The Indian retail sector is experiencing an exponential market growth with the sector expected to cross US $ 1.6 trillion by 2030, as per a report by Redseer Strategy Consultants. The non-branded and regional brands occupy over 70 per cent of the retail space and the retail space remains highly fragmented, the report highlighted.
While essential goods continue to capture the majority of consumer spending, non essentials are also likely to see a massive surge. The expected growth of discretionary spending, especially in apparel, in retail space is attributed to the increasing disposable incomes and changing consumer preferences. This in turn is pushing brands to evolve and meet the demand surge without compromising on quality to capture the market.
India’s retail landscape is largely characterised by the wide variety in product preferences, which results in a higher range of Stock Keeping Units (SKUs). This in turn highlights the challenges related to supply and obstructions for national-scape expansions for the brands. At present, the US $ 100 million revenue mark has only been achieved by 350 brands in India, which is one-eighth of China’s 2,800 brands.
The General Trade (GT) sector, which includes small, independent retailers, continues to dominate the Indian retail space as it is easily accessible for hyperlocal consumers. Nonetheless, this sector is faced with challenges related to structural inefficiencies, like pricing inconsistencies, availability and standardisation.
Organised online and offline retail has recorded a higher growth trajectory as it is efficient in addressing the inefficiencies of the unorganised sector and the market share of the same is likely to reach US $ 600 billion by 2030. Currently the organised sector accounts for 35 per cent of the total retail space in India.
Kushal Bhatnagar, Associate Partner at Redseer, has said that organised sectors will have to address the regional and unbranded consumption while they plan for scaling. He also stated that all players need to adopt mixed strategies including ‘backward integration, private labelling, and supply aggregation’.
The report also sheds light on the organised distribution networks outpacing the growth of legacy pan-India brands. Thus, to strengthen the market presence, both online and offline retailers will have to adopt strategies that Kushal has quoted.
