The modern trade in Sri Lankan is rapidly growing, emerging a large number of supermarkets in every nick and corner of the country, revolutionizing the retail sector. At the inception, majority of consumers patronizing the modern trade were upper and upper middle class income earning segment. But it’s now accepted, that irrespective of the social class, people of all walks of life patronize supermarkets. There is a strong loyal customer base for each and every supermarket and shoppers result in increased basket values.
The traditional brick and mortar groceries were the major source of fast moving consumer goods (FMCG) retailing for decades in the country while the modern trade is steadily capturing the share. Sri Lanka’s supermarket penetration at present is around 17% compared to 31% for regional peers with similar social and economic characteristics, which indicates the potential for the industry to grow based on Fitch Rating. There are about 2500 supermarkets (small, medium and large) spread all over the country at least with two or more checkout counters and about 200,000 retail and wholesale trading establishments.
Despite the big names, Lanka Sathosa, CBL’s SPAR, Softlogic GLOMARK, Cargills Food City, Keells Super, Super K, Arpico Super Centre, and LAUGFS Supermarketsthere are several other large chains of small & medium scale supermarkets operated in the regional markets and they have positioned themselves as market leaders in their respective areas. To name a few, they are; COOP Super, Sampath Food City, Singhe Super, Salinda Super, Nihal Super, Hewage Super, Alankulama Supermarket, Food Corner etc. Apart from them there are also well-known stand-alone supermarkets such as Premasiri Supermarket, Branas Super, Sirilak Supermarket, Royal Mall, Ranjan Lanka Supermarket, Samudra Supermarket, Surapathi Wholesale Supermarket, Seetha Supermarket, Best Life Supermarket, Annai Naga Food City and many more that contributes in revolutionizing the retail innovation. A state owned brand, 2 global brands, 5 national brands and over 10 leading regional brands along with a number of stand-alone brands are positioning themselves in capturing this massive modern trade or supermarket business at present.
“Private supermarket chains are rapidly growing in the country and are driven to rural areas.Supermarket industry is at the growing stage of its industry life cycle. Modern Trade is set out where ‘convenience’ as the key benefit. One of the best features that shoppers enjoy in super marketing is the ‘everything at one place’ concept. Stores with essential goods, house hold groceries, fresh commodities; containing meat, fish, poultry, dairy, vegetables, fruits, rice, grains, bakery food, frozen, canned and packaged goods, pharmaceuticals, day to day beauty & personal care products, household needs, stationery, housewares, builders’ hardware items and other sundries with liquor & tobacco as optional are considered to be available in real supermarkets”, said Amarasiri Wickramage, Director Retail Strategy of Fuchsia Retail S.A (Private) Ltd, a Singaporean Company engaged in retail by design.
“This format is extremely convenient to the busy working people who have less time to go place by place for marketing or shopping. Another fact is the payment options either by cash or cards, which is not a common facility in normal grocery stores. Online ordering and other shopping apps are major improvements, since customers can purchase without physically shopping. However, although there is a tremendous rise in name sake supermarkets across the country, the identical supermarket format is lacking in majority of so called supermarkets.”
He said, even the leading national supermarket chains does not comply by this criterion for most of their outlets. Wickramage described the main task of Fuchsia Retail as a consulting venture providing retail design, technology and solutions enabling retailers to unlock the live, sensorial and experiential quality of a physical retail store.
Wickramage also explained that “Modern trade format is more appealing, hygienic and in a comfortable atmosphere than the traditional ‘Sillara Kade’ - the retail shop. Initially consumers were apprehensive with trying out new shopping environments and straying from their trusted retail shops. Consumers also had preconceived notions about pricing; often consumers linked air conditioned store formats with higher product prices. As transitional economies evolve and as modern trade was capturing the market, they initiated various kinds of promotional gimmicks to attract the attention of consumers’ and provide them with new, exciting and enriching shopping experiences. However, once households began shopping in clean and welcoming shopping environments and were still able to avail of promotional offers, they began to become comfortable with frequenting modern trade for their shopping needs”.
“This has taken place due to the changes of lifestyles of the retail customers and due to the new social circle of the wealthy people in the outstation areas. The newly acquainted lifestyles of the people require them to seek such services. Now the local consumers are been influenced by the western lifestyles and they demand a greater convenience and a comfortable shopping experience. Such modern consumers are expecting a wide range of products and demand for quality and affordability with value-for-money offers. Due to the consequent entry of females to workforce they save time on shopping and substitute processed food instead of self-cooked foods to reduce cooking time. The modern retail formats fulfill all these requirements while taking great efforts to satisfy or delight their customers’ needs and wants” said Glenfrey De Mel, Director/Senior Vice President of STRAMMCO Corporation, a strategy advisor.
“The modern trade super-marketing has come to stay together with excellent state-of-the-art norms compared to traditional retailing. In order to keep in line with modern trade practices, the age old grocery store is also now been upgraded while do practice in similar fashion to the supermarkets, to stay in line with the competition. Those who are not shifting towards this trend are at a natural death while a significant number of such retail shops have been collapsed by now. Although the traditional grocers are facing a serious rivalry with the modern trade, consumers have not fully ignored them. The neighborhood retail store is yet the only place for day to day and emergency purchase. Such retailers are surviving without any obstacle amidst the modern trade rivalry. However, the traditional traders both in retail and wholesale yet dominate the major share for consumer goods, while there is a significant transformation in to convenience shopping.”
Consumers are searching for convenience more than ever as they say that convenience while shopping is more important today than it was before. They complain that checkout is the most important part of the in-store shopping which is less considered by majority of modern traders, with long checkout queues being a main pain point. Notably, they rank convenience as higher than brand values when it comes to their purchase decisions and they say that at least half of their purchases are influenced by convenience, while they are more likely to choose the retailer based on comfort of convenience. Convenience is particularly valued when shopping for groceries. Some elite and busy employees reported that they are willing to pay more even for convenience or for online purchasing, when shopping for groceries.
Ruchi Gunewardene of Brand Finance Lanka noted that there is enough space for new players to enter the industry; especially given the projected growth rate and to be at the right place at the right time and the importance of having a well-defined customer offering is critically important to build a successful retail business. He said “by defining their brand and what they provide, we are seeing a shift in going beyond advertising to offer a holistic customer experience. As the market gets more competitive and shoppers more sophisticated, focusing on the key brand drivers of price, convenience, product availability and service begins to play a crucial role”.Brand Finance Lanka’s Aliakber Alihussain added that “Sri Lanka’s grocery retail is to grow in the coming years with possible plans for ambitious new entrants for modern trade, with potential multi billion rupee revenues up for grabs, while existing brands are racing towards redefining, positioning and fine tuning their operations to better serve the shopper.
“The convenience shopping trade is still in the development and expanding process and still to reach more contours in the country with a huge space of opportunity for about 83% portion of the retail trade. This is evident with the current modern retail’s aggressive expansion plans and their strategies in attracting foot fall and increased basket values to achieve same-store sales growth while getting a substantial growth through new store openings, anticipating a growth of 20-25% in the next three years” said Aruna Mawilmada, Director – Customer Development at Unilever Sri Lanka. He said “Over the past decade the retail landscape in Sri Lanka has changed with the evolving needs of shoppers. The ubiquitous traditional trade of yesteryear is slowly giving way to modern trade. This change will increase in the coming years and the need to change and adapt will become a must do for traditional retailers in order to avoid being made obsolete”.
Mawilamada also said that Unilever is actively collaborating with local retailers in the general trade by sharing knowledge with the best practices of the world to face challenges caused by such changing market conditions and to transform their operations to stay in line with competition. “The ultimate beneficiary of this collaboration is the shopper who is given the experience akin to that of a modern trade store” he concluded.
The oldest and maiden supermarket style departmental store that was established in Ceylon was Cargill’s and Millers, in 1844 by William Miller and David Sime during British colonial time. However, Cornel’s was breaking new grounds in Sri Lanka as the first supermarket, located in Colpetty in 1980, set up by Cornel Perera in collaboration with Fitzpatricks of Singapore. Cargill’s established the first supermarket chain in Sri Lanka in 1983 with the opening of its first outlet “Cargill’s Food City” at Staple Street, Colombo 2, but the expansion appeared from year 2000 onward. Thereafter, rest of the others began launching.
0 comments: