KB Fair Price Archives - Anshul Punetha

A “Convenient” Truth..

I have been saying this for some time now that franchisee led expansion of the convenience store format seems to be the only way to get Modern retail closer to shoppers.

I have talked about KBFP’s franchisee programme here.

Seeing this article on my Linkedin timeline today made me feel strangely Nostradamus-like !

While KBFP had announced the launch of the franchisee programme nearly 9 months ago (Aug 2012 to be precise), there had been no indicator of any movement on this till now.

This article mentions that the group is looking at opening up a 1000 new stores in the next 2 years ! These stores will come up in Delhi, Bangalore and Mumbai.

Going with the assumption that a kirana store caters to around 500 persons, and assuming a minimum of 1.5 crore population per city, the TT outlet universe would be around 40,000 stores.

330 new ones on a base of 40,000 would barely register !

But if played smartly, I think this strategy could work.

The new stores could be launched by locality. Select the target localities (those with the right shopper profile) and saturate the larger ones first. This would ensure a few things –
1) Operational stability – it would be easier to serve more shops in selected locations rather then spreading oneself too thin.
2) Greater visibility and impact within selected locations.
3) Creation of pull – once the concept clicks with shoppers, the stores would start getting feedback. This could aid the decision to expand. As the trade starts to see merit in this, KBFP would get more requests and greater enrollment.

The rural experiment is another game changer in store – and FMCGs will be quick to see the value that this would add to them – significantly lower distribution costs, and reach to new consumers are the most obvious benefits!

Let’s see where this round of crystal ball gazing ends up !

The Game Changer is Here !

Here it is, today’s print ad from KB’s Fairprice, inviting store owners to join hands with the group and avail the benefits of an IT enabled, scale back – end, while ensuring a standardized front end and uniform shopping experience.

I have discussed the franchisee expansion model in my earlier posts here & here.
I firmly believe that it has the power to address the job loss due to FDI in retail, and other theories that currently limit the growth of this channel – mainly due to lack of funds to expand the coverage network.

Mr Biyani in his interview here had mentioned the plan to expand store coverage in Delhi and Mumbai through a franchisee network. Today’s ad has set the ball rolling.

KB’s Fairprice has a large store network in Delhi & Mumbai – this seems to be a first step in ramping it up nationally.

The website here details the fixed costs and up front investments. It also mentions the selection criteria, the application and training process (a 9 day orientation programme), P&L preparation and the obvious benefits of aligning with the brand.

This truly is a game changing initiative – for two reasons – IMHO.
1) This is a “never before” shout out to retailers across the country – those who want to upgrade themselves, or would like to get the benefits of scale.
2) The clarity and transparent nature of the communication – to be sure, I checked the Nilgiris website also – since it runs on the franchisee model. KBFP’s site wins hands down on this front. This is the first time that a large brand has spelt out so clearly what it wants from its partners – the last memorable example was skumars.com (clearly not so memorable now)

Will Mr Biyani & team be able to crack the code ? Will only ATL communication help ? Should they also roll out a retailer engagement plan / road show ? (maybe they have thought of it – it will happen only to the selected franchisees ? How will India’s Kirana community respond ? What will be the impact on people like Araamshop.com ?

A strangely intuitive feeling strikes me as write this – would it not help both KBFP & Araamshop to integrate their business models? Perhaps, at some stage they may even end up doing so – and I hope that I am proved right on that count as well !