Historically, India has been a land of retail characterized by the mom & pop stores ..millions of them across the length & breadth of the Country ..carrying the typical complexities & diversities of the Land as they change form from one State to Another ..
A Plethora of stores, an incredible assortment of formats; on one hand, we have local grocery stores offering credit and home delivery, and kiosks slightly larger than a kennel selling Tobacco , Cigarettes , Candies & confectionery ; on the other, we have organised big-box retail chains and branded Retail stores right from Economy to premium, to Bridge to Luxury and even the Luxury brand Retail !!
New kid on the block -There is a flourishing e-commerce sector that is expected to transform the industry. From personalised services, to cash-on-delivery and instalment payment systems, India’s retail sector has definitely come of age.
Over the last decade, the concept of shopping has also undergone change in terms of format and consumer buying behaviour. Modern retailing has taken over the Indian retail market and is observed in the form of bustling shopping centres, multi-storied malls and huge complexes and retail hubs that offer shopping, entertainment and food under one roof. As per the report on the retail sector – Think India, Think Retail, modern retail penetration in the top seven cities of India stood at 19% in 2014, of which brick and mortar modern retail space was at 17%, and E-retail at 2%. However, the scenario will soon change as the share of E-retail is expected to upsurge five times its current size, from 2% in 2014 to 11% in 2019.
The Indian customer has evolved with time and this has led to a sudden spurt in global brands entering the market with their set of offerings. This, coupled with a rise in purchasing power, has brought branded merchandise across categories like apparels, cosmetics, beverages, food and jewellery within the reach of customers. Currently, the total retail spending in the top seven cities in India amounts to INR 3,586 billion (R679 billion), with the financial & Commercial capital of the country -Mumbai accounting for the lion’s share of 29%. This is followed by NCR – New Delhi and Bengaluru at 25% and 15% respectively. Going forward, the total retail spending across the top seven cities is expected to more than double, over the next five years.
Given the current activity in e-commerce across the country, we expect the retail sector to see substantial changes in the coming months. While the share of E-retail is expected to upsurge five times by 2019, the share of brick and mortar modern retail will see a drop from 17% to 13% during the same period. It is time for retailers to take note of the change and capitalise on this opportunity by introducing newer formats that would pave the way for better products that are available at the right price.
With an ever expanding domestic market and a forecast growth rate of 15% a year, the Indian retailing scene seems extremely attractive for overseas investors who are looking to foray into this segment and make huge returns on the back of a large consumer base.
Today, several global names are keen to enter the Indian retail market; however, it is for the present government to decide the route. Will foreign direct investment be the best one? We will have to wait and see.
Organized Indian Retail is a relatively new sector, not over 30 years old with ‘Pantaloon’ from the Future group and Shoppers Stop initiated by Rahejas ( leaders in Construction business ) being the pioneers in the Retail industry or who it could be called before it acquired it’s spurs. Besides them, there were only a handful of early adopters in the first decade, a scenario that changed rapidly in the second decade. The late 90’s to 2008 saw a melange of emerging retail brands in India. With apparel and fashion taking the lead, other lifestyle needs were not too far behind. With the economic wave’s upward crescent and disposable income on the rise, the burgeoning middle class was now spoilt for choice.
But in the midst of this massive expansion, a critical question to be asked was, ‘Was Indian Retail at par with international retail?’ The answer was apparent with a walk down a high street ( There are No high streets in India in the True sense of the Word ) or Shopping malls — the new flavour in organized Indian retail. Often greeted by straightjacketed mannequins with hanging arms and staid expressions, standing in a military formation in a cramped window. This was the face of the store and it couldn’t possibly compare with global retail. The latter being more than a century old whereas organized Indian retail was still in its infancy.
Post 2008 the economic dynamics in the country saw a sea of a change. Hit by the global slowdown and the recession, the downturn saw many yet-to-be-profitable-brands fade into extinction. Consolidations, mergers, acquisitions and silent exits were the order of the day. Inflation was on the rise and GDP growth was at a measured pace. All this and more influenced the rise of a new government in 2014 which introduced ground shaking policies of demonetisation ( withdrawal of higher denominations of currency to Curb the parallel economy ) and GST ( rationalization of the tax regime ).
The turbulence of the last decade has certainly seen many small players exit the scene but it also led to the emergence of stronger, more cohesive brands that weathered the storm.
In a heartening move, one now experiences organized Indian Retail at far better standards & those which are comparable with the best globally. Perhaps Indian retailers have realized that to woo and wow the audience they need to tell a story from the beginning. Defined product lines, well presented in collections, synergized deliveries across the chain of stores, world class branding, a detailed and layered retail store experience projecting the brand identity, last but not the least, topped with effective social media posts and engagement, all building that traction at the store, a Certain Stickiness that builds a positive affinity for the store brand.
Today, brands fight hard to retain a customer acknowledging that brand loyalty can’t be taken for granted. Indian Retail brands have covered a greater distance in this last decade than the preceding one. What makes this achievement even more significant is that it has happened in a less favourable economic climate.
While the Evolution continues, there has been nothing less than a revolution in the Organized retail in India, given where it has originated from.
About the writer:
Sudhir Pai is ex-CEO Hamleys India and now Managing Consultant, Consumer & Retail Practice at Horton International India.
He has spent 27 years in retail – across companies like Titan, Blowplast (VIP Luggage), Unilever, Shoppers’ Stop and Reliance Retail and 10 years in FMCG, in Phillip Morris and Gillette.
His LinkedIn profile is https://www.linkedin.com/in/sudhir-pai-a65a092/.
He can be contacted at +91-9867645042 (Mobile), sudhir.pai@hortoninternational.in (Email).
