India’s retail sector is estimated to grow at an impressive 13% CAGR till 2027, according to research by GlobalData. With over 12 million outlets spread across 19,000+ pin codes and 780+ districts, the retail industry reflects the diversity and dynamism of the country. However, the retail ecosystem remains heavily skewed, with organised brick and mortar retail accounting for just 12%, online contributing 7%, and a staggering 81% dominated by unorganised trade, according to a report by Unicommerce and Wazir Advisors.
This divide presents unique challenges and opportunities, calling for innovative solutions to optimise operations across the spectrum.
Organised retail: Driving efficiency through tech
Organised retail, which includes the key sub-verticals of food, apparel , electronics, departmental stores, footwear, and healthcare, contributes 91% of the segment’s topline, says a study by Knight Frank. To cater to this growing sector, it is essential to streamline both the frontend and backend operations.
At the front end, customer interface solutions such as point of sale (PoS) systems play a pivotal role. PoS hardware and software solutions streamline billing processes, reducing the ‘waiting in line’ metric that most retail and hospitality companies monitor. Enhanced with video analytics, RFID solutions, and terminal management systems, these tools provide insights that can be utilised to one’s benefit and ensure customer satisfaction.
Backend operations rely heavily on rugged hardware for supply chain and warehouse management, with tracking and tracing of products being essential. From managing farm-to-fork supply chains to ensuring optimal food packaging and compliance with best-before-date requirements, these solutions are indispensable for many operations. Reliable software, running error-free 24/7, further supports the backend infrastructure.
Another critical component is ‘infrastructure management service’, which ensures uninterrupted operations across the retail network. By partnering with reliable service providers, retailers can minimize capital costs while maintaining high uptime for IT infrastructure—a necessity for both frontend and backend processes.
Challenges in organised retail
Despite technological advancements, organised retail faces key challenges. Faster bill-out cycles remain crucial as stores are evaluated on a ‘revenue and cost per square foot’ metric. Moreover, the lack of integrated data analytics coupled with personnel shortages, and IT infrastructure performance issues continue to hinder operational efficiency.
Retailers must adopt holistic solutions that integrate frontend billing with streamlined backend logistics to meet these demands effectively.
Unorganised trade: The backbone of India’s retail
Unorganised trade, accounting for 81% of India’s retail and serving over 1.42 billion people, is the largest of its kind globally. The popular mom-and-pop stores, neighborhood kiranas, small quick-service restaurants, and local footwear shops are the backbone of India’s retail ecosystem.
However, the sector is under immense pressure from quick commerce and established online players offering steep discounts and rapid deliveries. This has led to declining customer bases, cash flow challenges, and unemployment.
The Open Network for Digital Commerce (ONDC) offers a promising lifeline for unorganised trade. By embracing digital transformation, these small businesses can modernise operations and compete effectively with organized players.
Key interventions include:
- Hardware devices: Affordable PoS devices to capture billing and card payments
- Billing software: Streamlined software to enhance transaction efficiency
- Localised delivery: Fast delivery services targeting nearby apartments (0-2 km radius)
- Stock optimisation: Ensures essential SKUs are consistently available
The road ahead
India’s retail sector stands at a crossroads, where the integration of technology and infrastructure can unlock unparalleled growth opportunities. For organised retail, adopting efficient hardware and software solutions will ensure faster operations and superior customer experiences. For the unorganised sector, digital transformation through initiatives like ONDC will empower small businesses, allowing them to thrive in an increasingly competitive landscape.
The author is Vice President - PSG Business, TVS Electronics.
Edited by Swetha Kannan
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)