SPIT AND POLISH: Sri Gurudev Super Bazaar in Nagpur, which has morphed into a modern retail outlet; (Below) B.C. Bhartia, president of the Confederation of All India Traders
Pix: Sudarshan Sakharkar
It’s school time in Nagpur. The classes deal with anything from display to ways of addressing clients. But the students — Nagpur shopkeepers who were reluctantly dragged into class to begin with — are not complaining. Vijay Jethia, in fact, went back to his father’s store after the class and spruced up the shelves.
Just a few kilometres away, homemaker Gouri Gaidhane walks down the brightly lit aisles of Bante Super Bazaar, piling her bright red basket with provisions. Till last year, Gaidhane would hand over her list to the shop owners and wait outside for half an hour or more while they went around the dimly lit shop putting everything together. “Now I’m done in 15 minutes and I don’t have to wait outside in the heat,” she says.
That’s because eight months ago, the Bante brothers converted the 800 square feet Bante Kirana Store that their grandfather had set up into the 4,000 sqft Bante Super Bazaar, complete with bright lights, shining racks, air conditioning, computerised billing and close circuit television.
Across Nagpur some grocers are sprucing up their shops, converting dowdy kirana bhandars into snazzy super bazaars. Wooden shelves are giving way to bright racks, from where customers select what they need. Illegible hand-written receipts on scraps of paper have been replaced by computerised bills. Shopkeepers are being trained on ways to battle competition with a spate of measures, including special classes.
In the Maharashtrian city, retail is serious business. While the Centre dithers on allowing foreign retail chains to set up shop in India, a movement to get small retailers to stand up to the coming foreign retail onslaught is slowly taking shape. “The younger generation prefers the big chains for their ambience. If we provide the same atmosphere, why will they want to go there,” asks Gyanendra Rakshak, proprietor of Sri Gurudev Super Bazaar and one of those who have transformed their shops.
This comes even as large domestic retail chains are closing their smaller neighbourhood convenience stores, after clocking up red ink on their balance sheets (see David vs Goliath). Some kirana store owners feel that unless they pull up their socks, a similar fate awaits them.
“There is no point in merely crying about Walmart coming to India and wiping us out. We also need to change,” says Prabhakar Deshmukh, proprietor of Deshmukh Trading Co. Pvt. Ltd, which runs a large grocery shop located in a rather run-down area of the town. Along with introducing innovations there — computerised order booking, a waiting area for customers and a mike to announce when orders are ready — he has almost finished constructing a 2,200 sqft, four-storeyed centrally air-conditioned building a few kilometres away. The grocery shop as well as other retail shops dealing in shoes, garments, stationery and other goods that various members of his family run will shift into this building, which has ample parking space outside. “This will be our mall,” says Deshmukh.
So does that mean small traders are okay with the idea of foreign direct investment (FDI) in the retail industry? Not really, says B.C. Bhartia, the Nagpur-based president of the Confederation of All India Traders (Cait), which marked Thursday as “anti-FDI day” across 60 cities, burning effigies that said “FDI” in bold letters.
GETTING THERE: Nagpur’s Bante Kirana Store is now the swanky Bante Super Bazaar
Pix: Sudarshan Sakharkar
“We are clear that we have to oppose FDI and we will continue doing so,” says Bhartia, whose family owns a large department store in Nagpur. “But let us be realistic. We will not be able to stop it, only stall it.” If FDI in retail is delayed by another two years, the small shops can prepare themselves to give Walmart and Carrefour a good fight, he argues. “We want to make Nagpur the role model.”
The battle lines are already being drawn. Cait is planning to use the big retail chains’ weapons against them. Bhartia and Cait’s Delhi-based secretary general Praveen Khandelwal have practically memorised How Wal-Mart Is Destroying America (and the World) — a book on how a large chain such as Walmart affects small shops. Cait’s research wing pores through whatever material it gets on the operations of large retail chains. Some of the material is used to counter claims of the huge benefits organised retail will bring; the rest provides tips for small retailers.
Some of these tips are going to be used by Grahak Super Mart, a private limited company that Bhartia and fellow traders in Nagpur registered last year. The idea is to make Grahak Super Mart a retail chain managed on the lines of a co-operative. Member-shopkeepers will be franchisees of the Mart, displaying its logo on their signboard. The shops will have smartly-dressed attendants. Boys will wear trousers and T-shirts, while there is still debate on whether girls should be dressed in skirts/trousers or salwar kameez.
“Shopkeepers have to realise they can’t lounge around in their banyans anymore,” says Bhartia.
Appearances alone won’t be enough. The big chains leverage their size to get huge discounts from producers and manufacturers and are thus able to sell their ware cheap.
Mart plans to replicate this by centralised procurement, processing and packing of loose provisions, besides sourcing packaged goods directly from manufacturers at the discounts available to big retail chains.
The company will also manage all the legal and regulatory requirements such as filing VAT returns and getting various registrations centrally, as also advertising and marketing. “Doing this individually is costly and time consuming. Shopkeepers can save money and concentrate on their stores if this is centralised,” says Anil Nagpal, whose family manages Frontier Kirana Store in Nagpur.
The Mart has fewer than 10 members now and will need close to 150 members to be a viable venture. Bhartia is in no rush to enroll members. He wants to proceed cautiously, checking all legal issues and ensuring that only shop owners who are ready to comply with regulations join the venture. Small shop owners tend to be casual about this, something that needs to change, says Bhartia. The reluctance to comply with such obligations and keep proper accounts is what prevents small traders from getting bank loans to expand and upgrade their businesses.
It is to change these attitudes that Cait has started another initiative — a “retail school”. Delhi-based training institute Receptive Acumen Skill Development has been hired to conduct orientation sessions for shopkeepers. Starting with Nagpur last August, over 40 such sessions — covering even issues such as complying with laws — have been held across the country. Single sessions lasting a few hours won’t be enough to transform shops, Khandelwal concedes. But getting batches of 30 each has itself been a minor victory, with shopkeepers unwilling to leave their shops for something they think is a waste of time. In Nagpur, some like Jethani’s father prefer to send their sons.
The special classes were mooted by Bhartia two years ago. In fact, it’s his unyielding zeal that is pushing for change in his home town — and beyond. He had to battle to get the Cait executive to agree to the idea and now plans to start more intensive courses on different topics across the country. In Nagpur, it has tied up with Reliance Web World to train shopkeepers in using computers. It is in negotiations with English language trainers for spoken English training.
It’s a small movement yet, confined just to Nagpur. In west Delhi’s Janakpuri area, Baldev Kumar isn’t interested in changing his dingy little grocery shop. “My regular customers hardly come here, they just place orders on the phone and I have them delivered,” he shrugs. Kumar’s complacency may have something to do with the fact that a Spencer’s outlet that had opened opposite his shop in 2006 left two years later. “See, they’ve gone. I’m still here,” he smiles.
These people are not seeing the writing on the wall, laments Bhartia, who has still not been able to convince many Nagpur shopkeepers to change. “The younger customers want to see what they are buying; they won’t just place orders over the phone.” The closure of a few stores by large retail chains does not mean the small shopkeepers have won the battle, he points out. “It is only a tactical retreat; they haven’t completely withdrawn.” Once FDI in retail is allowed, the big chains will be back with deeper pockets and better expertise.
R. Subramaniam, managing director of the now-closed Subhiksha chain, dismisses concerns about big chains edging out kirana stores. “No one has cracked a model to substitute the small stores,” he insists. Pinaki Ranjan Mishra, partner, retail and consumer practice at consulting firm Ernst & Young, agrees. India is such a huge market that different retail models will co-exist, he says.
Bhartia concedes the point. “Small shops won’t be wiped out overnight, but they will disappear over 20 to 50 years if they don’t change.”
Is your neighbourhood shopkeeper listening?
David vs Goliath
Call it Indian retail’s David versus Goliath battle. Round One appears to have gone to David — the small mom-and-pop stores that service your daily needs — while Goliath, the large retail chains owned by powerful corporate giants, is in retreat.
In the mid-2000s, the retail chains were promising to change people’s grocery shopping habits for ever. Glitzy convenience stores sprouted in neighbourhoods across the nation. Just about five years later, companies seem to be doing a reality check. “No one is making money at the company level, though individual stores may be generating profits,” says Amitabh Mall, partner and director at Boston Consulting Group, the consultancy firm.
Indeed, Spencer’s logged an average 15 per cent sales growth in individual stores in 2011-2012. Reliance Retail, too, has seen a 20 per cent average growth in store sales. Both, however, have reported heavy losses — Rs 255 crore and Rs 273 crore, respectively. The losses are due to the hefty expenses they have to bear on rent, operations and staff. These costs are negligible for small retailers, most of whom bought the shops at cheap rates and have family members helping out. As a result, they are better off than the large retailers. No wonder some retail chains are closing down their small format stores, while others are not adding to their number. According to media and market reports, Aditya Birla Retail has closed down over 50 More small stores and has no outlets in Mumbai. The company did not respond to emails from The Telegraph. Spencer’s closed 15 small format stores in 2011-2012.
Almost all are concentrating on larger store formats like hypermarkets. “Shoppers increasingly are looking to migrate to shopping at such stores for ease of range, better offers and their time management,” Sanjay Gupta, executive director, marketing and business development at Spencer’s, told The Telegraph in an email. Store-level profitability is also better in such formats, he says.
Even if the large retail chains don’t completely vacate the small store space, the shift in strategy is a victory of sorts — for now — for the kirana stores. Says Ankur Bisen, associate vice-president at retail research firm Technopak, “The David is the Goliath here.”
Grahak Super Mart, a private limited company, will become a retail chain managed on the lines of a co-operative. It plans on launching centralised procurement, processing and packing of loose provisions, besides sourcing packaged goods directly from manufacturers at the discounts available to big retail chains.
A “retail school” functions now. Delhi-based training institute Receptive Acumen Skill Development has been hired to conduct orientation sessions for shopkeepers.
Grocers are sprucing up their shops. Wooden shelves are giving way to bright racks. Hand-written receipts on scraps of paper are being replaced by computerised bills.
Additional reporting by Hemchhaya De in Calcutta