Corner stores are well placed to benefit from digital commerce

Retail eB2B platforms that link manufacturers with neighbourhood retailers can yield disintermediation gains for them

- NATASHA BHIDE & ABHISHEK MALHOTRA

Go to any neighbourhood in India, and there will always be a kirana store-a small family-run shop that services one or two pin-code zones and turns over typically 1.5 lakh a month. At some distance, there would be a local agglomeration of shops: such as an apparel store stocked largely with unbranded and regionally made clothing turning over ₹5 lakh a month, a mid-sized metals and plastics store selling wares of 3 lakh a month, among other small shops.

There are millions of these traditional retail outlets driving last-mile distribution through India's triple-fragmented traditional value chains: retailers procure inventory from a regional distributor, which in turn sources it from the manufacturer. At each segment of this chain, a margin is added until the goods reach the end consumer, and this contributes nearly 40% to a product's eventual price.

Traditional retail formats accounted for 87% of the $1 trillion in consumer spending in 2022, according to McKinsey estimates. Modern trade and e-commerce have grown briskly over the past decade; even so, traditional retail has remained salient and will continue to garner 80% of the $1.5 trillion consumer spending in 2030, across key categories such as packaged grocery, staples, apparel, home and kitchenware, pharmaceuticals, and hotels, restaurants and cafes.