Hello all,
I deviate from my regular weekly updates today to highlight and build on two important ideas that just got printed in the newspapers.
One was the emergence of the upgraded kirana stores (read it here) – and perhaps I can stake my claim to a little bit of prescience on this – though not in so much detail (see here).
Kirana stores are indeed an important component in the social ecosystem. Their sheer accessibility puts them leagues ahead of the competition at any point in time. And imagine, if they become like the modern retail outlets that allegedly threaten their existence, I can comfortably state that the threat would soon be directed in the opposite direction! I am quite sure that the anti FDI in retail advocates have got the wrong end of the stick by opposing investment – if at all, the advent of competition would hasten the modernization process across the country.
The article quoted Mr Sameer Suneja, the MD of Perfetti on how it had identified the high offtake retailers and treated them differently.
HUL had pioneered this differential treatment concept in 2007 with the launch of the Supervalu stores programme – which was later adapted basis respective category relevance by other FMCGs (see this & this).
The Supervalu programme was possibly ahead of its time – it was a serious attempt to upgrade the retailer from his traditional practices and fast track him towards modern retail. It was also designed with a strategic vision of occupying key display opportunities and creating a 360 degree connect with the consumer. I cannot comment on whether it was a success or failure, but I am pretty sure that the current trend of retailer upgradation owes something to this initiative, which had the potential of being a game changer.
Speaking of game changers – the other point of today’s gyaan – one name that is frequently doing the rounds these days in my mind is that of Araamshop. This is a model which is bringing the established web economy “aggregator” concept to FMCG stores in the country. Araamshop lets you shop from a neighbourhood grocery store, via a convenient portal / smartphone app – a boon for people who typically put in long hours and are too tired to go to the market once they reach home – if they reach home on time.
It is a very powerful concept, one that marries the best of two worlds – bringing the convenience of the kirana to the consumers’ mobile phones – thus providing instant connectivity and freeing up of precious time and bandwidth for the user.
I am not too sure whether the model would be sustainable in the long run – and the reasons for my doubt are as follows –
I don’t know how the business makes money – I guess the retailers may be paying them some money to become a part of their network – but this is idle speculation on my part.
However, it seems to be a low capex, low opex model, so it could break even quickly and even turn profitable soon. Will it be sustainable – not quite sure.
I believe it would be an operational challenge of Himalayan proportions to be able to ensure consistent service delivery from such a large group of diverse retailers.
I could be wrong, and will be very happy if I am proved to be, but basis field experience – I can say that exerting sufficient levels of control on this motley crew would be a challenge.
Critical to the success of this model would be a few simple, basic facts – ensure timely service, correct billing, quality of goods supplied, & deliver customer satisfaction, and do all this consistently. We must remember that in the store environment, it is the shopper who makes the choices, and has various alternatives at her disposal. In this case, the severest drawback is the ability to change ones’ mind, and pick up something else.
If the model gets the service level bit right, then nothing can stop it from taking off, as the buzz that good experience would generate would be nothing short of significant- I for one would definitely become its advocate !
Of course, we can always rewind to the Supervalu experiment – and imagine a scenario where a large FMCG company (say ITC, because it already has the critical experience of running a similar initiative with its e-choupal experiment) – would throw its weight behind this programme, and support it through resourcing – in terms of ATL, website presence and the most effective lever – stocks. It could then ensure that the retailers partner with them in this new way of doing business. This support would give the company the first right of choice, create superb brand recall and would translate to higher offtake as well – but maybe I am getting too far ahead of myself in this mist of crystal ball gazing !
That’s it for tonight folks ! Have a great weekend ahead !
