Tag: retailer

India’s Kirana Stores May Suffer The Fate Of Once-Ubiquitous Telephone Booths

admin

September 16, 2024

Sesa Sen, NDTV Profit
16 September 2024

As India’s economy grows and digital technologies reshape consumer behavior, the future of kirana stores—the quintessential neighbourhood grocery shops—hangs precariously in the balance.

These soap-to-staple sellers, once impervious to change, now confront an existential threat from quick commerce players like Blinkit, Instamart, Zepto, and from modern retailers such as DMart and Star Bazaar, raising a pivotal question: Can kiranas survive the pressure of change, or will they die a slow death?

The All India Consumer Products Distributors Federation, that represents four lakh packaged goods distributors and stockists, has recently raised alarms, urging Union Minister for Commerce and Industry Piyush Goyal to investigate the unchecked proliferation of quick commerce platforms and its potential ramifications for small traders.

Their concerns are not unfounded. Data suggests that the share of modern retail, including online commerce, which is currently below 10%, is set to cross 30% over the next 3-5 years. Much of this growth will come at the cost of traditional retail.

“Unless the government takes on an activist role to support the smallest of business owners, the shift toward large corporate formats is inevitable,” according to Devangshu Dutta, head of retail consultancy Third Eyesight.

Casualties Of The Boom

Madan Sachdev, a second-generation grocer operating Vandana Stores in eastern Delhi, has thrived in the recent years, adapting to the digital age by taking orders via WhatsApp and employing extra hands for home delivery.

Despite having weathered the storm of competition from giants like Amazon and BigBazaar, he now finds himself disheartened, as his monthly sales have halved to about Rs 30,000, all thanks to quick commerce.

Sachdev is worried about meeting expenses such as rent, his children’s education, and other household bills. He finds himself at a crossroads, uncertain about how to modernise his store or adopt new-age strategies in order to attract customers in an increasingly competitive market.

India’s $600 billion grocery market, a cornerstone for quick commerce, is largely dominated by more than 13 million local mom-and-pop stores.

Retailers like Sachdev are also seeing a steep decline in their profit margins from FMCG companies, which now hover around 10-12%, down from the 18-20% margins seen before the Covid-19 pandemic. The consumer goods companies are instead offering higher margins to quick commerce platforms so that they can afford the price tags.

Quick deliveries account for $5 billion, or 45%, of the country’s $11 billion online grocery market, according to Goldman Sachs. It is projected to capture 70% of the online grocery market, forecasted to grow to $60 billion by 2030, as consumers increasingly prioritise convenience and speed.

Many of the mom-and-pop shops are family-run and have been in business for generations. Yet they lack the resources to modernise and compete effectively with larger chains. Modern retail businesses, including quick commerce, begin with significantly more capital, thanks to funding from corporate investors, venture capital, private equity, and public markets.

“They can scale quickly and capture market share due to a superior product-service mix, larger infrastructure, and more robust business processes,” said Dutta.

Moreover, their ability to engage in price competition poses a challenge for small retailers and distributors, making it difficult for them to compete.

“This is something that has happened worldwide, in the largest markets, and I don’t think India will be an exception,” Dutta said, adding that it would be incomplete to single out a specific format of corporate business such as quick commerce as the sole villain in this situation.

“India is a tough, friction-laden environment at any given point in time, including government processes which don’t make it any easier,” he said.

Peer Pressure

Data from research firm Kantar shows that general trade, which comprises kirana and paan-beedi shops, have grown 4.2% on a 12-month basis in June, while quick commerce grew 29% during the same period.

Shoppers are becoming more omnichannel, rather than gravitating towards one particular channel, said Manoj Menon, director- commercial, Kantar Worldpanel, South Asia. “While the growth [for quick commerce and e-commerce] might appear to have declined compared to a year ago, a point to note is that the base for these channels has significantly grown. Therefore, achieving this level of growth is still commendable.”

Consumer goods companies such as Hindustan Unilever Ltd., Dabur India Ltd., Tata Consumer Products Ltd., etc., have acknowledged the salience of quick commerce to their packaged food, personal and homecare products. The platform currently comprises roughly 40% of their digital sales.

“We are working all the major players in the quick commerce space and devising product mix and portfolio. This is a very high growth channel for us,” according to Mohit Malhotra, chief executive officer, Dabur India.

Elara Capital analysts have pointed out that the share of quick commerce is expected to rise to60% in the near future with e-commerce and modern trade turning costlier for FMCG brands than quick commerce. “The larger brands tend to make better margins on quick-commerce platforms versus e-commerce due to lower discounts on the former,” it said in a report.

However, it is too premature to draw a parallel between kirana and quick commerce in terms of competition, given the significant size difference.

The average spend per consumer on FMCG in kirana stores stands at Rs. 21,285 annually while the same is Rs. 4,886 for quick commerce, according to Menon.

Rural Vs Urban Divide

Quick commerce is still an urban phenomenon. In contrast, in rural settings, where internet penetration is still catching up and access to large retail chains is limited, kirana stores continue to thrive.

According to Naveen Malpani, partner, Grant Thornton Bharat, while the growth of quick commerce is undeniable, this channel is not poised to replace traditional retail, which still has a wider reach in the country. “It will complement older models, filling a niche for immediate, smaller purchases. Also, a 10-20-minute delivery may not have a strong market pull in rural markets where distance and time are not much of a concern.”

Yet many others believe, even in these areas, the challenge is palpable.

The small businesses are beginning to feel the sting of same slow decline that once befell the ubiquitous telephone booths in the era of mobile phone, according to Sameer Gandotra, chief executive officer of Frendy, a start-up that is building ‘mini DMart’ in small towns where giants like Reliance and Tatas have yet to establish their presence.

As rural customers slowly start to embrace digital shopping and seek more variety, kirana stores must adapt or risk becoming obsolete, he said.

Besides, the popularity of quick commerce is set to challenge the dominance of incumbent e-commerce platforms, especially in categories such as beauty and personal care, packaged foods and apparel.

“Quick commerce is primarily operational in metros and tier 1 markets, which is impacting the sales of traditional companies in these areas. However, if quick-commerce players were to extend their operations to tier 2 and tier 3, it would even challenge companies such as DMart and Nykaa, and would pare sales and profitability,” noted analysts at Elara Securities.

Frendy’s Gandotra believes the journey for kirana stores is not a lost cause, but it requires strategic interventions. Many kirana store owners struggle to integrate point-of-sale systems, inventory management software, or even digital payment solutions. These stores need to embrace technology.

Another aspect is the need for policy support. Regulations to ensure fair competition can prevent monopolisation by large retailers. Additionally, subsidies, tax benefits, and grants for infrastructure improvements can help small businesses adapt to changing market dynamics. With renewed support, kirana stores can continue to be the backbone of Indian retail.

Nonetheless, there will be some who’ll be left behind during this shift. Analysts at Elara Capital warn that the swift rise of quick-commerce platforms, combined with aggressive discounting, could wipe off 25-30% of traditional grocery stores.

(Published on NDTV Profit)

---

Game of toys

admin

January 10, 2022

Written By Vaishnavi Gupta

UAE-based Tablez has launched a kids’ super store in India

The first House of Toys store was unveiled at Global Malls, Bengaluru, in December, 2021. The store offers more than 20,000 products, from feeding bottles, strollers, and bathtubs, to wearable tech, remote-controlled toys, and stationery. Spread across 5,100 sq ft, the store also houses the Build-a-Bear shop, where kids can make their own soft toys. “We have toys starting from Rs 30, going up to Rs 30,000 in our assortment. We have 3,000 toys in the value segment of below Rs 500,” says Adeeb Ahamed, managing director, Tablez.

House of Toys aims to open 12-15 stores by the end of this year, initially in South India, and metros, followed by tier I cities and beyond. Tablez also plans to rebrand at least 10 Toys“R”Us stores in India to House of Toys in the second half of this year. The store’s products are available on Tablez’s own e-commerce platform, and will soon be listed on third-party marketplaces like Amazon and Flipkart. “House of Toys has potential to be one of the top revenue contributors of Tablez,” Ahamed says.

Tablez has been consolidating its presence in the Indian market lately. Last year, Tablez launched Yoyoso’s seventh outlet in India, and opened another outlet, its 33rd, of American ice cream brand Cold Stone Creamery, both in Kerala. Further, it has earmarked an investment of Rs 100 crore for the expansion of sportswear store Go Sport. Fashion brand Desigual, which caters to women in the 25-45 age group, is now present on Tata CLiQ Luxury, and will soon make inroads into Mumbai and Bengaluru, followed by Chandigarh and Hyderabad.

Presently, Tablez operates 80 brand stores in India; it plans to take this number to 250 over the next five years.

Playing smart

Given that more than a quarter of India’s population is under 15 years of age, intuitively, it makes for a “great market for toys,” says Devangshu Dutta, founder, Third Eyesight. He says upper-income households with fewer children tend to buy more toys, games and learning aids, especially since children have been much more confined to the home environment in recent years.

According to Angshuman Bhattacharya, partner and sector leader (consumer products & retail), EY India, the growth of this market has been driven by improved availability and penetration of branded toys, upgradation from manual to automated toys, and improved awareness and availability brought about by e-commerce.

However, any kids category, whether apparel or toys, has been a difficult model to crack, owing to factors such as low SKU proliferation, and difficulty in inventory management, says Bhattacharya.

To stand out in the market, analysts say, brands need to create an authoritative and diverse product mix, which, in turn, requires a relatively large store footprint in high-visibility high-footfall locations. “The stock turnover is also slower than many other product categories, so merchandising and replenishment strategies need to be really smart. Branded merchandise offers lower margins, so private labels and unique products are necessary to add to the margin mix,” Dutta notes.

Deeply understanding a store’s catchment, so that consumer engagement can be kept high through the year — rather than being limited to local celebratory peaks and holidays — could be a useful strategy, say analysts.

Source: financialexpress

---

Is Retail Design Tone Deaf?

Devangshu Dutta

October 21, 2011

I can’t think of any other reason why locations such as retail stores, malls, restaurants, large office receptions, and other public spaces are designed and built so badly from the point of view of handling sound.

Fundamentally Unsound

The retail soundscape, if I might call it that, is littered with noisy and uncomfortable spaces. Sound levels in busy restaurants and shopping malls can be as high as 70-110 decibels, which is the equivalent of a busy construction site. Sportswear stores play loud and fast-paced music throughout the day; are they trying to make you believe that you are in a nightclub at 11 a.m.? Internal equipment such as air-conditioning and fans add to noise levels. Restaurants and cafes are worse: noise sources include the kitchen, customers using the crockery and cutlery, chairs moving as people sit or leave, apart from the conversations going on.

For sustained exposure, 80 dB is judged to be the outside limit, and we are frequently exposed to sound levels that are higher than that, for long periods of time.

Unfortunately, it is also a vicious upward spiral of sound. Loudness feed loudness. We all raise our voices when we are competing with the surrounding sounds, and only end up adding to the noise further.

Developers spend millions on picking the right stone, fancy fixtures and creative layouts to make the place “look good”. I don’t remember ever coming across a retail space designer in India who says that the space should “sound good”. Even stores selling high-end audio equipment are badly designed and executed!

I remember sitting in a restaurant belonging to a popular Indian quick service chain after a “modern” redesign. No matter how much I tried, I could not understand a word of what my wife is saying (and that’s not just because we’ve been married for so long!). The reason my wife was inaudible was the high level of ambient noise, echoing from all the hard surfaces around us. What was worse was that I could very clearly hear a stranger who was sitting 5 tables away because the false ceiling had dome that perfectly captured his voice and bounced it across the room to me.

Toning it Down

The most basic thing to remember is this: noise has a negative impact. Not only are the customers uncomfortable, high noise levels actually interfere with the staff’s health and performance. Noise increases physical and mental stress.

What’s more, if conversations are not possible at a normal volume and tone, we have to put in more effort into hearing and understanding what the other person is saying. There comes a point when we just give up. Can you imagine what impact that has on a sale?

Studies have shown that noise can drive sales down by more than 80%. On the positive side, if sound is managed well, sales can rise by more than 1,000%! Isn’t that worth looking into?

A plea to architects and retail managers: do consider the fact that customers coming to the mall expect that space to be qualitatively different from an open market. Making a space noisy is not enough to recreate the feel of an open market – it only means that your space is noisy, and probably worse than an open market will be.

Materials selected for building and fitting out the retail outlet, the mall or the restaurant can have huge implications for how sound is handled in that space. A lot of “modern” design depends on hard, polished, reflective surfaces of stone, glass or metal. The floor, the ceiling and the walls, as well as the fixtures are all surfaces from which sound reflects back into the space, not just once but many times before it dies down. So not only do the sounds get amplified in such a space, the reflections also interfere with each other, adding to the problem.

Not Just the Sounds of Silence

Of course, just making every space a quiet “dead” space is not the answer. Sound and silence affect us positively as well as negatively.

The ancients believed that sound could transform the energy of human beings and their surroundings, and from various base sounds they created “simple” beej mantras to complex Vedic chants. Anyone who has chanted or sung hymns, or even an old peppy film soundtrack knows that sound has the power to affect our moods.

At one extreme, most people are uncomfortable in a heavy engineering factory, or for that matter, a modern shopping centre on a busy weekend, without realising why. At the other end, most people would also be uncomfortable in a recording studio, because it suppresses ambient sound as much as possible, leaving the space “empty”.

In some cases (e.g. a night club, or discount store), sounds need to be louder to ensure that the place “feels” lively, even when it is not full to capacity. In some places our enjoyment is enhanced by noise. Watching a cricket match in a stadium while wearing noise-cancelling headphones would hardly be as much fun. A school playground is “happy” when hundreds of children are running around screaming and shouting at the top of their voices, and “solemn” during a quiet morning assembly.

In some cultures and countries, normal social interaction is “louder” than would be acceptable in others. (For example, a British acquaintance mentioned to me how heavily she felt “the sounds of silence” when she moved back to England, after spending many years in Asia.)

So the key is to first define the ambience and the mood that you want to create in your space. What is the objective: who do you want to attract, who do you want to send away? (For example, operators of public transportation systems have successfully used classical music to drive away loiterers who were undesirable.)

Disney offers an inspiring example of how sound can be used. Over the years they have evolved systems combining sophisticated software and hardware in their amusement parks, such that you can walk through the whole park without the decibel-level changing too much. The music sets the appropriate mood for each specific zone. What’s more, the transitions are smooth as you move between zones.

Not everyone needs the sophistication of a Disney amusement park, but I believe it is worthwhile for most retailers to think about how sound is affecting people in their stores.

I would urge you, at the very least, to look at how it impacts conversations between customers, and between the customer and members of the serving staff, because that will definitely impact sales.

A leading cafe chain proclaims: “A lot can happen over coffee”. Yes, it can; but not if you make conversation impossible.

Try it. Tone it down. You’ll see an upswing in productivity, sales and customer satisfaction.

(Read “How Mr. Q Manufactured Emotion” in the Disney parks, on Dustin Curtis’ blog.)

---

Fashioning Seasons

Tarang Gautam Saxena

May 8, 2009

In a recent workshop on fashion styling, we were discussing how the retail seasons have evolved. In the developed economies, from the traditional two seasons – spring-summer and autumn-winter – the number of seasons grew as fashion brands discovered or invented (take your pick!) sub-seasons to create and satisfy distinct demand in specific time periods. For many companies, the number of “seasons” has grown to 10-12 now including transitions and “promo season” series.

India, you would think, essentially has two seasons, the summer and the festive season. However, in the last decade or so, as exposure to the global culture has increased, other “seasons” such as the “Valentine’s Day” have emerged and proved important for retailers.

In fact, events such as the “Sabse Sasta Din” (“the cheapest day”) on the 26th January (India’s Republic Day) created by Kishore Biyani’s Big Bazaar in 2006 should also qualify as seasons, given the huge sales upsurge during the event. In fact, the impact has been such that many other retailers and brands have also taken this concept rather seriously this year. In fact, after a rather dull consumer response in the festive season in 2008, many of our clients reported rocking sales in the last week of January 2009 on the back of heavy promotional campaigns.

More recently while voter awareness campaigns such as “Pappu can’t vote” have been effective marketing initiatives to get many of us out of our comfort zones and exercise our voting rights, many retailers and brands have also seized this opportunity of citizens’ awakening by offering up to 20% discounts to those who have voted. The economic slowdown is certainly getting people to think differently and more creatively. So, “Jago re” (awaken) brands, retailers and countrymen – go ahead and fashion your own season!

---

Supermercado in Houston – Wal-Mart in Spanish

Devangshu Dutta

May 2, 2009

Wal-Mart has just opened a new store Supermercado de Walmart in Houston (Texas). The Houston Chronicle reports that the Supermercado aims to reach out to the Hispanic population, tailoring the foods more to Hispanic tastes and needs and adding signs in Spanish. Wal-Mart is also reportedly planning to open a Mas Club this summer, based on its Sam’s Club warehouse outlet, but focussed again on Hispanic customers. (The original article is here: Wal-Mart gives its Supermercado concept a tryout).

Going by some of the negative comments attracted by the article, it is legitimate to ask: what will Wal-Mart’s existing customers think, and how will they behave?

I guess the answer is clearly not black or white (or beige, red, yellow or brown for that matter).

Wal-Mart is segmenting and localizing its offer as a smart information-rich retailer should.

Some customers who hold a tightly parochial view may feel alienated when they read about this development and may stop shopping at Wal-Mart, but most probably won’t bother as long as their local Wal-Mart continues to deliver what they want at prices they like.

Vibrant societies and economies are true melting pots; rather than exclude, filter and ensure conformity, they imbibe and blend newness. The fact is that real assimilation causes both to change – the ones coming in and the society / geography taking them in – and we have to accept that change often brings some pain with it, as expressed by the reader commenting on Houston Chronicle’s website.

The first waves of European settlers created a change when they started landing in North America 500-odd years ago, and so has every wave of immigrants since – Chinese, Japanese, German, Irish, Italian, Eastern European, Korean, Indian, Caribbean and so on. The first settlers will always be suspicious and exclusive in their approach towards the second set, the second lot of the next and so on.

The wave of economic homogenization driven by the post-war baby boom and infrastructure expansion was possibly one of the largest in recent history (other than the Soviet Union and the Chinese Cultural Revolution, which were more political than economic). However, we’ve seen the US market grow in diversity in the last 2-3 decades – not only because of differences due to race or country of origin, but also due to geographic, economic and otherwise cultural differences.

Today many of the diverse segments today in the US are large enough to express their unique needs, and expect them to be fulfilled. While the cookie-cutter approach served well during the years of national expansion across homogenized markets, that approach is counter-productive today. A retailer like Wal-Mart can’t be expected to ignore that fact.