India now emerges as the world’s 2nd most attractive retail destination. Indian government’s decision to allow foreign companies to hold majority stakes in multi-brand retail outlets will open the barriers for supermarket chains like Wal-Mart, Carrefour and others. Heated debate is going on in the parliament. Those in favor feel the much needed investments in rural infrastructure, cold chains and employment will happen whereas those who oppose feel the smaller retailers will suffer. In apparels the Indian brands like Pantaloon, Raymond etc too are expected to shore up their strategic capabilities and get ready to for the ‘Big Fight’🙂
It’s at this opportune moment we have my colleague Ms Maitreyee De write a ‘guest post’ on the entry of the big brands in India. Maitreyee De has extensive international marketing experience. As CEO of a brand marketing consultancy she worked on some of the world most recognized brands including Mercedes Benz, Rolex, Omega, Swatch, Chopard, British Airways, Bally, Ray ban, Philips, Apple, Guess, Baskin Robbins and Guess. She now chooses to spend her time sharing her experiences with young managers, aspiring entrepreneurs and students. I thank her for this interesting article.
“A round of the shopping malls in Pune brings one face to face with a fair sprinkling of familiar international apparel brand stores – Promod, Zara, M&S, Tommy Hilfiger, Levis, Guess et al.
With a gloomy economic crisis prevailing in large swathes of the planet, most luxury and mid-range brands from various genres (from airlines to automobiles and apparels to artifacts…) are looking at the emerging economies for redemption – especially the BRICS countries.
The global management consulting firm A.T. Kearney ranks China as the most attractive emerging market for apparel retailers in its 2011 study. With its compound annual growth rate of more than 20 percent in recent years and growing disposable income of its burgeoning middle class, apparel retail in China has grown at a rapid pace, and this trend is expected to continue for some more years. China was followed in the ranking by U.A.E., Kuwait, Russia, Saudi Arabia and India.
In terms of overall retail, India is placed 4th in the GRDI rankings (Brazil is No. 1 this year). India’s strong growth fundamentals—9 percent real GDP growth in 2010; yearly growth forecast of 8.7 percent through 2016; high saving and investment rates; fast labor force growth; and increased consumer spending—make for a very favorable retail environment, says the Kearney Report. Simultaneously, Indian consumers continue to urbanize, have more money to spend on non-food purchases, and have more exposure to brands. The result is the gradual emergence of a powerful, more discerning consumer class.
It also appears that international brands have learnt valuable lessons in their global expansion drive through diverse markets in recent years. The need for finding the right route-to-market, effective channel management, tenacity, cross cultural communication imperatives, flexible pricing mechanism and deep knowledge of local markets are being factored-in more cautiously than the ethnocentric attitudes initially displayed by many.
Some brands have gone through turbulent distributor/franchisee relationships and burnt their fingers earlier on. The paucity/extreme cost of prime real
estate in India (so crucial for experiential marketing and brand contextualization), high taxes and the deep-rooted preference for traditional attire — albeit somewhat westernized – among large sections of Indian middle class shoppers are other challenges.
To create a larger and more viable marketing base, international brands need higher awareness of their brand attributes; not just name recognition. Since these are purely ‘desire and emotion’ based purchase decisions, they primarily depend on strong, sustained and well-differentiated marketing strategies. Using the same celebrity endorsement route (the ‘usual suspects’ normally associated with umpteen other products) and other clichéd strategies are not likely to be a very productive. For each brand to secure its desired space in the ladder and drive home its intangible value propositions (thus justifying a higher price) is bound to be a time consuming and well-crafted endeavor.
The recent highly controversial Benetton ‘kisses’ campaign may be an overly bold and unconventional way to ‘shock the sheep’ but one hopes to see some really ‘wow’ marketing activities from these leading brands to create resonance with a wider target group rather than the selected few who are already ‘converted’. Perhaps the ‘Big Boys’ of fashion need to find more creative ways of wooing our young, demanding and price conscious shoppers!
Will wooing the Indian consumer by the international brands meet with success? What are your views?