The new-age rural consumer is as aspirational as her urban counterpart. She owns a smartphone, is internet savvy, and browses for products on Google, YouTube and other media platforms. She no longer wants to buy products pushed by her neighbourhood grocer, she wants to first touch and feel a product and then buy it. Rural distribution company, StoreKing (which operates in Karnataka, Tamil Nadu, Kerala, Andhra and Telangana), is looking at targeting this consumer by rolling out its supermarket chain in rural India.
Branded as StoreKing Smart, these stores would be located mostly in talukas or in the outskirts of district headquarters. By end of May, the company plans to roll out five StoreKing Smart stores in Karnataka, and 200 by the end of September.
"Rural consumers are seeking experiences which a kirana store owner is unable to offer. They can't discover products at a kirana store as they can't touch and feel a product and have to buy a product that is pushed to them by the store owner. We want to convert that into a pull mode by enabling the new-gen rural customers to buy products off the shelves. We will also offer them loyalty points and rewards to generate stickiness," explains Sridhar Gundaiah, Founder and CEO, StoreKing.
Apart from selling products made by FMCG giants such as Unilever or P&G, Gundaiah wants to focus more on smaller consumer product brands. "The smaller brands will give us higher margins and we can also have a wider array of products for consumers to explore. The margin offered by the big brands are wafer-thin and it will be difficult to build a successful business model."
A franchise model, StoreKing Smart stores would be owned by kirana store owners serviced by StoreKing's distribution business. Inspired by Radhakrishna Damani's Dmart, Gundaiah is making sure that his franchise partners own their stores. "Rentals for most modern retail stores comprise 16 per cent of their total cost, for Dmart, property cost is a mere 3-4 per cent as they own their stores. In the FMCG world, if we spend 16 per cent on rentals, we will not be able to sustain."
These 500-600 square feet stores would also have an aisle where consumers can experience consumer durable brands. "We will not have inventory, the consumers can see the products on display and place their order and we will deliver to their homes."
Gundaiah expects these rural supermarkets to give him significant insights that would help him upgrade his existing kirana network. "We will look at data and analytics closely and stock the right kind of product at the kirana stores, which often end up with lot of idle inventory. After all, consumers are changing and so are their needs," he says.