F&B Retail in India; Think National , Act local- A strategy worth considering

Even after a few years of the entry of large organized F&B retailers, the small ‘mom and pop’ grocers who have been around for a few years and the smaller sized local supermarket chains that have their roots in the ‘khirana heritage’ have survived and flourished. Why is this? The answer is simple and is centered on the concept of customer centricity. These chains are highly localized; understand what products, variants, price points and sizes to stock. Over a period of time they have even mastered their inventory cycles. I often keep probing relatives and female colleagues about their experiences with and preferences for organized national chains and the consistent response I get is their preference for their trusted khirana store or local supermarket cause it stocks what they want. It’s the small things that matters to them. They will invariably get their regular Taj mahal Tea or their Haldirams in any of the national retail brand but what sets the small guy apart is in addition to stocking the fast moving popular generic national brands he stocks his customers’ favorite brands of toiletries, spices, pickles, snacks cleaning material (cloth/mops),etc. As a result of which these women prefer going to their local trusted store and save time instead of wandering the aisles of 3 different organized retail brands to complete their weekly shopping needs.

Secondly, one must realize India is a country that is highly diverse in its food habits and culinary culture. Each state has its own unique culinary culture and this high degree of diversity breeds region specific culinary cultures within a state too. An example would be Coastal Karnataka vis-à-vis northern Karnataka or Central Karnataka. This diversity and concentration trickles down even to localities and suburbs within a city.

Let me use the example of Karnataka. Food culture varies across the state’s region. Coastal Karnataka has its own unique culinary culture vis-à-vis the rest of the state and in the same vain a typically Brahmin locality of Malleswaram in North Bangalore predominantly consisting of Tamilians and Konkanis will have different needs from the grocer vis-à-vis a Bengali dominated locality in the same city. I am not saying that F&B retail chains may have to devise a strategy that requires a high degree of customization in their store wise inventory, but if they want to beat competition and differentiate this is definitely a very interesting option. Now this is exactly while the small stores and department chains still mushroom and thrive irrespective of the presence of the Spencers, Foodworlds, Fresh @s and the Reliances.

The national chains may have to think national but act local if they want to grow beyond profit margins of 1% or 2%