4 minute read 15 Jul 2020
Impact of the COVID-19 crisis on kirana stores

Is digital adoption the new normal for the kirana stores amidst Covid-19?

By Mahesh Makhija

EY India Technology Consulting Leader

Technology evangelist, a facilitator of customer centricity and innovation

4 minute read 15 Jul 2020

The EY ‘Sentiments of India’ survey tracks the impact of the COVID-19 crisis on kirana stores and their evolving status within the urban consumer ecosystem.

Kirana stores have emerged as local saviours during this time of crisis. During the uncertainty, consumers have turned to their local Kirana stores for their requirements.  According to EY’s latest report ‘Sentiments of India – Pulse of the country, Kiranas’  there is a renewed trust in hyperlocal communities with the kirana store emerging as a hub that helped maintain the regular supply of essentials during the lockdown as cities struggle to get back to their normal rhythm. 

The report covers both the impact that the pandemic has had on consumers and its pursuant impact on kirana stores as providers of essentials. The report includes a survey that focuses on insights gathered through 27 qualitative interviews conducted across 12 cities, 5 metros and 7 non metros in India. Some of the key insights from the survey include:

Consumers have a more positive outlook towards their local kiranas and they are quickly becoming a trusted point in the local ecosystem

56% of respondents in metros feel that there has been a positive change in the attitude of consumers post the lockdown. FMCGs, large retailers and financial services companies should recognize that the kirana store is the new local touchpoint and their conduit into the daily life of a trusting consumers.

Consumer preferences have changed with ‘do it yourself’ (DIY) coming to the forefront

With consumers now spending more time at home, we see an increasing demand for specialty food items and DIY items. 79% respondents in non-metros and 75% in metros stated that consumers are purchasing specialty food items and DIY items in unprecedented quantities to the extent that the kiranas are finding it hard to source such specialty food items like baking goods, instant foods, ready mixes, special masalas and namkeens due to stock-outs.

Hyper-localization and change in influencers

The pandemic has led to a renewed trust in the local kirana store with a surge in new consumers visiting the local stores both in metros and non-metros. 79% of respondents in non-metros and 50% in metros state that there are new consumers coming to their store post the lockdown period. These are consumers who would earlier shop online or from supermarkets, are now preferring to buy from local kirana stores to avoid long queues and there is a semblance of trust and traceability.

As we move from now to next and beyond of this crisis, the new level of growth for kirana stores will come from partnerships and symbiotic relationships.
Shashank Shwet
Partner - Customer Experience and Design Thinking, EY India

Consumers have adopted digitisation in payment methods and so has the kiranas

In metros, 58% respondents are convinced with the shift to digitisation due to Covid-19, while 46% respondents in the non-metros still feel that cash is the predominant mode of payment. The survey further highlights that there has been a positive movement towards the adoption of technology with 40% respondents (kirana store owners) stating they want to partner with online delivery and supply platforms as they feel it can help them grow and tide over in these testing times. Another key insight is that consumer loyalty to brands is now in question, providing a window for new brands to replace old loyalties. At least 69% kiranas in the non-metros were able to sell alternative brands to their customers.

The survey also highlights the evolving relationships of the kiranas with various stakeholders. The pandemic has caused the kirana system to evolve from physical sales to digital plane. Kiranas have proven themselves to be both agile and resilient, being able to bear the brunt of an unforgiving pandemic.  Lacking other means, they have created a simplified online journey using chat apps as a medium of taking orders, providing contactless delivery and then receiving payments through digital platforms.

The increased disruption in supply chain and distribution channels has led to a growing acceptance of start-ups and partners which are endeavouring to enable the kirana stores with technology and services. However, the key issue that the kirana stores are facing is that the partnerships come at a high cost and not yet profitable.

Emerging partnerships and symbiotic relationships are the new way forward for kirana stores

Logistics and last mile delivery companies have new opportunity and relevance in this ecosystem, retailers can reach their customers who are now suspicious of entering large crowded spaces, through kirana stores. FMCGs must relook at their value chain based on changing consumer needs and financial services should recognize that the kirana store is the new hyperlocal touchpoint to provide secondary services like insurance, KYCs, and cheque deposits.

The survey, thus, focuses on how fragile human relationships evolve in the current situation and how these evolving situations challenge loyalties, long established behaviours and the resulting digital awakening.

Summary

The positive tilt in favour of the Kiranas in the minds of consumers, collective purchasing via societies and resident welfare associations and close association with digital partners is likely to continue.

About this article

By Mahesh Makhija

EY India Technology Consulting Leader

Technology evangelist, a facilitator of customer centricity and innovation