Unorganized is the NEW Organized

Indian retail sector is known for it's large number of unorganized retailers. Unorganized retailers who were popular till late 90s were known for low cost and personal relationship. One of the old ads of Nirma beautifully presented how close the unorganized retailers were to their customers.

The Ad goes like this :

(As soon as the customer enters)
Shopkeeper: Deepika ji, aayiye aayiye. Li jiye apka sab samaan taiyaar.
Deepika(Customer): Yeh nahi, woh.
Shopkeeper: Magar aap toh hamesha yeh wali tikiya
Deepika: Leti thi.

If you see the ad, the retailer was well aware of what the customer usual shop or purchases hence he already keep the product ready even before the customer visited the shop. That well, the unorganized retailers or Kirana shop owner knew their customer.

However, with the emergence of big players like RELIANCE, TATA, BIRLA, BHARTI etc. into the Indian market, retailing in India has took a dramatic shift. More and more unorganized retailers are shutting down their shops. Indian retailing has become more organized and more transparent. However, India being price conscious country, it has been very difficult for the organized retailers to provide goods at low price.

Unorganized retailers used to steal their margin by not giving sales tax since their transactions were never accounted. Hence, unorganized retailers were capable of providing goods at lower rates. Also, the operation cost of a Kirana store is very less. The Kirana stores were located in almost every nook and corner of the streets. Proximity factor played a major role in the success of Kirana store.

However, what they lacked was availability of all the products under one roof which was made possible by the organized retailers. This has played a major role in the success of the organized retailers. But with entrance of more and more players into organized retailers, competition has been forcing the retailers to provide goods at lower rates and cover as much area as possible.

Considering these factors organized retailers has been forced to think out of the box and has come out with innovative ideas to minimize their cost like logistics process, crossdocking of Walmart etc.

Nilgris has went one step further. It has realized the potential of Kirana stores and is making an attempt to bridge the gap between organized and unorganized retailing. Nilgris is trying to create a new trend by merging the marketing and operational alliances with chain of Kirana stores. Nilgris is trying to capitalize on the technical expertise of the Kirana store.

If this concept works, Nilgris would be writing a new concept of retailing where unorganized retailing would be the new Organized retailing.

You can read more about Nilgris and Kirana Store plans here : http://124.30.164.71/tmm/kma/mkt/cm/cm_200810.htm

Flagin Off with Cash and Carry in India

Cash and Carry has been in much of the talk these days. It is a new format in India, testing the retail market and trying to capitalize on the opportunities available in the country which is known for world's second largest population. Cash and Carry as you all know is a B2B format where the goods are sold in bulk at a wholesale price to the retailers.

Metro has already made their presence felt in India with their Cash and Carry store in Bangalore(2), Hyderabad(1), Mumbai(1) and Kolkata(1). Walmart has entered into India along with Bharti with their Wholesale Club named as Best Price. Carrefour and Tesco is planning to enter Indian market too.

But is Indian market really ready for Cash and Carry format? Is it really a profitable market? A recent article on Brand Equity(a weekly edition of Economic Times) has reported that the Cash and Carry formats in India is not getting much of the attention. Probably Cash and Carry retailers would have to keep their patience. Wait and watch is the word for them.

You can read the article online at : http://economictimes.indiatimes.com/features/brand-equity/Cash--Carry-formats-dont-get-the-eyeballs-in-India/articleshow/6737926.cms