Free Press Journal

Lessons From Local Self Sustained Retailers

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Kirana store

Mom and Pop or kirana stores are a leading form of business enterprise in India and throughout the world. The Indian retail sector is the second largest source of employment in the country and the job market is hugely receptive to retailing expertise in India. India has 12 million retail outlets. The retail market in India is estimated at Rs. 5,88,000 crores. Of this, the unorganized market has a share of Rs. 5,83,000 crores while the organized market is worth Rs. 5,000 crores. Over 8% of India’s population is engaged in the retail industry.

Fast Moving SKU’S

Local retail stores are of small size (average 350 square feet) and sell a range of identical products such as groceries, vegetables and assorted packed items at the front counter, plus a variety of canned foods, snacks, ice creams, biscuits and soda on the shelves. Products are generally the same and are limited to selected fast moving SKUs at most stores in all retail formats.


Shopping Habits

The shopping habits of Indian customers have spurred modern retailers to engage in practices of localization. Indian customers tend to shop more frequently and buy less on each trip because of a desire for fresh foods and vegetables. For Indian customers, fresh means high quality. To meet these expectation and standards are crucial for modern trade retailers. Here kiranas have a relatively strong position in engaging customers’ expectations.

Operating Costs

Kirana stores have always offered important advantages by offering distribution through small outlets in a limited operating area. The kirana shop has two major competitive advantages: limited product choice and lower operating cost. Also, the biggest USP of unorganized retail is the credit offerings to their customers, which proves to be an ‘add on’ service to offer to regular customers, thus giving kiranas an advantage over big or organized retailers. The big retailers, with high investments and overheads, are unable to provide credit to customers.

Operations

Store operations are fairly simple with minimal fluctuations in daily workflow and revenues. Normally these shops are open from 6am to 10pm daily, which is about 16 hours a day, to accommodate the maximum number of customers. The morning business between 6am to 8am is the busiest time of day as customers make purchases for their day at school or work. Small shop owners even offer prompt door-to-door delivery, and this provides a great deal of convenience to customers. The service is offered even for the smallest of quantities purchased.

Consequently, the kirana store attracts many customers within a radius of a few hundred meters. Most of these shops are located in residential areas. The stores practice a cost-plus pricing strategy in which prices are set by the wholesale cost plus a certain profit margin. Inventory and inventory turnover ratio is important in any type of business; kirana shops owners play with higher inventory turnover than modern trade retailers.

Loyalty

“Customer Relationship Management” does not require any software or hardware, all it requires is heartware. Instead of implementing CRM, kiranawalas practice it in their day-to-day business activities. Because of the limited customer base they can remember every customer’s needs and requirements. Kirana store establishments are in close proximity to families. Generations on generations from the same family shop at the same store and there is a natural bond that is built on that observed practice. These strengths support the historical image and reputation of the store, sustains customer loyalty and offers the convenience of close family support. These outcomes support the store’s ability to operate smoothly and cater to their loyal target market.

 

Dr. Srini R Srinvasan is heading the PhD research center at Vivekanand Management Institute, Mumbai and has rich experience in Teaching, Research and is a Strategy Consultant with some of the reputed names in retail.