Kiranas upgrade to wean ’em back from malls

Makeover pays, kiranas around the country are fast realising.
Like Lata Nagraj, the owner of Sri Manjunatha Provision and General Store in Bangalore’s Rajajinagar, who decided to upgrade in a bid to stanch customer attrition.

The presence of modern retail chains such as Trent’s Star Bazaar, Reliance Retail’s RelianceMart and Future Group’s Big Bazaar in a kilometer’s radius had starting taking a toll on footfalls at Nagraj’s 15-year-old, 10X12 outlet, which bore an unkempt look with fast moving consumer goods and staples lying undistinguished all over. The choice was clear —- change or perish.

Two months ago, Nagraj and her husband decided to put in `70,000 from their savings to revamp the store. Old disordered shelves were replaced and products were neatly stacked with clear labelling of categories like ‘detergents’, ‘tea & coffee’ and ‘oral care’ to enable consumers to decide their purchases at a glance.

“Now our sales have gone up 25%,” said Nagraj. “We think consumers in the locality are appreciating the change, and we hope to recover the investment within a year. Earlier, we were unable to attract consumers.”
She isn’t alone.

D V Dhanraj, 50, who runs Mahadeswara Stores in Bangalore’s Nehru Nagar invested Rs40,000 in changing his store’s layout last month, just so his store could look organised. “Even though there is a Mantri Square Mall close by, I was never impacted. But I noticed an immediate surge in sales by 20-25% after I revamped my store,” he said.

If retail observers are to be believed, a good 100,000 stores have been upgrading every year to be able to stay relevant in the face of the growing count of consumer brands, products and competition from fast-expanding hypermarket chains.

Raju Reddy, a kirana store owner in Hyderabad’s Uppal area has started keenly observing his consumers now, making a note of what they seek — a practice that came with the realisation that his regular customers were also shopping at other supermarket chains.

“I started asking my customers for feedback,” said Raju. This helped him add new products such as ice creams and men’s fairness creams, which have a huge demand.

Indeed, given the consumer appetite for juices, ice-creams and cheese, many of the stores are upgrading their refrigeration facilities.

Small wonder Blue Star, a leader in manufacturing of refrigeration products, is seeing huge demand for products like deep freezers from small kirana stores in both major cities and rural markets.

“While there is no significant investment or expansion taking place in the organised food retailing sector, the erstwhile kiranas are modernising quite rapidly. Where in cities the kiranas are upgrading themselves, the ones coming up in smaller towns are quite modern from the onset. The refrigeration products that we sell to kirana stores across the country are seeing a 30% sales growth,” said B Thiagarajan, president - airconditioning and refrigeration products, Blue Star.

Market estimates peg the number of kirana stores in the country at around 12 million.

A number of kirana stores DNA spoke to in Mumbai and Bangalore said the growth in sales was as low as 4-5% as consumers restrained purchases in the last few months. Availability of funds is the biggest challenge for them.
Interestingly, much against initial apprehensions, some cash & carry and modern retail chains have been helping the kiranas upgrade.

Dhanraj, who purchases his inventory at Metro’s cash-and-carry wholesale store, was prompted by the company to revamp his store. The Indian subsidiary of Germany’s Metro Group sells primarily to kiranas, hotels, and restaurants, and has been training traditional kirana trade through its Traders Support & Partnership programme.

“Our organisation in India partners closely with kirana stores as they form an important part of our core customer groups. If kiranas survive, our business grows. We have been helping kirana stores across cities where we have distribution centres. We work very closely with them to help them understand their consumers, study their competition, plan their assortment, and design their store layout better,” a Metro Cash & Carry India spokesperson said.

The company has so far helped transform an average of 25 kirana stores each in cities like Mumbai, Bangalore, Kolkata, Ludhiana, and Hyderabad. It has been guiding these stores on product assortment and researching consumers.

Over a year ago, the largest consumer goods player in the country, Hindustan Unilever Ltd (HUL), also initiated a movement called ‘Perfect Stores’ aimed at upgrading the shelves of kirana stores across the country in a bid to ensure greater visibility and access to its products.

HUL reaches 2 million outlets directly and around 4.4 million indirectly. In 2010, the maker of Lux and Lifebuoy soaps was able to scale up the initiative to 80,000 stores and as of early this year has converted 150,000 kirana stores to ‘Perfect Stores’.

“Our entire approach is moving away from supplying products to retailers to marketing our brands with shoppers. It is a really important difference. Because when you go to rural areas, where media impact may be minimum, how do you market your brands there? This is a really big leap we are taking from where we were to where we are. It’s not about just supplying in trucks it’s about marketing our brands to point of sales,” Harish Manwani, Unilever’s chief operating officer and chairman of HUL, said in a media interaction in Mumbai last month.