I want the pink Lays!” my three-year-old daughter responded to a new pack Saif was peddling on TV. It was past 10:30pm, on a weekday. I said: “Sure, but it is late. We’ll buy tomorrow.” Her reply, “So what, why don’t you call Naaz?” I was stumped as she was referring to the neighbourhood grocery store. From 7 in the morning till almost midnight, Naaz is at our beck and (phone) call, for that urgent loaf of bread or to satisfy that late-night craving for sandwich ice cream. I read your article about the impact of organized retail (Big Bazaar, Reliance, et al.) on neighbourhood stores with interest. I agree that retail is in the midst of a realignment, with the organized segment growing visibly and attracting more attention than is perhaps warranted. But I can’t agree that the small shop will get displaced, at least not as broadly as the article noted. It focused only on a few metros, not the largest, Mumbai, and had little input from the next tier of towns that are probably driving consumption growth.
The small shop can create a clear value proposition, particularly in some product segments, and more so in some markets. That may be of great interest, both to the small shops and their customers. And for the policymakers who have to find a fine balance between encouraging much-needed investments in organized retail and protecting the livelihood interests of millions dependent on unorganized retail.
The last time I went to Big Bazaar (the closest ‘mall’), it took me an hour to reach and over half an hour to park my car. The fuel cost would be at least 10% of my monthly grocery budget, and not worth any discounts I get there. I am unlikely to drive to a supermarket to buy supplies for the week (or even month). Add the narrow aisles and children-unfriendly sections in most grocery supermarts, and the friendly neighbourhood store seems a better bet. The same applies to fresh vegetables. I imagine most homes would not decide which vegetables to cook days in advance, and buying on a weekly basis shifts the burden of refrigeration and the risk of inventory management to the consumer. Empirical evidence (my experience) shows these costs are greater than the price discounts from organized retail. It would be different if you have a Subhiksha or a Reliance Fresh within a stone’s throw from where you live. Another strength the small shop can leverage is customer relationship management. Investment in CRM tools and data mining by the large stores can’t match the former’s uncanny, memory-based customized service. A few management lessons in bundling, cross-selling and up-selling can be learnt from these natural salesmen. Who else but Naaz can suggest to my wife on the phone that we should be out of flour (based on previous trends and last purchase date) and that Annapoorna had a good scheme for a 5kg pack? Or send our favourite ice cream along with a delivery, knowing we wouldn’t be able to resist?
Organized retail should, in fact, improve things for these small shops. The increased efficiency in the supply chain, reduction in wastage and introduction of new products would have a positive impact on the mom and pop shops, too. An interesting format for the large, organized groups could be to tie up with the small shops to support their back-end, and leverage the customer reach and relationships that the neighbourhood stores provide. The PCO and cable TV revolutions in India are great examples of the power of entrepreneurship—let us find ways to create an inclusive retail revolution.