Today, Flourish Ventures released a new research report showing that corner shops are doing better than predicted despite protracted supply chain issues and big-box and online retail competitors.
The study 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. Both shopkeepers and customers believe however, 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. Key findings include:
● 50% of consumers visit their corner shop daily, and 24% regularly use a store tab for credit purchases.
● 71% of consumers purchased more groceries from local corner shops during Covid-19 lockdowns.
● 73% of consumers strongly agree that the corner shop is vital to their community, valuing proximity, convenience, and service.
● 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.” 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.”
To learn more, read the 2022 Digitizing the Corner Shop report at https://www.DigitalCornerShop.flourishventures.com. Flourish Ventures is an early-stage global venture capital firm with more than half a billion dollars under management and 70 portfolio companies in Africa, India, Latin America, Southeast Asia, and the United States.
The firm backs entrepreneurs whose innovations help global consumers and small businesses achieve financial health.