During the COVID-19 pandemic and resultant lockdown in various parts of the country, the supply chain for consumer goods stood disrupted. This meant that several modern trade retail players were unable to service the demand of consumers. But the humble neighbourhood kirana store continued to service its clientele and adopted digital technologies to remain relevant.
At a high-powered panel discussion, which was a part of a thought leadership platform called Sashakt India: Powering the MSME Engine organised by Network 18 and Bandhan Bank, industry leaders from e-commerce and retail, discussed the sector’s growing prospects and outlined the opportunities it offered to MSMEs and aspiring entrepreneurs.
The speakers at the forum included Arvind Mediratta, managing director and chief executive officer, Metro Cash & Carry India; Abhinay Choudhary, co-founder, Bigbasket; and Sunil Kataria, chief executive officer – India and SAARC, Godrej Consumer Products.
Small retail accounts for 90 percent of the food and grocery segment and makes up for 65-70 percent of India’s total retail sector, industry experts say.
According to Mediratta, COVID-19 has seen the resurgence of the small mom-and-pop stores in this country, popularly known as kirana stores. Before COVID, the business of this segment of retail in India was growing at 6-7 percent. But the last six months, these kiranas have grown at a much higher rate compared to modern retail, he said.
Speaking in a similar vein, Choudhary of Bigbasket noted the positive impact that the digitalization of the retail format had on B2C (business-to-consumer) and B2B (business-to-business) operators. The kiranas saw 30-40 percent month-on-month growth because the traditional supply chain was disrupted due to the lockdown. Those that managed to build an online presence in this period, continued to do business since they received order on mobile apps.
Choudhary observed that there was a major upswing in new customers come to the Bigbasket platform and shopping for daily essentials. This has given Bigbasket’s B2C business a substantial fillip, even as its B2B venture (akin to a cash-and-carry model) continues to grow.
Kataria of Godrej Consumer Products weighed in to say that India had one of the world’s most evolved FMCG distribution systems, the backbone of which are the mom-and-pop stores. Modern trade and e-commerce were still serving only the tip of the “FMCG landscape”, which was basically consumers in urban India.
The well-entrenched kirana model is based on two or three critical pivots. One, is local access. No one knows the local terrain and consumer preferences like the local kirana store. Two, they have great personal relationships with their customers, which is not replicable, and the kirana store format is the most entrepreneurial of all business models in the retail space.
Industry leaders present at the forum were unanimous in their thought that small retailers needed to find relevant partners to work closely with and the idea was to know the customer deeply. ``Retailers need to cater to unmet, emerging and unarticulated customer needs,” Mediratta said, quoting the examples of global companies like Facebook and Google, who did something similar in their respective businesses.
The session was moderated by CNBC-TV18’s Executive Editor Latha Venkatesh.
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