New Delhi: Online retail in India will touch $170 billion or 8% of the total retail market of the country by 2030 growing at a CAGR of 21%, higher than the growth that offline retailers will see in the same period, brokerage firm Jefferies said in a report dated April 18. According to estimates by Jefferies, online retail is currently 25% of the total organised retail market: by 2030 it can jump to 37%.
Jefferies conducted a survey of over 550 online shoppers across several cities in India. It tracked their shopping purchases in a survey that threw up interesting results.
The brokerage noted that shoppers in India are now pivoting to online driven by convenience over discounts that drew the initial shoppers to the internet in India. While electronics and apparel have continued to see high demand, Jefferies said it has seen the emergence of newer shoppers buying into personal care and groceries a lot more in what can be seen as an imminent threat to offline retailers.
While electronics and apparel continue to be among the top shopped for categories online, Jefferies said, "Our survey results imply that apparel is the most shopped category online, but categories such as electronics, grocery and personal care may see higher recruitment of consumers on online platforms, where consumer preference for shopping online is higher."
Currently, Indian online shoppers spend ₹12,800 per shopper per year; that number is expected to rise to ₹25,138 by FY 30 as shoppers extend shopping online to segments beyond electronics and apparel.
Over the last few years, online retailers such as Flipkart, Myntra, Jabong, and Amazon have caused a sizeable dent into the shares of offline retailers such as Kishore Biyani-backed Future Group, Tata’s Trent, Arvind Retail, and Reliance Retail —which too have pivoted to an “omni-channel" retail model that helps shoppers buy both online and offline. Even though initially, online retailers used hefty discounts and an advertising blitzkrieg to get Indian shoppers to shop largely for electronics, and apparel, Jefferies noted that online shopping has now become a more convenience driven habit. “Online retail is increasingly becoming a convenience format, rather than just a discounting one," Jefferies said.
It also added that online discounting has come down from its peak promotions offered in FY13 and FY14. “We believe that the impact of online discounting has come off from its peak and given the under penetration of both organised and online retail in India, there is strong head room for growth for both channels," the report said.