When online grocery shopping channels first exploded in India, many wrote obituaries for ‘mom and pop’ stores, or what are popularly known in India as kirana stores or corner shops, None of that came true, because the humble kirana shop is in demand more than ever.
The unassuming neighbourhood grocery store has turned out to be the “saviour” in the time of the pandemic, according to Anurag Mathur, Partner & Leader , Consumer and Retail Business Strategy, part of the PwC network.
As per the Retailers Association of India-KPMG report, with the share of unorganised retail, mostly MSMEs, being 86%, kiranas have always been the bedrock of retail in India.
“Kiranas have an unmatched customer centricity and understanding of consumers. With the proliferation of modern retail in India, kiranas did face some heat and had been relegated to being the source of top-up shopping rather than primary shopping. COVID-19 changed all that, bringing them front and centre as the only source of fulfilling the demand for essentials, “ underlined Dr. Hitesh Bhatt, Director – Marketing and Communications, Retailers Association of India to The Blue Circle.
The brave act of working long hours, agility in time of need, and availability of inventory has made them a favourite of the consumers.
“While there was a surge in demand for products on online platforms in March, when the supply shut down after lockdown, the online platforms were not able to meet the supply. Kiranas had the inventory available at the local points, and were able to handle the situation. Given the uncertainty we find ourselves in, they are the only point that can store inventory closest to the customer,” noted Anurag to TBC.
A Future Retail spokesperson shared with TBC that since people have been staying away from malls, hypermarkets, and cash and carry in the last few months, discounts and discovery are no longer relevant. In these times, kirana stores have stepped up their game and are doing things they’ve never done before!
“For instance, earlier no one was selling idli batter or tender coconut water, but now everyone is doing. They are including important items that are needed by masses, which also gives them good margin. If not margins, it helps them with building attachment. A lot of them also sell fruits and vegetables, again something that they didn’t want to do earlier. I think the speed of adaptation, which is fuelled by the opportunity thrown by the current time of Covid, these places have become better,” he added.
An era of Transformation
In February 2018, digital wallet company, PayTm, had announced a new model of retail, where customers could walk into kirana stores, scan product QR codes to browse information, and make purchases using their app. Ever since, the number of players wooing kiranas have only risen in the time of coronavirus.
These neighbourhood stores are in the range of around 12 million in the country, and account for about 90 percent of the grocery business.
The future of these stores seemed to be on a shaky ground earlier, but now there is a reversal of sorts with leading online retailers seeking to get their attention.
Facebook has acquired a 9.99 percent stake in Reliance Jio’s platforms with the aim of capturing medium and small business onto its digital platform. Amazon has invested Rs 10 crore to expand its project – Local Shop on Amazon – that has 5,000 local shops and retailers into its platform from more than 100 cities.
Flipkart has also partnered with around 37,000 kirana stores, out of which 12,000 are designated as BuyZones, and about 25,000 are in last-mile delivery activities.
“I see the re-evaluation and re-emergence of possibly a hyperlocal kind of model, which combines the digital and the local. The model itself is fraught with many challenges, it was discontinued by many players earlier like Grofers and others. As we look at the changing situation, we might see a very different emergence,” shared Anurag.
Latest data from Bain and Co. suggests that the Indian grocery market will be worth USD 1 trillion by 2024 and nearly 60 percent of that can be attributed to fresh produce like fruit, vegetables and meats, a speciality of kirana stores.
Jumping onto the Digitisation Bandwagon
At the core, it is all about data and customers, with both stores and ecommerce companies vying to get the lion’s share.
The food and grocery market in India is dominated by offline retailers, which include both organised and unorganised segments. Ecommerce makes up for a miniscule 1 percent, which has created an opportunity for a partnership between online players and the kirana store.
E-commerce companies want to expand their presence by reaching out to more consumers, while kirana stores want to increase their proximity with this base, while expanding the range of products along with convenience. And this is only possible with the digitisation push!
“The entire situation is making us digitised faster than ever before, whether it is the local kirana guy who is trying to get to an app fast, because he is trying to make sure he is able to get supply from somewhere, and to capture the demand out there. Of course, there are other challenges like managing and mapping their inventory that will remain for hyperlocals, but some of this digitisation will happen. It will significantly become easier and potentially more viable to connect some of these platforms and local stores,” said Anurag.
Dr. Hitesh Bhatt added that while kiranas resisted the advances of several large and digital companies in the past, the overwhelming demand has now compelled them to change their stance and embrace omnichannel.
“They are finally exploring collaborations with different aggregators, be it for delivery or for ordering to be able to fulfil the overpowering demand. The pandemic has made everyone realise the critical role kiranas play in the ecosystem and this includes not just business partners but consumers as well. They are indeed the new darlings of retail, and rightly so,” he added.
Easing the Challenges
The e-commerce companies are yet to crack the supply chain network in the food and grocery segment, and their partnership with kirana stores might enable them to achieve this objective.
Currently, a range of supply chain tech upgrades are happening, with several companies looking to get the kirana owner’s attention.There are a bunch of startups in catalogue management and inventory, including the likes of Store King and Snapbizz, that are helping kirana owners sort their stock and better understand their business.
Bengaluru-headquartered Jumbotail, an online wholesale marketplace for food and grocery connects kirana stores to producers and distributors. It has collaborated with 21,000 small and medium grocery retailers, and is working towards modernising kirana stores at scale.
There are some challenges that exist, yet Anurag believes that mom-and-pop retail in India will not die, unless big retailers provide a value proposition that is above the kirana model, or even close to it.
“I think MSME retail has a very strong value proposition. Anybody who is looking to build a business above that needs to incorporate that value proposition and build over it, or compete with it, which is a significantly tougher task from a capital and investment standpoint. The service levers, the trust levers, the last mile which the local stores still enjoy with their patrons in a small radius, I think that is something that will continue to remain important. MSME to me has been retail and it will continue to be – models of including digital platforms within that will possibly be born,” he added.
The humble neighbourhood store may be unaware, but it is the prized catch of some of the biggest companies in the world. The journey from a retailer to an e-tailer might not be an easy one for the kiranas of India, but it sure is worth a try!
(Edited by Anu Choudary)