admin
June 6, 2012
Priyanka
Golikeri , Daily News & Analysis (DNA)
Bangalore,
6 June 2012
For
IT professional Meena Sarma, living in Mysore no longer implies
a small-town existence. The historical city has everything, from
corporate parks and hotels to dazzling malls.
Being a shopaholic, she is glad that from salad dressings and Dutch cheese to the latest apparel and footwear brands, everything is available within reach, the precincts of her neighbourhood or office complex, just like in any other megalopolis.
A welcome change, says Sarma, as this was not the scenario some
years ago. Earlier, we could shop only at neighbourhood mandis
and local stores, she says. “As there were hardly any supermarkets
and hypermarkets within easy reach,” she adds.
This meant stocking up on her favourite food and clothing brands during every visit to Bangalore. Nowadays, the 28-year old, who earns Rs. 35,000 monthly, prefers buying groceries and perishables from any of the organised outlets dotting her street.
At least thrice a week, she ends up making a trip to the supermarket,
spending an average Rs. 200-300 per visit. In contrast, her visits
to the local kiranas have come down to a trickle.
“Unless it’s a sudden realisation of oil or flour getting
over at home, I don’t visit the provision store next door.”
Sarma likes the air-conditioned ambience, the discounts on MRP given on certain products, not to forget the spread of international savoury and dairy food.
Tier II towners like Sarma, who breeze into retail outlets twice or thrice a week, are a chief reason behind the surge in growth in modern trade in non-metros. Data by Nielsen show that tier II markets like Surat, Indore, Jaipur, Vizag and the like are witnessing rapid growth in modern trade (see table). Not only are these places registering strong double-digit numbers, but are often clocking more growth than established markets like Mumbai, Chennai and Kolkata.
Like the metropolitan shopper, tier II and III town shoppers also display the same purchasing power and willingness to buy a wider category of brands, say experts. Jamshed Daboo, CEO, Trent Hypermarkets, says there is a distinct trend towards shopping in a modern environment that offers a variety of local and international products. Trent has 15 hypermarkets measuring 35,000-80,000 sq ft, including those in small towns like Aurangabad, Surat and Kolhapur.
Others like Spar have outlets in towns like Coimbatore, Vijaywada and Mangalore spread across 35,000-40,000 sq ft.
Likewise, the Bharti Walmart joint venture also has a presence in tier III towns like Ludhiana, Guntur, Meerut, Agra, Amravati and the like. It operates 17 wholesale cash-and-carry stores spread across 50,000-100,000 sq ft in such places. “Often, breakfast cereals, canned food, jams and salad dressing are hot favourites with customers,” says Daboo, adding that all the stores stock products by British retailer Tesco – with which Trent has an agreement – and other international goods priced between `30-500 per unit.
Devangshu Dutta, CEO of consulting firm Third Eyesight, says tier II towns have done well for retailers primarily because rentals and other associated costs are lower while competition from modern trade is limited.
“But the challenge is to ensure there is repeat purchase and basket sizes are gradually upgraded with people buying more rather than splitting their baskets across stores,’’ says Amitabh Mall, partner and director, Boston Consulting Group.
The consumer basket is often split between stores as people still prefer to go to traditional stores for certain products. “Like buying rice from mandis or fruits and vegetables from the local sabziwalla,” says Mall.
Also, though stores in small towns exude optimism, at times the productivity is just marginally below those in metros, according to experts. General outlets in metroes spread between 80,000-1 lakh sq ft witness monthly footfalls exceeding 6-10 lakh. But in small towns, the picture is slightly different, as stores are smaller in size and population less.
Dutta says a small town may not be able to support a store more than 15,000-25,000 sq ft, even with a similar “one-stop-shop” offer.
Says Viney Singh, MD, Max Hypermarket India, “Our stores in small towns have an average footfall of 150,000 per month and this is growing at about 5%.’’
