Notwithstanding a slowdown in consumption due to the sluggish economy, the Indian retail market is estimated to reach $1.3 trillion by 2025, helped by multiple structural, socio demographic and economic drivers, says a recent study. According to a study jointly released by Boston Consulting Group and Retailers Association of India titled R'etail 4.0: Winning the 20s', the retail market stood at $0.7 trillion in 2019.
"India's long-term consumption and retail growth drivers are expected to provide a strong foundation for future growth. Indian retail market is estimated to reach $1.1-1.3 trillion mark by 2025, reporting a CAGR of 9-11 per cent from 2019," it said.
The report noted that data and technology driven disruptions along with supply side innovations will shape the future of the retail landscape.
"With the onset of digital revolution, it is imperative for retailers to embrace data and technology to shape consumer shopping preferences and minimise costs prompting retailers to up their game. Also, increased margin pressures, retail space crunch, rising costs are putting considerable strain on business models thus pushing retailers to innovate to win in the next decade," it said.
According to Abheek Singhi, Managing Director and Senior Partner, BCG the Indian retail market is still fragmented and offers an opportunity for the top five retailers to more than double their share from less than five percent to over 10 per cent in the next decade.
"Winning in the 20s will require retailers to rethink their value proposition and operating model. Precipitating and participating in ecosystems will be a key driver of success," he added.
The report further stated that e-commerce grew strongly, but penetration and share has varied across categories. "Mixed pathways gained prominence as against pure channel specific customer journeys. Most significantly, small neighborhood stores have adapted well to the new reality, amidst competition from e-commerce and modern trade," the report said.It further said that consumer needs will evolve gradually but distinctly across multiple dimensions such as personalization, trust in brands as well as omni-channel affinity.