Would Kiryana stores go STD booth way? EC-2024 says e-commerce to eat up to 30-35% of retail trade in next 3-5 years

16 September 2024

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Srinagar, Sept 16: The Economic Survey 2023-24 tabled in the Parliament on July 22 said that the Indian e-commerce industry is likely to surpass the $350 billion-mark by 2030. It added that the share of modern retail, including e-commerce, will go up to 30-35 per cent of the total retail over the next 3-5 years.

This has been seen as a bad news for India’s traditional Kirana stores, the backbone of the country’s retail sector and source of livelihoods for millions of people.

The Economic Survey said that the share of modern retail, currently below 10%, could exceed 30% within the next 3-5 years, driven by increased consumer access to online platforms, evolving shopping habits, and the aggressive expansion of big retail chains.

What is driving the shift?

The increasing penetration of smartphones and internet access has led to a surge in online shopping, especially among young people, who form the vast majority of the country’s population. Consumers are increasingly drawn to the convenience, variety, and competitive pricing offered by e-commerce platforms like Amazon and Flipkart. This has made it difficult for Kirana stores, especially in urban areas, to keep up with changing consumer preferences, says Zubair Shah, an e-commerce trader.

While some Kiryana stores are beginning to embrace digital tools such as UPI payments and partnerships with e-commerce platforms to enhance their offerings, the technology gap continues to be a significant challenge for many small store owners.

Would Kiryana stores really go the STD booth way?

Not really. Next-door Kiryana stores remain part and parcel of India and J&K’s retail shopping culture.

“It is a part of our culture. It would not go away. Kiryana stores are deeply integrated into our social life”, says Manish Gupta, who runs a Kiryana store in Jammu city.

However, many Kiryana stores, whose location is away from population centres, may find it increasingly difficult to compete. , industry experts believe.

“This situation mirrors the fate of public telephone booths, which became obsolete due to the rise of mobile phones. However, the fate of Kiryanas is not sealed—local retailers have the advantage of deep-rooted community relationships and may survive by evolving their business models, focusing on niche markets, and leveraging digital partnerships”, says Nasreen Qayoom, an e-commerce researcher.

Economic Survey 2023-24 explains that the e-commerce industry’s upward trajectory in India during the past few years was marked by technological advancements and new-age business models coupled with government policies.

Some policies listed in the Economic Survey are Digital India program, UPI, One District-One Product (ODOP), Open Network for Digital Commerce (ONDC), new foreign trade policy, relaxation in FDI limits and Consumer Protection (E-Commerce) (Amendment) Rules 2021.

The economic survey, however, stated that the rise of e-commerce in India is constrained by inadequate skills for online selling, data privacy issues, and increasing online fraud. “It becomes imperative to educate users on the safe use of e-commerce platforms,” the survey noted.

Moreover, the ONDC, which started in January 2022, also expanded from its initial domains of mobility and food and beverage to other domains like fashion, beauty and personal care, grocery, home and kitchen, on-network logistics, agriculture, gift cards, Farmer Producers Organisations (FPOs) and artisanal works.

During Q4FY24, there was an 18 per cent rise in food and beverage orders due to its robust network of more than 95,000 restaurants and top brands serving 347 cities in India. It mentioned that Tata Neu, Dominos, and Ola have added food services to their apps whereas others like MagicPin and PayTM focus on competitive pricing and special deals.

In the grocery sector, a growth of 52 per cent in orders was achieved during the same period, the survey added.