Neighbourhood grocery stores in the quick commerce era

The neighbourhood’s small family-run grocery shops are gradually facing the heat of the digital era’s quick commerce. The small grocery shops in residential areas will need innovative use of their space to survive the price wars imposed by e-commerce quick delivery platforms. The ultra-fast delivery of groceries, daily essentials and small household items at the doorsteps of consumers at discounted prices has slowly influenced consumer habits. In cities, many nuclear families, with both partners working, have found the quick commerce a better option, as it allows them to enjoy a relaxed breakfast instead of going out and waiting in line for their turn at the neighbourhood grocery shop to purchase groceries and daily essentials. Steady growth of quick commerce in cities like Guwahati has shaped new ideas of the market among consumers. Children growing up watching their parents prefer quick commerce over the neighbourhood grocery stores naturally develop an affinity towards the app-based option. Apart from the advantage of quick doorstep delivery, the parents find the discount offers of quick commerce lucrative, as it helps them save on household expenses – even though such convenience comes at the cost of missing the chance to meet neighbours and have a quick chat while stepping out to buy essentials from the grocery store. The rat race for professional establishment, coupled with digital consumer habits, has permanently changed some traditional practices among many city households – like skipping a short visit to the grocery store. The persistent view of the central government on challenges posed by quick commerce to traditional neighbourhood grocery stores is that pricing and discounting of products are business decisions driven by market forces. The government also insists that the imposition of unfair or discriminatory prices (including predatory pricing) by a dominant enterprise or group is prohibited under provisions of Section 4 of the Competition Act, 2002. The government informed the parliament that the Competition Act, 2002, mandates the Competition Commission of India to prevent practices having adverse effects on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets in India. The CCI looks into the matter relating to anti-competitive agreements and abuse of dominance by enterprises in all the sectors of the economy. The fact of the matter is, grocery stores cannot afford to offer the same discount offered by quick commerce or e-commerce retail platforms. The Open Network for Digital Commerce (ONDC) initiative of the Department for Promotion of Industry and Internal Trade (DPIIT) facilitates commercial operations like cataloguing, inventory management, order management and order fulfilment and encourages easy adoption of digital means by those currently not on a digital commerce network. Several measures have been initiated under the ONDC ecosystem to support neighbourhood grocery stores to modernise their operations and remain competitive in the digital economy. These include the provision of simple and easy-to-use mobile applications to support digitisation for procurement as well as selling; the enablement of digital cataloguing, billing, inventory management and digital shopfronts for retailers; capacity-building and training support for the adoption of digital tools and technologies, etc. Quick and easy access to on-demand digital logistics services to improve delivery serviceability in the neighbourhood and hyper-local areas; support for faster stock replenishment through tech-enabled supply chain solutions; and provision of data-driven tools for demand forecasting recommended by ONDC are critical to improve operational efficiency. Onboarding of the neighbourhood stores on ONDC will make them discoverable even by some of their traditional customers who have shifted to the quick commerce ecosystem. However, small capital bases will make the adoption of digital e-commerce for a large number of small grocery stores difficult without initial support by the government or companies selling products through them. Without addressing these challenges, the gap between the intent of onboarding grocery stores on ONDC and execution will persist, providing an edge to quick commerce platforms. The ONDC also envisages enabling competitiveness in the digital economy through digital linkages between grocery stores and manufacturers, brands, wholesalers and distributors to ensure ease of ordering and improved margins; transparent visibility of pricing, brand schemes and promotional offers to level the playing field with organised retail; but training on digital marketing, customer engagement and product discovery will be crucial for sustained growth. The fact that over the past three years the ONDC has supported over 3,500 shops and neighbourhood grocery stores across the country, which is quite small compared to nearly 12 million such grocery stores, says a lot about the challenges in making them digitally discoverable. Nevertheless, neighbourhood grocery stores continue to provide essentials to their trusted customers on personal credit, which is still seen as a significant advantage of the grocery stores over quick commerce. With industry projecting about threefold growth of the quick commerce grocery market, the competition faced by traditional grocery stores is poised to become even more intense.