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Advanced analytics and AI will help Indian retailers unlock a ₹400 billion EBITDA opportunity: BCG-RAI Report

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The report also provides a roadmap for Indian retailers on how to get started with the adoption of advanced analytics and AI

Bengaluru: Retailers globally leverage advanced analytics and AI across the value chain, which will help to unlock a ₹400 billion EBITDA (earnings before interest, taxes, depreciation, and amortisation) opportunity over the next five years, says a joint report by Boston Consulting Group (BCG) and Retailers Association of India (RAI).

“Advanced analytics and AI have transformed retail globally and enabled many large retailers to leapfrog competition and build differentiation,” said Abheek Singhi, senior partner at BCG. “Indian retailers also recognize this opportunity and are optimistic about the potential of advanced analytics and AI to create value.”

The report highlights the varying relative importance of use-cases across different retail sub-sectors and illustrates examples of global retail leaders that have adopted advanced analytics and AI to solve critical business challenges and demonstrated significant value. 

“We are seeing a wide spread of use-cases being adopted by Indian retailers across the value-chain. A successful transformation needs more focus around managing people and processes rather than just different algorithms or technologies. Analytics transformation journey, if executed well, will yield enough benefit during its ignition phase to fund the next level of acceleration,” said Namit Puri, managing director at BCG.

Although there has been increasing focus on advanced analytics and AI in India, the report notes that there is significant headroom for improvement across dimensions. Large brick-and-mortar players and digital-first retailers have deployed analytics use-cases across the value chain, while mid-size retailers have taken a pragmatic approach with a few high-impact ones.

“Personalisation, accuracy, speed, and anywhere retail is expected in the modern age. Retailers who are able to utilize AI effectively will be the winners as we go forward. There is significant capability for retailers to be more accurate and many of the retailers are on the path, and on a war footing. Consumers can expect better standards of retailing as days go by, and also a much better offering of merchandise and services,” stated Kumar Rajagopalan, chief executive officer of RAI.

The report also suggests that retail players must build necessary capabilities required for advanced analytics and AI adoption to realize its full potential. Change management is a critical component and needs more attention from leadership than algorithms and technology. 

A strong foundation to the transformation journey requires a cohesive approach towards data, tech and people with change management embedded in the ways of working to deliver sustained value creation.

 

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