Food retailing in India has undergone progressive changes with the emergence of hypermarkets and supermarkets and the rapid expansion of organized retail in various parts of the country.
The growth trend is expected to remain stable, with analysts expecting a population increase to 475 million by 2030. CEOs see downtrading and increasing price sensitivity as the most influential trends in the food market, with 56 per cent of CEOs citing them as their top three priority. The most pronounced trend shows that online is becoming the core of food retailing, as value is king and the lifestyle agenda drives food demand.
These three important changes for consumers represent an excellent opportunity for online grocery stores to attract new customers. They are occurring on a larger scale and at a faster pace, which will lead to significant changes in market share in the coming years.
There is interesting growth in many niche sectors and mainstream markets, with e-commerce looming on the horizon. These include health and agricultural trade, the expansion of brick-and-mortar retail brands in the food and beverage segment, food technology, and the growing popularity of retail technologies such as Stor2u.in.
The retail sector in India has become one of the largest economic sectors and one of the five largest retail markets in the world in terms of economic value. India has replaced China as a favourable market for retail expansion, underpinned by a growing economy, rising consumption, a growing urbanized population, and a burgeoning middle class. An IBOF report from November 2019 predicts that traditional retailing will account for 75% of the total retail market by 2021, organized retail for 18%, and e-commerce for 7%.
Between 2013 and 2019, India’s food market more than doubled from $300 billion to more than $600 billion. Cheap government policies and market trends have driven the market to new heights, with online groceries accumulating a growing market share.
The expansion of the modern retail sector has dramatically increased the number of supermarkets and hypermarkets in the country. Growth during this period was mainly driven by traditional retailers and popular local mom-and-pop stores offering a range of products. The diversification of both traditional and modern retail has implications for food retailing.
According to a study conducted by the University of Pennsylvania, food retailing was estimated in India to account for more than 60% of the country’s total retail market before the arrival of the coronavirus on the shores of India. Analysts have put the online grocery retail market in India at $700 billion by 2022, with the small segment of online grocery stores representing the largest potential.