80 Lakh Kirana outlets have beena number constantly quoted in various studies as the first consumer choice forshopping across India. They have distinct advantages that are obvious now;convenience, extension of credit, home delivery & leveraging personalrelationships. But threats from outside & inside have ensured that theyhave evolved rapidly over the last 5 to 10 years.
Outside-threats are of course,the imminent opening up of the retail sector by the Government, with theintroduction of 100% FDI in this sector. Opposition or not, perception is thatthe sheer size of the wastage our supply chain faces currently, will reduceonce foreign players are in full-on.
Now, coming to the changing face oftraditional retail, there are two aspects to it. One is the adaptation of theKirana stores in light of organized competition & changing consumerpreferences, and the other is the importance with which companies have startedtreating this traditional channel.
I feel the first aspect is a no-brainer;new Independent self-service formats within Kiranas, computerized billing,stocking niche & imported products, the health angle, a cold storage unitare few of the areas where they have evolved. But the next step is ‘Collectivebargaining’ – i.e. when groups of big Retail outlets start creating a semblanceof an ad-hoc DC (Distribution center) & start procuring centrally fromevery big company. They’ll ask for better margins, differentiated service, morevisibility solutions; the list will become endless. I’ve seen instances of thisconcept being tried in a few key metros across India.
Now, lets us examine howcompanies are approaching this channel. Every FMCG company has realized that ifModern Retail is growing at a phenomenal growth rate, so is traditional trade.The projected numbers from various 3rd party agencies are quitemind-boggling. Hence focus towards garnering a higher share from within thischannel is soon becoming one of the biggest challenges faced by the topmarketing minds in this country.
In my previous article I had mentioned thatHUL had already started treating its key Kirana outlets with the same servicepack that they are offering Modern Trade. This is one big step towardsacknowledging the importance of the oldest channel in this country. Othercompanies have also started offering differentiated service packs & levelsto the top contributing outlets within each market.
Studying visibility as a separatesection throws a lot of light on the importance of this channel. Decisions aremade at Point-of-Sale; & companies are letting no stone unturned incapturing premium real-estate within these outlets. Shelf level Displays havebecome an essential part of any company’s strategy, whether they are for alaunch, a re-launch, a new communication message, a new variant etc. This fightfor this space has automatically made the retailer smarter, whose bargainingpower has thus increased significantly.
But, I still agree that such animportant medium for communication is still under-leveraged at this currentjuncture.
To‘end’ this small anecdote on the Kiranawala, it is very obvious that he/she is aconstantly evolving & adapting entity & will continue to co-exist withother formats in many a years to come. The differentiation across outletswithin this channel will soon become starker over the coming years, withdifferent clusters of outlets getting formed basis the speed of evolution thateach outlet undertakes.
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