Despite still occupying a major chunk of the retail space, Kirana stores in India have been facing stiff competition from organized players in the Q-commerce, D2C (Direct-to-consumer) segment, particularly in the FMCG. In fact, traditional and age-old Kirana stores have been feeling the angst and have been on the lookout for ways to hold their grounds against the competition.

Indian retail is likely to touch $1.3 trillion by 2025, given the rapidly changing country’s economic landscape – the market is witnessing a CAGR of 9-11 percent from 2019. Clearly, the retail space has a lot of potential; the requirement is to understand what is already happening in the market, how that will shape the industry, and which new strategies can be devised to make the best of the opportunity.

Harsha Razdan, Partner and Head - Consumer Markets and Internet Business, KPMG in India stated, “The Digital Bharat story has unlocked a very large wallet share for e-commerce players and D2C brands. Today, the D2C model is helping businesses understand what consumers want and are exactly looking for and as a result, is helping them communicate effectively. This also means that brands are able to personalize products and their marketing strategies depending on the customer cohorts that they are catering to. Technology investments to enable seamless order management will be a key to long-term customer stickiness. Lastly, the D2C model is characterized by its ability to change with speed and agility.”

Thus, neighborhood Kirana stores are up against two major challenges of providing i) personalization and ii) faster and seamless orders. In fact, post-pandemic, Kirana stores, which generally have a personal rapport with consumers, have been building their local communities through social media (mostly on Whatsapp) and oftentimes having their own delivery partners. For instance, Rapido has tied up with over 7,500 Kirana merchants to facilitate delivery.

Technology: Opening New Avenues

Furthermore, over the last year, more than a million Kirana stores in India have adopted technology for payments, delivery, or managing inventory. Consequently, we can state that Kirana stores are willing to catch up to speed and so it opens up a lot of opportunities for players in the supply chain, warehousing, and other industries.

The current scenario is perceptible particularly in the Tier-I and Tier-II cities whereas for the rest of Bharat the situation is mostly the same as before, however, given the retail market in the Tier-I regions is inching to a saturation point, and in the near future, the main center of competition would be Tier-II, III, IV, and further.

What Various Players Are Doing 

Legacy players like HUL (Hindustan Unilever) for instance had launched Suvidha app where Kirana stores can order inventory online whereas its Apna store helps create their own online store. Then there are a few other companies like Shopmatic, Coutloot, Dotpe, etc. that help Kiranas go online. Also, because of the growth in B2B, a range of players have come up including Solv, Retailo, ShopKirana, etc. which are making it easier for Kiranas to source and buy inventory. Despite the apparent rapid growth in the number of players in recent times, they have only scratched the surface and have a long way to go.

Anurag Avula, CEO of Shopmatic stated, “The e-commerce space has evolved in recent years and it's not surprising to see much action in this space today. Of course, Covid-19 had a big role to play in driving e-commerce adoption. It made businesses realize that going online was not only an option but a necessity and that if they don't open up options for their customers to buy from them, then they would be left out. The offline segment - Kirana dukaans, retail stores, and traders, are all-embracing e-commerce and Q-commerce today, as the market dynamics have changed completely. There are more than 60 million SMBs in India and there is huge scope for a big chunk of them to go online.”

Resonating the same thoughts, Amit Bansal, CEO of B2B platform Solv said, “We see high levels of awareness among Kiranas about the need for digitization, especially post Covid. This segment is upgrading itself, as we speak. The future is even brighter for this segment due to the hyper-growth in the B2B segment being witnessed. For instance, at Solv we are ensuring end-to-end digitization of Kiranas with access to a wide variety of SKUs, on-demand credit, doorstep delivery of goods, etc. to enable them to run their store in the most efficient manner possible.”

Working with an enabler/ service provider or a B2B platform is a go-to strategy that Kiranas can use to accelerate their business. Besides, they can also look at working with large retailers that are willing to extend their help. The best example would be Reliance partnering with the local Kirana store as a JioMart franchise partner.

“Partnerships with larger retailers could be key, as retailers could help Kiranas with the basic digital infrastructure and support them in their journey to digitization. Improvising the product portfolio and easing payment processes for customers by offering them UPI-based digital payment solutions, online wallets, net banking, etc. could help enhance their customer reach. To further leverage, Kirana stores could begin by accepting orders online and offer services like instant home delivery, etc. Keeping one’s ear to the ground and staying consumer-centric is definitely a good mantra to stay ahead,” Razdan concluded.