Kirana stores have a hard time paying the stock
Mumbai: Although retailers continue to grapple with logistical problems in purchasing essential goods, a liquidity problem has emerged for small grocery stores.
A shopkeeper in Mumbai said that dealers do not accept checks for larger sums, mainly because banks, which are understaffed because of it, are not clearing them. Some grocery stores also do not have RTGS facilities. While there has been a situation of unavailability of stocks after closing, small supermarkets said they are finding it difficult to obtain supplies from the company's distributors due to liquidity problems. This is another reason why grocery stores have been under-supplied in recent days.
However, companies like Hindustan Unilever ( HUL ) & Cargill They are extending a helping hand in these difficult times.
Piyush Patnaik, MD of Cargill's oils business in India, said, “Kiranas will run into trouble due to two reasons - logistical problems in delivering stocks to them, and lack of cash in the market. Our distributors are extending to kiranas and we are doing it for our direct customers. ”
An HUL spokesperson said the company expects the prolonged lockdown to impact the cash turnaround time of its distributors. “We will continue to evaluate the need for extending credit to our distributors from time-to-time and take appropriate actions in the best interest of our business and the partners with whom we work,” said the spokesperson. Previously, corporates had extended credit lines to their distributors during the demonetisation exercise in 2016.
Small retailers in Mumbai said that some dealers, as a rule, do not accept cash beyond Rs 15,000-20,000, and now even checks are not accepted. These retailers said they were rushing to register for RTGS facilities, a process that can be time consuming.
In Kolkata, some stores, mostly hyperlocal, face problems in purchasing products from larger stores and selling them with a small surcharge. However, the relatively larger stores are in a better position. While most trade in cash, some get credit from distributors.
There are around 12 million kirana shops in India, according to, and close to one million wholesalers that make up the industry's $ 650 billion lifeline. The relevance of small neighborhood stores has been stable given the familiarity and proximity factors. Some even extend monthly credit to consumers.
Naren Sen, who owns a hyperlocal kirana store in the Paikpara area of Kolkata, is facing a difficult time in recent days. “A lot of people in the neighborhood are shopping on credit, but we are not getting credit. Department stores and sub-distributors are also not ready to accept checks, he added. However, Milton Chakraborty, which has a relatively larger grocery store in the Kasba area of southern Kolkata, is receiving credit from distributors.
An industry executive said that distributors from companies like ITC, which has a strong presence in Kirana stores, are extending the line of credit to these stores. There is not much cash crisis at the moment, although most of the kirana stores do not have RTGS but are obtaining credit, the executive said.
In eastern Bengaluru, most of the neighborhood stores remained closed on Friday due to lack of stock, and those that were open only operated between 7 a.m. and 1 p.m. during the day due to low resupply of distributors. They all received their delivery last week and are waiting for them to be refilled as the shelves remain half-empty due to customers' panic purchase this week.
There has been no supply since last week, said a Kirana store owner, who pays his distributors in cash and online. We have yet to come to a check or RTGS payment situation currently, as that will only happen when the next delivery cycle occurs, he added.
A local ICICI branch manager said the bank has received no requests from any store owner to access RTGS facilities. You need an approval from the RBI. In the current situation, it is not likely that they will be able to leave their stores and go to the bank for that, ”said the manager.
(Contributions from Namrata Singh in Mumbai, Udit Prasanna Mukherji in Kolkata, John Sarkar in New Delhi and Avik Das in Bangalore)