The retail industry has shown incredible resilience after physical retail suffered setbacks due to complications during the pandemic. It has been back on pace since 2022.
Despite ongoing economic volatility, economists believe India’s retail sector will grow by 10–13% in 2024 as businesses leverage technological advancements to draw in consumers seeking high-end and budget products.
Moreover, retail sales in India are expected to reach $4.5 trillion by the end of this decade, as Deloitte India and SCAI reported.
Retail is becoming more than just a rural/urban narrative, and some of the most significant elements that will shape it in the future include increased sales, emerging technologies, international alliances, and smart investments.
So, what’s the future outlook of this industry, what is the current growth scenario, and what are the leading companies in the sector? Let’s find out!
Also read: India’s cosmetic industry analysis
What is the retail industry?
Retailers are businesses that deal directly with customers to offer them products or services. It’s called the “final distribution channel” because it ensures that customers can get an appropriate amount of goods in the best way possible.
One of the most essential parts of any economy is the retail sector, which indicates the economy’s current state. A robust economy is characterised by robust output and, as a result, an accumulation of money in consumer spending. In recent years, the competitive aspect of this dynamic market has been more apparent than ever before.
Some advantages of the retail industry include greater supply options, broader business opportunities, and fewer complexities, such as complicated online processes or shipping mishaps.
The retail sector can be divided into specific categories. The different types of retail industries include:
- Store retailing (departmental stores, grocery markets)
- Non-store retailing (direct and merchandised vending)
- Company retailing (franchises, chain shops)
- Online retailing
- Services in retai.
To give you a few retail industry examples, Reliance Retail can be a notable mention. It is the largest retailer in India in the fashion and lifestyle sector. Other noteworthy examples include Future Group, Shoppers Stop, Aditya Birla Retail, and more.
Also read: From print to digital: The story of India’s media and entertainment sector
Growth of the retail industry in India
The retail sector makes up more than 10% of the country’s GDP and employs about 8% of its workers. Among shopping destinations, India is the fifth biggest in the world. By 2030, the industry is supposed to generate 25 million jobs.
To begin, the industry’s revival is due to its growing purchasing power, which is a positive sign for India’s growth. The second factor contributing to long-term retail expansion is the increase in foreign investment and the emergence of well-known multinational brands.
International retail giants want to move into new markets because India has a large middle class and a retail market that has yet to be fully explored. This will certainly help Indian retail businesses expand faster.
To give you an estimate, between 2023 and 2025, about 60 shopping malls with 23.25 million square feet of store area are expected to emerge.
India will have about 500 million online shoppers by 2030, up from more than 150 million in 2020. By 2030, the gross merchandise value (GMV) of the e-commerce industry is projected to reach US$350 billion.
India is home to the third-highest online shoppers (the US and China are the top two). People in India like to shop online all year. This rapidly changing customer behaviour is resulting in the current reputation of Indian e-commerce firms today.
| Country | E-retail shoppers (million) as of 2020 |
| China | 702 |
| USA | 211 |
| India | 140 |
| Japan | 85 |
| Brazil | 76 |
In 2030, India’s E-Commerce market is expected to be worth US$350 billion, and the country’s digital economy will be worth US$800 billion.
| Fiscal year | E-commerce market in India (US$ billion) |
| FY19 | 23 |
| FY20 | 30 |
| FY21 | 38 |
| FY26(P) | 120 |
The future of the retail industry in India
Over the last few years, the COVID-19 epidemic has shifted consumer mindsets, behaviours, and preferences. Customers no longer discriminate between online and physical channels of consumption.
As a result, major corporations are experimenting with various approaches to create seamless, cross-channel shopping experiences. To enhance their consumer value offer, merchants are trying revenue models by employing conventional methods and well-established e-commerce platforms.
Compared to 4.7% in 2019, the online retail penetration rate is predicted to reach 10.7% by 2024. However, the industry’s long-term prospects are promising, supported by growing incomes, favourable demographics, an influx of international competitors, and growing urbanisation.
Today’s Indian retail sector provides various options, including social media-based vendors, multi-brand applications, speciality online storefronts, and international e-commerce platforms. It’s pretty amazing how quickly the Indian quick-commerce sector has grown.
India’s Micro, Small, and Medium Enterprises (MSME) sector had significant development in 2023. Government funding for infrastructure development, quick access to financing for MSMEs, advantageous PLI-related benefits, and specific non-tariff import barriers have all supported the nation’s manufacturing sector.
India’s digital payment market is expanding in parallel with these advancements, providing a wide range of choices, including virtual cards and digital wallets. This change reflects the way that customers’ confidence is evolving.
With this strong basis, the retail industry is expected to grow further through 2024 and beyond, bringing with it economic prosperity and a significant contribution to the economic development of India.
Also read: The Indian fashion industry: A booming sector with huge potential
Top stocks in the Indian retail sector
That said, let’s take a quick look at the leading companies in the Indian retail industry today, ranked by market cap on BSE (as of January 3, 2023).
| Company | Market cap (₹ Cr.) | Net profit (₹ Cr.) | Share price % returns (1Y) as of 03 January 2023 |
| Avenue Supermarts | 267,148.70 | 2,556.40 | -2.72 |
| Trent | 106,500.49 | 554.57 | 128.21 |
| Vedant Fashions | 30,999.81 | 422.89 | -5.29 |
| Aditya Birla Fashion and Retail | 23,017.49 | 132.52 | -14.9 |
| Shoppers Stop | 7,549.18 | 119.25 | -2.76 |
Conclusion
Rising income, favourable demographics, rapid urbanisation, and increased adoption of online shopping are all driving the Indian retail industry’s massive growth in the coming years. There is no doubt that for investors, the retail sector presents exciting opportunities to benefit from India’s economic expansion.
