kirana stores: Indian kirana stores will continue to be dominated by standalone shops, this time around with an online avatar – The Economic Times

Clipped from: https://economictimes.indiatimes.com/small-biz/sme-sector/indian-kirana-stores-will-continue-to-be-dominated-by-standalone-shops-this-time-around-with-an-online-avatar/articleshow/79692171.cmsSynopsis

The ability to adapt quickly to ever-changing needs, a new phygital approach for safer purchase is helping mom and pop kirana stores maintain their dominance in the market.

Waghadwala, a General Store in a busy suburb of Mumbai, found itself in a deep dilemma when the lockdown started in March 2020. The shop was getting incessant calls from the 200 plus families in the vicinity. Waghadwala had served them for over two generations, only this time the stocks were running low. Samir, the shop owner, quickly figured out locally produced alternatives for essentials such as grains and other household products, and soon business was better than before. Samir felt it was his duty to help his regular customers who had trusted him over e-commerce sites and helped him stay afloat.

There are many such stories around local shops that have gone out of their way to help the community they have been part of. Of course, it is business for the shop owners, however, a nimble approach towards product procurement and updating existing services has played an important role in maintaining customer loyalty through the pandemic.

Not surprisingly, in a research report conducted by Accenture in May 2020, the number of people shopping at local stores had gone up marginally.

consumer behavior graph

With 12 million shops still controlling about $100 billion worth of business, it’s a sector that affects almost all big and small FMCG firms. The changes in the Indian kirana stores have been keenly observed for a possible long-term impact. Our take is that while the increased investment in the e-grocery sections will bring in certain degree of consolidation, mom & pop shops are once again bracing up for the changes.

Following are a few emerging trends/ observations that indicate the same

Focus on vocal for local
The focus on procuring local produce started with the need to fill in the acute shortage of supply of essential goods from consumer brands. Due to a sudden halt of all transportation activities and shutting down of regular supply chains. However, over the last few months, consumer’s willingness to support local communities and many Government support schemes has made ‘vocal for local’ the new buzz word. Challenger brands and products locally produced are now a constant in the shopping list for most consumers. Kirana stores close to consumers helps in efficient hyper-local setups, conducive for locally produced goods.

A phygital approach to counter the health threat
Historically, while there have been several attempts by startups and established players to digitise the many small format shops across India, as of February 2020, less than 9% of the kirana stores had an online presence. However, with the enhanced focus of consumers on health and physical distancing, shop owners are now in a hurry to create touchless shopping experience. Websites, Whatsapp groups, digital payments are being introduced at a rapid pace. We expect nearly twenty five percentage of all shops to have more than one option to shop online by end of 2021

Easy and quick digital payments such as UPI, digital wallets have contributed immensely to the quick digital adoption.

Strong Covid tailwinds have re-prioritized the digitization intent for store owners
Covid has clearly propelled the world into a different future. However, experts believe shopping, especially essential goods, is largely habit driven. With an increased awareness about social distancing and health, consumers seem to divide their purchases on both offline and online channels.

According to an FMCG firm, of the three retail shopping formats- ecommerce, small shops and large convenient stores, the large stores have taken the maximum hit. Fear of crowding at these shops has made consumers stay away from them. This has further pushed up the business for local shops, which are convenient and easy to reach.

The litmus test, however, will be the next few financial quarters. Many socio-economic developments such as fear of job loss; re-lockdown; relocation to home towns etc will play an important role in how consumers continue to shop and spend.

The kirana stores, however, with the new found trust / confidence during the lockdown, look strong and poised for growth.

BOPIS
Buy online and pick in store or curb side pickup is expected to grow significantly as a shopping behaviour in India, primarily driven by delivery based businesses, domestic help and digital cart selection and payments. Also, given the concern for personal safety, customers would prefer to not physically enter stores and just get their products delivered to their vehicles or in person outside the store.

In summary, a kirana store powered by digital tools i.e. an easy way to catalogue products, WhatsApp, payment gateways and digital discovery is going to definitely put up a tough resistance in the fight for market share dominance with large e-commerce companies who have to grapple with large inventory, warehousing, logistics, marketing overheads, cold chain and customer loyalty.

The writer is Co-Founder, Near. Store.)

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