Make Global, Sell Local

One of the most promising modern economies in the world, India in recent years has been the focal point of continuous growth and development. The economy and the export market have been relatively stable, with a strong growth rate of approximately 8 per cent and 20 per cent, respectively. India is considered to be one of the key investment destinations, especially for brands and retailers who hope to sell unique lifestyle propositions to India's nouveau global citizens - reinforcing a more favourable attitude for global investors. However, a lot will depend how well these brands can create exclusivity, and consequently, distinct market standing.

Among other things, one major contributing factor to the growing economy is the changing dynamics of the Indian population.

A young India : Nearly 50 per cent of India's population is less than 25 years, while 70 per cent is below 35 years. A young population, born in the consumerist era, is much more open to spend and look forward to international formats.

Growth in urban India : Urban India accounts for 38 per cent of the total market consumption and its expenditure has grown at CAGR six per cent over the last six years.

Changing lifestyles : Nuclear families with double (or multiple) incomes, greater participation of women in the workforce, international travelling, and the consequent greater exposure, are all redefining lifestyles.

The middle class : NCAER's study on the Indian middle class very clearly highlights the change in inc om e distribution levels and the growth in prosperity and inc om e of the population in general.

Evolving shopping habits : The increasing number of malls offering wider shopping options like food, clothing and entertainment along with an excellent shopping experience, has made shopping more of a leisure pastime than the traditional, need-based activity.

All these factors together render the economy highly dynamic and progressive, leading to growth in per capita demand, consumption and share of lifestyle categories in the consumer's wallet. While the constant evolution in the economy's dynamics is changing the basic rules upon which it has been functioning, one key development is its acquiring of global form. This is both in terms of Indian companies making their presence felt in foreign lands and international brands entering the Indian subcontinent.

Some reasons for entry of international brands
For a country with a population of one billion and a burgeoning middle class, the numbers themselves apart from other factors have been enough to drive the growth of the economy, making it a favourable destination for foreign brands. The process that started with liberalisation of the economy in 1991, continues with the government moving a step ahead and opening the economy to retail players recently.

Besides the easy availability of quality retail space with increase in organised retail, mall development has been another attractive factor. The current number of operational malls, at about 200, is expected to rise to almost 600 by year 2010.

The partnering option with big corporate houses can also be used as a channel by international brands to enter India. Examples of such partnerships are Reliance with the brand Armani, and Arvind Brands with VF Corp.

International brand performance in India
Of course, the performance of most of the global giants entering the Indian market greatly depends on how successfully they understand the market and consumer behaviour. Hence, customisation of products to meet the Indian consumer's demands, requirements and purchasing power is the key to success.

India being a price-sensitive market, the biggest challenge is to meet price expectations in order to gain the consumer's acceptance. Customisation of foreign brands as per local market conditions can be achieved by introducing changes in the product mix and price range offered, vis-à-vis the international offerings. A quick review of some key lifestyle categories shows the increased level of activity in these segments, particularly with respect to international exposure.