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?
Thanks Ashish and once again best of luck! Cheers!
BTW I had a look at the Aryan Management & Engineering Colleges websites – looks great 🙂
Such a wonderful topic to share, discuss and comment.
1. If Wal-Mart comes in India It will develop the country, but India will face a big crisis because most Wal-Mart products are from third country not form India and selling imported product in Indian Market will affect Indian companies very badly and at the same time there will be high import through Wal-Mart which is again affecting GDP.
2. If government make an agreement stating that Wal-Mart will have to sell Indian product at least 85% then there will be win-win situation because Indian market will not be affected and also Wal- Mart will generate revenue.
3. Smaller retailer will definitely suffer as Wal-Mart will have all the products under one roof with less price and highly good in service. I will give a real example in Vimannager, there was a “Family supermarket” (near ICICI ATM) whose sales was decreased by 50% when retail chain store “More and Reliance fresh” has opened.
But, by not allowing Wal-Mart in India will Hamper/slow down the Country development.
As written above Indian consumer are being brand conscious and have more exposure to brand, the Branded apparel will have to come with good offers and “Good Design” to sell their product in market as Indian consumer always look for discounts and offers.
Most of the brands Like Levis, Peter England, Lee copper have become the preference of middle and upper – middle class. We have seen branded products not selling much in “NO” offers and when offer/sale comes, even though if there is summer, consumer buy discounted jackets for next year, because they buy it for cheap price with same brand name. This proves that most of the Indian consumer looks for discounts and offers.
By advertising and promotions it will only attract customer to their store but to sell the product they need to come up with attractive design, new style and offers.
But at the same time, company should not give too much of discounts as it will hamper and low down the Brand Image.
Sir Please Guide wherever I’m wrong…
A warm welcome Ashish after very long 🙂
Ashish Wall-Mart has covered mush in their global learning curve especially in China. India after China is another link in their global value chain. I am sure they will tread cautiously and respect Indian culture as well as provide value to the customer. They also know the art of coexisting with small stores our Kiranas and create win-win positions. But it will surely be a challenge but one that may not deter the global giant. Lets see what really happens>
Your assessment of the Indian consumer and apparel industry is very correct.
Thank you for your participation and views. I wish you great success in your large venture in Nepal. Knowing you – you will surely win the challenge.
Thank you for giving us such a good knowledge.. and thanks again for best wishes. 🙂
Thank you for sharing such a nice article, it gives me help in my assignment of Wal-Mart.
International brands which entered and will be entering in India must do environmental analysis. These brands should target first niche market and after getting the idea of consumer needs and wants, then can start to expand. Success of brands not only deals with brand image ,but also on their value chain, to get more cost effectiveness company should acquire full value chain. Finally last but not least factor which makes the difference is the employee. As Mr. Sam Walton founder of Wal-Mart said ” If you take good care of your employees, then they will take care of your customers.” I think so the cluster of these factors can make a difference for international brands in Indian market.
Thanks Shri you are spot on! Best regards.
was waiting fr an update from ur side on the retail sector … this ws one of the topicz dat we kept on speculating during SM lecture !!!
n wt an amazing title … i simply loved it and as usual the article is superb !!!
Thanks for sharing …. !!1
Wow Nisha its been ages isn’t it? I am sure your dissertation on KM turned out super. Your entire batch was just amazing. Glad you liked the retail review with the global brands now showing their splendor.
Trust you are in a Corporate setting by now/
Do keep in touch & cheers 🙂
i knw its been ages … actually was on vactn …. 🙂
I am still working on my dissertation and shall send you the details for your valuable suggestions…… n yea the entire batch was awesome !!!
Shall be in corporate setting in few months time, as am just preparing myself to be competitive enough !!!
Shall definitely keep in touch 🙂
Hey Nisha me waitn for read the KM paper 🙂 Thanks & best regards.
Loved the title – made me go through the article. Every line has a meaning and was informative. Thanks for sharing.
Its nice that you liked the article. Credit goes to Maitreyee Maam. Thanks for appreciating.
@ Sachin glad you liked it credit goes to Maitri maam. She is an authority on ‘International Brands and Branding’.
@ Girish … claps for Yogesh
@ Anil … cheers!
Dear Sir. Such a vivacious experience to read your article on world’s 2nd most attractive retail destination. MNCS are coming to India very swiftly. Moreover; Indian players like Reliance, Bharti, ITC, Future Group and many other taking significant investments in retail market. Big retailers can bargain with suppliers to reap economies of scale. Proper infrastructure is a pre-requisite in retailing; it would facilitate rapid economic growth. Here, one can get assurance about efficient delivery of goods and value-added services to the consumer who is a real king contributor of GDP. The biggest challenge I am seeing is “Trained Staff” in India which was the price concern of Wal-Mart when they started their environmental scanning process for our land.