Study the following case carefully and critically analyze the situation:
India’s grocery market
Amar Singh explained why he sells „exotic? produce, such as broccoli and iceberg lettuce, at his vegetable stall in Mumbai. “I have to keep the customer in my grasp,” he said. Mr. Singh has traded for 20 years, and is not worried by the supermarkets whose stores have recently opened nearby. “They are cheaper,” he said, “but they cannot match me on quality.”
In India, the 11 million small traders like Mr. Singh are protected. India’s complex rules have made it difficult for supermarkets from developed countries to enter the Indian grocery market. Also, India’s domestic supermarkets account for only 2% of food and grocery sales and are struggling to make a profit. Revenues have not kept pace with rising rents. Reliance Fresh, one of India’s big supermarket companies, has recently closed some shops around Mumbai. The companies had hoped that as India became richer; its consumers would abandon kiranas (small family-owned shops) and stalls such as Mr. Singh’s for modern supermarkets. This has not happened.
This may be because 70% of India’s population is rural dwellers so a localized strategy is vital to accommodate the variation in languages and cultures. India’s kiranas are often described as neighborhood stores, embedded in their local communities. Many have been run
by the same families for generations. They have a deep understanding of the local market and a good relationship with their customers, some of whom are loyal to the shop that their parents used. Today’s kirana and stall owners make product recommendations, offer credit to help shoppers balance their budgets, and can even obtain products not normally stocked. They will also deliver shopping to customers free of charge - something that the supermarkets struggle to match.
Long-established kirana retailers often also benefit from prime store locations, leaving modern supermarkets struggling to find space in existing shopping areas. Instead, supermarkets are forced to look for new places to develop larger stores.
Fig. 1.1 shows the results of a survey of customers in the largest cities in India
to find their preferred place to purchase groceries and vegetables.
Your report must be based on the following questions.
Analyze the market structure in which kiranas are operating in India and evaluate whether the entry of big supermarkets in India would lead to the decrease in the significance of kiranas with reference to the above information.
Here are the guidelines for your report;
Introduction (5 Marks)
Main Body (content) (10 Marks)
Conclusion/Recommendation (5 Marks)