Retail Report Card: Tale Of Recovery Amid Fierce Battle For Supremacy

Surviving the waves of the growth-driven ecommerce cruising ship, the retail landscape, particularly offline retail, showed signs of resilience this year. While the overall retail business ecosystem witnessed several phases of ups and downs throughout the year, it did pose healthy numbers. 

Key trends such as the participation from the non-metros, the shift towards cashless payments, the surge in quick commerce orders and debates over discounts made rounds in 2024. As ecommerce and quick commerce continued their upward growth trajectory, there were some serious concerns over the health and future of physical retail in the country.

Amid the ecommerce vs retail debate, the year 2024 had a lot to offer and it is crucial to take a look at what all happened in the ecosystem this year and what emerged as the ‘key defining trends’.

The Health Of Offline Retail
Despite rising debates around online platforms outperforming traditional 'brick and mortar' shops, offline trade showed resilience. According to the trade body Confederation of All India Traders (CAIT), Rakshabandhan-related trade alone has generated approximately Rs 12,000 crore this year, setting a promising tone for the festive season. The festival of Janmashtami saw the business over Rs 25,000 crore.

To put things in context, the trade during Rakhi was Rs 10,000 crore in 2023 and Rs 7,000 crore in 2022. Out of the Rs 12,000 crore business during Rakhi this year, only 7 per cent of the trade was conducted online. The trade juggernaut marched on during Ganesh Chaturthi as the industry body stated that the festival would boost business by Rs 25,000 crore. 

The data from CAIT showed that this year’s Diwali sales reached a record-breaking figure of Rs 4.25 lakh crore. Approximately 13 per cent of this was spent on food and groceries, 9 per cent on jewellery, 12 per cent on textiles and garments, and 4 per cent on dry fruits, sweets and snacks.

While initially perceived as a Western concept, Indian brands and retailers have seamlessly adapted Black Friday event, leveraging local cultural themes and cutting-edge technologies. As per data from CashKaro, mobile phones dominated the sales, accounting for 49 per cent of total purchases. Alongside other electronic devices, the electronics category contributed a staggering 66 per cent of overall sales.

Ecommerce platforms in India witnessed a significant surge in sales during the Black Friday weekend, with gross merchandise value (GMV) increasing by 24 per cent compared to the previous weekend, according to a survey by GoKwik.

Quick Commerce Disrupting ‘Kirana’ Stores?
The Kirana stores have been a backbone of the economy but they have been facing tough competition from the quick commerce players. A report by Datum stated that the market share of traditional Kirana stores in India is steadily declining as quick commerce platforms are gaining market share. An estimated USD 1.28 billion worth of Kirana sales are expected to move to quick commerce platforms in 2024, accounting for 21 per cent of the latter’s total sales. Kirana stores’ market share fell from 95 per cent in 2018 to 92.6 per cent in 2023 and is projected to drop further to 88.9 per cent by 2028.

The report predicted a 74 per cent growth in the quick commerce segment in 2024, making it the fastest-growing retail channel during the 2023-28 period. As per the report, 46 per cent of quick commerce users have reduced purchases from Kirana stores. Over 82 per cent of the buyers have shifted at least 25 per cent of their purchases from Kirana stores to quick commerce platforms.

As long as delivery costs remain lower than savings from channel consolidation, these platforms can offer competitive prices, further eroding Kirana stores’ dominance.

The Participation From Non-metros
Gone are the days when the ecommerce ecosystem growth was riding on the back of robust demand from the metro cities, now the enhanced participation from the tier-2, 3 and 4 cities have tilted the growth dynamics. Be it direct-to-consumer (D2C) brands, ecommerce platforms or offline retailers, the response from the ‘not-so-famous’ segment of the population has been excellent from the business perspective. 

A Redseer Strategy Consultants’ report mentioned that smaller cities displayed the highest growth rate in spending, climbing to 13 per cent in 2024 as the availability of discounts enabled tier 2+ customers to afford high-average selling price (ASP).

Highlighting the factors influencing the growth, the Redseer Strategy Consultants’ report added that the growth in the ecommerce market was fuelled by resilient consumer spending across categories, including quick commerce, electronics, fashion, beauty and personal care (BPC), home furnishings and groceries, with significant contributions from tier 2+ cities and increased per-shopper spending.

Festive Season’s Hiring Mania
As the festive season shopping on ecommerce platforms scaled newer heights this year, there was a major influx of job opportunities on such platforms to match the supply across the country. On 12 September 2024, Amazon India notified that it has created more than 1,10,000 seasonal job opportunities across its operations network ahead of the upcoming festive season. Flipkart stated that its supply chain will create over one lakh new jobs across over 40 regions this festive season.

Meesho, an ecommerce marketplace notified that it has enabled around 8.5 lakh seasonal job opportunities within its seller and logistics network.  As the numbers have suggested that the hiring has been going on a healthier trajectory, the contractual nature of such hiring has become the talking point. 

The Ecommerce Vs Retail Debate
On 21 August 2024, Union Minister Piyush Goyal expressed his viewpoint on the growth of ecommerce in the country by stating, “Are we going to cause huge social disruption with this massive growth of ecommerce? I don’t see it as a matter of pride that half of our market could become a part of the ecommerce network ten years from now; it’s a matter of concern.” Goyal accused the ecommerce giants of predatory pricing.

This sparked a great debate in the Indian business ecosystem. The question of whether ecommerce is breaking into the ‘brick-and-mortar shops’ category or the ‘touch and feel’ retail territory started making the rounds. While on the surface level, it may seem that ecommerce is growing at the cost of retail, the data paints a different picture.

The Pahle Foundation survey has stated that the offline vendors themselves have rejected the retail apocalypse narrative. As per the report, only 20 per cent of the offline vendors have reported a physical store closure in their neighbourhood since 2020, the year of the ecommerce boom in the country. Only 6 per cent of the offline vendors cited the consumer shift to online shopping as the reason for shop closures.

Growth Story of Amazon and Flipkart
When it came to choosing the ecommerce platform for their festive season shopping, Indian consumers trusted two of the country’s biggest online shopping platforms, Amazon and Flipkart. The Amazon Great Indian Festival (AGIF) was the most awaited shopping event for ecommerce purchases for at least 44 per cent of the urban Indians polled, while the Flipkart Big Billion Days was close on the heels with 42 per cent, as per the Ipsos IndiaBus Shopping Fiesta Survey.

The AGIF’2024 witnessed 140 crore customer visits during the season and saw over 70 per cent increase in sellers surpassing Rs one crore in sales compared to last year. On the other hand, Flipkart recorded an overall 7.2 billion visits during festivities from 1 September to 28 October 2024.

FMCG And Rural Demand
As the consumer goods industry grappled with poor demand in rural areas due to the slowdown reported in consumption since 2021, there was some extent of recovery this year. With most of the indicators impacting rural demand showing signs of positive growth, the fast-moving consumer goods (FMCG) sector was set to be realigned with the mainstream trajectory of growth.

Rainfall plays the most important role in deciding whether consumption will witness a boost or remain on the downside. The country has received surplus rains this year, so this has helped the demand to recover in many areas.

Experts state that rising disposable incomes, urbanisation, digital access and the growth of ecommerce and quick commerce drove consumption in Tier-two and Tier-three cities. Improved logistics and connectivity have turned these areas into major consumer hubs, where people are more open to spending on a diverse range of goods.

An Overall Retail Report Card
To summarise, it can be said that for the retail sector, the year was neither great nor bad. “Most of the year from April up to September, most of the companies, when we look at the retail industry, have grown about 5 per cent overall. However many of the retailers found that their like-for-like sales growth has been slightly negative,” stated Kumar Rajagopalan, the Chief Executive Officer (CEO) of the Retailers Association of India (RAI).

As the year comes to an end, it marked a healthy or rather intense competition between the rising stars of the business landscape (ecommerce) and the traditional leaders of India’s growth story (retail). 

Kishan Singh

BW Reporters The author is a trainee content writer with BW Businessworld