Two Lakh Kirana Stores Forced To Close As Quick Commerce Thrives

At least two lakh kirana stores—small neighbourhood retail outlets—have closed in the past year as consumers increasingly turn to fast delivery platforms such as Blinkit and Zepto, according to a market study by the All-India Consumer Products Distributors Federation. This is probably the first comprehensive analysis of the impact of quick commerce on the country's 1.3 crore stores that sell groceries, personal care items, and more.

Metros, home to 17 lakh stores and generating average monthly sales of Rs 5.5 lakh, account for 45% of store shutdowns, the study revealed.

Tier 1 cities follow with 30% closures and tier 2–3 cities at 25%. While the tier 1 cities hold 12 lakh stores with average monthly sales of Rs 3.5 lakh, the tier 2 and lower-tier cities collectively feature 1 crore stores, generating average sales of Rs 2.5 lakh each month.

"The rise of quick commerce, combined with economic slowdown, has created an existential challenge for kirana stores, which have historically thrived through competition, including the emergence of supermarkets," said Dhairyashil Patil, national president of AICPDF. The quick commerce firms are practicing predatory pricing—or offering deep discounts and selling below cost—to lure customers, he alleged. "This has created an unfair playing field, eroding the customer base and profitability of kirana stores."

AICPDF, the country's largest body representing four lakh retail distributors of major companies including Hindustan Unilever Ltd., Dabur India Ltd., and Nestle India Ltd., will seek intervention from the Finance Ministry and the Ministry of Commerce and Industry. The federation intends to submit its report to these ministries within the next few days.

The development comes at a time when the Competition Commission of India is already scrutinising online commerce players for alleged predatory pricing and other unfair practices. The CCI, in an internal report, found ecommerce majors Amazon India and Flipkart violated antitrust guidelines by giving preference to select sellers on their platforms. Similarly, the AICPDF called on the antitrust authority to investigate three quick commerce firms—Zomato's Blinkit, Swiggy Instamart, and Zepto—for alleged predatory pricing. In its letter, the federation argued that many consumer goods companies are bypassing traditional retailers in favour of direct partnerships with these firms, undermining decades-old delivery practices. The “unchecked” expansion of quick delivery platforms is making it "impossible for traditional retailers to compete or survive," it told CCI.

On Sept. 17, Finance Minister Nirmala Sitharaman said that the government will “give a serious thought” to safeguarding the interests of traders harmed by predatory pricing tactics of quick commerce and e-commerce players. Union Commerce and Industry Minister Piyush Goyal also expressed similar concerns about the e-commerce sector, highlighting the need for these platforms to "operate fairly" within the country.

Kirana stores still account for four-fifths of the total FMCG sales in the country, but companies are seeing a steady surge in online sales, which now comprise 7-10% of their revenue. The likes of Hindustan Unilever Ltd., Nestle India Ltd., and Marico Ltd. have pointed out that FMCG sales slowed down in general trade compared to digital channels owing to factors like liquidity constraints, fewer product launches than in online and modern retail, and a massive shift in consumer preference. These firms are working to streamline distributor inventory in general trade channels.

"Quick commerce is now 50% of our e-commerce business and has been the fastest-growing channel of growth," according to Suresh Narayanan, chairman and managing director of Nestle India. "The pace of growth in quick commerce is something that we have seen in a long, long time. But if this channel dynamics would sustain into the future, only time will tell," he said, adding that the general trade still comprises a substantial part of the business. "So as a company, we have kept a balance between all channels."

Patil said that kirana stores are grappling with declining sales as foot traffic has halved compared to 2-3 years ago. Additionally, with 65% of these stores operating from rented premises, rising rental costs are further complicating their efforts to achieve profitability.

They also blame dwindling profit margins for their difficulties in staying afloat. "With wafer-thin margins, they struggle to match discounts offered by online platforms," according to Patil. He noted that the anticipated festive boost has yet to materialise, leaving urban kirana stores with excess unsold inventory. "This year could turn out to be a dark Diwali."

A recent NIQ report, too, underscores the rapid growth of quick commerce, noting that the channel has emerged as the primary shopping method for 31% of urban Indians, with 39% using it for top-up purchases. The most popular categories include ready-to-eat meals, groceries, and snacks.

"Shoppers today are more discerning, price-conscious, and channel-agnostic than ever before," says Mitesh Dabrai, executive director, consumer and marketing insights, NIQ. Beyond speed and convenience, discounts are a key factor driving consumers online. "With consumers feeling the impact of rising food prices, businesses must focus on strategic pricing and promotions to retain customer loyalty," he added.