Small retailers fight a losing battle against the giants

Ever since a Reliance Fresh store opened close to his fruit stall at Noida in the suburbs of Delhi, 30-year-old Anand Kumar Gupta has opted for the oldest trick in business.

"If you buy in bulk from me, I guarantee that I will be cheaper than Reliance Fresh," he said.

A short wait shows that Gupta is a man of his word. He sells two kg of Kullu apples to a customer at Rs 25 a kg, though he had started by asking for Rs 40 a kg. The price of the same apples at the Reliance Fresh store nearby is Rs 24.90 a kg.

After ten minutes of haggling, Gupta matched the price of the retail chain. Once the customer was out of earshot, Gupta admitted he would have reduced the price to Rs 20 had she bought three kg.

The story is almost similar if you visit the stall of Santosh Kumar, a green grocer in Gurgaon.

"Even after the bargained price, if a customer buys vegetables for Rs 325, we round it off to Rs 300. That's another discount a cashier at a big retail store does not offer," he said. He was not aware of the loyalty cards being offered by big retail chains.

Bargaining has been a fact of life for the corner grocer. But ever since the large organised retail chains got into the act, the bargaining has become even more hectic.

When Business Standard compared prices offered by big retail, kirana or neighbourhood stores and green grocers in the National Capital Region, it discovered that big retail was cheaper than street prices by 5 to 10 per cent.

Organised players ensure that they price their fresh produce at around 6:30 am a few rupees cheaper than the neighborhood green grocers. The smaller grocers match their prices soon afterwards.

For branded consumer goods and staples, kirana stores and big retail prices were almost at par. The kirana stores offer roughly the same price as big retailers, but are unable to match the promotions and "combo" deals.

Still, small businessmen like Gupta and Kumar are finding it difficult to hold on to their customers.

Despite recent research findings that indicate that big retail is not hurting the traditional mom-n-pop store in India, facts on the ground suggest that the proposition of rock bottom prices with produce being stacked and sold in air-conditioned environs is weaning away customers from the humbler neighbourhood shops.

In Lucknow, shop owner Babloo Bansal said he had lost customers when an organised retail store opened nearby.

"This supermarket started selling onions and potatoes at lower prices than even the prevailing wholesale rate," he said. Gupta of Noida said his daily turnover had slumped from Rs 2,000 to Rs 750.

By most estimates, India has 12 million unorganised kirana outlets. In comparison, big retail makes up just 4 per cent of the $336 billion retail market. The main players include Reliance Retail, RPG, Subhiksha and the Future Group.

So what does the future hold for small grocers? The ones Business Standard spoke to said they would also love to revolt, as smaller retailers did in Lucknow.

"But there is no unity among us. If someone makes less money than me, he will not be on my side," said one kirana owner in Gurgaon.

"We have been in this business long enough to know that it is impossible for people like us to be on the same side. That was just a staged drama to get some money. But at least it has helped us indirectly for some time," Gupta added.