New research predicts the Indian retail market will hit US$1.2 trillion by 2020 and $2.1 trillion just five years later.
This year, Indian retail sales are projected to achieve just $550 billion.
The astonishing growth projection comes from industry organisation the Confederation of Indian Industry (CII) which also says the retail industry will generate between 10 and 12 million jobs over the next decade.
The report, titled The Indian Retail Medley, was released jointly by CII and Wazir Advisors at a Delhi retail industry conference organised by the CII, dubbed ‘Decoding the Future of Retail’.
“The organised retail in India is expected to grow seven- fold and online retail 26-fold,” the report said, but pointing out that despute such huge growth, ‘unorganised retail’ will continue to dominate the Indian retail landscape.
“CII & Wazir are certain the sector will get a transformational push with an aggressive collaboration between the organised, unorganised and online retail growth, driven by India’s demographics with huge young and tech savvy population (500 million are aged below 25 years).”
Rising incomes and levels of consumer demand, increasing urbanisation, attitudinal shifts and – above all – a phenomenal and continuous rise in internet penetration across the country thanks in part to the government’s commitment to digitisation, will also fuel growth, the report said.
“It is estimated there would be 550 million net users in India by 2018, as also the face of the Internet user will change dramatically, with higher penetration to the tune of 210 million in rural areas.
“The online retail would provide a superb platform to the unorganised retail to reach out to the consumers across markets in tier three and tier four cities”, the report said.
Adesh Gupta, chairman of the CII Retail 2015 and promoter with Liberty Group. said the time “is absolutely opportune to Make in India for Retail in India.
“Our country is one of the fastest growing and most dynamic retail markets in the world. We must produce and sell in India”
But Gupta warned of “a dire need” to strengthen the nation’s supply chain management, indentify consumers’ needs, developed skilled, trained manpower and streamlinethe taxation system.
India is expected to become the world’s fastest growing eCommerce market on the back of robust investment activity in the sector and the rapid increase in internet users. It is expected that India’s e-commerce market will grow from US$2.9 billion in 2013 to over US$100 billion by 2020.
“There is enough demand and the challenge will be how to reach the consumers, both from connectivity and logistics perspective,” said Gupta.
“Online retail can reach tier four to six areas much better than offline giving it a bigger advantage. Collaboration between both organised and unorganised retail companies could be the real game changer.”
Shreekant Somany, chairman or CII NR, said eCommerce’s share of Indian retail is growing steadily.
“Customers have an ever increasing choice of products at the lowest rates. eCommerce is probably creating the biggest disruption in the retail industry and this trend will continue in the years to come.
“Almost everything is sold on the internet now and this means that pretty much all of the retail industry faces the challenge of either being a part of e-commerce or taking it head on. Partnering is the best way out,” said Somany.
Mukesh Mathur, executive director with Oracle India said it is imperative retailers take advantage of eCommerce, which will enable them to spend less money on real estate while reaching more customers in tier two and tier three cities.
“Nevertheless, the long term outlook for the industry remains to be positive on the back of rising incomes, favourable demographics, the entry of foreign players and increasing urbanisation”, said Mathur.
But Harminder Sahni, MD of Wazir Advisors described the profitability of retailers as “a major issue these days”.
“The companies should concentrate on opening profitable stores, with thrust on hiring trained manpower. Both online and offline must work together.”
