KOLKATA: The landscape of consumer shopping in India is undergoing a significant transformation, especially in smaller towns, thanks to the introduction of quick commerce platforms like Blinkit, Swiggy Instamart, and Zepto. Industry executives have noted that consumers in these regions are increasingly gravitating towards purchasing larger packs and premium variants of everyday goods. This shift is largely driven by aggressive discounting strategies and the allure of free delivery options, which have made these platforms more attractive to consumers.

Quick commerce, a rapid delivery service that caters to a wider audience, has opened up new opportunities for fast-moving consumer goods (FMCG) companies operating in tier 2 and 3 cities. Traditionally, shoppers in these areas relied on neighborhood stores, often referred to as 'kiranas,' where the purchasing trend leaned heavily towards smaller, low-priced packages. However, Mayank Shah, the vice president at Parle Products, highlighted that quick commerce serves a more extensive catchment area, unlike kirana stores that hesitated to stock larger packages due to the insufficient demand.

For instance, Parle Products has reported that packs priced between Rs 40-70 now represent approximately 30-35% of their sales via quick commerce in smaller towns. In stark contrast, these larger packs accounted for only about 10% of sales through traditional kirana outlets. This trend has not gone unnoticed by other FMCG companies, which are adjusting their product offerings to align with changing consumer preferences. Amul, Indias leading dairy brand, has begun marketing packs priced up to Rs 500 through quick commerce in smaller cities, tapping into the growing demand for larger quantities of dairy products.

AWL Agri Business, previously known as Adani Wilmar and recognized as the countrys largest edible oil company, reported a notable shift in their sales patterns as well. They indicated that significant sizes, such as 5-litre jars and bundled three 1-litre pouches, now contribute to half of their sales through quick commerce platforms in smaller towns. In comparison, kiranas predominantly sell smaller pouches of 500 ml to 1 litre, with larger packs comprising less than 10% of their sales. Angshu Mallick, the CEO of AWL Agri Business, attributed this phenomenon to the enticing offers, free delivery, and substantial discounts provided by quick commerce platforms, which have further incentivized consumers to purchase larger packs.

Wipro Consumer Care, known for products like Santoor soap and Glucovita energy drink, has also witnessed remarkable growth, with their value pack sales surging by over 200% in the last year as a result of the rapid expansion of quick commerce into emerging cities. Khatri, a representative from Wipro, emphasized that quick commerce is playing a crucial role in fostering premiumization across both personal and home care categories. The companys impressive growth metrics underscore the evolving purchasing power and preferences of consumers in these regions.

Quick commerce companies have ambitious plans for further expansion, targeting towns such as Anand, Jodhpur, Rohtak, Bathinda, Haridwar, Vijayawada, Dehradun, Raipur, Siliguri, and Thiruvananthapuram. Just a month ago, Swiggy revealed plans to extend Instamart to 100 cities, while Blinkit aims to establish 2,000 dark stores by December 2024, effectively doubling their presence within a year.

However, this rapid expansion does come at a cost. The aggressive discounting strategies employed by quick commerce platforms are beginning to impact profit margins, as noted by Mohan Goenka, vice chairman of Emami Ltd. This company is well-known for personal care and healthcare brands such as Fair and Handsome and BoroPlus. Despite the challenges, Goenka remarked that the shift towards quick commerce has become a significant consumer trend that businesses cannot ignore.

It is worth noting that while cities like Delhi NCR, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, and Pune continue to dominate the quick commerce marketcontributing around 80% of the overall businesssmaller towns are steadily catching up. Swiggy's recent investor notes suggest that their smaller town outlets have experienced growth patterns comparable to those seen in larger cities within just six months of their launch.

Furthermore, Eternal's chief financial officer, Akshant Goyal, has informed investors that, on a return-on-investment basis, smaller towns present an appealing opportunity for growth. According to a recent report from Bain and Company, the quick commerce sector is forecasted to grow at a remarkable annual rate of over 40% through 2030, propelled by diversification across various categories, geographic areas, and customer demographics.