India’s retail market is largely populated by the Kirana stores, which still play a pivotal role in serving the daily requirements of Indian households. Currently, with 13 million Kirana and neighborhood stores, the unorganized space holds 88 percent of the overall retail market. The segment has been seeing rapid technological advancement (kirana-tech) in recent times, particularly owing to the push from the B2B space.
Flipkart’s recent festive sale Big Billion Days that concluded on October 10, 2021, witnessed 70 percent e-commerce adoption across the country compared to the same period last year by Kiranas, which joined on the B2B wing Flipkart Wholesale. Similar large-scale adoptions are seen by Kiranas on other platforms as well during the festive season.
The 25-year old B2B firm TradeIndia is gearing to organize the first edition of the much-awaited ‘Munafa Mahotsav’ 2021. "Through this mega sale event, TradeIndia is aiming to change the attitude of Kirana stores, retailers, SMEs, and MSMEs and encourage them towards procuring their supplies/products online for their store at a much affordable/ pocket friendly market," said Sandip Chhettri, CEO, Tradeindia.com.
In fact, over the last four to five years, several B2B startups such as Ninjacart, Udaan, ShopX, Indiamart, Moglix, and Jumbotail have been instrumental in digitizing the retail supply chain in India.
Reasons Behind The Push For Kirana Tech
Currently, the 4th largest in the world, India's retail market is expected to reach $1.1-1.3 trillion by 2025. A research report by Accenture shows that the transformation of just 10 percent of the 13 million Kirana stores could boost retail consumption by more than 5 percent and generate approximately 3.2 million new jobs in India.
Given the huge potential, technological adoption is the inevitable desirable option for the Kiranas, which is further going to lead to the growth of other connected sectors like B2B.
Sameer Amte, Managing Director and Lead – Retail, Accenture in India stated, “The Indian B2B e-commerce market has emerged as an extremely competitive segment with companies looking to transform the distribution model to small Kirana stores. Given the market opportunity, the growth in this segment is driven by a few large companies with deep pockets and a large number of startups focusing on ‘Kirana-tech’. These companies are offering a compelling proposition to small retailers to replace their incumbent sources of purchase."
Amte added, "In doing so, they are aiming to solve multiple pain points for these outlets such as single-source access to wider assortment, next day delivery, and credit. Even Kirana stores need to transform to unlock true value, specifically in key areas such as store location and layout, technology, store funding, and product placement."
The truth is that the growth of B2B e-commerce has come on the back of the increase in the pan-India outlet, however, the next phase of growth depends on expansion in the share of the retailer's wallet. Kiranas stores seem to be proactive in that aspect. During the lockdown period, 40 percent of Kirana stores were willing to partner up with online delivery and supply platforms to help them grow, a report shows.
Moreover, “expansion in the retailer's scope will help to improve the overall unit economics of the business model, which in the current state is unsustainable," said Amte.
Apart from B2B, developments in other sectors are also going to propel Kirana-tech further. Recently, Amazon Technologies had acquired retail tech start-up Perpule in an all-cash deal of Rs 107.6 crore to bolster its play in the Kirana-tech space. Fintech companies like Google pay, Paytm, PhonePe, Freecharge has worked aggressively to onboard kiranas in the payments front. Most FMCG companies like Hindustan Unilever, Marico, and ITC have launched their internal ordering app and onboarded millions of kirana stores on their platform.
The potential in the Kiranas is so much that foreign based-software firms like BUHL Data Service have shown interest to explore the field. Their app has shown tremendous responses within a month of launching the app. The advancement in Kiranas is going to operationally help them to do more business with B2B firms.
"The up-gradation/ adoption of tech in retail will occur at multiple levels spanning, sales operations management, inventory management, consumer profile management and so on leading to an end-to-end digitized supply chain management system. The imminent industry trend points towards an integrated supply chain management driven future for the Indian Kiranas and local retail sector," said Amit Mundra, CEO and Country Manager, Buhl Data Service.