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Kirana Stores v/s Supermarkets

“The Boom and Doom in daily markets”. Presentation on “Why shoppers prefer limited brand variety in Kirana Stores over huge brand variety in supermarkets?” gave me an opportunity to do an in-depth study on traditional & modern FMCG retailers. The study is based on research upto year 2011.

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Kirana Stores v/s Supermarkets

  1. 1. Why shoppers prefer limited brand variety in Kirana Stores over huge variety in supermarkets? Ridhi Luthra 70183
  2. 2. FMCG Industry Category Breakup Max. 53% Food & Beverages Modern Retailer Traditional Retailer FMCG popular Indian companies ITC, Amul, Cadburys, HUL, Nestle, etc. Store Ambience Locally present, hence convenient Indian FMCG sector (2009) US$ 25 billion (Rs. 120,000 crore) Brand Perception Good Customer Loyalty Huge product offerings Amazing services Price Points Quality products Promotions Price Points FMCG characteristics (consumers) Frequent purchases, low price, low involvement FMCG characteristics (marketer) High volumes & STOs, low margins, extensive distribution network Growth drivers (demand side) Consistent GDP growth, increased income, etc. Product Availability Growth drivers (supply side) Retail growth, low labor cost Store Staff Service
  3. 3. Understanding the pulse of the customer New products launched are first available at Kirana Stores “Do you have eggs?” High degree of replenishment Overall service level
  4. 4. • Consumer Survey & Retailer’s Interviews done within the area of 1-2 km of Greater Kailash, South Delhi. • People of all ages, gender, and income were questioned about their purchasing behavior for FMCG. • Kirana stores chosen are Rohit stores and Mehta Stores • For the supermarkets, Star Bazaar (only 1 store) and Big Apple (more than 30 stores) have been chosen.
  5. 5. Hypothesis Research Objectives I agree, Kiranas offer similar brand variety like supermarkets with personalized services. Variables To study the consumer behavior shopping for FMCG considering various factors like price, discounts, services, location, etc. Product Brand Price For sure, new product availability and replenishment services are made earlier in kiranas than supermarkets. To analyze which format (traditional/ modern) is preferred by the shoppers for FMCG and for what reasons. To understand the supply chain management system of kirana stores and supermarkets.
  6. 6. Sample Size – 25 consumers Where do you usually go shopping for FMCG? Are you loyal to some particular FMCG brands? Other Hypermarkets 32% Yes Supermarkets No 68% Kirana stores 0 5 10 15 20 0% If no, then where do you usually Do you change your FMCG brands due to changes in prices? look for new brands? 14% No Kirana stores Supermarkets Hypermarkets Yes Other 0 5 10 15 20 86%
  7. 7. Rank (1-7) as per your priorities considering various factors for Kiranas 8 7 6 5 4 3 2 1 0 Brands Availability 8 Services 4 Series1 Pricing 6 1 Convenienc Convenienc Discounts/ e (parking/ e (small Trust/ Loyal Schemes traffic) packs) 2 3 5 7 Rank (1-7) as per your priorities considering various factors for Supermarkets 6 4 2 0 Brands Availability Series1 Pricing Services 1 5 3 Convenienc Convenienc Discounts/ e (parking/ e (small Trust/ Loyal Schemes traffic) packs) 7 6 2 4
  8. 8. Customer loyalty Small Packs Problem Product Availability Price Reductions Experiences Convenience
  9. 9. Kirana Stores Working more than 12 hours daily Supermarkets Working more than 12 hours per daily Daily footfall: between 50 – 400 people Daily footfall: between 400 - 1000 people Basic products available of popular brands (4600 products) Wide range of products and brands available (15,000-20,000) Price range variation: Rs 5 - 500 Price range variation: Rs 5 - 1000 Employees: uneducated; less than 10 Owner handles the store Educated employees, above 25 Store manager handles the store Services – free & any quantity odd hours delivery, credit system Services – home delivery (Min. Rs 500) Trolleys at store level Distributors supply FMCG company to warehouses to stores Company based schemes & discounts on monthly bills Company based schemes and store promotions
  10. 10. Kirana stores: more organized, product offerings, systematic and advertisement Sample size is only 25 consumers & zone selected is G.K., South Delhi Supermarkets: require personal touch, better location, small packs & products availability Sabka Bazaar store manager refused to give interview due to company policies