Infrastructure

FNB News – Transformation of kirana stores essential to India’s economic growth: TRRAIN

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The transformation of just 10 per cent of the 13 million traditional grocery retailers in India, known as kirana stores, could boost retail consumption by more than 5 per cent and generate approximately 3.2 million new jobs in India, according to a new report from Accenture and Trust For Retailers and Retail Associates of India (TRRAIN).

Titled ‘Transforming kiranastores to drive economic growth’,the report outlines a strategic approach for unlocking value by transforming kirana stores through a seven-stage framework that focuses on store location and layout; technology; store funding; and product placement, among other factors.

Piyush N. Singh,unitlead, India Market, said,“The rapid changes in consumer behavior and acceleration of online commerce, mandate that the Indian retail ecosystem transform to meet emerging consumer needs. As the lifeline of the Indian retail sector, a digital led transformation of Kirana stores can result in significant economic gains, including a nearly 1 per cent employment growth in India. The transformation process needs to be expedited with comprehensive policy intervention, technology support, and, most importantly, collaboration between key ecosystem players.”

Sameer Amte, managing director, Accenture’s Strategy and Consulting business in India, said, “The modernisation of kirana stores will not only help improve consumption and local employment but will also have a positive impact on the retail ecosystem in terms of new growth opportunities. We believe with an improved, intelligent supply chain infrastructure, easier access to technology and funds, these stores can redefine the future of the Indian retail landscape.”

The report provides a framework for the modernisation of kirana stores, focusing on six key areas:
1.    Location assessment — essential to identify the customer profiles, demographic and social parameters, income class and external drivers such as competitors.
 
2.    Funding assessment — considers the in-store capital expenditures and the cost of the space; if the store is rented, the rent should not be more than 3 per cent of sales or one-fifth of the gross profit, whichever is higher.
 
3.    Store layout — influences the customer’s perception of the store; ideally, 75 per cent of the space should be devoted to sales, 10 per cent to office space and 15 per cent to storage.
 
4.    Technology — modernisation requires a fully integrated retail enterprise resource planning software solution and a point-of-sale machine along with digital wallets registration.
 
5.    Product placementpractices — can be improved by classifying products inside the store into three categories: destination, convenience and impulse.
 
6.    Customer engagement — can be improved with promotional activities and discount offers.

B.S. Nagesh, founder,TRRAIN, said, “India is a nation of shopkeepers, and kirana stores play a crucial role in the Indian retail sector, which in turn contributes nearly 11 per cent of the nation’s gross domestic product and 8 per cent of its total workforce. Kirana transformation will not only help store owners improve profitability but also add value to the customers and overall ecosystem. This report puts the spotlight on the pivotal role of the Kirana stores in the community and the impact of their transformation not just on them and the industry but also on India as a whole. We believe the report will serve as a foundation as we march ahead in our journey to impact millions of kirana store owners in India.”

The report also mentions the importance of building an enabling ecosystem for the transformation of kirana stores and promoting inclusive development. Among the report’s recommendations:
 
1.    Fast-moving consumer goods should implement innovative retailing techniques such as kirana-specific merchandising, customised programmes for product trials and assortment.
 
2.    E-commerce and cash-and-carry retailers can leverage kirana stores for last-mile delivery in remote places and in turn support them with digital technology such as digital payment solutions at the point of sale.
 
3.    Intermediary players such as wholesalers and logistics providers need to modernise to fulfill the needs of the transformed retail ecosystem.
 
4.    Retail associations and non-governmental organisation (NGOs) should support the education and skill-building of kirana store owners and collaborate with government bodies to facilitate the modernisation process at scale.
 
5.    Government can enable transformation with policy change to stimulate growth in consumption, gross domestic product (GDP), tax contribution and employment, also providing the impetus for other stakeholders to play their part.

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