The Indian retail industry is undeniably the most vibrant and fast-paced industries to have come up in recent years with the dawn of several new players. In fact, the country is the world’s fifth-largest global destination in the retail space responsible for over 10 per cent of the country’s Gross Domestic Product (GDP) and around 8 per cent of the employment. While the industry has been largely unorganized all these years; healthy economic growth, rising disposable incomes, increased digital connectivity, and changing consumer tastes and preferences are some of the key factors that have contributed to the growth of organized retail. Today, the organized retail in India might only be a decade old with just 9% of segmental share, it carries a huge growth potential driven by the vast market and the growing mindfulness of the consumers about product quality and services. However, this growth is highly dependent on the ability of the organised retailers in reinventing and staying abreast of the changing times and digital interventions.
The retail industry is presently witnessing a disruptive modification steered by the rising popularity of online retail. From clothes, electronics, groceries to big ticket items like furniture, cars and even houses, consumers today are buying everything online. The convenience of shopping from any place at competitive pricing has added to the growing acceptance of online retail. In fact, a report by investment bank Morgan Stanley stated that the Indian e-commerce market, which is currently pegged at $30 billion, is expected to be worth $200 billion by the year 2026. It is the rising smartphone penetration, upgraded logistics infrastructure and convenient payment gateways that will make online retail maintain robust growth in the coming years.
Considering the growth and potential of the online retail market in India, the brick and mortar stores have been realigning to the changing market dynamics. The stores are moving beyond the idea of just buying and selling but also to provide a unique experience to customers. The trend is fast becoming the highpoint of retail success for both established brands and startups. While brick and mortar stores are still considered relevant by many customers especially in the tier-2 and tier 3 cities, in this digital age, it is crucial for a retail brand to resonate with the consumers online as well. Features like technology displays and in-store designs, digital inventory management solutions have been adopted and implemented by many retail brands to attract a larger footfall at their physical stores. These help in setting up a significant connection with the consumers.
Can also be referred to as the confluence of physical and digital channels of retail, this phenomenon is fast catching up in the country’s retail trade. Physical retail stores are chancing upon the need to pair the physical ambience with online stores so that the consumers can browse through the products and pick them up as per their convenience. This also allows retailers to sell products that are no more stationed in the stores.
While Big Data and data analytics are already disrupting the world of digital businesses, particularly the customer-focused ones, retail industry too has joined the bandwagon. With more and more customers leaving their digital footprints with every transaction and engagement on various retail platforms like online, mobile, social channels and physical stores, brands are now able to analyse and derive insights to come up with informed decisions. They are not just providing innovative products with a conscious pricing structure to reduce the eccentricity in the supply chain process but are also able to ensure a better customer experience. Clearly, monitoring and gauging the impression of data-driven initiatives against company-specific measurements like the gross profit, revenue, and inventory carrying costs, can deliver significant benefits.
Indians have majorly been dealing in cash and debit cards until in 2016 demonetisation of two Indian currencies forced them to rely on other digital channels like mobile payment apps. As a result, the retail segment too witnessed a drastic transition from traditional commerce to e-commerce and now m-commerce. Mobile devices have gone beyond solving the purpose of communication. The internet-enabled smartphones are now transformed into retail outlets of many brands and consumers can now enjoy the convenience of shopping across websites, mobile apps and even in-store. This phenomenon is driven by increasing internet penetration and affordable data plans.
Considering all these developments, it is clear that retail sector is poised for a substantial growth where the organized retailing will be growing at a rate of more than 17-19% CAGR and E-tailing will form a significant part of the revenue for various retailers. As the tech-savvy customers want their retail experience to be a unification of both offline and online, it is the retailers and brands that are responsible for providing the shoppers with unique customer experience. And, those who manage to comprehend the consumer behaviour and adapt to the progressive expectations will ultimately emerge as the winners.
The article has been penned down by JP Shukla, Co-Founder & CEO, 1-India Family Mart