• Technology Adoption in Kirana Stores

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    Prime Minister Narendra Modi’s dream of a Digital India is moving at rapid pace and not only different government departments but even private sector companies are also adopting digital systems and moving towards automation. July 1, 2017, the day Goods and Services Tax (GST) was rolled out it’s been 6+ months since then. GST is fully based on a digital system and tax filing is completely online. In such scenario we got curious to learn how Kirana Store Owners are managing themselves and how GST implementation plus modern trade and online retailers have impacted their businesses. Are they inclined towards using cashless system of payment, adopting technology and moving towards automation, etc. To get answers Insights Board Research approached 54 Kirana Store Owners across Ahmedabad and conducted a small study.

    GST implementation impacted your business…?

     

    50% of Kirana Store Owners see No Impact on their business due to GST implementation and 46% of them feel it impacted their business Negatively as most of them felt products became costlier after GST implementation. Due to this now they don't purchase products in bulk and hence they aren't able to offer discounts to customers plus they stock less products, so consumers don't have variety of options. Also, profit margins decreased, and business has gone little low. We even found 2 Kirana Store Owners to be Positive about GST implementation and they felt that their business has got more organised plus their suppliers now distribute the same product in all stores at same price.

    Modern trade retailers and online retailers impacted your business…?

     

    57% Kirana Stores Owners says No Impact of modern trade and online retailers on the business. 43% said Negative impact on our business as we realise decrease in sales of package food items, customer footfalls are slightly low compared to before. Competition has surely increased due to opening of supermarkets and online stores but at a lesser scale as sales have gone slightly down. One of the reason that it had not impacted is because most customers still shop at Kirana Stores because the products related to their regular consumption are easily available and accessible whereas if they order through some online website or mobile app, many times products are out of stock and it takes time to reach to the consumer.

    Which payment methods you accept?

     

    After more than 1 year of demonetisation and Prime Minister Narendra Modi’s efforts on promoting digital and cashless economy across the country still Cash payment is the most common and accepted method across all Kirana Stores. Hardly 19% of Kirana Stores have facility of accepting payment via Credit/Debit Card and 31% of Kirana Stores accepts payment via Mobile Wallet which is more in comparison of Credit/Debit Card payment.

    Have you installed Point of Sale system which helps with Bar Code Scanning, Generate Receipts, Stock Management System, etc in your store?

     

    Retail sector is dynamic and is adopting technology at different levels and moving towards automation. In such scenario, what steps are taken by Kirana Stores to stay in competition against modern trade and online retailers. We found only 13% Kirana Stores have installed Point of Sale (POS) system which helps with Bar Code Scanning, Generate Receipts, Stock Management System, etc. So, that means 87% Kirana Stores still haven’t integrated POS system. Of those 7 Kirana Stores where POS system was integrated only 5 Kirana Stores use to generate and give receipt to every customer, 1 Kirana Store was only generating and providing receipt if customer asked for it and 1 Kirana Store never generated receipt and even hardly used their installed POS system.

     

    From 47 Kirana Stores which haven’t integrated POS system, 53% Kirana Stores didn’t provide any kind of receipt to customer, 45% provided hand-written receipt if asked by the customer and 1 Kirana Store provided hand-written receipt to every customer to make sure they have all data available in their books when required.

     

    Affordability has been the top most reason behind not adopting POS system by most of the Kirana Stores. As lot of Kirana Store Owners feel that in this highly competitive market, rapidly changing industry and with less profit margins implementing and maintaining such system and investing into manpower to operate it would increase their overheads. Selling less number of products, having less physical space and limited customer walk-ins are other reasons. Even lack of technology knowledge and language barrier is again a reason, as some of the Kirana Store Owners are less educated to run the system and not even good in using technology. Some still don’t see a need to implement POS system and handful of them feel the whole process is time consuming.

    If you get low cost Point of Sale system which helps with Bar Code Scanning, Generate Receipts, Stock Management System, etc will you purchase it?

     

    On giving an option of implementing low cost Point of Sale (POS) system which helps with Bar Code Scanning, Generate Receipts, Stock Management System, etc. only 7% of Kirana Store Owners were ready to implement, 69% said straight NO and 24% said Maybe they will implement, again they will take decision based on what would be the implementation and maintenance cost.

    If your customers can order via website/mobile app, do you think it will increase your sales?

     

    We even gave them a scenario that “if their customers can order via website/mobile app, do they think it will increase their sales” and 13% Kirana Store Owners said Maybe, 4% said YES and 83% responded NO as they see no need to take orders through online website or mobile app as customers always prefer and place orders through phone and accordingly free home delivery is done, so it is less time consuming. Plus building and maintaining online website or mobile application is an additional expense which they don’t want to get into.

    Overall, though technology is capturing retail space rapidly still it’s adoption and usage is very less in unorganised retail space due to Affordability being the major reason. We see a big opportunity for technology providers to create affordable retail technology specifically for unorganised retail space and tap this market as it’s huge in India. If affordable retail technology is available and even after that those who don’t wish to change their traditional method of book and stock keeping, they will be forced by market competition and condition to change and adopt technology in the coming future. As it is a question of their survival. This remind us phrases such as “Change is constant” and “Survival of the fittest” and it’s true.

    Hope you find our results insightful. If have any questions let’s connect together to share knowledge and gain more insights.

     

    Posted by Arpith Patel

    Posted on Jan 20, 2018