Overview of the industry

The Indian retail industry is one of the fastest-growing industries in the world. The Indian retail
industry is one of the top-five retail markets of the world. India possesses a huge population
base of 1.3 billion, which comprises a high percentage of youth; The average age of the Indian
population is around 28 years old. The penetration power of brands has increased, and they are
targeting Tier 2 and Tier 3 cities. The average income of the middle class is increasing, and
thus the purchasing power of consumers has also increased, which makes the retail industry
more lucrative for investors. Urbanization, changes in the lifestyle of consumers and
preferences for luxury goods have created a demand for the transitional phase of the industry
where traditional unorganized markets are being replaced by more organized markets.
Supermarkets, online retail business, and mall culture are prime examples.

Growth over last few years:

Indian retail market valuation in 2017 was around USD 670 billion and is expected to grow by
USD 530 billion by the year 2021 and by USD 1100 billion by the year 2026. We can
categorize the Indian retail market as a traditional retail market and a modern retail market.
The traditional retail market comprises physical stores and an unorganized retail market,
whereas the modern retail market comprises the online retail market, the mall culture, and
supermarkets. The overall retail market is likely to grow at a 12% growth rate per annum. The
traditional retail market is about 93% of the total trades and is expected to grow at a 10%
growth rate per annum whereas the economists expect the modern retail market to grow at a
20% growth rate per annum.

Government’s Policies on Foreign Direct Investment (FDI) in retail is likely to boost the
growth of the industry. The new policies allow 51% of FDI in multi-brand and 100% of FDI
in a single brand. Because of a high growth rate and huge demand from a large population, the
industry attracts investors from all over the world. The entry of bigger giants will further
increase the lifestyle changes of consumer. There has also been an increase in middle-class
purchasing power, which has led to an increase in the consumption of branded and premium
goods.
Present and future trends:

Multi Retail Channels: Retailers are focusing on promoting their products on multiple
channels for the ease of access to consumers. Consumer Nowadays prefers to shop at
convenience and mobile apps are the most adopted method for it. Landmark is one example
that owns lifestyle outlets but they also have dedicated mobile app from where a consumer
can buy their products which get delivered directly at their doorsteps.

Automated Retail Solutions: The effects of the advancement of technology are visible in the
retail industry, where retailers are embracing automatic vending machines. Retailers install
unmanned kiosks giving consumers the freedom to choose what they like and how to get it.
This helps in the reduction of costs and an increase in profitability, as it requires less
labour and new points of distribution.

Pre-purchase Access: Customers want to experience goods or services before they arrive at
the store or purchase that product. Retailers have taken this demand into account and have
worked on it. For example, Lenskart allows testing a frame virtually before buying it. Asian
Paints helps you in customizing and choosing colours for your home walls beforehand.

Integration of retail and hospitality: Customers desire an improved environment and increased
hospitality in physical stores of brands. Luxury brands have entered a collaboration with other
brands to provide a next-generation environment. Imagine you enter an apparel store and you
wish to choose your clothes by taking a sip of coffee from Starbucks.

Major events related to the industry:

Franchise India Expo: It is Asia’s one of the largest Expo and has completed sixteen editions
of the International Franchise & Retail show. Every year, this event is organized at Pragati
Maidan, New Delhi during October, with around 500 brands participating in the event. The
main agenda of this event is to bring franchise and franchisers to a common platform where
they can share business ideas. The franchisor could raise capital while the franchisee gets
guidance on the proceedings of the business.

Asia Retail Congress: It is an annual congress held during February organized by world CSR
day. The summit talks on current issues related to the industry with over fifty educational
sessions. It is another great platform for building networks with leading national and
international retailers.

India Retail & E-Retail Congress: The mission of the summit to encourage retailers to take up
the digital platform and to take up new models of business while achieving efficiency on the
existing model. The summit is organized annually during April with corporate leaders taking
up key sessions.

Importance to Economy

The Indian Retail Industry comprises around 10 percent of the Indian GDP, with over 100
million consumers attached to this industry. E-commerce retails have attracted consumers to
the retail industry at a high rate. Over 60% of consumers from metro cities such as Delhi,
Mumbai, and Bangalore purchase their daily products from the online retail market.

The industry generates around 8 percent of employment in the country. According to a

report by NSDC, the industry will provide jobs to around 50 million people by 2022 with an
increase of 17 million human resources. The industry is set to provide employment roles in data
analysts, sales, supply chains, and customer satisfaction.

 Equity Master(2019), “Retailing Sector Analysis Report”, Feb 12;

https://www.equitymaster.com/research-it/sector-info/retail/Retailing-Sector-
Analysis-Report.asp (as on Feb 02, 2019).
 IBEF (2019), “Retail Industry in India”, Ministry of Commerce & Industry;
https://www.ibef.org/industry/retail-india/infographic (as on July 2019).
 Kalpana Arya (2019), “Retail Events to grow business”, techjockey, Jan 20;
https://www.techjockey.com/blog/10-retail-events-you-must-attend-in-2019-to-grow-
your-business (as on Aug 2019).
Figure 1: Retail Industry growth over years

Source: IBEF – Ministry of Commerce & Industry, Government of India