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Consumers are sold on bargains, convenience at organized retail

Consumers are sold on bargains, convenience at organized retail
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First Published: Sun, Aug 19 2007. 11 59 PM IST

Narsimhan and wife Vatsala say they have completely stopped buying from their neighbourhood kirana shop
Narsimhan and wife Vatsala say they have completely stopped buying from their neighbourhood kirana shop
Updated: Sun, Aug 19 2007. 11 59 PM IST
For decades, Narsimhan, a 64-year-old marketing executive, shopped at his local kirana store for groceries.
Recently, he checked out a swanky new Big Bazaar supermarket, part of a new breed of retail stores synonymous with India’s emerging modern retailing, that opened in his Noida neighbourhood.
“I only buy from Big Bazaar now. See, it’s absolutely comfortable,” says Narsimhan, who goes by just one name, while pushing a shopping trolley with his groceries. “You know the place where you get things and everything is set in proper place, you take it and walk off.”
Since his first visit to Big Bazaar, a hypermarket owned by the country’s largest traded retailer, Pantaloon Retail (India) Ltd, Narsimhan says he has “completely” stopped buying from the corner shop. Narsimhan’s 61-year-old wife, Vatsala, says shopping at the hypermarket saves her about Rs1,000, or about 20%, on their monthly grocery budget.
Narsimhan and wife Vatsala say they have completely stopped buying from their neighbourhood kirana shop
Even as a debate rages about the merits of large brands and companies entering the retail market in India, shoppers such as the Narsimhans, across many major cities and towns, have started buying the bulk of their monthly groceries in the air-conditioned comfort of supermarkets and hypermarkets.
Five months after doing a two-part series on the nascent impact of organized retail on small retailers and wholesalers, Mint reporters talked to consumers in five cities from Kolkata to Bangalore and found, at least anecdotally, that low prices and more variety sold in a cleaner and convenient environment, has made converts out of many shoppers who are experiencing organized retail for the first time.
This is happening even as the government is awaiting a report, asked for by Prime Minister Manmohan Singh at the behest of Congress president Sonia Gandhi, to examine the impact of organized retail on both unorganized retailers and wholesalers in India.
Meanwhile, led by Reliance Industries Ltd, which is rapidly opening stores across India notwithstanding regulatory debates and local opposition, several Indian corporate titans as well as global retailers are already fanning out to reach out to consumers like the Narsimhans.
For good reason. Thanks to an expanding economy, consumer spending in India is expected to grow rapidly, making India’s $300 billion annual retail market to swell to $637 billion a year by 2015. Of this, the modern retailer has only a 3% share now but as more and more Indians switch from the mom-and-pop stores to branded outlets with names such as Reliance Fresh, Big Bazaar and Subhiksha, the share of modern retailing is expected to increase to 20% in the next eight years, according to McKinsey & Co.
Others, such as Wal-Mart Stores Inc., in partnership with Bharti Enterprises, the company behind Bharti Airtel Ltd, and Metro AG are also going after the middleman, opening the so-called “cash and carry” stores that will sell in bulk to traders and promising some of the same benefits that organized retail promises to shoppers. Cash and carry also has significantly less regulatory hurdles for foreign retailers than opening consumer store-fronts.
But both models have attracted criticism with demonstrations and protests, including small groups ransacking outlets of modern retailers in different cities, such as the Reliance store this past weekend in Kolkata.
“I just don’t see the reason for any demonstration or any reason for people wanting it (Wal-Mart’s venture with Bharti) not to happen,” Raj Jain, country president for Wal-Mart’s local unit said in a recent interview. “It will allow our customers—which are largely going to be small stores—to compete effectively with the organized retailers.”
But not all small retailers are buying the argument.
“The fight has just begun,” said Shaktiman Ghosh, general secretary of National Hawkers Federation, an umbrella organization of hundreds of street vendor groups nationwide, participating at the rally. “In the next two years, the fight will be in this (retail) trade because its related to land, its related to employment, and it’s the question of consumer rights.”
That may be but most consumers that Mint spoke to are speaking with their wallets.
“Its not like you are coming to stores like these and pay more… in fact it’s cheaper,” says 34-year-old Ruchi Singh, a housewife browsing through the apparel section in the Big Bazaar hypermarket in Noida along with her mother and sister. “It is very convenient... so you can do all your shopping in one go under one roof.” Singh spends around Rs3,000 on her monthly grocery bill and purchases the “bulk” of it from modern retail stores.
Says Oindrilla Bala, who lives in the modern Kolkata township of Salt Lake: “In a (modern) retail store, I am not pushed around or have to rub shoulders with sweaty men.” The 22-year-old chartered accountant says the well-laid-out shelves in modern stores have tempted her to buy more.
“You end up buying a lot more than you had planned. The orderly, well-lit displays actually entice you and you end up doing a spot of impulsive shopping,” she adds.
Mumbai housewife, Praveena Chaudhri, says at modern stores she learns about the freebies or different schemes on purchases which her neighbourhood store owner would try to hide. “My regular kiranawala never gives me the freebies that I see advertised on TV or in the newspapers—not unless I ask him for it or assert myself,” says the 54-year-old.
While the bargains may abound, some concerns do linger for shoppers at the new stores.
“What worries me is the amount of processed food stuffs that even I, a doctor, pick up when I am shopping,” says 38-year-old Mrinal Jaisingh, mother of a 10-year-old. “I am not saying they are responsible for our kids getting obese but the fact remains that I end up buying these high-calorie, sugary and highly processed food stuffs because I suddenly get easy access to them and they are not all that expensive to buy.”
And all is not lost for neighbourhood stores especially those willing to provide extra services such as willingness to deliver just a loaf of bread or a litre of milk.
“I don’t plan my entire week’s menu in advance and so there is no way I have all the ingredients that I require for a particular meal I decide to prepare on a day,” adds Chaudhri. “Meal decisions are made by family members who want something special on a particular day or guests who announce their impeding arrival.” Often, a local grocer is the go-to place on such occasions.
Chitra Swaminathan, who manages a family of four, says she continues to shop at her old neighbourhood stores, mainly because of convenience of home delivery. However, she visits the nearby Nilgiris Daily to buy vegetables and fruit that are not sold by the local vendors.
“I like the new retail shops as vegetables and other provisions are cleanly arranged. This helps me to buy goods which I fail to put on the monthly buying list,” said Chitra. Around 30% of her household expenditure on food and provisions is now being spent with organized retail shops.
(Sudha Menon in Pune, Rajdeep Datta Roy in Kolkata, John Samuel Raja D. in Chennai and Archana Rai in Bangalore contributed to this story.)
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First Published: Sun, Aug 19 2007. 11 59 PM IST
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