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Retail Ready: Foreign players know how to woo Indian consumers

By Meenakshi Kumar

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Retail

India’s retail industry is growing at a blinding speed. The number of global players venturing into the country and opening stores and existing ones expanding hugely are evidences of a booming retail industry. In such a scenario, it is only befitting that a major player such as the Spanish fashion major Zara decided to open its largest store - 50,000 square feet – in Mumbai’s toniest neighbourhood, Fort. The company will pay Rs three crore per month as rent. What this means is that the brand has estimated large sales every month, pointing to the coming of age of the Indian consumer.

Unpredictable Indian consumer

So far, the Indian consumer has been tough to understand and please. An Indian consumer is very particular of getting a good price and excellent quality. So, to get this right, retailers have had to try various formulas, some got it right, others did not. Usually, retailers in India have invested on branding – advertisements, events, eyeball-grabbing billboards and not the product itself. This has eaten up the profits. Also, both high-end and luxury labels have not been able to expand majorly primarily because of high rentals. Also, a quota maintained for backend ops has eaten into the quality of several brands and diluted their image. And more importantly, Indian franchisee holders have sought to make their own profits by keeping racks of a cheaper range that’s made in India, right opposite a rack of stuff made in China with international prices.

Some brands have cracked the consumer code

Global fashion brand Zara managed to capture the Indian consumer’s imagination and become a favourite by offering uptown-looking trendy clothes. Initially, it bungled by pricing its clothes high but then it slashed the prices down by 20 per cent. This helped it to double its sales. Since then it has grown big. The story is similar with Marks & Spencer. The British high-street magnate opened a four-storied mega store at Bandra’s Buzzing Hill Road two years ago. Besides, it is present in most malls across the country. What made it popular was its range of good quality, high wearability apparels that do not go out of style. And now Swedish Ikea will soon be opening in Hyderabad followed by Pune. It has excited the retail world like never before as it plans to invest Rs 1,000 crores in India and open 25 mega stores in less than 10 years. It is hoped that Ikea will fill the gap between cheap rubbish offered by home décor stores and overpriced lifestyle boutiques. Similarly, since its opening in stores in India, H&M is the latest to have attracted Indian consumers’ attention. Foot falls in H&M stores have been growing consistently as the brand is planning newer stores in various metros.

American global management consulting firm AT Kearney has ranked India as the fourth most attractive destination for retail investment. The retail market is expected to grow to Rs 47 lakh crores by 2016-17, expanding at a compounded annual growth rate of 15 per cent, as per Yes Bank-Assocham study.

H&M
M&S
Zara