With the FDI in retail knocking at the doors of the major Indian cities, here is a study on how already the organized sector has impacted the way shopping is done in India. With the long history of clustered selling of products, known as traditional bazaar, the historical depiction of India has been through its narrow running streets covered quarterly on both sides by the goods latching on the passers. This case is an analysis of one such traditional cluster market for Jaggery in Punjab.

The history

According to Mr. Dhamija, a fourth generation shopkeeper at Gur Mandi, the Market is celebrating the 134^th Dussehra festival this September. Nonetheless, like any other part of the country, these festivals are the life lines for the market since the times of his ancestors. He recalls how in the past, the customers were especially attracted by the size of the ‘Raavan’ statues that were procured by the gur mandi shopkeeper’s union. His father used to give VIP passes to the special customers, who would come along with their families from far off places to attend the celebrations.

Defining the place

Gur Mandi in Jalandhar is a traditional market place for jaggery, locally known as Khandsari, and is situated in the heart of the city. The market is made up of thin streets curving every now and then, and giving way to the heaps of the jaggery standing tall outside the wrinkled shops. The sight of the market embarked with the presence of bumble bees all around the heaps of jaggery is mouth watering phenomenon in itself.

The market has traditionally been the center point for the jaggery trade in Doaba region of Punjab, but with the passage of time, a part of the market started accommodating some other commodities which included bamboos, brooms, organic ropes (locally known as baans, jhadus, bagar respectively) that were transported from eastern parts of the country (present day West Bengal & Bangladesh). Hence the present-day Gur Mandi is the amalgamation of Khandsari (sugar related) products and the Bansa-Bazar (Bamboo market).

Traditional buyers

“But the scenario has changed now,” Shopkeeper 1 recalls “there used to be a time when the wholesale merchants from different parts of Punjab, especially Kapurthala, Bhogpur, Adampur, Phagwara & Jhandu-singha would pay frequent visits to the market. They would take away bulk orders for gur (Jaggery). The trucks used to be stationed at almost walking distance from our godown.” With a twist in his eye-brows he raises his head towards the ceiling, and adds “But who would like to consume Jaggery these days? Now people ask for it, occasionally. Just for a change of taste. Now they depend completely on Sugar – almost certainly. The major chunks of customers, who still come to us, are the village baniyas, who buy Sugar in bulk, but rarely do they come for Jaggery nowadays. But you know still we call it Gur Mandi, not Cheeni mandi”. And he bursts out in a healthy laugh.

According to an estimate of the various shopkeepers of the market, around 80% of the buyers are wholesalers from nearby villages, who come here to buy sugar and bamboos. There is only a small minority of buyers, primarily the local people who do come for traditional products ranging from Jaggery, Bamboos and brooms in addition to rather modern versions i.e. sugar and plastic wipers.

Kind of marketers

Like Mr. Dhamija, several other shopkeepers of the market are the fourth- fifth generation children of the founders of this market. According to shopkeeper 2, “All the shopkeepers in this market are close relatives, cousins or real brothers. Our primary aim is to keep these old traditions fit and alive.”

Fig. 1: Showing the traditional ambience of the gur mandi

Market Competition

Internal

According to the shopkeepers of the market, there is no internal competition between the market players. Given the fact that they are all close relatives, all of the players stock the sugar coming from different mills. In addition to this, everyone has his own customer base, and his own area in terms of villages, towns to which they cater to most of the times. Hence, there is little scope for any internal competition in that sense.

External

In the past one decade, Indian retail industry has seen a series of entries from the big players. Its impact is being felt by almost every commodity. According to Mr. Dhamija, “The entry of retails giants like Reliance Fresh and Easyday in the city has no doubt changed the shopping habits of the people to some extent, but still the majority of people like to visit the market, because they are used to the way they have been shopping.” While in contrast to this, shopkeeper 3 says, “There is certainly a decrease in the foot fall in the market for buying sugar. People now prefer to buy it from the nearby retail outlets, where they can get everything in an organized form under one roof itself.”

But in case of jaggery business, everyone in the market seems to have the same voice. The jaggery sold in this market is unmatched; hence there is no external competition what so ever in this regard. In case of sugar also, since the majority of buyer are the wholesalers from nearby villages, they tend to buy in the same fashion as before. So in terms of competition, the effect is still very low.

Strengths and Weaknesses of this format

The strength of this format of market is based on two main pillars. First is the relationship based marketing and the other one is the credit facility. Since the majority of the buyers are wholesalers themselves and there is a bulk dealing involved, the age long personal relations are very important. In addition to it, the credit facility due to the mutual trust and cooperation is very handy in retaining the big customers.

The most important strength of this market in one sense is its Product Differentiation, which is nonparallel in itself. The shopkeepers claim that, the quality of Jaggery produced in Punjab, and also in Jalandhar region, is best in whole India. The sugarcane in Punjab tastes the finest; hence the Jaggery produced from it is known to be the best. The demand for this Jaggery comes from foreign countries like UK, Canada, USA, Saudi Arabia, Australia, etc. Especially the NRI’s of Punjabi origin, settled across the globe, often miss the taste of Punjabi Jaggery.

When asked about the demerits that this type of market format shares, the shopkeepers unanimously raised the issue of the congested space and the parking problem in the market.  According to them,

Fig. 2: Showing the heaps of solid and powdered gur called shakkar in the gur mandi.

most of the buyers these days are short of time. Hence they cannot afford to waste time in long traffic congestion in the market. Since the market is situated in the heart of the city, there is no scope of expansion in terms of the space. Being an unorganized market place it is turning out to be a problem for the marketers.

Value propositions

Product differentiation

The high quality Jaggery available in gur mandi is not available in any of the retail stores like reliance fresh or easyday. Gud mandi offers different types of jaggery, which are often specialty products. Examples: jaggery with sauf coating, jaggery with hing (good for digestion), jaggery for animals (sub-standard product) and jaggery with other ingredients of medicinal value.

Trust

The kind of relationship the marketers of the gur mandi have built up with the wholesale dealers, regular customers and the suppliers is a result of years of interactions. This gives them edge over the new entrants like shopping malls, retails stores, etc.

Wide acceptance

Gur mandi is a famous brand for jaggery. As already discussed above, people from all over Punjab, Delhi, and nearby region have been loyal customers of the jaggery distributed from here. NRI’s of Punjab origin, especially, get attracted to it.

Proximity to resources

This mandi was built here keeping in mind that it is the central point for all the big sugar mills of central Punjab region. Good transportation channel of Jalandhar both through railways and roadways makes it an ideal market for distribution.

Distribution channel adapted keeping it in center

The distribution channel for sugar in Jalandhar region was designed keeping the gur mandi in cent re, so as to ease the flow of sugar/jaggery to nearby towns and villages from the mills. Hence this prevented any competitive market to develop in competition to it, even today.

Threats to the survival of the market

In additions to the parking and space problem, the other big problem faced by the marketers is in regard to the decreasing yield of the sugarcane in the Punjab which poses threat to the market as a whole. The only alternative left is the import from the state of Uttar Pradesh, which would be a costly affair for them. And also it has been observed that the Jaggery produced from sugarcane of Uttar Pradesh, tastes much different than that of Punjab.

Table 1: showing the contrast between market condition of gur mandi 35 years ago and present day.

The demand for Jaggery has shrunk to 0.1% of what it used to be three four decades ago. According to shopkeeper 1, “My father used to sell 2000 tore* of jaggery everyday. But the substitution of Jaggery by sugar has made the daily demand of Jaggery to shrink to less than 2 tore a day.”

‘How will such format continue?’: The Survival Tactics

Weaknesses turned into strengths

Shopkeeper 1 says, “Around six years back, survival in this format was becoming difficult for us. But we thought it was best time to introduce a change. We introduced Kirana wholesale, along with that of the Jaggery and sugar. We used same distribution channels, same customers, and same storage & transportation facilities to expand our product offerings. Now we also deal in pulses, flour, and general FMCG products.”

Shopkeeper 2 says, “My son is educated and he wanted to use his expertise for the betterment of our business. We first took an agency for masala (spices). We were already supplying the sugar and related products in bulk for parties and marriages. We decided to use our same knowledge and expertise in this field. And now my son successfully started the catering service for marriages and other parties.”

Table 2: showing the contrast between market condition of gur mandi 35 years ago and present day.

Shopkeeper 3 says, “Keeping in mind the changing needs of the people, we have adapted ourselves. We used to specialize in the organic ropes used for making charpais (rope beds), and broom sticks. But since the technology changed, we now specialize in good quality folding beds (made up of polymer strips) and plastic floor wipers. The business has flourished in this way.”

Table 3: showing the contrast between market condition of Bansa bazaar of gur mandi 35 years ago and present day.

Road ahead

Most of the shopkeepers in this market have started offering hybrid products and services. They have tried to retain the same customer base and have utilized the same existing distribution channel by adapting themselves to the upgrading technology, and hence the changing needs of the customers.

Shopkeepers here have very little idea on what would be the future of the market. The only thing they anticipate is some kind of help from the government. But more than that, they feel that it is only the customers who can decide their fate. Their interests and taste is what derives any market. There are still many buyers who love to visit gur mandi often, because the place still captures their childhood memoirs. Certainly, they feel that the aroma of place is diminishing rapidly. How long will the magic of aroma work? After all it is just a matter of one more generation to pass through.

-----------------------------------------------------------------------------------------------------------------------------

*1tora = 40 kg

Mukul Joshi

MBA Batch of 2013