A single corner store (kirana in Hindi) serves 100 Indians, yet three out of four of these mom-and-pop stores have no exposure to technology platforms for payments or procurement, according to a report by retail consulting firm Redseer Consulting, which was exclusively shared with ET.
Even the 25% of these shops that do have some technology touchpoint – through the use of payment services like Google Pay, Paytm or Phonepe, and procurement platforms like Udaan, Metro Cash & Carry, and others, are deeply underpenetrated, the research firm said.
After the Covid-19 virus outbreak further exposed India’s dependency on local businesses and the launch of Mukesh Ambani’s Reliance JioMart, these 13 million corner shops have come to the centre stage of top technology businesses’ commerce play.
Large technology companies, including Amazon, Flipkart, Udaan, Google, Swiggy, Pine Labs, as well as emerging businesses like Jumbotail, Khatabook, ShopX, Dunzo and Bounce, have moved fast to offer technology-backed sourcing, supply chain, financial services and value-added services to bolster digitisation at these corner stores, said the report.
“Until now (prior to the pandemic), online commerce outweighed B2B digital story, but now the dynamics have changed,” Abhishek Chauhan, Associate Partner at Redseer Consulting told ET.
The onset of the pandemic has also accelerated the willingness of small businesses to use technology to scale up operations, opening up a market that had in the past viewed technology companies as a competitor.
About 80% of these shops are in small towns, and a majority of large businesses, including Flipkart and Udaan, are betting these smaller cities will drive the next phase of growth.
“Partnering with kiranas enhances internet companies’ reach in smaller towns where the cost of owning last-mile delivery is high, while kiranas are already well penetrated,” Chauhan said.
India’s retail sector is set to grow to $1.3 trillion by fiscal year 2025 from $1 trillion now. Unorganized retail will continue to be the dominant category, even as its share will fall to 77% from 84% in the next 5 years. In the FMCG and grocery category though, their contribution will continue to be almost 90%, the report said. Organized retail, both online and offline, is poised to grow from 16% to 22%, the report said.
The dominance of corner stores in India is because of their footprint, locally relevant stock, perception among consumers that they are convenient and their personal relationship with shop owners. “These shops cannot be replaced…The only way to create a large business in the retail space is to enable these shops with technology to help them improve demand forecasting, inventory management and cut supply chain costs,” said Sujeet Kumar, cofounder of B2B marketplace Udaan.
In the book-keeping space, Khatabook, which enables micro, small and medium merchants to track business transactions, said that it had seen over 8 million active merchants on the app.
Last week, ET reported that Walmart-owned Flipkart was preparing to launch a separate business vertical for 90-minute delivery of goods from local stores.
Amazon India also said a survey of 2,000 shops and sellers conducted by the etailer had indicated that 75% need to go online to get their revenues back given reduced footfalls.
“Local shops can offer value-added services to nearby customers, and at the same time, listing on Amazon gives them access to national reach,” Gopal Pillai, Vice President, Amazon India Marketplace told ET.