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Digital transformation of Indian retail

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Indian retail is undergoing a rapid transformation propelled by several factors such as rising household incomes, increased consumerism, e-tailing, favourable demographics, and easy credit availability. Though we have experienced phenomenal growth over the past decade, share of organised retail still hovers just around 8 percent, while the unorganised sector constitutes 92 percent of the overall retail industry, retaining its dominance. However, in the coming years with technology getting intertwined and becoming seamless in both B2B as well as B2C experiences in a Phygital connected world, organised retail will no more be just an urban phenomenon. The tier 2 and smaller cities will also evolve rapidly constituting a significant share of organised retail ushering in a disruptive digital transformation across the country.
With curtailed physical movement and supermarkets and large-form retail outlets shutting shop to evade the risk of community transmission, the pandemic has emerged as a ‘black swan’ moment for the kirana stores. The local kirana in the neighborhood turned into lifeline for both urban and rural areas addressing daily essential needs. Reports have shown that four months into the lockdown, consumer spending at kiranas have risen by 22 percent. However, to sustain this momentum and to stay relevant post this crisis, it is crucial that kiranas adopt an intermix model of ‘bricks-and-clicks’, as an integrated channel while offering a seamless shopping experience for ever-evolving consumers.
The COVID-19 pandemic has accelerated greater acceptance of cashless payments as many consumers switched to digital and in many cases contactless transactions. According to a recent consumer survey, the usage of digital payments among Indian consumers in the current scenario was the highest around the globe, at 75 percent. Further, around 78 percent Indians said that they will adopt digital payments more actively over the next six to nine months.
The current scenario therefore is a fertile bed for the growth of a symbiotic relationship between technology and mom-and-pop stores, especially with the increasing need for home deliveries, and cashless payments. Retail giants like Amazon, and more recently, Reliance, with JioMart have recognised the kirana store as the new local touchpoint owing to their association with the daily life of an Indian consumer besides the the indispensable trust they enjoy.
India’s digital transformation saga has just begun. While the pandemic accelerated this drive multiple folds within a short period of time, creation of a nation-wide digital infrastructure allied with new tools and technologies is what will help sustain the momentum while helping it to outlive the pandemic. The local retailer playing the role of a powerful influencer and a trusted aide to the Indian consumer, it is critical to reinvent and empower the humble kirana network across the country is
In this digital marathon, local retailers or the kiranas need to be digitally equipped so as to function independently without the needing of affiliation with retail giants. Kirana stores should be empowered to embrace technology and modernize their businesses to cater to rising customer expectations. According to a survey by RedSeer, 70 percent of kiranas want to be able to accept digital modes of payment to keep up with the digitally-savvy population. According to an Assocham and MRRS India research, over 350-400 million retail consumers are projected to be digitally influenced by 2020, therefore digitizing a market that remains unorganized to a whopping extent of 90 percent is a task that needs to be taken up as immediately and extensively as possible.
From scanning QR codes, to local stores accepting orders through WhatsApp as well as e-payment options through mobile wallets and apps, along with cards, local retail is fast gearing up for the digital marathon, but we have a long way to go yet.
Recently early this month, the RBI allowed offline payments of up to Rs 200 through cards on pilot basis. It is an excellent move by the financial apex body to usher in financial inclusion in the hinterlands of the country, as it will encourage customers to opt for digital payments even in those places where the internet connectivity is poor. QR codes, NFC such as tap and pay, biometrics to contactless ATMs and micro ATMs, we need a host of these new age transactional technologies and much more to transform the space and considering the typical demographical traits of the Indian population the local kirana is going to play a critical role in making them the new norm.
However the digital drive needs to transcend beyond the fulcrum of urban India, to the real Bharat to truly bring about financial inclusion. With less than 30,000 ATMs across 6 lakh villages, rural, and semi-urban areas are plagued with a scarcity of digital infrastructure. Digitally equipping the local kirana stores to offer digital payment modes and services such as AePS and micro ATMs at the onset will help take digitization to the masses.
With consumer purchasing dynamics in a constant state of transformation, it is imperative that retailers develop the ability to transform digitally faster. Powered by latest technologies, local kiranas can offer quick, simple, seamless, and efficient micro experiences while playing a highly instrumental role both in driving financial inclusion as well as the transformation of India’s socio-economic landscape.
While demonetization pushed India’s need to take on digital and COVID-19 expedited the transition, building a robust eco-system powered by new-age technologies is what will ensure the digital drive not just outlives the pandemic but burgeons into a powerful new normal.

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