India among top 15 emerging retail markets

A.T. Kearney’s Global Retail Development Index for 2013 views India favorably and realistically. It points to India’s large, young, increasingly brand- and fashion-conscious population. Retail growth of 14 to 15 percent per year is expected through 2015.  “Modern retail” remains limited (7 percent in 2012), but it is expected to grow as the country urbanizes and retailers make new investments.  The balance of 93% is made up of individually owned stores, typically with small square footage.

In 2012, India’s retail sector reached an important landmark: The government allowed 100 percent foreign direct investment in a single brand retailer for the first time.  Kearny points out that several single-branded retailers entered India in many sectors: apparel and beauty (including Brooks Brothers, Kenneth Cole, Sephora via its Singapore franchisee, and Armani Junior), standalone boutiques (including Roberto Cavalli and Christian Louboutin), and food (including Starbucks in a partnership with Tata Beverages and Dunkin’ Donuts). Large retailers such as IKEA are finalizing their India entry strategies but it may be a couple of years before you can buy their furniture in Delhi or Mumbai.

In multi-brand retail, India nominally allowed 51 percent FDI starting in early 2013. However, there are preconditions about investment, sourcing, store locations, and state government approval. Although the government has received multiple investment proposals, many multi-brand players are taking a “wait-and-see” approach due to apprehensions about how the policy will be implemented. Retailers are expanding in tier 2 and 3 cities as real estate costs in major metro areas skyrocket. Carrefour, Metro, and Bharti-Walmart have increased their presence in these markets.

Online shopping is in the early stages, with e-commerce sales equal to less than 1 percent of all retail sales, but growth is expected as more people access the Internet. Mobile phones, electronic appliances, apparel, movies, music, and books are the fastest-growing categories. New entrants, new business models, and new niche categories have flooded the market, yet few players have turned profitable yet.

What this means
At Amritt, we have always maintained that our clients should take a measured, balanced but steadfast approach to India. Extreme euphoria is usually followed  by some disappointment. The long term prospects for investment in India are excellent and those with patience continue to reap large rewards.  For more about Amritt’s services for consumer goods companies that want to sell into India’s retail market, click here.
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July 2, 2013   No Comments

India starts receving P-8i surveillance aircraft

According to Aviation Week, India’s first delivery of an ‘in-country’  Boeing P8-i aircraft this month will be followed by two further aircraft in the third and fourth quarters of the year. India has eight P-8Is on firm order and Boeing is optimistic that options on a further four could be taken up later in 2013, or early 2014.

The Indian Navy became the first  international customer for the P-8, which is a modified Boeing 737, in the wake of the 2008 terrorist attacks on Mumbai.  Besides surveillance, the airplane is also delivered with anti-submarine missiles.

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May 28, 2013   No Comments

Mumbai sixth in Billionaire Count

According to a study by WealthInsight, Mumbai takes the sixth position of the world’s top cities with the maximum number of billionaires, with a count of 26 billionaires. New York tops the list with 70 billionaires, followed by Moscow with 64 and London with 54.  Los Angeles counts 19 billionaires which place the city at rank 10.

In terms of countries with the most billionaires, India ranks 11 whereas the United States top the list.

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May 16, 2013   No Comments

Returning Indian Expats Prefer Bangalore, New Delhi and Mumbai

According to the Times of India, Bangalore hires the highest proportion of returning overseas Indians (NRIs or non-resident Indian as they are still oxymoronically called) in its workforce.  It is especially relevant in the IT, pharmacy and healthcare sectors, where they prefer to hire candidates with international exposure, as told by Rajesh Kumar, CEO of a global recruitment consulting firm, MyHiringClub.

Companies that are especially looking into expanding globally need to understand global practices and specific markets. Studies conducted under MyHiringClub indicate NRI professionals accounted for 21% of total lateral hiring in India.  The IT & ITES sector has seen the number of NRI hiring at 23%, pharmacy and healthcare accounted for 21%, FMCG 18% and infrastructure 11%.

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October 26, 2012   No Comments

Bangalore and Mumbai are most the Expensive cities for Average Indian Consumers

Analysis of the most recent Consumer Price Index data released by Reserve Bank of India shows that Bangalore has the highest average cost of living in India, followed by Mumbai, then Chennai, Kolkata, and Delhi.

This is a chart from The Times of India, which indicates the CPI scores of the six different cities mentioned.

There are a variety of factors that contribute to the differential living costs of the cities, including aspirations of the people, political advantage and other factors. Here is an example of the variations in the price of cooking gas (LPG) cylinders, a staple need  for most households, since  piped gas is not available very widely yet.

City LPG Cylinder Price
Bangalore Rs 415 (USD$7.71)
Mumbai Rs 402 (USD$7.47)
Chennai Rs 393.50 (USD$7.31)
Kolkat

Rs 405 (USD$7.52)

Delhi Rs 399 (USD$7.41)

Economist Vibhuti Patel of Mumbai’s SNDT University points out that Mumbai has very high rents. She also says basic food items like vegetables, fruits and grains are likely to cost more in Mumbai than Delhi, since the latter is closer to Punjab and other agricultural states.

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October 26, 2012   No Comments