In today’s Finshots, we tell you the real reason why Indian kirana stores are dying, and why quick commerce can’t completely kill them.

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The Story

Kirana stores, those small, familiar shops that once ruled the Indian grocery market, are now facing an existential crisis. And no prizes for guessing who’s the culprit — quick commerce platforms like Blinkit, Swiggy Instamart and Zepto, which promise to deliver groceries or almost everything under the sun in just 10 to 30 minutes after you think of them.

As it turns out, nearly 80% of consumers have shifted at least a quarter of their grocery spending from kiranas to these lightning-fast delivery apps.

The impact?

In just the past year, over 2 lakh kirana stores have shut shop.

At first glance, it looks like quick commerce has completely cannibalised kirana sales and as if these neighbourhood stores are a dying breed. And while that’s partly true, there’s a case to be made for why quick commerce won’t be able to wipe them out entirely.

Now, if you’re wondering why we’re bringing this up today, it’s because a couple of days ago, a parliamentary standing committee directed the Competition Commission of India (CCI) to explain what it’s doing to protect small retailers. This comes amid growing allegations of deep discounts and unfair trade practices by some of the big e-commerce players in the market.

So while that’s in progress, we thought it’d be a good time to dig deeper into what’s really going on.

To begin with, you have to understand why kirana stores are losing business. And honestly, the answer’s pretty straightforward.

The shopping experience at unorganised retail is broken. If you’ve ever stepped into most small kirana stores, you’ll know what that means. You can’t just stroll in and pick what you want. Anything that lets you do that is called a supermarket. And since kiranas and other unorganised retail stores still make up nearly three fourths of India’s retail market, it means a large chunk of customers are used to this limiting experience. But when platforms let you pick, click and get your groceries delivered in minutes, it’s hard not to be tempted.

Sure, a kirana might be just across the street or a few blocks away. But sometimes you’ll have to deal with a grumpy shopkeeper, or hop between stores looking for the brand you want. Online or supermarket shopping simply makes that easier.

Compare that to mature markets like the US, where quick commerce never really took off and you’ll be able to get a better sense of what we’re saying. These platforms were barely able to make a dent there because retail is dominated by organised players, offering a better shopping experience right from the start. Plus, Americans don’t mind driving nearly 4 miles (around 6 km), which is the average commute for groceries, because almost every adult has a car, and paying for fuel isn’t a big deal. So quick commerce didn’t really have a problem to solve there, but it does in India.

The second important thing is that there’s no level playing field. See, when a retailer gives you a discount, it’s usually because they’re buying products cheaper in bulk and keeping their profit margins low. For a kirana store, that margin is about 5–10%, maybe 15% if they’re lucky.

But quick commerce platforms have got an unfailing weapon — offers! They’re happy to lose money for now, just to reel people in and make sure convenience becomes second nature.

Remember how apps like Google Pay, PhonePe and Paytm used to flood us with cashback offers? Slowly, those made way for brand or merchant based coupons and then came convenience fees on bill payments and mobile recharges. Yet, by then we were hooked. No more visiting the neighbourhood recharge chap or standing in long queues at the electricity office to pay the bill. Food delivery apps followed a similar playbook. Swiggy and Zomato, for instance, reeled us in with deep discounts before slowly dialling them down.

And quick commerce is playing a similar game. And the reason they can afford those heavy discounts and offers is because of foreign venture capital (VC) money. It might seem like a harmless boost, but it actually creates an uneven playing field.

That’s because foreign VC money is basically FDI (foreign direct investment). Now, India does allow foreign investors to own up to 51% in multi-brand retail businesses (or stores that sell products from multiple brands under one roof). But this needs government approval and comes with strict conditions. More importantly, FDI-backed e-commerce marketplaces aren’t supposed to own or control inventory. They can invest in platforms that act as intermediaries, but they can’t directly hold stock. The idea is to stop giant multinationals from flooding the market and pushing small local stores out of business.

But according to a white paper by CAIT (Confederation of All India Traders), quick commerce companies have found a clever way to break these rules — dark stores. Yup, those small hidden warehouses peppered across delivery areas that make those 10-minute delivery promises possible. CAIT believes these platforms are essentially running multi-brand retail operations because they sell products from different brands directly to customers. To dodge the FDI restrictions, they set up dark stores and create a network of preferred sellers. These sellers get lower fees for warehousing, delivery and other services, giving the platform indirect control over inventory.

CAIT’s proof to back this claim is that only about 2–5% of foreign funds is reportedly going towards actual infrastructure. The rest gets used to cover losses, offer steep discounts, subsidise warehouses, inventory and logistics.

In other words, quick commerce may not exactly be playing fair, while stealing business away from the humble kirana store.

But here’s the thing. This VC money may not be able to completely wipe out India’s kirana stores so easily. For one, the CCI is already investigating these alleged unfair practices. Plus, the government isn’t going to increase that 51% FDI cap in multi-brand retail any time soon.

And then there’s something else — where these kirana stores are shutting down. Most of the 2 lakh closures we mentioned earlier or 45% came from metro cities. Tier 1 cities made up 30% and Tier 2 and 3 cities saw 25%.

In smaller towns and rural areas though, it’s a different story. People are fiercely loyal to their neighbourhood kirana store. I live in a small town myself, and when a More supermarket opened just across the street, I was excited. But my mother in law immediately said, “If we all start flocking to these big billionaire-owned stores, what happens to our kirana shops who’ve worked for years to serve us?” That sense of community runs deep outside the metros.

Plus, kiranas still offer goods on credit, something people rely on for monthly groceries in many parts of the country. And navigating online shopping isn’t exactly second nature for everyone there either.

Even big brands recognise this. Companies like Parle are launching exclusive small packs only for kirana stores. And for quick commerce, which works best with ₹500–700 order values, those impulse-sized packs don’t always make sense.

And here’s a thought. Why compete when you can collaborate? Quick commerce platforms could tie up with kirana stores instead of setting up dark stores, using their inventory for deliveries. Flipkart Minutes is already doing this and making lightning-fast deliveries without cutting them out of the game.

So yeah, quick commerce might be sprinting ahead, but kirana stores are the ‘cockroaches’ of the business world — profit-driven survivors built to thrive in tough times. They’ve seen licence raj, modern retail and even demonetisation. They might be down, but they’re definitely not out.

Until next time…

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