RAI Report Highlights Shift to Purposeful Consumption in Indian Retail

The Retailers Association of India (RAI) has released its year-end analysis for the period April 2025 to February 2026, outlining key trends shaping the retail sector. The report indicates a transition from impulse-driven spending to more purposeful consumption patterns. It also highlights the growing role of digital platforms and evolving consumer behaviour.

The Retailers Association of India (RAI) has published its year-end analysis covering April 2025 to February 2026, presenting an overview of performance trends and structural changes in the Indian retail sector.

According to the report, retail growth showed a gradual increase during the period. Growth levels started at 4–5 per cent at the beginning of the fiscal year, rose to 7–8 per cent by mid-year, and reached 10–11 per cent during the festive season.

Experience-led categories, particularly Quick Service Restaurants (QSR), recorded consistent growth in the range of 10–16%. At the same time, consumer price sensitivity contributed to increased demand in value segments, especially apparel priced at ₹2,500 and below. Premium categories such as consumer durables experienced relatively slower growth of approximately 3 per cent, as consumers deferred discretionary spending.

Regionally, initial growth was led by the West and North, while Tier 2 and Tier 3 cities in the East and South showed sustained demand during the period.

The report also identifies the expansion of Direct-to-Consumer (D2C) brands as a key development. These brands have adopted digital-first supply chains, enabling them to operate without traditional distribution structures and expand more rapidly. Social commerce platforms have also evolved, integrating product discovery with transaction capabilities and enabling consumer engagement through digital channels.

The shift towards shared digital infrastructure and localised fulfilment systems has reduced entry barriers for smaller and niche players, contributing to a more competitive retail environment.

Looking ahead to FY 2026–27, the report outlines a transition towards “Connected Commerce,” defined as the integration of physical and digital retail channels into a unified consumer experience. While footfall in physical stores has declined, the proportion of visitors with purchase intent has increased. Retailers are expected to focus on improving conversion rates through in-store engagement and the use of AI-driven personalisation.

The report also highlights a move towards regional customisation, with retailers adjusting product assortments to reflect local demand patterns rather than adopting uniform strategies.

Despite growth in revenue, the sector is facing cost-related pressures. These include geopolitical developments affecting energy markets and supply chains, as well as rising costs related to logistics, energy, and real estate. Fluctuations in raw material prices are also contributing to operational challenges.

The report notes a divergence in category performance, with stronger growth in food and grocery compared to weaker demand in premium apparel. This trend is expected to influence retail strategies in the coming financial year.

For FY 2026–27, the sector is projected to maintain mid-to-high single-digit growth. Key performing categories are expected to include QSR, food and grocery, jewellery, and value apparel. Identified risk factors include geopolitical uncertainty, freight costs, and margin pressures.

The analysis is based on RAI’s monthly business surveys conducted from April 2025 to February 2026, with final fiscal year data, including March 2026, currently under consolidation.