Indian retail market to touch INR 130 lac crore by 2031-32: BCG Report
Mumbai, Feb 24 (KNN) The Indian retail market could grow to 130-140 trillion Indian Rupees (INR) by 2031-32, said a recent launched report by the Boston Consulting Group.
Retailers Association of India (RAI) and BCG unveiled a report titled “Retail Resurgence in India: Leading in the new reality” that highlights how the buying preferences of consumers have changed due to covid-19 and the way consumers are expected to shop going ahead.
The report talks also about the implications of these preference changes on retailers in the space and the imperatives for them to win in the post-COVID world.
Speaking about the report, Abheek Singhi, Managing Director & Senior Partner, BCG said, “The Indian retail market was nearly 50 trillion INR in 2019 and COVID-19 resulted in a degrowth in 2020. The sector is starting to get back on its growth trajectory and we expect the market to be 130-140 trillion INR by 2031-32.''
''Kiranas and e-commerce have been impacted less and bounced back faster, while modern trade is now getting back to normalcy. Retailers will need to adapt to shifts in consumer trends, build the resilience muscle and adopt digital technologies at an accelerated pace to help them stay ahead of the curve,'' he added.
The report also highlights that India’s consumption has been displaying steady growth over the last two decades - capturing the imagination of investors across the world. The entry into the new decade was expected to demonstrate a continuation of this narrative. However, the advent of COVID-19 has slightly altered the course of this story.
The report goes on to say that even after a short bump in the graph in 2020, the consumption pattern as well as the retail market of the country is on pre-COVID growth track, the pandemic has introduced a delay of 1-2 years in the trajectory.
The report discusses major consumer preference shifts and details the same across 4 categories - staples, mobile phones, apparel, and food ordering. Across all categories – the shift towards digital and online has accelerated significantly. Different segments of consumers have got impacted differently and that reflects in their behaviour.
According to the report, new trends visible are the reduced need to 'touch and feel' the products before buying and preference to branded products. In buying mobile phones, while low income people have started focusing majorly on price, high income people are increasingly looking at trustworthy brands to make the purchase.
''Imported value brands continue to dominate the market due to lack of alternatives. In apparel, the leisure category is seeing market-beating growth and has accelerated the ongoing trend of casualization of wardrobe. Traditional media’s role as influencer has decreased significantly in this category. In food ordering, functional and spontaneous needs have replaced celebratory occasions,'' the report said.
To cater to these changing demand dynamics, retailers will need to re-evaluate their value proposition basis their target segment, brand promise, range and assortment, design and quality, pricing, service, experience and Omni offering, the report said.
The report lays out key business model decisions retailers need to take centred around seven themes such as: Adapting store network for safety and Omni channel excellence; Providing right product and merchandise offer; Pricing and promotions across consumer cohorts; Innovating along the purchase journeys; Enhancing supply chain agility; Optimizing customer acquisition cost and Creating digital capabilities in the post-COVID world.
Lastly, the report provides a view on the locally adapted operating model decisions which will be key to market leadership in the new reality.
According to Rachit Mathur, Managing Director and Partner, BCG, “Essential categories, by their nature, are price sensitive while in discretionary, consumers look for value for money. While the significance of price remains, covid-19 has increased the importance of hygiene, quality and brand in essentials which will impact the category in the long term. In discretionary too, consumers are looking for enhanced value for money as incomes come under pressure. Understanding these nuances will help retailers align their offerings with consumer expectations and succeed in the categories.”
“Normally, customer behaviour and preferences evolve over time. However, the pandemic has created a revolutionary change in what they choose and how they buy. This, therefore, means that retailers need to embrace the new truth for succeeding in retail businesses. Every retailer now has to adopt digital in various ways—be it usage of social media, Whats app, or digital shopping in addition to their normal channels. This report will equip retailers to better understand different ways to augment their capabilities and meet the needs of the new consumer" said Kumar Rajagopalan, Chief Executive Officer, RAI.