India, the country with the second largest population that includes affluent middle class, rapid urbanization and solid growth of technology, has immense potential for the retail industry. Now, the country is the most favorable market for retail expansion which is well-supported by the rapidly growing economy, rising urbanizing population, increasing consumption rates and a burgeoning middle class.

The retail industry that was estimated to be around US$660 billion in 2016 is now increased to an estimated US $800 billion with an average growth rate of 10% per year. Of the total retail industry, the grocery and food account for the largest share in the country's revenue. Today, the grocery retail constitute for 69% of the total retail market of the country. Thus, it exceeds the US grocery retail market with significant margins.

Grocery Retail Formats

The grocery retail market is still in its nascent stage with only 8% organized section and 92% unorganized grocery retail. The unorganized sector is predominantly dominated by kirana stores, general stores, and street markets. According to a report, India has more than 12 million kirana stores that still follow the traditional business practices.

The organized section includes the department stores, discount stores, supermarkets, hypermarkets, e-tailers and cash-and-carry formats.

Drivers of Grocery retail Market

The food industry in India is growing tremendously and it is driven by the Supply side, the Demand side and the Regulatory channels.

To increase the organized market ratio and to bring the traditional stores into the mainstream of the business, infrastructure development, omnichannel marketing, easy credit availability and private labeling are few of the major change-driving agents on the supply side.

Similarly, the change-driving agents on demand side include increased urbanization, increasing disposable income, growing population, inclination towards healthy and hygienic lifestyle, consumer awareness and penetration of technology into the lives to name a few. These factors are majorly consumer-oriented and represent the shifting lifestyles.

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