How Small Kirana Shops Are Innovating To Fight Quick Commerce Giants

On a sunny afternoon in September, a kirana store owner waits for his employee to return from delivering an order as he readies another package. As soon as the boy returns, he’ll rush to deliver another order. “I have hired a full-time delivery person now,” Bharat, who owns Bharat Lakshmi store in Mumbai’s Malad, told The Core, “because people don’t want to come down to the shop”.

Over the past year, Bharat’s kirana store has seen a 40-50% decline in sales due to quick commerce. Bharat said he isn’t the only one. There are numerous other small neighbourhood mom-and-pop stores that are suffering as quick commerce expands. A few weeks ago, India's trade minister, Piyush Goyal voiced concerns, calling this growth a "matter of concern" rather than a "matter of pride."

While he did deliver orders earlier as well it was only for orders over Rs 500. Now, he delivers orders as low as Rs 100 - Rs 150 for his regular customers or those close by.

As quick commerce biggies like Blinkit, Zepto and Swiggy Instamart constantly innovate to reach more customers and deliver to more cities, kirana store owners have realised they need to up their game. To put up a fight against the quick commerce players, they need to be more proactive and cash in on their strengths — consumer trust and loyalty.

Keeping In Touch

Sudarshan, who runs a small kirana store in Mumbai’s Andheri maintains a broadcast list on WhatsApp of his regular customers. “There are some people whose grocery needs we understand very well. We know what they buy at the start of every month and I push out messages around the time informing them about any offers or discounts,” he said. Sudarshan’s sales have dropped by close to 20% from last year.

Small kirana owners have built their customer bases over many years, primarily due to their proximity and personal relationships with them. Sudarshan’s shop is right below his house so most of his regular consumers, living in the same area, are his neighbours. “Even if they have the option to buy groceries online, they would prefer to buy from me. But this is only as long as their prices are equal,” he said.

Despite the meteoric growth of quick commerce, general trade accounts for a larger majority of sales. A McKinsey report(pdf) from 2022 states that the share of traditional trade, which comprises these small kirana and mom-and-pop stores, could slide from 85% to 65-70% between 2024-2027.

Parvati, whose family runs the Sahyadri Surve store in Dadar, told The Core that it was her father who built these connections with the people in the area. “He made sure that the quality of our groceries is superior and that is one thing we have never compromised on,” she said. The store sells pulses, wheat, other grains, branded household items and onion, potatoes and garlic.

Who buys from quick commerce and who relies on the neighbourhood grocery store is also a generational thing. “The households where the mother-in-law or older women make the grocery purchases, kirana stores are still the mainstay. The assurance of quality, community ties, and the credit facility makes the kirana stores a better option for them,” Parvati said.

However, the younger generations find the convenience of ordering online more attractive, so the number of people who used to come in for small purchases ranging from Rs 200 - Rs 300 has drastically reduced.

Parvati pointed out that their regular customers often complain about the quality of products bought online, especially vegetables and fruits. “It is impossible to be sure of the quality of vegetables when you order online, it’s a gamble,” another customer at the shop said. Quick commerce platforms do provide refunds in case the fresh produce is spoiled, but customers would still need to step out and buy them again. “Unless it’s an emergency, I don’t prefer ordering these things (fresh produce) online,” the customer said.

Both Paravti and Sudarshan say that they are more focused on serving their current customers better, by offering services like fast delivery and online ordering before they can think of expanding their business and getting new customers.

Delivery Challenges

The option of having things delivered in under 15 to 20 minutes has made people very comfortable and they barely want to move out of their house, kirana owners say. To keep these consumers, kirana stores have been ramping up their delivery operations too, but the shortage of reliable staff and inadequate resources to ensure fast deliveries are making things difficult for them.

“We hired two boys a few months ago. They come for a couple of weeks and then become very irregular. They might have other work options,” Parvati said. While the store does get delivery orders, which are mostly monthly orders or orders above Rs 500, it is difficult to satisfy consumers’ demands for quick delivery.

For store owners like Bharat, who have now started delivering orders as low as Rs 150 - 200, matching the speed of quick commerce platforms is impossible. “I can’t afford to hire more than one person and if he is out delivering an order, I can’t guarantee a delivery within 15 minutes, customers don’t want to wait longer than that,” he said. Hiring delivery personnel can cost kirana owners an additional Rs 5,000 - Rs 7,000 per month.

Battling Low Prices

A big challenge for mom-and-pop shop owners, like Sudarshan, is to battle the pricing offered by quick commerce platforms, at least initially. High order volumes placed by q-commerce companies give them negotiation power with the FMCG companies, in the form of higher margins, kirana owners say. The platforms have been passing on these advantages to their customers in the form of discounts. “They have gotten people used to discounts. Young people, especially, constantly ask us if we have any discounts. With such low margins, it’s not possible for us to discount products,” Bharat said.

The share of quick commerce in FMCG companies’ overall sales has been steadily increasing. Quick commerce now contributes to 30-35% of FMCG companies’ e-commerce sales, which in itself is about 7-10% of their overall domestic sales. For Nestle, the share of e-commerce was just 1.3% five years ago. This has gone up to 7% till March 2024, led by quick commerce, according to its latest annual report.

While discounts were slowly getting normalised, the entry of new players might change that as they look to gain market share. “Flipkart launched in August is increasing the discount, 10% more than the previous players. This is a never-ending story, and it is going to be very lethal once it progresses,” Dhairyashil Patil, President of the All India Consumer Products Distribution Federation (AICPDF) told The Core.

Way Ahead

However, some kirana shop owners are convinced that quick commerce will soon have to start charging more and this will lead to customers trickling back. “We are already seeing the discounts disappearing slowly. As they start charging for the service, customers will return,” Parvati said.

Zepto introduced a platform fee of Rs 2 early this year, while Swiggy’s Instamart has a Rs 7 handling fee. Big Basket’s quick commerce arm BB Now also charges a handling fee of Rs 5. In addition to this, occasionally, packing charges and surge pricing are also levied.

Platforms have also begun to raise the minimum order values (MOV) for free delivery and rolling out subscription plans like Zepto Pass, Swiggy One, and Zomato Gold (for Blinkit) ranging between Rs 100 - Rs 300 per month for free delivery on lower MOV.

Meanwhile, associations are also pushing for a change. The AICPDF has written to the ministry asking them to look into possible regulatory lapses in quick commerce companies concerning the Foreign Direct Investment (FDI) rules.

“The FDI rules clearly prohibit e-commerce entities operating under the marketplace model from holding inventory or exercising control over inventory sold on their platforms. However, it appears that these quick commerce platforms may be engaging in practices that blur the lines between a marketplace and an inventory-based model, potentially violating FDI norms,” the letter said.

Kiarna owners are hopeful that AICPDF’s letter will get the ministry to take a look at the FDI regulations that quick commerce platforms might be flouting leading to some relief for them. Platforms like Open Network For Digital Commerce and multiple digitisation efforts to bring kirana stores online haven’t been very consequential yet but they might help too.

“There isn’t much we can do, many things are out of our control. We’re trying what we can but if nothing works we’ll shut shop and go back to our hometowns,” Bharat said, adding that many have already picked the second option.