Resurgence of Quick Commerce in India’s Grocery Sector
Recent trends reveal a significant shift in India’s grocery delivery landscape, where quick commerce—a relatively nascent segment—has surpassed expectations by impacting the ecommerce market more adversely than the traditional kirana stores.
Quick commerce has consolidated approximately 47% of the online grocery market share, with projections indicating it could dominate up to two-thirds of sales by 2030, according to exclusive data from the strategy consulting firm Redseer.
Currently, kirana stores exemplify remarkable resilience, possessing a commanding 91% stake in the grocery shopping sector. In comparison, modern retail and ecommerce account for merely 6% and 3% respectively.
Mayank Shah, Vice President at Parle Products, remarked that quick commerce adversely affects ecommerce and modern trade sales, as the latter mirrors its operational dynamics and adopts comparable discounts on bulk purchases.
“While kiranas feel some impact, it is relatively minor,” Shah noted. Initially serving as a solution for spontaneous purchases or emergency staples, quick commerce has evolved into a channel for more deliberate weekly replenishments, even monthly shopping traditionally associated with supermarkets and ecommerce platforms.
Angshu Mallick, Executive Deputy Chairman at AWL Agri Business, recognized that many ecommerce entities, including Bigbasket, are pivoting toward quick commerce, thereby catalyzing the transition to expedited delivery services.
“After ecommerce and modern trade, the most adversely affected are the A-class kiranas in metropolitan areas. Our sales, for instance, are increasingly derived from quick commerce, accounting for about 50-60% of our revenues in the Delhi-NCR region,” he shared.
The Redseer report anticipates a decline in kiranas’ market share to 86% within the next five years. Nevertheless, these neighborhood stores are expected to maintain a firm grasp on low-ticket, high-frequency transactions, typically ranging from ₹100 to ₹200, which remain economically unfeasible for mass digital fulfillment.
Chhavi Singh, Associate Partner at Redseer, asserted that within the online framework, quick commerce is poised to be the chief driver of growth, advancing at double the rate of traditional ecommerce grocery delivery.
The ascendance of quick commerce is projected to most profoundly affect convenience-driven modern trade frameworks, while value-oriented hypermarkets like DMart are likely to remain stable due to their competitive pricing and appeal among budget-conscious consumers.
In contrast, supermarkets, which historically emphasize convenience, may face a downturn in market share.
For major fast-moving consumer goods (FMCG) corporations, including Hindustan Unilever, ITC, Nestle, and Marico, quick commerce has emerged as the fastest-growing channel over the past seven to eight quarters, steadily elevating its share.
For Tata Consumer Products, nearly 18.5% of its overall business stemmed from ecommerce, complemented by burgeoning growth in quick commerce, while modern trade contributed approximately 14%.
Redseer’s insights indicate that kirana stores are projected to achieve a 7% compound annual growth rate (CAGR) until 2030, whereas modern trade and online commerce are forecasted to grow at 13% and 29%, respectively. Notably, quick commerce is expected to exhibit accelerated growth at 38% CAGR through 2030.
Swiggy, operating its quick commerce segment under the Instamart brand, communicated to investors that this retail model continues to “rapidly evolve as a preferred channel for various use cases among urban consumers.”
The latest quarter saw Instamart experience an impressive 100% year-on-year growth, with an average order value climbing to ₹746, reflecting a 7% increase quarter-over-quarter.
This surge is attributed to an expansion in basket size, with the share of non-grocery products in the sales mix rising to over 32%, up from 26% in the previous quarter.
Furthermore, notable ecommerce giants like Flipkart and Amazon are cautiously testing quick commerce avenues, while retail chains such as Reliance Retail and Spencer’s Retail are pioneering rapid online order fulfillment, achieving delivery within a mere 30 minutes.
Reliance Retail’s management indicated its aspirations to become the second-largest operator in the quickly evolving quick commerce space.
Source link: M.economictimes.com.
