What Is The Indian Food Retail Scenario Like?

online grocery store - stor2u

The retail sector contributes 10% of India’s gross domestic product and, according to Invest India, India’s investment and promotion army provide 8% of the country’s jobs. India has mom-and-pop shops selling clothes, shoes, food and electronics. Its retail market is expected to grow by 2024 to $1.3 trillion and. India is becoming a coveted retail destination with a growing base of young, affluent shoppers every year. The greatest potential emerged during the pandemic when estimates for the online grocery store market in India soared.    

Food and grocery retailing in India exceeds $294 billion and represents 16% of India’s GDP. The organized retail market is valued at $60 billion and accounts for 9 per cent of the total retail sector, while the unorganized retail market accounts for the remaining 9.1 per cent. In the same case of food retailing, the organized market is 3 per cent compared to the unorganized segment, which accounts for 9.7 per cent of the market.    

Organised retail has performed impressively in food retailing in India in recent decades, with both traditional and unorganised retailers dominating the industry to this day. The organised retail in India is growing yearly by 20-25%, which is a strong indicator of its potential for growth in the coming years.    

Organised retail has extended its activities in India with the rise of modern retail formats such as supermarkets, hypermarkets, shopping centres, convenience stores and various other forms. While traditional retailers account for more than 80% of total sales in the Indian market, kiranas (aunt and sister stores) continue to dominate food retailing in India. A number of factors have driven this growth, in particular government decision to allow 100% foreign direct investment (FDI) in the retail food market in February this year.    

Given the size of India’s food market, few foreign investors need a second invitation to enter, and most seek organized retail channels. As a result, it is easier and more lucrative to enter the organized retail trade, as the realization spreads throughout the country. It is a logical next step for e-tailers to build strong delivery systems with a strong customer base.

Moreover, India’s retail market is undergoing profound change and has experienced tremendous growth over the last 10 years. According to data, the market will exceed $1.75 trillion by 2026, at a time when India’s e-commerce market will also grow by 30% and gross merchandise prices will exceed $200 billion that year.    

Sales at Indian offline retailers, also known as brick-and-mortar retailers (B & M), are expected to rise by Rs. According to the Retailers Association of India (RAI), in February 2021 retail sales accounted for 93% of sales before COVID, while consumer goods and fast-food restaurants (QSR) grew 15% and 18% respectively.    

According to the Department of Promotion of Industry and Internal Trade (DPIIT), India’s retail trade received a total of $34.4 billion in foreign direct investment (FDI) and capital inflows between April 2000 and December 2020. Faced with rising demand for consumer goods in various sectors, including consumer electronics and household appliances, many companies have invested in Indian retail in recent months. Multinational companies (MNCs), well-funded start-ups, and large reputable businesses based in neighbourhood stores compete for weekly purchases from a list of more than 14 billion consumers.    

Stor2u, a leading grocery brand based in Goa, India is helping several offline grocers in transforming their business online without requiring them to know the technical aspects of associating themselves with eCommerce.

With two-thirds of India’s retail market and the maximum number of consumer contact points organised by stakeholders accounting for a meagre of 3-4% of the market, food retailing will face an unprecedented struggle in 2021. It is the political restrictions on foreign companies that own grocery stores that will put a dampener on Amazon and Walmart’s plans. In China, for example, Alibaba and Tencent serve as a vivid case study for the Indian government in promoting state-owned giants.   

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