RETAIL REBOOT

India’s mom-and-pop stores are finally ready to embrace technology

Quartz india
Quartz india

Kirana stores, or neighbourhood corner shops, are the backbone of India’s retail trade.

Approximately 12 million of these are the first port of call for most Indian households for everything from soaps to pulses. And they contribute heavily to sales of large consumer goods companies. But tech isn’t their strong suit—business there is mostly done in cash and inventory managed through books.

Only 13% of these kirana stores in major cities and 3% of such stores are tech-enabled, according to data from consulting firm RedSeer.

That, though, is slowly changing, as consumer goods companies, startups, and large retailers push to transform this ecosystem. Already almost 70% of kirana shops in big cities and 37% in tier 2 towns are willing to use technology to manage their businesses, according to RedSeer.

Move to digital

The process of familiarising kiranas with technology has been underway for years.

With e-commerce’s popularity rising, some stores have even been experimenting with mobile-commerce, loyalty programmes, and digital inventory management to compete with online grocers. The November 2016 note ban, which sucked out over 80% of the currency in circulation by value, also pushed small shopkeepers to adopt mobile payments.

The country’s largest consumer goods maker, Hindustan Unilever (HUL), thinks these stores are “fast evolving with the adoption of technology to serve changing shopper aspirations and needs.” HUL is experimenting with different business models in collaboration with the retail partners, a company spokesperson told Quartz over email. While the firm did not disclose the details, its spokesperson said technology intervention could help these stores customise their offerings.

German retailer Metro Cash and Carry, too, has been trying out new things. Through a pilot with 100 stores, the company is equipping retailers with software and hardware that can track daily sales, cash flows, and profitability, Arvind Mediratta, the company’s India chief, told Quartz in an interview in February. “Anything a modern retailer can do, they can do, too,” he said.

A clutch of startups have joined the fray as well.

Bengaluru-based SnapBizz, for instance, works with 3,500 to 4,000 such shops in three cities. It helps the small stores (with an average monthly turnover of Rs10 lakh) use mobile-commerce for promotions. It also uses data to help predict consumer demand and behaviour.

Challenges

However, it hasn’t been easy.

India’s kirana ecosystem is spread far and wide, making an overnight technology upgrade difficult.

Additionally, these stores are often run by people who aren’t tech-savvy. “Retailers have reported operational issues such as the lack of skilled manpower (to) use the software. Then there’s the issue of cash flow and a general lack of technical understanding,” said Prem Kumar, founder of SnapBizz.

Kumar, however, is hopeful that as technology gets more sophisticated, more retailers will realise its benefits. “Over the next 18-24 months, technology adoption in kiranas will reach a point of inflection,” he added.

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