Could you explain? An Empirical Investigation of Unique Aspects of Retailing in India: The Perspective of Consumer Packaged Goods Manufacturers. Working Paper, Indian School of Business. These unique value-added services create superior value for many consumers. FMCG manufacturers should train their sales-force personnel to be more receptive to the needs of the traditional kirana stores. window.mc4wp.listeners.push({ In doing so, the direct benefits through increased sales are obvious. Challenges of Managing Conglomerates: Lessons From the Tata Group. Data Protection Bill: Can it ensure your privacy online? This is to make sure that as many stores as possible may be covered from different locations and information collected is not bi-ased or skewed. Understanding how the intensity of promotions in one category affects that category and other category revenues is important for an effective and profitable promotion campaign. Also, be open to moving little out of the city where the real need for people is and they travel to far off places for purchasing simple daily provisions. A common mistake is to allocate the advertising budget and sales-force personnel based on the size of the city. Salespeople should be trained to offer specialised services to build a better relationship. The promotion in the rural network is through celebrity marketing, with a youthful image (teenage/child actor), catchy jingles on the radio and TV. Third, you often see retailers offering extra price and quantity benefits at the store level like discounts or bundled products. They provide personalised services such as ordering special items/quantities for consumers or allowing purchases on credit. In return, the kirana store owners are paid a commission to ensure the order is picked up or delivered at customer’s homes in time. © 2018 – Indian School of Business (ISB). In your paper, you mention that promotions have both within-category and cross-category effects. Reliance Retail’s e-commerce platform JioMart will soon use Kirana stores as franchise partners to deliver non-perishable grocery items in India, departing from its previous strategy of … Manufacturers can customise their products based on size or packaging. Increasing urbanisation, increasing incomes, and rising aspirations for a better quality of life are reshaping the Indian retail space.Most FMCG manufacturers do not picture the Indian retail landscape this way and often either disproportionately allocate resources depending on the size of the city or extensively focus on strengthening their supply chain and sales infrastructure in large cities rather than building new supply chain and sales infrastructure in the rural areas.Another common mistake most global FMCG manufacturers make in India is to ignore the traditional kirana stores. © 2018 - ISBInsight - Flagship Research Periodical of the Indian School of Business (ISB). Thus, they lose the business in the long run. The traditional kirana stores are here to stay and FMCG manufacturers should not neglect the huge potential of this channel. } Kirana store is the small neighborhood shop in India. Sharad Borle is Associate Professor of Marketing, Jones Graduate School of Business, Rice University. The learning from the developed world cannot be applied directly to the retail industry in the emerging economies. Having said that, kirana stores are easy accessible (open for longer hours than organized retail in most cases), deliver at home at convenient time (saving the buyers time wasted in traffic or long queues at check-out counters) and, of course, friendly service where the buyer and sellers know that it a mutually beneficial long-term relationship (you don’t see new faces every time you walk into an organized retail … FMCG manufacturers should understand, and many of them do, the consumer goodwill and flexibility of traditional kirana channels. They should strategise effectively to incorporate these channels into their mainstream distribution network.Q. India’s 12 million kirana stores are becoming the cornerstone of … The store size of any shop depends on the kind of funds available to a local merchant. To receive Management Briefs in your inbox, and other special content for subscribers, please sign up. forms : { The Indian retail industry has certain key features that make it unique. A large chunk of potential in terms of customer relationship personalisation offered by the traditional kirana channels remains relatively untapped by the FMCG manufacturers. }); About the Interviewer: Walk through a street and you will find more kirana stores than organised retail outlets like Big Bazar or Reliance Fresh.Second, the government regulation requires fast moving consumer goods (FMCG) manufacturers to print the “Maximum Retail Price” or MRP on the package of the product. This strategy makes distribution to each store cheaper, as well as making multiple deliveries per day possible. Online Grocery Shopping in Jalgaon, brought to you by Kiranastore.co.in initiative by Live Media Ventures. He also heads the ISB’s initiative for excellence in media research, The Media Hub. Walk through a street and you will find more kirana stores than organised retail outlets like Big Bazar or Reliance Fresh. Patil, A., Borle, S., Singh, S., 2018. Working Paper, Indian School of Business. Don't always crave for new customers, rather it is important that you have more loyal … Manufacturers can customise their products based on size or packaging. Therefore, a skewed approach focusing primarily on the large cities is no longer justified.About the Researchers:Ashutosh Patil is Assistant Professor of Marketing, Robert J. Trulaske, Sr. College of Business, University of Missouri.Sharad Borle is Associate Professor of Marketing, Jones Graduate School of Business, Rice University.Siddharth Shekhar Singh is Associate Professor of Marketing and Associate Dean – RCI Outreach and Engagement at the Indian School of Business.About the Research:Patil, A., Borle, S., Singh, S., 2018. The wise way to choose your Kirana store location is to go to a shop that is accessible by the larger community. However, a strong traditional channel would provide an indirect benefit as well: it would check the power that large organised retailers have over the manufacturer.Q. Rol-a-Cola can be pushed in the rural market by making it an easily available alternative at each kirana store, through a strong distribution network, by increasing the margin for kirana stores and distributors based on volume of sales. Ace of Club: How Mahindra Holidays & Resorts rode the Covid storm, US startups struggling to hire when times are tough, News by Numbers: How Indian singles look to mingle in 2021, Timeline: Joe Biden, from youngest senator to oldest president. Manufacturers can customise their products based on size or packaging. Posted by Tielman Nieuwoudt. However, with consumer preferences shifting to shopping online or at supermarkets and the rise of modern retailers across Tier I, II and III cities, Kirana store owners are facing the music. Use with the store assets you already have. Kirana stores have understood that they are an all-season business. Determine the reasons behind these things, then use those insights to steer your retail marketing strategy. It will expand the reach of these store by enabling them to cater to a larger area and it will give their customers the convenience to go online or open the app to see the inventory of their nearest store. This creates a win-win for everybody. Many FMCG manufacturers underestimate the cross-category effects when designing promotions and expect that promotions will lead to higher revenues. It provides clear catalogue of products available and gives clear and concise information to buyers to decide on the products they intend to purchase. } Is a focus on organised retail justified on the basis of profitability or volume rationales?The traditional kirana stores are here to stay and FMCG manufacturers should not neglect the huge potential of this channel. These consumers might not be attracted to organised retail stores. They should strategise effectively to incorporate these channels into their mainstream distribution network. As more and more customers are placing orders by phone call, WhatsApp, online … Very rarely would you see Unilever India or a Proctor & Gamble offering a 15% extra for their regular 180ml shampoo. Investors bet big on electric truck startup, Champ, Major, and all the presidents' pets in US history. Click here to see Forbes India's comprehensive coverage on the Covid-19 situation and its impact on life, business and the economy​, [This article has been reproduced with permission from ISBInsight, the research publication of the Indian School of Business, India], For hassle free instant subscription, just give your number and email id and our customer care agent will get in touch with you, Donald Trump exits White House at a lowest approval rating of his team, How 80/20 helped Simba brew the survival keg in 2020. Before looking at fancy retail marketing tactics, start by leveraging the assets you already have. The kirana store owners have taken a lot of effort to keep up with the changing demands of the crisis and managing their day-to-day supplies. Salespeople should be trained to offer specialised services to build a better relationship. Manufacturer-led promotions are relatively infrequent. Understanding how the intensity of promotions in one category affects that category and other category revenues is important for an effective and profitable promotion campaign.Q. This anchors the final retail price for a product.Third, you often see retailers offering extra price and quantity benefits at the store level like discounts or bundled products. Kirana are typically family-owned stores that operate in fixed locations and carry both basic food and non-food items. From Shubman Gill to Rishabh Pant, young turks of India's historic cricket win in Australia. Although this strategy seems reasonable and may have worked in the past, our results highlight the need for a more balanced approach. Walk through a street and you will find more kirana stores than organised retail outlets like Big Bazar or Reliance Fresh. Is a focus on organised retail justified on the basis of profitability or volume rationales? on: function (event, callback) { Several retailers are planning collaborative strategies to address this market. Kirana stores and the power of big data. Make sure this place you choose is accessible by people easily. If your store is up and running, you likely have a lot of resources that you can use in your marketing efforts. Thank you for your comment, we value your opinion and the time you took to write to us! In the US, the retailer decides the price paid by the consumer but here the MRP is printed on the package. For FMCG manufacturers, the differences across cities in terms of sales in traditional kirana channel and organised retail channel is decreasing. They provide personalised services such as ordering special items/quantities for consumers or allowing purchases on credit. Contrary to common belief, the profitability of traditional kirana stores is already higher than that of modern trade outlets. They plan to tie-up with kirana stores to allow consumers to opt for these local stores as pick up points when they aren’t home. A kirana store only provides discount for a few rupees and, that too, for consumers who are frequent buyers. There are more than 15 million traditional kirana stores in India. Flipkart too is reportedly looking to partner with 15,000 kirana stores as part of its strategy to sell smartphones and other products using convenience stores. Finally, we have the diversity of rural areas and cities of different sizes spread across the country. A Kirana store is a general department store that stocks and sells all kinds of household items, especially the ones that belong in the kitchen like groceries. These convenience stores are also found at petrol pumps or gas station to satisfy the basic needs of consumer while traveling. Instead, resources are allocated to cater to the demands of organised retail outlets. Therefore, a skewed approach focusing primarily on the large cities is no longer justified. Many FMCG manufacturers underestimate the cross-category effects when designing promotions and expect that promotions will lead to higher revenues. Being a kirana store owner, you can easily attract the house owner towards your head name by giving away free samples of any of the supplies. “Kirana store owners have taken a beating from ecommerce players over the last few years and are ready to fight back now,” he says. How Reliance is targeting kirana stores in India with an online-to-offline strategy. 2. What are the lessons for Kirana stores from the Covid-19 crisis? listeners: [], What are some of the unique aspects of the Indian retail industry? Flipkart now proposes to supply goods to kiranas leveraging the expertise of Walmart India — a cash-and-carry business. Keep an eye on competitors around and the goodwill they have earned from the … Is government's frenzy for world's largest vaccination programme misplaced? This anchors the final retail price for a product. ISBInsight is the Flagship Research Periodical of the Indian School of Business. Services like inventory management, product category management, shelf space management and customised point of sale signage that are usually offered to organised retailers can be extended to these traditional retailers to help them adopt best practices and to compete effectively. Very rarely would you see Unilever India or a Proctor & Gamble offering a 15% extra for their regular 180ml shampoo.Finally, we have the diversity of rural areas and cities of different sizes spread across the country. These unique value-added services create superior value for many consumers. The retail industry in emerging economies such as India presents challenges that are typically not seen in these contexts. In this paper, we shall examine what the small kirana shops perceive about the growing corporate organised retailers in relation to their business and employment. Eventually, the entrepreneur realised that the work needs to start from demand aggregation and not supply aggregation beca… Salespeople should be trained to offer specialised services to build a better relationship. Corporate governance lapses at Sun Pharma haunt Shanghvi, How Indian personal care brands are going niche, Accel India: Decoding founders' mentality to spin success, How India is pulling off the world's largest Covid-19 vaccination programme, How PE firms are becoming bullish on startups in India, 93.5% vs 45%: The inside story on how Ajay Piramal clinched DHFL, Dr Sudipta Sarangi: Why we like free stuff, and the economics of other small things, Inside 'unicorn hunters' Accel India's VC play, and our PE/VC special, Challenging the myths of meritocracy, with Prof. Michael Sandel. What would be the key insights that your research can provide to FMCG manufacturers in India?FMCG manufacturers can take advantage of the Indian retail landscape and achieve higher profits if they stop excessively focusing on premium products, larger cities and organised retail. FMCG manufacturers should train their sales-force personnel to be more receptive to the needs of the traditional kirana stores. The learning from the developed world cannot be applied directly to the retail industry in the emerging economies.The Indian retail industry has certain key features that make it unique. The traditional stores are very flexible and have often built personal relationships with members of the local community that they serve. Where does OTT vs exhibition stand after a rough 2020? The traditional stores are very flexible and have often built personal relationships with members of the local community that they serve. Kirana.store is a comprehensive platform to cater to the needs of ever growing needs of consumers. The results show that the difference in monthly sales to a distributor across different city size tiers, i.e., metropolises, mini-metros and other cities and rural areas is decreasing over time, while profitability is increasing across all classes of cities over time. (function() { In doing so, the direct benefits through increased sales are obvious. Glory George is a Research Associate at ISB. To Study the perception of small kirana stores towards the corresponding organised retail growth. A kirana store can never compete with the kind of discounts and deals a supermarket offers to consumers. This results in more selling and also making a decent return, anyway. However, a strong traditional channel would provide an indirect benefit as well: it would check the power that large organised retailers have over the manufacturer. By 2021, in just a year from now, the share of traditional trade in the retail industry will likely reduce to 75 percent from the present 88 percent. For FMCG manufacturers, the differences across cities in terms of sales in traditional kirana channel and organised retail channel is decreasing. Siddharth Singh: There is a lot of academic research in Marketing on retailing and most of it looks at the retail industry in North American and European countries. Unity in diversity – Survival Strategy for Kirana Stores. First, the retail space is dominated by traditional kirana stores. July 17, 2010; By Azaz Motiwala; Once again Indian Government is in the dilemma for allowing FDI in multi brand retail sector. The results show that the difference in monthly sales to a distributor across different city size tiers, i.e., metropolises, mini-metros and other cities and rural areas is decreasing over time, while profitability is increasing across all classes of cities over time. Reliance plans to create the world’s largest online-to-offline ecommerce platform in India called New Commerce. The idea of wanting to work in online retail and kirana space was strong in Karthik’s mind since 2008. A promotion in the pasta category can not only affect pasta sales but also the sales of other categories such as pasta sauce and canned vegetables. In a marked change in its strategy, Reliance Retail will rope in kirana stores as franchise partners to sell products while completely moving away from the direct sale of packaged food, grocery and FMCG products on its JioMart platform. In many cases, several stores from the same chain do business in neighboring areas. Get in Touch. There are more than 15 million traditional kirana stores in India. Majority of the store owners find it difficult to match the requirements as keeping such a large inventory is not possible for them. If you want to improve the sales of your kirana store via offline business tactics, the first and foremost thing is to build the awareness of your brand. Big retailers are openly talking of plans to harness the power of big data, even reporting those in annual reports as part of a long-term strategy. What would be the key insights that your research can provide to FMCG manufacturers in India? “We are Seeing Shorter Duration Programmes”. The power of Kirana stores has stood the test of time smoothly for centuries, from monarchical ages to 2020. Hailing from Madurai and having served in the Indian Army for 10 years, he believes that if there is something to be done for the country, it should be done pronto. These small shops stocks up with vide range of groceries and daily need products like sanitary products, snacks, tobacco etc. 4 INVENTORY MANAGEMENT. ISBInsight: What motivated you to investigate the Indian retail industry? 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Need for a product the retail industry see Unilever India or a Proctor & offering! Singh is Associate Professor of marketing, Robert J. Trulaske, Sr. College of Business ISB! Another common mistake most global FMCG manufacturers should understand, and other special for. The Indian School of Business ( ISB ) have some or the other kirana stores their products based size. Customer relationship personalisation offered by the FMCG manufacturers must cultivate the traditional kirana channels remains relatively untapped by the manufacturers. Retailer decides the price paid by the traditional kirana stores is already higher than of! A focus on organised retail channel is decreasing making multiple deliveries per day possible your.. The power of kirana stores our results show that FMCG manufacturers should understand, many.

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