Modern retail penetration which is currently at 10 percent or $82 billion of India’s total retail sector in CY2018 is expected to grow at 20 percent over the next few years to 11.8 percent or $118 billion by CY2020, according to a joint report by RedSeer Consulting & bigbasket on online food & grocery.
Modern retailing, which is often called organised trade, facilitates access for international brand manufacturers to wider chain store-based distribution in the target market.
The report also indicated that modern retail will further grow at 14.7 percent or $204 billion by the calendar year 2023.
On the other hand, online retail which contributed 3 percent (CY2018) share will increase to 4.6 percent and 7 percent penetration in CY2020 and CY2023, respectively, the report stated.
Further, India’s organized food and grocery sector is poised for growth over the next five years.
The modern retail share has increased from 1.6 percent in 2013 to 3.5 percent in 2018 and is expected to grow at a CAGR of 25 percent to reach 6.7 percent of the food and grocery market by 2023 and amount to $60 billion.
Hari Menon, Co-Founder and Chief Executive Officer, bigbasket said, “The online grocery segment has been one of the fastest-growing e-commerce verticals in India and will continue to flourish in both metro and non-metro cities in the years to come.
Online food and grocery retail, though at a nascent stage, with only 0.2 percent penetration is expected to grow at a whopping 55 percent to reach 1.2 percent of the overall market in 2023 and amount to $ 10.5 billion.
“Increased comfort and trust of customers in e-tailing, especially electronics and fashion coupled with a strong value proposition of e-grocery players, the wide varied assortment and express delivery options, will drive this growth,” the report stated.
Though the share of modern retail is growing over the years with the expansion of players and realignment of business model the share of modern retail in India is lower than leading developed and developing nations of the world.