admin
January 29, 2024
Economic Times, 29 January 2024
High aspirational value, rising disposable incomes in non-metro markets, premiumisation, and social media boosting brand awareness have led to international retail brands growing at a fast pace while desi brands go easy on expansion.
Global brands such as Zara, H&M, Bugatti Fashion, La Vie en Rose, Adidas, Nike, West Elm, Starbucks, Uniqlo and Marks & Spencer are fast finding favour with Indian buyers. A significant propeller of their growth is small towns where buyers, willing to spend more, are getting more brand conscious.
According to CBRE, about two dozen international brands entered India in 2023 and expansion by global brands that are already present in the country have fuelled the demand.
Videshi retailers make more space
The retail sector recorded an all-time high leasing in 2023, taking 7.1 million sq ft across eight cities, an increase of 47% from last year despite large retailers slowing down on store expansion. A prominent factor in the growth was international brands. Retail leasing by international brands was almost 25% in 2023 compared to 14% in the previous year, ET has reported.
Canadian lingerie retailer La Vie en Rose made its debut in India in partnership with Apparel Group India and launched its first store in Delhi-NCR in July 2023 and later expanded in Pune and Bangalore. Similarly, Rimowa, a German luxury luggage brand, entered India through its partnership with Reliance Brands and opened its first store in Mumbai.
Other notable expansions by international players include French fashion & apparel brand Bugatti Fashion and the American furniture brand West Elm opening their stores in Pune, and American lingerie brand Victoria’s Secret opening stores in Hyderabad and Pune.
Making inroads into small towns
Three dozen big brands entered tier-II cities in the first nine months of 2023, as demand from smaller cities continued to be strong even after the pandemic. A good number of those were global brands.
Brands such as H&M, Marks & Spencer and GAP have entered cities like Indore, Mangalore, Patna, Ranchi, Mysore, and Coimbatore, according to data by CBRE. “India’s first retail REIT has encouraged developers to aggregate and upgrade their existing facilities, apart from developing new malls. Moreover, domestic and international fashion brands are looking to expand in non-metro cities, fueled by a well-aware and well-travelled consumer set,” Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, has said.
Desi retailers turn cautious
While international brands are expanding at a strong pace, desi retailers are turning cautious. India’s top retailers have significantly slowed down their store expansion this fiscal year, after opening a record number of outlets last year, ET has reported based on their latest investor disclosures. The top five retail chains – Reliance Retail, Titan Company, Avenue Supermarts that owns DMart, V-Mart Retail and Shoppers Stop – together opened 44% fewer stores in the first three quarters through December compared with a year earlier.
Top industry executives attributed the slowdown in store expansion to more focus on profitability when consumption had not picked up the way it was expected to and as most of the new markets are already filled up with two-four retailers, leaving little room for more outlets. It appears global retail brands are less vulnerable to these pressures.
Global brands buck the trend
Top global apparel and fast fashion brands appear to have struck a strong chord with young customers, racking up sales growth of anywhere between 40% and 60% in FY23, bucking the trend in a market where the overall demand for discretionary products slowed down, ET has reported based on latest filings with the Registrar of Companies.
For instance, Swedish fashion retailer H&M and rival Zara reported a 40% increase in its topline while Japanese brand Uniqlo saw a 60% jump in sales. American denim maker Levi Strauss and British brand Marks & Spencer posted a 54% increase. Dubai-based department store Lifestyle International, too, saw a 46% jump in revenues on a large base. These brands garnered combined annual revenues of nearly $2.6 billion, more than double compared to FY21 when it was $1.1 billion all put together.
“With consumers getting brand conscious, global brands have a natural advantage. There is a distinct aspirational momentum for international brands that carries them through. Also they can sustain having unsold inventory and discounting better than smaller peers,” Devangshu Dutta, founder of Third Eyesight, a strategy consulting firm, told ET recently. “Also, these brands have not yet reached saturation point in terms of network and hence can invest further to widen their reach.”
Even as international brands are aggressively adding more physical stores, the revenue surge was also led by brands’ shifting focus on ecommerce, which now accounts for more than a quarter of their sales, even as they face intensify competition from both local and global rivals in an increasingly crowded market where web-commerce firms continue to offer steep discounts. Over the past two years, sales growth for most retailers have been price-led, reversing the historic trend when volumes or actual demand drove a bulk of the sales.
The fashion retail segment has been struggling with a demand slowdown since January last year due to inflationary headwinds. The overall retail growth slowed down to 6% in both March and April, increasing marginally to 9% in August and September before falling slightly to 7% in October and November, according to the Retailers Association of India.
(Published in Economic Times)
admin
January 26, 2024
Sagar Malviya, Economic Times
Mumbai, 26 January 2024
Hindustan Unilever and United Spirits together present a study in contrasts that seemingly reinforces the current purchasing trends in India’s consumption sector. At the country’s biggest consumer-goods and alco-bev companies, respectively, premium brands are flying off the shelves, but mass-priced products remain relative stragglers.
“At the premium and luxury ends, they (consumers) are continuing to spend, continuing to experiment, continuing to do repertoire drinking, especially experimenting with the white spirits, drinking at home,” Hina Nagarajan, managing director at Diageo-controlled United Spirits, told investors in a post-earnings call. “However, Middle India, or the value-oriented consumer, is actually cutting down on the number of occasions (to spend) to manage their money.”
The maker of Johnnie Walker and Smirnoff posted a 12.4% volume decline in the mass-priced segments, while pricier prestige and above categories saw a 10% growth during the December quarter. The Indian unit of the world’s biggest distiller said it expects this trend in purchasing behaviour to continue over the next couple of quarters.
At Hindustan Unilever, the country’s biggest consumer company by both sales and market value, the story isn’t vastly different. The FMCG bellwether said its premium portfolio expanded more than two-and-a-half times the mass segment over the past few quarters.
This trend was seen even in the rural areas that make up nearly half the annual sales at the maker of Dove soaps and Glow & Lovely skin creams. Pricier products now constitute a third of Hindustan Unilever’s total sales. “In rural areas, there are people who can afford and spend money, and hence, the premium portfolio in has also grown well – like it has grown in urban parts of the business,” Rohit Jawa, managing director, Hindustan Unilever, told investors after the December-quarter earnings. “We have always seen that essential and discretionary are the two realities of (the) rural (market).”
Incomes & Business Cycles
This dichotomy in purchase decisions appears to be a function of income disparity and is market-agnostic, experts believe. For instance, rural India that accounts for nearly 40% of the overall FMCG market saw a noticeable drop in demand for a year due to inflation and erratic monsoons. Cities, meanwhile, appear to be at the vanguard of overall consumption demand across categories as urban incomes, typically linked to organised sectors of the economy, are more resilient to business cycles and promise better protection against broader inflationary pressures. “Even if the consuming class, mainly upper and middle class, saw an impact on their incomes, it is still not significant to affect their discretionary spends,” said Devangshu Dutta, founder of Third Eyesight, a strategy consulting firm. “There is a buffer available for higher income growth and it will hit them later in any economic downturn. At present, it is felt in the lower-income segment.”
Over the past decade and a half, consumer companies expanded sales by pushing both pricier and affordable products. Companies still have budget-friendly options in their portfolio, but lower incomes, especially in rural areas, appear to have dented purchasing power at the budget end of the market. “The real pressure on the wallet is on the lower side, where we do see upgrades are not happening from country liquor to either the popular category or the lower end of prestige,” said Nagarajan at United Spirits.
(Published in Economic Times)
admin
December 12, 2023
Akshit Pushkarna, Afaqs
12 December 2023
The season for Indian weddings, usually spanning October to December, experienced an unusual twist due to Hindu calendar nuances this year, resulting in a shorter duration. The unexpected shift has upended the conventional decrease in marriage ceremonies, resulting in a condensed surge of weddings.
A report by the Confederation of All India Traders (CAIT) anticipates Rs 4.74 lakh crore in business earnings from the 38 lakh marriages expected this wedding season, marking a historic high. In comparison, the corresponding period last year witnessed around 32 lakh weddings with total expenses amounting to Rs 3.75 lakh crore.
This presents brands involved in the wedding business with an ample opportunity to capitalise and drive forth their business revenues for the year to come. Three key brands associated with wedding business are steering their strategies to align with the evolving preferences of Indian consumers in the lucrative wedding market.
A more region-specific focus for Shaadi.com’s marketing communication
In a conversation with afaqs!, Adhish Zaveri, VP-marketing, Shaadi.com, a prominent online matrimonial and matchmaking service, speaks about how digital media is more relevant for brand building for wedding-oriented businesses now, eclipsing the relevance of traditional TV and out-of-home advertising. He sees mass media serving only reminders to prompt registrations, while the primary focus shifts towards digital platforms.
This change involves a robust regional focus within our marketing playbook, recognising the dynamic shifts in matrimonial behavior across diverse geographies
Adhish Zaveri, VP-marketing, Shaadi.com
“This season, we have incorporated a paradigm shift in our marketing strategy, driven not only by the upswing in weddings but also by observing how Indians approach finding life partners, with nuances varying across regions. This change involves a robust regional focus within our marketing playbook, recognising the dynamic shifts in matrimonial behaviour across diverse geographies,” he says.
The campaign is driven by the company’s commitment to assure individuals of finding a match within a specified timeframe. The pledge to successfully matchmake within 30 days, with a refund guarantee, serves as the crux of their messaging this season. “Tailoring our approach to each market, we’ve executed this promise uniquely.”
This approach sees the company partner with people of influence across markets to drive better visibility. For the Hindi market, they’ve forged a strategic partnership with Jasleen Royal, the acclaimed singer behind popular wedding songs like Din Shagna Da and Hiriye. Leveraging her association, Zaveri says they have orchestrated a robust social media engagement strategy.
“In the Tamil market, we’ve employed celebrities who recently tied the knot as our ‘matchmakers.’ Adapting a viral reel from this region, featuring the celebrity couple, became a cornerstone of our campaign. While regional focus has always been part of our strategy, this time we’ve approached it through a celebrity lens, creating bespoke strategies for each South Indian market. Although distinct, each strategy is unified by a celebrity-centric approach. From featuring Supriya and Sachin Pilgaonkar for Marathi audiences to enlisting Jasleen Royal for the North, and partnering with Ashok Selvan and Keerthi Pandian for the South – we’ve delved deeper into regional dynamics,” he adds.
Zaveri believes the success of the approach is evident, particularly in the South, where the company’s market presence has increased dramatically post-campaign, providing them an opportunity to further invest in the region.
A focus on the Wedding planning business for Vikaas Gutgutia’s Ferns N Petals
In the backdrop of a season that signals prosperity, Vikaas Gutgutia, founder and managing director, Ferns N Petals (FnP), reflects on the trajectory of its business, navigating through the challenges of a pandemic-induced wedding lull.
He says FnP strategically sustained its business in 2022, aligning with the resumption of the wedding business. With the focus shifting to a year poised for business takeoff, the company plans on exploring the wedding planning business with their new business line Shaadi Central.
“With a legacy in the wedding industry, FnP has historically undertaken various wedding-related tasks, albeit not comprehensively under one roof or in an organised manner. This year marks a strategic shift as the company introduced ‘Shaadi Central,’ a luxury wedding company offering a one-stop solution for all wedding needs.”
“This holistic approach aims to streamline and elevate the wedding planning experience, allowing partners and their families to focus on the approaching wedding date with ease. The innovation and consolidation under ‘Shaadi Central’ have sparked notable interest and engagement in the new business venture. Having weathered a less-than-ideal summer season and traditionally subdued winter numbers, we anticipate a robust revenue surge, making the current season particularly promising,” he asserts.”
The business setup was sparked by Gutgutia’s assertion that, with the evolving landscape of wedding planning, which has made destination weddings and grandeur now necessary for some, the role of wedding planners has become significantly prominent. The launch’s alignment with the business boom anticipated with the wedding season of 2023, Gutgutia underscores the importance of timing in business.
The innovation and consolidation under ‘Shaadi Central’ have sparked notable interest and engagement in the new business venture.
Vikaas Gutgutia, founder and managing director, Ferns N Petals (FnP)
Delving into the marketing approach for this new business vertical, he explains, “The momentum generated by word of mouth for the growth of its wedding planning vertical. Each wedding becomes a nexus of potential customers, and social media plays a pivotal role in amplifying references. With clear and specific messaging in the realm of social media, we have successfully driven business, recognising the platform as the primary point of reference in shaping preferences.”
Looking ahead, FnP anticipates a substantial increase in business revenue across all its verticals. The wedding services vertical, in particular, is expected to bring in significant growth in revenue for the company. The belief stems from the observation that the wedding planning sector remains largely unorganised, and he believes that FnP stands out as a formidable player in terms of size and brand image. As the business charts its course forward, the wedding services vertical emerges as a key focus, poised for substantial expansion.
Senco Gold & Diamonds leveraging virtual try-ons for delivering business growth
Joita Sen, director- marketing and design, Senco Gold & Diamonds, says that the company, with a legacy of 80 years, is uniquely equipped to understand the evolving landscape of bridal desires.
Sen elaborates that the company started the year fresh after initiating their Rajwada Collection, a campaign with which the brand aims to weave together traditional designs infused with modern touches and patterns in their offerings. These offerings, thus, can resonate with the essence of the contemporary woman.
The move also sees the brand shifting its focus towards diverse designs, moving away from region-specific choices. Herein lies a unique selling proposition (USP) for the brand—fulfilling a diverse range of needs while ensuring accessibility across various price points. From high-end designs to more budget-friendly options, the brand aims to leave every customer content upon leaving the store.
“The evolution of groom preferences and competitive pricing have further shaped our approach. A significant aspect of our marketing strategy here revolves around social media, leveraging its targeted reach compared to traditional approaches like billboards and footfall. 50 percent of the marketing budget is allocated to digital channels, where advancements have allowed for more precise consumer outreach.”
50 percent of the marketing budget is allocated to digital channels, where advancements have allowed for more precise consumer outreach.
Joita Sen, director- marketing and design, Senco Gold & Diamonds
However, the digital realm poses a challenge in providing a comprehensive array of options compared to the immersive experience offered in showrooms. To address this, Sen acknowledges the importance of virtual try-ons.
“While currently available for select products, we are actively working on expanding our offerings in virtual try-ons. This approach proves instrumental in effectively communicating the design, look, and feel of the jewellery to consumers, bridging the gap between the digital and physical shopping experiences.
According to Devangshu Dutta, CEO, Third Eyesight, the ongoing mega-season of weddings presents a favourable outlook for formalwear and traditional wear brands across various categories. This surge in weddings is not limited to the upper-income segment but extends across the income spectrum, reaching the middle class and towns of all sizes.
Thus, to effectively capitalise on the wedding season, brands must establish a strong position in customers’ minds well in advance, he believes.
“Products and brands associated with brides, grooms, and close family members, as well as those intended for gifting to the extended family, are inherently perceived as “premium” within their respective consumer segments. This holds true regardless of the targeted population segment. Success as a “wedding brand” requires a long-term perspective, with continuous investments in product development, service enhancement, and marketing expenditure to ensure that the brand stands out prominently amid competition,” he says.
”In the current market landscape, achieving visibility demands a multi-modal approach, encompassing both offline and traditional channels, along with tactical online advertising.”
Devangshu Dutta, CEO, Third Eyesight
In the short term, however, he opines that the visibility and availability of products just before the wedding season play a crucial role in influencing specific performance during that period.
”In the current market landscape, achieving visibility demands a multi-modal approach, encompassing both offline and traditional channels, along with tactical online advertising.”
(Published in Afaqs)
admin
December 4, 2023
Sharleen Dsouza, Mumbai
3 December 2023
Hindustan Unilever (HUL)’s decision to split its beauty and personal care division and place a renewed focus on digital has been driven by its aim to serve the consumer of tomorrow, say analysts and brand experts.
HUL Managing Director and Chief Executive Officer Rohit Jawa is looking to make the company ‘future ready’, and while these bets are not for the short-term, they will eventually pay off as the Indian consumer is young and digital friendly, they add.
“Rohit Jawa comes with digital experience and he is preparing to steer HUL into serving the future consumer who is more digital friendly,” said Sachin Bobade, vice president at brokerage firm Dolat Capital.
On Friday, the consumer major also announced that it had named Arun Neelakantan its chief digital officer effective January 1. Neelakantan, who the company said was brought in to unlock growth opportunities by leveraging India’s digital ecosystem, will also join the company’s management
committee. Neelakantan is the first chief digital officer of the company who will be part of the company’s management committee.
Brand expert Devangshu Dutta, founder of business management consultant Third Eyesight, said that HUL was a traditional company but had never shied away from experimenting with different models of customer engagement.
“The profile of the younger Indian consumer is more digital friendly. This move won’t fundamentally shift the company’s business in the short term, but it is creating a connect with the younger consumer group which will be the mainstay for the future,” said Dutta.
On Friday, Jawa had said: “As we embark on our next phase of growth and transformation, we will combine our scale and discipline with innovation and agility to serve our consumers even better, and build a future-fit business,” adding that beauty and personal care continued to be a source of value creation for the company.
(Published in Business Standard)
admin
November 4, 2023
Faizan Haidar, Economic Times
4 November 2023
Some of the super-luxury brands that have opened stores at the recently inaugurated luxury mall, Jio World Plaza in Mumbai, have put in a condition that at least four top brands – such as Louis Vuitton, Gucci, Cartier, Burberry, Tiffany, Valentino, Bulgari, Zegna, Giorgio Armani and Bottega Veneta – should be present in the same complex, to ensure the position of their brands is not diluted.
ET has seen copies of the agreements between Reliance Industries, the owner of Jio World Centre, and five brands, accessed through data analytic firm CRE Matrix.
Reliance Industries and the brands did not respond to emails seeking comment till press time on Friday. Brands often have an exclusivity clause with the mall where they don’t want competing brands near their stores. However, in the high-end segment, to ensure a similar buyer profile, they want similar stores nearby. Jio World Plaza already meets the condition with several of these super-luxury brands having opened their outlets there.
“If at least four among the mentioned brands are not open within six months of us starting the operation, we should be entitled to a reduction of the licence fee by 25% for the period that this criteria remains unfulfilled,” Christian Dior Trading, which will operate Dior, has said in the agreement.
Dior will pay ₹21.56 lakh in monthly rent for a 3,317 sq ft space in the complex. Gucci has given a list of six luxury brands – Louis Vuitton, Dior, Cartier, Bulgari, Valentino and Burberry – and demanded that at least four have to be represented in the shopping centre.
Louis Vuitton, Cartier and Bulgari have also put in similar conditions. Most of them have kept the right to terminate the agreement after serving the notice for nine to 12 months.
“In the super-luxury segment, most of the brands complement each other and that is why they want the presence of these brands next to each other. Good mall developers also go with zoning of brands and don’t want to mix the super-luxury brands with the premium or mid to premium brands. As more luxury brands are contemplating India entry, we will see more luxury spaces coming up,” said Devangshu Dutta, founder of retail consulting firm Third Eyesight.
India only has a handful of malls that give space exclusively to super-luxury brands.
