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HomeBusinessIndian e-commerce industry set to grow by 141% through 2025

Indian e-commerce industry set to grow by 141% through 2025

06 July 2021: With the COVID-19 pandemic denting the consumer sentiment due to the imposed travel restrictions and lockdowns in India, the retail industry has been at the forefront of the economic disruption. As the business operations ceased completely, consumers increasingly are now preferring the online mode to purchase goods and services. Consequently, the Indian e-commerce (online retailing) industry is expected to grow steadily by 141% from US$46.2bn in 2020 to US$111.4bn in 2025, says GlobalData.

GlobalData’s Q1 consumer survey (February 2021) in India reveals that 84% of the consumers are still extremely/quite concerned about the impact of Covid-19. Reportedly, India recorded a 11-year high wholesale price index (WPI) in April 2021, as India continues to reel under the second wave of the Covid-19. The unemployment rate in retail shot up by 8% in April (up by 1.5 ppts from March) causing 3.4 million salaried employees to lose their jobs.

Suresh Sunkara, Retail Analyst at GlobalData, comments “Retail industry is the second largest employer in India. Small and medium-sized firms alone employ about 400-450 million people. However, the heightened inflation rate along with an equally high unemployment rate is weakening the consumer sentiment and affecting their purchasing power.

“On the other hand, the liquidity in the retail businesses is driven by seasonal sales and collections. However, high fixed expenditures and the absence of seasonal inflow of cash are threatening the existence of retailers.”

Against this backdrop, the impact of inflation (retail goods) and Covid-19 pandemic on the trading of retailers in India shows itself in various ways including store closures, rise of independent retailer strength, polarization of store sizes and targeting of marketing efforts.

Sunkara continues “To trim down the expenses, some retailers are resorting to salary cuts. In addition, with customers fearing contracting the airborne virus, retail stores and malls continue to witness a precarious drop in physical footfall. Hence, more retailers are contemplating layoffs and downsizing.”

In the post pandemic scenario, Indian retailers across sizes are set to understand the power of omnichannel digital transformation. The most resilient ones surviving this crisis are the omnichannel retailers. As a result, retailers with such approach have better chances of survival due to the convenience and experience that they offer.

Sunkara concludes “Nevertheless, the long-term outlook for the Indian retail industry looks optimistic, supported by rising income, favorable demographics, the entry of foreign players and increasing urbanization. Meanwhile, Indian retailers should look up to their peers in China, Singapore and South Korea to chart a quick road to recovery.”

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