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Business trends

Mom and pop 2.0: Asia's traditional retailers embrace tech

India's StoreKing and Indonesia's Warung Pintar are not out to disrupt an industry

Traditional grocery stores in developing Asia have found digital partners that are helping them remain relevant in the 21st century.   © Reuters

JAKARTA/MUMBAI -- For Renuka, a 36 year old living 110 km southwest of Bangalore, shopping became a lot easier after her local merchant adopted a service from StoreKing, an Indian startup bringing e-commerce to rural mom and pops.

Her village shop used to carry basic shampoos, soaps and not much else. But now, "recharging mobile phone talk time and transferring money has become a lot easier," she said. And a lot less of a time sink. Renuka no longer has to journey 20 km to the next town to carry out these tasks.

"I can also get stationery items like Camlin sketch pens for my children at the village store," she said. "And the Lakme foundation I saw on TV."

Stories like Renuka's are becoming increasingly common across developing Asia, where startups have come to realize the important role retailers play in rural communities and are giving them a technological hand. Data from Euromonitor International shows that in countries like India and Indonesia over 80% of grocery shopping is done at small retailers.

In Indonesia, unicorns Tokopedia and Bukalapak have been leading the way in offering online-offline conduits.

Mom and pops, known as warungs in the country, order goods from Bukalapak's platform, cutting out middlemen and local distributors. Bukalapak also offers cash back when orders are paid for with the app's electronic payment service. Partial refunds are given if an order placed in the morning does not arrive by the end of the day.

Tokopedia has launched an app for traditional retailers that brings internet data and other digital Tokopedia products as well as online game vouchers to the country's small shops.

A newcomer to the scene is Warung Pintar, which is putting "smart kiosks" inside the country's ubiquitous minimarts. These kiosks come with open-access Wi-Fi to help stores attract ride-hailing drivers and other customers. They also include CCTV cameras to monitor customers for data analysis purposes. Shopkeepers are also given tablets that allow them to track sales and inventory as well as order goods.

Warung Pintar was founded in 2017 and now has over 1,000 warungs in its fold. It says that the average store owner earns up to 40% more income by using its services.

"The warung has been the heart of the Indonesian community for centuries," said Agung Bezharie Hadinegoro, co-founder and CEO of Warung Pintar. "As a microbusiness, the warung is not only a place for people to conduct transactions, it's also a humble, local hangout where community members from different backgrounds can interact, sparking ideas and even movements.

"We believe that warungs still have the right to modernize and still keep their warmth as the heart of local communities."

Deepika Chandrasekar, research associate at Euromonitor International, noted how in smaller cities that have not been penetrated by modern retailers, mom and pops are more popular, "especially since they cater to low-income [earners] and are based on personal relationships" between the shopkeeper and customer.

"With a huge part of Indonesia's population falling under this category, traditional grocery formats continue thriving," Chandrasekar added. "Also, due to the low-maintenance, small size and less budget required for these warungs, [merchants] are able to open stores easily and quickly in neighborhoods closer to consumers."

The story is similar in India, where 70% of the population lives in roughly 650,000 villages, giving modern retailers a logistical nightmare and mom and pop stores relevance in the 21st century.

StoreKing, founded in 2012, provides small retailers with tablets. For merchants, this means a catalog of mostly discounted products; for customers, it means an e-commerce experience.

Alibaba-backed Paytm Mall has also gotten in on the online-offline game. When a shopper places an order through the marketplace, the merchant sends the items to a Paytm affiliate near the customer's home.

"We do not want to be the retailer where we buy inventory and we resell at a discount," Paytm founder Vijay Shekhar Sharma said. "We want to be the technology provider to the small shopkeeper, where we enable them to do e-commerce. Our business model is actually the heavy lifting up of small businesses to e-commerce."

In the Philippines, sari-sari stores, as mom and pops are known in the country, are having their market share gradually eaten away. Euromonitor data shows that these traditional retailers accounted for 68% of the country's 2.2-trillion-peso grocery market in 2018, 5% less than five years earlier.

Founded in 2015, Growsari, like its peers in other countries, seeks to eliminate middlemen and boost grocer income. The company said it plans to add payment, remittance, loan, insurance, store-layout and other services.

Mom and pop stores could help e-commerce and mobile payments become mainstream in the Philippines. But there is a long way to go. Last year, less than 1% of over-the-counter transactions were done via mobile phones, according to Mynt, a fintech company.

Nikkei staff writers Rosemary Marandi in Mumbai and Cliff Venzon in Manila contributed to this story.

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