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Challenges for Large Players

One big challenge Wal-Mart and the other biggies will face in India is the perception they carry by consumers. In US and Europe, a big warehouse has a recall in terms of lower prices, whereas in India, it has been exactly opposite. Smaller formats can offer lower prices because of lower overheads, no wonder they sell a kilo of potato for just 10 rupees, or even lower. India is the nation of shopkeepers.
India has 11 shops per thousand people against that of 4 in US. England once referred to as the Nation of Shopkeepers by Napoleon has only 5 shops per thousand people. While in India around 3% shops are in the organized sector, whereas around 9% of the shops are below 500 sq. ft. format, employing around 40 m people, which is about 8% of the total work force of the country.

Consumer behavior is widely varied across the globe. Coca-Cola learnt the need to adjust the sweetness and effervescence of its drink depending on the people's preferences. But certainly to understand the way people shop has been much bigger challenge. It has to do with simple things like how often people like to go to a store or the motivations that make them choose one store over another.

The real estate at preferred location and current prices can be a reason enough to deter weak hearts. The business model of retail formats also rely on the fact that everything is on display, requiring lots of space. Probably solution lies in setting up stores in the outskirts of the urban centers, but it will lead to emergence of other challenges too. Most of the house-holds don't own cars, a must to travel to outskirts centers. Some such shops opened in recent times already are experiencing the problem. However, the infrastructure developed in the areas around the organized retail outlets, also benefits the overall business environment in the areas including rise in the property prices.

Advantage Kirana

Kirana, having a wide reach and deep penetration, is poised for equal growth with the help of larger peer. Transportation, warehousing and distribution infrastructure in enigmatic India will continue to be managed by the kiranas.

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* Contributed by: -
Rakesh R. Panday, is an independent Brand Consultant at Jamshedpur and also enrolled in Ph.D. Programme at www.bitmesra.ac.in with subject, "Managing Brand in Retail - Study of Major Initiatives in India".