Indian Retail Revolution

The Indian economy has grown at a rate of almost 9% recently and is still growing at about 7%+. This growth is a direct result of liberalisation of government policies since the early 1990s. This has led to creation of significant wealth, employment and prosperity.

An exciting consequence of this sustained decade-long growth is the rapid emergence of a "well off" consumer market of close to 200 million people. It has been estimated that almost 40 million of these are "Super-Haves" with an annual income of over US$30,000 in real terms.

They are mostly resident in the top 35 or so cities (with the population range from just over a million to 16 million).

Why is it important?

Did you know that the respected global management consultancy AT Kearney has stated that India is the "happening place" for retail? In the firm's Global Retail Development Index, profiling the attractiveness of retail destinations around the world, India is rated FIRST!

The tastes and preferences of the new Indian consumer, many of them belonging to the very "young India" have been shaped by strong western influences, firstly via globally available cable television shows and by secondly by increased global connectedness through education, travel and globally dispersed "India Diaspora's social and economic activities". This segment of population is nothing like the "Traditional Indian Stereotype". They are high performers, global, aspirational and dreamers. This is India's "Generation Me" if you like who are blending the best of "International" and "Indian". Some characteristics of this "young India" are as follows:

• They will do anything project a cool personal image and are into Gyms, Power Yoga and spas
• Earning younger and with high disposable income at young age, but still living at home
• Looks at adventure tourism and generally outdoors for release and entertainment
• Comprehends a billion US dollars better than billion Indian Rupees
• Not limited to the 'big 4' towns (Mumbai, Delhi, Bangalore, Kolkata). A large number of contestants for Miss India are from smaller towns which also support a coffee culture, beauty salons and gyms
• Comfortable simultaneously with Armani and Fabindia, McDonald's and Haldiram, Harry Potter & Hanuman, MTV & Aastha. (Fabindia, Haldiram, Hanuman - the flying god with the face of a monkey - and Aastha are very established Indian "brands" in textiles, confectionary, super-natural tales and hit TV shows, respectively).
• Self assured and confident of success - "seize the day" mentality
• New media savvy, heavily networked with a high level of interaction with computers, the internet, and mobile telephones and active in blogging, chatting and online gaming

What are the opportunities?

Almost every segment of consumer retail in India offers huge opportunity. In particular, apparel, food & beverage and rural retailing are big opportunities.  Supporting the case for investment to unlock the retail opportunity is the sky-high confidence of the Indian consumer. According to the Global Consumer Confidence Index  of January 2009 (Nielsen Company), Indians were considered the world's most optimistic consumers.

To make the point, let us consider an extreme example and look at lingerie. The attitude to lingerie in India, once a taboo subject, is going through a bit of a revolution as more middle class Indian women take up Western fashions. Consider the following:

• Indian women appear to be spending anywhere from India Rupees 300-Rs 3000 (NZ$6-NZ$100) for quality lingerie.
• 70% of the lingerie market is unorganised (i.e. without modern retail formats or branded outlets, and 100s or even 1000s of local players). One company, Triumph, has the lion's share of the 30% or so of the organised market.

Consider "Health and Beauty" as another example. At least three major industrial houses are establishing dedicated "Health and Wellness" stores across India. They need products to stock as India does not make enough and the Indian consumer demands the world's best - and can pay for it! 

The chart below gives you an idea of the absolutely huge opportunity space.

Size of Indian retail market segments, 2007-08 - US$ billions

So if you have a world-class conusmer product in apparel, food, beverage, health and beauty or rural segments and want to tap a market as large as the USA - look at India. The unmet demand for high-end consumer goods is almost insatiable.

Want to break into the Indian consumer sector ? we can help, please contact us