Global Value Chains Sourcing & Retail in India’s $1 Tn Consumer Market
The retail market in India has undergone a major transformation and witnessed tremendous growth in the last 10 years. The overall retail market, that grew to $0.7 tn in 2019, is expected to cross the $1.1 tn mark by 2025. India ranks among the best countries to invest in the retail space. Factors that make India so attractive include its large population, a middle-class of 600 mn people, increasing urbanisation, rising household incomes, connected rural consumers and increasing consumer spending. While the unorganised sector contributes 88 per cent to the total retail sector, the organised retail sector is also set for stupendous growth in the coming years due to an increase in use of technology and diversifying consumption trends.
In the backdrop of upcoming trends in the retail market, lie the expectations and demands of the Indian consumer. The new found freedom of choice increase in personalisation, multi-channel engagement, as well as growing, consciousness towards healthy living are some of the expectations defining changes in taste and preferences. The consumer spending in India stands at $1.5 tn today is likely to rise to $6 tn by 2030. This entails a tremendous opportunity for companies from around the world, many of whom are already part of the India story, and leverage the advantage.
The Government of India continues to bring policy changes to encourage investment and develop the retail infrastructure from transport and logistics to online transactions under the Digital India campaign. The retail sector in India is significant to Prime Minister Modi’s Aatma Nirbhar Abhiyan campaign as it aims to strengthen domestic industries and make India self-reliant.
The Strategic Investment Research Unit (SIRU) at Invest India understands the immense potential in India’s retail sector has therefore, created this report for key stakeholders, to highlight the essential factors which have led to this growth while also showcasing the market opportunity for investors. Briefly, these are:
- Size of Population: India’s population, 1.35 bn and counting has ensured that its retail market is one of the most dynamic in the world, with consumer preferences changing by the day due to influx of technology and increase in income.
- Young Population: With a median age of just 31 years by 2030, India’s consumption will also be driven by the nearly 90 Mn new households headed by millennials and the 370 mn Generation Z consumers who would have grown up in the internet age.
- Percentage of GDP: Nearly 60% of India’s Gross Domestic Product (GDP) is driven by domestic private consumption, thus, making retail a necessary edifice for the growth of the economy.
The retail sector in India entails a tremendous new opportunity for companies, investors and other market players from around the world, many of whom have already been a part of the India Growth Story. Retailers reorienting their strategies to align operations to maximise comfort in each consumer segment has resulted in the emergence of mixed pathways for retail operations with value retail emerging as one of the areas of interest and investment. India's rapid urbanisation and reforms have given a strong fillip to the growth of retail in the country. A growing, prosperous middle-class, and soaring millennial aspiration has caused a mini retail revolution in the country. Whether it is the entry of multi-brand global giants or the success of home-grown unicorns in everything from apparel and electronics to home and office furnishings, the retail sector is booming.