By Saurav022 @ Shutterstock.com
Mom and pop shops in India are giving retail giants Amazon and Walmart a run for their money. The family run stores have almost no wage or rent costs, so they can compete with the logistical prowess of the multinationals. Eric Bellman and Vibhuti Agarwal report on the battle for India’s consumers in The Wall Street Journal:
Tiny stores known as kiranas dot every Indian street, village and slum. Usually family-run, these micro-businesses range from street vendors selling vegetables to shops the size of a one-car garage. They pay low wages and have little or no rent, which helps keep costs down. And since they cater largely to neighborhood populations, many offer instant delivery, interest-free credit and other personalized services that the global giants are unable or unwilling to provide.
“The kirana store has better economics than a supermarket,” said Rajiv Lal, a professor of retailing at Harvard University. “There is no way to beat them.”
Big retail chains, both homegrown and international, have tried for years— and often failed—to find a profitable niche in India, a massive market with 1.3 billion people and rising incomes. France’s Carrefour has come and gone. Germany’s Metro has only 25 stores.Walmart , WMT -0.61% until its recent $16 billion deal to buy a controlling stake in India’s largest e-commerce company, Flipkart Group, had its plans for the country on the back burner.
India’s biggest conglomerates, among them the Tata, Birla and Reliance groups, have launched their own new retail chains but haven’t made much of a dent in mom-and-pops’ dominance. Small retailers control close to 90% of the country’s more than $700 billion retail market, according to Indian retail consultancy Technopak.
“The real challenge for e-commerce or for brick-and-mortars or any retailer is, how do you match those cost structures,” said Raj Jain, former president of Walmart India.
Read more here.