A Look Into The Lives of Grocery Store Owners Who Benefited From Micro-Loans

November 4, 2016
By Rang De Team

Sunita Gond runs a grocery store in Mandla, a remote district in Madhya Pradesh has a forest cover of nearly 60 percent.

In the last eight years, we have disbursed over 2,000 loans to rural entrepreneurs helping them set up grocery stores across India, especially in the states of Maharashtra, Bihar, Madhya Pradesh and Jharkhand.

The number of grocery stores depend on the locality and the population of the area although one grocery shop for every 50 households is considered an ideal scenario.

The definition of a grocery store is not set in stone. People in rural areas, with their lack of education, find it hard to define the type of shop they run and categorise most shops as a grocery store. It takes a while for villagers to figure out the difference between a grocery store, a petty shop and general store.

Grocery stores in villages sell almost everything from packed food to matchboxes. They have a hard time running their store and their households due to a lack of finance.

Villages in Madhya Pradesh are in the interior regions and cut off from cities. There are one or two grocery shops for 400 households and these shops have a hard time purchasing items to keep their store running.

Most of the grocery shops in rural areas have to purchase wholesale stock from shops in the city or nearby towns. Transportation is a major hurdle for people in remote villages.

Grocery store owners spend on building shelves and drawers to stock their products

Usually, they use their regular income to replenish stock on a weekly basis. Since their income is irregular, it becomes hard for them to purchase stock.

The income margin for grocery shops is so low that for a sale of Rs 200, only Rs 50–60 can be considered actual income or profit.

Since their income is irregular and they need to handle expenditure based on this, grocery store owners calculate their income on a daily or weekly basis. Few know the importance of maintaining accounts on a monthly basis.

During festivals, when the demand for groceries is high, shopkeepers make sales of up to Rs 4,000 and earn profits of around Rs 500–600 from it.

Since their income is not steady, it becomes difficult for shop owners to pre-plan their purchases. This obstacle, along with their lack of knowledge about running a shop, makes the initial few months difficult.

The best way to make a grocery store a success is by catering to the needs of the local population but to figure that out takes a few months. Many times, grocery store owners realise the need to sell a product only after customers repeatedly ask for it.

Due to this, there is no guarantee of a high profit until the shop owner learns the ropes of running the shop.

Many other shops open up when one becomes successful so a grocery shop owner needs to constantly expand and offer more products in order to remain as the main source for shopping needs for the community

Grocery stores are also set up when rural entrepreneurs feel that other livelihood activities will not work for them. Shanti Devi from Bihar took a loan of Rs 10,000 to purchase a cow but felt that it made more financial sense to set up a grocery store.

Like Shanti, many grocery stores are set up due to similar reasons. This leads to further problems like excessive competition. When the number of stores are high in a village with a low population, it leads to most of them running into losses.

Even though grocery stores are the main source of income for most of the owners, its income is insufficient to feed large families. People are forced to take up secondary sources of livelihoods. Many start recharging mobile phones from their store. Tailoring, cow rearing and poultry farming are other popular secondary livelihood options among grocery store owners.

Customer satisfaction is the main thing that keeps a grocery store running. To keep customers satisfied, grocery shop owners need to sell fresh items. Appropriate shelves are a must for shop owners.

Many grocery shops in rural India are kuccha shops and goods are exposed to rain. Grocery shop owners run into a loss due to this.

An attractive shop attracts more customers. Shop owners need to incur expenditure for making shelves and tables.

Malabai, a disabled woman in Maharashtra, runs a grocery store from a kuccha shop by the side of the road

Running a grocery store is a suitable home-based business that works for most women in a patriarchal society. Deprived of an education, this business lets them use their household skills and knowledge in independently earning an income for their family.

The main aim of most grocery store owners is to expand their business from a small retail shop to a wholesale business. This is usually not possible with their meagre income and so they continue to seek help.

The loans we have provided them so far has made them self sufficient in their business and continuing these loans will surely help them expand their shops.

Your contributions have helped us provide loans to 2,005 grocery store owners, many of whom are now able to earn a decent income and support their family. Help us reach out to more rural entrepreneurs from across India.

Please do invest in the grocery store owners that continue to seek your support through Rang De loans.