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India's retail market is projected to grow from INR 90-95 lakh crore in 2025 to nearly INR 210-215 lakh crore by 2035, driven by the country's rising economic position. The report by BCG and RAI highlights that retailers who focus on disciplined execution, structural transformation, and AI-led innovation will capture the most value. AI is increasingly influencing consumer decisions and agentic commerce, particularly among urban Gen Z shoppers. End-to-end AI adoption across merchandising, supply chain, and services can deliver 40-60% performance gains, making comprehensive transformation crucial for future success.
India's retail sector is on track for remarkable growth, with projections suggesting it could more than double to INR 210-215 lakh crore by 2035 from INR 90-95 lakh crore in 2025. The expansion is attributed to India's steady economic rise, positioning the country to become the world's third-largest economy, according to a recent report. Advertisement
The joint report by Boston Consulting Group (BCG) and the Retailers Association of India (RAI), titled Winning Codes for Retail 2035: Capturing the INR 200 Trillion Prize, highlights that the next phase of growth will favour retailers who combine focused strategies with disciplined execution and AI-led transformation. Retailers that embrace structural changes across consumer engagement, operating models, and talent development are expected to capture a disproportionately large share of the rapidly expanding market.
The study emphasizes that explicit trade-offs and disciplined execution are essential for offering differentiated customer value and sustaining profitable growth. It points out that consumer decision-making is becoming increasingly complex and context-driven, while technology especially artificial intelligence is shaping every stage of the shopper journey. Retailers are encouraged to revisit traditional assumptions, offer sharply differentiated value propositions, and integrate AI as a key driver of organisational redesign.
Abheek Singhi, Managing Director and Senior Partner at BCG, noted that India's retail sector is poised to expand into a nearly INR 200 lakh crore opportunity over the next decade. He highlighted that both offline and online operating cash flows are showing clear improvements, and that future winners will have strong value propositions, extensive AI and technology adoption, and robust execution capabilities.
The report also underscores the rise of agentic commerce, moving beyond experimentation into reality. Generative AI is increasingly influencing product research and purchasing, with nearly 42% of urban consumers in the US already using it. In India, urban Gen Z consumers are expected to accelerate AI-led shopping journeys as digital adoption grows rapidly.
Bharat Mimani, BCG Managing Director and Partner, explained that the larger opportunity lies beyond front-end consumer experiences. Retailers adopting end-to-end AI-led transformations covering merchandising, supply chain, marketing, and service can unlock performance gains of 40-60%, significantly higher than the 10-15% typically achieved through isolated AI use cases.
Kumar Rajagopalan, CEO of RAI, added that the retail sector enters 2026 with three realities: resilient demand, more discerning consumers, and continuous innovation by retailers. He noted that long-term success will favour those who treat transformation as a disciplined approach rather than a one-off project and consistently deliver across formats, channels, and price points.
Source PTI
FAQ
1. How is India's retail market expected to grow over the next decade?
According to a joint report by Boston Consulting Group (BCG) and the Retailers Association of India (RAI), India's retail market is projected to grow from INR 90-95 lakh crore in 2025 to nearly INR 210-215 lakh crore by 2035. This expansion is driven by India's rising economic position, urbanisation, and increasing digital adoption among consumers.
2. What role will AI play in India's retail growth?
AI is expected to be a key driver of growth across the retail sector. End-to-end AI adoption in areas such as merchandising, supply chain management, marketing, and customer service can deliver performance gains of 40-60%. Generative AI is increasingly influencing consumer decision-making, particularly among urban Gen Z shoppers, making AI-led transformation crucial for retailers aiming to capture future market share.
3. What strategies are recommended for retailers to succeed?
The report highlights that future winners will combine disciplined execution, structural transformation, and AI integration. Retailers are encouraged to redesign operating models, enhance consumer engagement, and build talent capabilities. Clear value propositions, consistent performance across channels and formats, and robust technology adoption are essential to sustain profitable growth in the rapidly expanding market.
4. What is agentic commerce, and how is it shaping the retail sector?
Agentic commerce refers to AI-assisted shopping experiences where consumers rely on intelligent systems for product research, recommendations, and purchasing. In India, urban Gen Z consumers are expected to accelerate AI-led shopping journeys, similar to trends already observed in markets like the US. This shift is transforming traditional consumer behavior and creating opportunities for more personalised, data-driven retail strategies.
5. What are the key takeaways from the BCG-RAI report for 2026 and beyond?
The report emphasises three realities for the sector: resilient demand, more discerning consumers, and continuous innovation by retailers. Long-term success will favour those treating transformation as an ongoing, disciplined process rather than a one-off project. Retailers who integrate AI across the full value chain, execute consistently, and innovate across formats and channels are expected to capture the largest share of India's expanding retail opportunity.
6. What are the projected benefits of AI-led retail transformation?
Adopting AI comprehensively from front-end customer experience to back-end operations can unlock significantly higher performance gains than isolated AI use cases. Retailers can improve operational efficiency, enhance customer satisfaction, optimise inventory, and achieve stronger profitability, positioning themselves competitively in a market projected to more than double over the next decade.
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