Exciting Times For India's Food Retail

Supported by a burgeoning economy, rising urban population, a fast-growing middle class, increasing disposable income and increased consumption rates, India has overtaken China to become the most favourable market for retail expansion.

- Gaurav Dewan

Within the retail industry, groceries and food account for the largest share of revenues in India, and India is the world’s second largest producer of food. By 2020, food and grocery segment is estimated to account for 66 percent of the total revenue generated from India’s retail sector.

The rise in gourmet, department and discount stores, along with hypermarts, e-tailers, travel retail, and quick service restaurants in the country shows a clear indication of the evolution of India’s food retail sector.

According to a report jointly published by Retailers Association of India and property consultant Knight Frank India, the emergence of restaurant aggregators, mobile wallets and the increased use of digital media have been the key drivers behind the evolution of food retailing.

Digital and Lifestyle Factors

It is no doubt then, that advancements in technology have brought about the growth of online retail (e-tail) in India. Online food and grocery portals have gained acceptance across the country, especially in metros, with Mumbai topping the charts in online shopping, followed by Delhi and Kolkata.

In fact, the increased competition from e-tailers is forcing brick and mortar stores and restaurants to go online and follow an omni-channel model of business. The growth of e-tailers has also been spurred on the back of lucrative prices, home delivery and quick service.

Besides this, the gourmet food sector has received an impetus, with the evolution and globalisation of Indian palates, and a section of Indians are willing to pay a premium for quality, variety and taste. This segment in India is largely concentrated among young, urbane Indians, aged 16-40 who spend a significant portion of their income on food.