Some analysts may refer to east India as a relatively under-developed region in the context of retailing growth and evolution. However, this market has been on a growth trajectory since the turn of new millennium. The growth has been attributed to the growing middle-class segment, rising disposable incomes and growing aspirations for improved living standards (especially among the youth).
These factors are further influenced by media exposure, globalisation of cultures, lifestyles and better technology at our disposal. From an infrastructure perspective, east India has been well-integrated through improved communication systems and modes, real estate development, urbanisation, frequent travels by the population and growing service sector.
India’s retail market value is estimated to be Rs 6,156,333 crore (US $1026.06 bn) by 2017. And if this number has to be pushed further then the focus needs to shift from traditional North and West zones to states like West Bengal, Bihar, Orissa, Jharkhand, Chhattisgarh and the North-eastern states.
The true demographic dividend of India would remain untapped if the eastern region is not explored. As the retailers are now looking for scale, sustainability and growth, eastern India with its huge population base and untapped market potential poses to be ‘The Market for Tomorrow’. Over the past few years, retailers have realised the scope and opportunity of this zone and now they seem to be all set to reap the demographic dividend. While until a few years ago, many retail brands seemed hesitant to step into this market, today they are vying to build presence. Contrary to popular belief, the east has been the breeding ground for many major retail brands and large format retail players who are present across multiple categories.
Be it Pantaloons or a Big Bazaar, or regional fashion and lifestyle brands such as Turtle, Khadim’s or Sreeleathers, the east has been a major market contributing significantly to overall growth for all these brands.
The great middle class is automatically getting upgraded to a higher level. What was unthinkable in the Eastern region until a few years ago is becoming a reality, whether it is the special limited edition models of Breitling watches, high-end Canali Suits, or luxury brands Gucci, Burberry, Emporio Armani and Michael Kors that have opened stores in Kolkata, the gateway to luxury retailing in Eastern India. Customers belonging to diverse milieu are making a beeline for the malls to gaze at, touch, feel, buy, and revel in the experience of possessing these and more such high-end international and national products.
Aspiration-driven Retail Market
There is definite shift from need-based purchase to aspiration-based purchase, and fashion apparel is now becoming more than a basic need in India. Eastern India is not unaffected by this aspiration-wave. East India consumers, who till a decade back were known for their very conventional approach to fashion and luxury, and would hesitate to experiment with style and colours, have tasted the euphoria of buying the ultimate in luxury – be it in lifestyle, health and beauty, fashion wear, fashion accessories, jewellery or food products.
Tier II, III Cities as New Growth Drivers
Hit by high rentals and low footfalls, one-third of retailers at shopping malls in large cities such as Mumbai, Delhi-NCR, Chennai, Bengaluru and Kolkata are shifting to Tier-II and -III cities. Development in a Tier-II and -III city is more challenging as the target audience is in the process of changing its buying and consumption patterns. In a metro, one has competition, and the consumption pattern is already set, so the value proposition is a little different. However, in all cases, the ‘experience’ one delivers to the customer is what defines one’s success. Tier-II and -III cities are untapped markets where it is important for retailers to establish their brands. Both these statements establish the imperative need for creating visible brick-and-mortar presence by brands and retailers. The process has already begun in real earnest by both regional and national players, evident by the presence of brands in different formats.
Growth Proposition of Eastern India
There are many projects that the West Bengal Government is taking under ‘Bengal Leads’ Programme. Apart from West Bengal, Bhubaneswar in Orissa is becoming a new IT and education hub. Other cities in East India, such as Bokaro, Ranchi, Patna, Rourkela, Dhanbad and Jamshedpur have witnessed significant economic booms because of the rich mineral resources found in these places.
Some notable conglomerates who Kolkata has proudly hosted — in the past and currently — as headquartered include ITC Limited, Exide Industries, Bata india, Birla Corporation, UCO Bank and Allahabad Bank.
One can rightly say that between 1960 and the mid-1990s, many large size factories were closed or downsized because of lack of capital and resources coupled with a long standing tradition of trade unionism. Kolkata’s economic revival was led largely by IT services, and because of it there has been surge of investment in real estate be it housing projects or retail real estate.
Eastern India has all the potential to become an upcoming hub of modern retail. But certain factors, including facilitation of entrepreneurship, creation of quality infrastructure and upliftment of poor are critical if consumers in East India are to take the lead in modern retail.
East India is like a cheque ready to be encashed, only if the state governments agree to unlock the massive untapped potential of the region without further delay and allow the people to participate in the retail evolution sweeping across the country. Modern retail will also create thousands of jobs in the region and will lift many households from the low income category.