"Innovation will be the key to maintaining the relevance of retail spaces in the near future, with functional design giving way to engaging experiences that leave a lasting impression," says Sanjay Agarwal, Co-Founder & MD of FRDC, setting the context for the future of the Indian retail design industry in this exclusive conversation with Retail4Growth.

India's retail industry is undergoing a transformative phase. Nearly 60 shopping malls encompassing a total retail space of 23.25 million sq. ft are expected to become operational during 2023-25, signalling a significant growth in physical retail spaces, as Sanjay shares.

The growth of organised retail in India, which is expanding at more than 10% year-on-year, coupled with the rapid transformation of unorganised retail into organised formats due to changing customer preferences and demographics, is driving the demand for design services, adds Sanjay.

The Third Wave of Retail Evolution

Sanjay in fact highlights the evolution of Indian retail by drawing parallels to Alvin Toffler's theory of the ‘Third Wave.’ "If one had to apply Alvin Toffler's theory to Indian Retail evolution, we evolved from 'Muscle' (might of distribution led retailers) to 'Money' (more visible/ bigger the better) and now into 'Mind' (smart customer-led experiences). We are now experiencing the 'Third Wave' of Retail, where the dominance of brand/s and store size is giving way to the ascendancy of knowledge-based influence, innovation, and deep conversations led customer engagement."

This paradigm shift from transaction-led retail stores to experience-led places presents both opportunities and challenges for the Indian retail design industry. Given this, the growth trajectory of the industry needs to be clearly defined.

Growth & Challenges in the Retail Design Industry

Sanjay feels the Indian retail design industry is expected to grow at 10-15% year-on-year for the next decade or so. However, he feels the industry faces significant challenges, particularly in terms of fragmentation.
So what would a SWOT Analysis of the Retail design industry look like? According to Sanjay, it would be something like this:

Strengths: Availability of retail design manpower, exposure to international formats

Weaknesses: Talent Scarcity. As Sanjay says, “The strength itself is a weakness in a sense, as there are not enough qualified retail design professionals available. In my knowledge, there are not more than 3-4 such institutes which provide retail design courses." As he points out, this shortage of talent affects the industry's ability to deliver high-quality services and meet the growing demand for retail design.

The fragmented nature of the industry and lack of enough processes and systems in place is also a weakness, says Sanjay. "Indian retail design industry is highly fragmented with very few specialised agencies and a large number of very small multidisciplinary firms. This affects not only the quality of service but also the delivery capacity of the industry."

Besides, there are cost constraints, which make it difficult to invest in infrastructure, scaling up, manpower etc. “We don’t have the kinds of margins that can help us invest back and scale up so that we can serve more retailers with international quality,” points out Sanjay

Opportunities: The growing size of markets is itself a big opportunity. “We might be the third largest retail in the world soon, in terms of quantum and quality,” as Sanjay says.

Threats: Entry of international designers with greater capacity, capability and talent

Talent Pool Creation, Recognising Retail Design as an Investment

Addressing some of the above challenges will need a multipronged approach. For example, in the context of talent scarcity, Sanjay suggests that the industry should work towards creating a consortium or association that brings together academics and professionals. "There should be efforts towards a consortium or association which can build bridges between the academia and the industry and groom industry-ready design professionals."

Sanjay also emphasises the role of brands in enabling the growth of retail design as an industry. "Brands will have to look at retail design as something they cannot live without. They have to think of it like an investment, not as an expense, as it is done internationally."

“By treating retail design as part of the marketing budget, brands can expect better design environments, talent, and payouts for retail designers, ultimately leading to improved service quality and customer experiences,” sums up Sanjay.