Role of Retail-tech Companies in Getting Kiranas to Adapt to New Technologies

With the pandemic, the Kirana stores have recaptured not only consumer attention but also the attention of big players in the retail industry
Role of Retail-tech Companies in Getting Kiranas to Adapt to New Technologies
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Co-Founder and CEO of BluePi Consulting Pvt Ltd
4 min read
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In the global economy, in the last few decades, the markets have evolved to create giant, integrated, global supply chains focused on optimizing processes and creating streamlined operations. This has led to a revolution of a sort, where the commerce flows freely across the globe, creating mega markets and massive conglomerates.

As an undesired side effect, it has led to a concentration of operations and a few concentrated pressure points on the critical path that can turn off the entire supply chain. These pressure points were choked, and the supply chain was brought to a grinding halt during the Covid-19 pandemic. 

Now, as the markets start to open, the mega-brand stores are still finding it very difficult to get footfalls, and the supply chains are under tremendous pressure due to rapidly changing ground situation. The new normal has changed.

The resurgence of the Kirana stores

To be fair, around 90% of the retail market in India is still unorganized, the inflection point has not yet come, and Kirana stores have continued to play a significant role. With the pandemic, however, the Kirana stores have recaptured not only consumer attention but also the attention of big players in the retail industry. In recent news, there has been chatter about how Flipkart, Amazon and Reliance retail will be helping the Kirana store modernize their operations and help them compete better.

But therein lies the twist, the reason for the resilience shown by Kirana stores is an absence of a uniform, central nervous system and big conglomerates entering this ecosystem is not necessarily a win-win. At a time like this, if retail tech companies can come forward and help the Kirana stores adapt for these tough times, it can be a game-changer for these mom and pop stores.

How retail tech can help

The Kirana stores have shown an appetite for innovation during these tough times. For example, we see many of them using social media platforms, especially WhatsApp, to connect with their audience. Their delivery model is hyperlocal, and requires little oversight, with a couple of runners with fixed schedules.

A few examples of how retail tech can help the Kirana stores directly are as follows:

  • Online delivery and supply 

Safety is the biggest concern right now for the consumers, and Kirana stores are typically cramped in space. To help the stores serve the consumers better, an online platform that helps them create a digital portfolio from where the consumers can order would be the first step. If the supply side of the equation can also be managed through this platform, it would be an ideal combination.

  • Digitization bookkeeping and inventory management

Kirana stores rely on the old age "khata" (ledger) systems, where for a few patrons they run credit accounts. The inventory lists are made when the items are out stock by noting them into a notebook or a stack of paper. There is a definite scope of improvement in efficiency if the bookkeeping can be digitized. Inventory replenishment is another area that can get a good boost if maintained digitally. Digital transformation for stores can potentially include technology like image recognition using mobile phone cameras to capture the inventory and replenish automatically.

  • Access to microcredit

One area which can revolutionize Kirana stores is the availability of structured microcredit availability for the consumers. As mentioned in the above point, the Kirana stores maintain running accounts for their patrons. Having structured credit available can help them expand and help them improve their working capital flows. Given that groceries (broadly FMCG) is a major portion of wallet share in India, this is one opportunity that NCFCs can leverage, creating a mutually beneficial arrangement. This would require retail tech companies and NBFCs to create a compelling and tailor-made offering for retail segment.

More than these examples, the retail tech companies need to understand the mindset, ecosystem and nuances of these small businesses. Kirana store operations are highly optimized for cost, they know their neighborhood better than anyone else, and they have their nuances, for example, some of them carry specialty items; such as regional stores that provide special items.

Like anywhere else, the retail-tech industry needs to understand their customers, their needs and then adapt to serve specific needs. There is a mass market of businesses opening up to new innovations ready to be tapped. It’s only a matter of how we strategize to turn a challenge into an opportunity.

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