Brick-and-Mortar Stores are Being Reimagined, Not Replaced: CEO, RAI

In an insightful conversation with Kumar Rajagopalan, CEO, Retailers Association of India (RAI), FE Retail explores how technology, policy, and people are shaping the future of Indian retail. Besides providing a detailed perspective on the sector’s evolution, the discussion throws light on how the association navigates the diverse interests of stakeholders while fostering industry-wide advancement.

How do you define the current phase of India's retail revolution? Where is it headed in the next five years?
Retail has always been dynamic because customers and their needs keep evolving. As such, retailers must constantly adapt to technology, environment, and customer expectations. From barcodes to payment systems such as UPI, the sector has always stayed ahead by embracing innovation. Today, omnichannel retail is the norm as customers expect seamless access across platforms, anytime, anywhere. The future lies in enhancing convenience and experience while using technology as a tool. Retailers must understand customers deeply and fulfill their needs proactively.

Is customer experience now more important than price or technology?
While price leaders may focus on cost, those who don't set the price must invest in building superior customer experiences to ensure their relevance and competitive advantage. Technology helps, but the focus must always be on what the customer wants and values at that moment.

Technology is only a means to enhance customer experience. Winning retailers focus on the customer journey-right from identification to fulfillment. Both large marketplaces and small Kiranas use technology differently but effectively. For example, a Kirana predicting your mango needs over WhatsApp is as powerful as AI-driven product recommendations on an app. Small retailers often have the edge because they know their customers personally.

How are traditional retailers adapting to omnichannel and D2C trends? Are physical stores at risk?
The landscape is shifting. Large marketplaces, D2C brands, and quick commerce are redefining retail but small retailers aren’t doomed. They must carve niches, offer specialised products, and leverage social platforms, including WhatsApp, to engage customers. Brick-and-mortar stores are being reimagined, not replaced.

How is RAI supporting small and medium retailers in this transformation?
RAI has a three-pronged approach of advocacy, market creation, and knowledge and technology exposure. Under these, we ensure a level playing field for all retailers; host events that bring together small and large players, inspiring transformation; and share knowledge about scalable technologies, from AI to simple payment tools, to help retailers modernize.

Q: What is the Association’s view on FDI in multi-brand retail?
FDI restrictions were introduced to shield small retailers from the impact of large global investors. RAI supports FDI, provided all players compete on equal terms. If some retailers are barred from foreign investment, others should not take advantage of regulatory gaps. Our priority is fairness, not imposing blanket bans.

How has GST impacted retail?
GST has been a game-changer. It removed cascading taxes, allowed smooth movement of goods, and enabled pan-India logistics. Retailers no longer structure supply chains based on tax zones. While implementation has had hiccups (e.g., rate anomalies), overall, GST has greatly benefited the retail ecosystem and consumers alike.

What is the RAI’s stance on the draft e-commerce policy?
A clear policy is essential. Without it, fake products and fraudulent sellers can thrive. RAI supports measures that protect consumers, regulate genuine players, and create a fair market both online or offline.

How should retailers respond to changing consumer behavior post-pandemic?
Retailers must deeply understand their customers. Today’s consumer values experience as much as product, especially non-price-sensitive segments. Instant gratification is key, driven by quick commerce. Retailers must stay ahead by being relevant and responsive to these evolving demands.

Are Tier II and III cities India’s next retail goldmine?
Absolutely. Government investments in infrastructure, connectivity, and digital services have transformed smaller cities. These cities offer modern amenities with better quality of life than metros. As more people move back, these regions will fuel the next wave of retail growth.

How is AI being used in Indian retail? Are we seeing ROI or is it still experimental?

AI is transforming how retailers operate and interact with customers. It’s enhancing customer service, driving product innovation, accelerating speed-to-market and recruitment, and enabling sharper customer profiling. Essentially, AI is influencing nearly every aspect of the retail value chain. While large retailers have adopted AI in up to 40% of their tech stack, smaller ones may be using it indirectly, such as through platforms using AI-driven recommendations without even realizing it. The beauty of AI lies in its invisibility and integration.

What about data privacy in an AI-driven, digital-first retail landscape?Data privacy is a delicate balance. Customers expect personalization but don’t want their data misused or shared without consent. Retailers must be extremely mindful of what data they collect, how it’s stored, and the boundaries of personalization. Voice data, for instance, is also now sensitive. There are questions that need to be answered – who owns it? The platform or the customer? It’s crucial that retailers operate on permission-based frameworks and avoid crossing into territory that feels invasive to customers, as that can lead to serious trust and legal issues.

How are startups shaping the future of Indian retail? Is RAI engaging with them?

Startups have revolutionized consumer choice. Where once you had one or two types of milk or sauces in the fridge, today consumers enjoy a range of specialised, innovative products, thanks to startups. They’ve reshaped categories such as beauty and wellness and expanded market size. RAI actively works to connect these startups with established players, fostering a collaborative retail tech ecosystem.

How does RAI balance the interests of large and small retailers while working with policy makers?

While retailers compete in the market, they must collaborate at the industry level. RAI ensures a level playing field and makes decisions for the collective good. Policies are not shaped by one or two voices but through consensus. A key principle is that leadership within the association must remain unaffiliated with individual corporate interests. Our loyalty is to the industry, not any specific player.

What legacy do you hope to leave at RAI? What has been your most impactful accomplishment?

A successful organisation should outlive its leaders. If it’s built to survive beyond individuals, then it’s built right. At RAI, our key achievements include advocating for retail investment and policy reforms. Four states now have formal retail policies thanks to our efforts. We've worked on workforce capability with educational institutions, developed sustainability and POSH guidelines, and promoted women’s employment. For example, we’ve pushed for policies allowing women to work past 7:30 PM, which is vital for the industry. But above all, RAI’s greatest strength is its ability to unify diverse voices under one platform.