After 9 percent growth in India’s retail market from 2016 to 2018, which is further expected to reach $1.4 trillion by 2021, India ranks 2nd in A.T. Kearney’s 2019 Global Retail Development Index (GRDI). The GRDI is a bi-annual study of the global retailing landscape, serving as a source for retailers, consumer goods manufacturers, and international service providers to understand which economies are growing, stagnant, or declining, and why.
Even as social media and e-commerce fuel the evolution of a truly global consumer, retailing in emerging economies continues to be affected by local realities such as internet connectivity, availability and cost of labor, and government factors ranging from taxation policy and trade wars to armed conflict. The 2019 GRDI ranks 30 developing countries – selected from a list of 200 nations – based on three criteria: achieving a “Country Risk” score above 35; having a population of at least five million; and enjoying a per capita GDP of more than $3,000.
The GRDI finds that rising consumer incomes and greater digital connectivity in India have both contributed to a 9 percent growth in the country’s retail market from 2016 to 2018, which is projected to reach $1.4 trillion by 2021. Retail accounts for 11 percent of the GDP, and is something the government continues to support through liberalized retail, e-commerce, and investment policies.
Indian consumers love online shopping, says the GRDI, predicting that the online retail market will increase at a CAGR of 25-28 percent to reach $55-60 billion by 2020. It will account for 25 percent of India’s total organised market, and grow to 37 percent by 2030.
The average online spend per shopper is expected to nearly double to $309 by 2030 from its current $183, with Indians favouring purchases of electronics and lifestyle products the most. Online grocery promises to be the next growth wave at a whopping 87 percent CAGR by 2022.
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The GRDI also finds that the continued growth potential of the Indian economy and retail market has attracted various international retailers including IKEA, Under Armour, American Eagle Outfitters, Miniso, Ted Baker, Go Sport, Replay, and Hummel. Fueled by international investment and domestic innovation, the Indian market is growing in sophistication, not just size — and premiumisation has become a significant trend in the country.
Although ranked 1st in the 2017 GRDI, India dropped to 2nd place in the 2019 GRDI rankings despite the optimistic findings of the report. China moved up from the 2nd spot to top the ranks, narrowly beating India in the overall score but posting a much higher “Country Risk” factor. Malaysia, Ghana, and Indonesia came in 3rd, 4th and 5th respectively.
The GRDI highlighted findings from other countries, such as:
- Despite sanctions from the United States and its allies, urban Russians still enjoy High Street shopping.
- China’s retail sector – valued today at USD $3.8 trillion and expected to reach USD $6.6 trillion by 2024 – is characterised by a blurring of the line separating offline and online retail, a model known in China as “New Retail.”
- The picture for global brick & mortar retailers doing business in China is promising. Tim Hortons opened its first Chinese outlet in February 2019 and will add 1,500 locations over the next 10 years. This June, Aldi opened its first Shanghai store and a month later Costco’s opened its first Chinese branch.
- Saudi Arabian government’s decision to provide increasing freedoms to women is expected to increase women’s labor force participation to 25 percent by 2020, and 30 percent by 2030.
- Thirty-eight percent of Ghanaians have access to internet services. Though that is a relatively small number, most of them are middle class consumers who are interested in modern retail. In April 2019, DHL launched DHL Africa eShop, an e-commerce app that brings more than 200 U.S. and U.K. retailers online to 11 African countries, including Ghana.
- Brazil’s e-commerce sector has also continued to expand despite economic woes, and is expected to grow at a 5 year CAGR of nearly 11 percent to $34 billion by 2024. The online share of national chain retail sales is also set to expand.
“This year’s GRDI surfaced sometimes subtle, but critical, trends,” said Greg Portell, an A.T. Kearney Partner and head of the Consumer practice. “In emerging economies, we see a growing consumer demand for modern retailing. And, in advanced economies such as India and China, we see the future of retail-markets appealing to local tradition operating alongside modern global retailers.”
Read the full report here: 2019 Global Retail Development Index: A Mix of New Consumers and Old Traditions.