Being termed as essential business, most neighbourhoods’ daily grocery needs are being met by kiranas. Amidst the COVID-19 pandemic, the kirana store owners have taken a lot of effort to keep up with the changing demands while managing their day-to-day supplies.
The time is now
Rising disposable incomes, a young population, and growing internet use mean that India’s e-grocery market is expected to grow huge in the next few years. Large companies such as Reliance, Amazon, and Flipkart are collaborating with kiranas to acquire and retain customers.
The Indian government is also urging more and more kirana owners and local merchants to become “atmanirbhar” and compete with e-commerce websites and supermarket chains by going online.
Clearly, it is time for small, local grocers to go online and grow their business.
Kirana store operations
Most kirana operators own their stores to avoid rental expenses. Most of them employ fewer than 10 staff members at low salaries and without other benefits. The shops use cycles for home deliveries to nearby homes, keeping costs low.
Companies follow a multi-channel strategy to tap the massive kirana network. The stores are usually serviced by distributors (direct channels) and wholesalers (indirect channels). Direct channels reach about 20–30 percent of stores and are managed by the distributors. Salespeople visit stores, take orders, and send the items needed.
Big FMCG brands tend to provide their services in 3-4 days, which means that stocking requirements come down and ROI is improved for kiranas.
Wholesalers, on the other hand, send goods to smaller stores in larger towns and retailers in smaller towns and rural areas. Kirana owners often visit wholesale markets in nearby cities to buy goods, but they have the choice of getting items delivered directly to their doorstep by wholesalers.
Established brands, kiranawhich contribute to almost 30 percent of purchases bys, sell on advance payment; the others sell on credit (one week to three months) or consignment basis. Return and replacement options are common, and reduce cash requirement and risk of unsold inventory.
What are the challenges?
Kirana shops, mostly family-owned and run businesses, have a solid customer base, but often face problems with inefficient distribution.
The supply chain network is complicated, especially in the food and grocery segment. A mix of organised and unorganised segments, it involves distributors, warehouses, logistics, and financing. Distribution, limited investments in cold storage, and warehousing are among the other challenges.
Also, in most cases, the arrangement between the distributor/wholesaler and the kirana stores remains informal. Payments are routinely made and taken in cash, and banking transactions are common only among larger kiranas.
The way ahead
Experts say kiranas-turned-independent stores will find their way as they adopt technology in the next couple of years.
RedSeer analysis revealed that e-groceries grew by nearly 75 percent in the lockdown period. Brick-and-mortar stores may have reopened, people continued to go online.
It is clear that going digital will open up new markets for kiranas.
A report by World Economic Forum and Bain and Co. in January 2019 revealed that by 2030 nearly 31 boom towns and developed rural areas would drive consumption, with more consumers “open to using different technologies for discovery, browsing and shopping”.
The demand has led to the emergence of marketplaces and solutions that will simplify the transition and hand-hold kiranas as they make their way online for the first time.
Every part of the process – from order management and packaging, to delivery and payment collection – can be made easier for the kirana operator.
In the long run, this will lead to customer-centric business models, supply chain remodelling, and efficiencies to create value.
It is clear that no kirana operator will want to use multiple apps for different needs. An end-to-end service provider who can take kiranas online and even closer to the consumer is the need of the hour.
Boost360 is the one-stop solution that can help kiranas simplify operations, increase efficiency, engage customers, open new revenue streams, secure the business’ longevity, and help grow profits.