Small Retail and its Social Relevance

Will the millions of Retail stores in India, die a slow death?

With the onset of 10 min delivery, which is now the reason for the closure of hundreds of small stores in India, will they all die over the course of time? If so, what happens to such entrepreneurs? Who really benefits? Does the consumer benefit at all?

While Capitalist Socialism might sound like an Oxymoron, for a country like India, that now has 140 CR people as its population, and 65% of them being the youth, gainful employment is an absolute necessity. Capitalism seems to be ruled by one fundamental rule: Make money, at all costs. What does that mean?

In the neighborhood where I live for the past 2 decades, the population is now about 6000, with about 2000 houses and apartments spread across, in a radius of 2 KM. Demographics age and gender wise, it has a decent spread, with a skew toward the elderly, possibly 50% in that category. A nice community, served via culture at a nearby park, reasonably sensible traffic and cleanliness, good schools around, and peaceful.

Serving this community is about 50 Retail shops, ranging from small supermarkets to 3rd generation convenience stores, to bakeries, vegetable and fruit vendors, garments, spectacles, a few doctors, health care centers, and medical shops across English and Ayurveda and other medical systems. There are Banks to cater to finance, plenty of ATMs, temples, churches and so on.

Given an average spend of about 25K per household per month in groceries and such, that is a monthly spend of 5 CR, across the 50 shops. Which is an average of 10L per shop per month as revenue, and at about say 20% margin, about 2L per shopkeeper, as an average.

This translates to then 50 Entrepreneurs, who toil to make 2L per month, who also support about 500 employees, 10 per shop. Who all earn a decent 20K to 25K per month.

How did I arrive at this data? Here is what a small such supermarket owner told me:

This supermarket of ours, in the center of this neighborhood, a 1 store shop, does about 60K sale per day. That translates to about 15L per month. We employ about 15 people, and with all expenses met, make about 2L per month. Some months it is higher, over the past few years.

QuickDee sort of providers are creeping into our margins. Reasons:

1.??????? They can stock literally anything, given their bigger warehouses.

2.??????? Current gen likes the drop-in service of any time, and even when thy are not at home.

3.??????? We must deal with thefts; it is tough to control.

4.??????? We are unable to stock it all, we can only stock fast moving goods.

5.??????? Goods perish and we cannot supply that elsewhere.

Can we sell via these QuickDees? Margins are high for them, and we lose out big time.

What next: That is a question that does not have an answer. It is wait and watch mode, let it go on, as long as it can!

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Now 5CR in a month, 60CR in a year, is an excellent business in such a Radius, for an App driven supply chain. Let us say, QuickDee opens up a Warehouse nearby, employees 20 employees to drive 10 hours a day to supply the needs of this community, which is possibly a 15CR profitable business for QuickDee, since the App and the other backend is already in place and does not cost much.

What does this mean? In about 2 years, we take away business from hard working 50 Entrepreneurs, who employ 500 people, whose kids can go to reasonable schools, and get decent education and medical care, make them unemployable, and make the pocket of QuickDee richer by 15CR each year. 10 min supply is the in thing, all we have to do is to sit in our couch, and press a few buttons, while a plastic smiling delivery person, overworked, comes to deliver, and has to rush and go and deliver to the next customer. Do we benefit in terms of prices? Initially yes, later no. Do we really need grocery in 10 mins? Definitely NO. Do we lose the touch with humans? For sure YES. Do we, collectively, destroy what was possibly a CAPITALIST SOCIALISM? For sure, YES.

The neighborhood mom and pop stores, and these Entrepreneurs are an absolute must. Period. Employment here does not shift, it is destroyed.

INDIA at this point, needs massive employment. Driving a 2-Wheeler around is not the right way to shift this. Unless that workforce moves massively up the value ladder, which can happen maybe in 2 more generations. Until then, let us not accelerate and destroy what seems to work reasonably well now.

Well, it is still not time to mark the Death of small Retail. These are really hard-working genius Entrepreneurs, who figured out a way to survive in the torrid Covid days, when no one could visit a store, and QuickDees had a gala time. I personally know how they morphed and adapted, via WhatsApp orders, owners delivering themselves, and payment via Digital Payments. I also know a few others, who turned out to become last mile delivery, for free, to the elderly residents of our community. I am sure most of these will morph, adapt, and survive, for survive they must, for their own survival.

With the belief that they will coexist, with the QuickDees…

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