While it is a number considered lucky by some, there are others always looking at avoiding it. The number 13 has had this mystical aura around it always. Talking about 2013, the year indeed was very much dynamic for the retail industry in India. Where there was a major breakthrough for FDI in multi-brand retail, the other news worth a mention would be the entry of a couple of international brands in the country, the growing popularity and acceptance of online shopping and, of course, the Bharti–Walmart split.
As pointed out by a study taken by the Images Group, the Indian retail market is currently estimated at US$ 490 billion and is projected to grow at a CAGR of ~6 percent to reach US$ 865 billion by 2023.
Harish Bijoor, brand expert and CEO, Harish Bijoor Consults Inc. shares: “Indian retail went up and down in tune with the overall economic sentiment that had retailers re-think their retail strategy altogether. While expansion plans went on hold, older plans already made rolled on nevertheless. The overt feel of Indian retail, therefore, remained rather intact and everything looked hunky dory at skin-deep levels of retail appreciation. Margins went into a tizzy, off-takes went slow, and festival season sales did not go as expected. Management churns were the norm as well. As modern retail went into a tizzy, a silent selling movement, spearheaded by direct-to-home sellers gained ground. The biggest success in sales and marketing recorded in 2013 could be the direct to home guys. Although Amway ruled, it still went into a tizzy, with William Pinckley in trouble in Kerala. All the same, silent 1:1 selling gained ground.”
Click! click! click!
The online space has grown multi-fold in India, with practically everything under the sun being sold online. Leading the revolution in many ways is Flipkart. The other major players include Jabong.com, Myntra.com and Snapdeal.com. Niche e-commerce portals like bookmyshow.com too saw an amazing rise in consumer acceptance and confidence in 2013. Amazon.com, the world’s most preferred online shopping place, entered the Indian online domain in 2013 as a third-party marketplace providing for others to sell, instead of selling directly. On what made Amazon choose this model, Amit Deshpande, Director, Amazon Seller Services shares: “In all markets that we operated outside India and Brazil, we have a model known as hybrid model, which includes Amazon marketplace. Besides Amazon retailers, even other sellers sell on that platform. In India, FDI-related rules and regulations prevent us being retailers in India and we end up becoming a marketplace. We believe that allowing FDI would be beneficial for consumers in India because it would allow us to source products at lower prices that retailers don’t have on the platform. So, we are supporting something that would eventually benefit the consumers.” Adding further, he says: “We believe that the future of retail in India is e-commerce because there is very large clear value of customers in terms of convenience. Also, there is great opportunity for small and medium enterprises as well as larger retailers in India to reach national markets, where Amazon is bringing global expertise in India.”
An interesting development in the online space that deserves mention would be that of Nissan offering its entire lineup of models on sale in India for purchase on the internet. Through the online portal, customers will be able to pay for their car via credit card and the car will be delivered to them by the closest Nissan dealer. Tata Group too went ahead to make available the option of booking homes online.
Retail real estate
This is one segment that has always been an issue of debate and discussion in India. Where the rentals take the centre stage sometimes, at other times it is a discussion and deliberation on space scarcity in terms of quality and reach. The year 2013 didn’t see much movement in the retail real estate space with any major launches or policy changes. However, it would be unfair not to mention the launch of Lulu Mall in Kochi. From the stable of Abu-Dhabi based retail powerhouse EMKE Group, the mall is spread over 2.5 million sq.ft. and is built at a cost of Rs. 1,600 crore. The mall has a capacity to easily accommodate 300 national and international brands. The other major dynamics in this space would include the setting up of malls and shopping centres in Tier-II cities and towns.
According to real estate consultancy firm Jones Lang LaSalle’s ‘Indian Real Estate: A Review of 2013 and Outlook for 2014’ report, Chennai witnessed the strongest retail real estate absorption in the first three quarters, at 53 percent of net rentals and property purchases across the country during the period.
From across the globe
International brands were seen actively trying to set themselves in India and forerunners would be the premium and luxury brands that are betting big on demand from Indian consumers for their respective brands. The year also saw the launch of Les Petits, India’s first multi-brand luxury store for kids’ apparel and furniture. The store was opened to the Indian consumers at DLF Emporio, New Delhi. Eminent brands such as I Pinco Pallino, Fendi Kids, Miss Blumarine, Baby Dior and Simonetta that cater to children in the age group of 0-8 years are available at the store besides the globally renowned furniture brand – Theophile & Patachou.
Another international luxury brand to enter India was the American luxury goods retailer Michael Kors that offers apparel and accessories for men and women. The brand has joined hands with Genesis Luxury Fashion to open stores in India. The first Michael Kors store opened in New Delhi’s luxe mall DLF Emporio.
Year 2013 also saw the launch of Italian luxury label Misssoni in India. The brand that has built its USP around knitwear and iconic zig-zag patterns saw the unveiling of its first Indian store again at DLF Emporio. The store offers both menswear and womenswear prêt-à-porter collections, along with a line of accessories, eyewear and kidswear.
British retailer M&S has set India on its priority list. Since M&S formed its joint venture partnership with Reliance Retail in 2008, the retailer has built a solid platform to accelerate its growth in India. Since April 2013, M&S has already opened seven stores in India including doubling its presence in Mumbai and entering the cities of Kochi and Vadodara for the first time. M&S now has 36 stores in India, trading from over 500,000 sq.ft. As part of the retailer’s plans to take its business in India to the next level, M&S will open a further eight stores by the end of March 2014, followed by a further 36 stores in the next two years. Marc Bolland, Chief Executive Officer, M&S shared: “India is a priority market for M&S and working closely together with our partner Reliance Retail, we have set a clear plan to build a leadership position here. As the nation’s leading retailer operator, Reliance Retail is the perfect partner for us in India with extensive local expertise and experience, with strengths in infrastructure, logistics, technology and property. This combined with M&S’s brand loyalty, exceptional quality, and stylish products, has seen us continue to deliver strong double-digit growth in India. Now with 36 stores, we have the ideal platform to accelerate our growth in the market and see India become our largest international market outside of the UK by 2016.”
As pointed out by a report released by Technopak, the alternate retail landscape is rapidly evolving with the disruptive growth of direct selling, home shopping, and e-tailing retail channels. The report further states that leading the non-store retail segment, the e-tailing market is estimated at US$ 1 billion in 2013, and is projected to grow at a rate of ~50 percent year on year to reach US$ 56 billion by 2023.
As Ankur Bisen, Senior Vice President, Retail & Consumer Products at Technopak, points out: “Post-election, hopefully there will more clarity on the reforms in retail. This will lead to renewed interest by foreign retailers. We shall also come across more announcements from foreign fashion retailers and brands expressing their desire to look at India and, hopefully, some brands may open their first stores in India. We shall also witness a high interest and expansion of food services brands in India and e-tailing shall be an important driver for non-food retailing.”