Friday, May 02, 2008

Transferring credit

The retail revolution is supposed to be hurting the kirana, but the kirana is not your regular government organization. It wont roll over and die, it will try to make the best possible deal in the market. Like I had written before it is the Kiranas who take advantage of some of the newer retail stores bargain deals. Every time I am at Reliance, I see them buy a whole bunch of their requirements from Reliance - taking advantage of all the deals. 

Recently I noticed something else - which could be a reason for their using places like Reliance Fresh more than the prices. Their mode of payment is not cash, but Sodexho coupons. Why? It shortens their credit cycle. They use the Sodexho that they are paid in and use it to exchange for goods  that they buy from Reliance - so no more waiting for Sodexho reimbursement, they turn it around asap. Markets seek their own level, dont they?


Nikhil Narayanan said...

I have actually thought of this.
A panipuri guy can accept sodexho to a certain extent because most of his cash box will straight go out to buy raw materials.
And Sodexho accepted here board invites more ppl.

PS:Signing up for Sodexho is NOT easy.You have to deposit 10k or so plus Sodexho gives a shop keeper only 95.5% of the money. So on a 100 rs sale thru sodexho, the shop gets only 95.5. It is a volume game.(Info from a Kirana store)

Neelakantan said...

Oh! So that means, these kirana chaps are really getting mileage by buying their raw materials using sodexho!

Nikhil Narayanan said...

They get full worth for the sodexhos.
Indians are ingenious to say the least

Manoj said...

and anyways the big reatils would have negotaited amuch smaller cut from sodexho.. so at the end of the day the net loser is sodexho...