November 28, 2018 by Sujay Seetharaman

This report by PipeCandy chalks out the trends shaping the growth of the Indian Retail sector and estimates the Total Addressable Market (TAM).

For the purpose of this report, we restrict our focus to Business-to-Consumer (B2C) Retail.

The trends analyzed include Market size & Growth rate, Growth factors, Government Policies (FDI, GST and Demonetization), Modes of Payment and Private Equity and Venture Capital Investment growth curve. We also pinpoint the major challenges in the industry, the top players and their pan-India footprint, and estimate the Total Addressable Market through a combination of secondary research and proprietary data analysis.

India has approximately 14 million retailers. Nearly 99% of these companies – or 13.9 million retailers – are mom-and-pop stores such as owner-manned general provision stores, hand-cart and pavement vendors. The remaining 1% – or 0.1 million or fewer – belong to the Organized retailing sector and assume one or more store formats like Convenience store, Department store, Supermarket or Hypermarket.

The three behemoths of Indian retail, namely Future Group, Aditya Birla Retail and Reliance Retail have been making huge investments. Amazon has acquired a 51% stake in Aditya Birla Retail’s ‘More’ chain of supermarkets and is reportedly getting ready to obtain a minority stake in Future Retail.

Future Retail is the largest retailer in India with a huge physical footprint (both stores as well as warehouses and suppliers), and big expansion plans. And all of this physical presence will be available for use by if this deal is finalized.

The entry of these global players, however, does not threaten the local businesses in the short term, as we’ll see under the ‘FDI impact’ section. However, two major reforms that have impacted these businesses recently were Demonetization and GST. The former was a government reform that removed the high-value currency notes from circulation overnight in 2016. This led to a cash-crunch which severely affected individuals in businesses – The Micro, Small and Medium Enterprises in particular who are heavily dependent on cash. These difficulties have largely been ironed out but as an ironic consequence of Demonetization, 99% of the cash that was demonetized is now back into the system according to the Reserve Bank of India, leaving the dream of ‘cashless economy’ still a distant one.

The GST reform mandated these small business – many of whom previously grossly under-reported revenues to stay under the tax radar – to enter the tax system and become efficient in the way they operate. This, we believe will improve the efficiency of retail sector operations and give confidence to global retailers like Walmart and Amazon to bring such businesses into their fold for their India strategy.

The complete India Retail research report is available for free, here.

Sujay Seetharaman

Market Analyst @ PipeCandy

Currently donning the Researcher's hat. Talks to himself.