Abstract
Apna Store, a family-owned ‘kirana’ neighbourhood grocery store in suburban New Delhi, India, offers a diverse selection of 15,000 products. This case revolves around its owner, Mr Jagmohan Trehan, who faces a pivotal decision due to the ongoing COVID-19 pandemic: whether to revamp the store’s product range and venture into e-commerce.
The pandemic has dramatically altered consumer behaviour, with a surge in online grocery shopping. E-commerce vendors’ enticing promotions and the entry of Reliance Jio with a unique business model have presented opportunities and challenges to Mr Trehan and the kirana store industry, the backbone of India’s retail sector. In March 2020, the pandemic prompted panic buying and shifts in consumer preferences, compelling Apna Store to adapt during the lockdown. As online grocery shopping gained traction, the idea of entering e-commerce emerged, but with reservations. In April 2021, as India faced another pandemic wave, consumers became more comfortable with online grocery shopping, and e-commerce operators improved supply chains and delivery. This case centres on whether Apna Store should embrace e-commerce and the associated costs and benefits.
Discussion Questions
What characterizes a kirana store, and how do establishments like Apna Store establish a meaningful connection with their clientele?
What measures did Apna Store implement to address customer demands during the lockdown spanning from 24 March to 30 May 2020?
Some companies, such as Zomato (
Like Mr Trehan’s experience, many customers began stockpiling essential items and hygiene products out of fear of shortages, despite his assurances. In such scenarios, people often overbuy, leaving limited supplies for others. Did you encounter similar challenges during the pandemic? Were there items you could not purchase due to widespread hoarding?
Given Mr Trehan’s mention of supply chain disruptions, how did he manage the surging demand for essential goods during the initial lockdown when panic buying was prevalent?
During the pandemic, e-commerce platforms like Grofers and Amazon Pantry faced accessibility issues and even cancelled orders when consumers needed them most. Conversely, stores like Apna Store made every effort to fulfil customer demands. Considering this, should consumers reconsider patronizing local brick-and-mortar stores that offer doorstep delivery, even during a pandemic?
Despite Mr Trehan’s belief that there is no competition from small, independent stores or digital retailers, the market is indeed rife with competitors. Does his lack of acknowledgement of this competition pose a threat to his business?
Jagmohan Trehan, the proprietor of Apna Store, a family-owned ‘kirana’ in suburban New Delhi for over three decades, provided a wide selection of food, groceries and personal care items. Over the years, he developed enduring personal relationships with local customers, even by name. However, in March 2020, the landscape dramatically shifted as the COVID-19 pandemic took hold. The Indian government imposed a mandatory lockdown, leading to a decline in foot traffic, consumer stockpiling, disruptions in the supply chain, noticeable shifts in consumer behaviour, and the emergence of online grocers as formidable competitors.
On 5 June 2020, Trehan convened with his family to deliberate on how to navigate the crisis spawned by the pandemic. To secure long-term survival and gain a competitive edge, Trehan faced difficult decisions. These included contemplating the relocation of the store to a more densely populated area, offering safer and more hygienic home delivery services, collaborating with aggregators like Reliance Retail, reevaluating their product assortment, and considering the prospects of hyperlocal e-commerce operations. Amid these choices, Trehan struggled with the overarching question of how the pandemic would reshape his relationship with customers and how to expand the business while embracing technology.
Background of Apna Store
Jagmohan Trehan hailed from a family deeply rooted in agri-business, owning a rice, wheat and cotton seed oil mill in the northern Indian state of Punjab. His journey into entrepreneurship began at the tender age of fifteen when he started working in the family business. Being a college graduate, Trehan’s aspirations for a more urban lifestyle and better educational opportunities for his children led him to relocate to Delhi.
Trehan sold his family’s land holdings in Punjab. In 1990, he established the Apna Store at a prime location in the Jawala Heri Market at Paschim Vihar, a suburb of New Delhi, India. At its inception, the store boasted an initial product range of 1,500 items, offering a typical ‘kirana’ store experience akin to a corner neighbourhood grocery store.
The store’s inventory encompassed a wide array of products, including personal care items like shampoos, toothpaste, hair colour and hair oil, essential grains such as rice and wheat flour, a variety of grocery staples like cooking oil, sugar, tea leaves and coffee powder, dairy and egg products, an assortment of soft drinks and juices, an array of spices and packaged snacks like potato chips, ice cream and candy. It occupied a modest 2,000-square-foot space, somewhat smaller than the typical American convenience store, which averages around 2,700 square feet in size.
Kirana stores were the cornerstone of Indian grocery shopping, serving as essential hubs for everyday necessities. These stores, while not typically stocking meat and fresh produce, played a vital role in catering to the immediate needs of their local communities. Kirana shopkeepers developed a personal connection with their customers, often going to great lengths to ensure that they had even the most specialized products, which just one or two families consumed. Their neighbourhood-oriented approach frequently included complimentary home delivery services, further solidifying their bond with customers.
Despite their strong community ties, kirana stores faced a spectrum of competition. They contended not only with fellow kirana establishments but also with modern Western-style supermarkets and, in more affluent areas, even e-commerce platforms. India boasted an estimated 10–12 million kirana stores, highlighting their ubiquity and significance.
New Delhi, India’s sprawling capital, ranked as the world’s second-most populous metropolitan area, boasting over twenty-eight million residents. In this bustling urban landscape, Paschim Vihar, located in the western part of New Delhi, was a middle-class suburb housing more than 500,000 residents. The community comprised high- and low-rise apartment buildings and multi-family and single-family homes. Residents of Delhi enjoyed a diverse array of retail options, from Western-style supermarkets and malls to kirana stores and the convenience of e-commerce.
Mr Trehan’s journey began in 1990 when he opened his store. Despite facing competition from an established kirana store, Aggarwal Store, which occupied a more visible location on a busier street, Trehan’s ability to earn the trust of the local Paschim Vihar community proved instrumental in setting his store apart.
Over three decades, the Apna Store grew significantly, expanding to 2,000 square feet. The interior substantially improved during this time, featuring bright lighting and well-organized shelving. The shelves were thoughtfully arranged into distinct sections, neatly categorizing food items, detergents, shampoos, sanitizers, grains, pre-packaged foods, snacks, cosmetics and other essentials (see Annexure B for Apna Store Pictures). This meticulous arrangement enhanced the overall shopping experience for customers. Apna Store boasted an extensive inventory of 15,000 products, catering to a wide range of utilitarian and hedonistic consumer needs. The store had twenty CCTV cameras to ensure a secure environment, diligently monitoring customer activities (see Table A1 for product details).
The decision-making process at Apna Store primarily rested with Mr Trehan himself. While he handled most organizational and management matters independently, he occasionally sought strategic counsel from his elder son, a director-level employee in the corporate sector. Apna Store employed twenty contractual workers who assisted in various capacities.
The store maintained regular operating hours, welcoming customers from 10
Trehan wanted to build his business on relationships and trust, underpinned by a commitment to providing quality products. Approximately 80% of the store’s inventory comprised branded products from leading Indian and multinational corporations, including Unilever, Nestle, Proctor & Gamble, Coca-Cola, Godrej, Parle and Marico. The remaining 20% consists of unbranded commodities, offering various varieties of rice, flour, sugar and spices.
In 2019, Apna Store achieved another milestone by signing up as a franchisee for Patanjali Products, a renowned Indian natural and herbal brand offering personal care, food and health supplements. Initially, Trehan operated a separate store adjacent to the Apna Store for Patanjali products but later merged the two establishments.
Apna Store accommodated various payment methods, including cash, debit/credit cards, and Unified Payment Interface, to cater to its diverse customer base. The store primarily relied on traditional communication channels, such as pamphlets and local advertising, to connect with its target audience and had no social media presence.
The Indian Retail Market
India, the second most populous country globally, had a population exceeding 1.3 billion. Given this immense demographic, it came as no surprise that India’s retail market ranked among the largest on the planet. Consequently, it garnered significant interest from global retail giants, including Amazon, Walmart, and Alibaba, who made substantial investments and entered Indian retail.
From the perspective of the average Indian consumer, a noteworthy portion of their income—more than half, to be precise—was allocated to grocery expenditures. Grocery retailing accounted for over 60% of India’s overall retail market. This segment’s size was estimated to fall between $400 and $600 billion, and projections indicated that it could swell to nearly $800 billion by 2024. More than 85% of the spending of Indian consumers was with the kirana stores, making them the backbone of the Indian retail industry.
Coronavirus in India
India’s densely populated landscape, particularly among the lower-income segments, often entailed living in close quarters, sharing facilities like toilets, and navigating jam-packed public transportation. This reality made social distancing more challenging. The coronavirus posed a grave concern, coupled with an underdeveloped public health infrastructure and sanitation issues, a shortage of hospital resources, including beds and ventilators, and a historical vulnerability to epidemics.
In response to COVID-19 in India, Prime Minister Modi announced a ‘people’s curfew’ on 22 March 2020, followed by an extensive nationwide lockdown lasting nearly three months. During the initial phase of this lockdown, the entire country essentially came to a standstill. Educational institutions and commercial establishments, except hospitals and essential retail outlets, were mandated to close their doors. Citizens were instructed to remain indoors, with security forces, including the police and paramilitary, enforcing compliance. Wearing masks became mandatory for anyone stepping outside their homes. In this challenging environment, Apna Store, like many businesses, had to swiftly adapt its operations to navigate the evolving times.
2020 Lockdown 1.0 and Consumer Buying Behaviour
Trehan recounted the profound impact of the coronavirus on both his business and consumer buying patterns. With the lockdown announcement, panic buying ensued, prompting consumers to stock up on essential items. Simultaneously, e-commerce platforms experienced unprecedented crashes and inaccessibility, leading to the cancellation of customer orders. As a result, consumers turned to trusted neighbourhood stores like Apna Store. This abrupt surge in demand disrupted supply chains and posed a significant challenge in adapting to shifting consumer behaviours during the COVID-19 pandemic.
Trehan vividly remembered the week leading up to the lockdown preceding 24 March 2020. During this period, there was a remarkable surge in purchasing essential food items and hygiene products. People began stockpiling items such as large quantities of wheat flour, rice, lentils, cooking oil, soaps, and sanitizers. Some products, like Nestle milk powder, sanitizers and cocoa powder, quickly went out of stock. Before the lockdown, Apna Store typically welcomed 500 customers daily. As the lockdown commenced, this number initially remained unchanged. However, by the second week of April, foot traffic dwindled to 300 customers per day.
For instance, Preeti Gupta, a loyal Apna Store customer for two decades, mentioned how she proactively stocked her home with essentials and immune-boosting products in anticipation of the lockdown. Her purchases included 20 kg of wheat flour, 10 kg of rice, substantial quantities of lentils, milk powder, tea, liquid soap and other essential goods, all aimed at minimizing the need for frequent store visits. Her total bill during this period reached ₹12,000 (approximately US $165), a substantial increase from the pre-coronavirus average of around ₹5,000 (US $69). Preeti explained that she refrained from online orders due to her cautious approach to food and groceries, placing her trust in Apna Store’s product quality.
Apna Store, traditionally a self-service establishment, implemented new procedures to maintain safety during the lockdown. Customers were required to queue outside, with entry granted only after undergoing temperature checks and hand sanitization. Instead of customers selecting products themselves, they were asked to submit lists or message their orders via phone. The store operated from 10
2020 Lockdown 2.0 and Onwards
In mid-April 2020, recognizing the challenges faced by India’s sizable population, especially migrant workers and daily wage earners, the government decided to ease some aspects of the lockdown. This included permitting additional activities such as agricultural operations and relaxing restrictions on professionals like electricians, plumbers and carpenters. Responding to these changes, Apna Store made adjustments during what they called ‘lockdown 2.0’, commencing on 15 April 2020.
During this phase, Apna Store revamped its shelf layout and display strategy. Items in high demand, such as sanitizers, gloves, masks, liquid soaps and various hygiene products, were prominently showcased within the store and at strategic locations. This shift in presentation helped alleviate panic buying and stockpiling by customers.
Store hours were adjusted to accommodate customers from 9
With the relaxation of the stringent lockdown measures compared to the initial phase, customers and employees found it more manageable to navigate these changes. In response to supply chain disruptions, Mr Trehan adopted a hands-on approach. He personally visited wholesale markets in Janak Puri, Karol Bagh and Old Delhi, procuring commodities using his own vehicle to counter the challenges faced by his store.
During this period, there was a notable shift in consumer preferences. Sales of essential hygiene products and immune boosters surged, with products like Chyawanprash and Giloy juice increased from April to May. Additionally, sales of snacks, cake mix, gulab jamun (a milk-based Indian dessert) and baking powder soared. The closure of bakeries and sweet shops partly drove this surge. However, cosmetics sales, particularly lipstick, dwindled, as it became less relevant, with mask-wearing becoming the norm.
Customer interviews revealed that some opted for home delivery to minimize physical visits to the store due to COVID-related concerns. Others chose to avoid online orders because of incorrect order fulfilment issues with e-commerce vendors like Big Basket and the associated challenges in rectifying these orders through customer service.
The Road Ahead
Trehan noted that the steady sale of health and hygiene products helped offset the decreased demand for non-essential items like cosmetics. He recalled that Apna Store broke even during lockdown 1.0 and 2.0, a testament to their adaptability and commitment to serving their community.
In the competitive landscape, Apna Store faced competition from five other stores in its surrounding vicinity, representing the traditional brick-and-mortar retail sector. Additionally, the emergence of e-commerce stores added to the competitive challenges that Apna Store navigated in its efforts to cater to its customer base.
2021 Corona Wave and Changing Shopping Rules
About a year later, as Trehan carefully examined Apna Store’s cost structure amidst declining foot traffic, India was hit by a second wave of COVID-19 in April 2021. The surge in COVID-19 cases prompted various states to impose lockdowns and restrictions to combat the crisis. This new wave significantly impacted Apna Store’s sales and reshaped consumer buying behaviour.
Since April 2021, India witnessed a dramatic rise in COVID-19 cases, with approximately 400,000 new cases reported daily at the outset of the second wave. The estimated number of deaths attributed to this wave ranged from around 1.6 million, with some estimates, suggesting that it could be as high as four million. The second wave of the pandemic brought about profound changes in the purchasing patterns of Indian consumers.
Trehan highlighted that the situation was markedly different during this second wave compared to the previous year. When Delhi imposed a lockdown on 19 April 2021, Apna Store experienced a surge in footfall, with around 1,000 customers flooding the store. Their primary objective was to stock up on essentials for an extended period, with less emphasis on checking brand names or expiration dates of food items. However, as the lockdown continued, panic buying subsided, and the daily customer count dwindled to approximately 100 visitors. During this phase, Apna Store observed increased sales of health and hygiene products. The store adapted to the evolving situation by introducing home delivery services with minimum order restrictions and accepting digital payments. This practice had yet to be in place during the previous year of the pandemic.
Trehan also encountered challenges related to staffing during this period. Five of his delivery personnel fell ill or stopped reporting to work due to fears of contracting the virus, leading to a shortage of qualified staff.
The heightened concern for health and hygiene prompted consumers to shift their purchasing preferences towards immunity-related products, which contributed to an increase in online shopping among consumers.
During the second pandemic wave, e-commerce giants, like Amazon, Grofers and Big Basket, were better prepared than the previous year when their online operations stood to a standstill during the nationwide lockdown. This time around, their supply chains were more robust. Moreover, consumers displayed a calmer demeanour, resulting in less panic in buying essential items such as flour, rice, pulses, masks, disinfectants, hand sanitizers and diapers. Many consumers began placing online orders, seeking contactless deliveries and prioritizing hygiene consciousness. Consequently, e-grocery deliveries experienced delays, with delivery timelines extending from one to four days, depending on the city and zip codes. However, online platforms swiftly optimized their operational networks to address this challenge.
E-commerce companies made substantial investments in enhancing their digital presence to ensure the safety of both customers and staff. According to Shan Kadavil, co-founder of Fresh to Home, there was a significant increase in online demand, with a 12% rise in the number of orders over the past two weeks and a substantial growth in subscribers, which increased 2.5 times in the last six months.
As for the smaller retail shops like Apna Store, the pandemic’s disruptions and subsequent recovery forced them to contemplate adapting their business models and operations for an online presence. The pandemic accelerated the comfort level of middle-class Indian consumers with online grocery purchases.
This situation presented a significant challenge for neighbourhood-based kirana grocers like Trehan, who thrived on intimate customer knowledge and relationships, going so far as to know their customers’ preferences and even their families. Trehan engaged in discussions with his family to explore the possibility of enabling e-commerce ordering, including the logistics involved or potentially partnering with an e-commerce aggregator. These decisions would hinge on weighing the costs and benefits of such a transition.
Challenges of a Kirana Store Adopting an Online Retail Model
If a small kirana store like Apna Store was to partner with an aggregator like Grofers, it is likely that the aggregator would dictate the products that Apna Store should stock and the promotional schemes to follow. Trehan purchased products from company-appointed distributors of brands like Hindustan Lever and P&G, and these distributors offered favourable terms. However, entering into a partnership with an e-commerce aggregator would require Apna Store to buy products from distributors defined by the aggregator, who would set their own terms and conditions. This could lead to channel conflicts as aggregators often prioritise offers and schemes involving products from any distributor. Such a setup may result in quality issues with products, which could reduce customer satisfaction. Trehan also expressed concerns about possible payment problems, noting that digital companies often focused on massive sales promotion schemes, sometimes compromising product quality. These schemes could confuse customers, leading to frustration and annoyance, ultimately reflecting on Apna Store’s reputation.
Trehan emphasized that having a physical store allowed him the freedom to offer high-quality products to customers and educate them more effectively about their purchasing choices. Additionally, there were significant costs associated with setting up a website or developing a mobile app for Apna Store. Trehan pointed out that a lack of infrastructure could pose challenges, especially when dealing with product returns. Managing the logistics of returning items from distant locations may not be feasible for Apna Store.
While Apna Store was one of the largest kirana stores in the Jawala Heri market, Paschim Vihar, it still faced challenges in transitioning to a digital platform. As shown in Figure A1, Apna Store operated on relatively low profit margins, with a profit margin of only 1.4%. The net profit for the year ending March 2020 was ₹897,465.92 on total sales of ₹63,994,754.00. Given the financial constraints and the store’s financial position, large-scale investments in e-commerce operations may not be justifiable.
Growing Online Customers and Needed Transformation
‘The pandemic has fundamentally changed how customers and retailers interact, resulting in reduced footfall and a shift in consumer behaviour towards online grocery shopping’, said Khetarpal, Director of Amazon India. Kirana store owners must adapt to this evolving landscape by leveraging their inherent strengths, such as physical presence and proximity to consumers, in conjunction with the right technological tools to enhance their position in the value chain.
Failure to capitalize on this opportunity and prepare for the changing retail landscape could lead to significant disruptions for kirana store owners. To thrive, they need to broaden their perspective and redefine their value proposition, seamlessly viewing their stores as central hubs for physical and electronic retail. Kirana proprietors should shift their mindset from exclusively focusing on walk-in customers to considering the entire population residing within the zip code of their area or a 5-km radius as their potential customer base.
It was crucial to make operational adjustments and embrace the latest technology, encompassing aspects such as product displays, electronic payment options and minor infrastructure enhancements. Kirana stores could actively participate in virtual marketplaces and leverage social media platforms by offering virtual promotions to manage online sales effectively. While small retailers had a strong understanding of their customers, this knowledge often resided only in their minds. Hence, they must explore methods to develop and maintain accurate customer databases to better serve their clientele in this evolving retail landscape.
According to Khetarpal from Amazon India:
Almost all kirana outlets have a paucity of a ‘clean’ catalogue regarding the assortment of products they carry, and the accuracy of the count of the in-store stock is inadequate. Many stores still prefer cash as it is easier to account for and reconcile them rather than digital payments. Providing training to some employees to enhance the soft skills of employees to manage virtual customers and capabilities to handle IT performance management can equip kirana stores for the big scale-up. This would involve responding to online customer inquiries and requests for orders, processing basic inquiries, and intermingling with customers over the phone, by text, or via email. This includes scanning key information and uploading inventory files on virtual market spaces and keeping track of inventory, involving reskilling of the store owner and the employees.
From a learning and growth perspective, the kirana model relied on high touch, intimate customer knowledge and a deeply personalized shopping experience. The data-driven e-commerce model used sophisticated analytics to understand consumer behaviour but needed more interpersonal communication in the kirana store. One option could be to partner with an established e-commerce provider. However, the e-commerce providers might need to be more suited to establish a partnership with the kirana store for reasons outlined in the case previously.
Reliance JioMart Business Model
In 2020, the prominent Indian conglomerate Reliance Industries introduced an e-commerce grocery platform called JioMart, with the tagline ‘Desh ki Dukan’ (translated as ‘the nation’s store’). This platform offered a vast selection of over 50,000 grocery products at discounted rates, focusing on express delivery. JioMart operated on an online-to-offline business model, allowing consumers to place orders online and have their goods delivered from local kirana stores. It initially launched operations in Mumbai, later expanding its presence throughout India by partnering with local kirana shops. This approach set it apart from the warehouse-based models used by companies like Grofers and Amazon Now.
The JioMart model empowered local vendors and small kirana stores to accept orders via WhatsApp and ensure delivery within 24 hours or even on the same day. JioMart aimed to create a hybrid model that combined its own retail stores with local kirana shops to fulfil orders more efficiently and expedite deliveries. While the mobile application for JioMart was yet to be launched, the JioMart website was already operational for customers. Local kirana stores had the option to register online with JioMart’s merchandise delivery platform, and upon registration, they could digitize their kirana shop to receive and process orders via WhatsApp. Once the kirana shop processed an order, JioMart would send a confirmation to the customer for pickup from the store. Additionally, Reliance planned to transform these stores into JioMart franchises, enabling them to source goods directly from Reliance Retail and operate entirely digitally. JioMart was handling approximately 50,000–70,000 orders per day.
Reliance JioMart’s aggressive approach to incorporating kirana stores as suppliers had disrupted the traditional distribution landscape, offered competitive pricing and undercut established distributors, resulting in distributors losing market share. Reliance Retail’s initiative to enlist kirana stores as franchise partners presented an intriguing opportunity. It offered several potential benefits, such as relieving kirana stores from the burden of developing their own e-commerce infrastructure, access to a broader customer base through Reliance’s platform, and the possibility of better terms and support from a corporate giant like Reliance.
However, adopting the franchise model could come with certain challenges and trade-offs for kirana stores like Trehan’s. On the positive side, they would gain access to advanced technology, enjoy economies of scale, tap into marketing and branding benefits, and reach a larger customer base. Conversely, they might have to relinquish some autonomy, possibly pay franchise fees and face heightened local competition if other kirana stores followed suit and become highly reliant on Reliance for supply chains and customer orders.
For Trehan and other kirana store owners, the decision to embrace the franchise model or jump onto the e-commerce bandwagon hinged on a thorough assessment of their business goals, risk tolerance and adaptability to change. While the franchise model offered advantages, it entailed risks and potential loss of independence. In the changing landscape of consumer preferences, adopting technology and e-commerce appeared essential for the long-term survival and growth of kirana stores. However, the specific approach could be carefully considered based on each store’s unique circumstances and objectives.
Hyperlocal E-commerce Models
The COVID-19 pandemic accelerated the adoption of hyperlocal e-commerce platforms, particularly in the food and grocery sector, where the needs of retail owners, such as kirana store proprietors, took precedence. These platforms recognized the digital transition challenges faced by many kirana store owners. As a result, they designed user-friendly interfaces with real-time cataloguing solutions, consumer-friendly mobile apps, robust customer service support and streamlined setup processes that could be completed in just a few minutes.
These platforms offered a range of features, including digital supply arrangements, in-store pick-up and home delivery options, customer analytics, and marketing tools like special offers and loyalty points. Importantly, they empowered kirana store owners by giving them full control over their businesses while reducing the complexity of day-to-day online store management.
Similarly, in the West, many stores, such as Big Basket, Swiggy, Zepto, Blinkit and Instamart, were partnering with kirana stores to provide fulfilment services. However, it was crucial to consider the cost factor, especially when it came to instant delivery within two to four hours through these stores. This model tended to incur approximately 40% higher costs compared to the traditional slot-centric warehouse retail model in India.
Given the price sensitivity of Indian consumers and the economic constraints faced by kirana shops, it remained to be seen whether this high-cost instant delivery model could be sustained in the future, and Apna Store, like many others, would need to carefully evaluate the economic viability and customer preferences in this evolving landscape.
Footnotes
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The authors received no financial support for the research, authorship and/or publication of this article.