The retail sector in India is projected to grow at 9-10 per cent and will more than double in size across categories and formats to reach $2 trillion in the next decade, according to a report by the Boston Consulting Group (BCG) and Retailers Association of India (RAI). The report foresees a strong with steady growth for the country's consumption.

As the sector is experiencing key shifts affecting the pace and shape of growth, organised retailers would need to sustain performance and continue to grow shares, it noted.

While income growth remains steady, and consumers are optimistic about personal income outlook, they are increasingly looking to spend on 'experiences' or save more through newer or nascent vehicles, it said.

“…Successful retailers are the ones who continue to challenge the perceived growth profitability trade-off, '' BCG managing director and senior partner Abheek Singhi said.

Organised retail in the country has historically outperformed underlying category growth, but a slowdown was observed across segments last year owing to potential headwinds. Year-on-year (YoY) growth was down by 5-10 percentage points in the third quarter of fiscal 2023-24 compared to the corresponding quarter in the last fiscal, with some large retailers reporting a decline in like for like (LFL) store growth.

While this points towards potential short-term stress, industry participants continue to remain optimistic about the outlook and long-term structural tailwinds. Profitability at the same time has generally remained consistent and largely in line with global peers, the report said.

The report pointed out that retailers would need to address key considerations for sustainable growth in the future.

“By focusing on personalised customer experiences, exploring new collaborations, and leveraging AI for efficiency, we can propel India's retail industry towards unprecedented growth and global competitiveness,” RAI chief executive officer Kumar Rajagopalan said.

Store expansions continue and with increasing urbanisation, more consumption is expected in tier 1-4 cities.

Fibre2Fashion News Desk (DS)

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