Kirana - India's Neighborhood Stores

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September 2012

The Test of Time

India's retail industry is steeped in tradition, with a history of trade stretching back thousands of years. Remarkably, this tradition lives on today, thanks to the country's ever-present kirana stores. From as early as the Mughal empire (1526-1757), kirana stores have been a dependable source of supplies and, amazingly, still play a significant role in modern Indian retail.

What's in a Store?

The literal translation of 'kirana' is 'grocery', which is what these stores mainly sell. Normally run as a family business, they are India's equivalent of mom and pop stores, ranging from as little as 25 to 400 square feet in size. As well as employing family, kirana storeowners also hire individuals from their native state - this shared regional language creates a welcoming atmosphere for customers and a more productive work environment for employees.

But while Kirana stores mainly deal with food and grocery, they also offer a variety of branded and non-branded items, with greater emphasis on stockpiling low-priced, dry food goods that ease the need for cold storage. The stores themselves are easy to set up and require minimum financial investment. And as a business grows, the traditional method of expansion is to buy and merge neighbouring stores, creating the impression of a large supermarket.

The Kirana Touch

Because they mainly operate in residential areas, most kirana storeowners grow close relationships with their clientele - a solid foundation for customer loyalty. Given that the majority of Indian customers prefer personal interaction to self-service, kirana stores tend to fair much better than organized retail in this regard. Owners will even go to the extent of making a special order for a single item, often for just one customer. Also, many offer free home delivery and run simple credit systems that are often little more than a mention in a notebook.

Your Local Kirana Means Business

Don't be fooled by their appearance, though. Access to foreign brands through wholesale traders such as Bharti-Walmart, Metro, Carrefour and others, means kirana stores are now able to extend their offerings, especially in the FMCG category. With product cost relatively low for bulk buyers, storeowners benefit from huge margins that often rival those gained from national brands. What's more, kirana stores now have the benefit of new digital portals such as Aaramshop that provide even greater opportunity, allowing customers to make online orders.

On a national scale, kirana stores contribute to a large percentage of retail sales in India and play an important part in the country's economic growth, accounting for the employment of over 39.5 million people. Incidentally, this is one of the key factors that fuels opposition to allowing FDI in multi-brand retail. It should be noted, however, that the organized retail market is growing at 35 percent, while unorganized retail - like kirana stores - is at just 6 percent. Given India's population rate, this market growth can become a deciding factor in allowing FDI in multi-brand retail.

A Kirana Conclusion

There's no doubt today's kirana stores are changing, moving with the times and adapting to be better than the competition. Helped by smartphones and social media, in addition to the obvious appeal of convenience, trust and service, they might be able to hold their own against the big retail chains after all. One thing is clear, though - kirana stores are here to stay.