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IIM Ahmedabad suggests combination of online & kirana to develop retail
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Monday, 10 March, 2014, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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fiogf49gjkf0d A research paper by the Indian Institute of Management, Ahmedabad (IIM-A) - titled ‘Online Retailing Paired with Kirana - A Formidable Combination for Emerging Markets’ - suggested a combination of e-tailing and traditional kirana stores as a model for the development of the retail market in India.
Called the ‘brick and click model of business’, the combination would help kirana stores - which stock items of daily consumption, including food (which, incidentally, accounts for the largest share in India’s unorganised market and possesses a great deal of potential for the online world) - compete with modern retail formats.
The paper, by IIM-A professors Piyush Kumar Sinha, Srikant Gokhale and Saurabh Rawal, urged kirana stores to take innovative steps. It assumed significance in the wake of doubts about the continuance of kirana stores when foreign direct investment (FDI) in multi-brand retail opens the doors to multi-national retail chains.
It said, “Kirana stores provide such facilities as an adequate and localised marketing mix (especially with regard to edible items), home delivery, credit and a personal touch. Moreover, consumers do not find the prices too steep, as the goods are sold at the price printed on the pack. Discounts aren’t offered, unless offered by the manufacturers.”
“But they have a number of problems, such as the rising prices of real estate, the inadequacy of good store locations, the lack of trained manpower, high overheads, etc., whereas e-tailing does not demand a huge investment in real estate, saves the consumers’ fuel and time, and is available on the ubiquitous smartphones and Internet,” Sinha said.
The paper pinpointed four factors that favoured the need for the kirana-online combination. These were the rapid penetration of technology into consumers; the fast adoption of the online medium by stores and brands; the choices offered to consumers opting to shop online, and the growing real estate prices.
It stated that the difficulty in funding was another reason why the kirana-e-commerce combination could be a possibility. It also stated that this was the ideal time for such a combination, because India is currently poised to have about 370 million Internet users by 2015.
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