Retail in India has witnessed a meteoric rise in the last decade, growing on all fronts – market size, employment, SKUs, and formats. COVID-19 presented unprecedented challenges for the sector, with lockdowns, demand variations, and supply chain disruptions impacting all retail participants. The sector as a whole has shown exemplary resilience in these difficult times, coming together to collectively resolve the challenges. Retail participants increasingly leveraged technology in their COVID-19 response strategies leading to an acceleration of tech adoption in the sector.

As the dust begins to settle, we find Indian Retail ushering into the next era of retail evolution – Retail 4.0 –led by convergence and collaborations of online and physical retail formats, with technology as the key catalyst. The new era holds the promise of an agile, efficient, inclusive, and inter-dependent retail ecosystem with disruptive growth and benefits for the sector and nation at large.

NASSCOM conducted an in-depth study and conducted interviews with over 360 retail stakeholders in collaboration with Technopak to analyze Indian retail’s evolution, its drivers, and key components.

Retail Market Size Has Increased 3x In Last Decade And Accounted For-

• ~$800 Bn. To India’s GDP In FY 2019-20
• 35+ Mn Employment Or 8% of Total Workforce
• Pre-COVID, Indian Retail Evolution Spanned Three Eras Of Transformation- Retail 1.0 -Upto 1999-, Retail 2.0 -Year 2000-2006, and Retail 3.0 from 2007-2020.

Shaping Of Retail 4.0, The Offline + Online (O+O) Retail Era

• Retail 4.0 – The “Offline + Online” (O+O) retail era will witness convergence of traditional and online channels into a digitally-enabled ecosystem
• By 2030, Indian retail market will grow by $700 Bn in market size, reaching $1.5 trillion
• Around 25 mn jobs will be added in the next decade

Impact Of O+O Models On Accelerated Growth Of Retail 4.0 By 2030

• ~$640 Bn., O+O enabled sales, accounting for 90%+ of the market size addition in the retail sector
• 12 mn additional jobs, accounting for 50% of the new job creation in the sector
• India’s share of online-led exports globally to rise from 0.2% in 2020 to 8.9%
• O+O to account for 37% of retail sector’s total tax contribution

Key Challenges And Policy Recommendations

• Building technological awareness in traditional retailers, smoothening supply chain
•  cash cycles, introducing operating standards, and establishing equitable norms
• O+O requires coming together of policy makers, traditional and online retail entities and supporting sectors such as financial entities to further grow the opportunity presented

Please reach out to me at aniket@nasscom.in in case of any questions/suggestions.