How financial technology is empowering kirana stores to compete on a bigger stage

Kirana stores are at the crossroads of India's retail landscape. Superfast delivery by quick commerce companies is stealing the limelight, and the traditional mom-and-pop stores are unable to retain their customers.

According to recent data, kirana stores' market share is projected to decline to 88.9% by 2028 as quick-commerce grows by 74% in 2024. The urban impact is stark—nearly 90,000 kirana stores have shut down in metro cities alone, with 60,000 closures in Tier I cities.

This raises a critical social concern. Kirana stores are important contributors to the economy and crucial to the communities they serve. They create jobs, forge friendships, and even make unenforceable, informal loans to loyal customers.

And their loss is more than a blow to commerce—it's a blow to livelihoods. But out of these challenges comes hope—technology, specifically financial tools and payment solutions that gives the kirana stores a way to reinvent themselves for a new marketplace.

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Role in India's economic fabric

For decades, kirana stores have been addressing hyperlocal demands, ensuring that essentials are available even in faraway regions. While ecommerce behemoths rely on human relationships, many kirana stores provide credit to loyal customers. This is a significant strength, but the lack of technology adoption has exposed them to transformation in the changing retail landscape.

Ecommerce and quick-commerce platforms have transformed the expectations of customers by promising faster deliveries, greater choices, and convenient digital payments—and they deliver on all those counts. But it is not the end of kirana stores, but an opportunity to embrace technology and succeed in the new environment.

Role of financial technology

Fintech and new payment solutions improve kirana retailers' ability to level the playing field. These technologies help them to increase operational efficiency, improve customer experience, and expand their commercial scope. Here's how.

Digital payment solutions: Kirana stores have now begun embracing easy digital payment models to gain competition. In the modern digitally savvy market, cashless payment through the help of the Unified Payments Interface (UPI), QR codes, and point-of-sale (POS) devices has become the norm, which helps retain customers who prefer to transact digitally, thus enhancing trust and transparency.

Inventory management tools: Kirana owners now depend on data-driven insights to understand which products are popular. They modify their inventory to match the local demand and increase profits. The fintech tools make it easy to track stock levels, reduce waste, and reorder efficiently.

Microloans: The main challenge that most kirana stores face is a lack of working capital, and fintechs are filling in this gap. Microloans meant for small businesses help the owners upgrade infrastructure, stock up in bulk, or even adopt new technology—critical support needed for their survival and growth.

Digital storefronts: Kirana stores can now own a digital presence. Digital platforms that offer online delivery enable them to compete with players offering quick commerce. By doing this, they stay connected with modern shoppers while sticking with their loyal, old-time customers.

Loyalty programs and customer insights: Kirana businesses can now implement customer loyalty programs and analytics tools. These connect to digital payment methods and provide analytics via simple dashboards.

G2C services: G2C services can turn kirana stores into a hub in the local area. It enables kirana stores to offer services like the application of PAN cards, updates on Aadhaar cards, GST filing, and filing IT returns through fintech platforms. Additional services will not only bring diversification in revenues but also increase footfall and make it a business for the community. Through digital tools and partnerships with fintech firms, kirana stores can effectively run these services and be better positioned competitively in their neighbourhoods.

ONDC: By leveraging ONDC, kirana stores can seamlessly integrate with digital platforms, offering competitive delivery options and utilising remote inventory to stay agile and meet evolving customer demands, effectively levelling the playing field against quick commerce giants.

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Kirana stores and social responsibility

Technology can be enabled, but kirana stores also require community support. These establishments serve as more than just retail outlets; they are lifelines. They provide jobs, narrow economic gaps, and preserve the cultural fabric of neighbourhoods.

Digital transformation is accelerated through partnerships between fintech companies and governments. Subsidised tools and skill-building workshops are helping kirana owners adapt to change.

Kirana stores are not dinosaurs; they are resilient and adaptable. Given the right tools—digital payments, microloans, and online storefronts—they can thrive in a tech-dominated world. They will stay relevant, regain market share, and remain the backbone of India's economy if they embrace digital solutions.

It's not tradition versus technology for India's retail future; it's a merging of both. By supporting kirana stores, we are not only respecting the past, we are building a more powerful and inclusive future.

Kunal Jhunjhunwala is the Founder of airpay.