Small shops cry ‘inflation!’ | business | Hindustan Times
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Small shops cry ‘inflation!’

business Updated: Jun 26, 2008 20:44 IST
Saurabh Turakhia

Small kirana stores have started feeling the heat of inflation wave. At over 11 per cent, inflation has resulted in lower stocks and falling sales, casting doubts on their medium-term existence. Some have shut shop, while others are considering getting into new businesses.

“We have started keeping lesser stocks (reduced by up to 25 per cent) owing to inflation,” said Bharat Shah, owner of Jatin Traders in Kandivli, a suburb in North Mumbai. “Prices of products like rice and pulses have gone up by more than 1.5 times. The sales are clearly falling.”

Compared to a monthly business of Rs 5-6 lakh, Shah’s current monthly turnover is down by a third to around Rs 3.5-4 lakh. “It is fine if business improves, otherwise many of us are in a situation where we may have to close down.”

The challenges for small retail and departmental stores are not limited to any one city. To retailers across Delhi, Ahmedabad, Hyderabad and Kolkata, inflation has hit low-income groups hard, which in turn has taken its toll on the business of retail stores. From 5 litre packs, consumers are shifting to 1litre packs and preferring cheaper brands for all their purchases.

“While earlier we used to clock sales of Rs 8000 daily, now it reaches only Rs 6000,” said CH Srinivasa, proprietor and owner of a 300 sq feet medical and general store in Hyderabad, who is feeling the pinch. “Consumers purchase medicines in the form of individual units instead of buying the whole pack.” These retail shops are hit as salaries of people who do small-time jobs have not risen in proportion to the rise in inflation.

“After the recent fuel hike, sales have been immediately hit by 25 per cent,” said Darshan L Mehta, whose brother runs a 100 sq feet kirana store in Paldi, Ahmedabad. “In fact, some small shops have also shut down, especially those located in and around malls.”

Shyam Saha, storeowner of Sree Ganesh Super Bazaar, a 1,500 square ft store in Kolkata is planning to switchover to a different vocation. “We are also giving a serious thought of changing our line,” he said. “Competition from malls has affected many stores.”

Big retailers, however, feel that inflation is not such a big problem. According to Gibson Vedamani, CEO, RAI (Retail Association of India), “I think, the savings of consumers have got affected but not their consumption.

Retailers may have to work on keeping the right inventory and achieving a better stock turnover ratio.”