Resilient Boom: India's Electronic Retailers Thrive Amidst Digital Age

Amid fierce online competition, India's physical electronic retailers show robust profitability, backed by OEM support and tactical localization. Despite economic challenges, consumer demand for innovative products and disciplined operations continue to drive sector growth.

In a marketplace largely dominated by online retailers, brick-and-mortar electronic retailers in India are reporting profitable operations. A recent report from Nuvama reveals the resilience of traditional retail outlets, attributing their success to disciplined operations and substantial support from Original Equipment Manufacturers (OEMs). OEMs offer critical resources such as materials and credit facilities to help sustain these retailers.

The report emphasizes the surprising profitability of brick-and-mortar stores despite intense competition from the online sector. This success is credited to the discipline and efficiency within the retail channel, often bolstered by OEM-provided support. The competition is highly localized; once a store gains a foothold in a particular region, it becomes difficult for newcomers to challenge their dominance.

However, the sector faces a muted demand outlook due to uncertainties in global economic recovery, weak household incomes, and slowed consumption credit. While there's anticipation for increased government expenditure in late FY25, it's not expected to fully offset these challenges. Still, the sector has seen a 10% compound annual growth rate from FY19 to FY24, driven by factors such as technological advancements, under-penetration, and rising consumer affluence.

(With inputs from agencies.)