NEW DELHI: Entering a market as big and complex as India's is a big bet, but success is by no means guaranteed as China shows, the other promised retail land in Asia. Still, more than 40 mid-rung global retailers are planning to enter India in the next one year, thanks to the virtuous circle of rise in ease of doing business coupled with booming urbanisation and growing middle-class.
Brands such as HEMA, Delifrance, Petit Bateau, Magnolia Bakery, Marco Pierre White, Monnalisa, and many more from the United States, Europe and Australia spread across almost all sectors will be investing about $250-300 million. “Cumulatively, these brands will open about 2,000-2,500 stores over the next few years,” Gaurav Marya, chairman of Franchise India Holdings, a retail solutions provider that is helping some 43 brands find partners and get regulatory clearance, told TNIE.
Of the incoming brands, 29 are in the food & beverage segment followed by seven in apparel. Unlike most large global retailers which focus on urban cities, some of these mid-sized brands are looking actively at tier 2 cities and beyond which are said to be the future centres of retail growth in India. Also, as retailers struggle in their home markets, the success of brands such as IKEA, Miniso and Uniqlo seem to be a good reason why India has become a curious choice.
Rajat Wahi, partner, Deloitte believes small and mid-sized brands are also aggressively looking to cash in on the open retail policy and huge gap in the market for branded products. “The recent changes in single-brand retail trading norms, allowing brands to use their global sourcing volumes out of India against the local sourcing, and the low household penetration is attracting a lot of brands," he said.
For long, some brands have refrained from entering India because of the mandatory brick-and-mortar rule primarily because of the high cost of commercial real estate in high streets or shopping malls, pointed out Shubhranshu Pani, managing director, retail services, JLL India. The decision to allow brands to operate online-only model, and open brick-and-mortar outlets within the first two years of starting online, however, has spurred the interest in global retailers who have been upbeat about the country’s consumption story despite the economic slowdown.
The two-year window, he said, is enough to test the waters first and then open stores on their own or with a local partner depending on the consumer response to a particular brand and its scope of business. Among the new entrants, brands such as Petit Bateau and Perry Ellis have already had a taste of the India marketplace through Amazon. Keeping in mind the fast-paced lifestyle here, these brands are now entering the offline retail space because retailers see that the future of the industry won’t be black or white in choosing only online or only in-store, it will be multichannel