New age Indians to spur retail market to $2.1 trillion by 2025

Riding the robust e-commerce growth wave, the e-retail market is expected to rise from $5 billion in 2015 to over $130 billion by 2025.

May 16, 2015 12:04 am | Updated 02:41 pm IST - CHENNAI:

The Indian retail industry is forecast to grow almost four times to $2.1 trillion by 2025 from the present size of $550 billion.

“India’s young population, increasing affluence, changing lifestyle, and attitude towards spending and increasing availability in the smallest of the towns will spur consumption and drive the growth of the retail market during the next 10 years,” according to a report titled “The Indian Retail Medley” by Confederation of Indian Industry (CII) and Wazir Advisors.

In this period, organized retail is expected to grow seven times and online retail 26 times. However, the unorganised retail is expected to still dominate with about 80 per cent share even by then. Also, 10-12 million jobs (direct and indirect) are expected to be created.

The report points out that the organised segment is expected to grow at a compounded annual growth rate (CAGR) of 22 per cent, much faster than traditional retail, which will grow at a CAGR of 13 per cent. However, even with high growth, the organised sector will capture just about 15 per cent share of retail market by 2025, up from 8 per cent now.

Online retailing The online retailing, in the meanwhile, has seen a tremendous growth, aided by growing penetration of Internet. India is seen as the world’s fastest growing e-commerce market now, as Internet is changing the way people think, interact and consume.

“The Internet penetration presently at 19 per cent is at the cusp of an exponential growth — 25 crore people are currently connected to the Internet and the number will swell to 70 crore in a decade,’’ the report says.

Riding the robust e-commerce growth wave, the e-retail market is expected to rise from $5 billion in 2015 to over $130 billion by 2025. The e-retail market is thus the fastest growing segment in the online space. Also, the online retail would provide a robust platform to the unorganised retail to reach out to the consumers across markets in tier 3 and tier 4 cities.

“E-commerce is probably creating the biggest disruption in the retail industry and this trend will continue in the years to come. Almost everything is sold on the Internet now and this means that pretty much all of the retail industry faces the challenge of either being a part of e-commerce or taking it head on. Partnering is the best way out”, feels Shreekant Somany, Chairman, CII Northern Region.

Thus, the report argues for a strong collaboration between the organised, unorganised and online retail growth. All the three segments can co-exist in the Indian retail ecosystem and expand each one’s market as the industry sector is large enough to accommodate all participants, it points out.

The report also states that the traditional unorganised players have unique strengths that they can leverage to grow in today’s market. They just need to be aware of their competitive advantages and understand the shifting consumer preferences, thereby adapting their offering to make it more relevant for the new Indian, it adds.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.