Convenience store format in India

Kirana stores or the small neighborhood shop has always been predicted to close down in the face of competition. In the mid 90s when the Foodworld Supermarket chain started, everyone expected these small shops to shut down in that area. Later on with the arrival of several chains and then online retail, this doomsday prediction for these small shops has always been around.

Interestingly, till date these small Kirana shops have not only stuck around but have also managed to keep up with the shopper expectations. They have implemented various value additions like cramming in a few shelves to create a self service shopping experience, extended hours of operation, better service, etc.

Coupled with their penetration in any locality, they are truly the Indian version of convenience stores.

However, this might be challenged, soon. Already a few convenience store chains have started and recently a global retail chain has announced their entry into India.

How will the kirana stores compete in the face of such direct competition, Will the global chain be able to have a quick and easy entry? Will this finally lead to the Kirana stores to be affected? – Many more such questions have been addressed in my two articles in the “Inside Retail” column of the Business Line on Campus.

The links to these two articles are –

- https://bloncampus.thehindubusinessline.com/columns/inside-retail/can-indias-convenience-stores-stand-up-to-competition-from-abroad/article29856810.ece

- https://bloncampus.thehindubusinessline.com/columns/inside-retail/challenges-for-7-eleven-store-chain-in-india/article29983936.ece

Please share your views and comments about this.

Inside Retail; The great Indian MRP trick

One of my pet topics! 

During a session where I was explaining about MRP being irrelevant in the current market scenario, an interesting question/ counter point came up.

This point was - “MRP printed on a product gives the consumer some assurance about the price. If there was no MRP, what is the guarantee that retailers would not fleece the customers?”

The article “The great Indian MRP trick” answers this question as also reiterates that MRP as a concept is neither applicable universally nor is it being insisted upon and most definitely is enforced in very rare instances.

Please share your views and comments about this.

Inside Retail; Long way to go for omni channel retail

I have been remiss in sharing thoughts and insights about Retail in the blog due to lot of travelling and extensive engagements. Let me resume by sharing some articles I had written for my new column in the Business Line on Campus (BLoC) titled “Inside Retail” .

A full page advertisement by a retailer claiming to be an omni channel operator piqued my curiosity. Omni channel is easier to claim than do and this article explains the reasons for the same.

The full can be read by clicking on this link - “Long way to go for seamless omni channel shopping experience”. Please do share your views and feedback in the comments section.

Believing in what you sell is one of the most critical aspect in retail.

David Ogilvy, one of the gurus of advertising is credited with this quote; “I never assign a product to a writer unless I know that he is personally interested in it. Every time I have written a bad campaign, it has been because the product did not interest me.”

Decades later this maxim holds true for not only advertising but actually about almost everything we do in life. If we truly believe in something, we give it our best and the outcome is invariably a positive one.

This reality becomes critical in retail as the shopper is driven and motivated by the trust he or she reposes in the store. In reality, it is not even in the store but in the staff and their service.

It is no wonder that the staff are referred to as the “Face of the Retailer”.

In spite of this, the majority of training initiatives are focused on customer service, smiling and wishing the customer, etc. Very rarely have I come across a retailer who takes the trouble to sell their merchandise to their own staff and make them to truly believe in what they are being asked o sell.

That was the crux of the issue that was mentioned to me by a young retail manager and which led to this “Business Line” article; Do you believe in what you sell?

Apart from the interesting anecdote about my interaction with this your retail professional, the article also captures an essential milestone in the journey of modern trade in India, especially that of food/ supermarket formats.

Ten years and counting!

March 2009, when I decided to start my blog “An Indian and A Retailer”, has definitely become a defining moment in my life journey. Ten years and 1,00,000 plus views later, the blog still continues to attract regular readers who often use its contents as a reference with regard to Indian Retail.

The blog started off as a simple repository of my experiences and learning in the Indian Retail space. It went on to become the foundation stone of my journey as an author. This blog led to my first book “The INDIAN reTALEs”. That was followed by “Out Of Syllabus”, “BREAK FREE” and the latest one, “The Ultimate Guide to SMART SHOPPING”. This has been in addition to the various articles I have written for leading business publications. 

All these must total up to approximately four lakh plus words over the years.

A BIG THANK YOU to all my readers who found my writing to be of interest and use. Many of them have given private feedback as also written public reviews. 

Two anecdotes are worth sharing as part of this milestone.

The first is about the actual start of my journey in writing. In 2000 after I had returned from the UK after completing the Chevening Scholarship, Business Line invited me to write an article. This was to be about my stint at ASDA and was titled “Making an elephant dance”. The article detailed the interesting practices that were followed at ASDA to keep their large number of employees engaged and nimble footed to remain customer centric. The blog, in a manner of speaking continued from where this article had led me in the journey of being an author.

The second one is about the name for my blog. It was a challenge as I was conflicted by various ideas and options. The final decision was influenced by using the two identities that I am most proud of and has defined me as a person. 

An Indian; growing up in the pre-liberalization period and witnessing the contribution that an individual can make as an ordinary citizen of India has always been motivating to me. Post liberalization, this has only been reinforced. In spite of several options to pursue a career abroad, the appeal of being an Indian contributing to the country’s growth in whatever small way possible has held greater appeal for me.

A Retailer; is how I think and operate. The experiences from this sector have defined my outlook and continue to do so. I am immensely grateful that God led me into this sector and am thankful to all my mentors who have taught me about the various facets about retail.

One of the topics I have written extensively about is that the retail sector in India should be granted industry status. This would not only spur this sector to faster and better growth but also contribute significantly to the Indian economy. My fond wish and hope as “An Indian and A Retailer”, is that this happens soon. I hope that the industry status is granted and a comprehensive policy for this sector, including both offline and online retailers gets rolled out at the earliest. 

That would be fantastic and something to look forward to.

Is E-tail retailing or not?

E-Tail is a subset of retail and is largely about purchase of products (goods) online. However, the term e-commerce continues to be used for this segment. Apart from being misleading, this clearly is giving rise to policy approaches which disregards the aspects of a retail business which defines such e-tail operators.

If there is a defined FDI policy with regard to retail in India, there is no need for a separate policy and guidelines for e-tailing.

Yet, policy guidelines pertaining to e-tailing, wrongly described as e-commerce, keeps getting notified. The recent guidelines which came into effect from 1st February 2019, is a case in point.

Some points with regard to the dissonance created by guidelines pertaining to online shopping but defined as e-commerce have been explained in this article published in “The Hindu Business Line”. Click on this link to read the article titled, “The sting in the e-tail”.

The larger issue which is being conveniently ignored is industry status for the Retail Sector in India. Notifying this would not only help to streamline policy with regard to the various constituents of this sector but also enable the sector to growth.

Will this happen?

Policy Clarity required to enable Indian Retail

Trade in India is centuries old and historically the stories of our spices, etc., reaching many foreign shores, abound. From a historical perspective, it was these riches that attracted traders from overseas and the subsequent developments led to East India Company establishing a trading base first and then making India into its colony. This historical turn of events might have left a deep and long lasting imprint on the collective psyche which might be manifesting itself in the form of the vigorous and violent opposition to FDI in multi brand retail, today. 

Over the years we have largely seen shop keepers with a few exceptions where businesses managed a chain of stores. It is only from the mid 90s that Retail as a concept emerged in India. Understanding the differentiation between "Shop Keeping" and Retailing is very important. Their approach to business and priorities are completely different. Similarly clubbing eTail (Online Shopping) with eCommerce with regard to policy is incorrect.

As a start, Indian Retail needs Industry status and a cohesive approach with regard to policy-making and governance. My thoughts towards enabling the sector has been published as a Retail Report titled as "Six steps to redefining retail rules" in The Hindu Business Line. (Click on the link to read the article)

Price and Value Perception; of products as also businesses!

I recently read an interesting article in Times of India (Click here to read the article) about physical retail offering competitive and lower prices. This is from a report published recently by Goldman Sachs and compares the prices of few categories and some examples are in the visual below. 

My long held view is that online is not going to destroy physical shopping. At the very least, this is not going to happen in the short or even medium term. I have seen concerns similar to this from the mid 90s and more recently in the context of FDI in Retail. When supermarkets and then hypermarkets came into India, everyone was predicting the demise of the local grocer (Kirana store), This has definitely not happened. In fact after almost two decades the modern trade segment is just about 10% of the total Retail sector in India. This is in spite of the fact that the retail sector has grown from approximately USD 200 Billion in 2000 to close to 600 Billion in 2015. This clearly indicates that the conventional outlets are growing and growing significantly. The share of modern trade (Organised Sector) is expected to increase to 13% by 2019 – 2020.

These percentages might vary depending on the report you read. However, the macro picture remains the same. Modern trade is still a small contributor to the overall retail sector in India. This share might drop much lower if food & grocery alone is considered.

Online retail is roughly 10% of modern trade or 1% of the total retail sector in India as of now. This article states that Goldman Sachs estimates that online retail would grow to be 22% of the modern trade in the next five years.

Seems to be extremely optimistic!

The widely varying, but always optimistic projections regarding online retail is best captured a detailed article in Livemint (Click here to read the article).

The variance between the lowest and highest estimate of online retail in 2020 USD 70 Billion. To put that in context, The modern trade contribution to the overall retail sector in India would be in the range of $ 60 Billion TODAY! 

In summary I can only hope that the investors pouring money into the online space do two things –

• Physical retail is an important segment and investing there might be worthwhile.
• Put someone to work to cross tally and tabulate all the various percentages and figures being quoted in the various reports about retail in India. The variances across all these forecasts and projections might be a wake-up call.

Image courtesy - Times of India