Retail in India or whither kiranas

The Indian Economy Blog had this post on how kiranas will rule despite the entry of Walmart. I've disagreed with the view and my comment got so long, I decided to post it here as well.

Here's the original post on the Indian Economy Blog, and this below is my rather long-winded, hopelessly typo-ridden comment.

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Gaurav - Like you, I have no numbers to substantiate what I believe. Which is more or less in line with what Anshu has commented above, i.e. Kiranas will live - not rule. Here’s why.

I’ll limit myself to one case-study to further what I’m saying (which I also know from personal experience), i.e. Food Bazaar (part of Kishore Biyani’s retail chain, and part of what you’ve referred to above as “Big Bazaar”) at Infinity Mall, Versova. You might call the locality as “the very upper-middle-class”, but then I don’t know what you meant because you’ve not given an income level for that definition.

From what I know it will be hard for me to categorise the people coming to this store inside this very popular mall because they span almost all income categories, for example TV stars, film actors, struggling actors, gym instructors, businessmen, salaried employees, BPOs, etc, etc. Typical Mumbai suburban crowd.

Here’s what I’ve seen at this Food Bazaar
1. Huge variety - within each group, across brands, vegetables, fruits, plastic stuff, etc. etc.

2. Crowds - it’s a big place (not sure of the area, but its large) and fairly packed on weekends (as you pointed to above) with people of the variety mentioned above. What also helps is a 3-4 screen multiplex above and the mall experience.

3. Discounts - On a daily basis, they’ve got offers across almost every
category. On special occasions, such as on Republic Day this year, they had unheard-of discounts, stuff like 2 jeans for Rs500 (shitty quality, but it was there), free atta, rice, etc. etc.

4. Home Delivery - offered around the area for purchases above Rs1,000

5. Credit cards - accepted, some cards (like ICICI) even have higher reward points for co-branded Big Bazaar credit cards

The Food Bazaar Mall is about a year-18months old. Prior to that Lokhandwala Complex (which itself is huge) was almost entirely catered to by the Kirana stores. What’s changed ?

All those kirana stores are still there and doing quite fine. I’m not sure if anyone of them has shut down, but I don’t know if a single one of them is “ruling”.

I know someone who owns one of these places. Here’s his take - his profits have dropped about 25% in the last one-two years because he’s had to offer aggressive discounts, hire a couple of helps and buy cycles to for home-delivery. Sales are doing good, but his customers keep asking him for stuff he doesn’t stock because he doesn’t have space. He just expanded some time back to add more racks and store more stuff but he can’t keep pace with the variety of stuff that each brand is launching. And he can’t buy more space because property prices in Mumbai are just too high.

So, he’s worried. But here’s the good news, he’s hearing that Reliance is coming over..they’ve offered him a good deal to convert to a Reliance franchise format. He is considering that offer.

I’m tempted to give my own example (i.e. I’ve stopped going to a kirana store long time back, I prefer seeing a movie, having a beer and doing a week of shopping all at one place, on a weekend), but I don’t know if its appropriate, or if I’ll be labeled “very-upward-middle-class” (btw, is that bad ?) :)

So here’s my point - I don’t think kiranas will rule, I don’t think they will die. But they will have to get a lot more competitive. As for the Walmarts, Bhartis, Tescos, Ambanis, Biyanis, Birlas, etc. I think there’s enough room for everyone, if one were to believe the India growth story. Sure, there will be winners and there will be losers - and that’s as true for these biggies as it is for the kiranas.

I’m aware that Bombay might not be the ideal comparison for the point of this post, but I think its a fair indicator. Things might be different, but not wildly different, in other cities.

Just one last point - this bit you said But is this tie-up, which has Walmart managing only the back-end supply chain and procurement and Bharti managing the front-end, only a convenient arrangement to scale the policy barriers? Or is it something more? A strategic decision? I suspect it is more of the latter than the former.

Are you a free market proponent ? If yes, you’d not support the barriers on FDI in retail put up by the Govt, right ? But if these barriers are there, then this method (i.e. backend-MNC, front-end local) is probably the only route left to enter the retail sector, isn’t it ?

So, if you think the Bharti-Walmart tie-up is a “convenient arrangement”, then that is also the same for so many others who have followed the same route such as Tata Croma, Spar-RK Foods and Shoprite .

Thanks - would love to hear your thoughts on this.

Steve Irwin RIP. (a.k.a. revenge of the stingray)

A lot has been said on the demise of Steve Irwin. This one below by Germaine Greer* (from her article in the Guardian) adds some more perspective.

"The animal world has finally taken its revenge on Irwin, but probably not before a whole generation of kids in shorts seven sizes too small has learned to shout in the ears of animals with hearing 10 times more acute than theirs, determined to become millionaire animal-loving zoo-owners in their turn."

So a famous firang dies by a freak accident. Media goes into overkill. And then someone opines that the animal world has taken revenge ? This could be the next animation hit - Title "Jaanwaron ka badla" with a tagline "Ek julmi ki kahaani, stingray ki zabaani". Mithun-da as Steve, mate ?

* As expected, Ms. Greer's comments have raised a controversy. Sheesh.

Ghanta

No, it's not a bad word. Really, I mean come on. Like all slang, it captures feelings that a hundred words can't capture. In one word.

Honestly, think about it. How many times have you used it ? Recently someone asked if I'd come along to see Fanaa, even if he paid for it. Yup - you guessed my reply. The other day someone expected me to drive down to Bandra from town in half an hour, in rush hour. Reply? Yup. Then someone at office was saying that Holland would win the World Cup this year. What else could I reply? Hell, this optimistic friend of mine thought we'd get parking outside Pappa Pancho on a Saturday night. What did I tell him ? You get the drift.

Then today I read somewhere that Bombay's the rudest city in the world. Now you know what I'm talking about.

In all fairness

“Gore rang pe itna gumaan na kar, gora rang do din mein dhal jayega” Song from the film Roti, pictured above. Loosely translated it means, don't be proud of your fair skin, it'll vanish in two days.




And now a fairness cream for men. Emami has launched a fairness cream for men called "Fair and Handsome". With a name like that, Emami leaves nothing in the dark. Clearly, their marketing people as well as the geniuses at their ad agency spent long nights to carefully craft this well-thought out and utterly brilliant, path-breaking strategy for a product that promises to ligten up the faces of dark-skinned men. And where's the best place you'll find them ? Aha ! master-stroke #2 - launch the cream in - you guessed it ! - Andhra Pradesh.

Our legendary obsession with fairness has spawned off an industry worth Rs1,000cr (US$200m+), led by HLL. All this for the Indian man's fairness fetish that has always been and will always be so damn unfair on the woman. That Indian women are the most beautiful in the world is fairly (pun intended) well proven by our bevy of Miss Worlds, Universes, Solar Systems, etc. I don't need inane beauty pageants to certify that - take a look around you. Indian women rock. Even white-skinned Caucasians visiting India drool over them.

But back home, bride-seeking families are shameless enough to demand a "fair" woman in matrimonials. And groom-seeking families flaunt their daughters as "gori" (worst case, wheatish) in the same columns. Where did it all start ? Was it an inheritance from the British ? Or as my colleague Mahesh mentions, perhaps its got to do with mythology ? Remember a scarred Zeenat Aman in "Satyam, Shivam, Sundaram" singing about Lord Krishna asking his Mother why he's dark and Radha is fair.

Get over it guys. Remember Bipasha ? or Rekha ? Or Zeenat ? or Rani ? Ah naaahh, you prefer Kareena and Preity ? God ! they talk so much, and they aren't even as amply endowed! Even if men don't accept it, at some point of time they realise that its always the inner beauty of a woman that matters. But they have to get over their baser instincts to bite that bullet. Till then, they will continue to fall for fairness. Thankfully, intelligence and sense of humour don't have a colour. And like your skin, you're born with them.