A third of internet users would be actively shopping online by the end of this decade, offline retail to take a back seat

• The Indian offline retail market shrunk 5% in the fiscal year 2021 to reach $810 billion.
• The Indian e-commerce market, on the other hand, grew 25% and is expected to grow at the same pace for the next five years.
• One in three Indians would be actively shopping online by 2030, as per a new report by Kearney.

India is one of the largest consumer markets in the world — both in terms of online and offline retail. While offline retail continues to be the largest contributor to India’s retail therapy, it has been losing some of its ground to e-commerce/online retail, especially since 2020.

According to the ‘How India Shops Online 2021’ report by management consulting firm Bain & Company, the Indian offline retail market shrunk 5% in the fiscal year 2021 compared to the previous financial year.


The Indian e-commerce market, on the other hand, witnessed a 25% growth in the same time frame. This was despite the fact that the South Asian country was under strict lockdown in the first two months (April and May) of FY21.

The Indian e-commerce market grew about 45%-50% between June 2020 to March 2021, the 10 active months of FY21, the report notes.

India is home to the third-largest online shopper base of 140 million. It is only next in line after China and the United States of America (USA).

As India’s digital economy grows, the number of online shoppers are expected to grow with it.

About one in three internet users are expected to shop online actively by 2030, as per the ‘Value E-Commerce: the next big leap in India’s retail market’ report by another consultancy firm Kearney.

The report notes that India is expected to have 1.1 billion internet users by then, compared to 700 million reported in 2020.

The report, published on August 17, also noted that the Indian retail market is expected to grow at a slower pace compared to the e-commerce sector.

While Kearney has predicted a 9% growth rate for offline retail to reach $1.4 trillion, Bain & Company has anticipated a 25%-30% per annum growth rate for e-commerce to reach $120-140 billion by FY26.

The lifestyle retail for clothes, accessories and apparel is going to be the biggest segment for both online or offline retailers in this decade. It is expected to contribute about $249 billion to Indian retail.

Groceries too are going to be a shining segment for the sector

‘The curve continues to steepen’ published by Goldman Sachs in November 2020 also emphasised that online grocery has seen an increase in adoption due to COVID-19. The consultancy firm expects groceries to be the fastest-growing category within Indian internet retail, reaching $37 billion by FY25 and translating into an online penetration of 6.6%.

How e-grocery trend fared for traditional players in the last one year:

Company	Impact
Nestle	Sales through e-commerce grew 97% year-on-year (YoY) between July-September quarter of calendar year 2020. It contributed 4% to overall domestic sales
Marico	E-commerce sales grew 39% in Q3 of 2020 and contributed 8% to overall domestic sales
Avenue Supermarts (DMart)	Its subsidiaries — including private label and ecommerce — reported 111% YoY increase in sales in Q3 of 2020
Grofers	Claimed its August 2020 sales were higher than Feb 2020, pre-COVID
BigBasket	Claimed to record $1 billion in gross sales in FY21, its highest ever

*Source: Company announcements, Goldman Sachs

Bain & Company said in its ‘How India Shops Online 2021’ report highlighted that the grocery market — both online and offline — grew 80% in 2020 compared to 40% in the previous year.

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