Time in History when Kirana Stores overpowered e-commerce giants
India has around 13 million retail outlets which are also known as Kirana Stores. Out of 13 million outlets, 12 million are unorganized stores and only 1 million comes under organized Kirana stores. After the interference of e-commerce giants, the total percent retail sales through e-commerce giants were 2.2%, which is 32.3 billion dollars.
The e-commerce industry was growing rapidly but a time came in history when Kirana stores overpowered e-commerce giants. It was the Covid-19 pandemic that jolted the economy and e-commerce was one of the worst-hit sectors of retail businesses.
What is a Kirana store?
Kirana store can be considered as a small grocery shop in your area. It can be owned by a single owner or it can be a family business. They mostly work on the credit system. They get the supplies from the distributors in credit and return the credit after selling the product.
In rough stats, Kirana owners make around 16-18% profit annually by doing the business locally. There are more than 6.65 million Kirana stores across the country and have over 90% of share in the Indian retail market.
Structure of the Indian Retail Market
As we know, the structures of the Kirana or Parchun shop chains are mostly unorganized in India. Most of the revenue comes from these Parchun shops which are an integral part of the Indian Economy. The organized retail sector holds over 165 billion dollars of market share. The total value of Indian retail is worth 600 billion dollars.
Even after the emergence of e-commerce online retailers, the offline market has a stronghold on the Indian retail economy. Let’s see further how dependency on the Kirana store works in this country.
Dependence on Kirana Shops (Parchun shops)
The majority of Indian customers are depending upon local general stores or Parchun Shops for daily essentials. Food products are mainly distributed by small Parchun shops across the community. This is very difficult for online giants like Grofers, Flipkart, Amazon, etc. to establish a customer belief in a very short time. Kirana stores are providing over 13 million people their wages.
Impact of technology on Kirana and Parchun Industry
After the arrival of retail giants like Reliance and Grofers, Kirana stores are getting converted into their own branded outlets. Grofers have converted 200 Kirana stores to their own outlet. Idea is to maintain consistency over the unstructured layout of the stores in the country.
Reliance is planning to convert 5 million Kirana stores by 2023. This is a huge interference to the Indian retail market. Indian retail market is changing but according to Forbes India, Parchun and Kirana stores are going to stay here in India for some considerable amount of time.
Effect of Pandemic on the retail Industry
During the COVID-19 pandemic, services got hampered directly as mobility was restricted for the sake of people’s safety. People were not allowed to get out of their houses and it was necessary to provide daily essentials to the consumers. This was the time when Kirana stores played an important role in proving the essential products to the people.
Kirana stores were allowed to open during the lockdown period where online services were banned. Online giants were asked to provide essential services to the customers, which didn’t happen effectively during the lockdown period.
Kirana and Parchun Stores – A Lifeline during Lockdown
When demands of food items suddenly increased during the lockdown period, Kirana stores served as a life savior for the retail industry in India. People were asked for social distancing and traveling was not allowed.
People were allowed to go out for emergency services only. At that time people found these Kirana stores in their neighborhood for essential food item supply. Kirana stores turned out to be a lifeline during this pandemic.
Let’s dig more into how Kirana stores turned out to be a life savior for over 1.38 billion people in this emergency situation.
5 Reasons why Kirana Stores overpowered eCommerce giants
- Better connectivity
- Better Availability of essential items
- The Comfort zone of Indian Customers
- Ease of doing business
- Government’s interference during the lockdown – The restrictions
1. Better connectivity of Kirana stores
When we talk about the structure of the retail industry in India, Parchun Shops prove to be the most visited place for the purchase of daily essentials. This happens due to its better connectivity to the local residents. People find it easier to go out and purchase grocery items from these Parchun shops rather than going to a relatively complicated system of e-commerce grocery purchases.
2. Better Availability of essential items
During the period of lockdown, e-commerce giants got overwhelmed by the sudden increase in demand for essential items. It was impossible to fulfill the needs of customers once at the same time. At that time essentials were available at the local Kirana outlets which have a very vast network across the country.
People found it easier to go the traditional way. As the demand didn’t overwhelm the large network of outlets, the demand got distributed and thus Kirana stores became more effective during the lockdown period.
3. The Comfort zone of Indian Customers
E-commerce is relatively new to the Indian retail market. People are not used to buying essential items from any retail platform working online. Retail businesses are trust-based businesses that run on retail’s relation with their customers.
During the pandemic, people went for the local Kirana shops to buy essential products. Even today, people find it comfortable to buy products from local markets rather than buying it online. This made Kirana stores more effective than online stores during this pandemic.
4. Ease of doing business of Kirana stores.
E-commerce businesses run on a wider area with an integration of multiple service providers. This makes the process of delivering the ordered product longer than the Kirana shops. A product reaches its customers after lots of processing. This makes the delivery costly as well as time-consuming.
In the case of shopping through a Kirana store, geographical distances are negligible which makes it easier to get the orders instantly. A Kirana store is easily accessible and due to zero interference of third party bodies, services are easily availed at a very convenient rate.
5. Government’s interference during the lockdown
During the lockdown, e-commerce services were restricted to essential items only, whereas offline stores were able to provide non-essential items as well. This gave an extra amount of favor to the Kirana store services to do daily businesses.
Lockdown forced people to remain in their houses. The e-commerce delivery services were unable to deliver the ordered products because of the restrictions. Kirana stores had the permission to continue their services amid lockdown. Parchun shops also provided home delivery to the people in their locality. This made Kirana shops more helpful to the customers amid lockdown.
Future of Kirana and Parchun Stores in India
Indian retail Industry is digitalizing and local Parchun Shops are getting converted into branded supply chains. This has a significant impact on the traditional way of selling good and daily essentials. India has the second-largest population of internet users. This creates a great opportunity for the technology giants to sink in.
E-commerce giants are already on a move to digitalize the Indian retail Industry. Recently Facebook and Reliance made a $5.7 billion deal to enhance the Jio Mart project in India. Jio mart is an ambitious project of RIL to provide an online-to-offline platform to the customers. Idea is to connect all local Kirana or Parchun Shops to the customers through an online platform without losing the benefits of an offline store.
In short, a customer can place an order online and purchase offline. This will have support with Whatsapp which has 20 crore customers which will connect 3 crore Kirana stores to the customers. This will have a great impact on Kirana stores. Currently, Jio Mart is available in some parts of Maharashtra and expected to be available across the country very soon.
Conclusion
Hence Kirana stores overpowered e-commerce giants in this rare cause of an event. This came as a life savior for people locked in their houses. Kirana stores have a history in India and it’s not going anywhere for some considerable amount of time. It is true that technology will have an impact on the retail industry in India, but the traditional way of selling groceries will not vanish.
Kirana stores are evolving rather than getting extinct. This is very early to come to any conclusion. Things are changing rapidly but we cannot deny the fact that change is the only constant and Indian Retail Industry is on its move. With the change, Kirana stores are holding their position as the lynchpin of the Indian retail industry.
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