The Indian retail sector, a cornerstone of the country’s economy, has been undergoing seismic shifts over the past decade. Valued at approximately $950 billion in 2023 (IBEF), this diverse market is being reshaped by the growing dominance of e-commerce, which currently commands around 10% of India’s retail landscape. However, rather than bowing to the digital behemoths, brick-and-mortar retailers are innovating to stay competitive, offering immersive experiences, tailored services, and region-specific products.
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Phygital: The Future of Retail
India’s brick-and-mortar retailers are embracing a ‘phygital’ model, merging physical stores with digital capabilities to offer a seamless shopping experience. According to a report by Bain & Company, nearly 65% of Indian consumers prefer a mix of online and offline shopping, highlighting the importance of an integrated approach.
Retailers like Reliance Retail are leading the charge by deploying AI-powered tools to track consumer preferences and personalise in-store experiences. Similarly, Future Group has implemented IoT-enabled systems to optimise store layouts and inventory management, improving operational efficiency and customer satisfaction.
Experiential Retail
To differentiate themselves from e-commerce giants, retailers are investing in creating memorable, experiential spaces. For example, Tata-owned Westside stores now feature interactive zones where customers can explore product combinations or attend styling workshops. A study by Deloitte indicates that 76% of Indian millennials value experiences over material possessions, making this approach a critical differentiator.
In another example, IKEA’s large-format stores in cities like Bengaluru and Hyderabad offer not just products but curated experiences with food courts, childcare facilities, and mock-up rooms showcasing design ideas, drawing over 3 million visitors annually (Business Today).
The Rise of Localisation
India’s cultural diversity has prompted retailers to tailor their offerings to regional preferences. Brands like Fabindia and Tanishq have capitalised on this by incorporating local traditions into their product lines. According to a report by McKinsey, localisation efforts have boosted sales by 15-20% for retailers focusing on region-specific strategies.
Moreover, D-Mart and Big Bazaar have curated grocery selections based on local cuisines, ensuring a strong emotional and functional connection with consumers. This hyperlocal focus has allowed brick-and-mortar retailers to stand out in an increasingly globalised market.
Omnichannel Excellence
Omnichannel retailing is gaining momentum as retailers aim to provide consistent customer experiences across platforms. The Retail Association of India (RAI) reported that omnichannel strategies can increase a store’s revenue by up to 30%.
For instance, Shoppers Stop introduced the ‘Endless Aisle’ feature, allowing customers to browse products online and have them delivered from nearby stores. Similarly, Reliance Retail’s AJIO.com enables seamless in-store pickups for online orders, catering to time-sensitive shoppers.
Engaging Communities
Community engagement remains a stronghold for brick-and-mortar stores. Many retailers now host cultural festivals, loyalty programme events, and influencer meetups to build deeper connections. McKinsey research found that Indian consumers are 60% more likely to buy from brands that reflect their values, making community-building a vital component of retail success.
For example, neighbourhood kirana stores have leveraged community trust to retain customers, even in the face of competition from grocery delivery apps like BigBasket and Zepto. By offering credit lines and personal service, these stores account for 75% of grocery retail sales in India (FICCI).
Sustainability and Social Responsibility
Environmental consciousness among Indian consumers has surged, with 71% of them willing to pay a premium for sustainable products, according to a Nielsen survey. Retailers are responding by adopting greener practices.
Fashion retailers like Lifestyle and H&M India have launched recycling programmes, encouraging customers to return old clothes in exchange for discounts. Additionally, companies such as Godrej Nature’s Basket have reduced single-use plastic across their outlets, aligning their operations with eco-conscious values.
Leveraging Technology for Personalisation
Technological innovation has become the backbone of modern retail. Augmented reality (AR) and AI are being deployed to enhance in-store experiences. Lenskart, for example, uses AR to allow customers to try on glasses virtually, bridging the gap between digital convenience and physical engagement.
Similarly, AI-driven analytics are helping retailers like Pantaloons tailor their product offerings based on customer preferences, leading to increased footfall and repeat purchases.
While the innovations are promising, the road ahead for brick-and-mortar retailers is not without challenges. Rising rental costs, supply chain disruptions, and shifting consumer behaviours necessitate continuous adaptation. However, the potential for growth remains immense.
A report by Deloitte predicts that India’s offline retail sector will grow at a CAGR of 8.2% through 2030, driven by Tier 2 and Tier 3 cities where e-commerce penetration remains low. As these markets mature, physical retailers have the opportunity to capture untapped demand by focusing on affordability, accessibility, and personalised services.
A Resilient Retail Renaissance
Indian brick-and-mortar retailers are proving that innovation and tradition can coexist in a competitive market. By offering unique experiences, localised products, and seamless omnichannel services, they are reclaiming their space in the hearts of consumers.
As e-commerce continues to expand, the reinvention of physical retail underscores the resilience of this sector, which remains an essential part of India’s economic and cultural fabric. For consumers, this means the best of both worlds—a dynamic, diverse retail landscape where choice, convenience, and community come together.
