Between March 2020 to March 2021 there has been a 40% growth in unique customers adopting Unified Payments Interface, while there has been a steep 2.8X growth in UPI merchant payments by value from FY2020 to FY2021. As more and more Indian consumers are shifting from cash to digital payments, it is becoming increasingly important for the traditional kirana stores of India to stay relevant in the growing digital economy.

The current kirana store payment digitization drives are less inclusive and not necessarily handhold non-users to become users

Lately, there has been a wave of fintech firms, large retail chains, and e-commerce companies led efforts in driving digital payments for kirana stores. However, these sales driven initiatives primarily operate on a carpet activation mode and may not necessarily handhold non-users to become users.

As a result, the less savvy kirana store owners may be left behind. There is an opportunity for FMCG companies to take a more inclusive approach in digitizing payments for kirana stores and create a win-win situation. This can help kirana stores future-proof themselves, and in turn, help FMCG companies sustain their businesses.

FMCG firms have an in-depth knowledge of  kirana store businesses and expansive on-the-ground machinery to make responsible scale-up of digital payments adoption happen for them

1. FMCG firms have an improved visibility of the kirana retail channel and can engage key supply chain actors to improve the effectiveness of driving digital payments among kirana stores

The current payment digitization efforts focus majorly on kirana store retailers and seldom on other actors of the channel like kirana store customers, local distributors, or salesperson. But it needs an integrated approach to improve the effectiveness of onboarding retailers and minimize dropouts after activation. FMCG firms have a better view of the kirana retail channel and are better positioned to design a holistic digital payments program involving key value chain actors.

2. FMCG firms have a better outreach and can drive digital payments for harder to convert users

The current private sector led initiatives are guided predominantly by sales targets and driving digital payments for hard to convert users might not be directly linked to the business objectives. For example, a frontline salesperson of a fintech firm is guided by how many kirana stores could he activate in a month. In this framework, there will understandably be a lack of motivation in coaching and monitoring less savvy users to become digital payment adopters. Also, the focus currently is towards making the kirana stores accept digital payments and less so on making them pay digitally to purchase inventory. This can leave them half empowered.

Large FMCG firms have on-the-ground resources to responsibly scale up digital payments adoption for Kirana Stores, leaving no one behind – through continuous handholding, training, demonstrations, and monitoring. Apart from supporting less savvy users, this approach will also help include more rural kirana stores and women kirana store owners – which might not be the focus area of current private sector led interventions

Digitizing payments for kirana stores make a lot of business sense for large FMCG multinationals

At Unilever, we’ve seen first-hand how digital payments can empower individuals, micro and small businesses, and communities in the world’s most marginalized settings. Ultimately that strengthens our own business and inspires our people beyond measure.
Paul Polman, CEO Unilever  

1. Supporting kirana stores to adopt digital payments will help FMCG firms generate real-time data, smart analytics, and informed decision-making

Digital payments have the potential to improve the visibility for FMCG companies beyond their local distributors and understand the purchase behaviour of the kirana stores. This can include for example purchase size, segregation between credit and cash purchases, etc. If coupled with digital ordering, this can help businesses gather real-time information on their inventory and improved demand forecasting, ensuring appropriate supply and increased sales for their customers.

2. A digital record of transaction history will improve the creditworthiness of kirana stores, which in turn will help FMCG companies identify credit linkage opportunities, ultimately increasing sales

, especially the ones from rural areas. As most of their businesses are cash-led, the creditworthiness remains low. Adopting and regularly using digital payments can improve access to credit, which in turn will also increase the sales opportunities for FMCG companies.

3. In the long term, FMCG companies looking to expand into digital marketplaces can serve their consumers through kirana stores ready to accept digital payments

FMCG multinationals can look into building a network of kirana stores adept in handling digital orders and payments to serve new-age consumers. , and empowering kirana stores in accepting digital orders and payments will help companies in catering to this emerging market demand.