Retail Industry in India 2024-2028

Retail Industry in India 2024-2028

Market Insights:

The Indian retail sector encompasses various segments such as clothing, textiles, fashion accessories, jewelry, watches, footwear, beauty products, pharmaceuticals, consumer durables, home appliances, mobile phones, furnishings, utensils, furniture, food, grocery, catering, books, music, gifts, and entertainment. Currently, India stands as the third-largest retail market, globally, with a substantial online consumer base, making it an attractive e-retail market. In 2023, the Indian e-retail market observed the addition of 50 million new shoppers, marking a growth of around 35% compared to the online shopper base in 2020. These new customers predominantly hail from tier III or smaller cities, including members of Generation Z, who are poised to become a significant segment in the future. According to Invest India, the retail industry contributes to 8% of employment and 10% of India's gross domestic output. The retail industry in India is expected to be valued at INR 164.93 Trn by FY 2028, expanding at a CAGR of 14.90%. during the FY 2024 – FY 2028 period

Segmentation Insights:

India, with a population exceeding 1.3 billion, mostly relies on traditional local stores or neighbourhood markets for grocery shopping. Consumers increasingly prioritize value, healthier options, and convenience, prompting retailers to adjust accordingly. The surge in online shopping in India is driving the growing popularity of purchasing groceries over the internet. According to data from the World Gold Council, the demand for gold jewellery decreased by 6% to 562.3 tonnes in 2023 compared to 2022. However, there was a rise in gold investment demand during the year, with an increase of 7% to 185.2 tonnes. Consumers viewed the uptrend in prices as an investment opportunity, contributing to this increase. Wedding ceremonies and festivals remain the primary drivers of demand for gold jewellery in the country, with bridal ornaments alone capturing at least half of the market share. Home furnishings and decor retailers are more prevalent in the western and southern regions of India. Small furniture accounts for 75% of the market, while large furniture occupies 25%. Based on the International Data Corporation's (IDC) Worldwide Quarterly Mobile Phone Tracker, India's smartphone market showed a slight 1% year-over-year (YoY) increase in 2023, reaching a total shipment of 146 million smartphones. During the second quarter of 2023, India saw the addition of around 7 million mobile subscribers, ranking behind China and the U.S.Market Influencers:

Market drivers:

India's gross national disposable income, encompassing net primary income and transfers from other countries, has grown by 8.9% in FY 2024. With more money available for discretionary spending, consumers are increasingly purchasing items such as clothing, electronics, and home furnishings. This surge in demand, fuelled by rising disposable income, has particularly benefited the middle class, whose purchasing power has increased. The increasing popularity of e-commerce and online shopping is reshaping the retail landscape as consumers seek convenience in their purchasing habits. This trend has spurred the growth of online marketplaces, providing consumers with a diverse array of products and services.

Market Challenges:

The retail industry grapples with mounting challenges stemming from the escalating costs linked to expansive supply chains. Supply chains, which encompass a network of suppliers, manufacturers, and retailers, become increasingly intricate as the retail sector extends its global reach. Managing and controlling costs in such expansive supply chains pose significant hurdles for retailers. Retail touchpoints remain pivotal in shaping purchase decisions, with a significant portion of consumers preferring to evaluate and compare products firsthand at exclusive brand outlets (EBOs) or multi-brand outlets (MBOs). Despite the growing popularity of online shopping, customers continue to prioritize physical stores for their ability to offer live demonstrations, facilitate in-person product viewing, and provide hands-on experiences. These immersive experiences play a crucial role in influencing consumer decisions, underscoring the enduring importance of retail touchpoints in the purchasing journey.