As the second wave of Covid 19 receded, more than ten million Kirana stores of our country yet again re-enforced the fact they are indeed the lifeline for the Indian CPG industry. Although the profitability of general trade channel is lately dented due to rapid digitization of retail, the Kirana stores however were quick to adapt to the changing business environment and helped sustain the supply chain and distribution for the industry during the most testing times of the pandemic.
1. Adaption of Digital Sourcing by Kirana Stores
The CPG industry have always laid a significant emphasis on distribution through facilitating distributors with sophisticated distributor management systems, sales force automation and tools enabling the distributor sales force with enhanced market coverage. However, during the pandemic the beat/route coverage of the distributor salesperson got complemented with alternate channels like tele ordering and retailer ordering applications. Hindustan Unilever Limited (HUL) ‘Shikhar’ and ITC “Channel Kart” applications enabled the retail outlets to seamlessly place orders and make payments. Besides the retailer apps, tele-ordering channels were also established as efficient alternate secondary sales channel.
Industry Considerations:
· The fact that a Kirana owner has to transact on multiple retailer applications (provided by every CPG organization) may not be sustainable on a long term. A common unified ordering platform for adopted by all major industry players could be a future in sight for our industry.
· Alternate secondary sales channel like Tele-ordering to be strengthened and operationalized to co-exist with the traditional permanent journey plans (PJP) of the distributor salesmen.
2. Hyperlocal Delivery Model facilitated by Kirana Stores
While the onset of lockdown did not impact the overall demand for consumer goods what remained daunting was making them available to the consumers in a highly constrained logistics environment. The deeply penetrated Kirana stores acted as fulfillment partners for large format retail outlets and online retailers like “Bigbasket , Grofers etc. thus facilitating a hyperlocal distribution network. Organizations like Unilever with deep presence and investments in the General Trade Channel sailed through the pandemic challenges far smoothly as compared to organizations less penetrated, clearly demonstrating the might of the local kirana store. Additionally, investments on programs like Unilever’s Shakti Amma for rural outreach further helped organizations sustain business during the pandemic.
Industry Considerations
· Sustained use of hyperlocal delivery model developed in collaboration with general trade channel.
· With over 85% of CPG share with the traditional trade channel, investments in increasing the general trade footprint shall continue to remain a strategic effort for the Indian CPG players.
3. Kirana stores adapted to an e-commerce service model for their customers.
The orders which always arrived on a “Parchi” (handwritten list of items) simply got replaced with a WhatsApp/ SMS message followed by a phone call, payments received through UPI platforms (PayTM , PhonePe etc.) and door step deliveries executed by storekeeper’s cyclists in their respective catchment areas was almost a seamless transition to an efficient e-commerce model within no time. The transition was effortless as as most components of this model were in practice already- home deliveries to the customers, credit being extended, items returned unquestioned were practices business as usual even in pre-pandemic times.
Industry Considerations
· Enable the retailers through trainings for use of digital interactions and payments platforms
· Focused trade promotions enabling small retail outlets in general trade channel.
