India’s retail market is set for transformative growth, projected to reach $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 growth forecast comes amid shifting consumer preferences, with an increasing focus on experiences like travel and entertainment over traditional product purchases.

The report highlights that while the organized retail market in India has shown consistent growth, recent economic dynamics have tempered this expansion. Despite facing short-term challenges, including a 5–10 percentage point dip in year-on-year growth this quarter and subdued performance by some large retailers, the sector remains optimistic. Profitability has largely remained consistent, aligning with global peers.

Since 2010, when the market was valued at $250 billion, India’s retail sector has surged by over 200%, driven by a growing middle class and the entry of major international fashion and food chains. The market is expected to grow at a rate of 9-10% annually over the next decade.

Namit Puri, Managing Director and Senior Partner at BCG, emphasizes that the sector’s potential is vast but marked by significant performance variances among retailers. Success in this evolving landscape will depend on retailers’ ability to refine their delivery models, leverage artificial intelligence (AI) and analytics, and implement aggressive cost management strategies.

The report also notes a shift in spending patterns, with services growing faster than goods. Between fiscal year 2017-18 (FY18) and FY23, consumption of goods increased at a compound annual growth rate (CAGR) of 8-9%, while services reported a CAGR of 11-13% during the same period.

These insights underscore the dynamic nature of India’s retail market and the strategic adjustments retailers must make to thrive. The sector’s growth, influenced by changing consumer behavior and technological advancements, positions it for a significant expansion in the coming decade.