About 5 years back the organized retail was portrayed as the ‘next-big-thing’. Big players (like Reliance) were flocking into this space, where many of us (including me) feared that small retail shops (run by fellow mallu chettan/annachi) will vanish overnight. However, today its totally different picture, where small players not only survived, but also came out stronger and bigger businesses. In my neighborhood, three major players (Reliance Fresh, More & Smart) opened up retail outlets within 1 kilometer distance. Mallu chettan’s store is also located between them, who was expected to go back to Kerala within months after big players stepped in. But in reality the opposite happened! More outlet has already shut-down and I could hardly see any growth with Reliance Fresh & Smart. Whereas chettan, shop has grown leaps-and-bounds. How chettan got it right? Here are my observations.
Retailing means relationship: Unlike western countries, in India, retailers have stronger relationship with customers. Every time I walk into a chettan shop, he welcomes me with warm smile and his employees connect well with every other member in the family. I know cases (in my native town), where the retailer was even invited to family functions. There was an instance, where we requested chettan to keep his shop open for some more time in the night, so that we can purchase milk for my little one when we were returning back from travel. Such strong customer connection is totally non-existent in retail shops run by big players. They hardly have eye-contact with customers, let alone building relationship.
0% labor attrition: In chettan’s shop literally there is no attrition. The main reason being,all of his employees belong to his native place, who are mainly recruited thro’ family connections & network. All employees stay together in a shared accommodation, which creates a better linkage among them. In few cases he also has arrangement, where some portion of employee salary is directly sent to their families/parents back home. Because of such strong engagement, there is no attrition. As a customer, when you walk into the top you see familiar faces every time. On the other hand, organized retail industry is facing double digit attrition for years together.
Customer experience: Thanks to high labor attrition, every time big retailers bring new people who are not trained well. They don’t know which section is located where and how to help the customer to choose what they want. Manier times I have seen sales person struggling thro’ the items or re-directing to a different person (you know..its not my job BS) which doesn’t provide good customer experience. In chettan’s shop, every person knows in and out of various sections and they go thro’ regular section rotation. Most of the times I have seen these folks walk along with me and help to choose & purchase items. Strong employee connection results in providing better customer experience.
Divide and conquer: This is another interesting strategy that chettan has adapted. Among his employees if he finds a high potential individual, he funds them and helps to open up a shop nearby in a non-competing space. For example, I am seeing former employees of chettan opening cloth & novelty stores nearby. This has created a “win-win” situation where chettan has aided his employees becoming entrepreneurs and enjoys a major stake in the new business. By creating different shops serving different needs of the customer, he has literally captured a huge market in my locality. I am not sure such strategies can even applied in retail shops run by big players.
The above mentioned points are my observations from my neighborhood retailer. This will not be true for all cases, also such model cannot scale well across different cities & branches. However there are very small but significant lessons that big retailers should learn ,so that they can really succeed in the long run. After all the purpose of real value is as perceived by customers!