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RACING TOWARDS NEXT WAVE OF RETAIL

Published: September 22, 2022
Author: DIGITAL MEDIA EXECUTIVE

The India consumption story, the seeds of which were sowed more than three decades back, continues to remain stable despite unprecedented challenges. India’s consumption has been showing a steady and strong double-digit growth and, despite COVID impact in 2020, has bounced back.

Few factors that have been driving this consumption growth include

1) Increasing household income,

2) Access to avenues of consumption like malls, shopping complexes, multiplexes etc.,

3) Increasing internet penetration, and

4) Improving consumer confidence

Today, online channels have taken centre stage and are now generating a significantly larger share of revenue across segments for organized players. However, we believe that COVID had dramatically accelerated the growth and it is expected to stabilise.

We expect India’s Retail Industry to continue to grow at 9–10% to reach approximately $2 Tn by 2032, a growth trajectory that remains intact, although delayed by ~2 years due to the pandemic.

Retailing in India - Wikipedia

Shape-shifting retail landscape

While growth remains intact, the shape of this growth is currently in a state of flux. Over the last two years, consumer preferences, behaviours, and attitudes have changed precipitated by the COVID-19 pandemic. That has deep ramifications on how people can buy and consume goods and services. Inevitably, this engendered myriad challenges and opportunities for global retailers, many of whom are adopting innovative models to harness emerging opportunities in retail. Globally, five major emerging trends are being observed that are shaping the future of retail. These are:

 ‘Seamless’ retail: Consumers no longer see boundaries between online and offline channels of consumption. This has led global players to experiment ways to create seamless retail experiences that are integrated across all channels

Emerging revenue models: Retailers are experimenting with revenue models to enhance their customer value proposition, by leveraging both traditional methods and emerging e-commerce models

Rise of mega ecosystems: Rising competition and the need to constantly improve the customer value proposition is driving the rise of mega ecosystems, through acquisitions,partnerships, etc. which benefit both the shoppers and the retail partners.

Personalization at the core: Availability of quality data and the willingness of customers to share the same has enabled retailers across the world to deliver unique customer experiences.

Next-gen stores: Brands are experimenting new approaches to connect with shoppers, through in-store experiential concepts and using technology for blending digital content and the environment 10 Racing towards the next wave of Retail in India

Harnessing the ‘BIG’ retail opportunity

While there are multiple opportunities for Indian retailers, action needs to be taken on multiple fronts in order to achieve sustainable and profitable growth. The first step in that direction is to recognise that currently there is an interplay of several factors that are likely to shape the contours of retail in India. There may be changes in consumer behaviour due to evolving preferences, for example, convenience vs. gradual rise in sustainability, or hyper personalization versus rising concerns around data and privacy.

Some of the other changes such as preference for renting over owning or shift towards experiences and brand affinity could go up or down, as witnessed in global markets. Many of these are likely to be transitory in nature and have minimal to short-term impact.

There are other factors that could be more enduring in nature and could truly disrupt the retail landscape in India. These could include the launch of Open Networks for digital commerce, leveraging core consumer data to create offerings beyond retail, identifying supply side innovations that could create value, etc. As these factors play out, it will translate into choices that retailers will need to make either with respect to their core consumer proposition or backend operations.

Critical imperatives for winning in the future

Based on BCG’s learnings globally, there are multiple themes that could play out/gain prominence over the next 5 to 10 years. While some themes on consumer proposition such as convenience and experiential retail are already visible in India, emerging themes such as responsible and alternate retail could gain scale. Irrespective of the choice set, there are some “critical imperatives” to win in the next decade. These include improving the customer experience, Building an agile organisation, improving cost efficiency, developing partnerships and ecosystems, etc.

Retail in India is growing at a strong clip and creating new opportunities for retailers. However, the changing landscape demands retailers to be receptive to change and more agile in response to shifting consumer preferences.

Source: RAI-BCG Report: Retailers Association of India. Visit: https://rai.net.in.

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