Retail market in India to cross Rs 200 trillion as consumer behaviour evolves

New Delhi: India’s retail market is expected to more than double to Rs 210–215 trillion by 2035 from around Rs 90–95 trillion in 2025, according to a joint report released by Boston Consulting Group and the Retailers Association of India at the Retail Leadership Summit 2026 in Mumbai.

The report examines structural shifts in consumer behaviour, the growing role of technology and the strategic choices facing retailers as the sector enters a new phase of expansion.

Titled Winning Codes for Retail 2035: Capturing the Rs 200 Trillion Prize, the report points to continued consumption-led growth in India, supported by an estimated GDP growth of 8% in 2025. India is projected to become the world’s third-largest economy by 2030, with private consumption remaining a central driver. Over the next decade, the retail market is expected to expand significantly, with opportunities emerging across both organised and digital channels.

The findings note that consumer decision-making is becoming more complex and context-driven, with rising expectations around convenience, differentiation and personalisation. Technology, particularly artificial intelligence, is increasingly shaping discovery, purchase and service experiences. 

While nearly 42% of urban consumers in the United States have already used generative AI tools, the report suggests India’s high internet adoption and digital elasticity position it for rapid uptake of AI-led commerce, especially in urban markets.

AI is also reshaping retail operations, with functional transformation across supply chain, merchandising and marketing expected to deliver efficiency gains of 40–60%, compared with smaller improvements from isolated use-case deployments. The report emphasises that most of the value from AI adoption is likely to come from internal capability-building, process redesign and organisational change rather than technology alone.

It adds that organised retail has historically outpaced overall category growth, though this gap has narrowed in recent years, particularly in offline channels. As a result, retailers may need to refine their value propositions, focus on clearly defined consumer segments and adapt operating models to remain competitive in an increasingly fragmented market.

Commenting on the findings, Abheek Singhi, Managing Director & Senior Partner at BCG, said, “India’s retail story is an inspiring story - the sector is poised to expand into a nearly Rs 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”.

Bharat Mimani, Managing Director & Partner at BCG, added, “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.”

Mimani added, “The bigger opportunity, however, lies beyond front-end experiences. Retailers that adopt an end-to-end AI-led functional transformation approach across merchandising, supply chain, marketing, and service can unlock 40–60% performance gains, far exceeding the incremental impact of isolated use cases.” 

“To win in India’s complex retail landscape, companies must make deliberate strategic choices: define clear focus segments, align decisions around a distinctive core value proposition, and embed AI across the shopper journey to drive personalisation, improve conversion, and reimagine the overall shopping experience,” he further explains.

Kumar Rajagopalan, CEO of the Retailers Association of India, said, “India’s retail industry enters 2026 with three parallel realities: demand remains resilient, consumers are becoming more discerning, and retailers are innovating. The next decade’s ₹200 trillion opportunity will not be captured by sales growth alone.

It will be captured by retailers that make explicit business model choices, embed AI across the shopper journey, leverage AI to power agent-led functions, and rebuild talent and operating models with sustained operational excellence. 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."

The report concludes that as India’s retail sector enters its next stage of growth, retailers that align strategy with evolving consumer journeys, integrate AI across operations and invest in talent and organisational change are likely to be better placed to capture value in an expanding market.