E-commerce will hit 8% of Indian retail by 2025: report

Technopak has assumed that the current year and next year, i.e. fiscal 21 and 22, will see disrupted business cycles, loss of jobs and retail opportunities in many retail categories, especially discretionary, as India emerges from the pandemic.

“As a result, Indian retail will see a contraction in FY21 which may range from 25-40% from the FY20 base,” the consultancy said. even they will face a period of zero growth to marginal decline due to supply disruptions and heavy pressure on domestic consumption.

This will be followed by a period of marginal recovery in FY22 “and from FY23, the Indian economy may witness a resumption of economic activities to pre-covid levels,” the book says. White. pre-covid projections which placed the Indian retail market to reach $1 trillion within two years – and will now be reached in FY25.

Indian retail, largely unorganized and still dominated by small shops, run by independent entrepreneurs, is poised for change as pandemic-induced restrictions accelerate digital adoption and entice new shoppers to log in.

Technopak estimates that modern commerce will grow at a CAGR of 15% to reach 18% of total retail share by 2025, largely driven by a growth in e-commerce, whose share in total retail is growing. stood at 4.3% in FY20 but will touch 7.6% by 2025. Consumer electronics will still occupy the largest share of online retail with 28% penetration, followed by footwear, pharmacy and clothing.

Additionally, retailers will also be looking at omnichannel or digital activation, especially in categories such as fashion, home, jewelry, especially in the post-covid world which is already pushing brands to increase their presence online. line.

The share of brick and mortar or modern commerce will increase from 8% currently to 10% over the next five years to reach $113 billion.

Meanwhile, the traditional retail share will increase from the current 88% to 82% by 2025 – the format will continue to grow.

“Despite this predicted growth of e-commerce for modern retail, the size and influence of traditional retail is expected to remain the same. Although in percentage terms, its share is expected to decline from the current 88% over the FY20 to 82% in FY25, in absolute terms, traditional retail is expected to grow from current $749 billion to $934 billion over the next five years,” according to Technopak estimates. .

Technopak expects modern retail and traditional retail to “co-exist and grow in the future,” especially as new modes of e-commerce develop. The interaction between the two retail channels “will create competitive conditions, but these will be negated by the growth of assisted commerce (traditional retailers as last-mile fulfillment partners for e-commerce players) and exclusive retail markets for both in many clusters,” Technopak said.

As covid prompts more retailers to look for new ways to reach shoppers, it will also lead to the convergence of offline and online.

“…in the future, modern retail will experience convergence and digital commerce will become central to the growth of modern retail. Pure brick-and-mortar retailers will increasingly embrace digital technologies for accelerated growth and pure e-retailers will appreciate the importance of brick assets and pluggable reach for accelerated growth plans,” the document states.

Meanwhile, over the next five years, the retail sector is expected to create 9.2 million new jobs, bringing the sector’s total employment to 45.5 million by FY25. Nearly 28 % of new retail jobs will be created by modern retail. “Contrary to popular belief that employment in modern retail will grow at the expense of traditional retail, modern retail will create complementary jobs in the areas of supply management, digital technologies and last-mile deliveries, with a higher proportion of skilled and semi-skilled jobs than traditional retail,” the newspaper said.