Can Kirana Stores survive the Modern Retail battle?

Where will you buy these from?

The Indian subcontinent is flushed with around 13 million retail outlets (big or small) currently, that’s like 1 retail store for every 100 people. Indian traditional stores have been challenged by the modern supermarkets and hypermarkets and the battle between these two looks eventful.

The peaceful Kirana Stores of India are now getting indirect threats from the Alexander the Greats of Modern retailers who have already invaded the developed nations and conquered their land with large assortments, bright lights, air-conditioned outfits and wide aisles to move around quickly. Now these supermarkets and hypermarket brands like Walmart, Aldi, Auchan and Carrefour are looking towards the emerging markets like India and China and have started rolling their sleeves up to get dirty. Their tactics can kill the family owned chains, small independent stores and informal merchants. It was thought that the traditional Kirana Stores will eventually move towards these hypermarkets and merge with them or die but the expectation has been proved wrong and rightly so because the giants are struggling due to no set retail pattern and vast cultural difference within the countries they looked at some years back before entering.

Let’s, see what exactly happened?

Hypermarkets are huge stores, situated at the corner of the city or within malls covering an entire floor. People need to drive to such place, purchase the goods in bulk and enjoy an ‘unbeatable’ price. This model worked like wonder in developed nations where road connectivity is good, people’s jobs are secured and money is disposal and people own cars and have huge space to store the items purchased in bulk.

The Indian context is different but changing. The middle class is rising but the road connectivity and traffic issue is still a pain point, people are not used to bulk purchase and storage, and hence prefer small ticket value and emotional connect which they share with Kirana Stores is missing with hypermarkets and supermarkets.

On demand side, in developing nations like India people enjoy fresh food and household staples because they prefer cooking at home rather than having food outside. They love to have a connect with the owner of Kirana Store, which in turn give them discounts for customers’ loyalty. Also, the proximity from the home places an important role.

Even on the supply side, small retailers don’t pay corporate tax as most of them pre-own the storefront or open in residential places with accepting only cash. Also, the supplier side is too fragmented and seeking large national level supplier becomes an issue for hypermarket and supermarket owners, which directly affects their economies of scale of procurement and hence hitting the discounts or the low price they offer to customers.

While the influx of money is huge by these brands, the competition with our traditional Kirana store looks tough, but it’s not the time to rejoice and sit back. The threat of Hypermarkets can be overshadowed for only some time as the disposable income rises and people of this century will have less time off, they will move to hypermarkets which are cost effective and gives choices, experience and discounts at the same time. Even the loyalty card system has been launched to cut the loyalty enjoyed by Kirana Store owner from his or her customers. Kirana Stores have to bump up their practices and have to invest in innovation and automation, and current business practices to stay afloat, otherwise, they will perish just like the sand dunes of the desert when the wind of Hypermarkets and supermarkets blow.