Chattopadhyay A and Dholakia N and Dholakia R. R(2011): “Standing up to Goliaths: How Small Traditional Stores Influence Brand Choices in India” in proceedings of 10th International Conference Marketing Trends to be held at Paris January 2011, 20th -22nd co-organized by ESCP, Europe and Universita CaFoscari Venezia

1. David
Standing up to Goliaths : How Small Traditional Stores Influence
Brand Choices in India
Atish Chattopadhyay, Ph.D.
S. P. Jain Institute of Management & Research
Mumbai, India
Nikhilesh Dholakia , Ph.D.
University of Rhode Island
Kingston, RI, USA
Goliaths
Ruby Roy Dholakia, Ph.D.
University of Rhode Island
Kingston, RI, USA 1

2. Even in big
Emerging Economies Retailing: Cautionary Lessons for Brand Marketers
cities, complex “brand acquisition channels” have to be
managed
Big Store/Mall
• Self
• Spouse
• Child
• Servant
• Delivery
Wholesale Small Stores
Distributor
2

3. Aligarh {4} (106) [111] 3
Kolkata {3} (48) [65] 1
Mumbai {6} (49) [50] 1
Vizag {3} (61) [61] 3
N = {16} (264) [287] 8 3

4. Classification of Retail Outlets (Food & Grocery)
US$ 152 bn
99% 1%
4

5. General Merchants
5

6. General Provision Stores
6

7. Chemists
7

8. Key Characteristics of General Trade
• Average store is quite small
• Typically located very conveniently close to residential
areas
• Visual and physical navigation is constrained
• Verbal navigation is the common method by which a
shopper participates in the process
• Product assortment can be wide but not very deep
• Product display allows more visual than tactile
inspections
• Personalized services, credit and delivery are conveniently
available
• Store hours are long and a high proportion of regular
customers visit stores frequently 8
v

9. How are the two formats different?
Interaction
Impersonal Personal
Formal Informal
Faceless & desolate Part of the community/Social space
Self-service Service provider
Transactional Patron-client relationship
9

10. Key Themes in STS Shopping
Sl Theme Findings Observations
1 Familiarity Caters to wide spectrum “One can come dressed in only a towel to shop at my
breeding of shoppers across store; a shopper has to dress up to go to a modern store”
comfort socioeconomic classes
2 Locational Most important reason 55% of respondents mentioned locational convenience as
convenience for store patronage reason for patronizing a store
3 High 80% shoppers frequent 20% shopper visit the store at least once daily and 45%
Frequency of the store regularly frequent the store once a week
Shopping
4 Waiting time Visual scanning of 33% of all shoppers scan POP of which 47% made
window display/POD very purchases
common while Shopper Out of all the purchases made in these stores 34% were
waits unplanned of which
39% percent were POP reminded
5 Shopkeeper Avg. length of store Store owner usually knew more than 100 of their
Relationships patronage was 9 years shoppers by name, who were:
a) Extended credit
b) Charged less than MRP
c) Given home delivery / Telephone ordering
Shoppers relying for brand SKU and substitute
recommendations
10

11. What Shoppers Do (Actions) on Entering a Store
Shopper Actions
45
40
35
30
25
20
15
10
5
0
Calls out/gives Picks Product Asks for Scans Asks for Seeks brand on Informal
list Specific Brand Display/POP category scheme Communication
65% shoppers follow a brand driven path
11

12. Shopper Actions - 1
45
40
35
30
25
20
15
10
5
0
Calls out/gives Picks Product Asks for Scans Asks for Seeks brand on Informal
list Specific Brand Display/POP category scheme Communication
40
Store Actions - 1
35
30
25
20
15
10
5
0
Points to POP
Communication
Gives Product
Stock-out n
Suggests/Gives
Sets-up
Clarification
brands on
delivery
Alternate brand
Offered Alt.
Mentions
scheme
suggests
Alternate
brand on
scheme
Seeks
Informal
12

13. Role of Shopper in STS
Sl. Path Cases Observations Language used Role of
No % shopkeeper
1 Brand 65% Stock out in Centrefresh hai? Boomer hai. Wohi de do. Brand
driven 6% cases Replacement
2 Category 17% In 80% cases Ek mixed fruit jam Brand
driven shopkeeper Sarson-aamla ka koi hair oil hai kya? Decision
gives product Shopkeeper gives Dabur
on his/her
own
3 POP / 16% 85% specify Fiama: with sponsored window display Display
Display brand after sales INR 5000 pm; w/o display sales INR Decision
driven scanning POP 1500 pm
Customer asks for Horlicks Nutribar, takes
KitKat after looking at display
Lady asks for a particular shampoo,
shopkeeper gives an alternative which is
rejected. She
Scans POP and asks for Ayur
4 Deal 2% Enquires for Shopper enquires about schemes available Consumer
driven brand on with RIN. Shopkeeper informs 1 kg free on Promotion
scheme 2 kg RIN and 1 bucket free with 3kg HENKO 13
Shopper asks for HENKO bucket

14. Shopping Missions undertaken in STS
Sl. Mission Characteristics Implications
1 Comprehensive Large planned grocery Convenience of taking orders over phone and
/ Main shopping undertaken home delivery enables these stores to get a
Shopping regularly, usually sizeable comprehensive shopping even at places
monthly where modern trade retailers are present in
close proximity - As shoppers in the large Indian
cities starved for time .
2 Replenishment Trip triggered by need Continues to get the major chunk of emergency
or Top-up to top-up grocery and replenishment shopping due to convenient
shopping location. The provision of delivery and extension
3 Emergency Items needed of credit makes them resilient in the face of
immediately large scale competition.
4 Meal for the Buying items for Vast majority of Indians are employed in
Day consumption on the unorganised sector , who are daily wage earner
same day or within and make regular purchases for daily
one or within one or consumptions. This group is catered to buy the
two days. For STS who stock smaller SKUs like sachets, extend
example, sachets of credit and also offer a small discount on MRP.
14
shampoo

15. Managerial and Policy Implications
ICRIER research earlier concluded – with the entry of large organized retail
chain, STS outlets in the vicinity experienced a decline in volume and profit
initially, but this negative impact on sales and profit decreased over
time.
Branded manufacturers like Unilever and P&G– who experienced their
channel power erode as a result of the growth of large-scale, multi-store
retailing in other countries; and specifically because of the Walmart effect –
have started to take initiatives to protect their channel power
STS becomes even more important to branded manufacturers - Several
initiatives attempt to improve the market standing of these stores. For example,
Unilever awards the “Super Value” store distinction to their best
performing STS outlet
Frequency of shopping and different shopping missions leads
consumers who have accepted the large format stores to split their
purchases and patronize both large supermarkets and neighborhood stores.
The threat posed by organized retailers is unlikely to eliminate the
STS sector in the immediate future. Both the shopper and the retail systems
are in transition and will remain so for the foreseeable future. 15

16. Special status to STS by Unilever
16

17. Managerial and Policy Implications
ICRIER research earlier concluded – with the entry of large organized retail
chain, STS outlets in the vicinity experienced a decline in volume and profit
initially, but this negative impact on sales and profit decreased over
time.
Branded manufacturers like Unilever and P&G– who experienced their
channel power erode as a result of the growth of large-scale, multi-store
retailing in other countries; and specifically because of the Walmart effect –
have started to take initiatives to protect their channel power
STS becomes even more important to branded manufacturers - Several
initiatives attempt to improve the market standing of these stores. For example,
Unilever awards the “Super Value” store distinction to their best
performing STS outlet
Frequency of shopping and different shopping missions leads
consumers who have accepted the large format stores to split their
purchases and patronize both large supermarkets and neighborhood stores.
The threat posed by organized retailers is unlikely to eliminate the
STS sector in the immediate future. Both the shopper and the retail systems
are in transition and will remain so for the foreseeable future. 17

18. atishc@spjimr.org
+91-98333 93017
18