Sales dip at 60% of Mumbai's offline grocery as quick commerce grows: Study

More than 80% of such traditional businesses blame dark stores of quick commerce companies: JP Morgan survey

A majority of offline grocery stores in Mumbai say their sales have declined and most attribute the trend to the so-called dark stores of quick commerce (QC) companies, according to a dipstick study by JP Morgan.

 

The survey was undertaken in 50 offline grocery stores in seven localities in suburban Mumbai that account for more than 50 per cent of the dark store footprint in the city to understand the impact of quick commerce on offline retailers. As many as 60 per cent of respondents said their sales volume has declined.

 

The survey found that 82 per cent of the respondents who see decline in sales put the onus on quick commerce. As many as 77 per cent of the respondents said that their sales have fallen by more than 30 per cent as a result of QC.

 

The survey's finding is contrary to claims by QC companies. Sriharsha Majety, co-founder of Swiggy, has said that quick commerce cannot take away business from traditional kirana stories. He has argued that the 30-40 million people who shop at quick commerce platforms, did not use kiranas anyway. Zomato's co-founder Deepinder Goyal, who also runs QC firm Blinkit, has expressed similar views.

 

Praveen Khandelwal, BJP Lok Sabha MP and president of the Confederation of All India Traders (CAIT), has said businesses fueled by foreign direct investment are distorting the market and driving kirana shops out of business. He is pushing for QC companies to tie up with small offline stores to undertake last-mile delivery rather than setting up dark stores and keeping inventory – a practice he says violates India foreign investment rules.

 

That view is reflected by kirana stores too. As many as 62 per cent of the respondents in the JP Morgan study wanted the government to intervene and create a level playing field.  Some respondents complained that distributors and brands are giving quick commerce firms higher discounts. JP Morgan said that a potential government intervention might lead to regulatory headwinds in the form of franchise partners being asked not to work with only one QC player.

 

It does not mean that offline kirana stories are giving up altogether. At least 25 per cent of the respondents have adapted to quick commerce by diversifying their stock keeping units and pack sizes, offering home delivery and bulk discounts and leaning in on customer loyalty and relationships.