2 Lakh+ Kirana Stores Shut Down with Quick Commerce Surge in India

In a recent report by the FMCG distributor body All India Consumer Products Distributors Federation (AICPDF), it was found that over 2 lakh kirana stores in India have been forced to shut down due to the rise of quick commerce platforms. This greatly impacted the metropolitan areas, with 45% of the shutdowns occurring in metro cities, followed by Tier 1 cities at 30% and Tier 2/3 cities at 25%. [Source: NDTV Profit]

As the quick commerce industry continues to flourish, there are growing concerns about its impact on traditional kirana stores. Recently, Zomato CEO Deepinder Goyal stated that platforms like Blinkit are not competing with kiranas but with other e-commerce giants. Delhivery cofounder and CEO Sahil Barua supported Goyal’s opinion. 

Government senses a big problem

However, the Indian government has taken notice of the challenges faced by local traders due to predatory pricing tactics employed by quick commerce and e-commerce players. Finance Minister Nirmala Sitharaman has pledged to safeguard the interests of traders, while Union Commerce and Industry Minister Piyush Goyal has stressed the need for fair operations within the sector. Kirana stores still account for a significant portion of FMCG sales in the country, but companies are now witnessing a surge in online sales.

As reported by Outlook Business, Dhairyashil Patil, National President of AICPDF said, “Currently, online, e-commerce, and quick commerce platforms have fostered a mindset that if a product is sold online, it must be discounted, often heavily. As a result, these companies are offering as much discount as they can to establish a market monopoly.”

FMCG giants like Hindustan Unilever Ltd., Nestle India Ltd., and Marico Ltd. have observed a slowdown in general trade compared to digital channels. Factors such as liquidity constraints, fewer product launches, and changing consumer preferences have contributed to this shift. These companies are now focusing on streamlining distributor inventory in traditional trade channels to stay competitive.

Meanwhile, quick commerce platform Zepto is in the process of shifting its domicile from Singapore to India, targeting an increase in its Indian ownership. The company is also looking to boost its domestic shareholding by partnering with family offices associated with prominent Indian investors. In parallel, Zomato has approved a plan to raise funds through a qualified institutional placement, with the goal of reducing foreign institutional ownership.

As the quick commerce landscape evolves, it is essential to track how kiranas adapt and innovate in response to heightened competition. With the industry witnessing rapid transformations, traditional retailers must explore new strategies to stay relevant in an increasingly digitalized world.