The Indian retail industry is entering 2026 on a stronger footing, with expectations of improved margins and sustained double-digit growth, driven by rising demand from Tier-2 and Tier-3 cities and continued digital integration. Despite past disruptions, the sector is set to consolidate its position as the world’s third-largest retail market.
Valued at around US $ 1.1 trillion, India’s retail industry is being reshaped by rapid digitisation, expansion into smaller towns and cities, and increased mall development. Strong domestic demand, technology-led disruption and rising consumer expectations around quality and value are underpinning this transformation. Industry executives also see supportive policy measures, including goods and services tax (GST) reforms, income tax relief, a favourable monsoon and higher minimum support prices, as key factors likely to lift consumer sentiment.
At the same time, the sector continues to face challenges such as rising rentals, intense competition across online and offline channels, complexities in delivering seamless omnichannel experiences, supply chain inefficiencies, margin pressures and a shortage of skilled talent.
Anand Ramanathan, partner and consumer industry leader at Deloitte India, said the outlook for the retail sector in 2026 was highly optimistic, with expectations of continued double-digit growth and further structural transformation. He noted that GDP growth was projected at 6.4–6.7%, inflation remained under control and consumer sentiment was resilient. He added that e-commerce penetration would deepen, particularly in smaller towns and rural areas, while quick commerce and social commerce would continue to disrupt traditional retail models. According to him, greater omnichannel maturity would enable more unified consumer experiences and flexible fulfilment, while premiumisation, personalisation, sustainability and inclusion would increasingly differentiate brands. However, he cautioned that challenges related to margin management, supply chain optimisation and regulatory compliance would persist.
Retailers Association of India chief executive Kumar Rajagopalan said the sector would enter 2026 with steady momentum built through 2025, characterised by broad-based and measured growth. He noted that consumption strengthened progressively through the year, particularly during festive periods, even as consumers remained value-conscious. He said growth in 2026 would be shaped more by competition, operational efficiency and the ability to serve diverse markets, from premium urban consumers to value-driven Bharat.
Lalit Agarwal, managing director of value retailer V-Mart, said 2025 had been a challenging year for branded and premium retail, while value retail performed relatively well. He added that margins were under pressure, particularly due to GST changes, which forced retailers to liquidate older inventory at discounts across categories such as FMCG, apparel and footwear. Looking ahead, he said 2026 was expected to be a stronger year for retail, supported by higher consumption in apparel, fashion and related segments.
