State of Quick Commerce Market, 2024: Impact on Kirana Stores
The report by Datum Forecast explores the rise of quick commerce platforms in India and their impact on traditional Kirana stores. The document aims to shed light on the challenges faced by Kirana stores due to the rise of quick commerce. The report's goal is to encourage collaboration between all parties involved including Kirana store owners, quick commerce platforms, consumers, and policymakers.
**State of Indian Grocery Market**
The Indian grocery market is projected to reach $818.3 Billion by 2028, growing from $570.3 Billion in 2023. The market is expected to grow at a CAGR of 7.5% between 2024 and 2028 adding approximately $250 billion in sales. The largest category in the Indian retail market is grocery, with unorganized retail controlling the majority of the market share at 92% in 2024. However, quick commerce is expected to increase the channel shift from Kirana to online grocery. Indian consumers' shopping habits of small-ticket, high-frequency purchases are well-suited for quick commerce.
**Emergence of Quick Commerce**
Quick commerce delivers grocery items in 10-20 minutes and curates 10,000 SKUs per category. The leading quick commerce platforms in India include Blinkit, Swiggy Instamart, and Zepto. The operations of Blinkit rely on warehouses and dark stores. Swiggy Instamart involves commissions retained and advertisement revenue. Quick commerce provides lower prices than traditional retail. Quick commerce platforms possess better negotiating capabilities. Blinkit is rapidly adding dark stores and monthly riders and expects a 60% YoY growth.
**Quick Commerce Impact on Grocery Retail**
Nestle India has experienced accelerated e-commerce channel growth of almost 38%, primarily driven by Quick Commerce in Q2, 2024-25. Quick commerce contributes significantly to the e-commerce revenue of FMCG companies such as Dabur and HUL. Kirana store market share will decline and quick commerce will be the fastest growing channel for grocery. By 2030, quick commerce expects to reach ~$40 Billion.
**Insights from Consumer Survey**
An online consumer survey was conducted with 3,000 online adults across 10 cities in India. Grocery is the second largest category purchased online after clothing, with 61% of respondents having purchased groceries online in the past six months. 10-minute delivery is the preferred choice for buying groceries online with a majority of customers, 69%, favoring 10-minute delivery services over scheduled next-day options. The survey indicates that 73% of online adults are likely to pay extra for 10-minute grocery delivery in 2024, which is up from 47% in 2021. Fast delivery and discounts are key drivers for quick commerce. Quick commerce is no longer limited to top-up and unplanned purchases, with 58% of customers using quick commerce for their full month's grocery needs. Additionally, 75% of online grocery buyers have experienced a jump in unplanned purchases in the last six months, and 44% of online buyers get most of their unplanned purchases from quick commerce apps. 66% of customers find better value for money on quick commerce as compared to Kirana stores. Quick commerce platforms are considered cheaper than Kirana stores across categories. Close to 53% of buyers place more than 5 orders monthly on quick commerce. Also, the average delivery time on quick commerce platforms is 10-30 minutes for approximately 72% of buyers. Nearly 67% of buyers have an average order value of more than ₹400 on quick commerce. The majority, 79%, of consumers purchase grocery and kitchen items and 74% purchase snack and drink items. Additionally, 76% of customers are satisfied with the interface and experience of their preferred quick commerce app. High delivery fees and late deliveries are key challenges. Further, product quality, fast delivery, and lower prices are key motivations to switch.
**Impact of Quick Commerce on Kirana Stores**
Approximately 46% of consumers have decreased buying groceries from Kirana shops. A large portion, 82%, of buyers have moved at least 25% of Kirana purchases to quick commerce. Moreover, 67% of Kirana stores saw a decline in sales after the emergence of quick commerce and perceive quick commerce as a persistent challenge. Groceries, fruits, and vegetables sales from Kirana stores are most impacted by quick commerce. $1.28 Billion of Kirana sales are expected to move to quick commerce in 2024 and this accounts for 21% of sales on quick commerce platforms in 2024.
