the PM was because of the lower cost structures of the retailers in the PM and the presence of consumer groups who were sensitive to price.

According to the village officer, there were PMs in adjacent locations too. These PMs functioned on different days of the week and so did not compete with each other. The adjacent markets were Karungal, Thuckalay and Nagercoil. Karungal was at a distance of about 9 km from Thingalnagar and the market functioned on Saturdays. Thuckalay was about 8 km from Thingalnagar and functioned on Friday. Nagercoil was the district headquarters of Kanyakumari district and was 16 km from Thingalnagar. It had a Thursday market. The four customers interviewed in the first phase of data collection did not visit other PMs. The expectation of a greater choice of retailers because of the opportunity to visit different PMs is not supported. The competition was not only between the retailers in the PM but also between the retailers in the PM and permanent shops. The author observed that the number of buyers in the PM was much higher compared to the number of persons purchasing vegetables and fruits from permanent shops. The competition from PMs was significant for the permanent shops. Two retailers selling vegetables from permanent shops indicated that they had representatives selling in the PMs too. This helped them to counter the competition from retailers in the PM. The proposition of lower prices and variety within product categories sold in PMs is supported. The lower price however is because of lower costs of the retailers and not because of competition and the presence of adjacent PMs.

Outshoppers in PM: Thingalnagar PM had retailers selling fruits and vegetables, few utility items, some manufactured items and a couple of retailers selling low-end garments. In this respect, variety in terms of different product categories offered in the PM was lower compared to those offered by permanent shops. The four buyers interviewed in the first phase indicated that they came from outside the town and had travelled between 2 and 4 kilometres. Interviews with 13 buyers in the second phase indicated that the buyers visited the markets not only from the Thingalnagar town but also from adjacent locations. The buyers interviewed in the first phase indicated that they came only to purchase vegetables and fruits. The expectation that the PMs have better variety in terms of different product categories is not supported. The expectation that buyers perform a multi-shopping trip is also not indicated. The four buyers interviewed in the first phase indicated that the reason they preferred to buy from the PMs was the better prices. Two of these buyers indicated freshness of the vegetables also as the reason for preferring the PM. While all the 13 buyers interviewed in the second phase indicated better prices in the PM, 11 of them indicated better quality too. Choice within fruit and vegetable categories and so better quality and price were the reasons for participation from interior villages. Product variety was not there in PM and therefore the participants did not exhibit multi-purpose shopping. The proposition that consumers from adjacent locations visit the PM for lower prices and quality is supported but the consumers visiting the PM for the availability of a wide range of product categories and to perform multi-purpose shopping is not supported

Social Interactions and Their Influence on Economic Behaviour

Relational Benefits

Relationship in PM: A retailer selling vegetables from a permanent shop interviewed in the first phase of data collection indicated that many of their customers were regular buyers. Nine of the 13 retailers in the PM interviewed in the second phase indicated that they formed a personal relationship with customers. Three respondents said that relationships were not formed. Five of those who indicated that relationships were formed indicated that the retailer-buyer relationship was stronger for permanent shops. Four of these five respondents indicated the customers purchased from PM for the price than for the reason of personal relationship. Eight of the buyers interviewed indicated familiarity with retailers in the PMs and five indicated developing friendship. Seven respondents indicated that the relationships developed with retailers in the permanent shops were greater than that in PM.

The results suggest that the formation of relationships was much stronger for permanent shops than for PM and also the reason for purchase from PM was price than a personal relationship.

Relationship influence: PM buyers who were interviewed stated that the relationship with retailers in the PM was mostly familiarity. They indicated that the relationship did not result in any economic benefit. The interviews with retailers too did not indicate any benefit to the participants. Only one retailer indicated that the personal relationship was useful for customers when they had an urgent requirement and their demand had to be met. This retailer sold sweets and the customers possibly required sweets to be supplied at short notice for functions. The opportunity for retailers in the PM to build a personal relationship with buyers was limited.

Social Interactions in PMs

The PM did not have people sitting together and chatting nor was there any place in the PM that facilitated such social gathering. There was no evidence to indicate that the PM was a place for social gathering. The three buyers who were interviewed in the initial phase of data collection had visited the market from nearby locations to buy vegetables and fruits. They indicated that their visits usually did not have social interactions with friends and relatives. Two of the buyers interviewed in the second phase of data collection indicated that they visited the PM only to make purchases. Five of the respondents indicated that they purchased from the PM because of habit. Seven respondents indicated that their visits to the PM provided an opportunity to meet friends. For one respondent in addition to purchasing goods, a visit to the PM was entertaining. The social interactions with friends and relatives as an explanation for participating in the PMs was only weakly supported.

Discussion

Economic Factors Influencing Participant Behaviour in PM

The argument of central place theory that higher-order goods would be sold in PMs is not evidenced in this study. The PMs offer value to buyers because of the availability of fresh produce and competitive price. The reason for this is that the small retailers and farmers have lower costs and so offer a better price. An interview with one of the retailers indicated that the small retailer buys in small quantities and sells fresh produce in the PM with no carrying forward of these stocks. They also operate with low margins as they seek sustenance income and manage to transport these goods at low costs. Interview with officials of the agricultural department indicated that the small farmers sell fresh produce. They also do not charge for their effort and time spent in the market. The participation by sellers in the PMs is because of the low costs incurred in selling to consumers visiting these markets to buy staples. In the context of a less developed economy with surplus labour, the PMs offer an opportunity to earn for those who sell in these markets. The cost for mobile retailers is low and a reason for the success of the PMs is the economic value it delivers to the participants. This economic reason for participation in the PMs differs from the argument offered by central place theory.

The buyers in a PM visit other markets too in search of value. As indicated by a seller, the PM is relevant to the low-income than the high-income consumers. There is evidence to support the argument that it is the low-income and daily-wage consumers who frequent the PM (RMAI 2011). Low-income consumers find it worthwhile spending time and effort shopping to obtain value in the purchase of vegetables and fruits. The value offered by the PM and its ability to attract buyers is reflected in some of the permanent shops having their representative sell in the PM too.

Partial support for central place theory is indicated as the study suggests that PMs attract buyers from adjacent locations too. The availability of a narrow range of products (fruits and vegetables) in PMs is contrary to expectations from central place theory. The literature on outshopping that suggests that buyers perform a multi-product shopping trip is not supported. This is because the consumers who buy in the PMs have low income. They have limited needs and therefore limited items to buy and these are mostly necessities like vegetables, fruits and a few grocery items. Time and effort are not constraints for these low-income consumers but money is, and therefore they are willing to make the effort to get value for money for the products they purchase. Low-income consumers unconstrained by time are observed to differ in shopping behaviour compared to those in higher-income and constrained by time (Kenhove and Wulf, 2000). This suggests that consumer group differences influence participation in retail institutions. Studies in retail format choice in less developed economies offer support for this result (Jayasankaraprasad and Kathyayani 2013; Prasad and Aryasri 2011).

Influence of Social Interaction on Participant Behaviour

Social relationships are low in PM unlike for permanent shops. Social relations in PM are limited to familiarity and these do not influence the economic behaviour of the participants. Economic and not social considerations influence the transactions of participants in the PM. The consumer can assess the quality of the product and so does not have to depend on trust or relationship to ensure fairness in these simple purchases.

The buyers in the PM were from the town itself or adjacent villages and the PM offered an opportunity for some of them to meet and socialise among themselves. These social interactions did not reflect in economic behaviour. For some of the buyers, visiting the PM was more of a routine. Participation in PM is not only on economic considerations but to some extent also a routine. The familiarity and habit possibly reflect comfort factor but not in the sense of comfort created by reducing uncertainty as suggested by Spake et al. (2003) which would be more of instrumentalism.

Conclusion

The rural market place in a less developed economy was expected to have strong social embeddedness of economic behaviour. The study observes that the social interactions in the PM did not influence economic behaviour. The reason appears to be that the consumers visiting the PM do not have much discretionary income and they must make the best use of the limited money at their disposal. Expecting social embeddedness to be influenced by the stage of economic development may be only partially true. What would be appropriate is to understand the economic behaviour of participants in a market by examining the participant characteristics and also the type of products transacted. Consumer groups differ in the benefits they seek and the products they purchase. Different consumers may seek out different retail institutions to meet their different needs. In case of a purchase where the product is amorphous and also an important purchase there would possibly be a need for trust in the transaction and social embeddedness can be expected but this is not the type of product sold in Thingalnagar PM.

The results do not support the central place theory for the products sold in the PM. The products sold in the PM are necessities and not high-priced infrequently purchased products as suggested by the central place theory. The study finds the PM to be competitive as the retailers participating are small and operate with low costs and margins. The central place theory states that retailers gain volume by selling across different PMs. Central place theory suggests that permanent shops find it unviable to sell the higher-order goods in locations having a low density of demand, but the mobile traders would find it viable to sell these products in the PM. What is sold in Thingalnagar PM is not higher-order goods but fruits and vegetables, some essential grocery and utility items. The ability of farmers and small traders to offer fresh produce and at a lower price in the PM is what makes the PM relevant for buyers. The low-income buyers and small retailers gain value participating in the PM. Economic development possibly mutated the PM. PM possibly transformed over the years from one that had retailers gaining viability selling higher-order goods by visiting different PMs to one where small retailers sell small quantities of perishables and essential items. The low volumes of small retailers and their labour create cost and quality advantages.

The results from the study also contribute to understanding the reason for the coexistence of rural periodic markets and small permanent shops. The study suggests that participation in retail institutions differs according to consumer groups and thereby enables the coexistence of different retail formats.

Limitations and Future Scope of the Study

The present study is carried out for a large-size periodic market. The size of the periodic market would affect the number of commodities sold and the type of competition faced by this market from the small independent retailers. For a small-size periodic market, the catchment area may not extend much beyond the place where it is located. This could affect the type of consumers and their purchase behaviour. There is, therefore, a need to test the propositions for small-size periodic markets too.

The type of crops grown in the vicinity of the periodic market influences the type of produce that would be sold by farmers in these markets. This can affect the transactions depending on the seasonality and the nature of the crop. Selling of food grains in the PM would have greater participation from the residents than if cash crops are the primary crop. The cash crops may attract specialised buyers than the majority of the local populace. The study, thus, possibly needs to be replicated for the other major food-growing regions.

Implications of the Study

Policymakers would find it advantageous to take into consideration the presence of different consumer groups while deciding on regulations and incentives for retail institutions. Retail institutions for which to offer incentives or levy fees could differ by retail format. The policymaker needs to map the retail format to its potential to meet the needs of different consumer groups to decide on the incentives to offer or fee to levy.

The result also has implications for policy decisions specific to PMs. Strengthening the existing traditional periodic markets would offer an opportunity for large numbers of small unorganised retail vendors and also benefit economically weaker price-sensitive rural consumers. The policymakers can consider increasing participation by producer farmers in PMs by introducing specific days within the weekly cycle for local produce. The price-sensitive consumers would find it advantageous to visit the market and to buy directly from the producer farmers at lower prices and the demand creation would in turn encourage producer farmers to use PMs as the sole platform to sell because of the assured market and better price realisation.

The results suggest that small independent retailers would find it advantageous to compete with the traditional retailers in the periodic market by cultivating relationships with the economically better-off rural consumers and by offering additional services than cutting on price. An understanding that the different formats serve different consumer segments implies that the independent retailers in permanent shops need to increase service levels such as home delivery, make available products not stocked or out-of-stock as quickly as possible, extending credit and also establish social bonds. This approach rather than competing on price with the vendors in the PMs would help the small independent retailer to increase their margins and returns.

The presence of price-sensitive consumers who are willing to travel to nearby locations to realise better prices suggests that large format retailers can find opportunities for entry into rural markets. There is some evidence for this suggestion with a few rural supermarkets functioning (Sabharwal, 2013), even though the existing theoretical position does not expect such a format to successfully compete with the small independent retailers in rural areas.

Appendix 1. Case Study Protocol

Overview of the case study project

Project objectives

The objective is to understand buyer participation in periodic markets. There is no sponsor for the study.

Case study issues

Research question

Do economic benefits and social relationships contribute to participation in rural PMs? How well do social relations explain the economic behaviour of the participants in rural PM?

Specific research issues

The economic rationale for periodic markets is that high-order products would be available that would otherwise be not available. A trader is mobile if the density of demand is not sufficient to provide viability in that location. Therefore, for high-order goods, the mobile traders sell through periodic markets. This increases the viability of traders and convenience to consumers. The research issues are then: Are there any low-order goods in periodic markets? Are these low-order goods also available in permanent shops and the daily market? Do the periodic markets have high-order goods that are not available in daily markets? Are the traders mobile and do these mobile traders visit different markets?

Studies on consumer welfare of periodic market systems suggest that periodic markets increase competition and this allows for a better price to the consumer. The second proposition is that though economic density may increase periodic markets may persist because of better prices to the consumers and because adjacent periodic markets function on different days offering consumers greater choice of vendors. Are there greater choice for the consumer in terms of vendors because of the periodic markets and do consumers get better prices? The choice of vendors in the periodic market system could also increase by consumers visiting different periodic markets on different days of the week.

Outshopping literature suggests a greater variety in the periodic markets as a reason for their existence. The third proposition is that a greater variety in the periodic markets attracts consumers to these markets and possibly the reason for the continued existence of periodic markets. Do the periodic markets greater variety than available in the daily markets?

Competition between retail formats suggests the influence of retailer relationships with buyers helping in their patronage. The periodic markets are an opportunity for social interactions and the reason why the consumers still visit the periodic markets. Do the retailers in the periodic markets use their relationship to strengthen buyer patronage? Do buyers visit periodic markets for social interactions?

Field procedures

Obtain access to the village office, panchayat office, agricultural office, periodic markets.

Source of information includes interviews with representatives from the village office, panchayat office, and agricultural department. In addition to this, the study used the observation method. The rates charged for the vendors using the market were displayed at the entrance and this was also a source of data used in the study.

Case study questions

Are there lower-order goods in the periodic markets? Are there mobile vendors other than producer vendors selling these products in the market? Are these low-order products available in the permanent shops? Are there products available in the periodic markets that are not available in the daily markets? Are these high-order goods? (Need to define high-order goods.) Do the mobile traders sell in other periodic markets?

Do visitors to the periodic market make their visit from far off locations? Are the vendors visiting different markets?

Are there greater choice for the consumer in terms of vendors because of the periodic markets and do consumers get better prices? Do consumers visit the other periodic markets on the other days?

Is there a greater variety of goods available in the periodic markets than in the daily markets?

Do retailers in the periodic markets recognise their regular customers and do these customers prefer to buy from these retailers? Do these customers benefit from their familiarity with the retailers?

Do buyers during their visit to the periodic market meet their friends or relatives? Is the expectation of meeting their friends and relatives also a reason for visiting the periodic market?

Footnotes

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The author received no financial support for the research, authorship and/or publication of this article.

ORCID iD

Sanal Kumar Velayudhan

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