India’s value retail industry, excluding food and groceries, is expected to expand to USD 170 billion by 2026, up from USD 111 billion in FY 23, according to Wazir Advisors.
This industry is forecast to increase at a compound annual growth rate (CAGR) of 15 per cent between 2023 and 2026, outpacing the entire retail sector’s expected 10 per cent CAGR to USD 1,219 billion by FY26.
Apparel is the top value retail category, followed by furnishings, cosmetics & personal care, and footwear. The Indian market has seen the entry and expansion of significant value retailers, particularly in smaller cities.
Following Trent’s Zudio’s success, many big retailers, including Reliance Retail’s Yousta, Aditya Birla Fashion & Retail Ltd’s Style-Up, and Shoppers Stop’s InTune, have entered the value apparel market, focusing on low-cost clothes, footwear, and accessories.
Nonetheless, unorganised entrepreneurs continue to dominate the value retail industry, accounting for 79 per cent of the market in 2023 and offering unbranded items at low rates. Organised retail, which includes both physical and digital media, accounts for 21 per cent of the industry in India.
The survey stated that the key to value retail in India is accessible pricing across critical categories, with a focus on the mass, economy, and mid-economy sectors.
Despite having existed in India for three decades, organised retail has largely concentrated on metro and tier one cities. As organised brick-and-mortar retail faces issues in smaller areas, digital channels are projected to fuel value retail development, with platforms such as Amazon, Flipkart, and Snapdeal expanding their emphasis outside big cities, the report stated.
From 1995 to 2010, India saw the growth of huge stores such as Shoppers Stop and Westside, which focused on mid-to-high-end products in urban regions. From 2010 to 2015, several value-oriented stores emerged, like M-Bazaar and Citi Style, which mostly served tier two and three cities. This transition resulted in a clear distinction between national and regional fashion champions.
“Players such as M-Bazaar and Citi Style, which primarily focused on the eastern and northern regions of the country, offered curated assortments for tier 2 and 3 markets. This triggered a sharper segmentation of value retailers into national and legacy retailers and regional champions, particularly in the fashion segment,” the report added.
Value merchants’ average transaction value is between RS 500 and Rs 2,500, with basket sizes ranging from 2.5 to 7 items. Value retail stores are generally located in tier three or smaller cities and towns, accounting for 50 per cent of their total presence in such marketplaces.
Despite the hurdles faced by the pandemic, numerous shops, like Vishal Megamart, Style Bazaar, and V Bazaar, have maintained a strong CAGR of more than 15 per cent from 2018 to 2022.
