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Ravi Naware, CEO, ITC Foods, compares the two retails sectors – organised retail and its older counterpart, the ‘kirana’ store
“The total retail industry is likely to grow at a rate of 5-6 per cent over the next six years. And in this period, organised retail will grow at 30 per cent,” said Ravi Naware, CEO, ITC Foods. He was addressing a captive audience at the POP Asia In-Store Marketing Forum 2006, powered by ‘Point-of-Purchase’ magazine and VMRD, with agencyfaqs! and ‘The Brand Reporter’ as its media partners.
When faced with the big question of organised versus unorganised or traditional retail, Naware said: “Over the next decade or so, marketers will have to concentrate on both of these and not just any one of them, if they want to survive.”
Giving a broad overview of the favourable factors supporting the retail boom, Naware pinpointed favourable demographics as one contributing factor. “In the next seven years, 60 per cent of the total population in India will be 30 years old or less. This is a good thing as this is the age group when people are most willing to experiment with products,” he said.
The other factor, according to Naware, is the structural change in the economy such as media explosion and infrastructure development. He also pointed out that the share of organised retail is already quite high for the lifestyle categories. But it is low for categories such as food and groceries. “Hopefully, however, that will change soon,” said Naware optimistically.
Talking about ‘kirana’ or traditional shops versus organised retail stores, he said that while the ‘kirana’ store was a congested, cluttered space, organised stores are more spacious, have a higher width and depth of products and generally have a good ambience (music, lighting, etc.).
“On the other hand, the ‘kirana’ stores still offer advantages that organised retail doesn’t,” Naware said. “Firstly, the ‘kirana’ stores offer convenience and physical proximity to where the consumer lives. They also offer services such as home delivery, interest free credit and price negotiations. But the most important is the fact that the ‘kirana’ shopkeeper develops a relationship with the consumer and his household that lasts over generations. This plays a key role in recommendation of brands by the shopkeeper to the consumer, which organised retail lacks.”
But organised retail, said Naware, has its own set of advantages. “It offers access to a premium consumer base, in addition to displaying a range of products on the shelf. Promotions, too, can be done in an effective manner in organised retail.”
Naware concluded that the key focus areas for marketers in both ‘kirana’ and organised stores are availability and freshness of products (particularly fresh foods) and ensuring visibility of brands at the point of purchase (POP), such as packaging, ‘planogramming’ or product adjacencies, merchandising and display. Brand communication, promotion and sampling were the other key factors that Naware pointed out.
© 2006 agencyfaqs!