Opinion | Convergence of physical and digital: A new dawn of retail in India

With covid-led contingencies challenging the modus operandi of most sectors, a few businesses, like the humble neighbourhood stores, emerged as key support system for consumers. This network of 12 million stores forms the backbone of India’s retail landscape. Armed with an in-depth knowledge of the community’s needs, they are more important to the local community than ever before during the pandemic.

In parallel, customers chose to be at home, shopping online, tasking e-commerce companies to quickly build their logistical and technological capabilities amid the lockdown restrictions, to provide services across more geographies.

However, the new realities presented by the pandemic made it abundantly clear from the very beginning that ‘a one size fit all approach’ will not work while fulfilling the needs of the consumers. With neighbourhood stores reprising their roles of primary suppliers of necessities, and e-commerce playing a vital role in providing doorstep deliveries, there was a clear need to break free from the binary of offline & online retail model while serving the customers. As public safety continued to be closely interlinked to customers staying indoors, the existing partnership between neighbourhood stores and e-commerce emerged as a convenient means to reach the consumers for the retail ecosystem.

With social distancing being prescribed as the most effective tool for safety, there was an inadvertent impact on the footfall in the neighbourhood stores, leading to loss of revenue. Adapting to home deliveries became key to servicing customers, but retailers did face difficulties due to limited revenue. The generation of income usually translates to traditional options of keeping the store open for longer hours, more inventory, leading to hike in fixed costs or cash flow to build inventory. However, with kirana-e-commerce partnership model already in place, enterprising neighbourhood stores across the country, readily seized this opportunity and have augmented their services by partnering with e-commerce companies.

For instance, thousands of store owners across 350+ cities in India have on-boarded themselves under the 'I Have Space' program by Amazon. They not only found an additional source of income from delivering packages in the neighbourhood, but also benefited from increased footfalls as their stores doubled up as pickup points. The model allows them to make deliveries during their spare time in the store and hence helped them utilize their free time, especially when footfalls in their stores were low with zero need of additional investment or working costs for the store.

For store owners like Jayashree from Indore, the partnership with an e-commerce company was the only source of income during the last few months. “As a single mother, it is already not easy for me to take care of my children and manage my expenses. When I had to shut down my store during the beginning of lockdown, I could manage through the lean period only because of the earnings from the IHS program,” says Jayashree.

Zero investment programmes like these have allowed the neighbourhood stores to scale their business with ease and become a critical cog within the last mile of e-commerce deliveries. 70% of these stores belong to first-generation owners whereas 50% are second- or third-generation owners. Over the years, neighbourhood stores have built valuable relationships with customers and enjoy the benefit of proximity. Knowledge and connect with community becomes critical, especially during a crisis like this, where communities implement new protocols to operate basis what they know best for the safety of their members. Leveraging on their existing partnership with these ubiquitous stores, e-commerce companies have been able to expand their footprint and overcome last-mile bottlenecks while gaining insight into customer behaviour.

The post covid-19 landscape has ushered in a digital ecosystem where e-commerce and neighbourhood stores complement rather than compete with each other. The convergence of digital and physical retail is not new but it has never been more relevant than it is now. This hybrid ecosystem presents a win-win proposition for all the stakeholders – e-commerce companies, neighbourhood stores and customers. With this system in place, neighbourhood stores can now fully tap into their potential of providing a dynamic and delightful consumer experience.

(Prakash Rochlani is director, Last Mile Transportation, Amazon India. Views are personal and do not reflect Mint’s)