Posted in Marketing & Strategy Articles, Total Reads: 5697
, Published on 11 October 2011
India, with the highest shop density (11 outlets per 1000 people) is referred to as a nation of shop keepers and organized retail which has just made an entry has a very small share. However, it is feared that soon the small mom-n-pop or kirana stores will disappear from the landscape of Indian retail and would be dominated by the WalMarts, Reliance and Big Bazaars. Management consultancy firm AT Kearney, which publishes the annual Global Retail Development Index (GRDI), has issued a study that reveals that modern retail constitutes merely 7% of the $435 billion Indian retail market. Thus, indicating the strong foothold of the kirana stores.
In spite of the onslaught of the giant supermarkets, the kirana stores have several unique selling points which ensure that they will continue to rule the Indian retail landscape. They have the advantage of a low cost structure, location in residential areas and consumer familiarity because of being deep rooted in India for the past few centuries while the large supermarkets need to deal with higher labour costs, maintenance of bigger premises, and taxes. The target group of a Kirana Store is restricted to a particular locality which will continue to visit that store for their daily requirements of local products and small size options to an extent of 10gms which the giant supermarkets do not stock. With the increasing petrol prices and worsening traffic situation, people appreciate a 3000 sq ft store near their house a lot more than the much advertised, famed and jazzier one that boasts of 3 lakh sq ft but requires 2 hours of their travel time and that also through some of the busiest parts of the city.
The beauty of India is its diversity and with this diversity comes a huge difference in people’s consumption patterns. If Gujratis like a lot of Ghee in their chapatis the Tamilians would like a lot of sambhar with their idli. The national chains of supermarkets, even with their IT systems have not been able to gauge this. Whereas, a kirana stores know to the dot as to what their customers want and customize their stocks according to the particular location where they are situated.
Today, the marketplace is flooded with new products. However, a normal household uses no more than 20 product categories on a regular basis. Customers are normally running short on time and do not have the luxury to spend time traversing the length, width and altitude of the store if all they want is bread, milk, Atta, biscuits and tooth paste. Customers are more aware and can easily figure out that the supermarkets push their own brands compared to the national brands because they make more money over there. The common thought that runs through their minds is “What is the harm in putting them close to the entrance and make my life easier. I promise that I’ll see your entire store at a suitable time”. They find it easier to stroll across and buy whatever they need with no parking worries or better they simply order on phone and ask for home delivery than stand in long queues at the billing counters
Moreover, a kirana shop’s location does not change for many years and storekeeper knows almost everyone in the family, their likes and dislikes. They stock items which are otherwise difficult to find in a supermarket like shampoo sachets or drain cleaning powders or small quantity of boiled-sugar sweets. Though he might not have an IT database or an MIS system, he clearly knows what his customer wants. A case in point, me being a 'Hide n Seek' biscuit lover, had asked my kirana storewala twice for it. He didn't have it then. The third time I went, he had it stocked up. Compare this to a supermarket where they wouldn't really care for what I wanted. In fact, when making a monthly shopping list, the kirana storeowners remind the customers of anything that may be missed. Such small personal touches can make a big difference in customer preferences for kirana stores. While these kiranas are continuously strengthening their PR skills and nurturing their relationships with the customers, retail companies are still struggling to do so because of their less focus on this aspect. Rarely would one find any staff even at a store wishing the customers or interacting with customers.
Another major area where the kirana store owners rule is by offering credit facility to their customers. While, on the other hand, even if customers are found short of one rupee, they have no choice but to drop the item from the cart. Customers can easily exchange products at the kirana store and buy something of the same value on their next visit. However, organised retail stores have strict ‘no-return’ policies which are never compromised.
The major chunk of people who shop for FMCG products still find it convenient to shop at stores nearby, as they cannot always understand the concepts and the world of the organized sector. It is like comparing Delhi or Bangalore with a town in Rajasthan or any other state. Indians generally follow the JIT(Just in Time) system of cooking. This means, they buy curd, milk, fruits etc. which would just last for a day or two. A lot of this is because of the Indian psyche of not stocking up much at home. In spite of the fact that things have improved in terms of penetration of fridges, generators. However the Indian psyche hasn't changed much. India has still a long way to go before her retail industry is completely organized and we are able to see a paradigm shift towards acceptance for the malls and huge shopping centres, especially in Tier II and Tier III towns. For instance, if a person from a small town were to visit a huge mall in the larger cities, it would undoubtedly awe them with all the wonderful things they seem to offer but how far would the acceptance level be to use an elevator every week for purchase of small stuff which could be easily bought from the shop next door?
Nevertheless, the macroeconomic landscape indicates that the domestic retail industry has immense scope for the modern as well as traditional retailers to co-exist. Through a balanced regulatory framework and competition policy, both the traditional format and the modern format can continue to grow, eventually closing the gap between the organized and unorganized sectors.
About the Author
Sonam Doshi is a student of Goa Institute of Management.
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