Don't pity the kirana guy, he knows how to fight back

Never underestimate the resilience of the kirana shop owner. Rest assured, competition won’t kill him.

The hullabaloo over 51 percent FDI in multi-brand retail is a bit off-focus. The argument is that it would bring global players with deep pockets such as Walmart, Carrefour and Tesco into the picture and subsequently drive the neighbourhood mom-and-pop stores out of the market.

The apprehension was similar, though far less intense, when the country went for 51 percent FDI in single-brand retail in 2006. The local players - there are more than 14 million of different shapes and sizes -have not gone out market; they have instead, turned smarter and better.

“If FDI in retail sector is allowed, small traders will lose their jobs as their products or services will not be able to compete with foreign traders,” said senior BJP leader Murli Manohar Joshi. Both the contentions don’t wash.

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[caption id=“attachment_139764” align=“alignleft” width=“380” caption=“Multinationals like Walmart have been hoping to enter the lucrative Indian market. Getty Images”]  [/caption]

Despite the emergence of domestic organised retail activity kirana shops at street corners still account for 90 percent of $590 billion retail trade in the country. And there’s no possibility that they could be replaced easily.

“Despite the rise of the modern trade in the country, the traditional ‘kirana’ store too continues to be strong. The main factors driving this strength are the convenience of access, availability of home delivery, and trusted relationships between the shopper and local grocer,” says the latest Nielsen Shopper Trend India Report.

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On whether they could stand in competition with foreign traders, it could be said that they face the same threat from the organised retail sector in the country - and so far, they have managed to hold their own, remarkably well. According to the Nielsen study, shoppers also perceive that they get better price value from their local grocer.

No competition can take away the advantages kirana stores enjoy. Proximity is one of them. Where do you rush for a shaving blade which you need fast to get ready for office? Where do you run to when you realise that you need a packet of milk immediately? To the kirana store round the corner, of course.

There’s no standing in the queue and no need to carry the money immediately too. The air of informality is something special to our kirana stores. The manufactured suaveness of the supermarket cannot just compete with it.

Customer loyalty is something the kirana store can always bank on - the small customer base and scope for personal interaction ensures that. Supermarkets will never have that unique benefit.

“The kirana stores have a lot of advantages vis-a-vis the established firms. From the convenience standpoint, kirana stores are not going away at all, actually. To the extent that they help you take care of the daily needs, that’s an opportunity that will still be there for the kirana store,” Rajiv Lal, Stanley Roth, Senior Professor of Retailing at Harvard Business School, told DNA.

“…It is not easy to compete to with the kirana stores. Just because you are a big guy with a lot of money, it doesn’t mean that you can compete. Kirana stores have a lot of benefits that established retailers don’t have - first of all, location. What rents do they pay versus what established companies have to pay? Employees, same story,” he added.

And they are keeping up with the times and innovating too. There’s quick home delivery (the amount of purchase is not important here), you can place your order on the phone and yes, the shop owner is trying to make the shelves look presentable too.

So don’t worry about the kirana shops. They are good enough to take care of themselves. Just allow investments to come in - they would in all probablity make neighbourhood shops still smarter and more efficient.