India's retail market to hit $1.6 trillion by 2030, led by smaller players

India's retail sector is highly fragmented due to regional consumer preferences, high price sensitivity, and complex supply chains

India’s retail sector is on track to exceed $1.6 trillion by 2030 with organised retailers projected to capture over 35 per cent of the total retail market, exceeding $600 billion in value. While essential goods will continue to form the bulk of consumer spending, the next phase of expansion is expected to be driven by discretionary purchases, according to a recent report by consultancy firm Redseer Strategy Consultants.

 

Despite this promising outlook, the supply side remains highly fragmented, with no single dominant player, and is likely to remain so in the foreseeable future, the report said. As a result, smaller, regional, and unbranded brands are expected to make up over 70 per cent of the market.

   

Currently, only around 350 brands in India have surpassed $100 million in revenue. This is a stark contrast to China, where approximately 2,800 brands have achieved this milestone.

 

Why is India's retail market fragmented?

According to Redseer, three key factors contribute to the high level of fragmentation in the retail sector:

 

Regional preferences: India’s vast cultural and linguistic diversity has resulted in localised consumption patterns. Preferences for food, apparel, jewellery, and home décor vary significantly across different states and even cities.

 

Price sensitivity: A significant portion of consumers prioritise affordability, favouring smaller transactions over bulk purchases.

 

Complex supply chains: The presence of multiple unorganised intermediaries at sourcing and distribution levels has made supply chain management more challenging.

 

India’s diverse consumer base has also led to an extensive variety of stock keeping units (SKUs), with categories such as sarees, home décor, toys, spices, and cosmetics requiring a broad product range to cater to varying demands. 

 

General stores dominate but face challenges

General trade, which includes local kirana (neighbourhood grocery) stores and small retailers, continues to thrive due to their hyper-local focus and accessibility. However, general trade faces structural challenges such as irregular pricing, inconsistent availability, and lack of standardisation, which affect consumer experience.

 

Organised retailers expanding fast

Organised retail includes licensed, large-scale businesses like supermarkets, hypermarkets, and retail chains that follow tax and regulatory guidelines. Through better sourcing strategies, technological advancements, and improved infrastructure, organised retailers' value is expected to exceed $600 billion by 2030.

 

Market shift towards organised distribution

According to Redseer’s report, the retail industry is seeing the rise of multiple structured retail models that cater to a balance of product variety, affordability, and convenience. These models are evolving to meet the demands of India’s heterogeneous consumer base, allowing both offline and online retailers to carve out sustainable growth strategies.

 

The report highlights that organised retail is growing faster than traditional pan-India brands, shifting market dynamics. However, to remain competitive, brands, policymakers, and ecosystem players must invest in supply chain efficiencies, digital transformation, and consumer-centric innovations.