When the whole nation was shut down due to the lockdown imposed, most people got panic stuck about arranging essential items, at times of distress like these our local Kirana stores acted up as the real saviors, some went out of their way to make basic food items available to all at lower rates. Kirana shops have had a vast number of people as their loyal customers and account for about 90% of the country’s consumer purchases, not only this, Kirana shops have been fixtures in the country’s retail situation for decades. However, many local shops have witnessed a decline in their sales, what do you think could be the reason? The first answer that pops up in our mind is the giant E-commerce companies like Flipkart, Amazon, etc due to which small merchants of our nation have been driven out of business. While contrasting to what the general opinion might be, big retail companies like Amazon have included these tiny stores in every corner of the street as emerging key partners of their online units. In the western countries, these mega giants have destroyed businesses for local merchants, however, the future of India’s retail landscape looks very different.
CREATING A PASSAGE TO SUCCESS
It is essential to note that if Amazon, Reliance, or Walmart want to scale significantly, kiranas can be their passage to India. These vast companies might have exclusive offers in hand but what they lack is an extensive network in India’s vast hinterland, unlike Kirana stores that are easily accessible to all and are spread all over India. These e-tailing giants are interested to expand beyond selling electronics and fashion online to venturing into India’s mammoth food and grocery segment, where less than 1% of sales have moved towards digital methods. It has now become significant for these companies to make that shift, they’re now thinking about wooing bulk orders from kiranas, as well as striking deals to provide credit services or utilize these grocery stores as fulfillment centers.
HOW ARE SHOPKEEPERS BENEFITTED?
It is obvious to think that these mega-companies might be exploiting these vendors, however, this is not what the reality is. There have been various researches conducted and it has been witnessed that shopkeepers who once did not have use anything other than calculators, phones, and notepads to manage their business are now becoming well informed about latest apps and platforms, they are now beginning to use apps supplied by the e-commerce companies to reload stock, manage inventory, and improve customer service as well, the change and improvement is widely evident. We all know that small grocery stores do not earn much profit and mainly have to manage everything themselves, sometimes there is support from family and maybe a helper but now, with the introduction of these digital services these shopkeepers don’t have to roam around, in the markets all-day with stock lists in hand while they significantly lose business at the shop, this change has been largely fruitful for the vendors.
Innovation and change result in growth in all countries and these are important factors for the rise of a nation, hence, this is the time to make this switch, and rather than killing these Kirana shops, big companies can learn to live and mutually coexist with these shops and both can prosper together.
We explained above how big companies and grocery shops can mutually coexist, however it is not as much of a smooth ride. The main challenge that these mega-companies will have to face is our country’s slow pace of adopting and innovating technology. India’s online sales of $33 billion in the year witnessed till March 2021 were only a small fraction of China’s $1.5 trillion. Indian citizens have always been accustomed to purchasing items through cash, since many of them do not have the proper knowledge about digital platforms and online cash payments yet. We Indians are also lacking the knowledge and usage of digital payments that are adversaries to the growth of e-commerce. The number of online transactions had doubled to 34.3 billion in the year till March 2020 but according to different sources, they were still just one-eighth the number in China.
Talking about the challenges faced by the small shops, for several years shop owners have been critical of Amazon and Walmart, the reason behind which is that they blame them of threatening the livelihoods of small online and offline sellers. An instance of this was witnessed in recent events wherein an association of small merchants across India protested against the two big U.S.-based retailers for alleged unfair trade practices.
Small shop owners have also asked Indian courts and antitrust regulators to keep a check on the e-commerce giants, because they believe that they’re seeking to break India’s retail backbone—the kirana—with the introduction of practices such as deep discounting. This inherent suspicion and wariness towards big companies may prevent many kiranas from working exclusively with one large retailer.
To conclude, large companies have now started making way for local shops to prosper and gain profits, they have included them in their ways of market which has actually benefitted both the parties, however, some challenges still prevail. The Indian government is also working to maintain regulations and keep a check on the market so as to give to equal opportunities to all.