Advisory Jun, 23 2015

Indian soil proves to be lucrative for UK brands

Make in India, Invest in India and Flourish in India is the new motto that has taken the business world by storm. India, with a 7.5% projected growth, may officially surpass China in the growth chart of leading major emerging economies, according to lates

By Upant Sharma
Feature Writer
Indian soil proves to be lucrative for UK brands

According to global financial major Bank of America Merrill Lynch (BoFA), India topped the global emerging market investors’ country preference chart, followed by China and Poland. Going by the TechSci Research report, food services market in India is anticipated to grow at a CAGR of over 12% through 2020, due to increasing disposable income, changing lifestyle and tastes and preferences of consumers. One of the many significant reasons the foreign-based brands making a beeline for India to tap in its service market that is expected to go up in the years to come.

Homework; extremely crucial before entering Indian market

Entering a new market is itself a huge task for a brand since from customs and conventions to incomes to standard of living to choices everything takes a turn over. So, it turns immensely important to identify with the demography and needs of the region.

Caremark, a UK-based homecare service provider has recently entered the Indian market by opening their first service center in Kochi, Kerela and planning to foray in other regions. Greg Kuriakose Jacob, Chief Operating Officer, Caremark India says: “For a brand entering an international market, it is very important to understand the competitors. As we aim pan-India expansion, we need to see the kind of services our competitors in the same segment are providing. The kind of clients they cater to. What price they charge for providing the similar services. Most importantly, we should get ourselves aware of the difficulties and negativities our contemporaries faced during their course of establishment.” 

India; A cash rich market for expansion

India is a huge market in terms of doing business. When it comes to investing in the foreign market, most of the international companies do look for India as a lucrative option. These days with the introduction of proactive policies for the easiness of the conduct of business, India’s stature as a global business hub has touched new heights. Foreign-based brands not only are establishing their foothold in the market but, also raking up every possible option to penetrate across the nation.  With the advent of technological advancement and rising awareness among the people, every sector has witnessed a record hike. So, there is reasonable likelihood of the brands spreading their footprints across metropolitan, tier-I, tier-II and tier-III cities to do well.

UK-based retailer, Mothercare is operating under a JV with DLF Brands. Dipak Agarwal, CEO, DLF Brands says: “We will be adding at least 25 stores every year on average and our goal is to exceed the 200 store mark in the coming five years. The stores will open across tier I, II and III cities.”

Jacob of Caremark India says: “If we get successful in Kochi, we will move to other parts of Kerela like, Kottayam and other inner regions. At the later stage, if everything goes the way our team envisions, then we would like to take Caremark to some prominent cities of India, like Bangalore, Chennai and Mumbai.”

Franchising promises promising returns

Confining brand to a particular region can dilute the chances of its growth in future. So, the brands are always on the lookout for new horizons, new possibilities to branch out their networks. One of the best ways to spread biz footprints across the length and breadth of the nation is through franchising model. UK-based brands that have commenced their journey in India also feel the vitality of opting for franchise business model to grow their clientele network. Franchising business model has always been a viable and substantial option to expand footprints.

Speaking over opting for the business model to widen their base, Jacob says: “We needn’t experiment that how the new ways work in the entirely new Indian market. Caremark has been providing services for more than 25 years in the UK. The brand has always singled out franchising over other business models to mark a strong foothold in the service industry. So, we are robust to taking the franchise route to penetrate deeper in the Indian market. At this point, as our brand is new in India and looking forward to marking a significant place in this service provider’s segment, going for some other business model is out of question.”

Sharing a word on the Indian expansion Sally Chamley, Founder, Black Orchid says, “In India there is no tough competition from the organised players in the segment of luxury furniture. We see a great scope in the Indian market for establishing our foothold via master franchise route.” The brand is looking for partners with a proven track record in bulk warehousing and distribution and a keen interest in the luxury furniture market.

Challenges for foreign brands in Indian market

India is a land of diversity so challenges are bound to appear to the international brands foraying in the new market. Most importantly, the customers of the sector are expected to test the waters before picking the brand services. So satisfying the customer’s need in a way better than their competitors do in a lesser price is the major hurdle brand needs to overcome.

Jacob of Caremark India says: “Since India is having an entirely different culture, clients do seek for our experience in the care providing segment. Another roadblock is to getting the brand fit in the newly diversified atmosphere. We as a new brand need to prove the community that why we should be selected out of so many other service providers. The system we have been following needs uplifting through the time.” 

Undeniably, Indian market has profuse business opportunities to offer for every single international brand to thrive and rise higher. With well formulated plans, adept strategies and thorough home-work about the regions past business record, international brands could bet on investing money in India that promises promising returns.

Related: Reducing the start up cost of franchise

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