India's Retail Market to Double by 2035
India’s retail market is projected to more than double, surpassing INR 210 trillion by 2035, according to a new report from BCG and the Retailers Association of India (RAI). The growth is expected to be driven by AI adoption and shifting consumer trends. The report highlights that retailers with clear value propositions and digital agility are best positioned to succeed.
- The projected growth of India's retail market is underpinned by an expected annual GDP growth of 8% and a consumption compound annual growth rate (CAGR) of 10.6% between 2025 and 2035, a rate that outpaces other major economies like China (7.7%) and the US (5.5%). - While organized retail has historically grown faster than the overall market, this gap has recently narrowed, especially in offline channels, indicating intensifying competition and the need for more distinct strategies beyond store expansion. - An end-to-end AI transformation across merchandising, supply chain, marketing, and service can unlock performance gains of 40-60%, significantly higher than the 10-15% improvement seen from isolated AI projects. However, nearly 70% of the value from AI initiatives comes from internal skill-building and process redesign rather than just technology investment. - Consumer behavior is becoming more selective and less predictable, with purchasing decisions increasingly influenced by immediate needs and convenience, forcing retailers to move beyond discount-led strategies. - The rise of the Unified Payments Interface (UPI) is a significant factor, accounting for over 75% of all retail digital payments as of May 2025 and serving 491 million individuals and 65 million merchants. This widespread adoption reduces transaction friction for both online and offline retailers. - E-commerce is a key growth driver, with the online retail market projected to grow from $75 billion in 2024 to $260 billion by 2030. A major part of this growth is coming from non-metro areas, with Tier II and III cities expected to account for 64% of all online shoppers by 2030. - Key high-growth retail categories include food and grocery, which leads the market, followed by fashion and apparel, consumer electronics, and the rapidly emerging pet care segment. - Private labels are an increasing area of opportunity, accounting for 10% of retail sales in 2024 and allowing retailers to improve profit margins while offering competitive pricing to consumers.
