Sales dip at 60% of Mumbai's offline groceries as q-commerce grows: Study

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

Don't want to miss the best from Business Standard?

A dipstick study by JP Morgan on 50 offline grocery stores in Mumbai shows that 60 per cent of them have seen a decline in their sales volume, and most attributed it to quick commerce (qcom) through their dark stores.

 

The primary survey was undertaken in 50 offline grocery stores across 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 qcom on offline retailers.

 

The survey raises some major concerns: 82 per cent of the respondents who see a decline in sales put the onus on qcom. As many as 77 per cent of the respondents say that their sales have fallen by more than 30 per cent due to the qcom juggernaut.

 

The response is contrary to claims by the qcom players.

 

Swiggy co-founder Sriharsha Majety, who just completed its initial public offering, says that qcom cannot take away business from the kirana (mom-and-pop) stores. He says this because the 30-40 million customers who shop on qcom did not shop from kiranas anyway — they were online shoppers who are now moving to qcom. A similar view is echoed by Zomato co-founder Deepinder Goyal, who also runs qcom Blinkit. 

 

However, Praveen Khandelwal, president of the Confederation of All India Traders (CAIT), said that businesses fuelled by foreign direct investment (FDI) are undermining local retailers, distorting competition, and driving kirana shops out of business. He, in fact, is pushing for qcoms to tie up with small offline stores to undertake the last-mile delivery rather than setting up dark stores and keeping inventory, which looks like a violation of FDI rules.

 

That view is reflected by kirana stores too.

 

As many as 62 per cent of the respondents want the government to intervene to create a level playing field. According to JP Morgan, some respondents have complained that distributors and brands are giving qcom players higher discounts, which is making kirana shops competitively weaker. Hence, JP Morgan says that potential government intervention might lead to regulatory headwinds in the form of franchise partners being asked not to work with only one qcom player.

 

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