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Aug, 09 2011

Best of the Rest in Retail

In the monsoon of retail business, it's perhaps the best time ever to soak up the most of specialty. Specialty retail category takes the front seat in organised retail sector, as business opportunities in this sector are selling like hot cakes.

In the monsoon of retail business, it's perhaps the best time ever to soak up the most of specialty. Specialty retail category takes the front seat in organised retail sector, as business opportunities in this sector are selling like hot cakes. After digging deep into this lucrative sector, we handpicked the best 15 brands for you to invest in.

SO, what's unique and 'special' about these new-age retailers? Specialty retailers are specialists who are more focused and have deep selection of goods in their business. They emphasise on selling their products to a particular and niche clientele. These retailers precisely select the market that they want to cater to. Commenting on the same, Anurag Poddar says, “The speciality retail industry in India is in a nascent stage. The concept is so new that not many people from the industry know much about it. There are numerous formats that deserve expansion. More than anything else, retail infrastructure is the main hindrance for their growth. Far too many brands are chasing far too less retail space in this country.”

From accessories to book stores, home furnishings, stationery, telecom to music retailers and much more, remember, there are opportunities galore under the specialty retail umbrella.

Revolution in retail

In the past decade, retail industry has witnessed a sea change, especially when it comes to speciality retail, which now has defined characteristics and a definite growth attached to it. It contributes to 50 per cent of the organised retail business and is growing at 40-50 per cent per annum. The factors that have lead to the growth of specialty retail brands are mainly evolution of new-age consumers between 18-30 years, partnering among brands, retailers, franchisees, investors and malls; novel yet profitable and scalable models of retail, brand extension and constraint in retail space. All these factors have lead to the emergence of kiosk and cart model too.

The Indian retail market, which is the fifth largest retail destination globally, has been ranked as the most attractive emerging market for investment in the retail sector by AT Kearneys eighth annual Global Retail Development Index (GRDI) in 2009. According to a recent research, India's overall retail sector is expected to rise to USD 833 billion by 2013 and to USD 1.3 trillion by 2018, at a Compound Annual Growth Rate (CAGR) of 10 per cent.

Trends in specialty retail

Considered to be crème de le crème of the organised retail sector in India, specialty retail accounts around five per cent of the Indian retail market. This shows humongous growth potential in this sector. After talking to around hundred brands regarding their target audience, cities and sectors, we bring to you the hot trends in specialty retail:

Expansion in small cities: Tier-II and III cities are the prospective hotbeds of growth for specialty retail brands. The existing and potential franchisors don't want to miss out on this untapped, lucrative opportunity. Majority of the franchisors believe as there is not enough space left in metros, the growth percentage in small cities is much more. Tier-II and III cities like Gurgaon, Noida, Kochi, Siliguri, Amritsar and Ludhiana are considered as the most preferred destinations.

Target locations: Whether it's a metro or a tier-II city, specialty retail franchisors are targeting posh locations everywhere. A big chunk of franchisors only prefer malls and high streets for their presence. Kiosk format have also become a fad with specialty retail brands. Kiosks are also used by a few brands as a pilot franchising model before opening a full-fledged store.

Call for categories: Which category among specialty retailers rules the roost? It was tough, but after doing extensive research we have made a list of categories for potential franchisees that will make their job easier. Beginning from the category that tops the priority list of potential franchisees is fashion accessories that include footwear, jewellery and watches, handbags and travel gears. Following this trend is consumer durables like books, music and gifts to home furnishings and pharma brands, mobile handsets, to health and beauty products. So, before you plan to invest your hard-earned money don't forget which category holds maximum potential.

Partner in a special way

Specialty retailers have a bright future, as they are the 'hero' of their own product. Expanding via franchise model is preferred by a majority of specialty retailers. The prime reasons to go the franchising way are franchisees' knowledge of the area and hike in real estate prices. V Govind Raj, Vice-President, Integrated Retail Services Ltd, Titan Industries, feels, “Franchising helps brands to scale up quickly.”

As consumer spending has grown to an impressive 75 per cent in the past four-five years, even the organised retail (specialty retail), which is pegged at around USD 8.14 billion, is expected to grow at a CAGR of 40 per cent to touch USD 107 billion by 2013. Looking at this trend, potential franchisees have a bright future.

When asked about their expansion via franchise format, S Ravikant, Chief Operative Officer (COO), Eyewear Division, Titan Industries Limited, says: “Titan Industries historically has ventured into all its business through the franchise model. All its businesses have successfully grown and become market leaders. We have developed 700+ happy and prosperous associates for watches, jewellery and eyewear.”


So, to remain 'special', specialty retailers must recognise the gaps initially in the market and must never succumb to diversifying or adding novel product lines to their existing ones. Instead, they must focus on growing tall and not wide.

Lastly, after talking to industry experts and doing an extensive research, ‘unique and unconventional retail concepts’ have been crowned as the ‘money making businesses’ for the upcoming quarter. In this issue focus of specialty retail, we have brought together 15 best specialty retail franchise opportunities based on novel trends, performance, returns on investment and business model feasibility.

(Contributions by Pallavi Majha, Amanpreet Kaur and Tushi Deb)

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