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Wal-Marts no match for local kirana stores

Wal-Marts no match for local kirana stores
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Global retail giants are unlikely to push small grocery stores out of businessA Lata Jain Hyderabad: At Ramakrishna store, a very small grocery...

Global retail giants are unlikely to push small grocery stores out of businessA

Lata Jain

wal2Hyderabad: At Ramakrishna store, a very small grocery shop that stocks specialized south Indian food and personal care items, at all hours of the day, a crowd can be found in front of the store jostling to catch the eye of the shop attendants. Even when a Spencer's outlet opened right opposite Ramakrishna, the crowds never thinned and its loyal customers would rather prefer to wait in front of the pokey shop than visit the fancier store opposite. Today, the Spencer's outlet has shut shop while Ramakrishna store continues to thrive.

Priya, a housewife who used to buy fruits, vegetables and grocery from a Reliance Fresh outlet that opened a year ago in her locality, has now stopped visiting the store. "Initially, most of the people in our locality were fond of visiting clean and organized shops to buy food and grocery. But then, we realized that buying from the street vendor was much cheaper and convenient than going to Reliance Fresh," she said.

The message is loud and clear. The Baniya with his Kirana stores can't be wiped out or challenged by the retail giants. All those who expect big retailers like Wal-Mart to come in and devour small Kirana shops should pause and think. Can retail giants really do that? Just look at what the average kirana store offers the average Indian household. Firstly, it is just a stone's throw away.

So anytime the family needs something, it is easy to just stroll over and get it even if it is as paltry as a loaf of bread. Secondly, there is the trust about all the items being fresh and reasonably priced at the friendly neighborhood kiranawalla. Thirdly, there is free home delivery, usually on a bicycle, for the regular monthly supplies. And fourthly and most importantly, there is credit. Since the shopkeeper knows the families in the vicinity well enough, he can actually extend credit.

A vast majority of middle class India still shops from one of the millions of tiny kirana stores for precisely these reasons. And there is no way Wal-Mart or even the local big retailers like Food World, Big Bazaar or Reliance can lure away a chunk of the middle class from the kirana stores at least for another few decades.A People are of the perception that supermarkets on several occasions make them overspend. This can be attributed to impulse buying that happens at supermarkets due to the display of products in strategic points and discounts offered.

Even FMCG companies have realized that if modern retail is growing at a phenomenal growth rate, so is also traditional trade. HUL had already started treating its key Kirana outlets with the same service pack that they are offering to the modern retail chains. This is one big step towards acknowledging the importance of the oldest channel in this country. However, Manohar Mason, Managing Director, Pentagon Communications, a marketing and consulting firm, has a different view. "People can wait for books, but not groceries. Things at supermarket are more attractive".

But many Indians find it more convenient to call upon their nearest kirana uncles rather than rushing to a posh housing development to buy rice or noodles at the Big Bazaar or Star Bazaar.A Chennai-based Subhiksha which ran around 1600 outlets selling groceries and medicines to mobile phones across the country, shut down in 2007, primarily because of a cash crunch.

Vishal Retail went bust after several attempts to revive itself. According to news reports, Kishore Biyani's Future Group, which runs Big Bazaar, Food Bazaar and Pantaloon retail stores among others, is sitting on a debt of more than 60 billion rupees (about $1.13 billion). Aditya Birla Group reportedly lost 4.23 billion rupees ($79.4 million) last year.

"We have been in the business for several years now, but despite deep discounts, we have not been able to the match the convenience of neighborhood Kirana stores," said the CEO of the Indian retailer who did not wish to be identified.

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