Introduction:- Indian retail industry has emerged as one of the most

dynamic and fast-paced industries due to the entry of several new players.
Total consumption expenditure is expected to reach nearly US$ 3,600
billion by 2020 from US$ 1,824 billion in 2017. It accounts for over 10% of
the country’s gross domestic product (GDP) and around eight% of the
employment. India is the world’s fifth-largest global destination in the
retail space.

India ranked 73 in the United Nations Conference on Trade and

Development's Business-to-Consumer (B2C) E-commerce Index 2019.
India is the world’s fifth largest global destination in the retail space and
ranked 63 in World Bank’s Doing Business 2019.

India is the world’s fifth largest global destination in the retail space. In FDI
Confidence Index, India ranked 16 (after US, Canada, Germany, United
Kingdom, China, Japan, France, Australia, Switzerland, and Italy).

Market Size:- Retail industry reached US$ 950 billion in 2018 at CAGR of
13% and is expected to reach US$ 1.1 trillion by 2020. Online retail sales
were forecast to grow 31% y-o-y to reach US$ 32.70 billion in 2018.
Revenue generated from online retail is projected to reach US$ 60 billion
by 2020.

Revenue of India’s offline retailers, also known as brick and mortar (B&M)
retailers, is expected to increase by Rs. 10,000-12,000 crore (US$ 1.39-2.77
billion) in FY20.

According to the Ground Zero Series findings of the consulting firm

RedSeer, the retail sector is expected to recover ~80% of pre-Covid revenue
(amounting to US$ 780 billion) by end-2020.

India is expected to become the world’s fastest growing E-commerce

market, driven by robust investment in the sector and rapid increase in the
number of internet users. Various agencies have high expectations about
growth of India’s E-commerce market.
After an unprecedented decline of 19% in the January-March 2020 quarter,
the FMCG industry displayed signs of recovery in the July-September 2020
quarter with a y-o-y growth of 1.6%. The growth witnessed in the fast-
moving consumer goods (FMCG) sector was also a reflection of positivity
recorded in the overall macroeconomic scenario amid opening of the
economy and easing of lockdown restrictions.

Investment Scenario:- The Indian retail trading has received Foreign

Direct Investment (FDI) equity inflow totalling US$ 2.17 billion during
April 2000-June 2020, according to Department for Promotion of Industry
and Internal Trade (DPIIT). With the rising need for consumer goods in
different sectors including consumer electronics and home appliances,
many companies have invested in the Indian retail space in the past few
months.

India’s retail sector attracted US$ 970 million from various private equity
funds in 2019.

In September 2020, US private equity firm Silver Lake announced plan to

invest Rs. 7,500 crore (US$ 1.00 billion) in Reliance Retail, which marks
the second billion-dollar investment by Silver Lake in a Reliance Industries
subsidiary after the US$ 1.35 billion investment in Jio Platforms earlier in
2020.

Walmart Investments Cooperative U.A invested Rs. 2.75 billion (US$ 37.68
million) in Wal-Mart India Pvt Ltd.

Retail investors boosted their shareholdings in Indian companies to an 11-

year high in September 2020, with first-time investors continuing to add
more money into equities. According to Prime Database, shareholding of
retail investors in 1,605 listed companies hit an 11-year high of 7.01% and
witnessed ~3.4 million new ‘Demat’ accounts from July 2020 to September
2020.

In November 2020, OnePlus, the Chinese smartphone maker, launched

‘OnePlus Nizam Palace’ in Hyderabad, touted as its largest experience store
worldwide that is spread across 16,000 sqft. The company also announced
plans to invest Rs. 100 crore (US$ 13.51 million) towards market
penetration across the omnichannel retail business, including extension of
offline experience beyond metro cities with new retail partnerships.

Government Initiatives:- The Government of India has taken various

initiatives to improve the retail industry in India. Some of them are listed
below:

Government may change Foreign Direct Investment (FDI) rules in food

processing in a bid to permit E-commerce companies and foreign retailers
to sell Made in India consumer products.

Government of India has allowed 100% FDI in online retail of goods and
services through the automatic route, thereby providing clarity on the
existing businesses of E-commerce companies operating in India.

Road Ahead:- E-commerce is expanding steadily in the country.

Customers have the ever-increasing choice of products at the lowest rates.
E-commerce is probably creating the biggest revolution in retail industry,
and this trend is likely to continue in the years to come. Retailers should
leverage digital retail channels (E-commerce), which would enable them to
spend less money on real estate while reaching out to more customers in
tier II and tier III cities.

It is projected that by 2021, traditional retail will hold a major share of 75%,
organized retail share will reach 18% and E-commerce retail share will
reach 7% of the total retail market.