Kirana comes full circle

It’s true that the Covid lockdown made grocery glamorous, with numerous e-commerce companies and start-ups bringing kirana to the centre stage. But two recent steps, both by the original posterboy of e-commerce, Flipkart, make it clear that we’ve come full circle on grocery. Flipkart, owned by American retail major Walmart, announced its wholesale unit’s foray into grocery retail some days back. This meant retailers and other businesses can now buy grocery online through Flipkart’s B2B platform. Also, the Bengaluru-based company unveiled a nationwide campaign to popularise its grocery segment on the marketplace for the masses. The two steps suggest that Walmart’s India retail moment is here, as it draws up the all-round grocery strategy—something that it had set out to do more than a decade ago.

The Bentonville-headquartered retail major, which had entered India in 2007 with the intention of making it big in food and grocery through a mega chain of brick-and-mortar stores like in the US, is reaching the goal via a different route and a bit late in the day. All this, when online is almost the new brick-and-mortar for grocery. E-grocery in India is estimated at around $3 billion and could grow to $18.2 billion by 2024, according to RedSeer. That’s still a tiny portion of the country’s retail pie, mostly unorganised, at over $500 billion.

Indeed, Walmart could never set up the big-box stores in India, upsetting its plan to capture a promising market. The group was kept waiting as foreign direct investment (FDI) policy in multi-brand retail was a hurdle it could never cross. Walmart remained a wholesale business in the country, first in partnership with Sunil Mittal-led Bharti group and then on its own, till it acquired a majority in Flipkart in 2018 at more than $16 billion. But grocery remained elusive for the American retailer, other than in  the Walmart wholesale stores. Flipkart (started as an online book store) was a go-to place in the electronics, fashion and household categories.        

                                      

Walmart, which knew the potential of grocery back then, was seen as a threat to India’s unorganised retail sector, more so for the kirana or the mom-and-pop stores, and so the multi-brand policy with a 51 per cent FDI came with tough conditions, including on-sourcing under the United Progressive Alliance rule. Subsequently, the National Democratic Alliance government kept it on hold without changing anything on paper. While that may be a piece of history, the basic premise of retail business has remained constant in the 14 years that Walmart has been in the country. That is, whether it’s a physical store or an online one, companies with deep pockets have an edge.

There is, however, one change—it’s the number of organised players with deep pockets in the Indian grocery space. Earlier, multi-brand FDI or global play in grocery was synonymous with Walmart, which was never seen without suspicion in the government corridors as well as in the dusty grain markets of the hinterland. Carrefour and Tesco, too, had multi-brand retail ambition, but they remained on the sidelines in India. In a gradual shift, grocery in India today is populated by heavy weight foreign investors as well as India Inc, while physical and online boundaries have crisscrossed.

That brings us to a point that keeps analysts busy in other sectors, such as telecom, for instance: Consolidation. Will grocery be a three-horse or a four-horse race? Kishore Biyani’s Big Bazaar is taken by Reliance Jio. Online grocery major BigBasket is likely to be acquired by the Tata group. Besides Reliance and Tatas, the big players would be Amazon, Walmart-owned Flipkart and Grofers, backed by investors such as SoftBank, Tiger Global and Sequoia. There was restaurant aggregator Swiggy too, backed by Tencent, DST Global and others, but it decided to stop the regular grocery delivery business after the lockdown eased, restricting it to the genie service from cloud stores.

Plus, there’s the most important chunky world of kiranas, who must play their cards right to prevent their market share from crashing. It’s time for traders and some of the prominent associations representing them to tweak their strategy to stay relevant in a world that’s vastly different from what it was when Walmart came in more than a decade ago. Rather than waging a war, kiranas must increasingly strengthen themselves through technology and other backend partnerships with the big groups, including the foreign majors. That would help them be self-reliant or atmanirbhar in the now glamorous grocery business.

Adding to its glamour is the science of farm-to-fork, something that’s being frequently used in the context of the controversial agriculture reform laws these days. But, it had turned fashionable when pro and anti groups debated Walmart’s impact on farmers and their produce a decade ago. The narrative has a much broader spectrum now.