The Hindu Business Line : Never mind modern retail, Chennai’s kiranas do well: Study

Chennai, May 8 It’s 12 years to the day since modern and organised retailing took birth in Chennai when Carnatic music icon, the late M.S. Subbulakshmi, inaugurated the first Foodworld store, then promoted by the RPG group, on C.P. Ramaswamy Road, one of the city’s main thoroughfares.

Twelve long years later, from the inauguration on the May 9, 1996, of the first Foodworld store, Chennai has the largest penetration of modern supermarket stores compared with any other Indian city. During these 12 years modern organised supermarkets have grown to more than 250 stores in Chennai. Subhiksha, Spencer’s Daily, Reliance Fresh and Aditya Birla’s More have all got more than 50 stores each. These modern stores occupy about 7 lakh sq ft of street front retail space and about 5 lakh sq ft of warehousing and distribution centre space.

However, if one thought the corner store or the kiranas were struggling in the face of the onslaught from organised retail, it’s far from the truth. In order to understand the impact of modern organised supermarket retailing, Kiranafirst, a not-for-profit organisation, devoted to enhancing competitiveness of kiranas, undertook detailed research on this subject. The study found that modern supermarkets are still struggling and the good news is that traditional kiranas are reinventing themselves and have become more prosperous.

The study incorporates research by members of faculty and students of a prominent city business school. A total of 304 kiranas from 30 stratified geographic hamlets in Chennai were chosen to study the impact of modern supermarkets on traditional kiranas.

The outcome of the research, to be published exclusively in this newspaper, has been serialised in three parts: Status of supermarket retailing, emergence of ‘super kiranas’ and impact on traditional kirana stores.

However, the study finds that organised retail too has changed the shopping habits of Chennaiites. While new stores are being added on, the current monthly revenues of organised retail in the city is about Rs 50 crore a month.

The study puts Chennai’s household expenditure on food, groceries and other household consumables at about Rs 250 crore per month from 12 lakh homes. This would mean that modern supermarkets are taking away some 20 per cent of Chennai’s domestic expenditure.

While specific numbers are not available, the study makes an assumption that supermarkets’ share of SEC A and B-plus segments could well be between 30 and 35 per cent. This figure compares favourably with other developed retail markets in the Asian region such as Thailand, Malaysia and Taiwan.

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