Tuesday, August 01, 2006


Most of you must have heard of the major private companies planning their foray into retailing. One of them is a very ambitious project and is already giving jitters to other players in the value chain and its competitors. Statistics say that less than 10% of retailing in India is organized. I do not remember the exact numbers here but it is very obvious that a hell lot of money is tied up with the small kirana and department stores. Organized retailing is making way slowly and steadily and this is seen as a danger to the small shopkeepers. Not if they are smart!

A couple of my friends and me took part in a competition in college wherein we have to come up with an entry strategy for a new retailer. We came up with a model in which the new retailer takes advantage of the existing network of kirana stores in the city. They got advantages one cannot beat for quite a long time. The small guys cannot really compete with the organized retailers as they whole lot of other disavantages like their small size. As long as they are small with no sourcing power, the organized retailers can provide goods at a lower cost to the end consumer. This is one of the USP of huge retailers. E.g. Big Bazaar

Imagine if all the small kirana store guys come together and form a group. They buy as one and sell as one under an umbrella brand. There will be consistency in service and all the stores will be seen as one by the customer. They are availing the benefits of a huge retailer and also getting the advantage of being smaller and closer to the customer. The trust and relationship with the customer is already there. It is a killer combo! Isn’t this exciting? It is happening in Rajkot. Read about it here.

The power of buying as one is immense and can change the contours of an industry and economy too. China does most of its raw materials purchases through a single body. Imagine the power they exert on the global economy. If you take an industry and see its changing fortunes, the reasons usually given are 1. US recession; 2. 9/11 attacks; 3. China stopped buying! That is the power of single sourcing. I am really excited at this development in Rajkot. I hope these guys put aside their petty differences and actually pull this off! All the major FMCG companies must be pissing in their pants.

This development will upset the strategies of the big retailers. Can India do what the US could not?


Anonymous Anonymous said...

we must have patented the idea...
- One of your "friends??" :D

1/8/06 7:53 PM  
Blogger Chasing said...

Reminds me of the new fad in Chinese consumerism. People band together and mob shops to get great deals because they are buying in volumes.

2/8/06 6:11 AM  
Blogger Saip said...

panty bitch :)

2/8/06 11:00 AM  
Anonymous Anonymous said...

FMCG pissin in pants..ahem ahem

16/8/06 5:58 PM  

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