India is a country of 1.4 billion people, a mosaic of diverse preferences. There are 22 official languages, and we sport a rocket economy. The truth is, we all are witnessing an interesting intersection of an emerging Bharat along with the coming to age of Modern India.
Fueling the Fire
Studies suggest that 50% of India’s population will live in urban areas by 2047. These people will have access to and increasingly make use of new age technology, which is slated to create more opportunities, intersections and new avenues of distribution to leverage.
This new age technology is leading to infrastructure upgradation and rapid urbanisation. There is a marked increase in purchasing power among the young population and an aspirational and trend-conscious mindset is being witnessed. These factors, along with women entering the workforce, are expected to propel retail sales in the country.
The Indian Government has also implemented many key initiatives to drive development in Tier III to V towns, namely:
- The Smart Cities Mission
- Atal Mission for Rejuvenation and Urban Transformation (AMRUT)
- Pradhan Mantri Awas Yojana: Affordable housing for all
- Swachh Bharat Mission (Urban initiative)
- Urban Infrastructure Development Scheme for Small and Medium Towns
In this scenario, premiumisation is no longer an urban trend, but has now reached Bharat.
This gives retailers access to a lot of potential customers, leading to an immense revenue growth potential. Since there is a larger area covered, and a bigger target audience, there is also a greater likelihood of success along with long term profitability.
Strategies for Success
In this era of conscious consumerism, there are 5 probable future scenarios for retailers to strategise around:
Rise of New Commerce: The growing internet user base, smartphone adoption, and e-commerce penetration are reshaping commerce. New commerce channels driven by factors such as increased internet use in Tier 2 & 3 cities, ease of starting online businesses, personalisation, easy discovery and payment, and trust in influencers are set to redefine the retail landscape.
Technology to Drive Retail Towards Immersive, Frictionless, Intelligent Experiences: AR, VR, the Metaverse, and experiential retail are transforming customer interactions. Retailers can enhance customer engagement, satisfaction, and sales by creating captivating and interactive shopping environments.
Rise of the Luxury Market: Luxury brands entering the Indian market through online luxury retailers and partnerships with Indian companies are bound to create a boom for Indian retail. Millennials are driving the luxury market, with 60% share in modern India.
Experiential Retail: This goes beyond transactional experiences, transforming physical and online shopping environments. Retailers must prioritise immersive and unforgettable experiences.
Private Labels to Self-Sustain & Intensify Competition: Private labels are gaining prominence, offering higher profit margins for retailers compared to traditional brands. They offer quality, are affordable, and also offer differentiated products to consumers and thus are well-positioned to thrive.
