Monday, July 23, 2018

The Mouse That Roared

From Return to Order:
The name of this tiny victorious model is a kirana.And the vibrant market is India’s 1.3 billion people with their rising incomes. Kiranas are small family-run shops and vendors found on every city street in India. They are usually the size of a one-car garage and their walls are lined from top to bottom with an amazing variety of goods. These mom-and-pop wonders control 90 percent of the nation’s retail market. Despite repeated attempts to break their hold, giant retailers have hardly put a dent in their market share.

The secret to the kirana’s success is scale. They cannot compete with the huge economy of scale enjoyed by giant retailers that buy massive amounts of goods cheaply. However, they save money on their smallness. They have little overhead. They employ family members and pay lower wages for other help. Usually there is little or no rent involved since the shopkeepers may own their small properties. Their volume of sales insures they have little or no inventory expenses. Thus, their overhead costs are half that of major supermarkets. With these advantages, kiranas will often undercut the prices of the giant retailers. (Read more.)

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