As more and more neighbourhood kirana stores aim to modernise their tech infrastructure, the entry of Reliance Industries Limited (RIL) would help expand the current 15,000 digitized store base to over five million stores by 2023, a Bank of America Merrill Lynch research said on Tuesday.
One of the most interesting trends in retail sector in India is that kirana stores are keen to upgrade their merchant point-of-sale (MPoS) technology, which is driving a wave of modernisation (90 per cent of the $700 billion retail market is still unorganized).
“The current one-time price point of Rs 50,000 limits the market to Class A/B stores (turnover of Rs 900K+/month).
“We believe that with the RIL’s entry, we could see an increase in merchant adoptability, as the price points will likely come down (RIL’s current one-time deposit is Rs 3,000) and reach should expand,” the research noted.
As a big player, RIL is entering an otherwise scattered market. Some of the key players in the fragmented merchant point-of-sale (MPoS) today are SnapBizz, Nukkad Shops and GoFrugal.
“Overall, we expect RIL to help expand the current 15,000 digitized store base to over 5 million stores by 2023,” said Sachin Salgaonkar and Sukriti Bansal, Research Analysts at DSP Merrill Lynch (India).
For the research, the team met with the SnapBizz management which has over 4,500 devices installed in more than seven cities in India (or over 30 per cent of the digitized store base).
For a one-time payment of Rs 50,000, the merchant gets a PoS device with Snapbizz software, a screen space to display ads and a personal app to interact with users.
On back of these products, the retailers’ revenue is estimated to increase by Rs 8,250 month each, thus recovering the investment in six months.
“Kirana stores liked the ease of billing/generating GST complaint bills the best. The PoS system provides an option of adding in-built discounts and also push offers to entire customer database via SMS,” the research noted.
Reliance, with a deep footprint in over 10,000 Reliance Retail outlets pan-India, is working on to create the world’s largest online-to-offline new ecommerce platform.