Retail sector grapples with subdued demand particularly in rural areas: Report

Retail Growth Challenges: Amidst rising input costs and inflation, India's retail sector grapples with subdued demand, particularly in rural areas. However, urban centres witness robust spending, fueled by e-commerce platforms catering to diverse consumer segments, from the affluent seeking luxury goods to budget-conscious shoppers chasing deals, a recent report by KPMG said. 

Despite pandemic-induced setbacks, luxury brands find solace in their resilient online presence, attracting aspirational younger demographics.

Government initiatives, like the Open Network for Digital Commerce (ONDC), aim to bolster e-commerce adoption among traditional 'kirana' stores and startups, fostering transparent pricing and real-time transactions. Digital-native brands thrive, leveraging social media and innovative payment models to spur consumer spending. Yet, last-mile delivery costs pose logistical hurdles, particularly for low-value items.

India's rapid shift towards e-commerce positions it as a global digital market leader. Encouraging 'kirana' stores to embrace digital payments remains a priority, despite existing delivery mechanisms. With online shoppers projected to double by FY2026, retailers focus on data-driven personalization and seamless integration of digital and physical touchpoints to enhance customer experiences.

Physical Retail Dynamics

Despite e-commerce's ascent, physical stores retain relevance, buoyed by India's burgeoning middle class. However, challenges such as limited real estate availability and escalating rental rates impact profitability. Retailers pivot towards backend optimization, tech integration, and virtual reality enhancements to enrich in-store experiences and streamline operations.

Seamless Commerce Imperative: Adapting to shifting consumer preferences, retailers prioritize local relevance and convenience. Collaborations with regional supply chain players ensure product availability in smaller markets. Value and convenience offerings gain traction, complemented by sustainable initiatives and multi-channel communication strategies to engage diverse audiences effectively.