lipped from: https://economictimes.indiatimes.com/industry/services/retail/mom-and-pop-store-day-why-kirana-will-survive-the-corporate-blitz/articleshow/99091239.cms
In India, mom-and-pop stores are typically neighbourhood grocery stores. Apart from being social connectors for the local community, they also serve as an informal credit source, especially in rural areas. Customers can buy on credit on a weekly or monthly basis.
Mom-and-pop stores, the small neighbourhood family-run businesses (or the kirana stores, as we call them in India) put the community in commerce — the warmth of communication on first-name terms, the familiar smell of the merchandise, a bit of haggling, and a little small talk. We are now trading all that away for speed, comfort, variety and big discounts of the faceless and nameless e-commerce or impersonal stores run by huge retail chains.
Today, on March 29, Americans observe ‘National Mom and Pop Business Owners Day’ to celebrate small businesses, especially the family owned, that have been a vital part of their economy. Small businesses create local jobs and strengthen local economies by putting the dollars they earn back into the local economy. That’s why the slogan ‘buy local’ reverberates throughout America’s small towns.
Kirana, the backbone of India’s informal economy
In India, these mom-and-pop stores are typically neighbourhood grocery stores. Apart from being social connectors for the local community, they also serve as an informal credit source, especially in rural areas. Customers can buy on credit on a weekly or monthly basis. The kirana stores provide this service, even though it hits their daily cash flow, to retain customers for long term. Thus kirana stores are important nodes of India’s informal economy and not just sellers of products. And that’s why they are valued as India’s economic backbone even as a formal economy is still taking shape.
These days most kirana stores take orders on the phone and also provide home delivery, two big reasons for their remarkable resilience in face of huge competition from corporate biggies.
Forrester Research estimated India’s retail market was worth $883 billion in 2021, of which grocery retail accounted for $608 billion. By next year, the market is expected to grow to $1.3 trillion. And kirana stores are estimated to form nearly 90% of the total market. There are nearly 11 million kirana stores in India.
This unorganised sector is so vast that the government is now eyeing it to boost its tax collection. The number of businesses in the GST net has increased to 14 million as of January 2023, from about 6 million in 2017. To widen the taxpayer base under the GST, the government now looks at sector-specific measures to tap a large number of these 11 million mom-and-pop stores.
The big challenge to small business
Just as e-commerce bulldozed the brick-and-mortar business in America, in India too, e-commerce and big retail chains have come up as a challenge to kirana stores.
Organised modern trade has smelt blood in the gargantuan unorganised retail sector in India. From online platforms such as Amazon Pantry and Big Basket to mammoth retail chains such as Reliance and D-Mart, kirana owners are buffeted by blows from all sides.
The bulk purchases by these big companies enable them to offer lower prices to customers, making it difficult for kirana stores to compete on price. Huge discounts, often reaching 50%, during festivals, and free delivery services help these goliaths to attract more customers and have a larger brand reach. Moreover, these companies have better supply chain optimization, inventory management, and online ordering and delivery services that local kirana shops may not be able to replicate.
But kirana has hope yet
While large companies may have strong brand recognition and razor-sharp sales tactics, local kirana shops can still leverage their strong ties to the community to build customer loyalty. Small businesses can offer a personal touch, getting to know their customers by name and providing personalised service.
But that’s the definitional appeal of the neighbourhood kirana store. There are signs now that indicate kirana stores are nowhere near decimation as was feared nearly a decade ago when corporate giants had set their eyes on this unmarked territory.
Kirana stores are finding many opportunities to survive. One of them is the emergence of e-commerce apps like Swiggy Instamart, Zepto, and Blinkit which provide small businesses with an opportunity to digitalise and offer online orders and delivery services. These apps provide features such as inventory management, online payments, and delivery logistics, enabling small businesses to compete with larger e-commerce companies.
The biggest hope for kirana stores — to not merely survive but thrive — lies in the government’s Open Network for Digital Commerce (ONDC), an electronic platform where kirana stores can sell online and compete with biggies such as Amazon and Flipkart by adopting their strategies. ONDC is still at initial stages and has yet to come up to its promise.
“It’s an idea whose time has come,” Nandan Nilekani, one of the architects of ONDC, had said, “We owe it to the millions of small sellers to show an easy way to participate in the new high-growth area of digital commerce.”
Think of how the Unified Payments Interface (UPI) has revolutionised payments in India at every level. ONDC is supposed to do the same with online retail. If ONDC lives up to its promise, mom-and-pop stores will never go out of favour, at least not for the competition they face from big online retailers.
But the fact remains that new-age tech support to India’s kirana stores in one or the other form will help them fend off competition from corporate giants. And given India’s huge social and economic diversity which makes it difficult for big companies to map rural and small-town India even when they take to small-format standalone stores, mom-and-pop stores, it seems, are here to stay.