45% of retail market growth is expected to come from online segment: Report

Over the last few years, digital brands have catapulted as online retail continues to drive overall retail growth in India.

According to a report by Redseer Strategy Consultants, the retail market is expected to grow from $335 billion to $510 billion by CY2026, with 45% of incremental market growth coming from the online segment.

The report stated that ecommerce is expected to grow 3X faster than offline retail, and by 2026, online could account for over 25% of sales in most categories, excluding grocery.

In terms of category sales, online accounts for 53% of mobiles, 44% of electronics, 20% of large and small appliances, 18% of fashion, 17% of beauty and personal care, and 15% of home and living.

Digital native brands are gaining a share over traditional brands, increasing their share of online sales from 25% in 2018 to 40% in 2022. According to the report, traditional brands have only 60% of the market.

Television and wearables have emerged as the two categories dominated by online-only brands driving the high demand.

"Wearables + hearables today are as big a category as television and will be significantly larger in the next four years. If there were no ecommerce platforms where these products were marketed online, perhaps wearable and hearable penetration would have been a lot lower in the country," the report added.

For a lot of categories, including mobiles, electronics, home and living, large and small appliances, fashion, etc., over 50% of incremental market growth will come from the online segment.

As online penetration increases in other categories such as fashion and beauty, digital brands in these categories, too, will emerge stronger and challenge the traditional brands for category market share.