Kirana shop owners betting high on hypermarkets for better margins!

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Recently I came across a news that Kirana shop owners are relying on their big counter parts like Future group’s retail outlets and others to reap a better margin. What interested me is the thought that came across my mind….how the biggies who are showcased as competitor (or you can call them as rivalry like our politicians do) for our poor kiranawallahs can fetch profit for them???

What these people do is that they travel 100 kms to buy a wholesale store…yes readers, I am not bluffing!!!!….these people are smarter than many CEOs of MNCs!! Kiranawallahs line up in front of the hypermarkets in the city on days of discount offers, purchase the discounted items , most often FMCG, and back at their kirana shop they sell them at the original market price, making a better profit margin…..well they are turning the air-conditioned aisle as their wholesale market space.

What excites the kiranawallahs is the huge profit margin on the table. For example, a kirana shop owner sells a two-litre bottle of Coca-Cola at Rs 65 and earns a margin of 9% if he had sourced the product directly from company’s distributor. On the other hand, if he is able to get the same product at an offer price of Rs39 from any of the modern retailers, it would fetch him a whopping profit of 40%. (hope now it makes sense).

This phenomenon earns them double profit than what they earn form their company distributors. The surprising part is that kiranawallahs pay no heed in spending in these hypermarket stores as this is a kind of investment for them.

According to Future Group’s Big Bazaar official, they have been seeing this trend since they launched their “Sabse Sasta Din scheme in 2006!!!. However, the retail brands doesn’t seem to be disturbed by this new breed of customers.

What I feel from the new trend is that politicians no more need to worry about FDI in retail affecting kiranawallahs. They are optimists and smart enough to tap the opportunity from the challenging environment they are thrown into!!!

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