Mumbai: Retailers Association of India (RAI) organized its flagship event, The Retail Leadership Summit, with Boston Consulting Group (BCG) as their gold partner. At the backdrop of the event, BCG-RAI unveiled a report titled “Racing towards the next wave of Retail in India”.
The report jointly developed by BCG and RAI, details the opportunities for retail in India while underscoring innovative practices adopted by retailers globally and in India. It forecasts India’s retail industry to be on a robust path to recovery and despite unprecedented challenges, is set to resume its growth momentum primarily driven by growth in consumption. India’s consumption, which was growing at approximately 12% pre-pandemic, went into negative territory ring the pandemic but has now recovered to surpass pre-pandemic growth levels at 17%. India’s retail industry will continue to grow at close to 10% CAGR to reach approximately $2 Tn in the next decade despite a 2-year hiatus caused by the pandemic. The report further highlights that while certain industry segments like food and grocery, restaurants and QSR, and consumer durables have recovered to pre-Covid levels, others like jewelry and accessory, apparels, and footwear remain on track to a full recovery.
The Indian consumption story continues to remain strong and household consumption grew significantly to INR 130-140 Tn in 2021. Average household income is projected to increase ~1.4x from 2019-2030.
“Indian economy continues to be driven by consumption and we are observing that consumption growth is back in the positive territory after the two-year COVID pause. India’s retail industry will grow to approx. $2Tn in the next 10 years. The next decade will see organized retailers focus on footprint expansion, across all formats – offline and online – to fuel future growth”, explained Abheek Singhi, Managing Director and Senior Partner, BCG.
The report presents findings of an in-depth study of global retail players, identifying challenges in the prevailing environment and highlighting emerging trends and models that can potentially shape the future of retail. Five key trends, namely ‘seamless’ retail, next-gen stores, personalization, the rise of mega ecosystems, and emerging revenue models, have been identified and detailed examples of how global retail players both in the East and the West have adopted these models to optimally leverage the potential offered by these trends are shared.
“The rising competition and the need for constantly improving the customer value proposition is driving the rise of ecosystems – and the customer being approached by players across retail and non-retail. We are seeing examples of this trend already in India and is expected to significantly transform the entire landscape in the future”, explained Rachit Mathur, Managing Director and Partner, Consumer & Retail Practice, BCG.
“The pandemic taught retailers and consumers new lessons which are here to stay. Consumers shop across channels, have a hybrid shopping culture while businesses are learning to adopt hybrid work cultures. It’s evident that retail in India will grow, however, retailers have to learn new techniques and new methods to keep the customers with them. It’s a land filled with opportunities and challenges.
When looking at retail performance, one needs to factor in the inbuilt inflation in most products like garments, electronics and some FMCG products. That said, FY 2022 onwards, retailers are hopeful that quantitative growth will be restored, and business will be back on a steady growth trajectory,” said Kumar Rajagopalan, Chief Executive Officer, Retail Association of India, speaking about the findings and state of Indian retail.
The report recommends key action points, i.e., 8 critical imperatives that retailers in India need to execute to generate sustainable and profitable growth. The report also lays out the several factors that will influence the shape of retail in India. Three of these factors, namely, the upcoming open network for digital commerce (ONDC), retailers’ ability to leverage retail data to create offerings beyond core retail, and rise of the gig economy, have the potential to truly disrupt the retail landscape in India and influence the choices that retailers need to make in order to ‘win’ in the future of retail.
“Retailers have access to huge amount to customer data, and therefore have the potential to leverage this core data, either themselves or through partnerships, to create a layer of services which are beyond retail, for instance, using buying preferences data to provide customized financial services viz loans, insurances, etc.”, explained Bharat Mimani, Managing Director and Partner, BCG.