India’s march toward becoming the third-largest economy globally is driving a shift in consumer behaviour, with rising per capita income translating into higher consumption.
India’s retail sector, which witnessed a sharp post-pandemic rebound with a 20% growth rate, has recently seen its expansion moderate to just 5%. However, industry leaders remain optimistic about a turnaround.
Kumar Rajagopalan, CEO of the Retailers Association of India (RAI), told The Hindu that the industry is now poised to grow at 9% to 10% in the near future. This expectation is backed by increased consumption, favourable demographics, and growing disposable incomes.
“Immediately after the pandemic, the retail sector got into a 20% growth, but in the last one year the growth has slowed to 5%, but we expect the growth to get into 9% to 10% range soon,” said Rajagopalan.
India’s march toward becoming the third-largest economy globally is driving a shift in consumer behaviour, with rising per capita income translating into higher consumption.
“Everything is going towards better consumption. As per capita income increases, consumption increases. So I think there’s a lot that’s happening,” he said.
Rajagopalan added that India’s large population and growing middle-class base are providing the support needed to sustain this consumption-driven growth.
The Indian retail landscape is also undergoing a structural transformation. A decade ago, only 4% to 5% of the sector was organised. That figure has now jumped to 17%, according to RAI.
“This conversion from unorganised to organised retail is happening on many fronts,” Rajagopalan explained. “Traditional businesses are transitioning as the next generation takes over. E-commerce is pushing this shift, and government policies like GST, digital payments, and ease-of-doing-business initiatives are further accelerating the trend.”
Despite positive trends, the sector is grappling with rapid changes. One of the most notable shifts is the rise of the omnichannel model, where consumers buy both online and offline.
“The business is completely changing. There is intense competition now as barriers to entry have been shattered. Everyone is trying to adapt to the fast-changing needs of today’s digital-first consumer,” Rajagopalan noted.
He pointed out that customer attention has become harder to secure.
“There’s a fight for a share of customers’ time. Retailers now have to create messaging that is engaging, clear and attractive in a very crowded and distracted environment,” he said.
On the human resources front, he flagged the talent gap as a major issue. While the industry employs over 40 million people — making it one of the largest employment sectors after agriculture — retaining quality talent and developing skilled professionals remains a pressing challenge.
