The document discusses the growth and evolution of MK Retail, a family-run grocery store business in India over 85 years. It started as a small kirana store and has expanded to seven supermarket locations totaling over 100,000 stock-keeping units. MK Retail has been able to adapt and modernize while maintaining a local focus and strong customer service. Key aspects of their success include a fill rate of 75%, a wide product assortment tailored to local customer needs, and loyal customers due to quality products and service. While India's retail sector has potential for growth, challenges remain around infrastructure, warehousing, logistics and high employee turnover.

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In the past 10 years, Indian retail has
grown significantly.
As per industry reports, organised retail has
grown from 3 percent in 2010 to the current 10
percent. There is a boom in organised retailing
as more and more grocers are beginning to
upgrade their stores, expand their product
offerings, and improve their customer service
and staff training. We too have gone through
several changes; from a kirana store we have
grown to become a supermarket, in fact, we are
bigger than a regular supermarket. The need
for supermarkets is also growing as consumers
Niyas KN, Chief Information Officer, MK Retail, charts the progress
of his family business over 85 years
Interface
Niyas KN
are flocking to such stores where they can
buy all that they want under one roof and in a
comfortable environment.
Unlike a traditional grocer, we offer
our customers more than just the basic
requirements.
We have a total of 60,000 skus which
include stationery items, footwear, garments,
cosmetics, frozen food, dairy products,
staples... all of which may not be full-fledged
offerings but they meet the basic needs of any
customer.
By Roshna Chandran
Past, Present
The Future
&

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acquiring manpower is very difficult nowadays.
We only get freshers. There is also a lot of
uncertainty whether they will stay on or not.
Attrition on the whole is very high as people
only look for higher salaries; so there is no
loyalty to any company. If they get a hike of
even a few hundreds they will just move on.
We have lots of promotional schemes
and offers - at least 100-150 skus are
currently on schemes.
This keeps changing month on month. Each
category has an offer, like Ariel detergents on
which we are offering 40 percent discount.
We take up each category and put an off price
on one of the fast selling skus within that
which is about 25 percent, and another 25
percent is from consumer durables. We have
imported products in all categories so we have
not allocated a separate area for international
brands. It is not a separate section, it is all
mixed.
We have a strong base of loyal customers
who have been shopping at MK Retail
stores since they started.
We plan to have more promotions and develop
customer loyalty programmes. We are also
working towards giving home delivery to our
customers. No doubt, the sales staff is the
primary connect customers have with our
brand, so having good staff is crucial. But
There is a boom in organised retailing as more
and more grocers are beginning to upgrade
their stores, expand their product offerings, and
improve their customer service and staff training
Total number of stores: 7
Store Size: 4000-25000 sqft
Daily footfalls: approx 5,000 across all stores
No. of staff: 550 across all stores
Sales growth over the past 5 years: 25% per
annum.
Monthly overheads: 3-4 % of sales
Sales as per product categories:
Staples: 35 % of sales in food category
FMCG - food and non food: 65%
Space allocated to PLs: 40%
Average billing size: Rs 750 to Rs 1500
MK Retail
Our fast moving products are staples, which
is our private labels (PLs). All the food grains
that we sell are mostly PLs. We have been
seeing growth in almost every vertical ... every
category is growing. Processed food is growing
very fast which in turn affects sales of staples.
Our sales from FMCG food is about 50 percent
of our overall sales, followed by non-food

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category. We are not much into advertising
now as the brand is pretty strong already. We
are a regional player, and wherever we are
present, we have a good customer base, and
we are banking on our loyal customers to
strengthen our brand value.
Infrastructure is a big challenge and that
affects the supply chain.
Bigger formats have to set up their own
warehouse. If there was government support
MK Ahmed (Niyas’ grandfather, started
a food and grocery store in 1927 and
named it after his own name. It was a typical
grocery store situated at Bangalore’s Mysore
Road and catered to consumers in the
neighbourhood.
When Ahmed died in 1947, his sons
managed and grew the business. Son
Abdul Rahman, current Chairman of MK
Retail (Niyas’ father), set up a kirana store
in Malleswaram in 1963. In 1983, when
the business split between his five sons,
Abdul Rahman inherited the kirana shop
on Bangalore’s CMH Road. Soon, the store
expanded its product assortment to include
products such as packaged foods, and
even deployed technology to modernise
its store operations, launched promos and
loyalty programmes as part of its marketing
plans.
In the early 2000s, Rahman’s five sons
joined the business in quick succession, and
began expanding. The 17,000 sqft flagship
store opened further up on the same road
in 2002. It stocked stationery, appliances,
crockery and furniture.
To the 2nd
generation of the family, the
company owes its expansion initiative. But
it was the 3rd
generation that started the
modernising and branding process to make
the store a part of modern retail, and which
Secret of Success
Many of our skus don’t
make money, but we
stock them nevertheless
because our customers
want them
in terms of warehousing, things would be a lot
easier. It depends on the capacity of a retailer
- whether he can set up a good warehouse
or not. Generally, the trend abroad is to have
warehousing spaces. Distribution centres are
rented out. India does not have anything like
that. We have to set up our own warehouse
in some industrial area. Infrastructure and
supply chain is something we have to seriously
improve. Although we have a distribution
centre, we need a better location to maintain
freshness and ensure timely supply. If
products are damaged during transit vendors
will not take them back.
When it comes to technology, there is
nothing good in India apart from a good
ERP and some business intelligence.
RFID is still not very affordable, but this
advanced technology is more specific to
supermarkets. We use Microsoft ERP which I
think is the best for our segment. and the most
affordable too. This takes care of our back-
renamed the store MK Retail. The brothers
meet once a month to discuss strategy
and take important decisions. There are no
external board members or advisors. Having
only family members in the business is what
differentiates them from national corporate
store chains. “We have a common vision,
mission and goals,” says Niyas.
Each one of their stores is individually
profitable and sustainable on a stand-alone
basis. Their focus is more on profitability than
the number of stores. What is unique about
them is their personal touch with customers,
their quick acceptance and adaptation to
customer needs and market trends.
Besides its fresh produce, good quality
and seasonal fruits, vegetables and flowers,
wide range of Indian mithaais, gourmet foods,
high-quality bakery products and desserts, a
good range of crockery and other household
products and variety of gifts for all budgets,
MK Retail has built up a reputation of
catering to the needs of the local catchment
area for instance, it offers Kerala delicacies
to meet the needs of residents from Kerala in
the catchment area.
Quick and friendly service, the right
product mix and affordable pricing enables a
good retail experience that keep customers
coming back. “A truly progressive grocer
is one who is capable of meeting the
requirements of his customers, and how
localised his product assortments are,”
says Niyas.
Quality and not price is important to the
family. In their experience, premium brands
are far more sustainable in the long run than
economy brands. Even in their private labels,
they have had better success with premium
priced (and high quality) products than low
budget offers.
Now there are 7 MK Retail stores - all in
Bangalore. And the grocer continues to be
one of the most well known, trusted and
successful local retailers in the city. What
is the secret behind MK Retail’s consistant
success and popularity? “First is our fill
rate, which is 75 percent; second is our
wide product assortment, and third is our
customer service,” says Niyas.

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end management and other operations such
as warehousing, stock inventory, ensuring
fill rates, supply and distribution to all our
stores. We have a business intelligence tool for
forecasting and placing orders.
For India’s F&G retail business the future
looks very bright — there could be a boom
in this industry.
With growing disposable income people are
willing to spend more. The trend will be more
towards modernising F&G retail as grocers
upgrade to new technologies, store layout and
design, and expand their product assortment
to cater to every need.
However, at present, the infrastructure
is not all that great. It is not easy to expand
beyond one’s own city. If I want to open
an outlet in Mysore, I will not be able to
manage it with the kind of infrastructure
we have. Logistics would pose a problem
as would warehousing facilities, supply and
distribution. This industry is labour intensive,
but unfortunately, India’s retail labour
productivity is the lowest in the world, and
really less as compared to that of USA. High
attrition rate and lack of training are issues
that are hindering growth of Indian retail.
At MK’s, our top management have been
with us since ages, but at ground level, we
have only new faces and they keep changing
constantly.
Our merchandisers have been with us for
15-20 years, and understand the consumer
pulse. We source products based on what
customers demand, rather than based on
margins or profitability. Many of our skus don’t
make money, but we stock them nevertheless
because our customers want them.
Our growth will be organic — slow but
steady.
We have three store formats ranging from
4,000 to 25,000 sqft. The one at CMH Road is
20,000 sqft, the Sarjapur store is 10,000 sqft;
and CV Ramagar store is 4,000 sqft.
We study the catchment area and the class
of customers there, and based on the customer
profile we bifurcate them into what we call B+
or A. We basically look at the population in
a given area as we are into niche residential
layouts. Wherever we find an opportunity we will
definitely expand. Presently, we are planning to
go South - Kerala and Chennai in particular. We
plan to achieve this by the next 5 years.
Our seventh store of 4,000 sqft is the
smallest in the chain. We have experimented
with this size because we believe that this
size could be more viable in the future. We
believe that it is easier to set up smaller sized
stores across several more locations, either as
company-owned or as franchises, and easier
to run them too, as compared to large format
stores of 15,000 to 20,000 sqft. We also
prefer high streets rather than malls which
charge very high rentals. We cannot afford
to operate on a business model that allows
breaking even after two or three years. Each
store has to make money from day one.
FDI could be a good thing
With the coming of big retailers the whole
perception of Indian retailing would change. It
may provide more employment and moreover
we will be able to adapt new technologies,
which will become more affordable. Where
Indian retailers need to improve is on their
store design and ambience. Although we keep
working on the look and feel of our stores,
somehow, stores outside India are completely
different and so much better. n
Quick and friendly service, the right product mix and affordable pricing enables a good retail
experience that keep customers coming back.
MK’s sales from FMCG food is about 50% of the overall sales, non-food which is about 25%, and
consumer durables is 25 %