Introduction:
Before few days,
there was uproar about the entry of Multinational Giants like Walmart etc., in
the Retail Market. The main reason given by the people who opposed it was that
small shop owners will be adversely affected by the entry of the MNC’s So, I
thought of analysing the business structure of both ordinary retailers and
Retail Giants like More, Reliance Fresh etc., I have taken grocery items as my
main area of study.
Visit to the Store:
First, I went to
Kalpakkam market and interacted with small retailers there. I went to a shop
which was 22 years old in that locality. He was explaining me in and out about
marketing. He told me that he will be very friendly with customers by
sponsoring few vegetables even to the kids who come along with the customers.
He will compensate these freebies by adding some margin in the products which
the customer buys. Eventhough though some margin has been added, customers will
go home with satisfaction.
Practices followed
by the vendor:
He told me that he won’t sort the vegetables in his shop.
The freebies which he offers to the customers include Coriander Leaves, Curry
leaves etc.,
He also explained how he buys vegetables. For small load, he
buys from Chengalpet and for large loads he buys from Koyambedu market. He
laments that he has to pay bribe to the police in each signal. I felt really
bad about it. He buys vegetables based on daily requirement and seasonal
requirement. The vendor also has good knowledge about how many days the
vegetable will withstand without getting rotten. He also cleans the vegetables
frequently in case they get dirty.
The vendor buys the vegetables in boxes (lots). He regrets
about the transit loss ie., loss while transportation. He buys around 10 boxes
daily. He told me that his demand has come down recently. Previously, he was
buying around 20 boxes daily. But now due to heavy competition, the demand has
come down drastically.
He was having two weighing machines (analog and digital).
The inverter backup is there to support him incase of a power failure. The shop
is a rented one from the area Panchayat. Many shops now has been obtained from
the Panchayat and rented to third parties for higher profits. The vendor’s
working time is 8A.M to 11:30 P.M. He maintains and tallies his accounts daily.
And to my surprise, he told me that the hotels are not paying him on time for
the vegetables which they get.
Constraints:
The vendor was mainly lamenting about the location
constraint. As his shop was located inside Kalpakkam Township, he told me that
only loyal customers will come all the way to his shop to buy vegetables. The
monopoly, which he enjoyed before 5 years has now been lost due to the arrival
of new shops in the locality.
The vendor has not employed any labour inspite of the tough
schedule he handles. The main reason he cited was a single manpower costs him
around 20-30 Rs per day. He was not in a position to pay for the labour due to
the tough competition he is facing at present. At present, he earns a revenue
of Rs 8000 per month. If he gets some marriage orders, then he says he earns
around 20000 per month. But in the latter case, people mostly tend to buy on
credit.
Due to the Tsunami which happened in 2004, many people
migrated away from the coast. This in turn created the revenue loss for the
vendor.
Network:
There were many sub sections to from producer to supplier.
First the farmer cultivates the vegetables. Then Agent 1 buys the vegetable
from the farmer and sells it to Agent2. The Agent 2 inturn sells it to the
shopkeeper. The Agent 1 will be mostly out of town agents. Agent 2 will be
mostly present at Koyambedu.
People Misconception:
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