Flourish Ventures has recently released a research report showing that corner shops are doing better than predicted despite protracted supply chain issues and big-box and online retail competitors.
The report confirmed better-than-expected sales and that 94% of consumers surveyed plan to shop as much or more at their corner shops in the future. From the same study, both shopkeepers and customers agreed that corner stores will need to accelerate digital technology adoption to remain relevant and competitive.
The ‘2022 Digitizing the Corner Shop’ research report, published by Flourish, a global fintech investor in partnership with Bain & Company and 60 Decibels, elevates the voices of more than 800 shopkeepers and 800 of their customers in Brazil, Egypt, India, and Indonesia. These primary research findings, along with accompanying Flourish analysis, provide shopkeepers, technology providers, and investors with fresh insights into this often overlooked $900 billion industry with informal retailing making up 67% of total retail across Kenya, Nigeria, and South Africa.
The report gathered a number of key findings which included stats that showed that 50% of consumers visit their corner shop daily, and 24% regularly use a store tab for credit purchases. The report also showed that 71% of consumers purchased more groceries from local corner shops during Covid-19 lockdown.
The report further showed that 73% of consumers strongly agree that the corner shop is vital to their community, valuing proximity, convenience, and service. Furthermore, the report found that 80% of shopkeepers are eager for digital business and financial tools, which have the potential to increase profits by 60-100%.
“Our research proves that, even during the pandemic, predictions of the corner store’s demise may have been premature,” said Flourish Managing Partner Arjuna Costa.
“But while customer sentiment across the surveyed markets is enthusiastic, continued patronage will depend on further digitization of store operations and customer responsiveness. The findings of our research can be applied to other markets in Sub-Saharan Africa with corner shops adopting some form of digital solution with the diffusion of mobile technologies in Africa solving many of the challenges that shop owners face, making it easier to track inventory, record sales, monitor cash flow, and supervise customers’ credit,” Costa added.
Shopkeepers are adopting new technologies that customers wanted yesterday
During the pandemic, shopkeepers accelerated the adoption of digital technologies to address supply chain inefficiencies, low online sales and limited access to finance and other banking services. Research findings include:
- Across the countries, 55% of shopkeepers use messaging apps in their businesses, and 75% plan to increase usage in the next 12-24 months. Together, these factors point to the opportunity for a “digitized corner shop,” a tech-enabled, well-financed, efficient, responsive, and competitive informal retailer.
- Flourish estimates that when corner shops go digital, merchants can increase profits by 60-100%, which may explain why 80% of shopkeepers are eager for better business and financial tools. However, they remain slow to adopt them due to other pressing business tasks, data security concerns, lack of familiarity and limited access.
“As the digitized corner shop ecosystem matures, early technology platforms—such as ApnaKlub in India, MaxAB in Egypt, Mercê do Bairro in Brazil, and ShopUp in Bangladesh will develop into trusted service providers,” continued Costa. “However, to serve this market, entrepreneurs must determine what immediate pain point to solve, how to monetize and when to partner versus build technology. They must create a seamless and trust-worthy onboarding process, as merchants are reluctant to invest time and money into solutions until they see the tangible value.”
DX100 (CIO100) is here.
Call for the most innovative digital transformation brains! Apply now via link.
100+ winners will be featured on www.cioafrica.co Final deadline: 31 September 2022.