Keeping it ‘local’: Kirana stores are essential to Walmart’s future operations in India

When Walmart announced its acquisition of a 77% stake in Flipkart last month, its press release included a direct reference to its “kirana” strategy. The US retailer said that it planned to “partner with kirana owners and members to help modernise their retail practices and adopt digital payment technologies”.

Kiranas are small shops, usually run by families, that can be found on every street corner. These micro-businesses sell groceries and focus on specific neighbourhoods, culling a remarkable degree of loyalty through services such as free delivery and credit schemes.

Walmart will work with these stores on two fronts. As part of its Flipkart deal, it is likely that they will integrate more of these stores into Flipkart’s supply chain network and get them to start using Flipkart's PhonePe digital payments network. However, on another level, Walmart also plans to expand its Indian wholesale cash-and-carry business - which it operates under the Best Price brand - and increase its business with the kirana stores, which are important customers.

Mera Kirana

In mid-2014, Walmart launched its Mera Kirana programme, aimed at helping these mom and pop stores improve the efficiency of their operations, especially in terms of assortment and sourcing.

Under the pilot programme, Walmart introduced spaces in its Best Price stores that resembled kirana stores, but with a number of technological modifications in order to showcase what these stores could be doing better. It also offered training modules to kirana store owners that focused on best practices, tech adjustments and cost savings.

It made sense for Walmart to work more closely with kirana stores and make their operations go digital. These stores comprised roughly 70% of the orders from its wholesale cash-and-carry business, so by making them adopt to new technologies, it made the process of supplying and distributing products to them a lot easier.

Following the deal with Flipkart, Walmart plans to make Mera Kirana front-and-centre of its wholesale strategy. According to a report in Mint, it plans to expand the programme and also establish a new “dark store” or fulfilment centre by the next month to exclusively supply goods to these stores.

Customers, but also competitors

While kirana stores are important customers for Walmart’s wholesale business, they act as competitors in the retail sector. WIth their last mile connectivity, strong customer loyalty, reasonably low overheads, they cater to the demographic that isn’t used to shopping online or at large retail stores.

As the saying goes, if you can’t beat ‘em, join ‘em. Walmart’s latest strategy announcement highlights its plans to make allies out of these stores as it prepares to counter Amazon’s push into India’s retail market.

Walmart is looking open 50 additional Best Price stores in the next four years, taking its total store count in India to 71, and the expansion of the Mera Kirana programme will be vital to achieving this growth.