Insights Retail Reports Kirana

7/28/2019 Insights Retail Reports Kirana

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Insights from the Retail stores I visited

The visit has been made on certain kirana stores, I spent around hour to 1 hour standing there and

observing the behavior of customers and shopkeeper, I did ask questions about the supply chain

Following is the brief of findings

1. Most kirana stores have repeated customers from nearby locality and they do provide creditfacility and home delivery facility to loyal customers, as well as they do take orders over the

phone.

2. They do give certain discount over the MRP to the regular customer over the total bill.3. Most of the purchase made are unplanned buying (consumer use their memory to find what has

been finished at the home, and what need to be purchase) and impulse buying( instantly

without any memory association)

4. Certain consumers do come with the list of item to buy. (Few I Observed, the no. can be high forsuch buy at the start of the month on weekend)

5. Every kirana store have mix assortment of all the product lines, variety is differentiator in smallstores and large size stores.

6. I observed a pattern of keeping the SKU( like most selling items were in front) in individual shopbut it differs from store to store( like couple of stores were keeping food item in front or grocery

in front, while some of them have personal care in front)

7. Most of them were not aware from the margins they earn across categories( or maybe theywere reluctant to tell me)

8. For sourcing of material, usually they order through the phone to the wholesaler/distributor,sales person from respective companies do visit the stores in a week to take the feedback about

sales of the product or to take orders ( distributor/wholesaler do send their guys to take orders)

9. All the shopkeepers were on consensus that companys wholesalers/distributors do not providestock on credit; they have to pay cash for every billing.

10.None of the shops have computerized billing, one said that executives from companies nowcomes with the tablets and do the ordering and billing process online.

I met with the supply chain executive of the Hindustan unilever ( I knew him personally) he throw some

light how the HUL supply chain works but even he denied to tell the margins across categories they offer

to wholesaler/distributer.

Apart from this, I studied many reports over the supply chain of companies and traditional retail,following is a brief of it.


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Understanding the supply chain of traditional retail in India

India traditional retail market consists of more than 95% of total retail market. There are more than 15

million mom and pop stores across India and it is growing with the CAGR of 6%. The Organized retail

market consists of 5% and growing at the rate of 28% CAGR.

India due to its huge population base and rising income level has become center of attraction for large

players of the world and most of them have been trying hard to understand the consumer of India. All

the big business houses of India have also stepped in with the huge cash flows to invest in the retail. But

as of now, most of them are non-profitable.

It is very hard to draw customer to modern retail chain as the Indian consumers have different shopping

habits compared to their foreign counterparts. Therefore major FMCG companies have been identifying

the potential retail stores in terms of turnover and helping them to stand against the modern retailer

with the traditional values attached.

Major FMCG companies have established their information systems to make the flow of smooth and

timely, to reduce the stock outs, to improve replenishment time as well as cycle time. Due to the IS,

there supply chain have become more responsive than efficient.

Lets look at the supply chain drivers in traditional retail first then we will see the supply chain of

different FMCG majors.

Location

Most of these stores are spread across the residential colonies and local markets and covers almost

entire population of the town/city. Most of the stores are having size of 200 sq. ft.

Inventory

Food category is the major category which drives the business, apart from it, these stores keep,

vegetables, Non-food, staples, beverages etc.

Food items are generally carried for 4 days (avg. values), while vegetables have the 2 days of stock,

other items have the 7 days ofshelf time.

Stock outs are issue in the kirana stores, there is around 5 %-10% of stock out happens generally.

Sourcing

These kirana stores generally source from the wholesaler, stockiest, distributors and depots based on

convenience, special offers and discounts, credit facilities, variety and quality of merchandise

They generally procure things by ordering through the phone to wholesalers, then the salesperson visit

to the stores, other than this they also procure through the phone to distributors or by personal visit.


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Mode of payment is generally cash, but few retailers do get credit facilities.

Credit happens generally for one week to two weeks

Pricing:

Most of the consumers to these kirana stores are repeated and loyal, kirana stores have to provide

sufficient discount to keep the service level, therefore most of them give discount of certain percentage

on the total bill amount as well as credit facilities. Generally the total discount percentage varies from

2% to 5%.

General observations

Kirana stores do not focus on visual merchandising

Most of the kirana stores are not using computers.

Merchandising management is an issue, not aware of slow moving and fast moving.

Sourcing on credit is also an issue for small size retailers.

There are certain factors which are named as retail priority factors (RPF)

1. Product assortment in the kirana outlet (variety and quality)

2. Infrastructure (the layout, appearance, amenities, parking, location)

3. Price (price and offers provided)

4. Communication (with consumers, company sales persons, distributors etc)

5. Service (response time, home delivery, payment options, and extra services)

6. Relationship with consumers (loyalty)

7. Proximity (the reach)

Price is the most competitive factors followed by the assortment and proximity and service, these 4

factors accounts for almost 75% of total competitiveness.

Two types of shopping habits is shown by the consumers

Routine shopping (Food and Beverages, personal care)

Occasional shopping (clothing and textiles, consumer durables. Home dcor)


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Supply chains of Major FMCG.

Hindustan Unilever Ltd

Amul

Factory Company Depot Regional Stockist

Wholesaler

Retailer


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Britannia

Farmer unions Co-ops societies Member unionsState federations

/GCMHFL

Distributors/w

esaler/stock

Retailers

Manufacturing

plantsC&F agents Distributors

Wholesaler

Retailers

Insights Retail Reports Kirana

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