Retailers Association of India (Rai) says that retailers are grappling with rising energy costs, logistics expenses and real estate rentals
The Indian retail industry is looking to sustain mid-to-high single-digit growth in the current financial year amid intense geopolitical disruptions. The Retailers Association of India (Rai) said that retailers are grappling with rising energy costs, logistics expenses and real estate rentals.
The industry body noted that these input costs, alongside fluctuating raw material prices, necessitate a focus on supply chain efficiency and value engineering to protect margins without hurting consumer demand. While total revenue remains on a growth trajectory, the divergence between categories (strong food/grocery versus weak premium apparel) complicates portfolio strategies for the coming year.
The industry is moving toward connected commerce, the total integration of physical and digital touchpoints into a single, unified customer journey. Rai added that while physical footfalls have seen a decline, the “intent to buy” among walk-ins has increased. FY 2027will focus on higher conversion rates through in-store engagement and AI-led personalisation.
Retailers are moving away from ‘one size fits all’ toward localised assortment strategies, ensuring that inventory matches regional demand patterns. Rai pointed out that the data reveals a resilient sector that has pivoted from ‘impulse-driven’ growth to a model defined by ‘purposeful consumption’ and digital democratisation.
The Year In Review
The period from April 2025 to February 2026 was characterised by a steady acceleration in consumption momentum. Retail growth, which began the fiscal year at 4 to 5 per cent, surged to 7 to 8 per cent by mid-year and peaked at 10 to 11 per cent during the festive season.
Experience-led categories, particularly Quick Service Restaurants (QSR), remained the standout performers with consistent growth of 10 to 16 per cent. Rai noted that High price sensitivity has led to strong traction in value segments, specifically apparel priced at Rs 2,500 and below. Conversely, premium segments like consumer durables saw a slower growth rate of approximately 3 per cent as consumers delayed big-ticket discretionary spending.
Direct-to-Consumer (D2C) brands have leveraged digital-first supply chains to bypass traditional middlemen, allowing for rapid scaling and localised assortment. On the other hand, social media platforms have transitioned from discovery engines to transactional hubs. By integrating ‘social proof’ with seamless checkout, retailers are capturing the ‘value-driven but active’ consumer where they spend their time.
The shift toward shared digital infrastructure and localised fulfilment centres has allowed niche players to compete with established giants, leading to a more diverse and competitive marketplace, the industry body added.
