Offline Zinda Hai: Why retailers are betting big on outlets

For years, the narrative around Indian retail has been that e-commerce is growing rapidly, and more consumers are shopping on their phones than ever before.

Yet India's largest retailers are doing something that seems to go against that trend. They are opening thousands of new physical stores.

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According to an Economic Times report, the country's 10 largest listed retailers added a net 2,182 stores in FY26, 25% more than the previous year, taking their combined network to more than 31,000 outlets. Reliance Retail, DMart, Trent and More Retail have also raised or announced plans to raise over Rs 4,000 crore this financial year to fund expansion. Reliance Retail alone increased its non-current borrowings to Rs 22,521 crore in FY26 from Rs 14,809 crore a year earlier.

At first glance, it may seem like retailers are simply responding to stronger consumer demand. But industry experts say that is only part of the story.



Increasingly, companies are opening stores because they want to be present where India's next wave of consumers will come from.

The race is for new markets

Retailers are seeing healthy demand, especially during wedding and festive seasons. But existing stores are not necessarily selling dramatically more than before.

"It is only partly demand-driven. While strong wedding season and festive discounting supported consumption in the latest quarter, same-store sales growth across most large chains remained modest. That suggests retailers are not just opening more stores because existing outlets are seeing significantly higher demand. They are also looking to expand their footprint, enter underpenetrated markets and be closer to the next set of consumers," said Poonam Upadhyay, Director at Crisil Ratings.

That shift is important.

Instead of opening more stores in cities where they already have a strong presence, retailers are increasingly moving into new catchments where organised retail is still limited. The objective isn't just to serve existing demand, it's to make sure they are present when demand picks up.

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"Consumption determines whether a new store can work; market share is what the retailer earns if it executes well," said Anand Ramanathan, Partner and Consumer Industry Leader at Deloitte South Asia.

In other words, retailers are following where consumption is headed rather than simply trying to outdo competitors.

India is still an offline retail market

The numbers explain why.

India's retail market is expected to grow from about $1.06 trillion in 2024 to $1.93 trillion by 2030. E-commerce will also expand rapidly during this period, reaching around $250 billion, said Ramanathan.

But even then, online shopping will account for only about 13% of the country's retail market.

That means the overwhelming majority of purchases will still happen through physical stores or a mix of online and offline channels.

"The expansion is demand-led, but growth in online commerce is reinforcing, not replacing, the need for stores," Ramanathan said.

Instead of competing with e-commerce, stores are increasingly becoming part of it.

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Many now double up as fulfilment centres, places where customers can experience products before buying, or locations that support online deliveries and returns.

According to Deloitte, nine out of ten consumers prefer a seamless experience between online discovery and offline purchase. Integrating stores with digital platforms can also generate nearly 20% incremental revenue.

The next growth story is outside the metros

Much of the expansion is happening beyond India's biggest cities.

According to another Economic Times report, retailers are accelerating store openings in smaller towns where organised retail still has significant room to grow.

Reliance Retail added a net 820 stores in FY26 after rationalising its network the previous year. V-Mart Retail CEO Lalit Agarwal earlier told the Economic Times that the shift from unorganised to organised retail continues to create opportunities for expansion.

Upadhyay said Tier-II and Tier-III cities are emerging as the biggest growth markets, helped by lower rentals and relatively low organised retail penetration.

Value fashion and grocery retailers are leading store additions in these markets, while jewellery and premium lifestyle brands are opening larger stores to cater to rising incomes.

The opportunity, therefore, is less about taking customers away from competitors and more about reaching consumers who have so far had limited access to organised retail.

Stores are still central to retailers' plans

The push isn't limited to grocery and fashion chains.

Reuters recently reported that jewellery retailer BlueStone plans to more than double its store network to 705 outlets by FY30, with most of the expansion happening on high streets rather than malls because premium retail space remains scarce. Brands such as Wooden Street and Asics have also continued to expand their physical presence despite highlighting the shortage of quality retail space.

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Across categories, retailers increasingly see physical stores as more than just places to make a sale. They are becoming important for customer acquisition, brand building and supporting omnichannel operations, complementing rather than competing with online channels.

Even so, the pace of expansion is expected to become more measured. Ramanathan expects retailers to be more selective about where they deploy capital, with greater emphasis on store productivity, catchment-level demand, omnichannel integration and returns on investment rather than simply adding more outlets.

Upadhyay also expects offline expansion to remain a key growth driver for organised retailers, supported by low organised retail penetration and the continued shift towards organised retail.

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However, she said the pace of store additions will increasingly depend on same-store sales growth, rental trends in smaller cities and the extent to which quick commerce reshapes buying behaviour in categories such as groceries and electronics.

India's retail story is no longer about choosing between online and offline. The two are increasingly working together. And for the country's biggest retailers, opening a new store today is as much about expanding their footprint into tomorrow's growth markets as it is about serving customers walking in today.