In 2022, India’s online retail market was valued at $70 billion, and as per industry reports, it is set to increase to $325 by 2030. This astounding growth trajectory has been propelled by a digital technological landscape that has empowered India’s retail sector to record tremendous development, especially in recent years. Additionally, future forecasts predict that online retail penetration is projected to grow at an extraordinary rate that would outpace offline retail by 2.5 times in the coming decade. India is now poised to become the third-largest retail market, boasting a digital consumer base with over 220 million active users.
Much of this growth is attributed to the advent of the internet and the many powerful tools that come with it. Moreover, many additional factors have come into play that further strengthened digital technological tools' impact on the retail market.
The traditional pre-tech retail landscape: challenges and limitations faced by Indian retailers
Before the widespread adoption of technology in retail in India, the sector operated primarily traditionally and unorganized. The traditional stores were the congregation points for people to make their purchases. Their obvious physical limitations meant a limited product stock, fixed opening timings, and waiting times due to other shoppers present at the store. The limited number of products in a store meant that customers needed more choices for different brands and their inventory. This meant consumers would have to go to an entirely different store for a product unavailable at their usual frequented outlet.
When it came to transactions, physical cash was the predominant mode of payment. Over time, electronic payment methods such as debit/ credit cards were added, allowing customers more freedom to transact in these stores. When it came to the prices of products in stores themselves, they were often subject to price markups and delays. This was due to inefficiencies with multiple intermediaries between manufacturers and retailers. Due to this, consumers would often find similar products priced differently across stores due to numerous mediators in the entire process. Brands also need more visibility due to these stock and supply chain challenges.
Stores also faced significant challenges in understanding their consumers thoroughly due to the unavailability of tools to study consumer insights and market data. They relied on the personal relationships that owners built with customers and stocked their products accordingly. Balancing different items in their stock according to the season was also challenging for the stores. This meant specific items would only be available during particular times of the year, which trickled into buying/ purchasing preferences, with shopping habits influenced by festivals/ seasons/ special occasions.
Marketing/ advertising efforts of brands were limited, with stores having to use age-old methods such as word-of-mouth marketing, posters outside their stores, local events in the vicinity, and so on. Subsequently, physical stores needed help with inventory management, especially when inventory had to be arranged for the future. This is because of the need for more tools to predict and foresee demand levels and optimize stock levels accordingly.
Over time, this dramatically changed due to the internet's ability to disrupt the Indian retail industry.
The digital revolution in the Indian retail sector
The advent of e-commerce platforms on the internet put brands online and in front of a whole new world teeming with hundreds of millions of consumers. These platforms gave consumers the power to browse numerous brands and products, enabling them the power of discovery at their fingertips, transcending geographical barriers. Consumers could now make purchases with just a few clicks/ taps of a button and have their products delivered in a matter of days. These purchases also saw a transformation, with transactions becoming primarily digital with the proliferation of digital payment systems, mobile wallets, in-app cash credit, and more. This made transactions extremely convenient, fast, and hassle-free, reducing the dependency on physical cash. Moreover, they also became safer thanks to the digital security infrastructure that safeguarded these transactions. All of this improved the process of purchasing for not only consumers but sellers as well.
Online retail drastically skyrocketed the accessibility of products to consumers who could now access what they wanted to buy from wherever they were and at whatever time they wanted to purchase it. The power of the internet meant that their shopping came to them, and not the other way around, in an era where people once had to visit physical stores to make purchases. This has been a driving force for the growth in online retail.
The Indian retail landscape today: present developments and their implications for the future
Today, retailers can also use technology to study consumer behaviors and tailor their products according to their preferences. Products are recommended to consumers accordingly, with specific advertisements that target them. This also allows sellers to optimize their inventory more effectively for different groups of consumers. Online marketplaces have also allowed big and small retailers to establish a presence nationally and internationally without requiring a physical presence.
Technology has also helped retailers establish presences across rural areas, tapping into audiences previously unable to access retail services. Internet penetration has helped businesses cater to these regions that were previously underserved, contributing to the growth of the online retail market in India.
The Indian retail sector today boasts convenience, accessibility, and ease unlike never before. As time passes, more technological tools are only set to improve these foundations. As internet penetration continues to grow, especially in rural India, and as consumers increasingly demand convenience and digital empowerment, retailers will continue adopting the latest internet & technology to improve the retail ecosystem.
Ravish Pahuja, Managing Director & CEO, ORO Precious Metals PVT Ltd.
The Red Sea crisis, sparked by escalating tensions in the region, has cast a shadow of uncertainty over various industries, with the retail sector being significantly affected. As the crisis disrupts vital shipping lanes and raises concerns about maritime security, ships are avoiding the Red Sea and choosing a longer route through the Indo-African region, it takes more time and effort to deliver goods. This crisis affects everything from electronics to clothing, impacting a wide range of products.
The retail sector, reliant on global supply chains, faces formidable challenges as the crisis unfolds. The disruption of maritime routes poses to the timely delivery of goods, leading to potential shortages and increased costs. Moreover, heightened geopolitical tensions exacerbate market volatility, further complicating the situation for retailers already grappling with the aftershocks of the pandemic. Data from the Centre for Monitoring Indian Economy (CMIE) reveals that shipping rates for Very Large Crude Carriers (VLCC) soared to their highest point since November 2023, experiencing a notable 3.5 percent month-on-month escalation to $48,171 per day in February but to tackle this situation logistics companies are deploying a range of measures to navigate the stormy waters and uphold the resilience of the retail sector.
One significant measures comes in the form of leveraging air freight as a mode of transport. With traditional maritime routes facing increased scrutiny and potential blockades, air transport offers a viable alternative for expedited delivery of goods. While typically more expensive than sea freight, air cargo enables logistics players to ensure timely delivery, albeit at a premium. By incorporating air freight with adequate in-land transportation into their supply chain strategies, logistics companies can reduce the risk of delays and shortages, thereby bolstering the stability of supply chains.
Furthermore, logistics players are prioritizing insurance coverage on goods as a proactive risk management measure. Recognizing the heightened security risks associated with maritime transport in crisis-affected areas, insurers are offering tailored policies to protect cargo against potential losses or other unforeseen events. By securing comprehensive insurance coverage, logistics companies provide added assurance to retail stakeholders and mitigate the financial impact of supply chain disruptions. This proactive approach not only safeguards the interests of all parties involved but also fosters confidence in the reliability and resilience of supply chains amidst geopolitical uncertainties.
In addition to these operational measures, logistics players are also collaborating closely with retail partners to develop contingency plans and ensure effective communication and coordination in times of crisis.
In conclusion, the Red Sea crisis has caused significant disruptions in global supply chains, particularly impacting the retail sector. With vital shipping lanes disrupted and concerns about maritime security escalating, logistics companies are facing formidable challenges. However, through innovative measures such as leveraging air freight and enhancing insurance coverage, they are striving to mitigate risks and uphold the resilience of supply chains. Collaborating closely with retail partners, they are developing contingency plans to navigate through these uncertain times. Despite the challenges posed by geopolitical tensions, their proactive approach underscores their commitment to ensuring the continuity and reliability of supply chains amidst adversity.
Visionary, strategist and go-getter, Jitendra Srivastava, the dynamic CEO of Triton Logistics & Maritime is the man behind Triton Logistics & Maritime’s nimble, agile and best-in-class operations. A stalwart of the logistics and maritime industry with over 25+ years of experience in International Freight Forwarding, Global Sales, Supply Chain and Logistics, Mr. Srivastava has ensured smooth sailing for TRITON LOGISTICS & MARITIME’s clients through the company’s innovative, efficient and time-bound deliveries. A veteran with years of experience creating, training and developing result-driven teams, Mr Srivastava is a respected figure in the global logistic landscape and has guided Triton Logistics & Maritime through the choppy waters of international trade, environmental challenges and shifting market dynamics.
Copyright © 2009 - 2024 Franchise India Holdings Ltd