Domestic and multinational food retailers doing business in India need to be aware of competition from the country’s traditional, “mom-and-pop” traders, a leading homegrown retailer said today (6 May).
Bijou Kurien, CEO of Reliance Lifestyle, a unit of ambitious Indian group Reliance Retail, told the World Retail Congress in Barcelona that the prevalence of the mom-and-pop stores – also known as kirana – represented fierce competition to organised, modern retailers.
“Food and grocery retailing is one of the most challenging businesses in modern retail in India today,” Kurien told delegates at the conference.
Mom-and-pop stores are “nimble” competitors that know their shoppers, Kurien said. “That is the competition we are up against and you have got to have a very good reason for [shoppers] to come into your store,” he added.
The traditional outlets account for the majority of sales in India’s fast-growing food retail sector, which in 2007 generated revenues of US$202.6bn.
The Reliance executive was talking as the World Retail Congress discussed the impact the global economic downturn has had on the Indian economy.
Arvind Singhal, chairman of consultants Technopak, said GDP growth in India is expected to have slowed to between 6% and 6.5% in 2008 – down from growth of 9.6% in 2007.
“Compared to the rest of the world 6.5% looks very attractive,” Singhai said.
Delegates were urged not to treat the Indian market as a single entity and to recognise that the country is made up of a number of different demographic groups based on age, religion and urban and rural regions.
Domestic and international retailers continue to jostle for position int the country’s fledgling and fragmented food retail sector.
Last month, Carrefour met with over 600 suppliers in India as the French retail giant laid out plans to open its first cash-and-carry outlet in the country by the start of next year at the latest.
In April, UK wholesaler Booker announced plans to expand into India, following the likes of Germany’s Metro Group, UK retailer Tesco and US giant Wal-Mart into the market. Meanwhile, Pantaloon Retail India, the country’s largest retailer, plans to divide its business into three separate subsidiaries in a bid to gain “greater focus”.