Why my next door grocerywala shut shop?

May 28, 2008 

Six-lane roads, clean streets that are swept with a machine every morning, green trees lining either side of the road, well-maintained children’s park with manicured lawns and flower gardens for every Km, well planned residential and commercial areas, grocery stores at the intersection of every two streets and a walking pavement all around. This where we live. Not abroad; very much in India; Pune to be precise. This neighborhood is not one of the fancy names that Puneites would easily identify to but is one o the most well kept planned residential areas of the city free of pollution, congestion, traffic and well able to handle the increasing population. The thought of moving out of this place to Bangalore sometimes gives me the jitters - to go back to the dust, jostling crowds and lack of walking spaces.

It was undeveloped in many respects when we moved here over two and half years ago. There were no organized retail supermarkets or malls within the 20 Km radius. Infact, there was no multiplex - just a single hall theater and no fancy coffee shops. For that matter, even Pizza corner didn’t have a home delivery option. They deemed the place too far from the city to make home delivery viable and profitable. One shopped for vegetables from the local vegetable vendor and groceries from the next door kirana guy. Weekend outing meant trips to the city to hangout for coffee or watch a movie and shop for other essentials.  Salad dressing and lettuce leaves were unheard of and  one hard to make a painstaking list to pick them on the city trips. In relative terms, we lived in a beautiful civilized village and trips to the city was a visit to the urban India. But we love it here - where evenings are peaceful when you return from work and one can spend hours sitting at the balcony enjoying the cold breeze without loud horns of the moving traffic blaring in the ear or polluted air choking the lungs.

A lot has changed in the past 1 year. Lettuce leaves and avocados are available at More retail which is lesser than 250 metres from home. I More runs out of stock then there is always Spencers at the opposite end.  And by some remote chance both have their inventory mismanged then Subhiksha comes to rescue. And there is no dearth of weekend entertainment with malls mushrooming like babies are made in India. All this development hasn’t affected the beauty and serenity of the neighborhood much. Thanks to the planning.

While it has made our lives easier, there is also something disturbing happening. Shopping at the next door grocery wala was nice. There was a personal rapport - home delivery with no minimum amount of purchase required and often just a phone call would do. For many, they are a window to the neighbourhood provided tidbits on the happenings, rentals info and leads to getting that new maid/cook. Despite More coming up, I split up my grocery between my old trusted friend and the impersonal More.  It’s sad that many are shutting shop like my trusted grocery friend facing stiff competition from organized retail.

I interviewed a few of them and in their own words, the problem they face:

1. Supplier woes - suppliers find it easy to deliver 50 packs of Sundrop at Spencers than visit 10 kirana stores. It’s a volume game made easy. As a result, it was becoming difficult to get the brand of your choice at these small places making customers go away.

2. Discounts and Margins - Kirana stores operate on a smaller margin than the organized corporate houses. More can afford to sell a 1.5 liter of Pepsi at Rs.29 but not the smaller stores when the MRP itself is Rs.30 and they ought to sell atleast at Rs.31 to make a profit.

3.  The lure of a/c and fancy racks to display items is drawing ordinary customers away from the not-so-attractive kirana stores. Makeover for these stores means a lot of investment and the space is usually not available. Lesser customer, lower profits to stay in business. One of them confided in me that his profits has reduced by a staggering 66% in the past 8 months.

This is a phenomenon happening all around the country forcing people to diversify or start some other business. According to a study by  Government, it was found that nearly 25% of unorganized retail stores will shut shop over the next 5 years. Will the initial retail boom sustain itself or will it give in to the slowdown is something to be seen! Until then it’s the end customer who stands to gain from the best of both worlds.

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Comments

2 Responses to “Why my next door grocerywala shut shop?”

  1. Which Main? What Cross? on June 16th, 2008 8:40 am

    Sad but true. It’s the same story everywhere.

  2. Manish on June 21st, 2008 1:02 pm

    Kirana shops are not going to shut down for the simple reason that no one wants to drive down to a mall to get a bar of butter or a kg of onions. Sure, you may not buy in bulk from them but they get enough customers to make up for that in volume. At least I haven’t seen any slow down in the kirana shops near my house even though there are 5 big retail stores nearby.

    Conceptually, this is right that no one wants to drive down to the mall for a Kg of onion. Most households work on a weekly/monthly buying system. Ofcourse, there are things you miss out that you replenish from the next door kirana shop. The point is these very households supplied the kirana guy with their monthly list - most often on a credit basis. They may have not shut shop perhaps because there is no alternative business for them to diversify in. And are just barely surviving because it lets them bring food to their table. If you have 5 malls nearby, I’m more than positive his profits would have been slashed tremendously. Talk to them and you will know the inside story which isn’t as rosy as it seems!

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