Even while e-commerce platforms such as Amazon, Flipkart and hypermarkets such as Reliance Fresh and Big Bazar give stiff competition to mom and pop stores, the neighbourhood stores continue to thrive as several factors such as vicinity play out in favour of Kirana stores. 10 years ago, it was expected that “Small neighbourhood stores would be threatened with increased competition from super/hypermarkets and e-commerce,” but now, “Small neighbourhood stores continue to be relevant owing to familiarity, proximity, monthly credit,” a joint report by BCG-RAI said this week. On the other hand, online shopping has the pull of reasonable prices and promotions while hypermarkets continue to attract crowds because of a better shopping environment and ambience.
Further, while online shopping platforms are popular for categories such as food delivery and leisure and travel services, purchasing of mobiles, electronics, apparel and staples is still dominated by offline mediums including modern trade and general trade, according to the report. Packaged food, fresh food, health care and FMCG have a largely offline play.
Mix and match retailing
Multi-channel selling is also gaining momentum with players experimenting with both online and offline selling. Online platforms are extending physical presence and offline only players are ramping up their e-commerce portfolios to build a complementary multi-channel presence. “A leading Indian beauty retailer, as part of its offline expansion, has two types of stores — one houses luxury premium brands and the other carries a portfolio of brands that trend on its online platform,” the report said. “Some leading apparel players in India have established their online business and are actively looking to scale this channel — some even creating their own online-only portfolios,” according to the report.
Meanwhile, the Indian retail is likely to touch $1.3 trillion by 2025, levered by multiple structural, socio-demographic and economic drivers. The retail market is witnessing a CAGR of 9-11% from 2019.