In my last essay on retail we looked at how organized retail is gearing for a big bang entry in India. Now let’s have a look at what the unorganized sector has to do to counter the attack.
With the onslaught of organized retail in India, the Indian press and the Left front are devoting endless articles and speeches about how to safeguard the local ‘kirana’ store owner.
The usual points are:
- Give personalized services
- Home delivery
- Short term credit to customers
- Providing added services like P.C.O. and Bill payment.
In my opinion, all these things they already did. As far as I can remember whenever I asked my grocer to give me bathing soap, without fail, he always gave me ‘Pears’ (which happens to be our ‘family bathing soap’) and after I have left, dutifully enters it’s cost under our family credit account. Of course whenever we purchased bulk items like sugar, ghee etc. he would deliver it to our doorstep.
No doubt that with the kind of money currently being put in organized retail in India, the share of organized retail is bound to increase from the current pittance of 3-4%. It’s increasing share can be delayed but cannot be averted. Though with a CAGR of 50% or so, still the share of organized retail will reach only to 10 – 15% by 2010. That leaves the unorganized players with ample time to get their act together or perish.
Where the organized players score against local retailers is in bulk purchase of goods. To counter that the local retailers will have to form certain organization at city level so that they can pressurize the FMCG majors into giving them better prices.
Or maybe some of the local retailers can transform themselves into supermarkets with some loan. It is a necessity in urban areas where organized retailers are fast setting shops and with changing shopping habits more and more urban Indian’s are going for shopping in Hypermarkets.
The threat of organized sector to local retailers is definitely there in the long run, but in short run they won’t feel much of a difference. And those who won’t change on this slight difference will have a hard time, not now, but may be in next 8-10 years.
Trivia: Pears is the only product which is exported from India by HUL.
Hi,
That was a good peek into the future aspects of Indian Retailing. I just wanna ask u whether there is a possibility of the organized and the unorganized players joing hands together, some 10 years down the line???? This will create a win-win situation for them….. but what will happen to the consumer….??? Will the consumer will get hit or will he be benefited….? Please do an analysis, if ur interested…. Thank You….
BmYhx1 comment5 ,