A reflection on how 2024 unfolded for the Indian retail sector
New Delhi: The year 2024 was a mix of opportunities and challenges for India’s retail sector, with aggressive expansions fueling growth on one hand and rising rental, input, and import costs presenting hurdles on the other.
Here’s a recap of the highs and lows of 2024….
The Highs
- Rapid retail footprint expansion
Both domestic and international brands aggressively increased their physical retail footprint in the year, focusing on tier-2 and tier-3 cities, to tap into underpenetrated markets. Several digital-first players also entered the offline market by investing in stores to provide customers with an omnichannel experience.
Menswear brand Blackberry, with a legacy spanning over three decades, expanded its presence with 30 new stores in 2024. Meanwhile, Snitch, a relatively young brand at just four years old, opened over 35 stores within the last 1.5 years. D2C menswear retailer The Bear House also ventured into offline retail this year, with Vivek Biyani’s retail chain Broadway making its debut in Delhi providing a stage for hundreds of D2C brands to make their physical presence felt.
Bagzone Lifestyles, the parent company of Lavie, launched 50 exclusive outlets, while Brand Studio Lifestyle, which owns Tokyo Talkies, added more than 25 stores in just six months. The Sleep Company also opened over 25 new stores across India in 2024, while Aditya Birla Group’s jewellery brand Indriya opened its 11 stores in just 17 weeks after its launch.
In the F&B sector, Bakingo marked the opening of its 100th kitchen, and Graviss Foods, the Baskin Robbins licensee, celebrated crossing the milestone of 1,000 stores across India and the SAARC region in 2024.
- Foreign brands entering India
In 2024, India continued to attract global brands. With a burgeoning middle class, increasing urbanisation, and a youthful, digitally savvy population, the country has become a hotspot for international retailers.
In fashion and beauty, American footwear brands HeyDude and Foot Locker partnered with Metro Brands, while South Korean skincare brands Mizon and Skin1004 entered with Katalysst and Tira, respectively. Fenty Beauty by Rihanna launched in India with Nykaa, Swedish lifestyle brand Gaston Luga debuted with Maison ID8 Brands, and German watch retailer Aigner Watches partnered with Titan. Moreover, Coty-owned beauty brand Max Factor arrived with House of Beauty.
In the F&B sector, American QSR chain P.F. Chang’s launched with Gourmet Investments, Belgian bakery brand Le Pain Quotidien re-entered with Bake & Brew Pvt. Ltd., and UK-based boutique café EL&N London and Armani/Caffe both debuted with Reliance Brands.
In the home segment, homecare brand Bissell made a comeback in India after six years. Thailand’s Index Living Mall and Turkey’s Konfor entered the market through a partnership with Creaticity, Brazilian houseware brand Tramontina launched its presence online, and Japan’s largest furniture and home-furnishing retailer, Nitori, entered India recently.
- Indian brands going global
Multiple homegrown brands leveraged e-commerce platforms, partnerships, and exclusive retail stores to establish a presence in global markets like the Middle East, North America, Europe, and Southeast Asia.
For example, Tanishq’s jewellery brand CaratLane opened its first global store in the US, while Tata Group’s value fashion chain Zudio debuted in the UAE. Curefoods’ F&B brand Sharief Bhai launched its first global outlet in Dubai, and D2C fashion label Beyoung entered the Middle East via e-commerce platform Noon Luxury fragrance brand Nisara partnered with Beauty Brands Global DMCC to become its exclusive distributor in the UAE.
Already-established Indian brands continued to broaden their global reach in 2024. Indian eyewear giant Lenskart opened more than 15 stores in the UAE and entered Thailand, while fine jewellery brand Malabar Gold & Diamonds extended its presence to new markets, including Australia, New Zealand, Egypt, and Bangladesh, through offline stores.
- More shopping malls
India saw a surge in the launch of new shopping malls in 2024. Developers focused on creating more neighbourhood shopping centres in tier-2 and beyond cities to feed the rising consumer aspirations in these regions. These are designed to offer convenience and accessibility, featuring a mix of essential services as well as local, national and global brands.
Some of the new malls launched in 2024 include HiLITE Mall in Thrissur, Lulu Mall in Kottayam and Kozhikode, PRM Centre Point Mall in Malda, Pacific Mall in Dehradun, M5 Ecity Mall in Bengaluru, Omaxe Chowk in Old Delhi, Langval Mall in Thanjavur, and Prism Mall and Aparna Neo Mall in Hyderabad.
The Lows
- Rising customer acquisition costs
The surge in digital marketing expenses, fueled by intensified competition on e-commerce platforms and social media, has driven up advertising bids and customer conversion costs.
Also, the fragmentation of consumer attention across multiple channels has necessitated higher investments in multi-channel campaigns to ensure visibility.
“In 2024, the D2C industry faced challenges like rising customer acquisition costs, intense competition, and oversaturation, making it harder for brands to stand out and maintain profitability,” said Ripal Chopda, CMO of the mattress-first brand The Sleep Company.
The rise of quick-commerce has elicited mixed reactions from retailers. Kanchan Achpal, CMO of luxury chocolate brand Smoor, shared that while Q-commerce led to a decline in direct website orders, it prompted the brand to introduce exclusive products on its website.
- Geopolitical obstacles
Geopolitical tensions, including trade restrictions and shifting international relations, have led to scarcity in the availability of raw materials and increased import costs.
“The jewellery industry was affected by geopolitical tensions, which disrupted the supply chain, particularly in sourcing precious metals and gemstones, leading to operational complexities,” said MP Ahammed, Chairman of Malabar Gold & Diamonds. He also said that the growing popularity of lab-grown diamonds posed a competitive challenge, as consumers increasingly sought these affordable alternatives.
Reinforcing this sentiment, Jignesh Mehta, MD and Founder of the solitaire jewellery brand Divine Solitaires, pointed out that the diamond industry encountered challenges due to weakened global demand, US inflation, and the ongoing conflict in Europe, all of which led to a decline in prices.
This impact has extended beyond the jewellery sector, influencing the fashion industry as well. Disruptions in Bangladesh’s textile and apparel sector exposed vulnerabilities in concentrated global supply chains, leading to delays or cancellations of garment orders.
- High input costs
This year, retailers have been grappling with high input costs, impacting profitability and pricing strategies. High raw material prices, driven by global supply chain disruptions and geopolitical uncertainties, have increased production expenses across various sectors, including textiles, electronics, and consumer goods.
Multiple food and beverage brands raised the issue. Aditi Handa, Co-Founder and Head Chef of artisan bakery brand The Baker’s Dozen said, “Fluctuating input costs were tough to navigate, especially as we worked to keep our products both premium and affordable for our customers.”
On a similar note, Himanshu Chawla, Co-Founder of the online cake delivery portal Bakingo stated that “2024 was a lucrative year for the bakery industry, but like many others, we faced challenges due to rising raw material costs, especially cocoa, which affected overall pricing and margins.”
Mumbai-based ice cream brand Natural Ice Cream also encountered challenges, including a cocoa shortage and a lack of dry ice during the peak season, which led to supply disruptions, as stated by Siddhant Kamath, Director of Naturals Ice Cream.
- Scarcity of prime retail spaces
The rapid expansion of domestic and international retail players has intensified competition for premium locations in high-street areas and popular malls.
“In India, the availability of prime spaces in malls is extremely limited, particularly in the premium sections we target,” said Ricky Vasandani, CEO of lab-grown diamond brand Solitario.
“We prioritise shop-in-centres over high-street locations because our product is still in its early stages. High-street locations often require customers to make a deliberate effort to visit, whereas malls provide a natural flow of foot traffic. Achieving the right level of visibility in these constrained spaces has been a persistent challenge,” added Vasandani.
- Environmental challenges
Environmental factors such as erratic weather patterns, and floods, have affected the production of key agricultural goods, leading to price volatility. These have forced retailers to adapt by diversifying supply sources, adjusting inventory strategies, and finding ways to maintain sustainable operations.
“The biggest global industry challenge this year, and likely to continue into next year as well, has been production and sourcing issues driven by climate change,” said Ayush Bathwal, Co-Founder of the cafe chain Third Wave Coffee.
“Unpredictable weather patterns and rising temperatures are impacting coffee-growing regions, leading to lower yields and higher prices. While we navigated through rising coffee prices, these challenges are expected to intensify, putting pressure on the industry to adapt through sustainable farming practices, and diversification of sourcing regions, to stabilize the supply chain,” added Bathwal.
