Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 150
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 151
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Warning (512): Unable to emit headers. Headers sent in file=/home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php line=853 [CORE/src/Http/ResponseEmitter.php, line 48]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 148]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 181]
LATEST NEWS UPDATES | FDI in retail: How the Indian kirana store can stay on top

FDI in retail: How the Indian kirana store can stay on top

Share this article Share this article
published Published on Sep 22, 2012   modified Modified on Sep 22, 2012
-The Economic Times

With the coming of 'organised' multi-brand retail - whether through FDI or indigenous - can the kirana store owner create an effective response so that he competes successfully to retain his share of the consumer's growing shopping basket? And second, will he want to make the change?

To answer the first question, let's recap what we know are the kirana's strengths. Successful kirana stores have great neighbourhood locations and unbeatable access. With ever-increasing traffic congestion, this is a huge customer benefit. Our country lends itself to neighbourhood solutions better than countries that have wider open spaces and lower population densities (i.e., most of the rest of the world!).

Secondly, low - often notional - rents and 'flexible' wage costs often mean ability to have cost neutrality, if not competitiveness, versus larger players. Indeed, the biggest hurdles that large-format 'modern' retail faces are the high, inflexible rents and the need to constantly train a churning and less flexible staff.

Thirdly, the fact that an entrepreneur leads the store brings with it the ability to give what every customer wants: personal service and flexibility, not to mention the nice word and the eye contact when they need it. This is an area where modern, large-format retail will endeavour to match.

These are great strengths, but what about the weaknesses of kirana: the lack of scale in buying and procurement, lack of expensive technology and processes, the inability to offer a wide assortment or to brand and advertise?

Here's how all these disadvantages can be overcome.

Consider issue of lack of economies of scale. This is where most modern trade makes their margin advantage and it is what enables them to price lower than the kirana. Big retailers continuously 'work with' suppliers and buy so much that they can justifiably demand significantly lower costs. While every small kirana owner cannot have that negotiating power, there is a successful model to achieve the same end: that of the cooperative. Internationally, groups of stores combine to form a cooperative that negotiates centrally and buys locally so that they get the same pricing advantage. Furthermore, large-format stores in the west came up in the latter half of the 20th century. The model is, therefore, relatively new. But with the rapid emergence of new technologies, it is incredibly old as well.

Smarter phones, e-commerce and social media access have revolutionised the kirana owner's options. Besides his physical assortment, he can even develop a hitherto-impossible virtual width of offerings that can match those of many large-format players. Access to sophisticated inventory models, business intelligence aids and training aids are all possible now to help reduce costs and improve customer service like never before. Social media marketing opportunities enable him to advertise at very low costs and to laser-target his customers in a way that, perhaps, can't be matched by large-footprint retailers.

Today, the models, technologies and processes are available for the 'traditional' kirana store to compete with 'modern' retail, while retaining his strengths. To paraphrase, "Yes, he can!"

Let's come to the second question: will the kirana store owner want to change? Here is where we need to separate kirana owners into two groups. The first are those who are stuck in the past, who want the status quo because they are comfortable with it - even if their customers aren't - and those who are unwilling to adapt to the new reality. They look at themselves as besieged martyrs. Frankly, we have seen groups who thought in a similar, static vein in our history, who have thwarted change and eventually succumbed to foreign forces for that reason. This group needs to be nudged to change - or to be left behind.

The second group of kiranas is those who can be inspired to grab the opportunities of modern life with both hands and their hearts to delight their customers. This group focuses on customers and the opportunities to serve them better. They raise the important question as to why the kirana store has to be tied to the word 'traditional' - once you loosen that bond and say that kirana stores can be super-modern, all kinds of possibilities emerge.

Creating this change would require leadership to combine kiranas into larger cooperatives, to raise capital and invest to create an appropriate supply chain and a brand that can compete with the best. It also means creating processes, systems and, above all, a culture and value system to enable dynamism, partnership and service to thrive. One just has to look at late Dr Verghese Kurien and the inspiring Amul story to see that this is possible. It makes the issue of 'FDI in retail' really the sideshow in what could be a great win-win-win model for the supplier, retailer and consumer in India.

The Economic Times, 21 September, 2012, http://economictimes.indiatimes.com/opinion/guest-writer/fdi-in-retail-how-the-indian-kirana-store-can-stay-on-top/articleshow/16482753.cms


Related Articles

 

Write Comments

Your email address will not be published. Required fields are marked *

*

Video Archives

Archives

Im4Change.org हिंदी वेबसाइट का परिचय. Short Video on im4change.org...

Im4Change.org हिंदी वेबसाइट का परिचय. Short Video on im4change.org...

"Session 1: Scope of IDEA and AgriStack" in Exploring...

"Session 2: Farmer Centric Digitalisation in Agriculture" in Exploring...

"Session 3: Future of Digitalisation in Agriculture" in Exploring...

Objectives | About Us | Workshops | Disclaimer
share on Facebook
Twitter
RSS
Feedback
Read Later

Contact Form

Please enter security code
      Close