FDI and Global Retailers 51% FDI allowed in single brand retailing FDI Laws relatively liberal in wholesale trade Metro AG and Shoprite already operating More Foreign Retailers eyeing possibilities in wholesale Tesco and Carrefour expected to operate soon Wal-Mart has already sined a JV with the Bharti Group Woolworths (Dick Smith Electronics - durable retail arm) recently started their operations through a JV with Tatas with plans to open 60 Croma stores by 2009. French retailer Geant is also expected to begin operations in India soon.
Government of India is considering opening up of certain retail sectors for foreign direct investment (FDI). The four sectors are electronic goods, Office equipments & stationery, sports goods, and building equipment.
The Retail Evolution
Indian organized retail is at the brink of Revolution indeed. The last few years have seen rapid transformation in many areas and setting scalable and profitable retail models across categories. Indian consumers are rapidly evolving and accepting modern formats overwhelmingly.
With escalating consumerism, unprecedented awareness, and a youth-heavy customer base, India is the ‘Promised Land' for the Global brands and retailers. A T Kearney's ‘2005 Global Retail Development Index' gives a clear message to global retailers on India: Move now or forego prime locations and market positions that will become saturated quickly. Global retailers that missed out on capturing first-mover advantage in China can make up for it in India.
INDIA RETAIL: 2006 (at current prices)
Retail Segments
INDIAN RETAIL MARKET 2006*
India Retail Value (Rs.Crore)
Organised Retail (Rs.Crore)
% Organised in 2006
Clothing, Textiles & Fashion Accessories
113,500
21,400
18.9%
Jewellery
60,200
1,680
2.8%
Watches
3,950
1,800
45.6%
Footwear
13,750
5,200
37.8%
Health & Beauty Care Services
3,800
400
10.6%
Pharmaceuticals
42,200
1,100
2.6%
Consumer Durables, Home Appliances/equipments
48,100
5,000
10.4%
Mobile handsets. Accessories & Services
21,650
1,740
8.0%
Furnishings, Utensils, Furniture-Home & Office
40,650
3,700
9.1%
Food & Grocery
743,900
5,800
0.8%
Catering Services (F & B)
57,000
3,940
6.9%
Books, Music & Gifts
13,300
1,680
12.6%
Entertainment
38,000
1,560
4.1%
TOTAL
1,200,000
55,000
4.6%
© IMAGES F&R Research
* Quick estimates
1200000
54999.6
USD 270 Billion
USD 12.4 Billion
_________________________________________________
Observations :
BOOKS, MUSIC & GIFT RETAIL
The magazine & books segment offers tremendous opportunity to structure the roadside selling of new and old publications. Neighbourhood stores, kiosks in malls, airports, stations & subways and online space tremendous opportunity for this segment to grow.
CATERING SERVICES
Indian railways, inter-state bus stands, fuel stations, service centres, large offices, fitness salons, educational institutions offer additional spaces for growth.
CONSUMER ELECTRONICS
With ever evolving technology and communication spread, last few years have seen big change in consumer mindset. Indian consumers now upgrade fast. The traditional formula of progression may not apply in the context of changing consumer behaviour in this country. A rich villager wanting to buy his first TV set can straight go for a plasma model.
FASHION RETAIL
The branded retail revolution is yet to happen for the Indian women. The ‘Adonis Complex' or the ‘syndrome' has won over in the ready-to-wear stakes. Womensfashion branding is still elusive. With some of the fashion companies entering the womens market, we see the stirring of a revolution that may sweep India in the next 5 years or so. The designer fashion brands may also play a role in this dramatic development.
Women have driven fashion worldwide. The power of the purse is getting more powerful by the day. In India too, we are beginning to see the change and it's high time that our fashion industry and the marketers strategise to drive this trend towards business generation.
If the fashion business has to grow, it is arguably the untapped womens segment that needs attention of the corporate giants.
FITNESS AND PERSONAL CARE
Many corporates are opening fitness and grooming centres within the office premises and this shows the way ahead for growth of this segment. Sports & beauty companies need to work aggressively to inculcate the very concept of living healthy and beautifully. Over 1000 centres expected to come up in next 2 years through these two channels itself.
FOOD & GROCERY
In the absence of quality space within main cities and neighbourhood markets, it is expected that by 2010 over 50,000 kirana stores will get a facelift in partnership with national retailers and FMCG brands engaging structured VM, supply chain, billing systems and loyalty programmes.
FOOTWEAR
As footwear moves from utility to fashion and durability takes a backseat, there is is a big opportunity for small retailers to get into boutique spaces with traditional handcrafted footwear.
FUEL & FORECOURT RETAILING
Fuel forecourts with 24X7 convenience within cities and on the highways with security around offer huge scope. The concept has the potential to create excitement and initiate activities in small towns and cities as well.
HEALTH AND PHARMACEUTICALS
Scope for specialisation not explored so far. Concepts like ' Trust Diabetic World ' can do well. HOME AND OFFICE IMPROVEMENT
This sector badly awaits entry of foreign players as these formats require demo spaces & skills and most materials are imported. As more builders, architects and designers take up the job of home and office improvement, retailers need to appoint expert salesmen like medical representatives to meet up with the consultants and ensure their visits to the stores with their respective clients – builders or customers.
JEWELLERY RETAILING
High value sales of jewellery in exhibitions in cities' premium hotels prove that security remains a prime concern for the buyers. There is a definite need to create high security zones for high value transactions – banks, luxury & jewellery retailing etc..
TELECOM RETAILING
Mobile handsets have been immensely successful in increasing aspirations of the classes as well as the masses with rapid successions. The top priority segment in the age group 11-50 years, retailing of mobile products and services has the potential to connect with every possible format and category of retail.
TIMEWEAR & EYEWEAR RETAIL
Part of the giftware and personal accessories segment, watches and sunglasses retail need to add more to its portfolio to ensure steady inflow of customers. Premium writing instruments, metalwear could be the initial add ons matching the price points and overall look of the stores. There is a distinct need for stores like Claire's in India.
Retail Formats
MBOS will do well - converting to EBOs, speciality concept stores or category killer formats. Neighbourhood stores - day-to-day needs only - face lift & supply chain management in association with leading retailers or FMCG Brands (Examples Subhiksha and HLL) Cash & Carry - Big Bazaar also opening Big Bazaar Club. Opportunity to explore for small cities & towns Public private partnership Co-operatives - Facelift & vendor management Post offices & Banks Railways - Railways land, platforms, in train shopping marts, restaurants, entertainment Khadi Bhawans & State emporia Neighbourhood markets Corporation and state authorities owned/ managed distric centres & office complexes
Indian organized retail is at the brink of Revolution indeed. The last few years have seen rapid transformation in many areas and setting scalable and profitable retail models across categories. Indian consumers are rapidly evolving and accepting modern formats overwhelmingly.
With escalating consumerism, unprecedented awareness, and a youth-heavy customer base, India is the ‘Promised Land' for the Global brands and retailers. A T Kearney's ‘2005 Global Retail Development Index' gives a clear message to global retailers on India: Move now or forego prime locations and market positions that will become saturated quickly. Global retailers that missed out on capturing first-mover advantage in China can make up for it in India.
INDIA RETAIL: 2006 (at current prices)
Retail Segments
INDIAN RETAIL MARKET 2006*
India Retail Value (Rs.Crore)
Organised Retail (Rs.Crore)
% Organised in 2006
Clothing, Textiles & Fashion Accessories
113,500
21,400
18.9%
Jewellery
60,200
1,680
2.8%
Watches
3,950
1,800
45.6%
Footwear
13,750
5,200
37.8%
Health & Beauty Care Services
3,800
400
10.6%
Pharmaceuticals
42,200
1,100
2.6%
Consumer Durables, Home Appliances/equipments
48,100
5,000
10.4%
Mobile handsets. Accessories & Services
21,650
1,740
8.0%
Furnishings, Utensils, Furniture-Home & Office
40,650
3,700
9.1%
Food & Grocery
743,900
5,800
0.8%
Catering Services (F & B)
57,000
3,940
6.9%
Books, Music & Gifts
13,300
1,680
12.6%
Entertainment
38,000
1,560
4.1%
TOTAL
1,200,000
55,000
4.6%
© IMAGES F&R Research
* Quick estimates
1200000
54999.6
USD 270 Billion
USD 12.4 Billion
_________________________________________________
Observations :
BOOKS, MUSIC & GIFT RETAIL
The magazine & books segment offers tremendous opportunity to structure the roadside selling of new and old publications. Neighbourhood stores, kiosks in malls, airports, stations & subways and online space tremendous opportunity for this segment to grow.
CATERING SERVICES
Indian railways, inter-state bus stands, fuel stations, service centres, large offices, fitness salons, educational institutions offer additional spaces for growth.
CONSUMER ELECTRONICS
With ever evolving technology and communication spread, last few years have seen big change in consumer mindset. Indian consumers now upgrade fast. The traditional formula of progression may not apply in the context of changing consumer behaviour in this country. A rich villager wanting to buy his first TV set can straight go for a plasma model.
FASHION RETAIL
The branded retail revolution is yet to happen for the Indian women. The ‘Adonis Complex' or the ‘syndrome' has won over in the ready-to-wear stakes. Womensfashion branding is still elusive. With some of the fashion companies entering the womens market, we see the stirring of a revolution that may sweep India in the next 5 years or so. The designer fashion brands may also play a role in this dramatic development.
Women have driven fashion worldwide. The power of the purse is getting more powerful by the day. In India too, we are beginning to see the change and it's high time that our fashion industry and the marketers strategise to drive this trend towards business generation.
If the fashion business has to grow, it is arguably the untapped womens segment that needs attention of the corporate giants.
FITNESS AND PERSONAL CARE
Many corporates are opening fitness and grooming centres within the office premises and this shows the way ahead for growth of this segment. Sports & beauty companies need to work aggressively to inculcate the very concept of living healthy and beautifully. Over 1000 centres expected to come up in next 2 years through these two channels itself.
FOOD & GROCERY
In the absence of quality space within main cities and neighbourhood markets, it is expected that by 2010 over 50,000 kirana stores will get a facelift in partnership with national retailers and FMCG brands engaging structured VM, supply chain, billing systems and loyalty programmes.
FOOTWEAR
As footwear moves from utility to fashion and durability takes a backseat, there is is a big opportunity for small retailers to get into boutique spaces with traditional handcrafted footwear.
FUEL & FORECOURT RETAILING
Fuel forecourts with 24X7 convenience within cities and on the highways with security around offer huge scope. The concept has the potential to create excitement and initiate activities in small towns and cities as well.
HEALTH AND PHARMACEUTICALS
Scope for specialisation not explored so far. Concepts like ' Trust Diabetic World ' can do well. HOME AND OFFICE IMPROVEMENT
This sector badly awaits entry of foreign players as these formats require demo spaces & skills and most materials are imported. As more builders, architects and designers take up the job of home and office improvement, retailers need to appoint expert salesmen like medical representatives to meet up with the consultants and ensure their visits to the stores with their respective clients – builders or customers.
JEWELLERY RETAILING
High value sales of jewellery in exhibitions in cities' premium hotels prove that security remains a prime concern for the buyers. There is a definite need to create high security zones for high value transactions – banks, luxury & jewellery retailing etc..
TELECOM RETAILING
Mobile handsets have been immensely successful in increasing aspirations of the classes as well as the masses with rapid successions. The top priority segment in the age group 11-50 years, retailing of mobile products and services has the potential to connect with every possible format and category of retail.
TIMEWEAR & EYEWEAR RETAIL
Part of the giftware and personal accessories segment, watches and sunglasses retail need to add more to its portfolio to ensure steady inflow of customers. Premium writing instruments, metalwear could be the initial add ons matching the price points and overall look of the stores. There is a distinct need for stores like Claire's in India.
Retail Formats
MBOS will do well - converting to EBOs, speciality concept stores or category killer formats. Neighbourhood stores - day-to-day needs only - face lift & supply chain management in association with leading retailers or FMCG Brands (Examples Subhiksha and HLL) Cash & Carry - Big Bazaar also opening Big Bazaar Club. Opportunity to explore for small cities & towns Public private partnership Co-operatives - Facelift & vendor management Post offices & Banks Railways - Railways land, platforms, in train shopping marts, restaurants, entertainment Khadi Bhawans & State emporia Neighbourhood markets Corporation and state authorities owned/ managed distric centres & office complexes
As there is not much scope in creating more high street within cities, Govt. needs to explore public private partnerships for regenerating district centers, office complexes, railway spare land, post offices etc.
There should be restriction of developing multistoried malls in new cities and encourage more high streets Need to give Indian retail - a face of India
India Brand Story can travel across the globe with 'Delhi Hat' type shopping cum entertainment centres opening not only across India but all over the world. Public private partnership can revitalise the formats like KVIC run Khadi Bhawans, one of the largest retail networks in the world, and also govt. state run emporia.
There should be restriction of developing multistoried malls in new cities and encourage more high streets Need to give Indian retail - a face of India
India Brand Story can travel across the globe with 'Delhi Hat' type shopping cum entertainment centres opening not only across India but all over the world. Public private partnership can revitalise the formats like KVIC run Khadi Bhawans, one of the largest retail networks in the world, and also govt. state run emporia.
As India emerges as one of the most potential markets for global brands and retailers and retail reinvents the way modern Indians celebrate their s pending power , India that takes pride in its rich culture, heritage, art, craft and variety of wares must capitalize on this ever escalating consumerism and channelise the spending towards healthy consumption for overall development of the country.
Retail can not sustain exorbitant real estate prices
Skyrocketing retail real estate costs not healthy for retail growth. Khan market rentals – Rs. 700-1000 psqft quite absurd. Retail sales in such a market do not justify rental of even Rs. 250/- psqft.
Real estate owners/ developers need to evolve new revenue models on profit sharing basis and minimum guarantee. Select City Walk, the upcoming premium mall in south Delhi has worked on this new concept.
Special Note for the Auto retail sector
The auto retail sector needs to explore innovative collaborative opportunities with the retail sector to create excitement in auto retailing and also to add value to auto shopping experience like oil companies are expanding with new concepts on forecourt retailing. So far operated through dealership network with showrooms mostly in not-so-happening premises, auto showrooms are now beginning to move to retail centres to grab attention of new generation upwardly mobile customers. With increasing income, easy credit facilities and 'change every year' new found attitude (initially started with mobile handsets) Indian consumers are likely to make spontaneous decisions on automobile buys as well.
No comments:
Post a Comment