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Indian online retail to grow over five-fold in 5 years: study

10 February 2015

To the discomfiture of brick-and-mortar stores, a study shows that India's rapidly growing e-retailing market will grow by more than five times across major cities in the next five years.

The report titled Think India. Think Retail by Knight Frank, a global property consultancy, and the Retailers Association of India (RAI) said that the total retail spending in the top seven cities is projected to more than double to Rs7.65 lakh crore ($127.5 billion) in 2019 from Rs3.59 lakh crore ($59.8 billion) in 2014, and the share of e-retail is expected to grow to 11 per cent in 2019 from 2 per cent in 2014.

The seven cities are Delhi NCR (National Capital Region), Mumbai, Kolkata, Pune, Hyderabad, Chennai and Bengaluru.

E-retailing across 23 product categories considered in the study is expected to increase to Rs83,900 crore in 2019 from Rs7,200 crore in 2014 - a compound annual growth rate (CAGR) of 64 per cent.

The growth of e-retail will correspond with a decline in the share of brick and mortar modern as well as non-modern retail. Brick and mortar modern retail's share is expected to decline to 13 per cent during the reference year from 17 per cent in 2014, while non-modern retail will decline from 81 per cent to 76 per cent over the same period.

According to Knight Frank India chairman and managing director Shishir Baijal, ''The e-commerce industry is booming like never before, and this, coupled with high disposable incomes, has led to a spurt in the Internet culture that aims to change the dynamics of the brick and mortar modern retail segment.''

RAI chief executive Kumar Rajagopalan said, ''There are several catalysts playing concomitantly in favour of e-retail, the most significant being the strengthening ecosystem that makes buying online better every day. Increasingly, malls and high streets are feeling the heat with the growth of e-tailing.''

In terms of retail space, the requirement for brick and mortar modern retail in India is expected to increase 92.1 million sq. ft in 2019 from 70.3 million sq. ft. in 2014, the report says.

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