March 20, 2023

Be it Ambani or Adani, they are not able to break the power of grocers in the country, this is the reason. Why Ambani to Adani could not break the stronghold of kirana stores in India

Over the past 20 years, grocery stores have stood their ground and accounted for more than 88 percent of retail trade. Modern trade stores have seen expansion from metros to tier-2 cities and can only capture a 10 percent share of the retail market in India.

Kirana store

Image credit source: Focus News India

Indian retail market The sector was valued at $800 billion in 2020 when the country’s two biggest traders entered. yes we are here Reliance Industries And Adani Group Talking about the same thing. This retail market in India has not only attracted these two, the world’s largest retail stores Walmart, Tata, Birla, RPG Group, Nange Group and many others are in this list. All these companies tried their best to make a dent in the country’s retail market in the last 20 years but to no avail. Even now the country’s retail market or grocery store is standing strong.

When modern trade stores entered the country, it was assumed that country grocery stores could not stand up to them and would soon close, but in the last 20 years, grocery stores have stood their ground and their partnerships. Retail trade is growing, at over 88 percent. Modern trade stores have seen expansion from metros to tier-2 cities and can only capture a 10 percent share of the retail market in India. In this situation, many questions arise that why big groups like Tata, Birla, Ambani, Adani, Walmart could not make their presence in the retail market strong?

Why is the grocery business strong in India?

  1. The country’s economy is linked to agriculture: In 2022, India has the largest army of billionaires. India has the third largest startup ecosystem in the world, but it is also true that 69 percent of the country’s population lives in rural areas and a large part of the country’s economy is from agriculture. About 54 percent of the population still depends on agriculture as their primary source of income. Indian GDP per capita is expected to reach $1,850 by the end of 2022.
  2. Lack of volume in small towns: With low income levels, mainly rural population, opening a chain store in India is a big challenge. Walmart, the world’s largest retail chain, found early success operating in small towns with populations of less than 10,000. But in the Indian market, volumes are too low to run large stores profitably in small towns. Because of this, small towns and rural areas depend on grocery stores.
  3. Indians love fresh food: Female labor force participation in India is still less than 20 percent. Most Indian families prefer home-cooked meals. Hence ready-to-eat and ready-to-cook foods as well as frozen and canned foods have no place in the Indian kitchen. Indians like to cook fresh food at least twice a day. For Indians, fridge or cold food means stale food. Indians prefer to order cooked or fresh food from restaurants rather than buying ready-to-eat food from supermarket shelves.
  4. Availability of fresh produce throughout the year: Unlike other countries of the world, India’s climate is quite different. Summer, winter, monsoon all types of seasons are seen here. Due to which there is no shortage of vegetables and grains throughout the year. There are grains and vegetables in every season. Due to which everything is available fresh throughout the year and delivered to every corner of the country.
  5. There are shops on every corner: Metros and other big cities are overcrowded, and only 7% of Indian households own a car. Thus, large stores like Walmart, which are located outside US cities, have had little success in India. Also, the country has more outlets per million than Western countries, with cigarettes and ready-to-eat snacks available on every corner.

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