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Tech playing central role in modernising India’s grocery sector
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Wednesday, 04 March, 2026, 15 : 00 PM [IST]
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Dr Chandni Sharma
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Growth, Stability and Changing Consumer Trends - The global food and grocery retail market is one of the most essential and dependable sectors in the world economy. In 2023, it was valued at $11,932.5 billion and is projected to reach $14,781.1 billion by 2030, growing at a steady compound annual growth rate of 3.2 per cent. Although this growth may seem modest compared to technology-led industries, the size of the market means that even small percentage increases are very significant in real terms. Food retail is considered a defensive sector because demand remains stable regardless of economic slowdowns, political uncertainty, or global disruptions. People may reduce spending on luxury goods or travel, but food remains a daily necessity. However, recent years have shown that while demand is constant, the way consumers purchase groceries is changing rapidly.
Asia accounts for the largest share of the global food and grocery market, driven by its vast population and expanding middle class. Rapid urbanisation, rising disposable incomes, and improved retail infrastructure have strengthened consumption across the region. China currently leads Asia in terms of market size, but India has emerged as one of the most dynamic and fastest-growing grocery markets. With a population exceeding 1.4 billion people, India represents a powerful consumption engine not only for Asia but for the global retail industry. India’s food and grocery sector forms the backbone of its retail market, contributing more than 60% of total retail sales. Food expenditure in India is largely centred on essential items such as rice, wheat flour, pulses, edible oils, dairy products, fruit, and vegetables. These staples form the foundation of Indian household consumption, reflecting the country’s strong tradition of home-cooked meals. Unlike many Western countries where processed foods dominate, Indian families continue to rely heavily on fresh ingredients and daily cooking practices.
A defining characteristic of India’s grocery market is the dominance of small neighbourhood stores, commonly referred to as kirana shops. These family-owned businesses account for approximately 70-85% of total grocery sales in the country. Kirana stores are deeply rooted in local communities. They are typically located within walking distance of residential areas and offer personalised service, flexible purchase quantities, and informal credit facilities. Shopkeepers often know their customers personally, creating a relationship of trust that large retail chains sometimes struggle to replicate. This strong community connection explains why traditional retail continues to thrive despite the growth of modern formats.
At the same time, organised retail is steadily expanding, particularly in urban centres. Supermarkets, hypermarkets, and large-format retail chains are increasing their footprint across metropolitan cities. Companies such as Reliance Retail are investing in both physical stores and digital platforms to strengthen their presence. Although its market share remains smaller compared with traditional retail, organised grocery is expected to grow as urban lifestyles evolve and consumer expectations change.
Digital Shift and Changing Consumer Trends in India’s Grocery Market - The Covid-19 pandemic marked a turning point for India’s grocery sector. During nationwide lockdowns, restaurants and hotels were closed, and mobility was restricted. As a result, households increased spending on groceries and essential goods. Consumers stocked up on staples such as rice, flour, pulses, and packaged foods due to uncertainty about supply chains. This surge in grocery demand helped the sector remain stable while other industries faced severe contractions. One of the most significant long-term effects of the pandemic was the rapid growth of online grocery shopping.
Before 2020, online grocery penetration in India was relatively limited and largely confined to major cities. Many consumers preferred to select fresh produce themselves and were hesitant to rely on digital platforms. However, lockdown restrictions encouraged millions of first-time users to try online grocery services. Retailers responded by expanding warehouse capacity, strengthening delivery networks, and enhancing mobile applications. What began as a temporary adjustment gradually developed into a lasting consumer habit.
Quick-commerce services have further transformed urban grocery shopping. Companies such as Zepto and Blinkit offer ultra-fast delivery, often within minutes. The promise of speed and convenience has reshaped consumer expectations, making instant fulfilment an important competitive advantage. India is now considered one of Asia’s fastest-growing online grocery markets, supported by affordable mobile data and widespread adoption of digital payment systems such as UPI. A large proportion of households remain highly price-sensitive, especially in rural and semi-urban regions. These consumers focus on affordability, discounts, and value-for-money products. Retailers address this segment by offering competitive pricing, smaller pack sizes, and private-label alternatives. At the same time, a growing urban middle and upper class is driving demand for premium and specialised products. Organic vegetables, millet-based foods, gluten-free items, plant-based proteins, and fortified beverages are gaining popularity. This dual demand for both value and premium products require retailers to adopt flexible pricing and merchandising strategies.
Health, Technology and Expanding Growth - Health awareness has increased significantly in recent years. Traditional Indian ingredients such as turmeric, ginger, and millets experienced renewed demand, aligning with broader global wellness trends. Fresh and minimally processed foods are increasingly preferred over heavily processed alternatives. Additionally, environmental sustainability is slowly becoming an important consideration among urban shoppers. Eco-friendly packaging, reduced plastic usage, and locally sourced produce are gaining attention, particularly among younger consumers.
Technology is playing a central role in modernising India’s grocery sector. Retailers are using data analytics to predict demand, manage inventory, and personalise promotions. Digital payment systems have become common even in small kirana shops, allowing customers to pay through QR codes and mobile wallets. Many traditional retailers are partnering with business-to-business supply platforms to streamline procurement and improve efficiency. This integration of technology into traditional retail models highlights India’s unique hybrid approach, where digital tools support rather than replace small businesses.
Growth in the grocery market is no longer limited to major metropolitan areas. Tier-two and tier-three cities, as well as rural regions, are emerging as strong consumption drivers. Rising rural incomes, improved road infrastructure, and government welfare schemes have strengthened purchasing power outside urban centres. Similar developments are visible across Asia, where emerging economies are experiencing retail modernisation. However, India’s scale and demographic diversity make its growth story particularly significant within the region.
Despite strong momentum, the Indian food and grocery sector faces ongoing challenges. Inflation, fluctuating agricultural output, and rising transportation costs can affect pricing and profitability. Supply chain inefficiencies, especially for perishable goods, remain a concern. Retailers must balance competitive pricing with sustainable margins while maintaining consumer trust.
Overall, the outlook for India’s food and grocery market remains highly positive. Urbanisation, a young population, increasing digital adoption, and steady income growth will continue to support expansion. Organised retail and online platforms are expected to gain further ground, yet kirana stores will remain central due to their accessibility and community ties. The Indian grocery sector represents a powerful blend of tradition and transformation. Anchored within a steadily expanding global market and supported by Asia’s rising consumption, India’s food and grocery segment stands as one of the most dynamic and resilient components of the national economy, poised for sustained growth in the years ahead.
(The author is associate professor, Shiva Institute of Pharmacy, Chandpur, Bilaspur. She can be reached at sharma092chandni@gmail.com)
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