On the second day of the immersion, as a part of India Fellow induction training, we were asked to conduct a semi-structured interview with one of the people we had spoken to, the previous day. Eager to learn more about the economics of their business, I rushed to the vada pav wala who I had interacted with yesterday. However, it turned out that this was their peak business hour. I was delighted to see the small group of rickshaw walas in front of the stall and not wanting to interrupt them in the middle of the business, I decided to find another shop. Here’s a detailed account of my discussion with a grocery store owner who was nice enough to talk to me in between attending customers.
Mr. Shravan* owns a small grocery shop in Goregaon. His family comprises of his wife, his 4 year old son and an 18 month old daughter. He has studied until 12th grade and worked at a diamond shop before starting his own grocery store. He was born and raised in Goregoan, Mumbai, but the family is originally from Madhya Pradesh. He lives right behind his shop in a home that he has inherited from his parents.
Impact of Covid-19 on his business
Despite being a grocery store owner (which fell under the essential services category during the lockdown), his business did not do well in the last few months and is still taking time to pick up some steam. The main reasons for this include low footfall due to the lockdown and the inability to procure goods. Mr. Shravan explained that the standalone grocery shop business has been declining since the advent of malls and more so, due to e-commerce. However, the impact was the harshest during the lockdown with most people opting to order groceries online. Moreover, he said that the vendors in the neighbourhood switched from their primary businesses to selling vegetables since certain other businesses were not permitted to function. The increased competition, as a result, made doing business even harder.
Even though his shop fell in the category of essential services, BMC (Bombay Municipal Corporation) denied him the permit for opening his shop to prevent the spread of Covid-19. However, he accidentally stumbled upon an idea to sell his products. After he closed his shop, he brought some of the products home, largely for storage purposes. The people living around his house started inquiring if the products were on sale. So, he began selling whatever little he had, from his home.
Procurement was still a challenge. He managed to contact certain wholesale vendors via WhatsApp to know where and when their products will be available. This meant lining up in front of a mall for four hours before gathering what he needed, which was earlier possible in 30 minutes. Since unlock began, he has been ordering groceries online and from local vendors. Realizing the high demand for vegetables, Mr. Shravan decided to expand his business and include vegetables to sell as well. As we speak, a local pickle vendor arrives introducing Mr. Shravan to two of his varieties of pickle. He, uninterested, asks the vendor to come later and explains to me that business is not going well for them as well.
Mr. Shravan wore a mask when any customer arrived which would otherwise be pulled down to his chin. After asking him his view on the pandemic, he explained that he, too, is scared of contracting Covid like anyone else, but closing his shop is not an option. He further goes on to explain how he insists that his customers follow social distancing norms when lining up in front of his store. But people would rarely comply and even get irritated at his request. Losing customers was not an option, so he decided to relinquish such requests. He also told how he diligently wore gloves initially, but clarified that working with gloves got increasing difficult especially since they would frequently get torn by getting stuck in aluminium boxes that are lined on his counter. He is aware of the mechanisms of the spread of virus and tells me how one infected person can come in contact with another who can then infect other 4 people.
Workings of his business
Mr. Shravan has been running his shop for over 10 years now. It has many shelves and one refrigerator. He tells that the space belongs to his close friend and he pays him a rent. The initial investment in this shop was done out of his own pocket and he had later taken a loan to expand. When I asked about the cost of running his shop for a month, he said that it varies each month and can cost upto 50 or 60k. My immediate follow-up was to ask if he breaks even and he clarified that he sets a revenue target each month, but it is hardly ever met.
When probed on how he decides which products to keep, he explains that the margin on certain products like biscuits and wafers is very low (Rs. 0.5), but he still has to keep them because these products are always in demand and not selling them means losing customers. The highest margin, I am told, is on acid (Rs. 10) though it is hardly ever sold and Phenyl (Rs. 5). He does not do a fixed review of his inventory, but calculates it, on a day-to-day basis, and orders products, as and when needed.
I was curious to know how he decides the number of pieces to order, specially for perishable items, he said that he takes a call basis the demand and availability of the same product in neighbouring shops which he identifies through the customers’ requests. For example, someone asking if he sells Bisleri mineral water despite it being displayed on the stands tells Mr. Shravan that this customer was sent away by another shop that ran out of Bisleri. Sometimes, the customers are direct enough to say that they came to his shop because the other shop did not have what they were looking for. He told that all these little details are crucial when deciding what quantity of stock to order. Also, that perishables are always sold before they go stale, so he is not worried about his inventory going waste.
As for his staff, he has one young man who is related to one of his friends. He is just learning the work and is therefore, working pretty much as an unpaid intern. Apart from him, Mr. Shravan has been running this show on his own. Interested in knowing his future plans, I asked if he ever thinks to buy his own shop or expand his business further. He is quick to ask, “Aapko yahan ka evaluation pata hai?“. Though that cross-question itself had clearly indicated that such a thought would be ridiculous, he clarified that a shop would cost him nearly 80 lacs, and investing that kind of money in a business that cannot be sustained in the future did not make sense to him. However, he admits that this job makes ends meet for now, so he will continue doing his best for as long as he can.
On healthcare, education and other aspirations
Talking to Mr. Shravan was a delight as he patiently responded to all my questions with examples and anecdotes for added clarification. His patience was also evident in the manner he deals with customers, and the intern who is being trained on the job. On asking if he has a health insurance, he denied, but it is something he has contemplated on getting, for a while now.
While his own education ended prematurely owing to his parents’ death, he hopes his son will become a doctor or a pilot and his daughter, an engineer. He also points out that these are just his aspirations for them, and he would encourage them to pursue their own interests.
Understanding the economics of Mr. Shravan’s business was extremely edifying. More importantly, I ended up getting to know him and making a new friend whose grit and humility inspired me the most. “Kabhi yahan aaye toh zaroor milna“, he says enthusiastically as I say goodbye to him on my last day in the training center.
*Name changed to protect identity
Well written Tanaya. Insightful indeed 🙂
Well written Tanaya. Insightful indeed 🙂