45
/ 5
Min Read
The Indian retail sector is undergoing a transformation driven by the rise of e-commerce, quick commerce, and increasing consumer expectations. 60 percent of brick-and-mortar retailers believe that improved access to technology can enhance their competitiveness, according to PwC India’s latest report. However, despite this recognition, 53 percent of retail stores have yet to adopt tech solutions. To bridge this gap, retailers must leverage AI-driven analytics for personalized experiences, mobile applications for consumer engagement, and modern POS (Point of Sale) systems for operational efficiency. By integrating these technologies, traditional retailers can elevate customer satisfaction and optimize their supply chain processes.
Ravi Kapoor, Partner and Leader - Retail and Consumer, PwC India, emphasized this need, stating, “Indian retailers need to navigate the complexities of e-commerce—balancing online and offline channels, optimizing supply chains, and enhancing customer experience. The future of retail belongs to those who seamlessly integrate innovation with localized strategies, leveraging data analytics and consumer insights to tailor offerings and drive sustainable growth in a competitive market.”
The Growing Influence of Quick Commerce and E-Commerce
The rise of quick commerce is significantly impacting Indian retail, particularly in metros and Tier I cities. The report reveals that 42 percent of consumers in these areas prioritize rapid delivery for urgent needs, with over 65 percent relying on quick commerce for essentials like packaged foods. However, this trend has led to a 28 percent reduction in foot traffic to physical stores, demonstrating the increasing consumer preference for convenience and immediacy.
E-commerce, on the other hand, has posed a significant challenge for traditional retailers, with 34 percent of them reporting negative impacts from online shopping. Despite these challenges, traditional retailers are adapting by offering credit options, free home delivery, and personalised services. Additionally, they are focusing on omnichannel strategies to maintain relevance and attract customers who seek a seamless shopping experience across multiple platforms.
The Omnichannel Evolution: A Balanced Approach
While e-commerce continues to disrupt the market, research shows that consumers prefer a hybrid approach. Approximately 45 percent of consumers opt for a mix of online and offline channels for shopping. Certain categories, such as apparel and beauty, see over 50 percent preference for online shopping, whereas family-related products like fresh produce and home furnishings still maintain a strong in-store presence, with 36 percent of consumers favoring physical purchases.
To cater to these changing consumer behaviors, retailers must embrace a comprehensive omnichannel strategy. The report introduces a retail reinvention framework, urging businesses to blend traditional and modern approaches. By integrating AI-driven analytics and mobile applications, retailers can enhance customer interactions, gain valuable insights into consumer behavior, and align their channel strategies effectively.
Sanjay Dawar, Partner and Leader – One Consulting, PwC India remarked, “Brands must adapt to shifting consumer preferences by using technology and tailored channel strategies to maximise relevance and impact. PwC’s Retail Reinvention Framework helps businesses navigate these complexities, ensuring optimal resource allocation, strategic decision-making, and the ability to anticipate market trends and consumer demands effectively.”
Strategies for Offline Retailers to Stay Competitive
Traditional retailers are actively strategizing to thrive in a digital-first market. The report highlights that 64 percent of offline retailers are self-funding their marketing efforts, emphasizing the importance of a well-planned roadmap. Additionally, fairer logistics policies are seen as essential for creating an equitable playing field between online and offline retailers.
Another adaptation strategy is the rise of dark stores—small, local fulfillment centers that cater to online orders. The report notes that 21 percent of retailers are exploring this concept, while 10% have already implemented it to streamline operations and reduce costs.
Moreover, consumers are also reinventing their expectations in the omnichannel journey. According to the report, 40 percent of consumers prioritize flexible return policies, 39 percent demand efficient after-sales service, and 39 percent look for better payment options. These preferences are particularly significant in Tier II and III cities, where 41 percent and 39 percent of consumers, respectively, emphasize the need for robust after-sales support. Retailers must align their strategies with these evolving consumer demands to build loyalty and drive long-term success.
The Path Forward: Merging Innovation with Localization
As the retail landscape continues to evolve, it is imperative for retailers to strike a balance between innovation and localization. Leveraging geographic nuances and consumer utility profiles can help retailers tailor their strategies more effectively. By aligning channel actions with consumer preferences, businesses can optimize resource allocation and remain relevant in an ever-changing market.
Raghav Narsalay, Partner and Leader - Research and Insights, PwC India, emphasized this approach, stating, “Our research shows how dynamic the Indian retail landscape is and how the forces of technology combined with evolving consumer preferences across metros, Tier I, II, and III markets are driving retailers to innovate to maintain their competitive advantage. This requires a proactive approach towards embracing digital tools and fostering a culture of continuous improvement.”
The future of Indian retail will be defined by its ability to seamlessly integrate digital advancements with traditional retail strengths. By embracing technology, refining omnichannel strategies, and understanding the nuances of local markets, retailers can build immersive consumer experiences that foster customer loyalty and sustainable growth. The insights from PwC’s report serve as a roadmap for businesses aiming to navigate this rapidly evolving landscape and emerge as leaders in the retail sector.
(Courtesy: Indian Retailer, from the house of Franchise India)
