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Nov, 20 2009

Niche foreign retailers bullish on India

India’s specialty retail industry is undergoing a sea change with the coming of many foreign brands. Marina home interiors chain of stores from Middle East, Home furnishings and clothing franchise, Laura Ashley, from UK and Crate & Barrel are just to name

Even though the concept of hypermarkets, supermarkets, discount stores, convenience and factory outlets have been receiving a lot of interest from all quarters, it is the specialty retail store concept that is really arousing the curiosity of consumers. Specialty retail is a kind of niche concept, which spellbinds the consumers’ attention in various categories, including furniture, consumer electronics, luggage, writing instruments, toys, books, fashion accessories, home furnishing, gifts and office products. Steady growth of the Indian economy, subsequent rise of the living standards of Indian consumers and increasing disposable income are the key growth drivers, which are responsible for the entry of foreign specialty retail brands in India.

Internationally, the concept of specialty retail is fairly organised than the Indian market. The international concepts are not only giving competition to the Indian players, but also giving them a room for improvement to reach out to the consumers in a better way.

Foreign brands vying for India

In recent years, many foreign retailers entered the Indian market with their specialty retail concepts to target the Indian consumer. Many foreign brands from UK, USA, Australia, Middle East, Germany, France and Singapore are eager to penetrate India through franchising, considered to be the most feasible option to extend operations instantly.

To increase their foothold aggressively in the Indian market, varied foreign brands are vying for an entry.

In home furnishing segment, Marina home interiors chain of stores from Middle East, Home furnishings and clothing franchise, Laura Ashley, from UK, Crate & Barrel are interested in the Indian market, possibly through the franchise route. Laura Ashley has revealed its plans to continue its international expansion through franchising. The company is looking for Area Developers in 18 countries, including Morocco; Pakistan; Thailand; India; Russia and Egypt. At present, UK’s Rosebys, Splash (Middle East), Germany-based Nya Nordiska, New York-based Portico and Gautier from France (present in India through Ebony via exclusive distribution agreement) is present in India.

Air division, a furniture brand, is planning to target Delhi and Mumbai. On disclosing their India entry plans, Christopher Soh says, “India is expected to be one of the emerging consumer markets in the near future. This opportunity would certainly bode down well with early adopters and history has shown it to be so. Time is relative as to when we will enter the market. This is something that we will have to negotiate with potential partners and distributors in the near future.”

Besides this, Italy’s luggage company Roncato and French leather brand Le Tanneur also has plans to enter India. At present, Victorinox, a swiss lifestyle luggage brand, and Samsonite are present in India.

In the eyewear segment, Milan-based Luxottica Group’s Sunglasses Hut entered the Indian market with a franchise agreement with DLF Group. Other optical brands such as Harley Davidson and Hoya Vision Care, the Japan-based spectacle lens maker, would soon be making a beeline in the Indian market. At present, Rayban and Vision Express from Pearle Group are present in Indian through a Joint Venture partner, Reliance Retail Limited.

In infants and mothercare segment, UK’s Mothercare, Maternity Destination and Babyshop, a part of Middle East-based Landmark Group, are present in India. Other international brands that are exclusively available in maternity range in India that are retailed by Mom and Me include Startrite of UK (infants and kids footwear major), Brainy Baby of USA, Mary Meyer of USA (both educational toy brands), CAM from Italy, Evenflo from USA, and Avado from Australia. Other brands like Graco, Mattel, Dreambaby, etc. are also available in exclusive ranges.

In the gifts segment, Edible Arrangements International, Inc., a leading purveyor of delicious and artistically designed, fresh fruit arrangements, will be entering India soon. Golfworx, world’s largest Golf interactive bar, lounge and retail destination, is planning to open its first store in India this December.

Customising brand

It is advisable for foreign brands to go through proper market study in terms of understanding the local market conditions, knowing the consumer likings and, thereafter, customising their products so as to suit the local market conditions.

Commenting on this, Soh believes, “No matter how much market research we put in prior to entering a new market, a great deal still is reliant on people with whom we have forged a partnership with. We believe that tapping on their comprehensive insight and familiarity with the market, culture and lifestyle coupled with what we have to offer in regards to our brand and product offerings, we are set to be in a position to take advantage of these resources for successful market penetration.”

Darrell Stapleton, CEO and MD, Golfworx, feels, “Localisation will play an important role in the development of Golfworx. If we just look at the retail sector of our business, the current Indian offering in golf retail is very small, unprofessionally operated and overpriced. There is even stories of retail outlets selling counterfeit products, which is completely unacceptable and unfair.”

Golfworx will offer the largest range of golfing equipment, apparels and accessories in the country with the latest premium products at the most competitive prices.

Innovate new strategies to stay afloat

Competition is likely to increase with a number of foreign brands penetrating in the Indian market. And to stand out in this competitive market, the companies will have to focus more on offering niche products to allure consumers. The emerging companies in the specialty retail business will have to come up with innovative marketing strategies to give a boost to sales. Offering merchandise at lower prices and more discount options will be of assistance to give tough competition to the well-known players in the market.

According to Stapleton, Golfworx has an extensive membership programme, which allows members to access discounts on retail, simulators, F&B and events. The membership programme has three levels, each different from the other by way of the percentage of discount, exclusive invitations to events, members only sales, free simulator usage and many other items extending to individuals and corporate alike.

Franchising is the best way and the right pick to instantly reach out to the consumers in different locations. It can help foreign retailers to establish their brand presence in the market in a lesser time period. Specialty retail is all about providing a good shopping experience to the customer.

Soh says, “Visual appeal of the store is of utmost importance. Even the ambience of the showroom along with what music is played will have an indirect effect to our valued customers. Anyone buying furniture would want to try and feel the item before it is purchased, and this is exactly what we aid in our customers.”

Marina Home interiors will be catering to the growing middle and upper class by providing unmatched home décor never seen before.

Khurshid Vakil, Co-Founder and Executive Director, Marina Exotic Home Interiors, notifies, “We will pick locations carefully that will best suit the brand demographically. We will start off with a flagship store, covering not less than 50,000 sq.ft of prime space, either in a well-established mall or a prominent high street location. We would carefully select our franchise partners, who would have a successful retail track record and understanding of home interiors businesses.”

To reach the consumers in a better way, changing the visual merchandising of the store on regular intervals is considered very necessary. Talking about the intervals wherein they change the visual merchandising of the store, K. Venkatraman, Managing Director, Mom & Me, adds, “Visual merchandising is changed in synch with a visual merchandising calendar, which is based on marketing, merchandising and business strategies to increase footfalls and conversions through various seasons, festivals, event and promotions. On an average, the displays are changed twice a month.”

Expansion ahead

On future expansion, Venkatraman, says, “We plan to target the metros and mini-metros. The company is looking at opening outlets in malls and high streets.”

Stapleton adds, “We will be opening our first store in December in Ambience Mall, Gurgaon. Other sites we have visited are standalone locations, outdoor golf clubs and resorts as well as some new and exciting ventures being presented to us at the moment.”

Soh informs, “On a global scale, Middle Eastern, Chinese and the Indian markets are promising to be the future bets to go into with the tremendous growth expected over the next few years in these countries.”

As far as India is concerned, Golfworx is looking at New Delhi, Hyderabad, Chandigarh, Mumbai, Bangalore, Kolkata, and Chennai. Marina stores are located in some of the top shopping centres and standalone locations in the Gulf markets e.g. Mall of the Emirates (Dubai), Souk Madinat Jumeirah, Dubai Festival City, Abu Dhabi Mall to name a few. With the entrance of niche foreign retailers, specialty retail market in India is expected to boom in the years to come.

Guidelines

  • Select appropriate business entry route
  • Take assistance from consultants, who can guide you in a better way to penetrate the market
  • Go for right business partner, who has good understanding of the market
  • Create unique selling proposition of your product to attract customers
  • Pay attention on offering high level of customer service
  • Customising the brand as per consumer preference
  • Right pricing strategy
  • Right locations where you can achieve higher footfalls
  • Offering vast variety of products
  • Changing visual merchandise at regular intervals
  • Offering loyalty programmes to hold on to existing customers and target more
  • Franchising the best option to reach target consumers in short time.
  • Maintain uniformity at all outlets
  • Build effective marketing tactics
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