India’s retail market to touch $2 trillion by 2033: BCG-RAI report
India’s retail market is poised for transformative growth, with projections indicating a leap to an impressive $2 trillion within the next decade, up from $820 billion in 2023, according to a report by the Boston Consulting Group (BCG) and the Retailers Association of India (RAI).
This forecast comes amid a paradigm shift in consumer behaviour, favouring experiences such as travel and entertainment over traditional product purchases, a trend that has notably influenced allocation of expenses in the past two years, the report said.
The report highlighted the consistent, albeit recently tempered, growth of the organized retail market in India against the backdrop of broader economic dynamics. Despite encountering potential short-term challenges— evidenced by a 5–10 percentage point dip in year-on-year growth this quarter and subdued performance by some large retailers—the sector remains buoyed by optimism.
“Profitability at the same time has generally remained consistent and largely in line with global peers,” BGC said in the report.
Since 2010, when the market was valued at $250 billion, India’s retail sector has surged by over 200%, driven by a burgeoning middle class and the entry of major international fashion and food chains.
Over the next decade, the market is expected to grow 9-10%.
These developments underscore the sector’s vast potential, albeit punctuated by significant performance variances among retailers, said Namit Puri, managing director and senior partner, BCG.
Success, Puri said, hinges on retailers’ ability to refine their delivery models, harness artifithe cial intelligence (AI) and analytics, and implement aggressive cost management strategies.
For instance, between fiscal year 2017-18 (FY18) and FY23, consumption of goods increased at a compound annual growth rate (CAGR) of while services grew faster, reporting 11-13% CAGR in the same period.
BCG tracked consumption trends for categories such as food, beverages, tobacco, clothing, footwear, housing and household products such as rentals and household goods apart from spends on transport, vehicles, maintenance, education, leisure, eating out or ordering in, insurance products, EMIs, personal care products, among others.
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The report also shed light on the notable increase in savings and investments among households, including a 30% rise in demat accounts between December 2022 and December 2023 and a growth in health insurance penetration.
“The competition for high-ticket categories such as jewellery or durables is going to be mutual fund savings or holidays. As consumers are actually investing more on experiences and are also dial8-9%, ling up their investments— retailers cannot take demand as a given,” said Puri.
Moreover, consumers are trading up to better products, driving demand for premium goods. The report revealed that spending by “elite households”—those earning upwards of ₹20 lakh annually—is significantly higher on luxury products such as cosmetics, air conditioners, microwave ovens, water purifiers, beauty and health services, cars, and leisure travel.
The report added that store expansion will persist and consumption in cities across all tiers will rise, driven by ongoing urbanization.