As part of our mission to identify sustainable survival spaces for our neighbourhood Kiranas in a landscape increasingly characterised by the presence of organised retail and e-commerce players, we are conducting exploratory interviews with Kirana owners. Today, we share insights from an in-depth interview with a local kirana owner.
This particular interview focused on a neighbourhood Kirana situated within a residential society. The interview was conducted early in the evening on a hot summer Delhi day at the store. A frail man apparently in his forties, the sole owner, and a recent entrepreneur, Mr. Kiran Walia (name changed) answered our questions while servicing his customers, who came in at regular intervals mostly for small purchases paid for by cash.
The neighbourhood stores often cater to unplanned top-up purchases, daily essentials such as milk, bread, or urgent needs—a forgotten toothpaste, last-minute sugar running out, or that urgent household item. They offer added convenience by extending credit, quick home delivery, and a personal touch where they remember customer product preferences and any delivery instructions.
Home delivery contributed about 40% of the total store sales; however, the story is more complex, and the tradeoffs are not as obvious as one would believe. While the store’s focus seems aligned with the image of a convenient neighbourhood Kirana, the interview revealed that the store catered to two distinct demographies at opposite ends of the affluence spectrum with about an even split of revenue. When serving the neighbourhood the store faced competitive pressure from two kinds of businesses.
During the interview, Mr. Walia made the point that price eats convenience for breakfast in cases of large regular purchases. Organised retailers with bulk buying, large pricing power can offer prices that Kiranas find difficult to match. As per the interviewee, even the residents of this affluent gated community, contrary to widely held belief, are price-sensitive and willing to forgo the convenience of home delivery for better prices.
Meanwhile, quick commerce companies are progressively eroding the top-up and urgent purchase space. With delivery guarantees and a wide assortment, they offer a competitive value proposition. Kiranas are losing a key differentiator arising out of location convenience to quick commerce retailers.
Very clearly, the basis of competition in the industry is shifting away from the traditional Kirana stance of convenience price tradeoff. The interviewee, however, felt that other factors, such as store appearance or display, had minimal impact, and reducing costs was probably the only effective way of staying afloat.
The Demographic Inversion: Serving the Underserved
The interview revealed that about 40% of the store’s revenue comes from a specific demographic: low-income workers employed within the community of the store’s location. These customers typically buy smaller quantities and lack the purchasing power to access deals offered by large retailers or online platforms. As a result, they pay full price at the Kirana store and are the most loyal customers.
Here, a curious phenomenon arises: Kiranas, facing pressure to compete on price, are inadvertently charging higher prices to a customer segment they rely on for survival. This concept of “demographic inversion,” where Kiranas end up charging higher prices to their loyal low-income customers, highlights a potential blind spot in their pricing strategy.
By focusing solely on competing on price and cost avoidance, Kiranas risk alienating their more affluent clientele, who value store attributes, customer services, and stock assortments at stores. The cost avoidance approach can gradually erode Kirana’s performance on these attributes and could ultimately exclude them from competing for these buyers and trap them in a low-profit, low-cost spiral with limited growth possibilities and constant fragility of survival.
We at Kiranamitr believe the interviewee’s belief about price being the sole determinant of the purchase decision is misplaced. Additional factors such as store, retail, and customer attributes need to be considered to understand customer choices. A more analytically driven segmentation and an offering proposition tailored to each segment may help in retaining and growing customers who are willing to patronize Kiranas.
The interview reinforces the importance of Kiranas, the vital role these stores play, and the criticality of their survival for underserved demographics. We continue to examine other potential levers, such as digitization, establishing an omnichannel presence, and implementing customer-centric practices, that can help Kirana stores adapt to the evolving retail landscape.