According to a newly released report by PricewaterhouseCoopers International Limited (PwC), India is one of the fastest-growing retail markets in the world and the country could see a compound annual growth rate (CAGR) of 10 percent over 2012-2020, growing from $500 million to $1 trillion.
In a report titled, “Future of India – The Winning Leap,” PwC mentions India’s ever-growing population, more specifically its emerging-middle and middle class populations with annual household earnings between Rs 150,000 (roughly $2,300) and Rs 850,000 (about $13,400). These classes account for 640 million people, predicted to reach 900 million in 2021. This would lead the growth of the retail industry in the country.
However, 92 percent of the country’s total retail market is unorganized and dominated by local shops owned by independent private individuals. Encouraging growth of organized retail will improve India’s consumption ecosystem, which includes producers, unorganized retailers, consumers and the overall government.
This growth would also help create more jobs that are ideal for people with lower skill levels.
Currently, the retail sector employs roughly 40 million people. If the industry is improved, it could offer 10 million more jobs in the next 10 years.
The writers of the report predict the share of organized retail will grow from 8 percent of total retail in 2012 to 30 percent in 2024 and eventually 50 percent in 2034.
“The goal is to support the creation of a retail value chain that improves operational efficiency and that works with the unorganized sector to improve consumers’ overall retail experience—for instance, by offering more choices, more reliable supply of popular products, and lower costs. The end result would be an increase in overall consumption, among other advantages,” they noted.
The report recommends that organized and unorganized retail companies should work together to improve the overall retail industry, while generating new benefits for their own customers. This idea combines the skills of organized retailing with those of the neighborhood shops, creating more value for consumers than either could provide on its own.
According to the report, if retailers increased their use of technology, they would reach more customers. The writers predict that digital retail could account for 50 percent of the organized retail in 2034.
Taking advantage of digital retail channels (e-commerce) would enable retailers to spend less money on real estate while reaching more customers in tier-2 and tier-3 cities. Some of India’s major e-commerce brands, like Jabong and Myntra, collect almost 50 percent of their revenues from tier-2 cities.
Other new technologies that would help to improve the retail customer experience are virtual walls and mirrors. Virtual walls allow customers to scan an item’s barcode on an electronic wall using their mobile phones and place orders with retailers. Virtual mirrors enable shoppers to try on clothes and accessories virtually.
“Our report, ‘Future of India – the Winning Leap,’ is driven by the belief that India can build shared prosperity for its 1.25 billion citizens by transforming the way the economy creates value.”
In the report, PwC analyzes the key sectors of the country including education, healthcare, agriculture, financial services, power, manufacturing, retail, urbanization and digital and physical connectivity, and suggests solutions for each industry that would benefit India as a whole.