Who Will Dominate India's Retail Segment? Retail is expected to triple in size by 2025

By Aastha Singal

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Ever since technology has entered into our lives, we have witnessed a huge shift in the way people shop. The emergence of online retail has empowered customers to order anything and everything on a click. However, the trend has had negative ramifications on the traditional markets, putting a question mark on the future of retail in India. Numbers, though, suggest otherwise.

According to a recent report by the research and brokerage firm Motilal Oswal, food & grocery and apparel categories may require 4,000 new retail stores due to strong demand. "To cater to robust demand, about 4,000 new store additions will likely be required over the next eight years (2017-25), offering a huge runway of 15per cent CAGR in retail footprint over the next eight years," Motilal Oswal said.

Despite the e-commerce taking over a considerable market share, retailers have witnessed an expansion in their footprint, revenue and overall growth in the past years. The report further predicted that the retail market will grow its size to triple by 2025. While space has a great scope, one questions keep lingering – who will lead the retail game:

Startup Scope

With the customers becoming familiar to online shopping model, traditional retail stores have been prompted to devise new ways to attract consumers. Startups are coming up with a viable solution to develop a conducive environment for the online and offline retail to co-exist. Traditional Kirana stores have now pro-actively started home delivering in their neighbourhoods.

The likes of Paytm have recognized the hidden potential lying in the offline stores and hence, have partnered with retail chains such as Croma, Reliance Digital etc to provide customers with a tactile experience. Kewal Kapoor, the Director & Creative Strategist of CHAI Kreative believes that startups are leading in redefining traditional retail by providing new age tech support through the use of Artificial Intelligence or Machine learning.

The Global Giants

The entry of global giants like IKEA and Walmart into India's retail space is posing a threat to the startup ecosystem, that was catching onto the trend. The aggressive groundwork they did to spread their wings in the country would work in their favour. "Not only they have covered the offline market but have a good hold on online presence i.e. within the reach of every customer," suggested Rohit Sahni and Gaurav Dabas, the Directors of WK Life.

"As India enters the organized retail world, its billion populations and growing consumption power will grab a lot of attention from global giants who are seeking growth," they further stated. Nonetheless, consumer start-ups who might struggle with distribution and marketing while competing against global giants have various other factors holding their back.

"Factors such as smart marketing, product innovation, understanding the changing category trends, product offerings which meet demands of value-conscious consumers and an overall flexible approach help start-ups lead when it comes to the retail segment," shared Bhuman Dani and Shariq Ashraf, the co-founders of TGL Co.

The MSMEs Collaboration

Not just startups but the micro-small and medium enterprises (MSMEs) are also disrupting existing retail businesses by offering innovative products which are expected to have a growing demand and are relevant to the evolving lifestyles of Indian millennials. The "Aspirational" segment is projected to grow the fastest over the next 5 years.

"Start-ups and micro-small and medium enterprises have shown 10 per cent year on year growth as opposed to 6-8 per cent average industrial growth," they shared, adding, "Challenger brands have efficiently mastered the secret sauce to success through niche product offering where health becomes an indulgence whereas global giants are struggling to keep up with the shifting trend."

The Beautiful Mix

The convenience of the consumer is the determining factor in every step of any business transaction and that is what makes e-commerce so popular. The traditional retail model of supply chains has understood that survival without tech support is impossible. "A healthy mix of both offline and online retail backed by new technology will help retail organizations keep the momentum going," Kapoor stated.

He is also of the belief that the "growing preference for online shopping will continue to grow for some time and will eventually start plateauing. After a point of time, the culture of real-time shopping will see a revival again." Puneet &Yatin Jain, the Directors of ODHNI stated, "For healthy supply chain ecosystem, retail segments should focus on a partial transition to have a strong online presence to balance their offline presence."

The USP of Retail

Personalized Experience - Personalized shopping and personal care are the segments that will lead the game for the industry. More personalized shopping experiences and new personal care items will help players garb more eyeballs as well as footballs. Despite the competitive advantage, online stores do not allow customers to touch, feel, smell and taste every product, hence compromising the quality.

Trustworthy – Through retail, you buy what you see. Even in cut-throat competition, Retail is never out of fashion and is the most trustable option. Obviously, the industry has a long way to go and there are several sectors which will help the retail industry to have a stake in the game but the omnichannel customer experience will drive the ecosystem.

Aastha Singal

Entrepreneur Staff

Former Features Writer

A business journalist looking to find happiness in the world of startups, investments, MSMEs and more. Officially started her career as a news reporter for News World India, Aastha had short stints with NDTV and NewsX. A true optimist seeking to make a difference, she is a comic junkie who'd rather watch a typical Bollywood masala than a Hollywood blockbuster. 

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