Indian Retail Is Shifting: What the Latest SANKET Data Means for Businesses

India’s retail market is showing signs of recovery after a softer first quarter. However, the latest numbers from the RAI-Innoviti SANKET report point to something more important than a simple rebound.

Retail demand is changing across categories, cities, and payment methods. The RAI-Innoviti SANKET report tracks more than 50 million data points across 2,800+ cities and uses like-for-like business growth to show how existing stores are actually performing. This removes the impact of new store openings and gives retailers a clearer view of underlying demand.

For business leaders, the findings offer a useful view of where retail demand is heading and how consumers are paying for their purchases.

Retail Growth Softened Before Rebounding in July

The first major signal from the latest SANKET report is the movement in like-for-like retail growth.

Growth declined through the first quarter:

• April: 9.4%
• May: 7.8%
• June: 4.7%

July brought a recovery, with growth reaching 6.8%. This was the first month-on-month improvement during the quarter.

The numbers show that retail demand did not move in a straight line. The slowdown was followed by a recovery, but the pace differed across categories and locations. That distinction matters for retailers. Looking only at overall growth can hide what is actually happening across individual markets and customer segments.

Smaller Cities Continue to Gain Ground

One of the most interesting findings comes from the geographical data. Smaller cities continued to outperform metros through much of the quarter. The lead of Tier 3 cities over Tier 1 cities increased from 0.7 percentage points in April to 2.4 percentage points in June.

In July, the gap narrowed to 1.9 percentage points as metro demand recovered faster. The regional picture was also uneven. All four zones softened through the first quarter before recovering in July. The South remained the strongest-performing zone throughout the period, while the West recorded the sharpest slowdown during the quarter and the strongest rebound in July.

The trend points to a retail market that is becoming increasingly distributed beyond the largest urban centres. For retailers, this creates an important opportunity. Growth is not limited to traditional metropolitan markets. Smaller cities are becoming increasingly important contributors to retail demand across both essential and discretionary categories.

What the RAI Perspective Says

Kumar Rajagopalan, CEO of the Retailers Association of India, highlighted why the like-for-like approach matters when assessing the health of Indian retail:

“The RAI-Innoviti SANKET report shows like-for-like business growth data — real, per-store demand, not growth that’s just new stores opening. That distinction matters, because it’s the only way to tell if Indian retail is actually gaining strength or just gaining square footage. This quarter, the data showed a sector that dipped through the summer and then bounced back — but unevenly across categories, cities and payment methods. Jewellery moves on its own calendar. Payments are shifting structurally toward UPI. And whether smaller cities keep outpacing metros, or whether July’s recovery closes that gap for good, is exactly the kind of question this data will keep answering month by month. That’s why this partnership matters.”

Consumer Spending Is Moving Differently Across Categories

The category data shows why a single retail growth number does not tell the whole story. Jewellery recorded the widest swings. Growth reached 14.2% in April around Akshaya Tritiya before falling to 4.6% in May. It then settled at 6.6% in June and 6.4% in July.

Grocery followed a different pattern. Growth remained around 7% for two months, fell to 4.3% in June, and then recovered sharply to 7.5% in July. The report links the June slowdown to food inflation reaching a 16-month high and the July recovery to easing supply pressures.

Consumer electronics and fashion remained positive throughout the period and both improved into July. For retailers, these differences highlight the need to look beyond headline growth. Category behaviour can vary significantly depending on the products consumers are buying and the factors influencing those purchases.

UPI Is Pulling Further Ahead of Cards

The payment data reveals perhaps the clearest structural shift in the report. UPI transaction growth remained significantly ahead of card transaction growth throughout the period.

In April, UPI transactions grew by 22%, compared with 4.6% for cards.

By June, UPI growth had eased to 12%, while card growth fell to just 0.7%.

Both payment methods accelerated in July, but the gap remained substantial. UPI grew 14%, compared with 3.2% for cards.

The shift is also visible at the category level. Card growth remains concentrated in jewellery, where higher ticket sizes continue to favour cards. In grocery, UPI now dominates payment volumes almost entirely. The data suggests that UPI is no longer simply a payment option for smaller purchases. Its use is extending into higher-value transactions as well.

UPI Is Becoming a Mainstream Retail Payment Behaviour

The SANKET findings point towards a broader change in how Indian consumers pay. According to Rajeev Agrawal, CEO of Innoviti Technologies, the data indicates that payments are shifting towards UPI not only for small-ticket purchases but also for higher-value transactions.

For retailers, this means payment infrastructure needs to keep pace with changing customer behaviour. As UPI becomes more deeply embedded in retail transactions, understanding where customers are using it, how payment preferences differ across categories and how these patterns change across cities becomes increasingly valuable.

What the Innoviti Perspective Says

Rajeev Agrawal, CEO of Innoviti Technologies, explained the broader significance of the data:

“The RAI-Innoviti SANKET report shows what categories consumers are buying, where, and how they are paying for it. The inferences are from a compilation of 50million+ data points from 2800+ cities gathered from consenting businesses, publicly reported data, and primary data acquired through surveys. The report then uses AI to correlate trends with events happening in the economy to provide insights. It focusses on like-for-like growth across category, geography, and payment instruments. The key findings are a) discretionary buying (lifestyle and consumer electronics) has stayed robust throughout this period, b) economic growth is deepening into smaller cities, both in essentials and discretionary buying, and c) payments are shifting towards UPI for good, not just small ticket, but also higher values. We are excited to be partnering with RAI on unravelling these insights using advanced technologies and AI applied to real data, to build a roadmap that can help businesses plan better, market better, and grow better.”

Why Like-for-Like Data Matters

The SANKET report uses same-store comparisons. That means the current month’s sales are compared with sales from the same stores a year earlier. This removes the impact of new store openings and gives a clearer picture of actual demand at existing locations.

For retail decision-makers, this distinction is important. A business may report higher overall sales simply because it has opened more stores. Like-for-like growth answers a different question:

“Are customers actually spending more at the stores that were already operating?”

That makes the data more useful for understanding genuine demand trends across categories and geographies.

What Retailers Should Take Away

The latest SANKET data does not point to one uniform retail story. It shows a market that is changing at different speeds across categories, cities and payment methods.

The July recovery is encouraging, but the bigger story may be the structural shifts underneath it. Smaller cities continue to gain importance, lifestyle and consumer electronics remain robust, and UPI continues to pull ahead of cards.

For retailers, these shifts make timely and granular data increasingly important. Knowing what customers are buying is useful. Knowing where they are buying, how they are paying and how those behaviours are changing provides a much stronger foundation for planning.

The RAI-Innoviti SANKET report is built around that idea; turning real retail data into insights that help businesses plan better, market better and grow better.

Want to explore the full retail trends? Read the complete RAI-Innoviti SANKET Report.