Page 42 - DMGT550_RETAIL_MANAGEMENT

Unit 3: Types of Retailer

3.4 Retail Models in India: Current and Emerging Notes

The Indian food retail market is characterized by several co-existing types and formats. These
are:
1. The road side hawkers and the mobile (pushcart variety) retailers.

2. The kirana stores (the Indian equivalent of the mom-and-pop stores of the US), within
which are:
(a) Open format more organized outlets
(b) Small to medium food retail outlets.
3. Convenience Stores

4. Supermarkets
Within modern trade – the organised retailers, we have:
1. The discounter (Subhiksha, Apna Bazaar, Margin Free)
2. The value-for-money store (Nilgiris)
3. The experience shop (Foodworld, Trinethra)
4. The home delivery (Fabmart)
While the focus of this note is on modern organized retail trade, we hereunder present insights
into the smaller, semi and unorganized retailers.

Hawkers – ‘Mobile Supermarkets’

The unorganized sector is characterized by the lari-galla vendors (also known as “mobile
supermarket”) seen in every Indian bylane and is, therefore, difficult to track, measure and
analyse. But they do know their business – these lowest cost retailers can be found wherever
more than 10 Indians collect – a rural post office, a dusty roadside bus stop or a village square.
As far as location is concerned, these retailers have succeeded beyond all doubt. They have
neither village nor city-wide ambitions or plans – their aim is simply a long walk down the end
of the next lane. This mode of “mobile retailers” is neither scalable nor viable over the longer
term, but is certainly replicable all over India. Most retailing of fresh foods in India occurs in
Mandis and roadside hawker parks, which are usually illegal and entrenched. These are highly
organized in their own way. Hawking of food products, cooked food and FMCG products is a
very interesting model of retailing. Much has been written about these roadside “malls” – from
social security issues to their nuisance value. However, if you put these hawkers together, they
are akin to a large supermarket with little or no overheads and high degree of flexibility in
merchandise, display, prices and turnover. While shopping ambience and the trust factor maybe
missing, these hawkers sure have a system that works.

Kirana/Grocers/ Provision Stores/Mom-and-Pop Stores

Semi-organized retailers like kirana (mom-and-pop stores), grocers and provision stores are
characterized by the more systematic buying – from the mandis or the farmers and selling –
from fixed structures. Economies of scale are not yet realized in this format, but the front end is
already visibly changing with the times. These stores have presented Indian companies with the
challenge of servicing them, giving rise to distribution and cashflow cycles as never seen
elsewhere in Asia. The model is very antithesis of modern retail in terms of the buyer (retailer)-
seller (FMCG) equations. It is not unknown for MNC leaders to link the supply of one line of
products to another slower moving line of products. These retailers are not organized in the

LOVELY PROFESSIONAL UNIVERSITY 37