Breaking News:Retail challenge is not consumer demand but demanding consumer– What Just Happened

India’s retail market is on track for unprecedented growth, projected to nearly double from Rs 90–95 trillion in 2025 to Rs 210–215 trillion by 2035, according to a joint report by the Boston Consulting Group (BCG) and the Retailers Association of India. This expansion is being powered by robust GDP growth and sustained private consumption. Yet, despite the bright prospects, the report warns that retailers face a far more nuanced challenge than simply finding customers — today’s consumers are more selective, context-driven and demanding than ever before.

“You’re not going to see linear growth. I do think real markets give you peaks, give you troughs, and you need to keep reinventing yourself to be more desirable for customers as a brand,” P Venkatesalu, CEO of Trent, has told ET recently while commenting on Zudio’s recent growth moderation. Organised retail no longer consistently outpaces the market, particularly offline, signalling the rise of a consumer base that demands relevance over mere availability.

The rise of the contextual consumer

The BCG-RAI report highlights a fundamental shift in consumer behavior. Buying decisions are increasingly shaped by immediate context such as what consumers need, when they need it, and how seamlessly it can be acquired. Price comparisons across channels are now automatic, and expectations for service, convenience, and personalisation are at an all-time high.

This trend echoes insights from earlier ET survey of Gen Z shoppers. The ET-Snapchat Gen Z Index had found that younger consumers prioritise authenticity, speed and experience in retail interactions. Gen Z shoppers are digital natives who move fluidly across platforms, increasingly guided by AI-driven recommendations, social discovery and peer validation. This cohort is not just price-conscious. They want value aligned with relevance and personal taste.

As a result, traditional growth levers like store expansion or discount-driven sales are losing their effectiveness. Retailers can no longer rely on scale alone. They must curate experiences, segment sharply and embrace technology to stay ahead.
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Artificial intelligence is emerging as a key enabler of this transformation. According to the BCG report, AI is already reshaping product discovery, recommendations, and transaction experiences, especially in urban markets with high internet penetration and among Gen Z consumers. Retailers who can leverage AI at scale to anticipate needs, personalize interactions, and streamline multi-channel operations are positioned to win.

In practical terms, this is already being tested by industry leaders. Reliance Retail, for instance, is piloting a search and discovery platform designed to enhance its multi-channel strategy, integrating online and offline experiences to meet increasingly exacting customer expectations. The company is piloting the platform at its apparel stores such as Trends and Yousta, and plans to roll it out at its retail chain Smart Bazaar later this year, Damodar Mall, chief executive officer of Grocery Retail at Reliance Retail, told Reuters. Customers can scan a QR code at stores to use the platform, which then helps them discover and search for products tailored to their preferences, Mall said.

Such initiatives illustrate that the future of retail success hinges not just on products, but on how intuitively a brand can serve its customers.

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Selectivity shapes product and brand strategies

Consumer selectivity extends beyond the digital sphere. ET has reported that private label adoption is rising sharply, with 52% of shoppers actively choosing store brands over established labels. Meanwhile, Gen Z consumers are aligning their spending with ethical, sustainable, and authentic brands, further complicating product strategies for traditional retailers.

This means that retailers must make deliberate choices about which consumer segments to target and how to design assortments, pricing and in-store or online experiences around these preferences. Attempting to appeal to “everyone” is increasingly ineffective. Even in Tier-II and Tier-III cities, where retail growth is accelerating, demand is no longer homogeneous. Shoppers expect convenience, curation and consistent service, reflecting the broader national trend toward more discerning consumption.

Implications for retailers

The message for India’s retail sector is that the challenge is not demand but the consumer. While the market itself continues to expand rapidly, the rules of engagement have shifted. Winning in this new landscape requires retailers to adopt segmented, experience-focused strategies rather than relying solely on broad-based expansion.

Technology-driven personalisation, including AI-guided recommendations and seamless digital experiences, has become a key differentiator. At the same time, alignment with values and authenticity, particularly for Gen Z and millennial shoppers, is essential. Retailers must also be agile, able to adapt to peaks and troughs in context-driven demand rather than assuming linear growth. As BCG managing director Abheek Singhi notes, “The winners of the future will have a sharp differentiated value proposition, at scale use of AI and technology and excellent execution”. Those who embrace these principles will not only ride the wave of India’s retail expansion but also thrive amid a generation of consumers who are as demanding as they are numerous.