The pandemic’s severe impact on India’s retail sector led to a market size decline of 8.5% in FY 2021.
Organised and traditional retail segments witnessed a major hit, whereas online retail sustained its growth momentum. According to Wazir Advisors, India’s retail sector is worth USD 836 bn in FY 2022, with an 81.5% contribution from traditional retail. Wazir Advisors, also added that Organised brick and mortar retail makes up 12% of the overall retail market, followed by online sales channels at 6.5%.
Organised retail’s footprint remains low when compared to mature markets such as the US, UK, and Germany. Online retail continues to outperform despite the pandemic-related lockdown’s adverse impact on overall retail in FY 2021, online retail market in India is expected to grow at 32% over the next few years with potential to reach USD 225 billion.
The D2C segment emerges as the key propeller of this growth; reflecting a robust CAGR of near 45% levels.
Marketplaces garner significant 35% of the D2C potential categories and hence they will further leverage this growth by focusing this segment.
In addition to enabling enhanced platforms for digital native brands across these categories; the private label focus by marketplaces will intensify. D2C brands and digital-first companies are investing heavily in technology to build a strong supply chain ecosystem powered with AI and Big Data.