India's Retail Sector Growth Likely To Hit $2 Trillion By 2034: Study

While income growth remains steady and consumers are optimistic about their personal income outlook, there is a growing trend among consumers to spend on "experiences"

India's retail sector is projected to expand by 9-10 per cent, reaching $2 trillion in the next decade, states a report by the Boston Consulting Group (BCG) and the Retailers Association of India (RAI). Despite this positive outlook, organised retailers must maintain their performance and market shares amidst significant shifts that are influencing the pace and structure of growth within the sector.

While income growth remains steady and consumers are optimistic about their personal income outlook, there is a growing trend among consumers to spend on "experiences" or prioritise saving through newer or emerging methods, the report noted.

"The Indian retail sector will more than double in size to $2 trillion in the next decade - across categories and formats - and the successful retailers are the ones who continue to challenge the perceived growth profitability trade-off, " BCG Managing Director and Senior Partner Abheek Singhi said.

The report said, "India retail (is) expected to grow at 9-10 per cent to reach $2 trillion in the next decade." In the past, organised retail has typically surpassed the growth of underlying categories, but there was a slowdown observed in 2023, the report highlighted.

The recent quarters witnessed a slowdown in growth across segments, as highlighted in the report. It emphasised that retailers must address critical considerations to ensure sustainable growth in the future.

"By focusing on personalised customer experiences, exploring new collaborations, and leveraging AI for efficiency, we can propel India's retail industry towards unprecedented growth and global competitiveness," said RAI CEO Kumar Rajagopalan.

According to the report, store expansions are ongoing, and with rising urbanisation, higher consumption is anticipated in tier 1-4 cities. "Although e-commerce is still expanding, the rate of net new user addition has slowed down this year," the report stated, emphasising the need to reimagine the role and offering of online platforms.