Traditional retail sector "unaffected" from growth of e-commerce: Pahle India

New Delhi [India], August 27 : Amid charges of predatory pricing and negatively impacting offline retail shops in India by big E-Commerce giants, a recent study by Pahle India says the contrary.
The E-commerce boom that took place since 2020, has not impacted the traditional retail sector, says the study of Pahle India Foundation (PIF) released last week.
According to the report, less than 20 per cent of the offline vendors reported a physical store closure in their neighbourhood since 2020.
Only 6 per cent of offline vendors think that shifting consumer behaviour towards online shopping has caused the brick-and-mortar stores to close.
E-commerce currently at 7.8 per cent of India's trade is rather positively impacting employment generation and consumer interests.
It further noted that around 8 per cent of offline vendors attribute physical store closures to the growth of large organised retail.
On the negative impact of e-commerce on their overall business, 86 per cent of offline vendors disagreed with the notion that e-commerce growth negatively affects the employment they generate.
Interestingly, about 14.4 per cent of vendors are now prioritizing 'Packaging & Delivery' skills in their employees which has driven local shops to hire staff for delivery services, enabling traditional mom-and-pop stores to adapt to the evolving market.
Contrary to the prevalent notion, the report refutes the popular notion that e-commerce has adversely impacted the traditional physical retail sector, adding that e-commerce remains relatively under-penetrated in India and the traditional, brick-and-mortar segment continues to thrive.
It further stated that around 70 per cent of offline vendors have adopted some form of technology and 54 per cent adopted technology to enable cashless and digital payments, followed by the use of software like Logic ERP, Tally etc. by 22 per cent of these vendors.
About one-fourth of offline vendors plan to expand by either buying a new store, expanding or renovating their existing store, diversifying their product range, adopting more technology, or listing on e-commerce platforms, it observed.
PIF further said that e-commerce is expanding into newer markets like Tier 3 cities instead of replacing physical markets.
Underscoring the impact of integrating e-commerce on the physical store vendors, the report observed that about 71 per cent of Tier 3 city vendors have seen an increase in sales since the time they shifted to online sales.
E-commerce constitutes a small portion of the retail sector, with a share of 7.8 per cent of the total retail sales in 2022 and growing at a CAGR of 27 per cent between 2018 and 2030.
Currently, India's e-commerce market share of 7.8 per cent is much smaller than 46 per cent in China and 16 per cent in the United States.