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India’s E-Commerce Figures May Catch Physical Store Share By 2019

Despite its current problems with slow adoption of online retail, a new retail survey in India predicts that by 2019, e-commerce will pass physical store sales by 2019.

According to the report entitled “Think India, Think Retail” by property consultant Knight Frank India and lobby group Retailers Association of India, e-commerce will grow by 11 percent by 2019, while modern brick-and-mortar retail is expected to decrease by 13 percent over the same time period. Currently, modern retail is 17 percent of the economy, largely concentrated in India’s seven largest cities like the National Capital Region (Delhi, New Delhi) and Mumbai, while online retail sits at just 2 percent. Taken together, modern retail has a penetration of around 19 percent, which may grow to 24 percent by 2019 as “disruption” from sites like Amazon, FlipKart and Snapdeal continues to grow.

The growth of modern retail will also necessitate larger retail space, from 12.1 million square feet to over 70.3 million square feet, an estimated 5.6 percent annual growth rate (or 4.3 million square feet). The largest markets that could be primed for this growth are major cities like Hyderabad, where over 90 percent of retail is not considered modern and online penetration is below 1 percent. On the flip side, the NCR easily has the highest percentage of modern retail outlets of any major city in the country with 23 percent penetration, with 3 percent online penetration.

For many investors and startups, India is considered fertile ground for investment in a modern retail infrastructure, with interest in the online retail market in India growing as of late with companies like Ant Financial investing in Indian payments company One97 in order to stimulate the mobile payments industry there. Domestically, startups like FreeCharge are also looking to stimulate online and modern retail by creating incentives for customers to shop online and in stores through coupon reward programs for paying off bills.

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