Home Retail Technopak conclave: Opportunities — beyond metros — beyond conventions

    Technopak conclave: Opportunities — beyond metros — beyond conventions


    Emerging markets and Asia’s retail economies were among the key subjects of discussion on day 2 of the 9th Marketing & Retail Conclave, 2008, organised by Technopak in New Delhi.

    Staf Lenders, property and establishment manager, Ikea, India, communicated his perspective on key challenges and opportunities for emerging markets. In his presentation, Lenders studied the different aspects of the emerging markets in India, Russia and China.

    Citing examples, he said that the model of FDI and VAT is very strange in India. “There are various points that seem confusing to me. How can a market emerge without having 100 per cent FDI? Besides, a retailer cannot ensure uniform price where there is VAT in India.”

    Venturing deeper into the mode of operations of the Indian market, Lenders said, “The real estate prices here is sky high. Besides, the realtors don’t respect the retailers from whom they earn.” Speaking about the real estate boom in the country, Lenders said that India, despite running high on the growing real estate scenario, is actually lagging way behind the real estate developments in China and Russia.

    With this as forethought, it was contextually relevant to have insights on retail trends in Asia, supported by performance figures of major retailers. Robert Gregory, senior analyst at Planet Retail, UK, forecasted that as the lifecycle of retail diversification evolves, global grocers will increasingly look to building smaller store formats, as against going on and on with the hypermarket model. A couple of prominent examples are Tesco’s Homeplus Express in South Korea (estd 2004) and Carrefour’s Dia in China (estd 2003). In fact, Tesco’s strategy in Thailand is revealing. Tesco Lotus hypermarkets were set up in the country in 2000, with an average size of 8,000 square metres. In terms of number of stores, it grew from 24 in 2000 to 75 in 2006, and expected to touch 120 in 2012. Relative to this, the company’s convenience stores called Tesco Lotus Express, averaging 250 square metres in size, numbered 266 in 2006 and are slated to jump to 616 by 2012.

    A research on ‘channel values’ in Asia for the period 2000-07 reveals that for hypermarkets and superstores, sales travelled from USD 95,707 billion in 2000 to USD 163,986 billion in 2007. For supermarkets, sales for 2000 and 2007 were USD 61,253 billion and USD 116,455 billion, respectively. Convenience stores registered USD 63,509 billion for 2000 and USD 97,369 billion for 2007.

    Bijou Kurien of Reliance Retail, speaking about the role of modern retail, said, “In India, modern retail has brought in ample employment opportunities, whereby a person who would otherwise be considered as unemployable, can get employed in a retail store. Besides, this is a diverse country, and all the retailers should address the diversity if they have to succeed. The traditional retailers know how to act and adjust to situations. That is why they are still alive and successful.”

    Speaking about the consumption patterns in the country, Kurien listed food and grocery at the top of the lot, while listing home products and luxury brands at the bottom.

    What is a ‘premium lifestyle brand’ in the context of the Indian market? How do varied pricing of similar premium brands in different countries affect their sales? What are the desires, demands and aspirations of niche consumers of premium brands? These queries, and more, were discussed by the panel comprising Dilip Kapur of Hidesign, Subhinder Singh Prem of Reebok, Sailesh Chaturvedi of Tommy Hilfiger, Vispi Patel of LVMH, India, and Alexis Szabo of Cosmos Group, India. Tarun Joshi of Brandhouse Retails Ltd moderated the discussions.

    The panel in the attempt to arrive at a definition of a ‘premium’ or a ‘lifestyle’ brand, agreed that it was a subjective matter as it varies not only in terms of the price or the market, but also with the demographic profile of consumers. The panel cohered that the consumer in India is as aware as his counterpart in any other country, and not only keeps track of the brand’s worldwide pricing, but also checks if the collections on offer are the latest.

    Harminder Sahni, managing director, Technopak, made a definitive case for retailing potential in cities other than metros in India. He showcased relevant data supporting the growing number of urban population in other parts of the country, and indicating how smaller towns are developing. According to his presentation, there is 27 per cent urban population in the six major cities in India – and that happens to be the most pampered lot by organised retailers. On the other hand, there are 39 cities with over 77 million population, out of which 22 per cent qualify as ‘urban’ population and are still at the exploration stage. The rest of the 350 cities have more than 20 million-strong population that falls in Sec A and B category, and still have not seen much happening on the organised retail front.

    Sahni cited the example of the United States, where the list of the top 20 cities keeps changing quite often as even unknown cities come up on top due to the development they sees in all respects. In India, similarly, a lot more cities from various states are likely to develop and be better than cities that are today on the top rung.