Retailers in emerging markets employ different selling formats characterized by different degrees to which consumers can access and inspect products in-store. In the modern trade format, retailers organize products on store shelves, allowing consumers to examine them freely. In contrast, in the kirana store format, retail stores employ shopkeepers who offer products one at a time to consumers, and the consumers decide whether to purchase the offered product or to ask for an alternative. Our research highlights the role of a potential factor — how consumers’ time costs of shopping interact with their preference heterogeneity — in explaining the surprising prevalence of the kirana format in emerging markets despite the advent of modern trade, which has more buying power and typically is more efficient. To this end, we build a game-theory model to study a retailer’s selling format choice and its effect on product assortment and pricing. We analyze a scenario where the retailer can offer a mainstream brand (with a known utility) and a specialized brand (with a possibly higher or lower, but ex-ante uncertain, utility) to consumers who have time costs of shopping. We find that the kirana store format enables the retailer to generate a higher profit per consumer by taking advantage of consumers’ shopping costs, while the modern trade format serves as a commitment not to exploit these costs, leading to increased overall demand. The retailer adopts the kirana store format when consumers’ match heterogeneity with the specialized brand is either sufficiently high or sufficiently low. Furthermore, the kirana format may allow the retailer to offer a limited assortment and, therefore, survive with a smaller footprint. We show that these findings are robust under competition, and even ex-ante symmetric retailers may choose to adopt different selling formats in equilibrium.