In the race for retail market dominance, India’s kirana stores still hold sway

India’s kirana stores, or local mom-and-pop outlets, proceed to dominate the country’s grocery retail market, with 90 % share.

Fifty-eight-year-old Sriram opens his kirana retailer – akin to a neighbourhood mom-and-pop shop – at the break of day day by day, as has been his tradition for the final 20-odd years. Little has modified for him by means of his clients, all of whom are from the neighbourhood and who he is aware of by identify.

Over the years, he has learnt intricate details about each of his clients and their consumption habits. He can inform aside the ones who have moved to wholesome eating, those that favor tea over coffee, or perhaps a specific brand of flour that’s more often consumed. To be clear, Sriram’s store is greater than only a native grocery store; it now doubles up as the supply point for parcels and mails for his clients, whereas he assumes the further position of an area real property agent – all of which highlight the unique relationship borne of familiarity and belief that kirana retailer house owners take pleasure in with their clients.

In reality, this distinctive relationship coupled with the personalised purchasing expertise that kirana stores supply its clients explains how and why Sriram and other such shop house owners have survived the altering face of competition in the retail business.

And right now, international and domestic retail gamers – as soon as seen as robust competitors for India’s kirana stores – at the moment are trying to leverage these very stores to broaden their retail presence and achieve a higher hold over the Indian shopper.

In the almost 20 years since he first opened his store, Sriram has witnessed the onslaught of supermarkets, giant retail chains, and now, the ecommerce wave. But for Sriram, as is true for India’s large community of kirana stores, this competition has carried out nothing to change their influence on the Indian shopper.

Kirana stores proceed to dominate India’s grocery retail market. They hold sway with a whopping 90 % share, providing accessibility, convenience, and quite a lot of regionally related goods.

And now, as international retail gamers – from US-headquartered Walmart and Amazon to Germany-based Metro – battle one another and domestic retail giants Reliance and Future Group for a higher share of the Indian shopper’s spending finances, India’s large community of kirana stores are featuring prominently in their retail strategy.

Walmart, Metro, Amazon, Reliance, Flipkart

As international retail gamers like Walmart, Amazon, and Metro battle one another and home retail giants Reliance and Future Group for a higher share of the Indian shopper’s spending finances, India’s kirana stores are featuring prominently in their retail strategy.

“If you look at FMCG, electronics, food, and pharma distribution, they are all coming on to a larger network or a platform,” says Kumar Vembu, Founder of GoFrugal, a startup that has 30,000 small retailers on its enterprise resource planning (ERP) platform.

Reliance Industries’ retail subsidiary Reliance Retail, which pegs the number of kiranas at more than seven million, is readying a platform to convey small retailers into their fold as part of the Indian conglomerate’s ecommerce plan. So is Metro Money and Carry, which plans to launch a web-based kirana platform for business-to-business (B2B) clients later this yr.

To counter Reliance’s retail push, both Walmart and Amazon are additionally expanding their efforts so as to add comfort stores to their network – not just as last-mile supply brokers however with the view to manage the B2B wholesale provide for kirana stores.

Also read: Growing measurement of the food retailing business

Reliance Retail’s aggressive retail push

Mukesh Ambani, Reliance Retail

Mukesh Ambani has huge plans for retail with Reliance Retail

To be clear, Reliance Retail, considered one of India’s largest retailers, made it clear that it needs in on the soul of Indian retail market, because it introduced its online-offline omni-channel retail strategy, with India’s kirana stores and small retailers at the heart of the plan.

Reliance Retail presently operates 7,573 stores, with 17 million sq. ft in area, and a minimum of Rs 9 crore generated per store. As we speak, Reliance is trying to transcend the combined power and attain of its digital providers via Jio (more than 300 million subscribers), media and entertainment by way of Community18 (with a reach of 700 million), and Reliance Retail (with a attain of 350 million).

In FY18, Reliance spent Rs 14,070 crore on indigenous suppliers (small companies) to work with the retail chain. The corporate has a presence in 4,400 cities and is now going after truthful worth outlets. Experiments are also on in Andhra Pradesh to cover 5,000 outlets across 10 districts with 400 stock holding models (SKUs) resembling staples, meals, and apparel. Last yr, they coated greater than 100 truthful worth outlets.

Equally, rival Future Group, the second largest retailer in the country, can also be harbouring plans to broaden to an area community of small stores. It operates 666 stores at present, but needs to scale up.

Future Group, Kishore Biyani

Future Group Chairman Kishore Biyani says the retailer plans to broaden to a community of 10,000 small stores

“We will expand the small store network to 10,000 stores,” says Kishore Biyani, Chairman of Future Group. The corporate goals to extend its retail footprint by leveraging the power of networks and gathering knowledge of shoppers from its stores.

In Bengaluru, Future Group’s Shopper and Digital (C&D) Lab is integrating computing power with shopper insights, and knowledge with design-led considering. More than 100 technologists, design thinkers, and knowledge scientists are partaking with the greatest know-how corporations and startups to digitise every side of the company’s enterprise.

“We believe technology is not an end by itself. Technology rests on human ability to use it. Technology enhances human ability; it helps us achieve objectives faster and better,” Biyani says.

Additionally learn: Foodhall carries Biyani’s retail legacy forward but by means of luxury meals

The aggregation of India’s kirana stores

And yet, the aggregation of India’s kirana or small retailer house owners shouldn’t be limited to only the giant brick-and-mortar retailers; it’s occurring with the ecommerce corporations too.

Amazon at present has 17,500 small stores across the nation in its network underneath its ‘I Have Space’ (IHS) programme. Amazon leverages its IHS companions – which are principally native grocery, pharmacy, stationery, and common stores – for last-mile connectivity. In return, Amazon gives them an additional supply of revenue, without having to make any investments. Its IHS companions are dotted across the nation, in over 350 cities, with most of them in Tier II and III towns akin to Jodhpur, Nasik, Kolhapur, Belgaum, Guntur, and Dehradun.

Flipkart too is reportedly trying to companion with 15,000 kirana stores as part of its strategy to sell smartphones and other products using convenience stores. The company is reportedly partnering with over 800 stores in Telangana to promote smartphones. Flipkart’s style platform Myntra, as a part of its ‘Mensa programme’, already uses a network of convenience stores to carry out last-mile deliveries.

Indeed, each Amazon and Walmart-owned Flipkart are serving to near 500,000 Indian sellers operating small and medium businesses take their enterprise online and develop their earning potential.

“Thanks to the growth of ecommerce, our business is doubling every year,” says Manish Chowdhary, Co-founder of Match&Glow. His brand, Wow, is certainly one of the bestsellers on Amazon, both in India and in the US.

Like Flipkart and Amazon, several other smaller B2B gamers are using know-how to offer tech-enabled options to small retailer house owners.

SHOPX, a retail working system that connects brands, retailers, and shoppers, is now quickly aggregating small stores. After 5 years in operations, it has reached near 120,000 retailers and is at present experimenting with an entire digital platform at Ramnagar, a small town outdoors of Bengaluru, and different towns across India.

“Retailers want technology to tell them what they need to stock up on, and not what they don’t have to stock up on. This changes the way companies supply products to them,” says Amit Sharma, Founding father of ShopX.

Their know-how can manage over 500,000 transactions per day and powers a deeply integrated supply chain.

Similarly, Mobisy Applied sciences can also be connecting retailers to distributors and FMCG corporations. Lalit Bhise and his staff have constructed a big community throughout the country and have reached near 100,000 retailers. Even Retailer King is digitising small stores to develop into “assistants” to rural clients for digital funds, digital commerce, and logistics help.

And one can’t downplay the position of digital funds platforms like Paytm and PhonePe in aggregating mom-and-pop stores. Paytm, on its website, claims to have reached seven million merchants, but does not disclose the number of retailers actively utilizing Paytm providers.

Then there’s SnapBizz, which has greater than 10000 mom and pop stores on its platform. Snapbizz has a solution that permits kiranas to make more cash with FMCG manufacturers advertising in their stores. “India Retail 4.0 will be a collaborative model between independent retailers and trusted business houses which have the ability to add value on both demand and supply side of the small retail shop owner’s business,” says Prem Kumar, founder of Snapbizz.

Profitable the monopoly recreation

And yet, India’s kirana stores proceed to remain unchartered territory, with many, like Sriram’s, still untouched by know-how.

Like Sriram, the giant majority of kirana retailer house owners still want to deal in money and handle their

stock by way of books. Whereas demonetisation has pressured many small retailer house owners to adopt digital funds, the extent of the digitalisation of their enterprise has been restricted to payments.

But this too might soon change. Based on a RedSeer report, virtually 70 % of kirana outlets in huge cities and 37 % in Tier II cities are prepared to use know-how to manage their businesses. And with corporates keen to convey them beneath their wing, a battle is underneath means – to win the heartland of Indian retail.

As Arvind Mediratta, CEO of Metro Cash and Carry, strongly emphasises: India’s future lies in the arms of its small enterprise house owners. He says,

“At present, all small and medium business (SMB) entrepreneurs still want a face to deal with, but they are getting used to tech. They want specialised, customised, and personalised service. Relationships are very important in India, but tech also has a role to play.”

Certainly, the convergence of know-how and retail – and the aggregation of local kirana stores like Sriram’s into giant tech-enabled networks – might change the approach India outlets, perpetually. And in doing so, it might properly decide the future of the Indian retail panorama, or more particularly, the victor(s) in the battle for retail market dominance.

Additionally watch: Arvind Mediratta, CEO of Metro Money and Carry, in dialog with YourStory’s Shradha Sharma