The Diwali festivities ended a couple of days ago and Jai Shetty’s snacks-cum-grocery store in an upmarket Mumbai locality continues to have a steady inflow of customers. “This time of the year is always hectic,” he says as he packs a one-pound tea cake and Shrewsbury cookies from Pune's famous Kayani Bakery. When asked when he started selling Kayani Bakery products, Shetty says it’s been close to a year, ever since quick commerce (Zepto, Blinkit, Swiggy Instamart etc) has gathered steam. “My store has always been known for farsan (snacks), but customers in the locality also visited me to buy imported chocolates, sandwich spreads, juices and cookies. Quick commerce has taken away that segment of the business from my store, which was almost 45% of my business. Therefore, I have expanded my offerings of snacks and sweets,” explains Shetty.
Apart from the usual range of traditional homemade snacks such as samosa, aloo vadi, vada pav, khakra and thepla, Shetty has also started live frankie and jalebi counters. The conscious move to reduce his dependence on premium packaged food brands has helped him to keep the excitement alive during this festival, at a time his peers (traditional kirana stores and mini-marts) have struggled to stay afloat. According to a statement by the All-India Consumer Products Distributors Federation close to 200,000 kirana stores have closed down in the past year. Around 90,000 of these are located in metro and tier-1 cities where demand for quick deliveries is especially high.
The situation is indeed grim for the traditional mom-and-pop stores, but the kiranas are known for their resilience (they successfully battled competition from modern retail and e-commerce) and not all of them are giving up. Like Shetty, Manish Vora, owner of Swastik Stores in Andheri West in Mumbai has also expanded his snack portfolio. Vohra has also gone online. He has subscribed to Snaporder, an online retail app launched by retail tech company, Snapbizz. “I have listed my catalogue on the app and this has helped consumers to order from me online just as they order on Instamart or Blinkit. In fact, a lot of them realized that I sell similar SKUs which they buy from the quick commerce apps,” explains Vora. He has also listed his farsan menu on the app. Vora had lost 40% of his revenue to quick commerce but ever since he launched his catalogue online 10 days ago, he claims there is already an uptick in sales.
“There is margin erosion in the profitability of merchants as quick commerce is cannibalising the top end of the market. The upmarket and mid-market products (premium shampoo, chocolates etc) are getting cannibalised where they could make margins. The profitability mix is changing and is shifting from branded goods to unbranded,” explains Prem Kumar, founder and CEO, Snapbizz.
The kirana store owner is trying to reinvent by increasing his focus on not just traditional snacks. He is also doing his bit to improve his inter-personal relationship with the customers in his locality. “The kirana store owner always had a personal connection with customers, but he is taking it to the next level by sending a birthday card to his loyal consumers or informing them about his gifting portfolio during Diwali,” adds Kumar. Most of the kirana stores had digitised their billing systems during COVID and now they are also open to embracing CRM tools as well as making sure their inventory is digitised so that they can reach their customers on platforms such as WhatsApp.
Predatory Pricing
The common complaint against quick commerce companies which has led to the downfall of the kirana stores is predatory pricing. “Quick commerce satisfies a consumer need which is not getting satisfied by kiranas or any of the existing channels. Therefore, when we launched consumers embraced it,” says Albinder Dhindsa, founder and CEO, Blinkit. “For Blinkit, we have been upfront in charging our customers for delivering a superior experience. We have not built quick commerce on the back of discounting,” he adds.
“We wouldn’t have been able to survive had we deep-discounted,” says Aadit Palicha, co-founder and CEO, Zepto. “Our model benefits local entrepreneurs. People who used to run eateries or cash wash services have pulled out some capital and started dark stores. We give them tools, technology, and operational support. They are making money and growing, launching a second store or third store. We are empowering local entrepreneurship, instead of being at odds with them,” he adds.
Lack of Interest
Though erosion of profits is surely a concern, the bigger challenge for bulk of the kirana community is the lack of interest of the next generation to carry forward the business. “The psychological impact is phenomenal,” says Snapbizz’s Kumar. “Most kirana shops are run by the generation who are in their 50s or 60s. Their children don’t want to be in that business as they feel that the format will die sooner or later. On one hand, their operating expenses have gone up and margins have eroded and they also have to deal with their next-gen who is already looking at other forms of employment/business.”
Wilson Dsouza, who runs Loreto Stores in Tardeo, Mumbai, has recently taken over his father’s 35-year-old store but he is already considering shutting shop. “Quick comm companies are discounting and that’s impacting my business. The building where my shop is housed is 100 years old and is going to go for redevelopment in the next year. Once that happens, I don’t think I will start another grocery store.” D’souza isn’t clear what he wants to do. He is not interested in starting a dark store either.
In fact, the bulk of the kirana store owners don’t see merit in converting into dark stores, says a real estate agent. “Most of the entrepreneurs setting up dark stores are outside of the kirana community. Since their next generation is not showing interest, the existing store owners are sceptical to convert into dark stores,” he explains.
There are challenges galore. But India’s 12 million-strong network of kirana stores is known for its resilience. By embracing digital or by relooking at their assortment basket, the mom-and-pop stores are already trying to bounce back.
