Consumer companies give kirana stores a facelift

store "" stays alive and kicking.

They are helping them get a face lift and making them operationally more efficient. If Hindustan Unilever has roped in designers to change the way kiranas look, Tata Tea is putting its money where its mouth is by offering more discounts.

Godrej Consumer Products Ltd (GCPL) is trying to make sure it does not overload shops with stocks. And Marico is teaching store owners to use computers.

Such is the importance of these ubiquitous shops that the firms are prepared to take a hit to their profits to sustain this key distribution channel.

Says Percy Siganporia, managing director, Tata Tea, "Because of the growing bargaining power of organised retail, kiranas have a fear of being let down by suppliers. So we're being pragmatic and sometimes are absorbing a hit in the margins."

Siganporia adds that as a result some kiranas today are able to offer higher discounts than they were able to do some time back. "The gap between prices offered by big players and the kiranas is narrowing to an extent," he notes.

While the discounts are bringing in customers, kiranas are in better financial shape today, with less pressure on cash flows because they carry lower inventories.

Explains Hoshedar Press, managing director, GCPL, "Earlier, we were guilty of forcing them to carry huge stocks. We have realised there's no point in doing that. Apart from the fact that there was damage and obsolescence, their cash flows were always strained."

Adds Siganporia, "It's better that their stock turns improve and so we are doing replacements every night in some places."

The lower inventory means that kiranas today need less credit. GCPL has just kicked off an experiment in around 2000 outlets in Gujarat where it replenishes stocks when the shops require them. Once Gujarat is covered, GCPL plans to do the same in other states, adds Press.

Meanwhile, Marico is giving store owners lessons in accounting. Thus, kiranas may soon be well-versed in metrics such as "overheads as a percentage of sales" or "employee costs as a percentage of sales".

Explains Milind Sarwate, CFO, Marico ,"We started this recently in Mumbai. Unless store-owners start measuring everything, it is impossible to figure out whether the system is working."

Almost all companies are trying to help kiranas attract footfalls. Hindustan Unilever Limited has been working hard to help several shop-owners do up their stores, making them more customer-friendly.

"Earlier people could not walk around inside the shops , they can do so now," says a spokesperson for HLL. Marico, too, has been trying to convince store owners to convert to an "open format" though because of the investment involved, there is some resistance.

"The way that a store looks is only one element that impacts sales, but it is an important one," says Sarwate. Many kirana owners have realised the importance of a shop's appearance and have refurbished their outlets.

Says Virji Shah who has a small shop in the western suburb of Vile Parle in Mumbai, "I have rented some additional space and now have a bigger store."

"Companies have helped me with signages and the shop looks brighter and my sales are picking up." he added.

Tata Tea organises events regularly, invites wives of retailers and, of course, sponsors the tea.

"We are hoping the bonding will work," says Siganporia.

With this kind of support, the humble kirana is going to be around for longer than most of us would imagine.