How Quick Commerce is Redefining Grocery Shopping

Quick commerce has emerged as a new challenge for kirana stores in metro cities. The trend of getting goods delivered to your doorstep quickly is growing rapidly, making it difficult for traditional kirana shops to keep up. Reports indicate that kirana stores now either need to evolve or risk being pushed out of the market.

Let’s explore the reasons behind the boom in quick commerce and what this shift means from an investor’s perspective.

What is Quick Commerce?

Quick commerce is a service that promises to deliver goods to consumers within 10 to 30 minutes. This service is currently offered mostly in metro cities by companies like Zepto, Blinkit, and Swiggy Instamart. In FY24, the share of FMCG (Fast-Moving Consumer Goods) sales through quick commerce doubled, mainly due to the rapidly changing consumer behaviour in urban India and the growing demand for instant services.

Challenges for Kirana Stores

India is home to around 13 million kirana stores, which sell groceries and daily essentials and serve as a key revenue source for FMCG companies, especially in Tier 2 and Tier 3 cities and rural areas. A significant portion of FMCG product sales in these areas happens through kirana stores rather than large supermarkets.

However, with the rise of quick commerce, their presence in metro cities is becoming limited. According to India Today, about 45% of consumers in India now buy groceries online through quick commerce, while 49% and 47% of consumers in metro and Tier-1 cities, respectively, use quick commerce for their grocery needs. Additionally, 18% of consumers prefer quick commerce for purchasing food and beverages.

Reasons Behind the Growth of Quick Commerce

A report by Deloitte and FICCI highlights that the quick commerce segment grew by a staggering 230% between 2021 and 2023. This growth is primarily driven by smaller families with dual incomes who prioritise convenience and speed. Quick commerce meets their needs by delivering goods within 10 to 30 minutes.

Another key driver of this service’s popularity is the surge in demand for FMCG products during festive seasons. According to Unicommerce, an e-commerce enablement SaaS platform, e-commerce order volumes grew by 20% during the first four days (26-29 September) of the 2024 festive season sales.

What’s in it for Investors?

The rapid growth of quick commerce presents a golden opportunity for investors. The entry of new players like Nykaa and Myntra is intensifying competition in this sector. Among listed players on the Indian stock exchange, Zomato, a food delivery company, has already entered the quick commerce space through its subsidiary, Blinkit. Moreover, Swiggy is gearing up for its IPO, with its Swiggy Instamart division working in the quick commerce segment.

Reliance Retail, which has strengthened its position in quick commerce, is also giving stiff competition to Swiggy Instamart, Zepto, and Zomato Blinkit. Additionally, Reliance plans to expand its quick commerce operations across India by the end of October.

What Lies Ahead?

Quick commerce has significantly altered consumer behaviour in metro cities, putting kirana stores under pressure not just to adapt but to transform entirely.

Since the COVID-19 pandemic, India’s quick commerce industry has seen rapid growth. It is projected to grow at a CAGR of 27.9% between FY22 and FY27. According to a report by RedSeer, this segment could reach a market size of USD 5.5 billion by 2025. In the coming years, quick commerce platforms’ share in the online grocery market is expected to rise from 10% to nearly 45%.

The companies mentioned in the article are for information purposes only. This is not an investment advice. Disclaimer: Teji Mandi Disclaimer