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OCTOBER 2021
Kirana Stores – An Indian Economic Identity
All cities have an economic identity, depending on the prevalent local industry like manufacturing, ceramic works, glass foundries, spice markets, vineyards, educational centres, technology hubs, etc.
Irrespective of the industry prevalent in any Indian city or town, all Indian streets are characterised by Kirana shops. They are like a strong fabric holding the neighbourhood together.
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Saving Indian Kirana Stores is like Saving Indian Culture
One may not be surprised with the prevalence of the Kirana system since the Vedic times. Indian sub-continent has been the source of spices and grains.
Botany and culinary science have been highly sophisticated ever since history was recorded. Anybody can guess that the Kirana type system is as ancient as the history of India.
No wonder European history and exploration has started with the search for India.
Kirana as modern Economic System
There is more to Kirana shop. It runs the country's lifeline as it sells provisions to households and is the centre of micro-economic activities.
The composite of these micro-economic activities builds the business of those multi-national conglomerates. How isolated or tiny these Kirana shops may seem, they are a deep-seated confluence of the trading network.
A remote village may not have a railway station or a bank branch but will indeed have a Kirana shop. It is the importance has to the nation. In a definitive sense, they are the building brick of the Indian economic system.
India's barometer of economic activity resides at these Kirana shops. No one needs to be an economist to interpret the action at a Kirana.
Starting from the most minor purchase of toffee for kids to toiletries, packaged food to spices and grains, everything else required in the household quietly resides here.
They cater to all tastes and preferences of the neighbourhood. Though commercially, it survives on low margins and provides a stable source of daily needs for a household.
Whatever is said and done in the corridors of the finance ministry of state and country gets reflected directly here. Rather, any social changes and disruptions have an impact.
All are consequential, from taxes to fuel surcharges, farmer unrest to "chakka jam", weekend to festival holidays.
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India's barometer of economic activity resides at these Kirana shops
The reverse is true for economists. Making the Kirana economy stronger will make the national economy stronger because it is at the bottom of the economic pyramid.
Demand – Supply Information
The supply chain matching the demand at the right time is the crux of running the Kirana. There is a reverse statistic that works in demand-supply management.
Each shop has a unique consumption pattern, and the suppliers consult with the Kirana owners, who obviously knows the trend due to their vast experience.
It is precious, and even the best demand management software cannot reach the predictive accuracy of this tacit knowledge.
The owners are the smartest in business. Though not enough academic research is done about Kirana, they are the source of best business practices.
Those who wish to undertake management studies must spend time under training at a Kirana shop.
Social Science
If Kirana stores are strong, so will be India. For every Indian, a small village or big town, the Kirana is an integral part. Not only do they provide for the supply, but they are the centre of social interaction.
Usually, they are family-run businesses with their employees serving for a long time, often a lifetime. So it is no wonder that many readers would have seen the ageing "Seth" and their children taking over.
What is more important to understand here is the continuity in the community. These Kirana owners have grown with society. Also, they have been witnesses to social and economic changes in the neighbourhood.
As a result, there is a wealth of social science sitting behind the counters of Kirana stores.
These are not fancy shops; instead, they are no more than a dignified warehouse. They have come of the ages, transformed themselves to the extent of a few technological changes like electricity, display cabinets, refrigerators, items beyond groceries like SIM cards, payment digitisation and banking interface.
If we let go of these precious sites to large multi-retail stores, it will disintegrate the community into non-interactive, display only robotic shopping.
Products
Kirana shop stacks more items per square meter than any of those superstores. It is due to the different models of shopping and servicing their customers.
As a result, the range of products available is broader, though with lower inventory, because they specifically cater to the neighbourhood.
The flexibility of product placement is another advantage that is gigantic and not considered as a merit. Apart from the national and international brands that find a place in a Kirana shop, local product sellers can easily find a place.
If it sells, it's a win-win. On the other hand, if a product from the local cottage industry wants to place its product in those chains, the process can be self-defeating due to the inertia of processes.
In a way, the Kirana shops provide a space for micro-entrepreneurship, which none of those corporate chains can.
When compared, Kirana shops effectively store more items in their inventory than any other chain outlet. It means that these Kirana shops operate in lesser space, hence leaving the valuable real-estate for homes.
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... the Kirana shops provide a space for micro-entrepreneurship, which none of those corporate chains can
Another stark comparison likes in the reach of the network. There are nearly 5 lakh villages in India. 80% of the population still lives in villages and small towns.
If one considers only the number of villages, no retail giant can match those many outlets. Therefore, any policy step by the state or central government that dilutes the network of Kirana shops will only bring chaos and disruption to the lives of Indians.
The expected disruption will be long term and will change the lifestyle of the population.
The strategists of supermarkets know their limitations that they cannot reach every street of the country. Hence, they make a large size superstore, usually in a remote area of the city.
The disadvantage is that the entire neighbourhood converges to one location, some driving long distances. It is not an efficient model for pollution, time management of customers and cost per transaction.
ExpertX will discuss the disadvantages of supermarkets in another article.
Just because the Kirana shops are located close to many households, the propensity to store goods in the house is very low. Small size refrigerators suffice for the perishables.
On the contrary, in the countries where the supermarkets have taken over these Kirana style systems, the size of the refrigerators and long shelf-life goods have increased.
Today, the UHT (Ulta High Temperature) processed milk can last up to 3 months, and the population consumes it more for convenience than for health.
Anybody guesses that this habit of storing long-lasting food and eating not-so-fresh is consequential to the nation's general health.
Change of Economic demography –
The Kirana system is all about small entrepreneurs, and there are millions of them. Many are running this business through many generations.
It takes only Rs 50,000 to start a small Kirana shop that grows overtime for a newcomer. It employs from 2 to 5 persons along with other relatives and kins. So the barrier to entry in this retail sector is non-existent.
With these supermarket chains, ownership will never exist. As an employee, mass employment will be at the check-outs, shelf loaders, goods movers, and supervisors.
It will be the peak of career for millions. In a holistic view, the pyramid for a career in this industry sector is flat than any other sector.
With supermarket chains, young generation will easily become employees than take a challenging route of owning a business. Hence the dreams to own a business will cease to exist over time. Fewer will risk this route.
World over, the corporates owning these supermarkets are the richest, while their employees, the poorest. In the US, the employees of Walmart, the icon of a "supermarket", employee wages are so low that they undertake multiple jobs and end up on social security.
The wealth of the market gets concentrated in the hands of few, and the enormity is dangerous. They can strongly influence national policies and dictate social change in society.
Kirana shops, in contrast, provide an opportunity for school leavers to start a small business and employ a few others.
Economic History
British history of corner shops (the Kirana equivalent) is laden with learning, as witnessed by history. They have been the mainstay of British society, run mainly by migrants from East Africa and undivided India.
What could have been a migrant crisis in Britain, the dynamics of the corner shops (Kirana) system has given ample opportunity to millions.
They were never a burden on the government and society. Over 50 years, all of them have done economically well, and 'prosperity' got defined. But, of course, it was fuelled by hard work and sacrifices by the entire family.
This system's power propelled the British economy, stabilised the neighbourhood, bound the communities, and strengthened the essential supplies for millions of households.
Even today, though not many, they are the most dependable sources of household provisions, even while next door multi-national supermarket giants exist.
This power of personalised selling, catering to the local needs with unmatched flexibility of opening hours and product range, keeps them thriving.
Problem with Kirana
Issues with labour exploitation.
Mostly the employees working in Karana shops are either relatives or well known to the owner. It is so because that makes the best case for loyalty and trust.
The downside of this is arrangement is that the employees are lowly paid and have poor working conditions. Concerning modern HR standards, they would score dismally low.
Long working hours, hire and fire, heavy lifting, unpaid vacations, restricted holidays, few medical leave etc., are some of the primitive operational standards.
The upside in this employment model is its flexibility. It does not require formal education to prove the abilities, nor a lengthy HR process.
All that a person is required to show trust, loyalty, and willingness to work when needed. Overall, available opportunities help solve the employment problem to a great extent.
Later, these employees often spin-off to start their own Kirana shop elsewhere, and the cycle continues, fanning out the network, deep into the villages and towns.
Survival and Future
A price war is the weapon of mass destruction that corporate giants use to decimate small businesses. They have done so in the developed economies and intent to do so in India. The economic history of the US and UK is evidence.
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A price war is the weapon of mass destruction that corporate giants use to decimate small businesses
By the very nature of size, economies of scale are missing in these Kirana shops. If there is a price war, it is at the expense of the owner's pocket.
Instead, those large conglomerates can give deep discounts to outsmart the competition. There is already a growing row, similar to this one in the e-commerce sector.
The government had to intervene, but scepticism and mistrust in these corporates still widely prevails.
Bringing corporate chains into the retail household market will dismantle Indian society from the deepest point of its foundation. Human interaction will change forever.
While the western developed economies are approaching India to run their personalised customer care services, we Indians are attempting to remove that very strength from our society.
I am very sure that many of the readers remember the name of the owner and employees of their local Kirana. But unfortunately, it is not the case of those superstores which already have cropped up across the country.
In a pursuit to modernise the Kirana market, supermarkets and their chain is encouraged. In cities, shopping cart style self-servicing stores are presented to the customers in the name of shopping experience.
Instead, modern shopping is a self-service, label-dependent product packaging has to speak for itself. In case of doubt, the store workers are don't have the job description or incentive to help the purchase.
Usually, that is not the case with Kirana. The customer may clarify, seek advice and in many cases, get a review too. It is this interaction and buying habit that makes the market dynamic.
More varieties find their places on the shelf of a Kirana than the superstores. For example, in the largest supermarket in UK or US, there could be just 3 varieties of raw rice, and that too is packed, and customers cannot touch, feel or smell, which are essential to ascertain the quality of rice.
While in a Kirana of India, there will be more varieties, and customers can see, feel, smell to evaluate the quality. Often, the shop owner or employee assists with additional information like the age of the rice, availability, and personal experience.
Hence, the buying decision is based on expertise and even friendlier at the Kirana.
The most crucial flexibility at Kirana is the customised size of purchase compared to the few available packets at the superstores.
Food waste is a serious concern in climate change and fighting poverty, and supermarkets are worrying offenders in this issue.
By promoting the supermarket chains in the household retail sector, we Indians are attempting to dehumanise the cultural fabric of India, the sheer strength on which this nation has survived.
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