The Indian Economy Blog

November 29, 2006

Kirana Will Still Rule

Filed under: Business — Gaurav Sabnis @ 11:26 am

So Walmart is officially in India now. The Indian Left has predictably started making noise. I suspect a lot of left-leaning-human-face commentators will also shed barrels of tears bemoaning the imminent death of the small Indian shopkeeper. They will write about how Walmart got a “backdoor entry” into India.

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.

All those who expect big retailers like Walmart to come in and devour small kirana shops should pause and think. Can Big Retail really do that? Just look at what the average kirana store offers the average Indian household. Firstly, it is just a stone’s throw away. So anytime the family needs something, it is easy to just stroll over and get it, even if it is as paltry as a loaf of bread. Secondly, there is the trust about all the items being fresh and reasonably priced at the friendly neighbourhood kiranawalla. Thirdly, there is free home delivery, usually on a bicycle, for the regular monthly supplies, colloquially called “ration”. And fourthly and most importantly, there is credit. Since the shopkeeper knows the families in the vicinity well enough, he can actually extend credit based only on the jottings made in a tiny pocket-sized plastic-covered notebook.

A vast majority of middle class India still shops from one of the millions of tiny kirana stores for precisely these reasons. And there is no way Walmart or even the local big retailers like Foodworld, Big Bazaar or Reliance can lure away a chunk of the middle class big enough to make the kirana store go out of business for at least another few decades.

The small segment of the population which has made Foodworld and Big Bazaar run successfully is the very upper-middle-class. Families in this segment have a car so they can plan weekly or biweekly trips to the big shops. These families actually purchase a lot of packaged food items and it makes sense for them to travel that extra distance. These families don’t need credit. And yet even these families will still buy a considerable proportion of their groceries from the local kirana stores. This segment of the population is small. It is growing, but it is not growing nearly fast enough to gobble up the main clientele of the kirana store – the middle and lower-middle class.

Walmart surely understands this. It has learnt from its mistakes in Korea, Japan and Germany. Supply-chain principles may remain largely uniform all over the world. But retailing has a very culture-specific flavour. Taking the same modus operandi that worked in the US and superimposing it in other countries will not work. And if Walmart failed in countries like Korea, Japan and Germany, which Americans at least have some understanding of, can they dream of a retail success in a country as complex, diverse and confusing as India?

The threat from Bharti-Walmart or Tata-Woolworth is not to the friendly neighbourhood baniya, but to purely desi retailers like Big Bazaar and Foodworld. These desi retailers have been raking in the moolah because the upper middle class has grown in the last 5 years or so, there has been a rise in salary levels in that segment, and there isn’t enough competition. With more players entering, competition will hot up. And margins will surely go down.

Another bogey being raised regarding Walmart is about their ruthless procurement tactics which squeeze every penny out of the suppliers and the manufacturers. Let us assume for the sake of argument, and for the brevity(!!) of this post, that such tactics are evil, and harmful to the local economies. Even if we assume that, organised retail does not and will not, for several decades, have the marketshare big enough to get a clout to actually pull off those tactics in India.

So comrades, unless it is Big Bazaar and Food World that you consider the meek and weak, do us all a favour and shut up. The desi baniya will continue to do well for ages to come. And the day that Big Retail is actually poised to capture marketshare of the Indian retail industry big enough to drive the baniya out of business, is the day that the economic indicators in this country will have changed so much that communism will exist only in museums and history textbooks.

55 Comments »

  1. The AV Birla group joins the bandwagon… should be a good time for the Indian consumer

    http://economictimes.indiatimes.com/articleshow/629756.cms

    Comment by Prashant — November 29, 2006 @ 12:41 pm

  2. Why Walmart will remain a luxury for most Indians…

    Gaurav Sabnis at the Indian Economy Blog argues Walmart wil remain a rich mans luxury. I tend to agree with him, Walmart can never extend credit to those who need it like the mom-n-pop stores therefore can never dominate the market….

    Trackback by PutVote.com — November 29, 2006 @ 2:06 pm

  3. I tend to both agree and disagree with Gaurav. Lest i sound like the LeftWagon that supports the government on “strategic” issues and dissociates from others (read – unpopular economic decisions), i would better clarify my point.Its this:

    True the average kirana shop will not be affected as much as the detractors of WalMart are shouting. But equally true is the fact that the very reasons Gaurav put forward for their existence is comming under the hammer. Let me sort this out; the USP of the neighbourhood shop is its “convinience” and “trust” right? That it is very easily accesible and that the customer knows the guy for last 7 years etc. etc.

    Now this landscape is chaning with the influx of community residences. These are huge methodical complexes with preplanned sites for “organized retailers”. These retailers stock RealGoods Chicken and packed fresh vegetables along with other merchendises. They are like the kirana shops ony by their convinience and the rapport with the complex dwellers. Even credit system is being simulated by the use of Food Coupons that the organizations (ex. TCS) give to their employees.

    U may say this is a miniscule model and very complex.Trust me it sounds so but efficiency is extremely high. Just go to Hiranandani or Lokhandwala Complex if you have trouble believeing me.Yes today its with middle class Mumbai, but the trend is fast catching up and the Indian Retailers Gaurav was talking about are filling up this excess service. Still it will not be possible to beat the Kirana shops but Indian retailers will survive hail and hearty iF (and only if) they can maneuovre this space.

    -Romit

    Comment by Romit Choudhury — November 29, 2006 @ 2:40 pm

  4. just love the last para of your piece which summarises the essence of the entire issue and mind you if Tesco makes an offer to Big bazaar today, they will be the more than eager to join them. Another thing, has anyone ever thought of the Indian consumer who has been getting a raw deal in terms of price, quality and availability for so many years. At least the entry of these big players will shake them up to become more consumer friendly and I can tell you that the same is already visible on the ground.

    Comment by Sanjeev — November 29, 2006 @ 3:36 pm

  5. I think credit cards hold the potential of circumventing the credit problem. But I don’t know what their penetration rate and penetration profile is. Any clues?

    This is kind of a progression of Division of Labour, as the scope of the market is growing, more specialized firms are emerging. Credit and Sales functions are bound to diverge over time.

    Comment by Gautam Bastian — November 29, 2006 @ 4:15 pm

  6. I think Gaurav is right but with one more qualification: big retail stores will work only in the big metropolitan cities or cities where IT professionals flock today (but in these cities, most of the middle-classes will flock to them, not just the upper middle-classes). In the rest of India, kirana shops will still rule.

    In big cities, the success of the big stores will be not just because of the logistics (they should be less expensive, more accessible, etc etc and provided that they manage to do all this) but also because city-folk are just more open to the idea of this kind of shopping. In the rest of India, especially small towns, on the other hand, there’s an almost pathological distrust of big stores which gets mixed into a lots of ideas on clan loyalty — and people just prefer shopping from people rather than stores. By which I mean that a big store is this huge impersonal structure — when people buy from it they don’t know where their money is going, exactly. But when they buy from a kirana shop, they know exactly who benefits and the idea is to benefit someone whom you know, are related to, or is from the same caste. As long as the kirana shop is reasonably well-priced, it wouldn’t matter if the bigger store was cheaper.

    All this is my conjecture, of course based on what I observed when I moved from Mumbai and lived in a very small town for about two years. And which doesn’t mean that this is always the way it’s going to be. My point is: the success of small kirana shops is not only because of the range of services they provide, but also because of caste and other family-based loyalties that come into play in small towns.

    Comment by shreeharsh — November 29, 2006 @ 7:34 pm

  7. Big retailers increase choice/variety, as well as offer a significant price advantage. Foodworld offers neither, so the local shops have not felt the pinch thus far. The scale a Reliance or a Bharti-Walmart operates in, is precisely the reason why they can offer these benefits to the consumer. Plus, (sorry I do not have the figures) the procurement chain as it currently exists contributes greatly to the price of the commodities in the local shops (and Foodworld, which has no revolutionary wholesaler deals either).

    Point 1. Access: Not all retail outlets will be freewayside superstores. There is bound to be city-wide smaller size representation as well. These smaller-size stores stock only the goods and varieties that are favoured by the local demographic. For more variety and slightly better deals, one can definitely make the monthly drive to the bigger superstore. (This already happens when we drive to the ‘wholesale’ mandi to buy for pujas and festivals)

    Point 2. Trust: True, you could ‘trust’ the local shop to give you fresh goods and good deals. Competition among big retailer virtually ‘ensures’ that you actually get fresh goods and good deals.

    Point 3. Home Delivery: The local shop does not do free home-delivery just because he loves his clients, but because he can afford it. What makes you think that a larger retailer cannot do the same?

    Point 4. Credit: Again, just because the corporation is big, does not mean it will not be innovative in dealing with its customers, especially if there is money to be made.

    Walmart may have had trouble in Japan and Germany fighting against the methods of other big retailers (who have the same procurement and distribution abilities and infrastructure) but certainly will not have too much trouble in a country which has an excuse for a retail system.

    Comment by Anand — November 29, 2006 @ 7:49 pm

  8. A few questions for Gaurav and the commenters:

    1. Can anyone think of creative ways to formalize the operations of the kiranashops so that they are on the books, paying taxes, part of the GDP numbers, etc.? I know the VAT was suppose to take us in this direction but I don’t think it’s enough. I still think the complete lack of enforcement, and the fact that most of them probably have murky land titles makes the cost of compliance too high for the shopowner. Any ideas on how to reduce this?

    2. What do you reckon will be the impact on price levels for household goods? Is the difference between the customer bases of big and small retail going to lead to a bifurcation of prices? or of the quality of goods sold? Or will there be a net reduction accross the board? The former is probably not in the best interests of the economy… the latter obviously is.

    3. Impact on employment and wages in the sector as a whole? I suspect wages will almost certainly go up; less certain about employment.

    On a personal note: I love my kiranashopwala (when I lived in Bombay that is). The guy would bring me a bottle of Bisleri and a pack of smokes (along with anything else I needed) every morning before work without me having to call or anything. I haven’t found this level of convenience anywhere in Europe or the US. So please remember that us middle class folk also value convenience quite a bit.

    I suppose the move would make retail something like it is in NYC with business spread fairly evenly between grocery stores/pharmacies and your neighborhood bodegas/delis.

    Comment by Nandan — November 29, 2006 @ 8:14 pm

  9. Shreeharsh: A valid point about caste and kinship in smalltown retail. And as Adam Smith points out, the caste system, which prevents the existence of a free market is sustained only by force. (And in the current case of India, also by sheer inertia—or shall we call it, not enough incentives to break out of). But such ‘restrictions’ on the market are possible only if ‘all’ the constituents of the market are within the ‘violence’ of the system. Obviously the big retailer is not.

    Nandan: 1. If non-compliance with tax regimes gives the Kirana shops an unfair advantage in retail, then his competition, the bigger retailers will take care of forcing compliance.

    2. We all go by the understanding that more choices, and a freer market and hence fair competition imply lower prices and better quality. Of course, there will always be price ranges and difference between luxury goods and other commodities. As far as household goods go (I guess you mean detergent, rice, green-groceries etc.) prices are bound to come down and quality and variety going up.

    3. Wages go up for the kind assistant who homedelivers your ‘provisions’. And wages are high when demand for jobs are high and supply is low. So employment goes up.

    Comment by Anand — November 29, 2006 @ 8:51 pm

  10. [...] From the Indian Economy Blog: Gaurav believes that despite the entry of Walmart in Indian Markets, Kirana shops will still rule the roost. [...]

    Pingback by DesiPundit » Archives » Kirana Will Still Rule — November 29, 2006 @ 9:13 pm

  11. Thanks for your responses Anand.

    I understand the economic theory behind what should happen, but I’m more curious about what will actually happen. The predictive efficacy of normative economics diminishes in the informal sector – so I was trying to get a sense of what the empiricists might say a few years hence.

    Comment by Nandan — November 29, 2006 @ 10:31 pm

  12. I am not so sure Gaurav. Some kiranas may do well with cigarattes and other smaller stuff (pan shops already have some of that market), but unless they change what they offer with quick and trouble free service, regular retail will take away their market for most household things. Attitude change of older people may keep some kiranas going for a while, but for most of them – their days are numbered.

    Comment by Chandra — November 29, 2006 @ 10:53 pm

  13. Large retail grocery outlets are an obvious consequence of 1. growing size of middle class and their income levels 2. increasing penetration of 4-wheelers as both private and public means of transport. Increasing penetration of credit/debit cards is going to make the big bazaar shopping even more convenient. Also the big stores are not just grocery stores but they sell almost all possible consumer goods and therefore are more reasons for affording shoppers to visit them. Matters of loyalty, trust, quality etc. will die down over time.

    In small towns and rural India things have not changed a wee bit in terms of income levels and the big marts become irrelevant.

    In terms of welfare efficiencies and distributions the big marts are bound to cut into the sphere of Kiranas and small grocery shops. The leftists come into play here debating the fate of small businesses. But should the fate of small businesses restrict the choice of consumer is equally sound argument. The employment opportunities related to small shops have traditionally been tied to wealth and caste. It would be a good welcome change big retail chains creating lots of new jobs at the drop of resume. The big chains are bound to add new wealth to the exchequer that are otherwise lost unaccountable. The big chains can create visible demand for ag. and non-ag commodities, can help reduce black market and hoarding, induce supply chain efficiencies.

    The spread of the big marts can unleash a new wave of consumerism which again means increased demand for a variety of raw and processed goods. New jobs and efficient markets.

    Comment by Sridhar Sankranti — November 29, 2006 @ 11:12 pm

  14. I don’t know much Econ, but I agree with Nandan. Broadly speaking some sort of equilibruim point will be reached between mom-n-pop and big stores in the metro areas.

    Comment by PH — November 30, 2006 @ 1:20 am

  15. [...] Wal-mart’s entry in India along with other big retail plans elicits quite a few reactions from those who feel it might threaten the traditional kirana stores (cornershops). The Indian Economy Blog on why that’s not likely. “A vast majority of middle class India still shops from one of the millions of tiny kirana stores for precisely these reasons. And there is no way Walmart or even the local big retailers like Foodworld, Big Bazaar or Reliance can lure away a chunk of the middle class big enough to make the kirana store go out of business for at least another few decades.” Neha Viswanathan [...]

    Pingback by Global Voices Online » Blog Archive » India: Cornershops in the era of big retail stores — November 30, 2006 @ 2:14 am

  16. Gaurav,
    Though I seem to agree with your overall position that small neighborhood stores have no immediate threat from Walmart, I am not sure I am convinced by your arguments. (immediate ==> less than 5 years)

    You give 4 reasons why neighborhood stores are preferred by the indian middle class but seem to offer no reasons why Walmart cannot do the same (or something similar). In your list of 4 things we love about the kirana, certainly (2) and (3) are easily achievable for Walmart. In fact they can do much better on (2) and (3) just by bringing some standards (like round-time for delivery, same quality produce all days of the week).

    Regarding (1) and (4), I agree they may have to get innovative. But even there, I dont see why these two will clinch the deal for the nbhd store as opposed to Walmart – particularly when Walmart will almost certainly offer much lower prices and far more goods and variety. Add to that their advertising might.

    So, as I said, your 4 clinching reasons don’t seem like clinchers for me. There is probably no immediate threat for the local store, but I repeat, my immediate is only 5 years long.

    Comment by swamy — November 30, 2006 @ 4:09 am

  17. Romit, yes, there is space for organised retail to grow as well.

    Sanjeev, thanks

    Gautam, Not sure about the exact penetration rates of credit cards, but it is still quite low among everyone except for the upper middle class.

    shreeharsh, Agree with you. Though even the kirana stores in Bombay do rocking business.

    Anand, Competition among big retailer virtually ‘ensures’ that you actually get fresh goods and good deals. Great point. I completely agree.
    The local shop does not do free home-delivery just because he loves his clients, but because he can afford it. What makes you think that a larger retailer cannot do the same?
    For a monthly or biweekly stock, sure they will deliver. But even for small less-than-rs-100 purchases? Doesn’t make economic sense. I have a feeling that a large proportion of grocery purchases in India are of the day-to-day kind. The “ration”, i.e rice, sugar, dal, atta etc may be bought for a month at a time. But stuff like eggs, bread, snacks, other things which add up are different.
    Again, just because the corporation is big, does not mean it will not be innovative in dealing with its customers, especially if there is money to be made.
    True. The credit puzzle is not uncrackable. But it is tough for sure. It will be interesting to see if they can crack it.

    Nandan,
    formalizing operations – I am not completely aware about this topic. But is VAT really not working?
    about prices – I think it will vary from area to area. And will depend on the competition. Overall, competition always causes prices to drop on an average.
    employment and wages – I think both will go up. As I said, i don’t see too many people losing jobs because of Big Retail. In fact employment in organised retail will increase.
    about convenience and nyc-like situation – completely agree

    Comment by Gaurav — November 30, 2006 @ 6:28 am

  18. Chandra, let’s see what happens. I think the kirana store still offers enough overall value to the customer which big retail will find difficult to replicate. Sure, big retail can slash prices. But the other value offered, like the one I mentioned, will be tough to replicate. Not impossible, like I said to Anand. But tough. And I wonder if big retail will actually find it worth their while to replicate the value.

    Sridhar, you’re right. Which is why I don’t predict a failure for big retail. it is here to stay. But the boom in big retail will not necessarily cannibalise the kirana store is my point.
    My post was specific to grocery shopping. As for consumer goods, maybe you have a point. Haven’t thought about it a lot.
    The rest of your comment I fully agree with.

    PH, I think so too. I don’t think Walmart will fail. I am just saying that walmart doesn’t pose a major threat to kirana stores. It poses a bigger threat to other organised retailers. Right now, in India, most of the supermarts like Big Bazaar don’t have local competition in close proximity. They do price their stuff aggressively, because they are trying to compete with the kirana store. But the real fun will start when you see a Tata-Woolworth, Big Bazaar, Reliance and a Bhartimart store within a 1 km radius. And when the size of the market is not big enough to support them all.

    swamy, see my response to Anand. They CAN do 3). But at what cost? Will they be able to afford the cost and still make money? In the US, Walmart works because people go to Walmart. In India, the shops come to people many times. Can Walmart do the same? It will be interesting to see how.
    About 2) I am not so sure. Trust is a complex issue and mere assurances don’t build trust. At least not overnight.

    I disagree about the immediate being only 5 years long. I’d give it 15-20 years easily. I’d be happy if you were right though. Because that would mean that a massive proportion of India’s population will make the transition to a significantly upper class.

    Comment by Gaurav — November 30, 2006 @ 6:48 am

  19. Why I disagree with Gaurav..

    Proximity : What is Reliance rolls out a chain of small stores ??

    Free home delivery : It thrives on low cost of labour. What prevents larger chains to take advantage of low cost labour ? Nature Fresh from Godrej gives free home delivery. They even call up once a week to check if u need grocery.

    Kirana will live – but not rule . Even if you shift 20% of your purchase basket to organised retail – kirana will get hit badly.. simple concept of operating leverage. Obviously kirana will rule in places without organised retail ( small towns , villages ). But in cities – they are bound to be hit..

    It is easy to be optimistic and dismiss a threat.. Reality is that direction of change is more important than magnitude of change. The end goal is clear – what is uncertain is timing – 5, 10 ,15 , 20 ,30 years.. and timing will depend on aggressiveness of players – which I believe will be there.

    Comment by Anshu — November 30, 2006 @ 9:38 am

  20. another point – about credit..

    I will reiterate that direction of change is important. Credit card penetration is rising.. that will solve the problem.. Why does big bazaar have co-branded credit cards. These people are not stupid.. and they realise that people need credit.

    About your argument on Walmart failing in so many countries – That does not mean that organised retail has failed in these countries.. Walmart may be stupid , but one of the 10 other players who are entering the organised retail space will not be..

    In the end – you will use the kiranas only to buy bread and butter and milk and eggs..

    Kiranas will survive only if you believe India will continue to be medevial in every possible way.

    Comment by Anshu — November 30, 2006 @ 9:43 am

  21. If Indian grocery stores can flourish in US,there is no reason why they ca’nt survive Walmart’s competition in India

    http://www.asiastore.org/1580631436.html

    Walmart is China’s seven’th largest export trading partner and there are reports of Walmart’s Chinese suppliers relocating to India

    http://www.siliconindia.com/shownewsdata.asp?newsno=28190

    Many items on Walmart’s merchandise list,like wooden and steel furniture and fixture are reserved for SME sector in India.It has it’s own problems,like lack of instituitional finance,access to private equity.So Walmart’s entry in retailing is going to have much more profound impact on Indian industry

    Comment by con man — November 30, 2006 @ 11:06 am

  22. 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 , the Spar-RK Foods and Shoprite .

    Thanks – would love to hear your thoughts on this.

    PS – Guys, at Indian Economy Blog – can you have a “preview comment” option please ? just a thought. Thanks.

    Comment by Bombay Addict — November 30, 2006 @ 2:53 pm

  23. Sorry for inflicting so many typos. But I’ll correct this one thing – there are 3 tie-ups I referred to in the para above “thanks” whose links didn’t come right. These are
    1. Tata-Croma – Link here
    2. Spar-RK Foods – Link here
    3. Shoprite – Link here

    Comment by Bombay Addict — November 30, 2006 @ 2:59 pm

  24. Gaurav,
    Oh yeah, no doubt about the fact that the ‘redder’ pinch will be felt by Big Bazaar etc, kind of like Linux eating into Mac’s market not Windows.

    Comment by PH — November 30, 2006 @ 10:27 pm

  25. Anshu, Bombay_Addict, I guess you guys are right. Kiranas won’t exactly “rule”. But they will live for sure. And yes, I am a free market supporter. I do not believe there should be any caps on FDI at all, retail or otherwise.

    Comment by Gaurav — December 1, 2006 @ 7:57 am

  26. Is Walmart just a grocery supermarket?

    Comment by Srikanth — December 1, 2006 @ 9:23 am

  27. Great post, Gaurav. The neighborhood Kirana guy will always rule. As it is, the margins in retailing is arene’t bigger than 4%.

    Comment by Pramit Singh — December 1, 2006 @ 1:22 pm

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    Pingback by ?????? - Gilli » Wal Mart in India — December 1, 2006 @ 6:59 pm

  29. The entry of walmart will certainly shake up the Indian retail scene and the Indian baniya. And the change is going to be good for the Indian consumer and the Indian economy.
    Firstly, this will help the local kirana store to consolidate.The more efficient will survive. Most purchases at these kirana stores will be top-up purchases. This will make it essential for the kirana store to stock wide and not deep. The small local std booth/cola store/kirana store and three packets of surf will have to move on.
    Secondly, the huge hidden un-employement and underemployment will be exposed. Forcing the economy to move from the traditional trading overload to true entrepreneurial pursuits. So chache ka beta needs to get an education or a brilliant idea to survive. He does not get an easy walk in at the uncle\’s store. In the long run the economy gains as more people are forced to work.
    Thirdly, not all local retailers are the customers best friends- some are rude, corrupt(ever thought what happened to the one for one scheme on your favourite hair oil), over-priced, underweighing rogues.So the only way left to these guys will be to shape up or ship out.Either way the consumer like you and I are the gainers.
    Fourthly, as the big box retailers scale up they will drive the prices down leading to great consumer gains.
    Services like home delivery and the like are not so difficult to execute. As a matter of fact that might be easier for a big player to execute rather than the baniya.imagine a loyalty card and you order your ration online with free home delivery. Takes the locational question out for the retailer. Giving the retailer the power to penetrate areas not in its geographic foot-print. It could be even an opportunity for small logistics companies that handle store to consumer logistics for more than one retailer. an uniquely Indian business opportunity.
    Fifthly, the chache ka beta gets a job at the big retailer and has a career, atleast a possibility for progression. Imagine the numer of jobs that this will create.
    I am not saying that all this will happen just because Walmart has come to India. This will happen because the Indian consumer will demand more and will get it. Whether Walmart will be able to deliver or whether an Indian retailer will do so remains to be seen. And, India is not Korea- we have a huge population and area to -SCALE UP. The other challange that the big retailers need to address is – how to personalise their services.
    Kirana stores might as well wake up and wake up fast. They can still to a David to the Goliath but they need to put the consumer ahead of themselves to do so.

    Comment by gaurav — December 2, 2006 @ 1:07 pm

  30. I don’t want to sound like a conspiracy theorist, but I can’t help in thinking about the volte face of the govt. in allowing Wal-Mart into India. This is all done after Ambani had a headstart. Looks like the control-permot raj days where the licences and the permits were handed out as favours are not over just yet.

    Comment by y v sai madhav — December 3, 2006 @ 9:14 am

  31. From the way in which India is growing and its immense size, there is enough for everybody. Wal-Mart mainly works for the 200 million lower to middle class families in the US and their strength is cheap price, while aesthetic and slightly more quality buyers prefer elsewhere (ToysRus, Tiffany, Safeway, JC Penny, Nike & Banana Republic outlets). So, Wal-Mart can grow significantly in a cost-conscious desi mindset and as people are getting more mobile and are not getting to attached to a single locality they no longer be tied to the dull 50sq pt, paper-packaging local shopkeeprers.

    My guess is that 200 million strong Middle class in India will follow Wal-Mart & organized retail, while 50 million might go for more speciality stores, and 800 million of the poor and lower-middle class will stay with the local shopkeepers in the next decade. If each chain could get a small fraction of the 200 million prospective buyer class they are in for a big booty.

    Comment by Balaji Viswanathan — December 4, 2006 @ 12:51 pm

  32. “My guess is that 200 million strong Middle class in India will follow Wal-Mart & organized retail, while 50 million might go for more speciality stores, and 800 million of the poor and lower-middle class will stay with the local shopkeepers in the next decade.”

    I have a problem with the 200 million number. I think Wal-Mart’s target market in India is middle to upper middle class only in the big cities, and only for destination shopping, which means a much smaller share of the consumer wallet than in the US.

    I have seen how retail has changed in the 34 years I have lived in the US. Wal-Mart’s widesweeping impact on the retail sector in the US is undeniable. Wal-Mart has virtually wiped out the retailers in small towns of America, with the possible exception of those retailers whose transactions usually include a strong service and expertise component, such as pharmacists, specialized grocers, repair shops, hardware stores. But gone are the purveyors of appliances, furniture, clothing, household items, books, CD’s and a thousand other consumer goods from the small towns of America. The “Main Street,” a cultural icon representing the idyllic life of small town America, is officially dead.

    Now, the above scenario is not likely to be replicated in the huge sub-metro or semi-rural markets of India for one simple reason – lack of mobility. For a Wal-Mart to wipe out the retail market in a 20 to 30 mile radius, all its customers must have cars and the area must have good roads so that the customers can pop into Wal-Mart at whim to pick up a TV or a couple of shirts or personal toiletry. Since Wal-Mart cannot cost justify its typically large stores in every town, its stores will have to be regional. The travel time within a “region” in India could be half a day each way.

    The second safety net in the Indian sub-metro retail market is the weekly “haat.” Not just an Indian phenomenon, the weekly or daily “market” is a strong retail presence in most developing economies and all not-so-developing ones. From Bogota to Mexico, from Nairobi to Instanbul, the “market” is a Wal-Mart-like supply chain optimizer and a ruthless elminator of the middle-man’s mark-up and the point-of-sale overheads. I have seen how little impact Wal-Mart type supercenters have had in places such as Trinidad and Mexico. It is entirely true that Wal-Mart type discounters are niche marketers in those countries, not the mainstream retailers.

    So where will Wal-Mart hit the hardest in India? My guess is that it will be in the top 10 or 15 metros where a typical Wal-Mart sized store can draw upon a market base of a million people living within an easy commute, which in a country where personal automobiles are still scarce, is less than a 10-mile radius. So NCR may eventually have 5 Wal-Marts, Mumbai the same and so on.

    Would the metro Wal-Marts ever add up to a number that could significantly alter the nature of retailing in India? From what I read on this blog once, the metro is still a small portion of the overall Indian retail market, and Wal-Mart will probably have a portion of that small portion! You do the math.

    Most importantly, the metro Wal-Marts will not penetrate as deeply into the household spending as they do in the US. Obviously, they will not get the small-ticket, frequent purchases as they do in the US. How many people will burn Rs. 100 worth of gas to buy Rs. 500 worth of odds and ends? And those using autos and buses, which is the vast majority, are not going to spend the extra time and money on destination shopping. They will walk to the corner store.

    Assuming that Wal-Mart in India remains a discount version of the shopping mall, a strictly metro phenomenon, it will have no bigger impact than the malls have had.

    In fact, Wal-Mart may be a much needed positive influence on Indian retailers. Its credo of service, set pricing, refund policy and just the consumer experience it provides may raise the bar for other big retailers in the metros. In that sense, globalization is good, isn’s it?

    Comment by Sarat — December 5, 2006 @ 2:48 am

  33. @Sarat
    I agree that Wal-Mart cant cause significant dent in Rural India. But, in the top 50 cities it would definitely have an impact. I doubt whether Walmart will go headlong with the supercenters as we have here. If it is innovative, it will opt-in for slightly smaller stores and more services. I also have a doubt whether it can easily penetrate the upper class in the long run. Even many of us have stopped goin 2 Wal-Mart to buy the cheap Chinese stuff and the use&through T-shirts. Over a period, the quality and prestige conscious upper class will definitely move for niche stores.

    And in the next decade, transportation systems would have to developed a great deal (like the Delhi metro), if we could kick out guys like Dewa Gowda & Co and if the current trends continue, India will have the same sub-urbian sprawl as we have here.

    So, I envisage organized retail in India that is less of superstores and warehouses, but more of big retail centers in the cities that would require lesser transportation. Also, it would center mainly on grocery and farm products, and might not do well in manufactured goods. In this aspect, I believe Reliance could achieve a great success goin by their plan with Reliance Fresh.

    It would also increase the efficiency and so will bring greater benefit to rural poor who supply the food items. If we keep our politicians shut, this will open the long-awaited Agricultural reform and revolution.

    Comment by Balaji Viswanathan — December 5, 2006 @ 6:00 am

  34. Food retailing in Asia will never completely imitate the West, or more precisely, North America. There is a very strong cultural bias in Asia towards buying food daily. Japan, despite its western style retailing, is a good example. To some extent, so is Europe. The supermarket is still not as widespread even in Europe as it is in North America.

    Asian households do not buy and inventory a week’s worth of fresh foods, and their daily purchasing pattern does not bode well for organized food retailing through supermarkets. Yes, the kiranas and baniyas and sabjiwallahs and kasai’s will still rule.

    Comment by Sarat — December 5, 2006 @ 4:31 pm

  35. They dont need to buy a week’s worth of foods. They could buy it every 2 days, from the organized retail instead of rotting stuff from sabjhiwallas. If you look in detail, Indian retail plans are goin to be more in urban areas (they could go as often as they can), unlike the suburbian focus of US superstores. Who said things have to be the same as in US? Given the entrepreneurial culture and innovation potential, Indian organized retail will definitely do well not to imitate too much of our model.

    Comment by Balaji Viswanathan — December 6, 2006 @ 2:46 am

  36. [...] This is just a short piece to follow-up on Gaurav’s very to the point post last week on this topic (and the interesting debate in comments). Now Prashant sent round this link to a WSJ article by Salil Tripathi which I think bears reading and thinking about. [...]

    Pingback by The Indian Economy Blog » Wal-Mart and India — December 6, 2006 @ 7:20 pm

  37. I do not agree with much with Gaurav here. I think the USP of retailers is one can get all the things under one roof and at an unbeatable price. Mind you the retailers are not just competing eith Kirana wala but even with dudhwala, bhajiwala and even chappalwala.
    i find that a Big Bazzar at a place like Sangli is thriving. And Sangli is definitely not an IT city. The trick is where u place your store. The Store at that place is in multiplex area. People go to a movie at least 2 times a month and same time buy the grocery. here people who dont have cars also go there because of the unbeatable offers at the store.
    The Kirana guy will not be able to match it. And now the count down begins to the Kirana gharana (not the music one!)

    Comment by Vishal — December 7, 2006 @ 2:37 pm

  38. Is this a quick entry strategy by Walmart. the moment FDI in retail sector is permitted will they buy out mittal. they would have everything place.

    Comment by Pramod P Thevannoor — December 11, 2006 @ 10:55 pm

  39. Great ideas.Fully agree that India is too complex a country that one large or a couple of retailers can take over.Even if the upper middle class stop buying from the neigbhour- hood stores ,still there are millions who donot have cars and will continue to buy groceries in small quantities .
    One very important and interesting aspect of the whole retail story is that our Kirana stores are also changing.There is a smile in their faces ,become too polite overnight ,ready to deliver any quantity at home.Many shops are being renovated with new tiles on the floor and walls are getting new colour.Earlier everything was dumped on the floor with cockroaches and rats playing around.Competition will force everyone to innovate and a few who refuse to change may have to closedown.
    Shashi Panikar http://www.arth-manthan.com, E mail :learneconomics@gmail.com

    Comment by Shashi Panikar — December 13, 2006 @ 7:38 pm

  40. just test soft-a :))))

    Comment by Vaha — December 21, 2006 @ 11:36 pm

  41. i am sure that the retail cant target chhapalwala forget about about kiran stores.For all the four reasons mentioned i love kirans stores for example u want to buy a cool drink u cant walk up to retail store to buy a cool drink but kirana walla will only help some times with out keeping deposit for the bottle we are taking he will give the cool drink bottle because he knows us and most probably if he dont know us and he is a very old kirana wala. with our family reference he will give us credit.

    Comment by kareem — January 31, 2007 @ 10:39 pm

  42. I think the author has some grudge against communists – on one hand he :”cares” for the bargardars of bengal , on other hand, he thinks kirana shops will survive despite walmart invasion – my question to him – dont you think the Tata factory will generate employment and a quality of lifestyle better than what the farmers can thnk of? sorry sir, but yoiu are double speaking – on one hand , you want walmart to thrive,at the cost of neighbourhood retail, on other hand, you want poor landless farmers to remail like that for ages

    Comment by Kaushik — February 2, 2007 @ 9:04 am

  43. > a stone’s throw away

    accessibility / convenience / location is one strong point in favor of the kirana’s survival.

    > paltry as a loaf of bread

    and the kirana will serve to provide only ‘top-up’ buys, and not the weekend/monthly grocery purchases.

    > there is the trust about all the items being fresh and reasonably priced

    trust, the years of relation with the kirana surely does go in favor of the kirana store, however, prices start becoming a factor soon enough. i have seen our kirana being swapped by periodic buys from the ‘new low price shop’ in our locality.

    > there is free home delivery

    offered by most ‘low price shops’ in our locality.

    > there is credit.

    a valid point. however i feel this need is obviated by use of credit cards to pay at the low price shop..

    another aspect of the ‘selling from warehouse’ model (which removes the retailer from the supply chain) is that it relaxes the ~10% margin, apart from the worries of managing the retailers, pop display mgt, spillage and the likes.

    besides, with good IT support, larger scales (inventory, sales) become manageable (as compared to paper based manual stock/book keeping), IT helps reduce operational costs – the help is seen more at larger scales.

    also consider the buying experience – we may question if this is ‘necessary’ for buying regular groceries – which is substantially different from that at a kirana store.

    tag that along with branding for regular groceries (like some ‘sadhu’ basmati that was popular with some of my friends) and you can build in the ‘trust’ factor soon enough. perhaps we can see this with Reliance Fresh soon enough. spencers at pune has their ‘value ..’ tagged moong daal, rice et al..

    ..

    an interesting pattern observed in my locality – before the subiksha chain jumped in (and much after the fair price sahakari shop languished cos of their own ineptitude!) – was of the larger kirana owner setting up a ‘low price shop’ selling stuff below MRP. he drew crowds, and does that till date. includes free home delivery, ordering over phone (HLL does this in Bombay, forgot the name)

    i feel the way ahead for the kirana store is to either size up or sell off!

    Comment by svp — February 2, 2007 @ 10:22 am

  44. No matter who is coming in India to open Tesco or Asda type stores, I am going to buy from my local kirana shop. I do the same while Iam in UK. Down with these giant evils.

    Comment by Manish Mittal — February 8, 2007 @ 10:25 pm

  45. What about quality, especially in case of fresh and packed foods? Godrej’s nature’s basket for instance, despite whatever it boasts of has been consistently supplying poor quality vegetables and fruits. The imported fruits are almost always rotten. And for some reason best known to the company, it’s packaged `frozen’ chicken is not frozen in the nature’s basket stores, emitting a terrible stink in the entire store. So, we stand in long queues to pay for substandard goods.
    Big Bazaar – big bargains, etc. What about the quality and variety of goods? Not there.
    Maybe our kirana stores and roadside vegetable vendors do not have air-conditioned luxury, but at least the quality is assured. And our age-old neighbourhood kirana shops stock all brands, not so with the branded outlets. All food brands swear by the kirana stores which have been instrumental in taking the latest launches to a large consumer base very effectively. Branded outlets cannot achieve this.

    Comment by Raj — March 7, 2007 @ 5:21 pm

  46. posting after a lot of elapsed on this particular blog!!!!!!!!

    Just an anecdotal thing and my own conclusions from them….

    I live in the centre of hyderabad and had food world , trinetra, neighbouring kirana wallahs just a stone throw away. The spencer’s hyper market(a 70% version of of small-town walmart) is 3 km away. initially when the supermarkets came, for say 6 months, we bought many stuffs there. Then the cool down started, now we dont buy anything from food world (trinethra is a mighty mighty flop in our area) and buy mostly from neighbouring kirana, reason : food world and trinetra are far more costly for our daily stuff!!!!!!!!!! gulp!!! thats the truth! The unbranded rice, pulses are far more cheaper and more quality wise assuring than these brands.

    The hyper market offers discounts on everything, discount is 5 ps on 30 rs stuff!! Infact we go to the hyper market mainly for window shopping(its nice to have ac running in hot weather, when its not on your bill) or when we have some heavy shopping to do, worth more than 3k. We only buy stuff from it, when there are heavy discounts.

    Reliance fresh is more than 15 km from my place, so not worth the petrol for daily produce. I just went there twice, once i saw the stuff real fresh and good, next time i saw they were rotting and over priced. Immediatly i came to the conclusion nothing meets the mandi in giving everyday fresh stuff. It was simply a complete US version without making the right Indian changes. I dont know how the backend stuff of it is really going, they were also the initial days. I dont know whether they have fixed it right now.

    An interesting thesis can be done as how these mandis operate! From what i saw, they have an ingenious way of managing waste. the produce comes in lorries to big mandi, where they are sold to the local mandis. Now these mandis will hold the stock for max two days and simply sells them to the push carts. These push carts gather all the varieties from many sellers in the local mandis and then they go to selling all this combined stuff from one house to another. Interestingly all these transactions take place only late in the night, which essentially means no time is wasted in the time for the actual buyer. This stuff will work when there are many independent houses. But the affect of flats/apartments on the last leg of this is, i really dont know!! But they some how seem to have accomodated even this, the top floor wali memsaab simply gives a basket with a rope attached, all the things she wants to buy, she will shout from top and the transaction takes place (includes bargaining).

    Comment by Kavi — June 25, 2007 @ 1:55 pm

  47. In the Indian context, the whole retail revolution seems to be just overhyped BS. It has dovetailed very nicely with the Real Estate boom and developers have (believe me) sold flats at exporbitant prices because “we will soon have a hypermarket /mall /supermarket here in the complex, so please buy this flat for Rs. 5000/- a sq feet!” My own experience with Foodland, which was earlier Spar (Spar have bitten the dust, they made just Euro 2000/- TOTAL profit in their 2-3 years of operation here)is this. My wife wanted to buy mangoes, she visited the Foodland outlet nearby, she was told the price of EACH mango was Rs. 65/-. She made an about turn and came out. Outside the airconditioned Foodland building was a “Bhaiya” (a native of UP, known colloquially as Bhaiya here) who was selling better Alfonso mangoes at…Rs. 250 a dozen! Of course she bought it from the Bhaiya. Then I started thinking..who pays for the sky high lease rentals for these huge buildings of the malls, the airconditioning, the suave staff, the electronic systems, etc. Obviously the starry eyed customer. This will last for only some time. Once she realizes that she (or he) is actually paying for all this fancy cost she will dump the mall for the Bhaiya. Bust goes “organized retail”.
    Just a few weeks back Reliance Retail announced that “they have been making losses in selling only vegetables and therefore they will also sell groceries”
    Duh! It was a no brainer from the beginning! How can you compete with a vegetable seller on the road, who has no fixed costs to speak of, no taxes, no inventory, no power bills, no airconditioning,etc? Whereas Reliance Fresh has to buy/lease really expensive buildings, pay exorbitant salaries to the overpriced “retail experts”, pay bills for AC, etc. Even Reliance cannot.

    Comment by Sane Voice — June 25, 2007 @ 9:29 pm

  48. I agree with sanevoice above. I have seen only little of US. My impressions on retail over there and the wrong lessons that seem to have been learnt from them by our Indian retailers. I restrict my self to the eatables in this comment.

    First AC is a COMPULSION in US. You cant survive without it. Every dealing has to be needs a closed room area with an ac if it has to be year round. So even the smallest retailer needs a built up space, In India, the ac is not a compulsion. (it is not a luxury but also not a compulsion). thus the whole ac thing is an avoidable expense.

    Also there is a difference of culture between them and us. Our cooking styles and needs are different. Their style is eating mostly eating bread, which by default has to be pre made. Our eating styles require them to make them. The ready made pre mixes of flour in the supermarket are half waste of time, because they only reduce the overall cooking effort by only max 20%. The newly drdo developed techniques in this aspect may be helpful(for north indian foods), but at the present moment they are costly and also require a costlier storing approach. They wouldnt make the cut.

    Probably pre-cut vegetables(I havent yet seen them in India) might be a good starting point. reducing the cooking time considerably atleast for the newly single employees. Probably installing a cutting machine which will cut all vegetables to any shape(to cater for different tastes) at the counters will go in a major way (hey, patent pending for this idea :) ).

    Even in US, walmart did not attack the vegetable produce at first, it stabilized itself in the fmcg and then latched on to this. Even now, it is not considered a good source and people prefer the local stores for the produce.

    I am in the it industry. So i know the limits of it. IT can only act as an enabler here, nothing more nothing less.

    Also I agree with the observation of Shashi Panicker. The kirana stores have definitely tightened their belts.

    For the business houses to dislodge the local mandi wala, understanding how they operate is very important, without which they will be only nominally successfull, instead of making a full breach. My understanding is that unfortunately none of them (including reliance/walmart) seem to have got that understanding and so they seem to be aiming only for the top 5% instead of 30%.

    Comment by Kavi — June 26, 2007 @ 10:03 am

  49. hey precut vegetables are very much here , and surprisingly aaloo, pyaz and chawal , aata is cheaper than the vendors on road . I dont know how this is happening but , i am seeing this right in the heart of Mumbai in Goregaon , in Food bazaar.

    Comment by priyank — June 26, 2007 @ 3:43 pm

  50. Sorry, I didnt encounter the pre-cut vegetables. (therefore was the expression “I didnt see” before it.

    I have a market right next to my door step, so those rates almost i know byheart, i just have to take a stroll and i get all of them. I only said that even reliance fresh was not “always” cheaper than the market price.

    Thanks for the information on pre-cut priyank

    Comment by kavi — June 27, 2007 @ 2:29 pm

  51. We had the pre cut vegetables about two years back here, but it failed to take off. I do not know the reason, but actually I suspect the typical Indian consumer somehow judged it to be much more expensive. (Price wise it is, because while cutting you have to remove a lot of parts that we don’t use plus the labor cost). Secondly I think the vegetables don’t last long after cytting because the juices dry up. I don’t know…

    Comment by Sane Voice — June 27, 2007 @ 8:39 pm

  52. The smile which I get in kirana stores by their owners, may not be availble in hyper markets.

    I prfer kirana stores for many reasons.

    Comment by Vasu — July 10, 2007 @ 8:48 pm

  53. New to this blog guys………..

    But looks as if we have some serious retail bloggers here.

    My question:
    5.How should Foodworld approach high-cost metros like Bombay and Delhi in its rollout plan? Or should it ignore them completely

    Comment by Shryansh — October 20, 2007 @ 9:06 pm

  54. [...] Earlier posts on India’s retail industry — Protect The Chain But At What Cost Kirana Will Still Rule The Better, Faster Road To Development The Wrong Behind A Nation Of Self-Employed More Bang For the [...]

    Pingback by The Indian Economy Blog » India’s Retail Revolution: Question 1 — December 26, 2007 @ 8:06 am

  55. Hi Guys,

    I think whatever the size (Big Retail or Kirana) it will survive in future only if they add value to the producer or consumer or the product.

    Regarding your points
    Kirana is just a stone’s throw away – I agree with this

    Trust – Although this factor makes a big difference we cannot differentiate Big Retail vs Kirana on this factor, people trust Big Bazaar and that is why they shop in droves when offered a steal. If you dont trust Big Bazaar you would not see many shoppers in these stores.

    Free home delivery – Big Retail does this, for example if you buy merchandise on the website they will deliver the merchandise at your home. It is only a matter of time and once a good competitor to Pantaloon springs up they will provide these kind of value added services. Only when the local kirana store can match the price of Big Retail these valued added services come into play.

    Credit: Credit is a double edged sword. The local kirana store in some cases loose the credit extended just because the customer relocates or stops coming to the shop. Big Retail allows credit cards and its just a matter of time that everybody has credit extended, and kirana cant do it in many cases. Visit a STAPLES store in Bangalore and you have an emi option for all the laptops by future money

    Like once Kishore Biyani was quoted saying “If you have money to spend, you should spend at our stores; if you have less money, we can give you a loan; if you have more money, please invest with us” – I dont think credit is not a big factor in differentiating Big Retail and Kirana.

    Value can be added in many different and innovative ways to the producer or consumer or the product. A lot of middlemen are cutting a decent profit by just staying in the middle, eliminating them adds value which is being done by Big Retail, but when a Kirana or a small store is adding value to the consumer by packaging what all he needs before he comes to the shop or stocking what a small section of the people need, they are adding value to the consumer and no Retailer will be able to displace them.

    Regards,
    Ranjit

    Comment by Ranjit kumar — January 12, 2008 @ 8:07 pm

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