Despite the exponential growth of e-commerce and digital retail stores, India’s retail sector is still mostly unorganized, particularly in non-metropolitan areas. During the government-imposed lockdown due to COVID-19 pandemic, organized retailers of non-essential goods registered steep losses. However, technology has restored the faith of consumers in local stores as they remained operational even during the peak of the pandemic and helped meet their needs, says GlobalData, a leading data and analytics company.
GlobalData forecasts India’s retail market to grow at a compound annual growth rate (CAGR) of 10.4 percent between 2020-2023 to reach US$ 1,410 bn in 2023.
Hrishabh Kashyap, Retail Analyst at GlobalData, comments: “Technology has transformed the small physical stores from pure brick and mortar entities to ‘phygital’ stores. Leading technology and retail giants have invested in transforming these stores directly or indirectly.”
While Facebook is eyeing the sector through its alliance with Reliance Retail, Amazon has already tied up with local stores to provide a platform for many small shops and merchants on its Amazon marketplace. Walmart, on the other hand, has its own network of 28 ‘best-priced’ stores serving these local stores across the country.
Besides this, many fintech companies are competing for their presence in these local stores. In May 2020, Paytm announced an US$1bn loyalty program for kirana stores in India and launched online ledger services for them. Other fintech companies like PayNearby, Phonepe, BharatPe and Mswipe have launched different services for small shop owners, enabling better digital payments and delivery options at these stores.
Kashyap concludes: “Though mall-based large retailers, particularly grocery and other essential retailers, registered strong growth in the early days of the pandemic, driven by panic buying and hoarding, consumers have now returned to local shops for their need-based daily shopping requirements. Digital integration of local shops not only provides insightful data about consumer trends, but also helps companies understand the performance of their product, helping them strategize better.
“Once coined as a redundant business model, local stores, now empowered by technology, are serving consumers in India like never before. Personalized services, ease of payment and renewed customer trust will shape the growth of Indian retail post-COVID-19 era.”