The Future of Customer Loyalty, Personalisation, and AI Adoption in India’s $1 Trillion Retail Sector

✍️ Opinions

Sanvi Barjatya

15 Nov 2025 — 5 min read

The Future of Customer Loyalty, Personalisation, and AI Adoption in India’s $1 Trillion Retail Sector, Varun Kashyap, Co-founder & CEO of Zithara.AI

This article has been contributed by Varun Kashyap, Co-founder & CEO of Zithara.AI

A woman in Indore sends her grocery list to her neighbourhood kirana store on WhatsApp. Within minutes, she gets a confirmation, a personalised offer on her favourite cooking oil, and a few extra loyalty points on her digital wallet. No fancy e-commerce app. No big chain. Just a small family-run store using simple AI tools.

That’s India’s new retail reality where ancient trust meets modern technology.

India’s retail market, already worth $1 trillion, is on track to almost double to $1.9 trillion by 2030. But this growth isn’t just about more stores or more shoppers. It’s about how data, AI, and personalisation are reshaping the idea of customer loyalty a concept deeply emotional, fiercely local, and now digitally intelligent.

Loyalty, Indian Style: From Points to Personal Bonds

For years, loyalty programs meant plastic cards, cashback, and occasional discounts. Today, loyalty in India is personal and emotional.

According to The Wise Marketer, 74% of Indian consumers say they stay loyal to brands because they feel a personal connection — much higher than the global average. In a country where relationships and rituals define life, loyalty is more about warmth than algorithms.

A well-timed Diwali surprise, early access to a cricket offer, or recognition of local festivals builds stronger bonds than a few extra reward points. Indian brands are finally catching up to this truth.

Take HDFC Bank’s SmartBuy, for instance a cross-brand program that lets customers earn and use rewards across Amazon, Myntra, and BookMyShow. It gives people flexibility and a sense of community value. Or IKEA India’s “IKEA Family”, which rewards eco-conscious choices showing how loyalty and sustainability can go hand in hand.

The numbers back it up. India’s loyalty market is expected to jump from USD 4.3 billion in 2025 to USD 17.1 billion by 2035 (Future Market Insights). Loyalty is no longer about transactions — it’s about trust.

The Billion-Person Personalisation Challenge

Here’s what makes India fascinating and complex.Personalisation here isn’t just about sending the right email or push notification. It’s about understanding a billion different lives.

There are 22 official languages, hundreds of dialects, countless festivals, and every state has its own rhythm of consumption. A marketing message that clicks in Delhi might completely miss the mark in Coimbatore.

E-commerce leaders like Myntra and BigBasket are already tailoring experiences to this diversity. Myntra’s “Insider” program curates discounts based on what each shopper loves. BigBasket adjusts loyalty offers according to categories people buy most often groceries, home essentials, or fresh produce.

Even for high value purchases like offline jewellery retail in India is becoming more tech-enabled, with stores using digital tools to let customers explore unseen designs, customise pieces, and place personalised orders. These systems capture in-store interactions such as browsing a bridal necklace or gold coin and link them to follow-ups through WhatsApp or email. By analysing purchase history and engagement patterns, jewellers can identify high-value or dormant buyers and reach out around occasions like weddings or Akshaya Tritiya. The shift reflects how a traditionally relationship-driven industry is adopting data intelligence to build loyalty, increase frequency of purchase, while preserving the personal touch

And consumers are responding. CapillaryTech found that 73% of Indians prefer personalised rewards, and 61% are even willing to pay extra for upgraded loyalty experiences. That’s a huge shift in mindset from discounts to relevance.

But this isn’t just a big-brand story. Thanks to UPI, WhatsApp Commerce, and affordable cloud tools, even small retailers can now use AI-driven insights. A kirana in Surat can predict when a family might restock rice; a boutique in Hyderabad can auto-message loyal customers before festive season launches.

Personalisation in India, then, is both a challenge and an equaliser. Whoever masters regional nuance understanding how shopping peaks differ during Onam, Durga Puja, or Bihu will win hearts, not just market share.

AI: From Buzzword to Backbone

AI Empowers Small Retailers to Compete with Large Brands

Until recently, AI in Indian retail sounded futuristic. Now it’s becoming invisible — woven into everything from inventory to interaction.

EY reports that 71% of Indian retailers plan to adopt Generative AI within the next year, and 80% aim to scale it in 2025. Productivity could rise by 35–37% by 2030. That’s a transformation in motion.

AI already helps retailers:

Forecast demand before festivals.
Adjust prices in real time.
Spot empty shelves through computer vision.
Power multilingual chatbots that respond in Hindi, Tamil, or Bengali.

India’s AI-in-retail market, valued at USD 216 million in 2023, could surge to USD 2.96 billion by 2032 (Credence Research). But the real story lies in access.AI is no longer just for big chains. Small retailers, powered by affordable SaaS tools, can now analyse sales, predict demand, and engage customers like never before. The technology is quietly levelling the playing field giving kirana owners the same predictive edge as multinational brands.

The Hybrid Reality: Kirana + Cloud

Even as digital sales rise, India’s physical stores aren’t disappearing — they’re evolving.Visit any modern retail zone, and you’ll find physical spaces designed for experience, not just sales. Try-before-you-buy fashion, local language assistance, live demos all powered by digital systems in the background.

According to Texfash, 60–65% of Indian consumers now prefer a blended experience: browsing online, buying in-store, and paying through UPI. This hybrid behaviour defines the modern Indian shopper.

In smaller cities, this mix is even more exciting. Tier-2 and tier-3 stores are leapfrogging old models, combining local relationships with digital speed. That Indore kirana with WhatsApp ordering? That’s the new face of omnichannel India humble, yet high-tech.

The Next Big Test: Trust

As India races toward its $1.9 trillion retail future, one thing stands out: trust will be the new currency.

AI can predict what people want. But trust determines whether they’ll share their data in the first place. With new data privacy regulations on the horizon, brands that respect consent, transparency, and cultural context will earn lasting loyalty.

The next era of retail isn’t about algorithms replacing emotion it’s about data learns to speak the language of human relationships. The real winners will be those who blend technology with understanding, automation with respect, and innovation with Indian insight.

Because in this country of a billion shoppers, loyalty can’t be coded it has to be earned, every single day. In India’s trillion-dollar retail revolution, loyalty isn’t just built, it’s felt.