Update 6/25/2021: This post has been updated with additional information about future developments in the retail industry.
India’s retail sector attracted US$ 6.2 billion from various private equity and venture capital funds in 2020.
With rising needs for consumer goods across different sectors, many companies have invested in the Indian retail space in the past few years. It has emerged as one of the most fast-paced and dynamic industries due to the entry of several new players.
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But, e-commerce is also expanding steadily in the country. With a plethora of products available at the lowest rates, the trend will revolutionize the retail industry. Moreover, retailers are leveraging digital retail channels to reach out to customers in tier II and tier III cities.
By 2024, India’s ecommerce industry is expected to increase by 84% and rise to $11 billion. This change will be driven by mobile shopping, which is further projected to grow at 21% annually over the next 3 years.
Before we move into the trends that will impact the Indian retail industry, let us know more about the history of retail businesses and the changing customer behavior.
Retail Businesses In India- Past and Present
Retail in India has traveled through different phases. The history of retailing goes back to the era when the barter system came into existence. The introduction of currency gave rise to commerce activities, and small entrepreneurs set up shops to sell medicines, groceries, hardware, etc.
Small kiranas or general merchants became an integral part of the daily lives of people. In this way, retail gained recognition as a professional activity.
This evolution led to the surge of two categories of retailing. One is the store retailer, the other one being the non-store retailer, and the virtual store or retail on the internet.
Changing Consumer Behavior
Consumer behavior is changing and so are retail needs. Interestingly, loading buckets with items in a store is being replaced by quick online trips. Technology and in-store retail are collaborating to eliminate traditional central store purchases and disrupt the whole industry.
This is much more than getting discounts on online shopping channels. There is an emerging need to create innovative customer-centric shopping experiences to meet the needs of modern shoppers. With the current store layout not fulfilling that, the future stores will need to adapt to keep customers coming in.
Top 8 Future Developments in the Indian Retail Industry
Here are some of the developments that will impact the Indian retail industry.
1.Click and Collect Products
The most interesting development the coming year will see is the facility to click and collect products. All you will need to do is save your shopping list, and it will be delivered to the counter. This will result in a reduction in crowds at the store.
This will be a masterstroke for countries like India, which are overpopulated. As technology is on inclination, stores will be able to accommodate each product’s detail in QR codes ranging from prices to nutritional information and much more!
2. Omnichannel Assistance
Omnichannel assistance will make it simpler for stores to retain the offline experience while providing the benefits of online portals. It will facilitate more purchases and provide instant gratification to the customers. Some of the things you will be able to do easily include-
- Buy online/ship from the store
- Reserve online/ pick up from store
- Get access to unlimited aisles for stores and fit catalogs digitally if not physically
3. Changing Importance of Physical Stores
While this will play out differently for different shoppers’ categories, going out with family is still an event for the Indian consumer, especially for clothes and jewelry. Unfortunately, eCommerce lacks the human touch a store can offer.
People will still do a lot of research, going shopping, and checking out product reviews. However, online data will make shopping at stores a much better experience, and the physical aspect of the store will be aided by Omni channeling. Like a physical store, you will be able to analyze various options and get quick answers to your queries.
4. Smart Mirrors
When it comes to clothing, there will be an increase in smart mirrors. These will use artificial intelligence (AI) and virtual reality (VR), gesture recognition, and double up as your virtual changing room. Thus, eliminating the time-consuming process of going to a trial room.
A smart mirror will incorporate different styles of clothes depending on your physical appearance and provide options. It may also show you a variety of color options.
Interestingly, you will be able to connect these smart mirrors with your social media. This way, you will be able to click pictures, share with your friends and take their opinion when selecting items and clothes.
5. Touchscreen Orders at Food Courts
More food courts will provide touch screens at each table. This will allow customers to scroll through all options available without having to visit overcrowded counters.
Moreover, food courts will also offer some surprise products or exciting discounts to attract customers. Also, checkouts will turn into self-checkouts that will allow customers with larger orders to do their transactions faster.
6. Cost Optimization
Retail businesses are taking drastic measures and revamping their budgets when deciding the cost centers.
“With our retail outlets being the biggest cost center, we put all efforts to curtail the menu, make the servings fast to avoid overcrowding, and change the service model to self-service.” – Shivam Shahi,- Co-founder of Blue Tokai Coffee Roasters.
In the future, stores will realize that there is a huge scope of cost optimization in retail. D2C and local kiranas will ensure that their brand can deliver the desired products to the consumer while taking care of the budget. In addition, there will be an increased focus on sustainability in the years to come.
7. Middle-income Group Will Lead India’s Consumption Story
If we talk about market leaders, the Indian e-commerce industry has seen a myriad of changes over the past 15 years. In 2006, only 3% of people shopped online. With the internet population reaching 500 million, around 12% of people did online transactions in 2021.
Offline retailers who are adopting e-commerce will have a significant advantage over their competitors. Moreover, voice technology and vernacular mediums of customer support will accelerate digital access.
Here is what Kalyan Krishnamurthy, Group CEO, Flipkart, has to say about the changing market dynamics.
“India’s consumption economy will be the third-largest (globally) by 2030, and we are looking at a scale of $5 trillion. This consumption growth will not be restricted to certain segments, and the middle-income group will lead 75 percent of this,”
8. Digital Will Open New Opportunities for Distribution
The digital wave has made a lot of Kirana stores adopt technology and support digital mediums. But, how has it been important in creating mediums of distribution?
It led to the creation of digital flyovers, enhanced use of social media, and intermediaries working towards multi-stage distribution.
Modern retail will create formal jobs close to neighborhoods. It will also create jobs that are gender agnostic and embedded in the community.
Also, as Kirana stores are getting modernized, you would no longer see the conventional errand boy service model.
They will gradually convert into self-service stores and even encourage the next generation to join the family business.
What’s your take on retail businesses in India? Share your views in the comments below!