E-commerce to have a larger share of the Indian retail sector by 2021
Driven by economic growth and digitalisation, the Indian consumer market is expanding and evolving at a rapid rate, and an increasing portion of this market is comprised of organised retail models and ecommerce, according to a new report from global professional services firm Deloitte.
India’s substantial population makes it potentially one of the largest consumer markets in the world. In recent years, a rapidly growing economy and the consequent increase in prosperity and purchasing power have led to the gradual realisation of this enormous potential.
A number of predictions have emerged in recent years surrounding the exact nature and amount of this growth. In 2017, the Boston Consulting Group released analysis that placed the value of India’s consumer market at $4 trillion by 2025. Earlier this year, Bain & Company placed this number at $6 trillion for 2030.
Big Four accounting and advisory firm Deloitte has been particularly active in its efforts to monitor the consumer market in India. In March last year, the firm predicted that the rapid growth of the consumer market is set to be driven, among other things, by the rapid increase in online consumption.
Milennials, who comprise 34% of India’s population, are the primary drivers of this growth in online consumption, given their relatively high levels of comfort with technology and online transactions. According to Deloitte, the overall consumer market will cross the $1 trillion mark by 2021.
A new study from Deloitte on India’s consumer market has produced similar results. Digitalisation is as rampant as ever in India, with the number of online users expected to surpass 850 million by as early as 2025, which offers a substantial online market for the ecommerce segment.
Growth in the ecommerce segment is supported by overall growth in the organised retail segment. India’s consumer market continues to be dominated by traditional retail models, which comprised 88% of the nearly $800 billion consumer market, while organised retails comprised 12%.
By 2021, Deloitte expects the consumer market to have reached $1.2 trillion, and 25% of this market will have been captured by the organised retail segment. Within this segment, the 3% that was occupied by ecommerce in 2017 is expected to expand to a 7% share by 2021.
The increased share is driven by an overall increase in the size of ecommerce in India. In 2017, the ecommerce market it India was valued by Deloitte at $24 billion, a figure that is expected to grow at a compound annual growth rate (CAGR) of 32% to reach $84 billion by as early as 2021.
By 2025, the segment will grow at a further CAGR of 19% to reach a value of $200 billion. During this time, the overall consumer market in India will reach an approximate value of $1.8 trillion according to Deloittes report, at a CAGR of nearly 8% from 2021
Similar to its earlier findings, Deloitte expects the increasingly digital consumer market to be dominated by new age consumers who, according to the report, “are more connected than ever. They are empowered by technology to get what they want, when they want and where they want.”
