Shiny Provision Store: Retailing Challenges In the Indian Context

By,Mayank Chowdhary, Mohit Kothari, Nishant Agarwal, Pankaj Bhutoria,

Mekhala Maiti, Siddarth Garg

Background

Madhvan Anandan, the owner of Shiny Provision Store.

He wondered about his traditional managing and market-based skills in running the retail store

Objective

The objective of case study is to

a) develop a strategy to assist Anandan and stand him in good stead

b) Ascould not afford the high investments that MNC were able to make in professionals management

Indian Retail Market

Retail context emerged from its diversity. The country has 28 states and seven union territories

Consumers segments differed significantly in terms of lifestyle, income, religious practices and custom

Example: Urban India accounted for 64 percent of consumption

Indian Retailing Scenario

Existed since Mohenjodaro days

Major traditional retail forms are :

a) Fairs

b) Shandies

c) Village shopkeepers

d) Public distribution shops(PDS)

Composition of the retail sector

Growth of Retailing

• Kirana shops are like the “mom and pop” shops of the west

• Ranges from 25 to 400 sq.ft

• Preferably unbranded stuffs

• Food and grocery market valued US$236 billion in 2008( 60% of retail sales)

• Created employment opportunities

Growth: Over the years

Initially, retailing focused on basic necessities

Year No . of Shops (millions)

1950 0.25

1978 2.335

1997 5.13

2005 12.77

Modern Retail Formats

Organized retailing:

a) Transparency in accounting

b) Organized SCM

c) Centralized quality control

d) Centralized sourcing

e) Not a standalone shop

Unorganized retailing:

a) Operated by a single owner

b) Lacks technical standards

c) Lacks Accounting standards

Types of Modern retailing formats

Supermarkets:

a) Includes food and household productse.g.: Food World, More & Nilgiris

Departmental Stores:

a) Includes life style driven productse.g.: Lifestyle, Shoppers Stop, Westside, etc.

Hypermarkets:

a) Large volume driven discount based stores

e.g.: Reliance Fresh, Big Bazar

Specialized Killer stores:

a) Extensive range of products under a single category

e.g.: Croma, Vivek & Co.

Factory Outlets:

a) Present in Urban areas

b) Out of Vogue products sold at discount rates

e.g.: Louis Philippe in apparel, Nike in footwear, etc.

Kirana Shops Vs Modern Retail Outlets

Kirana Shops:

a) Unbranded stuffs

b) Monthly expenditure same as MRO

Modern Retail Outlets:

a) Branded products

b) Monthly expenditure same as Kirana stores

c) Has an edge in basically all the fields

Practical scenarios

Kirana Stores:

a) Customer-Trust ratio is very high, thus affecting consumer behavior

b) Very fast billing

c) As Indian FMCG customers, none of us can run to the supermarket every now and then

d) Unplanned and sudden purchases

e) Perishable items are more fresh

f) free home delivery service

g) An edge in terms of providing month’s credit to it’s regular customers

Porter’s 5 Forces model

Forces Kirana Stores Modern Retail Outlets

Rival Intensity High High

Threat of Entrants High High

Threat of Substitutes High Low

Power of Buyers High High

Power of Suppliers High Low

4P’s of Marketing: Kirana Vs MRO

PRODUCT

MODERN RETAIL OUTLETS KIRANA STORES

• Variety in each category • Product SKU’s are limited

• Expensive as well as low end items • Cheaper and daily use items

• More attraction of branded products • Unbranded products

PLACE

MODERN RETAIL OUTLETS KIRANA STORES

• Located in densely populated area • Located on busy cross-roads

• Area: 3000-3500 sq. ft. • Area: 600-1000 sq. ft.

PROMOTION

MODERN RETAIL OUTLETS KIRANA STORES

• Promotion in regional and national level

• Promotion is a rare event

• Loyalty Card Scheme • Bargains with regular customers

• No such Provision • Provide free home delivery

PRICE

MODERN RETAIL OUTLETS KIRANA STORES

• Synergy due to bulk purchasing • Variable depending on type of consumer

• Central warehousing and transportation

• No proper SCM in place

Recommendations

• The shopkeepers should be polite and warm in greeting their customers.

• They can take feedback from the customers in order to improve their product line.

• They can give discounts on selective fast moving products.

Questions ?