Local neighbourhood stores (mom-and-pop stores) have always been an important hub for community exchanges in India. With nearly 1.5 crore corner stores, locally known as Kiranas, across the country, they account for about three-fourths of India’s consumer goods market as per various estimates. Local stores, often family-run, are a haven for Indian shoppers as they meet their emergency, fill-in, and stock-up requirements. They also evoke a sense of nostalgia and a yearning for familiarity.
Until a few years ago, and even today, a standard local store would be cramped with endless assortment of consumer goods. The store manager would pull down the shutters sharply at midnight and, after that, spend hours tallying the day’s sales scribbled in his khata, or ledger. But things have changed, it is not uncommon to see pencils from the back of the ear disappear and compact POS machines taking their place; handwritten receipts are quickly giving way to printed ones and digital notifications.
The transformation
When the pandemic hit, the world around us turned upside down. Amidst on-ground restrictions, a lot of shutters were down, but a transition was at work with lakhs of local stores thinking of going digital—by selling online or taking orders on social media apps, organising deliveries and taking payments through digital instruments. We saw tens of thousands of local stores from across India come online on Amazon to sustain and grow their business and they continue to do so. While many may have hesitated to pivot from the conventional ways of business at first, the situation accelerated a shift that would have arrived eventually.
In parallel, the digital payments landscape has undergone a dramatic transformation. The Unified Payments Interface (UPI) has been a game-changer for digital payments in India and a precedent-setting innovation for the global fintech sector. According to the National Payments Corporation of India (NPCI), UPI transactions hit a staggering Rs 18.41 lakh crore in January 2024, marking a 42 per cent increase year-on-year. In 2023, the platform saw 11,765 crore transactions worth Rs 182.25 lakh crore, reflecting a 59 per cent increase in volume and 45 per cent in value compared to 2022.
The way customers shop and make shopping decisions has also transformed dramatically. They expect a seamless transition from one channel to the other with an experience that is personalised for them. To address this evolving customer behaviour, local stores—big and small—are already looking at a range of tech solutions. The government and other stakeholders are helping create an enabling ecosystem for technology adoption by local stores. By paying closer attention to customer behaviour, local stores can use digital tools to craft strategies that better cater to growing customer needs. And this is by no means a question of offline vs online. It is about the digitisation of dukaans in a way that they can operate across channels.
Retail 4.0
While the benefits of digitisation for local stores are well documented, the need to mesh physical experience with digital convenience cannot be exaggerated. Strengthening all customer touchpoints and breaking geographical barriers will help retailers meaningfully connect with customers, forge lasting relationships to build customer loyalty, and acquire new customers. By investing in systems where customers can order via the Internet, social media, or through an app, local stores can provide their customers with multiple avenues to return.
I was at a couple of retail industry events recently, and interestingly, the question on how to create the best strategies to serve customers in the world of online and offline in both the forums had the same answer – a combination of the two.
The government of India has set a vision of India becoming a $1 trillion digital economy by 2030. The retail sector itself is pegged to double to $2 trillion in the next 8-10 years and notably, a lot of this growth will be powered by digitisation, whether it is e-commerce or integration of technology in stores. This means that local stores will need to be equipped to leverage technology and turn it into actionable insights.
Ultimately, it will be all about delivering better customer experiences. To help local stores trade confidently, there are ready-to-roll tech solutions available for inventory procurement, inventory management, credit access, payments, etc. They can choose to invest in either one or a host of these tech solutions to better manage cash flow. Many store owners have already taken the first step towards digitisation by adopting UPI or digital wallets.
Digital Dukaan ka time hai
So what next? Local stores must think holistically about their digital transformation journey. They can start by identifying business functions that have significant pain points that are critical for their survival and growth. While going online can be the starting point, focusing on emotional intelligence, and investing in plug-and-play tech can help them identify and solve customer concerns. These stores have the advantage of knowing their customers more deeply, and if they leverage technology to serve their customers and grow their business more, that will perhaps be the secret sauce.
In a nation of shopkeepers, local stores are the true unsung heroes of the Indian neighbourhood. To lean into the brave new world of digitisation, the customers will still be centre stage, and so will embracing technology. The big lesson? Think seamless customer experience, adopt digitisation.
Ab Digital Dukaan ka time hai!
Bharadwaj is Secretary General FISME, and Somareddy is VP Seller Experience Emerging Markets and India Exports at Amazon