The closure of around 200,000 Traditional Neighbourhood Kirana stores in India during the last year raises alarm and carries significant implications for the country’s economy and inclusiveness and retail ecosystem, especially as the retail landscape shifts towards the organised and digital formats or, in other terms, Quick Commerce.
Significant loss of employment and livelihoods: Kirana stores are predominantly family-run and provide livelihood to millions of small shop owners. There is a dependency in terms of the livelihood of on & average six persons in one such store. It is affecting not only the store owners but also the workers and support staff who rely & depend upon such businesses. You may imagine the impact. It has the potential to disbalance the whole ecosystem and, most importantly, inclusivity, which is important for any country that looks to attain uniformity in the reach or last-mile delivery of development, resources and growth in any economy.
Ripple Effect on Supply Chains: Many local suppliers, farmers, and transporters depend on Kirana stores for sales and distribution. With the closure of these stores, the informal supply chains they sustain are facing serious disruption.
Shift in Consumer Dynamics, Dependence on Large Retailers and E-commerce: As Kirana stores are closing, there is a shift of customers towards organized retail or e-commerce platforms, which is leading to higher prices over time due to decreased competition.
Loss of Personalized Service: Kirana stores are known as community-based stores with personalised service, credit facilities, and customer trust. This experience is difficult to replicate in larger stores or online platforms, potentially alienating customers who rely on these advantages.
Effect on Local Economy and Community Relations: Reduced Economic Circulation: Kirana stores are embedded within communities, reinvesting earnings locally and supporting neighbourhood-level economic circulation. Their closures are limiting local financial flow and reducing microeconomic activity.
Disruption of Social Ties: These stores are integral to community interactions, with store owners knowing customers personally and often offering credit to those in need. In a close-knit social structure, many times, It also evolves as a platform for community dialogue. Their absence is diminishing the social fabric of communities, especially in smaller towns and rural areas.
Increased Dominance of Organized Retail: Market Consolidation: Organized retail and e-commerce giants are dominating the market, resulting in reduced competition. This consolidation might limit consumer choice and even lead to potential monopolistic behaviour in pricing and product availability behaviours.
Pressure on FMCG Companies: Kirana stores account for a significant share of FMCG (fast-moving consumer goods) sales in India. A reduction in the number of Kirana stores would pressure FMCG companies to rely on fewer retail channels, potentially disrupting their sales and pricing strategies.
Digital Divide and Financial Inclusion Challenges: While digital transformation is advancing, many Kirana stores, particularly in semi-urban or rural India, may not have the resources to pivot to online or digitally integrated sales models. This divide could push many out of business, especially as tech-savvy consumers lean towards e-commerce.
Credit Access and Financial Marginalization: Many Kirana stores provide informal credit to their customers, which large retailers rarely offer. The decline of these stores could marginalize those who depend on this credit system, impacting the informal economy and leading to greater financial exclusion.
Decreased Demand for Local Produce: Kirana stores play a crucial role in selling locally sourced produce and goods. Their closure could reduce demand for local products, forcing smaller farmers and producers to rely on corporate channels where they may not receive fair prices.
Rise in Cost of Distribution: Kirana stores are key players in the last-mile delivery of essentials, particularly in rural and semi-urban areas. With fewer stores, the distribution cost may increase as organised retail chains need to invest more in logistics to cover underserved areas.
While the transition towards organised retail and e-commerce has advantages, the potential disappearance of Kirana stores highlights the need for policies to safeguard small businesses.
Initiatives to help Kirana stores modernise, digitise, and integrate with new retail models may allow them to coexist with organised retail, sustaining their role as a backbone of the Indian economy.
It has the potential to disbalance the whole ecosystem and, most importantly, inclusivity, which is important for any country that looks to attain uniformity in the reach or last mile delivery of development, resources and growth in any economy.
If India has to achieve uniformity and, most importantly, inclusiveness, the dying Neighbourhood / Mohalla Kirana Stores must be saved.
