The biggest competitors in India with Walmart and Amazon? Mom and Dad



NOIDA, India-Amazon.com Inc. and Walmart Inc. are betting billions face to face in India, but their most powerful rival could be a ubiquitous local champion: the mom and dad store.

Tiny stores known as kiranas dot all the streets, villages and slums of India. Usually run by a family, these micro businesses range from street vendors selling vegetables to shops the size of a car garage. They pay low wages and have little or no rent, which helps keep costs down. And since they serve the neighborhood's population to a large extent, many offer instant delivery, interest-free credit and other personalized services that the global giants can not or will not provide.

"The kirana store has better economies than a supermarket," Rajiv said. Lal, professor of retail sales at Harvard University. "There is no way to beat them."

Large retail chains, both national and international, have tried for years, and often failed, to find a profitable niche in India, a mbadive market with 1.3 billion people and an increase in revenues. The Carrefour of France has come and gone. The metro in Germany has only 25 stores.

Walmart


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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 in a background.

India's largest conglomerates, including the Tata, Birla and Reliance groups, have launched their own retail chains, but they have not made a dent in the dominance of moms and pops. Small retailers control nearly 90% of the country's retail market of more than 700 million dollars, according to Indian retail consultancy Technopak.

"The real challenge for e-commerce or for physical stores or any retailer is how to do it combine those cost structures," said Raj Jain, former president of Walmart India.

Unlike the United States, where large retailers have used their power to obtain wholesale discounts, offer lower prices and squeeze smaller players: small stores in Indian stores often have the advantage of cost . Despite paying higher wholesale prices for their products, their cost structure is much lower than modern retail chains, which gives them higher profit margins, according to a survey of stores in India conducted by Boston Consulting Group. A 2016 report estimated that rental costs, labor and other operating expenses of small stores were as low as 7% of sales. The same costs in modern supermarkets in India tended to be more than 15%.

Stores like the Maa Bhagwati store in Amit Jindal, in the flourishing suburb of Noida in New Delhi, demonstrate the challenge that large retailers face. Mr. Jindal's store is only 240 square feet, but he packs it with more than 1,000 different products, stacked on shelves that reach the ceiling. There are bags of rice and wheat in the corner, a beverage cooler in the front, a refrigerated glbad case full of chocolates, plastic bags to hang on the walls and two ladders to help reach it.

Your rent is $ 750, and your two employees cost you around $ 160 per month, he says. It has few expenses besides the wholesale price of its products. He does not have inventory. He recognizes his customers by voice on the phone, and his deliveries arrive in 30 minutes because his delivery people know where they live.

A few years ago, Easy Day, a national grocery store chain, once owned by 49% of Walmart, was installed a mile away, then Amazon's grocery delivery service moved there. Mr. Jindal says he barely noticed, and his own sales continued to rise. Today, those larger retailers are no longer in the neighborhood.

Saravjeet Singh, one of Mr. Jindal's regular customers, says that he sometimes buys in large modern stores, but still prefers the comfort of his local store. "We have a personal relationship with our kirana man, the owner even knows my name," he said. "We can call and ask for just one box of matches or four eggs and they come running."

Large international and local retailers say that there are enough businesses in the growing market. Walmart has a wholesale business in India that sells directly to mom and dad stores.

"We love the fact that our cash and transport business here in the country supports the Kiwis," Walmart CEO.

Doug McMillon

He said earlier in May in New Delhi after announcing the company's mbadive investment in the sector. "We believe we can help them."

Amazon did not respond to a query about whether it considers kiranas as competitors. The company has partnered with thousands of family stores in India, paying them to deliver Amazon orders to nearby homes or store packages until customers pick them up.

Still, some small retailers are making changes to try to ensure they stay on top. Millions have begun to accept cashless payments through electronic wallets. And they are interacting with customers through messaging applications instead of over the phone. Some even turn to e-commerce sites to supply the products their customers want.

-Corinne Abrams and Newley Purnell contributed to this article.

Write to Eric Bellman at [email protected] and Vibhuti Agarwal at [email protected]

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