India’s Retail Landscape is EvolvingJuly 25, 2019
India’s rapid economic growth prompts retailers to rethink their relationship with consumers as new trends emerge.
India has emerged as the second fastest growing major economy in the world and is expected to be one of the top three economic powers by 2025, according to a recent report released by the United States Department of Agriculture (USDA) agricultural service.
Agricultural related imports grew by 10 per cent, from US$22bn in 2013 to US$25bn in 2018, with the market for imported foods experiencing a 68 per cent growth over the previous six years.
Consumer oriented foods, including fresh fruits and tree nuts, are the fastest growing segments of imported agricultural products, reaching US$5.3bn in 2018.
Traditional roadside stands, open markets and corner stores, otherwise known as Kirana, make up 98 per cent of the total market share, however modern retail stores including supermarkets and hypermarkets are growing and are estimated to double their market share to 4 per cent by 2020.
With 62 per cent of India’s population below the age of 35, investment into e-commerce is an important step in diversifying the industry. Supermarkets and hypermarkets, such as FoodHall and Star Bazaar, are providing online services to their customers via their own mobile apps and are providing free home delivery in an effort to capitalise on convenience.
Other approaches include developing marketing strategies, offering new payment schemes and different pricing strategies via the creation of private label products. Outlets have also begun providing organic, natural and vegan grocery options to their customers as part of an ongoing healthy eating trend emerging in India.
USDA reports that although online grocery retailing is the smallest retail channel (representing 5 per cent of total retail grocery sales), it has the highest potential and is expected to increase by almost 27 percent in 2019.
The government has reduced the time and cost to import food through the implementation of electronic sealing of containers, the upgrading of port infrastructure and permitting the electronic submission of supporting documents with digital signatures.
However, exporting to India remains challenging due to high tariffs, ongoing import restrictions and strong competition from the domestic industry.
Tree nuts, including almonds and walnuts, apples, pears, grapes and non-local seasonal fruit all performed strongly in 2018.