Supermarkets are re-shaping retail  ( February '4,2004, ET)

Being small, yet significant is an odd paradox to straddle, but it’s one that India’s emerging modern trade manages with aplomb. Not surprisingly then, a closer look at the dynamic evolution of the modern trade brings our attention to one of its most important constituents —standalones. Standalone supermarket stores that are not part of a multi-city or local chain of stores comprise over one-fourth of FMCG sales through modern format retail outlets. Defined as single self-service stores, standalones are an important supermarket store-type within the modern Indian retail environment.

Analysing data for almost 2,300 outlets across 28 urban Indian cities reveals interesting insights into the development of the retailing landscape. While traditional retail formats such as kirana stores, grocers, paan outlets etc still hold sway, modern retail formats are growing in importance for the FMCG marketer due to the range of products that they stock and the high average daily sales per store of FMCG products they yield.

While standalones reach a greater number of consumers, they present an interesting challenge for marketers in terms of visibility. The average shelf space per store at 1896 sq ft implies that their smaller overall size does not restrict them from displaying more categories and brands. Compared to the 122 product categories stocked by the average supermarket, standalones stock an average of 126 product categories. Combining this with the fact that the average number of customers visiting standalone stores per day and the average spend per consumer is lower than the average supermarket, means that products and brands have to compete much harder for the consumers’ rupee within this store format.

For the marketers of branded packaged goods this means that their in-store promotions and point-of-purchase material will need to play a more effective role in stimulating off-take.

Standalone stores are not merely upgradations of the grocery stores within a locality. Not only do they not restrict themselves to just FMCG products, which makes it easier to cross promote brands through cross-selling schemes, but also have a healthy stock of premium FMCG products. Premium FMCG products are well penetrated within standalones with some premium food categories and women’s toiletries registering a higher penetration in standalones compared to other supermarket store-types on an average.

Some urban Indian cities however, appear to enjoy a higher than average contribution from standalones. In cities like Delhi and Lucknow more than half of all FMCG sales through supermarkets comes from standalone stores, while in smaller cities like Varanasi, Chandigarh and Patna, the absence of local or multi-city chains results in all FMCG sales through supermarkets coming from standalones. Even in Chennai, which has a healthy presence of multi-city and local chains, standalones contribute 50 per cent to supermarket FMCG sales. Standalone stores are able to attribute their large contributions to their geographical placement since they reach over 40 percent of the purchasing population. Moreover, they go to lengths to service consumers within their catchments, with a higher percentage of these stores offering telephone ordering and home delivery.