One kirana store?s tale, and how it sets an example for all kiranas? survival against organised retail
R Vishvesh
The liberalisation of FDI in retail has been hailed in many quarters?by the ruling UPA government itself, the outgoing chief justice of India, some of the state governments, MNCs, investors wanting to enter this business, and just about everyone else who has an opinion to express. It has also been acclaimed by analysts, and the stock markets have gone into a tizzy with the BSE Sensex touching new highs in the post-announcement euphoria. But simultaneously, the FDI policy pronouncement has also been denounced by the Opposition parties, some of the allies themselves, and a section of the Indian populace, notably the trading community, who apprehend that FDI in retail will kill the kirana trade and drive it into extinction. There is a lurking fear that this will throw thousands of people in the kirana trade out of jobs. This article seeks to examine only this aspect of the misgivings against FDI in retail and suggests a model for the survival, nay revival, or even rejuvenation of the kirana trade.
In one of the residential colonies of Chennai, where predominantly the middle and lower middle class resides, there is a kirana shop, some three decades in existence, called Shakti Stores. The store deals essentially in food and provisions, toiletries, confectionaries and articles of day-to-day use?in short, a regular, run-of-the-mill kirana shop. The establishment is owned by a Chettiar family, and Chettiars, as we all know, are a very strong Southern trading community with trading roots dating back several centuries in history. Let us now take a look at Shakti Store?s (SS for short) unique selling propositions.
To start with, all articles and packaged goods sold at SS are invariably below the maximum retail price (MRP) printed on the product. A popular brand of toothpaste marked R45 a tube, will cost you about R41 at SS. Similarly a bottle of ketchup or jam is sold at least 5-10% below the price tag. It doesn?t matter what you buy at SS, it is sure to be much lower than what it says on the pack. This may sound surprising to a resident of Mumbai or Delhi who may have never bought an article below its MRP except at Sahakari Bhandar or Super Bazaar, and there too, only at a token discount. Despite diligent survey, I?ve yet to come across better discounts elsewhere than at SS. On being queried, the venerable Chettiar at the counter nonchalantly replied: ?Sir, from the commission I get from the wholesaler, I endeavour to pass on the maximum possible to our customers after taking into account our costs and a nominal profit. I strongly believe in maximising turnover.? The discount policy followed by SS has been adopted/copied by other kiranas in the area in varying degrees with varying success, but SS has had the first-mover advantage and thrives on the enormous goodwill it has built up over the years.
SS?s second USP is free home delivery. During the first week of the month, there is a mad rush at the shop as everyone within a range of 2 km throng this establishment to stock up. My mother, who has been a client of SS for years, has only to ring up and dictate her list or send it across, and it is home-delivered within the hour by a cheerful lad on a bicycle! Home delivery is never refused even if the purchase is a mere R100. SS?s delivery boys and other staff are incidentally jobless youth brought from the owners? village and given jobs at the store, with meals and accommodation taken care of. True, some of them leave for greener pastures after a few years of experience, but invariably, more join from the same village.
SS gives credit! Invariably after the 15th of the month, most middle-class housewives eagerly await the next pay packet of their husbands and are reluctant to make purchases. But SS has resolved this problem too. A regular customer has only to say ?put it on my account? and SS promptly gives her credit without even a signature. It all goes down in the kachcha notebook which the proprietor maintains. ?Don?t you run up bad debts,? I once asked out of curiosity. The old shop-owner appeared shocked. ?They always settle on pay day,? he said very casually.
SS?s owners haven?t invested in expensive CRM software, but their brand of customer relationship management is unique. They don?t know most of their customers by name but they know them all by sight and where they live i.e. by their house number or door number. ?Please attend to D-3 madam?, or ?quickly attend to K-14 Sir? would be the refrain and their staff will immediately smile at you and take your order.
Some time ago, one of the leading Indian retailers set up shop exactly opposite SS. With a shop floor triple the area of SS, the brightly-lit store, with its delightful array of merchandise and smartly-dressed shop girls, looked inviting. Many in the area, especially the younger generation, started visiting the new supermarket and the sceptics immediately predicted doomsday for SS. But a year down the line, when I happened to visit Chennai last week, I found the crowd at SS larger than ever! Amazed, I entered the old establishment to find that SS has redesigned the store from the old counter format to a self-service format with shopping baskets et al! On some of the shelves, I even found some products with their own brand or packaged especially for SS. A point of sale (POS) terminal was there now at the counter and the rustic gentleman at the ?check-out? was swiping credit and debit cards at will, from the young and old alike.
Not wanting to miss an opportunity to chat with the old man, I asked him if he feared the threat of the supermarket across the road. The septuagenarian cheerfully replied: ?Sir, our regular client?le will never leave us as we continue to give them what they want. I also keep a tab on the prices the supermarket and others offer by sending my boys to ?check? now and then. Though some of their offerings are below the MRP, they cannot beat us on price or on quality either,? he said confidently. ?All our clients have visited the supermarket at least once, but mostly to buy fruit and vegetables which we don?t stock. Our customers will always continue to support us?they are God to us. With the blessings of all of you, I have opened another store recently,? he concluded.
I was flabbergasted. There was nothing more to say. He had said it all and done it all?right pricing, top quality, customer retention through customer delight, adapting to change and reinventing oneself, studying the competitor, mystery shopping, taking quick corrective action, and above all, recognising that the market is God! Wasn?t there some self-improvement book??What they don?t teach you at Harvard Business School? or something like that? Well, they don?t teach this at our IIMs either!
I warmly shook his hand, wished him the very best and went on my way. As I stepped out of the store, I reckoned that it wouldn?t be very long before Shakti Stores, my friendly neighbourhood retailer, started accepting payments through mobile banking and booking orders over the internet as well!
The author works with a leading public sector bank. Views are personal
