The World's Unsexiest Business
adding a little sizzle to the convenience store industry
quora question: "would a 7-Eleven style convenience store work in India, at least in tier one & two cities?"
Although I answered this question on Quora, I have also included the response here.
High throughput and high SKU retail is what India is known for and excels in. In fact, the number of retailers in tier 1 and tier 2 cities is mind boggling! But what’s even more impressive is that most of these do it without using any technology or formal pricing scheme. Much of it is driven by entrepreneurs who simply have a heightened ‘finger on the pulse’ of their business sensibility.
The convenience ‘corner’ store model is ubiquitous in India. So the formality of a traditional convenience retailer wouldn’t entirely make sense because it’s already a low(er) margin business. While I’ve seen many gas stations in the larger cities use their brick and mortar space to sell traditional convenience store goods, research suggests revenue on a per square footage basis is low. With a significant number of de facto competitors in the marketplace and margins already being well below industry norms (sub 30%), survival comes down to leveraging market share by geographic placement, a unique business model, or even just the appearance of something different than the street vendors— wide aisles and air conditioning.
After all, if Wal-Mart, a big box retailer traditionally known for selling goods at low prices has just about completed its exit from the Indian market, the traditional convenience model outlook doesn’t look entirely promising. (Yes, there’s a strong correlation between the two.) But I could be entirely wrong and the brand equity of a convenience retailer like 7–11 might be strong enough to merit entry. Either way, it’s the land of the ‘hustler’—the entrant better have a unique business model that’s not vulnerable to hustler undercutting.