Consumer goods companies such as Hindustan Unilever Ltd., Dabur India Ltd. and Tata Consumer Products Ltd. have recognised the importance of quick commerce in packaged foods, personal care and home care products. Currently, the platform accounts for around 40% of digital sales for these companies.
“We are working with all the key players in the quick commerce space to come up with the product mix and portfolio. This is a very high growth channel for us,” said Mohit Malhotra, CEO of Dabur India.
Analysts at Elara Capital point out that with e-commerce and modern trade becoming more costly than quick commerce for FMCG brands, the share of quick commerce is expected to rise to 60% in the near future. “Large brands tend to enjoy higher profit margins on quick commerce platforms compared to e-commerce due to lower discounts,” they said in the report.
However, it is too early to compare kirana and quick commerce as there is a huge difference in scale between the two.
According to Menon, the average spend per consumer on FMCG in kirana stores is Rs 21,285 per year, while the same figure in quick commerce is Rs 4,886.
Rural-urban divide
Quick commerce remains largely an urban phenomenon.
In contrast, in rural areas where internet penetration is still low and access to large retail chains is limited, kirana stores continue to thrive.
According to Naveen Malpani, partner at Grant Thornton Bharat, the growth of quick commerce is undeniable, but the channel is not poised to replace traditional retail, which is still more widespread in India: “Quick commerce will complement older models and fill a niche for immediate small purchases. Also, 10-20 minute delivery services may not have much market traction in rural markets where distance and time are less of an issue.”
However, many believe that challenges are evident even in these areas.
Samir Gundotra, CEO of Friendi, a startup that is building “mini-D Marts” in smaller towns where big companies like Reliance and Tata have not yet reached, says small businesses are starting to feel the pain of the same slow decline that saw phone booths become ubiquitous in the age of mobile phones.
As rural customers gradually embrace digital shopping and start demanding more variety, kirana stores must adapt or risk becoming outdated, he said.
Moreover, the popularity of quick commerce is likely to challenge the dominance of incumbent e-commerce platforms, especially in areas such as beauty and personal care, packaged foods, and apparel.
“Quick commerce is mainly present in metros and tier 1 markets, impacting sales of traditional players in these regions. But as quick commerce players expand into tier 2 and tier 3 markets, they will also challenge players like DMart and Nykaa, which will lead to a decline in sales and profitability,” analysts at Elara Securities said.
Frendy’s Gandotra believes that the journey of kirana stores is not doomed, but strategic intervention is required. Many kirana store owners struggle to integrate point-of-sale systems, inventory management software and even digital payment solutions. These stores need to embrace technology.
Another aspect is the need for policy support. Regulations that ensure fair competition can prevent monopolies by large retailers. Moreover, subsidies, tax benefits, and grants for infrastructure improvements can help small businesses adapt to changing market trends. With new support, kirana stores can remain the backbone of Indian retail.
Still, some people will be left behind in this change: Analysts at Elara Capital warn that the rapid rise of quick-commerce platforms, combined with aggressive discounting, could eliminate 25% to 30% of traditional grocery stores.
