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Navigating the world of Kiranas

Atharva Purandare
30th March 2021

We have always been bullish and very confident on the Kirana story playing out in India. As the second wave of startups bring with it a new wave of digitization, we’re keeping our eyes and ears close to the ground, while trying to find answers to differentiation, retention, and monetisation. Here's a deep dive into the topic, If you’re a founder building something fascinating here, write to us!

Take a walk through any neighborhood in India and there is one sight you simply cannot miss- the potholes Kirana stores. These are your quaint little unassuming stores, peppered all across the nation in various shapes and sizes. All of us probably also have similar memories associated with them- your favorite around-the-corner store where you’re greeted by your name and a nod, a one-stop-shop for all your sundry needs: from biscuits, groceries, pulses, to your favorite chocolates, and a ‘usual’ 10% discount owing to your familiarity with the owner. Kiranas have sustained local neighborhoods for decades, and contribute heavily (90%!) to the overall Food and Grocery (F&G) Industry.
 

The lockdown made Kiranas more relevant than ever- they emerged as local saviors during this time of crisis. Amid uncertainty, consumers turned to their local Kiranas for their requirements. They truly rose to the occasion- operating within a truncated window during the early hours of the morning, dealing with supply chain disruptions, stepping up their services to meet the overwhelming demand, and getting (slightly) comfortable with technology adoption. The pandemic made one thing increasingly clear- the Kiranas have remained largely similar for generations and would remain so unless technology intervened and enabled operational efficiency. Zoom out further from your local neighborhood and this problem is persistent and amplified across all the 13MM Kiranas in the country.

 

Think about it: 13MM Kiranas waiting to be tech-enabled, making up 90% of the overall F&G industry seems like a huge market.

 

Just how big?

 

$500BN+ big.

 

Let’s do the Math- India’s Retail Industry which stood at $850BN in 2020 is estimated to reach $1.3TN by 2025. The F&G market has consistently accounted for 65-68% of the total retail spend in India, currently amounting to ~$560BN. Being a nascent market, this figure is much higher than the 30-40% contribution found in developed countries like the US and UK. The Food & Grocery category comprises of fresh fruits & vegetables, packaged food, personal care & home care, and utilities. Going deeper, Modern Trade contributes <8% to F&G, and Online Commerce contributes <2%. This leaves the Kiranas (called General Trade in retail parlance) with a 90%+ contribution, presenting a $500BN+ opportunity. This big of a contribution by GT is unheard of- the figure stands at 6% in the UK and 8% in the US.

If it was not already evident, Kiranas hold massive potential waiting to be unlocked and as stated by the numbers above, is a uniquely Indian opportunity with no western parallel. Disruption is a term we often use in the startup world. But interestingly so, owing to their massive size, Kiranas are waiting not to be disrupted but to become tech-enabled. Thankfully, a plethora of startups have realized this opportunity and are working with Kiranas to solve for various day-to-day responsibilities of the Kirana owner, giving rise to a newly coined industry: KiranaTech.

                                                    

 

 

E-commerce firms have realised they are better off functioning with the Kirana stores rather than disrupting them.

 

 

So, what is KiranaTech? It consists of any tech solution that is built for solving problems and inefficiencies Kiranas face throughout their day-to-day processes.

 

One quick caveat before we go deeper: For the sake of this discussion, Kiranas and SMEs are two separate entities. Kiranas are stores that stock F&G and FMCG products. More formally, a Kirana is a small, usually family-owned shop selling groceries and other sundries. They are owned and operated on a small scale, usually by an individual or a family. SMEs are your local businesses that sell everything from hardware, clothes, stationery, to anything non-FMCG.