Good things come in small packets

Indian retail sector is growing in tandem with the economy. Retail is one of India's largest industries, contributing to about 10 per cent of the GDP and providing employment to 8 per cent of the nation's workforce.
small size

Indian retail business promises to be one of the core sectors of the Indian economy. The quintessential mom-and-pop retailing outlets or the cornerstone formats constitute a major part of Indian retail store formats.

Scenario

Over 12 million small and medium retail outlets exist in India, the highest in any country. Multi nationals like Unilever’s Indian subsidiary are lauded for their reach in distribution as they service over a million small shops in urban and deep rural India, helping them access the local mom and pop stores. There is the news of retailer private label FMCG products moving out to the smaller mom & pops stores so as to compete against the established FMCG brands as the modern retailers put the squeeze on FMCG companies for better prices.

The players

Delhi-based REI Agro - a rice producer and exporter - hived off its retail entity REI 6Ten, the company launched 21 stores of 1,000 sq. ft each stocking private labels in rice, staples, spices and other items. "The concept behind 6Ten was to create not a monthly grocery store but rather a daily needs store," says Danish Beg, REI Agro's assistant finance controller. The company now has 300 stores across 10 cities such as Delhi, Nagpur and Kolkata. Similarly, when denim and apparel manufacturer Arvind Mills restructured its loss-making apparel retail business into three kinds of stores - Megamart with 150 stores, Flying Machine with 60 and Arrow comprising 70 stores, they seemed to have hit the sweet spot. The 1,500-sq. ft stores with distinct identities served the purpose of the brand with its small format outlets, encouraging them to provide products of the highest standard.

Factors

Even though the percentage of retailers switching from large to small format is not encouraging, still the share of small stores is such that, their existence cannot be ignored. There are definite factors which have influenced the philosophy of the store for a brand over the years. These can be; segment of consumer targeted, availability of space, keep themselves confined to the low rung areas in the country etc.  Even with the uprising trend of mall culture developing, you still get the feeling that brands are clearly not in a mood to risk their planning to such an extent that it might just fade away. Brands like Fab India, Elvy, The Body Shop have clearly understood the need to keep themselves on equal terms with regards to the format of their stores, but there is a general consensus that slowly and steadily the trend will make a static shift. 

Prudence

Retailers must make sure that there is no wholesale paradigm shift in their approach towards the switching of formats, as this can directly affect their consumer base.

 

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