India is a big market with over 12 mn Kirana shops, which constitutes about 1/3rd of the world driving over $400 billion worth of food and grocery sales in the country. These Kirana stores are the second largest employment generator and thus the backbone of the economy alongside agriculture. Over the decades they have expanded their combined reach to every nook and corner of the country and cater to every income and demographic segment. With their strong customer connection, easy demeanor, easy return/ refund, etc. they are favorites for grocery purchases across the country, presiding over a share well north of 80 percent.

Industry experts are envisioning these Kirana stores as the next harbinger of growth even when customers are going ‘phygital’, largely due to their age-old customer trust, and their ability to reinvent themselves towards building a stronger connection with the end customers. They have enthusiastically responded to newer models of sourcing e.g Cash-and-Carry and eB2B. On the other hand, these new-age models have also reciprocated by going beyond their core offerings either by building in-house capabilities or partnering with best-of-breed industry partners, towards delivering a greater value to the Kirana shops. For example, industry leader Metro Cash and Carry has partnered with fintech specializing in offering credit facilities to SMEs in India, and together continuously innovated towards helping small Kirana shops in maximizing their earnings and thus instilling confidence in them to compete with other retail formats in the country. 

This has led to a very important change in the ecosystem since these small Kiranas are no longer dependent on non-banking entities for their working capital needs. They can instead easily secure a credit line from Buy Now Pay Later B2B fintechs and use it for their purchases from Metro across product lines. 

They are helping in digitalizing, remodeling, and modernizing Kirana stores to help grow their revenue and profitability; helping them with efficient utilization of inventory, data analytics, targeted promotions, and B2C app to grow their demand. Also, leveraging the expertise of innovative partners who provide easy credit facilities to help hypermarkets with their working capital efficiency. In essence, the digital interventions are providing Kiranas the requisite value service, both on the supply and demand side, in order to help them grow their top line, bottom line, and cash flows.

What are the Advantages? 

Creating a Level Playing Field - Metro and ePayLater have been supporting the Kirana shops migrate to better and more efficient practices, which in turn allows them to focus on key business aspects such as end customer management. Kiranas not only can get the widest assortment of products under one roof, but also a consistent and interest-free credit window of 14 days across all their purchases. So, they can thereby streamline procurement, avail volume discounts, and are no more constrained by the working capital – the issues which have been balking their growth and creating impediments in competing with larger and organized retail formats. In fact, Kirana stores can now explore newer products and combine them with their unparalleled understanding of the neighborhood, towards gaining an edge over the competition.

Impact of Technology - Such partnerships have helped Kiranas realize the benefit of leveraging technology and information as a differentiator, and this has triggered a chain reaction in the adoption of credit-based purchases. A study by ePayLater on the same unpinned a whopping 225 percent jump in purchase volume by Kirana shops on an average after the facility was made available to them. Further, their purchase frequency has jumped by 2X, and Average Order Value (AOV) by 3X over the past 2 years.

Shift to Digital - In order to meet the phenomenal market response, to cater to a wider set of Kirana shops, and to help Kiranas maintain business continuity during Covid times, Metro and ePayLater decided in 2020 to gravitate towards digital channels of enabling commerce and credit. The entire credit journey starts from signing up to transactions and mostly these are embedded in a simple app within 5 minutes leading to  100 percent digital transition at the end of which Kirana stores get access to up to 25 lakh worth of credit lines and also use it instantaneously. This model served as a boon for Kirana shops who saw a spike in demand during Covid times, but supply lines were disrupted as sales executives could not come to visit. The results have been very encouraging. The number of Kirana shops registering per month has crossed 100K now, while the overall volume of business has grown 30X in the last 18 months. 

Road Ahead 

Buoyed by the success, the organizations have vowed to double down on their commitment to support Kirana stores and create a healthy ecosystem of mutual growth – complimenting offline and online. Each of these stores touches the lives of at least 50-100 households. Thus, any solution which helps in improving the efficiency, productivity, and profitability of the segment, directly impacts millions of lives. Companies such as fintech allow both the sellers and buyers in the last mile of the supply chain to do business more efficiently and unlock value which was till now lost due to the cash dependence and hyperlocal nature of the business. So ‘Buy Now Pay Later’ is a boon for B2B customers in India.