India’s retail sector experienced a significant slowdown in new store openings in 2024, with major players like Reliance Retail, Tata’s Trent, Aditya Birla Fashion & Retail, and DMart adopting a cautious expansion strategy. Data revealed that only three new stores were added daily on average in 2024, a steep decline from ten per day in 2023.
Declining Growth in Retail Outlets
The collective store count for leading retailers grew by just 3% in 2024, reaching 34,839 outlets, compared to a robust 12% growth in 2023. Retailers such as Titan, McDonald’s, and other quick-service restaurants (QSR) reported slower expansion rates, reflecting the challenging market conditions.
Factors Behind the Slowdown
Industry experts cited multiple reasons for the decline in discretionary spending, including:
- High Food Inflation: Rising prices significantly impacted consumer purchasing power.
- Limited Salary Hikes & Job Creation: Stagnant income growth dampened discretionary spending.
- Increased Housing Rentals: Higher living costs diverted consumer spending away from non-essential items.
- High Real Estate Costs: Escalating real estate expenses affected the feasibility of new store locations.
Discretionary categories such as apparel, footwear, and beauty products saw muted demand throughout 2024, extending a trend that began in 2023 after a post-pandemic surge. According to the Retailers Association of India (RAI), organised retail sales growth slowed to mid-single digits in 2024, a sharp drop from 15% in 2022. Consequently, many companies closed underperforming stores to streamline operations.
Retailers Shift Focus to Consolidation
Major retailers have indicated that their store rationalization strategies are nearing completion, paving the way for renewed expansion. Vishak Kumar, CEO of the lifestyle business at Aditya Birla Fashion & Retail, said, “Some of our margin-draining retail stores have been taken off. That augurs well for the overall network. We are now cranking up the expansion machinery again, which will drive the next wave of growth.”
Similarly, Shoppers Stop MD Kavindra Mishra stated, “We are at the end of the cycle of rationalising our stores. I don’t see a lot of closures in the coming year. In FY26, we plan to open 12-15 new stores.”
Path to Recovery
Retailers are now observing slight reductions in rental expectations, which could enable more favorable expansion deals. With market conditions stabilizing and consolidation efforts largely complete, leading brands are preparing to enter the next phase of growth. The sector remains optimistic about regaining momentum and fulfilling long-term expansion goals in the coming years.
