Tuesday, October 2, 2012

Combat ‘FDI’- Head On!!

There has been a great amount of hue and cry across the country regarding the approval of FDI (Fixed Direct Investment) in retail (in particular) as compared to the FDI in aviation and broadcasting. The small kirana stores are really scared that the entrance of Biggies like Walmart  Carrefour etc would snatch their daily earnings and hamper their survival. But that is not the case empirically, look at China where FDI in retail has been in existence for almost two decades now but still the penetration of the so called Biggies in the Business is hardly 20% of the entire organized retail sector. One of the CRISIL report suggests that even if  these big international players enter the domestic market they would not be able to capture more than 15% of the organized retail market. In short, the spectre of these big names taking away the business from the kirana stores is highly hypothetical.

Let’s be practical and analyze the situation, domestic organized retail sector witnessed some of the large brands getting established like Big Bazaar, Reliance retail or Pantaloons but none of them were able to sweep away the market off these kirana stores. Domestically their existence was not lethally harmful for these kirana stores. Their business was definitely dented but the reality is that still majority of people across the country has an ease to visit these kirana stores more as compared to the big domestic players.
Now as the government has approved and paved the way for the international players to enter the domestic market lets be a little pragmatic and consider the situation. As proved earlier that these retail chains can't suck the business out of these emotionally bonded kirana stores then why this hue and cry? Rather its an opportunity to streamline the business now, make it more operationally efficient, try and woo the customers with attractive prices and make the most of the market knowledge which these stores have and the big retailers don’t.

Competing with big players is not possible in terms of prices they offer but there are many advantages which these small domestic suppliers have and these biggies don't, like:
·        1. Kirana stores are in existence from many decades now and no one knows the pulse of the domestic market as better as they know.
·        2.  Accessibility of these stores is the biggest positive while the biggies have to have a big place outside the main city to avoid the high realty prices and rents.
·       3.   At the end of the day an emotional connect with the supplier acts as an adhesive for the kirana stores.

Though these big retail chains can dent the business of these domestic mom and pop stores a bit but definitely they can’t grab the market share which these kirana stores have.
Its an opportunity for these domestically loved kirana stores to revamp their business strategically, become more operationally perfect, stronger emotional connect with the customers is the need of the hour and better supply chain management would make these small outlets the biggest competitor of these international biggies.

So a message to all the kirana stores, national and international retail chains: Face D Intense competition (FDI) and Finally Deliver the Inevitable (FDI) and that inevitable is to deliver the right product at the right price for the right customer. Because at the end of the day – “Customer is King”.  

1 comment:

  1. Vei true..also, m nt vei sure bt i think, derz a competition commission in India that prevents any probable monopoly. So there is no need to fear the entry of either Walmart or Carrefour.