Pick up some modern traits

The Indian retail sector is worth USD350 billion, has an organised retail penetration of between five to eight per cent and is one of the most dynamic and exciting markets to operate within.  A large middle class, demanding young consumers, increasing incomes, a growing consumption-based culture, etc. are driving the growth of the sector. The Indian sector is one of the most exciting, dynamic and challenging sectors to operate within, as noted by the PricewaterhouseCoopers Thought Leadership report entitled Strategic Issues for Retail CEOs.  The study indicates that India’s robust micro- and macro-economic fundamentals (e.g., robust GDP growth, favourable demographics, Government policies and rural India’s growth potential) will further accelerate the growth of the Indian retail sector.

With its large size and low organised retail penetration-

• The sector presents tremendous opportunity to grow
• Both modern trade and kiranas to co-exist

Means for modernisation

That being said, some measures/tactics that unorganised trade can implement in order to upgrade their service offerings to consumers include-

• Offering selected imported items - Most consumers visit supermarkets for weekly shopping needs, hypermarkets for monthly shopping requirements and kiranas for daily needs.  In order to upgrade their selection of items, kiranas can stock selected fast-moving imported items that will delight the consumers.  For example, imported pasta, pasta sauces, certain types of cheese, chocolates, personal care products (e.g., deodorants, skin creams, etc.), and others are typically fast-moving items. 
• Chocolates can be placed near the point-of-sale systems to induce impulse-led acquisition. 
• Imported food items are popular today given the Indian consumers’ increased comfort in buying new food items, experimenting with global cuisine, etc. 
• Given the Indian consumers’ growing importance towards personal care, related products will move quickly.
• Automating purchase processes: Using point-of-sale technologies (scanners, bar code readers, computers, etc.) can help reduce customer dissatisfaction associated with long queues and longer billing time.  Automation will also enable kirana owners to have a better idea of fast-moving stock, inventory levels, etc.
• Focusing on the softer aspects: Adding a fresh coat of paint, using signage to display products in aisles, having staff wear simple and clean uniforms, using good lighting, etc. are all important in establishing an image of being a retailer of choice.  Most modern trade outlets are easy to navigate through, are clean and have helpful and friendly staff; traditional retailers need to ensure that their offerings are also on par.
• Entering into sourcing partnerships: Kiranas can purchase their products from cash and carry majors and accordingly, pass on benefits to consumers.  Kiranas can also form informal alliances to procure in bulk from fast moving consumer goods companies.
• Offering loyalty programmes: Like larger modern trade players, kiranas can launch loyalty programmes where frequent customers can avail selected discounts or receive free products.  Loyalty programmes enable retailers to better understand consumers’ buying habits and can be used as a predictive tool towards learning, such as which SKUs move quickly, which are slow movers, etc.
• Embarking upon SMS Marketing: Kiranas can send targeted text messages to consumers during sales and promotions.  Maintaining a database of consumers’ numbers and their frequent purchases can help kirana owners move stock; for example, kirana owners, during promotions on personal care products, can send messages to consumers who frequently purchase skincare products, etc.  This enables the kirana owner to offer an extremely personalised form of service.
• Providing free home delivery services: Assigning consumers with customer ID numbers enables kiranas to monitor the types of products purchased; this information can then be used to understand stock movement, popularity of products, etc.
• Offering bakery items: Diversifying the product mix by offering baked and other speciality good can help draw customers and increase sales.  Offering baked goods, in addition to standard personal care, home care, food and grocery items, can act as a point of differentiation for kiranas.

Unique features of kiranas

The PricewaterhouseCoopers Thought Leadership study entitled “The Benefits of Modern Trade for Transitional Economies” indicates that kiranas are an important and critical element of the retail ecosystem and enjoy the following features and attribute which will ensure their consistency-

• Knowledge intimacy, which is hard for modern retailers to replicate
• Ingrained consumer behaviours since consumer frequent kiranas to fulfil their daily top-up needs.

The author is Executive Director and Leader,
Consumer and Industrial Products, PricewaterhouseCoopers