Before COVID-19 era, 95 per cent of the retail sales in India was taking place through offline channels like malls, shops etc. But after COVID-19 is over, there will be a paradigm shift in the consumption behaviour of India, stated a report.
According to a joint report by RAI-Anarock report, “The growth of the retail industry to slow down amid the imposed nationwide lockdown. However, the share of organised retail and e-commerce to rise exponentially.” Before COVID-19 crisis, the retail industry was estimated to grow from USD 0.79 trillion in 2017 to USD 1.2 trillion by 2021.
The report stated the market size of organised retail was approximately USD 71.6 billion in 2017. The organised retail was expected to grow at a CAGR of 20-25 per cent per year. “E-commerce was expected to grow from USD 24 billion in 2017 to USD 84 billion in 2021.”
The report claimed that the future of the Indian retail industry is more likely to be driven by its large population base and rapidly changing consumer. “While a large portion of the market remains unorganised, the share of organised retail is growing rapidly,” stated ‘Certainty Despite Headwinds’ report.
However, it cannot be ignored that the share of online sales is significantly low in India compared to China and the USA. In India, organised and unorganised retail in the country accounts for 10 per cent of the GDP. Meanwhile, India’s retail industry ranks fourth in the world in terms of size. The retail industry contributes 8 per cent to the overall employment in the country.
A big push for the industry will come from rural India. “The rural sector is likely to revive faster owing to the government’s focus. The stimulus packages and the impetus provided in the union budget and the stimulus to combat the effect of the pandemic is set to create a robust rural economy which is capable to drive demand,” it stated.
The report also pointed out after the COVID-19 lockdown was partially lifted, retailers have witnessed a conversion rate of 90 per cent post-COVID-19 versus 20- 40 per cent pre- COVID-19. It was reported that in China after the lockdown was lifted, revenge shopping kicked in. The French brand ‘Hermes’ flagship store in Guangzhou reported a USD 2.7 million sales on the day it re-opened in April post lockdown. It was reported as the biggest single-day shopping at a luxury outlet in China.
At present, the Indian retailers are taking time out to implement technologies which will help them to become much more cost-efficient in the long-run. This is a positive trend. However, it will pinch retailers the most as the cost burden will be high, but in long-run will reap the benefits.