Will e-commerce deals like Flipkart-Walmart wipe out the neighbourhood kirana stores?
Indian traders are up in arms against the $16 billion Walmart-Flipkart deal. Their grouse is that the deal could severely impact the livelihood of small traders (kirana stores). There is also immense scepticism about the two American retailers, Walmart and Amazon dominating the Indian retail scene. With the global biggies (which have deep pockets) coming in, the local retailers definitely don't have a level playing ground. If Walmart or Amazon decide to sell a shampoo worth Rs 100 at Rs 75, the local kirana stores will certainly not be able to match the pricing and would eventually lose out. However, Amazon and Walmart are talking about partnering with the kirana stores. Amazon has a programme called 'I Have Space', where it partners with local kirana stores to deliver products to consumers within a two-four kilometre radius. It has a network of 17,500 stores in 225 cities across India. But retail experts feel that this is mere rhetoric. "I can't see a business model where one can integrate such a disintegrated kirana network," points out Arvind Singhal, Chairman of retail advisory company, Technopak. "They will step into the kiranas as distributors and then step into the shoes of a manufacturer through their private brands. They will give technology and see what the Kirana is selling. They will start taking customer data. Finally they will do consolidation and boot a few people," points out a senior retail industry expert. But it will surely take Amazon and Walmart a while before they actually impact the business of the neighbourhood grocer. There is also no denying that no organised retailer understands the consumption patterns of a particular locality better than the local grocer. "You cannot beat a kirana store's knowledge of what the local community consumes. Looking for a Maharashtrian lonche or Tamil manathakkali vattal, you are more likely to find it in a neighbourhood store. Not only the variety of local assortment, but usually they provide free delivery in less than 60 minutes with a handy credit facility for regular customers," observes Arvind Mendiratta, MD & CEO, Metro Cash & Carry India. Mendiratta says that the kirana stores still account for around 92 per cent of India's grocery retail trade. "They are an integral part of the entire independent business eco-system and they will still stay relevant and thrive." It's high time the Government steps in, points out Kumar Rajagopalan, CEO, Retailers Association Of India. "There should be schemes for smaller retailers which would allow them to access funds at a much better rate. We have not allowed for small kids to grow but allowed the outsiders to come and fight with the small kids. We have small kids fighting with large professional wrestlers from outside of the world. That's the unfortunate situation." Mendiratta of Metro believes that kirana store owners need training. "In order to stay relevant, kiranas/traders need to embrace technology to cater to the changing and evolving needs of the customers in their respective catchments. Kirana stores need to elevate and convert to the digital mode in order to stay relevant to the modern consumer by offering value proposition to them." The government till date hasn't allowed FDI in multi-brand retail. It's constant excuse has been that it can't afford to compromise with the interest of the local traders. But likes the Walmart are already here through e-commerce. "We told our retailers that you are poor, we will create protectionism policies for you which effectively is not protectionism. It was a policy that allowed leakages, it allowed for some guys to come in a roundabout manner and create competition at a large scale," points out Rajagopalan. It's high time the government looks into its archaic and highly confused retail policy.