With Pressure mounting in the race to stay relevant, Kirana stores are bracing to put the storm at bay by finding viable alternate solutions
As the buying behaviour of Indian consumers has evolved over the years with them now favouring the convenience aspect over the hassle of going out to meet their grocery shopping needs, the country has been witnessing the rapid growth of quick commerce players. Considered the backbone of brick-and-mortar retail, Kirana stores have been under threat as a report by Datum Intelligence revealed that around USD 1.28 billion of kirana sales was likely to have moved to quick commerce in 2024
As quick commerce offers better pricing than traditional retail by removing multiple intermediaries between the companies and the buyer, these new-age platforms have been mimicking the buying behaviour of Indian consumers on kirana stores. The likes of Blinkit, Zepto and Swiggy Instamart have been leveraging on the speed and convenience front while aligning with consumers’ needs for efficient, on-demand grocery shopping experiences.
USD 1.2 Billion Shockwave
While India’s grocery market is predominantly controlled by unorganised retail, which holds an impressive 93 per cent market share as of Calendar Year 2023 (CY23), the forecast suggests a harsh sail ahead. In its State of Quick Commerce Market 2024 report, Datum Intelligence stated that by 2028, the share of kirana stores is expected to decline by 4 per cent while that of quick commerce is set to be up 2.4 per cent.
The report added that USD 1.28 billion worth of kirana sales were likely to have moved to quick commerce last year. Quick commerce is projected to have experienced a 74 per cent growth in 2024, positioning it as the fastest-growing channel during the 2023-28 forecast period with a 48 per cent compound annual growth rate, as per the stated report.
The Road To Downfall
One of the core reasons why the kirana stores have been struggling to maintain their dominance has been the ability of quick commerce to mirror the offline purchase behaviour of local shops. The capacity to provide frequent and timely top-up purchases for immediate needs, high fill rate and quick delivery time along with offering a diverse range of products for customers to choose from have been leading the case in the favour of these delivery apps.
Quick commerce offsets traditional retail’s high channel costs by removing layers and substituting them with delivery costs. As long as delivery costs are lower than savings from the channel consolidation, quick commerce has been able to offer prices lower than traditional retail.
“In metros, dark store-led quick commerce has already taken away over 40 per cent of the Kirana business. Flush with funds, and increasing their burn rates, the quick commerce players could soon take away 70-80 per cent of Kirana business very quickly in metros, if the stores do not digitise and start offering similar quick commerce options to their loyal customers,” stated Alok Chawla , Founder, Kiko Live.
The Trend Of Reduced Spending
As per Datum online grocery study 2024, nearly half (46 per cent) of respondents reported reduced spending at Kirana shops, indicating a shift in customer behaviour towards quick commerce platforms. 76 per cent of buyers expressed their intention to increase grocery purchases on quick commerce platforms.
The results of the study indicated that customers are increasingly prioritising speed and ease of access. The report mentioned 82 per cent of buyers moving at least 25 per cent of their Kirana store purchases to quick commerce platforms. It added that 31 per cent have moved more than 50 per cent of shopping from Kirana shops to quick commerce.
The Road Ahead For Kiranas
In a recent survey conducted by Kiko Live, 80 per cent of Kirana stores expressed the need for digitalisation to win back business from Zepto and Blinkit. Kirana store owners stated that quick commerce platforms have impacted overall sales volumes. Price competition, delivery speed, and product availability are some key issues Kirana stores are facing.
While it may appear that this is the end of the brick-and-mortar culture in the country, the experts have suggested a solution that involves leveraging WhatsApp networks and partnerships with delivery platforms.
“Kirana stores could evolve their WhatsApp networks into efficient customer engagement tools. By offering quick and reliable services and partnering with delivery platforms, they can enhance their relevance while maintaining their strong community relationships. The key to survival for Kiranas will remain hyper-local relationships and deep customer understanding,” stated Kumar Rajagopalan, Chief Executive Officer (CEO) of the Retailers Association of India (RAI).
Rajagopalan added that open network for digital commerce (ONDC) can help kiranas create hyper local relevance in the digital commerce age. While jumping to conclusions concerning the fate of kirana stores may seem a bit early, the unprecedented rise in the popularity of the quick commerce platforms surely has caught them off guard and forced them to come up with alternate solutions quickly to remain the leaders that they once were.
