Dr. Hitesh Bhatt, Director – Marketing and Communication & Editorial Director – STOrai – Retail Magazine By The Industry For The Industry, Retail Association of India, speaks about how India’s retail business transformation happening due to various factors, how technology has become a base for explosive retail growth and challenges faced by Retail businesses and possible solutions. Excerpts…
India is on the threshold of retail revolution. Can you explain the growth factors responsible for such an outlook?
India is indeed on the threshold of retail revolution. Retail has been not just growing at a fast pace in India but has been undergoing tremendous transformation. As per an RAI – Deloitte report, The Indian retail industry is expected to grow to USD 1.1 trillion by 2020, registering a CAGR of 8.79% between 2000 and 2020.
There are various factors that are driving this growth. One of the biggest is the consumer: rising disposable incomes, rise of nuclear families has increased consumption. Moreover, the Indian consumer who has become digitally savvy and exposed to international lifestyles is buying more through all retail channels. The other very important factor is policy environment. There have been considerable positive changes from both central and state governments to facilitate ease of doing business and encourage retail growth. Some of them include: GST, furthering opening up of FDI in retail and several state-level retail trade policies.
The third and important factor is Technology that is at the base of all, it is accelerating the pace of growth and enabling transformation.
Post demonetization and GST, how do you see their impacts on retail businesses?
GST has been one of the most transformative steps by the Government in the recent years towards facilitating the promised ease of business. Retailers tell us that it has made life easier for them.
GST as well as demonetization have played an extremely important role in formalization of the economy.
Retail developments are majorly concentrating in Tier-II and Tier-III cities. Your take on this trend.
Tier-II and Tier-III cities are where real changes are happening as this is where aspirational India lives. The metros are all saturated. Tier-II and Tier-III towns are also rapidly adapting digital technology. The new business models such as ecommerce and mobile based e-tailing are increasingly becoming popular in India across tier I, II and III cities. The aspirational segment in the Tier II & III cities has shown a high desirability to keep up-to-date with the latest trends in style and fashionable merchandise. The trend was expected and will accelerate in the coming years.
With global giants fiercely vying for Indian e-commerce space and customers increasingly opting for online shopping, what is your forecast for Physical Retailing by 2023?
Physical retail isn’t going anywhere, though it will not be the same as it is today. Physical retail of 2023 will actually be Phygital retail. Stores will not be places to shop but centres of experience driven by technology such as IoT, Artificial Intelligence, Virtual and Augmented Reality.
According to you, what are the challenges faced by retail businesses? Your suggestions for possible solution.
The biggest challenge for retail is that despite being the second largest contributor to GDP, it has still not received industry recognition. This has lead to challenges like difficulty in access to funds to Indian retailers. While we get foreign retailers to India, we should also focus on making Indian retail brands worthy of going international. That is only possible when they have easy access to funds. Also there should be a level-playing field for players across formats and channels of retail.
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