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Sep, 01 2006

Emerging Trends

POST liberalisation and globali-sation, the country\'s economic standing has witnessed a substantial upward movement. Foreign players are already in the country or knocking at the door, whereas the domestic market is undergoing a complete make over. With

POST liberalisation and globali-sation, the country's economic standing has witnessed a substantial upward movement. Foreign players are already in the country or knocking at the door, whereas the domestic market is undergoing a complete make over. With more money in their pockets, the growing middle-class consumers have become more discerning and demanding in terms of commodities and services.

The new economy has brought along with it a major shift in the consumer's behavior pattern, resulting in change in the buying habits and lifestyle of the consumer. Today's new age consumer is more brand driven, and more conscious than ever before. Whether it is eating out, seeking entertainment or shopping for branded products, today's consumer is not what he was a decade ago.

Eating habits

Gone are the days when eating out was something that would happen once in a while, involving the whole family. Now, eating out has become an everyday casual affair, more specially due to the coming up of nuclear families, and working parents.

Over recent years, two kinds of eating habits have evolved: Food on the move, and proper dining restaurants.

While kiosks and highway eateries cater to the increasing demands of today's customer on the move, prominent high streets outlets, food courts in malls, and swanky highway joints are satisfying the urge of the new age consumer's food desire. These eating joints have become ideal places for consumers who are casual on eating out.

In the dining category, consumers can be classified into two segments: one, who is interested in fine dining, and the other who eats out on a regular basis.

For the new age consumer partying does not require a reason. He wants to celebrate each and every day of his life shopping and eating to his hearts contents in the newly evolved food courts and branded retail outlets. Food courts in malls, in this case, are offering an impressive range of cuisines to select from at one place.

The demand for new and stylish eating joints has also increased over the years. Places like coffee bars have become meeting point for the youth of today. Be it a business meet or a day out for the college students everyone wants to be at the nicest place in town. Coffee bars like Barista, Café Coffee Day are increasing their presence in large as well as small cities.

Though the food and beverages segment is popular with customers, it is, simultaneously, a very sensitive business where the final judgement lies with the customer, based on his experience at the outlet.

The success of a Quick Service Restaurants (QSR) model depends on whether is it able to offer quality food at low prices and excellent service. The USP of QSRs is the fact that you drive in, place an order at the window counter or with the cashier, and then drive away with your order in a matter of minutes.

Food and beverages have always been a chosen sector for franchisors as well as franchisees. In India, a number of companies are in full support of franchising their QSRs. The cost-controlled franchise model has been the sole reason behind the success of franchising in QSRs.

Franchisors provide training and support to the franchisees and they, in turn, want their franchisees to be committed and passionate about building the brand to further strengthen the system. On part of the franchisees, leadership, innovation and the ability to implement the concept are essential.

One leader in the QSR sector is Kentucky Fried Chicken (KFC) which has spread its franchisees across the country. Subway, Pizza Corner, Tikka Express are other leading QSRs that are expanding through franchising.

Entertainment conscious

Entertainment is another major feature that has always been an integral part of the lifestyle of consumers. Cinema houses were the only option available earlier that fulfilled the demand of the consumer.

Today, the definition of entertainment has changed altogether. Multiplexes, where people get the opportunity to watch movies at flexi hours, have taken over the one-screen cinema houses. Cinema, which is the largest entertainment source in India, is now offering world-class experience to the consumer so that he can enjoy each moment, at whatever time that suits him.

Retailing and allied activities

With the shopping and entertainment mix making its foray on the Indian retailing horizon, a paradigm shift has occurred, resulting in the creation of huge profits for many retail franchises.

Retail franchises cover almost every type of store you would find on a typical high street; and new retail franchises are springing up to cover emerging or previously ignored markets or niches. Key to a retail franchise success is its location; but the great advantage of working within a franchise system is that you will be helped to find the ideal premises and benefit from the bargaining power of a large company.

The evolving organised retail market has given rise to allied activities, which is turn has added to more business for the retailers. With multiplexes came the concept of shopping areas and food courts. The effort is now to provide the customer with the best of both worlds. This is well illustrated by the coming up of various malls in all metros and mini metros.

Today's middle income group has more money to spend than their previous generation, and their desire to live an affluent life is adding to this section of the consumer each day. For instance, the current trends in consumers visiting shopping mall is not out of a desire or need to go to a mall, but in order to spend money. Gone are the days when a corner grocery store was the single available option for buyers.

The ever-attracting discount stores not only offer lower pricing but also some of the best brands. Whether it is the Subhiksha store in Chennai or Big Bazaar in Delhi, the formats of corner shops have undergone a complete turn around.

Discount stores are also into franchising. The Loot, known as the multi-branded discount store model, offers customers products with heavy discounts throughout the year. The Loot started as a franchisee of various brands and later moved to the value-retailing format in 2004. The store is set to start a new breed of discount stores in India, which are growing to the level of the international hypermarkets.

Through retail franchises, an ordinary person can capitalise on the opportunities to make money in a fast-growing segment of the industry.

Many owners of retail franchises have some experience of retail work themselves, or at least have had to regularly deal with members of the general public.

Brands everywhere

Retail opportunities have increased. People like to hang out and experience the new places in their city. The new age concept is to attract the customer in every possible way. Today, the concept of planned shopping is almost redundant, and is being replaced by impulsive buying.

Branding has evolved over the years. People are now interested in buying branded products that has quality. The customer today is educated and more conscious now than before. Brand is not restricted to clothing only, even cookies, candies and corn shops offer branded products. Brands are everywhere, and are hitting harder with their powerful advertising methods.

Companies are changing their strategies, using kiosks in various malls to attract the consumers. The shopping experience that malls offer to the consumer is so vast that consumers are not able to satisfy their demands in one visit. The retailers, simultaneously, are also exploring new fields to fulfil the burgeoning demands of the consumer.

With more than 30 brands in the Indian jewellery market, there is a boom for branded products today. Branded jewellery is increasing by 15 per cent each year, and is forecast to grow by 40 to 45 per cent within the next three years.

Franchising in the jewellery sector has lead to the formation of a strong network nationally and internationally. Although a franchisee has limited options to choose from the branded jewellery segment, and with consumers becoming demanding, and increase in competition with the entry of global brands, franchising has emerged as an excellent option for doing business in this sector.

Titan Industries was the first company in India to have a national presence in the branded jewellery sector under the Tanishq name (which is being franchised). Other companies into franchising are Orra, D'damas, Adorra and Oyzter Bay.

Service sector

A strong private sector, an entrepreneurial culture and an efficient capital market have given India a phenomenal growth of around 8 per cent over the next five years at least. Virtually every major industry in India is hiring suitably trained resources. Job consultancy is one area that is being lapped up by various companies.

The Indian population stands at 1.2 billion, 32 per cent of it is in the marriageable age-group of 18 to 35 years, and 54 per cent of the population is below the age of 25 years. The Indian continent is best suited for the matchmaking business. This one sector, besides being new, has a huge potential in online business due to its low costs of operation.

The revolution within the aviation sector with the introduction of low-priced air fares a couple of years ago, has grown domestic and international traffic by 24.2 per cent and 18 per cent, respectively, in April-December, 2005. As a result, the demand for manpower, including airhostesses, has increased. Simultaneously, more girls are opting for the airhostess career. This has led to the expansion of the airhostess training institutes who are finding the franchising model very useful.

Retail florist is a different industry than any other in that more than 80 per cent of it belongs to roadside vendors. There are comparatively fewer organised players with a multilevel outlet format in India.

Still, the future holds a lot more for retail florists. One major plus point is the increasing spending inclination of consumers. Franchising in this industry too has seen a very steady growth in business generation.

Research shows that half of a child's adult intelligence is formed during the first four years of his/her life. It is partly the responsibility of the education system to create this environment. Earlier, known as a part of the service industry, education today has taken a bend towards commercialisation. This move has added to the quality in education.

Through franchising, the franchisee gets a proven and systematically planned structure to run a successful school, without much research on his part. Today, many pre-schools are expanding their network through franchising, developing a franchise model to provide improved education.

The new-age entrepreneur

The young entrepreneur understands the demands of the young consumer. The new age business has given rise to franchising as nobody intends to take risks. Young entrepreneurs are more inclined towards franchising as it offers them the brand value and easy recognition in the market. This new age has brought with it new sectors in the market. Consumer behavior has led to a new age retail revolution. And franchising is the new route taken by the new age retailer.

Franchising provides a good way to privatise, has no danger of flight of capital and will help enormously to establish global standards for products. Franchising in India is evolving fast and it is the right distribution model for business. This model ensures that the franchisor provides maximum value, attention and quality service to the customer.

Overview

Franchising in India has proved to be a successful concept, specially for SMEs. And the inspiring trends in franchising, presented here, indicates that franchising, if implemented in its true sense, can be a potent business strategy for expansion and distribution.

The Indian industry is still evolving and with the coming of international players newer concepts will be introduced, making it job-oriented and business promotional. Some of these sectors are already into franchising for the last

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