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Some thoughts on the evolution of the Indian Kirana dynamics.
A lot going on in the space right now ( #JioMart 's the big gorilla, BigBasket, Udaan, Amazon, FK, Swiggy/Zomato, Dunzo - all interested in the space) (1/n)
A lot going on in the space right now ( #JioMart 's the big gorilla, BigBasket, Udaan, Amazon, FK, Swiggy/Zomato, Dunzo - all interested in the space) (1/n)
Why is this the case? The Indian retail market size is expected to be $1.5+ tn by 2025. Everyone wants a piece of the pie.
Additionally, retail data is a goldmine for anyone who wants to do anything in the consumer tech space! (2/n)
Additionally, retail data is a goldmine for anyone who wants to do anything in the consumer tech space! (2/n)
The retail node is also the one where all parties converge: consumers, retailers, distributors, brand manufacturers (products & promotions). This is the node of the value chain where supply meets demand. Hence, this is the most profitable (& most likely) to be digitized (3/n)
And, the Kirana store is ubiquitous in this space. Around 85% of Indian retail happens through these stores. In contrast, modern trade/e-comm have single-digit market shares. And, this is extremely heterogeneous~15 mn retailers spread across the country. (4/n)
CPG incumbents operate in a linear manner to navigate this diversity: Brands sell to distributors and they sell to the retailers. Everyone makes a margin as the product moves across the supply chain.
It also helps them get scale for sales & distribution profitability (5/n)
It also helps them get scale for sales & distribution profitability (5/n)
New entrants (BB, Grofers) have looked to follow one of the 2 approaches: marketplace or inventory. They have focused on matching the demand through either one of these supply models (marketplace or inventory). Essentially, competing with the kirana stores (6/n)
Which is a mistake. Because, apart from a little convenience, they are not solving any problem for the consumers - orders are placed on WA/call, credit provided by the retailer, items home-delivered (free of cost), easy returns - stores have always provided these services (7/n)
This is where JioMart becomes interesting to track. It aims to create an omnichannel experience around the kirana stores (starting with the PoS device).
@bytesofnews wrote an incisive article (must read!) on JioMart's strategy to capture market (8/n): https://economictimes.indiatimes.com/prime/consumer/jiomart-wants-to-revolutionise-the-e-grocery-space-its-starting-with-the-humble-kiranas/primearticleshow/76986649.cms
@bytesofnews wrote an incisive article (must read!) on JioMart's strategy to capture market (8/n): https://economictimes.indiatimes.com/prime/consumer/jiomart-wants-to-revolutionise-the-e-grocery-space-its-starting-with-the-humble-kiranas/primearticleshow/76986649.cms
But, winning GT in India requires 2 things (broadly speaking):
1. Get scale
2. Get scale, while not "owning" sales & distribution.
This is how the HULs of the world have captured market share. (9/n)
1. Get scale
2. Get scale, while not "owning" sales & distribution.
This is how the HULs of the world have captured market share. (9/n)
There's absolutely no doubt on RIL's ability to think and execute big & get scale.
@vedicakant wrote a fantastic 2-part article on the same (10/n) https://hind.substack.com/p/from-oil-to-jio
@vedicakant wrote a fantastic 2-part article on the same (10/n) https://hind.substack.com/p/from-oil-to-jio
JioMart's ability to execute as a platform is something I am most skeptical of. RIL's growth story is one of continuous backward vertical integration: owning operations up the supply chain, making more margins - making it India's largest company across most parameters (11/n)
It remains to be seen if JioMart's able to shake off this cultural baggage and unleash the retail revolution in the Indian kirana space.
Will it be successful? who knows.
But, no one else has the ability to pull it off. Interesting times ahead(n/n)
Will it be successful? who knows.
But, no one else has the ability to pull it off. Interesting times ahead(n/n)
