The retail sector in India is poised for substantial expansion, with projections indicating a robust growth rate of 9-10 per cent.
According to a joint report by the Boston Consulting Group (BCG) and the Retailers Association of India (RAI), the sector is anticipated to more than double in size across various categories and formats, aiming to reach a staggering $2 trillion within the next decade. This growth trajectory underscores a steady rise in the country's consumption patterns.
The report underscores significant shifts shaping the pace and contours of growth within the sector. Organised retailers, in particular, are urged to sustain their performance and strive to capture larger market shares amidst evolving consumer preferences.
While personal income growth remains stable, consumers are increasingly inclined towards spending on 'experiences' or opting to save through emerging financial avenues. Abheek Singhi, Managing Director and Senior Partner, BCG, emphasises that successful retailers are those who challenge conventional wisdom regarding the trade-off between growth and profitability.
Despite historically outperforming underlying category growth, the organised retail segment experienced a slowdown across various segments last year, attributing to potential headwinds. Year-on-year growth in the third quarter of fiscal 2023-24 witnessed a decline of 5-10 percentage points compared to the corresponding period in the previous fiscal year. Some major retailers reported a decrease in like-for-like store growth.
However, industry stakeholders remain optimistic about the sector's outlook, pointing towards long-term structural tailwinds and consistent profitability, aligning with global peers.
The report underscores the necessity for retailers to address critical considerations to ensure sustainable growth in the future. Kumar Rajagopalan, CEO, RAI, emphasises the importance of personalised customer experiences, forging new collaborations, and leveraging artificial intelligence for operational efficiency to propel India's retail industry towards unprecedented growth and global competitiveness.
As store expansions continue, coupled with increasing urbanisation, Tier I-IV cities are anticipated to drive more consumption, further fueling the sector's expansion.
