80 Lakh Kirana outlets have been a number constantly quoted in various studies as the first consumer choice for shopping across India. They have distinct advantages that are obvious now; convenience, extension of credit, home delivery & leveraging personal relationships. But threats from outside & inside have ensured that they have 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 the introduction of 100% FDI in this sector. Opposition or not, perception is that the sheer size of the wastage our supply chain faces currently, will reduce once foreign players are in full-on.
Now, coming to the changing face of traditional retail, there are two aspects to it. One is the adaptation of the Kirana stores in light of organized competition & changing consumer preferences, and the other is the importance with which companies have started treating 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 unit are few of the areas where they have evolved. But the next step is ‘Collective bargaining’ – i.e. when groups of big Retail outlets start creating a semblance of an ad-hoc DC (Distribution center) & start procuring centrally from every big company. They’ll ask for better margins, differentiated service, more visibility solutions; the list will become endless. I’ve seen instances of this concept being tried in a few key metros across India.
Now, lets us examine how companies are approaching this channel. Every FMCG company has realized that if Modern Retail is growing at a phenomenal growth rate, so is traditional trade. The projected numbers from various 3rdparty agencies are quite mind-boggling. Hence focus towards garnering a higher share from within this channel is soon becoming one of the biggest challenges faced by the top marketing minds in this country.
In my previous article I had mentioned that HUL had already started treating its key Kirana outlets with the same service pack that they are offering Modern Trade. This is one big step towards acknowledging the importance of the oldest channel in this country. Other companies have also started offering differentiated service packs & levels to the top contributing outlets within each market.
Studying visibility as a separate section throws a lot of light on the importance of this channel. Decisions are made at Point-of-Sale; & companies are letting no stone unturned in capturing premium real-estate within these outlets. Shelf level Displays have become an essential part of any company’s strategy, whether they are for a launch, a re-launch, a new communication message, a new variant etc. This fight for this space has automatically made the retailer smarter, whose bargaining power has thus increased significantly.
But, I still agree that such an important medium for communication is still under-leveraged at this current juncture.
To ‘end’ this small anecdote on the Kiranawala, it is very obvious that he/she is a constantly evolving & adapting entity & will continue to co-exist with other formats in many a years to come. The differentiation across outlets within this channel will soon become starker over the coming years, with different clusters of outlets getting formed basis the speed of evolution that each outlet undertakes.