Kirana 2.0: Making a comeback in a digital avatar

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The pandemic has not been kind to anyone – least of all to India’s neighborhood grocery stores, popularly called Kiranas. However, despite the challenges posed by the pandemic, the Kiranas have managed to hold ground. In fact, in many instances, the local Kirana emerged as the preferred choice of buyers during the lockdown. Faced with an ‘adapt or perish’ situation, many Kiranas prudently chose to adopt digital transformation, especially digital payment modes, translating into enhanced revenues and customer loyalty extending even beyond the thick of the pandemic.

Kirana stores: Crucial participants in the Indian retail landscape

The Indian retail sector valued at over $750Bn is made up of an estimated 12 million Kirana stores, contributing 90% to the retail trade. Clearly, the Kirana stores play a key role in our retail ecosystem. A recent Accenture report highlights the critical role played by Kirana stores in the Indian economy, contributing 11% to the GDP and supporting 8% of the workforce i.e. 43 million workers. Further, it is estimated that food and grocery products are worth $500Bn and the bulk of items is sold by Kiranas making up over 65% of the retail sector. The below chart summarizes the positive impact of digital transformation on mom and pop stores:

Source: Accenture


Let’s look at how some key factors are shaping the transformation of the traditional Indian Kirana.


Mapping the mind of the Indian consumer: In Kiranas we trust

Historically, before the influx of the giant e-commerce players, the Indian customer was accustomed to buying from the nearby Kirana store, enjoying the facility of a running credit account or khata book with transactions settled at a regular frequency. This was a relationship rooted in trust and customer-centricity. In many instances the local grocery owner was familiar with the purchase preferences of a close-knit circle of customers and their households, taking remote orders through the phone and providing prompt home delivery at a time convenient to the customer.  

This was followed by the foray of the e-commerce players who took orders through an app or a website and provided deep discounts to capture market share. The pandemic forced the Kiranas to rethink their business model and rapidly adopt digital tools to stay competitive. 

The steps in this digital transformation included a simple online platform including chat apps for taking orders, ensuring contactless delivery, and accepting payments through multiple digital modes.

A study by RedSeer in May 2020 indicates that there was a marked jump from 7% pre-COVID to 60% during COVID amongst Kiranas willing to adopt technology. Further, there was a hike from 45% to 60% in mobile-based transactions at the point of sale among Kiranas using digital payment modes.

In a certain manner, the pandemic has turned the clock back for Kiranas with customers returning back into the fold, supported by the Indian Government’s thrust on ‘Vocal for Local’ and AtmaNirbhar Bharat. A report by EY highlights how the Kirana store took centre stage during the lockdown with a surge in renewed trust levels.

a. 79% Kirana owners in non-metros and 50% Kirana owners in metros reported new customer footfalls in their store after the lockdown was implemented

b. It is believed that these same customers earlier opted for online purchases or visited supermarkets, who made the shift to local Kiranas, post lockdown to avoid long waiting times and displayed an inclination towards building personal relations with the neighborhood store, prioritizing customized shopping experiences and customer traceability. 

c. Consumers are adopting a flexible approach to buying, using digital payment modes and substituting healthy foods and DIY goods instead of entertainment and travel spending.

Digital payments as the key facilitator 

Digital payment modes present a win-win situation for both the customer as well as the Kirana store, with the former preferring cashless, touchless payment and the latter being assured of immediate monetary receipt in the bank account, without the hassle of maintaining cash and change. According to a 2019 Assocham-PwC India study, the value of the digital payments industry is expected to cross $135.2 billion by 2023.


A report by RedSeer highlights Kiranas’ transition story from a cash-led model to a digital ecosystem. Some of the notable trends are:

  • Kirana stores led the way in the retail consumption of essentials, especially during the lockdown
  • Owing to the touchless preference, the digital payment market share of groceries jumped from 60% to 75%, spearheaded by mobile-based payments.
  • India’s digital payment markets were estimated to be INR 2162 lakh crore in 2019-20
  • The merchant payments segment (P2M) is expected to be the key growth driver with a CAGR of over 50% till FY2025.
  • P2M counts amongst the most preferred mode for retailers 
  • Small merchants are expected to fuel growth in the payment enabler space i.e. EDC and payment gateway aggregator
  • The number of terminals is expected to cross 1.7 cr by FY2025 from 0.5 cr in FY20, a 27% CAGR

One of the key challenges faced by Kiranas was timely credit collection from customers. This narrative was changed with the onset of the digital payments wave. 


Evolving dynamics between Kiranas and stakeholders

An EY report indicates how the Kiranas have reinvented themselves from being a pure physical brick and mortar set up to migrate to the digital plane, reaffirming their resilience and nimble operational scale with low-cost efficiencies and seamless phygital omnichannel capabilities. 

Source: EY


Coexistence: How Kiranas overcame Corona

Before COVID-19, it was anticipated that the local store would have a tough time competing with the likes of global e-commerce giants and corporate-backed online retailers. Ever since the onset of the pandemic, the tables have reversed. Large e-commerce players with their share of troubles comprising holding large inventory stocks, adequate storage and warehousing requirements, supply chain logistics, and huge marketing spends are keen to partner with the humble Kirana store. 

JioMart’s ambitious Desh Ki Nayi Dukaan initiative, spurred by a $5.7Bn deal with Facebook with access to WhatsApp’s over 400Mn subscriber base was expected to on-board over 1lakh Kiranas by end of 2020, paving the way for hyper-local customer fulfillment offering digital payments and order status tracking. 

While the e-commerce players and business houses bring in the technology-prowess, the Kiranas bring unique capabilities like personal rapport with customers and assorted products based on accurate customer need assessment. 


Advantage Kirana in the retail battleground

As per BCG, the retail market in India is expected to grow from $700Bn in 2020 to $1.3Trillion in 2025. E-commerce accounts for a mere 3-6% by market share. A Morgan Stanley study estimates that e-commerce sales in India would grow from $42Bn in 2020 to $200Bn in 2026

Compared to the e-commerce counterparts, the Kiranas have an economic edge, being largely family-run with low wage costs, low rentals, and prompt delivery.

An Accenture report below emphasizes the Kirana archetypes prevalent in India and the positive impact from a digital makeover:



The Kiranas have emerged as the new focal point in the Indian retail value chain. Armed with cutting-edge digital arsenal namely digital payment modes, combined with the traditional loyalty-driven, trust-based customer relationships, Kiranas are rewriting the rules of the game in the new normal.

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