Can existing retail stores challenge dark stores in quick-commerce race?

As quick commerce expands into smaller cities, existing retail stores can lower fixed costs, but their edge depends on order density, basket economics and fulfilment efficiency

Quick commerce is no longer just a fight between Blinkit, Zepto and Swiggy Instamart. Traditional retailers are also joining the race, increasingly using their existing stores to fulfil online orders, offering a route to rapid delivery without building separate dark-store networks.

 

The contest is less about whether one model replaces the other than about where each makes economic sense. Dark stores are built specifically for speed and fulfilment but carry dedicated fixed costs, while existing stores can spread costs across walk-in sales and online orders.

 

The question, then, is whether physical stores can give traditional retailers a lower-cost route into quick commerce, and where that advantage runs out.

 

The store becomes the fulfilment centre

Vishal Mega Mart is a clear example. It fulfils quick-commerce orders from 767 of its 819 stores across 520 cities, including 423 in tier 3 towns. Its registered quick-commerce users have reached 14.1 million, with quick commerce contributing 2-9 per cent of store revenue. The average order is around ₹800, and one in five users is new to the retailer.

 

Speaking during the Q1FY27 earnings call, Managing Director and CEO Gunender Kapur said the channel is now contributing meaningfully to store sales and helping it reach new customers as it expands beyond its traditional offline business.

 

The attraction is straightforward: retailers can use stores, inventory and staff they already have instead of investing immediately in a separate dark-store network.

 

"This is a potentially important shift in the economics of quick commerce. Rather than viewing store-led fulfilment and dark stores as competing models, the industry is increasingly recognising that each serves a different economic purpose," Naveen Malpani, partner, Grant Thornton Bharat, told Business Standard. Dark stores work best in high-density urban markets, while existing retail infrastructure can become more useful in emerging consumption centres where demand is still developing, he added.

 

Reliance Retail illustrates how the two models can also coexist. It said JioMart covered 5,500 pin codes in the June quarter, with more than 2,500 digital, fashion and lifestyle stores linked to the network. Grocery orders can be delivered in under 30 minutes, while other categories take up to two hours. Grocery digital orders rose 116 per cent year-on-year. Rather than relying on one fulfilment model, Reliance is combining physical stores, dark stores and digital commerce.

 

“Physical stores are no longer just points of sale. They are evolving into fulfilment hubs, customer engagement centres and inventory nodes within a broader omnichannel network,” said Malpani.

Order density is the economic test

Dark-store economics depend heavily on order density. A facility needs enough orders within its catchment to cover rent, staff, inventory and delivery costs. Emkay Global estimates a dark store in a tier 2 city needs around 800 orders a day to break even, compared with about 1,300 in tier 1. Lower rents and wages help, but smaller cities can also have lower order density, smaller baskets and higher logistics costs.

 

That is where existing retailers could have an advantage. “If order density is still building and the retailer can spread fixed costs across both walk-in sales and online fulfilment, using an existing retail store becomes more economical,” Anand Ramanathan, partner and consumer industry leader at Deloitte South Asia, told Business Standard.

 

He said tier 2 and tier 3 markets could favour store-led fulfilment as demand is more dispersed and retailers can expand without taking on the full fixed costs of a standalone dark-store network.

 

A 2026 Google-Deloitte report estimates India's ecommerce market could reach $250 billion by 2030, with quick commerce reaching $50 billion and about 70 million shoppers. Tier 2 and smaller cities could account for around 30 per cent of quick-commerce spending, adding to the case for hybrid models as platforms expand beyond large metropolitan markets.

 

A Deloitte-Ficci report said tier 2 and tier 3 cities already account for more than 60 per cent of ecommerce transactions. A Bain and Flipkart report estimated quick commerce reached $6-7 billion in gross merchandise value (GMV) in 2024 and accounted for more than two-thirds of online grocery orders.

Existing stores start with customers as well as infrastructure

For traditional retailers, the advantage is not only the ability to reuse physical assets. Their existing customer relationships can also reduce the burden of building demand from scratch.

 

They already have locations close to consumers. They have employees, suppliers and inventory in place. They also have brand recognition. A customer who already shops at Vishal Mega Mart, Spencer’s or a neighbourhood supermarket may be more willing to try its online service.

 

“One of the strongest advantages incumbent retailers bring to quick commerce is not necessarily their store network, but the trust and familiarity they have built with consumers over years of interaction,” Malpani said.

 

Spencer’s Jiffy's online business generated ₹200 crore in FY26, up 37 per cent, from 2.6 million orders. The average order was about ₹760, with a gross margin of around ₹110 against fulfilment costs of ₹98-99.

 

The retailer has also focused on drawing existing customers online rather than spending heavily on acquisition. That gives traditional retailers a potential cost advantage over digital-first players that have to build both their customer base and fulfilment network.

 

"Existing customer relationships, while valuable, are only part of the equation," Malpani said. Customers still expect accurate inventory, reliable delivery and a smooth digital experience, he said.

Dark stores retain a fulfilment advantage

The cost advantage of an existing store, however, comes with an operational trade-off. According to Ramanathan, dark stores are designed specifically for fulfilment, allowing them to:

• Optimise layouts for picking rather than browsing
• Curate inventory around high-velocity products
• Operate without staff having to serve walk-in customers
• Use data to determine exactly which products should be stocked at each location

"Quick commerce has already grown roughly 25 times between 2021 and 2025, showing how quickly specialised platforms can scale. Over time, they can replicate parts of the store-led advantage by building denser dark-store networks, partnering with local retailers and using retail media to monetise high-intent demand. The likely market structure is therefore hybrid: dark stores will dominate high-density metro pockets, while store-led fulfilment can become a strong model in lower-density or expansion markets," Ramanathan said.

The retail store comes with its own problems

A customer standing in a store can pick up the last packet of a product just as an online customer places an order for it. If the digital inventory is not updated quickly, the result can be a cancellation or substitution.

 

According to experts, picking speed is another problem. Store layouts are designed for shoppers to browse, not for employees to race through aisles collecting orders. As order volumes increase, online pickers can also interfere with walk-in shoppers, while employees may have to balance online delivery commitments against the needs of customers inside the store.

 

"Traditional retail stores have historically been designed around customer discovery, browsing and in-store transactions, whereas quick commerce is built around speed, precision and fulfilment efficiency," Malpani said.

 

Retailers will therefore have to redesign parts of their stores as online volumes rise. Dedicated picking areas, stronger inventory management systems and separate staff allocation can make the model more efficient.

DMart shows the limits of a physical-store advantage

Avenue Supermarts' DMart Ready has been much more cautious about rapid delivery than the new-age quick-commerce platforms. It has maintained scheduled delivery windows and focused on large-basket orders rather than attempting to replicate the 10-minute model.

 

Its approach shows that having a physical retail network does not, by itself, make ultra-fast delivery the most attractive strategy.

 

DMart Ready discontinued operations in seven cities during the June quarter, reducing its footprint to 11 cities from 18 at the end of March. The company said the exited markets were marginal contributors and that it was deepening its focus on large metros.

 

The example reinforces the central economic test: retailers still need sufficient demand and attractive basket economics, regardless of whether fulfilment takes place in a conventional store or a dark store.

 

Malpani said retailers should focus on contribution margins, asset utilisation, customer lifetime value, repeat frequency, basket economics, inventory turns, and delivery efficiency rather than simply chasing order growth.

 

Ramanathan similarly argues that there is no single order threshold that determines whether a store is viable. Basket size, delivery radius, rent, labour, inventory turnover and assortment all matter. A store with moderate order volumes can still work if its baskets are large, its delivery radius is tight and its existing fixed costs are well utilised.

 

For retailers, that makes orders per day, orders per square foot, repeat purchase rate, average basket size, picking time, delivery distance, order accuracy and fulfilment cost more useful measures than order growth alone.