Tuesday, November 30, 2010

A curious case of Autorickshaws and Kiranas!


The prepaid queue at the Bangalore City Railway Station was long, but we decided to wait patiently instead of choosing one of the touts who were continuously stalking us. After all, many auto drivers have been waiting patiently notwithstanding the early morning chillness for their turn to pick up a customer at the prepaid counter for a long time. In our city like many others, the night fare (10 pm – 5 am) is usually 1.5 times of the normal and is quite well accepted. So the prepaid fare to my house was Rs. 200/- as against the more luxurious Meru Cab which we took during the onward journey that cost us Rs. 350. While sitting in the auto this morning, I was thinking about need and necessity. At 5am, all we needed was a transportation to reach home safely. During the peak hours last Saturday we had chosen a taxi – we had time at our disposal and didn’t mind paying a bit more for the comfort of a/c during the day time. Is there a lesson or two, I was guessing if one had to compare autos and kiranas. Just after sometime, the headline of a leading English newspaper claimed that 15,000 additional autorickshaw permits were being issued shortly and the total number of such vehicles plying in the city would touch close to 95,000 vehicles!


That’s a lot for a city of size of Bangalore, many would argue. I disagree a bit. It is based on the age-old principle of demand and supply, according to State Transport Commissioner Bhaskar Rao. The power of permit makes the auto driver a ruler. We need more autorickshaws to reduce the nuisance. Liberalising the over-regulated permits will no doubt increase their numbers on road but the good part is that it will also increase options for the commuting public. Auto drivers will have to oblige then, he said. Quite true. In the long run, with personal mobility becoming a compulsive habit and the acceptance of public transport as a sustainable and viable mode of commute, Autos will become more of fillers – running short distances and acting as the last mile connectivity – be it from bus stands or Metro stations while taxis could turn out to be the preferred mode while travelling from home to airport or railway station.


Cut to the real Retail Story. In spite of the increasing number of Organized Retailers, especially in the food, grocery and household segments, it’s quite common to see so many Kirana Stores coming up in smaller neighbourhoods. As is the case of “Bottom of Pyramid”, the consuming class is right there and is expanding its base as well as its propensity to consume. They are moving upwards from the Govt. run – Public Distribution Stores (PDS) to the neighbourhood kiranas whose regular clientele is moving towards neighbourhood Supermarkets, and in turn whose regulars are moving towards the large-format Hyperstores. However, all these consumers, when they need a pack of salt or sugar, vermicelli or Maggi, reach out to the neighbourhood kirana!


The case here is logical and comparable. When the product becomes a bare necessity, consumers would reach out to what’s close by and cheapest as a measure of time – the ubiquitous kirana while the monthly pantry filling or a weekend party shopping would be at a large format organized Super market or Hypermarket. The consumer is fully aware that one doesn’t derive the benefits of organized retail such as bulk discounts, buy one get one, and price-offs at the local kirana, but they know that time is of essence and hence reach out.

I have always remained a proponent of Retail FDI in the hope and faith that it would only do good to Kiranas as well as end users and consumers in the long term. Such anecdotes make our hypotheses stronger.


Long Live Kiranas; Long Live Organized Retailers!

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