Kirana

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Supply Chain Model for Kiranas in India

Executive Summary

Modern Retail has seen a significant growth in the past few years with large scale investments made by Indian corporate houses primarily in Food and Grocery retailing. The total retail (organised and unorganised) industry in India is estimated to be Rs 20 lakh crore in 2010. This is expected to reach Rs 27 lakh crore by 2015. Organised retail, which is estimated to be Rs 1.0 lakh crore (5 per cent share) in 2010, is projected to reach Rs 3.0 lakh crore (11 per cent share) by 2015. This means a tripling of the current size and scale of organised retail in the next five years, i.e. 2010 - 2015. While organised retail will grow at a fast pace, it is important to note that a larger part of the Rs 7.0 lakh crore growth in total retail will come from unorganised retail. This segment (unorganised retail) is projected to grow by over Rs 4.5 lakh crore in the next five years.

Kirana’s are a unique business model in india whereby the stores are run as a family business and is carried over from generation to generation within the famiy. But these Kirana stores are facing a huge threat of extinction especially in the metro cities due to the emergence of the large supermarket and other organised retail sector.

This project was the initiation of the project called as “KIRANA CONNECT” at V-OPT which is a vision of the senior management at the company. The company wants to design an effective supply chain model whereby the Kirana stores can make use of it to remain competitive and sustain in the market.

The project started with the literature review of the Kirana’s in India whereby we identified some of the key points based on which we started the design of our questionnaire. The entire project was done with the support of the worldwide wholesale giant “Metro Cash N Carry” Bangalore head office where Mr.Sebastin from Metro gave us key inputs to kick-start the project.

Based on our primary research and Metro’s input we designed a questionnaire to address and identify the pain points of the Kirana’s following which a pilot survey of the sample size 38 was done in the outskirts of Bangalore i.e at Doddaballapur town about 70 km from Bangalore.

After the pilot survey the questionnaire was redesigned based on the responses collected after which the main survey was conducted at Doddaballapur, Hebbal, Yelahanka and Yeswantpur. A sample of 81 was collected during the process.

The data collected was feeded and analysed using Microsoft Excel 2010. The outcome of the analysis identified some of the key issues of the kirana’s namely Credit, Door Delivery, time management, lack of technical skills etc.

Based on these points we designed a supply chain model for the Kirana’s which is proposed later in the draft

CONTENT

INTRODUCTION

History
India’s retail industry is steeped in tradition, with a history of trade stretching back thousands of years. Remarkably, this tradition lives on today, thanks to the country’s ever-present kirana stores. From as early as the Mughal empire (1526-1757), kirana stores have been a dependable source of supplies and, amazingly, still play a significant role in modern Indian retail.

Working of the Kirana
Successful kirana stores have great neighborhood locations and unbeatable access. With ever-increasing traffic congestion, this is a huge customer benefit. Our country lends itself to neighborhood solutions better than countries that have wider open spaces and lower population densities (i.e., most of the rest of the world!).

Secondly, low - often notional - rents and 'flexible' wage costs often mean ability to have cost neutrality, if not competitiveness, versus larger players. Indeed, the biggest hurdles that large-format 'modern' retail faces are the high, inflexible rents and the need to constantly train a churning and less flexible staff.

Thirdly, the fact that an entrepreneur leads the store brings...
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