According to management consulting firm, RedSeer, India’s retail sector, which has witnessed a smooth recovery post the unlock, has reached 80% of pre-Covid gross merchandise value (GMV) levels, and is pegged at about $780 billion, this year.
According to the consulting firm, almost 65% of India’s retail is coming from the grocery market, and its recovery post-covid can be attributed to customer-affinity towards local kirana stores, which continued to be open throughout India’s lockdown. Retrieval of the non-grocery segment is still predominantly led by offline, according to RedSeer.
In the middle of the pandemic, there are numerous pointers that lead us to the fact that we have entered a sustained growth phase for Indian e-commerce and the best is yet to come, as e-commerce rises to solve the structural challenges faced by India’s retail- which still has inefficiencies vs other markets, said Mrigank Gutgutia, director at consulting firm RedSeer.
Even though the online grocery witnessed a huge push due to the covid-lockdown, with a compound annual growth rate of 57%, it still commands 0.3% of the overall retail market and will grow to 2.3% catapulting into a market size of $18.2 billion in the next four years. This succeeds on the back of Indian e-commerce giants like Flipkart doubling down on this segment, and Reliance-Retail-backed JioMart also being a new entrant into this market space in 2020. However, grocery continues to be a big push for Indian e-commerce, as its GMV, jumped by 73% between January to June, in 2020.
Gutguia adds that presently the largest in-progress trend is that the ‘rise of integrated e-commerce’ that not solely digitizes the frontend however conjointly the backend of India’s retail system. this implies that earlier e-tailers were making an attempt to solely solve for client frontend and convenience, however currently with the arrival of ‘Kirana-tech’, players have conjointly begun to alter the backend of kiranas and solve for supply-chain bottlenecks.
According to RedSeer, the GMV of products sold-out by Kirana-tech players stood at $3 billion, in 2019. “Currently there square measure a varied set of e-grocery models operational within the market. Some centered on ‘convenience play’ et al on ‘value play’, whereas some do on-demand delivery whereas others do scheduled delivery. With numerous models vying for a share of the net pie, we tend to square measure assured that the e-grocery class is poised to speedily grow to exceed $20 billion in GMV over ensuing few years. With growth returning from across each massive and tiny cities and across each contemporary and non-fresh classes,” aforementioned Gutgutia.
In the unlock phase local stores show faster sales recovery than organised retail
Neighbourhood departmental stores and small shops could bounce back faster with higher sales and transactions in comparison to organised retail, as the country slowly opens up after months of lockdown due to COVID-19. Bengaluru-based digital payments player Innoviti Payments said smaller stores were doing three to four times of sales compared to larger organised retail as India entered into Unlock 1.0.
“Within two weeks of lockdown opening, the sales in small shops in these (consumer durables) categories jumped to 44 percent of January numbers, while organised merchants grew to about 21 percent in the same geographical area,” said Innoviti Payment Solutions in a report published in May on changing Indian consumer behavior in the post-COVID world.
“Large retailers have 80 percent of their decision making centralised, hence they cannot switch supply partners easily or make changes based on different cities, this has caused more shelves to be empty at such stores compared to the local grocer,” said Agrawal.
However, some early signs of recovery in merchant sales could be driven mainly by pent -up demand from the last few months, he added. Overall, these businesses will not be able to get back to their normal transaction volumes before January 2021, Agrawal noted.