Sep 6, 2015

How to Enter in Kirana Market with New Product Line

Here I will give few ideas for small companies or entrepreneurs who have limited source but they are passionate to initiate business. Certain rules are common for all marketers so they have to follow those rules in the primary phase.

Before you go to a new market first you have to make a detailed feasibility survey.  Such a survey should be carried out by in-house team where you need to draft a questionnaire keeping few points relevant. Before drafting a survey questionnaire you should have the first detailed product knowledge and all measure related to food safety and other statutory compliance, packaging and SKU size and master packaging type.  Once you finalise your product and it's complete product note then go to make a survey in the focus market. This survey will give you a detailed picture of market size, consumer base and retailers behaviour.

Once you have a detailed survey then you can easily make budget and sales planning.
For small enterprises, you should pick your focus market first. After that mode of supply chain system need to be aligned like you are going to appoint a distributor in that focus market or you as a company will do the direct distribution. If the focus market is your native place then it would be good to have direct market distribution rather go for seeking distributors. As soon as a Distribution channel is finalised go for recruitment of sales and marketing staff.  Remember General manager of sales should be from the market or he should have experience of the product line you are having.  Never recruit people from other streams.  Sales officer or representatives you can recruit from different sales verticals but they should be properly trained before they go market.

Product knowledge, about company, promoters and policies should properly be given to them. Fill full enthusiasm and energy in them. Give them trust that your products are good in terms of quality, price and service will be of the best class. All such positive things should be given on daily basis as a routine diet.

Once primarily measures of the market are done then the time comes at your workshop or factory side where you start working on product manufacturing, labelling or relabeling as per the nature of your product.

Map your focus market in zones/Clusters and under zones make weekly beats for sales planning. Sales beat, market beat or delivery beats depend on the market size you are going to explore. Generally, a city like Delhi needs 20 sales beat if you are going to cater to the whole city whereas a city like Jaipur will need 10 sales beats.

Beats mean a dedicated area under a sales officer which help him to map retailer day wise. Do not target 20 shops per day and per week 120 shops under one SO or SE. 
When your salesman starts exploring beats so there they need more time to interact with retailers. It helps them to introduce your product to them. So 20 shop per day for a SE is more than enough.  In the first three months, there would be productive calls around 8 to 10  and slowly it will increase to 60 to 80%. Don't expect 100%.

If you have a marketing budget in big capacity then only choose your customer base otherwise you need to go by the following method.

There is a category of stores in Kirana segments like a store or outlet having per day 30000 to 50000 comes under A category and below 30000 it comes under B, C and D. Big retailer under A category or A+ category will not entertain you easily because they are well off in terms of customers footfall, business and they are having full attention from brands so they don't want to keep new brands or products so are more rigid. Here you have to select stores having reasonable sales,  must be attentive and care about you. So here you will find Outlets under B, C and D category. Go with them and introduce your products to them.

This is the cheapest way of marketing your products in your target market because these small Mom and Pops shops have a direct connection with their customers and they can push your new products to them taking own reliability and trust.  Within 1 year you can capture 2nd line retainer market.
No doubt this process is little bit time consuming but if you don't have a deep pocket for burning money in marketing then this is the best way.
I did this in many cities and without spending a single penny on marketing I could succeed to firm roots to their brands.  Few of them are from Delhi, Hyderabad, Dubai, Singapore, UP, Rajasthan and many more. I will explain the name of those brands here but they now doing business of millions of dollars. Anyway, this is the easiest path to find the destination for your products and after one year you will find those big retailers from A and A+ categories will approach your salesmen and they will enquire about your products.

You know why because some of their customers demanded your products which they don't have. Remember retailer will not say no to their customer if one has demanded particular products. Here you have silently created demand among their vicinity so now you can step up to their counter and place your products.

One important thing to remember always gives a boost to your salespeople, your logistic team and your account team because they are the ecosystem of your distribution.
Always pay higher than your competitors, create loyalty by giving them special attention.

Especially to salespersons, give them quantifiable incentive plan, instead of giving annual appraisal make it half-yearly or quarterly. They are your brand ambassador.

In the very first day, all of your sales staff should have a proper uniform so they will feel energetic. Equipped them with the proper bag, stationery and try to make the system fully digital. Nowadays you can take a sales order on mobile so you should opt for such IT tools.

How to boost your sales team. It is a vast subject. I will write in detail on this.

Now in very first dealing with retailers you should make your payment, delivery, return policy very clear so that retailer can envisage the same in their routine and follow them. Never give credit beyond 15 days, yes in some products you have to choose this as per market practice but try to make payment term in your favour. You can give incentives to the sales team or collection team on timely collection of payment. There are many good retailers who make cash payment like COD so there you should give them extra cash discount and good treatment.

Always remember you should make a proper payment follow up and make it daily routine. Never let it open with your sales team. While setting up the market for your business you should bear enough patience and try to get a break-even after 18 months of start.

Once you attend BEP then you need to start ATL/BTL activities to create pull from the consumer end.  It is then needed. First 18 month period you need to push your products to retailers and onward you have to make your marketing efforts to pull demand from households. If you do this way then by end of 2nd year you will have 10% either GP or NP as per the profitability of your products. 

Now you are ready to expand your market.  Here you need a different strategy.  in my next blog, I will write on this.  In case you need any immediate comments or advice you can reach to me at 

First, make your self success, survive and sustainable
Sustainability is the key to our survival on this planet and will also determine success on all levels.

"Remember Retail is  Detail"

This is just a brief about business development in Retail.
You may drop an email to me at 
Bs Rana

Development in Indian Kirana Retail and challenge for Traditional Kiranas

Turning Point in Grocery retail after 2013 when the first time Future Group thought of opening new franchise Grocery stores in Rural or Semi-Urban Areas. Though retail is witnessing significant development in the coming days amid the entrance of big retail players.  Such events are not only happening in Kirana but also having at market places whether it is physically available or virtual.  

Still, some people are thinking to open retail chain as 7eleven has in US and Japan, Some are thinking of Zoon in UAE, and many more want to operate it the way it is being operated in the US and another developed world. But, before that, we need to go deep and understand what India is? Think about it,  you need need to visit whole India, its cities, villages or urban or rural areas,  you just explore Retail market in " Delhi", Mumbai or Kolkata" you will see the diversity.  Once, you see and analyze data from these places, you will understand how different is Indian retail and what kind of difference is there.

In Delhi, you will find Rs. 1500 per month/family in most of the Trans-Yamuna area, even in there, you will find that Laxmi Nagar and Preet Vihar area has more buying power than the nearby Nand Nagari, Baljeet Nagar, Shahdra area. Same is in Central Delhi where an average basket size is Rs. 10000/- per month for a family with a great diversity in merchandise whereas in the slum areas there is more pressure on staples.   Same is with Mumbai,  where Andhri, Kandiwali and East part of most of Area till Church Gate has a different buying habit than comparing to West side of areas. Even I have seen in new Bandra where a family has Rs. 15000 per month ration.  There is a different kind of diversity, which is really not even easy to understand and workout.  One side of Road has a high-end area and another party a slum.

How one can compare the American retail market. A consumer living in high-end cities has a routine buying habit where they mostly depend on hypermarkets nearby them.7eleven in New York has uniformity in assortment but when it moves to California, assortment change only 20% or 30%.  Same is in Japan, most of the people have the same food habits, so there is no significant diversity in product assortments but here in India situation is different.  Every state has different Language, customs, colour, creed, caste and Food habits. For Example, A south Indian when he moved to North India for Business or on his deputation or employment he always prefer to have south Indian Food in his daily routine. He will hardly eat north Indian Food because of his food habits. Same is with North Indian people when they moved to South Indian areas they are fed up with Idli Dosa, Utpam and anyhow want to have Chapatis and Dal in their plate.  I am witnessed of this, when I was in Kakinada in 1998, there was Rajasthani Hotel nearby Railway station (Samalkota) which was almost 15 KM far from my resident but on daily routine for me reaching there like going temple,  because of my food habit.

Based on various information  and their collective analysis, I made the following analytics: 

Recent Kirana data: 
Organize Kirana Market: 10.60% appx 11% including 1% of the online marketplace. 
Traditional Kirana Market: 89-90%
Market Size in USD billion:  USD  400-500 Billion from Main Stable and FMCG from Kirana. 
Per Month
Per day                                7,778

This average is high because out of USD 400 billion business approx 60% business comes from Tier one, two and Tier three cities where the average turnover of a shop is excellent. 
Nos of StoresPer day Sales/ Store
30% shops are in Tier 1, 2 and 3 cities                   3,600,000                            18,148
70% in Rural and Villages                   8,400,000                               3,333
Total Appx. Stores                12,000,0007778

( Fig given above is worked out by Balwant Singh Rana based on various market data available in open source)

20% of  Stores in each City contributes  60% of Business has more than 20000 per day Sales,  Appx 6 Lakh per month.  These stores have a reasonable size where they can merchandise the right basket of products, and they can provide space to brands for more visibility.

More than 8 million shops having below 5000 per day sales which shows that still a significant portion of the consumer base is untouched by companies and this is due to low buying capacity and weak supply chain management systems. Above data is just a rough idea,  since there is no authentic data survey or agencies, so it is sometimes not reliable but based on tentative market survey conducted by various companies and sales agencies we can predict above one in this way. 

Flipkart one of the sizeable eB2C platform competing with Amazon in India has some ongoing strategies,  I am sure that it will be acquired either by Amazon or Walmart. For Walmart, I am talking based on their few instincts where they want to come closure to consumers. In India, due to FDI norms, they will have limitation directing communication with end consumers so definitely they need the proxy to work in this field.  Maybe this prediction goes wrong, but it will be happening in another world. 

Metro cash & Carry, Future Group and many more are exploring Kirana for seeking last-mile offline market place.  Since 1998  companies are trying to break the traditional Kirana ecosystem by various means but failed to do so, and now they are making them part of their supply chain system and trying to empower. Still, all are just seeing a platform for their products. Six months back Future group started their B2B segment via traditional distribution systems, however, so far they are not able to attend what they were expecting. Still, surely it will help retailers to benefit from the competition. Organize players and companies from abroad do not provide clear credit to retailers so there they have limitation but instead they are going to sack had with traditional distributors. 

Traditional distributors are doing Business in their own way and providing clear credit to retailers, and they are giving Cash or controlled credit payments to retail companies.  So this way, they are not doing different things, they are part of the traditional distribution system and promoting their products in the open market.  All big giants in retail are trying to distribute their private label products in the free market and to the consumer in large through this system. 

Opening a hypermarket in India is something has significant cost where they don't think that they will gain from such direct operations and selling private label products from their own stores has limited consumer base, they have to spread those products in the open market and then only they can see ROI from their India operation. 

Last-mile connectivity in India is essential for all such players which they can not create from their own, and it is now evident that if they need to get sustainability in India, they have to associate traditional Kirana stores with them.  

A simple calculation is there, India has 12 million Kirana Shops, selling main stables and FMCG to Indian consumers. If we go by average basket size for 12 million Kirana Shops, then it would be around Rs. 1100 per Famly per month which was Rs. 850 in 2008.  

As per various market survey growth of organized retail is expected to grow 20%  by 2030, which means 120 billion USD annual business is going to convert from traditional Kirana to modern organize retails. This way industry of 600 Billion USD is going to lose their share by 20% by 2030, resulting in a big set back to traditional Kirana shops. Traditional Kirana is going to disturb in some way or other way, but I am confident that there would be some great experients are going to happen which will help grow traditional retailers.  Why I am talking about this, because of hyperlocal need in coming days.  Day by day, consumers is facilitated through various ways, i.e. Omnichannel presence will help them to buy from any means.  

Big Organise players like Walmart, More, Future Group, Reliance and even online players like Flipkart, Amazon and Alibaba (Paytm) see opportunity at Moms and Pops shop as their last-mile connectivity.  This vertical will help them to stay directly connected with consumers for prompt delivery; also, they will save high logistics costs.  

Further,  I can predict based on my discussion with various IT experts, I am sure that soon startups may come in Supply Chain aggregation,  it will be like e-Mandi where the seller will be the merchandiser and eB2B platform will act as a marketplace.  One can imagine the Business GMV,  it would be USD 2 billion or 3 billion dollars annually, and for India like market there we need more than one thousand startups to work like this and in such volumes. Still, there would be an opportunity for newcomers.

Recently new vocabularies are used in Retail Kirana :
like: Offline Market Place,
Online Market Place,
Omni Channel,
Cloud technology
Basket Size
Market size
Last-mile connectivity

So developments are there but still there are many challenges for Traditional Kiranas. Nevertheless, they are not ready for change and want to run their stores in the old manner. Problems from organizing retail are in front of them, but they just pretend to close their eyes and unknowingly misleading the facts.

Now the time has come to change the mindset and adopt the changes and webs are coming here in the industry.

Please write to me on for information. You may share with me your thoughts, and with a join brainstorming, we can come to a conclusion.  Remember, this is retail where we need to work hard and in Detail, after all, " Retail is Detail."

Writer: Balwant Singh Rana

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