Food and grocery is the largest segment in the Indian retail sector, having an opportunity worth $570 Bn and accounting for 66% of the country’s total retail spend. Organized food and grocery retail market to reach $60 Bn by 2025. The market is expected to grow at a CAGR of 8%, supported by macro drivers such as increasing per capita income, urbanization, and increasing nuclear families. Conversion from unpackaged to packaged, premiumization, and demand for convenience are some of the key drivers at a segment level.
Owing to evolving lifestyles and purchasing habits, an increasing number of consumers are choosing to shop at modern retail stores and stock up on groceries instead of shopping frequently at neighborhood Kiranas. Convenience stores have also started to gain popularity in urban clusters to cater to the increasingly busy lifestyle.
Although conventional categories like Staples and Fresh put together account for ~80% of the total food retail spend, but emerging categories of packaged snacks, confectionery, and beverages are growing rapidly at a compounded rate of 15%. Increasing awareness around health and wellness is set to increasingly shape consumer preferences across categories.
With the onset of the Indian e-Commerce revolution, online groceries have been gaining prominence. Indian eGrocery market is set to reach $21-25 Bn by 2025, growing at a CAGR of 50-55%. Additionally, total active users for e-Grocery segment have touched 23 Mn users, almost doubling from it stood at 12 Mn in 2019.
The growth is being driven by an increasing preference for convenience, value offerings, and greater assortment available on online grocery portals. With the outbreak of COVID, factors like better hygiene and safety have further strengthened the positioning of e-Grocery platforms. COVID-induced restrictions further boosted adoption with the segment growing by nearly 75% during the first lockdown period (2020). Categories such as FMCG and Fresh (fruits and vegetables) saw a 145-150% uptick in monthly sales spends.