Brands Involvement with Local Indian Retailers

With the advent of technology, shopping for daily essentials and groceries has become simpler, easier and more convenient for the new age citizen. Brands with bigger names and reach have tapped the market potential for growth and are offering never-before discounts and deals to online shoppers for their brand positioning.

Despite this, the friendly ubiquitous small Kirana store and the ever-smiling man behind the counter still command the respect and loyalty it always has. Now a day, the neighbourhood Kirana store is stocked with not only everyday essentials such as toothpaste and soap but also gourmet food ingredients.

So, what is it that still helps retain the business for local Kirana stores? research conducted by Google in collaboration with Ipsos Media CT and Sterling Brands has surprising findings. It goes on to state that digital and retail shopping have a much-nuanced relationship. In fact, it shatters three myths that one has regarding retail shopping.

Myth #1: Search engine results redirects consumers to e-commerce sites only

People who rely on local buying options are more likely to visit a store, verify the product for themselves and then go on to buy it. Thus, validating the fact that majority of consumers still require physical inspection of the product prior to making a purchase.

Myth #2: Once in-store consumers start looking at their smartphone, the retailer loses their attention

While 64% of people rely on search engines, the remaining audience tends to go to the retailer’s website/physical store. With the primary reason being product verification or product specifications inquiry to ensure that their purchase is genuine. Statistical data too states that 42% of in-store consumers conduct research within the store.

Myth #3: Online research has lowered consumers’ expectations of stores; they just go to a store to transact

In fact, when consumers go to a store, they look for an informative and customized experience. A research conducted in 2014 concluded stating that 5 years down the line i.e. 2019, majority of the retailers and even the local Kirana stores would adopt digital technology to enhance their businesses.

The market space has realized that customer retention, brand loyalty and in fact, even customer acquisition is no longer the functions of just sales and discounts. Gen Z is all about forming emotional and personal connects to a brand/store. Our local neighborhood shopkeeper has always been an avid practitioner of this policy and therefore his adaptability to this concept is the highest.

Moreover, with the increasing development of tier-2 cities, the dawn of start-ups and technology, the local Kirana stores are getting a makeover. The reach of the local Kirana store in a geographical region is much higher due to a variety of factors right from proximity, brand loyalty to positioning. A local Kirana store owner becomes a de facto brand managerfor a consumer product and the locals would be more convinced about the genuineness of a brand when it comes with a recommendation, especially from a Kirana store owner, with whom they are comfortable as well as loyal.

Today, these stores have better purchasing power and offer a variety of payment options to customers, given the ease of availability of digital payment apps. Digitalization has offered the mom and pop stores a new concept i.e. data and trends analysis. For instance, deducing consumer buying patterns became feasible with digital accounting and billing systems. Hence, empowering shop owners to design and be able to offer a better product mix and discount offers. In fact, it also provides them with an opportunity to collaborate with consumer brands and come up with customized bundled offerings.

In a country with a billion population, varied diversities and demographics, there exist about 12 million local Kirana stores holding a stronger market position. Having said that big brands are vying for their attention and the focus on their transformation is considered huge. (Reference: Article in Economics times, dt: 9th June).

Here are some astonishing statistics by Economic Times that speak out volumes about why big brands would show interest in the local Kirana.

It’s an untapped potential market that would help brand positioning to a large extent. Fintech digital payment giants such as Google Pay, Paytm, and PhonePe, among others, are increasingly encouraging small store owners to utilize their mobile Apps to connect with their customers. Also, they are observed paying commissions and rewards with a growing volume of transactions, offering new avenues for earnings. Retail e-commerce companies such as Amazon, Reliance, and Metro are not left behind as they have recently shared their interests in building an ecosystem that could help suffice their e-commerce business’ daily groceries requirement via Kirana stores. To begin with, they have started helping Kirana stores to efficiently manage their inventories and renovate their infrastructure by providing lower credits. Hence, supporting them attract more business opportunities.

At present, every brand is targeting the local Kirana store for better growth opportunities. The primary game changers in the market would be Reliance Industry, Metro Cash and Carry, PhonePe, BharatPe, and the international Biggie Walmart India. Reliance Industries’ retail arm has with foresight identified Points of Sales (PoS) and is targeting approx. 5 million smaller retailers. While, Metro Cash and Carry is offering similar services for B2B platforms, comprising established stores to smaller neighborhood Kiranas, thereby increasing their outreach. Walmart India is in the midst of expanding its business from the Lucknow pilot store to another 100 stores.

Krish Iyer, CEO of Walmart India says “With our Knowledge of the country, retail expertise and because of our decade long work with Kiranas, we are in a unique position to understand their pain points.”

The bigger players have realized the growth potential of the local mom and pop stores and have acknowledged the fact that it is beneficial to tie-up with these stores and grow along with them. A symbiotic collaboration is what will drive the supply chain as well as tap the growing consumer base which is increasingly influenced by digitalization and social media. The local Kirana store now finds itself to be the centre of attention and is transforming itself into a newer polished and alluring avatar that still holds the appeal.

O4S's Engagement with Brands and Local Kirana Stores

India’s 12 million Kirana Store account for over 90% of total FMCG sales, roughly USD 1 Trillion. The fragmented supply chain results in Manufacturers conducting the bulk of their business blindfolded and by second-guessing the on-ground conditions basis secondary audit data received from spot checks. All these factors make it imperative that a retailer has visibility of his downstream supply chain.

O4S aims to develop solutions to streamline the Kirana stores’ supply chain and improve sales by empowering them with a level playing field. The burgeoning counterfeit market in the country which churns out duplicates that find their way into over 20% of consumers’ basket has become a topic of concern for both brands and consumers. In light of this event, O4S has supported brands track over 500 million unique products across India over the past one year and aims to significantly scale up the count in the coming 0years. O4S’s value proposition lies in facilitating a platform that directly engages Kirana Stores with Brands through Retailer Trade Promotion Schemes. The company’s highly secure and scalable web software and mobile App solutions have helped brands establish a direct connection with millions of retailers and tighten control over the quality of goods sold to the consumer. Visit www.o4s.io for more information.