55-year old Shakuntalatai Shinde calls the shots when it comes to shopping decisions of her Amravati-based family. And she prefers to purchase groceries and household essentials from the local kirana shop she has been frequenting for over three decades, clothes from a garment outlet known to her for several years, and snacks from a sweetshop next door. Ask her why and prompt comes the reply – they know her very well and give her the best deal possible.
There are millions such Shakuntalatai across India’s tier-two and tier-three cities who are serviced by kirana and small retail stores. This huge offline channel offers trust, comfort and personalized service to their clientele, even at a time when bigger retail chains and online shops are pushing into their domain.
This growing competition is making them realize the urgency to shift from bricks-and-mortar to bits-and-bytes. This earnestness stems from their need to offer existing customers the efficiency and convenience of online, which also attracting the next generation of shoppers.
Vaman Khare, the kirana owner where Shakuntalatai purchases her monthly supplies, stated, “While our old-time customers still like visiting our stores, the younger generation, especially working professionals, prefer to buy things online as they do not have time. Given this changing buying habits, shops like ours will have to adopt an omnichannel approach if we want to sustain our business.”
KEEPING PACE WITH CHANGE
India’s retail market, which was estimated at $688 billion in 2016 is expected to grow at a 14% CAGR to touch $1 trillion in 2020, according to RedSeer Consulting. Shubham Anand, Lead, Retail and CPG of RedSeer Consulting, who wrote a report titled ‘Changing retail landscape in India’, said, “The retail industry has gone through tectonic changes over the past two decades with a slow transition from the unorganized sector to organized one. While in 2016, the organized retail penetration was only 9%, while in 2020, it is expected that 12% will be organized and this figure will go up to 15% in 2025.”
This progress will be propelled by tier-two and tier-three cities, which were previously untouched by the organized retail sector. “Headwinds for the retail sector remain strong, and omnichannel retailers and customer experience-focused retailers are best prepared to withstand this storm,” Anand added. “The growth will be driven from mobile, small appliances and fashion segment in recent years.”
There is an inevitability when it comes to the adoption of omnichannel as a strategy. Yet, retailers in smaller cities are yet to embrace it openly. One reason is ignorance about solutions that they can leverage without much hassle. The other is wariness about return on investment, given that there are many variables that often come with a solution platform.
Talking about this, Satnam Singh, a mobile phone dealer in Jalandhar said, “While I know that I should go omnichannel to sell to more buyers, I don’t know how to identify a tech solution ideal for my needs, other than selling on an online marketplace. Also, I don’t know how I can actually profit by investing in a particular omnichannel product and whether I need another person just to manage it.”
Talking about why retailers in rural markets are naturally cautious about technology adoption, Jitender Singh, Founder and CEO of MiniDukan, explained that the problem lies with the limited access to products that can add value to their business. “Through their interactions on our omnichannel network, we are matching retailers with manufacturers – or vendors – who are capable of providing the correct products. Our experience in this field is, of course, a benefit as it helps create these connections,” he added.
Serial digital entrepreneur, Faisal Amin, too, has encountered several instances, where retailers were ignorant about solutions that could boost their business. Hence, he designed KIRA Smart, a mobile-enabled retail ERP solution for kirana shop owners and SME retailers. Operational on all kinds of electronic devices – from desktops, laptops to mobile phones – it can digitize their business activities – from inventory management, billing, delivery to maintaining a record of customers, etc. The company also provides a free website for a kirana store to help them get online orders from customers.
Similarly, Bengaluru-based ShopX works with kirana shops, mobile store and FMCG outlets across the country, giving them an opportunity to reach consumers through an omnichannel mobile retail format, called ShopX Edge. The company claims to have a network of over 1 lakh retail outlets across 350 Indian towns catering to more than 50,000 populations. In June 2018, it launched ShopXpress to drive its supply chain delivery model that promises to deliver products within 24 to 72 hours.
LEARNING ON THE GO
It is not enough to get smaller retailers to start jogging on omnichannel route; it is necessary to equip them with tools what that will help them sprint. This is where regular training and upskilling becomes pertinent.
After familiarizing local vendors about its platform, MiniDukan keeps handholding them to take their businesses to the next level through customer acquisition. Singh stated, “When we bring a particular retailer on, we have a stringent on-boarding process. There is a local team who helps them with their basic requirements. This usually includes on-boarding of the products, accepting orders and dispatching the correct orders to the local logistics hubs.”
Since majority of mobile phone users in rural India are comfortable with Android, KIRA can be operated on Android-enabled mobile phone. Amin added, “To help understand the application better, a series of tutorial videos have to been made, demonstrating clearly every single feature within the application. Also, our sales team individually visits every store to give the retailers a hands-on experience about the application.”
This explains how over 1000 retailers in Bhopal, Kota and Mumbai have already created their shop profile on the KIRA platform and are operating their business through their mobile applications as well as from their online website.
This might indicate that smaller retailers are yearning to crack the digital code pronto, but that is not entirely the truth. Singh said that brands like his still have to work hard on gaining visibility, creating connect and building trust with their customers. “However, over the years we have managed to win them over and now have individuals who are keen to be associated with us. In fact, we have also started receiving references from them for the new market!” he happily claimed.
Amin pointed out that initially, retailers were hesitant to upgrade from traditional methods of operating their stores to running it all full-fledged on a smartphone application. “Considering that 60% of shop owners are within the 35 to 60 year age group, their adaptability to technology is slim. Hence, it was a challenge to get them out of their comfort zone,” he noted.
However, the younger lot were a lot happier with KIRA and willing shifted their business operations to this digital-first platform. To offer better customer value, they are game to take more informed and data-driven choices, and reap its benefits.