Retail industry’s role in propelling India’s economy is decisive

A Deloitte study titled “Future of Retail” predicts that India’s online market will jump to $325 billion in 2030 from $70 billion in 2022. The organized retail market will grow to $230 billion in 2030 from $110 billion in 2022. However, the total value of the offline retail market will be $1,605 billion in 2030, up from $860 billion in 2022

Driven by socio-demographic and economic factors like urbanization, income growth and rise in nuclear families, the country’s retail market is estimated to reach $two trillion by 2032. On the other hand, the Indian e-commerce industry is expected to cross $350 billion mark by 2030, growing at a CAGR of 23% and it is estimated to be worth over $55 billion in gross merchandise value in 2021.

E-commerce and consumer internet companies raised $15.4 billion in PE/VC funding in 2022, almost twice the $8.2 billion it raised in 2020. The country will become the third largest online retail market by 2030 and is expected to have about six million MSME merchants by 2027.

Although, the retail market is largely unorganized, the expectation is that over the next 3-5 years, the share of modern retail (including e-commerce) will increase by 30-35% with share of traditional retail coming down to 65-70%.

The retail landscape in India offers a wide array of choices, including global e-commerce platforms, single-brand shopping websites, multi-retail apps, and social media sellers. Furthermore, discretionary spending power is on the rise, with the average per capita income surpassing $2000, which is projected to exceed $12,000 by 2047.

The substantial middle class and underserved consumer base in non-metropolitan cities have attracted the interest of several international retail giants seeking expansion into new markets. Branded products, such as apparels, cosmetics, jewellery, footwear, watches, food and beverage (F&B) and furnishings, are gaining popularity and becoming essential lifestyle items for both business and leisure purposes.

The era of social media and internet commerce has further accelerated two significant trends: product premiumization and a growing emphasis on health and sustainability. Indian consumers are increasingly making aspirational choices driven by their desired image. As India continues to evolve into a thriving consumer-driven economy, its retail industry is experiencing remarkable growth, making it one of the most attractive markets for businesses around the world. The underlying fact is that we are moving ahead of the time to capture production, retail and business because we have peoples power.

During FY 2022-23, a significant surge in demand for discretionary and lifestyle products resulted in the rapid expansion of nearly a dozen listed retailers and quick-service restaurant chains across the country. Collectively, they added almost 4,700 stores to their network, averaging around 13 new stores per day. This expansion rate marked their most substantial growth in at least five years. India is projected to witness the opening of approximately 60 shopping malls, totaling 23.25 million square feet, in FY 2023-24.

The fast-moving consumer goods (FMCG), apparel and footwear, and consumer electronics segments are the largest segments in the Indian retail market, accounting for 65 per cent, 10 per cent, and nine percent, respectively.

A Deloitte study titled “Future of Retail” predicts that India’s online market will jump to $325 billion in 2030 from $70 billion in 2022. The organized retail market will grow to $230 billion in 2030 from $110 billion in 2022. However, the total value of the offline retail market will be $1,605 billion in 2030, up from $860 billion in 2022.

India’s retail industry is poised for exponential growth, with private consumption projected to expand to $4.5 trillion by the end of the decade, according to a survey-based joint report by Deloitte India and the Shopping Centre Association of India (SCAI) titled “Recognising malls and shopping centres as a new-age industry”. The report stated that mall and shopping centres account for a significant share of the organised brick and mortar retail sector. This segment is expected to grow at a rapid pace, with a projected ~17 per cent CAGR from 2022 to 2028, outpacing the overall growth of the retail pie.

In 2022, malls and shopping centres accounted for about 12 per cent of the overall retail market in India, contributing about 1.2 per cent to India’s GDP. The shopping centre industry plays an important role in driving economic growth and fostering employment opportunities with an annual revenue of approximately Rs. 1,80,000 crore, employment opportunities for 1.2 crore people, and tax contributions of Rs. 35,000 crore.

The Global Powers of Retailing 2023 report shows the top 250 companies posting 8.5% year-on-year growth in retail revenue, up from 5.2% in the previous year. The apparel and accessories sector achieved the highest annual sales growth with 31.3%. The top 250 retailers achieved an average net profit margin of 4.3%.

With 73% of Consumer Industry CXOs having increased investments in sustainability over the last year, this remains high on the agenda.