4,000 new retail stores needed to meet growing food demand: Report

The success of e-commerce companies like Amazon and Walmart may have taken a toll on retail stores, but those are still a strong force. A report by Motilal Oswal reveals that the growing demand for food and grocery can be met by 4,000 new retail stores.

According to the brokerage firm, there has been an expansion in the footprint of retail stores, its revenue and overall growth, which is indicative of their formidable future.

The report said that the food and grocery market, as well as the apparel space, would see a compound annual growth rate (CAGR) of 27 percent and 22 percent respectively. It predicted the size of the retail market to triple by FY25. “To cater to robust demand, about 4,000 new store additions will likely be required over the next eight years (2017-25), offering a huge runway of 15 percent CAGR in retail footprint over the next eight years,” the report stated.

Startups and other businesses like Paytm have realised that offline stores are much more attractive to customers because they like to touch and feel the products before they spend money. This is why Paytm has partnered with retail chains like Reliance Digital or Croma.

Modern retail formats are appealing to consumers because of the ease of shopping and flexibility of prices. Therefore, old kirana shops may have to improve their offerings to survive this competitive market.

Retail stores may now be looking at modest operations in order to cut costs and make the business more profitable. Customers should expect leaner store layouts, the promotion of private labels, and membership-based and reward-based models.


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