The report, titled Winning Codes for Retail 2035: Capturing the ₹200 Trillion Prize, highlighted India’s consumption-led growth trajectory and the structural shifts redefining the sector. With GDP growth of 8 per cent in 2025, India remains one of the fastest-growing major economies and is on track to become the world’s third-largest economy by 2030.
India’s retail market is set to more than double to ₹210-215 trillion (~$2.31-2.37 trillion) by 2035, driven by strong consumption growth and structural shifts, according to a report by BCG-RAI.
With GDP expanding in 2025, AI-led transformation is emerging as a key differentiator.
The report suggests retailers must sharpen focus, embed AI end-to-end and redesign operating models.
Private consumption, particularly discretionary and services spending, continues to power this momentum. Between 2015 and 2025, India recorded consumption Compound Annual Growth Rate (CAGR) of 4.5 per cent. Looking ahead, consumption is projected to grow at 10.6 per cent CAGR between 2025 and 2035, outpacing China (7.7 per cent), the US (5.5 per cent), Germany (3.7 per cent) and Japan (1.3 per cent).
The report noted that while organised retail has historically grown faster than underlying categories, this gap has narrowed recently, especially in offline channels, signalling the need for sharper differentiation and operating model evolution.
Indian consumers are increasingly context-driven, with rising expectations around convenience, differentiation and seamless experiences across missions and segments. The study underscored that traditional playbooks are no longer sufficient in an environment marked by fragmented attention spans and hybrid shopping journeys.
Technology—particularly artificial intelligence (AI)—is rapidly reshaping discovery, decision-making and transactions. Globally, nearly 42 per cent of urban US consumers have already used GenAI tools. With internet adoption in India having grown more than three times since 2016 and strong elasticity for digital technologies, AI-led commerce is expected to scale rapidly, especially among Gen Z in urban centres.
Beyond customer-facing use cases, AI is transforming core retail functions including merchandising, supply chain, pricing and marketing. The report highlights that a functional, end-to-end AI transformation can unlock efficiency gains of 40-60 per cent, compared with 10-15 per cent typically achieved through isolated use-case deployments.
However, nearly 70 per cent of value creation from AI initiatives stems from internal enablers such as skills, capability building, process redesign and effective change management, rather than technology alone.
To capture disproportionate value in the journey towards a ₹200 trillion market, the report outlined key imperatives for retailers. It states that retailers must define sharply focused target cohorts and make explicit trade-offs to deliver a differentiated customer value proposition profitably, with disciplined execution anchored around a clear consumer focus.
Marketing and shopping experiences need to be reimagined in light of agentic commerce and AI-guided discovery, which are moving from experimentation to reality. Organisations must pursue end-to-end, function-led AI transformation and reimagine talent and operating models to sustain competitive advantage.
As India’s retail sector enters its next growth phase, success will favour players that combine clarity of focus with relentless execution and embed AI across the shopper journey and enterprise backbone, positioning those that adapt to structural shifts in consumer behaviour, technology and operating models as leaders in the next decade of retail expansion, added the report.
“India’s retail story is an inspiring story—the sector is poised to expand into a nearly ₹200 trillion opportunity over the next decade. More importantly—both the offline and online operating cash flows are showing clear and sharp improvement. The winners of the future will have sharp differentiated value proposition, at scale use of AI and technology and excellent execution,” said Abheek Singhi, managing director and senior partner at BCG.
“Retail is entering a decisive new phase where AI is no longer a peripheral experiment but a core driver of competitive advantage. Agentic commerce is already influencing how consumers discover, evaluate, and purchase products globally. Given India’s strong digital adoption curve, we expect AI-led shopping journeys to accelerate rapidly in urban India, particularly among Gen Z consumers,” said Bharat Mimani, managing director and partner at BCG.
“The winners of the next decade will be those who treat transformation as a discipline rather than a project, and who build trust by delivering consistently across formats, channels, and price points,” said Kumar Rajagopalan, CEO, RAI.
Fibre2Fashion News Desk (SG)
