E-Commerce in India to Triple, Reaching $550 Bn by 2035: ANAROCK report

The Indian retail sector is on an unprecedented growth trajectory, fueled by the dynamic rise of e-commerce and the revival of brick-and-mortar retail spaces, particularly shopping malls.

India’s e-commerce market, which stood at $125 billion in 2024, is set to touch $345 billion by the end of 2030, and an astounding $550 billion by 2035, according to the latest ANAROCK report. This represents a compound annual growth rate (CAGR) of 15 percent, outpacing the growth of traditional retail channels. The report attributes this expansion to multiple factors, including:

- Increased Internet penetration: With over 900 million active internet users, India has one of the world's largest digital consumer bases.

- Smartphone adoption: The affordability and accessibility of smartphones have driven online shopping habits across urban and rural India.

- Digital payments: The Unified Payments Interface (UPI) and other digital payment methods have eased transactions, making online purchases seamless and secure.

- Government initiatives: Programs like ‘Digital India’ and improved logistics infrastructure have propelled e-commerce adoption across all demographics.

Notably, consumer behavior has evolved significantly, with non-metro cities becoming a major driver of online retail. In FY2024, Tier II and III cities accounted for 56 percent of total online shoppers, up from 46 percent in FY2020. By FY2030, this share is expected to climb to 64 percent, reflecting a deepening penetration of digital retail into India’s heartland.

The Rise of Organized Retail and Mall Expansion

While e-commerce continues to soar, organized retail—comprising modern retail outlets and shopping malls—is also experiencing rapid growth. The overall retail industry in India is projected to reach a market value of $2,500 billion by 2035, growing at a steady 6 percent CAGR. The share of organized retail, currently at 12 percent, is expected to rise to 17 percent by 2035, signaling a shift from traditional markets to modern retail formats.

Shopping malls have become a crucial part of this evolution. In 2024, the top seven cities in India saw a new mall supply of only 1 million sq. ft., while the demand for retail spaces was six times higher, with 6 million sq. ft. absorbed. This disparity indicates a severe supply gap, underscoring a robust demand for quality retail spaces.

“New supply is lagging far behind demand. Current trends suggest a post-pandemic rebound in mall leasing, largely driven by experiential retail,” said Anuj Kejriwal, CEO & MD, ANAROCK Retail. “Apparel and the F&B sectors are the biggest footfall drivers, contributing nearly 45 percent of total mall demand.”

Another key trend is the significant drop in mall vacancy rates. Before the pandemic, mall vacancy in India stood at 15.4 percent in 2019. By 2024, it had declined to 8.1 percent, reflecting increased leasing activity and retailer confidence in offline retail spaces.

Tier II & III Cities: The Next Retail Hotspots

One of the report’s most crucial insights is the rising importance of Tier II and III cities in India’s retail expansion. With e-commerce firms and major domestic and international brands aggressively tapping into these markets, smaller cities are witnessing a retail renaissance.

By 2030, over 26 million sq. ft. of mall space is expected to be added in these cities, providing a structured retail environment that complements the growing online shopping trend. This surge is driven by rising disposable incomes, increased urbanization, and an aspirational consumer base that seeks the shopping experience offered by large-scale malls.

The Future of Indian Retail: A Hybrid Approach

The future of India’s retail landscape is increasingly hybrid, where e-commerce and brick-and-mortar retail will coexist and complement each other. Key factors influencing this hybrid model include:

- Omnichannel strategies: Leading retailers are integrating online and offline shopping experiences, enabling customers to browse online and pick up in-store, or vice versa.

- Technological advancements: AI-driven personalization, AR/VR shopping experiences, and data analytics are enhancing consumer engagement across channels.

- Sustainability initiatives: Retailers are focusing on eco-friendly supply chains and sustainable packaging, aligning with evolving consumer preferences.

- Experiential retail: Shopping malls are transforming into lifestyle hubs with entertainment, F&B, and leisure options, making them a destination beyond just retail.

(Courtesy: Indian Retailer, from the house of Franchise India)