Kirana Wala- The Last Man Standing in our quest against Covid-19.

The Corona Virus or Novel Covid 19, the 7th new pathogen of the Corona Virus family has humbled the great Homo Sapiens race which claims to have won everything worth winning on this planet. At the spur of the moment, it has pressed the pause button on our lives across the globe and confined the mighty human race to their homes. The streets are empty while the inhabitants of our towns and cities are filled with much of the unrest, fear and anxiety, a great share of this anxiety is towards the “Fear of the unknown” as to what will happen next, how will we arrange for our groceries and supplies and how can we provide meals to our family members. Well, these are the obvious concerns of every household in this once in a lifetime pandemic.

Desperate times call for desperate measures and apparently in every civilization and generation, it’s been etched in the eternity of time that some unsung heroes appear in the societies in these trying times, which till now or till the time of existential crisis have been conveniently forgotten and pushed under the carpet with their daily drudgery, while the glory hunters flash their badges and take back all accolades. These are the times, when societies and countries realize the true worth of these heroes which till now attract all sorts of analysis and questions on their very existence in our fast changing modern world.

 I guess by now everybody in India , during the last 2 weeks have realized the importance of “Kirana Wala” or “Neighborhood Grocery Store” in our lives who have been risking their lives and their family’s lives to feed us, our children and parents when our billion dollars funded Hyper local Delivery Apps and E Commerce have abysmally failed again and again and eventually thrown the towel with “No new slots available” messages on these apps. These Kirana Store owners have taken it as their moral responsibility to stock their shops on their own when the nationwide grocery supply chain and distribution system of the large FMCG Companies and Brands have collectively failed in these last 14 days. Right from basic staples, dairy and milk products they have supplied everything right at our doorstep even as we are too fearful to venture outside.

The failure of all leading E commerce companies and Hyper local delivery apps and the Lone battle fought by Kirana Store owners, perhaps has drastically changed the discourse on the importance and significance of the Kirana Stores in the wake of Grocery supply crisis due to the Covid 19 lockdown post 24th March 2020 and their role in the Indian Grocery Retail Market. These Kirana Stores have vehemently resisted the onslaught of E Commerce and Super market chains that once claimed in early 2006 that soon the Kirana Stores would be an endangered species, while the truth is that the Kirana Stores have only thrived despite all odds and disruptions in Technology as well as B2B supply chain aggregation and they account for almost 98% of the Grocery Retail Market. I don’t want to remind readers on the data when it comes to Kirana Store penetration as it has been commented upon widely across all platforms, but just a Gist would be enough to set the context:

üKirana dominates the Grocery Market- 85% spends of Indian consumers are with Kirana Stores.

ü There are 12-15 million Kirana Stores across our country.

ü Grocery accounts for half of the Country’s Retail Consumption.

ü Organized Grocery sector is at 2% of available market.

ü This again implies that Kirana stores control the 98% share of Available Grocery Market as per figures of NSSO on Consumption Data.

ü India’s total grocery market is at 19.9 lacs INR, accounting for roughly 48% of entire Retail consumption.

 Let us take a look at some of the other factors highlighting the impending importance of Kirana Stores in our Retail eco system post Covid-19 and why they have come out with flying colors in this worst possible crisis that our race has witnessed so far.

Why Kirana store owners have been successful in these last 2 weeks when billion dollar funded companies in E commerce and hyper local delivery apps have failed and Super markets could not fill their shelves for their consumers ?

First Thing First!!!

ü First and foremost, Kirana store possessors are intelligent business owners as they have a mix of sourcing and buying options that saves them from supply chain redundancy and occasional failures. They use a mix of distributors both small and large and what I mean by small are obvious players whom we all know in FMCG industry. They use Retailers cum wholesalers operating in their vicinity, Cash and Carry stores, Stockiest and large retailers who have certain margin flexibility. So when the conventional supply chains falls flat on its face, they come out unscratched.

ü This gives them an edge in terms of flexi pricing and availability of necessary goods and they by and large focus on 300 odd sku’s as they cater to a block of 200-250 household in their operating areas. Since they know their consumers well and their psychological behavior, they identify with almost certainty of all the alternate sku’s in case the top running sku’s is stock out or coming at prices they can’t afford.

ü They source by themselves and deliver through self or through some of their family member- Low overheads.

ü Contrary to the belief that the operating margin of a Kirana store is much higher than any other Modern Trade Retailer, perhaps this is the fact that they have been in existence despite so many threatening external business factors.

ü They have a strong liaison among their fraternity and often barter grocery items to match demand and supply paradigm. Trust runs deep and a common bonhomie ensures that if someone is in need of any item, he can get it from another store and the adjustments can happen later, either in cash or through goods.

ü Geographical Agility- As they supply to a pre-determined block of 200-250 houses as their primary customers, they can plan the buffer and add on stock, much smoothly given the low risk involved.

Psychological Aspects

ü One to One family relationship with his consumers and their family members.

ü A Kirana Store owner is a responsible Community member and given the fact that the Kirana Store is his only source of livelihood, he takes the requirements of his consumers very seriously and often arranges for the items that are not in stock in next 24 hours and even though if it comes a bit expensive, the consumer is okay as he don’t have time to go to the supermarket and wait in a long queue, most certainly not in this kind of crisis which we are witnessing right now.

ü Knows the requirement and taste of all his consumers, his word of recommendations are taken without any questions by most of his consumers as it’s the Kirana store owners who have successfully launched some of the top sku’s across categories of major brands in India. They command an unparalleled authority to suggestive sell the new sku or a new variant to the decision maker in the family- The Female Consumers.

ü Credit facility is a major aspect here. In the ongoing crisis of lockdown, some of the consumers who are low in cash are making part payments which can never be a case in a high street super market or with an E Commerce app.

When we are faced with a new reality, we change our course and that will now happen in Indian Kirana Segment. Let’s see how?

ü The prevailing times have proved beyond any reasonable doubt that the strong foundations of Kirana stores and their importance in our lives. India will soon witness a surge of private investment in the form of VC Capital and other instruments in Kirana Retail, however given the size of the industry in India, there could be space for many formats, players and the width of the operations will determine how the aggregation of front end Kirana operations will come into play and it will be a very interesting time to watch for.

ü Grocery and Staples width in terms of Category assortment would be increased substantially with inclusions of many local and regional players of good quality assortments.

ü Kirana industry will also see a major adoption of Technology to harness the advantage of digitization and online payments, as in this crisis time, Kirana store owners have also realized the differentiation Technology and online payment facility can make to their business and the concept of Retail POS and Shelf space management tools will be taken up hand which were struggling for adoption barely few months ago.

ü Consumers - The Kings, will be more inclined to buy regularly for their monthly fills and weekly refills from nearby Kirana stores, of course they will go where they will find hygiene and convenience but I can safely presume, a big mind block has been erased by this crisis as humans never easily forget someone who helps their family in do and die situations.

ü The assortments of Kirana stores are bound to change in leaps and bounds after the crisis is over. Kirana Store owner knows for sure now that they need to put the sku’s their target audience likes as this impending crisis has changed many blocks from the sub conscious of the store owners too when it comes to the small pack size, processed foods, ready to eat , beverage, dairy and fresh categories.

ü Shelf space management will see drastic improvements and perhaps the dominance of local and regional players as the store owners have now realized the fragility and frugality both of national player’s supply chain and large manufacturer’s ability to fill their distributors in such crisis. Regional players will have an advantage here, now considering their production facilities proximity to their consumption market.

ü There will be a lean supply chain adoption by leading FMCG players and large millers.

ü Public Private Partnership (PPE) is sure to explore the Public Distribution system – The Ration shops, facilitated by the Government and some large retailers as the Government has also realized that to ensure the food supply in these sort of crisis situation, The PDC will be a game changer in time to come. Of course, they all need to re-strategize with their design planning, assortment planning, training of manpower and inclusion of more categories apart from core staples. This will be a very interesting space to watch out for. Future group as per some recent media reports have already started working on this in some states.

Government’s To-Do-Crisis of this magnitude calls for a complete overhaul in Food Supply chain system and asks more from government to take futuristic steps by empowering the entire stakeholders in the value chain.

ü Government needs to now devise a national strategy for Farmer Producer Organization (FPO’s) to integrate with Kirana industry across India for Direct to Retail (DTR) supplies as this will not only increase employment at rural grass root level but also encourage consumption near production facilities, a must do theory for a successful supply chain dynamics for a country so vast as ours.

ü Government needs to encourage by means of a central policy for Rural Supply chain aggregation startups or NGO’s interested to work in this domain as we need to have a long term plan to aggregate the rural supply chain, considering the inefficiencies of our existing supply chain and density of rural population.

ü Government can also explore Rural APMC and Mandis now, to plan the consumption of commodities specifically in the immediate proximity of 30-40 kms from the farmlands. We need to start working on it now to create a long term action plan that encourages produce, processing and supply within blocks of 30-40 kms to reduce the dependency on urban markets.

ü As mentioned above, State governments need to completely turn around the operating methods of Public Distribution System, “The Ration Shops “, under Public Private Partnership modules with leading national and regional/local Retailers .

What FMCG companies can take back to their Board Room for further reflection?

ü With the collapse of FMCG and Grocery supply chain in this crisis, FMCG companies need to work on lean supply chain with customization of their products on size, packaging and variants as per the Tier 2, 3 and Rural market segments. It’s an established fact beyond doubt now that you cannot have a universal strategy made for a large city’s requirement and run it successfully in the Bharat of India.

ü They need to have an inclusive strategy for Traditional Kirana Channel which up till now they have been calling as General Trade. Strategists in these companies need to dive deep into the skin of the consumer of the Kirana Channel.

ü For FMCG companies, Sales differences across cities in Traditional Kirana Channel and Organized Retail channel is decreasing, the signs are written on the wall.

ü All FMCG companies need to equip themselves for a fierce fight with Regional and Local brands for the shelves at the Kirana stores, as with increased customer loyalty with them, Kirana stores will be more inclined to do business with brands that are lucrative to them.

 Epilogue

There are times in our lives when the circumstances not only change the current disposition of intellect , established truths and to some extent the factual fundamentals, they also rewrite the new rules of the games with very less time given to the not so long ago dominators. We are witnessing times like these in our lives when the rules of Retailing and FMCG distributions will be written around our next door “Kirana Wala” and it looks in no hurry to leave the top spot.

(Above are the personal thoughts of the writer in his personal capacity)