India, home to over 1.4 billion people, has one of the fastest-growing retail sectors in the world. As of FY22, India’s retail sector was estimated to be a whopping USD 836 billion, according to a joint report by Unicommerce and Wazir Advisors. Over the years, India’s retail sector has seen remarkable growth and transformation. This is primarily thanks to accelerated digitisation and technology integration across businesses of nearly every vertical. As digitisation and technology take center stage, the retail industry has capitalised on this shift to gain market share, particularly with the surge in digital payment methods. Here’s how.
Digital payment trends in the Indian retail landscape
The Digital India campaign, initiated by the Government of India, has played a pivotal role in driving the growth of digital payment methods in the retail sector. With a focus on building a digitally empowered society and a knowledge-based economy, the campaign has fostered a favourable environment for retailers to embrace technological advancements.
According to a recent report by PhonePe and BCG, India’s digital payments market is projected to touch USD 10 million by 2026. The rapid rise of digital payment methods has been fueled by factors such as increased smartphone penetration, improved internet connectivity, and the government’s push for a cashless economy.
The impact on retail expansion strategy
The breakneck pace at which digital payments have gained traction has had a profound impact n the retail expansion strategy, leading to increased market share for forward-thinking retailers. For one, it has contributed to enhanced customer experience. The convenience and ease of digital payments have significantly improved the overall shopping experience for consumers. Retailers offering diverse digital payment options have witnessed increased footfall and customer loyalty.
Apart from improved customer experience, the rise of digital payment methods has accelerated the growth of e-commerce in India. With online shopping becoming more accessible and secure, retailers have capitalised on this trend by expanding their online presence and reaching a wider customer base. To accelerate their market share, retailers have adopted an omnichannel approach, seamlessly integrating their physical stores with their online platforms. This enables customers to experience a hassle-free and cohesive shopping journey, paving the way for brand loyalty.
Further, digital payment methods have streamlined the end-to-end transaction process, minimising the wait at checkout counters. This makes for better operational productivity and results in higher sales conversions. The Digital India campaign has also been instrumental when it comes to promoting financial inclusion, as it has enabled several unbanked and underbanked individuals across the country to have a digital banking facility, thereby expanding the potential customer base for retailers.
The challenges and opportunities
While the Digital India campaign has brought significant opportunities for retail expansion, there are some challenges that retailers must consider and address. One of them is the security concern. With the increased adoption of digital payment methods, there is a corresponding rise in cyber threats and fraud. Retailers must invest in robust cybersecurity measures to safeguard customer data and ensure secure transactions.
Further, despite significant progress, some segments of the population still face challenges in embracing digital payment methods due to limited digital literacy. Retailers can play a role in educating customers about the benefits and safe usage of digital payment options. To fully embrace and utilise the potential of digital payments, retailers have to ensure consistent efforts are made to bolster digital infrastructure, especially in non-urban areas.
The Digital India campaign has been a game-changer for the retail sector, propelling it into a new era of growth and market expansion. The rise of digital payment methods has not only improved customer convenience but also enabled retailers to enhance their market share through a more efficient and customer-centric approach. As India’s digital payments market continues to soar, retailers who embrace technology and align their expansion strategies with the digital landscape are poised to reap significant benefits in the evolving retail ecosystem.
Sudhanshu Agarwal, Founder and CEO, Citykart