Modern trade gets quick commerce check as users pivot online; grocery chains’ volume growth falls to 4% in July-Aug

Not just kiranas, but quick commerce is beginning to hurt organised grocery retailers in urban centres as consumers seek instant gratification and convenience.

While DMart, a popular grocery chain, admitted last week that online formats were hurting sales in metro stores, NielsenIQ data sourced from the industry corroborates this trend.

Sales volume growth in modern trade in July-August has decelerated to around 4% versus 24% in the corresponding two-month period a year ago, according to industry executives quoting NielsenIQ data. Sales numbers for the month of September 2024 are not out yet.

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Traditional trade, meanwhile, saw volume growth of around 5% in July-August versus 8% seen a year ago, sources said. September numbers, say sources, are not expected to dramatically alter the picture for both modern trade and traditional trade, in part due to a high base effect in the year-ago period. In July-September 2023, traditional trade and modern trade saw volume growth of 7.5% and 19.5%, respectively, according to NielsenIQ data.

While modern trade contributes around 12-15% to FMCG sales, traditional trade contributes 80% and e-commerce, which includes quick commerce, contributes 5-8%.

From under a fifth two years ago, q-commerce share within e-commerce is now over a third for FMCG companies, according to firms as well as industry experts.

Also ReadKotak Mahindra Bank reports 5% rise in standalone net profit

“Definitely, we are seeing modern retailers feel the pressure of online channels. Urban consumers want convenience and when a channel such as q-commerce is offering you just that, a pivot is likely,” Krishnarao Buddha, senior category head at Parle Products, said. The company has been pushing small, medium and large packs of all its products into q-commerce to take advantage of the boom.

In its recent earnings update for the September quarter, Dabur said it was seeing disproportionately higher growth in quick commerce. The company, therefore, had taken the strategic decision to correct distributor inventory in general trade, its largest channel,

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