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November 28, 2022
Sagar Malviya, ET Bureau
November 28, 2022
About half a dozen global apparel and lifestyle brands expanded anywhere between 30% and 70% to garner combined annual revenues of nearly $2 billion in FY22, reversing the performance from a year ago when Covid-induced curbs on mobility and business operations caused sales to shrink.
Sales of Swedish fashion retailer H&M expanded 49% while rival Zara reported a 61% increase in its topline. Japanese brand Uniqlo saw a 64% jump in sales while American denim maker Levi Strauss posted a 58% increase, latest filings with the Registrar of Companies showed. Dubai-based department store Lifestyle International, too, saw a 38% jump in revenues on a large base while German brand Puma expanded 68% despite being the biggest firm in the sporting segment.
“This is a combined impact of a rebound in industry-wide demand in India, a low base effect for some brands, and the visibility and mindshare advantage global brands have,” said Devangshu Dutta, founder of Third Eyesight, a strategy consulting firm.
Big Focus on Online Sales
“Global brands are aspirational not only for consumers but also for real estate developers. Perceived as anchor tenants, they get their choice of the best locations – this provides more impetus to their stores vis-a-vis Indian brands, which are shunted to higher floors in multi-level shopping spaces,” Dutta said.
The revenue surge comes at a time when most of these retailers are facing intensifying competition from both local and global rivals in an increasingly crowded market where web-commerce firms continue to offer steep discounts. Even multinational companies have upped their online focus and for some, web-based orders make up more than a third of their revenues.
For instance, Puma India’s online sales make up nearly half its total business, while for H&M the share is 42%.
Abhishek Ganguly, managing director, Puma India and Southeast Asia, said the affinity of young Indian consumers toward ecommerce is extremely high and that adoption of the online mode of shopping continues to accelerate even after the resumption of normal business operations.
“Consumers may have bought online for the first time during the lockdowns, but they have embraced ecommerce in their shopping journey,” said Ganguly.
“Almost half of our business is in the form of digital commerce today. Having said that, we are witnessing equally strong growth – both in our offline and online channels,” he said.
As the world’s second most-populated country, India is an attractive market for aspirational apparel brands as rising disposable incomes cause the consuming base of the pyramid to broaden further. The performance by global brands is also in line with the overall trend within the home-grown apparel and lifestyle segment, with Shoppers Stop, Tata-owned Trent and Aditya Birla Fashion & Retail also reporting smart performance rebounds, indicating a secular demand for discretionary products.
(Published in Economic Times)
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November 19, 2022
Chloe Cornish, Financial Times (select extracts)
Mumbai, November 19, 2022
Billionaire Mukesh Ambani’s oil-to-data conglomerate Reliance Industries, India’s biggest single listed company by market capitalisation, profits most from its refinery, the world’s largest. But Reliance wants to embed itself in India’s towns and cities by dominating the $800bn retail market as well, from partnerships with luxury fashion houses like Balenciaga to acquiring a Coca-Cola copycat.
Despite being India’s biggest retailer by revenues, Reliance’s 16-year-old shopping unit has often been overlooked, as Ambani’s Jio mobile network stole the limelight in transforming India’s data landscape.
Taking advantage of restrictions that hamper foreign companies’ ability to compete in India’s fragmented retail sector, still largely made up of mom and pop shops, Reliance is expanding its shopping empire at a rate of seven stores a day, using acquisitions to accelerate growth and investing around $3.6bn last financial year. It has 16,000 stores across India, while online purchases contribute 17 per cent of revenues, according to a person with direct knowledge of the matter.
India’s tycoons have long ventured into consumer businesses, from the Tata family, once best known for steel and now also boasting jewellery stores and a joint venture with Starbucks, to industrialists like Aditya Birla, whose conglomerate includes a large fashion business. Reliance, however, has aimed to control entire supply chains, all the way from the petrochemicals in the fibres it uses to produce textiles.
“The ethos of the group is dominance,” said Devangshu Dutta, founder of Gurgaon-headquartered retail consultancy Third Eyesight. “Unless other businesses step up to the plate, their dominance is a foregone conclusion.”
In its latest potential acquisition, Retail has reportedly bid $500mn for German wholesaler Metro’s Indian business. Indian rules allow foreign companies to own 100 per cent of a cash and carry business, but only if they do not sell directly to consumers. Reliance, by contrast, could unlock value by extending the business to sell direct to shoppers through Metro’s 31 distribution centres, said a person familiar with the company’s thinking.
Reliance has also announced it will launch its own fast-moving consumer goods company by the end of this year. The person close to the company said it would look to acquire brands to build the business, akin to its August deal for Campa, a nostalgic Indian fizzy drink, as well as exploring licensing and joint ventures.
While its ecommerce business JioMart has recently tied up with WhatsApp, owned by Reliance investor Meta, to increase its online reach, Reliance further boosted its physical shop space this year. It swooped to thwart potential foreign competitor Amazon in a battle over failing shopping group Future Retail.
Reliance Retail recorded quarterly revenue of around $8bn for the three months ending September 30, earning a net profit of $283mn, a 36 per cent increase year-on-year.
Reliance Retail declined to comment for this story.
Additional reporting by Andrea Rodrigues in Mumbai
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November 16, 2022
Written By Aditya Kalra
NEW DELHI, Nov 16 (Reuters) – India’s Tata Group is planning to open at least 20 “beauty tech” stores where it will use virtual makeup kiosks and digital skin tests to get young, affluent shoppers to buy premium cosmetic products, according to a company document and a person familiar with its strategy.
The move pits Tata, whose interests range from cars to jewellery, against LVMH’s (LVMH.PA) Sephora and domestic rival Nykaa (FSNE.NS) for a share of the fast-growing $16 billion beauty and personal care market in the world’s second-most populous country.
Tata is eyeing what it calls a “beauty enthusiast” in India aged between 18 and 45 years who likes to buy foreign brands such as Estee Lauder’s (EL.N) M.A.C and Bobbi Brown, according to the document, which lists The Honest Company (HNST.O), Ellis Brooklyn and Gallinee as potential partners. Tata is in talks with more than two dozen companies to supply exclusive products to the new stores, according to the person familiar with the strategy, who did not name specific brands.
Tata declined to comment on its planned beauty stores and the contents of the document seen by Reuters. Representatives of The Honest Company, Ellis Brooklyn and Gallinee did not respond to Reuters requests for comment.
The store opening plans, still under wraps, follow the recent launch of Tata’s beauty shopping app, called Tata CLiQ Palette. The company is already in the brick-and-mortar retail business in India, where it has joint-venture partnerships with global brands such as Zara and Starbucks.
The stores will have a bright red facade showing Tata CLiQ Palette branding, with 70% of the products inside being skincare and make up, according to the Tata document. Inside the stores, Tata is planning to install technology allowing customers to try on dozens of lipstick shades virtually on screens and to get digital skin tests to find out what products might work best for them, according to the document.
The technology is not new and is in use by other beauty retailers around the world, but this venture into what industry experts call “experiential retail” is still a relatively new concept in Indian malls and high street shops.
“Experiential retail is going to be a big thing in India as more customers will spend their leisure time at such stores,” said Pankaj Renjhen, joint managing director at India’s Anarock Retail consultancy. “In the premium segment – where a customer is looking for things beyond price – experiential retail helps trigger impulse shopping and can entice them.”
Renjhen added, however, that “the product and the brands have to be exclusive and good – if they are not that, she (the customer) is not going to come back.”
MILLENNIAL DRIVE
As India’s economy grows, and people return to shops after coronavirus lockdowns, Tata is looking to target relatively young and affluent customers who like to shop in comfortable surroundings and are willing to pay the sticker price for premium international brands. Tata calls such customers “non-bargainers” in the document seen by Reuters, in contrast to most Indians who buy low-priced local brands of lipsticks or skin creams from small mom-and-pop beauty stores where haggling for discounts is common.
The company is targeting shoppers with an annual income of at least 600,000 rupees ($7,358), which is more than three times the average earnings of $2,000 per year among India’s 1.4 billion inhabitants. The new stores should drive “sales across channels as a leading Beauty Tech destination for Gen Z & Millennials,” the Tata document says.
India’s $16 billion beauty and personal care market is much smaller than China’s $92 billion, but market research firm Euromonitor estimates India’s will grow an average 7% a year over the next few years.
“The Indian beauty market is not saturated – far from it,” said Devangshu Dutta, head of New Delhi-based retail consultancy firm Third Eyesight. “If you are investing for the long term, with higher income profiles and changing lifestyles in mind, there’s a long runway of growth ahead.”
Tata faces strong competition to take advantage of the projected growth. Sephora, which has been in India for around a decade, has 26 outlets selling beauty and fragrance brands. Reliance, led by billionaire Mukesh Ambani, has a long-term plan to open 400 beauty stores, the first of which may open inside a Mumbai mall next month, according to a person familiar with its plans. Reliance did not respond to a request for comment.
Indian beauty retailer Nykaa, backed by private equity firm TPG, asset manager Fidelity and endorsed by a Bollywood celebrity, has said it plans to open as many as 300 stores, from 124 now. The 10-year old company, which started as an online-only retailer, attracted attention to the sector last year when its stock nearly doubled after listing on the Mumbai stock exchange, valuing the company at the time at $14 billion.
HURDLES AHEAD
Tata’s first “beauty tech” store will likely open by March, with further expansion stretching into next fiscal year beginning April that could see it open as many as 40 stores, according to the person familiar with the plan, who added the company will start with bigger cities such as New Delhi before considering smaller places.
However, Tata is struggling to persuade owners of upscale malls, where space is scarce, to take on a new beauty store where one already exists, if it does not have enough exclusive products or another differentiating factor to attract new customers and increase foot traffic to the mall as a whole, according to another person with direct knowledge of the discussions.
Alongside exclusive product launches, Tata is focusing on the in-store technology, which the document seen by Reuters describes as a “key differentiator.”
One of the tech tools will be a device Tata calls a “skin analyzer,” a device with a mirror that can read and analyse a customer’s skin to reveal 25 to 30 attributes that can help make product choices. There will also be “virtual try-on” kiosks for eye and face makeup. Among them will be a circular stand with lipsticks slotted in; as someone lifts one, a digital mirror-screen in front will automatically start showing how the colour shade will appear on the face, eliminating the need for repeated manual try-ons before a purchase.
Tata is also testing use of so-called geofencing technology to allow its store staff to detect when a customer using its app enters, and share the shopping history and wish-lists with staff to make better recommendations, the person familiar with the plans said.
Source: reuters
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November 4, 2022
Christina Moniz, Financial Express / BrandWagon
November 4, 2022
Direct-to-consumer (D2C) lingerie brands, often credited with transforming the category and the way women shop for innerwear, are expanding their offline footprint in response to growing demand from tier-II markets and beyond. Zivame, whose journey began online just over a decade ago in 2011, has grown its offline presence to over 120 stores and also sells through over 4,000 partner outlets. In its recently concluded Grand Lingerie Festival, Zivame saw its sales grow three times,with a 120% increase in new customer acquisition. “Tier-II markets are showing massive potential and though tier-1 remains our highest revenue contributor, we are seeing significant revenue baseline shifts in tier-II locations,” says Khatija Lokhandwala, head of marketing at Zivame. The company has announced that its focus will be retail expansion in the second half of this fiscal, going beyond metros and tier-I markets.
Another decade-old D2C player in the innerwear segment, Cloviais eyeing the immense opportunity presented by smaller markets with aggressive expansion plans in place. “Clovia currently has 45 exclusive brand outlets in the country and has been diversifying its product range, with plans to open 130 outlets by the end of this fiscal. Ours has always been a mass- market brand, and most of the repeat customers come from tier-II and tier-III markets,” explains Pankaj Vermani, founder and CEO, Clovia. He notes that over 65% of its customer base is from the non- metro markets, and average order values are 20% higher in these cities compared to the metros. Earlier this year, Reliance Retail Ventures acquired an 89% stake in Clovia’s parent company (Purple Panda Fashions) for Rs. 950 crore. Vermani adds that Clovia will ben- efit from the conglomerate’s scale and retail expertise, driving up growth and love for the brand. Reliance Retail had picked up 15% stake in Zivame back in 2020.
Shaping the market
The women’s innerwear market in India is set to double to reach $11-12 billion by 2025, according to a report by RedSeer. Aside from the key segments of bras and panties, ancillary products like athleisure, sleepwear, swimwear and lounge wear are also boosting the lingerie category’s growth in the country, as is evident from the widening portfolios of leading brands. The online segment for women’s innerwear is expected to become a $1 billion market by 2025.
Experts believe there is a large opportunity for companies to grow since 60% of the $6-billion women’s intimate wear market in India is unorganised, and the category is still largely underserved.
“The lingerie market is an example of improving supply feeding into a growing demand, and the increasing demand expanding the opportunity for more brands to step in. Larger cities, with their higher income profiles and demand concentration, are the logical first-choice market for companies such as Zivame,” points out Devangshu Dutta, CEO, Third Eyesight.
The competition in the large cities is greater, with a plethora of Indian and global brands, which is why Dutta recommends that e-commerce led companies should push aggressively in smaller markets to drive sustained growth.
The fact that D2C brands have better data sets at their disposal to glean insights about Indian women and their concerns when buying innerwear has also worked in their favour.
“Intimate wear shopping can be overwhelming for a lot of women. Finding the right size and choosing styles for their specific needs requires an environment free of embarrassment and judgement. At Zivame, we help women choose the right size and perfect fit, ensuring a private, comfortable and discreet shopping experience,” says Lokhandwala.
While lingerie can sometimes be prohibitively expensive, Vermani points out that Clovia’s feedback-led design approach helps it keep pricing competitive.
The brand creates each product in small quantities, and uses technology to predict future sales based on customer feedback, thereby determining the right quantities for production. He states, “With this approach, we have created a fashion brand that is low on cost, high on consumer appeal and efficient in inventory, leading to better margins and cash flows.”
(Published in Brandwagon, Financial Express)
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November 3, 2022
The organised traditional snacks market in India is expected to double to Rs 20,400 crore by fiscal 2026, according to Bikaji Foods, aided by rapid urbanisation, a shift towards branded products and export demand.
Written By Devika Singh
Bikaji Foods is the largest manufacturer of Bikaneri bhujia with an annual production of 29,380 tonnes. (Image credit: www.bikaji.com)
A few years back, chips and kurkure packets would mostly adorn aisles in grocery shops across the country but now they jostle with enticingly packed bhujia, sev and other local savouries.
The upcoming initial public offering (IPO) of Bikaji Foods has put the spotlight on the huge inroads made by traditional snacks in the organised packaged snacks segment.
Till a few years ago, the traditional segment was mostly unorganised but bhujia, chana chor garam, ganthia, bhel puri, among others, have made their place in the organised packaged snacks market. Though western snacks like chips still dominate packaged snacks, with a 57.2 percent market share, traditional Indian sweets now command a 42.8 percent share. Of this, the traditional savoury bhujia has a 15.9 percent share.
A few years ago, these snacks were sold by small regional players, often loose, while organised players like Haldiram’s, Bikaji Foods, Bikano had a small share in the packaged snacks market.
“The traditional Indian snacks segment had been a fragmented market mostly sold by individual retailers and the brands in it were small,” said Devangshu Dutta, chief executive at retail-focused consultancy Third Eyesight.
However, with the introduction of packaging and processing along with the consumer preference for local taste, Indian brands have significantly picked up the pace.
According to the draft red herring prospectus (DRHP) filed by Bikaji Foods, the overall market for savoury snacks was valued at Rs 75,100 crore in FY22, in which the organised segment had a 56.3 percent share at Rs 42,300 crore. Of this, the organised ethnic or traditional snacks market was Rs 11,400 crore and expected to grow at a compounded annual growth rate (CAGR) of 16 percent to reach Rs 20,400 crore by FY26, said DRHP. This sub-segment was valued at Rs 5,700 crore in FY15.
Haldiram’s (Delhi and Nagpur), as per an IPO note issued by Axis Capital, have the largest share of the traditional savoury snacks market in India at 38.5 percent, followed by Balaji at 9.6 percent, Bikaji at 9 percent, Bikanervala (Bikano) at 6 percent and PepsiCo at 3 percent. Haldiram – Prabhuji (Kolkata), Prataap Snacks, DFM Foods and other organised players have the rest of this market.
Here are a few factors that have led to the growth of traditional savoury snacks in India.
The Covid factor
The entire market for savoury snacks, Western and traditional, has been rapidly growing, triggered by Covid-19-led restrictions in 2020 and 2021. “Snacking in between meals has always been traditional in Indian culture and Covid-19 forced lockdown has increased this habit of snacking multi-fold and is driving the growth of this industry,” said Bikaji Foods’ DRHP. The document projects the overall market for savoury snacks, which stood at Rs 75,100 crore in FY22, to reach Rs 1,22,700 crore by FY26. The DRHP added that increased concerns over health and hygiene are also pushing consumers towards the organised market and branded products will be a major beneficiary of this growth.
Rapid urbanisation
According to the DRHP, while traditional savoury snacks were consumed in specific regions earlier, with urbanisation and working population migration to different regions the demand for regional snacks is increasing pan-India. This has led to the domestic expansion of many regional players like Bikaji and Chitale, it added.
Packaging and processing
As stressed by Dutta of Third Eyesight, several traditional snacks were not sold in packaged form earlier but brands are launching more and more products from Indian cuisine in the packaged form now. Bikaji’s DRHP says this trend is expected to continue as companies discover processes to increase the shelf life while retaining the authentic taste of traditional food.
The shift towards branded products
Consumers who earlier used to buy traditional snacks in loose and unbranded forms are switching to branded, packaged products now. “The boom in branded or organised namkeen is driven by consumers who are upgrading from unbranded segment rather than consumers of western snacks shifting to ethnic segment,” said the DRHP.
The rise in exports
Home-grown companies such as Bikaji, Haldiram’s, Bikano have also cracked the export market over the years and their products can be found in several countries abroad. “Earlier, these products were found in stores catering to the Indian diaspora in the US, the UK, or Canada but now they have even made their way to large chains,” said Dutta. Bikaji, for instance, drew about 5 percent of its revenue from exports in FY21. The company currently exports to 35 countries.
Source: moneycontrol
