Leadership lessons from the local mom and pop stores — the story of the Kirana stores

Prologue:
Rewinding back time to 2003–2004 Hyderabad, India. This is where I spent the majority of my schooling and college days. During the hot summer afternoons I still remember walking to the local kirana store and buying a bag of chips and soda asking them to write it in “my account”. For those who do not know what a kirana store is, this is your local mom and pop store where you go to stock up your pantry, housing needs etc. This article is about the evolution of the kirana store and why I think they are here to stay.

Source: Spice — Wikipedia

Topic Introduction:
Kirana stores dominate the Indian supermarket ecosystem, they hold upto 90% of the market share. The evolution of these stores have been phenomenal, from the times when the stores were small, lots of stuffy bags and no place to move to now when you see very well structured storefront and digital footprints through the store.

The business model of these local stores is very fascinating and unlike the big chain retailers which have a lot of initial capital needs and higher fixed costs, the smaller stores are able to cater to the local community with a very small footprint, lower inventory and much smaller initial costs. The flip side of the coin here is that the big name retailers have deep pockets and are able to sustain a loss for a few months whereas the small kirana cannot afford to do that. So how else can they win and sustain the market share that they have built up over the years? Keep reading :)

The Conceptual Framework:

Comparing traditional lifecycle stages to that of a Kirana’s:

A quick recap on the customer’s lifecycle journey through your product. I want to break it down to Acquisition, Activation, Onboarding, Engagement and Retention. Comparing it with how a kirana thinks and takes every user through this journey.

Acquisition of a customer: Think about this as when the customer first walks up to the Kirana store and makes his/her first purchase, there are multiple things that could have acted as a trigger to this point.

Simplicity of the store: Think about this as the no judgement zone where you can walk in and ask for a local product by its name and you will most likely be able to find it there. Maybe a local favorite food brand etc.

Local people talking about it: You will most likely hear someone you talk to in your neighborhood refer to the kirana owner by name and call it his store example: Mani anna kadai (Mani brother’s store), there is your first touch with closeness and the moment you establish that deep a connection they are bound to visit your store to feel the warmth which might be something that they miss in the big brand retails.

Activation: Think about this as when the customer has made their purchases and what are the different things that the local kirana does to make sure that they get the products that they have purchased.

Account with the local store: As I said when I started the post we had an account with the local kirana store where you can buy what you want from the store and not pay for it at that point in time. The owner maintains a journal of your purchase and depending on the trust levels you either have one of your own or not and towards the beginning of the month your accounts are settled meaning you pay the owner what you owe. This isn’t possible with the big brand retails and this invokes something that is something very deeply seeded in our DNA as humans — trust. Once you know someone trusts you and you do the same you have forged a relationship that will last a very long time, even decades in fact.

Same day delivery — mostly no minimum needed: I have seen the helper from the kirana store deliver to our home even if the order was for Rs.100 (~$1.37). Honestly, I don’t think there was a minimum that you had to order for him to come home and deliver, he would do it immediately if he had the time or let us know when he could come by and drop it off. I think this is possible if the store is local and the effort of delivery isn’t much, which is something that the kiranas implement well and use to their advantage. Also this no-minimum delivery is reserved for loyal customers and also first-time customers to give you a taste of what you get if you stay.

Onboarding: Think about things that the kirana would do to make sure that the customer comes back to the store to make continuous purchases.

The place to learn about all things local: If you are like me you like drama, gossip and all the fanfare that comes with it and the local kirana store probably has all the stories from the local happenings but in addition to that they also have is information about all of the other businesses that are new or thriving in that neighborhood which you would not have know about otherwise. My mom was a part-time math tutor and I remember many people mentioning they gained the contact info from the local kirana store and the leads are legitimate majority of the time and the local kirana owner knows who is serious about wanting information and who isn’t.

Engagement and Retention: Think about this as things that Kirana would do to make sure that the customers not only come to his/her store but also act as influencers for other people and families to become customers with the kirana.

Early influencers — kids coming back to the shop for family orders: In many households kids are asked to head to the store to buy pantry items from time to time if the rest of the household is busy and as many of you already know kids are the center of a household and help shape the purchase trends and have a lot of knowledge about what to buy, when to buy etc. Kiranas use this to their advantage and make sure the kids are treated well by offering them a candy or a gift from time to time. This in turn will translate to more transactions and maybe even have the parents become loyal customers of the store over time.

Make a list drop off at the store — they will home deliver with the delivery boy (even arrange in the fridge if needed): This is very close to placing an online order from the list of products they have, in this case you make a list of things you need for the house and drop it off at the kirana’s, they will assemble the things they have, procure things they don’t and send the box home. This might not tell you about the new things that the Kirana has but this ensures that you aren’t over spending on things you do not need. The kirana compensates for your lack of visit and knowledge of new items by sending you a “sample” of the new items at the store for you to try and maybe order for the next time. Think about the latest insta influencer trend and free products from sponsors for that one insta post, the kiranas have been doing this for a very long time.

The other side of the coin:

I want to take a moment to point out what I think are probably not in favor of the kirana in the present day time and age:

Lack of inventory for the millennials and Gen-X: Given the lack of space and money the local kiranas might not be able to compete with the big name retails. The big name retailers have a lot of shelf and warehouse space to carry the well known brands in the market, the kiranas would definitely get it for you but they need time which is something none of us have at the moment. We need things yesterday for the fast paced lifestyle. With that in mind the millennials and Gen-X will probably slowly drift to the big name retailers to make up for the lack of time.

Recoverability of the capital: As I mentioned earlier the kiranas do not need a lot of capital to get up and running and so this opens the doors of many people to get into the business without a proper recovery plan. Since they are probably starting with no back up money, if the business does not kick off in the first month then they will probably struggle to make ends meet in the upcoming months driving to the closure of many stores.

Technology disruption:

I want to break this into two segments:

  1. E-commerce: the lack of an app with a list of products offered like many e-commerce web sites which people are used to today would put these kiranas far behind the experience that the big name retailers have to offer. You can argue that people want to go in person to select their groceries etc. but then came the pandemic which broke all such notions and the world was heavily relying on technology and product catalogs to get by day by day.
  2. Payment management: every other person has a credit card today and there is no real need to maintain an “account” with your local kirana to buy stuff, the kids have a smartphone and google pay attached to it so gone are the days when I don’t have money in my wallet. With this in mind one of the biggest differentiators — carry now cash later is kind of broken/moot and might not be enough to stand up against competition.

The nexus beyond:

Think about any subscription product out there and you will see the user lifecycle map that I outlined above, in addition to that apps like TikTok, Insta etc. which are looking for Monthly Active Users (MAU) will also follow a very similar trend for acquiring and retaining customers.

The side markets that apps like Insta and TikTok have spun off for influencers and content producers are in line with the way kiranas introduce new products by sending home samples etc.

In short the Kiranas have wonderful leadership lessons which can be applied towards succeeding. Given there are many other models and many different trends compared to a decade ago, making sure that you are able to catch up with the trend and apply differentiators at the same time are super important to survive.