PremiumNeighbourhood grocery stores, having led the growth for fast-moving consumer goods companies last year, are back in the spotlight as consumers avoid large stores and online deliveries take longer than expected.
Kiranas have undergone a transformation over the last year in choosing stock-keeping units wisely, and switching to technology for payments, inventory management and home deliveries, FMCG companies said. However, restricted store timings in large cities remain a challenge, said companies.
As covid-19 cases surge, consumers are avoiding large stores or driving long distances to fetch orders. “Local kirana stores have come back to reclaim their market space and visibility. Adapting better to the needs of local customers with a small pool of shop assistants and delivery boys, they have been able to find their groove even in these difficult times. This is unlike modern trade, which is struggling to meet the demands of customers," said Manish Aggarwal, director, Bikano, Bikanervala Foods, a packaged snacks company.
Kiranas and FMCG firms have also stepped-up digital interventions in the past year. These include tele-calling to place orders and utilizing services offered by business-to-business payments, delivery, and inventory management companies.
“There’s a silent revolution going on in kiranas. A lot of them have moved from closed-format to open-format. They have invested in digital and better stock-keeping units. In the kirana ecosystem, there’s transformation through business-to-business platforms, cash and carry companies etc. Many firms are also investing in the modernization of kiranas," said Saugata Gupta, managing director and chief executive officer at Mumbai-based Marico Ltd. Gupta said more local shopkeepers are now taking orders on WhatsApp and delivering them home.
Nearly two-thirds of kiranas were shut during the lockdown last year, as per data by retail intelligence platform Bizom. In April this year, only 12.6%of kiranas were shut. “In this wave, FMCG product availability at kiranas is steady and helping meet needs while e-commerce and modern trade struggle. Data scanned for April suggests stocking in kiranas that were open had soared to more than double the average stocking value last year," said Akshay D’Souza, chief marketing officer, Bizom.
Sunil D’Souza, MD and CEO, Tata Consumer Products Ltd (TCPL), said the company expanded its reach to kiranas, given the patchy nature of lockdowns as well as restricted timings for essential stores in some states. “By channel, we’re seeing a repeat of what happened in the first wave, where we see lower footfalls in modern trade, e-commerce is starting to accelerate and a bit of a tweak on the kiranas because last time the kiranas saw rapid offtake," D’Souza said. This time, like most others, TCPL is adjusting its supply chains to make sure it can tackle those restricted timings.
He said that e-commerce platforms probably did not expect such a spike in orders, which led to either stock-outs or delays in delivery.
A spokesperson for online grocery retailer Grofers said the company has been ramping up both its physical capacity of stocks and workforce. “We are not facing massive issues with deliveries as such, as yet. While deliveries for some items, within some areas, are happening as fast as in two hours, most others are happening within one-two days. Also, to minimize disruptions, we are compensating our last-mile delivery partners higher wages and incentives to ensure we are able to offer most customers the earliest deliveries of their essentials," the spokesperson said.
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