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Adapt and thrive

india Updated: Apr 24, 2008 01:22 IST

The neighbourhood grocer shuddered at the thought of that pervasive retail giant about to enter his city, who threatened to ruin his business. That depressing thought heralded the onslaught of organised retail chains with their professional ideas about how to do business and attract the Indian consumer and their purses. But that was over five years ago.

In the meanwhile, the professional retailers came in slowly but steadily and stayed, but so did the neighborhood grocer.

Necessity is the mother of invention, and it could not be exemplified better than by the crusade of the “mom and pop” (kirana) stores in India to survive the surge of large, purportedly professional retailers. In retrospect, there was never a threat of the former’s extinction, nor will there be, so long as their flexibility to adapt to the changing environment remains intact.

So where did the big guys of retail find their forte? Firstly, bigness has ensured a lower price line at the point of sale to the end consumer. An advantage they have acquired through leveraging their scale at the sourcing point of the supply chain. They may have also provided brighter, swankier and comfortable shopping environment to the customer, which has somewhat lost its sheen over the years.

They have also enhanced product variety available at one place, something rarely encountered in the earlier times.

But that has not been enough to push the kirana guy out of the market. The retail boom, especially in food and grocery segment, has mainly taken up the slot that was earlier occupied by the Super Bazaars and the Apna Bazaars, albeit with a brighter and more cheerful façade and in larger numbers. The traditional strongholds of the kirana shops, the neighbourhood markets of the various residential localities of the city, have remained more or less unchanged.

So, the dreaded substitution effect that was predicted has not been seen. Instead, there has been significant traction towards building complementarities between the traditional and the new formats of food retailing. Kirana still rules a majority of the markets as the preferred point of purchase which is available at the “street level”. Whereas, professionally organised retailing has found its space in attracting buyers for periodic planned purchases of high volume.

But for a large number of the Indian consumers who are not financially equipped to take advantage of the savings provided by bulk purchases, the charm of shopping at the new-age store has remained little more than a “window shopping” experience. In a few commercially savvy markets of the country, organised food and grocery retail outlets have worked out effectively as middlemen for the neighborhood retail outlets, further building on the theory of complementarity.

This symbiotic characteristic of today’s retailscape illustrates an important lesson. It highlights the versatility of the minnow and its ability to reinvent itself in the presence of formidable competition.

While the latter primarily thrives on the dimension of efficiency and scale, smallness proves to be advantageous by providing the flexibility to adapt to match up to the changing requirements.

Where else can one expect the readiness to serve, be it home delivery or short term credit or assistance in getting customised orders with alacrity but in the lakhs of kirana stores dotting our markets?

All that, only for a small hike in the price charged. Large professional organisations with their elaborate internal controls to manage their scale will find it a tad more difficult to beat such “guerilla” tactics.