India’s Booming Retail Sector

The retail sector in India is fast emerging as one of the largest sectors in the economy, accounting for more than 10% of the country’s GDP and around 8% of employment. With India occupying the first rank in the Global Retail Development Rankings this year, the sector is likely to boost growth further.

The retail sector has been undergoing a fast paced revolution, fuelled by a growing consumer base and technological advancements. A remarkable development in the last decade has been the rapid evolution of the online retail sector. E-commerce industry is expected to be the number one sector boosting retail industry growth in India and online retail is estimated to reach US$ 70 billion by 2020.

The Confederation of Indian Industry (CII) along with JLL has recently released a Report on “India Retail: Change is the New Constant” in June 2017, which highlights recent trends, retail practices, role of technology and policy impact.

Trends and Approaches

Rapid advances in technology have redefined retail spaces by integrating physical and digital experiences. Strengthening of new and existing retail markets coupled with rising tourism are major drivers of international retail expansion.

Retailers are introducing innovative ways to provide a unique customer experience through Retail-tainment, by combining leisure with shopping. These include clubbing various activities along with shopping, such as sports and gaming parlours, movie theatres and children’s play area. Food Entertainment Cinema (FEC) has become an integral part of mall trade as visitors look for one-stop entertainment.

Office-Retail Complexes (ORCs) have emerged from vanilla office buildings to those which offer retail services and banking & financial services. Mumbai, NCR Delhi and Bangalore are the major ORCs hubs in India.

Retail Sector in India: Role of Technology

Technology in the retail industry extends across functions of merchandising, supply chain, store operations, customer engagement and fulfilment. It can bring about a new era of precision retailing, influencing both consumers and retailers significantly.

Online retail aims at providing a real-time personal experience to the consumer by informing and influencing the customer at the point of decision.

Mobile technology has already revolutionized retail and is set to transform retail even further in years to come. More than 50% of the Google searches are now done on mobile. Social media plays an important role in the development of the sector and its importance is likely to grow in the future. The reputation, sales and success of different online retail shops can all be decided on the strength of a single tweet or a post.

An Omni-Channel Journey

An omni-channel strategy aims to provide a seamless experience to the consumer across channels factoring in the different devices that consumers use for transactions like mobile, online stores, mobile app stores, telephone sales, physical stores etc. Most brands have come up with new and innovative methods to interact with their customers. This strategy will enable retailers to rethink their marketing plans and tap the best of both worlds.

Impacts of Key Acts & Policies

The Government’s act of demonetizing currency notes had both short and medium term impact on the retail sector. On one hand, there was an increase in online transactions through E-banking, E-Wallets and Apps along with increased usage of debit and credit cards. On the other, sectors with high cash transactions were adversely impacted.

On the positive side, consumer sentiment remained steady despite short-term constraints for consumers. India’s consumer confidence index increased post demonetization in the fourth quarter of 2016-17 as compared to the third quarter.

Goods and Services Tax

The Goods and Services Tax (GST), which is slated for a rollout in less than a month’s time, is expected to positively impact both the offline retail industry as well as India’s e-retail sector.

For the offline retail Industry, uniformity of tax rates and structure is expected to facilitate ease of doing business. GST is also likely to boost the competitiveness of the sector along with increasing profit margins, owing to reduction in transaction costs.

The e-retail sector is also likely to benefit from improved clarity for e-commerce players on tax issues such as collecting tax at source or the first point of transaction.

Foreign Direct Investment

The Indian Government has allowed 100 % Foreign Direct Investment (FDI) in online retail. FDI in the retail sector is likely to boost investment and modernize the retail sector.

100 % FDI in online retail is expected to ensure price parity between online and offline retail, thereby facilitating offline retailers in malls. FDI in retail has also been introduced with the objectives of legitimizing existing business of e-commerce companies operating in India and also to check promotion-driven funding. It is a move towards balancing offline and online retailing by preventing marketplaces from offering discounts and capping total sales originating from a group of company or one vendor at 25%.

By providing clarity on laws and regulations governing the e-commerce sector, FDI in retail is likely to provide a clear framework for players who operate as well as plan to operate in the e-commerce space.

CII Initiatives

CII is committed to the cause of Indian Retail and promotes an active dialogue between the Government and Industry to help foster an enabling environment. With rapid advancements in technology and traditional marketing methods being replaced by digital means, Indian retail players have to contend with a growing urban population, one that is increasingly knowledgeable and demanding.

CII engages in active consumer advocacy as also organises and participates in programs related to this sector.

The CII National Committee on Marketing organized the National Marketing Summit, with the theme “Digital, The New Normal of Marketing”, which deliberated on the changing marketing environment and the attendant challenges and opportunities. CII has also organised several webinars on topics such as Analytics in Omni Channel World, Marketing-Led Commerce in the Digital Age and IoT & Augmented Reality to build capacity.

CII participated in the Consumer Mela, organized by the Department of Consumer Affairs in October 2016 in New Delhi to educate consumers about grievance redressal mechanisms.

The Road Ahead

With accelerated pace of change, retail outlets need to constantly innovate and adopt new technologies to sustain a rapidly growing consumer base. E-commerce is creating the biggest revolution in the retail industry.

Quite simply, in Indian retail, change is the new constant.

Subscribe for Weekly Updates


Have you read?

Contact Info

The Mantosh Sondhi Centre
23, Institutional Area, Lodi Road
New Delhi - 110 003 (India)

+91 11 45771000 / 24629994-7

Membership Desk

Copyright 2018 © All Rights Reserved