Kiranas to quick commerce: How the landscape changed for retail trade

India's retail sector has evolved from neighbourhood kiranas to organised retail, ecommerce and quick commerce, driven by liberalisation, technology and changing consumer habits

Long before Indian cities were dotted with malls and their roads teemed with delivery persons from quick commerce firms, there was the humble neighbourhood kirana. Here groceries came in paper packets, biscuits were sold one packet at a time, and the shopkeeper knew every family’s monthly grocery list.

This was India’s retail story before liberalisation: Built on trust, familiarity and the humble corner shop.

 

Of course, there were some organised retail outlets in the form of supermarkets — prominent chains like Spencer’s in Madras (now Chennai), Sahakari Bhandar in Bombay (now Mumbai), Nilgiris in Bangalore (now Bengaluru), and Super Bazar in Delhi — but these existed in pockets.  

 

 

When the floodgates were opened by economic liberalisation in 1991, Indian customers were provided a wider choice of products that significantly increased local competition. 

 

“The biggest pivot was that liberalisation gave customers choices. Retail modernisation happened only after 1991, when consumers began gaining access to products from across the world and retailers were able to offer a much wider assortment,” Kumar Rajagopalan, CEO and executive director of the Retailers Association of India (RAI) tells Business Standard. 

However, organised retail chains had to await their turn as changes in rules in some sectors took a little longer. First, in 1997, the government approved 100 per cent foreign direct investment (FDI) in the business-to-business (B2B) cash-and-carry format. Then in 2006, it allowed 51 per cent FDI in single-brand retail trade, and in 2012 it extended that to multibrand retail, while raising the FDI bar for single-brand to 100 per cent.

 

Other reforms, not directly related to the sector, have helped too. For instance, changes in India’s telecommunications sector paved the way for the rapid adoption of advanced communication technologies which in turn helped first build a vibrant ecommerce landscape, and since the pandemic helped in the rapid growth of the quick commerce segment.

 

Together, these changes transformed the sector that had grown to $1 trillion in 2024, according to a Deloitte and FICCI report, which estimates that it could touch $2 trillion by the end of the decade.