Retail channels in India have started to converge
Different retail channels — kirana stores, modern trade and e-commerce — have been competing with each for their share of the retail pie. However, they have understood that a confluence of the retail channels, wherein each channel complements the offerings of the other to provide a seamless shopping service, is the future of retail.
Large retailers and e-commerce players are trying to leverage the widespread network of kirana stores to increase their retail presence and to win over the consumer, finds a study. The traditional kirana store, which forms the backbone of retail in India, holds 88 per cent of the market share. The country has a total of 12 million kirana stores. Lack of latest technology and lack of capital to improve store ambience are key challenges for kirana stores, finds a Deloitte India study.
As just three per cent of kirana stores are techenabled, retail giants are using this opportunity to technologically and financially empowering the kirana stores. For them, partnering with kirana stores solves two issues — unavailability of affordable real estate and logistics problems. “Various bigger retailers both online and offline are running their pilots for modernising the traditional retailers which is beneficial for the industry,” said Shashwat Goenka Sector Head – Retail & FMCG, RP Sanjiv Goenka Group.
For tech-enablement, kirana stores are provided with PoS billing systems, app payments, and backend integration with wholesaler. To help kirana stores cope with working capital shortages, easy loans are provided.
Additionally, to improve the margins, staff are trained on planograms, assortment selection, and product placement.“We, as METRO, are providing that support to them. As an example, we are transforming their business by educating them about planogram, inventory management, quality management, etc. We are providing them with Point-of-Sales (PoS) devices to track their daily sales, inventories, P&Ls, immediate ordering, etc. We are also helping them by providing apps where customers can order online and products can be delivered from that store to them,” said Arvind Mediratta, MD & CEO, METRO Cash and Carry, India.
E-commerce firms too are collaborating with kirana stores to increase their outreach and are also providing them with an additional source of earning by acting as their channel partners/distributors. This arrangement helps them in last mile delivery, especially in smaller cities, and saves cost on logistics and warehousing.
Amazon had introduced the ‘I Have Space Program’ to collaborate with local store owners. Over 17,500 local stores across 225 different cities deliver products to customers within a 2–4 km radius of their store. Such an alliance would expand the reach of e-commerce to rural areas.