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MARCH 25, 2007
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Business Today,  March 11, 2007

Kiranas Strike Back
In possibly the first experiment of its kind in India, some 3,000 mom-n-pop stores in Rajkot, Gujarat, have come together to take on modern retailers. There's no guarantee their initiative will succeed, but without it, their failure is almost certain.

United we stand: Rajkot Chamber of Commerce's Bagdai (middle, both arms raised) with local retailers

Driving into Rajkot's Dharmendra road, a down town shopping area, from Ahmedabad on a recent afternoon, one doesn't expect to see too many people in the streets. For one, Rajkot is a relatively small town (population: 1.35 million). For another, it's a weekday. But there's a third reason, and the one that has prompted me to come all the way from Delhi: Rajkot's traditional retail formats (for the sake of simplicity, I will be referring to them as kiranas, or neighbourhood stores) are under attack, and, no prizes for guessing, the culprit is modern retail.

At this point in Rajkot's history, modern retail boils down to just one mall, the Iscon Prozone Mall, anchored by Kishore Biyani's hypermarket chain, Big Bazaar, and lifestyle store Pantaloons. There are other retail chains as well, including Subhiksha and Adani (now part of Reliance Retail), but these entered the city only last June. Therefore, to say that the 400-year-old city's mom-n-pop retailers are under attack may sound like a lot of exaggeration. But talk to the small retailers, and they will tell you-besides pointing to the empty streets-that they can already see the writing on the wall. "My shop is 40 years old and we sell utensils and crockery of reputed brands like La Opala, Borosil, Coral, and Diplomat, but ever since the malls started selling cheap Chinese crockery and smaller brands that had never entered the city before, my sales are down more than 20 per cent over the last six months," laments Nayan Kotecha, a 29-year-old who mans his family store in Dharmendra market. With more retailers headed to Rajkot (see Destination Rajkot), Kotecha and his peers have plenty to worry about.

The big competitor: Big Bazaar at the Iscon Prozone Mall

But, then, don't forget that this is Gujarat (Rajkot is about 218 km from Ahmedabad), and home to some of the savviest business communities in the country. So, far from rolling over and playing dead, Rajkot's kiranas, some 3,000 of them, are coming together to take on modern retailers at their own game. A brainchild of Rajkot Chamber of Commerce & Industry (RCCI) President Hitesh Bagdai (who, in turn, roped in Delhi-based consultancy Technopak to devise a strategy), the Rajkot experiment is both ambitious and unique. The plan is really simple: Create an umbrella association under which Rajkot's fragmented retailers can rally around and start becoming more organised in terms of how they buy and sell, and how they manage their inventories and customers. "I think the Chamber is on the right track and if survival means getting together and spending a bit more on marketing, I don't mind it," says Kotecha.

A question of survival it is, as Bharat Thakkar, owner of Options, a four-storeyed branded-goods store in Rajkot's tony shopping district, Dr Yagnik Road, has discovered. Come March 31, Options, Thakkar says, will see a 10 per cent drop in sales over last financial year. The store's in-house merchandiser says that he has had to change his sourcing points, as his customers have become more brand-conscious with the advent of big retail in the city. In fact, apart from losing customers, Thakkar has lost employees as well to the bigger retailers. Others tell similar stories. "With diminishing sales, I have almost halved my sourcing and even removed the HLL Super Value scheme and started keeping locally-made products to supplement my income, but I am sure that with the Chamber's help, small grocers like me will also be part of (the manufacturer's) promotional campaigns and eventually get my customers back," says 43-year-old Raju Bhai Manwani, who says sales are down for the first time in 23 years.


If you can't beat 'em, join 'em, say Rajkot's kiranas.

The Front-end Plan
All the 3,000 small-time retailers plan to rally under one shopping mall or complex, and offer modern facilities such as food courts, ATMs, and entertainment (gaming)

The Back-end Plan
Do collective buying to increase the negotiating powers of small retailers vis-à-vis the bigger, modern retailers

Wooing Customers
Offer same quality, hygiene and service levels as modern retailers, while continuing to do things like home delivery

Sharing Logistics
To reduce infrastructure costs, create common warehousing facilities, database and connectivity, besides common parking facilities

The Rise of 'Small-Marts'

To start with, the Chamber plans to develop three market clusters in the first year. The first cluster to be developed will be in the old areas of Rajkot, comprising the three parallel markets of Dharmendra Road, Lakhajiraj Road and Gheekanta Road, which also happen to be the oldest market lanes in the city. Here, the shops range from tea shops to garment/saree shops to those selling electrical appliances. The Rajkot Municipal Corporation (RMC) has already widened the roads here and although the complete makeover will take some time, the vendors are excited about the project. "When conceptualised, this will give us the scope to not only retain our customers but also become a shopping centre as attractive as the malls," says Sarju Karia, who runs a hosiery store, Liberty, in Dharmendra market.


A handful of malls is to open in the city by the end of 2007.

Iscon Prozone Mall
Operational, 170,000 sq. ft (Pantaloon and Big Bazaar)

Reliance Mall
200,000 sq. ft

Crystal Mall
150,000 sq. ft (Anchor: Croma)

Iscon Mega Mall
200,000 sq. ft (Westside)

Ozone Mall
100,000 sq. ft (PVR)

The second cluster to be developed would be at Dr Yagnik Road and the third at Kalawad Road. These clusters will be developed like any other shopping complex, with street furniture, decorative lighting system, systematic billing and hygienic food outlets. There will be common sourcing and warehousing of goods, common advertising, marketing and below-the-line activities and a single identity created via common designs and colour schemes for all stores on the street. All stores in this model will have a unique identity and shoppers would be given discount coupons on purchases from any shop on the same street (see Getting Organised).

Prabhudas K. Tanna's saree shop is three generations old. He fears he may lose customers once branded saree stores come to town