Convenience Stores Struggle for Relevance in the Age of Quick Deliveries
Traditional grab-and-go retail faces an existential squeeze from rapid doorstep delivery platforms.
1The Quick Commerce Squeeze
Traditional convenience stores in India are facing an existential crisis as quick-commerce apps dominate the market. These platforms deliver daily essentials to doorsteps within minutes, rendering the physical grab-and-go model less necessary. Consequently, convenience chains struggle to justify high commercial rents and staffing costs while competing against both local kiranas and digital giants.
2High-Profile Market Exits
The sector has seen significant retreats, notably the closure of all 31 remaining 7-Eleven stores in India on 30 September. This followed the termination of its franchise arrangement with Reliance Retail. Additionally, Godfrey Phillips India exited its 24Seven business in April 2024, highlighting the immense difficulty of scaling branded convenience formats profitably.
3The Middle-Market Trap
Convenience stores currently occupy an awkward middle ground between large supermarkets and neighborhood kiranas. Supermarkets offer wider assortments and higher margins, while kiranas maintain lower operating costs and superior local adaptability. Smaller convenience outlets suffer from limited shelf space and higher operating costs per square foot, which severely erodes their overall profit margins.
4Franchising as Economic Strategy
The New Shop, a prominent chain, emphasizes that franchising is essential for economic viability in this sector. After running company-operated stores, they shifted to a franchise-first model in 2022. Setting up a new store costs under 20 lakh rupees, and the company has maintained profitability for three years after reaching 110 locations.
5Operational Model Divergence
AMPM is taking a different path by converting all existing stores to company-owned, company-operated outlets. Founder Shubham Gupta cited previous failures in franchise procedures and payment disputes as the primary drivers for this shift. The company currently operates 12 stores and plans to introduce local deliveries once they scale to 50-100 units.
6Pivot to Specialist Services
Wellness Forever is countering the quick-commerce threat by focusing on pharmacy-first services rather than general convenience. They have reduced food assortments due to declining sales and expanded into skincare, vitamins, and nutritional supplements. With over 500 stores and 2,000 pharmacists, they leverage expert product advice to differentiate from online delivery platforms.
7Diversifying the Store Experience
To remain relevant, some chains are transforming outlets into lifestyle destinations. The New Shop now offers services like courier pick-up, ticket booking, and electric vehicle charging to drive foot traffic. These value-added services aim to turn the physical store into a hangout spot, moving beyond simple retail transactions to increase customer engagement.
8Future Outlook and Expansion
Despite current struggles, international interest remains high. Japanese retailer Lawson plans to open five directly managed stores in Mumbai by 2027, targeting 100 outlets by 2030. Success will depend on location strategy, such as metro stations, and the ability to control costs while maintaining an assortment that justifies the physical visit.