Amid lockdown in India, neighbourhood kirana store has become the cynosure of all eyes whether its consumers or brands which are struggling to reach to their consumers. Government has also chosen these stores only to serve the consumer directly at their doorsteps while using the network of logistics chains. The plan is to take orders using Whatsapp messaging services and payment through via e-tools such as UPI and BHIM while deliveries can be managed logistics firms. In a scenario, while many established online and organized retailer players are unable to reach to customers, the age-old, dusty and shabby kirana stores have been the only source to purchase food and groceries for billions of Indians.
Since the last few years with increased penetration of organized retail chains and stores and growing demand for e-grocery, kirana stores were finding it tough to sustain their business. Even their market share which used to be close to 90% in FMCG distribution till 2015 was expected to go down to 75% by the end of 2020. Organized retail was expected to touch 18% of market share while e-grocery with a whopping growth of 300% was estimated at 7% market share. In a market size of USD850 billion drop of share from 90% to 75% was looking quite significant and most of the research studies were about to write off the kirana stores while very few had suggested that kirana stores have potential to sustain their business but they must find ways to transform their business model and start using technology to meet the changing expectation of consumers especially the younger ones.
The challenge before these store were to manage and maintain their customer base and business which had impacted badly from organized retail even in smaller towns also. While kirana stores were known for localization as they use to connect with the immediate neighbourhood to serve and sell the products, very personalization approach of organized retail was winning over the consumers. In early February, while I was researching factors critical for the selection of format for grocery and household shopping, most of the consumers across age had suggested that their first preference would be supermarket followed by online platforms due to the trust for quality and personalized services they get. On most of the parameters kirana stores had scored very less against other medium and the general feedback was these stores are shabby, lack space to store products, are unhygienic and attitude of store owners is an issue. At the same time very few consumers were of the opinion that they would prefer to buy from these kirana stores only as it provides the opportunity to connect with local neighbourhood besides the personal touch and facility of hassle-free returns.
I am sure if today I go back to the respondent of my study, my findings would be quite different as far as preferred medium to shop food and grocery is concerned. In last one month of lockdown in India which was announced as a safety measures post-outbreak of COVID-19, only these kirana stores have stood in support of their customers by risking even their own lives also.
In India where there are more than 12 M kirana stores and organized retail is close to 7000 outlets, serving a population of 1.3 billion is not an easy task. But kirana stores were able to serve as they serve to the smaller number of families and can maintain the norms of social distancing also which would have not been possible for organized players seeing space constraints and layout of the store.
Probably this ability of kirana stores to serve the last mile without any difficulty makes them unique and a potential partners for many established players like Amazon, Walmart and Flipkart which have been in process to develop a business partnership with these stores to serve their customer using the distribution setup of these kirana stores.
So what makes our kirana stores unique? While there are many factors which were there earlier also in support of kirana stores but in the recent time when getting basic food items were not easy and regular shoppers had disowned many of the consumers in main cities, most of the new customers of kirana stores must have experienced and would vouch for these factors now.
- Ability to serve customers across the cross-section of society
- Personal attention is given to customers (He may not have your purchase data in the computer but he knows your preferred brands if you are a regular customer)
- Credit facility- Kirana stores extend credits to most of daily wage earner s
- Time Saver- Shopping From kirana store saves your time and transportation cost both
- Opportunity to connect with local neighbourhood
- Hassle-free returns
- The commitment of store owner
- Trust and familiarity with the store owner
Kirana stores need to build upon from here which is an opportunity for them to expand their consumer base. They need to abide by the guidelines by authorities for sensitization of store as well as meeting the norms of social distancing. At the same time, they must speed up the process of adoption of technology both in terms of digital transactions and using a smartphone as a communication medium to not only take and serve orders but also to communicate the availability of product at stores to their customers. They were into selective home deliveries but now they should try to build upon this expectation of consumers with more seriousness. Besides this, they should try to partner with not only food and grocery segment suppliers and brands but use the opportunity to enter into a newer segment where brands are struggling big time to reach to their consumers. It is reckoning time for kirana stores and I am sure that with kind of experience they have, these stores would bounce back to their old 90% market share very soon.