India’s top organised retailers including Future Group and Reliance Retail are roping in local kirana-walas to expand operations and widen product reach, but small traders remain sceptical of their moves.
While Mukesh Ambani-led Reliance Retail has quietly speeded up expansion of its wholesale cash-and-carry stores, Kishore Biyani-promoted Future Group is running its Big Bazaar Direct Programme, under which a small grocery shop owner can become a franchisee for the big retailer.
Industry analysts say big organised retail stores may not be successful everywhere, especially in small catchment areas, and therefore, pushing products, especially higher margin private brands, through other channels such as local trade helps growth.
Small traders, however, are not too optimistic on being co-opted by the big boys.
“Organised retailers are in the business for making profits and are least bothered of the small traders. They use predatory pricing tactics to ultimately wipe-off the smaller guys. Even their wholesale stores are nothing but retail in disguise, since they are giving membership to anyone, when it was only meant to be for traders,” said Praveen Khandelwal, secretary-general, Confederation of All India Traders.
Reliance Retail, which opened its first wholesale store in 2011, has opened around 12 more such stores in the last 10 months, and the pace of expansion is expected to continue, according to a source close to the company. “We are catering to institutional consumers, hotels, resorts, cafes, catering companies etc, but kiranas are among the biggest target group,” the source added.
Reliance Retail has 1 million partners (institutional customers) signed up for its wholesale store business, and the company is organising member meetings, especially involving small shop owners, to understand their needs.
Besides, it is also converting some of its retail hypermarkets into wholesale stores. When contacted, a company spokesperson said only three stores are being converted and it will continue to expand across all formats, including retail and wholesale.
Future Group has also roped in grocery shop owners to become franchisees for its “KB’s Fair Price” neighbourhood stores.
“Big Bazaar Direct will help the company reach customers deeper into India, which may not be necessarily possible by expanding a physical supermarket,” said Vivek Biyani, director, Future Group.