According to reports, the current size of the retail industry is about $810 million. With a conservative growth rate of 9 per cent the industry is expected to be a $1.3 trillion market by 2026. Further, after agriculture, retail is the second biggest source of livelihood in India. Currently, the retail segment is dominated by traditional trade.
Commenting on the future of the retail sector, Arvind Mediratta, Managing Director and Chief Executive Officer, Metro Cash and Carry India, said, “In FY22, the size of traditional trade in total trade in India is about 83 per cent. The share of retail in modern trade is 9.8 per cent. However, over the next 3–4 years, e-commerce will get ahead of modern trade.”
There are four key themes that are shaping the future of the Indian retail industry. “First is the digitisation of the economy, then the formulation of the economy, which is why the GST collection continues to go up month-on-month. The third factor is the easy availability of risk capital; unicorns are burning a lot of capital acquiring customers,” Mediratta added.
The retail domain is bound to make the correction. The valuations of companies are being corrected. To this effect, several companies are delaying IPO (initial public offering) plans. On the same line, Mediratta mentioned that businesses are burning cash. The business model of most of the e-commerce players is to burn cash; the moment you drop discounts and deals, they will switch over to the next available player.”
The traditional shopping hour has taken on new significance. The customers now prefer buying online rather than offline. Customers want everything at the click of a mouse. They want deliveries in half an hour, and there is a cost involved in delivering fast. Therefore, it is important for all retailers to offer a seamless omni-channel shopping experience. We need a combination of physical and digital stores,” he further elaborated.
Pricing is a challenge for the retailers. The players in the segment need pricing tools so that they do not leave money on the table. There is an opportunity for targeted pricing and promotion for every stakeholder in the domain. Targeted pricing for specific groups of consumers is the need of the hour. For retailers to make a significant profit, data analytics has become critical. And to target the value-conscious consumer, businesses have to be very efficient at operations.
