Saturday, March 12, 2011

Who Wins? Modern retail chains or Mom and Pop stores?

Example of an American grocery store aisle.Image via Wikipedia

Here is a insightful post by Manoj Vishwasnath on the classic clash of modern vs traditional retail outlets / formats in India.

Modern trade arguably accounts for 50% of all retail grocery and consumables business in the developed markets but this has been achieved over a period of 40 years since the first organized retails stores made their appearance in the country. India has a long way to go before it reaches this juncture, probably longer than the political careers of most of the protagonists who are trying to make a livelihood by pitting the Davids against the Goliaths. Today the contribution of modern trade is merely 4% of the total retail trade in the country.

Modern trade bashers also do not have a realistic understanding of the competitive advantages that kirana stores have at their disposal. Kirana stores offer the customer convenience at several levels i.e., proximity, credit facility, home delivery etc which organized retail stores find difficult to replicate.

Unlike the Americans, Indians do not have the culture of driving down several miles to a retail outlet to accomplish grocery shopping. Most customers shop at a mom & pop store that is a stone’s throw from their homes – a luxury that can never be provided by their organized counterparts.

Neighbourhood kirana stores also offer customers short-term credit facility, which is possible because of the close relationship that the shop owner enjoys with the customers. Organized retail stores cannot provide credit since they don’t know the customers as well.

Read the full article here;

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