Will supermarkets gobble up kirana stores?

Things are really hotting up. Reliance stores are expected to open next week starting in Hyderabad and Bharti says by the end of the month, it will tell us whether or not Tesco's partnering them.  So, what does this mean for the local kirana store -  is the local grocer's store is expected to take a beating once all this happens? Apparently not, because a new study says that they will not just survive but thrive.

One loaf of bread, some biscuits and a litre of fresh juice - it's short and sweet orders like these that are also home delivered which will be the saviour of local kirana stores. In spite of fierce competition from big modern retailers, the ability to reach consumers effectively and the lower cost of operations will keep their cash counters ringing.

Grocery store owner, S Shah told CNBC-TV18, "We give good service. We send them small ticket items, be it one packet of bread etc  and later get big monthly orders from them."

According to a new KSA Technopak report, Indians are getting addicted to shopping and the retail market, incudling both tradtional and modern outlets is pegged to grow by 42% in the next five years. But modern retail - that includes hyper and supermarket formats - will manage to collect only 15% of that. Traditional stores will see a lion's share of 75% by 2011.

Experts say one reason is because investment in modern retailing is still small. In the next five years, over Rs 1 lakh crore, are estimated to pour in from the domestic and foreign players like Reliance and Walmart. Stores located close to hypermarkets will be affected and there are 300-500 thousand such stores. But there are options for those who are likely to be put out of business.

Chairman, Technopak, Arvind Singhal says, "Telecom retailing outlets can be put in mom and pop stores and some current retailers could become food service retailers and others could become cyber cafe owners."

Chairman, Godrej Group, Adi Godrej says, "Since organised retail is about 4% in FMCG, thats growing at about 30% and is expected to accelerate, but even the number of tradtional stores is also growing. So, currently both are growing, but perhaps after 10 to 15 years, their numbers might start declining."

So the party is not yet over for the little mom-n-pop kind of establishments.

Molshree Vaid