20th March 2010
Set out on my agenda to unveil the competitiveness and effectiveness of the small retailer, I have tried very hard to get information from more than 7 shops till date and have hit a road block on each of those occasions.
First attempt:
I told the retail shop man on the counter that I was doing a study on how the small retailer works and how difficult it has been for him to set up shop. I told him I was doing this as a college project for my course and asked him if he could spare me some time. What ensued was a very very agitated and almost fear stuck man telling me he has no time, telling me that "hum yeh sab nahi karte" (we don't do such things).
I thought that he probably misunderstood me in someway, because I couldn't imagine why he was so agitated. I reiterated that I was only conducting a survey and there wasn't anything else to it. He refused to answer any more questions. In order to make myself more acceptable to him I stepped away from the counter and bought a bottle of fruit juice. And while I was paying the money I thanked him for his time to put him at ease.
On my way back home I was perplexed by what I had just witnessed. I thought that may be I had spooked him because of something I said, or perhaps he was in the wrong.
The next day with renewed enthusiasm I moved to the next shop on my list and to my surprise and dismay I was met with a similar kind of reception.
The third shop I went to, I made an attempt to cozy up with the owner by first purchasing something and initiated a conversation. I had a whole new story in place about how I was making a video on the "aam aadmi" (the common man) and his contributions to India's growth. The story would talk about how tough these guys have it and yet they make India proud. At the money counter, I asked him if he could spare me some time and started the story and you guessed right, I was a stranger once again, a very dangerous one at that, for some reason that was still beyond me.
Ok, I was getting nowhere with a simple task and that was getting weirdly fascinating. I sought to answer a question and was presented with another puzzle. I began to think why was I being rejected so bluntly and so vehemently?
I can only speculate but these are a few reasons I think could be at play here.
1. Small retailers live on wafer thin margins, they virtually make a living because of the bigger distributors, they are almost like paid employees to the distributors. They fear giving out any data that might bring them into the limelight and may cause discomfort to their distributors. They also fear that some of their illegal practices like charging an extra buck for a soft drink bottle may also get highlighted and may make them lose their only source of livelihood.
2. Tax evasion is widely prevalent amongst such small businesses who have seen many of their high flying cousins in the small retail industry either tie up and grow along the corporate ladder as employees of the enormous bazaars and the moon bazaars or fall prey to the tax raid. If you are doing something illegal its best not to get noticed.
3. Entry barrier to the retail industry is very very weak. A single distributor provides all the goods for each and every shop on a block. The distributor has no problem adding one more shop in the same street. There are no bonds or contracts between the retail shop owner and the distributor about restricting competition. So the retail owners may have perceived me as potential competition too.
In my complete endeavour I tried to interview 8 shops and got simple answers only from one and varying degrees of hostility from the others.
Simple questions often uncover answers to difficult questions while still remaining unanswered themselves.
Gopal Balakrishnan
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Gopal: really appreciate the efforts u ev put in but while i was curious to see if u had the ansers some where I did think that this cud be the final outcome. Just taking a shot. It is also possible that had u talked to them in local lang..u might have come across some success. Not sure u did or did not.
ReplyDeleteAlthough...on a different note.
Did u ever observe that some times these retailers try to sell a new product in place of the "old already in market" prod and it is possible that not every shop in the street might be selling it.
This is because they have a better profit margin in that prod. and higher risk as well. Risk that the stock might not sell et al.
So if a new player comes in the market. To establish his prod. he got to give more incentives and also offer higher range of profits as compared to the known brand.
Also, My relative runs a hardware shop and through my personal experience I can say that with small items the profit margin is really really small(as put forth by u too). It is only through the bigger size of consumption which complements this small profit margin.
Moreover, These small retailers work more on relations with the consumers and through a series of purchases they might give some sort of discount too.Just to make sure u remain with them. I remember my Mom purchasing from a particular shop. Which was a win-win for both. A new client is not so attractive to them as compared to an old established one.
Avinash
dude....who would want to answer questions, cross questions... if i was a shopkeeper it would be a pain at peak as well as off peak..if you are really looking for solutions you must put in a good questionnaire, smart types.... as in ask the same question in three different ways and five such questions.... go with two other students and an i card....try fifty shops even if you get twenty back, dats a good database to begin with....
ReplyDeletei did a questionnaire on plastic usage in shops when i was in school....nobody minds a simple game of choose a b c or d
@tolpol Good points. I conducted similar surveys in school also for college. What i was looking to build with the initial discussion was just some rapport so that i can come back later with a questionare. I had a list of questions prepared. Most of them were really innocuous. I also had by SPCE college icard on me and i used it a couple of times too. The usual irritation with people not wanting to answer questions apart. These guys were too hostile. I mean literally wanting to throw me out of the shop asap.
ReplyDelete@avi like u pointed out may be local language was an issue, but the owners of the shops that I went to 4 of them were marwadis.
The hostility of the reactions rather than simple irritation is what surprised me.
The conclusions i drew are based on the answer of the one guy who did talk to me.
@gopal: Maybe you should try a different region. Usually General stores are managed by Malayalis. They are far more friendly.
ReplyDeleteTo answer your question of competition i have a couple of points
1. Their customers are not fixed. If i'm walking down the road somewhere, i need a bottle of water, tea wt friends and a smoke etc.. i dont really have a fixed place or "Adda". I can buy it from anywhere.
Similar reason for the groceries too. People travelling across might just stop by and buy a soap or a toothbrush etc.
2. To reduce dependency on nomadic customers, they give out their stuff on credit.
There are two general stores within 200 mts in my locality. One is on the main road, having maximun visibilty and the other behind this one on a parallel road among residents.
The main road store has loads of people coming in for a cup of tea,smokes. But not many buy groceries. Where as for the second store, there aren't many short term customers but more of long term. All the residents buy groceries from him including my mother.
He gives his groceries on credit and also door delivery to certain customers. He also has a small group of "nomadic customers" too
To me, both are in a Win-Win Situation.