Kirana Stores 2.0: Going tech-savvy, but staying local to survive

The Covid-19 pandemic has proven to be a much-needed shot in the arm for the unorganized retail sector in India, especially the small kirana stores that were long due for a ‘digital’ makeover.

Hyderabad: Sarita, a homemaker in her late 50s who has been living at a prominent residential area in New Delhi for the last 35 years, has been ordering her household groceries from the same kirana store in the neighbourhood for all these years. The bi-weekly visits to the store were a routine for her family from late 1980s till almost 2010, after which the popularly growing concept of ‘home delivery’ changed the way the shop started delivering goods to its customers.

But the biggest transformation happened just recently, after a nationwide lockdown was imposed across India towards the end of March 2020 in the wake of the coronavirus pandemic. Since then, Sarita has been placing her order on the Whatsapp number of the same kirana shop, availing contactless delivery of goods, getting the details of her bill on a digital ledger mobile app on her smartphone and settling her payments digitally. In short, everything has changed.

This flexibility and adaptability, especially in the times of the Covid-19 pandemic, has helped India’s kirana stores, also known as the local mom-and-pop stores, get a new lease of life and reinforce their position as the backbone of the country’s $700 billion retail sector despite the emergence of e-commerce giants like Amazon and Flipkart and super market chains like Big Bazaar and D-Mart.

A recent Ernst and Young survey highlighted that there is renewed interest in local kirana stores as consumers who would earlier shop online or from supermarkets are now preferring to buy from the local stores to avoid long queues and also there is a semblance of ‘trust and traceability’. Another survey by Deloitte found that majority of the consumers in India want to buy from locally sourced items going forward, which reflects the trust built by kiranas during the lockdown.

Praveen Khandelwal, national secretary general of Confederation of All India Traders (CAIT), an industry body that represents 60 million traders and 40,000 trade associations, said: “Consumers are happier with their neighbourhood shops going digital since they maintain a long trust and mutual relations with their nearby stores. Their absence on digital portals had forced the consumers to shift to other technology-enabled portals. But now, since their own stores have adopted the same format, the consumers are happier to buy from traders instead of big e-portals.”

Why the lag?

It’s not that digitization of kirana stores is a new concept, but just like ‘work-from-home’, the urgency to adopt the technology became the need of the hour in the aftermath of the coronavirus outbreak. Also, with GST (goods and services tax) and the movement to digital payments, store owners started realizing that the technological shift is now imperative for survival.

“We should not forget that people in the age bracket of 18-40 years are the real consumers and since they have paucity of time they will always prefer to purchase online and make payment digitally. Keeping in view of the demand of real consumers, the traders will have to digitalize,” Khandelwal said.

Still, despite what seems so obvious, the shift to modern trade platforms has been slow. Retail conglomerates, for years, have been trying to take kirana stores on board to grow their e-commerce business as they understand the strength of these local shops. Kirana stores will not only help these big retailers penetrate deep into markets inaccessible till now, but also help in cheaper last-mile delivery in a country where logistics is a key cost component.

No wonder, India’s most valued firm Reliance Industries Ltd (RIL) chose the humbler mom-and-pop shops as partners to create the world’s largest online-to-offline e-commerce platform in the form of JioMart. An online-to-offline (O2O) business platform is where customers place an order online, but purchases the products offline (nearest local retail stores).

The company is looking at installing its Jio mobile point-of-sale (MPoS) device at local kirana stores at a one-time cost of Rs 3,000 to connect them to its high-speed 4G network that can be used by its customers to order grocery supplies. In return, kirana stores would have to source their stocks exclusively from Reliance Retail.

The service is being offered in all leading metros (Mumbai, Delhi, Bengaluru and Kolkata), and even in smaller towns like Mysuru, Bhatinda and Dehradun.

Reliance Chairman and Managing Director Mukesh Ambani at the first virtual, 43rd Annual General Meeting of the company said that they are piloting the beta version of the JioMart platform in 200 cities. He further said "In the coming years, we will cover many more cities, serve many more customers across India, and expand to many more categories."

A study of Bank of America Merrill Lynch in May said that RIL’s entry into online retailing will help expand the current 15,000 digitised retail stores to over 5 million by 2023.

US retail conglomerate Walmart, which owns e-commerce firm Flipkart, is also piloting the Kirana Development Programme, testing its own PoS machines with small kirana stores. This is helping Walmart to expand its Indian wholesale cash-and-carry business -- which it operates under the Best Price brand -- and increase its business with the kirana stores that are its key customers.

The details of the reach and success of the programme, however, are still unknown. On being asked the number of kirana stores the company has enrolled so far under its kirana development programme, Walmart refused to comment on the story.

The role of start-ups

Interestingly, kirana stores that are still skeptical to form alliances with retail giants due to certain restrictions that come along in terms of sourcing the stock, are still becoming a part of the e-commerce ecosystem with the help of some new apps that help them streamline their operations.

For instance, a mobile app called duNow was launched recently for small businesses, especially targeting the country’s 14 million neighbourhood shops. It integrates local shops, their suppliers and customers just through a simple mobile application without any need of a PoS, thereby helping kirana stores set up their online platform at a fee starting just Rs 20 per day. The app also digitises billing, credit management and customer communication. At the time of launch earlier this year, the company said it is aiming to digitize 20,000 shops in two years.

Another app that is gaining popularity among small stores is Khatabook, a free book-keeping app or the digital version of a ‘bahi khata’, that was launched in 2018 and has already garnered over 10 million downloads on the Google Play Store. Khatabook allows merchants to record their credit dues and then issue reminders to customers whose payments are due. Owing to its unique business proposition, the startup has received funds from renowned investors like Sequoia India, Tencent, DST Global and B Capital to expand operations.

A long way to go

Undeniably, the coronavirus outbreak has been a shot in the arm for the unorganized retail sector in India that was long due for a makeover. In the EY report mentioned earlier, Shashank Shwet, India Partner - Customer Experience and Design Thinking, said: “Amidst the Covid-19 pandemic, the kirana stores have emerged as local unsung heroes… they have proven themselves to be both agile and resilient, being able to bear the brunt of an unforgiving pandemic.”

The report said that 40% per cent of the kirana store owners surveyed now want to partner with online delivery and supply platforms as they feel it can help them grow and tide over in these testing times. But still there is a long way to go.

“Now they (kiranas) are more eager to digitalize their businesses. But more steps are needed from the government to facilitate and encourage more and more traders to adopt it. With the efforts of CAIT, nearly 40% traders in the country are digitalized now. But lot more is yet to be done,” he said.

(ETV Bharat Report)