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In the next few years, the Indian retail industry has the potential to reach the size of $2 trillion employing 25 million employees, so will be a big contributor to the GDP and growth of India, said Mohit Malhotra, CEO, Dabur.
While speaking at the Great India Retail Summit 2024, he said that key drivers changing India’s growth story are the growing affluence demographic, the emergence of Bharat, and the proliferation of technology.
“India is changing at a fast pace in demographics, psychographics, usage behavior, and purchase behavior as the consumer is changing, and along with this, their buying patterns are also changing. Mom-and-pop stores were taken over by the modern trade, and it is now replaced by e-commerce,” he said.
At present, e-commerce penetration in the country stands at 7-9 per cent as compared to 5 years ago at less than 1 per cent.
“At Dabur, e-commerce contributes to 10 per cent of the business. It’s amazing, the way technology is changing the retail landscape,” he said.
In India, credit card penetration stands at 6 per cent and UPI penetration at around 30-40 per cent, he added.
“Indian consumer is becoming richer as per capita income in the last 12 years has risen to double from $1,400 to $2,500 and is projected to be going at $4,000,” he said.
“Going ahead, India will have higher disposable income as 50 per cent of the population of this country will be earning around Rs 3 lakh plus every month. So, one in every four households will belong to the upper middle class and this leads to premiumisation and personalisation,” he further added.
Talking about the changing consumer behavior, he said, India is getting younger and this younger population will embrace brands, retail environments, and ecosystems that are talking about responsibility, sustainability, social improvement, respectfulness, and transparency. Clean label is the future of the country.
“Going ahead, consumers will embrace only those brands who believe in not marketing but in transparency, trust, and genuineness,” he stated.
In India, the growth is going to come from the nine metro cities, and 30-plus boom towns, along with 50, 000 plus villages in Bharat, he said.
“The consumption in rural is going to be 4.3X as compared to urban growth, which is going to be 3.5 X. So Bharat becomes as important as urban,” he asserted.
“Going ahead, rural shrinkage will happen because the economic power will move up in the country and India will also become urban and that’s what we call Viksit Bharat,” he further added.
The growth in rural India will be led by increased penetration and moving from unbranded to branded.
Apart from this, there is an emergence of new-age channels coming into the country like modern trade, quick commerce, e-commerce, and O2O but every channel has a different mantra and a different consumer mix, he stated.
“This retail change is leading to the birth of digital-first brands and paving the way for premiumisation and personalisation,” he said.
“Apart from this, the path to purchase is also changing now. Instead of TV commercials, mobile has become the path to purchase. Social media has become an important tool. So, almost 30 percent of our spending today is on digital media or social media,” he further added.
Concluding the session he said that at present, 70 percent of the business is still happening through traditional trade and to match the changing pace of retail, they will have to re-gear and recalibrate otherwise the margins will become thinner which will lead to a faster contraction of the traditional trade.
“Mom-and-pop will have to reconfigure them to self-service stores or standalone modern trade stores. They will have to adopt technology and install a POS and billing software,” he said.
“Every retailer has to become relevant. Retailers will have to gear up to be on ONDC, and become more technology savvy. Retailers will have to increase relevant assortments and channel financing will become important,” he further added.
Physical stores will become more experience center to touch and feel the product, but the purchase may eventually happen online, he concluded.
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