Kiranas unfazed by big retail -- that's ironic

A couple of years ago, as modern retail was booming mindlessly, there was much concern about the future of mom-and-pop stores in the country, better known as kirana stores.

Big retailers and consultants espoused the cause of modern retail and said it posed no threat to these stores and that there was space for all.

They stand vindicated.

The irony is not to be missed. Modern retail is still not making profits, shutting down stores all around and finding trouble filling shelf space. Kiranas, on the other hand, are seeing business as usual, notwithstanding the economic slowdown.

Analysts Aniruddha Dutta and Shrinivas Radhakrishnan of CLSA India said in their report dated January 19, 2009, "The organised grocery retail stores are facing stiff competition from the mom-and-pop stores. We observed the customers' preferences tilting towards the kiranas for daily purchases due to convenience, better stocking and easier access."

In the long term, the scale will work better for organised retail. But in the near term, big retail lacks the imagination and firepower to innovate and sustain its initial euphoria, the report states.

Spencer's, Big Bazaar, Subhiksha and Reliance Fresh have shut down several stores, which were running in losses. They are all struggling with property costs and wafer thin margins. In fact, Subhiksha has exited the fruits and vegetable business in several areas.

In contrast, kirana stores are stacking as many product varieties as possible, sometimes even going beyond the realms of food and grocery.

Most kirana shop owners are taking home delivery orders on their mobile phones and delivering goods to the customer's doorsteps, even if the order is as small as a loaf of bread.

For Monica Khatri (23), a Mumbai Central resident, it is the comfort of quick and easy buy at kirana store that works. She said, "I have a Reliance Fresh outlet right opposite my house where I go once a month to buy certain utilities, but by and large I go to the kirana store downstairs. The benefits of going to a kirana store are many -- I do not have to keep my bag aside, there is not too much variety to confuse, and you buy what you originally intended to, within minutes."

Samar Singh Shekhawat, vice-president, marketing, Spencer's Retail, said, "Given the current slowdown, there is definitely a downturn in sales revenue. Our same-store metrics is pretty flat but this is more because of the economic scenario than a shift of preference from organised to traditional retailing."

Spencer's shut 55 stores last year and opened 20 new ones.

Future Group's retail brands, Big Bazaar and Food Bazaar have also seen sales slump.

"Though we are facing some challenges in terms of consumer reluctance to enter our stores, this is only a

Tier-I phenomenon. Our business in the Tier-II market has not been affected since the market there is not exposed to the financial wreck as much as Tier-I market is," Atul Takle, head -- corporate communications, Pantaloon Retail India, said.

Availability of products on credit and location close to home sure gives kirana stores an edge over big retail stores, which offer home delivery only on stipulation of a minimum order.

Competing with small retail stores and kirana stores, however, is Future Group's new chain of retail stores -- KB's Fair Price -- which are non-air conditioned and need an investment of Rs 250 per sq ft as compared with the usual Rs 2,000 per sq ft.

An analyst with a leading brokerage who did not wish to be named said, "Modern retail in India is always going to be a luxury and feel-good domain and traditional kirana stores are clearly at no risk from it. Consumers, who earlier purchased family-pack products, are now satiating their purchases with smaller packs and for this they go to local kirana stores."