Business Today

Thriving in the shadow of big retail

Most kirana and mom-and-pop stores have been able to hold their own against the might of India Inc’s giant retail formats. Can they survive in the long run? Business Today walks into five such stores in the metros to gauge the pulse of unorganised retailing. The verdict: Don’t write them off, yet.

     Print Edition: June 28, 2009

Most kirana and mom-and-pop stores have been able to hold their own against the might of India Inc’s giant retail formats. Can they survive in the long run? Business Today walks into five such stores in the metros to gauge the pulse of unorganised retailing. The verdict: Don’t write them off, yet.

Mumbai
The door-to-door edge

Neelkanth General Stores
Neelkanth General Stores
For Prem Patel, having a grocery store in an upmarket township in Thane, on Mumbai’s outskirts, seemed a great business opportunity back in 2001. The potential was clear-cut at that time: 5,000 families, and not a single grocery store. Patel and his brothers put up Neelkanth General Stores over 350 sq. feet and rode the gravy train for the next three years. Then came the rumble in retail.

Reliance Fresh, Spencer’s, Spinach, Godrej’s Nature Basket invaded the area by setting up large-format stores within a 500-metre radius of Patel’s humble store. For the Kutchi-Gujarati trader, the options were to either get steamrolled or to counter the threat. He chose the latter. Patel couldn’t compete on space, variety and ambience.

Neelkanth general stores
Location:
Township in Thane, on Mumbai’s outskirts
Competition from big retail: Godrej’s Nature Basket, Spinach, Spencer’s, Reliance Fresh
Survival strategy: Focus on timely delivery
Where he could score over the organised players, though, was on the service front. “We started focussing on customer attention and timely door-to-door service,” says Patel. For instance, he made sure that the customers calling in got their groceries—even if it was just a loaf of bread— within 30 minutes. Such home delivery is available between 8 am and 10 pm. Unsurprisingly, Patel spends more time on the phone taking orders than dealing with walk-ins. That the township has its own mini-telephone exchange encourages residents to call as many times as they want as the calls aren’t charged for. Patel isn’t complaining. Over the last many years, the display of the shop hasn’t changed; and Patel is in no mood to encourage credit card usage. Not that he didn’t want to innovate. For instance, after years of stocking just items like wheat, pulses, spices and other food items, in 2006 he started a small vegetable counter at the entrance of the shop. That didn’t work for too long, as the builders asked him to get rid of it.

Such setbacks notwithstanding, Patel is unwaveringly focussed on delivery. Discounts are a no-no. “People are more bothered about timely delivery of goods than the discount they get,” he quips. He clams that despite the presence of four organised retailers, his business and margins haven’t been hit. If that’s true, it’s doubtless a feather in Patel’s cap, considering he gets a credit period of just four days—as against 10-15 days for organised retail—and profit margins offered by distributors are lower than those doled out to the large-format stores. Patel for his part prefers to focus on what he has that the big boys don’t enjoy—lower overheads.

Virendra Verma

Youtube
  • Print

  • COMMENT
Page 1 of 5 Next >  >>
BT-Story-Page-B.gif
A    A   A
close