Kirana stores worry q-comm will eat up their business; is the threat overrated?

Q-comm is growing at break-neck speed and is making enemies while at it.  

Distributors and mom-and-pop store owners are irked by what they claim is a “rapid and unregulated growth” and allege that the “unchecked expansion of quick-commerce (q-comm) platforms is creating an uneven playing field, undermining the viability of small ‘mom-and-pop’ stores.” 

The worry is that quick commerce platforms are becoming direct distributors for major FMCG companies, sidelining traditional distributors and threatening small retailers' livelihoods.

The All India Consumers Products Distributors Federation (AICPDF) has urged Union Minister of Commerce and Industry Piyush Goyal to scrutinise the rapid and unregulated growth of q-comm platforms. 

Could q-comm platforms with their promise of rapid delivery times, efficient last-mile logistics, and a diverse range of products, edge out 1.3 crore kirana shop owners, who have historically dominated the retail landscape and currently makeup over 95% of India’s $600 billion food and grocery sector?

The worry seems rooted in the knowledge that a sector that is barely 3-4 years old has managed to change how some Indians shop. As per Kantar, the penetration of q-comm has more than doubled in three years. In June 2022, the Moving Annual Total (MAT) penetration of q-comm was at 3.6%; it stood at 8.5% in June 2024.

MAT refers to the total sales or penetration measured over 12 months, ending in the specified month. It provides a rolling yearly view of performance, capturing longer-term trends.

In the traditional retail model, distributors purchase stock from companies and supply it to retailers, who then sell it to consumers. In contrast, q-comm operates as a direct business-to-consumer (B2C) channel, eliminating the distributor and delivering goods directly from the company to the end consumer.

Krishnarao Buddha, senior category head at Parle Products, dismisses the distributors' concerns, arguing that q-comm is not shifting sales from traditional retailers but expanding new markets by adding additional touchpoints for brands and generating extra sales.

“For any traditional FMCG brand, modern trade accounts for 10% of sales, e-commerce 2-3%, and quick commerce roughly around 1.5% of sales. Q-comm is creating new opportunities for brands, not merely taking away from existing ones," he states.

Pankaj Mishra, founder of Gatih Foods, a relatively new brand that sells cow ghee and desi ghee, says, “For a brand like us, quick commerce is providing a high percentage of sales despite its geographical challenges. For us, it contributes around 30% of revenue.”

Buddha also notes that distributors did not raise concerns when modern retail formats like Reliance Retail and D-Mart emerged. They adapted to those changes but are now reluctant to accept new technologies and online platforms. 

“The idea of q-comm shouldn’t be discouraged; adaptation is key,” he emphasises.

Vani Gupta Dandia, who has previously worked with PepsiCo and Unilever, argues that in India’s diverse landscape, a single generalisation like ‘kiranas will die’ is not applicable.

She further highlights that quick commerce cannot offer the tangible experience and personal touch of local stores, such as the ability to gauge sizes, the joy of browsing, and the familiarity of seeing local faces. 

"The convenience of credit and the ability to directly address expired goods contribute to the enduring value of local vendors," she adds. 

She also points out that costs associated with quick commerce platforms, such as delivery charges and handling fees, alongside the challenge of reaching every corner of India, further underscore the unique advantages of kirana stores in the country.

Currently, Zomato-backed Blinkit operates in 39 cities, Zepto is present in approximately 10-11 cities, and Swiggy’s quick commerce service, Instamart, is available in 25 cities. Q-comm remains predominantly a metro phenomenon, with these platforms rapidly expanding into new cities and diversifying their product offerings to become comprehensive solutions. Additionally, Flipkart Minutes, Flipkart's quick commerce service, is also scaling up and entering new markets, while Amazon has announced plans to launch its quick commerce service in the first quarter of 2025

Manoj Menon, commercial director at Kantar Worldpanel, notes that nearly 85% of quick commerce shoppers buy food categories, with the majority purchasing cooking ingredients and biscuits. 

He also reports that 7 out of 10 q-comm shoppers buy personal care products, with bar soaps and toothpastes being popular, and among household care products, washing powders and utensil cleaners are mostly bought from q-comm retailers.

Jay Sachdev, marketing manager at Balaji Wafers, whose products are available on Zepto, Swiggy Instamart, and Blinkit, remarks that while quick commerce has evolved over the past six months, it still accounts for only 1% of sales compared to 97% from general trade. “In India, with 65% of the population living in rural areas, kirana shops remain irreplaceable.”

Traditional companies such as Hindustan Unilever, Marico, PepsiCo, and Dabur have long enjoyed a competitive edge due to their extensive distribution networks. However, in the future, if quick commerce platforms expand into remote areas, they pose a potential threat to the business of these established brands.

Sachdev also suggests that q-comm might achieve a 5-6% market share in the future. “Over the next decade, it is unlikely that quick commerce will replace general trade.”

He adds that packets priced under Rs 20, particularly those at Rs 5 and Rs 10, are in high demand but often unavailable on quick commerce platforms. Consequently, general trade will continue to be the backbone of retail channels.

Menon states that currently, every one in three households who used e-commerce for FMCG purchases has now moved to quick commerce, but as the channel gains popularity, its penetration is expected to close the gap with e-commerce significantly.

Expert advice 

Buddha advises traditional retailers to enhance their efficiency. “If local stores take 6 hours to deliver one kilogram of goods while quick commerce delivers in 10 minutes, customers will naturally prefer the faster option.” He suggests that traditional retailers can remain competitive by reducing delivery times and offering better deals. While traditional retailers often charge the Maximum Retail Price (MRP) and q-comm players provide discounts, improving service can still attract customers. Long-standing relationships with retailers can also play a significant role in retaining customer loyalty.

Dandia suggests that local kirana shops adapt to the digital age by offering online browsing of their stock and improving inventory management by leveraging their direct knowledge of customer needs to stock accordingly.

Mishra believes that traditional retailers should partner with quick commerce platforms to help them serve the market in the future. According to him, this will reduce the cost of operations of quick commerce platforms, and help both parties to bring in synergy.