The rapid expansion of quick commerce in India has led to the closure of around 200,000 kirana stores in the country in the past one year, India’s biggest retail distributors association the All India Consumer Products Distributors Federation (AICPDF) said on Monday.
In a statement, the federation added that the sales of kirana stores this festive season have remained stagnant. Currently, India is estimated to have around 13 million of these stores, with over 10 million of them in tier-2 and smaller cities.
According to Dhairyashil Patil, National President of AICPDF, quick commerce is eroding kirana stores’ customer base and profitability.
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“Deep discounting, combined with predatory pricing, has created an unfair playing field, eroding the customer base and profitability of kirana stores that have anchored our retail landscape for generations,” he said.
“These aggressive practices, coupled with the economic slowdown, are forcing many traditional retailers to shut their doors.”
In recent days, many consumer goods companies have said that the demand for their products on quick commerce platforms has increased due to shifting customer preferences. FE on Monday reported that several direct-to-customer brands are witnessing up to 250% higher festive sales on these platforms as compared to last year.
The industry body highlighted that customer visits to kirana stores have fallen by almost half this year’s as compared to the last two-three years. It added that quick commerce is putting pressure on margins “as they struggle to match discounts offered by online and quick commerce platforms”.
“These aggressive practices, which prioritise short-term customer gains over sustainable business practices, are directly responsible for the closure of nearly 200,000 Kirana stores across the country,” said PM Ganeshraam, chief patron at AICPDF.
The data shared by the federation showed that the highest impact of quick commerce has been witnessed in metro cities. Out of the total, 90,000 stores have been shut down in these cities alone. Currently, all quick commerce companies operate majorly in metro cities.
As many as 60,000 stores have closed in tier-1 cities, with an additional 50,000 shutting down in tier-2 and tier-3 cities.
AICPDF also called for steps to regulate the quick commerce industry in India and “create protections for small retailers”.
Earlier this month, AICPDF written a letter urging India’s antitrust authority, the Competition Commission of India (CCI), to investigate three prominent quick commerce companies—Zomato’s Blinkit, Swiggy, and Zepto—for alleged predatory pricing practices.
“Such practices make it impossible for traditional retailers to compete or survive,” the letter had said.
From: financialexpress
Financial News
