Retail Industry

Overview

The Indian retail industry has rapidly evolved into a dynamic and fast-paced sector, with the entry of numerous new players contributing to its growth. Currently, it constitutes over 10% of the country's gross domestic product (GDP) and employs approximately 8% of the workforce. India holds the position of the world’s fifth-largest retail market. In 2019, the United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-commerce Index ranked India at 73. Additionally, India secured the 63rd position in the World Bank’s Doing Business 2020 report.

A significant middle-class population and a relatively untapped retail market make India an attractive destination for international retail giants looking to expand their operations. The purchasing power of urban Indian consumers is on the rise, particularly in categories such as apparel, cosmetics, footwear, watches, beverages, food, and jewelry, which are increasingly becoming popular among urban consumers for both business and leisure purposes. Analysts predict that the retail sector in India will reach a staggering US$ 2 trillion in value by 2032, as per an analysis by the Boston Consulting Group (BCG).

India's retail market is the fifth-largest globally, attracting foreign direct investment (FDI) and ranking 17th in the FDI Confidence Index, following countries such as the US, Canada, Germany, United Kingdom, China, Japan, France, Australia, Switzerland, and Italy.

The Indian market is highly promising and continues to evolve, drawing significant interest from multinational corporations aiming to tap into the expansive consumer base. Forecasts indicate a sharp increase in online shoppers, reaching around 500 million by 2030, and the E-commerce market is expected to touch US$ 350 billion in Gross Merchandise Value (GMV) by the same year. Moreover, nearly 60 shopping malls encompassing a total retail space of 23.25 million square feet are anticipated to become operational between 2023-25.

India is considered among the top countries for retail investment due to factors such as its immense population, a growing middle-income class, increasing urbanization, rising household incomes, connected rural consumers, and a surge in consumer spending. The retail sector is experiencing growth not only in major cities but also in smaller towns, driven by healthy economic growth, changing demographics, increasing disposable income, urbanization, and evolving consumer preferences.

To enhance the business climate and facilitate foreign companies' entry, the Indian government has implemented various rules, regulations, and policies, making it simpler for these companies to establish fully owned subsidiaries within the country.

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Our commitment to understanding your organization, combined with our industry expertise, empowers us to deliver solutions that not only meet but exceed your expectations. With Cyberensic Global, you can rest assured that your organization's cybersecurity and information security needs are in capable hands.

Market Size

India's retail industry is anticipated to experience substantial growth, with projections indicating a 9% growth rate from 2019 to 2030. In 2019, the retail industry was valued at US$ 779 billion, and it is predicted to reach US$ 1,407 billion by 2026 and exceed US$ 1.8 trillion by 2030, according to Kearney Research.

Brick-and-mortar (B&M) retailers in India are expected to witness an increase in revenue by Rs. 10,000-12,000 crore (US$ 1.39-2.77 billion) in FY20. The direct selling industry is also on the rise and is projected to reach a value of US$ 2.14 billion by the end of 2021. E-Retail has been a significant boon, especially during the pandemic. A report by Bain & Company in association with Flipkart titled 'How India Shops Online 2021' suggests that the e-retail market is set to grow to US$ 120-140 billion by FY26, at a growth rate of approximately 25-30% p.a. over the next 5 years.

Despite facing unprecedented challenges, the consumption story in India remains robust, driven by factors such as affluence, accessibility, awareness, and attitude. Household consumption stood at Rs. 130–140 trillion (US$ 1.63-1.75 trillion) in 2021.

India ranks third globally in terms of the number of e-retail shoppers, trailing only behind China and the US. The logistics sector is evolving, with new-age players expected to deliver 2.5 billion Direct-to-Consumer (D2C) shipments by 2030. Online transactions for used cars are predicted to increase by 9 times in the next decade.

In 2021, there were approximately 1.2 million daily e-commerce transactions, and the total value of digital transactions amounted to US$ 300 billion. Projections suggest that this figure will escalate to US$ 1 trillion by 2026. Furthermore, online shoppers in India are expected to reach around 500 million in 2030, a significant surge from the approximately 150 million recorded in 2020.

The digital economy in India is forecasted to reach a remarkable US$ 800 billion by 2030, and the E-Commerce market is anticipated to achieve a Gross Merchandise Value (GMV) of US$ 350 billion by the same year. These statistics highlight the immense potential and promising growth of the retail and e-commerce sectors in India.

Advantage

Robust Demand: A Thriving Market

India stands as a beacon of opportunity and growth in the global marketplace. Multinational corporations are keen to tap into the immense consumer base within India, recognizing it as a highly promising and evolving market. The surge in purchasing power has significantly heightened consumer demand, fueling growth across various sectors. The anticipated opening of nearly 60 shopping malls in the coming years amplifies the prospects of meeting this burgeoning demand.

Innovation in Financing: Empowering Consumer Choices

Collaborative efforts between financial institutions and retailers are revolutionizing the accessibility of products for consumers. Innovative financing options empower consumers to acquire durable goods through flexible credit solutions. This synergy not only augments consumer purchasing capability but also propels economic growth by driving retail sales.

Increasing Investments: Attracting Global Interest

India's wealth of resources, a vast labor pool available at competitive costs, and attractive incentives like tax breaks make it a magnet for foreign investments. The conducive investment environment has propelled substantial investments by foreign corporations, further fueling economic development and expanding the horizon of opportunities in various sectors, including retail.

Policy Support: Nurturing Business Growth

In its pursuit to create an attractive business landscape, the Indian government has diligently instituted policies and regulations to simplify market entry for foreign companies. These initiatives are designed to enhance the ease of doing business, encouraging the establishment of fully owned subsidiaries by foreign entities within India. Such policy support bolsters confidence, attracting global businesses and fostering a conducive business climate.

As India strides forward on the path of growth and development, the convergence of robust demand, innovative financing solutions, increasing investments, and a supportive policy framework sets the stage for a vibrant and thriving economic landscape. These factors not only attract global players but also nurture the domestic market, driving economic prosperity and a higher quality of life for its citizens.

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