In India, Kiranas have been the original quick-commerce solution for decades now. Whether you need a sachet of shampoo or a packet of sliced bread, the friendly neighborhood store has been a dependable resort. Kirana stores keep a larger number of SKUs, a wider product mix, and offer better prices to a shopper.

 According to a survey by Snapbizz, smart Kirana stores are the best proposition for the shopper not just in terms of order fulfillment but also in terms of prices.

Online orders and home delivery are standard retail terms for Kiranas and e-commerce. Kirana, on the other hand, has been doing it for a long time when it comes to financing and receiving payments over time. Many have multigenerational and lifelong relationships with their customers and that level of stickiness is difficult to imitate. Q-commerce offers 500-2,000 key SKUs but may struggle to enhance unit economics with small orders, and centralized stocking makes changing the product mix difficult. Additionally, they require high-density regions to thrive. Kiranas perform successfully even in low-density locations due to their small order baskets and inexpensive overheads.

“Smart Kiranas are new-age entities that offer speed, efficiency, and efficacy of using digital solutions while offering the traditional advantages of a quick delivery, personalization, financing, and speedy response to customers. Q-commerce will find that Kiranas are no pushovers, and instead of competing with them, they could leverage modernized Kirana stores for last-mile delivery,” Prem Kumar, Founder & CEO, Snapbizz said.

Q-Commerce v/s Kiranas

According to current estimates, the quick commerce industry is projected to grow 10-15x over the next five years. Today’s customers are digital-savvy and like the convenience and having more options at their fingertips - at the same time, neighborhood store owners offer an extra degree of trust that no amount of digitization can replace.

The neighborhood Kirana stores and vegetable and fruit vendors have been a vital component of Indian retail for millennia, serving about 90 percent of India's 1.3 billion population. Apart from delivering the monthly grocery list, they are also the last-minute and last-mile suppliers for Indian households. None of this has changed, despite the fact that deep-pocketed e-commerce businesses are focusing on last-minute deliveries.

Previously, e-commerce had the advantage of presenting a wider range of products. However, Covid-led shifts in consumer purchasing behavior have now led to Kiranas adopting digital solutions as well, making them more competitive and integrated with other ecosystem stakeholders.

“Kirana stores are the veterans in this game. Instead of replicating small retail, new-age Q-commerce may be better served by collaborating with the already enormous infrastructure of Kirana stores, where one can profit from the other. While Q-commerce brands have a larger reach and more budgets, Kirana boutiques have stronger selling skills and a more personal touch. They may work together to access underdeveloped locations and become true one-stop shops for Indian buyers,” Kumar noted.

Like e-commerce, quick commerce shall have limited success (primarily, among Tier-I and-II towns and amongst millennials and Gen-Z users). “They have to find alternate revenue sources in order to stay afloat. Leveraging data to drive sales of high-margin deals can’t be ruled out. When the market matures, dark stores of quick commerce players can be replaced by large Kirana, a move Jio Mart is already undertaking,” Ashutosh Verma, CEO, and Founder, ANVI asserted.

Empowering Kiranas

Kirana stores are the concierge of the household rather than suppliers of groceries. Q-commerce claims to be fast, but Kiranas, especially smart digitized stores, are fast, have more SKUs, a better product mix, and a better value proposition. Various platforms are facilitating Kirana stores to digitize their operations.

For instance, udaan has built robust capabilities across the retail value chain — supply chain, sourcing, lending, and technology — to solve the problems faced by small retailers across the country who cater to over 90 percent of India’s retail consumption.

“Over the last five years, we have invested and built huge capabilities — daily delivery to over 1,200 towns and cities, delivering over 7,000-8,000 tons of products daily on our network, offering the best quality and a huge variety of products to Kiranas across Bharat, offering trade credit and enhancing the experience of retailers with deep customer insights,” udaan spokesperson stated.

Similarly, ANVI is empowering Kiranas by equipping them with an easy-to-download neo bank account along with a plastic card that can be directly loaded with cash along with smartphone-based payment acquiring capabilities.

“For Kiranas, this eliminates the need to open a bank account, take an expensive merchant discount led Point of Sale Device or bank account linked UPI QR. It’s everything a Kirana store needs to do business and avail cheap credit in one easy-to-use app,” Verma said.

The company provides easy and cheap credit to stock up inventory using its Artificial Intelligence backed 3-1-0 platform (3 minutes for a Video Interview conducted by an AI synthesized loan officer, 1 second for AI engines to disburse the approved loan on the provided ANVI card, and 0 paperwork).

To achieve significant financial inclusion, Snapbizz, too, delivers embedded, relevant, and holistic financial solutions not only to small merchants but also to their ecosystem partners on both the demand and supply sides. Using customized digital solutions from Snapbizz, Kiranas have improved their inventory management, and billing systems, made larger online catalogs available to customers via apps, as well as used predictive analytics to identify customer preferences.

“Our products not only assist merchants in obtaining working capital in a cost-effective and timely manner but also assist lenders in reaching out to them and providing them with information on the merchants' financial health. What distinguishes our proposition and perspective is that we map store performance variables such as media basket size, footfall, goods, stock turnover ratios, and consumer profile against similar store clusters to deliver continuing meaningful scores and alerts,” Kumar added.

The Future Ahead

Quick commerce brands are a relatively new entrant into the e-commerce space, which is why it’s too soon to say how far customer sentiment will shift in their favor. What is certain, however, is that Kirana stores are currently doing much better when it comes to small, daily purchases.

The Indian retail market is estimated to be a $1 trillion market opportunity of which food and grocery constitute 65 percent. Despite a huge market opportunity, about 93 percent of the market is currently unorganized and served by over 20-25 million Kirana stores across the country.

“With a large addressable market, we foresee the trend to continue given the inherent advantages that traditional Kirana stores offer especially across Bharat (Tier-II and III cities). We have always believed Kiranas will be integral for everyday purchases. The pathway to success is to further leverage the B2B e-commerce model as more retailers and Kirana stores pivot to digital to serve customers,” udaan spokesperson said.

“We did a recent study where we found that out of a few daily-use items on the average shopper’s bill - such as spices, handwash, cooking oil, and biscuits — Kirana stores were able to supply 100 percent of the items while Q-commerce stores could only do 20-26 percent. Additionally, the Kiranas were the ones that offered better value for money on a lot of the items. This may change, of course, as Q-commerce brands expand their offerings and take advantage of unit economies that can bring down bill value. What is likeliest, on the whole, is that both models will bring their unique offerings together and serve Indian customers in new and improved ways while retaining the familiarity that makes such a difference,” Kumar concluded.