Dwindling Fortunes: Quick Trade Platforms, Big Retailers Sound the Death Knell for Small Businesses, Neighborhood Shops in Kerala

A faint hint of the setting sun is visible on Mohanan’s face as he sits staring at his mobile phone screen outside his shop, located a stone’s throw from the Thamalam level crossing in Thiruvananthapuram, Kerala. Residents pass by, but he doesn’t see any of them turning to his shop to pick up something essential for the home.

“You see for yourself. Everything is gone,” says the 62-year-old, pointing to shelves of various items scattered haphazardly around, when asked how his sales are going.

The shop has been sitting there for more than 50 years, ever since his father opened it in the neighborhood where Mohanan has lived all his life.

“It’s all the sadder because I’ve seen better times in the past. Even five or six years ago, I used to make ₹3,000 to ₹5,000 a day. Now I barely manage to make even ₹300 on most days. I stocked a bag of rice about a month ago, but I couldn’t bring it all and deliver it home. Why would I come home with just half a kilo. I sit here every morning because it’s become a habit. Before long I will have to close shop and find another job, maybe somewhere as a security guard that will pay more,” rues Mohanan.

Now a common pattern

Mohanan’s plight is not an aberration, but part of a pattern playing out across neighborhoods in Kerala and across the country as fast-casual platforms and large corporate-backed retail outlets spread their wings and penetrate smaller urban centers and even rural areas.

Although the first players in the fast food scene started their operations in Kerala in a limited, experimental way in cities like Kochi about five years ago, there has been a major expansion in the last two years. Swiggy, Instamart, Blinkit, Big Basket, JioMart and Zepto are currently operating in the state. With the promise of fast delivery and attractive prices, these platforms are an attractive proposition for consumers, while many young people have also found employment as suppliers. In parallel, large retail chains, including Reliance, have rapidly expanded into cities and rural centers in the state.

From the consumer’s perspective, it all paints a rosy picture, but a walk through business zones and neighborhoods reveals the plight of those struggling to cope in the digital age. The effect is felt even by relatively large traders who have had thriving businesses for decades, such as 59-year-old K. Unnikrishnan, whose family has run the Kumar Store in Neyyattinkara for 70 years.

Padmakumar, owner of an old grocery store in Thiruvananthapuram’s Poovachal village, inspects the store, which he has gradually converted into a fertilizer warehouse. | Photo credit: Nirmal Harindran

“Earlier, on the first day of every month, we used to have sales of over ₹50,000 and an average sale of ₹25,000 for the rest of the month. Now the first sale of the month has come down to ₹10,000 and an average sale of ₹5,000,” says Unnikrishnan.

“We had five clerks and one cashier. Now it’s just me and one other person. We’ve been hit by both the fast food companies and the big supermarkets because we can’t afford to give the deep discounts they’re giving. I don’t plan to take any more risks or loans to improve the business because I don’t have much hope of overcoming this downturn,” he says.

Predatory pricing mechanisms

The change that is happening now is not something that any of them could have predicted ten years ago. The Kerala Vyapari Vyavasayi Ekopana Samiti (KVVES), a traders’ body that has been voicing concerns over the predatory pricing mechanisms of both fast-casual and big retail chains for some time, is feeling this shift in declining membership.

According to Babu Kottayil, Vice President of KVVES, in recent years, an average of 20-30% of various business ventures in Kerala close annually, while 10-15% new ones open annually, with a net decline of 10-15% in the number of such businesses. A large number of new businesses are restaurants or cafes.

Unnikrishnan, owner of Kumar Stores, a grocery store in Neyyattinkara, Thiruvananthapuram, inspects the empty old shelves in his store. | Photo credit: Nirmal Harindran

“There are a lot of factors at play, including fast-commerce platforms and large supermarket chains. Both have penetrated even the smallest towns. Smaller traders are now moving away from the business at a much faster pace. Big corporate players who dictate competition are now present in all areas, be it inventory, electronics or apparel. Since they fix prices, the margins of small traders are being trapped drastically,” observes Babu.

Large “dark shops”, the name given to fast-food products in various neighborhoods to ensure super-fast delivery, have now also appeared in rural areas. Since there are no signboards outside, the only clue to their presence is the large number of two-wheeled deliverymen running around. Since their supplies almost never come from local markets and are sourced through large supply chains, local producers or traders have no opportunity to benefit from their massive growth.

Eighty-four-year-old Gopi, who runs Sree Panchami Variety Stores at Chiramukku in Thiruvananthapuram, says declining sales, high rents, business license fees, power bills and food safety license fees even for selling snack packs have made the entire business unsustainable. “Some people order online or shop in supermarkets at the beginning of the month and come to me at the end of the month to get things on credit,” he says sadly.

KVVES has tried in the past to overcome the challenges of larger chains and online commerce through various experiments, including a uniform shopping model for all stores in a certain area, but these attempts have failed.

“During the early days of the online platform boom, the samiti thought of initiatives, but we realized that these required huge investment and were mostly impractical. The one-stop-shop model was tried in some districts, but many traders did not cooperate with it. Home appliance traders have a collective for bulk buying,” notes Peringamala Ramachandran, former KVVES office.

“There are strategic discussions among traders about how prices can be reduced. Because they all buy from wholesalers, they cannot sell without a minimum profit, unlike larger chains or supermarkets who buy directly from companies at a lower price,” says Ramachandran.

Smaller traders who have switched to new shops in recent years, for example owners of smaller mobile shops, are also feeling low.

“Online sales as well as big chain stores have made inroads into our business. Now customers come to us mainly for accessories or for servicing and not for buying new mobiles,” says Mohammed Shafi, who runs a mobile shop in Valanchery in Malappuram district.

Local fishmongers are another category whose business has declined due to the online shift. Adding to the challenges posed by online fresh fish delivery services and supermarkets are restrictions on their entry into many apartment complexes. “Many of the long-term vendors are either out of work or have switched to other jobs,” says Pulluvila Stanley, general secretary of the All India Fishers and Fisheries Workers’ Federation.

Complaint not heard

The All India Consumer Products Distributors Federation filed a complaint against e-commerce platforms with the Competition Commission of India two years ago. According to Dhairyashil Patil, the federation’s national president, not much has been done in relation to the complaint, which highlighted some of the major problems as a result of brisk trade.

“We made substantial points about deep discounting and predatory pricing in the marketplace by fast-commerce platforms. Supporting documents and accounts were provided, particularly about how they manipulated prices. Products available in the mainstream market and products provided through these platforms are often weighted differently. So the discounts customers receive are mostly perceived and not real. The Commission has not gotten any worse about this,” Pat now warns, and it can be alarming.

A rare story of survival

Amidst all the grim stories of the struggle to survive in the digital age, the story of how local cable operators in Kerala have managed to stay afloat may have lessons for other industries as well.

In 2007, as the winds of digitization began to sweep through the cable sector, local cable operators across Kerala formed the Kerala Communicators Cable Limited under the umbrella of the Association of Cable Operators. The company had a cooperative structure with local cable television operators as profit-sharing shareholders. The company launched digital cable television services under the Kerala Vision brand. It launched broadband services in 2015 and Over-The-Top (OTT) platforms as a bundled service in the years after COVID. Currently, more than 6,000 local cable operators across Kerala are part of the initiative.

This model is particularly interesting as local cable operators have slowly been closing up shop across the country amid corporate rollouts and the proliferation of OTT platforms. A study by the All India Digital Cable Federation estimates a 2025 job loss in the sector at 5.77 lakh from 2018 due to the closure of 72,000 local cable operators and 900 multi-system operators.

“We couldn’t survive in the digital era if we didn’t stay united. Since all the local operators are shareholders, they get a share of the profits. We now have an agreement with major streaming platforms like Hotstar to provide their services in a bundle with ours. In the last two years, about 10% of subscribers have given up their cable set-top box to meet the challenge. But we are well set up with broadband joining. member of the association.