Neighbourhood Stores during a Pandemic

Aswathi Rebecca Asok (Research Associate, CSES)

April 8th 2020

Disclaimer: The views expressed here are solely of the author and not of CSES

It would have been quite unimaginable at the turn of this century, had someone told us that with a single click on the phone, everything that we need would reach our doorstep. Over the last few decades, the markets flooded with commodities, inventions, innovations and technological developments have changed our consumption patterns in an unprecedented manner. Many of us, particularly from a middle or upper-middle class background, prefer shopping from online platforms or one-stop shops like hyper marts and supermarkets rather than running between a nearby provision store, a vegetable vendor and a fish market. We never paid heed when our neighbourhood grocery shop got closed down as it lost out its customer-base (including us) due to the competition thrown by the nearby supermarkets.

However, crises such as the current global pandemic and the resultant lockdown compel us to reflect upon such minute things which we kept aside until now, very conveniently. After the imposition of lockdown, as usual we might have gone to our regular supermarket; just to see it closed or with a long queue at the billing counter. Then, hesitantly we might have returned to our old neighbourhood provision store. And the chettan/chechi there would have welcomed us just like the pre-supermarket days; refreshing the old bonds, asking about our family, chit-chatting with us about the current situation, and we would have reciprocated with enquiries about their family, availability of the stock and ultimately wondering how he/she will endure the tough time.

What is the relevance of these small neighbourhood stores in enabling us to survive through this desperate situation? Don’t we need to support them even after this period passes? These are some thoughts that occurred to me from small talks with three retailers after one week of lockdown. One is the owner of a neighbourhood provision store (Rafeeque), the second is a small vegetable vendor (Rajan) and the third one is the owner of a supermarket, a childhood friend of mine (Anas). (The names provided here are fictitious).

Rafeeque has been running the shop for the last many years in the same place and he seemed quite happy. “I am getting an adequate supply of goods as before from the same wholesaler. I have not lost out customers, in fact my customer base expanded. Since everyone is sitting at home, all of them buy goods from me only. Earlier many of them used to purchase from somewhere else on their way back from office.” It seemed that a couple of factors enabled him to keep the shop open even in the face of low sales in some days. 1. He stays very near to the shop, which is a family enterprise. Therefore, the operational cost required to keep the shop open (such as payment of salaries) is much lesser for him. 2. His ensured customer base and his ability to stock the most locally relevant assortment of goods reduces his capital investment. Unlike the massive capital costs (such as huge space) involved in the running of a supermarket, the intimate knowledge of the local consumer community helps him to prudently utilise the limited store space of his small shop. He keeps only what the local community actually needs while using the wholesaler as a warehouse. With a smile, he assured me that I do not need to worry about the supply until his shop remains open. “If you need any specific thing, let me know. If possible, I will arrange it for you”.

Rajan is a small roadside vendor (a tiny shop, referred as madakkada/pettikkada in Malayalam) mainly sells eggs, vegetables, bananas and plantains acquired from the locality. Confidently he said: “Since I have fixed customer base and regular local supply mechanism the lockdown did not affect me badly. The local farmers do not need to worry about the market for their products until I am here.”

However, I could not feel the confidence in the eyes of Rafeeque and Rajan in my friend Anas, the owner of a famous supermarket chain in my locality. “The supply is not regular and adequate. We are getting enough supply of essential goods like rice. But as you might already know, merely selling them will not cover our daily expenses. On some days we run out of vegetables and fruits, and on some days, the shop is filled with vegetables and fruits without any customer to buy them. Last week, people were rushing to stock things and we were falling short of meeting their demands. This week, sales have declined sharply. Even if the sale is less, we have to bear a substantially high cost just to open the shop, such as salaries and electricity charges. With this uncertainty, it will be difficult to keep the shops open throughout this entire lockdown period. Since there is government regulation that only five people can enter a supermarket at a time, the last week witnessed long queues in front of our shops. Maybe because of that people are generally hesitant to come to supermarkets now. We attempted converting one of our shops for online delivery. But that did not work properly due to the staff shortages. We have cut down the working hours of our employees as it will not be possible for us to pay them as per the current scale.”

Now we will discuss the most important point of this note; how do such scattered small neighbourhood kirana stores/pettikkadas, not requiring massive capital investment and overhead costs, enable us to overcome this difficult period?

The hoarding of essential commodities by the traders and middle men to profit out of the panic scenario is a common headache for any government. The last two floods in Kerala witnessed similar endeavours, despite strict government vigilance, at least in some parts of the state. It is quite natural to expect the same in the present situation too when the entire world is running to defeat a microscopic virus. How many days more, how much more of restrictions…no one can give a definite answer. We all were rushing to pile up things regardless of the assurance given by the state government on the continuous supply of required commodities (the natural outcome of such stocking could have been the rise in prices).

The interventions experimented by the Kerala government such as distribution of essential commodities through ration shops and setting up of community kitchens (to provide cooked food to the needy), instead resorting to direct cash transfer were smarter ways to evade hoarding. Transferring cash would also mean that people have to venture out to procure commodities, which has to be restricted at this juncture to control the community spread. Perhaps, Kerala is the only state in the country that distributed free ration to all, irrespective of priority and non-priority card differentiations. As per the official data, 63.5 per cent of total PDS cardholders in Kerala have purchased their share within four days by complying with the physical distancing protocol.

Beyond these efforts, do the neighbourhood provision stores have any role in preventing the possible hoarding and consequent price rise during hard times? Imagine a situation, no grocery shops and vegetable vendors are available in our locality and we have no other choice but to depend on the nearest supermarket for the purchase of all the required goods. This will definitely provide them with some sort of monopoly power in sales. In the panic situation, we are forced to remain at the mercy of such shops, believing whatever price they charge from us as the fair price. They do not have any personal bond with us; therefore, do not care whether we are jobbed or not, whether we have money in hand or not. On the contrary, the personal relationships developed between the neighbourhood shop owners and the customers work in two ways, beneficial for both sides. The intimate knowledge about the customers and the consequent accountability, many a time, prevent the neighbourhood shop owners from raising the prices arbitrarily. Similarly, such relations help the public to withstand the jobless, moneyless crisis periods. “Many of my customers are daily waged and I know that they don’t have jobs during the lockdown. Most of them have credit book (known as pattu book in Malayalam) with me and I continue to provide them goods on credit. They are my regular customers residing locally and I know them very much personally. They have to depend on me in the future also, so it is imperative for them not to break my faith. Therefore, I am sure that they will repay my dues once things get better and they start going for work,” Rafeeque paused. Besides the spreaded nature of such shops ensure that one seller cannot take advantage of the situation by acquiring monopoly power.

Although no authentic statistics is available, it is roughly estimated that about 12 million to 14 million petty shops operate in the unorganised retailing sector across our country. These include the local kirana shops, owner manned general stores, convenience stores, hand cart and pavement vendors. They are usually vulnerable to economic shocks, as we saw during demonetisation. However, considering their potential to provide livelihood to a significant number of families, their ability to prevent the creation of monopolies, their capacity to back the local economy and the public during difficult times, the government may think of support mechanisms (such as ensuring smooth supply of goods) for them during this lockdown period. This pandemic adds an additional public health dimension to the relevance of such shops. Through their scattered nature, they facilitate us to practice physical distancing, which is the need of the hour.

Now I can very well relate to what one of my friends residing in the middle of Delhi once said: “I miss a kirana store (grocery shop) in the corner of this street, as in my village, where I can conveniently go and buy things on credit as per the needs and close the account at the beginning of each month. It would be much better than making absurd calculations and buying things together for a whole month from the hyper-mart in the nearby mall at once my salary is credited”.

So, rest assured…even after this pandemic and lock-down is gone, ….nammade chettante kada, will be right there around the corner of your street. All they need is a little support from us who were their regular customers…once upon a time…