Kirana V/s Super Markets.
The case study in BW missed out one important business model. BW did talk about this earlier but some how missed to include in the case study. The Margin Free Markets of
Kerala. As per a report in BW some months back it is the largest retail chain in India.
Colored yellow all over, from walls to racks, this is something that your eyes would not miss if you travel through the roads of Kerala. Ubiquitous by their presence, Margin Free Markets is a model that is worth emulating for the retailers.
Some facts about Margin Free Markets:
Govt models like the Maveli store had taken a back seat thanks to the issues omnipresent in a govt controlled organization.
MFMs were started somewhere in late nineties by a guy from Trivandrum. He had a partner who later (read on…) First showroom was near Verma Travels near East Fort.
Went on well, kept on building up franchisees.
The Business Model:
Make the idea of super markets shed its “Up market” image. The idea of supermarket was still a fledgling when MF started. None of the biggies had set foot in Kerala. And whoever like the Varkey’s showed some presence was altogether for a different crowd. The MFM attracted the common man for its simplicity and price factor. It helped the populace shed their inhibition towards the supermarkets.
Give every single commodity at a price lower than the MRP.
The people of Kerala never dreamt of purchasing products at sub MRP prices. Build the network. Accept all discount cards available -be it issued by newspapers like Manorama
or Mathrubhumi or by Margin Free themselves. Use of these cards make it cheaper even than the MFree price.
All the goods offered at MFMs -were packed as in any typical supermarket.
The idea was that of sharing profits. The chain gets bigger.
Number of pieces of a product purchased goes up. Get discounts from MNCs and others. Reduce the number of intermediaries. Rise up to the level of a distributor. Pass this
advantage to the consumer.
People flooded MFMs . Where else could the common man get a discount of 1-1.5 Rs for a Soap. This was immaterial of the number of pieces purchased. The idea was a big hit.
Then came the era of clones. On expected lines, there was a split in the business. One of the partners, moved to Cochin and started a similar chain with a similar logo. And the funniest part is that never do they claim to be different, entities unless asked for. They feel that revealing the truth would take the sheen and hijack customers from one to another.
Later atleast 4 of such MFM chains tried to build their networks. None succeeded as the original(s). The success of model is evident in the fact that even the Kirana next
door is changing to the MF yellow and discounts on a smaller scale.
The products offered at MFMs range from FMCG to grocery, Crockery to Electrical Appliances.
Very recently, they came up with MFREEM brand of spices and condiments. Signs of prosperity…..
And the chain is getting bigger and bigger.
Any IIM there to include this model in their syllabus?
Related posts brought to you by Yet Another Related Posts Plugin.