April 7, 2016, India
A friend just whatsapped me the photo below of a shop signboard. Now if I had been walking down that street, I just might have popped into that Mom & Pop store, picked up that King Prawn Curry, gone home, feasted on it, and then promptly spent ten times as much at some online store.
Sure, I feel for Mom and Pop. They are the good guys. They don’t cheat me, and just add a small markup on whatever they are selling. They have a smile every time they see me, and live a simple, middle class life without major extravagances. Unlike that big, bad CEO who’s not able to find happiness in either of his two holiday homes.
The problem is when I’m offered the same product at a lower cost, it’s hard to expect me to pay more. I may do so a couple of times but sooner or later I will plonk down for the cheaper rate. Eventually, Mom and Pop are going to lose my business.
Sadly, that’s how capitalism works. Survival of the fittest.
Local shops have fixed overhead expenses like rent, electricity, and salaries. Pop has to buy whatever he sells at wholesale market rates, and add a profit, to make his business viable.
Whereas big department stores can reduce their overhead costs by sharing it across a whole lot of products. They get better prices from wholesalers by buying bulk. They may even buy directly from the producers at much cheaper rates.
But just when the CEO is about to order that third holiday home, he spots an online store undercutting him. They do this by selling directly to customers, cutting out the costs of middleman, and doing away with the very shop itself. Mr CEO reluctantly puts his holiday home plans on hold, calls his stock broker, and asks him to sell off his company stock.
The funny thing is people have been predicting the end of the small shops for some time now. But some of them have not just survived, but are thriving. So what’s their secret?
Putting up appeals like that signboard and appealing to human emotions won’t work for long. Because when money talks, people eventually listen. But there’s a place for those who can adapt to changing times.
My Mom and Pop ran a pharmacy store for twenty years, and built up a lot of goodwill. Primarily because Papa had a soft heart, and would give away medicines on credit to those hardworking souls who couldn’t afford to pay.
When my parents retired, my brother and his wife took over the pharmacy. They are a couple who speak little, but have lots of ideas.
My brother is methodical person with a head for numbers and business. Efficiency comes naturally to him and he can be a brusque, no-nonsense kind of person. He is well balanced by my sister-in-law who has a diametrically opposite personality. Sweet by nature, she’s always smiling, soft spoken and a very good listener.
The first thing the two of them did, was solidify their base. While my brother kept the pharmacy going, his wife went back to college, attended a pharmacy course, and came out in a couple of years with a pharmacy degree which allows her to dispense medicines.
Next, they sorted out the financial mess by stopping the line of credit for customers who were perpetual defaulters. Harsh but practical.
On the buying side, my brother made sure all wholesalers were paid on time. In return, he got preferential treatment from them, and was always assured some stocks of all medicines. Customers soon realised that if a medicine was unavailable elsewhere, it would often be available here.
The next problem was the rapidly increasing competition. Many new pharmacies were springing up, as the town is located in the midst of rural farming area, and is home to many hospitals catering to the local people.
My brother urgently needed to differentiate his service, and provide a reason for his customers to keep coming back to him.
Now the majority of the town are Muslims, and the businesses are generally headed by males and run by male assistants. With Muslims, there is customarily not much interaction between the males and the females. Though the women are educated, they are generally married off by their early twenties and live out their lives as housewives.
There was an opportunity and it was taken. My sister was a trendsetter, and among the first women in the community to not just be involved in running a business, but also to be its actual face. She quickly brought onboard a lot more women staff. Though it was a conservative society, the Muslim community too felt comfortable enough to let their daughters work under a woman, and earn a bit of money till it was time for them to be married off.
The novelty of a pharmacy where medicine was dispensed by smiling women brought in customers in droves in this society where social interaction between sexes is very limited. By the time, the competition caught on, the pharmacy had established a unique personality for itself which it has never since ceded. It was brand building at its best.
There were other dangers.
Fake drugs is a big issue in India. So my brother insisted on ordering medicines only from reputed companies. When people complained that the prices were lower sometimes at other pharmacies, my brother would patiently explain to them why he would not risk going for cheaper medicines from unknown companies.
The pharmacy did lose a few customers. But in the long run, it gained a reputation of being a place where only quality drugs were sold.
This reputation helped the pharmacy tackle the next challenge. This came in the form of Government subsidised drugstores that sold cheaper drugs. Though the pharmacy again lost customers, the inefficiency and substandard service of these new stores saw the customers return in a short while.
Last week, I saw ads for an online medicine store in India. I suspect the pharmacy will again lose a little business. But medicines are a sensitive subject, and there will be a good percentage of people who will prefer to buy from reliable people whom they have known and trusted for years.
Yes, I think this Mom and Pop store has shown how it’s possible to survive by evolving with the changing times, offering high quality, reliable services, and backing it all up with a personal touch.