New Delhi: India's retail market has the potential to grow from USD 630 billion in 2015 to USD 1,100-1,200 billion in 2020 on the back of rising income levels and increased urbanisation, according to a Report.
"The overall retail market has potential to grow from USD 630 billion in 2015 to USD 1,100-1,200 billion in 2020.
Retail sector will reap the benefits of a large, young population adding to the workforce, 70 percent increase in income levels, nuclearization of families and increasing urbanization," the CII-BCG report said.
The report forecast the organised retail and ecommerce to grow rapidly to USD 140-160 billion and USD 45-50 billion respectively by 2020.
"Whilst the opportunity is massive, Indian retailers would need to transform themselves to win," Abheek Singhi, Senior Partner and Director, The Boston Consulting Group (BCG), India, said.
The report also highlights the challenges faced by Indian organised retailers in terms of value conscious & digitally connected consumers, lower bargaining power against suppliers, strong competition from traditional retailers & ecommerce as well as regulatory barriers.
The report estimates that by 2020, 350-400 million retail consumers would be digitally influenced i.e. their decision making process would be influenced by digital. These consumers would have retail spend of USD 240-250 billion.
"In this context, retail companies would need to examine how they can use digital to disrupt the way they do business.
Companies would need to build capabilities in omni-channel retailing, big data & analytics, agile IT and supply chain," it pointed out.
These factors result in lower profitability and return on capital for India retailers in comparison with other sectors and global retailers.