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Business News/ Opinion / Columns/  Opinion | Is India ready for 24/7 convenience store format?
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Opinion | Is India ready for 24/7 convenience store format?

Changes in consumer behaviour and lifestyle will drive growth of 24-hour stores

Photo: Ramesh Pathania/MintPremium
Photo: Ramesh Pathania/Mint

Last fortnight a subsidiary of Kishore Biyani’s Future Retail Ltd announced its plans to set up 7-Eleven brand of convenience stores in India. Biyani, founder and group CEO, Future Group, said the company was targeting a revenue of $1 billion in the next seven-eight years. 7-Eleven has over 60,000 outlets worldwide, which function as small-format convenience stores that stock both fresh and packaged foods, beverages as well as items of daily use. In India, Biyani emphasized, 7-Eleven will be urban-centric. “We will be open 24 hours wherever we can...I think the urban markets are ready for a format where customers can get their lunch, breakfast, dinner, a lot of food and convenience items," he said.

India doesn’t really have a tradition of 24-hour convenience stores. Examples of firms dabbling in round-the-clock stores are few and far between. However, retail experts say the 24-hour grocery store has potential in this market. “But this potential is restricted to the top four or five cities," says Ankur Bisen, vice-president, retail and consumer products, at consulting firm Technopak. He feels that modern retail has evolved and it now has several sturdy pan-India players such as DMart, Future Retail and Reliance Retail. A recent Deloitte report pegs the share of modern retail trade at 9% of the overall retail trade as of 2017. By 2021, the share of modern trade is expected to go up to 18%, driven by a consumer shift towards convenience formats, says the report.

For the 24-hour format, retail companies need to temper their expectations and restrict them to certain clusters. “There is no urgency for round-the-clock convenience stores beyond the top few cities," Bisen says. The 24-hour convenience stores make sense in high footfall areas or high density travel destinations. “Although convenience stores are not there for your monthly ration shopping, they serve a big top-up need. So, they must have a presence in neighbourhoods as well," says Bisen, adding that in some places real estate supply may not support such stores. The location must ensure easy access and footfalls as well as justify the unit economics of the store. The 24x7 formats could work in mixed-used developments, condominiums and office spaces. “Samir Modi’s 24-hour format convenience stores branded 24Seven are present in mixed-use locations and boast of high density in NCR. They are doing a reasonably good job," says Bisen.

Bhasker Canagaradjou, head of business consulting at Ipsos India, agrees that 24Seven has been “successful after a roller coaster ride in the last 10 years of operations in India". The firm has aggressive growth plans for the next four-five years wherein it plans to add stores in other regions via the franchisee model which will help it to scale faster. “It changed its retail strategy by increasing the store size and added more product stock keeping units. The decor was changed to appeal to the modern consumer. The brand is more focused on providing better customer experience through digitization, food vending machines and cashless service," he says.

Changes in consumer behaviour and lifestyle will drive growth of 24-hour convenience stores. “People’s retail needs are more spread out today. There are call-centre workers on night shifts, late night flights, people living in hostels, single living. All these may boost the need for convenience stores," says Bisen. In several markets, the 24-hour convenience stores are used by consumers to grab some food, snacks, drinks and everyday products on the go. Generally they are no-frills stores with little emphasis on the decor.

“Traditionally, these stores target urban customers and customize the store offerings to local tastes and requirements to increase the footfall. In many markets, these stores provide other services wherein customers can pay their phone and utility bills, take a photocopy, and pick up online Amazon shopping. To achieve this customer orientation, most of the stores are operated by franchisees who understand the local customer and environment," says Canagaradjou. Will this concept work for India? With the growth in modern trade, India has tremendous potential. The country’s organized grocery stores registered a strong 22% growth in sales, according to a report titled Reformatting Retail in India by insights firm Nielsen India. Yet for the 24-hour convenience store format to click, retail companies need to find a unique proposition for customer experience. As a late entrant, for 7-Eleven “the challenge will be to find the best available locations and manage the cost of operations", he says. Besides, customization of services, such as offering facilities for utility bills payment or laundry pickups, could be key.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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Updated: 13 Mar 2019, 11:49 PM IST
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