Indian retail market to reach $1 trillion by 2025: Report

Mumbai:The Indian retail market is estimated to cross $1 trillion-mark by 2025 and top five retailers could take on a bigger slice of the industry, reaching over 10 per cent market share each in the next decade, a new report said on Wednesday.

The Indian retail market is likely to hit $1.1-$1.3 trillion dollar mark from 0.7 trillion in 2019 -- a 9-11 per cent CAGR growth -- driven by multiple structural, socio-demographic and economic drivers fueling consumption, said the report by Retailers Association of India (RAI) along with Boston Consulting Group (BCG) titled "Retail 4.0: Winning the 20s."

"The market is still fragmented and offers an opportunity for the top five retailers to more than double their share from less then 5 per cent to over 10 per cent in the next decade," said Abheek Singhi, Managing Director and Senior Partner, BCG.

"Winning in the 20s will require retailers to rethink their value proposition and operating model. Precipitating and participating in ecosystems will be a key driver of success," he added.

India's long term consumption and retail growth drivers are expected to provide a strong foundation for future growth.

"Building cost-efficient and technology-enabled operations and partnerships would be key to success in the days to come," said Kumar Rajagopalan, CEO, the Retailers Association of India.

However, in the past few months, the economy witnessed signs of a consumption slowdown.

"The extent of this slowdown varies across categories, channels and geographies, like product categories such as white goods and mobile phones delivered double digit growth; e-commerce and physical multi-category organised retail grew robustly and the FMCG sector grew by 7 per cent over the past 12 months," said the report.

The strength of multiple structural, sociodemographic and economic drivers can sustain high growth in the industry over the 20s, the findings showed.

"Increased margin pressures, retail space crunch, rising costs are putting considerable strain on business models - pushing retailers to innovate to win in the next decade," the report added.

Consumer needs will evolve gradually but distinctly across multiple dimensions such as personalisation, trust in brands as well as omni-channel affinity.

Retailers, in parallel, will continuously innovate to address challenges posed by the changing external environment.

New data and technology driven trends will disrupt retail, along with new competitive forces which will challenge the rules of the game. Lastly, regulatory moves would have a large impact as well - could be positive or muted for the industry.

"The real size of prize for retail has been achieved when concepts and operations are scalable, driving sustained profitability. The fourth wave is likely to be shaped by retailers who innovate their business models to stay ahead of a constantly evolving market," said Rachit Mathur, Managing Director and Partner, BCG.