INDIA'S CONSUMER MARKET

According to a study by the McKinsey Global Institute (MGI) called 'Bird of Gold': The Rise of India's Consumer Market, total consumption in India is likely to quadruple by 2025, making India the fifth-largest consumer market in the world by 2025.

The BMI India Retail Report for the third-quarter of 2010released in May 2010 forecasts that the total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014.
Growing young population : Indian population in the age group of 15 to 59 forms the real consumer base for durable companies. This population is estimated to grow to 800 million by 2016.

According to recent estimates, household income in the top 20 boom cities in India is projected to grow at 10 per cent annually over the next eight years.

The Indian FMCG sector, with a market size of US$ 25 billion (2007-08 retail sales), constitutes 2.15 per cent of India's GDP. This is poised to grow between 10 - 12 percent annually.

There exists a well-established distribution network spread across six million retail outlets (including two million in 5,160 towns and four million in 627,000 villages)

NEW FDI RULES EXPECTED

There are indications from the Goverment of India that a new policy on foreign direct investment in the politically sensitive multi-brand retail sector will soon be announced. Currently FDI is not allowed in the lucrative retail sector  in India. The retail sector today employs 33 million people and is dominated by the Kirana Shops.

The Department of Industrial policy and Promotion (DIPP) has initiated a debate on this sensitive issue of allowing FDI in the multi-brand retail sector.

It received inputs from stakeholders, including business chambers, WalMart India and French retail major Carrefour, besides the wings of the government. The concept paper had favoured opening of the sector, subject to creation of back end logistics by the foreign retail stores. The committee comprises officials from ministries of Micro, Small and Medium Enterprises, Agriculture, Finance, Rural Development, Commerce and Industry and Consumer Affairs.

While multi-brand retail is closed for foreign investors, 51 per cent FDI is permitted in single brand retail while there are no restrictions on inflows in wholesale cash and carry format business. According to the discussion paper, India annually loses more than Rs 1 lakh crore (US$22.523 billion) in agri-products, including fruits and vegetables, due to lack of proper infrastructure like cold chain storage and warehousing. While there had been political resistance to the idea on the presumption that global players would swallow the small 'mom & pop' (kirana) stores, the industry has been pitching for allowing FDI in the retail sector.
Asia Pulse: October 12, 2010

AD SPLURGE

Navratra's started yesterday and with that came a splurge of ads from all urban retailers. From bringing in the New to an Exchange Offer to Sports Fitness - it's all there.  The first to break out was Big Bazaar with a double front page spread in the Times of India - the ad loudly welcoming the new with a wide range of products. Does the ad mean New Products or New Season ?? Anything new in the products being offered ? Couldn't find any  - wonder if customers that the ad is targeting would !

The Big Bazaar Ad

Home Town ( Another future group retail format) is focusing on an exchange programme on furniture. Could be a great success if the offers are good and exchange offer's value. The Value offered in exchange for old items - Rs 15000 for an old sofa set to Rs 75 per Kg of old plastics. The caveat is that the purchase values is to be 4 times the exchange voucher value.

Exchange Offer of Home Town

Vishal too has released a half page ad with a somewhat Bizarre message - 'Sports and Fitness Rationing' and then talks about a flat 40% off. Products offered range from food to Kurtis to LCD TVs to Mobile phones. The connection to Heath and fitness was difficult to spot.

The Sports & Fitness Rationing ad of Vishal

Reliance retail with it's Reliance Fresh, Super & Mart formats is focusing on 'Lowest Prices on Fruits & Vegetables' in it's full page ad. The lowermost portion of the ad talks about '1000's of products below MRP at our stores'. Does this statement really carry any weight with customers ? All stores today sell these products below MRP.

 Reliance & Lowest Prices

With the onset of the festive season, this frenzy is bound to increase  as the countdown to Diwali begins. It would be interesting to see the approaches and the offerings of the main players in Indian Retail during this season.

RETAIL ROUNDUP

RELIANCE RETAIL PLANS 4,000  NEW STORES IN 4 YEARS
Reliance Retail has mega plans for the next 4 years. The Mukesh Ambani promoted retail chain plans to open 3,000-4,000 stores across its 19 formats, in addition to the existing 1,000 stores. Reliance Retail currently operates 19 formats, some of which are Reliance Fresh, Timeout, Trendz, Jewels and Digital.  The company also aims at a growth rate of not less than 100% for the financial year 2010-11.
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BHARTI RETAIL GOES WEST
According to sources, Bharti retail is planning its first hypermarket in Mumbai. The 60,000 sq,ft store is planned at the Neptune Magnet mall in Bhandup and is expected to open in the 1st quarter of 2011. It is additionally planning another 20  stores in Mumbai, Pune and Nanded. To service these stores, a Distribution Centre is planned on the Mumbai-Pune highway.
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RELIANCE RETAIL TO ENTER CASH-AND-CARRY BUSINESS
Cash and Carry in retail is the flavour of the day. Reliance too plans to jump on the bandwagon with 3 new stores in the next 6 to 8 months. Reliance is going solo on this - no foreign partner of joint venture. The stores are planned to be in 1.5 lakh sq ft in size.
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MOBILESTORE TO ADD 700 OUTLETS
Mobilestore today is 1200 stores strong spread across 200 cities with a 45% market share in organised telecom retail. It is now planning to add another 700 outlets in the next 6 months. 200 stores are in process and another 100 in the pipeline. In tier 2 and tier 3 towns, the company is adopting the franchise model which will help add around 500 stores. Mobilestore will also be financially involved in these franchised outlets.Mobilestores are owned by the Essar Group.
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METRO NOW EYES PUNJAB
Metro Cash & Carry is now extending its reach into Punjab after operations in Karnataka, AP, Maharashtra and West Bengal. Metro opened it's 2nd outlet in Hydrabad on 23rd September.  The Punjab operations of the wholesale retailer are expected to be operational in 2011 with an investment of Rs 2400 Million.
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