With close to 12 million Kirana stores in India, considerably one of the untapped markets in India opens a tremendous opportunity for technology companies. The boom of e-commerce and supermarkets has not impacted the market share of Kirana stores in India and they continue to contribute to almost 96% per cent share of the grocery retail business while keeping in mind that the $700 billion retail industry is considered to be the lifeblood of Indian consumption that still is unorganised, reports say. The unorganised retail sector can be tapped with low-cost mobile-based point of sale (mPOS) solutions that enable the merchant to generate bills and manage his inventory. This opens a wide market to IT companies in India and the success factor is undoubtedly high for the following reasons;
Real estate is still a huge challenge for supermarkets in India and the massive capital involved has a bearing on their pricing and profitability. On the other hand, the Kirana stores manage with fewer SKUs (Stock Keeping Units) in a smaller space. As well as, the reach to the local consumer community helps them to utilise the limited storage space and turnover their goods in a smarter way. The small shops in the precinct stock only what is required and procure as per demand, from a wholesaler; thus the wholesaler acts as a warehouse for them. Most importantly, it is to be noted that the bigger entities cannot beat the Kirana store’s knowledge of what local community consumes.
Impact of eCommerce in the Indian market
Urban India has shifted towards e-commerce tremendously and India is now among the top investor focused nation globally. Most of the e-commerce startups have accumulated huge investments in the last years. But, e-commerce penetration is just about 17-20% and worth about $84 billion compared to $700 billion retail sectors. And as per reports by various management consulting agencies, the average growth rate of the e-commerce sector is much lower compared to other markets.
With the introduction of 4G network and low-cost smartphones, it is easy to bring effective solutions to create a sustainable business structure at the store level. As internet has become available to all economic levels in our nation at lesser cost, a basic mobile based point of sale solution along with sufficient basic training will enable the local merchant to get onboard towards digital solutions.
GST Implementation is another major driving force behind the modernization of Kirana stores, as now it has become mandatory to have GST bills made for each sale made. A GST enabled billing solution can make the merchant's job easier and help them to manage their account for billing and taxation purposes.
Supply Chain Management
Grocery and food retail is a low margin business sector and the investment to develop supply chain infrastructure is a challenge for companies. Especially, the companies that require specialised infrastructure and cold chain storage facilities for food retail business.
Hence the companies must depend on the local players to create the infrastructure, so that their products can reach their end-consumer, making sure that the quality and freshness is maintained. The cost of an available point of sale solution in the industry starts between Rs. 25,000 to Rs. 40000. An average Kirana store merchant cannot afford a solution at this price range and the overall infrastructure requirement and complexity makes it further more difficult. This is where product focused mobile application companies can make an impact in the digitalization of Kirana Stores in the country with affordable and easy mobile solutions. Companies must focus on design and develop a cloud-based point of a sale solution that doesn't cost more than Rs. 5000 and focus on volumes in the long-term to cover the cost of the solution. The product must focus on;
- Simple UI that enables the user to easily access the features, even for an illiterate merchant with a picture representation of functionalities.
- Less memory usage
- Cloud storage, data must be stored in secured cloud services
- Localization — multiple language support for based on merchant preference
- Offline capability, the system must be functional even when there is a network issue and keep data offline.
Most Kirana stores would be interested in procuring a solution for tax compliant bill generation POS machines to keep their account up to date. Inventory updation might not interest most merchants, on the POS solution, as they might procure materials either daily or weekly from a wholesale shop nearby. It will colossally benefit the users, if the system developers can place focus on developing functionalities that allow the merchants to make payments for their purchases, make payments for utility bills etc. through the same mobile application thereby allowing the user to manage both debits and credits through the same system. This will bring more users to the digital solutions and payments platform; thus creating a transparent business ecosystem in future. Companies that develop the software should support users with cloud services and customer support services to make the business sustainable.