What I Read This Week…
Happenings in the quick-commerce space, offline value retail, third-party marketplaces, and consumer demand across the apparel, footwear, single-malt, fitness and children’s products.
The consumer space continues to be as exciting as ever, with brands working hard to reach out to as many consumers as possible, through as many channels as possible.
While creating a product and having the same validated amongst a small base of consumers can prove easy, the harder part is to build up scale for most brands. This is where understanding the right channels and the dynamics behind the same becomes critical. Most of my reading is centred around this space.
So let’s dive into the 9th edition of All Things Consumer.
The addressable market for Quick-commerce, which is currently the most happening channel for consumer goods, is estimated to be around $45Bn, and is expected to grow to $77Bn by 2025. This represents a significant opportunity for players to disrupt traditional grocery and retail ecosystems.
Walmart backed PhonePe has become the first payments firm to take a shot at the quick commerce market, as it sees rapid delivery as a major area of growth in the next two years-
Pincode, PhonePe’s ecommerce venture, has fully pivoted to the quick model and has now gone live with 15-minute deliveries in 10-15 per cent areas of six cities - Bengaluru, Mumbai, New Delhi, Pune, Hyderabad and Varanasi.
It plans to expand coverage to about 25 per cent in these markets in the next couple of weeks.
Quite unlike other pure play quick commerce players, Pincode has taken a hybrid plan for deliveries - doing it through the company’s fleet-on-ground team as well as partnering with kiranas and modern retail stores instead of operating through dark stores.
Blinkit and BigBasket are racing beyond groceries to foray into medicines and make even ambulance services available in minutes.
India’s online pharmacy and wellness market, valued at $2.5 billion in 2024, is projected to soar to $7.9 billion by 2031, growing at a compound annual rate of 21%.
These developments highlight a crucial shift in quick commerce, where "higher order frequency and convenience" become key drivers of adoption.
Blinkit’s ambulance service, currently operational in Gurugram, is all about prioritising affordability and social utility over profitability.
According to Grand View Research, India’s ambulance services market is projected to grow from $889.6Mn in 2023 to $1,920.4Mn by 2030 at a CAGR of 11.6%.
The ambulance tech sector has seen its share of ambitious players, but most of them have failed to scale. Of the 29 startups launched, 9 have shut shop, with the segment raising a paltry $4.07 million in total equity funding over the past five years, according to Tracxn.
BigBasket’s quick medicine delivery service aims to boost average order values (AOV) through larger cart volumes driven by recurring medical purchases.
Among other reads in this space -
The website and mobile app of Dunzo went offline a couple of days back, marking another grim chapter for the struggling startup. The shutdown followed the departure of its remaining cofounder and CEO, who has joined to lead Flipkart Minutes.
Another player, Zing, has emerged in the 10 to 15-minute food delivery space. Gurugram-based Zing operates a hyper-local kitchen with the help of technology and a menu optimised just for quick deliveries. What makes Zing’s foray more interesting in this space is that it claims to offer freshly made meals at a time when food items with longer shelf lives seem to be the primary play of many.
Amazon has reportedly begun testing its quick commerce service, "Tez," in select Bengaluru neighborhoods with its employees. Walmart-owned Flipkart's quick commerce service, "Minutes," is rapidly scaling up. It's projected to operate around 150 dark stores this quarter and is expanding its product range to include higher-value items.
Beyond medicines, BigBasket is expected to foray into the quick food delivery space in the current year, like Blinkit’s Bistro, Zepto Cafe and Swiggy’s Bolt.
Swiggy launched a dedicated app called ‘Snacc’ that will deliver beverages, snacks, tiffin items, and meals in 10 to 15 minutes.
Snacc will be Swiggy’s second rapid food delivery offering after it launched Bolt back in Oct’24.
In the model deployed for Snacc, Bistro and Zepto Cafe , the companies procure food items across 50-60 stock-keeping units (SKUs) from third-party vendors who typically service hotels, restaurants and cafes. Under this model, the orders are serviced from dark stores.
In the Zomato 15-minute delivery model, Swiggy Bolt and Swish, food is delivered from restaurants located in close proximity to the customer.
Further, Swiggy will launch a standalone app for its quick commerce vertical Instamart, the company said in a stock exchange filing, even as it expanded its operations to 76 cities across India.
It has also been reported that Swiggy is shifting towards becoming a house of apps, moving away from its current strategy of having different offerings within its main app.
The positive reception in new cities and categories suggests Instamart could achieve far greater user adoption, going well beyond 100M+ users.
This approach mirrors strategies adopted by Chinese internet giants like Meituan and Alibaba, which combine a unified app with a suite of standalone apps tailored to specific use cases.
Pyng is Swiggy's latest launch where it will have offer curated professional services like yoga instructors, CAs and more.
The majority of Instamart’s users, 77.69%, were originally customers of Swiggy’s food delivery offering. However, only 13.84% of Instamart first users transitioned to food delivery, which suggests there is a distinct audience for grocery.
Beyond speed - Where Quick commerce goes in 2025
Brands will need to carefully choose their sales channels with long term considerations in mind.
This year models and platforms will come under scrutiny.
Customer retention will be a central element of the quick commerce playbook, and not merely a support measure.
New stringent regulations may prompt companies to stay compliant, and this may result in higher costs.
Quick commerce apps may become larger retail destinations catering to broader consumer needs.
D2C brands are hitting a wall or are about to hit one. There is only so much brands can grow online, even with the advent of quick commerce. Online-only brands typically start seeing slow growth after they hit a few hundred crores in sales.
The final frontier, offline, is hard. Brands can’t hyperscale offline just by increasing performance marketing as it requires a supply chain that must be built brick-by-brick.
Instead, D2C brands increasingly see strategic acquisitions as a convenient way to avoid offline’s hassles, riding on the supply chain of FMCGs for their next stage of growth.
Meanwhile in the offline space, DMart’s CEO believes that the grocery brick and mortar value retail market is not going away anywhere and that it’s a very large opportunity and continues to grow. While he accepted that DMart cannot be at the cutting edge of every segment of the consumer basket from a channel perspective, it’s recently released Q3’25 results show that -
Total Revenue for the quarter ended December 31, 2024 stood at Rs.15,973 crore, as compared to Rs.13,572
crore in the same period last year.
EBITDA in Q3FY25 stood at Rs.1,217 crore, as compared to Rs.1,120 crore in the corresponding quarter of last year. EBITDA margin stood at 7.6% in Q3FY25 as compared to 8.3% in Q3FY24.
DMart Ready which allows customers to order online and collect groceries from a pick point, is seeing a movement toward home delivery of orders. In fact, DMart has shared that its home delivery business now far exceeds the company’s pick up point sales contribution.
DMart’s progression is a validation that there are enough consumer sets, with multiple needs that retailers - offline or online - can look to target and grow their business. In case of DMart, it follows the “Everyday Low Cost - Everyday Low Price” (EDLC-EDLP) model. What will be critical for them though, will be to figure out their mix of products and the growing preference for convenience over value in urban markets.
Value-first retailers in India have emerged as a powerful force.
By offering competitive opening price points (OPPs) & average order values (AOVs), selection mix, and store experience, these retailers target a broad demographic, creating a larger addressable market and driving widespread geographic coverage, particularly in Tier-2 cities and beyond.
The broad serviceable addressable market (SAM), estimated at ₹56-60 trillion (US$ 680-720 billion) in CY2023 and projected to grow to ₹90-96 trillion (US$ 1,090-1,150 billion) by CY2028.
Their competitive opening price points, typically 10-20% lower than peers, attract consumers transitioning from unorganized to organized retail.
Globally another approach that traditional retailers — including Walmart, Target, and Best Buy — are adopting are third-party marketplaces, which connect customers with external sellers and thereby offer customers a much broader selection. This stems from the need to remain relevant in the digital age, an increasing number of major retailers are following the lead of global tech giants such as Amazon or Alibaba. Some key takeaways from this HBR article -
In the marketplace arena, marketplace operators must excel at connecting customers with sellers - a role significantly different from a retailer’s core function as a merchant.
Marketplaces allow retailers to dramatically increase their product offerings without the financial burden of owning lots more inventory.
Retailers often lose sales due to product unavailability. A marketplace allows retailers to reclaim some of those lost sales via commissions.
Marketplaces provide insights into customer behavior and preferences.
Operational challenges, ultimate customer experience and the need to shift from an internal focus to managing an external network of sellers can be difficult for many retailers though.
Portuguese electronics retailer Worten illustrates the potential of the integrated approach. It placed signs in its stores that proclaim, “Welcome to the largest store in Portugal.” It is positioning its stores as gateways to the 4 million SKUs available through its marketplace, which can be promptly delivered to stores or customers’ homes, seamlessly blending the physical and digital shopping experience. This move goes beyond a traditional omnichannel strategy, extending its benefits to products offered by third-party sellers.
It will be interesting to see if offline retailers in India can look towards this approach to try and stem the challenge being faced from quick commerce platforms.
In the offline space in India, CPG brands derive a lot of sales from the general trade or Kirana stores. Some readings in this space included -
FMCG major HUL is enhancing its distribution model by directly supplying kirana stores, aiming to cut delivery times to 24 hours and ease credit constraints, thereby improving service and supply efficiency.
In this updated distribution model, distributors will be responsible only for handling orders and payments from local stores. HUL will oversee all back-end logistics, including warehousing and delivery.
However, this model has not gone down well with its distributors, who argue it is a short-sighted approach focused on quick profits, while squarely overlooking the long-term health of the distribution ecosystem.
A survey of 21000 Kirana retailers by Kirana Club revealed their top sales representatives in 2024. Parle took the lead, while Hindustan Unilever and ITC fell in rankings.
The survey analysed the sales teams of FMCG companies on 7 key metrics including communication, ethics, empathy, customer support, regularity, business impact and sales team retention.
According to the survey, Parle, which ranked second last year, took the top spot, displacing FMCG major Hindustan Unilever, which slipped down to rank 7 in 2024. Similarly, ITC, which was voted as the third favourite by Kiranas, slipped down to rank 8 this year.
Consumer demand across the apparel, footwear, single-malt, fitness and children’s products seems promising, now and in future too as per reports from research firms and media reports.
As per a report from Phillip Capital, the footwear and apparel industry are anticipating strong demand in the coming months. Both categories are expected to be buoyed by the festive season, an increased number of wedding dates, and signs of improving consumer sentiment. Some other key observations in the report are -
Rural markets outperformed urban areas due to higher disposable incomes driven by government policies and lower inflationary pressures.
Value retailers continued to perform well as consumers leaned towards affordable options, while premium retailers faced challenges.
The trend of premiumization persists, with consumers gradually shifting to organized and branded players.
The "original" single malt makers Amrut Distilleries and John Distilleries, saw their sales increase 36% to ₹1,543 cr and 24% to ₹7,849 cr, respectively, in 2023-24, significantly faster than in the previous few years.
This has happened despite the slowdown and changing tastes pampered by a flurry of brands from Indri and Godawan to Ranthambore and Longitude launched since 2020.
While the demographics haven't changed, youngsters are taking up to single malts and Indians are aspiring for other malts beyond scotch, American or Japanese.
India’s fitness industry is on a growth trajectory, thanks to increasing consumer awareness, a focus on wellness and the rising adoption of technology driven solutions.
The hybrid fitness model, offering both digital and in-person workout options, has gained significant traction with over 40% of fitness enthusiasts preferring the flexibility of mixed routines.
Functional fitness is becoming increasingly popular, with 20-25% of fitness centers now offering specialised functional training programs.
The wearable tech market in India has grown by over 50% year-on-year.
Tier II and Tier III cities are increasingly contributing to the demand surge for health and fitness products, a trend that contrasts with previous years.
Smart rings are one of the hottest consumer electronics categories today, as evidenced by the number of companies showing such gadgets at CES 2025 this week.
Embracing preventative care, will be among the top health trends in 2025, as per Oura CEO.
Research firm IDC estimated that worldwide shipments of smart rings would rise 88% to 1.7 million units in 2024. It expects the category to increase at a compound annual growth rate of 17% from 2024 through 2028. IDC is forecasting shipments of 3.1 million units of smart rings in 2028.
However, in India, in the July-September period, 38 million wearable devices were sold, down 20.7 percent for the same period of the previous year, due to fewer product launches and cautious inventory management in the festival season, IDC has said.
Demand for children’s products, from educational toys to healthy snacks, is up on the back of modern parents’ willingness to invest in high quality, safe and innovative offerings.
Given the massive market size and growth potential, children have emerged as a strong target cohort for brands.
The global toys and games market was estimated at $324Bn in 2023and is expected to grow at a CAGR of 4.3% from 2024 to 2030, according to research from Grand View Research.
India’s market for kids apparel reached $22Bn in 2023, and is expected to grow to $26.5Bn by 2032, as per IMARC Group.
Recently, India’s latest inflation data was released, and it’s something which I have struggled to understand. Hence, some of my reading this week was focused on the same, to help me understand the same better.
India's wholesale inflation accelerated to 2.37% on an annual basis in December from 1.89% in November even as food prices see marginal change.
In India, wholesale price index is divided into three groups: Primary Articles (22.6% of total weight); Fuel and Power (13.2%); and Manufactured Products (64.2%).
A poll by Reuters had indicated India’s WPI to be at 2.3%.
As a significant portion of 1.4 billion people spend most of their income on food, India's inflation index is heavily influenced by food prices.
RBI’s Monetary Policy Committee (MPC) in December downgraded its growth forecast for this fiscal year to 6.6% from 7.2%, while increasing its inflation estimates to 4.8% from 4.5% for the same period, highlighting concerns over food inflation.
While WPI tracks the prices of goods and services at the wholesale level - in other words, the price before the goods reach the consumers, CPI tracks the average price of goods and services at the consumer level - in other words, the goods and services purchased by households.
December's retail inflation rate, fell to its four month low of 5.22%. This was only a slight dip from 5.48% in November.
This decrease was largely attributed to a notable drop in prices of key food items, including vegetables, pulses, sugar, and cereals.
Food inflation, which makes up around half of the overall CPI basket, eased to 8.39% in December from 9.04% in the previous month.
The drop in inflation was largely driven by a big reduction in vegetable prices, especially for staples like onions, tomatoes, and potatoes. These items are a big part of the average Indian household’s diet, so when their prices go down, it brings immediate relief. For example, vegetable inflation fell to 26.6% in December, the lowest it’s been in four months.
While price rises have eased modestly, inflation is not expected to return to the central bank's 4% medium-term target at least until the second half of 2026, a separate Reuters poll showed.
There’s another part of inflation we should keep an eye on—Core Inflation. This excludes food and fuel since their prices can be very unpredictable and might not give a clear picture of overall inflation. In December, core inflation stayed steady at 3.6%.
In summary, the drop in inflation is a welcome relief, especially for households struggling with high food prices. But the overall picture remains mixed. While vegetables are cheaper, essential items like milk, oils, and proteins are still expensive.
Finally, some of my reading which was from the food & beverage space included -
Are celebrity chefs still setting the trends ? The recent rise of social media has seen the focus shift away from seasoned chefs, towards the more relaxed approach of online influencers. However, celebrity chefs continue to be the source of trends and even the future of the industry.
Are non-alcoholic beverages falling short on flavour ? Sales of NAB have been rising since mid-2000s, when alcohol consumption began its steady decline. The global NAB market is valued at $1.46Tn and is projected to grow at a CAGR of 6% over the next five years. Consumers have responded saying that while NABs’ flavours fail to match up to their alcoholic counterparts, it’s not the only priority and that they are motivated by health and wellness benefits.
Top 5 women’s health trends impacting food and beverage. The women’s global health industry is valued at $35Bn and growing at a CAGR of 3.2%, as per Fortune Business Insights. From female focused brands, to collagen, weight loss and gut health, women’s health is sparking NPD and boosting sales.
Top consumer trends in dairy likely to shape NPD in 2025 range from protein to healthy ageing.
That’s it for this edition 😊
Thanks for reading All things Consumer! This post is public so feel free to share it.
As always, your note doesn’t let me down; look forward to the next insightful piece from you Sanjeev.
Thank you in advance Sir