Griffin's fancy

A griffin is this mythological creature which is supposed to be a half lion half horse with wings .. he is said to seek out treasure .. each place he lands in has treasure .. whether he finds it or creates it is not very clear ..

Anyway, thats hardly the point .. The first business plan I made which made it to the final round of Eureka, the BPlan competition hosted by IIT Bombay, was named Griffin Inc. And post that whatever business plan I've worked on ... secretly I want to name it the same.

Actually, thats not the point either .. I started writing this entry to put down an idea ..

Currently in the Indian FMCG market, each company has its own sales and distribution network. This system exists in quite a few other countries as well, with fragmented retail. Eventually the modern trade channel will grow to substitute traditional trade up to a large extent. This however is a gradual process and in India traditional trade will continue to be significant for the next 20 years.

The thought that struck me a couple of years back was that there was great savings to be made if we have a single market servicing setup for all the products that a grocery retailer sells. There could be daily replenishment and a single unit/entity would need to visit the outlet. Greater convenience for the retailer and economies of scale leading to savings in the supply chain.

The strength of a business that takes this up would be firstly through the savings on the sales and distribution cost that the companies are currently incurring with their own structures. Secondly, the scale would enable this business to compete with the likes of Reliance and Big Bazaar on prices. Well, not exactly compete but definitely reduce the differential in prices. This would make it less desirable to go to these stores from a price angle. Thirdly, with the top grocery retailers included in the network which would be serviced by such a business, the purchase point could be invested in and the shopping experience made as friendly and entertaining as possible. This would reduce the differential in the shopping experience as well.

Effectively the model would emerge as a convenience store retail chain which would expand at an insane pace, as investment in real estate is not needed. The trick is to identify the right retailers - retailers who are feeling the pinch of modern trade eating away their business and feel the need for such an alternative. The business would work on huge scale and a margin of around 2% or less.

The time is just right for such a venture in the retail space, as the retailers around modern trade outlets are feeling the pinch of sales plumetting and people migrating to the other shopping formats and discounted offerings. It needs to be done at a scale which brings out the benefits, as for a small scale operation the model is just not viable.

If theres anyone who finds this thought exciting buzz me on it. Would be fun to talk about it in more detail.

yukon ho,

- Kashy