I visited my friendly neighborhood panwaala, Ashok, after a long time today. I was just getting pally with him. He inquired about my absence, "Long time no see bhaiya", I told him that I had been living on my stock for sometime. I observed that:
He knows the choice of his customers and the moment they come, he digs out their brand in a flash.
He is an enterprising person and always greet me with a smile.
He is benevolent enough to give me loose change whenever I need them.
He is open from 6 AM to 11 PM.
He is diversifying, he stocks up groceries, water cans, ready to eat, phone booth and other sundry things.
He gives credit to lots of his customers.
He knows most of his customers by name and address.
That made me ponder over the onslaught of supermarkets and hypermarkets on these Mom and Pop stores (hereafter referred as M&P) that dot the Indian landscape. No doubt the ripple effects are being felt by these small unbranded grocery and retail outlets, but these M&P stores might just have an ace up their sleeves.
M&P have few advantages over the multi million square feet retail chains. M&P know their clientèle and their preferences. M&P know their terrain and have deep penetration. M&P can improvise upon and provide customized service (for example door to door delivery) to their clients. I remember having a chat with a senior client member, he pointed out that his wife still likes to buy fresh vegetables from the sabziwala who comes every morning. He reasoned out, that his sabziwala knows how much quantity is consumed and which vegetables are preferred by his family. That sums up the advantage that M&P might be having.
In India unorganized retail still accounts for over 90 percent of the retail market, but M&P are facing a constant and increased threat from organized retail chains. These retail chains bank on the seamless supply chain that they have built and also on the economies of scale. Till now Organized retail has appealed premium and high end customers. But it wont be long before no-frills retails chains on the lines of Subhiksha and others give M&P a tough fight for the turf.
But Ashok is unfazed, he knows that market is big enough for everybody to survive and innovation will be the key to the survival of M&P in the times to come.
Subscribe to:
Post Comments (Atom)
6 comments:
Interesting post and currently related to a book I'm reading which has numerous pricing strategies described. On the friendly neighbourhood paanwalla's strategies, here are my thoughts on how supermarkets employ some of these strategies, but subtly:
He knows the choice of his customers and the moment they come, he digs out their brand in a flash.
Supermarkets use feedback/surveys to get customer preferences and use group-pricing to do something similar. In the case of an online interface, Amazon did it as an individual pricing strategy by selling favoured brands to individuals at a price discount.
He is an enterprising person and always greet me with a smile.
India is lacking here, but with practice, Indian supermarket billing agents will learn (like US counterparts) to sport artificial smiles to make your day look beautiful :) With time, they may even get to know you.
He is benevolent enough to give me loose change whenever I need them.
I think this caters to ciggiwaala public a lot :). Don't think supermarkets can always offer loose change :)
He is open from 6 AM to 11 PM.
24 hr supermarkets will soon come in.
He is diversifying, he stocks up groceries, water cans, ready to eat, phone booth and other sundry things.
They are called supermarkets for a reason.
He gives credit to lots of his customers.
Supermarkets retain customers with market membership cards - often offering discounts in the process.
He knows most of his customers by name and address.
Enter supermarket database and customer reach out surveys in your mailbox. I also suspect that as Ashok grows, he'll find it difficult to maintian the same personalized relationship with each of his customers. It's the size of his shop that allows this personalized touch. Once they grow, you will not identify with the person, but with the brand.
great reasoning...
I agree that M&P are no match for the deep pocket retail chains. But they are evolving and they are ready to give the retail chains a tough fight. But I realize that M&P might be losing the battle. The economies of scale associated with the Big retails will simply turn the balance in their favor. And with many retail chains like More of AVB stable penetrating the tier II cities, the battle field has just been expanded. However it will be sad if M&P are wiped out, since they are a source of employment for roughly 5 percent of our population. Retail is the second largest employer after agriculture in India.
M&P dont have high profile consultants at their disposal, but I am sure that they will give a tough fight before giving up on their territory.
Another way to look at it is that a supermarket retail that comes into an area should try to trainl and employ the local vendors on the customer interface side so that loyal customers may identify with the same vendor.
A survey in Iowa revealed what had happened in that state since Wal-Mart had arrived in 1983:
o 50% of clothing stores had closed
o 30% of hardware stores had closed
o 25% of building materials stores had closed
o 42% of variety stores had closed
o 29% of shoe stores had closed
o 17% of jewelery stores had closed
o 26% of department stores had closed
• On average, about 100 stores go out of business in the area surrounding a town with a new Wal-Mart store
No wonder, our government is trying to hold off Wal-Mart as long as they can. Time will tell whats in store for Indian Retail giants :)
The Customer is not a moron...she's actually your wife.M&P or Organized Retail, should be chosen by free market economics and not by concerns like job loss et al.If the traditional Indian retailer is really smart enough, he'll leverage his strengths(which I'm sure he's got in lots) and be a part of the revolution.
For 40 years(50s to early 90s), we tried to save jobs at the cost of productivity and we know what it cost us.Govt would be doing no long-term good if it tries to over-regulate the Retail giants.
May the best-model survive...
isn't Subhiksha chain a failure? They have huge debts and poor supply chain , a model gone bust probably some other example would have suited better to the article.
Post a Comment