Not surprisingly, the diversification from traditional to modern retailing affected food retailing as well. The expansion of the modern retail sector saw a drastic increase in the number of supermarkets and hyper-markets across the country. Conglomerates including Aditya Birla and Tata had established a strong foothold in this sector, with their respective store numbers growing year after year.
Despite these astounding growth numbers, the unorganized sector continues to dominate the market by a large margin. The Indian retail market is unique compared to other developed markets, largely because the market in the country presents challenges that are not common to the latter. Traditional kirana stores crowded the streets across urban and rural areas, in contrast to organized retailers which were mainly established in urban areas.
While modern retailers sold products at MRP, maximum retail price, one often paid less at a kirana for those same products, thanks to the art of bargaining. Moreover, the owner or seller at a neighborhood shop becomes an important figure in the community. By building personal relationships with each of his or her customers, the kirana owner is able to meet the consumers’ demands directly. There was no replacement for a kirana store’s knowledge of its community’s needs – one that changes, sometimes drastically, from community to community. Another reason for their dominance of this sector could be the miniscule real estate and capital costs compared to that of their modern, organized counterparts.
With over 15 million traditional corner shops across the country, it was unlikely that large FMCG retailers were able to compete in the long run. Organized retailers such as Reliance Industries seemed to understand this. Instead of creating an us-versus-them situation, Reliance Industries had tied up with kiranas to better the latter’s infrastructure. The aim was to digitize about five million stores by 2023. Reliance, one of the largest conglomerates in the country, is powered by its Jio telecom network, intended to create the world’s largest online to offline e-commerce platform. If this joint venture works, it would probably lead to a new era in India’s retail market, bringing about a balance of technology and human interaction.
