February 2024

Abheek Singhi
Retail Opportunity
Unlocking the $2Tn

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 It's time for India
2023 2030F
10 -

India to be in Top 3
8-
Nominal GDP ($ Trillion)

(US $7+ Tn by 2030)

6-

3 years to

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4- $3 Tn 10 Years to
7 years to next 4+ Tn
$2 Tn
63 years to
2-
$1 Tn

0-
1947-2010 2010-2017 2017-2020 2020-2030F Ranking basis nominal
GDP US $ Tn
3

Source: MOSPI, RBI, Government estimates, BCG analysis 1

Note: All years referred represent Calendar Year
Consumption and GDP growth

Real1 1GDP growth

Real GDP growth Real
Real 1 HH consumption
1 HH consumption

5.9% 6.1%
CAGR (2007 – 2023) CAGR (2007 – 2023)
% change (YoY) % change (YoY)

16% 16%
11.9%
12% 9.2% 8.9% 12% 9.2%
7.5% 6.5% 7.5% 8.1%
7.1%

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8% 5.1% 7.0% 6.1% 9.0% 8% 5.9% 6.2% 6.5%
7.3% 6.3%
7.0% 6.1% 4.6% 6.7% 6.7% 7.7% 6.1%
4% 4% 6.6% 5.6%
4.5% 5.1% 4.4%
0% 0%
-4% -4%
-6.0% -6.6%
-8% -8%
2008

2012
2013

2016
2017

2020
2021

2009

2013

2017
2018

2021
2022
2009
2010
2011

2014
2015

2018
2019

2022
2023

2008

2010
2011
2012

2014
2015
2016

2019
2020

2023
1. Real value based on 2011Q2/2012Q1 Prices
Note: All values for calendar year
Source: Government estimates 2
 What unites India?

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India retail will be $2Tn+ opportunity in the next decade

India retail market size (USD Bn)1

2000+
+9-10%

+9%
-7% +10%

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+12% 820-840
650-700 670-690
610-630

250

2010 2019 2020 2021 2023 2033F

Actuals Projected-Post Covid

1. Euromonitor, BCG Analysis 4

Note: Retail size market includes size of categories like Grocery, Electronics, Fashion, Jewelry. All years referred represent Calendar Year
Organized retail has outperformed underlying category growth

Organized retail has outperformed Recent reduction in rate of growth more

category historically for listed retailers vs category
YOY growth for top offline organized retailers 1 & underlying category (%) YOY growth for top listed offline organized retailers 2 & underlying category (%)

35% 35%
30%
20%
17%
15%

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11%
15% 13%
9% -2%
2022 2023
-7%
2019 2020 2021 2022

Underlying category Organised retail Underlying category Organised retail (listed)

1. Calculated basis company filings of top 70+ retailers (listed & unlisted) across sectors. 2. Calculated using company fili ngs of top 30 listed offline organized retail players
Note: All years referred represent Calendar Year. Underlying category growth calculated using market size data in INR terms 5
Source: Euromonitor, Company filings, Investor presentations, BCG analysis
Profitability has been steady and in line with global peers

Offline retail showing margin ….Margins largely comparable

resilience except electronics… with global peers across sectors

FY 20 FY 23 NAMR Europe LatAm

Fashion 17% 18% 8-10% 16-18% 10-12%

Electronics 5% 1%
5-7% 3-5% 3-5%

VS

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Grocery 6% 7%
4-6% 4-6% 7-9%

Jewelry 11% 11% 12-14% 26-28% 5-7%

QSR 20% 21% 26-28% 10-12% 14-16%

Change in offline retail margin

Higher Lower Similar

EBITDA margin (%) of top offline retail players

Note: Players grouped into their respective sectors basis major category of retailing. Retailers playing across multiple categories with no sector data cut have been excluded from analysis 6
Source: Company filings of top retailers, BCG analysis
Difficult to get both growth and profitability

Growth & Profitability trend for top 30 listed Split of 10 years based on growth & profitability
retailers for last 10 years performance : Large variation

Retailer 1
Retailer 2
Revenue Retailer 3
Growth Retailer 4
Retailer 5
(YoYy) Retailer 6
Retailer 7
5/10 2/10 Retailer 8
High years years Retailer 9
Retailer 10
i.e >10% Retailer 11
Retailer 12
Retailer 13
Retailer 14
Retailer 15
Retailer 16

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Retailer 17
Retailer 18
Retailer 19
Retailer 20
2/10 1/10 Retailer 21
Retailer 22
Low years years Retailer 23
Retailer 24
i.e. <10% Retailer 25
Retailer 26
Retailer 27
Retailer 28
Low High Retailer 29
Retailer 30
i.e. <=Sector i.e. >Sector EBITDA %
Average1 Average1
High Growth, High EBITDA % High Growth, Low EBITDA %
Low Growth, High EBITDA % Low Growth, Low EBITDA %
Note: Average number of years considered in each quadrant. FY21 not considered to remove bias from impact of COVID-19.
1. Sector wise EBITDA limit considered basis average for Indian & Global retailers in each sector. 7
Source: Company Filings, BCG Analysis
Driving growth AND profitability key to shareholder value creation
For India

Indian companies with above median TSR over past 10 years1

EBITDA Margin Change, 2013-23 (%) Growth

Growthisisnot
notoptional
optionalto
to
50 drive
drivevalue
valuecreation
creation
45 No Growth Both Growth &
40 Margin improvement
35 <1%
30 ~70% But many top performing
25 companies have used
20
both growth and margin
15
levers to deliver TSR…

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10
5
0
-5 Growth at expense …only a third have
of Margins
-10 delivered above
-15 median TSR through
-20 ~30%
-25
growth alone
-10 0 10 20 30 40

Average annual revenue growth, 2013-23 (%)

1. Of the top 500 Indian companies (excluding FI and real estate) by market cap as of 31 st Mar 2023, N=176 represents companies with 10-year average annual TSR above the
median for the 500 companies (21%) 8
Source: Capital IQ; BCG ValueScience® Center
As retailers think of this journey, need to be mindful of shifts in retail
today…

Pace Shifts: Shifts:

of growth Category Geo & Channel

Steady income growth, but Differentiated impact of Rising urbanization with

higher spend on experiences affluence across category non-metros driving

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& savings/investments growth consumption

Supply side Differing mix of Slower new user addition

investments indexed volume & ASP in online but robust
on small stores growth across sectors outlook for future

9
… and set in place an activist agenda for long term value creation

Improve
Create a Devise a
Unlock Accelerate relevance of
superior seamless and
efficiency in growth through format and
consumer personalized
the value chain new revenue merchandise to
proposition consumer

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with use of AI streams by each catchment
enabled by experience
to challenge leveraging through
business model enabled by
legacy models partnerships systemic
innovation Digital & GenAI
localization

1 2 3 4 5
10
Need to have the will to challenge existing trade-offs & models
Global fast fashion retailer based
…using agility & tech at each step of value chain
out of China…

Small initial prod.

Responsiveness Big data/AI for trend
batches; analytics for
dentification
forecasting

Fast fashion
retailer

Affordable Smart tools for design Data sharing with

Fast fashion & sample finalization suppliers; QC embedded

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luxury players
vertically in design
integrated players

Basics brand Platform driven price

Cost player Quality VOC for tracking
negotiation &
product-level complaints
procurement

$30Bn global brand with revenue CAGR of 90%+ in last 3 years vs 3-5% for peers
11
Are we energized to climb mount $2Tn?
$2+ Tn

$820-$840 Bn 2033

2023

12
13

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