• Offering convenience through tech-enabled kirana stores is the new success mantra for Indian brands and retailers ; While the number of social media users in India is expected to reach 448 million by 2023, more than 20 percent of these users are from rural India, as of 2018.
• While the overall retail market is expected to reach US$ 1.2 trillion in value by 2021, e-commerce sales will increase at a CAGR of 32 percent between 2017 and 2021 to reach a value of more than US$ 80 billion ; Rural India accounts for 40−45 percent of the FMCG sales.
• The number of online shoppers is expected to increase from the current 15 percent of the online population to 50 percent by 2026; Vernacular is changing the game of voice and video content consumption. India currently has 250 million local language internet users and this number is expected to go up to nearly 600 million users by 2023.
Deloitte India launched a report, ‘EVOLVE for consumer’, at the FICCI Massmerize 2019 event. The report lays emphasis on the convergence of general and modern trade as retailers continue to use the strength and scale of technology to tap both urban and rural India.
According to the report, modernised kirana stores will play a key role in the overall consumption game. They hold an 88 percent share in the total retail pie compared with modern trade at 8−10 percent and e-commerce at 3−4 percent (expected to grow at a CAGR of 32 percent). Traditional kirana stores will continue to be the backbone of Indian retail as they have a knack of acquiring local customers.
As convenience becomes a major consideration for consumers while making a purchase decision, companies (in addition to using technology for personalised messaging) are focusing on strengthening their last mile availability through tech-enabled kirana stores to make their products more accessible. To this end, a majority of the modern brick and mortar retailers, e-commerce players, and brands have begun using technology through a widespread network of kirana stores to increase their retail presence and win over the Indian consumer.
The report also highlights that with the rise of the connected consumer, brands now must focus on convenience, availability, sustainability, and omni-presence by investing in technology throughout the consumer lifecycle.
Commenting on the launch of the report, Rajat Wahi, Partner, Deloitte India, said, “While advanced technological solutions will be paramount in engaging people through their shopping journey, what is even more important is the last mile connectivity to ensure product penetration in rural and urban markets through digitisation of kirana stores and their linkages with online channels.”
Our report mentions that retailers need to focus on using digital strength to modernise kirana stores. This in turn can address delivery issues, especially in rural India.
Bharat presents a great opportunity to retailers and brands because of its size and increased discretionary spending.
The report also talks about India’s retail journey from brick vs. click to brick and click. With just 3 percent of kirana stores being tech-enabled and a majority of the rest willing to adopt technology, retailers and brands have significant opportunities to technologically and financially empower these stores.
Key highlights from the report
Significance of using voice of consumer (VoC) data to understand consumer needs: Brands using VoC data effectively are usually able to enhance their financial health and customer experience. Such companies are also able to have a higher retention rate. Interestingly, a lot of brands are using social listening to glean insights from social media channels, social forums, blogs, and product review sites with the help of technologies such as text analytics and artificial intelligence.
Rise of connected consumers and the need to use technology throughout the buying lifecycle: Companies will have to start using technology throughout the consumer lifecycle to engage with customers and perform engagement activities via traditional channels. Brands are realising the significance of using technology for customer engagement. They are using technology for various purposes, such as creating awareness about a brand via digital media, providing personalised promotions to consumers to increase purchases, using chat bots to provide after sales service, and creating an online platform to provide reward points.
Increasing focus on smaller towns and rural markets, and collaboration of traditional and modern retail: Saturation in metro markets presents an opportunity to tap the high potential and fast-growing semi-urban and rural segments. Given the increasing penetration of internet and digitisation of economy, kirana stores in rural India will soon place orders on mobile applications to replenish their inventory. However, this will take at least a decade to function smoothly.
