2020:Retail Market Challenges in India

Indian Retail Market is one of the fastest-growing in the world. The Indian Retail industry is expected to reach Rs.76.87 lakh crore in 2020, says ibef.org report. India ranks 63 as per World Bank’s doing business publication 2020. Also, the United Nation’s Trade and Development’s Business-to-Consumer (B2C) E-commerce Index-2019 gives 73rd Rank. Importantly the Indian Government has invited Foreign Direct Investment (FDI) in the Retail sector. This post focusses on 2020: Retail Market challenges in India during this pandemic affected time, the government policies, and shoppers’ expectations from retail sectors in the current context.

Bird’s Eye View of Global Challenges in Retail-2020

• Alt Retail is a new jargon in the Retail Market. Retailing is no more just selling products it is all about providing products on Rental, Servicing, Resales, and Experience. Subscription-based services have redefined Retailing as Alternate (Alt) Retail. So, In a nutshell, Subscription and Rental Models will reach new maturity says Coresight Research Group.
• Luxury Products endorse Inclusivity instead of exclusivity. Today Branded products endorse social values instead of showcasing aristocracy. So, This is a definite sign of growing demand for inclusivity in the Retail sector.
• Technology Enablement of Retail through 5G networks and automation promises to provide better customer experience. While 5G networks provide speedy connectivity automation, analytics and robotics play a vital role in the digitization of supply-chain.

The overall global retail sector is moving towards Frictionless Retail, Fast Retail, and Spectacular Retail.

Glimpse of Challenges Faced by Indian Retailers

Though India is one of the fastest-growing Retail Market many generalized challenges scare new entrepreneurs entering the segment. Important ones are:

• Lack of Technology adoption
• Poor Logistics and Infrastructure
• Inefficient Supply-Chain management
• Price War
• Rampant Fraud in Retailing
• Tax Structure and Bureaucracy
• Competition from Unorganized Retailers
• Lack of Customer Understanding

Growth Opportunities for Indian Retail Sector

The brighter side for the Indian Retail sector is the Market Size: India ranks 16 in the global market as per the FDI Confidence Index. Also, India is the 5th largest retail destination. In addition, Indian Retail market reached 950 billion US$ in 2018 and is expected to reach 1.1 Trillion in 2020. Also, With the rapid increase in internet users, India Retail is projected as the World’s fastest-growing e-commerce market.

Investment Spree is in progress as per ibef.org reports. According to the Indian Retail, Trading has received Foreign Direct Investment equity of 2.12 billion US$ during the period April-2000 to March 2020. Importantly the Indian Retail sector is able to obtain 970 million US$ from different private equity funds in the year 2019. Also, Walmart Investment Cooperative UA has invested Rs.2.75 billion in its India office Wal-Mart India Pvt. Ltd.

Government of India Policies for Retail

The government of India has allowed 100 FDI in the online retail of goods and services. Also, Govt has plans to change FDI policies to promote Food Processing products through E-commerce Sites and Foreign Retailers. This initiative can help Made In India Products to get a global market.

Sector Wise Retail Market Share-2019

Market Size of Retail Sector Year on Year Graph

Effect of COVID-19 on Indian Retail Market

During Lockdown a survey conducted by Retailers Association of India says, In Non-Grocery Retails 80 to 100 percent of sales is reduced. As 85 percent of retail costs are fixed retailers are facing immense pressure. Most importantly Retail industry is facing severe liquidity challenges that can lead to huge unemployment. While the Food-Retailers expect to earn 56 percent of profits when compared to the previous year. The Non-Food Retailers expect to earn 40 percent of previous year profits in the next six months provided pandemic situation doesn’t worsen. Though, Indian Retail Market Size is showing a growing trend unexpected onslaught of the pandemic has worsened the situation for retailers.

Shoppers Traits-2020

According to Economic Times report 46 percent of Indian workforce is Millennial. This clearly points to the fact that the buyers in current India are Technology Savvy. They prefer relying on technology gadgets to purchase and make payments. Providing best Customer Experience needs utilization of technology tools. So, Retailers have to adopt technology to thrive in current market. Important Technological developments in Retail sector are:

• Ultra-Convenience: Convenience in making a purchase is a vital factor for Today’s Shoppers. Based on how hassle-free a transaction is buying decisions happen. With the proliferation of smartphones to rural places of India Consumers have got acclimatized to Digital payments and Transaction methods. So, It is vital for Retailers to change with time.
• Recommendation Engines and Personalization: With Data Analytics making inroads to all segments of our life Recommendation Engines that provide a personalized experience to customers are gaining popularity. Thus, to survive in the retail market relying on recommendation engines and thus providing the best possible customer experience (CX) is key.
• Augmented Reality and Virtual Reality: These technologies have redefined Stores’ concept. Today Pop-Up Stores and Virtual Stores are becoming popular amongst consumers. So, It is inevitable for Retail outlets to test such technology-based tools.
• Contactless and Cashierless Stores: Self-Checkout Kiosks and Self-Order Devices have gained popularity in supermarkets. Also, the pandemic situation has forced customers to prefer humanless transactions. Obviously this situation has forced Retailers to adopt Contactless technologies at their outlets.

Summary

The trends for the Indian Retail Market is promising. But at the same time, it highlights a fact that Retailers who are keen to accept technology advancements and adapt them to their business needs in a customized manner can thrive in this fiercely competitive market. Also, with the Indian Retail Market Size estimated to grow up to 1750 Billion US$ retailers can definitely maximize their growth trajectory. We hope this post could succinctly provide readers an overview of Retail Market Challenges in India.