How India’s 12 million kirana stores becoming cornerstone of growth plans of Reliance Retail, Amazon, Flipkart

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July 24, 2020 7:30 AM

In a corporate restructuring exercise, announced on Thursday, Walmart India will be housed in Flipkart Wholesale, which will launch marketplace operations in August, starting with services for the grocery and fashion segments. 

Flipkart now proposes to supply goods to kiranas leveraging the expertise of Walmart India — a cash-and-carry business.

India’s 12 million kirana stores are becoming the cornerstone of the growth plans of retailing giants Reliance Retail, Amazon and Walmart Inc-owned Flipkart.  They are increasingly teaming up with mom-and-pop stores to supply merchandise and also to help digitise their operations, empowering them to record customer preferences and stock SKUs accordingly. Moreover, they’re enabling buyers to place orders online at their neighbourhood stores, and at some point, plan to help the stores deliver the goods.

As they transact on e-marketplaces and dabble in analytics, kiranas are transforming from pure brick-and-mortar entities to quasi-digital businesses and in the process changing the character of the country’s $650-billion retail industry. Experts reckon that powered by the involvement of these ubiquitous outlets, the country’s e-retailing business could grow multi-fold to $100 billion very soon.

While Reliance Retail is betting on its alliance with WhatsApp to give it an edge, Amazon is already enabling small kiranas to sell their goods on their e-marketplaces. In fact, four years back, Amazon had in a pilot project tied up with local groceries and modern retailers such as Big Bazaar to deliver groceries in Bengaluru.

Flipkart now proposes to supply goods to kiranas leveraging the expertise of Walmart India — a cash-and-carry business — that has been servicing kiranas for more than 10 years now.  Walmart India runs 28 best price shops and caters to more than 1.5 million customers kiranas and MSMEs.

In a corporate restructuring exercise, announced on Thursday, Walmart India will be housed in Flipkart Wholesale, which will launch marketplace operations in August, starting with services for the grocery and fashion segments.  Last week, Walmart Inc topped up its investment in Flipkart, which it bought out in 2018 for $16 billion, by a chunky $1.2 billion. Given Flipkart’s relationships with manufacturers, big and small, it should have no problem sourcing merchandise, experts said. The latest initiative is aimed at retaining the customers of Walmart India and not losing them to Amazon and Jio.

Satish Meena of Forrester Research pointed out companies like Amazon, Flipkart and Jio not only want to support kiranas with back-end infrastructure but also want to deliver supplies so that kiranas need not rely on local distributors. Meena believes Walmart’s expertise in sourcing and Flipkart’s in last-mile delivery can be a good combination.

Reliance Retail announced last week it was planning to expand its range of merchandise — that would be supplied to small stores — to include electronics, fashion and healthcare products. The retailer runs a pan-India network of 12,000 stores that includes neighbourhood outlets Reliance Fresh and supermarket Reliance Smart. So far Amazon Inc has committed over $6 billion to its India operations and experts believe the US-based firm will unravel more strategies to grow its business here.

Flipkart said in a statement on Thursday: “Whether in grocery, general merchandise or fashion, kiranas and MSMEs will have one-stop access to an extensive selection of products with attractive schemes and incentives, supplemented with data-driven recommendations for stock selection, delivered through a fast and reliable network to drive greater efficiencies and better margins.”  Flipkart Wholesale will be led by Adarsh Menon.

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