India's Geography & Demographics Fuel Retail Attraction: Kumar Rajagopalan, Retailers Association Of India

As India's retail sector rapidly evolves amidst the surge of e-commerce and shifting consumer preferences, Kumar Rajagopalan, the CEO of Retailers Association of India (RAI), sheds light on the sector's trajectory. In an insightful discussion, he outlines the industry's key challenges, from establishing seamless omnichannel experiences to penetrating Tier-3 and Tier-4 cities. 

Rajagopalan delves into trends such as the rise of 'O2O' models, the convergence of physical and digital retail, and the impact of advanced technologies. With a commitment to promoting the growth of the retail sector, RAI has spearheaded initiatives for education, sustainable practices, and levelling the playing field for small retailers. Rajagopalan also offers a glimpse into the future, highlighting the government's role and the symbiotic relationship between established players and micro, small, and medium enterprises (MSMEs). Excerpts from the interview:

What are some of the key challenges that retailers in India are currently facing?

India is one of the largest growing markets in the world. Its geography, its young demography, and its aspiring population, makes it an attractive market for both local and international retailers. However, with this growth come challenges. One of the challenges is implementing a seamless omnichannel experience in India. Given the vast size of the country, varying consumer habits, and infrastructural gaps, creating an integrated experience is complex. The varying degrees of digital literacy and the presence of many small independent retailers who might not have the resources to invest in sophisticated digital platforms also add to the challenge.

Ensuring retail penetration in reach in Tier-3 and Tier-4 cities is daunting. Factors like infrastructural limitations, diverse regional preferences, and limited awareness about global or national brands can pose hurdles. The logistical challenges of reaching these cities, coupled with the need to customise offerings to local tastes and preferences, make expansion a multifaceted challenge.

Given India's vast geographical expanse and varied terrain, establishing a seamless and efficient supply chain is challenging. Factors like road conditions, varying state laws, and the complexity of managing inventory across such a vast area can lead to inefficiencies. Add to this, seasonal variations and regional festivals which can lead to fluctuating demand, making inventory management even more complex.

While these challenges are significant, the vast potential of the Indian market, combined with the nation's young and aspirational demography, means that overcoming these hurdles can lead to immense rewards for the retail industry.

What are some of the trends and innovations you are seeing in the retail industry in India?

We're observing a shift towards 'O2O' (Online to Offline) where customers explore products online and purchase them in-store. There is a significant movement towards omnichannel retailing, ensuring consumers receive consistent experiences across multiple touchpoints. Physical retail spaces are evolving into hubs for social interaction, entertainment, and dining. Rapid technological advancements such as AI, Machine Learning, and the rise of quick commerce are shaping the future. Video commerce is another emerging trend, especially with the anticipated 5G roll-out.

What initiatives or programmes has the association implemented to promote the growth and development of the retail sector in India?

RAI is a body that has created by retailers to promote retailers in general, and modern retail practices in specific. We are deeply committed to fostering the growth and vibrancy of the Indian retail sector. To that end, we have launched and backed a multitude of initiatives like education and training where we have collaborated with several universities to design programmes aimed at educating and training individuals. We also provide platforms where businesses can compare their operations against industry standards. We curate best practices, allowing retailers, whether established or emerging, to adopt efficient methods and technologies.

Aligning with our vision, we promote and encourage practices leading to sustainable consumption, ensuring the retail industry's growth benefits the economy while being environmentally conscious.

How do you see the future of retail in India, considering the rapid growth of e-commerce and changing consumer behaviours?

India is the world’s largest democracy, with a significantly large young demographic. This, clubbed with affluence and aspirations has resulted in the inclusion of local, national, and international brands creating a diverse retail environment. Another critical trend is the emphasis on creating a cosmopolitan ambiance in stores, ensuring the urban shopping experience is mirrored in non-metropolitan areas, albeit with a local touch.

The omnichannel approach also showcases that physical and digital platforms can coexist and elevate each other. We anticipate significant growth in both domains. While e-commerce provides convenience, physical stores offer a tactile experience that cannot be replicated online. The future lies in blending digital discovery with the physical shopping journey.

What are the key areas where the government can support and facilitate the growth of the retail industry?

The government's support in areas like digital literacy, infrastructure development, and fostering an environment conducive to both local and international investments can play a crucial role. The push towards ONDC, promoting digital commerce, and offering equal opportunities to small enterprises can spur growth. Policies focused on ease of doing business, infrastructure, and consumption can further propel the sector.

How do you ensure that small and independent retailers are not left behind and can compete with larger players in the market?

Initiatives like ONDC are instrumental in ensuring inclusivity. It allows sellers, regardless of size, to access the marketplace and compete fairly. By breaking down language and cultural barriers, ONDC ensures that even the smallest enterprises can thrive in the digital commerce era. Moreover, collaboration between larger retailers and MSME suppliers fosters a symbiotic cycle of success, with the larger entities supporting the smaller ones.