Retail Sector in India

 

Indian retail industry is one of the fastest growing in the world. As per Forrester Research, in 2020, India's retail sector was estimated at US$ 883 billion, with grocery retail accounting for US$ 608 billion. The market is projected to reach US$ 1.3 trillion by 2024. The retail sector includes any business or individual involved with selling products directly to consumers. The retail sector includes shops, department stores, supermarkets, market stalls, door-to-door sales people and internet retailers. Retail stores are an important part of high streets and town centers.

Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of several new players. Total consumption expenditure is expected to reach nearly US$ 3,600 billion by 2020 from US$ 1,824 billion in 2017. It accounts for over 10% of the country’s gross domestic product (GDP) and around eight% of the employment. India is the world’s fifth-largest global destination in the retail space.

Amazon is a massive online retailer that has a market capitalization as of June 2018 that is in excess of $268 billion U.S. As well as being an online retailer, Amazon allows for individuals and business to sell and display products for sale on line. Big Bazaar and Reliance Fresh are hypermarkets that attract enormous crowds. These are the largest retail format in India. Malls provide everything that a person wants to buy under one roof. From clothes and accessories to food or cinemas, malls provide all of this, and more. On 20 September 2012, the Government of India formally notified the FDI reforms for single and multi brand retail, thereby making it effective under Indian law. On 7 December 2012, the Federal Government of India allowed 51% FDI in multi-brand retail in India.

 

India ranked 73 in the United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-commerce Index 2019. India is the world’s fifth-largest global destination in the retail space and ranked 63 in World Bank’s Doing Business 2020. India is the world’s fifth largest global destination in the retail space. In FDI Confidence Index, India ranked 16 (after US, Canada, Germany, United Kingdom, China, Japan, France, Australia, Switzerland, and Italy).

 

As per Forrester Research, in 2020, India's retail sector was estimated at US$ 883 billion, with grocery retail accounting for US$ 608 billion. The market is projected to reach US$ 1.3 trillion by 2024. Revenue of India’s offline retailers, also known as brick and mortar (B&M) retailers, is expected to increase by Rs. 10,000-12,000 crore in FY20. According to the Retailers Association of India (RAI), the retail industry achieved 93% of pre-COVID sales in February 2021; consumer durables and quick service restaurants (QSR) increased by 15% and 18% respectively.

 

After an unprecedented decline of 19% in the January-March 2020 quarter, the FMCG industry displayed signs of recovery in the July-September 2020 quarter with a y-o-y growth of 1.6%. The growth witnessed in the fast-moving consumer goods (FMCG) sector was also a reflection of positivity recorded in the overall macroeconomic scenario amid opening of the economy and easing of lockdown restrictions.

 

The Indian retail trading has received Foreign Direct Investment (FDI) equity inflow totaling US$ 3.44 billion during April 2000-December 2020, according to Department for Promotion of Industry and Internal Trade (DPIIT). With the rising need for consumer goods in different sectors including consumer electronics and home appliances, many companies have invested in the Indian retail space in the past few months.

 

India’s retail sector attracted US$ 6.2 billion from various private equity and venture capital funds in 2020. In May 2021, Big Bazaar rolled out its two-hour delivery service in small cities, such as Bhopal, Mangalore, Raipur, Ranchi, Guwahati, Kanpur, Lucknow and Varanasi, and recorded a boost in orders over the past weeks.

 

In April 2021, Flipkart expanded its hyper local delivery service Quick to six new cities including Delhi, Gurugram, Ghaziabad, Noida, Hyderabad and Pune as the demand for essential goods on e-commerce platforms surges amid the second wave of the pandemic. In March 2021, AP Group announced an expansion plan for their Italian brand – Just Cavalli in India with the launch of 200 offline stores in 2021.

 

In March 2021, Realme announced to expand retail footprint in India with flagship stores; it is planning to launch its first flagship store (over a 10,000 sq. ft. area) in Gujarat. On March 25, 2021, Xiaomi introduced a new initiative ‘Develop with Mi’ (GWM). GWM plans to have 30,000 touch points in a year and 6,000+ retail stores in the next two years.

 

In March 2021, ASICS expanded its retail concept in India with a new store in Bengaluru. In March 2021, Vivo announced plan to open 100 exclusive retail stores across India in 2021; aims to cross the 650-store mark in India by 2021. In March 2021, Unicorn, a premium Apple reseller, announced plan to launch 4-6 new flagship stores in India by FY22.

 

In March 2021, Mi India launched a Rs. 100-crore support plan over the next two years for its retail partners. In February 2021, Greyweave, a hand-made carpets and rugs brand, announced to invest Rs. 75 lakh for the firm's offline expansion plan. Government may change Foreign Direct Investment (FDI) rules in food processing in a bid to permit E-commerce companies and foreign retailers to sell Made in India consumer products. Government of India has allowed 100% FDI in online retail of goods and services through the automatic route, thereby providing clarity on the existing businesses of E-commerce companies operating in India. The government’s focus to improve digital infrastructure in Tier 2 and Tier 3 markets would be favorable to the sector.

 

E-commerce is expanding steadily in the country. Customers have the ever-increasing choice of products at the lowest rates. E-commerce is probably creating the biggest revolution in retail industry, and this trend is likely to continue in the years to come. Retailers should leverage digital retail channels (E-commerce), which would enable them to spend less money on real estate while reaching out to more customers in tier II and tier III cities.

 

By 2024, India's e-commerce industry is expected to increase by 84% to US$ 111 billion, driven by mobile shopping, which is projected to grow at 21% annually over the next four years. In 2020, the most common payment methods online were digital wallets (40%), followed by credit cards (15%) and debit cards (15%). Online penetration of retail is expected to reach 10.7% by 2024 versus 4.7% in 2019. Nevertheless, long-term outlook for the industry looks positive, supported by rising income, favorable demographics, entry of foreign players, and increasing urbanization.

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