Neighborhood Retail – Getting crowded in there
Among other behavioral adaptations that COVID-19 has triggered, one change that has happened at a rapid clip is the digitization of India’s local retail ecosystem – reaffirming the ‘survival of the most digitized’. More than a million Kirana stores went digital during COVID-19 pandemic in 2020. When the organized retail system labored to halt during the lockdown, and the retail distribution machinery became defunct, the local Kirana stores came to the rescue of the last-mile customers.
The hyperlocal retail pulls
With one of the largest ‘young and affluent’ shopper communities in the world, India, with a population of 1.3 billion is witnessing a fierce competition to acquire the customers currently affiliated to the neighborhood Kirana stores.
The Indian online grocery market is estimated to reach $18.2 billion in 2024 from $1.9 billion in 2019, expanding at a CAGR of 57%. The sector contributes 10% to India’s gross domestic product and accounts for 8% of India’s employment, according to Invest India, the country’s investment promotion arm.
Road to neighborhood
The global and national behemoths have got the pulse of the Indian grocery market and are jostling for their share in the neighborhoods. More than 60-70 per cent of the grocery bills in India are below Rs. 250, and it is only the neighborhood Kirana stores who can service orders of that value.
- Fabmart.com (later rebranded Indiaplaza.com) in 1999 to the now rebranded More –> Local Grocery
- Junglee.com (2012) now Amazon –> Local Grocery
For the big players, shifting the strategy from global > national > local > hyperlocal is not just understanding the number of smartphone users or the subscription volume for a digital payments app…
Tamarind vs Mango Powder
It is getting into the skin of local consumption and demand economics…A grocer in Bangalore or Chennai would keep ‘Tamarind’ while one in Delhi or Calcutta would plan for ‘Mango powder (Aam Churna)’ – for a similar purpose in neighborhood kitchens.
Its more of a synchronized dance between the overarching corporate strategy and the hyper-local approach – at a corporate level the head-office, store operations and the supply chain system need to match their steps.