In spite of online grocery seeing a massive push due to the covid-lockdown, with a compound annual growth rate of 57%, it still commands 0.3% of the overall retail market, and will grow to 2.3% catapulting into a market size of $18.2 billion, by 2024
India’s retail sector, which has seen a steady recovery post the unlock, has reached 80% of pre-Covid gross merchandise value (GMV) levels, and is pegged at about $780 billion,this year, according to management consulting firm, RedSeer.
The consulting firm said that close to 65% of India’s retail is coming from the grocery market, and its recovery post-covid can be attributed to customer-affinity towards local kirana stores, which continued to be open throughout India’s lockdown. Recovery of the non-grocery segment is still predominantly led by offline, according to RedSeer.
“In midst of this covid disruption, there are multiple indicators that point to the fact that we have entered a sustained growth phase for Indian e-commerce and the best is yet to come, as e-commerce rises to solve the structural challenges faced by India's retail- which still has inefficiencies vs other markets," said Mrigank Gutgutia, director at consulting firm RedSeer.
In spite of online grocery seeing a massive push due to the covid-lockdown, with a compound annual growth rate of 57%, it still commands 0.3% of the overall retail market, and will grow to 2.3% catapulting into a market size of $18.2 billion, by 2024. This comes on the back of Indian e-commerce majors like Flipkart doubling down on this segment, and Reliance-Retail-backed JioMart also being a new entrant into the space, this year. Nonetheless, grocery continues to be a big push for Indian e-commerce, as its GMV, jumped by 73% between January to June, this year.
Gutguia adds that currently the biggest ongoing trend is the 'rise of integrated e-commerce' which not only digitizes the frontend but also the backend of India's retail ecosystem. This means that earlier e-tailers were trying to only solve for customer frontend and convenience, but now with the advent of ‘kirana-tech’, players have also started to digitise the backend of kiranas and solve for supply-chain bottlenecks.
According to RedSeer, the GMV of goods sold by kirana-tech players stood at $3 billion, in 2019. “Currently there are a varied set of e-grocery models operating in the market. Some focused on 'convenience play' and others on 'value play', while some do on-demand delivery while others do scheduled delivery. With so many models vying for a share of the online pie, we are confident that the e-grocery category is poised to rapidly grow to exceed $20 billion in GMV over the next few years. With growth coming from across both big and small cities and across both fresh and non-fresh categories," said Gutgutia.