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Modern Format Store

Modern format stores growing strongly: ACNielsen | | Announcement / Companies & Industry October 19, 2006 | | | | Mumbai, October 19, 2006 Modern Trade in India is in its growth path, accounting for 11 percent of sales in the leading 23 Metros, according to the latest 2006 ACNielsen | ShopperTrends report. | | Contrary to popular belief, Supermarket stores grew by only 5 percent during 2005 and currently less than 20 percent of household shoppers in key cities are regular supermarket shoppers. However Hypermarket has posted better growth with the number of hypermarkets growing by 57 percent form 2004 to 2005. | | When compared to China, India is 36 times less developed. But with one modern store for every 400,000 population, there is adequate scope of expansion in the country. With a lot of companies intending to invest in the Indian retail sector, we are likely to witness a retail boom. So it would be an interesting time to monitor the retail

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space in India said Sujit Das Munshi, Executive Director, Retail Management Service, ACNielsen South Asia. | | Another interesting trend when it comes to price sensitive Indian buyers is that it is convenience that takes them to a store rather than pricing. The other key factors that drive store preference are store accessibility, quality of products, loyalty programmes and product assortment. | | The numbers of stores visited by consumers have not increased in the Metros. This clearly shows that Indian consumers is evolving and are likely to settle for their favorite branded store instead of experimenting. The task now lies ahead for marketers is to ensure that they manage to retain their customers with availability of good quality products, innovative promotions and world class service within a store. A satisfied consumer can be a great brand ambassador and can help win new/loyal customers. commented Das Munshi | | Across Asia Pacific | 01. |Modern Trade in India Retail is worth about 7.8 million retail stores, but most of those are

traditional ones, which only recently started making way for hypermarkets, supermarkets and specialty stores. Modern trade in India is witnessing tremendous growth, especially in Tier I cities. It accounts for 4 per cent of urban FMCG sales but for the top 15 metros it is about 9.7 per cent of the total FMCG sales. For South Indian metros it touches about 16 per cent, because modern trade started there a little earlier. There are more than 3,430 modern trade stores in India now. There are a few segments in the FMCG range of products that have experienced good growth from the modern trade format. In the food segment, processed food products (23 per cent),

impulse food products (32 per cent) and packaged grocery (38 per cent) are the segments that have witnessed immense growth from urban Indian modern stores. Similarly, in the home and personal care segments it is household cleaning products (38.1 per cent), fabric care (23 per cent) and categories related to grooming, viz. hair care (28.3 per cent), fragrances (26 per cent) and skin/body care (23 per cent) that have recorded considerable growth from urban modern format stores. Modern trade and food as a category: Food accounts for about 48 per cent of FMCG sales in the country and for modern trade the number is even higher, at 51.3 per cent. Like other Asia-Pacific markets, in India too, among the processed food segments, the breakfast cereals category is exhibiting a stupendous 40 per cent growth rate. Other growing categories are biscuits (26 per cent), vermicelli & noodles (28 per cent), 02.
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Modern format stores growing strongly: ACNielsen


Announcement / Companies & Industry October 19, 2006

Mumbai, October 19, 2006 Modern Trade in India is in its growth path, accounting for 11 percent of sales in the leading 23 Metros, according to the latest 2006 ACNielsen | ShopperTrends report. Contrary to popular belief, Supermarket stores grew by only 5 percent during 2005 and currently less than 20 percent of household shoppers in key cities are regular supermarket shoppers. However Hypermarket has posted better growth with the number of hypermarkets growing by 57 percent form 2004 to 2005. When compared to China, India is 36 times less developed. But with one modern store for every 400,000 population, there is adequate scope of expansion in the country. With a lot of companies intending to invest in the Indian retail sector, we are likely to witness a retail boom. So it would be an interesting time to monitor the retail space in India said Sujit Das Munshi, Executive Director, Retail Management Service, ACNielsen South Asia. Another interesting trend when it comes to price sensitive Indian buyers is that it is convenience that takes them to a store rather than pricing. The other key factors that drive store preference are store accessibility, quality of products, loyalty programmes and product assortment. The numbers of stores visited by consumers have not increased in the Metros. This clearly shows that Indian consumers is evolving and are likely to settle for their favorite branded store instead of experimenting. The task now lies ahead for marketers is to ensure that they manage to retain their customers with availability of good quality products, innovative promotions and world class service within a store. A satisfied consumer can be a great brand ambassador and can help win new/loyal customers. commented Das Munshi Across Asia Pacific In total Asia Pacific region, the Competition for the grocery dollar is set to continue with the total number of grocery outlets in the region increasing by two percentage points to over 12.7 million by the end of 2005, according to the latest 2006 ACNielsen | ShopperTrends report. Conducted annually, ACNielsen | ShopperTrends provides insights into changing grocery shopper behaviour and the factors driving shopper satisfaction and loyalty in 15 countries across Asia Pacific and more than 40 globally. ShopperTrends also provides an understanding of shoppers awareness and usage of Private Labels. The real action across the region is coming from the growth in modern self-service grocery stores. In 2005, a net increase of over 12,000 stores, an increase by six percentage points compared to 2004 was experienced. The growth was driven by a 19 percentage point increase in hypermarkets and 15 percentage point growth in convenience stores. (Table 1) The increasing availability of these store types is continuing to

have a significant impact in changing the behavior of shoppers in this region. The shifting grocery spending In 2005, modern grocery retailing accounted for 48 percent of fast moving consumer goods (FMCG) packaged grocery sales in Asia an increase of two percentage points compared to 2004 and at similar rates to the last five years. (Table 2) The switch of spending from traditional grocery stores is expected to continue at this rate over the next 12 months, when we are likely to see the modern trade becoming more important, for the first time, than traditional stores, Peter Gale, Managing Director, Retailer Service ACNielsen, Asia Pacific said. In fact this is already the case in North Asian countries, with China (excluding villages) experiencing another three percentage points shift compared to 2004, with the modern trade now accounting for 53 percent of total grocery sales. In South-East Asia, the picture differs, with Singapore the only market where the modern trade dominates. Compared to North Asia, only 43 percent of sales in South-East Asia go through modern self-service grocery shops, although the shift towards the modern channels continues in nearly all countries. The most significant modern trade growth during 2005 has come from Malaysia, Indonesia and Vietnam. The grocery retailing structure is changing Based on the regular usage of the different store formats in urban centers, the grocery retailing structure in Asia Pacific is gradually changing and can be segmented into four distinct groups according to ACNielsen | ShopperTrends. Among them the Pacific, Hong Kong and Singapore are the most developed; Korea, China and Japan the most fragmented; Thailand, Taiwan and Malaysia have become more hypermarket-dominant; and the developing markets of Indonesia, the Philippines and India are fast catching up. Concentrated supermarket-dominant markets In Hong Kong, Singapore and the Pacific, the modern grocery trade accounts for more than 90 percent of packaged grocery sales and the markets are dominated by a limited number of chains. Supermarkets are the most frequently used channel by the vast majority of shoppers, typically visited twice a week or more. Meanwhile convenience stores are well established in these markets, where 50 to 60 percent of shoppers use them regularly on average, once a week, and less frequently than the use of Supermarkets. In Hong Kong however, with the much higher frequency of shopping, over eight in 10 shoppers are using convenience stores, on average, three times a week. Hypermarkets are either non-existent in these markets or very limited. In Singapore, where there are now nine Hypermarkets used by a quarter of shoppers, only four percent use them as their main grocery store. Fragmented multiple channel markets While they may be at different stages of development in grocery retailing, Japan, Korea and China are experiencing the greatest level of diversity of all markets in Asia Pacific, from the well-developed and slowly changing Japanese market, to the transitioning Korean market, to the fastest changing retail market in the world, China. Within urban centres, there are some striking similarities in how people shop, with a significant amount of cross-channel shopping, most developed in Japan but increasingly in China as available shopping options increase. Shoppers in these markets are, along with Hong Kong, the most frequent shoppers in the region, using Supermarkets two to three times a week and Hypermarkets once or twice a month in China and Korea. The level of development of convenience stores differs across the three markets, with the vast majority of Japanese shoppers being regular and frequent users, while only 25 percent of urban Chinese shoppers are using convenience stores currently. This is clearly a reflection of the number of stores, with Japan having more than 10 times the number of stores per head of population, but again its a retail format which is starting to increase in China, with store numbers growing by 18 percent in 2005, Gale added. Hypermarket-dominant markets Among the three markets in the hypermarket-dominant category, Taiwan is significantly more developed

than both Malaysia and Thailand, with 90 percent of grocery sales going through the modern trade nationally compared to less than 50 percent in the other two countries. Hypermarkets are the main store format for more than 50 percent of shoppers in Taiwan, Malaysia and Thailand, and the majority of households use them on a regular basis, typically two to three times a month. Meanwhile a developed convenience store sector is fast emerging. In both Taiwan and Thailand, over 85 percent of urban shoppers use convenience stores as often as three or four times a week - higher than in Japan. Malaysia, while behind in this area, has experienced a significant growth in 2005, with an increase in regular users of convenience stores from 43 to 65 percent of households. The effect of this growth in the largest and smallest modern trade formats has been pressure on supermarkets, where the number of shoppers using this channel has been declining. To survive in these markets it is clear that supermarkets will need to effectively differentiate themselves, as they struggle to compete - on price and range with hypermarkets, and on location with convenience stores, Gale urged. Developing markets At the other end of the scale, traditional trade, counter service grocery stores and wet markets are still dominant in Indonesia, India and the Philippines. Shoppers in these markets visit the traditional format daily or once every other day and supermarkets less frequently . While about 50 percent of urban shoppers are using supermarkets on a regular basis, hypermarket penetration is low and convenience stores are hardly used. Convenience stores arent developed but there is an interesting trend in the Indonesian market where mini-markets have been growing rapidly with the number of stores growing by 15 percentage points in 2005 to over 6,500 and share of trade nationally increased by 10 percentage points. The appeal of mini markets to shoppers is low-priced convenience. About ACNielsen ACNielsen, a VNU business, is the worlds leading marketing information provider. Offering services in more than 100 countries, the unit provides measurement and analysis of marketplace dynamics and consumer attitudes and behavior. Clients rely on ACNielsens market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns. For further information visit http://www.acnielsen.co.in

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Modern format retail is witnessing phenomenal growth, driven by the impact of increasing urbanisation, the
new well-travelled, knowledgeable Indian consumer and a youth-driven culture. In its official estimate for the current fiscal ending in March, the government said that the economy, Asia's fourth-largest, was expected to grow at 9.2 per cent. India [ Images ] once again topped the world in the ACNielsen Consumer Confidence Index for the third time in a row since the index was established in early 2005, with the highest score of 131 in the last leg of the survey, conducted in November 2006. Strong economic growth has brought with it new sets of Indian consumers. The booming young adult population with unprecedented levels of disposable income is more conscious of the latest trends and fashion. Enhanced media penetration and greater connectivity also are making consumers more knowledgeable and discerning. All these factors are rapidly changing the needs and aspirations of consumers. Schedules are also getting tighter, with the time for professional commitments and regular chores getting limited. Hence, the "convenience" factor has a major influence on purchase decisions.

Modern trade, the characteristic of which is having everything under one roof and with a great array of products displayed in an uncluttered fashion where the touch and feel factor prevails, is providing an environment to access products driven by convenience and fashion. Modern trade in India is an old saga in India with about 7.8 million retail stores, but most of those are traditional ones, which only recently started making way for hypermarkets, supermarkets and specialty stores. Modern trade in India is witnessing tremendous growth, especially in Tier I cities. It accounts for 4 per cent of urban FMCG sales but for the top 15 metros it is about 9.7 per cent of the total FMCG sales. For South Indian metros it touches about 16 per cent, because modern trade started there a little earlier. There are more than 3,430 modern trade stores in India now. Impact on FMCG Looking at the kind of consumer patronage a modern trade format store has in terms of an urban population growing rich, there are a few segments in the FMCG range of products that have experienced good growth from the modern trade format. In the food segment, processed food products (23 per cent), impulse food products (32 per cent) and packaged grocery (38 per cent) are the segments that have witnessed immense growth from urban Indian modern stores. Similarly, in the home and personal care segments it is household cleaning products (38.1 per cent), fabric care (23 per cent) and categories related to grooming, viz. hair care (28.3 per cent), fragrances (26 per cent) and skin/body care (23 per cent) that have recorded considerable growth from urban modern format stores. An increasing number of working women and nuclear families are some reasons behind the growth in the food categories. Packaged grocery is a very convenient product for people who are busy and hence we see it doing so well. Again the young adult population of India is ambitious and hard-working, and has the money to spend on lifestyle. They are brand-conscious and aware of what their counterparts in the West are wearing and buying. No wonder products related to grooming like like skin care, hair care, and fragrances, or, for that matter, products like household cleaners are witnessing growth. These consumers represent the target for manufacturers and retailers, who want to capture a share of the booming consumer markets in India. Manufacturers, on their part, are investing aggressively to capture the minds of today's and tomorrow's generations. With more modern format stores setting up shop in the country we are also witnessing an expansion in these segments in terms of availability of innovative packaging sizes, product innovation and overall ranges. Modern trade and food as a category: Food accounts for about 48 per cent of FMCG sales in the country and for modern trade the number is even higher, at 51.3 per cent. Like other Asia-Pacific markets, in India too, among the processed food segments, the breakfast cereals category is exhibiting a stupendous 40 per

cent growth rate. Other growing categories are biscuits (26 per cent), vermicelli & noodles (28 per cent), beverages (24 per cent) and ketchup and sauce (29 per cent). Indians have an old fascination for home-cooked food, especially when it comes to lunch and dinner. With the changed lifestyle, the trend is changing and people have started showing interest in ready-to-cook foods. However, even today a majority of these consumers are willing to restrict the experiment to packaged foods and accompaniments meant for breakfast and snack time. Chocolates (28 per cent) and namkeens (37 per cent) are two major categories of impulse food products showing good growth, along with packaged rice (92 per cent) in the packaged grocery segment. Modern trade and home and personal care products (H&PC): As far as H&PC is concerned, from modern trade it has witnessed a growth rate of about 23 per cent, which is at par with the overall growth. Modern trade brings with it a great shopping experience, with good product displays, making selection far easier. Under household cleaners it is floor cleaners (88 per cent) and toilet cleaners (37 per cent) that are growing well; in hair care, it is hair conditioners (43 per cent) and hair oil (35 per cent), and for the skin care segment, it is skin creams (35 per cent) that are driving the H&PC sales in modern stores. With the overall economy doing well and basic necessities mostly taken care of, people are now more keen to look and feel good and are ready to devote time and money on that. Unlike in the past, when there was one product used for all household cleaning, people now are willing to experiment with specific products meant for cleaning glasses, utensils, floors, etc. Modern stores and their challenges It's a very competitive situation with more and more new players entering the market. There are Reliance [ Get Quote ], the Tatas, the Birlas, ITC, and foreign players like Wal-Mart now. India is a market where from time immemorial existed the mom and pop grocery stores and I don't see them going away so soon. Looking at our vast consumer profiles, both traditional grocery stores and modern format retail stores will exist side by side. People with low incomes will keep visiting local grocery stores for the credit facilities they get and the frequent top-up shopping they do whereas the middle and upper income households would love to do their monthly shopping from the modern format retail stores with occasional top-up shopping from the local grocer. The other end of the spectrum would be rural India, where again a lot is happening but it will take time for its effect to be felt. The author is Associate Director, Client Services, The Nielsen Company, India. 04.

5 things that the Organized retailers can learn from Kirana and vice-versa

Submitted by bhanu on Wed, 04/21/2010 - 21:16.

It's a world of cut throat competition and more of often than not it results in a very narrow view of the world for most of the companies. As the objective is focused on beating the competitors, benchmarking studies starts replacing consumer studies. The situation worsen if your view of competition is limited to only company X or Y. Talking about retail, why can't the retail biggies learn something from the Kirana format? In fact the stores that have learnt a few things(like Big Bazaar) are a lot more successful than the copy-paste versions of western formats. Here are my views on this: Things that Modern format stores need to learn from kirana stores:
1. Give me what I want (I am not a tourist): I believe that you understand that a normal household uses no more than 20 product categories on a regular basis. What is the harm in putting them close to the entrance and make my life easier. I promise that Ill see your entire store at a suitable time. But dont make me traverse the length, width and altitude of your store if all I wanted was bread, milk, Atta, Biscuits and tooth paste. Give me what I want (I am not here to search for my products hidden behind your products): OK, it doesnt take an Einstein to figure out that you push your own brands compared to the national brands because you make more money over there. You have full right to promote them, but I, as a consumer have a right to differ. I dont know when your greed will lead to another brand being banned out. Why will I pick up your MandyBurry when all that I wanted was my old trusted Cadbury? Help! Anyone? : I would like to interact with humans with common sense, not those incapable robots. Suppose I ask a simple question like I dont want this 3+1, can I take a single piece out of it? Ill pay full price for it. Now while the Kirana person will take a decision on the spot, in your store, to solve the same issue, theyll need nothing less than a brainstorming discussion that will put even the Copenhagen climate conference to shame. The person you are talking to is likely to show 2 contrasting behaviors, i. He will give you a dumb folded look, as if you are discussing Laplace transformation with a class 2 student. He will either continue to stare you in sheer amazement till you ignore him or will himself ignore you after a while. ii. He will think for a while.. then hell ask you to wait, then hell go Mr A, who in turn will go to Mr B.. then both of them will discuss this great issue. Then one of them will come to you, will see the pack, again discussions and if you have any better way to spend your time in this world, youll move on. Sadly none of these 2 types will help you. Why cant the system trust its employees and their judgment a bit more? 4. Crunch that waiting time: My purchase took me 30 minutes, btw 20 of which were spent at the check-out counter: More counters? Flexi counters? Self billing? Express counters for limited items? Billing counters at department levels? Any other solution (like Auto billing)? Come next door: You know the traffic situation here. Ill appreciate your 3000 sq ft store near my place a lot more than the much advertised, famed and jazzier one that boasts of 3 lakh sq ft but requires 2 hours of my travel time and that also through some of the busiest parts of this busy City.

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Things that a Kirana store can learn from modern retail:


1. Professionalism, Heard of it? - Open, Close on time and always be there or at least have someone else to be present there all the time. Numerous times I have to scream Dada, Deedi, Chettan, Chechi, Hello, Anna, Uncle koi hai? , Aunty, Anyone there? Hello! $$@##. OK.. 90% of your sales come from 3 hours of evening prime time, but same is the case for all the Superstores. They dont shut their shop. And then when eventually you come, half of the time you show up in your big blue vertical stripes kachcha and an even more appalling yet contrasting princely attitude of yours. Lemme see something: As a customer I love the touch-feel experience (products obviously) that I get before selecting the brand in a modern outlet. I understand that I cant get that in a Kirana store but at least provide a less cluttered view of the store. I dont buy that too many products and too little space argument as most of it is mismanagement than anything else. Please, look at your shop from my eyes. What do I find there, Bhola pickle sachets covering those shampoo sachets, I cant see if you have the product that I am looking(and youre busy as always) and dammit! Harpick n Ketup bottles in the same shelf? n btw why does your pet dog barks at me always? Stock check becomes my headache: To ensure that what you sell is in good shape is your responsibility. Now in your case, Ill have to check for code dates/expiry, physical damage, leakages and all by myself. Fight with your Supplier, for me: You might be having strained relations with your suppliers over the credit issues or margins, all of which relates to your profit. For a change, fight for me. All of your suppliers give disproportionate time, inputs, promos to those fancy new stores, while 90% of their sales come from stores like yours. Ask them to give you the newly launched products (that are usually available only in bigger stores for initial 3-4 months of their launch), ask them to give you all the hot selling variants (While theyll tell you about stock issues, I bet Ill find the same in a big format outlet), ask them for consumer sales promos, go ahead and ask them for earth, but for me : ) 5. I expect readers to add further through comments : )

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