Question: How is the experience of living in a global city intermeshed with the local?
The main objective of this study is to analyse the impact of organised retailers (supermarket/hypermarket) on the unorganised retailers (Kirana store) that deal with the segment of food and grocery in the emerging global cities of India. The contemporary scenario of the unorganised retailers mainly Kirana stores is being studied along with the factors that affects the purchasing behaviour of consumers with respect to food and grocery. The study also aims to understand the future course of action of the unorganised retailers and the reinventing of the Kirana shops into better grocery stores and how they can make use of global change and transform themselves. It is concluded that empowering the Kiranas should be the goal by integrating it with the help of government policies, foreign e-commerce service providers as well as civil society organisations.
Keywords: Organised, Unorganised, Kirana, e-commerce, Global city.
Global city as a concept was first coined by Saskia Sassen in her 1991 work ‘The Global City’ in reference to London, New York, and Tokyo in which she emphasized on the flow of information and capital. The concept of Global city is also important in the study of globalization and the way in which the economies and the societies are interconnected.
It is seen as a centre of innovation, entrepreneurship and research where significant competitive advantage is enjoyed which ultimately attracts capital, talent, and investment that transcends the national boundaries and systems of regulations (Sassen, 2001). It is also seen in relation to geographic locales that is designed strategically where the global process is being created, facilitated, and enacted (Global City, 2007). Global city serves as an urban centre for global economic activity, political influence, and cultural exchange because it attracts diverse and skilled workforce from around the world.
Although, within the developed countries, businesses and governments aspire to reach the status of ‘Global City’, Sassen highlights the negative consequences of the shift towards these metropolises are prone to extreme social and economic inequality where on the one side lies the extraordinarily wealthy class and on the other very poor section of the society. (Fainstein, 2012). According to Sassen, the widening set of inequality between the elite professionals and specialists, the workers and service people, a growth of the highly security gated communities and shopping areas and different median income for different socio-economic background are some of the features of the Global city. Sassen believes that the internet technologies and communication is responsible for widening these inequalities (Understanding Society, 2013).
Therefore, the phenomenon of globalisation has led to the emergence of global cities that are characterised by their cosmopolitan and multicultural nature and attract people from all over the world. However, despite their global outlook, the global cities are deeply intermeshed with their local communities. This assignment focuses particularly on the Kirana shops in India and the role they play as small businesses in the lives of urban dwellers and how they adapt to the challenges that is posed by globalisation.
I. Retail scenario in India
Globalisation is one of the major factors in the India’s Economic reforms. Since the early 1990s, the impact of the globalisation can be seen the retail sectors of India due to the government policy of the liberalisation and privatization that comes along with it. In the global city, the entire retail market can be seen to relate to the market of the world and global competition is also one of the main reasons behind this. The established business from the developed nation come to explore the untouched market of the developing nations because of the availability of great retailers at cheap price and good quality (Bhattacharjee, 2017).
In case of India in the post liberalization era, retail can be considered as one of the flourishing sectors of the Indian economy that was unique as compared to the world scenario. The change in the demography of the Indian consumers and the consumer buying behaviour also contributed in the growth of the retail sector in India. The liberalisation of Indian economy has also promoted the opening of the market for the MNC brands like Unilever, Nestle, etc that offer a variety of products to the Indian consumers. Also, today the Indian consumers are having wide choice in terms of choosing the shopping centres to multiplex malls that offer, ‘everything under one roof’ (Rani, 2013).According to the Forrester research reports, India’s retail market was estimated $883 billion in 2021 in which the grocery retail (Kirana store) was estimated $608 billion and by 2024 the grocery retail market (Kirana, mom and pop, etc) is expected to grow$1.3 trillion.
II. Organised Vs Unorganised Sector in Retailing.
The major retail format in India can be described in two ways that is unorganised and organised. The Unorganised sector includes the mom-and-pop stores, Kirana stores, street vendors, etc, whereas the organised sector includes the hyper/supermarkets, departmental stores, shopping malls, e trailers, discount stores, vending, speciality stores etc. The Kirana(unorganised) and the Supermarket(organised) are quite different in characteristics and features since the Kirana stores are owned and operated on a small scale in an area of 500sq.ft or even less and are easily available in the neighbourhoods of the residential areas (Rani, 2013). On the other hand, in case of supermarkets, minimum of 2000 sq. Ft is needed and it is found usually in the commercial areas.
The organized retailing is generating some challenges for the traditional unorganized retail sector India. Supermarkets are able to cutdown the cost of wholesaling, offer more variety to the customers and receive the newly launch products much early than the local Kirana stores. The future of unorganized retail sector in India is suffering because the unorganised sector is facing huge threat day by day since, the organized retailers are attracting the customers through their infrastructure, customer support services and several added benefits and tangibles. There are several other facilities that they provide like, elevators, air conditioning, washroom, lighting, etc that furthers adds up to the image of the store (Bhattacharjee, 2017).
In India, the scenario of retail has been changing very rapidly. Although, the major part of the countries retailing is covered by the unorganised sector, even then the organised retailing has grown tremendously in terms of size and market dominance. Nowadays due to competition in the retailing sector they are putting much efforts and attracting more classy and demanding customers and the motive is to influence them towards the modern day organized retailing (Bhattacharjee, 2017). Also, the growing inclination of shoppers towards the e-commerce is very much evident since they offer online discounts and fast delivery services to the customers. according to the Invest India estimates, India’s e commerce retail market is expected to grow 30% to $200 billion by 2026 (Reuters, 2021).
Although in case of India, the organised retailers entered quite late that is 2000s their growth has been modest. Therefore, it is important to study the effects of organized sector on the unorganised sector in the emerging global city and how the consumer preferences and behaviours are shaped by it (Girija, 2019).
III. Kirana Economy
The term ‘Kirana’ is used to describe the small businesses and traditional grocery retailers or general stores in India. It is also called as the small mom & pop shops that contribute to most of the the India’s $932 billion retail economy. According to the estimates, there are 12-20 million Kirana shops in India and it contributes to the 10 percent GDP of India and give employment to 8 % workforce. Although the organised sector and the e commerce is booming these days, still the Kirana store continues to represent approximately 75% of the total consumer good sales in India and they have a significant effect on the India’s retail business (Research, 2022).
III. Reinventing Kirana Stores into better grocery stores.
Major challenges associated with unorganised retailing in India in the globalized era of business are related to lack of better and attractive services in terms of better and attractive environment, computerised billing system, proper assortment of products, availability of multiple items under one roof, parking facilities, effective promotional activities, etc (Bhattacharjee, 2017). Taking care of all these challenges is necessary for the unorganized retailers and they need to be dynamic with their strategies since change is needed in the current business environment to survive and compete effectively (Bhattacharjee, 2017).
Therefore, to keep up with the competition and meet the demands of the customers, the Kirana stores should alter the way in which they operate and their storefronts by incorporating modern retailing techniques and experience. However, the advantages of the Kirana store should be given priority. Since, the Kirana stores are situated in the immediate locality, they have good idea of their customers and their preferences. Also, to stay competitive many Kirana shops have started to adapt to the changes of the current market conditions.
Incorporating technology can help the Kirana stores in effectively adding more revenue and reducing the costs some of the primary areas that are needed to be worked upon are the inventory management, digital payments plus providing the credit extension to the customers, digital wallets, store layouts that include the product placement and increased self-service, mobile marketing, and tech enabled delivery. Adopting these technologies will give an edge to the Kirana stores as quasi-digital retailers and help them in fighting against the increasing competition (Research, 2022).
According to the survey on the buying behaviour of the customer the distance of the Kirana outlet from the residential areas is one of the important factors. The survey reveals that the customer usually travel to greater distances to shop packaged foods, household cleaning products, etc from the supermarket and the other organised retail stores. One of the reasons could be the presence of variety of options in the organised retail outlet. The Kirana outlets can take ideas from this and include more of packaged items and products (Girija, 2019).
The unorganised retailers should utilize the resources that are available and incorporate more innovative methods in their practice to attract more customers. also, nowadays there are several cooperative initiatives that help the individual retailers to match the price that is being offered by the organised retailers (Girija, 2019).
The results of the surveys reveal that the consumers prefer the opening of the organised retail outlets more than the unorganised retail outlets because of the enjoyable shopping experiences due to the ambience along with the added benefit of the price advantage. There are several ‘super value store programmes’ that help the unorganised retail shops to upgrade themselves in terms of their look and along with that these programmes also train the unorganized retailers about the basics of the modern retail tactics (Girija, 2019). Therefore, consumption is considered as a highly pleasurable activity in this sense and is tied to a social logic and as Baudrillard say that the in the capitalist society the social institution is hidden behind the economic ideology of consumption as uncontrolled pleasure (Clarke, 2003). These organised retailers can achieve these factors that is lacking in the local Kirana stores.
One of the attractions of the organised retail outlets is that they have almost every variety of products under one roof that makes it very convenient. Therefore, instead of having specialised products, the unorganised outlets can try including variety of products. But the main issue is of funds because most of the unorganised retailers are small scale retailers who lack the resources to upgrade themselves. The government and financial institution can act in their support for example providing soft loans (Girija, 2019).
The type and preference of the retail outlet is also depended upon the socio-economic and the cultural aspects for example in case of the smaller/emerging cities of India . It is important to acknowledge that the adoption of newer methods and technologies is important for the unorganised instead of holding resentment against the organised retail. Therefore, the institutionalised intervention in terms of educating and supporting the unorganised retailer by the government agencies is important (Girija, 2019).
IV. Change in the Kirana store economy due to Amazon, Reliance, and Walmart.
Through Jiomart, the Reliance has built a marketplace that connects the customers with the Kirana stores where the customers place an order and the products are picked up from the local kerana stores. Hence, the Jiomart is acting as a bridge between the offline and the online world since they provide the stock ordering from Reliance’s Retail network of wholesalers. Walmart is associated with Flipkart and it as a wholesale supplying e-commerce source to the Kirana stores. Walmart has also managed to onboard 27000 Kirana stores across 700 cities There are several loyalty programs also that area being given as added benefit to the Kirana store owners. Another, innovative option has been provided by the Amazon’s ‘Local Shops’ store on the Amazon where the retailers can register their Kirana store on Amazon and then sell to the local customers doing shopping from the Amazon. Amazon also provides the ‘Prime Badge’ to the local Kirana retailers that helps in the promotion as well helping customers to discover them easily (Research, 2022).
V. COVID-19 pandemic and its aftereffects on the Kirana Sectors.
Although the e-commerce sales are important in linking the global city with the local sectors, the pandemic has reinforced the importance of India’s Kirana network. This is because, the sales of the ecommerce were estimated only USD 2.5 billion of the total USD 550 billion sale of food and groceries in India that is negligible when compared to the Kirana stores. This shows the trust and reliance on the part of the customers towards the Kirana stores (Narayan, 2020).
However, during the restrictive period of the pandemic, emergence of various platforms such as Instamojo and Shopmatic helped to link offline stores to connect online and introduction of new category called ‘essentials’ was done that enabled the consumers within the 3km radius to order online (Narayan, 2020). Also, coming up of the several online grocery stores such as Blinkit, swiggy instamart, dunzo, etc shows how the Hyperlocal Grocery Delivery was being evolved as the alternate business models. It is a fact that the major part of the Indian retail sector is covered by the traditional unorganised sector but this reality should not be denied that the modern organized retailing is posing several challenges for the traditional Kirana stores (Bhattacharjee, 2017).
VI. Why Kirana will stay in the global city despite the existence of large format retail chains?
This is because the Kirana store owners are very aware of the local community consumes, developed a deep level of trust, they usually provide free delivery and easy credit facility to the regular customers. another reason is the issue of real state in India that acts a huge challenge for the supermarket retailers since they need large capital that directly has bearing on their profits. On the other hand, the neighbourhood Kirana store operates with fewer stock keeping units (SKU). Their knowledge of the local consumer community also helps them to utilise the small space they have according to the demands (Mediratta, 2021).
There has also been a lot of debates regarding the e-commerce and its merits and demerits in India. But this is also not a very easy task since the margins and return are very low on the food items in comparison to the non-food items also the customer acquisition cost is high (Mediratta, 2021). Therefore the ultimate solution is not to dive into the debate of the online versus offline but it should focus upon how online will complement the offline in the. Empowering the Kiranas should be the goal because the network of the Kirana stores cannot be matched by any large retail giants. The government should also work toward formulating policies that help in integrating the local Kirana with the foreign e-commerce service providers and further collaboration with the civil society organisations and consumer groups is also helpful.
However, it is imperative to mention that in the organised retail sector such as supermarkets or hypermarkets there is a particular institution that is working behind it. For example, in such organised places a clear dividing lines between the workers who interact directly with the public and who work in the backend can be seen. There are sub contracted workers who clean and guard and interact with the full-time staff members but they remain unacknowledged in this sector and they must match the social expectation within the corporate space by adjusting with their own time and bodies. For example, usually the cleaners are requested to take their lunch break at different times other than the core member staff (Mcneil, 2017).
Therefore, the local businesses like Kirana the stores are facing challenges in the era of globalization but the global city has not displaced the local sectors but has resulted in the adoption of new technologies and business practices that has led the creation of more diverse and cosmopolitan urban environment. Even in the global city, the local businesses like Kirana stores play an important role in the local community and economic activity and is ultimately shaping the future of urban life in India.
The experience of living in the global city is deeply intermeshed with the local that is evident in case of unorganised sector such as Kirana store in India that plays a major role in the shaping of the local economy as well as the urban life of India. Due to the globalisation, the Kirana stores in India are facing challenges also but that can be tackled through integrating the government and further collaboration with the e-commerce and the civil society organisation. Therefore, the interplay between globalization and the local is a complex and dynamic process.
Bhattacharjee, K. (2017). Globalization effect on Indian Retailing: An Empirical Study on Retail Consumers. International Journal of Current Advance Research, 4141-4147.
Clarke, D. B. (2003). The Consumer Society and the Postmodern City. New York: Routeledge .
Fainstein, S. S. (2012, November 01). Inequality in Global City-Regions. disP- The Planning Review, 37, 20-25.
Girija, D. S. (2019, octuber 15). Will the Kirana shops Survive the Tide of Organised Retailing in Emerging Cities of India. Retrieved from blog.iilm.edu.
Global City. (2007). Retrieved from www.cs.mcgill.ca.
Mcneil, D. (2017). Global Cities and Urban Theory. London: SAGE Publications.
Mediratta, A. (2021, December 07). The Kirana store will remain evergreen. Retrieved from thehindubusinessline.com.
Narayan, P. S. (2020, April 26). View: Integrate local Kirana stores in the supply chain of e-commerce. Retrieved from m.economictimes.com.
Rani, E. (2013). Supermarkets Vs Small kirana stores. IOSR Journal of Business and Management, 01-07.
Research, C. I. (2022, April 7). Bigger than e-commerce? Digitizing trhe Kirana store is the biggest opportunity in the Indian Reatil. Retrieved from www.cbinsights.com: https://www.cbinsights.com/research/kirana-store-india-retail/
Reuters. (2021, March 22). India’s $883 billion retail landscape dominated by Kirana dtores. Retrieved from www.businesstoday.in.
Sassen, S. (2001). The Global City. Princeton: Princeton University Press.
Understanding Society. (2013, september 15). Retrieved from understandingsociety.blogspot.com: https://understandingsociety.blogspot.com