The retail market in India has undergone a major transformation over the past decade. The Indian retail market can be divided into organized and unorganized retail. The organized part consists of recognized companies registered for sales and income tax purposes, such as listed supermarket chains and corporate-backed superstores such as Walmart and chain stores.
The organized retail market accounts for 12% of the entire retail market and is currently valued at about 80 billion dollars, online channels have a 6.5% market share and the unorganized market holds the rest. This unorganized retail market best describes itself as a traditional form of low-cost retail in open markets or small supermarkets and clothing stores, for example.
The Indian government allows 100% Foreign Direct Investment in single-brand retail and 51% in multi-brand retail. With the entry of large, new Indian players such as Reliance Retail, Indian retail has become a dynamic and fast-growing sector.
Snapshot of the retail sector in India
- India has become the world’s fifth largest retail destination and is expected to reach as much as 2 trillion dollars by 2032, according to the Boston Consulting Group.
- India ranked No. 2 in the 2021 Global Retail Development Index (GRDI).
- India has the second largest population in the world, increasing urbanisation, rising household incomes and rising consumer spending, making it very attractive to international retailers.
- India currently has the fourth-largest retail market in the world. India’s retail industry is expected to grow to 1.5 trillion dollars by 2030 from 793 billion dollars in 2020, representing an increase of nearly 700 billion in market size. India’s retail industry is fast becoming one of the country’s most important industries.
- In the fiscal year of 2020, the retail sector contributed 800 billion dollars to India’s GDP and employed 8% of the labor force (35 million people). By 2030, the sector is expected to have created 25 million new jobs.
- The Indian e-commerce market is expected to reach 350 billion dollars in gross sales by 2030.
Growth drivers of the retail sector in India
-
The Indian retail market is expected to be worth 1.5 trillion dollars by 2030 compared to 795 billion dollars in 2017.
-
India has the fastest growing e-commerce market in the world. It is expected to reach a value of 200 billion dollars by 2027.
-
In 2030, India will have 140 million middle-income households and 21 million high-income households – resulting in a huge, emerging middle class.
-
India is expected to have 500 million online shoppers by 2030, up from 150 million in 2020.
-
Per capita consumption in rural areas will be 4 times higher compared to 3.5 times higher in urban areas by 2030.
-
By 2030, India will have nearly 90 million new households headed by millennials who are more focused on international brands and products.
Retail trends
-
Omni-channel strategies: customers want flexibility and the retailer must therefore be present at all touch points where the customer wants to be served. Online and offline.
-
Micro-retailing with hyperlocal small stores: always being as close to the customer as possible. In the wake of the pandemic, the need for “convenience retail ‘ has grown tremendously.
-
Integration of tech: To be profitable or to break even, retail chains in India are now making a big digitization push. Everything from inventory planning and supply chain to POS and delivery apps, retailers are looking for simple technology solutions.
-
Shopping experience: In India, the customer’s in-store experience is still essential for a purchase, despite the fact that consumers are also increasingly buying online. Therefore, in addition to a solid online shop, retailers need to keep the personal experience and quality of service tailored in their physical stores.
