May 24, 2007

Does a supermarket have to be super sized?

In my last post on Retail in a transcultural environment I had talked about the ‘work arounds’ that consumers adopt to adapt to a foreign environment and I was to follow it up with a post that talked about these work arounds from the marketer’s / retailers perspective as retail grocery chains enter the Indian market

It’s been a long wait though I am glad I did, since having moved to India I have been able to compare my notes about what I saw of supermarkets in the UK with those that I see in India.

The biggest difference I noticed between grocery retail formats in UK v/s India is that unlike in the UK – there isn’t much of a difference….between the traditional grocery stores (the mom and pop variety) and the modern grocery formats (supermarkets as we know them). Let me explain…

Size & SKUs – super markets in the west are humongous (10 times or more) as compared to the tiny neighborhood grocery vendors. Naturally the number and variety of products stocked also increase proportionately. In India most supermarkets would be twice or at the most thrice as large as the mom-n-pop stores (leaving aside a few exceptions like Hypercity). I notice that the number of brands / product variants stocked does not differ significantly between stores of the two formats. This is partly related to the next point i.e. Location

Location – In the UK the corner stores have a locational advantage. One can literally run across the street and pick up emergency supplies (though that’s all they have) rather than having to drive down a few miles to reach a super market. In India it would not be uncommon to see traditional stores and supermarkets cheek by jowl with each other since the culture of driving down a few miles just to buy grocery has still not set in. Indians are habituated to having grocery stores in close proximity to their place of residence and that places constraints on the size and scale of operation a supermarket can potentially have.

Prices – In the UK a trip to the corner store would require you to shell out more pounds for your can of milk, where as in India prices do not vary too much by store format.

Opening Hours – In the UK the corner stores (run mostly by Indians / Pakistanis / Sri-lankans) stay open till late evening where as the supermarkets shut relatively earlier depending on where those are located. Most shops including the supermarkets on the ‘high street’ (chief shopping area) would shut by 6 p.m. – a grim reality that I’d rather not remind myself about. In India most shops stay open till 10 p.m. and since traditional and modern grocery stores operate in the same commercial zone their closing hours do not differ

Service – here I cannot comment too much about how different the levels of service are between the corner stores v/s supermarkets in the UK. I found a consistent professional attitude throughout. In India though, the traditional stores win hands down. To give you an idea let me cite my experience – I stay in a multi-lingual community. If I have to call the traditional store to place an order - I just have to specify my house number and he will greet me in the language I speak. They deliver within a span of 20 mins even if it is something that costs 20 bucks. If he does not have the product in his stock he would rather get it from the next store – than risk losing a customer. These stores often offer credit to known customers – if one is short of money the grocer’s typical response is… neither are you running away anywhere nor am I…pay me tomorrow !

Most of these traditional stores are family run businesses due to which the people employed have a greater interest in offering good service since it helps their business grow. The supermarket staff in stark contrast can project quite an indifferent attitude – at the end of the day it’s just a job for them and that too not a high paying one

Layout – is the most interesting element of this retail space. The mom and pop stores are breaking down their traditional structures and morphing into mini supermarkets – allowing the consumer to ‘walk in’ and browse through their wares which was earlier not possible partly due to the store layout and partly to blame were the ubiquitous but annoying sachets hanging from nowhere blocking one’s visibility. In their new avatars the traditional grocery stores are not only adding suffixes like ‘supermarket’ and ‘super-shopé’ to their names but also creating a cleaner, more organized layout. In place of dingy store interiors and bags of grains mercilessly dumped at the store entrance one encounters neatly partitioned shelves with a well thought out organization of products such that you will no longer find your mosquito repellent next to your pulses.

While the smaller stores are imitating store and shelf layouts from super market, the latter are taking lessons from these small guys on how to woo the elusive consumer back. Spinach – a super market in Mumbai employed some of the local vegetable vendors to stand inside the store and ‘cajole and connect with’ the consumer for whom the sterile and indifferent store ambiance was an alien concept. After all these consumers (mostly women) are used to shopping at vegetable markets, where conversations are exchanged with vendors along with money and goods.

Poor_Planner talks about one more potential 'work around' - supermarket chains co-opting with the local vegetable vendor

It’s interesting to see how retail establishments from these two worlds are converging – borrowing elements that work and shunning away those that don’t. The small – medium size ‘supermarket’ ensconced in residential pockets with service standards to match that of the traditional grocery – sounds to me - more like the future than - what we know and have seen of super markets in the west



C. B. Whittemore said...

Reshma, wonderful continuation to the discussion. I love your service example. When you think how successful a supermarket like Trader Joe's is despite its small size and you hear about intense commitment to service as you have captured, then a supermarket absolutely does NOT have to be supersized to be successful.

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