Quick commerce platforms are rapidly reshaping India’s grocery shopping experience, leading to a marked slowdown in traditional retail sales growth, which has fallen to a four-year low, as per the report by NeilsenIQ. Sales in modern trade increased by a mere 3.2% during July and August, sharply down from the 24% growth experienced a year ago. Small traders are raising alarms about quick commerce’s encroachment on traditional distribution channels, potentially threatening their livelihoods.

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Quick commerce platforms are swiftly transforming the grocery shopping landscape for Indian consumers. In July and August, sales growth of groceries, personal care, and home care products in modern trade and supermarkets fell to a four-year low. This decline has been largely influenced by consumers migrating to online channels, especially quick commerce, coupled with the closure of hundreds of retail stores over the past year as retailers strive to enhance profitability, as per NielsenIQ (NIQ)

India’s fast-moving consumer goods (FMCG) sector has encountered a notable slowdown in volume growth across both food and non-food categories during the June quarter, primarily attributed to declining sales of packaged foods such as salt, flour, and oil, it added. It also noted that FMCG volumes grew by just 3.8% year-on-year in the June quarter, a significant drop from the 7.5% growth recorded in the same period last year.

Sales in modern trade also reflected this trend, with a mere 3.2% increase during July and August, sharply down from the 24% growth experienced a year ago. In the same period, general trade, or kiranas, achieved a 5% sales growth in the same timeframe, compared to 8.5% last year. Major retailers like Reliance Retail, More, Spencers, and 24Seven have closed over 800 stores in the past year, and while new locations have opened, it will take time for sales growth to recover.

Amidst these changes, the trend of unplanned purchases with low to moderate order values has driven demand for instant delivery services offered by quick commerce platforms like Zepto, Swiggy Instamart, and Blinkit. For many FMCG companies, online sales now contribute nearly 10-12% of total revenue, with quick commerce accounting for about a third of that.

Small Traders wrote to Government

The rapid expansion of quick commerce platforms has caused disruption in the market, sparking discontent among small traders and distributors. The All India Consumer Products Distributors Federation (AICPDF), in August raised their concerns in a letter to Trade and Industry Minister Piyush Goyal, highlighting the growing influence of these platforms.

The association expressed that quick commerce platforms are increasingly acting as direct distributors for major FMCG companies, bypassing traditional distributors and threatening the livelihood of small retailers. They warned that this unchecked growth is creating an uneven playing field and endangering the viability of small stores, which have long been the foundation of India’s retail sector.

According to media reports, this may prompt government scrutiny of quick commerce platforms, but consumer behavior has already shifted significantly, driven by the appeal of convenience and discounts. As noted earlier, Indian shoppers are using quick commerce platforms not only for top-up purchases but also for their main grocery shopping.