Burgeoning Retail in India

Retail in India

India is the fifth largest retail destination globally. The Indian retail industry has experienced tremendous growth over the last decade with a significant shift towards organised retailing format and development taking place not just in major cities and metros, but also in Tier II and Tier III cities. The overall retail market in India is likely to reach Rs 47 trillion (US$ 792.84 billion) by FY 17.

 

Textile Ministry for FDI in multi brand retail, but only in Indian apparel

The ministry of textiles under the newly formed BJP government has a contrarian view on the allowing foreign direct investment (FDI) in multi brand retail. Contrary to the party’s policy for not allowing FDI in multiband retail, the ministry, in its strategy report for the sector has recommended FDI in single and multi brand retail under automatic route, albeit restricting its views only to Indian apparel brands. At present, foreign direct investment policy does not allow any FDI in Indian brands or retail but only in foreign brand/retail, which is owned and operated by an international company. On the other hand, the ministry is of the view that building brands and expanding retail footprint is capital intensive yet promotion of Indian brands in the domestic market needs to be supported with success in dedicated retail stores for single and multiple Indian brands. It has further stated that the Turkish model for helping country’s brands to venture overseas is a good template, which can be adopted with suitable adjustments and modifications on a pilot basis to begin with. The ministry has also come up with a proposal to conduct a scientific, systematic anthropometric study of Indian population for developing a standard Indian sizing system. Today markets are either European or American size which does not fit body size of typical Indian person. Providing right size and fit to the market will promote domestic demand and sector growth, suggested the officials. Meanwhile, the textile sector could diversify its export markets and goods category, suggested the strategy report. There are several finished goods categories such as suits, women’s western wear, intimate wear, swimwear, outerwear, etc which has multibillion dollar trade globally but India’s share in them is quite nominal. Besides, there are several large markets like Japan, Russia, South Korea, Switzerland, etc. in which India’s trade share is very low. Therefore, in order to increase India’s share, it is suggested that country specific export strategies should be developed and implemented. Under this strategy, initially four to five major markets should be identified in which share of Indian exports can be increased. Albeit, to promote exports in non-traditional products, the ministry has suggested to extend five year tax holiday for designated companies on exports of specific finished good items (apparel, made ups and technical textiles), if their export growth is over 25% annually. (Source: http://www.business-standard.com/article/economy-policy/textile-ministry-for-fdi-in-multibrand-retail-but-only-in-indian-apparels-114090300880_1.html )

 

Future Group ties up with hybris for its retail operations in India

Hybris software, an SAP company and the world’s fastest-growing commerce platform provider, announced that Future Group, a leading retailer in India, will use the hybris Commerce Suite to support its omni-channel retail operations. Comprising a number of different retail brands covering sectors such as fashion, sportswear, food and groceries, electronics and homeware, Future Group wanted to find the technology that would allow a seamless convergence of its emerging digital and physical commerce touchpoints (physical facilities/store network, human assisted digital commerce network Big Bazaar Direct, e-commerce sites, catalog/phone order; mobile devices; TV/new media etc). Having looked at various solutions, the company decided to use the hybris Commerce Suite as it was the only solution that best met these requirements. Over 500 companies have already chosen hybris to help develop their omni-commerce strategy including leading brands and retailers like Toys ‘R’ Us UK, Metro, Levi’s, Galeries Lafayette, Migros, Nespresso and Lufthansa. True omni-channel retailers are able to seamlessly integrate the best of both digital and physical worlds at each step of the customer experience. Even before a customer comes to a store, many customers are researching and making their product decisions online. hybris gives an optimal, consistent user experience in-store, on the web, on mobile devices or any other digital platform. And it works in both directions: hybris gives the retailer one view of the customer and the seamless customer interface gives the customer one view of the retailers’ brand. Thus for an omni-channel retailer, websites and mobile devices aren’t just e-commerce ordering vehicles, they are front doors to the stores. Retail outlets aren’t just showrooms, they are digitally-enabled inspiration sites, testing labs, purchase points, instantaneous pickup places, help desks, shipping centers, and return locations.(Source: http://www.asianage.com/business/future-group-ties-hybris-its-retail-operations-india-978 )

 

Sri Lankan retailers step up India presence via single brand route

Sri Lankan retailers are making a beeline to enter India through the single brand FDI (foreign direct investment) route. After premium brands such as Avirate and Amante, fashion and lifestyle brand Odel is also seeking to set up stores in the country. Odel will bring in its private labels and stay away from multi-brand retail, since the norms and clauses attached to it are considered to be stringent by most international retailers waiting to enter India. Odel stores in Colombo are mostly in malls, selling several fashion and lifestyle brands. Since Odel has already been sourcing from India, the local sourcing clause of 30 per cent is not likely to make any difference to the Sri Lankan retailer. Premium lingerie brand Amante, the first Sri Lankan brand to enter India seven years ago, is also planning to tap into the single brand retail route to open its exclusive outlets. Amante is in India through Mas Brands India, a subsidiary of its holding company, Mas Holdings in Sri Lanka. Amante has three factories in India for global sourcing. Single brand retail would help facilitate operations for the Sri Lankan retailer. Meanwhile, woman’s western wear brand Avirate (part of Sri Lanka’s Timex group) is present in the country for the past three years through the single brand retail route.(Source: http://www.thehindubusinessline.com/companies/sri-lankan-retailers-step-up-india-presence-via-single-brand-route/article6373628.ece )

 

Japanese retailer Muji considering India entry

Japanese household and consumer products retailer Muji plans to enter India next year, a newspaper report said. Tokyo-based Muji plans to forge a joint venture in India next fiscal year and open its stores in major Indian cities by 2016, the Japan Times reported, citing sources it didn’t name. Prime Minister NarendraModi is currently visiting Japan, seeking to improve bilateral ties and attract investment. Tokyo on Monday pledged investment of more than $35 billion in India in a wide spectrum of projects over five years. Another Japanese giant, Fast Retailing Co that operates the Uniqlo fashion apparel stores, has been exploring possibilities to enter India for years. Uniqlo’s head met Modi on his current tour of Japan. Muji operates stores in the US, Europe, China and in Southeast Asian countries. (Source: http://articles.economictimes.indiatimes.com/2014-09-02/news/53480074_1_japanese-retailer-muji-uniqlo-india-entry )

 

Thus we can say that with the online medium of retail gaining more and more acceptance, there is a tremendous growth opportunity for retail companies, both domestic and international. Favourable demographics, increasing urbanisation, nuclear families, rising affluence amid consumers, growing preference for branded products and higher aspirations are other factors which will drive retail consumption in India. Both organised and unorganised retail are bound not only to coexist but will also achieve rapid and sustained growth in the coming years.

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