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. Depending on the funds you have available or raised, you can decide the grandeur of your store or shop. What would be the key insights that your research can provide to FMCG manufacturers in India? They should strategise effectively to incorporate these channels into their mainstream distribution network. These small shops stocks up with vide range of groceries and daily need products like sanitary products, snacks, tobacco etc. Kirana.Store emphasizes on quality at reasonable prices to all consumers. 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. if (!window.mc4wp) { Contrary to common belief, the profitability of traditional kirana stores is already higher than that of modern trade outlets. Kirana stores and the power of big data. Although this strategy seems reasonable and may have worked in the past, our results highlight the need for a more balanced approach. FMCG manufacturers should train their sales-force personnel to be more receptive to the needs of the traditional kirana stores. } When all the other stores are closed, the Kirana and Pharmacy store owners are continuing to serve the community by taking all the precautions required to safeguard their staff. There are more than 15 million traditional kirana stores in India. } They provide personalised services such as ordering special items/quantities for consumers or allowing purchases on credit. 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. Most of the supermarkets have some or the other offer running. First, the retail space is dominated by traditional kirana stores. The traditional kirana channels might have very limited bargaining power due to constraints in assortment, products, price or location. These kirana stores are also known as corner shops, C- store or convenience shop. Many FMCG manufacturers underestimate the cross-category effects when designing promotions and expect that promotions will lead to higher revenues. Use with the store assets you already have. 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.A common mistake is to allocate the advertising budget and sales-force personnel based on the size of the city. Keep an eye on competitors around and the goodwill they have earned from the … They should strategise effectively to incorporate these channels into their mainstream distribution network.Q. It has tied up with nearly 60,000 kiranas, and has plans to enroll more by April. In the offline market, more people know you, greater will be the chances of acquiring customers. Promote your business in the nearby locations. Our results show that FMCG manufacturers must cultivate the traditional kirana channel and help strengthen their business. 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. Many FMCG manufacturers underestimate the cross-category effects when designing promotions and expect that promotions will lead to higher revenues. FMCG manufacturers should train their sales-force personnel to be more receptive to the needs of the traditional kirana stores. But what is unseen is the enormous consumer goodwill garnered by these stores. Kirana.store is a comprehensive platform to cater to the needs of ever growing needs of consumers. He decided to put up his shop in an area where 10 big Kiran stores were already there. 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. 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. To get home delivery of your favourite groceries simply: * Choose your nearby grocery store * Select from a wide variety of products including Dal, Atta, Oil, Ghee, Sugar, Noodles, Soaps and Shampoos. Finally, we have the diversity of rural areas and cities of different sizes spread across the country. About the Interviewer: 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. Data Protection Bill: Can it ensure your privacy online? 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. 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. A common mistake is to allocate the advertising budget and sales-force personnel based on the size of the city. The retail industry in emerging economies such as India presents challenges that are typically not seen in these contexts. Very rarely would you see Unilever India or a Proctor & Gamble offering a 15% extra for their regular 180ml shampoo. Determine the reasons behind these things, then use those insights to steer your retail marketing strategy. 2. 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 … Sharad Borle is Associate Professor of Marketing, Jones Graduate School of Business, Rice University. 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. Services like inventory management, product category management, shelf space management and customised point of sale … MyKirana lets you buy groceries from your local Kirana store, with 2 Hour Home Delivery! The wise way to choose your Kirana store location is to go to a shop that is accessible by the larger community. “Kirana store owners have taken a beating from ecommerce players over the last few years and are ready to fight back now,” he says. window.mc4wp = { 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. Reliance plans to create the world’s largest online-to-offline ecommerce platform in India called New Commerce. 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. Salespeople should be trained to offer specialised services to build a better relationship. Netflix will no longer borrow, ending its run of debt, The next Tesla? In your paper, you mention that promotions have both within-category and cross-category effects. About the Research: Get in Touch. A kirana store can never compete with the kind of discounts and deals a supermarket offers to consumers. © 2018 - ISBInsight - Flagship Research Periodical of the Indian School of Business (ISB). If your store is up and running, you likely have a lot of resources that you can use in your marketing efforts. Posted by Tielman Nieuwoudt. From Shubman Gill to Rishabh Pant, young turks of India's historic cricket win in Australia. Increasing urbanisation, increasing incomes, and rising aspirations for a better quality of life are reshaping the Indian retail space. How Reliance is targeting kirana stores in India with an online-to-offline strategy. They provide personalised services such as ordering special items/quantities for consumers or allowing purchases on credit. 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. 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. 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. 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. ISBInsight: What motivated you to investigate the Indian retail industry? Walk through a street and you will find more kirana stores than organised retail outlets like Big Bazar or Reliance Fresh. What are the lessons for Kirana stores from the Covid-19 crisis? How Can You Transition from Merely a Good Manager to a Great Leader? The traditional stores are very flexible and have often built personal relationships with members of the local community that they serve. Eventually, the entrepreneur realised that the work needs to start from demand aggregation and not supply aggregation beca… Thank you for your comment, we value your opinion and the time you took to write to us! Kirana.One would serve as a directory for local kirana stores or nukkad stores. A kirana store only provides discount for a few rupees and, that too, for consumers who are frequent buyers. Kirana store is the small neighborhood shop in India. Manufacturer-led promotions are relatively infrequent. In the US, the retailer decides the price paid by the consumer but here the MRP is printed on the package. 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. First, the retail space is dominated by traditional kirana stores. To receive Management Briefs in your inbox, and other special content for subscribers, please sign up. Working Paper, Indian School of Business. 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. Contrary to common belief, the profitability of traditional kirana stores is already higher than that of modern trade outlets.Our results show that FMCG manufacturers must cultivate the traditional kirana channel and help strengthen their business. Manufacturers can customise their products based on size or packaging. July 17, 2010; By Azaz Motiwala; Once again Indian Government is in the dilemma for allowing FDI in multi brand retail sector. 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. 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. The promotion in the rural network is through celebrity marketing, with a youthful image (teenage/child actor), catchy jingles on the radio and TV. Unity in diversity – Survival Strategy for Kirana Stores. That led to the birth of kisan.co, which didn’t take off. In your paper, you mention that promotions have both within-category and cross-category effects. Manufacturers can customise their products based on size or packaging. Sample size consists of 101 Kirana Store retailers. For FMCG manufacturers, the differences across cities in terms of sales in traditional kirana channel and organised retail channel is decreasing. FMCG manufacturers should understand, and many of them do, the consumer goodwill and flexibility of traditional kirana channels. Could you tell us more about this?The traditional kirana channels might have very limited bargaining power due to constraints in assortment, products, price or location. There are more than 15 million traditional kirana stores in India. listeners: [], Majority of the store owners find it difficult to match the requirements as keeping such a large inventory is not possible for them. 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. Get your visiting cards designed. Mostly Kirana stores consist of daily needs and commonly used grocery items. How Can Firms Cope and Even Thrive In A Shifting Political Environment? Bulk purchase always comes with discounts and deals. Could you explain? event : event, Kirana King’s core mission is to encourage retailers to adopt transformation of their Kirana stores and to bring them on an organized retail platform. Manufacturers can customise their products based on size or packaging. forms : { Therefore, a skewed approach focusing primarily on the large cities is no longer justified. Siddharth Shekhar Singh is Associate Professor of Marketing and Associate Dean – RCI Outreach and Engagement at the Indian School of Business. it is a revolutionary idea of standardization, digitization & centralization to traditional Grocery system. From kirana stores to hybris: SAP’s evolving Business Network strategy Follow RSS feed Like 12 Likes 8,784 Views 12 Comments This strategy makes distribution to each store cheaper, as well as making multiple deliveries per day possible. As more and more customers are placing orders by phone call, WhatsApp, online … The concept of Kirana stores exists only in the subcontinent of India. 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. What are some of the unique aspects of the Indian retail industry?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. Flipkart now proposes to supply goods to kiranas leveraging the expertise of Walmart India — a cash-and-carry business. Salespeople should be trained to offer specialised services to build a better relationship. Is a focus on organised retail justified on the basis of profitability or volume rationales? A large chunk of potential in terms of customer relationship personalisation offered by the traditional kirana channels remains relatively untapped by the FMCG manufacturers. Objectives 1. Could you tell us more about this? 4 INVENTORY MANAGEMENT. Several retailers are planning collaborative strategies to address this market. The store size of any shop depends on the kind of funds available to a local merchant. Kirana are typically family-owned stores that operate in fixed locations and carry both basic food and non-food items. 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. 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. How is the retail industry in emerging markets different from developed economies? 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. These consumers might not be attracted to organised retail stores. © 2018 – Indian School of Business (ISB). These unique value-added services create superior value for many consumers. 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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 … It provides clear catalogue of products available and gives clear and concise information to buyers to decide on the products they intend to purchase. As the kirana stores are still accustomed to the traditional food basket requirements, customers look for grocery supermarkets for the additional supplies. The Indian retail industry has certain key features that make it unique. ISBInsight is the Flagship Research Periodical of the Indian School of Business. These convenience stores are also found at petrol pumps or gas station to satisfy the basic needs of consumer while traveling. FMCG manufacturers should understand, and many of them do, the consumer goodwill and flexibility of traditional kirana channels. Salespeople should be trained to offer specialised services to build a better relationship. We analysed over a million sales transactions of a large FMCG manufacturer with traditional kirana as well as organised retail channels for over three years. 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.