The retail industry in India is the 4th largest in the world and it is showing greater prospects with every passing day. The Indian economy was adversely affected by the Great Recession of 2007-2009, but since the beginning of the decade, the consumption expenditure in the retail industry is rising higher due to various factors like increase in per capita income, evolving consumer trends and rural retailing. In 2017, the revenue earned in this sector reached US$ 1824 billion and it is estimated to reach US$ 3600 billion by 2020. The retail industry accounts for 10% of India’s Gross Domestic Product (GDP) and approximately 8% of the employment opportunities.
The domestic retail sector is thriving due to the exceeding demand of the huge population and it is cushioned by digitization and globalization. The retail sector is broadly categorized as offline retailers and online ones. The offline retailers are also known as brick and mortar (B&M) retailers have huge prospects in the coming decade. The rural economy is contributing to the expansion of the retail industry. The Kirana stores, Mom and Pop stores, trolley carts and pavement vendors also contribute to the growth of this sector. In various parts of India, the street vendors are earning their livelihood by their product banter to attract the attention of the mass. In Delhi, there is Palika Bazar, in Lucknow there is Aminabad, in Mumbai there is Lokhandwala Market, in Kolkata there is Gariahath, in Chennai there is T Nagar, in Bangalore there is Commercial Street, to name a few. The growing shopping malls and the street side shopping destinations attract various cross-sections of the mass, and this decade has witnessed a steady rise in such sectors.
From the year 1995 till 2004, I used to enjoy chocolates like Hershey’s and Snickers only when my uncle used to visit us from the USA. But since this decade, I have been enjoying my favourites from the Kirana stores in Kolkata. How is it possible? The foreign brands are investing in the Indian market as they see huge potential for profit and growth. The foreign brands like H&M, Gucci, and Armani are available in major metro cities of India like Delhi, Mumbai, Bangalore and Kolkata. In these 10 years, the picture of the retail industry has changed to a great extent. Let us proceed to the following paragraphs for a better understanding!
Increase in Per Capita Income
The growing Indian population is getting inclined towards a better lifestyle and a much productive and prospective career growth. They are relocating from their hometown in search of better career opportunities, which is leading to a sharp increase in per capita income and it is 10.5% in 2019. In the year 2011 the per capita income was Rs 64,316, in 2015 it was Rs 88,533 and in 2019 it was Rs 92,565. This leads to a speedy increase in the Gross National Product (GNP) of the country. With the upcoming mall culture, people can get all their required items from one place.
At the start of the decade, the people were hesitant to go to the malls as they feared that commodities are highly-priced. But with the closing of the decade, the picture is vividly different. More and more people are comfortable purchasing from malls, and the malls are cropping up at frequent intervals in the major cities in India. Even in the semi-urban areas, you will be able to find a mall where the mass is gathering for movies or going to food courts.
The increase in income has given the scope to a large percentage of mass to spend through various platforms. The retail industry witnessed a higher sale on Household items, personal care commodities, accessories, electronic appliances and gadgets etc. Several online and offline retailers grew in this decade to meet the needs of the consumers.
Domestic and Foreign Competition in Retail Industry
As per the report published by The Guardian, India has 600 million young people, below the age of 30 and this is the highest in the world. With the Gen-y and Gen-Z, India is all set to welcome the newer brands and technologies. The dominant global retailers operating in India are Wal-Mart (entered India in 2007), Amazon (entered India in 2012, gained pace since 2015), McDonald’s (entered in1996), Starbucks (entered in 2012), GAP (entered in 2015), Burger King (entered in 2014), Wendy’s (entered in 2015), KFC (entered in 1995).
As per a report published in 2011 by The New York Times, India started to build favourable conditions for foreign retailers to expand their market on Indian soil. From the above-mentioned list of foreign retailers, it is evident that this decade witnessed the stark growth in the foreign retailing brands. But, the domestic brands like Shoppers Stop, Pantaloons, Westside, Reliance Trends will not quit the limelight anytime soon. Both the domestic and global brands are favourite of the growing Indian user base. The USA is correctly colonizing the whole world under a cloak. The country is not ruling the government like the British colonizers, but its lifestyle is affecting us and also the other parts of the globe.
The affinity of Indian users towards foreign brands are eminent, they are investing in both domestic and global retailers without any second thought. The online eCommerce platforms like Shein, Amazon, Myntra and Flipkart are very popular among the mass. The influence of the fashion industry and the media explosion are motivating the mass to spend a considerable amount of time in investing in this sector, thus painting a very positive picture for the retail industry.
Digital Penetration in Retail Industry
Just like all other sectors of the Indian market, the retail industry is reaping benefit from the Digital Revolution. The diverse product range is easily assessable and affordable to the mass, secured payment options like Google pay and BHIM are a bonus, eCommerce sites and apps bring forth a convenient and favourable retail experience for the consumers. Demonetization in 2016 affected the Retail industry, but the super-fast and hassle-free online payment options could fight the woes within a short period of time. The social media platforms play a major role in the expansion of the retail sector in India. Apps like TikTok, even though I don’t want to participate in any debate regarding the fruitfulness of Tiktok, boost the young mass to buy newer clothes and accessories for uploading chain of videos.
The retail brands are opening their official pages in the social media platforms to build a more innovative marketing strategy. The festive sales, offers and discounts like End of Season Sale, End of Reason Sale, Diwali Dhamaka offer etc are projected across all social platforms, television ads, newspapers and magazines to reach a broader spectrum of prospective users. As per a 2019 report published by Deccan Herald, the new age Indian customers prefer digital devices to in-door sales personnel for pricing comparison, product availability etc. According to a study by Boston Consulting Group (BCG), the age group of the future digital users will not be limited to the younger people but also the older people as well.
Investments and Initiatives
As mentioned in the previous point, foreign retailers are investing in the Indian market judging the optimum growth potential. In West Bengal, Biswa Bangla(started in 2014) has been a profitable state government initiative to invest in the retail sector. According to the Department for Promotion of Industry and Internal Trade (DPIIT), as of 2019, the total Foreign Direct Investment received by the Indian retail sector is US$ 1.85 billion. Wal-Mart has invested US$ 2.75 billion in Wal-Mart India, cushioning the growth in this sector. The Government initiative of Jago Grahak Jago from the Ministry of Consumer Affairs and Public Distribution has gained momentum and added an extra sense of security in the minds of the consumers. If a consumer has any problem related to any retail experience, he can reach the forum, dial the consumer forum number and lodge a complaint. The government is taking special care in developing the infrastructure of the market, thus aiding the retail sector.
Conclusion
The retail sector has enough scope and opportunities to grow due to the rising demands, increasing income, urbanization and favourable demographics. The market was affected due to the introduction of GST, but the steep competition gives the users to choose from various options. The retail brands are applying marketing strategies both on online platforms and offline retail stores. The advanced retail sector is growing and opening various lucrative job opportunities. The organizations both domestic and global are looking for employable resources for business expansion.
The retail market, like any other sector, is undergoing a massive change. It is impossible to get a complete picture of the competitive market landscape within one single post. But you can know the market in greater details. Why am I saying so? Talk to our niche skilled experts now and get in-depth knowledge about the diverse retail industry in India. We at Vedak have an exclusive pool of experienced industry professionals and veterans who have a total grasp of the retail sector. Contact us to know more.