India’s humongous retail market, estimated to be worth more than $800 billion in 2020, has attracted investments from leading international retailers, the biggest Indian conglomerates, and even first-time entrepreneurs. Grocery makes up more than 65% of India’s retail market and has seen intense competition. Walmart, Carrefour, Tesco, Spar, Nanz Group, Tata, Birla, RPG, Reliance , and Adani are among the corporates to have ventured into grocery retailing. These firms employed various models in the last two decades to crack this market. The intense action has led to expansions, rollouts, mergers, buy-outs and even closures.
The evolution of the grocery retail landscape in India reflects the complexity and contradictions inherent to the country. We find that national and regional chains of hypermarkets, discounters and neighbourhood supermarkets coexist with kirana stores. It was initially assumed that kirana stores would not survive the onslaught of modern trade (MT) stores. Two decades later, kirana stores have stood their ground and hold more than 88% share of the retail trade. MT stores have also seen expansion from metros to tier-2 towns and reached close to 10% share of retail.
We are yet to witness the dominance of big-box stores like Walmart and convenience stores such as 7-Eleven like in western countries. The resilience of kirana and the evolution of MT formats in India offer unique lessons to all of us.
Analysing the trajectory of the organised retail sector in the US — often seen as the originator of many MT formats — and comparing it with the evolution of the Indian retail industry can help build a perspective on the evolution of MT stores and their co-existence with kirana stores in India. These learnings can become the building blocks required for the next stage of India's retail industry evolution.
The origins of modern trade formats in the US can be traced to the 1870s, often known as the era of the Second Industrial Revolution. This era — led by railways, roads, cars (internal combustion engines) and telephones — ushered the US into a period of economic development and prosperity unparalleled in human history. It significantly impacted the consumption of food, clothing, medicines, home, transportation, communication, and health services. The US emerged as the world’s economic engine contributing to one-third of the world’s industrial output by the 1920s.
This unprecedented prosperity made the US a land of opportunity, attracting immigrants from all over, especially from Europe. The country witnessed a sharp population increase from 40 million in 1870 to 280 million in a century. The share of the population residing in urban areas increased from 26% to 73.5% during the period.
The Second Industrial Revolution transformed the US from a rural agrarian nation to an urban industrialised one. The rapid industry growth reduced dependence on agriculture as the primary source of income. The population employed in agriculture drastically dropped from 46% in 1870 to an estimated less-than-4% by the 20th century.
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