India’s lower tier cities next growth frontier for retail with digital adoption


Phygital Retail Convention 2021 explores Indian Retail’s paradigm shifts on Day 1

MUMBAI, November 10: India’s retail growth is witnessing a tectonic shift towards lower-tier cities in a post COVID-19 era with increased digital adoption, according to industry experts at India’s largest retail intelligence event, which opened today at Renaissance Hotel Mumbai.

Speaking at the inaugural session of Phygital Retail Convention on Day 1, Anurag Mathur, Partner & Leader – Consumer and Retail Business, Strategy8, part of the PwC network, said, “B2B ecommerce players such as Udaan & ShopX are betting on these lower tier cities accounting for 60% of retail spend.”

Triple digit growth in online fashion sales from Tier 2/3 cities vis-à-vis sub 20% in metros and five times more investments in retail infrastructure in tier 2+ cities than tier 1 metro cities are some of the indicators, Mathur said.

By 2025, India’s online retail sales is estimated to rise to USD 104 billion from USD 37 billion in the year 2020 with social commerce pie within it rising to USD 18 billion from USD 2 billion, respectively. 

The significance of social commerce over e-commerce can be gauged from the fact that the total investment in social commerce in 2021 was an overwhelming USD 882 million.

Alluding to the digital trend, Damodar Mall, CEO – Grocery, Reliance Retail said that over half of their stores are based in small towns and around 60% of the total orders of JioMart were placed from Tier 2-3 cities of India.

Experts at the two-day convention including William Bissell, Chairman, Fabindia, Sandeep Kataria, Global CEO, Bata, BS Nagesh, Founder, TRRAIN among others pointed out that the pandemic crisis had pushed malls and retailers to be innovative and opt for e-commerce and this will shrink time to value cycles with rapid digital adoption.