India’s online shopping market is expected to grow rapidly, reaching $325 billion by 2030, with a 21% compound annual growth rate (CAGR), according to Deloitte’s latest report released on Monday, October 7.
FMCG at 10%, Retail Sector at 8% and E-commerce at 10%
According to the report, India’s retail industry is expected to experience steady growth, with the overall retail sector growing at 8% annually. Online shopping, or e-commerce, will see even stronger growth at 21%. Everyday essentials, known as fast-moving consumer goods (FMCG), will increase by 10%. Additionally, sub-sectors within these industries will grow at rates slightly above or below these percentages, all around 10%.
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Interestingly, the rise in income among affluent and middle-class families is driving growth in the retail sector. These households will contribute nearly half (48%) of total spending, up from 32% previously. Notably, rich households are opting for larger pack sizes and premium products, indicating increased spending power. In contrast, lower-income consumers are choosing smaller, unbranded, or more affordable options.
At a Federation of Indian Chambers of Commerce and Industry (FICCI) event where the report was revealed, Union Minister of Food Processing Industries, Chirag Paswan, said India offers big opportunities both locally and globally. He noted, “Our population gives us diversity in every sector through new technologies and innovation.”
Paswan added that the FMCG sector’s resilience and adaptability are crucial for building a strong, sustainable economy. He emphasised that India must not compromise on product standards and should always ensure high quality.
Quick commerce held 35% of share of all FMCG online sales
Following which, in an interview with Economic Times, Anand Ramanathan, partner of consumer products and retail sector leader at Deloitte India said, “Online is about 10% of FMCG sales. Within that, quick commerce holds 35% of the share of all FMCG online sales. So, quick commerce will impact e-commerce chains and modern trade. There will be some cannibalisation within the modern formats itself. Considering the convenience that quick commerce provides and its entry into other categories like mobile phones, it will eat into the revenue of the larger players and that’s why they are also getting into quick commerce. Some e-commerce marketplaces have already done it. Others will also get into it,”
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As the country’s FMCG, e-commerce, and retail sectors rely on strategic mergers and acquisitions (M&As) for long-term growth and competitiveness. The report stated that about 60% of these M&As occur within related areas, while 30% aim to diversify. Ramanathan, during the report’s unveiling, said, “Across these consumer sectors, we observe common threads of driving premiumization, accelerating new product development and the adoption of digital at scale.”
Market shows growth in sustainable, eco-friendly products
Meanwhile, around 78% of consumers are now willing to spend more on healthy food and drinks. There’s a growing trend to avoid ultra-processed foods. People are also ready to pay extra for sustainable, eco-friendly, and minimally packaged products, as well as clean labels, ethically sourced goods, and brands with ethical labour practices as per report.
While unveiling the report, Nidhi Khare, secretary of the department of consumer affairs from the ministry of consumer affairs, food, and public distribution, mentioned, “Notably, the number of registered complaints has doubled since last year, indicating growing consumer confidence in national grievance redressal mechanism.”
Furthermore, the clean-label ingredient market grew at a rate of 20.7% per year from 2018 to 2022. Indian retailers are introducing more private labels that are 25-40% cheaper than other brands to attract price-sensitive buyers.
