Strategizing in small informal retailers in India: Home delivery as a strategic practice

Abstract

Small informally organized family-owned grocery retailers—kiranas—are ubiquitous in India and have retained market dominance while facing increasing competition from large formally organized retailers (FORs). Yet, strategy literature has under-explored such informal businesses. We explore kiranas’ distinct strategic practices that give them competitive advantage over FORs, generating kiranas’ sustained market dominance. To explore kiranas’ informal strategizing, grounded theoretic analysis of our multi-year case study suggested the employment of strategy as practice (SAP) framework, enriched with the social exchange theory (SET) concepts of trust and reciprocity. We find that the kiranas’ sustained enactment of strategic practice such as free-of-charge home-delivery significantly depends on contextually rich, reciprocity-based social exchange relationships with customers which evolve through praxes involving continuous exchange of trust. The practice enactment and exchange relationships constitute strategy-practitioner’s emerging dual-identity, which in turn reinforces the practices, generating a self-reinforcing cycle of practice enhancement. Within this cyclic relationship, an inimitable enactment of a strategic practice can be a key source of competitive advantage for informally organized small retail retailers over large FORs. By linking two unconnected prominent approaches to understanding patterns of workplace interactions, namely SAP and SET, the study opens theoretical avenues for exploring strategizing of informal businesses.

Appendix: Steps in home-delivery practice enactment (excerpts from field notes)

Customer telephones kirana. The kirana recognizes customer household by memory (of number) or quickly identifies customer (by name, house number, or just by being familiar with the customer’s voice). Quickly takes order (on any handy paper-chit)—written in a cryptic script (using short forms/ notations). Kirana often suggests items or asks customers if she needs certain products (based on knowledge of what customer regularly buys). Product characteristics (size or packaging) are often implicitly assumed based on past preferences. While taking telephonic orders, kirana simultaneously serves in-shop customers (multi-tasking). Often customers on counter wait patiently while kirana takes telephone orders (evidence of social relationship). Some social-chitchat is interwoven into the phone call. Kirana also subtly finds out the urgency of customer’s need (to schedule delivery-person’s round accordingly). Kirana’s assistant puts together customer’s orders in a bag, along with kirana’s scribbled order-chit. This bag is combined (with other bags which have orders of other customers) in a larger cloth bag, which the delivery-person loads on a bicycle and sets off on the delivery run. The delivery-person hands over groceries to the customer (this is sometimes at the doorstep or sometimes in the kitchen or storeroom. Sometimes he returns without payment if the customer says that she will pay later. If a customer’s house is locked, the delivery-person takes a spontaneous decision of knocking on a neighboring door and leaves the order bag there with a request to give it to the customer once she returns home. No acknowledgment of delivery to the neighbor is taken, and the transaction is completely on a trust basis. Once all the deliveries are completed (typically 3–4 in one trip), the delivery-person returns and hands over cash to the kirana. He then starts assisting in the shop until the next round.