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For years, offline retail has served as a vital component of local communities. MSMEs (Micro, Small, and Medium Enterprises) are intricately woven into the fabric of Indian commerce. These brick-and-mortar businesses are a testament to the enduring spirit of entrepreneurship and their unwavering commitment to serving their communities. In fact, these small businesses are crucial to the Indian economy, contributing around 30% to India’s GDP and employing over 110 million people. This significant contribution underscores the importance of supporting and nurturing these enterprises to sustain economic growth and community well-being.
India’s Retail Landscape: An Overview
With a population of 1.42 billion, India’s retail landscape is diverse and vibrant, encompassing bustling local markets, neighborhood kiranas, and contemporary shopping centers. This blend of traditional and modern retail experiences creates a dynamic environment. The offline Indian retail market captures approximately 93% of the total retail market share and is valued at USD 941 billion. The future of India’s retail sector looks promising, with an estimated Compound Annual Growth Rate (CAGR) of 10% between 2021 and 2029.
How Offline Retailers Are Propelling the Industry Forward as MSMEs
Operating as Micro, Small, and Medium Enterprises (MSMEs), traditional offline retailers play a pivotal role in sustaining local economies and driving the overall industry forward.
Rising disposable incomes and increased spending power, particularly within India’s middle class, have been instrumental in driving substantial growth in the retail sector over the past decade. A NASSCOM report indicates that India’s retail sector accounts for nearly 10% of the country’s GDP and employs 8% of the Indian formal workforce, which translates to nearly 35 million individuals. By 2030, it is projected that this sector will create 25 million new jobs. MSMEs are crucial in enabling employment opportunities and contributing to the country’s overall economic growth.
Additionally, NeoGrowth’s NeoInsights report ‘Click & Mortar: The Evolution of India’s Retail Ecosystem,’ states more than 70% Indian shoppers value family shopping experience in a physical store. This preference allows retailers to create a symbiotic relationship that extends beyond monetary transactions, fostering strong community bonds. Businesses in sectors such as FMCG & Retail, Food & Beverage, and Consumer Durables & Electronics significantly contribute to growth in these areas.
Digital Transformations to Offline Retail
In the increasingly digital world, offline retailers remain unfazed by e-commerce growth. According to the NeoInsights Report, 80% of offline retailers say they are not threatened by the boom. In fact, offline retailers are incorporating a digital touch. For instance, offline retailers utilize social media marketplaces to list their products online to boost sales and expand to a larger customer base. Some offer free home delivery services and accept orders via messaging apps and phone calls catering to customers who prefer shopping from home. This amplified customer requests for home delivery services for close to 60% offline retailers.
Another interesting observation reveals that one in two offline retailers often receive customer requests to replicate products based on online reference images, a capability not typically available with online purchases. This highlights offline retailer’s ability to combine the best of both worlds.
The Future of Offline Retail
India’s retail market is poised to reach US$ 2 trillion by 2032 according to a BCG Report and offline retailers will play a pivotal role in this. While the road ahead seems bright, it is fraught with challenges, but also full of opportunities.
One primary challenge for offline retailers is the pervasive influence of e-commerce as a continuous threat to the convenience and extensive offerings on online platforms.
Nonetheless, personalized services, innovative marketing strategies, and loyalty programs can be leveraged to create a unique shopping environment. Offline retailers are deeply rooted in local communities. Utilizing this local connection for targeted and personalized marketing campaigns can strengthen customer loyalty and foster community engagement.
The future of India’s MSME sector is a powerful synergy between the online and offline space. By embracing click-and-mortar strategies, offline retailers can tap into the vast potential of online marketplaces, expanding their reach and customer base. Online giants can leverage the established networks and trust of physical stores to ensure seamless omni-channel experiences. The collaborative approach, fueled by technology and driven by a customer-centric mindset, holds the key to unlocking the true potential of India’s MSME boom, empowering local businesses, and enriching the lives of millions.
