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Impact of modern Retail on Kirana stores ACKNOWLEDGEMENT We would like to thank our College Dr. V. N. Bedekar Institute of Management Studies, Thane, for giving us an opportunity to do a seminar course project on the RETAIL INDUSTRY and to learn various aspects of retailing. We would like to extend our gratitude to our Project Guide, Asst. Prof Ms. Shobhana Panikar, whose timely help, valuable suggestions, encouragement and guidance has helped us throughout our project. We are also very thankful to our Seminar Course Coordinator, Asst. Prof Ms. Pallavi Chandwaskar, for her valuable inputs, time and motivation. We are also thankful to all the kirana shop owners, who participated in our survey, for their valuable time in providing response and being cooperative. We also want to thanks our friends and colleagues, who have directly or indirectly helped us in the compilation of our project. Lastly, we would like to thank the entire Teaching and Non teaching staff at Dr. VN BRIMS for their support and co-operation during our project. Dr.V.N.BRIMS PGDM (2012-14) Page 1
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Impact of Modern Retail on kirana stires

Sep 14, 2014

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A study of how Modern retail has impacted Kirana shops, N how Kirana shops are fighting against modern retail.
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Page 1: Impact of Modern Retail on kirana stires

Impact of modern Retail on Kirana stores

ACKNOWLEDGEMENT

We would like to thank our College Dr. V. N. Bedekar Institute of Management Studies,

Thane, for giving us an opportunity to do a seminar course project on the RETAIL

INDUSTRY and to learn various aspects of retailing.

We would like to extend our gratitude to our Project Guide, Asst. Prof Ms. Shobhana

Panikar, whose timely help, valuable suggestions, encouragement and guidance has helped us

throughout our project.

We are also very thankful to our Seminar Course Coordinator, Asst. Prof Ms. Pallavi

Chandwaskar, for her valuable inputs, time and motivation.

We are also thankful to all the kirana shop owners, who participated in our survey, for their

valuable time in providing response and being cooperative.

We also want to thanks our friends and colleagues, who have directly or indirectly helped us

in the compilation of our project. Lastly, we would like to thank the entire Teaching and Non

teaching staff at Dr. VN BRIMS for their support and co-operation during our project.

__________________ ______________

(Ms. Shobhna Panikar) (Neelam Devre)

_______________

(Sandeep Singh)

Dr.V.N.BRIMS PGDM (2012-14) Page 1

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ABSTRACT (EXECUTIVE SUMMARY)

Retailing consists of all activities involved in selling goods and services to consumers for

their personal, family or household use. Sales of goods to intermediaries who resell to

retailers or sales to manufacturers are not considered a retail activity.

The Indian retailing industry, which was traditionally dominated by small and family-run

stores, has come of age. The retail sector is the second largest employer after agriculture in

the country and also the second largest untapped market after China. There are some 12

million retail outlets in India. Besides, the country is also dotted with low-cost kiosks and

pushcarts. Organized retailing is only 8% of the total retail industry. Over the past couple of

years there have been sweeping changes in the general retailing business.

Traditional markets are transforming themselves in new formats such as Departmental stores,

hypermarkets, supermarkets and specialty stores. In the last few years, as modern retail

concepts begin to make an appearance across urban India, the debate on their impact on the

traditional Indian retail businesses including the so-described "mom & pop" stores and the

neighbourhood “kirana stores” gets shriller.

Small Indian "Kirana" Shopkeepers Are Already Feeling the Heat from the Malls. The

opposition to large retail shops seems to be growing, and broadening to take in domestic

retail chains as well as the international giants that want to enter the Indian market.

Admittedly, such opposition flies in the face of the received wisdom: studies based on

extensive field surveys have concluded that the spread of organised retailing will not hurt

Millions of small mom-and-pop, or kirana, stores across the country. But the experience so

far (and it is early days yet) suggests that this may not be entirely true.

News reports have cited instances of small shops closing down or losing business in areas

where large retailers have set up shop. Analysts are still working out the odds on the kirana

v/s organized retail major battle, vacillating between saying that the two sets of entities will

co-exist happily, each serving different needs and predicting doom for the kirana store, who

perhaps would find the pace daunting. But only as long as the Indian consumer weighs his

options in favour of the kirana – paying MRP at an outlet that’s a stone’s throw away versus

paying better prices,but at the cost of a longer trip to the nearest retail outlet. In any case,

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most of India still prefers to walk to the nearby kirana store for nearly everything! This will

change if and when the biggies set up outlets in every other street, in every neighbourhood –

which they will, if the numbers make sense. However, Kiranas has opportunities to grow in

India in spite of the growth of malls because these kirana shops will also get benefit of the

growing economy. The argument that the kirana shops will be affected by these malls is only

myth. Therefore both the malls and kirana stores can play simultaneously in India.

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INDEX

Sr.No. Particulars Page No.

1. Background Of Study

2. Importance of Study

3. Objective of Study

4. Methodology

5. Research Methodology

6. Definition of Retail

Current scenario of retail industry in India

Market size

7. Changes in Consumer Buying Behavior

8. Key Players

9. How Modern retail have Impacted Kirana Stores

10. Primary Research & Analysis

11. Recommendations

12. Conclusion

13. How to win during slowdown

14. Referencing

13. Annexure

LIST OF CHARTS USED

Figure

No.

Particulars Page No.

1. Kirana Shop size

2. Product sold by Kirana shops

3. No. of people working in kirana store

4. Factors in favors of kirana store

5. Perception of kirana towards modern retail

6. Strategy adopted by kirana stores

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GENESIS OF THE PROJECT

This project is based on change in business practices of Kirana stores, due to modern

retailing. Since 2006, when most big retailers either entered the retail space or began

expanding their network, sales in local kiranas have grown in the low single digits even less

than the GDP growth rate, while modern trade has grown in strong double digits, though at a

much lower base.

"The Indian Shopper has discovered modern retail and is increasingly shopping there," says

Nielsen's Executive Director for Retail and Shopper Practice Dipita Chakraborty. This trend

is fueled by the growth in number of modern stores, she adds.

Reliance Retail President Bijou Kurien attributes this to more options that big retailers offer

to consumers. "In mom-and-pop stores, customer has to be very specific with what they want,

but they can get more options in a modern store, and that's where we are gaining," he says.

In fact, an inter-ministerial group set up by Prime Minister Manmohan Singh to suggest ways

to tackle high inflation has said that organised retail will reduce the margin between the price

farmers get and what consumers pay by eliminating traders, and this will bring down prices

Multinationals like Wal-Mart and Carrefour, which are lobbying for entry into the big and

fast-growing Indian retail market, also say big investments in cold storages will cut wastage

of fruits and vegetable in the country, estimated at 130 crore every day, or about half the total

production.1

While doing our Seminar Course Project, We got an opportunity to conduct a survey on how

kirana Store owner are fighting against Big Retailers, A Questionnaire was designed to get

feedback from the Kirana Shop Owners.

The project was chosen to find out that, kirana stores view towards modern retail, which is

growing at very fast pace. New strategies Kirana stores have implemented to ensure high

level of customer satisfaction & loyalty.

1 Modern retail outgrowing Kirana stores in India: Nielsen Study Sagar Malviya & Maulik Vyas, ET Bureau Jun 15, 2011, 03.18am IST

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BACKGROUND OF STUDY

Retail sector in India is dominated by unorganised players, and even today’s time of modern

super market and Hyper market customers are buying products from kirana stores, but the

frequency of purchase from kirana stores is going down day by day. Today a customer does

not simply buys a product; they look for variety, Best quality product at lowest possible price

and convenience in purchase. Organised retail out-competes traditional retail on prices,

variety and quality and offers greater convenience.

A article published by The Hindu on Sep 21, 2012, Prime Minister’s Economic Advisory

council Chairman C Rangarajan said that when large retailers come into operation, then small

retailers need to strengthen themselves. This is something that the small retailers will have to

do on their own. He further said that once the share of overall modern retail in food reaches

about 25 to 30 per cent, it is bound to affect the kirana traders first and then the small and

marginal traders. They (small retailers) will continue to remain. In fact, the international

experience shows that even in advanced countries where there are large scale department

stores operating, the ‘mom and pop’ stores have not disappeared. They continue to exist.” He

also suggested that These kirana stores and street hawkers can also become part of the

modern retail change story if they can be assimilated into organised retail, organise

themselves under their banner through franchisees, upgrade through infusion of capital, better

training,”2

Another article published by The Economic Times states that ET visited popular kirana stores

across Kolkata, Gurgaon, Delhi, Mumbai, Bangalore, Hyderabad and Chennai to compare

their prices of day-to-day items with big retail chains in their cities. Modern retail won hands

down.

In branded items such as detergents, wheat flour and edible oil, modern trade prices were 4-

20% lower than general trade, which primarily sold them on MRP. And in unbranded staples

such as sugar and onions, larger stores were cheaper anywhere between 10-35% in different

cities. Take the case of onion.

In Bangalore, Aishwarya department store sells it for Rs 20 per kg, while Aditya Birla

Retail's More on the same road charges Rs 16.90. In Chennai, Star Bazaar, a hypermarket

2 http://www.thehindu.com/business/Industry/organised-retail-outcompetes-kirana-pmeac/article3922709.ece

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chain run by Tata's Trent in a franchise agreement with UK's Tesco, sells onion at Rs

18.50/kg, but at Jyothi Kirana at T Nagar it costs Rs 24. The reason for this, say big retailers,

is that they are able to cut through various levels of middlemen while sourcing. Also, these

chains can bargain for lower prices with manufacturers because of their large purchase orders

and pass on the savings to the consumer.

Kishore Biyani of Future Group feels that kiranas are essential to service the breadth of

Indian consumers. Analysts agree that consumers need both the formats, to always have an

option to choose between the convenience of a neighbourhood store and value deals of a big

retailer. They say consumers will always prefer around the-corner kiranas for low-volume

purchases.

"Kiranas deal with consumer goods brands in low volumes. Since these firms do not share

good margins, kiranas make it up by charging the MRP without discount," says Anand

Ramanathan, associate director at management consultancy KPMG. Organised retailers,

however, have to make it worth the consumer's while to drive out, brave traffic and parking

hassles and shopping queues. This is where their unique selling point of low prices comes in.

"To draw consumers, retailers squeeze suppliers and ensure efficiency in categories that drive

footfalls. They balance it out by enjoying higher margins in categories where impulse

buying is high," says Ramanathan.3

While modern retailers make their purchase in bulk, and due large to quantity they can easily

negotiate with their suppliers. Small retailers don’t enjoy these benefits from suppliers.

3 http://articles.economictimes.indiatimes.com/2011-12-01/news/30463099_1_kiranas-big-retail-chains-star-bazaar

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IMPORTANCE OF STUDY

This report can be referred by students to understand the impact of Modern retail on Kirana

stores. Kirana store owners can also refer this report to get an idea that how modern retailers

are pulling crowd for them, & most importantly, what they can do to retain their customers,

Providing Service and better customer satisfaction, so that customers should not come to

them only for small purchase but also for bulk purchase.

In Retail, organised sector share is only 8%, where as unorganised retailing’s is near around

92% of total retail value. It’s true that most of unorganised players don’t pay Income tax to

government, but government gets a large portion of its money, through unorganised retailing

by indirect taxes such as sales tax, LBT etc. Unorganised retailing provides employment to a

large no. of people. If unorganised retail would not have been there, our government would

have faced a swear problem of unemployment. So it’s high time that govt. should come

forward and take some initiative to protect unorganised retailers, from modern retailers.

This report can be used govt. Organisations and other institutes to understand how Kiranas

are fighting with big retailers and what steps they need to take in helping kiranas to fight with

modern retailers.

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OBJECTIVE OF STUDY

To study the attitude of kirana stores towards modern retailers operating in

their locality

To analyse the impact modern retail on the business of kirana shops

To understand how modern retail has changed customers’ attitude towards

kirana shops

To identify ways in which kirana stores are competing with modern retailers

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APPROACH OF STUDY

Given below is the manner in which we approached this study.

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RESEARCH METHODOLOGY

We used both Primary and Secondary research for this project.

I] SECONDARY RESEARCH:

For secondary research we referred to various articles published in:

o Newspapers like

o Reports published by different Institutes and Agencies.

II] PRIMARY RESEARCH

.

Tools Used:

Questionnaires were used for primary data collection through Personal Interviews

Sampling Method:

The sampling method chosen is Convenience Sampling (as response of only shops

nearby Korum Mall was taken)

Convenient sample: A statistical method of drawing representative data by selecting people

because of the ease of their volunteering or selecting units because of their availability or

easy access. This type of sampling are the availability and the quickness with which data can

be gathered.

(Source: http://www.businessdictionary.com/definition/convenience-sampling.html#ixzz2hlbfBPns)

Sample Size: 25 Kirana shop owners were interviewed for their responses

Sample Area - Shops located near Panchpakadi area as that is the area surrounding

Korum Mall

Sample Unit: Kirana Shops

Tools and techniques used for to represent observations and findings:

Graphical Analysis

Pivot table

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INTRODUCTION

AND

STUDY OF

INDIAN RETAIL MARKET

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DEFINITION OF RETAIL

The term Retail is derived from French word “Retaillier” meaning to cut a piece off or

to break bulk.

According to Cundiff and still, “Retailing consists of all those activities involved in

selling directly to ultimate consumers”.

According to Mc. McCarthy, “Retailing is selling to final consumer products to

households”.

CURRENT SCENARIO OF RETAIL INDUSTRY IN INDIA

The India Retail Industry is the largest among all the industries, accounting for over 10 per

cent of the country GDP and around 8 per cent of the employment. The Retail Industry in

India has come forth as one of the most dynamic and fast paced industries with several

players entering the market. But all of them have not yet tasted success because of the heavy

initial investments that are required to break even with other companies and compete with

them. The India Retail Industry is gradually inching its way towards becoming the next boom

industry.4

Online retail still only accounts for a minuscule $600 million (around Rs.3,600crore),

compared with India’s $518 billion brick and mortar retail industry. according to a report

published by Technopak. E-commerce sector has a potential to grow to as much as $76

billion by 2021.5

Retail market is growing at an annual rate of about 20 per cent, is largely dominated by small

shops and stores as of now. The organised segment is in its nascent stage and has huge

potential to harness in the sub-continent. Foreign giants like Wall-mart and IKEA have

recently received the Government’s nod to enter the Indian market, after making all the

necessary compliances.

4 http://www.fibre2fashion.com/industry-article/free-retail-industry-article/indian-retail-industry-its-growth-challenges-and-opportunities/indian-retail-industry-its-growth-challenges-and-opportunities1.asp

5 http://www.livemint.com/Industry/JI8YmK2GistPUKQimV4f9N/Indias-ecommerce-retail-sector-faces-cash-crunch.html

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MARKET SIZE

India’s retail market is majorly dominated by the unorganised sector. Organised segment

accounts for 8 per cent of the total retail landscape, according to a study by Booz & Co and

RAI. In the developed countries, the organised retail industry accounts for almost 80% of the

total retail trade

The Indian retail industry has expanded by 10.6 per cent between 2010 and 2012 and is

expected to increase to US$ 750-850 billion by 2015, according to another report by Deloitte.

Food and Grocery is the largest category within the retail sector with 60 per cent share

followed by Apparel and Mobile segment.6

Luxury Retailing is gaining importance in India. This includes fragrances, gourmet retailing,

accessories, and jewellery among many others. Indian consumer is ready to splurge on luxury

items and is increasingly doing so. The Indian luxury market is expected to grow at a rate of

25% per annum. This will make India the 12th largest luxury retail market in the world. 

Rural retailing is now the focus for many retailers. It is observed that the rural regions

registered saw consumption even during the economic slowdown. Rural India accounts for

2/5th of the total consumption in India. Thus, the industry players do not want to be left out

and are devising strategies suited especially to the rural consumer.

The sector can be broadly divided into two segments: Value retailing, which is

typically a low margin-high volume business (primarily food and groceries) and

Lifestyle retailing, a high margin-low volume business (apparel, footwear, etc). The

sector is further divided into various categories, depending on the types of products

offered. Food dominates market consumption followed by fashion. The relatively low

contribution of other categories indicates opportunity for organised retail growth in

these segments, especially with India being one of the world’s youngest markets

Historically, Indians have been conservative spenders, thus food forms a huge chunk

of India’s consumption needs. Transition from traditional retail to organised retailing

is taking place due to changing consumer expectations, demographic mix, etc. With

6 http://www.ibef.org/industry/retail-india.aspx

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the revival in consumer spending, expansion plans of retailers are back in full swing.

The convenience of shopping with multiplicity of choice under one roof (Shop- in

Shop), and the increase of mall culture etc. are factors appreciated by the new

generation. These are expected to be the growth drivers of organised retailing in India

over the long run.7

7 http://www.equitymaster.com/research-it/sector-info/retail/Retailing-Sector-Analysis-Report.asp

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EVOLUTION OF INDIAN RETAIL

Before the decade of eighties, India with hundreds of towns and cities was a nation striving

for development. The evolution was being witnessed at various levels and the people of the

nation were learning to play different roles as businessmen and consumers. The foundation

for a strong economy were being laid, youth were beckoning new awareness in all spheres.

And this brought in an opportunity for retail industry to flourish. First in the metros and

major cities later to impact sub urban and rural market as well.

In olden days there used to be weekly Markets and village fares from where people used to

make purchase. Weekly markets and melas are, even in existence.

After some time Mom? Pop kirana & continence Store came into existence. Convince stores

are usually located near roads and petrol pumps and they used to charge a little higher prices.

During the time of independent fight , the concept of khadi Bhandars came in existence.

Cooperatives were formed to provide products at lower prices to customers.

8 http://www.equestindia.com/eq/article_3.asp

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Then came the concept of Hyper markets and shopping malls. Experts believe that modern

Retail is going to be future of retailing. To our surprise there was not a single mall in India a

15 years back and just a few years ago only a handful of them were striving, today there are

more than 50 malls across different cities and 2 years from now around 500 malls are

predicted to come up.9

9 http://www.equestindia.com/eq/article_3.asp

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CHANGES IN CUSTOMER’S BUYING BEHAVIOR

Consumer behavior in retailing is more unpredictable and volatile. Due to the change in

lifestyle consumers are demanding very large selection of producers and they expect more

discount. Consumer are no longer influenced by brand name but they are very cautious about

quality and value.

34% consumer prefers unorganized retail shopping while 26% consumer prefers organized

retail shopping but 40%consumers are still in dilemma. 37% consumers purchase daily

groceries from local kirana store While 26% customer Shop from Supermarkets,21%

consumers from convenience store and rest 16% customer’s prefer hypermarket. Thus,

highest percentage is still with local kirana stores however the difference between

supermarket and local kirana is less. 40% customer’s visit fortnightly to the malls for various

different purposes, 30% customers visit weekly, 20% monthly and rest 10% daily.(ICRIER

Report, 2013)

60% customers are satisfied with the pricing strategy of the malls after considering

various discounts, sales and other offers, while 40% customers are not satisfied.

During the survey

It was found 64% consumer’s finds best shopping deals in malls with various discount

offers, gift packages etc.28% customer’s are satisfied with the shopping deals served

by the local kirana stores while 8% customers has no opinion. 32% of consumer’s

declared an increase in spending, 21% indicated decrease and the balance no change.

Thus the arrival of organized retail has enhanced spending in general. The reasons

indicated for higher spending have been mainly the purchase of larger quantities due

to wider range of products, availability of attractive offers like discounts and

promotional schemes, and access to better quality products with higher price.

(Source: Indian Council for Research in International Economic Relations (ICRIER), Vol. 2, No. 3,

July 2013)

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Unorganized retailers in the vicinity of organized retailers have been adversely affected in

terms of their volume of business and profit.

Unorganized retail has maintained employment levels perhaps as a result of competitive

response. The major factors that attract unorganized retailers to consumers are proximity,

goodwill, credit sales, bargaining, loose items, convenient timings, and home delivery

There is clear evidence of a competitive response from traditional retailers who are gearing

up to meet the threats from organized retailers.

Consumers have generally gained with the emergence of organized outlets through the

availability of better quality products, lower prices, one- stop shopping, choice of additional

brands and products, family shopping, and fresh stocks.

Lower income consumers have saved more from purchases at organized outlets.

These results are not indicative of the countrywide scenario. For the country as whole,

unorganized retail is growing at a reasonable rate and will continue to do so for many years to

come. India is however a latecomer to organized retail expansion and the picture still remains

unclear as to its future direction. 10

10 http://www.equestindia.com/eq/article_3.asp

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KEY PLAYERS

x

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BIG BAAZAR:

Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of India's leading

business houses with multiple businesses spanning across the consumption space

About Big Bazzar Hyper mart

Chain of development store in india

Out let 104 out lets located in india

Parent Group Future Group

Owner Kishore Biyani(CEO)

Founded 2001

Head Quarter Jogeswari,Mumbai

Industry Retail

Website WWW.bigbazar.com

Tag Line “Is se sastaaurachhakahinahi”.

Introduction: Big bazaar is a chain of shopping malls in India. Currently, there are 214 big

bazaar stores across 90 cities and towns in India. Big Bazaar offers a wide range of

merchandise including fashion and apparels, food products, general merchandise, furniture,

electronics, books, fast food and leisure and entertainment sections. Food Bazaar, a

supermarket format was incorporated within Big Bazaar in 2002 and is now present within

every Big Bazaar as well as in independent locations.

local brands of popular commodities, like diapers, sugar, wheat flour garments etc, are very

popular in Big Bazaar stores Also, the quantity for each product is not limited to large packs

onlyBig Bazaar offers the maximum variety for each category of product.

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Key Facts

No of Stores 214

No of Cities with presence 90

A total retail space covered 16 million sq.ft.

Focus of Marketing Initiatives Engage the customers by adapting to local culture Focus

on the lowest price guarantee in all the campaigns

Key Driver of Footfall Large Product Mix

Growth rate 19%-22%

Price is the main value proposition for Big Bazaar. Prices are usually 5

to 60 percent lower than the market price.

The Average Size of Big Bazaar store is 50,000 sq.ft and the Big Bazaar

family centre is 80,000-120,000 sq. ft

Stocks 3,000 to 4,000 SKUs (stock-keeping units) of merchandise

Food and groceries account for 40% of Big Bazaar’s revenue, whereas

fashion and apparel make up for about 30% of the overall revenue. The

remaining 30% comes from the other units such as electronics. (February

23, 2013)11

11 www.bigbazar.com

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Product List:

Target market :Big Bazar specially targets working women and homemakers The large and

growing young working population is a preferred customer segment Big Bazar targets higher

and upper middle class customersTARGET MARKET

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Reliance Fresh:

Reliance Industries Ltd is an India-based company. The company is India's largest private

sector company on all major financial parameters. They are the first private sector company

from India to feature in the Fortune Global 500 list of 'World's Largest Corporations' and

ranks 117th amongst the world's Top 200 companies in terms of profits. The company

operates world-class manufacturing facilities across the country at Allahabad, Barabanki,

Dahej, Hazira, Hoshiarpur, Jamnagar, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and

Vadodara

About Reliance Fresh a convenient store format, is governed by the MukeshAmbani and is

the most important part of Reliance Industries retail Business. Reliance Ltd. has planned to

invest more than Rs. 25000 crores in the retail division.

It also comprises more than 560 reliance fresh stores all over the country. The outlet sells

fresh fruits, staples, dairy products, fresh juice bars, groceries and vegetables. A distinctive

Reliance Fresh outlet is around 3000 to 4000 sq. feet and accommodates catchment area of

one to three Kilometers.

History of Reliance Fresh

The Reliance Retail had to face various difficulties before the launch of Reliance fresh,

because of the various circumstances prevailing in Orissa, West Bengal and UP, along with

the news focusing on the dearth of vegetables and fruits stocks. The retail business of

Reliance then minimized its exposure in vegetable and fruit business, as a result established

Reliance fresh positioning a pure super market play focusing on various categories like IT,

consumer durables, home, FMCG and food.

The retail company of Reliance may not supply the vegetables and fruits in a few states, the

Reliance Fresh decided to not to race with local wholesalers partly because of the political

reasons as well as its incapability to maintain a healthy supply chain.

1213

About Reliance Fresh Supermarket

Chain of development store in india

Out let 784 cities and 6,000 towns in india

Parent Group Reliance ltd

12http://www.indiainfoline.com/Markets/Company/Background/Company-Profile/Reliance-Industries-Ltd/50032513 http://ekikrat.in/Reliance-Fresh

Dr.V.N.BRIMS PGDM (2012-14) Page 24

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Owner Mukesh Dhirubhai Ambani (CEO)

Founded 30Oct 2006

Head Quarter Mumbai,India

Industry Retail

Website WWW.rilfresh.com

Tag Line “Growth through value Creation”.

Revenue $ 19.9bilion

Dmart:

About Dmart Departmental store

Chain of development store in india

Outlets 64 outlets located in india

Parent Group Avenue Super Marts Ltd (ASL)

Owner R K Damani

Founded 2000

Head Quarter Mumbai,india

Industry Retail

Website WWW.dmartindia.com

Tag Line “Mehnat hamari bachat aapki”

The company has over 2800 employees located across 50+ offices in the country

Target group: Value conscious

Upper /Lowe middle income customers.

Over 12 milion outlets operation the country and only 4 of the being larger than 500 Sq (46

m2) in size

14

14 http://www.dmartindia.com/about.html

Dr.V.N.BRIMS PGDM (2012-14) Page 25

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More retail:

Aditya Birla Retail Limited is the retail arm of Aditya Birla Group, $40 billion corporation. The

Company ventured into food and grocery retail sector in 2007 with the acquisition of a south based

supermarket chain. Subsequently, Aditya Birla Retail Ltd. expanded its presence across the country

Under the brand “more”. With 2 formats supermarket and hypermarket

About More Supermarket ,Hypermarket

Chain of development store Country

Outlets 509 supermarkets and 15 hypermarkets across the

country

Owner Mr. Kumar Mangalam Birla

Founded 2007

Parent companey Aditya Birla group

Head Quarter Mumbai,india

Industry Retail

Website WWW.morestore.com

Tag Line “Hamesha Extra”

Employee Over 11,000

Supermarket:

more. - Conveniently located in neighbourhoods, more. supermarkets cater to the

daily, weekly and monthly shopping needs of consumers. The product offerings include a wide range

of fresh fruits & vegetables, groceries, personal care, home care, general merchandise and a basic

range of apparels. Currently, there are over 512 more. supermarkets across the country.

Hypermarket:

more.MEGASTORE - is a one-stop shopping destination for the entire family.

Besides a large range of products across fruits & vegetables, groceries, FMCG products, more.

MEGASTORE also has a strong emphasis on general merchandise, apparels & CDIT.

Currently, sixteen hypermarkets operate under the brand more.MEGASTORE in Mysore, Vadodara,

Indore, Mahadevpura, Old Madras Road, Marathalli, Bull Temple Road & 4th Block Jayangar in

Bengaluru, Thane, Saroor Nagar, Kukatpally & Banjara Hills in Hyderabad, Rohini & Kirti Nagar in

New Delhi & Nashik.

Dr.V.N.BRIMS PGDM (2012-14) Page 26

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Own label food brands more feasters,kitchen’s and best of Indian home & personal care brands

more,Enrich, 110% pestex paradise and Germe.

Vision & Values

Vision : "To consistently provide the Indian consumer complete and differentiated shopping

experiences and be amongst India's Top retailers, while delivering superior returns to all

stakeholders".

Values:

Integrity

Commitment

Passion

Seamlessness

Speed15

15 http://www.morestore.com/abt_retail.html

Dr.V.N.BRIMS PGDM (2012-14) Page 27

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HOW MODERN RETAILERS HAVE IMPACTED KIRANA STORES

Modern retailers offer customers quality products at 6 to 20% prices lower as compare to

traditional retailers because modern retailers eliminate many layer of intermediary and since

their purchase quantity is big so they are in better position to negotiate with their suppliers.

Apart from lower prices also offers large choices and better merchandising of products.

Today customers don’t simply just shop they also think about shopping experience thats

where modern retailers win the race.

They usually operate in specious shops where products are segregated as per their category so

customers can easily pick up the products they want. Whereas traditional retailers operate in

small shops.16

16 http://articles.economictimes.indiatimes.com/2011-12-01/news/30463099_1_kiranas-big-retail-chains-star-

bazaar

Dr.V.N.BRIMS PGDM (2012-14) Page 28

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FINDINGS FROM PRIMARY

RESEARCH

Dr.V.N.BRIMS PGDM (2012-14) Page 29

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PRIMARY RESEARCH

size of the shop

Area in Sq.ft No of Respondent

150 7

200 7

250 4

300 2

350 3

Above 350 2

Figure 1 . What is the size of your shop? (In sq.ft.)

Interpretation:

The majority of the kirana shop said that they operate in the area of 150 to 200 sq.ft and we

observed that most of the kirana shops were attached to owners home and only 8% of kirana

shops operate in the area above 350 sq.ft so we can say that most of the kirana shops still

operate in smaller area.

Dr.V.N.BRIMS PGDM (2012-14) Page 30

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Q-2: Which products do you sell in your shop?

Prodct Category No of respondent

Grocery 25

Dairy 21

Confectionery 21

Food Products 21

Cosmetics 9

Home Care 22

Personal Care 24

Stationery 7

Any other (Please mention) 0

Figure 2. Product sold by kirana store

Interpretation:

All retailers that they sell Grocery products and personal care products and almost all

retailers sell dairy, Confectionery, food product and we also observed that many retailers sell

other products like Vegetables, Recharge coupons and some other products. We can say most

of the Kirana retailers sell all the products that are sold by modern retailers, But stationery

and cosmetics are two product categories, where kirana shops can improve to attract more

customers.

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Q3- No. people of working in store including

People working

in Shop

No of

respondent

Up to 2 16

less than 5 7

more than 5 2

Figure 3. No of people working in kirana store

Interpretation:

Most of the kirana shops are operated by the owner of the shop because most of the kirana

shops operate in small area. And those who have more than 200 sq.ft .They have more than 2

people work in the shop. Only 2 shops had more than 5 people working in shop.

Dr.V.N.BRIMS PGDM (2012-14) Page 32

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Q-4: Why do you think customers come to your shop? Please rate the following factors on a

scale of 1 to 5 as per their importance. (1 being least important & 5 being most important).

Factors

Store

Timing

Credit

Facility

Emergency

Purchase

Discounts

& Offers

Customer

Relationship

Home

Delivery

Service

Product

Range

Not at all

Important 0 0 0 0 0 0 0

Low Importance 1 7 1 9 0 3 4

Neither important

nor unimportant 10 12 8 10 12 16 8

Very Important 18 18 18 0 18 6 12

Extremely

Important 48 4 44 0 52 8 12

Total 77 41 71 19 82 33 36

Figure 4. Factors in favor of kirana store

Interpretation: The most important factor for pulling customers towards kirana is store

timing, because Big retailers normally operate between 10.00 am to 10.00 pm, and Kirana

shops operate from 7.00 am to 11.00 pm, when consumer requires any product in morning

or after 10.00 pm ,they have come to kirana shop because it opened at 7.30 am. Store timing,

Emergency purchase, and customer relationship these factors are extremely important.

Discount and offers, home Delivery and product range these factors does not plays an

Dr.V.N.BRIMS PGDM (2012-14) Page 33

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important role in bringing customers to shop. And also for the dairy product people prefer to

buy from kirana shops because they purchase dairy products like milk on regular basis.

The most important factor is Customer relationship which attracts customer toward

kirana store.

Dr.V.N.BRIMS PGDM (2012-14) Page 34

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Q-5: Do you feel insecure due big retailers opening their shops in your locality?

Option No of Respondents

Yes 17

No 8

Figure 5.No of Kirana store feel insecure due to big retailers.

Interpretation: The 68% retailers feel insecure due to big retailers opened in their locality.

and 32 % retailers told that they don’t feel insecure because they thought that for small

purchase, customer will not go in organized retail they will go to small shops, which are

located at a stone throw distance from their home.

Dr.V.N.BRIMS PGDM (2012-14) Page 35

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Reasons for Kirana Retailers feeling Insecure:

Discounts & offers

Lower prices

Packaged food

More convenient shopping

wide Choice

More product range

Reasons for Not n ot feeling insecure:

For small or Daily purchase consumer will come to retailers.

For dairy, food products they buy from kirana store.

Convenience

Some retailers feel that prices in modern shops are higher as compare to traditional

retail.

Some Retailers said that middle class people always go to kirana shops.

Dr.V.N.BRIMS PGDM (2012-14) Page 36

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Q-6: What are the new strategies that you have adopted to face competition from big and

modern retailers?

Adopted Strategy No of respondents

Store Renovation 10

Increasing Product range 8

More Discount 6

Home Discount 5

Improved Display 6

Customer Relationship 10

Credit Facility 5

Improved packaging 8

Not adopted any strategy 10

Figure 5 Strategy adopted by Kirana store to face competition.

Interpretation: 68% retailers told they adopted strategy like store renovation, customer

relationship. and also they started to provide home delivery and also they change packaging

style. and 40% retailers said that they haven’t adopted any strategy to fight with modern

retailers.

Dr.V.N.BRIMS PGDM (2012-14) Page 37

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RECOMMENDATION

During our primary research, we observed that most of kirana shop owners are not taking

much efforts to attract customers, they feel that customers will come to them just only

because their shop is located nearby customer home, when ever customers wants to make a

small purchase they will go to kirana shops. Kirana shop owners feel that they can’t do much

to fight with modern retailers.

Kirana shop owners can attract more customers by increasing their product range, they reduce

their margin and offer products at lower prices, offering credit facility in only area, where

kirana stores have edge over modern retailers, and kirana stores can also offer better

packaging and display of products.

Since kirana stores have less no. of customers they are in a better position to maintain

relationship with customers.

Kirana store can also organize themselves by forming some association or franchise system.

Under this system all retailers will come together, that will in better position to negotiate with

wholesalers and manufacturers.

Small store owners can upgrade their shops to emulate practices of large retail chains, thus

they can become more profitable than their bigger counterparts, who continue to cut costs,

consolidate and review operations on the back of poor consumer sentiment in a sluggish

economy.

“Local retailers are growing profitably much faster than large retailers,” said the India Retail

Report 2013, which was released on Wednesday. The Report also mentions that about 57,000

local retailers in the country resorted to modern retail practices in the past two years.

There are some kirana stores who have adopted modern retail look and they can also help

other retailers to upgrade their stores to follow modern retail look and practices. For Ex-

Sarvodaya Super Market—a 40-year-old 2,500 sq. ft food and groceries store in Dadar West,

Mumbai has helped close to 60 other traditional retailers in Gujarat, Uttar Pradesh and

Maharashtra to upgrade their stores to follow modern retail look and practices. “We are

seeing more and smaller store owners interested in converting their traditional stores to

modern retail.

The other area where kirana shops can improve in Inventory, they need to manage inventory

more efficiently.

Dr.V.N.BRIMS PGDM (2012-14) Page 38

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CONCLUSION

Both the formats of retail kirana and modern are essential to fulfil customer needs. Modern

retail will see tremendous growth in future but they wont be able to replace kirana store. Even

today middle class people prefer to make purchase from kirana stores. Even the customers

who don’t grocery and other products on a monthly basis prefer to buy from kirana stores.

Given the time of recession modern retailers are putting their expansion plan on hold. The

growth of modern retail will hurt the profits of kirana stores but kirana store owners will able

to make their bread and butter due to increasing population. The entry of foreign players in

Indian market will make their job more difficult.

But customer relationship and store timing will help them to retain customers even during the

time of slowdown.

Factors that are playing a role in fuelling the bright future of the Indian Retail are as follows:

The income of an average Indian is increasing and thus there is a proportional

increase in the purchasing power.

The infrastructure is improving greatly in all regions is benefiting the market.

Indian economy and its policies are also becoming more and more liberal making way

for a wide range of companies to enter Indian market.

Indian population has learnt to become a good consumer and all national and

international brands are benefiting with this new awareness.

Another great factor is the internet revolution, which is allowing foreign brands to

understand Indian consumers and influence them before entering the market. Due to

the reach of media in the remotest of the markets, consumers are now aware of the

global products and it helps brands to build themselves faster in a new region

However despite these factors contributing to the growth of Indian retail Industry, there are a

few challenges that the industry faces which need to be dealt with in order to realize the

complete scope of growth in Indian market.

Foreign direct investment is not allowed in retail sector, which can be a concern for many

brands. But Franchise agreements circumvent this problem. Along with this regulations and

local laws and real estate purchase restrictions bring up challenges. Other than this lack of

integrated supply chain and management and lack of trained workforce and flux of the market

in terms of price and product choice also need to be eliminated.

Dr.V.N.BRIMS PGDM (2012-14) Page 39

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Despite these challenges many international brands are thriving in the Indian market by

finding solutions around these challenges. A company that plans to enter Indian market at this

time can definitely look forward to great business if it analyzes and puts efforts on all

parameters.

Dr.V.N.BRIMS PGDM (2012-14) Page 40

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WINNING STRATEGY FOR MODERN RETAILERS

Modern retailers can rebuild their assortment strategy and that has seen better traction from

consumers. They can increase the share of fashion category in store to drive margins.

We also believe that constant store renovations will help them to increase stores productivity.

The retailers can also restructure the store format and make effective utilization of space.

"To fight with recession and earn profit in retail business, large retailers have to revamp their

smaller formats with a mix of merchandise similar to that offered by kirana and differentiated

ones like those offered by global convenience stores. in order to cut the cost of real estate.

Modern retails can also promote private labels in food category, since private labels gives

more margins to retailers.

Retailers can offer can provide more attractive offer to attract offer.

Dr.V.N.BRIMS PGDM (2012-14) Page 41

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ANNEXTURE

Questionnaire

I______, a student of Dr.V.N. Bedekar Institute of Management Studies, Thane, is

conducting a survey on Kirana shops. Could you please spare five minutes to answer a few

questions. (TO BE FILLED BY ONLY OWNER/PARTNER OF SHOP)

Instruction: Please circle the correct selected by respondent. Date:__________

Name of respondent: ____________________________________________________

Name of the shop:___________________________________________________

Address of the shop:___________________________________________________

Contact details (optional):______________________________________________

Q-1: What is the size of your shop? (In sq.ft.)

1. 150

2. 200

3. 250

4. 300

5. 350

6. Above 350

Q-2: Which products do you sell in your shop?

1. Grocery

2. Dairy

3. Confectionery

4. Food Products

5. Cosmetics

6. Home Care

7. Personal Care

8. Stationery

9. Any other (Please mention)

________________________

Q3- How many people are working in your store?

1. Up to 2

2. less than 5

3. more than 5

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Q-4: Why do you think customers come to your shop? Please rate the following factors on a scale of 1

to 5 as per their importance. (1 being least important & 5 being most important).

Factor 1

(Not at all

Important)

2

(Low

Importance)

3

(Neither important

nor unimportant)

4

(Very

Important)

5

(Extremely

Important)

A-Store Timing

B-Credit Facility

C-Emergency

Purchase

D-Discounts &

Offers

E-Customer

Relationship

F-Home

Delivery Service

G – Product

Range

Q-5: Do you feel insecure due big retailers opening their shops in your locality?

(a):YES - If yes then why?

__________________________________________________________________________________

(b): NO - If no, then why?

__________________________________________________________________________________

_________________________________________________________________________________

Q-6: What are the new strategies that you have adopted to face competition from big and modern

retailers?

1. Store Renovation

2. Increasing product range

3. More Discounts

4. Home Delivery

5. Improved Display

Dr.V.N.BRIMS PGDM (2012-14) Page 43

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6. Customer Relationship

7. Credit Facility

8. Improved Packaging

9. Not adopted any strategy

Thank You. ( Please thank respondent and terminate interview)

Dr.V.N.BRIMS PGDM (2012-14) Page 44