Retailing in India - New Revolution

With the who is who of Indian corporate announcing ambitious schemes for the retail space, it is indeed a question how the neighbourhood small retailer will manage to retain his own. Grandma's wisdom suggests that the small retailer will continue to staty. Is that the case?

Let us look at similarities in few other major retail spaces - the eateries, the road side mechanics for 2 wheelers.

I remember the early 80s when we had very little choice in class restaurants in Chennai. As a matter of fact if you move out of one part of town, you are literally on your own or you will have to be dependant on the small road side restaurant, with its basic facilities. But today, we have choices and this has not reduced the number of small eateries; on the contrary the small eateries have also increased in numbers.

Similarly we were wholly dependant on the road side mechanics but now we have a choice for the place of service; but that has not eliminated the road side mechanics, but has only added in numbers.

The main reason for easy accommodation of the variety of service providers is the latent demand which has not been met, be it in terms of quality or quantity or infrastructure the service provider offers. Similarly in the retail space there are people who are looking for shopping in large Retail chain stores, which they can not do so now. When such an opportunity arises they will definitely shift. But that would not mean that the entire lot who are shopping with the neighbourhood retailer will shift. There will be pressure on the local small timer to improve and attract new customers, retain existing ones. So will be the case for the Super Bazzars;

The key differentiator between the big and small will be Technology. This will play an edge as it can be leveraged to assure consistent quality in all aspects. Indian consumer is very demanding as many marketing surveys has established and the big ones are aware of it. So if they provide quality products and service they will have their own space and will manage to wean away a larger segment. But they can never dream of eliminating the small retailer.

Indians are masters in retailing and will put the large international logistics firms and whole sellers to shame by their rudimentary solutions, as in the case of the panwallahs. These road side delivery centers are are so excellently linked through out India by a supply chain mechanism, which even the giants such as HLL have not been able to replicate after years of attempts. The pan (beatle leaf)is fresh and so is the gulkand! And please note this chain works with out proper refrigerated storage and refrigerated handling vehicles.

As on today the small retailer who is threatened by the big bazars like Food world are slowly transforming themselves. One group whom I am observing, has improved his personalised service and has started accepting cheque payments! Assisted by the local telecom service provider, he accepts orders through intercoms from nearby flats who are all connected to the same service provider and have availed of the group dialling facility! The small retailers are fearsomely innovative and the wal marts should remember their German fiasco when they enter India