The retail industry in India has gone through tremendous change in recent years. The year 2022 noted that the Indian retail industry was heavily dominated by the unorganized sector which accounted for 81% of the market. However, the organized retail sector has been growing at a rapid pace, fuelled by technological innovations and a customer-centric approach.
Due to the growing income and purchasing power of Indian consumers, their purchase patterns are changing quickly. This is driving a rapid increase in the adoption of advanced technology and investment in infrastructure by retailers in order to meet shifting consumer demand.
Rapid growth in organized retail can also be attributed to a growing number of individuals moving to metropolitan regions as the country urbanizes at a fast pace. It is expected that infrastructural development will continue to grow leading to the building of new malls and retail locations which increases the scope for growth of the organized retail sector. Increased internet penetration in the country has also led to a rise in rural consumption and increase in digital payment modes which are impacting consumer behaviour.
Retailers have started adapting to new shopping paradigms to better engage with their customers, enhance their experience and earn their loyalty while also ensuring better speed, time and cost efficiency for their businesses. As such, increasingly retailers are focusing on three major facets of growth by ensuring a more efficient, resilient and agile supply chain for the future.
Technology Integration spurs growth in for retailers in India
This is one of the most important and more experimented growth trends in the retail industry in India. While the adoption of technological tools has been underway for quite a while in the retail industry, it’s scale rapidly expanded over recent years as businesses sought innovative technologies to gain a competitive edge in the market.
Retailers in India are increasingly focusing on providing personalised shopping experiences to their consumers through omnichannel strategies exploring 3 trends:
- cashless and contactless digital payment modes
- hyperlocal marketing campaigns
- customized communications and offers.
The implementation of contactless payments skyrocketed during the pandemic and continue to be a favoured means of transaction both for retailers and for consumers due to its ease and convenience. For consumers, the presence of self-checkout kiosks and contactless payments allows for a better and quicker shopping experience. Whereas for retailers, it allows them to eliminate long checkout lines allowing them to process more shoppers quickly and efficiently, thus increasing their sales and revenue. Integration of advanced technology enables retailers to ensure protection of their consumers data and also provides them with increased visibility and tracking of their inventory and income.
The integration of digital tools into visual merchandising, such as the use of artificial intelligence (AI) and data analytics, is also becoming a key trend in the retail industry in India, as it can enhance consumer engagement and improve their overall shopping experience. Hyper localization, a strategy that involves tailoring products, services and marketing campaigns, helps retailers to provide consumers with a more relevant and more personalised shopping experience. Through data collection and analysis, retailers can ensure that they maintain stock of products that are consistently preferred by customers and offer services such as discounts, cashback programs and more that help them increase their profitability and competitiveness in the market. Retailers are also adopting personalization strategies to help them communicate more relevant information on product recommendations and offers to their customers through multiple channels. These strategies help retailers to retain their consumers by increasing their satisfaction and loyalty.
The e-commerce sector is also expected to evolve with the combination of online and offline purchasing. Mediums that allow the consumers to interact with their preferred products from the comfort of their homes before deciding to purchase have gained immense popularity. For example, trying on outfits, accessories or make-up or visualizing the fit and look of new furniture in their homes through an app. Retailers are adopting strategies such as digital displays, augmented reality, and in-store pickup for online purchases to provide their consumers a seamless and integrated shopping experience. It also allows for improved decision making by consumers, thereby reducing the risk of returns.
With the adoption of technology such as RFID tags, barcodes and sensors amongst others, retailers can also enhance their inventory management and real time visibility of their products while reducing their overall costs.
Capitalizing on Government Initiatives and Policies for Retail Growth in India
The government of India has been launching many nation-building initiatives over the last decade, to increase the prominence of the country as a key hub for manufacturing, trade and other sectors. These include initiatives like Make In India, Open Network for Digital Commerce (ONDC), National Logistics Policy, new frameworks for retail digital payments and many more.
The drive to promote digital transformation was essential to India’s digital strategy which has empowered several sectors including the retail industry in India to increase the database of customers that they can reach. The Central Government has opened the doors for 100 percent foreign direct investment in online retail of products and services. Moreover, small and medium sized players are being provided platforms like ONDC to expand their reach to both local and national customers, provide a more seamless customer experience and gain opportunities for retail innovation.
Initiatives like the National Logistics Policy focuses on establishing India as a major trade hub with improved connectivity, better logistics infrastructure, enhanced digitalisation of the sector and better processes. The improvements brought about by this initiative will empower retailers in India by boosting their supply chain management capabilities for both their online and offline business strategies.
Improved Logistics Infrastructure for better growth in India’s retail industry
Logistics plays an essential part in the end-to-end supply chain of any industry. The retail industry in India needs an ideal logistics operation that can empower them to maintain just-in-time strategy for the movement and storage of their products. This means that there are many angles that need to be taken into consideration when planning the logistics operations. It is essential to choose a logistics partner who can satisfy multiple aspects of the retail logistics operations, in particular, speed to market and inventory management. An ideal logistics partner should be able to provide retailers with:
- Improved transportation networks
- Temperature-controlled movement and storage
- Better warehousing and storage facilities
- Own delivery network and fulfilment centres
- Seamless last mile delivery empowered by digitalisation
A collaboration with one single reliable logistics partner, with ample assets and expertise to provide the above logistics support, eases the strain of supply chain worries and coordination with multiple partners. This frees up the time and energy that a retailer can devote to focusing on their own growth and expansion strategies while also reducing the overall expenditure on their supply chain management.
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