India's e-commerce market is likely to see exponential growth, rising to $550 billion by 2035, influenced by elements including growing internet penetration, enhancing digital payment ecosystem, and having a youth demographic which is highly technological and web-empowered, as indicated by a joint study by ANAROCK and ETRetail.
In 2024, the industry had grown to a valuation of $125 billion and was expected to see growth at a compound annual rate (CAGR) of 15% to possibly reach $345 billion in 2030.
E-commerce has emerged as a prime force of change in India's retail sector. The post-COVID mall vacancy rate has also witnessed a substantial reduction, declining from 15.4% in 2019 to 8.1% in 2024. The report suggests that the growth in e-commerce has been propelled by growing internet penetration, increased adoption of smartphones, and advancement in digital payment systems. The initiatives of the government, such as 'Digital India', along with better logistics and supply chain networks, have further boosted the growth.
Apart from metro towns, e-commerce firms are progressively reaching out to tier 2 and 3 cities. Online consumers from these cities have expanded from 46% in FY2020 to 56% in FY2024 and is expected to jump to 64% by FY2030, according to Anuj Kejriwal, CEO and MD of ANAROCK Retail.
The Indian retail industry as a whole is also looking to grow, with an estimated size of $2,500 billion by the year 2035, triple the size it was in 2019. This growth will be fueled by increasing disposable income, urbanization, a large youth population, and a growing middle class. The retail market now comprises huge malls, thriving online business, and traditional bazaars.
In 2024, new mall space supply across the top seven cities was a mere 1 million square feet, whereas absorption was 6 million square feet. The report points to post-pandemic recovery in leasing, with the demand being predominantly driven by experiential retail. Apparel and food & beverage sectors continue to be the strongest contributors to mall footfalls, contributing almost 45% to the demand.
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