Why
Retailer is Cursing Ecommerce & Modern Trade?
When
consumer is in the center of all activities and their preference is changing
then we should understand that we are in the era of Retail 4.0. Now things are
changing very fast and technology is adding those wings to it. The last half
decade is dedicated to various tech driven startups in B2C, B2B, Q-Com, D2C,
Food Delivery, Logistics Pharma, Fintech and many more areas. There is no doubt
in mind that Indian end consumer is facilitated in many ways and this has made
them lazy and obsessed. So, there we don't need to focus because things are at
the center of all these developments.Retail 4.0 is a convenience driven sector where
all stakeholders are working on innovations. Here things are revolving around
technology. Most of the startups are driven by technology i.e. tech is their
business and without it they are nothing. When the crowded Apps are creating
demand, ensuring supply chain and providing Fintech services to end users so it
is true that those are the technology drives businesses.
Change
is good and inevitable, and those who resisted they were eliminated by the
market. As far as the current developments in retail are concerned, I am
satisfied that things are progressing rapidly and smoothly. The end consumer
has a plethora of options to choose from, evaluate and make a purchase decision
through the best suitable mode.
Do you know who is the most important link in
the entire distribution channel? You would say distributor but my answer would
be the retailer which is taking the most pain in the entire journey of a brand.
He is the one who is creating the product "brand". Yes, this is a
fact.
Retailers
also got many options to source their merchandise. Earlier they had to depend
on traditional distributors, some price cutters and cash and carry formats, so
dependency was high with traditional channel but in present scenario they have
C&C, B2B, traditional distributors, price cutters etc. This has
strengthened their sourcing and accordingly they can be able to offer some
competitive products to their customers, but they need more focus.
Before I suggest solutions it is unavoidable to
list the problems they are facing in their routine and what has made challenges
for them in terms of their sustainability.
Here are more than twenty factors which are stopping them to be part of
the development and growth.
v
Space
constraint – size of shop is not much to keep the entire product range
v
Improper
Product Assortment – not able to coup the hyperlocal requirement in fast pacing
changes.
v
Hygiene
issue - Lack of cleanliness
v
Poor
Time Management in Buying and Sourcing.
v
Decreasing
consumer footfall
v
Mishandling
of Product expiry resulting losses.
v
Communication
Gap Company to Retailer.
v
Competition
from large format Retail stores and walk through stores, E-commerce & now
D2C brands.
v
Change
in Consumer Behavior
v
Manpower
Issue – not able to service home deliveries & other customer oriented
services
v
Promotion
and Offers not available
v
High
Density of Kirana Stores in same vicinity.
v
Next
Generation is moving out from this business.
v
Lack
of IT, not using computer billing & POS.
v
Limited
Working Capital.
v
Food
Safety compliance.
v
Do
not want to keep records of bookkeeping
v
Lack
of market knowledge.
v
Due
to stand-alone status and no apex body representing them to safeguard their
business.
v
No
Banking facility in terms of Credit line as a retailer does not maintain books
of accounts.
If you're wondering?, that these are the only challenges at the retailer level, I might have forgotten to mention more. I sympathize with grocery retailers as compared to other retailers because of low margins, and they are losing business day by day.
Now, I think "disruption" is the
right word that startups are using and based on that they are getting good
funding. Actually disruption is a big word which is affecting the entire
retailer community and when things happen on such a large scale it is disruption.
So my way of thinking is correct that disruption is tantamount to the
destruction of grocery retailers.
Just like hyperlocal fulfillment is done by
traditional distributors, retailers are doing last-mile connectivity to end
consumers. Consumer-focused ecommerce startups are letting consumers end mass,
burning millions of dollars and diverting the business of these retailers from
them.
I have personally met more than
three thousand retailers so my experience is more than expectations. Here would like to communicate with people
who has sympathy with the Retailers that we should do something great for them.
When I met retailers last few months I
came to know that Kirana retailers lost 30-40% of their business volume. Here are factors which are giving them tough
competitions and are liable to erosion of opportunity from the nearby
consumers.
- · B2C players they are into Omni channel, hyperlocal, demand bugger, aggregator etc., hybrid
- · D2C Brands - Direct to Consumer
- · Q-commerce – Quick Commerce delivery in 10 minute
- · Big Box Retailers – Like Reliance Smart, D-mart, Big-Bazar
There
are more than 150 startups operating in this segment, both nationally and
regionally, having their appropriate sized business in their areas of
operation. It is true that D-Mart is a big villain for retailers, a new D-Mart
store is responsible for reducing 50% of the retailer's business and closing up
to 2% of stores. As per my analysis the impact of a DMart store remain in the
radius of 2-3 km. There is no other standalone big box retailer like Dmart that
has so much magnitude to negatively impact the retailers. There are 5-6 D-mart
stores in a city like Jaipur which is quite reasonable numbers that affects the retailer
universe of 2500-3000 unpleasantly. And heard from market that they are
planning to open more stores, so can
think how rapidly they will take the share of native retailers.
Further, D2C and Quick Commerce startups will impact
the ecosystem in big way in the coming years. They will work on impulsive
buying behaviours of customers. Convenience drivers will be more effective;
However, they will not make money even after ten years of burning in the
ecosystem, but again this will cause turmoil to the other segment in the retail
ecosystem. 14 million retailers are part of the upheaval and after-effects of
convenience drivers.
While
some quick commerce startups have started functioning in Mumbai and Tier I
cities, the impact of this change is visible in the surrounding areas. The
retailer started claiming that they stop seeing their regular customer at their
stores after the 10-minute delivery starts in their area, resulting a 30% drop
in Kirana retailer’s business. “Vijay Bhai (one of the retailer near Blinket
store) in Mansarovar said that 30 of his regular customers have stopped
visiting his store in the last three months. When he questioned some of his
loyal customers, he found out that they were ordering impulsive purchases from
Blinket (quick commerce startup) and getting delivery in 10 minutes. A lot was
heard from the retailers on the said issue.
Literally grocery retailers are crying, they
are facing sustainability issue, they are trying to understand it more. Some
fintech solutions and hyperlocal commerce are trying to give them their tech
tools to generate demand by sending offers and downloading apps. Dukaan,
Snapbizz and other regional players are offering hyperlocal connectivity by
providing last-mile neighborhood commerce applications. eB2B Food & Grocery Distribution startup “Kirana
King” is working for the upliftment of Kirana Stores and providing them various
services under RaaS. Still we need
companies like Dukaan, Kirana King and many more startups who are empowering
Kirana retailers not only by giving them supply chain but increasing the consumer footfall at their shops.
We should not ignore them and also should not
left them alone. In this fast paced development,
they must be in the driving seat and should be protected from the big box
commerce players.
Here I would like to quote a
famous saying of Sun Tzu “
Know the enemy and know yourself in a hundred battles you will
never be in peril. When you are ignorant of the enemy but know yourself, your
chances of winning or losing are equal. If ignorant both of your enemy and of
yourself, you are certain in every battle to be in peril.
This must be applied to Kirana Retailers that
they must know the enemy and accordingly need to equip themselves with better
services and should bring the consumer first approach in their routine.
Be part of change and ready to involve them for
the betterment of their business & personal life not for the battle work.
Please share your views on the said writeup and
send your valuable comments, forward in your groups and appreciate if written
in good prospects.
Written by : Balwant Singh Rana
15.04.2022
