What's Driving the Evolution of Kirana Stores in Rural India

What's Driving the Evolution of Kirana Stores in Rural India
Empowered by modern technology and innovative supply chain solutions, these small retailers are not just surviving but thriving.

By Aritra ghosh , Features Writer

05 Jul 2024 | 11 min read

In rural India, a notable transformation is taking place, spurred by the innovative initiatives of two dynamic companies: Frendy and Vilcart.

These enterprises are reshaping the traditional Kirana store landscape, bringing modern retail practices and technology to smaller towns and villages. This article explores how Frendy and Vilcart are empowering micro Kiranas, addressing industry challenges, and envisioning a brighter future for rural commerce.

India is a nation of shopkeepers, with approximately 13 million Kirana stores forming the backbone of the country's retail market. Despite their prevalence, the retail segment in rural areas remains largely unorganized, facing challenges such as poorly stocked inventory, high prices, and inefficient supply chains. Frendy and Vilcart are addressing these issues head-on, leveraging technology and innovative business models to modernize the Kirana industry.

Frendy: Modernizing Micro Kiranas

A Vision for Better Shopping

Frendy's mission is to enhance the daily shopping experience for consumers in Tier II and Tier III cities through its network of franchised grocery Mini Marts and micro Kiranas. These Frendy Marts, typically 600 to 1000 square feet in size, offer a wide range of products, including national and local FMCG brands and private label products across various categories.

"The founding team of Frendy had previously worked together at an affordable housing business targeted at customers from Tier II/III towns. We saw that consumers in these smaller towns were becoming increasingly aspirational," says Sameer Gandotra, Founder CEO of Frendy. "We understood that if aspiration exists for housing, it will for groceries and daily essentials as well."

The Phygital Model

Frendy's innovative phygital model combines physical stores with digital solutions to meet the unique needs of rural consumers. This model allows customers to browse and order products via a digital app or through a micro Kirana partner, ensuring the trust and convenience of a local store. The app also facilitates home delivery, making shopping easier and more accessible.

"Our mission is to make daily shopping better. Our offline Frendy Marts bring value through deals and offers, a wider assortment, and a safe, clean environment," explains Gandotra.

Leveraging Technology

Frendy uses technology to streamline operations and enhance customer experience. Their in-house Auto Replenishment System ensures that shelves are always stocked, while WhatsApp marketing keeps customers informed of daily deals. Additionally, a digital loyalty program gamifies shopping, increasing customer engagement.

"We focus on serving 90 percent of the needs of 90 percent of our customers. This means we don't have too many SKUs physically at our Marts or micro Kiranas, which simplifies inventory management," notes Gandotra.

Vilcart: Empowering Rural Kiranas

Connecting Farmers to Consumers

Vilcart, a Bengaluru-based startup, is revolutionizing rural commerce by providing quality products at affordable prices directly to rural Kirana stores. Established in 2018, Vilcart addresses the lack of a direct supply chain connecting agricultural producers to consumers, a significant challenge in rural India.

"Approximately 70 percent of India's population resides in rural areas, yet these regions are largely underrepresented in city-centric supply chains. To address this, we developed an end-to-end supply chain that directly connects farmers as producers with farmers as consumers," explains Prasanna Kumar, Rural CEO of Vilcart.

Addressing Industry Challenges

Micro Kiranas often face challenges such as poorly stocked inventory and high prices due to their reliance on wholesale markets. Vilcart’s inventory-based model, supported by 93 warehouses across Karnataka, Andhra Pradesh, Telangana, and Tamil Nadu, ensures a consistent supply of goods to rural Kirana stores at competitive prices.

"We provide doorstep delivery to rural Kirana stores twice a week, ensuring a consistent supply of goods. Our prices, inclusive of incidental costs and transportation, are more competitive than procuring products from urban centers," Kumar adds.

Enhancing the Shopping Experience

Vilcart leverages technology to streamline operations and enhance the shopping experience for rural consumers. Their user-friendly app and telesales facility allow customers to place orders conveniently, while data analysis provides insights and recommendations to optimize inventory management for Kirana store owners.

"Our app fits well with the special needs of rural India. By prioritizing our relationship with rural Kirana stores, we effectively extend our care to a significant segment of rural households," Kumar emphasizes.

A Shared Vision for the Future

Both Frendy and Vilcart share a common goal: to modernize rural retail and improve the daily lives of rural consumers. Their efforts are not just about bringing products to rural areas but about creating a sustainable ecosystem that empowers local retailers and enhances the shopping experience.

Funding and Expansion

In January 2023, Vilcart secured USD 18 million in a Series A funding round, positioning the company for ambitious expansion across South India. Similarly, Frendy's measured growth approach and focus on optimizing costs have positioned them for scalable expansion.

"We believe that our neighborhood mini Mart format, digitally connected to micro Kiranas, will allow us to serve the largest number of households with our phygital model with the least capex," Gandotra states. "Frendy aims to be the market leader and believes that over time, a large network can be built Pan India via organic growth and consolidation."

The Road Ahead

As incomes rise and aspirations grow in rural India, the demand for a better shopping experience will continue to increase. Both Frendy and Vilcart are well-positioned to lead this transformation, leveraging technology and innovative business models to bring modern retail to the heart of rural communities.

"We believe that overall in India, this customer segment will grow to become a 500 billion USD grocery market. There is a direct correlation between per capita income and the modernization of grocery retail," Gandotra predicts. "Frendy Mart seeks to make daily shopping better for these consumers, both in dense urban towns and digitally via micro Kiranas in the rural catchment areas surrounding such towns."

Vilcart’s Kumar echoes this optimism, "Our platform serves as a one-stop solution, catering to the diverse needs of rural India and bringing the luxury of grocery shopping right to their doorsteps. By transforming rural Kirana stores into grameen supermarkets, we are revolutionizing the rural shopping experience."

Frendy and Vilcart are at the forefront of a retail revolution in rural India, empowering Kirana stores with technology and innovative business models. Their efforts are transforming the daily shopping experience for millions, creating a sustainable and efficient ecosystem that benefits both retailers and consumers. As these companies continue to expand and innovate, the future of rural retail in India looks promising and bright.

In rural India, a notable transformation is taking place, spurred by the innovative initiatives of two dynamic companies: Frendy and Vilcart.

These enterprises are reshaping the traditional Kirana store landscape, bringing modern retail practices and technology to smaller towns and villages. This article explores how Frendy and Vilcart are empowering micro Kiranas, addressing industry challenges, and envisioning a brighter future for rural commerce.

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