Have the Supermarkets killed the Small Kirana Stores?

chillibreeze writer — Sugandha Agrawal

None of us are likely to get up at 7am and find that we’ve run out of a shirt to wear or paint to cover our walls! Yet, at some point or other, each one of us has probably faced the experience of running out of bread or milk for breakfast.

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The role played by FMCG products in our lives is vastly different from that of the retail business. FMCG products constantly need to come up with unique, innovative solutions to satisfy the customer’s demand.

In India, retail has been getting cheaper and more competitive. Departmental and company-owned stores have been entering into almost every sector of retail, turning the typical manufacturer to wholesaler and wholesaler to retailer. With the organized players moving in and running the show, the FMCG sector, which has thus far been the most organized and valuable sector of the Indian retail scene, could stand to lose.

FMCG in India accounts for 31% of the total retail and just 3%of it was organized until the year 2006. In terms of turnover, it shows a 10% annual growth (second highest in retail segment) every year.

In such cases, where the market is so appealing to big retail players like Tata and Reliance, as well as to manufacturers like ITC, the kirana stores have good reason to worry about their position in the market.

In order to discuss the basis of survival for supermarkets and kirana stores, we first need to understand the type and nature of purchases. Products can be widely divided into four different categories:

Unique situation products – products that are not planned or stocked, but are required only in cases of sudden demand.
Low shelf life – products that are perishable in nature and can be stocked up to a maximum of two days.
Planned grocery – products that are a must in a family; they are planned and foreseen in terms of consumption, and are usually bought in huge quantities.
High valued product – products that are expensive and well considered before purchase.

Taking stock of these categories, it has been found that people usually buy unique situation products and low shelf-life products from the local kirana, while planned grocery and high-value products are typically purchased in supermarkets that offer better bargains and quality assurance.

The features of a kirana and supermarket are quite different. The following pointers explain to an extent why both the kirana and the supermarket are essential to the Indian scenario:

Kirana stores are owned and operated on a small scale, usually in a space of 500sq.ft. or less. These places are easily available within residential localities. However, for a supermarket to operate, a minimum of 2000 sq. ft. would be required, and usually, so much space would usually be found in commercial localities.
Supermarkets have the benefit of economies of scale over kirana stores.
Kirana stores are operated by the owners themselves and thus provide the benefit of low operational costs.
Supermarkets are capable of eliminating the wholesalers from the chain and can provide benefits of saved margins.
Kirana stores target a much smaller market than supermarkets and thus, can be more responsive in terms of their exclusive demands.
Supermarkets often offer more variety to customers. Moreover, it is likely to receive the newly launched products earlier than kirana stores.
Kirana stores are likely to be in the immediate locality and thus have a better understanding of customer preferences.
Supermarkets often offer the best bargains, and experts from the company explain the usage and care of a particular product to its potential buyers.
Kirana stores are more likely to provide services like free home delivery.
Supermarkets have big names backing them; moreover they have stronger advertising, probably on national or state level. At the same time, there have been instances of kiranas selling at prices higher than the MRP and tampering with the quantity of loose products.
Each of us knows our kirana store for a long time, probably from our birth or so. Thus, the customer-trust ratio is very high. The billing is also very fast when compared to the supermarket.

As Indian FMCG customers, none of us can think of running to the supermarket every now and then. Nor can we think of bargaining over every small thing at the local kirana store.

Moreover, there are times when we’d like to stick to our preferred brand of bread and other times, when we’d like to try something new.

We may not like waiting for our billing procedures, but then again, neither do we relish keeping a hawk’s eye on the kirana store’s measurement scale to ensure that we are not cheated!

At the end of the day, both kiranas and supermarkets are here to stay. And given the unique demands of the Indian market and its 1 billion plus customers, both of them can co-exist peacefully by capitalizing on their own unique strengths.

Chillibreeze's disclaimer: The views and opinions expressed in this article are those of the author(s) and do not reflect the views of Chillibreeze as a company. Chillibreeze has a strict anti-plagiarism policy. Please contact us to report any copyright issues related to this article.

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—About our writer:

Sugandha says, "As an eternal learner, I love to read anything I can lay my eyes upon...I am a painter, a dreamer and a traveller who loves to put her dream and experiences in words.

To sum up I quote Dr. Robin S. Sharma
"I''ve had good seasons and some deeply painful ones.
I've made some spectacularly good choices
and some outrageously bad mistakes.
I'm very human- A WORK IN PROGRESS"

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