- June 10, 2019
- Posted by: Octagona India
- Category: Retail, Retail market
Two months ago Kishore Biyani’s Future Retail Ltd, through its subsidiary, announced its plans to set up a 7-Eleven brand of convenience stores in India. Through this venture, the company was targeting a revenue of $1 billion in the next eight years. 7-Eleven has over 60,000 outlets worldwide, which function as small-format convenience stores that stock both fresh and packaged foods, beverages as well as items of daily use. In India, Biyani emphasized, 7-Eleven shall be urban-centric. Why is this important?
India doesn’t really have a tradition of 24-hour convenience stores. Examples of companies successfully dabbling in round-the-clock stores are few and far between. However, retail experts say the 24-hour grocery store has potential in this market albeit in major cities only, for now.
For the 24-hour format, retail companies need to temper their expectations and restrict them to certain clusters. The 24-hour convenience stores make sense in high footfall areas or high-density travel destinations. The location must ensure easy access and footfalls as well as justify the unit economics of the store. The 24×7 formats could work in mixed-used developments, condominiums, and office spaces.
But why 24/7 in the first place? Convenience stores sell three-quarters of all the gasoline purchased in the United States. With changing consumer preferences, lifestyle, rising income level, India has got to be the next potential markets for convenience store players. An extraordinary business opportunity is not always about inventing a revolutionary product but also about making the existing products available at a convenient time and place. In my opinion, there are a few factors that should be taken into reckoning.
Not all products need to be sold late at night. While readymade food, grocery, pharmaceuticals, movie tickets are areas which usually top the priority list of most people other products might not find much business during the late hours. The very name convenience store suggests that a store working on such a format should be located in proximity to the potential buyers. Most convenience locations for such stores could be the ones that are located on busy street corners or gas stations or in the heart of residential localities.
Convenience stores are generally based on the small format of retailing. They fall in the range of 300 sq ft to 1000 sq ft, depending upon the location of the store, customer in-flow and of course the capacity of the owner to invest. The staff also needs to be trained to suit the special needs of the customers at special hours. Most of the existing players prefer to develop an in-house training platform for their staff members. They are exposed to all the departmental functions to give better service to the customer. Since convenience stores usually follow the small retailing format, the owner can cut down on their real estate cost. Also, with a lesser number of competitors, one can reap an early movers’ advantage.
So, the next time you pull over at a gas station in New Delhi or Mumbai, spend some time at the 24/7 retail located there and make a purchase. You would, after all, be contributing to the new potential wave of retail stores in India.
With the lifestyle of the people undergoing drastic change due to irregular working hours, changing consumer preferences and rising income level, many people find it difficult to do their day-to-day shopping during the regular shopping hours. Here lies an opportunity for those who want to grab it- Become a retailer who is accessible and available 24/7.