Can Budget 2025 Protect Kirana Stores From Quick Commerce's Growing Dominance?

India's retail ecosystem is witnessing a seismic shift with the rapid growth of quick commerce platforms such as Zepto, Blinkit, and Swiggy Instamart. These platforms, which promise ultra-fast deliveries, have captured 8% of the urban grocery market in 2023, up from just 3% in 2021, growing at an impressive CAGR of 25%.

This expansion is not limited to metropolitan areas. Tier 2 cities now contribute 30% of overall sales, highlighting the deepening reach of these platforms across India. However, the rise of quick commerce has come at a cost to traditional kirana stores.

According to the Confederation of All India Traders (CAIT), kirana stores in urban areas experienced a 12% revenue decline in FY25. Many customers are shifting their purchases online, with 82% of buyers diverting at least a quarter of their grocery shopping to quick commerce platforms, as per Datum Intelligence's November report.

Quick commerce platforms thrive on substantial funding, expansive logistics networks, and deep discounts, making it challenging for kirana stores to compete. The industry’s gross merchandise value (GMV) skyrocketed from $0.5 billion in FY22 to $3.3 billion in FY24—a staggering growth of over 280%.

Budget 2025: A Possible Lifeline

Experts believe Budget 2025 could play a pivotal role in ensuring a level playing field. Recommendations include enforcing compliance with FDI norms and the Competition Act, 2002, to address anti-competitive practices like predatory pricing.

Paresh Parekh, Partner for Consumer & Retail Sector at EY India, emphasized that a robust regulatory framework and supply chain transparency are vital to protect small retailers. Deloitte’s Anand Ramanathan proposed developing an ethical code of conduct to shield kirana stores from market distortions caused by deep discounts.

Additionally, the Federation of Retailers Association of India (FRAI) has urged the government to launch a dedicated platform for kirana stores, enabling them to compete effectively with quick commerce giants.

What’s at Stake?

With the quick commerce industry projected to grow by $40 billion by 2030, the survival of India’s kirana stores hinges on swift government intervention. Will Budget 2025 rise to the challenge and protect the backbone of India’s retail sector?

with inputs from The Economic times